Sitting of 10 March 1982

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

CONTINGENCIES FUND 1980–81
Account ordered,
of the Contingencies Fund, 1980–81, showing (1) The Receipts and Payments in connection with the Fund in the year ended the 31st day of March 1981, and
(2) The Distribution of the Capital of the Fund at the commencement and close of the year; with the Report of the Comptroller and Auditor General thereon.—[Mr. Budgen .]

Oral Answers to Questions
  TRANSPORT

    Seat Belts
    Mr. Greville JannerSecretary of State for Transport what is his estimate of the likely reduction of fatal accidents on the road as a result of the forthcoming introduction of the compulsory wearing of seat belts.
    The Under-Secretary of State for Transport (Mrs. Lynda Chalker): While seat belts undoubtedly save lives, I do not believe that it is possible to estimate what the effect of compulsory wearing would be. Too much depends not only on the level of wearing but on other factors such as the relative propensity to accidents of wearers and non-wearers.
    Mr. Janner: When does the Minister expect the lifesaving measure, which will make front seat belt wearing compulsory, to come into effect? Who will be exempted? Will she consider extending the protection and rules to rear seat passengers?
    Mrs. Chalker: I believe that it will be possible to consider regulations later in the year, I hope as quickly as possible, but I do not wish to give an exact date. I hope that that will be shortly after Easter. The hon. and learned Gentleman asked about extending the use of belts to passengers in rear seats. Unbelted rear seat occupants can cause injury to those in the front. Therefore, the Government are keeping the question of rear seat belts under careful consideration. Most new cars are provided with rear seat anchorage points, and all cars manufactured after 1 October 1981 are required to provide them. Medical exemptions will be for the doctors to decide.
    Mr. J. Enoch Powell: Is the hon. Lady aware how wise she was to avoid the error of her predecessors in that office when they gave exaggerated estimates of the reduction in casualties that would be consequent upon the compulsory wearing of crash helmets?
    Mrs. Chalker: I am grateful to the right hon. Gentleman for his remark.
    Mr. Lawrence: I congratulate my hon. Friend on her new appointment, but is she yet aware that the medical commission has recommended so few exemptions on medical grounds that the public in Britain will be so infuriated that it is highly probable that those against compulsion will win when this matter is reconsidered in 1984? Will she give urgent reconsideration to an exemption for driving instructors while they are instructing?
    Mrs. Chalker: I shall certainly consider my hon. and learned Friend's last point. I thank him for his kind remarks. I am aware of the guidelines that have been brought forward by the Medical Commission on Accident Prevention, but these are guidelines produced by doctors for doctors, and we must abide by that professional advice. I note carefully my hon. and learned Friend's comments and will watch what reactions come forward.
    Mr. Sheerman: Is the Minister aware that the main body of opinion in the medical world is that exemptions should be very few, and that if someone is so ill as to be unable to wear a seat belt there is some question about whether he should be driving?
    Mrs. Chalker: I understand that there are some diseases and temporary conditions, such as cracked ribs, which might mean that a person would be wiser to stay at home and recover before getting into a car. We have to achieve a balance in all these matters.
    Mr. Nicholas Winterton: I hope that my hon. Friend will not be a promoter of the extension of the nanny Stale. I congratulate her most warmly on her change of position. Can she say how many people will be killed as a result of the decision of the House that people should be compelled to wear seat belts when travelling in the front seats of a car? Many people have been involved in accidents in which, if they had been wearing a seat belt, they would have been killed.
    Mr. Sheerman: Prove it.
    Mr. Winterton: It happened to me.
    Mrs. Chalker: I must tell my hon. Friend, despite his kind remarks, that I should not be here today but for the wearing of a seat belt. Only 18 per cent. of the fatalities are people wearing front seat belts. About 30 per cent. of passengers and drivers wear them voluntarily at the moment. I do not believe in nannying anyone, but measures taken in the futherance of safety and a reduction of accidents and deaths are, to me, an important preventive measure.

    Motorway Network
    Mr. KnoxSecretary of State for Transport whether he is satisfied that the current motorway network is adequate for the present level of traffic.
    Mrs. Chalker: Yes, except in few places where additions or improvements are already planned.
    Mr. Knox: Does my hon. Friend agree there has been a considerable increase in recent years in traffic on some parts of our major motorways? Is there not a strong case for building some new stretches of motorway to complement those busy parts so that hold-ups can be avoided?
    Mrs. Chalker: I am well aware of the pressure on some of our motorways, and particularly on sections of the M6 and Ml. My hon. Friend will know that plans are afoot to extend the M62 and the M40. We shall do as much as is feasible. It is important to note that we have done more work for less money and will have spent 15 per cent. more in 1981–82 than we spent in 1980–81.
    Mr. Cyril D. Townsend: Has my hon. Friend's attention been drawn to the urgent need to complete the M25? Does she appreciate that many of those in South-East London understand the legal delays, but think that there have been unnecessary administrative delays? Will my hon. Friend promise, here and now, to review the position, with a view to the speedy completion of that important motorway?
    Mrs. Chalker: I assure my hon. Friend that I give top priority to the completion of the M25. As my hon. Friend knows, the estimated date for completion is 1985, and I have no reason to think that that date will be extended. I understand the great problem for those in the South-East, and that is why we have given completion top priority.

    British Railways (Track and Permanent Way)
    Mr. Bob CryerSecretary of State for Transport when he next expects to meet the chairman of British Railways to discuss investment in track and permanent way structures.
    The Secretary of State for Transport (Mr. David Howell): I meet the chairman frequently to discuss this and other matters of mutual interest.
    Mr. Cryer: No doubt the Secretary of State is aware that British Rail is very concerned that the lack of investment may be causing a deterioration in permanent way structures and track maintenance. Will the right hon. Gentleman ensure that an inquiry is conductd into the derailment of a freight train today at Leeds? That train was hauling a flask that usually contains nuclear waste, but which was, fortunately, empty. An inquiry must be held to ensure that no such accidents could arise from a deterioration in the standards of track maintenance due to lack of investment.
    Mr. Howell: In the first case, such incidents are for British Rail to consider. Track renewal and maintenance has been put outside the investment ceiling to enable British Rail to spend the required amounts. However, British Rail must find the resources from within its overall budget. That must be its main commercial need and that is the way that it must organise its business.
    Mr. John H. Osborn: Will my right hon. Friend bear in mind that the amount of investment in track and so on depends on the demand for the service? Is it not an unfortunate fact that British Rail will have to learn the lesson that British Steel learnt two years ago? Will my right hon. Friend also bear in mind that money spent must be spent on a service that others want to use?
    Mr. Howell: Those are lessons that those working for British Rail, those managing it and British Rail travellers will bear in mind when considering the future of the British Rail system.
    Mr. Robert Hughes: Does the right hon. Gentleman recall that over three months ago he agreed to the request
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    of the Britih Railways Board for a thorough-going review of British Rail finances? Why has there been no appointment of a chairman or committee, and no mention of the terms of reference? When will the right hon. Gentleman give us that information and when will he set the review in motion?
    Mr. Howell: I hope that that review will take place shortly. However, as a result of the severe disruption and the difficulties experienced in persuading ASLEF to recognise the importance of productivity to the future of the railway system, difficulties have arisen. However, I hope that the review will go ahead shortly.

    Channel Tunnel
    Mr. Nicholas WintertonSecretary of State for Transport when he now expects to make a decision on the building of a Channel tunnel; and what the cost implications for his Department will be.
    Mr. WhiteheadSecretary of State for Transport when he expects to make an announcement of the Government's policy towards the Channel tunnel.
    Mr. David Howell: I expect to receive the report of the Anglo-French study group in the course of the next few weeks. I shall then wish to consider and discuss it with my French counterpart, but I do not expect a decision to be long delayed. The Government's intention is that the British share in any fixed Channel link which may be decided upon should be financed entirely by the private sector.
    Mr. Winterton: When my right hon. Friend announces his decision, will he designate the sponsor of the scheme? Will he also tell us how the additional funds are to be provided for British Rail if, as the Government have implied, they would like a 7-metre rather than a 6-metre tunnel?
    Mr. Howell: If it is decided to have a fixed Channel link, the type of scheme decided upon will determine the promoting group that is best suited to providing such a scheme. If a scheme involves extra expenditure over the years by British Rail, that would have to be taken into consideration when fixing its investment ceilings, external financing limits, its overall pattern of finances and any other demands on its funds.
    Mr. Whitehead: Is the Secretary of State aware of the old saying:
    "Hope deferred maketh the heart sick"?
    Given that many of us are heart-sick after yesterday's Budget and that many of us are supporters of capital projects for the regeneration of British industry, is there not a need for a speedy decision on this major project, which could make a substantial contribution to such regeneration?
    Mr. Howell: The hon. Gentleman should be more cheerful after a Budget that everyone recognises will be very good for industry and for industrial development. The Anglo-French studies have gone ahead quickly. Once the French became involved in the studies they moved quickly, and I am hopeful that we shall be able to keep to the timetable that I gave in response to the question asked by my hon. Friend the Member for Macclesfield (Mr. Winterton).
    Mr. Michael Marshall: Will my hon. Friend expand a little further on what he understands to be the private investment interest in the project in Britain? What is his understanding of the involvement of private French capital?
    Mr. Howell: I understand that on this side of the Channel eight groups have put forward schemes as promoters for the fixed Channel link. They recognise the Government's requirement that there should be no recourse to public funds. They intend to propose schemes that will satisfy that criterion, although until the nature of the scheme is clearer none will be able to do so. On the French side of the Channel, too, there is a greater inclination to look at market sources of finance than at purely State resources, as was originally suggested.
    Mr. Bidwell: May I remind the right hon. Gentleman that an admirable Select Committee on Transport is currently hard at work and that it has recommended the 7-metre tunnel? In the exchanges that have taken place—I hope—across the Channel has the right hon. Gentleman discerned more enthusiasm among the French than among the British?
    Mr. Howell: I had the honour of appearing before that Select Committee. It has done excellent work on the fixed Channel link. As I told the Select Committee, there is enthusiasm for a project, provided that the finances can be sensibly organised. The respective Governments have made it clear that they would like studies to be made so that a decision in principle can be reached.

    Heavy Lorries
    Mr. WallerSecretary of State for Transport if he will make a statement about his timetable for implementing the main proposals contained in his White Paper on "Lorries, People and the Environment."
    Mr. ChapmanSecretary of State for Transport if he will make a statement on the progress of his consultations with local authority associations on aspects of his White Paper, "Lorries, People and the Environment."
    Mr. David Howell: I have consulted widely on the proposals in the White Paper, "Lorries, People and the Environment". I hope to make a further announcement shortly. Consultations with the local authority associations have included discussions on the more effective use of their powers to control lorries and their routing. I am also consulting local authorities about the establishment of lorry action areas for the places worst affected by lorry traffic.
    Mr. Waller: Will my right hon. Friend confirm that yesterday's Budget changes in the rates of duty payable on heavy lorries will ensure that these vehicles pay their track costs? That is one of the main recommendations of the Armitage report. As more and more companies have made it clear that if the weight of lorries were increased there would be savings in both fuel and the number of vehicles used, are not the environmental and economic considerations in favour of my right hon. Friend's White Paper becoming more apparent?
    Mr. Howell: It has always been clear that the substantial benefits from the proposed package are both industrial and environmental. My hon. Friend is also right
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    to draw attention to the proposals made yesterday by my right hon. and learned Friend the Chancellor of the Exchequer. He proposed that vehicle exise duty on the heavier lorries and vehicles should be substantially increased—by, I believe, about a quarter.
    Mr. Booth: Would it not be improper for the House to consider a Finance Bill that made special provision for the taxation of lorries that could not be used legally on our roads? Will he therefore give an undertaking that before such a Finance Bill proposal is made the House will have an opportunity to decide on the construction and use regulations that the Secretary of State intends to bring forward in the light of the proposition in the White Paper on "Lorries, People and the Environment"?
    Mr. Howell: I hope to make an announcement on these matters shortly.
    Mr. Crouch: In my right hon. Friend's timetable for the implementation of the White Paper, which will come first—the heavier lorries, their safety requirements, the bypasses, the motorways, the route control or the weighing machines that will be required to keep a check on these vehicles?
    Mr. Howell: The package of controls on lorries which I believe is necessary to prevent what is at present a bad situation from getting worse, must go hand in hand with any changes in maximum weights or, indeed, maximum heights—where the proposal is that there should be a limit. All those things should go together as a package. At the same time, the Government have announced a substantial bypass programme, which has been speeded up, and that should also go forward. All in all, it is essential to tackle the environmental impact of what in many cases are extremely offensive vehicles. A competitive advantage can accrue to the freight industry if we combine that with a sensible package of lorry controls as a comprehensive whole. That is the Government's approach.
    Mr. Bagier: Does the right hon. Gentleman agree that whatever the Chancellor did yesterday about meeting the track cost of heavy lorries, that cost in no way comes near to putting the environmental costs right? Does he also agree that a vast number of people are absolutely against an increase in lorry weights? Will he give some assurance to the House that he has no intention of agreeing to those lorry weights coming into operation?
    Mr. Howell: The hon. Gentleman should accept the point I made earlier—that the present situation is bad and getting worse. There is a strong case for a comprehensive package of controls on lorries, including safety, lorry routing and a number of other developments. Many people will be extremely concerned if these things are let slip yet again. That ought to go hand in hand with allowing a heavier maximum weight to allow the industry to compete and to find the cost of these extra controls. That is a sensible and balanced approach, which many people will appreciate.
    Mr. DykesSecretary of State for Transport what representations he has received from the various interested parties, affected organisations, and the public in general on his Department's draft circular of 18 February on lorry controls.
    The Under-Secretary of State for Transport (Mr. Reginald Eyre): None as yet. The purpose of this circular

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    is to encourage a more vigorous approach to the introduction of planned lorry controls, which is one of the most worthwhile ways of improving the environment locally. We have asked for comments by 18 March.
    Mr. Dykes: I thank my hon. Friend for that answer. Will he undertake to oblige local authorities to use the 1967 and 1973 Acts properly to ensure full-scale environmental controls for the heaviest lorries if there is an increase in weights that is not yet acceptable, bearing in mind that the full details of the package are yet to be seen?
    Mr. Eyre: My hon. Friend makes an important point. About 850 lorry control schemes have been introduced on amenity grounds since my hon. Friend promoted the 1973 Act, known as the Dyke's Act. Many authorities have used their powers effectively, but there is still plenty of scope for more—hence this circular.
    Mr. Cryer: Does not the fact that there is scope for further controls indicate that there is already widespread apprehension about the use of lorries? The package proposed by the Secretary of State is widely regarded with suspicion because many people think it is part of a public relations exercise to get heavier lorries on our roads, to which the vast majority of people are deeply opposed.
    Mr. Eyre: The circular urges local authorities to make full use of their powers to restrict lorries to roads most suitable for them and to keep them away from the most sensitive areas. I ask the hon. Gentleman to pay regard to the great virtues of the comprehensive package described by my right hon. Friend in reply to the previous question.

    Gas Tanker (Solent)
    Sir David PriceSecretary of State for Transport whether, pursuant to the answer by the Prime Minister on 15 February, Official Report, c. 1, he has now given further consideration to the issues raised by the proposal to moor permanently a 60,000-ton tanker full of liquefied petroleum gas in the Solent.
    Mr. Eyre: My right hon. Friend is urgently considering with colleagues whether changes in existing arrangements for dealing with proposals of this kind may be required.
    Sir David Price: Is my hon. Friend aware that this particular proposal—now dead, we hope because Mobil is not prepared to go ahead with it—raises a much wider issue, which is the inadequacy of the present legal control over the mooring of vessels with potentially hazardous cargoes anywhere within our territorial waters?
    Mr. Eyre: I fully appreciate my hon. Friend's anxieties and those of my hon. Friends who represent nearby constituencies. I am glad to say that the Solent proposal is unlikely to go ahead, as my hon. Friend said. The Government are considering whether and, if so, what, new controls are needed.
    Mr. Penhaligon: Is not the Minister aware that arguments relating to the Solent are the same as the arguments used about the control of the mackerel factory boats in Cornwall? The Government then said that they were looking into the matter and would do something about it. That was five years ago, and they have done nothing.
    Mr. Eyre: I know that the hon. Gentleman would not wish to judge this Government on the basis of
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    malfunctions on the part of the previous Administration. There are no similar gas tanker proposals elsewhere in the United Kingdom, but our first priority must be to ensure that we have appropriate powers and procedures for dealing with any development of this kind in the future. That is the purpose of the working party reported upon yesterday by my hon. Friend the Minister of State, Department of Energy.
    Mr. Viggers: Does my hon. Friend agree that the framework of common law and statute law enables the Government to control such projects for reasons of transport and trade, but that there is no provision for the broader environmental issues to be considered? Therefore, the people of South Hampshire, who were considering this project, would like the Government to have the capacity to call for a public inquiry and to consider the broader environmental issues.
    Mr. Eyre: My hon. Friend will be happy to know that the working party to which I have referred includes representatives from the Departments of Energy, Trade, Transport and the Environment. My hon. Friend has emphasised an important aspect of the working party's inquiry. I sympathise with the suggestion that there should be a public inquiry, but I ask my hon. Friend to await the working party's conclusion, because I hope that out of that we shall be able to arrive at a satisfactory solution.

    Freight and Traffic
    Mr. HeddleSecretary of State for Transport what proportion of freight traffic is now carried by rail; and what was the comparable figure in each of the last five years.
    Mr. Eyre: The latest figures are for 1980 when about 14 per cent. in terms of tonne-miles was carried. Figures for earlier years are conveniently given in "Transport Statistics 1970–1980" and for the five years from 1975 to 1980 show a variation between 14·3 per cent. and 15·8 per cent.
    Mr. Heddle: Will my hon. Friend note the pleasure of Conservative Members at his appearance at the Dispatch Box today? Does he agree that the scope for translating freight business back to the railways is enormous, but that industry will not do so until the unions streamline their working practices, increase productivity and guarantee that goods will be delivered on time?
    Mr. Eyre: I thank my hon. Friend for his kind words. He is right to say that the scope for freight that could be transferred is large. My hon. Friend made powerful points by emphasising, as did my right hon. Friend earlier, the vital importance of productivity to the future of the railway system.
    Mr. Stott: In addition to productivity increases, the Minister will be aware that investment is of crucial importance when talking about translating freight from road to rail. Is he also aware that the Armitage report recommended an increase in section 8 grants to provide private rail sidings? Is he also aware that one of the impediments to achieving that is the peculiar and inhibiting planning conditions that apply to section 8 grants? Will he look at this problem with a view to introducing legislation aimed at making those planning conditions more amenable to the freight trade?
    Mr. Eyre: I appreciate the importance of the hon. Gentleman's points about section 8 grants, which were referred to in the Armitage report. I emphasise that we understand the importance of that aspect. We shall consider the points that the hon. Gentleman has raised.
    Mr. Cockeram: Does not my hon. Friend's reply point to the declining importance of the railways in our transport system and to the fact that the consumer is increasingly choosing to carry his freight by road? Does not that demonstrate the importance of greater roads expenditure?
    Mr. Eyre: Unfortunately, my hon. Friend is right. The figures show a slight decline in percentage terms over the years in the amount of freight carried by the railways. That in itself emphasises the tremendous importance of the railways achieving a competitive position and attracting as soon as possible extra business as a result of its competitive virtue.
    Mr. Eastham: The Minister and his hon. Friends seem to be enthusiastic about the transfer of heavy freight to the roads, but is the Minister satisfied about the maintenance of the roads, which are also used by vehicles that do not carry heavy freight? Is he prepared to make representations so that he can offset some of the collapses of the roads and of the sewers in many of our cities?
    Mr. Eyre: The hon. Gentleman has entirely misunderstood what I have been describing. It is clear that there is scope for the railways to attract more freight business. The Government want them to do that, but it must be done on the basis of a competitive attraction of that business. The hon. Gentleman will appreciate the importance of the announcement made by my right hon. and learned Friend the Chancellor of the Exchequer yesterday about the contribution that heavy lorries will make to the covering of track costs.

    Sealink
    Mr. John TownendSecretary of State for Transport what is his policy towards the future of Sealink.
    Mr. Eyre: It is the agreed policy of the Government and the British Railways Board that Sealink UK Limited should be transferred to the private sector at the earliest suitable opportunity.
    Mr. Townend: I am sure that my hon. Friend will realise that that reply will be appreciated by Conservative Members, many of whom would like to see Sealink sold lock, stock and barrel, as it is inefficient and overmanned. Is my hon. Friend aware that the head office staff of Sealink is approximately five times as large as the head office staff of European Ferries, which is no smaller than Sealink?
    Mr. Eyre: The British Railways Board is in the lead with regard to privatisation. The Government await its proposals. The board has had to take account of the fact that the Monopolies and Mergers Commission decided that Sealink should not be transferred to European Ferries. Therefore, we know that the board is giving urgent consideration to further proposals in that respect.
    Mr Snape: Having failed to peddle Sealink's assets to Townsend Thoresen, despite the blandishments of the hon. Member for Dorking (Mr. Wickenden), will the Minister
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    bear in mind and make it a condition of any future sale that a prospective buyer should not only pay British income tax but sail British-built ships?
    Mr. Eyre: I shall bear in mind the point that the hon. Gentleman makes. I emphasise that at present Sealink is not valuable to British Rail. It is a net drain on the board's resources.
    Mr. Best: I welcome my hon. Friend to his new post. Is he aware that passenger traffic in Holyhead is at a standstill owing to the damaging dispute over the introduction of a B & I Line ship into the port of Holyhead? Will he keep a close watch on events? Is he further aware that the dispute could have a damaging effect on the long-term future of the port? If at any stage this becomes a matter of negotiation between the British and Irish Governments, will my hon. Friend ensure that everything possible is done to enable Holyhead to continue as a viable port?
    Mr. Eyre: I know that my hon. Friend has made great efforts to bring together the parties in this sad dispute. I emphasise that Sealink must conduct its own industrial relations. It is not possible for the Government to intervene in any way.
    Mr. Dobson: Does the Minister accept that if he goes ahead with the sale of Sealink he will be exporting jobs from the shipyards? Will he confirm that heither P & O nor European Ferries has bought a British vessel in the last decade?
    Mr. Eyre: I do not think that the hon. Gentleman can justify that assumption. If Sealink were transferred to the private sector, it would have access to private investment, which would be desirable for its future.
    Mr. Hoyle: How many vessels?
    Mr. Eyre: In the public sector there would be the great advantage that British Rail would not have the problem of finding funds for Sealink. Therefore, British Rail could concentrate on the investment needs of the railways.

    Main Line Electrification
    Mr. BagierSecretary of State for Transport when he expects to receive British Railway's proposals for main line electrification; and if he will make a statement.
    Mr. David Howell: I hope to do so shortly, but the board will first need to reassess the financial prospects of the inter-city and freight businesses in the light of the recent ASLEF strikes.
    Mr. Bagier: Will the Secretary of State not use the recent dispute as an excuse for delay in electrification? Does he accept that it is essential to go ahead with the electrification scheme if we are to have a modern railway system? What is the cause of the delay? When will the important East Coast main line electrification start and be completed?
    Mr. Howell: We are looking for progress on the railways, particularly on productivity, not for excuses. The East Coast main line railway is one of the projects that will be at the top of the list when electrification proposals come forward. However, those proposals always assume certain traffic forecasts and progress on productivity. The

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    recent strikes mean that the traffic forecasts will have to be revised. Regrettably, progress on productivity remains outstanding.
    Mr. Colin Shepherd: Will my right hon. Friend continue to bear in mind that English companies operating in the valuable overseas market of railway electrification find it difficult to continue to compete without an adequate home base?
    Mr. Howell: I am concerned to see that the suppliers to the railway industry have a good home base and make progress in overseas markets. However, the electrification investment, which is large, must stand or fall on its viability and common sense in the United Kingdom context.
    Mr. Robert Hughes: The Secretary of State cannot be allowed to get away with that. He has had British Rail's electrification proposals for more than two years. In those two years massive productivity gains have been provided by the unions. People in the industry are fed up with the Government using every excuse to prevent investment in British Rail. The right hon. Gentleman must show some commitment if he expects co-operation from workers in the industry.
    Mr. Howell: The hon. Member for Aberdeen, North (Mr. Hughes) is misrepresenting the situation. The Government were expecting British Rail's proposals for electrification and there was some hope that they would reach us before Christmas—certainly after Christmas. Perhaps the hon. Gentleman will explain to members of ASLEF that they are putting a veto on productivity increases in the railway system and therefore on a good, well-invested future for the railways. He may also get a better understanding of what has been achieved so far. Productivity is the key to progress.

    Railway System (Development)
    Mr. Jim MarshallSecretary of State for Transport when he next intends to meet the chairman of British Railways to discuss future development of the railway system.
    Mr. David Howell: I meet the chairman frequently to discuss matters of mutual interest.
    Mr. Marshall: At his next meeting with the chairman of British Rail, will the Secretary of State take the opportunity to deny that the Government have any plans to sell British Rail Engineering Ltd.?
    Mr. Howell: The policy of privatisation and of bringing in private capital is based on a clear agreement between the British Railways Board and my predecessor. That policy will be pursued vigorously. It is in the best interests of the railway system that funds are found for the much needed investment that all hon. Members recognise is required.
    Mr. Sainsbury: Will my right hon. Friend emphasise to the chairman of British Rail that if British Rail is to hold, let alone expand, its volume of passenger and freight business, it is necessary that the service provided should be of a comparable quality to the alternatives? That is a matter not just of price, but of reliability and of providing reasonably clean carriages on commuter lines.
    Mr. Howell: These are important points, which I have emphasised and shall continue to emphasise to the British Railways Board. I think that the board recognises them.
    Mr. Ennals: When the right hon. Gentleman has discussions with the chairman of British Rail, will he take up again the question of electrification? Does he accept that there has been an intolerable delay in proceeding with electrification under both him and his predecessor? When does he expect to be able to give a timetable for the electrification of the Colchester to Norwich route, which is at the head of British Rail's list?
    Mr. Howell: The board is bound to look again at its traffic forecasts, which were previously based on assumptions that are now in question as a result of the pointless, senseless and self-destructive ASLEF strike and resistance to higher productivity. That means that it must re-examine the calculations, and that is bound to mean some delay.
    Mr. Cyril Townsend: Is my right hon. Friend aware of the burning resentment in south-east London at the outcome of the McCarthy inquiry? Will he make it clear once and for all that the Government in no way leant on the chairman of British Rail to accept the findings of that inquiry? Is he further aware that on the Conservative Benches there is nothing but complete support for him when he insists on greater efficiency in British Rail?
    Mr. Howell: I make it clear, as I always have done, that the chairman and board of British Rail have pursued their policy of seeking productivity increases. The arbitration is not by any means over, nor is the outcome decided. There is a further procedure to go through. ASLEF has undertaken not to exclude from its consideration any questions, including flexible rostering and the 8-hour day. I expect it to be as good as its word and to meet the needs of the railway system—needs that are fully recognised by all the other unions and all those working in it.
    Mr. Booth: When the Secretary of State meets the chairman of British Rail, will he explain to him why he is so grossly misrepresenting the position on main line electrification and why, when he knows full well that his predecessor took a decision against picking up any of the five main line electrification options before there was any question of a dispute, he now suggests that the decision not to invest in electrification arises from the dispute?
    Mr. Howell: I suggest no such thing. My predecessor and the Government made quite clear their commitment in principle to a 10-year rolling programme on proper conditions, such as that the inter-city and freight businesses should be run commercially. Plans were required to show how that could be done. Those plans were ready before Christmas. Unfortunately, the ASLEF strike has produced the need for new traffic forecasts. If the right hon. Gentleman feels so strongly on this matter, perhaps a little more speed by himself and his colleagues in condemning the ASLEF strike would have been in place before the damage was done.
    Mr. Moate: Does my right hon. Friend agree that many Conservative Members regard the electrification programme as essential for the creation of a modern railway, but that it depends on modern attitudes from all the unions involved? Does he also agree that more damage has been done to the investment prospects of British Rail

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    by the recent ASLEF dispute than by any other factor in recent years? Is it not essential that, if we are to secure the investment programme that is needed, we have an agreement on flexible rostering and commitments to single manning when we have electrification on these crucial lines?
    Mr. HowellI agree with my hon. Friend, who puts these matters with his usual clarity.

    M27
    Mr. ViggersSecretary of State for Transport what progress has been made on construction of and access works for the M27.
    Mrs. Chalker: The motorway is open from Cadnam to Chilworth, and from Hedge End to Portsbridge. Main construction of the section between Chilworth and Hedge End, with a connection to the A33 at Bassett, started at the beginning of this year. A further contract will be let shortly, and I hope that the whole motorway will be completed in 1984.
    Proposals for a link from the M27 to Swaythling were published on 26 February. Subject to completion of the statutory procedures and the availability of funds, I hope that this link will also be completed in 1984.
    Mr. Viggers: I thank my hon. Friend for that answer and am pleased to see her in her new post. The initiative taken by the Government for the construction of the M27 and the M3 in Hampshire is particularly welcome, because the motorway box is essential for communication in Hampshire. Will my hon. Friend encourage the Hampshire county council to continue the new initiative and to improve the particularly bad stretch of road between Gosport and Fareham on the A32?
    Mrs. Chalker: I take my hon. Friend's point. I shall see what more can be done to help.
    Mr. R. C. Mitchell: Does the Minister envisage that there will be another public inquiry before the Swaythling link is proceeded with?
    Mrs. Chalker: I must be honest and tell the hon. Gentleman that I cannot answer his question at the moment. From what I have heard, I do not think that there will be a need for an inquiry, but if there are many objections, presumably there will have to be one.
    Mr. Hill: Is my hon. Friend aware of the report by the chief constable of Hampshire which points out that the road accident figures on the uncompleted portion of the M3 have reached horrifying levels? Surely the well-meaning people who delayed the building of the M3 should be publicly named by the Department and those deaths brought to their notice.
    Mrs. Chalker: I shall certainly read the report that my hon. Friend has mentioned. I regret that so far I have not had time to do so, but I shall consider it.
    Mr. Michael Marshall: Will my hon. Friend confirm that if there are sufficient objections to the final section of the route for bypasses, which are an essential part of the M27 link, public inquiries will be held? If she has problems on this matter, perhaps she will write to me.
    Mrs. Chalker: There is no problem. If there are objections to the proposed route, the public inquiry procedure will take place.

    Trunk Roads
    Mr. Roy HughesSecretary of State for Transport how many miles of trunk road are under construction; and how this compares with the figure 12 months ago.
    Mrs. Chalker: A total of 169 miles of trunk road are now under construction in England compared with 143 miles 12 months ago.
    Mr. Hughes: Does the Minister agree that the Government have no moral right to introduce heavier lorries on to our roads, particularly when insufficient impetus has been given to the provision of new trunk road schemes? Does she also agree that a crash programme would be invaluable in this respect, because it would not only improve the environment but have a beneficial effect in that it would put some people back to work?
    Mrs. Chalker: In no way will I condone the present situation on heavy lorries. The hon. Gentleman should await the statement of my right hon. Friend the Secretary of State for Transport. However, I remind him that we are spending 15 per cent. more in this financial year than we did in the previous one. We want to improve the existing system as rapidly as possible.
    Mr. Nicholas Winterton: Has my hon. Friend's Department received any representations from private contractors or private consortiums about the construction of trunk roads from private funds initially, with the co-operation of the Department of Transport, as have been received by the Department in respect of motorways?
    Mrs. Chalker: Yes, we have received representations, and we are studying them sympathetically.
    Mr. Robert C. Brown: Will the hon. Lady take the opportunity to improve these deplorable figures by making an immediate start on the city of Newcastle upon Tyne's western bypass?
    Mrs. Chalker: I shall take a special interest in the western bypass, together with all the others that have been brought to my attention in the last three days.
    Mr. Waller: Does my hon. Friend find it curious that the hon. Member for Newport (Mr. Hughes) should put the question on lorries in the way that he did when it is clear that the increase in mileage on trunk roads, to which the Government have committed themselves, shows that they are determined to solve the problem of heavy lorries?
    Mrs. Chalker: Yes, it is slightly curious, because the Government are continuing the programme of repairs as the older motorways reach the end of their lives and of renewing about 50 miles of motorway a year. We are doing all that we can, and we are examining all the necessary improvements to be made in the corning years.

    Greater London Council (Fares Policy)
    Mr. DubsSecretary of State for Transport how many representations he has received in favour of his introduction of legislation allowing the Greater London Council to continue its present low fares policy; and how many representations he has received that he should not do so.
    Mr. David Howell: Not surprisingly, the GLC's £250,000 publicity campaign providing Londoners with

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    coupons and pre-paid postcards has produced several hundred items of post for me. Since the campaign has concealed the fact that the low fares policy would mean pouring an extra £1,200 million into London Transport, and since it neither explains to old-age pensioners and others that this sum would come out of their pockets nor provides them with coupons to give me their views about this aspect, it is also not surprising that I have not received many representations against low fares.
    Mr. Dubs: Is the Minister aware that his reply is insulting to the intelligence and common sense of the people of London? Is not the overwhelming view of the people of London in support of the continuation of the GLC's "Fares Fair" policy? Is it not time that he took note of the wishes of the people of London?
    Mr. Howell: It is a pity that the hon. Gentleman talks in terms of insult. If there is any insult to anyone's intelligence, it is the putting forward of a programme of low fares without facing the question "Who pays?" When the question of "Who pays?" is examined, it transpires that an additional heavy burden falls on ratepayers, combined with a heavy deterrent to jobs and employment in central London and an additional burden on pensioners. I cannot believe that it is sensible that the people of London should be asked to view only half the problem.

    CIVIL SERVICE

      Office Management
      Mr. SainsburyMinister for the Civil Service whether she is satisfied with the efficiency of the office management within the Civil Service.
      The Minister of State, Treasury (Mr. Barney Hayhoe): No, but it is getting better. Tight cash limits and repayment for office supplies and, from next year, for accommodation make Departments look hard at their running costs. In addition, Departments have undertaken a wide range of studies, more than 50 in association with the Management and Personnel Office, to improve the cost-effectiveness of such services as messengers, typing and telecommunications. Studies will continue. I believe that our general efficiency programme will bring further good progress.
      Mr. Sainsbury: I thank my hon. Friend for his encouraging reply. Does he agree that these important services, covering programmes that involve many people and areas such as energy efficiency, respond to central guidance and monitoring?
      Mr. Hayhoe: Yes. Energy conservation studies initiated from the centre have achieved an 8 per cent. reduction. A 15 per cent. reduction has been achieved in office supplies and there has been a 10 to 15 per cent. reduction in telecommunications charges. Other larger savings have been made as a result of these studies.
      Mr. Pavitt: Is the Minister aware of the horse laugh to be heard in Whitehall over the closure of the Civil Service Department because of the assumption that most people who worked in the Treasury before moving to the Civil Service Department are now going back to the Treasury? Is he aware that the desks are the same and that the only change is the additional payment by the taxpayer in changing the name on the stationery.
      Mr. Hayhoe: If the hon. Gentleman had been following these matters with care, he would not have made such an absurd suggestion.
      Mr. Fairbairn: Will my hon. Friend address himself to the level of heating and energy used in Government offices? Will he see whether this can be accomodated in a way that bears more relation to the level of use by the ordinary taxpayer, who has to meet the cost?
      Mr. Hayhoe: This must be a matter primarily for the Ministers concerned. As a result of a programme of measures initiated by the Property Services Agency, consumption of energy has been reduced by 8 per cent. in the last two years, and a further 4 per cent. saving is planned this year.
      Mr. Alan Williams: Is it not a fact that double the £260 million prospective Rayner efficiency gains has already been wasted by the Government in non-recoverable interest as a result of last year's Government-created Civil Service dispute? Will the Minister confirm that, had the Prime Minister at the start of that dispute offered the package that she was forced to offer to end it, over £500 million in interest charges would not have been wasted and the extra money in the kitty would have enabled the Chancellor yesterday to offer a penny off the standard rate of tax?
      Mr. Hayhoe: I can confirm that substantial sums were involved in interest payments as a result of the non-collection of revenue arising out of last year's industrial dispute. This only goes to show, as I and other Ministers stated at the time, that there was no justification for the action then taken by the civil servants. I think that many of them now regret the action that they took.

      Computer Techniques
      Mr. ViggersMinister for the Civil Service if she is satisfied with progress in introducing computer techniques into Civil Service operations.
      Mr. Hayhoe: Generally speaking, yes. The Civil Service is the largest single user of computers in the United Kingdom, with 650 medium to large size computers in use for administrative and scientific purposes. Central Government expenditure on computing is large and rising. Around £100 million will be spent in 1981–82. Increasing use is being made of new computer-based technology. There are currently over 700 microcomputers and 500 word processors in use in Government Departments.
      Mr. Viggers: I thank my hon. Friend for that reply. Does he agree that much of Government practice is five to 10 years behind private industry in computer techniques? Is he proud of the fact that the Italians have organised payment of social service benefits by computers, that are made in Hampshire? Does he agree that there is enthusiastic support for the work that he is doing in this area, but that this support verges almost on impatience?
      Mr. Hayhoe: I am delighted that foreign Governments are using computers manufactured in this country. I hope that this process will continue. Computers are being widely used in Government processing and this situation is improving as new computers come on stream.
      Mr. Wrigglesworth: What is the future of the computer-assisted placing scheme in employment offices in the London area?
      Mr. Hayhoe: The hon. Gentleman must address that question to my right hon. Friend the Secretary of State for Employment, who is responsible for the project.

      Promotions
      Mr. EggarMinister for the Civil Service what priority is being given to proven management experience when decisions are being made on promotions within the open structure.
      Mr. Hayhoe: Proven management experience already is, and should increasingly be, taken into account in deciding on promotions within the open structure.
      Mr. Eggar: I thank my hon. Friend for that reply. In the past, has not too much importance been given to the quality of advice given by civil servants on policy matters? Should there not be a move towards a position where people are promoted within the Civil Service because of the quality of their management skills and especially their advice on financial and personnel matters?
      Mr. Hayhoe: My hon. Friend has got it right. This is what we propose to do.
      Mr. Robert C. Brown: Has not the Minister denied many civil servants on Tyneside the opportunity of promotion by his absurd and disgraceful decision to transfer the regional offices of many Government Departments from Newcastle upon Tyne to Leeds, thereby adding to the unemployment figures in an already overburdened unemployment area?
      Mr. Hayhoe: The hon. Gentleman pushes his constituency interest with skill and vigour in the House. The changes were made in the interests of cost-effectiveness and efficiency.

      Outside Appointments
      Mr. CryerMinister for the Civil Service what are the criteria for appointing additional civil servants from outside the Civil Service; and if he will make a statement.
      Mr. Hayhoe: Additional civil servants are recruited if additional manpower is justified by the work load, if there
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      are not enough suitably qualified civil servants available, and if the increase can be accommodated within cash limits and manpower targets.
      Mr. Cryer: Does the Minister realise that when chief executives of the PSA are appointed from outside at £50,000 a year, deep offence is caused to many thousands of civil servants who do a decent, hard-working job? At a time when lower-paid civil servants are told that they will get nothing, when the rest are told that they will have to keep to 5 per cent. and when other public servants, such as nurses, are offered a mere 6 per cent., does the hon. Gentleman appreciate the strong sense of injustice that has arisen over such appointments?
      Mr. Hayhoe: As usual, the hon. Gentleman has got it fundamentally wrong. The appointment of someone from outside the Civil Service was made because he was the best man for the job.
      Mr. Waller: What opportunities are taken to enable civil servants to gain experience in the private sector, thereby enabling them to return to their Departments with the benefit of the disciplines of the private sector?
      Mr. Hayhoe: There is a considerable programme of secondment in and out of the Civil Service, which is valuable to all concerned.
      Mr. Alan Williams: Is it not a counter-productive absurdity for the Minister and the noble Lady, Baroness Young, to preach the need for civil servants to accept that a career in management of the service can be as rewarding as a career in the policy area when, as my hon. Friend the Member for Keighley (Mr. Cryer) said, they went outside the Civil Service, when the opportunity presented itself in December, to appoint a new head of the PSA at a premium of 50 per cent.? Will the Minister take the opportunity to allay the rumour that the Government did not even attempt to take up references from the previous employers of the individual who was eventually appointed?
      Mr. Hayhoe: The appointment of the head of the PSA was a matter in which my right hon. Friend the Secretary of State for the Environment had a particular interest. As regards rewarding management skills, many senior positions are becoming vacant as a result of natural retirement in the next two years. I am certain that the Prime Minister and the Secretary of State concerned will bear in mind the management abilities of candidates when determining who shall fill those jobs.

Tribute to Lord Butler of Saffron Walden
3.30 pm
The Prime Minister (Mrs. Margaret Thatcher): With permission, Mr. Speaker, I should like to express the great sense of loss which the country and Parliament have sustained by the death of Lord Butler of Saffron Walden, and to extend our sympathy to his family, especially to my hon. Friend the Member for Bosworth (Mr. Butler).
Rab Butler was one of the greatest statesmen and most distinguished personalities of our time. He was, indeed, a giant of his generation. His long, busy, active life was dominated by one overriding purpose—to serve his country and his fellow men.
He was determined to continue his family tradition of public service. His father had been Governor of the Central Provinces in India and Master of Pembroke College, Cambridge.
Rab's early years were a characteristically meticulous preparation for the path which he had chosen to follow. At Cambridge he won a double first and became President of the Union. At the age of 27 he was elected to this House and represented the same constituency without interruption for 36 years before he went to another place.
He was in office for 26 out of those 36 years, half of them as a member of the Cabinet. Within three years of his arrival in the House of Commons he became Under-Secretary at the India Office, and then at the Foreign Office, before becoming Minister of Education in 1941. It was in that capacity that I first heard him speak—at Oxford.
His four years in that Department were among the most rewarding of his life. He regarded the Education Act of 1944 as a deep and abiding contribution to the future of his country. Then followed a brief spell as Minister of Labour.
After the defeat of his party in 1945, Rab was the major intellectual force in refashioning policy for the post-war world. Mr. Churchill appointed him as chairman of the research department and no chairman has ever exercised as powerful or as lasting an influence as Rab.
He became Chancellor of the Exchequer in the first post-war Conservative Government. His first Budget Statement, delivered 30 years ago tomorrow, concluded with these words:
"We must now set forth, braced and resolute, to show the world that we shall regain our solvency and, with it, our national greatness."—[Official Report, 11 March 1952; Vol. 497, c. 1305.]
Rab was a patriot, a scholar and a statesman. Whether at the Treasury or as Leader of the House, as Lord Privy Seal or Home Secretary, as First Secretary of State or Foreign Secretary, his patriotism, his scholarship, as well as his genius as a politician, shone through.
Twice during those years, in 1957 and in 1963, he suffered grievous disappointment. He allowed neither event to diminish his zeal or his work for the cause which he served throughout his life.
Although we remember him primarily as a statesman and politician, there were two other aspects of Rab's life which meant so much to him. He was devoted to the cause of learning. He was High Steward of Cambridge university for six years and Chancellor of Sheffield university and of the university of Essex. But nothing gave him greater pride
846
than his presidency of the Royal Society of Literature and his mastership of Trinity. It was singularly fitting that he, with so much experience at home and abroad, with a deep understanding of our constitution, should have been master when the heir to the throne became an undergraduate at Trinity.
Throughout his arduous life, Rab was supported by a loving family. His first wife died in 1954. He married again in 1959 and Lady Butler brought a new comfort and purpose into his life.
The last 17 years of Rab's life were spent out of office, but they, like the earlier years, were filled with achievement and the pride of a united family, and all the while the sometimes indiscreet but always lovable sense of humour kept coming through.
On the day that Winston Churchill resigned in 1955, Rab wrote to him saying:
"this time with you has given me … the strength to face all things quietly."
He ended with the words of St. Augustine:
"Let nothing disturb thee, Let nothing affright thee, All passeth away, God alone will stay, Patience obtaineth all things."
Those words are also a fitting tribute to the man whom we honour today.
3.36 pm
Mr. Michael Foot: I am glad to respond to the Prime Minister's remarks and also to offer the Opposition's sympathies to Lady Butler and to the hon. Member for Bosworth (Mr. Butler).
I can remember Rab Butler in this House over many years. The Opposition regarded him not only as one who made a considerable contribution to the politics of the period but also as a formidable opponent. In the early period, it is natural enough that some of us regarded him in a different light. The Abbé Sieyés was once asked what he did in the French Revolution. He replied that he had survived. Lord Butler survived. He survived through the 1930s and the later period. Indeed, he survived so successfully that I believe that most of those on this side of the House who knew him best expected that he would become the Leader of the Conservative Party and Prime Minister.
I remember vividly, in 1957, in those far-off days of the inscrutable process by which the Conservative Party then chose its leader, the morning of the announcement that Mr. Harold Macmillan had been chosen to succeed. I remember my conversation on that occasion with Aneurin Bevan and the gasp of astonishment that he unloosed. He, I am sure, like many of us, believed that Rab Butler was likely to be chosen as Leader.
Rab went on to make many other contributions. Many of his writings, I believe, have added to the politics of the country. He wrote one of the best political autobiographies under the title "The Art of the Possible". I conversed with him a short while before the book had that title ascribed to it. I suggested that the title should be different, that it should be called "The Best Possible Prime Minister". He would not accept my suggestion. No doubt it was partly wisdom and partly modesty which led him to refuse that title.
Rab was the master of the compliment that kills, of the embrace that can suffocate; he could make a stab in the back seem like a caress and he carried his writings and

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instruction right up to later days. Not only would I recommend "The Art of the Possible" to anyone who wishes to know how the Conservative Party has survived so long against all the odds, but I would also recommend the introduction to Disraeli's "Sybil" which I believe was one of Rab's last writings.
Contrary to any supposition that there might be, Lord Butler was not an admirer of Disraeli. I know that fashions change in these matters. Indeed, I suppose that in a sense, although he would never have used the term himself, Lord Butler might have been described as the original "wet".
Lord Butler approached his own politics in his own way, and although he was scornful of Disraeli in many respects, in his introduction to Disraeli's "Sybil", with the touch of irony that added to everything that he said, he wrote:
"Even today there is in Britain a 'one nation group' led by Lord Hailsham and Lord Hinchingbrooke which is dedicated to uniting the rich and the poor."
As I believe the right hon. Member for Down, South (Mr. Powell) wrote in The Times this morning, the witticisms of Lord Butler were always deliberate and I think that they were deliberate in the sentence that I have quoted. I doubt whether Lord Hailsham and Lord Hinchingbrooke have exchanged a word in the past two decades. Moreover, I doubt whether Lord Butler, who was never a member of the "one nation" group, was as enthusiastic about it as that sentence might suggest.
Lord Butler presented politics to the nation in an original manner and tone and the Opposition are happy to join the Prime Minister in the tribute that she has paid.
3.43 pm
Mr. J. Grimond: The Liberal and Social Democratic Parties would like to be associated with the tributes that have been paid to Lord Butler and with the sympathy offered to his widow.
Together with Harcourt and Joseph Chamberlain, Rab was one of the trio of leading politicians of their time who never became Prime Minister. Yet he has left an imprint on our affairs greater than that left by many Prime Ministers. The background against which all parties have developed their policies on education and the Home Office derives not only from the reforms that he introduced but from his capacity to crystallise opinion and to generate consensus. Butskellism can be seen as the practical application of the doctrines of Keynes—the patron saint of responsible capitalism and the mentor of those who try to manage the mixed economy.
Rab was at once a reforming and a unifying figure in a post-war world in which, without him, politics might have been much more abrasive. I personally regret that he did not become Prime Minister after Suez. I believe that Britain at that time was ready for wider reforms of the type at which he excelled and which, had they been carried out with the good will that he engendered, would greatly have improved the performance of our industry, our industrial relations and the well-being of our country.
His talents, his kindness and his taste are celebrated. Everyone was always glad to see Rab. People gravitated towards him and were often rewarded by the latest Rabism. His illuminating ambiguities said more than many straight answers, and the expected oblique was part of his charm. I once asked him to dinner on a certain
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Wednesday. After consulting his diary long and earnestly, he looked up and said with an absolutely straight face, "If you had asked me on Tuesday, I could not have come."
We shall all always miss him, and our heartfelt wishes go out to his widow and family.
3.45 pm
Mr. J. Enoch Powell: The Chancellor of the Exchequer in his speech yesterday remarked that there are few left in this House who heard R. A. Butler introduce his first Budget. Perhaps one who not only heard that speech but worked under and with R. A. Butler for six years before that may add a few words to what has been said.
In the many tributes, written and spoken, of the past 24 hours, one important trait has strangely and unduly been absent. There has not been adequate reference to the attention and respect which Rab Butler commanded in this House. No man can occupy any position in the politics of this country who has not learnt to deserve the respect and to govern the attention of the House of Commons. Schooled perhaps by his experiences in those difficult years of defending the sometimes scarcely defensible in the 1930s, he had learned that art and had gained that position as few others have done. Whether the occasion was a little one or a great one, the House looked forward to what Rab Butler would say, knowing that it would not be disappointed.
Reference has been made already to a certain peculiar turn of his wit—the Rabism, as it was called—of which those of us who loved him most were the most zealous collectors. It might perhaps be called the art of the backhander. I am certain, however, that it betokened no meanness or bitterness of spirit nor any desire to injure, but was a sign of the deep and humorous comprehension of his fellow men and of the world which sometimes took the form of that self-deprecatory expression—for the Rabism was always in part directed against Rab himself.
It is more than 16 years since he sat in this House. When we go hence, our room is soon filled, and we are soon forgotten. Those who knew Rab Butler will be glad that the time and space were still not so long that those who knew and remembered him could not bring their tribute where he would most have wished it—to the Floor of the House today.
3.47 pm
Mr. Alan Haselhurst: As the current Member for the constituency that Lord Butler represented in this House for so long, I should like to add my tribute. That he was a great statesman requires no repetition from me. Nor do I need to enlarge on his skills and sensitivity as a politician. It is worth remarking, however, what a tremendous source of inspiration he was to many people of my generation in their formative political years. He has undoubtedly left his mark on the politics of this country—a mark which many of us regard as indelible.
I venture to suggest that nowhere outside the family circle, to whose members I send my personal condolences. will he be more greatly mourned than among the people whom he represented and the communities that he served in the towns and villages of north-west Essex. For all that Rab held high office and moved in the highest circles during most of his 35 years' membership of this House, he was the most attentive of constituency Members. His devotion to the details of constituency life earned him an

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enviable reputation. For as long as it exists, I doubt whether Saffron Walden will ever be thought of as other than Rab's seat.
In the past four-and-a-half years, I have been struck by the volume of tales, memories and anecdotes about what Mr. Butler did for people and their continuing affection and regard for him. Whenever I had the privilege of seeing him in these last years, he would always end by saying, "Give them my love." I can attest that that love is returned in the fullest measure by the people of Saffron Walden. The reputation of being at heart a good constituency man is an essential part of the statesman whom we honour today, and I suspect that it is the epitaph which Rab himself would most appreciate.
3.50 pm
Mr. Robert Rhodes James: I speak briefly to express on behalf of the people of Cambridge, of all parties and of none, our grief at the loss of a true friend as well as an eminent statesman, and our warmest wishes to Lady Butler and to his family.
My hon. Friend the Member for Saffron Walden (Mr. Haselhurst) referred to the fact that Rab was an inspiration to a particular generation. I, too, am a member of that generation. He was to me not only a friend, a mentor, and a critic, but also an inspirer. He will be remembered long, not only in my constituency and in the House—as the right hon. Member for Down, South (Mr. Powell) so rightly put it—but also in the hearts of those who believe that public life is not about getting but about giving.
Mr. Speaker: I trust that the House will allow me to conclude these proceedings by saying that I consider it a great privilege to preside over the House when it reminds itself of a very great parliamentarian. I served in the House for 21 years when Rab Butler was a Member. His kindness to people who sat on the other side of the House from himself was something to be experienced and never forgotten.

Social Security Benefits (Uprating)
3.51 pm
The Secretary of State for Social Services (Mr. Norman Fowler): I will, with permission, Mr. Speaker, make a statement required by the Social Security Act 1975 about the annual uprating of social security benefits which will come into operation in the week beginning 22 November. For the convenience of the House, a detailed schedule of the new rates of benefits, which forms part of this statement, has been placed in the Vote Office and will be included in the Official Report.
The new rates reflect the estimate that the general level of prices will increase by 9 per cent. between November 1981 and November 1982. Benefits generally will be uprated in line with that forecast, and in addition the 2 per cent. shortfall at the 1981 uprating will be made good—not only for pensions and other related long-term benefits, as we had already promised, but for all other weekly benefits. This gives a total increase for most benefits of 11 per cent.
Turning first to the uprating of national insurance benefits, the standard rate of basic retirement pension for a single person will go up by £3·25 a week from £29·60 to £32·85. The rate for a married couple will go up by £5·20 from £47·35 to £52·55. The standard rate of sickness benefit and unemployment benefit will go up by £2·50 for a single person from £22·50 to £25·00, and by £4·05 from £36·40 to £40·45 for a married couple.
The same percentage increase of 11 per cent. will apply to the earnings-related additional component to national insurance pensions; to pensions payable under the old graduated pension scheme; to those who receive guaranteed minimum pensions from contracted-out occupational pension schemes; and to public service pensions. It will also apply to all other weekly national insurance benefits, including industrial injuries benefits, and to war pensions.
Child benefit will also be increased, by over 11 per cent., from £5·25 to £5·85, an increase of 60p per qualifying child. One-parent benefit will go up by the same percentage from £3·30 a week to £3·65. So a one-parent family with two children not in receipt of any other social security benefits will find the amount paid for the children rising from £13·80 a week to £15·35.
After taking the increases in child benefit into account, as has been the practice in previous years, the dependency additions for children paid with short-term national insurance benefits will be 30p a child compared with 80p at present. The child dependency additions payable with retirement, widow's or invalidity pensions will increase from £7·70 a child to £7·95.
Family income supplement is payable to people in work where the family's gross income, apart from child benefit and one-parent benefit, falls short of a prescribed level. The prescribed level of income for family income supplement will go up by £8·50 to £82·50 weekly for one-child families, and the additional amount for each further child will be raised from £8 to £9 a week. The maximum payment for a one-child family will rise from £18·50 to £21 a week, and the addition for each further child will go up by 50p to £2. This means that the increases will be particularly helpful to larger families with the lowest incomes.

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I turn now to supplementary benefit. As the House will be aware from the proceedings last week in the Committee stage of the Social Security and Housing Benefits Bill, we propose to increase the scale rates of supplementary benefit from next November in line with the forecast increases in the general level of prices, after excluding housing costs. This is because both under the present scheme, and when housing benefit is introduced, the housing costs of supplementary benefit claimants are met separately. Supplementary benefit is different in this respect from all other benefits. The treatment of housing costs distinguishes those costs from all other day-to-day living expenses that are covered by the supplementary benefit scale rate.
The Government's approach recognises this, and, in effect, avoids double counting, while maintaining full price protection for all claimants. In addition, as with other benefits, we shall be making good the 2 per cent. shortfall. The effect of this will be that the increase in the scale rates will be 10·5 per cent, but housing costs will, of course, be paid on top of that.
The ordinary supplementary benefit scale rate will, therefore, rise from £23·25 to £25·70 for a single householder and from £37·75 to £41·70 for a married couple. The long-term scale rate will rise from £29·60 to £32·70 for a single householder and from £47·35 to £52·30 for a couple. The scale rates for children will rise from £7·90 to £8·75 for children aged 10 and under, and from £11·90 to £13·15 for children aged 11 to 15.
There has been a great deal of concern about the effects of the capital limit for supplementary benefit. This is the limit on the amount of capital a person can have and still get supplementary benefit. It has been argued that the current limit of £2,000 set in November 1980 is now too low. The Government recognise the force of the argument and propose to raise the limit by 25 per cent. to £2,500. This will fully restore the value the limit held when it was introduced.
We also propose a further small but worthwhile improvement in the supplementary benefit scheme. We are increasing the amount of occasional payments by way of a gift, for example at Christmas or for a birthday, which can be disregarded. At present, any excess over £20 is deducted from benefit. We propose to increase the amount that can be totally disregarded to £100.
Supplementary benefit heating additions are now paid to over 2 million families. In 1980 we boosted them with a record increase. The 1981 uprating turned out to be more than enough fully to protect this increase against rising fuel costs. For 1982 we propose to increase the heating additions from this higher base in line with the expected rise in fuel prices between November 1981 and November 1982. The standard amount will rise from £1·65 to £1·90 a week, and the higher rate from £4·05 to £4·65.
As the Chancellor of the Exchequer announced yesterday, mobility allowance will no longer be subject to tax. I am sure the whole House will welcome that change, which will benefit some 40,000 recipients who have other taxable income. In addition, the rate of mobility allowance will be increased in November from £16·50 to £18·30. This means that since coming to office we have increased the rate of mobility allowance by 83 per cent. These measures will help even more disabled people to take advantage of the motability scheme for leasing or buying cars on advantageous terms.
852
I have also decided to make an improvement in the rules affecting invalid care allowance. The weekly amount which can be earned by someone who is looking after a severely disabled person will be increased from £6 to £12. The disregard has been £6 since the benefit was introduced in 1976 and the increase will restore its original value.
A further improvement affects the therapeutic earnings limit, which helps people recovering from illness who want to get back into full-time work. The present earnings limit is £16·50. I intend to raise that by 21 per cent. to £20.
The Christmas bonus of £10 will be paid on the same basis as last year in the week commencing 29 November. I also propose to increase the earnings rule limit for retirement pensioners in November from £52 to £57, the first such increase in three years.
The total cost of the uprating will be close to £3 billion in a full year, of which about £2 billion will fall on the national insurance fund, the balance coming out of the Consolidated Fund. The House has already approved the changes in contribution levels in 1982–83, set out in the Social Security (Contributions) Act 1982, and I shall, as usual, further review contribution rates in the autumn. Any necessary changes will take effect from April 1983.
The proposals mean that annual expenditure on social security benefits will rise to over £30 billion in 1982–83, which represents about 26 per cent. of all public spending. The changes that I have announced mean: full price protection of all weekly benefits; the 2 per cent. shortfall in 1981 made good for all benefits; the supplementar,7 benefit capital limit increased to £2,500; supplementary benefit heating additions protected against rising fuel costs; the retirement pension earnings rule increased for the first time in three years; mobility allowance taken out of tax and fully price protected; a doubling of the earnings disregard for those receiving invalid care allowance ; and an increase of more than 20 per cent. in the therapeutic earnings limit for those receiving incapacity benefits.
The measures will particularly benefit the elderly and disabled people. They will also give valuable extra help to all families with children. They are designed to bring practical help to those who most need it.
4.3 pm
Mr. Brynmor John: The right hon. Gentleman has made an important statement which we shall want to debate more fully tomorrow. However, I start by welcoming the mobility allowances declaration and the capital increase. I am surprised that the right hon. Gentleman has not introduced a taper on the disregard after £2,500 and that he has not, in the rule changes, met the difficulties that occur over redundancy payments and insurance policies. Those difficulties have led to considerable hardship.
Those who must live on the benefits that he described will not greet the statement with enthusiasm; nor will the House. The statement deserves merely the politeness due to a minimum and uneven performance of the right hon. Gentleman's duty. For example, does he agree that the 1 per cent. increase in national insurance contribution—that most regressive form of taxation—which is payable next month will more than wipe out the income tax gains announced yesterday for single persons earning £120 a week and married couples, with or without children, earning over £180 per week?
Will the Minister tell us exactly how the supplementary benefit rises have been calculated? We know from what

853
he said that they have been calculated using yet another price index—the "Rossi" price index—which does not include housing costs, but, since it was casually and inadequately explained to a rather startled Standing Committee, will he tell us exactly how the housing costs have been removed and give the House his estimate of their expected rise by next November? By how much, therefore, will the base rate for supplementary benefit uprating have been lowered?
Will the right hon. Gentleman consider the greatest crime of the Budget? Does he share with the rest of the House the belief that our financial treatment of children is the greatest cause of poverty to the low-paid and those on social security? If so, how does he justify increasing child benefit by only 60p a week, thereby cutting its real value since 1979 by 40p a week? Does that not represent a fall in child benefit of 6½ per cent. during the Government's reign?
Does the right hon. Gentleman agree that total child support for short-term beneficiaries, such as the unemployed who have children, will have fallen since November 1979 by 23 per cent. while support for longterm beneficiaries, such as widows with children, has fallen by nearly 12 per cent.? Is that not an absolute disgrace?
How does the right hon. Gentleman justify his decision not to make good the 1980 5 per cent. abatement on unemployment benefit? It was supposed to be an interim measure until taxation was introduced, as it will be in July. The House was assured that the abatement would then cease. It will not. Does that not amount to a gross breach of faith, and will the invalidity pensioner eventually be treated in the same shabby way as the recipients of unemployment benefit?
The Government have assumed a 9 per cent. increase in inflation, but is it not right to err on the high side, bearing in mind the bitter experience of the 2 per cent. shortfall and the incompetence of the Chancellor of the Exchequer? Is it not a fact that an underestimate now would not be put right until November 1983 and that in the meantime many helpless people would suffer cruelly?
Mr. Fowler: I am grateful for the hon. Gentleman's introductory comments and I shall try to help him on some of the questions that he raised. The first concerned the supplementary benefit capital disregard, how much capital should be exempted, whether a taper should be introduced and whether the cut-off procedure was understood. We have had the matter examined by the supplementary benefit policy inspectorate, which seems emphatically to support our case that there has been no hardship as a result of the changes that we have introduced. I shall make the report available to the right hon. Gentleman so that he can check it.
The hon. Gentleman asked about the effect of the Budget measures. The net result of the Budget, plus the increased national insurance contributions and increased benefits that I propose, is that we are concentrating help on the lowest paid. I shall set out the details.
The hon. Gentleman referred to the housing element. He knows that my hon. Friend the Minister for Social Security has explained that supplementary benefit scale rates cover all the normal living expenses except housing costs. An amount to cover actual housing costs is added
854
to the scale rates and they are met in full. In that respect it is different from all other benefits, and we are proposing a 10½ per cent. scale increase, plus full housing costs.
The cost of the child benefit increase is about £400 million this year. The total cost of the benefit and the one-parent benefit is about £4 billion a year. That shows the Government's commitment to bringing support to children.
The unemployed will obviously be helped by the decision on the shortfall. A heavy cost would be involved in restoring the 5 per cent. unemployment abatement, but clearly we shall continue to keep that under review.
Several Hon. Members rose—
Mr. Speaker: Order. There will be plenty of opportunities for these matters to be pursued in the Budget debate. Therefore, I shall limit questions to 15 minutes today.
Mr. Paul Dean: I welcome the increases in pensions and other benefits, the making up of the 2 per cent. shortfall and the increase in child benefit, all of which show the Government's continued commitment to protect the most vulnerable sections of the community.
I welcome also the increase in the capital limit for supplementary benefit and ask my right hon. Friend whether, to encourage thrift, that can be indexed so that it does not fall behind in future years. In regard to the longterm unemployed, will my right hon. Friend give increasing attention in future plans to the mounting evidence that those who have been unemployed for a long time, particularly those who have dependent children, do not have arrangements that give them adequate support?
Mr. Fowler: My hon. Friend knows that the Government have already improved the position for the over-60s and we shall continue to keep the matter under review. I am grateful for my hon. Friend's comments on the supplementary benefit capital disregard figure and on the other benefits that we are increasing. The present capital disregard is a disincentive to thrift. The cut-off level is too low, which is why we are improving it and increasing it. I cannot give a commitment on indexation, but we shall keep it under review.
Mr. Harry Ewing: The Secretary of State mentioned the Social Security and Housing Benefits Bill, which is in Committee. Is he aware that clause 18 removes from local authorities in Scotland their discretion under the Local Government (Scotland) Act 1973 and the Housing Finance Act 1972 to disregard completely war widows' pensions and war disablement beneficiaries' pensions for the purposes of rent rebates? Can the Secretary of State reassure the Royal British Legion in Scotland that that discretion will be restored when the Bill comes back for Third Reading?
Mr. Fowler: The discretion remains with the local authorities. The Royal British Legion can be reassured on that.
Mr. Patrick Cormack: May I add my thanks to my right hon. Friend and say that I believe that the package will be warmly received generally? However, will my right hon. Friend reconsider the capital limit on supplementary benefit? Does he accept that many people in their fifties, who are out of work

855
through no fault of their own and with little chance of being employed again, will see this measure as a penalisation of thrift? Does he accept that although the increase is welcome it is far too modest?
Mr. Fowler: I understand my hon. Friend's concern. He has been one of the hon. Members most concerned about the position. We have made a substantial step today. As I said to my hon. Friend the Member for Somerset, North (Mr. Dean), we shall continue to keep the matter under review.
Mr. A. W. Stallard: Does the Secretary of State accept that his announcement of the £5 increase in the earnings limit will be received with widespread disappointment by many thousands of people who wish to hear an assurance from him that the Government intend to carry out their manifesto pledge to abolish the earnings limit during the lifetime of this Parliament? Does he accept also that there will be widespread disappointment at the absence of a statement about the future of the death grant?
Mr. Fowler: I hope that some time next week we shall publish a consultative document about the death grant. The earnings limit has been increased to £57. That will enable pensioners to carry out part-time work without penalty, and I am sure that the hon. Gentleman will join us in welcoming that addition. We are committed to abolish the earnings rule, but I cannot give a timing for it.
Mr. R. A. McCrindle: May I return without apology to the point raised by my hon. Friends—capital disregard in relation to supplementary benefit? Does my right hon. Friend accept that, despite this welcome package, there will be some disappointment, not because the amount has been raised to £2,500, but because it has not been possible to arrange a separate system that does not imply the penalty on thrift that the capital disregard appears to do? Will he especially consider the fact that many people who have £2,500 may have that sum as a result of systematic saving over the years, sometimes through an endowment policy? Will my right hon. Friend take on board the fact that many who otherwise support what he has said would wish him to consider the point more carefully than he has evidently done already?
Mr. Fowler: We have already considered the point carefully, and I share the concern expressed by my hon. Friend. I can add only that the findings of the supplementary benefit and policy inspectorate will be made known. They will cover many of the points and we shall return to the matter.
Mr. Mike Thomas: Is the Secretary of State aware that his proposals offer nothing to the unemployed and very little to the poor? Is he aware that the Government, because of the failure to make good the 5 per cent. abatement, are cheating the unemployed of about £1 a week and that as a result of the Budget unemployment will continue to rise? Is he further aware that social security benefits have still not been restored to their level in real terms when the Conservative Party came to power? Is he also aware that, for the wage earner, what the Chancellor of the Exchequer gave away in tax cuts yesterday he has already taken back in national insurance contributions?
Mr. Fowler: If the hon. Gentleman had listened to my earlier reply he would know that what he said at the end of his supplementary question is untrue. I shall set it out for him so that he fully understands. The hon. Gentleman must take on board fairly rapidly the fact that we are spending almost £3 billion more, that we are giving full price protection next year, that we have restored the shortfall and that we have made many other changes that the public will welcome. I am content that the public should judge this package.
Mr. Ted Leadbitter: Will the Secretary of State bear it in mind that the House is rather disappointed with his announcement that there will be a consultative document on the death allowance? The House is aware that the Government opposed a Private Member's Bill on the subject only a short time ago, and a consultative document will encourage no one. Does the Secretary of state accept that he should either place a document in the Library or come to the House and make a full statement about the impact of Government measures on poor arid lower-income families, having regard to the balance of the allowances that he has announced today and the insurance contributions that were announced last December and which are to be effective from April, so that we can see the real effect on families?
Mr. Fowler: I should be happy to debate that matter at any time, on the Floor of the House or anywhere else. We believe that it is reasonable to issue a consultative document about the death grant. Although the hon. Gentleman waxes indignant about the death grant now, the Labour Government did nothing about it during six years in office. The public might also remember that.
Dr. Brian Mawhinney: Does my right hon. Friend accept that many hon. Members wish to congratulate him on the decisions that he has announced today, especially those to reduce the shortfall in unemployment pay and to take the mobility allowance out of taxation?
Mr. Fowler: I am grateful to my hon. Friend. I hope that there will be a welcome for some of the measures that we have put forward and that disabled people will welcome the measures that my hon. Friend mentioned.
Mr. Kenneth Marks: Does the Secretary of State accept that, because of Government miscalculation of the inflation rate, pensions this year are 2 per cent. lower than they should have been? How much money are the Government saving this year because of that? Is that money lost for ever to the pensioners?
Mr. Fowler: Our procedure means that we shall make good the 2 per cent. shortfall in the annual uprating in November.
Sir David Price: Is my right hon. Friend aware that those hon. Members on this side of the House. who have campaigned for years to get the mobility allowance taken out of tax, are extremely grateful to him and to the Chancellor of the Exchequer? Do we take it as being one move further towards establishing a general disability income, for which many hon. Members on both sides of the House have campaigned for even longer?
Mr. Fowler: That is a long-term aim. I am grateful for my hon. Friend's remarks. All that I can say is that there has been an 83 per cent. increase in the mobility allowance

857
as well as the fact that we have taken it out of tax. I hope that disabled people will recognise the steps that we have taken.
Mr. David Winnick: Is the Secretary of State aware that the new capital limit for receiving supplementary benefits remains much too low? Why is redundancy money included, as that obviously harms many people in their late fifties who have been made redundant and whose chances of getting another job are remote? When will the Government give a heating allowance to those people on low incomes who do not receive supplementary benefit? For how much longer must those people be penalised?
Mr. Fowler: I can add nothing further about the supplementary benefit capital disregard. The hon. Gentleman raises an important point about fuel. We shall now make available over £300 million a year in aid for fuel costs. Another important step is that we shall not claw back the overshoot for 1981.
Mr. Chris Patten: I welcome wholeheartedly the Government's decision to make up the 2 per cent. shortfall in supplementary and unemployment benefit, but will my right hon. Friend note that there is concern on the Conservative Benches about the decision to calculate supplementary benefit increases on a different basis? Will he say how much lower supplementary benefit will be in the coming year on the new basis than it would have been on the old basis?
Mr. Fowler: With respect to my hon. Friend, who I know has a great interest in and knowledge of these matters, there should be no concern about what we are doing. We are simply preventing double counting on the housing element. In the coming year we are increasing the scale rates of supplementary benefit by 10½ per cent., and in addition we shall be making full provision for the housing costs of the supplementary benefit recipients.
Mr. Leslie Spriggs: Is the Secretary of State aware that widows who receive a pension from the mineworkers' pension fund are to be assessed for taxation? As many of these widows find it difficult to make ends meet, will he act to stop the taxation of widows who receive pensions from the mineworkers' pension fund?
Mr. Fowler: That is a tax threshold matter, and I shall have to look into the details of it.
Mr. Toby Jessel: As each year there are about 150,000 more retirement pensioners than there were the year before, is it not a remarkable achievement, in the current economic conditions, not merely to maintain the value of the pension, but to plan to increase it in real terms, as my right hon. Friend intends to do?
Mr. Fowler: My hon. Friend makes an important point and it is in line with the pledge that we gave at the last election.
Mr. Reg Race: The Secretary of State may be pleased with his statement, but will he confirm the figure that was given by the Under-Secretary, that the Government have cut £1,520 million from social security benefits, beginning in the financial year April 1982? Will he say precisely how much the Government will save this
858
year by calculating the uprating of housing benefits in the way that they propose? Will they not save £60 million in that way from the pockets of the poor?
Mr. Fowler: The figure will be about £30 million in a full year. If housing costs increase by less than the general RPI, the supplementary benefit scale rate will increase by an above-average figure.
Mr. Speaker: Order. I shall call the two hon. Members who are left of those who have been rising, although only one minute remains, according to what I said. Mr. Tom Benyon.
Mr. Richard Needham: Thank you, Mr. Speaker. My nose is not quite the same shape as that of my hon. Friend the Member for Buckingham (Mr. Benyon), although I accept that the rest of me is remarkably similar.
I thank my right hon. Friend for having said that he will consider the 5 per cent. abatement. I am sure that he will bear in mind that now that the benefit is coming into tax a considerable amount of money will be available for the restoration of the abatement. I am sure that he will also bear in mind that the long-term unemployed are not entitled to long-term benefits, only to short-term benefits. Will he say when he will be in a position to do something about that?
Mr. Fowler: I accept what my hon. Friend says and I recognise his disappointment. We shall continue to keep the matter under review during the coming months.
Mr. Dennis Skinner: Is the Secretary of State aware that the increase for the unemployed and pensioners and most of the other benefits that he mentioned are paltry compared with the handouts that have been given, even in this Budget, to people in the higher income brackets? When it comes to heating allowances, even in this Budget the Government are prepared to hand out subsidies to firms, while refusing to give more help to people who are suffering from hypothermia, and to old-age pensioners and others who are dying in the wintry conditions? Does the right hon. Gentleman accept that the only way to combat the £2·50 and upwards rent increases, the 10 per cent. gas levy this year, and goodness knows how many other increases this year is to grant old-age pensioners an increase that is in line with the declaration of half average earnings for a married couple and one-third for a single pensioner? On the question of the taxable—
Mr. Speaker: Order. The hon. Gentleman is taking too long. He has already asked about three questions. The Minister must answer those questions now.
Mr. Fowler: The hon. Gentleman's last proposal, which I do not think is the policy of the official Labour Party—[Interruption.] We shall hear in a moment. It may be the hon. Gentleman's policy. [Interruption.] If the hon. Gentleman will calm down he will be able to hear my reply. What he proposes would cost over £10 billion extra a year. I do not believe that the public would take seriously any party or politician who puts forward proposals of that kind.
Mr. Tristan Garel-Jones: Does my right hon. Friend accept that much of what is welcome in yesterday's Budget Statement is contained in the statement that he has made today? Does he agree that if advantage is taken of the other side of the Budget, as it were, both

859
in wage settlements and in industrial investment in the coming year, he may be in a position to move a little further on the welcome move that he has already made on raising thresholds?
Mr. Fowler: That is always possible, and I hope that we shall be in a position to make further moves. Given the general pay settlements in the current round, the 11 per cent. represents a fair deal for those who are most in need in our society today.
Mr. J. W. Rooker: Is the Secretary of State really telling us today, on behalf of the Government, that supplementary benefit pensioners and others on supplementary benefit have been overpaid by £30 million because of the way that the index was working? Is he saying that those people, those in the safety net, the poorest in the land, received £30 million too much? Will he assure the House that there will be full publication of the way in which the calculation has been made and that there will be a regular publication of the index, excluding and including housing, so that the House and the country can see how the figures are moving?
My last question concerns the 5 per cent. abatement, which the right hon. Gentleman says he has reviewed and is reviewing. Is it still the case, as it was at the time when the Social Security (No. 2) Bill went through the House, that if unemployment benefit were taxed the Government would receive more in revenue than they received from the 5 per cent. abatement? Is that still true today? If so, why cannot the Government restore the 5 per cent. abatement before they start to tax the benefit in July?
Mr. Fowler: My answer to the hon. Gentleman's last question about the social security cost, which also involves a tax revenue element, is that it would cost £60 million a year to make good the abatement although, as I said, we shall continue to keep the matter under review.
My answer to what the hon. Gentleman said about supplementary benefit and the housing element is that the old system double counts housing costs. Therefore, we are giving a 10½ per cent. scale increase, plus the full cost of housing, I believe that that is fair. We shall of course publish the basis on which we make that assessment.
Following is the information:

Social Security Benefits (Uprating)
  INCREASED BENEFIT RATES
  (The Social Security Act 1975, as amended, is referred to as "the Act"; the Social Security Pensions Act 1975, as amended, is referred to as "the Pensions Act")
  INCREASED BENEFIT RATES

    PART I BENEFITS PAYABLE FROM NATIONAL INSURANCE FUND (SEE ALSO PARTS 3 AND 4)
    Existing weekly rate

    Proposed weekly rate

    £

    £

    Basic component of Category A retirement pension* (section 6(l)(a) of the Pensions Act), Category B retirement pension* (section 7 of the Pensions Act), widowed mother's allowance and widow's pension

    29·60

    32·85

    Category B retirement pension* (section 29(7)(a)(i) of the Act)

    17·75

    19·70

    Basic component of invalidity pension

    28·35

    31·45

    Standard rate of unemployment and sickness

    benefit

    Beneficiary under pension age

    22·50

    25·00

    Beneficiary over pension age

    28·35

    31·45

    Invalidity allowance:

    Existing weekly rate

    Proposed weekly rate

    £

    £

    Higher rate

    6·20

    6 90

    Middle rate

    4·00

    4·40

    Lower rate

    2·00

    2·20

    Maternity allowance

    22·50

    25·00

    Widow's allowance

    41·40

    45·95

    Child's special allowance

    7·70

    7·95

    Guardian's allowance

    7·70

    7·95

    * An age addition of 25p is payable to retirement pensioners who lire aged 80 or over.

    The weekly rate of graduated retirement benefit payable for each unit of graduated contributions will be increased by 11 per cent. from 3.86 pence to 4.28 pence.
    The following sums will be increased by 11 per cent. :—

    (a) additional components in the rates of long-term benefits calculated by reference to any final relevant year earlier than the tax year 1982–83.

    (b) increases of retirement pensions for deferred retirement under Schedule 1 to the Pensions Act.

    (c) increases of graduated retirement benefit for deferred retirement under Schedule 2 to the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978.

    (d) increments in guaranteed minimum pensions under section 126A of the Act.

    PART 2 BENEFITS PAYABLE FROM CONSOLIDATED FUND (BUT SEE ALSO PARTS 3 AND 5 TO 8)
    Existing weekly rate

    Proposed weekly rate

    £

    £

    Attendance Allowance

    Higher rate

    23·65

    26·25

    Lower rate

    15·75

    17·30

    Non-contributory invalidity pension

    17·75

    19·70

    Invalid care allowance

    17·75

    19·70

    Mobility allowance

    16·50

    18·30

    Category C or D retirement pension*

    Higher rate

    17·75

    19·70

    Lower rate

    10·65

    11·80

    * An age addition of 25p is payable to retirement pensioners who ate aged 80 or over.

    PART 3 INCREASES FOR DEPENDANTS
    Existing weekly rate

    Proposed weekly rate

    £

    £

    Increase for a wife or other adult dependand of:

    Category A or B retirement pension

    17·75

    19·70

    Invalidity pension

    17·00

    18·85

    Unemployment benefit and sickness benefit (where beneficiary is over pensionable age)

    17·00

    18·85

    Unemployment benefit and sickness benefit (where beneficiary is under pensionable age) and maternity allowance

    13·90

    15·45

    Non-contributory invalidity pension, invalid care allowance and Category C retirement pension

    10·65

    11·80

    Increase for a qualifying child of:

    Widow's allowance, widowed mother's allowance, invalidity, non-contributory invalidity, and retirement pensions, invalid care allowance, unemployment and sickness benefit (where beneficiary is over pensionable age) and child's special allowance

    7·70

    7·95

    Existing weekly rate

    Proposed weekly rate

    £

    £

    Unemployment benefit and sickness benefit (where beneficiary is under pensionable age) and maternity allowance

    0·80

    0·30

    PART 4 INDUSTRIAL INJURIES BENEFIT
    Existing weekly rate

    Proposed weekly rate

    £

    £

    Injury benefit:

    (a) beneficiary 18 or over or entitled to increase for child or adult dependant

    25·25

    27·75

    (b) beneficiary under 18 and not entitled to such an increase

    22·50

    25·00

    Disablement pension:

    (a) beneficiary 18 or over or entitled to increase for child or adult dependant—

    Degree of disablement per cent.:

    100

    48·30

    53·60

    90

    43·47

    48·24

    80

    38·64

    42·88

    70

    33·81

    37·52

    60

    28·98

    32·16

    SO

    24·15

    26·80

    40

    19·32

    21·44

    30

    14·49

    16·08

    20

    9·66

    10·72

    (b) beneficiary under 18 and not entitled to such an increase—

    Degree of disablement per cent.:

    100

    29·60

    32·85

    90

    26·64

    29·57

    80

    23·68

    26·28

    70

    20·72

    23·00

    60

    17·76

    19·71

    50

    14·80

    16·43

    40

    11·84

    13·14

    30

    8·88

    9·86

    20

    5·92

    6·57

    Maximum disablement gratuity will be increased from £3210 to £3560.

    Existing weekly rate

    Proposed weekly rate

    £

    £

    Unemployability supplement

    28·35

    31·45

    Increase of unemployability supplement for early onset of incapacity for work:

    (a) if on the qualifying date the beneficiary was under the age of 35, or if that date fell before 5 July 1948

    6·20

    6·90

    (aa) if (a) does not apply and on the qualifying date the beneficiary was under the age of 40 and he had not attained pensionable age before 6 April 1979

    6·20

    6·90

    (b) if (a) and (aa) do not apply and on the qualifying date the beneficiary was under the age of 45

    4·00

    4·40

    (bb) if (a), (aa) and (b) do not apply and on the qualifying date the beneficiary was under the age of 50 and had not attained pensionable age before 6 April 1979

    4·00

    4·40

    (c) in any other case

    2·00

    2·20

    Existing weekly rate

    Proposed weekly rate

    £

    £

    Maximum increase of disablement pension in cases of special hardship

    19·32

    21·44*

    Maximum increase of disablement pension where constant attendance needed:

    (a) except in cases of exceptionally severe disablement

    19·40

    21·50

    (b) in any case

    38·80

    43·00

    Increase of weekly rate of disablement pension for exceptionally severe disablement

    19·40

    21·50

    Increase of injury benefit for dependent children

    0·80

    0·30

    Increase of disablement pension with unemployability supplement for dependent children

    7·70

    7·95

    * or the amount (if any) by which the weekly rate of the pension, apart from any increase under sections 61, 63, 64 or 66 of the Act falls short of £53·60, whichever is the less.

    Existing weekly rate

    Proposed weekly rate

    £

    £

    Increase of injury benefit for adult dependant

    13·90

    15·45

    Increase of disablement pension with unemployability supplement for adult dependant

    17·00

    18·85

    Widow's pension—

    (a) initial rate

    41·40

    45·95

    (b) higher permanent rate

    30·15

    33·40

    (c) lower permanent rate

    8·88

    9·86

    Widower's pension

    30·15

    33·40

    Allowance under section 70 of the Act in respect of each qualifying child—

    (a) higher rate

    7·70

    7·95

    (b) lower rate

    0·80

    0·30

    Maximum under section 91(1) of the Act of aggregate of weekly benefit payable for successive accidents—

    (a) beneficiary 18 or over or entitled to an increase in respect of a child or adult dependant

    48·30

    53·60

    (b) beneficiary under 18 and not entitled to such an increase

    29·60

    32·85

    Maximum weekly rate of lesser incapacity allowance supplementing workman's compensation (Section 2(6)(c) of the Industrial Injuries and Diseases (Old Cases) Act 1975)

    17·75

    19·70

    Weekly rate of allowance payable where disablement is not total (Section 7(2)(b) of the Industrial Injuries and Diseases (Old Cases) Act 1975)

    17·75

    19·70

    PART 5 MAIN INCREASED SUPPLEMENTARY BENEFIT RATES
    Existing ordinary weekly rate £

    Existing long-term weekly rate £

    Proposed ordinary weekly rate £

    Proposed long-term weekly rate £

    Supplementary benefit

    Couple

    37·75

    47·35

    41·70

    52·30

    Single householder

    23·25

    29·60

    25·70

    32·70

    Existing ordinary weekly rate £

    Existing long-term weekly rate £

    Proposed ordinary weekly rate £

    Proposed long-term weekly rate £

    Non-householder

    —age 18 and over

    18·60

    23·65

    20·55

    26·15

    —age 16–17

    14·30

    18·15

    15·80

    20·05

    Existing weekly rate £

    Proposed weekly rate £

    Any other person aged:

    11–15 years

    11·90

    13·15

    under 11 years

    7·90

    8·75

    Existing ordinary weekly rate £

    Existing long-term weekly rate £

    Proposed ordinary weekly rate £

    Proposed long-term weekly rate £

    Boarders' Personal Expenses

    Couple

    15·40

    17·10

    17·00

    18·90

    Single person

    7·70

    8·55

    8·50

    9·45

    Existing weekly rate £

    Proposed weekly rate £

    Personal expenses for dependent children aged:

    18–19 years

    7·70

    8·50

    16–17 years

    4·60

    5·10

    11–15 years

    3·95

    4·35

    0–10 years

    2·60

    2·85

    Existing weekly rate £

    Proposed weekly rate £

    Non-householder housing addition

    2·55

    *

    Heating additions to supplementary benefit

    1·65

    1·90

    4·05

    4·65

    Dietary additions to supplementary benefit

    1·30

    *

    3·05

    8·70

    Blindness addition to supplementary benefit (unchanged)

    1·25

    1·25

    Addition for claimant or dependant over age 80 (unchanged)

    0·25

    0·25

    Existing level £

    Proposed level £

    Occasional gifts—level of disregard

    20·00

    100·00

    Supplementary benefit—capital cut-off

    2,000·00

    2,500·00

    * To be announced after the February index of retail prices becomes available.

    PART 6 MAIN INCREASED WAR PENSIONS RATES
    All ranks receive the same increases, officers' rates being expressed in pounds per annum.

    Existing weekly rat £

    Proposed weekly rate £

    Disablement benefits:

    Disablement pension for private at 100 per cent rate

    48·30

    53·60

    Age allowance with assessments of:

    40 to 50 per cent

    3·35

    3·70

    Over 50 and not exceeding 70 per cent

    5·25

    5·85

    Over 70 and not exceeding 90 per cent

    7·50

    8·35

    Over 90 per cent

    10·50

    11·70

    Unemployability allowances

    Personal allowance

    31·40

    34·35

    Increase for wife or other adult dependant

    17·75

    19·70

    Increase for child

    7·70

    7·95

    Invalidity allowances

    Higher rate

    6·20

    6·90

    Middle rate

    4·00

    4·40

    Lower rate

    2·00

    2·20

    Constant attendance allowance

    Special maximum

    38·80

    43·00

    Special intermediate

    2910

    32·25

    Normal maximum

    19·40

    21·30

    Half and quarter day

    9·70

    10·75

    Comforts allowance

    Higher rate

    8·40

    9·30

    Lower rate

    4·20

    4·65

    Allowance for lowered standard of occupation (maximum)

    19·32

    21 ·44

    Exceptionally severe disablement allowance

    19·40

    21·50

    Severe disablement occupational allowance

    9·70

    10·75

    Existing annual rate £

    Proposed annual rate £

    Clothing allowance

    Higher rate

    65·00

    72·00

    Lower rate

    41·00

    46·00

    Existing weekly rate £

    Proposed weekly rate £

    Death benefits:

    Widow's pension—private's widow:

    Standard rate

    38·45

    42·70

    Childless widow under 40

    8·88

    9·86

    Widow's children

    10·85

    11·25

    Rent allowance (maximum)

    14·65

    16·25

    Motherless and fatherless children

    11·65

    12·15

    Age allowance for elderly widows

    Ages 65–69

    3·75

    4·15

    Age 70 and over

    7·50

    8·30

    Adult orphans

    29·60

    32·85

    Widower's pension (maximum)

    38·45

    42·70

    PART 7 FAMILY INCOME SUPPLEMENT
    Existing weekly level £

    Proposed weekly level £

    Family Income Supplement:

    Prescribed amount for family with one child (gross income below which FIS is payable)

    74·00

    82·50

    Increase in prescribed amount for each additional child

    8·00

    9·00

    Maximum weekly amount for a one·child family

    18·50

    21·00

    Increase in maximum amount for each additional child

    1·50

    2·00

    PART 8 CHILD BENEFIT
    Existing weekly rate £

    Proposed weekly level£

    Child benefit—

    each child

    5·25

    5·85

    One-parent benefit—

    first or only child of certain lone persons

    3·30

    3·65

    PART 9 EARNINGS RULES
    The amount specified in Section 30(1) of the Act (amount of weekly earnings which must be exceeded before a Category A or Category B retirement pension is reduced by reference to earnings) will be increased to £57·00.
    The amount specified in regulation 8(1) of the Social Security (Invalid Care Allowance) Regulations 1976 (amount of personal weekly earnings above which invalid care allowance is not payable) will be increased to £12·00.

    PART 10 THE THERAPEUTIC EARNINGS LIMIT
    The amount of net earnings from permitted work (the "therapeutic earnings limit") which can be received without loss of benefit by claimants to sickness, injury and invalidity benefits and non-contributory invalidity pension will be increased from £16·50 to £20·00 per week.
    The corresponding level of earnings which a beneficiary can be capable of earning without losing entitlement to an Unemployability Supplement to the industrial injuries disablement pension will be increased from £858 to £1,040 per annum.

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 26 MARCH
  Members successful in the ballot were:

  Mr. John Lee

  Mr. R. A. McCrindle

  Sir Russell Fairgrieve

Child Care Bill
4.30 pm
Mr. David Alton: I beg to move,
That leave be given to bring in a Bill to abolish local authority resolutions assuming parental rights and to make provision for the making of care orders in cases where a child is already in the voluntary care of a local authority; and for connected purposes.
My reason for introducing the Bill stems from my meeting in Liverpool a young lady called Caroline Pritchard; she has a son aged five called Frank who is in care. She has come to London today with some 2,000 signatures of neighbours and friends asking for her child to be returned to her care. About 13 months ago the child's father walked out, leaving her in an emotional state. While she was in that state she agreed to put the child into voluntary care. The grandmother of the child would have been prepared, as would another relative, to have taken the child into her care, but no one from the social services department approached them to do that.
Caroline was allowed to see her son for one hour a month. In May a care order was applied for by the social services department and granted by the magistrates' court. In November Caroline went to court to appeal against that decision. Then the decision was made by the court that in some way Caroline was unfit to take care of her son. Innuendo was used and Caroline was told that she could not see her child again. She has no right of appeal and she cannot get legal aid.
In today's edition of The Times, Michael Horsnell has an article about an interview with a paediatrician who has dealt with the case. He says that Mrs. Pritchard
"is supported by Professor Ralph Hendricks, a consultant paediatrician at Alder Hey Children's Hospital, Liverpool, who has known mother and child for three years and treated Francis when he was ill.
He said: ' … From all my observations Mrs. Pritchard has been a good mother. There is not a shred of evidence that he has ever suffered physical or emotional hardship from her, quite the reverse.
I should like to know why on earth they should have been separated. The mother is not a psychopath, nor has she any psychiatric illness. Some of the things said to this woman have been almost in the category of mental cruelty. The effect is something which I find quite appalling.'"
Since November Caroline has been barred from seeing her own child. She does not even know where he is. She has been told by the social services department that she may never see him again. She is in the very pits of despair, heartbroken and terribly upset.
This Bill would give mothers such as Caroline the chance, right from the start, to have the case dealt with in the juvenile courts to ensure that people such as she could be present at all stages of the proceedings. Instead of the onus being placed on her to prove her suitability to be a mother, the burden of responsibility would fall on the authority to prove her unsuitability.
My Bill seeks to remove from local authority social services committees the power to assume the rights of parents over children in voluntary care. The Bill gives these powers instead to juvenile courts and therefore allows parents to be heard and represented. The Bill also aims to ensure that all reasonable attempts are made to help keep families together and to uphold good social work practice. In addition, the Bill allows parents to apply for access to their child if a care order is made and it establishes a code of conduct.

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The Bill is not for or against social workers. It is not even against bad social workers. The point is simply to achieve what is best for the child and the family. Sometimes that may be a care order and sometimes it will mean allowing the child to return to its parents. Decisions should be made in a manner which is fair and just. Unless a proper examination is made of the issue the best results cannot be guaranteed.
The system is inadequate in many ways. A social worker who has been advising the parent decides that the parent ought not to look after the child. A report is made to the social services committee; the social worker can do this at any time. He need not get the parent's consent first; he does not even have to inform a parent that the resolution is to be made. The committee considers the report of the social worker and generally accepts it without question. The resolution of the committee accepting the report is made without a hearing, behind closed doors, in the absence of the parent and the child. There are no representations and natural justice is ignored. What is so extraordinary is that it is only after that that the parent can object.
Supporters of the system claim that the single procedure is advantageous. They say that it saves time and money and that it requires a lower level of evidence. They claim that there is no need for the parent or the child to be represented, because the social worker has already taken their views into account. That may be true in some cases but it is not the cut-and-dried cases with which we are concerned in the Bill. This Bill is concerned with giving to a parent who wishes to contest the decision a fair opportunity to do so. We are concerned not with the vast majority of scrupulous, competent social workers but with the minority of bad ones, those who make mistakes and ruin lives.
The proposal in the Bill is straightforward. It would allow a parent a hearing at the first stage, before any decisions were taken. One of the arguments that may be advanced against the proposal—I understand that the hon. Member for Bootle (Mr. Roberts), who has had considerable experience as a social worker, may put this forward later—is that court procedures would deter social workers from seeking care orders. However, if the social worker is not sure enough of his case to be prepared to submit it to a court, he should not be seeking a care order in the first place. If the Bill has the effect of weeding out bad cases before they get started, so much the better.
Before I took the matter up I was concerned to see what other people felt about it. I was pleased to find that the argument for change was supported not only by Members of almost all parties in the House but by the National Council for One-Parent Families, the Child Poverty Action Group, the Family Rights Group, the Legal Action Group, Justice for Children, the Children's Legal Centre and the National Council for Civil Liberties.
I canvassed the views of lawyers who had extensive experience of the use by local authorities of powers to assume parental control. The reply from a firm in the south-east of London is of particular interest:
"We are particularly concerned as to the total lack of justice involved in the current rights of local authorities in these matters. The procedure places the burden to oppose the resolution on parents who are frequently not in a position to understand what they should do; especially as the persons who would otherwise advise them (social workers) are frequently the persons who are in fact on the opposite side of the fence in these matters."
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In essence, all that the Bill does is to require a local authority, if it believes that its case is right, to present the evidence upon which it bases that decision to a court for examination. Reluctance to do so can only be construed as an indication that frequently these resolutions are made when the evidence is not available to support them.
It might be argued that magistrates are not fit for the task set them by the Bill. That simply is not true. Magistrates are not a bunch of old fuddy-duddies living cloistered lives, detached from the real world. Juvenile magistrates are specially selected because of their interest in child care work. Indeed, many are teachers, child psychologists or even social workers. In addition, they now receive some, although not enough, training.
Of course, the juvenile court is not the optimum solution. Ideally, a family court should be set up to hear disputed cases between parents and social workers. But it is not realistic to aim for that in a private Member's Bill. The cost would be too high. The resources would not be made available. The House would be well advised to look at the Social Work (Scotland) Act 1972 which provides for an informal family hearing. Just because the best solution of a family court is too expensive that is no reason for avoiding progress towards it. This Bill would give the parents a hearing before the decision is taken. It would make the procedure seem fairer. Justice would manifestly be seen to be done.
Another argument that may be put against the Bill is that it might take a long time to get cases to court, with decisions being made only after a long and drawn-out process. That i s not and need not be true. Juvenile courts, although they do not advertise the fact, are not vastly overcrowded. Delays are reasonably short. Cases are dealt with efficiently. Care proceedings can and do get priority . Juvenile courts are not so formal as to frighten a parent away from contesting the matter. In any event, a parent has the option of not taking part in the proceedings.
The current procedure is rather like expecting the priest to whom one has just confessed one's crimes to turn round, put on his judge's robes and begin to pass sentence. It sounds absurd. One cannot expect people to be able to wear two hats at once, but we expect this of our social workers and social services committees, who must be witness, counsel, judge and jury, and will continue to be so until the Bill becomes law .
I should also like to see a requirement that a decision whether to seek a care order be made within the first year of voluntary care. That would be contained in the code of conduct.
The Bill will give the parent a hearing where none existed before. It will end the incestuous relationship between social services committees and social workers. It will provide for natural justice. Above all, it will ensure that young mothers such as Caroline Pritchard will have the chance from the outset to challenge those who decide to play God.
4.40 pm
Mr. Allan Roberts rose—
Mr. Speaker: Order. Is the hon. Gentleman seeking to catch my eye to oppose the Bill?
Mr. Roberts: Yes, Mr. Speaker.
It is with some trepidation that I oppose the Bill, because many of the examples of bad practice under the present procedures are real and give rise to the need for action to alter the way in which local authorities may assume parental rights over children who are already in care. What I object to is not

869
the definition of some of the problems as outlined by the hon. Member for Liverpool, Edge Hill (Mr. Alton), but his proposed solution.
There is a great deal of misunderstanding, even in the hon. Gentleman's mind, about exactly what he is doing. I do not know the Liverpool case of Caroline Pritchard, which the hon. Gentleman quoted. I would not want to judge whether that child should be returned to the parent. But it is clear from what the hon. Gentleman said that he has not been returned to his mother because a decision has been taken on two occasions by a juvenile court—not by a social services committee.
Last May the Liverpool social services committee successfully applied to the magistrates court for a care order. In November the parent applied for the revocation of that order. That application was turned down, not by a social services committee but by the court. At that hearing, not only could the parent be represented but, under the Children Act 1975—originally sponsored by the right hon. Member for Plymouth, Devonport (Dr. Owen), who is now in alliance with the hon. Gentleman—the child could be separately represented in an application for revocation. Therefore, the courts made mistakes, or the hon. Gentleman would not be critical of what they had done.
The Bill is not about care orders. It is about a child who is not committed to the local authority's care but has been received into its care on a voluntary basis. It is decided that it is in the child's interests to secure plans for his long-term future, and therefore a resolution needs to be made about his guardianship. Such a resolution could be made only if it could be shown that he had been abandoned or that the parents had permanent disabilities that prevented them from caring for him or had failed to discharge their obligations as parents.
The only other ground on which parental rights can be assumed are that the child has been in care for more than three years. That in itself is justification for the assumption of parental rights. It was a new provision in the 1975 Act to deal with the problem of children left languishing in care, with no parental contact. No long-term plan for them could be made because parental rights could not be assumed.
That provision was introduced as a result of the Maria Colwell case, a scandal which resulted directly from a juvenile court decision, which was wrong, to send the child home to the natural mother and stepfather. The stepfather beat the child to death.
It is true that hon. Members will make representations on behalf of constituents who come to see them. Such constituents represent their own interests and may or may not represent the interests of their children. Legislation now recognises that the child can be separately represented. No children turn up at law centres. No children in care turn up at advice bureaux to see Members of Parliament. Their views are often represented by social workers and by a guardian ad litem appointed by the court.
I believe that something needs to be done. What is wrong with the present system is that, as the hon. Gentleman said, when a social services committee and the social workers decide to assume parental rights over a child already in care, to determine its long-term future, they do not have to notify the parent until after the assumption of parental rights. Then
870
the parent has the right to go to court, but the notification after the assumption of parental rights can be in writing and the parent may not fully understand it.
I should like a code of conduct to come out of this debate and the Bill, a code that will make it clear that parents shall be informed before proceedings on the assumption of parental rights; that they may be represented and may appear before the committee; and that a guardian ad litem to represent the child and interview the parents may be appointed before the assumption of parental rights. If that goes through a social services committee against the wishes of the parent, he or she will have the right, as now, to go to the court to argue their case and seek to have the assumption changed or revoked.
The court should be a backstop for parents who object to what is happening. I do not think that in every instance, even when the parents consent or there are no parents, it should be a matter for the juvenile court to decide. Anyone who believes that magistrates are better able to take the decision than dedicated, elected councillors on social services committees is mistaken. Many people on social services committees, people of all parties, are dedicated—that is why they are on the committees—to the well-being of children and to wanting to see families united. They want to avoid the need for children to come into care. They should be able to take the decision, with the safeguards that I have said should be provided. Those safeguards, given statutory backing, together with the parents' present right of appeal to the courts, would be adequate. It would be misguided to fill up the magistrates courts with assumption of parental rights cases simply because one does not think that it is just to have a hearing before elected members of social services committees.
I hope that something positive will come out of the debate and the Bill. I hope that what is wrong with the present system will be put right and that there will be a code of guidance with statutory backing, one that the hon. Gentleman and I can support. But I hope that the House will not accept the Bill, which proposes to put every case into our already overcrowded courts, even when there is no need, or to do so is not necessarily in the interests of the parents or the children. Whether we like it or not, they see the courts as punitive instruments. Social services committees are nearer to the family courts, which may not be seen to be so punitive.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.
Bill ordered to be brought in by Mr. David Alton, Mr. John Cartwright, Mr. Patrick Cormack, Mr. Alfred Dubs, Mr. Reginald Freeson, Mr. Clement Freud, Mr. Frank Field, Mr. David Knox, Mr. Kevin McNamara, Mr. Christopher Price, Mr. Jack Straw and Mr. Dafydd Wigley.

Child Care Bill
  CHILD CARE
  Mr. David Alton accordingly presented a Bill to abolish local authority resolutions assuming parental rights and to make provision for the making of care orders in cases where a child is already in the voluntary care of a local authority; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 2 April and to be printed. [Bill 84.]
Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [9 March].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

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

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

    (ii) for refunding any amount of tax;

    (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

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

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

    Question again proposed.

  Budget Resolutions and Economic Situation
  [Relevant European Community documents: Document No. 10077/81 and the annual report on the economic situation in the Community (1981) and the economic policy guidelines for 1982.]
  4.50 pm
  Mr. Peter Shore: As the Chancellor resumed his seat after 5.30 yesterday, as his supporters waved their Order Papers and stamped their feet with approval, and as a flush of pleasure suffused the features of such wets as I was able to glimpse, I confessed to a sense of almost complete bewilderment, quickly followed by a recognition of the Chancellor's unexpected gift for sleight of hand and of the equally unexpected gullibility of his Back Benchers. Yesterday was an exercise in bluff and fraud; a skilful presentation that momentarily persuaded one half of the House of Commons that the Chancellor had presented, as he claimed, a Budget for industry, a Budget for jobs, a Budget for people, and tax cuts.
  It is, however, invariably a mistake to deceive the House and country, for the truth will out and what is unpalatable becomes doubly so simply because of an attempt to conceal it. Yesterday's blooms are already dropping their petals. They will not survive this week's Budget debate.
  My first duty is to tell the truth about the Budget—the whole Budget, not only the half presented yesterday, but the other half that was revealed last December. This full Budget has not cut personal taxation—it has increased it. This Budget will not reduce unemployment—it will continue to rise. This Budget offers a sop to industry but will do virtually nothing to deal with its basic problems of loss of competitiveness and lack of demand.
  It is not difficult to document these assertions. In the White Paper on the Government's expenditure plans which
  872
  was released yesterday we find confirmation of the Government Actuary's forecast of last December about unemployment. He said:
  "the number of unemployed persons (excluding school leavers etc.) will average 2·6 million in 1981–82 and 2·9 million in 1982–83 and subsequent years."
  When school leavers, adult students and others are brought into the picture, an additional 225,000 people must be added to the unemployed figures. Unemployment is to rise by some 300,000 during this year and to stay there in the years that lie ahead. So much for the claim that this is a Budget for employment; it is a Budget for unemployment.
  The tax burden will obviously vary according to the size and nature of the incomes that people receive. In my remarks I must exempt the highest incomes, the top people whom this alleged Budget for the people so noticeably serves. In a full year, they will gain no less than £196 million as a result of the further and major relaxation in capital gains tax and capital transfer tax that the Chancellor has announced. What a disgraceful contrast with the shabby treatment meted out, above all, to the poorest in the land and those who, through no fault of their own, have been forced into unemployment and who have had their unemployment benefit cut by 5 per cent. last year and by the abolition of earnings-related short-term benefit on 1 January.
  What is the position for the ordinary taxpayer and the great mass of British people at work? The Government last night issued their document, one of many, entitled "Income Tax and Indirect Tax: The Main Proposals". It contains a number of tables showing how the tax burden in 1982–83 compares with the tax burden of the year that has just ended, 1981–82. The tables show reduction in tax payments next year, which have been widely publicised today in most newspapers, but make no allowance for inflation. Therefore, they are seriously misleading. However, the last table in the Government's clutch of tables shows the crucial figures—the percentage of total income taken in income tax and national insurance contributions next year compared with this year. It does that on the very modest basis of a 7·5 per cent. increase in earnings.
  Let us consider that table because it is that one that matters. For all single people within the range of income beginning at £3,000 a year and rising to £15,000 a year, the burdens of direct taxation will be higher in 1982–83 than they were in 1981–82. As for married couples, with the single exception of those on £3,000 a year, for whom there is a marginal improvement, all income earners from £4,000 a year to £15,000 will, as with single persons, pay more of their income in tax in this coming year than they did in the year that has just ended. The average family man on average earnings who paid, in income tax and national insurance, 27·5 per cent. in 1981–82 will pay after April 28 per cent.
  Therefore, only those earning more than £20,000 a year clearly gain from the changes in direct taxation announced yesterday. So much for the Budget for people, the tax cut Budget—and I have not mentioned the impact of the Budget and public expenditure on the likely rate burden and the almost certain rent burden to be imposed within the next few weeks.
  The Government have allowed local authority expenditure to increase in money terms by 6 per cent., bat they know that expenditure will increase by a great deal more. My guess is that rates will rise nationally by at least

  873
  15 per cent. in 1982–83. The Secretary of State for the Environment has already decided that overall local authority rents must be raised generally by a minimum additional £2·50 a week. So much for the Budget for people, the tax cut Budget.
  What shall we say about the claim that it is a Budget for industry? No one who has read the Budget submissions of the TUC or the CBI can fail to recognise how massively short, not just of the TUC's proposals, but of those made by the CBI, this Budget falls. The Chancellor will not contest this point made by the CBI:
  "in 1981 the real pre-tax, pre-interest rate of return for non-North Sea and industrial commercial companies fell to just over 2 per cent. , the lowest ever recorded in this country and almost certainly much lower than in any of our main overseas competitors."
  On the real profits of industrial commercial companies, less payments of tax and interest, the CBI said:
  "in 1980 for the first time on record this total was negative. And we estimate that it remained negative in 1981 and our central forecast will continue to be negative on unchanged policies this year."
  It was against that background that the CBI called for a cut of two points in the national insurance surcharge, a 15 per cent. business de-rating and, much more important, for action to ensure a competitive exchange rate, including cuts in interest rates.
  The real problem is, of course, that we have lost, in international competitiveness, about 30 to 35 per cent. since the Government came to power about three years ago. The question that must, therefore, be considered is how far the one point cut in national insurance surcharge and the other minor measures that the Chancellor announced will go in helping to cut into that massive loss of competitivenes that we have already sustained. Perhaps the Chief Secretary will give us the information, but I should be surprised if as much as 3 per cent. were to be regained by the Budget against the 30 to 35 per cent. loss in competitiveness. So much for the so-called Budget for industry.
  Of course, this Budget has not been launched in a vacuum, but follows three previous Budgets and three years of monetarist madness, which have together inflicted more damage on the economy, industry and people of Britain than anything since the great slump of 1929 to 1931. We know what has happened. In the year that has just ended, in 1981–82 alone, investment in the future and in British industry has fallen by 5 per cent.—fallen from the reduced levels of the previous year. The number of people registered as unemployed has risen from 2·4 million last March to just over 3 million today—a rate of just over 50,000 a month. This year, taxes for the average family with two children, on average earnings, have taken 42·6 per cent. of personal income, compared with 39 per cent. in 1979–80.
  Public expenditure, particularly on capital projects, has once again been reduced, including an unprecedented and spectacular fall in the number of houses completed and a further fall in houses started by the construction industry. The Chancellor of the Exchequer's deliberate deflation of demand—whether in the form of reduced public expenditure, increased taxation burdens, high interest rates or an uncompetitive exchange rate—has been at the very centre and core of Government policy. As we all recall, the right hon. and learned Gentleman's justification
  874
  for his measures last year was that they were the only way to reduce inflation, lower interest rates for industry and thus to prepare the way for that long-awaited sound expansion of the economy and the creation of "real" jobs.
  This time last year, interest rates were reduced to 12 per cent. Within three months they rose again to 14 per cent. and then to 16 per cent. They then fell back to 15 per cent. What can we now expect? Of course, we can expect a reduction—surely at least to last March's figure of 12 per cent. But we do not know how long they will stay in that position. In March 1981 inflation stood at 12 per cent. Lo and behold, it is 12 per cent. in March 1982.
  That was last year—a year on which, with incredible complacency, the Chancellor of the Exchequer and the Chief Secretary repeatedly congratulate themselves for their judgment and prescience. If they had really anticipated that unemployment would rise by an additional 600,000 between last year's Budget and this, and had foretold that interest rates would not fall below or even be sustained at last year's figure of 12 per cent.—but would rise to the level of 16 per cent., reached last summer—they were remarkably reticent in telling the House. Indeed, they were reticent not only at the time—last March—but in all our subsequent debates on the economy in the past year.
  I have described only one year, but if I were to take the three-year period since the general election the record would be—as the House knows—still more appalling. Output is down. The gross national product has fallen by about 6·5 per cent. Industrial output is down still more dramatically, and manufacturing output has fallen by about 20 per cent. Worst of all, that has happened during a period when we have had the full benefit of self-sufficiency in North Sea oil.
  That is the background against which the Budget proposals and the prospects must be judged. Only one component remains to complete the picture. I refer to that half of the Budget that the Chancellor of the Exchequer revealed in his statement on 2 December, some three months ago. The House will recall that he then announced an increase of 1 per cent. in the employee contribution to national insurance, to take effect on 1 April. At the same time, he announced the totals of public expenditure in the year 1982–83, the details of which are set out, with minor modifications, in the White Paper published yesterday.
  It is, of course, only when those measures are brought into the total picture that the reality of the right hon. and learned Gentleman's measures for 1982–83 can be properly appraised. Here we find the simple answer to the myth of tax cuts in the Budget. It is the extra 1 per cent. increase in national insurance contributions, paid by the vast majority of our people at work, and which yields over £1,000 million, which negates that small relaxation in income tax and other tax payments, over and above the indexation of personal tax allowances that the right hon. and learned Gentleman announced yesterday. It was during our exchanges and debates last December that the apparent £5 billion increase in public expenditure that the right hon. and learned Gentleman had announced was found—on the the Chancellor's admission—to be in real terms no more than was necessary to maintain public expenditure in 1982–83 at the 1981–82 level. That was confirmed by the Chancellor of the Exchequer yesterday and by the contents of the Red Book.
  The planning total for 1982–83—allowing for the figure of 9 per cent. for inflation—will be the same as it was last year. Of the total, an extra £1 billion must be allowed for

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  the financing of additional unemployment, and an extra £1 billion to £2 billion must be allowed for the necessary increased support for nationalised industries faced with still deeper recession and enhanced costs. Of course, that will mean cuts in other public programmes of expenditure.
  I shall sum up where the Budget and public expenditure White Paper have taken us to. The Budget is broadly neutral on taxation, but the Chancellor of the Exchequer has been forced to make cuts in public expenditure to accommodate the recession costs to which I have just referred. Therefore, unemployment will rise—as the Government admit—by at least another 300,000 during this year. To adapt a famous couplet, the best that could be claimed by the Chancellor for his Budget is:
  "Across the wires the electric message came, the economy is no better, it is much the same."
  So much for the Government's direct contribution—through tax policy and public expenditure programmes—to the level of activity of the flattened British economy. In the right hon. and learned Gentleman's statement and the Red Book, the gross domestic product is expected to grow by 1·5 per cent. from 1981 to 1982 and, taking the first half of 1982 to the first half of 1983, by 2 per cent. Where does that growth come from?
  Consumer expenditure will contribute virtually nothing. According to the Red Book, the main stimulus is to come—surprisingly—from a recovery in private investment and from that interesting category, which represents at least half the increase, "statistical adjustments." The contribution from an increase in exports is more than matched by the anticipated growth in imports. It looks like rather precarious figuring to me. However, let us assume that the right hon. and learned Gentleman achieves his anticipated growth in gross domestic product. By the summer of 1983—four years after the Conservative party was elected to office—gross domestic product will be about 3 per cent. lower than it was when it took over. On the same favourable assumptions, manufacturing output will be about 13·5 per cent. lower over the same period.
  No doubt, in this new Thatcher era of modest expectations, the Government will claim and hail such an outcome as an achievement. However, to those of us who have not lost all touch with reality, it will be treated with derision and contempt. Again, this achievement conceals the contribution that the Government have received from North Sea oil in the past three years. There has been a £6 billion bonus in tax yields and an increase in the value of output—between 1979 and 1981 alone—of over £7 billion.
  What are the implications for unemployment and of the anticipated growth of gross domestic product? The Chancellor of the Exchequer has told us that productivity is increasing and that productivity per capita has returned to the level that existed three years ago. That productivity is expected to continue to grow, although not at the pace experienced during the past year. Let us assume that productivity stays on the trend of the despised and lethargic 1960s and that there is an increase of between 2 per cent. and 3 per cent.
  If that figure were sustained the implication for unemployment is surely obvious. There could be no fall in the number of unemployed. Indeed, the underlying rate would inevitably rise. The only new factors that might mitigate the effects and cosmetically reduce the size of the
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  unemployment register are the type of measures so murkily outlined at the opening of the right hon. and learned Gentleman's Budget speech, which will affect some 100,000 unemployed people, and the more extensive measures announced last December by the Secretary of State for Employment—in other words, the creation on a more substantial scale of precisely those phoney jobs, as opposed to real jobs, that the right hon. Lady and her colleagues so contemptuously dismissed when in Opposition four years ago.
  The Chancellor's forecasts for GDP, unemployment and other main aggregates are supported by virtually all the competent and independent forecasting bodies that assist us in these studies—the National Institute, the Cambridge economists, the St. James' Group based on the Economist Intelligence Unit, the London Business School, Simon and Coates, Phillips and Drew and others. But there is a major and additional point. We must now not talk, just about the short term—that is to say, the period up to mid-1983—but we must look at the situation that lies beyond.
  The view here is again broadly shared by forecasters as different as the broadly monetarist London Business School and the more Keynesian group based on the Economist Intelligence Unit, as well as by the Government's own forecasts built into the public expenditure White Paper. The message is one that the country and the House should most seriously consider and absorb. Unemployment is here to stay. On the Government's policies, 3 million registered unemployed is to be the new normality for the British people in the 1980s. Not only has this figure been brought about by Government economic and monetarist policy, but it is to be sustained by the continuation of those policies into the indefinite future. At no point and on no occasion have the Prime Minister, the Chancellor or any other member of the Cabinet spoken of even a medium-term commitment to the restoration of full employment.
  Yesterday, the Chancellor paid tribute—those tributes were re-emphasised and re-echoed at the beginning of our proceedings today—to his most distinguished predecessor, Lord Butler. I could not help thinking and recalling that Rab was, in his many different roles, a member of the wartime coalition Government and a member of the Cabinet that published and accepted that great commitment enshrined in the 1944 White Paper on "Employment Policy" to sustain full employment in the post-war period.
  I recall that statement:
  "The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war … A country will not suffer from mass unemployment so long as the total demand for its goods and services is maintained at a high level … The Government are prepared to accept in future the responsibility for taking action at the earliest possible stage to arrest a threatened slump. This involves a new approach and a new responsibility for the Stale."
  That commitment, for the first time in the post-war years, has been abandoned by the Treasury Bench. I challenged the Chancellor to deny it.
  Of course, the Chancellor will say that he does not want unemployment. Of course, he will repeat the ritual regrets that we heard from him yesterday. Of course, he will say that there is no contradiction between his professed aim of reducing inflation and reducing unemployment, to which my short riposte is
  "Ye shall know them by their fruits".
  My longer riposte is to use words that will be familiar to the Chancellor and the Chief Secretary to the Treasury

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  in their professional capacity as members of the Bar. They will recall the many occasions when at the end of trials judges have addressed juries in broadly the following terms: "A man must be presumed to intend the natural and probable consequences of his conduct." In other words, it is no good for a villain to brandish a crow-bar, to bring it down on the skull of his victim and then to say that that was not what he meant to do at all, that the victim was an old friend and that he only wished him well.
  No. People, including Prime Ministers and Treasury Ministers, must be judged and presumed to intend the natural and probable consequences of their conduct. Is it not a fact that mounting and high unemployment is the natural and probable consequence of throttling the economy with the medium-term financial strategy? Is not the inevitable result of a squeeze on the money supply that business is driven to bankruptcy and firms to liquidation as the cost of borrowing soars beyond their reach? Is it not a fact that, by cutting public expenditure regardless of whether resources of men and material are idle year in year out, the number of people employed, either directly by the public sector or in projects financed by public money, such as housing, will find themselves jobless? Is it not a natural and probable consequence that, regardless of circumstances, a Government pledged to reduce their borrowing requirement year by year will reduce demand in the economy and, therefore, the number of jobs available?
  Mr. John Townend: Surely the right hon. Gentleman's point is that unemployment is basically caused by a shortage in demand. Does he not agree that in many areas of industry there is no shortage of demand? For example, there is ample demand in the motor car industry; the problem is that British manufacturers are not building the right cars at the right price.
  Mr. Shore: If the hon. Gentleman is willing to engage in that argument, I hope that the House will follow it up. Of course, in particular instances there may be a case for saying that there is not a shortage of demand, but what about the economy as a whole? There is more surplus capacity than ever before recorded. If Conservative Members think that that is peculiar to the people of Britain; if they think, as they undoubtedly do, that it is a kind of retribution for enjoying the benefits of full employment and the gradual amelioration of circumstances that come from a welfare State; if they think that over the years the British people have suddenly become corrupt and lazy; how do they explain the fact that unemployment throughout the whole Western world has risen from 8 million to more than 24 million in the last six or seven years?
  The point is that there is a lack of demand, not only in Britain but in the world economy. That is the message we have been trying to get into the Conservatives' thick skulls, year in, year out, ever since the first oil shock hit Britain and had to be managed, in spite of all the difficulties—when we did not have a spot of oil ourselves—by my right hon. Friends from 1974 to 1979, and with far better results than we have had in the last two or three years.
  Several Hon. Members rose—
  Mr. Shore: In the light of what I said earlier, was not the real offence of the Leader of the House, when he got
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  into hot water just a month ago, that he spoke with an appalling frankness? He actually said what I have said—that the Government expect, and are planning for, a permanent level of unemployment of 3 million. Is that not what the right hon. Gentleman meant when he said:
  "Britain … must endure much higher levels of unemployment than we have been used to always before in our history",
  and
  "in the short run, living standards generally can only fall … and for some time to come we shall face the struggle to hold on to something like our present living standards"?
  That was the right hon. Gentleman's offence but I much prefer a candour of statement than the weasel words that we have had from some of his colleagues.
  Sir William Clark: The right hon. Gentleman said that when his Government were in office they managed the economy much better than we are managing it now. Will he explain how, under his party's economic management, the country was near bankruptcy and also had to go to the International Monetary Fund to be bailed out?
  Mr. Shore: There were overwhelming reasons for our difficulties. I know them well because I was Secretary of State for Trade in 1974. We had a balance of payments deficit of nearly £4,000 million mainly due to oil but partly due to what we inherited. We did our best to cut that deficit, but we ran out of reserves. In 1976 we had no option but to go to the IMF. That had nothing to do with the nonsense and mythology that the hon. Gentleman and his right hon. Friends have erected and created.
  Mr. Tim Eggar: Will the right hon. Gentleman give way?
  Mr. Shore: I will not give way.
  I shall make my concluding points about the natural consequences of the Government's actions. Whether it is the judgment of history or whether it is to be the judgment of the electorate within the next 18 months, there is only one possible verdict on the Prime Minister and the Chancellor of the Exchequer and his colleagues on the great crime of the wilful creation of unemployment. That is "Guilty".
  What I have just said brings me to the heart of my difference with the Government. The Chancellor sees his task as essentially one of fine tuning a slump. If I thought that that was the task, I would adopt some of the right hon. and learned Gentleman's Budget proposals. I urged reductions in the national insurance surcharge and extra help for high energy users in my response to the Budget 12 months ago, but the right hon. and learned Gentleman rejected those proposals out of hand.
  I see the task of the Chancellor of the Exchequer not in terms of accepting or fine tuning the slump, but in terms of overcoming it. The task on which we should embark is the restoration of output and employment in Britain with the objective of the earliest possible return to full employment in our land. That will require a major and fundamental change of direction and of economic policy. It is because I believe that that I set out a week ago an economic statement in which I put the key proposals and the main judgments of the extent of the economic stimulus required, which should have shaped yesterday's Budget.
  I have no doubt that we must bury and abandon the medium term financial strategy, if it has not been buried

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  already. I noted what had happened to the various monetary targets that the right hon. and learned Gentleman put before us. They have changed every year, they have been overshot every year and they have been broadened every year. Frankly, I fail to understand the utility of preserving them.
  It is essential for interest rates to be cut and for a realistic and competitive rate for sterling to be achieved. Those are necessary first steps to a sustained recovery of output. They must be backed by measures to increase domestic demand, both in the form of increased capital expenditure and increased current expenditure on major social and community services.
  Mr. Eggar rose—
  Mr. Shore: My judgment was that about £9 billion should be spent on increasing expenditure and on what I described as cost restraint measures, including reductions in the national insurance surcharge. On our calculations the public sector borrowing requirement would increase by some £5½ billion. The predictable response of the Chancellor was, is, and will continue to be that any increase in the PSBR is bound to lead to an increase in interest rates and that any increase in demand is bound to lead not to an increase in output, but to an increase in inflation.
  The idea that interest rates will be driven up seems to be based on the false notion that there is intense competition in the United Kingdom for capital funds. That is patently not so when British industry is in serious recession. That is true only to the extent that the Government have made it true by abolishing exchange controls and by allowing British capital—much of it the savings of people at work in Britain—to pour across the Channel and the Atlantic to wherever their managers believe the largest return is available.
  Since exchange controls were abolished, the outflow of capital has been enormous. In 1978, the last full year of office of the Labour Government, about £4 billion was invested overseas, either in direct or portfolio investment. The total for 1981, based on the first three quarters' return, will be not less than £9 billion. That additional £5 billion could be and should be used to finance the restoration and revival of British industry and employment.
  That is one reason why it is our intention to restore exchange controls the moment we have the opportunity to do so. But let me pursue the matter further. I can see no convincing reason, nor have I been presented with any past convincing evidence, to cause me to believe that the PSBR of the kind that I have in mind is something that can be achieved only at the cost of rising interest rates.
  It is an obvious irony that the Chancellor's experience in office has been precisely contrary to what he expected and predicted. As he has sought to reduce the PSBR as a percentage of the gross domestic product, interest rates have not fallen, but risen. Interest rates are higher today than when he came to power three years ago, yet the PSBR in the last year of the Labour Government was 5½ per cent. of GDP as opposed to 4¼ per cent. in 1981–82 and the proposed 3½ per cent. for 1982–83.
  Furthermore, as the Chancellor knows, and as the CBI stated in its Budget representations, when the British borrowing requirement is put on a comparable basis with that of other countries, it forms a smaller part of gross national product than in Japan, Germany, Italy and now
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  France. It is only because we, unlike other countries, classify and use the concept of PSBR to include the borrowing of publicly owned industries for capital investment and their future growth that we manage to push up PSBR towards the upper end of the international comparative table.
  I do not pretend for a moment that the future for Britain is easy or that the achievement of economic success will not involve the greatest effort and utmost co-operation of the British people. That task has become immensely more difficult, given the hideous damage that the Chancellor and his colleagues have inflicted on our economy. What we shall invite our fellow countrymen to join with us in achieving is a programme that seeks to create new jobs, to increase the output and wealth of our society and, above all, to establish a more just distribution of what we have both between different income groups and between private and community needs.
  In contrast, what the Chancellor offers, as his Budget confirmed, is a dead end: the continued and massive waste of human and material resources, the absence of hope and the encouragement of division and despair. It is a Budget that we must totally reject.
  5.28 pm
  The Chief Secretary to the Treasury (Mr. Leon Brittan): We have just heard from the right hon. Member for Stepney and Poplar (Mr. Shore) not just a somewhat distorted series of references to the Budget of my right hon. and learned Friend the Chancellor of the Exchequer, but a highly sanitised account of his prescriptions. If hon. Members had taken the trouble to look at the pre-Budget economic statement that the right hon. Gentleman published last week, they would have read a fuller account of what he has in mind.
  To the right hon. Gentleman's colleagues, especially those who served with him in the Cabinet, the heat and passion that he brings to bear on these matters must revive old memories. My predecessor, the right hon. Member for Heywood and Royton (Mr. Barnett), has recorded what it used to be like in his book, "Inside the Treasury". He notes that the then Prime Minister
  "was just not willing to push Peter, who could be so touchy and ill-tempered and ready to get passionate and thump the table … that everybody was frightened to upset him."
  To continue the quotation, the right hon. Member's technique apparently was
  "to behave in as prickly a manner as possible. Better still leave the impression that if you lose you might not only resign but become so convulsed with the strength of your case as to push your blood pressure right up and collapse on the Cabinet table."
  Having looked at the right hon. Gentleman's proposals, and having heard him put them forward in a somewhat sanitised form this afternoon, I cannot help feeling that I would fear not the right hon. Gentleman's collapse but that of the British economy if he were ever to come to office again.
  Mr. Chris Patten: While my right hon. Friend is talking about the sanitisation of the Labour Parry's budget proposals, will he say a word about the failure of the right hon. Member for Stepney and Poplar (Mr. Shore) to say anything about something called "the national economic assessment", which was supposed to be the central part of those proposals? We do not know whether that is a pay policy or something else.
  Mr. Brittan: I am grateful to my hon. Friend, who has foreshadowed a point on which I was to touch. I notice with interest that, apart from an attempt to throw a certain amount of dust in our eyes about the Chancellor's proposals, the right hon. Member for Stepney and Poplar was extremely reluctant to talk about the proposals in the Budget. I have not been in the House for as many years as the right hon. Member has, but I cannot remember another speech from an Opposition spokesman that had so little to say about the Budget proposals. That reflects the fact that the Budget proposals were so well received that the right hon. Gentleman felt that the only thing to do was to attempt to distort them slightly and then generally throw mud at the background against which they were presented.
  Before the right hon. Member for Stepney and Poplar seeks to intervene, I must tell him that, in general, his assessment of the nature of our economic problem is one that he has put to the House and been debated on a number of occasions. We have often discussed and considered the fact that the present rise in unemployment is caused by historic factors that have been present for the best part of a generation. Labour Members who point the finger and say that the rise in unemployment that has gone on for a generation is caused by the present Government are showing an inadequate understanding of the magnitude of the problem.
  The right hon. Member for Stepney and Poplar also fails to ascribe any responsibility for the increasing unemployment to the steady loss of competitiveness in the British economy, caused by the adoption, for the majority of the period in question, of policies on all fours with the one that he once again put to the House.
  Mr. Shore: The right hon. Gentleman knows that there have been many occasions when both Britain and other industrial countries have lost out in competitiveness with, if he likes, more dynamic and go-ahead competitors, but the adjustment that has been made in the past has been through the exchange rate. It was the doctrinaire pursuit of monetarist policies that drove up the exchange rates and added to the loss of competitiveness of the British economy, as the Chancellor and the Chief Secretary well know. That is why we are 35 per cent. less competitive than we were in May 1979.
  The right hon. Gentleman made some allegations about my lack of comment on the Budget. I shall ask two essential questions, which I hope he will answer. First, is unemployment now to go up and stay up, as we suspect? Secondly, am I or am I not right in what I say about the weight of taxation on the broad mass of our people when we aggregate social security contributions with income tax?
  Mr. Brittan: I was coming to those points, and I shall now do so. The right hon. Gentleman is making a third point that is not correct. I do not accept that the increase in the value of the £ sterling, which he so much deplores, was caused by the monetarist policies—as he describes them—of the Government. The increase in the value of the pound was due almost entirely to factors relating to North Sea oil and not to the monetary policies of the Government.
  The right hon. Gentleman has raised a number of points about the Budget, although he has touched on it fairly lightly. He has not examined the policies in the Budget, but has made allegations about it. He began by talking
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  about unemployment and the impact of the Budget on that problem. The statements that he has made about the Budget and unemployment are based on a complete misreading of what is said in this year's public expenditure White Paper. That makes it clear that the figures are not a forecast or a prediction of unemployment in any sense. It clearly says that if developments on pay and world economic recovery are favourable there is a reasonable prospect that unemployment levels will fall.
  If the right hon. Gentleman will recall what my right hon. and learned Friend the Chancellor said in answer to questions on 2 December after the public expenditure announcements, he will remember that he said that there had been no significant difference in these matters since then. My right hon. and learned Friend then said that those figures were consistent with the prospect of some fall in the total unemployment figure before the end of financial year 1982–83.
  The right hon. Gentleman also ought to know that it is the long-standing practice to adopt as a convention, and no more, for the purpose of estimating public expenditure totals in the White Paper, the assumption in the first year carried over into subsequent years. That is exactly what was done in the last public expenditure White Paper issued by the right hon. Gentleman.
  If the right hon. Gentleman is saying that the prospect of an immediate fall in unemployment is not before the House, he is saying no more than what my right hon. and learned Friend and my right hon. Friend the Secretary of State for Employment have frequently said. There can be no doubt that if one is examining the impact of the Budget—which is what we are talking about and about which the right hon. Gentleman is so reluctant to talk—it is in the direction of bringing nearer the moment when unemployment will fall.
  The right hon. Gentleman looks askance, but it would be astonishing if a Budget that did the things announced by my right hon. and learned Friend yesterday to give assistance to industry by reducing the cost of employing people did not have an impact in the direction of reducing unemployment at an earlier stage than would otherwise be the case. It is not possible, as the right hon. Gentleman knows, from the practice followed by his Government, to give a forecast of the date on which unemployment will start to fall. That is not something that his Government did, and it was something that the Leader of the Opposition, when he was Secretary of State for Employment, steadily refused to do.
  It is inconceivable that if the national insurance surcharge is reduced by 1 per cent. and if there is assistance to the construction industry by way of home improvement grants, that that will not help rather than hinder employment. Who will be carrying out the extra work that will be provided for by the money from the Exchequer for home improvement grants? Who will be assisted by the extra money in the energy package provided by my right hon. and learned Friend, except the firms that are at the moment experiencing difficulty and have had to lay off people? They will be materially assisted by the programme.
  Mr. Robert Sheldon: The estimating assumptions of 2·9 million unemployed people in Great Britain, excluding Northern Ireland, are for the

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  years 1982–83 to 1984–85, as the White Paper makes clear. This is what the White Paper is all about. Does the right hon. and learned Gentleman repudiate it?
  Mr. Brittan: I am sorry that the right hon. Gentleman was not able to listen when I explained that the reference to the later years follows exactly the convention in the public expenditure White Paper issued by the Labour Government. It is a conventional assumption carrying forward the unemployment figures assumed for this year. It does not indicate anything at all about future years. I am sorry that I was not able to keep the right hon. Gentleman's attention when I was explaining this matter.
  There has been talk of the effect on employment. Only those who are blind to the facts can possibly deny that the measures introduced by my right hon. and learned Friend in relation to the national insurance surcharge and the construction industry, and the measures that my right hon. Friend the Secretary of State for Industry will be amplifying to give assistance to the growth sectors of the British economy, which will lead to the jobs of tomorrow, point in the direction of increasing employment and not diminishing it. It is farcical and fantastic to present anything in a contrary sense.
  The right hon. Member for Stepney and Poplar also made much of the tax position. Indeed, some Opposition spokesmen have even suggested that the Budget is, in some sense, deflationary. I find that a fantastic proposition. The tax cuts made by the Chancellor amount to £1,625 million in 1982–83 and to £3,055 million in a full year. On top of that there are the expenditure plans of £350 million in 1982–83 in addition to the £5 billion increase announced in December. Expressed in terms of the public sector borrowing requirement, the £1·3 billion addition that my right hon. and learned Friend announced over and above the level that would otherwise be the case speaks for itself. The percentage of gross domestic product taken in tax, if national insurance contribution and rates are included, will be reduced from 40 to 39·3 per cent.
  If one looks at the impact on the individual, the net effect, including national insurance contributions, is beneficial—
  Mr. Jack Straw rose—
  Mr. Brittan: I shall not give way.
  Hon. Members: Give way.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order.
  Mr. Straw rose—
  Mr Brittan: I shall not give way.
  Mr. Straw: Will the right hon. and learned Gentleman give way?
  Mr. Deputy Speaker: Order. The hon. Gentleman knows that, unless the Minister gives way, he must resume his seat.
  Mr. Brittan: The hon. Gentleman knows perfectly well that I have already given way several times more than did his right hon. Friend. I am prepared to give the figures in any form that the hon. Gentleman wants. On a full year basis, the effect of the changes on individuals at work is that the personal tax allowances amount to a benefit of £2·4 billion, national insurance contributions are reduced by £1·2 billion, Excise duties are reduced by £0·8 billion
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  and child benefit is increased by £0·35 billion. The net total balance is approximately £750 million. Those are the figures. Of course, the impact on individuals in particular circumstances will vary. My right hon. and learned Friend has not put forward the Budget primarily as a series of tax concessions to the individual. He has sought to present the Budget as one designed to sustain and nurture an economic recovery that has already commenced.
  Mr. Straw rose—
  Mr. Brittan: No, I shall not give way.
  It is for that reason, and for that reason alone, that the bulk of the measures of assistance that my right hon. and learned Friend was able to announce were rightly given to industry and to business to assist growth and to assist the development of the economy and also to assist the recovery from present levels of unemployment.
  Mr. Straw rose—
  Mr. Brittan: No. I shall not give way
  Mr. Straw rose—
  Mr. Deputy Speaker: Order.
  Mr. Brittan: I have given the figures—
  Mr. Straw rose—
  Mr. Brittan: I am not giving way.
  Hon. Members: Give way.
  Mr. Deputy Speaker: Order.
  Mr. Brittan: I have given the figures—
  Mr. William Hamilton: On a point of order, Mr. Deputy Speaker. The right hon. and learned Gentleman misled the House on personal taxation, and he should withdraw what he said.
  Mr. Deputy Speaker: The hon. Gentleman has been here long enough to know that I have no control over the Minister's speech.
  Mr. Brittan: I have not misled the House. Taxpayers at all income levels are likely to pay a smaller proportion of their earnings in income tax next year. I have said nothing that has misled the House. Opposition Members may choose or prefer to put forward selective figures on other bases, but the figures that I have given are correct. I should like now to proceed—
  Mr. Shore: The right hon. and learned Gentleman can assist the House. We are simply trying to find out the facts. We are not quoting figures that we have concocted. We are quoting figures put out by the Treasury late yesterday evening. The table for single and married couples gives the charge for 1981–82, including income tax, national insurance contributions and the percentage of total income taken in tax and NIC. It then gives exactly the same figure for 1982–83. In all cases, until the level of £15,000 to £20,000 is reached, the percentage is higher in 1982–83 than in 1981–82. We may be wrong, but the right hon. and learned Gentleman has a duty to explain the matter. To ignore the plea of the House is unbelievable.
  Mr. Brittan: I have given a detailed set of figures. I have explained the income tax position. I made it clear when we debated the matter earlier in the year that national insurance contributions needed to be increased to finance

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  higher benefit payments. Even taking account of the higher contributions, the right hon. Gentleman gives a misleading account. [HON. MEMBERS: "No."] The lowest and highest paid, the same groups that lost out last year, will still have a smaller overall burden. That is a factual statement. The lowest paid families will also benefit from the increase in family income supplement.
  The right hon. Gentleman was really saying in the bulk of his speech that the measures put forward by my right hon. and learned Friend were not enough. It is not the case that he disagrees with them. It is his view that they are not sufficient. The right hon. Gentleman would fling a bucket of petrol on the fire of the economy. That is assumed to work because, contrary to all reason and experience, the bucket is believed to contain petrol of a newly discovered and unique character—it drives the engine, but is not combustible. All the measures put forward by the right hon. Gentleman on behalf of the Labour Party are deemed to have a beneficial effect, but in every case the down side is denied or ignored, however clear the evidence of the past. The past cannot be denied or ignored in that way. Low growth rates have afflicted the British economy for years.
  Mr. David Winnick: On a point of order, Mr. Deputy Speaker. As the Minister is clearly waiting to be briefed by his civil servants, may we have a short adjournment until they come back with the information?
  Mr. Deputy Speaker: The hon. Gentleman is well aware that that is not a point of order.
  Mr. Brittan: The right hon. Gentleman's prescriptions ignore the evidence of the past. Low growth rates have afflicted the British economy for many years. We have consistently lagged behind our competitors. Under the Labour Government, average annual growth was barely 2 per cent., yet the right hon. Gentleman now undertakes to provide a 5 per cent. growth rate.
  The prospects for employment offered by the right hon. Gentleman are equally ambitious and equally incredible. Every time Governments have tried to deal with the upward trend of unemployment by spending more and borrowing more, as the right hon. Gentleman advocates, the result has been higher inflation. [Interruption.]
  Mr. Deputy Speaker: Order. The right hon. Member for Stepney and Poplar (Mr. Shore), when speaking from the Dispatch Box, received a very fair hearing. I appeal to the House to give the same to the Minister.
  Mr. Brittan: Every time Governments have tried to deal with the upward trend in unemployment, which has continued for so long, by spending and borrowing more, as the right hon. Gentleman advocates, the result has been higher inflation and a diminishing effect on jobs and output. The Labour Government saw the doubling of unemployment, yet the right hon. Gentleman now says that he can create at least 2½ million jobs in five years.
  It is all supposed to be different this time, but what has the Labour Party to offer now that makes it so different? The formula offered is not new. It has been tried and found wanting. The effects of higher spending and borrowing are to be checked by price and exchange controls and a deal with the unions. That was precisely the strategy of the Labour Government.
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  I remind the right hon. Gentleman of the result, as we have seen it in action. The result was 27 per cent. inflation, 30 per cent. wage increases, steadily rising unemployment and then the forced resort to the IMF to bail us out. There was then a cut in public spending of 8½ per cent. in real terms between 1975–76 and 1977–78. That is what happened under the Labour Government.
  The really significant feature of that period was the intervention of the IMF and the subsequent pursuit of policies which actually led both to lower inflation and to lower unemployment. Yet is is precisely the policies which were then successully pursued that the right hon. Gentleman now denounces. He tells us that it is possible safely to embark upon an inflationary policy of increasing public expenditure and reducing taxation by about £9 billion. He calculates that that would mean an increase in borrowing of about £5½ billion. All experience shows that to suggest that that would lead to anything other than a massive rise in interest rates is a travesty of history. The right hon. Gentleman denies that.
  Mr. Straw rose—
  Mr. Brittan: No, I shall not give way.
  We are told that some of the money borrowed by the Government would go back to the companies, which would then reduce their own borrowing. If that is so, there would be no beneficial impact on output and jobs. We are told that exchange controls would be reimposed to keep money in the country for the Government to borrow. As my right hon. and learned Friend the Chancellor told the House on 11 February, it is clear that the effect upon interest rates of removing exchange controls is very small. The proposition that the reverse effect would be different is therefore unworthy of support.
  The right hon. Gentleman then says that there is no need to worry about interest rates because we can abandon the monetary targets, which can be relaxed and forgotten about altogether. If that is true at all, it is true only in the very short term. It is no accident that countries with low interest rates are those with low inflation rates and monetary targets.
  In the years after the first oil shock, we enjoyed—if that is the right word—an inflation rate at least double that of Germany. Like the more successful countries, we must maintain monetary targets if we are to bring down inflation and interest rates. This is not some kind of aberration. Governments throughout the world now set such targets. In the United States, Germany, Canada, Switzerland and even in France, that is the position.
  Mr. Straw: I am very grateful to the Chief Secretary for giving way. On the question of interest rates, now that I have the rare privilege of asking him a couple of questions, perhaps he will confirm what he has so far refused to confirm and what his right hon. Friend refused to confirm yesterday. It seems that the Government are unwilling to answer any questions put to them by the Opposition about personal taxation. Will the Minister confirm that for the average family man on average income the burden of direct taxation—that is, national insurance and income tax—will be a higher percentage of his income in 1982–83 than it was in 1981–82?
  Mr. Brittan: If the hon. Gentleman thinks that that is a question about interest rates, he has certainly lost me.
  The right hon. Member for Stepney and Poplar does not like it, of course, but I am following through the

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  implications of the policy that he has put before the House and showing that the consequences of abandoning the monetary targets are bound to be highly inflationary. The risk of creating extra demand is that it will be spent on foreign goods. The right hon. Gentleman envisages that, to avoid the increase in money supply being spent on foreign goods, there must be a trade strategy to protect the plan from being frustrated by our propensity to attract imports. It is difficult to imagine what distinction there might be between a "trade strategy" and the more familiar "import controls". If we impose import controls, what is to prevent others from setting in place a trade strategy designed to prevent their plans from being frustrated by their own propensity to attract our exports? That would certainly not help British jobs.
  Perhaps the proponents of this plan have in mind other inducements, in the form of subsidies or direction, to persuade people to buy British goods. The truth is that with vastly increased borrowing and import controls to prevent foreign competition, and with monetary control abandoned, the inflationary pressures that would build up would be enormous.
  It is here that the point made by my hon. Friend the Member for Bath (Mr. Patten) arises, because the only solution that is put forward by the Opposition is the so-called annual economic assessment—the Government, employers and the unions will work out what is to go where and how. However, an incomes policy agreed with the unions appears to be struggling to get out from the deliberately anodyne and bashful proposal of an annual economic assessment.
  No doubt we shall also be told how the share of national income going to profits, rents, social benefits and other incomes will be determined. The one thing that we can say with certainty is that an economic assessment of that kind—however wrapped up, however bashful as an incomes policy—will not work, because it is one of a long line of such attempts. There was the
  "solemn and binding undertaking"
  which—I use the words of the right hon. Member for Leeds, East (Mr. Healey)—
  "melted away like butter in the sun."
  In addition, there was the social contract, of which the right hon. Member for Heywood and Royton has written:
  "The only give and take in the contract was when the Government gave and the unions took."
  Therefore, the belief that it is possible to deal with the inflationary consequences of rampant monetary growth and of borrowing, on the scale that the right hon. Member for Stepney and Poplar suggests, by some kind of economic assessment is simply cloud-cuckoo-land. We have exchange controls, import controls, incomes policy, and control of profits, rents and so on. It is all very coyly expressed, but it is all there. Then we have a dash of commitment on all sides to industrial plannning to ensure that each major company plays its part in the national plan for recovery.
  It is the same mixture of direction and control as before. As the right hon. Member for Down, South (Mr. Powell) has noted in a recent critique of the right hon. Gentleman's proposals—[HON. MEMBERS: "He said 'Vote Labour' ."]. —once there is borrowing on the scale put forward, the only consequence is inflation. The attempt to deal with inflation caused by interest rates soaring as a result of these irresponsible policies can only mean, in the words of the right hon. Member for Down, South, that
  888
  "there must be control—comprehensive, thorough. rigorous control of every aspect of the economy".
  Therefore, let not the right hon. Member for Stepney and Poplar beguile the House or Britain into believing that there is a prospect of reaching prosperity and full employment under his proposals in a free economic society, because there is not. Once we embark on the road advocated by the right hon. Gentleman there is no alternative but the siege economy, which he is reluctant to endorse in full, but undoubtedly puts forward in his document.
  Mr. Shore: The right hon. Gentleman really must show a little more sense of history and temperance than that. The whole Western world—not only Britain—had full employment without any undue inflationary pressures for three decades up to the great upheaval of the mid-1970s. Germany had less than 1 per cent. unemployment. Therefore, to say that we cannot have full employment and contain inflation without reverting to a kind of siege economy is to talk through one's hat. May I put a last point—[Interruption.] I am sure that the right hon. and learned Gentleman heard the bugles of the fifth cavalry riding to his rescue. Will he answer that point and the one that was put to him a few moments ago?
  Mr. Brittan: The right hon. Gentleman knows perfectly well that I am not the one who says that inflation and unemployment cannot be dealt with without a siege economy. It is the right hon. Gentleman who is saying that. The references to economic management and economic assessment and all the matters that. I have put forward are from his programme. The inexorable logic of the siege economy emerges from an attempt to deal with the problem of unemployment by building more inflation in the system.
  Of course it is possible to deal with unemployment and with the long-term ills of the economy. It is to deal with those problems by improving the competitiveness of the British economy that we have embarked on our policy, and the signs of success are beginning to be increasingly apparent.
  My right hon. and learned Friend has put forward a series of measures which are designed to give assistance to the one area of the British economy which can furnish further advances on the road to success—British industry and business.
  For the right hon. Gentleman to seek to decry the assistance given to the construction industry—an industry which the Opposition always have on their lips—is a piece of arrant hypocrisy. For the right hon. Gentleman to say that the reduction in the national insurance surcharge will not help economic revival is another piece of arrant hypocrisy. For the right hon. Gentleman to ignore the impact of the measures to help the new technologically-based industries is a piece of blindness or hypocrisy. For him to ignore the changes in the tax system designed to assist enterprise is to ignore totally the measures that my right hon. and learned Friend has taken to assist the recovery of the British economy.
  It is painful for the right hon. Gentleman to hear his massive reflationary policies exposed as failures in the past and doomed, if followed, to lead to hyper-inflation and economic collapse. It is painful for the right lion. Gentleman to hear the sustained policy put forward by my right hon. and learned Friend to increase the competitiveness of the British economy and assist recovery. It is

  889
  because the policy that my right hon. and learned Friend has put forward will assist in recovery, without leading to further inflation and massive problems with interest rates, that it has commended itself to my right hon. and hon. Friends, and to the House and the country.
  6.6 pm
  Mr. Richard Wainwright: I hope that during my introductory remarks the Chief Secretary will now get together with the Financial Secretary, because I intend to question him on his failure to own up to his Treasury documents in regard to the undoubted increase in the direct tax burden.
  Thanks to an ancient local skill, the largest meat pie in the world was baked and eaten in my constituency to celebrate the recovery of George IV from madness.
  Mr. Patrick Cormack: George III.
  Mr. Wainwright: George III. I accept correction more graciously than the Chief Secretary does.
  Every so often, in the splendid township of Denby Dale, we have nostalgic pie bakings to remind us of those celebrations, and everyone says to everyone else how terrible it must have been for the people of Britain to know that the Head of State was eating his meals off the carpet and thought that cows could fly. They imagine how marvellous it must have been when people suddenly realised that the King was back to normal mental health.
  That experience enables me to understand precisely the feelings of Tory wets when the Budget made it clear yesterday that monetary madness had been exorcised and that the whole nonsense of M3 had been virtually banished from the Chancellor's policies and calculations. It must have been a good moment and we cannot grudge Tory Members their temporary demonstration of immense relief.
  My only complaint concerns the extremely undignified way in which the heresy was banished, not by a quiet burial or a modest requiem but by the cruel business of exposing it to a derisive caricature, for the Chancellor said that in future he would look at all the indicators and would act accordingly.
  Imagine an episode in "Yes Minister" when the Chancellor is seated before a great number of dials and, as almost always happens—and as the Red Book shows—half the dials point to the monetary figures going backward, while the rest of them point to the monetary figures increasing rapidly and alarmingly. There is also the exchange rate, which the Chancellor says he will look at in the future—a very big change—and money GDP. Faced with all that mutually contradictory evidence, the Chancellor flees from the room clutching his forehead and saying that he cannot possibly make head or tail of it—and he will be right. However, that is a rather undignified exit for the sheet anchor of the policy of the past three disastrous years.
  Now we can breathe again, because undoubtedly monetary pragmatism now rules. The recommendations of the Select Committee on that subject have at last penetrated the skulls of Treasury Ministers.
  It is interesting that regional comments on the Budget have been far more acidly critical than the comments of the moguls who do well out of pretending to represent
  890
  national industry from a desk in London. Indeed, the nearer to the miserable coal-face of our battered economy, the more pungent the criticism. I am not surprised. Taken with the December measures, which the Chancellor characteristically kept quiet about yesterday, the net effect of the Budget is depressive. No wonder that it gives rise to the official assumption that there will be a further 300,000 unemployed during the coming year.
  A particularly impudent part of the Chancellor's speech was his priggish accusation that previous Governments, including those of his own party, had
  "plundered the store of investment for the future."—[Official Report, 9 March 1982; Vol. 19, c. 730.]
  How can that lie on the lips of a Government who yesterday published a White Paper on public expenditure showing that we are ruining our higher education? What could be more important as an investment store for the future than training students in the new technologies and educating our scholars and intellectuals of the future? How can a Government who are sabotaging universities such as Bradford, Salford and Aston criticise their predecessors in this way?
  In neglecting urgent capital projects, the Government are doing the traditional work of the business shyster who takes on a business that urgently requires a lot of annual repairs but who fails to have them carried out and thus produces fictitious profit figures. He sells out the company when its assets have been virtually brought to ruin. It is therefore not acceptable to us for the Government to claim credit for a Budget which aids industry.
  I turn to direct tax. By a mere token recovery of only 2 per cent. in the 17 per cent. rate of inflation, which the Chancellor ignored last year when dealing with personal tax thresholds and allowances, the Chancellor is once again condemning many poor people to paying direct taxation. The thresholds for direct taxation in this country are the lowest of any country in the free world, except Italy which levies a rate of only 18 per cent. on its low thresholds. Even after the Budget indexations, a single earner will start paying 38·75 per cent. direct tax on earnings of just over £30 a week. A man working, with a wife at home, earning only £47 a week will start paying direct tax at the punitive rate of 38·75 per cent. That is the highest rate for starting direct taxation anywhere in the free world except, perhaps, Australia. It is that fact which the Labour segment of the Opposition rightly brought to the attention of the House and which the Chief Secretary refuses to answer.
  Table 9, published by the Treasury yesterday, which the Tory press for the most part unfortunately failed to print, makes it clear that after the indexing of pay by a modest 7½ per cent., people on incomes right up to £16,000 will be paying a higher percentage of their incomes in direct taxation as a result of the Budget than they paid during the year 1981–82. If the Chief Secretary wishes to contest the Treasury press release I shall be happy to give him the opportunity to do so.
  Mr. Shore: The House is in difficulty. An important part of the Budget debate concerns whether overall tax rates have increased or diminished. Obviously that affects what we shall say to the country. We can argue about matters of opinion, but we want, as far as possible, an agreed basis of fact. What the hon. Gentleman has suggested either is the case or it is not.

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  The tables clearly show one thing, but the Chancellor and the Chief Secretary have asserted another. It is the duty of the Chief Secretary and the Treasury team to tell us what is the truth.
  Mr. Wainwright: I shall be willing to leave off in mid-sentence—I do not have Ministers' obsession with syntax—if the Chief Secretary decides to reply. It may stimulate his efforts if I remind him that the present Prime Minister said in 1977:
  "We pay the highest rate of income tax at the lowest level of income of any country in the EEC. That is the measure of Socialism—the effect on the poorer people of this country."—[Official Report, 29 March 1977; Vol. 929, c. 293.]
  Whether it is an effect of Socialism or Toryism, it is intolerable to Liberals that the whole basis of the Welfare State should be destroyed by making the poor pay for their own benefits. That is a principle which, given the opportunity by the British people, we shall reverse. It will undoubtedly be one of the first aims of an alliance Government to work towards a position where income tax would cease to be significant to anyone earning less than half national average earnings.
  I do not say that as a proud boast, because when I was first elected to the House, which is not that long ago, people needed to bother about income tax only if they were earning more than the full average wage. All that I am saying is that we would struggle to get back to a position where those on half average national earnings would not be subject to income tax.
  Mr. Harry Ewing: As the Chief Secretary has not accepted the hon. Gentleman's invitation to confirm or deny the figures that he quoted from table 9, does the hon. Gentleman agree that, for the sake of the record of the House and for the country, we must assume that the figures in the table are correct and that the Chief Secretary does not have the courage to admit it?
  Mr. Wainwright: That appears to be the position, but I never give up hope and I shall carry on, with the bare tolerance of the House, in the hope that the Chief Secretary will intervene in the next few minutes.
  The appalling thing is that all these miseries have been inflicted on the country when it is in an extraordinarily privileged economic position which no previous Government have had the good luck to enjoy. The Government do not have to worry about the traditional balance of payments crises that bedevilled the economic efforts of previous Governments of both parties.
  The Government have the incredible gift from Providence of North Sea oil, but all that they are using it for is to maintain an army of 3 million or 4 million in enforced idleness. Meanwhile, the country's physical assets are, in many cases, going to rack and ruin.
  Turning to other important matters, we had hoped that, in view of the appalling winter suffered by so many, the Chancellor would find it in his heart to reduce the gas tax. It is not widely known, but it is a fact, that the Government levy a tax of 5p on every therm extracted from the North Sea.
  Mr. Eggar: The hon. Gentleman was not listening carefully, nor has he read the briefing notes. The Government are reducing the gas levy by 1p a therm to ensure that industrial gas prices are kept down.
  Mr. Wainwright: Perhaps I was rash to offer to be interrupted in mid-sentence, because I am referring specifically to domestic gas prices. I referred especially to those who live in the colder and wetter parts of Britain and, more than ever, to those who live in substandard accommodation where they suffer from cold and damp. That the Government's tax on North Sea gas should bring about—there was no other cause—an increase of 23 per cent. in domestic gas prices from April to October last year is a scandal. It is no good trying to palm it off on the British Gas Corporation. It is a direct result of Government taxation. We had hoped to see a reduction in the rise of domestic gas prices.
  Another meanness in the Budget is the refusal adequately to uprate child benefit. Even if the Chancellor had been fair and considerate enough to increase child benefit by £1 , which was our proposal and that of many others, he would still not have returned child benefit to the purchasing power that it had when the right hon. Lady entered 10 Downing Street. To deny child allowances in that way seems peculiarly hard.
  The sad fact is that all the pratings about monetarism and the new economic outlook and the policy are making no lasting structural improvement either to our industrial relations or to our capacity for output. There may be temporary boons for some privileged people. Unfortunately, there are benefits for some if 3 million or 4 million of their fellow countrymen are idle, but there is no permanent improvement. Ministers are well aware that if ever, by some miracle, the economy is stoked up again and is working properly, we shall find that there has been no improvement in methods of restraining or bargaining over pay and no improvement in basic industrial relations and we shall be struggling to do all that with manifestly decaying industrial assets.
  This Budget will not benefit the real economy about which the Chancellor so often speaks. In desperation, many people who are over-taxed, with their real disposable income at 1978 levels, may be driven to the black economy. Only the black economy stands to benefit from this Budget, which we reject.
  6.22 pm
  Mr. Nicholas Winterton: I wish to raise only two or three points with the Treasury Bench. However, it is a good opportunity for an independent Back Bencher on the Government side to express approval of some aspects of the Budget and at the same time to express criticism of other aspects that he believes will be damaging to some sectors in industry.
  The hon. Member for Colne Valley (Mr. Wainwright), and the right hon. Member for Stepney and Poplar (Mr. Shore) who spoke for the official Opposition, were less than reasonable in their criticism of the Budget because, although I have described it as a modestly industry-oriented Budget, it has some extremely good features. My right hon. and learned Friend the Chief Secretary to the Treasury was correct to criticise the right hon. Member for Stepney and Poplar for failing to tackle the details of the Budget in his speech. I do not believe that the hon. Member for Colne Valley, who spoke on behalf of the Liberal-SDP alliance, reflected the views of many small business men and industrialists who have in the past 24 hours welcomed the Budget—even if it be only lukewarm welcome—because it is moving in the right direction. It would be wrong not to admit that much more ground must

  893
  be made up, but I hope that my right hon. and learned Friend does not accept all the criticism and believe that the Opposition feel that there is no good in what was announced yesterday.
  A matter close to my heart is the caning that the beer industry has had from my right hon. and learned Friend the Chancellor of the Exchequer. I declare an interest as non-executive chairman of CAMRA (Real Ale) Investments PLC. The House should be aware of the savage increases that the brewing industry has had to take by way of extra tax since the Government came to office. In the 1981 Budget my right hon. and learned Friend the Chancellor increased the tax on beer by almost 40 per cent., which was well ahead of inflation. That biggest ever Government increase added between 4p and 5p in Excise duty and VAT to the price of a pint of beer. Is my right hon. and learned Friend aware that the industry is a substantial employer? It employs tens of thousands of people not only in breweries but in pubs and off-licenses. In the past two years, as a result of increases in excise duty and VAT, the consumption of beer has gone down by 3 million pints a day. We have seen the effect of that on the revenue that the Government receive from the brewing industry.
  The beer drinkers' tax burden has almost doubled since the Government came to power. I warn my right hon. and learned Friend that he is in danger of throttling the goose that laid the golden egg. I appreciate that the increase this year might have been larger and perhaps we should be thankful for small mercies. However, in the way that this sector of the economy is being caned, there is a limit to the burden that it can accept. I hope that that message is taken well and truly on board.
  If we add to that the proposal that the licence fee for 5p and lop gaming machines will be increased in clubs and pubs, I assure my right hon. and learned Friend, sadly, that that will result in the closure of pubs in certain areas which currently operate only on a marginal profit. It will also create great problems for clubs. Perhaps again we should be grateful for small mercies in that the Government did not introduce an ad valorem tax on gaming machines. I am grateful for the attention that the Treasury paid to the representations that were made about that proposal.
  However, many areas are served by pubs that operate on a touch and go profit margin. The additional burdens could well drive those establishments out of existence, thereby creating a vacuum of facilities both in urban and rural areas. I hope that my right hon. and learned Friend will take that message to my right hon. and learned Friend the Chancellor so that he does not believe that this goose can continue to lay golden eggs. He will know from his returns that the amount of excise duty and VAT is down substantially and that his increase, although it may temporarily bring him additional resources, could well result in a fall in revenue from this sector of the economy.
  Having got that hot potato off my chest, may I say that the overall package of proposals for small businesses is warmly to be welcomed. The extension of some schemes announced by my right hon. and learned Friend the Chancellor last year, which have been promoted so brilliantly by the Under Secretary of State for Industry, my hon. Friend the Member for Norfolk, South (Mr. MacGregor), will pay handsome dividends to the
  894
  Government. Perhaps many of the little trees that have started to sprout from those acorns will produce the upturn in employment that Britain so desperately requires.
  It is interesting that the schemes announced by my right hon. and learned Friend the Chancellor, which are an extension of the new training initiative, the community workshops and the work scheme that featured so prominently in the Budget yesterday, were not mentioned by the right hon. Member for Stepney and Poplar today. It would be helpful if we could reduce the dole queue by 100,000, even if those people will be only moderately remunerated, in order to carry out worthwhile community projects. I sincerely hope that we receive the support of the trade union movement for this scheme, because it will give a meaningful purpose to work for many people who are at present out of work and who want to contribute in some way to the community and the economy.
  I want to raise one other point of substance, which was raised earlier. Would it not be possible for the Government to look again at the threshold at which those who are out of work through no fault of their own can draw supplementary benefit? It seems grossly unfair that people, particularly over the age of 50, who find themselves redundant—I repeat, through no irresponsible action of their own, but because of the economic problems of the country and, no doubt, of the industry in which they were working—should have to dig into their savings over £2,500 which they had put aside for retirement? It is a disincentive to thrift and saving, and it is an injustice which many Conservative Members hope will be rectified.
  Would it not be possible for the threshold to be raised to a figure closer to £5,000? It could be triggered so that when a person over 50 was made redundant compulsorily, he would be entitled to social security if his savings were £5,000 and no more. The figure at which a younger person would qualify for supplementary benefit could be accordingly lower. I hope that this matter can be looked at, and that the trigger sum of £2,500 will be reconsidered. There is a severe injustice here, and I hope that my right hon. and learned Friend will take note of what I say.
  I commiserate with my right hon. and learned Friend, because he has been caught slightly with his guard down in connection with the tax tables. Table 9 was mentioned by several Opposition Members. Since this Government came to power, let alone during the past 12 or 24 months, the average family man on the average wage has paid more tax, taking into account national insurance contributions. Perhaps I can help my right hon. and learned Friend. I have not raised the matter to be unhelpful. I hope that he will come clean in this connection, if that is the right expression to use, because the media are well aware of the situation, and certainly I, as a salary earner, am well aware of it. It would be wrong if the Government sought to mislead the House and the country in any way. This Government are committed during their term of office to reduce the overall burden of direct taxation.
  Mr. Robert Sheldon: In the request that the hon. Gentleman is making to his own Front Bench to give the figures, will he also take into account table 10? Two tables are involved, as I am sure he knows.
  Mr. Winterton: The right hon. Gentleman is speaking through me to the Chief Secretary on the Treasury Bench, who has perhaps got the message that both tables 9 and 10 should receive attention in the Government's winding-up speech.

  895
  I welcome the Budget, with some reservations. It is perhaps the first Budget that is moving towards reflation. It has given modest confidence to industry and commerce. It will ensure that industry can maintain its current work force. In 12 months' time, I hope, the desperate unemployment figures will slowly begin to come down. The various measures announced for small businesses and the energy package are most welcome. They will bring benefits to industry and commerce. However, it is only a start.
  I hope that the British work force, and particularly the trade union movement, will see a glimmer of hope for the future and continue to put in moderate wage demands, so that the economy which has begun to get off the ground can maintain the progress that it is making. Then, as the hon. Member for the Colne Valley said, all our people, whatever their position in life or salary, will benefit from the improvements in the country's economy.
  6.35 pm
  Mr. Tam Dalyell: By leave of the House, I wish to say a few words. Last night, in 15 seconds, I blurted out one sentence at 6.59 pm. In normal times, or at any time during the past 19 years that I have been a Member of the House, I would not make a narrow speech pertaining to the Budget. However, the situation is not normal—at least, I hope that it is not normal—in the constituency of West Lothian. Unemployment there is 24 per cent. Among young people, unemployment is now 40 per cent. in some areas.
  That brings me to column. 747 in the Budget speech. My purpose is to engage the interest of Ministers, and particularly of their civil servants, because in my view Treasury civil servants can do something about the situation before it is too late. I wish to bring to the attention of Ministers the proposed closure of MOTEC at Livingston. It was visited by a Select Committee of the House, my hon. Friends the Members for Newcastle-under-Lyme (Mr. Golding), Glasgow, Maryhill (Mr. Craigen) and Thurrock (Dr. McDonald), and also I believe, by a number of Conservative Members, some time ago.
  MOTEC of Livingston has a record of 1,500 apprentices, not one of whom has failed external City and Guilds examinations. In fact, it is the flagship of the road transport industry training board's training scheme. For a moment I shall address my remarks to Scottish Members of Parliament. I hope that the Scottish Whip, the hon. Member for Galloway (Mr. Lang), the hon. Member for Perth and East Perthshire (Mr. Walker) and all hon. Members representing the North of England realise that if Livingston is shut there will not be a skills testing centre north of Gainsborough. Livingston serves not only Scotland but the North of England.
  I excuse myself for raising this matter in the Budget debate by saying that, unlike Plessey, British Leyland and the International Synthetic Rubber Company, this is a problem of the North. Apprentices come to Livingston for their training from the whole area north of the Humber.
  Is it really value for money for the Chancellor to talk about help for small engineering firms? Is it sensible to spend money on the Services—in fact, I do not dispute this—for allowing youngsters to clamber over rocks, while at the same time closing a purpose-built centre which allows them to clamber over vehicles to considerable effect? I, as the constituency Member of Parliament, have
  896
  visited the facility on several occasions, most recently last week, and I have seen the purpose-built paint shop, the diesel fuel injection pump unit, again purpose-built, £4 million-worth of training machinery with special gadgets whereby faults can be picked out on special simulators, by apprentices. Moreover, there is £2 million-worth of land and buildings.
  I particularly welcome the presence of my hon. Friend the Member for Edinburgh, Central (Mr. Cook) on the Opposition Front Bench, because he knows the situation in Livingston, and he knows exactly what I am talking about. Is it not a crying shame that the road transport board should apparently make proposals—as it has done, because the letters of possible redundancy are actually going out—without the Under-Secretary of State for Employment knowing about it? I think that the Under-Secretary of State for Employment did not know that this was the proposal until I put down a parliamentary question.
  I am not scolding the Government. I am asking for help on behalf of the road transport committee at Livingston, the chairman of which is Alec Kitson. The local trade unions feel strongly on this issue. They are united with the management. The management has my admiration for having sweated for 10 years to build up this establishment to achieve something. The idea that it can be economically consolidated or merged with High Ercall on the Shropshire border is ridiculous. I have nothing against High Ercall—it has my regard—but it is a different kind of establishment from that at Livingston. Livingston is a craft engineering centre.
  I listened hawk-like to the Chancellor and heard him say that there was to be special help for small engineering firms. Among small engineering firms are many garages. The problem is that the levy has been cut. The Scots should be careful, for reasons that each one of us knows. A 44 per cent. cut in the grant for the road transport board throughout Britain means a 90 per cent. cut in Scotland. They can draw their own political conclusions from that. I will not go into it further.
  This is a valuable establishment which stands on its own merits. When the Government are getting into expenditure to help small employers, could not the Treasury consult the road transport board before it goes any further? Could it not ask its colleagues at the Department of Employment whether it is wise to go ahead with the sort of scheme outlined in column 747 with the right hand, and with the left hand pass by like a biblical Levite on the other side of the road and say that it is a matter for the road transport board, which must take its own decisions.
  The purpose of my speech is to plead with Treasury officials and Treasury Ministers to get in contact with their colleagues at the Department of Employment. They should prepare the Prime Minister for Question No. 4 next Thursday which asks her to visit Livingston. I am writing a long background letter to her because I do not believe that civil servants should waste their time wondering what open questions are about. They should brief the Prime Minister before then.
  The Government should consider the situation carefully before 13 April, when the transport board will be making a final decision. We do not want to see the closure of a firm which is precisely the kind of establishment which on their own definition the Government say they want to encourage, at the same time as other schemes which are

  897
  less satisfactory are set up in non-purpose-built premises. Ministers, particularly the Under-Secretary of State for Scotland who has come in to the House, presumably because he saw a Scottish MP's name on the screen, should interest himself in it. Action would be not just for me as a constituency MP but for every MP, regardless of party, north of the Humber.
  6.44 pm
  Mr. David Knox: The hon. Member for West Lothian (Mr. Dalyell) has just made a speech about a point obviously of great importance to his constituency. I hope he will not mind if I do not follow the detailed points he made. No doubt he will hear in due course from the Treasury about these matters.
  I have been critical of the economic strategy of the Government, and I still am, but it would be churlish not to welcome, and indeed commend, certain features of the Chancellor's Budget. First, I should like in his absence to congratulate my right hon. and learned Friend on the manner in which he introduced his Budget. His was a confident parliamentary performance. Despite the lengh of his speech, which was understandable in the circumstances, he retained the attention of the House throughout. He may not consider that I am being quite so complimentary if I add that his speech was also a highly skilful political performance.
  Several of the measures which were introduced deserve a particularly warm welcome. The increase in the retirement pension obviously comes to mind straight away, an increase which covers not only the projected rate of inflation but in addition the 2 per cent. shortfall in the past year. The Chancellor's decision to have second thoughts on the increase in other benefits should be warmly welcomed, as should his decision to exempt the mobility allowance from income tax.
  Although I do not think that my right hon. and learned Friend went far enough, I was pleased about the reduction in the national insurance surcharge, which is a step in the right direction to reduce industrial costs, to increase profits and to help slow down the increase in unemployment.
  The increase in personal tax thresholds is also to be welcomed. The failure to do so last year caused widespread resentment. The fact that the Chancellor has increased the thresholds by 2 per cent. more than the rate of inflation is all to the good.
  Although I welcome these aspects of the Budget, like my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), I think that the parts are better than the whole. Of course it is a much better Budget than last year's. Despite what the Chancellor may say, last year's Budget was deflationary. Despite what the Opposition may say, this Budget is not deflationary. Neither is it reflationary; it is a neutral Budget. At a time when we have 3 million people out of work and when there is massive under-utilised capital capacity in the economy, this is a mistake.
  This brings me to the central thrust of the economic policies of the Government over the last three years, about which I have the gravest doubts which remain unaffected by yesterday's Budget. I am not alone on these Benches in having these doubts. It would be surprising if I was, because the economic policies of this Conservative Government are very different from those of all the other
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  post-war Conservative Governments. We think of this particularly today following the tributes paid earlier to R. A. Butler, in my view by far the most successful Chancellor of the Exchequer since the end of the war.
  When the Government came into office in 1979 they claimed that the cause of the country's economic problems had been a failure to control the money supply and that if that was done all would be well. It was suggested that when the supply of money increased, prices rose, and that if the supply of money was controlled inflation would be eliminated and somehow everything else would fall into place.
  But that was always nonsense—first, because no one knows which measure of money supply should be used; secondly, because no one knows whether, the measure having been chosen, the actual quantity can be accurately determined; and, thirdly, because in any event the velocity of circulation of money cannot be controlled. Monetarism is therefore a policy based on shifting and dangerous sands. I had the impression yesterday, I hope not wrongly, that my right hon. and learned Friend was himself beginning to think that.
  Whether the money supply has been under control over the past three years, no one really knows. It will never be known, and it does not matter very much. What matters is that in the past three years the Government have pursued a policy of severe deflation. The results have not been tremendously successful. Unemployment has risen from 1·3 million to 3 million. We have permanently lost a great deal of industrial capacity through bankruptcies, many of them of firms that were very efficient. Manufacturing output has fallen by about 20 per cent. Despite all the claims about increased productivity, manufacturing output per head is up by only 1 per cent. since the Government came to office. Despite the fact that a reduction in the rate of inflation has been the principal aim of the Government's policy, it is today at about the same level as it was when they came to office, and projections suggest that it will remain for some time at a rate considerably above the post-war norm.
  I believe that the reason for the lack of success has been a faulty analysis of our economic problems and in particular of the problem of inflation. There are two kinds of inflation—demand-pull inflation and cost-push inflation. Unfortunately, the Government have not distinguished between the two, which call for different policies to right them. Indeed, in answer to an oral question of mine on 30 April last year, my right hon. and learned Friend said that it was not "elucidatory" to make such a distinction. I take a different view.
  Demand-pull inflation occurs when total effective demand for goods and services in the economy as a whole is in excess of supply potential. As total effective demand has fallen short of supply potential since 1966, the British economy has not suffered from demand inflation for quite a long time, and it certainly is not suffering from it now, yet the deflationary policies of the present Government, and of the last Labour Government, have been geared to reducing demand inflation.
  Cost inflation, on the other hand, takes place when income costs rise faster than output; when indirect taxes and excise duties are increased; or when import prices rise.
  There is not much that we can do about increases in import prices. It is regrettable, and often politically unwise, when Governments add to cost inflation by increasing indirect taxation and excise duties. But the main

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  type of cost inflation that this country has suffered, not only during the past three years, but for a considerable time, is income cost inflation. This has been caused by wages and salaries rising faster than increases in output. In the battle against inflation it is this to which the Government should have directed their attention during the past three years and before, rather than the deflation of demand.
  Some people argue that income cost inflation exists only in conditions of demand inflation, but that presupposes that we have a perfect market for labour. Clearly we do not, for a number of reasons. First, no one has a complete knowledge of the labour market or job opportunities, nor is there complete knowledge of availability of workers. Secondly, no one has sufficient skills to do all jobs. Thirdly, mobility of labour is hindered by factors such as housing and children's education. Fourthly, and far and away most important, the labour market is distorted by monopolistic forces of trade unions and professional bodies. That means that those monopolistic forces can demand and obtain wage and salary increases which are not necessarily related to the demand for labour, either in general or in specific areas.
  That is the main cause of Britain's inflation problem over the past 15 years. How can it be tackled? There are three ways. First, we could deflate the economy to the point where unemployment reached such a level that overall wage and salary increases would be in line with increases in output. That would mean that members of strong unions would still secure increases and members of weak unions and non-unionists would have reductions in their wages. But the level of unemployment at which that would be achieved would certainly be higher than the present 3 million, and therefore would be totally unacceptable for economic and political reasons.
  Secondly, we could tackle income cost inflation by attacking directly the monopoly power of trade unions and professional bodies. I would reject that course, as it clearly is not within the bounds of practical politics in the foreseeable future, and it would result in social unrest. In the longer term there may be something in that argument, but in the short term it will not be very helpful.
  The third way would be to return to an incomes policy, which seems to me the most acceptable course—or perhaps I should say the least unacceptable course. Of course, an incomes policy will not provide a perfect solution. Of course, it has severe disadvantages, but I know of no perfect solution to any problem, nor do I know of any policy that does not have disadvantages. I also know that the incomes policy of my right hon. Friend the Member for Sidcup (Mr. Heath) restrained income increases considerably during 1972–73 and that the Labour Government's incomes policy had a similar effect from 1975 to 1978.
  I readily accept that at present it would not be easy to introduce an incomes policy and obtain the necessary consensus, but the sooner we start to look for such a policy, the better for everyone. I am convinced that if it were put squarely to the people that an incomes policy that was universally accepted and observed would mean lower unemployment, they would embrace the concept with considerable enthusiasm.
  I have no doubt that the principal problem facing the country today is the level of unemployment. We all know the devastating effect of unemployment on our society in the 1930s. Although unemployment today does not result
  900
  in the same economic deprivation, it is doing great social damage. The feeling of not being wanted or needed has undoubtedly embittered many people, especially young people. It has alienated them not only from the mixed economy, but in some cases from democracy itself.
  As in the 1930s, today's unemployment has already adversely affected the quality of the lives of many of those concerned. The effect will stay with them all their days. Today's unemployment has undoubtedly damaged the cohesion and stability of our society. Immediate action is required to halt the increase and then reduce the level.
  Although in my view a neutral Budget—I think this is a neutral Budget—will stop the rise in unemployment after a certain time lag, it will do nothing to reduce unemployment. That is why the Budget should have been reflationary. That is why it should have aimed to increase the demand for goods and services and so in turn increase the demand for labour
  The degree of reflation should have been of the order suggested by my right hon. Friend the Member for Chesham and Amersham—£5 billion to £6 billion. Of course, this sounds a lot but it is really a very moderate amount. We have spare capacity in the economy today of about £40 billion. Trying to take up £5 billion to £6 billion of that in the coming year is scarcely irresponsible. Indeed, it would take seven years of expansion at this rate to use up all the spare capacity and, of course, by then there would have been a further increase in capacity.
  I have no desire to be dogmatic about the nature of the reflation I would have liked to see, except that I would have preferred to see it in the form of tax cuts rather than increases in Government expenditure. There is a strong case for a larger reduction in the national insurance surcharge. If it had been reduced further, it could have made a greater contribution than the Chancellor will make to the reduction of industrial costs, increase of profits and reduction in unemployment. In addition, I should have liked to see a reduction in VAT, which would have had a beneficial effect on the retail price index and in turn, one would hope, on wage and salary increases. It would have helped to increase the demand for consumer goods and so increase living standards and reduce unemployment.
  Some people argue that British industry is too inefficient to cope with such a rise in demand and that it would merely lead to an increase in imports. I am surprised to find that those who use that argument often in the next breath say that British industry is leaner and fitter than it has been for years. That apart, while accepting that there may be some risk in such a policy, the longer we put off the expansion of consumer demand, the greater will be the risk. If we cannot take risks of this sort now, when we have North Sea oil, we will never be able to do so.
  If a reflation of about £5 billion to £6 billion had been introduced in this Budget, as I have implied already, it would have had to be accompanied by some form of incomes policy. We are told today that there is a mew atmosphere and new attitudes in industry. Therefore, presumably, the time is right for the start of talks between Government and all interested parties with a view to getting some sort of consensus on income increases. After all, that was suggested in the manifesto we produced at the last general election.
  Even if we do not have reflation, there is surely a case for pursuing such a policy which can only be in the

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  interests of Britain; if we have a greater understanding of these issues and if there is a new atmosphere in industry, surely now is the time to cash in on this.
  7.4 Pm
  Mr. Bruce Douglas-Mann: I congratulate the hon. Member for Leek (Mr. Knox) on what was undoubtedly a very brave speech. I substantially agreed with his analysis, although I felt that his conclusions, on the scale of the increase, level of demand recommended and the direction to which it should be applied, were inadequate. I agree that it is possible to eliminate the waste in our economy, in unemployed people and resources and to engage all these capacities for the benefit of the entire society. However, concentrating it on reductions in taxation rather than public expenditure is not the right way.
  The hon. Gentleman said that this was a neutral Budget, but I ask him to look at the public expenditure White Paper. The Government have changed their manner of presentation of figures from a presentation in real terms at constant prices to a presentation in cash terms. When one considers the last page of the second volume of the White Paper, one discovers that in order to convert figures in the 1981 White Paper into the figures appearing in the current White Paper, one must add on 41 per cent. The hon. Gentleman will discover that a great many of those things presented as being increases and improvements in the contribution to particular industries turn out to be reductions in overall expenditure. He is wrong in thinking that this is a neutral Budget. He will find, in practice, that the Budget will increase unemployment and is a deflationary rather than a neutral Budget.
  I was anxious to speak to express my vehement disagreement with the economic strategy being pursued by the Government, and also to explain why I found it necessary to leave the Labour Party. I relate my remarks particularly to the speech of the right hon. Member for Stepney and Poplar (Mr. Shore) today, to his speech on 28 January and to the economic package he recently presented. I listened with great interest and enjoyment to the right hon. Gentleman's analysis of the Government's policy and I also had little sympathy for the Chief Secretary to the Treasury when he was wriggling and blustering on the hooks of the shafts which the right hon. Gentleman had directed at him in his analysis of the dishonesty and incompetence of the Government's approach to management of the economy.
  I had, however, sought something more constructive in the right hon. Gentleman's speech; to indicate how, were a Labour Government to be returned to office, they would be able to deal with the problems of unemployment and restore the economy to a state of which I believe it is capable. This country should be a leader rather than a follower—a provider rather than a supplicant in world economic circles. However, I found little or nothing. He has said practically nothing today on that subject but we have the benefit of the economic package that he presented last week, and of his speech on 28 January.
  I left the Labour Party because of my commitment to a rapid reduction in unemployment, to a large increase in public spending in order to restore public services to their former levels and then to a continuing improvement from
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  that base. My commitment on such matters is too great for me to remain in a party whose economic policies have a guarantee of failure built into them.
  I agree, of course, that the Government's policies are built on the assumption of a level of unemployment that I regard as degrading for those affected, destructive of our economic future, inhumane and totally unnecessary. They also deprive everyone in Britain, apart from the very rich, of adequate health, housing, education and other services that we all need. They prevent us from playing the part we should be playing in alleviating world poverty.
  Mr. John Townend rose—
  Mr. Douglas-Mann: I will give way in a minute. We should play our part in alleviating world poverty and averting the threats of world starvation. There is a better way of dealing with this and it is not that adopted by the Labour Party or, indeed, the Conservative Party.
  Mr. John Townend: Does the hon. Gentleman believe the statement he made about health when this Government have increased nurses by 22,000, increased spending on the Health Service in real terms by 5 per cent. and reduced the waiting lists by over 120,000?
  Mr. Douglas-Mann: I do not accept that. The hon. Gentleman is no doubt better informed on the overall figures but I suspect, when one comes to a detailed analysis, that those figures will not bear out what is asserted. I am very conscious that the waiting lists are growing. Hospitals in my constituency, such as the Cumberland hospital, which had a valuable service, are being closed. Families wishing to visit elderly relatives must travel further and further, and the whole quality of service in the Health Service has deteriorated remarkably during the Government's period in office.
  Mr. Tom Benyon: I endorse every word that my hon. Friend the Member for Bridlington (Mr. Townend) said. There are many things wrong with the Budget, but it is not right for the hon. Gentleman to misrepresent the reality of what the Conservative Party has done. One of our major successes is on health. I totally endorse my hon. Friend's figures and one must not misrepresent, by using a little local problem which might be of concern in one's constituency, the national position.
  Mr. Douglas-Mann: I do not pretend to be an expert on the Health Service. If hon. Gentlemen wish to ask me about housing figures, I will debate them.
  However, I receive a great many complaints from constituents and from everyone involved in the Health Service. Doctors plead with me to use my influence in the House—little as it is—to prevent the destruction of the more valuable aspects of our Health Service and to ensure that we sustain the standards of education and higher education in the health service. Everybody that I speak to says that the situation is deteriorating, is dangerous and is alarming.
  I return to the main thrust of my speech, which concerns the Labour Party's economic policies and the prescription that we are invited to believe will be presented if the Labour Party is returned to power. The Labour Party's economic policy is based on a massive injection of demand into the economy. I certainly agree with that. However, I do not pretend to be capable of as fine an economic judgment as to know whether the sum should be the £9,000 million mentioned by the right hon. Member for Stepney

  903
  and Poplar in his economic package, the £8,300 million advocated by the TUC in its programme for recovery, or the £6,000 million referred to by the right hon. Member for Crosby (Mrs. Williams) in her speech in the House on 27 February. However, I suspect that the figure mentioned by the hon. Member for Leek and recommended by the right hon. Member for Chesham and Amersham (Sir I. Gilmour) is inadequate to cope with the problems, for the reasons that the hon. Member for Leek suggested: it will take seven years to absorb the wasted resources.
  Mr. Knox: Does the hon. Gentleman accept that, if we started off with that figure, we could increase it in subsequent years? It would be dangerous to move too quickly too soon.
  Mr. Douglas-Mann: I accept that. It is a question of fine economic tuning rather than fundamental judgments about the direction in which the economy will move. However, all of those whom I have mentioned agree that we should move towards a substantial reflation of demand. I agree with the hon. Member for Leek that our problems have stemmed from income cost inflation rather than demand inflation. I believe that we need a substantial increase in demand.
  Suggested figures for the level of increase have been given from several quarters, and most of them have been fed, on various assumptions, through the Treasury model. On certain assumptions, the larger figure mentioned by the right hon. Member for Stepney and Poplar and by the TUC would not necessarily involve massive inflation. However, a prediction from the Treasury model about the effect on the economy of an additional £1,000 million cannot necessarily be multiplied by eight to ascertain the effect of a £8,000 million injection. Therefore, I am inclined to keep within the lower rather than the upper band of the scale, at least in the early years.
  The Labour Party's strategy is based on assumptions that are incapable of realisation. The last Labour Party conference reaffirmed its commitment to free collective bargaining, and to the rejection of any form of incomes policy by an overwhelming vote of acclamation. A minority no doubt dissented, but none of those who disagreed dared to demand a vote, because they knew well that their support in such a vote would be derisory.
  In a speech on 28 January, the right hon. Member for Stepney and Poplar said:
  "I fully understand the danger of inflation which will then be created. It is a challenge that we must meet and overcome with the aid of a tax policy, a price policy, and a national understanding, to which reference has been made, with the trade unions."—[Official Report, 28 January 1982; Vol. 16, c. 1022.]
  The right hon. Gentleman knows as well as I do that if demand is rapidly increased, with no control over money incomes, in the period before our industries can increase their output of goods and services to satisfy that demand, the money will be spent in two ways. First, it will force up the prices of goods and services and, secondly, it will suck in additional imports.
  The Labour Party's answer to the second point is import controls, coupled with a commitment to cut ourselves off from the EEC, which provides a market for about 45 per cent. of our exports. The Labour Party has no answer to domestic inflation other than price controls. I have no objection to controls on profiteering, but price controls, with growth in money incomes unchecked, will inevitably lead to rationing and to black markets that are enforceable only in a rigidly controlled economy.
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  Of course, I recognise that the right hon. Member for Stepney and Poplar would like to reach some new form of social contact with the unions and to establish a voluntary incomes policy. Indeed, he implied as much on 28 January. However, even if the union leaders wished, in those circumstances, to deliver—understanding, as most of the more informed of them do, that only an incomes policy will make possible the expansion of the economy that their members so badly need—they will be unable to deliver. It must be remembered that control of much of the middle hierarchy of the trade unions has been seized by unrepresentative militant activists, in much the same way as control of many constituency Labour Parties has been seized.
  I opposed the Government's Employment Bill and disagreeed with many of my hon. Friends in the Social Democratic Party in doing so. I concluded that on balance the harm that that Bill would do outweighed its benefits. However, I would support legislation that made the trade union structure more democratically representative, but, I very much doubt whether we shall see such legislation before the next general election. Such a change will certainly not take place if the Labour Party wins that election.
  If the Labour Party won the next election and the right hon. Member for Stepney and Poplar became the Chancellor of the Exchequer, he would face a trade union movement, the bulk of whose branch and district officials were implacably opposed to co-operating in any form of voluntary incomes policy. Even if the right hon. Gentleman, in desperation, and with a majority in the House, were to turn to the threat of a statutory incomes policy—whether in the form of an inflation tax, as I would favour, or any other—he would find that his hon Friends would be unwilling to carry it through.
  If the Labour Party were to gain a majority in the House in the next Parliament, the political complexion of the Parliamentary Labour Party would scarcely bear contemplation. The candidates being selected now for seats that the Labour Party will have to hold or win if it is to succeed at the next election are, on balance, much more likely to support the views of the right hon. Member for Bristol, South-East (Mr. Benn) than those of the right hon. Member for Stepney and Poplar.
  Mr. Michael McGuire: On a point of order, Mr. Deputy Speaker. Are we discussing the Labour Party and its internal politics, or the Budget?
  Mr. Douglas-Mann: We are discussing the Government's policies and those presented by the Opposition. We are also discussing whether the Opposition would be able to carry into effect any of its policies. As I have said, their policies have a built-in guarantee of failure. It is perfectly in order for me to elaborate on whether proposals put by the Opposition are likely to succeed. Whether the Opposition have a credible alternative is directly relevant to the Budget and to the economic situation. If the official Opposition have no credible alternative, we must search for other policies. The policies that I advocate will, I hope, provide a solution. We must consider what is happening within the various parties. Indeed, the press has told us today that the wets have been defused as a result of the smokescreen that the Chancellor of the Exchequer put up yesterday. However, I was pleased to note that the hon. Member for Leek was not completely satisfied.

  905
  I fear that the Parliamentary Labour Party—which has, until now, been the bulwark against the unthought out extremism of the resolutions hurriedly passed through Labour Party conferences—would find that that bulwark had disappeared if the Labour Party were to return to power.
  Whether the right hon. Members for Ebbw Vale (Mr. Foot), Stepney and Poplar, Birmingham, Sparkbrook (Mr. Hattersley), Manchester, Ardwick (Mr. Kaufman) or other hon. Members on the Opposition Front Bench wish to remain as nominal leaders of a Parliamentary Labour Party which fairly accurately reflected the current attitudes of recent Labour Party conferences is a matter for them to judge. I am glad to be out of their dilemma.
  They are also committed to policies on import controls which must have extremely damaging effects not only on world trade and on our export markets but on the economies of Third world countries. They are committed to leaving the European Economic Community, which will cut off the market for a large part of our exports and destroy our farming industry, because at present Britain is 75 per cent. self-sufficient in food. The Labour Party's own research group concluded that if we are to avoid having crippling subsidies to our farming on leaving Europe—
  Mr. Michael McGuire: On a point of order, Mr. Deputy Speaker. I realise that men with greater knowledge of the rules of the House sitting directly in front of you will guide you, but I cannot see how labouring this point about Labour Party policies and some of the difficulties we have is relevant to a discussion of the Budget. I appeal to you to call the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) to order and ask him to concentrate his remarks on the Budget.
  Mr. Keith Best: Further to that point of order, Mr. Deputy Speaker—
  Mr. Deputy Speaker: Order. I shall deal with one point of order at a time. We are having a debate about the Budget. The hon. Gentleman was commenting on—
  Mr. Michael McGuire: The Labour Party internally.
  Mr. Deputy Speaker: —a speech that he had heard and there appears to be nothing out of order.
  Mr. Best: Further to that point of order, Mr. Deputy Speaker. Is it not in order to talk about policies of a party that might become the future Government? If the hon. Member for Ince (Mr. McGuire) thinks that that is inconceivable, I accept that it might be out of order.
  Mr. Douglas-Mann: The hon. Member for Anglesey (Mr. Best) has made the point that I was hoping to make. If the Labour Party no longer considers itself to be a credible alternative Government, perhaps my points are irrelevant.
  We must work on the assumption that the case presented by the official Opposition would be presented to the country and carried into effect if enough Labour Members of Parliament were elected. If the Labour Party were to take Britain out of the European Community it is acknowledged within its own discussion groups that it would be necessary to reduce the output of food from
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  British farms by a third. Instead of being 75 per cent. self-sufficient in food, Britain would then be 50 per cent. self-sufficient. That means that we would be competing in world markets in a hungry world for food that we could be producing ourselves.
  Mr. Michael McGuire: It is an agricultural debate now.
  Mr. Douglas-Mann: If we add to that the virtual repudiation of the NATO Alliance, we have a picture of a Britain totally friendless with soaring inflation and disastrous balance of payments troubles. It is not surprising that Mr. Patrick Wall and his Militant Tendency friends who did not make his mistake of breaking cover before being endorsed by the national executive as Labour Party candidates say that revolution and the seizure of arbitrary power which will bring to an end parliamentary democracy as we have known it is the only answer.
  They are right. Under the Labour Party as it stands, and is likely to stand at the general election, revolution is the only way to keep out of the hands of the International Monetary Fund and another bout of deflation and unemployment.
  Mr. Michael McGuire rose—
  Mr. Douglas-Mann: The hon. Member for Ince is trying to intervene, but my points are directly relevant to the alternative economic policy presented by the Labour Party. If that policy is not capable of being carried into effect without either running the country into enormous inflation and the effects Britain experienced in 1976 or the breakdown of parliamentary democracy, it is properly debatable in the House in the context of the economic policy that Britain is to pursue.
  If either of those results were to come about—I fear that they would be likely—how could we help solve the problems of world poverty to which the Brandt commission has pointed us? Neither the revolutionaries—
  Mr. Deputy Speaker: Order. I am not sure that the Brandt commission appears anywhere in the Budget documents.
  Mr. Douglas-Mann: With respect, Mr. Deputy Speaker, there are figures in the public expenditure White Paper for the overseas aid contribution that Britain makes to the rest of the world. That forms part of the Budget. The contribution that we can make to the finances of the Third world, and to trade within the Third world, is relevant to the state of the British economy.
  As has been repeatedly pointed out, the state of the British economy cannot be isolated from the state of the world economy. In the interests of both Britain and world peace, it is important that the entire world economy should be stimulated. It is unlikely that we shall get such a stimulus either from the present Conservative Government, who have completely ignored the recommendations of Brandt, which are central to economic policy generally, or from the bulk of the Labour Party, which seeks to replace them.
  There is a very much better way than that presented by either the Conservative Party or the Labour Party. As the hon. Member for Leek (Mr. Knox) said, we need a substantial expansion of the economy. I wish to see the bulk of that go on public expenditure in our social services,

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  particularly housing, construction, education, the restoration of our industrial infrastructure and the generation of new investment funds.
  Incidentally, among more radical measures, I should like to see the use of the ideas promoted by the hon. Member for Surrey, North-West (Mr. Grylls). But these must be coupled with a policy to ensure that the additional funds released use assets that are presently being wasted—the 3 million people unemployed, the empty factories and the disused quarries and brickworks. All those resources are going to waste as a consequence of the Government's deliberate action.
  There is a desperate need for a vastly increased programme of public expenditure. Housing is only one example, and it is one on which I shall be happy to accept a challenge from Conservative Members. It is an issue on which the Secretary of State for the Environment has repeatedly refused to make any assessment of the extent of the need. Day after day in my constituency I see the extent to which the Government are failing to meet the housing needs of ordinary people.
  Only the other day, I met a constituent who is a single parent with two children, one aged 2½ and the other two weeks. All three share one bedroom, with no bathroom, no hot water, and an outside lavatory in a flat that is damp and smelling of mould. That constituent complained of slugs in both the lavatory and the kitchen. She has 32 points on the housing list, but requires 42 points to have any prospect of being rehoused. She will accumulate one point a year, and would have to wait ten years for the chance of rehousing were it not for the fact that the children are of opposite sex and that after a certain period there will be additional points for overcrowding.
  It is an utter disgrace that a country such as ours, with relative wealth, should condemn people to such living conditions, with little prospect of their emerging from them. Such a problem is unlikely to be remedied as a result of the housing figures contained in the public expenditure White Paper, nor will this disgrace be alleviated by the changes announced in the Budget.
  If one analyses the public expenditure White Paper and relates it to the figures issued by the Select Committee on the Environment as to likely housing output as a consequence of the figures published last year, and adjusts the figures to take account of the inflationary changes that have taken place, one will find that the probable output will be down rather than up.
  Every hon. Member could add his own details to the catalogue of defects and deterioration in our public services. The Government and the Labour Party alike are crippling themselves from solving those problems. That is why the only hope lies in the Social Democratic and Liberal alliance.
  7.29 pm
  Mr. Tim Eggar: I hope that the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) will forgive me if I do not follow his mea culpa or if I refrain from joining in the fratricidal battle. We must be grateful for one thing. The hon. Gentleman does not appear to think himself capable of entering into the economic battle and argument that is likely to take place in his party and between the two parties of the alliance. After his contribution tonight, I look forward with renewed confidence to the by-election that will take place shortly in his constituency.
  908
  Yesterday we witnessed the first political Budget that my right hon. and learned Friend the Chancellor of the Exchequer has introduced. I welcome that. I do not criticise it. We were elected to exercise political judgments, not to take part in economic experiments. Sometimes I feel that we have forgotten that.
  I notice from the national press today that my right hon. and learned Friend has succeeded in pleasing most of my hon. Friends. We can all pick out certain proposals in the Budget that give us great pleasure. I notice also that neither the wets nor the dries, in popular press parlance, are able to claim a great victory. There is not enough reflation for one group, and the other group has not fully realised that the medium-term financial strategy is destined for oblivion.
  I welcome the Budget because of the broad way in which it has approached the problem. I shall pinpoint four detailed measures that I particularly welcome. The first is the continuation of 100 per cent. capital allowances for teletext television sets. That will be of help to the indigenous television manufacturing industry, particularly to Thorn, which is a major employer in my constituency.
  Secondly, I welcome the increase in mobility allowance. We have a fine record in that area. I welcome the decision to make mobility allowance non-taxable for disabled people in work. That is the sort of incentive and help that we should give to these unfortunate people.
  Thirdly, I welcome the changes in the North Sea oil taxation system. The House has probably underestimated the damage that the Government have done to the level of North Sea exploration and development as a direct result of their taxation policies. I shall look carefully at the detailed proposals to see whether the changes that have been announced give enough assistance to companies that are trying to develop marginal and satellite fields.
  Finally, I welcome the closing of the tax avoidance loopholes that can arise through the leasing of various sorts of items. I declare my interest as a banker. I regret having to say that I believe that the major United Kingdom banks have seriously abused the leasing system over the past year. I can only comment in their defence—if defence is needed—that the decision of my right hon. and learned Friend to impose the windfall profits tax last year was unacceptable and un-conservative in its origins. However, I trust that my right hon. and learned Friend and the banks will come to a reasonable agreement about the level of taxation that banks should pay next year, because I recognise that they cannot go on making the profits that they have been making without making a higher contribution to the national Exchequer.
  As welcome as those four measures are—and there are others that I support—they are insignificant when compared with the broader macroeconomic picture. As my right hon. and learned Friend made clear yesterday, Britain is unable to isolate herself from world economic forces. We must accept that. Our industries' output, productivity and so on are inextricably linked to the level of world trade. I feel strongly that the level of world trade will be influenced more by factors such as the level of oil prices than by any action that the Government might take. Equally, I feel that the level of interest rates in this country, despite all that has been said, will be influenced more by the level of world interest rates, particularly United States interest rates, than by any action that we may take internally on the PSBR or in any other way.

  909
  The day after the Budget it is perhaps all too easy to overestimate our ability to control our economic destiny. We must always remember that in this country we are completely at the mercy of world economic forces. We can only temper those forces. We cannot divert them in any way.
  My right hon. and learned Friend's speech contained two major decisions. I beg to differ from the first, but I generally welcome the second. My right hon. and learned Friend would have been fully justified in aiming at a higher PSBR than the one that he chose. I should have gone for a figure between £10·5 billion and £11 billion. I say that in full knowledge that, if we compare this coming year's PSBR on a similar basis to last year's, the true level of the PSBR is more like £11 billion than £9·5 billion. That £1·5 billion difference arises, first, because of the £1 billion worth of taxes that should have been collected last year, but will go to reduce the PSBR next year, and, secondly, through what I believe to be a deliberate underestimate of the amount of money that the Government will receive from asset sales.
  To a certain extent I agree with my hon. Friend the Member for Leek (Mr. Knox). We cannot deny that we are suffering from a lack of demand in the economy. There are many successful firms in my constituency which have invested and have done everything that we say they should, but which are still operating at 70 to 80 per cent. of capacity. That is for one reason only—a lack of demand.
  An increase in the PSBR of a further £1 billion to £1½ billion would help. That should have been done through a further reduction in the national insurance surcharge, through higher personal tax allowances and additional help to the construction industry. That £1 billion to £1½ billion would have had a beneficial effect on the level of demand and output without leading directly to inflation. I noticed with interest this morning that Dr. Alan Budd, who is recognised by many as one of the leading advocates of monetarism, supported my broad line of argument and admitted that he would have liked a higher PSBR.
  I make my argument with some reservation and concern, because I recognise that the economic growth that my right hon. and learned Friend predicts at 1½ per cent. is, to say the least, fragile. It is based almost entirely on the assumption that there will be an end to destocking and an increase in restocking. The decision on stocking levels is taken by many business men at different levels throughout the economy. Their decision on whether to restock will depend crucially on the level of confidence. A slightly more expansionary budget would have increased confidence. However, I must admit that a higher PSBR might mean higher interest rates, which might increase the cost of carrying stocks and decrease confidence.
  It is worth spending a little time on the argument about the inter-relationship between the PSBR and interest rates, because it is crucial. If all things were equal, clearly a higher PSBR must inevitably lead to higher interest rates, but there is only one certain thing in economics, and that is that all things are never equal for more than about a second at a time. So, to say the least, the correlation is not exact. The empirical evidence points out clearly that our interest rates are influenced far more by the level of world interest rates than by the level of the PSBR.
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  I recognise that this is a matter of fine judgment. There is no absolute right and there is no absolute wrong. The Chancellor has access to many more details and information than I have, and in the last analysis one has to bow to his judgment in this matter, although I state my preference clearly.
  A second and more welcome decision that my right hon. and learned Friend took yesterday was much more important, and much more surprising. It can be expressed in seven letters, RIP MTFS—rest in peace the medium-term financial strategy. It was given a courteous but rather brief funeral yesterday. There is no doubt that the funeral oration was lacking. We have to remember that it was my right hon. and learned Friend's sacred belief in the importance of controlling sterling M3 that led to many of the decisions on interest rates and exchange rates that gave us so much difficulty in the past couple of years.
  It may have escaped the notice of the House that monetary policy was given less time in the Chancellor's speech yesterday than the section that he devoted to tax havens and company residence. He glossed over it and consigned it to the realms of technicality. It is worth quoting what he said:
  "I propose next to describe to the House how monetary policy will operate in the year ahead. I shall, nevertheless, do so as briefly as I can. The technically-minded will find ample solace in the lapidary prose of the Red Book."—[Official Report, 9 March 1982; Vol. 19, c. 732.]
  That is rather extraordinary when we remember that this time last year monetary policy was the cornerstone of the Government's economic policy.
  Mr. D. N. Campbell-Savours: The hon. Member voted for it.
  Mr. Eggar: I did what my right hon. and learned Friend suggested. I went to the Red Book and found that it says in paragraph 2.14:
  "The path shown in Table 5 applies to both broad and narrow measures of money: £M3, (and PSL2), and Ml."
  In other words, sterling M3 has been ditched as the sole important aggregate. It goes on:
  "The target for 1982–83 implies a significant reduction in recent rates of growth of the wide aggregates. It has been set above the illustrative range for £M3 shown last year"—
  because they could not reach it—
  "to reflect the changes to savings behaviour and the institutional developments discussed above. The ranges for 1983–84 and 1984–85 will be reconsidered nearer the time."
  In other words, this is now a moveable feast and the Government will decide what measures they want, when they want them and when it happens to suit them. I do not regret that, but it is a significant change.
  Later on, in paragraph 2.16 the Red Book says:
  "Interpretation of monetary conditions will continue to take account of all the available evidence, including the behaviour of the exchange rate."
  In other words, we have seen in the Chancellor's speech—and this has not been adequately picked out by the press this morning—a dramatic and significant change of policy.
  Mr. John Maxton: Does the hon. Gentleman welcome it?
  Mr. Eggar: I welcome that change, in answer to the hon. Member for Glasgow, Cathcart (Mr. Maxton), because sterling M3 is regulated in importance, pragmatism has won the day and yesterday we saw the triumph of experience over expectation.

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  The control of the monetary aggregate is no more important than it ever should have been. It is a necessary but not a sufficient tool of economic management. I recognise, as do many hon. Members on both sides of the House, that a modern economy cannot be run without using both monetary and fiscal measures. They have to go together. To put one up as of overriding importance, as we did with sterling M3, is a mistake and I welcome that this has been admitted.
  Despite everything that has been said in the Budget, and everything that I have said, the most pressing problem that our country faces is that of the level of unemployment. Some of the measures announced yesterday, when combined with the new training initiatives, will help. They put the lie to the accusation from Labour Members that we do not care about unemployment. We have done more for the unemployed than they ever did. We should be happy and proud to admit that.
  Having said that, we should not rest on our achievements. We should constantly be looking for new ways to help. Above all, we must not deceive people into thinking that there is any real hope of a significant reduction in unemployment over the next 18 months. Whatever the economic policies put forward by either the Labour Party or the Conservative Party, if any of us pretend that we can, from this place, significantly reduce unemployment in the short term, we are exercising a cruel and vicious deception on the British people.
  Nothing that the right hon. Member for Stepney and Poplar (Mr. Shore) says can surprise me. There are no depths to which he is not prepared to sink. But I find it surprising when I listen to the arguments from the other Opposition parties, particularly the SDP, that there are those who find the economic policies suggested by the right hon. Member for Crosby (Mrs. Williams) rather beguiling. She is absolutely economically illiterate. Anyone who can claim that she can create 1 million more jobs in two years for an extra expenditure of £5 billion a year is more of a magician than an economist. I cannot believe that the British people will be foolish enough to fall for that line.
  I am sorry that the hon. Member for Gateshead, West (Mr. Horam) is not here, because I feel rather sorry for him. He has tried valiantly to put forward a coherent economic policy on behalf of his party and he has been bounced, for that is the word, by the populism and the economic illiteracy of the right hon. Member for Crosby.
  I suspect that in a few weeks, or even months, the Budget will have disappointed the hopes of some of its most vocal supporters. I suspect that it may improve output marginally and have some impact on slowing down the growth in unemployment, but the fundamentals will not have changed. That is not because of the content of the Budget. They would not be any different, whatever the economic policies in the Budget. The fundamentals will not have changed because the lessons of the last 20 years are clear. Government economic policies can do very little in the short to medium term to achieve those ultimate aims that we so much want—full employment and higher output. Those must be our aims. We should not deceive ourselves that the Government can really influence them.
  7.50 pm
  Mr. John Maxton: The acceptance and almost delight of the hon. Member for Enfield, North (Mr. Eggar) in seeing the medium-term
  912
  economic strategy of the Government deserted is remarkable considering that he has never voted as far as I am aware against a previous Budget presented by his right hon. and learned Friend. I do not see why he welcomes it so grandly when he might have shown his opposition in the past by voting in the Lobbies against the monetarist policies that he now condemns. The hon. Gentleman told the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) that he was awaiting with some delight the by-election in that constituency. I should like to say that following the result of the by-election in Glasgow, Hillhead on 23 March it is unlikely that there will be a by-election in Mitcham and Morden.
  Mr. Douglas-Mann: Would the hon. Gentleman care to have a word with his right hon. Friend the Opposition Chief Whip to whom I have written inviting him to discuss when a by-election can take place? I remain ready, willing and anxious to fight a by-election irrespective of the result in Glasgow, Hillhead.
  Mr. Maxton: I am glad to have that assurance. I am glad to know that within a short period the hon. Gentleman will not be representing that constituency.
  What we have heard today of the Social Democratic Party's economic policies shows that it attacks the Government for their policies and attacks the Labour Party and the proposal of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) as a mish-mash of all the things that the hon. Gentleman believes to be wrong with the Labour Party. I have heard nothing of SDP plans if it came to power except a cobbling together of different parts of machines to be put together into one machine to be driven down the middle of the road. The best way to start an accident is to drive an unsafe car cobbled together from different machines down the middle of the road. It is a recipe for disaster. That is what the SDP is all about.
  Those hon. Members who represent Scottish constituencies perhaps felt some warmth from the Budget speech because there can be few Budgets this century in which so many references have been made to Scotland. I do not know whether most hon. Members noticed these references. Those hon. Members representing Scottish constituencies certainly did. Every so often, when the Chancellor was talking about Britain, there would appear references to Scotland and to Glasgow. Apart from the hon. Member for Perth and East Perthshire (Mr. Walker) and myself there are probably no Members present in the House who read the Glasgow Herald. It has a headline today saying "The Hillhead Budget". It has a cartoon with the Chancellor of the Exchequer holding a bottle of whisky on which it says "Old Tory Vote Catcher—Scotch whisky".
  If, however, vote catching was the intention of the Chancellor of the Exchequer and the Government, I have to say that the by-election is either too late or too early. If the by-election was tomorrow the smokescreen put up by the Chancellor in the Budget might have been just sufficient to allow the Conservative candidate in Hillhead to win. In a fortnight's time, when the smokescreen has cleared, most people will be able to make a proper assessment of what the Budget means to them and to the voters in Hillhead.
  By that time they will also be paying more for their cigarettes, for their petrol and for their whisky. The increase may not have been as big in percentage terms as

  913
  that on claret, but people buying a bottle of whisky are not concerned whether the increase is 20p, 30p or 50p. They are concerned that it is an increase and that this week they are paying more than they paid last week. This is what matters to them. The small tax benefits that they may receive from the Budget will not appear in their pockets by the time that the by-election takes place. The Chancellor has badly misjudged matters if he thinks he can win the by-election with this Budget.
  Far too many people in Glasgow are unemployed. In my constituency, unemployment among those living in the Castlemilk housing scheme amounts to 25 per cent. of the total population. In certain areas of the housing scheme, the figure is over 50 per cent. Anyone who knows Glasgow will be aware that most Glaswegians like a smoke. I am a recent convert against smoking. I succeeded eight weeks ago in stopping smoking. For the first time ever, I am therefore not adverse personally to the Chancellor putting up the price of cigarettes.
  Mr. Campbell-Savours: My hon. Friend took my advice.
  Mr. Maxton: That is right. I took my hon. Friend's advice. However, many of my constituents and many constituents in Hillhead, especially those who are unemployed, enjoy a packet of cigarettes. They will resent the increase. Those who are working will also resent it. There have also been increases in the price of beer and drink. The poorer people who own cars have to pay for their own petrol. They will resent the increase in the price of petrol.
  Mr. Bob Cryer: Will my hon. Friend accept that the Budget is an interesting demonstration of the Government's view of market forces? They always purport to support market forces and want them to have more play. However, when market forces apparently reduce the price of petrol in the consumer's favour, the Government immediately intervene to put up the price of petrol.
  Mr. Maxton: Yes. Anyone who listened to the Chancellor's speech will know that this is exactly what the right hon. and learned Gentleman said. My hon. Friend is right. His view is that 9p on a gallon of petrol makes no difference because it has come down by that amount in the last few weeks anyway. However, many people had come to like the lower price. It was having an effect on the cost of living, so the Chancellor has put the price back up.
  The Chancellor's excuse for putting up Excise duties was that they would be kept in line with the rise in the cost of living. That is not what he says to public sector workers. They cannot have an increase in their earnings to keep pace with the cost of living. They are kept to 4 per cent.
  Mr. Campbell-Savours: Has my hon. Friend noticed that the reason that the Chancellor implied for raising revenue was that he was worried that additional money might unnecessarily boost demand? His fine tuning has therefore been extended to increasing the price of petrol simply to reduce demand.
  Mr. Maxton: Yes. I did not catch that point as fully as my hon. Friend. He has a copy of the Chancellor's speech. It makes nonsense of what the hon. Member for Enfield, North said about increasing demand. There is an
  914
  anomaly in terms of increasing Excise duties in line with the cost of living while not being prepared to take the same attitude to people's incomes.
  The Government have made great play of the importance of the construction industry in Scotland, which is linked to housing. Both the Chief Secretary and the Chancellor have made great play with what they are doing for the construction industry. Somehow or other, the Budget is supposed to be a big deal, which will create jobs in that industry and solve the housing problem. I shall examine that first in the light of what the Treasury said in its statement.
  The beginning of that statement says:
  "In his Budget Statement, the Chancellor announced measures aimed particularly at helping the construction industry. Last year's Budget included similar measures."
  I do not know whether anyone in the construction industry would say that he has seen the impact of last year's similar measures. I do not believe that the construction industry in Glasgow or Western Scotland would think that it had benefited from those measures. One must ask, therefore, if the new measures are similar to those introduced last year, whether they will have any more impact.
  The Government's White Paper on expenditure plans for Scotland says that between 1982–83—they are now talking in cash terms; they no longer take account of inflation—capital expenditure on housing in Scotland will be £167 million. The figure for last year was £180 million. That is a reduction of £13 million. Is that £13 million reduction arrived at after taking account, as it must, of the £10 million? I am making a rough estimate—£100 million for the Government's energy and renovation proposals, and estimating £100 million for the United Kingdom. Roughly 10 per cent. is allocated to Scotland and that becomes £10 million. If my calculations are correct and if Scotland does not receive that sum, capital expenditure on public sector housing in Scotland will be reduced by £23 million.
  Under the scheme set out by the Chancellor for expenditure on improvements in housing, applications had to be received by the end of 1982 to gain any benefit, presumably so that expenditure could be taken up by the end of the coming financial year. Does that mean that next year there will be the same reduction in capital expenditure in Scotland and that it will be £23 million or more, rather than £13 million as it is this year?
  If there is to be a net loss in capital expenditure on housing in Scotland of £13 million, Glasgow's share would be reduced by about £3 million or £4 million or more. That must be added to the £13 million reduction on current expenditure on housing. If those figures are correct, there will be no boost for the construction industry in Scotland or the United Kingdom. Instead of extra money being given, so that more work has to be taken into account and more workers will come off the unemployment register, the proposals will prevent a few people from going on the unemployment register. We shall stop people going on the register, rather than bring them off it. More construction workers will go on the dole if £13 million less than this year is spent on housing in Scotland next year.
  Will the Minister confirm that that will be the effect? The housing situation in Glasgow is desperate. We have a chronic housing need. Many people are living in damp houses. There is a long-term dampness problem. Constituents have come to my surgery week in and week out for the past month. Five weeks after the freeze they

  915
  still have no water and are still not back in their own homes because ceilings have not been repaired. The enormous damage done during the severe frost has not been repaired. Those people are living in misery. Also, a gale in Scotland, rising to a force of 105 miles per hour, caused further damage to housing.
  Those are short-term problems. If housing authorities in Scotland, especially in Glasgow, must find extra money to pay for that damage out of their own expenditure, any extra money that they receive from the Government will be completely absorbed in carrying out those short-term repairs. No new building will take place. It is extremely unlikely that the long-term problems will be solved.
  Conservative Members constantly mention improvements in the Health Service. They make great play about how we have more, presumably qualified, nurses and doctors in the Health Service than ever before. That means, they argue, that there are shorter waiting lists. That is true, but it takes at least three years to train a nurse and five or six years to train a doctor. Therefore, the new qualified nurses and doctors that have come into the Health Service during the past 18 months to two years started their training under the Labour Government, not the present Government. It is hypocritical for the Government to claim the credit for those extra nurses and doctors when they were recruited under the Labour Government.
  Mr. John Townend: Surely the hon. Gentleman will admit that the present Government have provided money to employ those nurses. Surely he will admit also that waiting lists have been reduced during the present Government's term of office. Although I might accept that training was started during the Labour Government, it is unfair and ungenerous to complain that the Government have reduced the level of the Health Service.
  Mr. Maxton: For a start, some nurses cannot find a job. The Government have not employed all the nurses that the Labour Government intended should be employed. Of course, if there are more doctors and nurses the waiting lists will be reduced, but the waiting lists have been re-written a little so we must be wary of the figures.
  I do not believe that the Government have changed their major strategy. Examining the public expenditure White Paper from a Scottish point of view, one sees that the basic theme of the Government's economic policy is that somehow public expenditure must be cut and money put back into the pockets of those who are likely to invest it in industry to solve all our economic problems. That seems to be the main strand of the Government's economic policy, but it will not solve our economic problems.
  Under the Budget, those who make large capital gains will benefit again. There is not much mention of that in the press. Again, it is the rich who benefit from capital transfer tax rather than, as the Government claim, those at the bottom end of the scale. In cash terms, the real benefit is going to the top end. The Government have consistently done that since they came to power. They have given to their rich friends and taken from the poor on the principle that their friends will then pour extra money into the British economy by investing it and the economy will improve as a result.
  That is absolute nonsense. It has not worked. There has been no increase in investment—it is falling. The Government have given money away to the rich and there has been no benefit or return for the economy. Their
  916
  friends have benefited but the economy has not. The more public expenditure is cut, the more private industry is damaged. I wish that the Government would learn that lesson.
  I should have thought that in the construction industry, if nowhere else, that lesson should have been learned. How many building companies have gone out of business as a result of the cuts in housing expenditure of the past three years? The answer must be many thousands. Nowadays, even big companies rely increasingly upon Government expenditure and Government contracts to survive. Some are Government contracts from abroad, but it is still public expenditure, whether it is our own or someone else's. The lesson must be learned that nowadays one cannot divorce public and private expenditure as the Government would like because they depend upon each other. If anything, private expenditure depends more upon the public purse for survival than the other way round. The Budget shows that the Government have failed to learn that lesson, and it is time that they went, so that my right hon. Friend the Member for Stepney and Poplar may become Chancellor of the Exchequer and begin to solve our economic problems.
  8.11 pm
  Mr. Tom Benyon: I am grateful for the opportunity to make what I hope will a brief contribution to the debate.
  First, I should say that, in the round, I very much appreciate and applaud the Budget. I believe that it was last year's much-reviled Budget that made this one possible. My right hon. and learned Friend the Chancellor has begun to create a proper basis upon which we can build.
  There are those who ask the very important question, which the Government seem to find difficult to answer: are people earning £15,000 a year or less better or worse off as a result of the Budget? I believe that indexing levels of income and tax puts people exactly where they were a year ago. It would be illusory to pretend that they will be better off. Nevertheless, I believe that in the main the people of this country will be substantially better off, provided that our industries manage to become more productive, which in turn will lead to increased prosperity and further job security for employees. I believe that my right hon. and learned Friend the Chancellor has created a climate in which this will be possible.
  I applaud the comment of my hon. Friend the Member for Enfield, North (Mr. Eggar) that it would be a cruel deception to pretend that the Government can somehow reduce unemployment. I believe that we shall go into the next general election with at least 2¾ million or 3 million unemployed, because we are going through an industrial revolution. I do not know whether we are perhaps too close to events to realise what is happening, but I firmly believe that we are going through an industrial revolution, and no Government of any complexion can do very much about that.
  Over the past 15 years, with predictable steps, unemployment has risen. To pretend to our constituents and to the electorate that somehow we can wave a magic wand and solve the problem simply by feeling more compassionate and caring more is the most illusory primrose path down which we can march and it serves our constituents ill. I also believe that our constituents are well aware of that. Politicians have often patronised the

  917
  electorate, believing it to be more stupid than it is. I believe that our constituents understand the truth when they hear it, and telling them that we can wave a wand and reduce unemployment will be of no help at all to them.
  Many of those who, tragically, are unemployed have been so for many years—hidden within our overmanned industries—and it has taken a world recession, which no Government can possibly buck, to make that clear. There is no way in which we can isolate Britain or its unemployment problems just because we care more, when the problems are similar in Australia and New Zealand, on the Continent and in America. We cannot wave a magic wand and reduce unemployment overnight.
  I commend to the House an idea put to me by my hon. Friend the Member for Peterborough (Dr. Mawhinney), which I know some of my colleagues have also taken up. My hon. Friend took this step to try to reduce unemployment in his constituency and I have copied it in mine. It is the creation of a small, local enterprise area. I asked the National Westminster Bank whether it would be prepared to lend money to people with good business ideas—several of them unemployed as the unemployed should not be precluded from such a scheme—unsecured, but for charges over the assets of the small businesses thus created. I then asked a firm of lawyers and accountants whether they would give free advice for one year to people wishing to start such businesses. I also asked my local chamber of commerce whether it was prepared to give free advice, and the local college of further education whether it would provide a free administrative course. The package was wrapped up and called "Enterprise Abingdon and Didcot 1982", and I am pleased to say that it worked well.
  My theory was that many people with excellent ideas are frightened of going to banks. They do not understand how to put a package together. They do not know whether they should form a limited company, trade as sole traders or form a partnership. They do not know what the building requirements or local authority restrictions on starting a new workshop might be. They need a great deal of help. In Abingdon we had 42 replies, many of which are still being processed by people who put civic duties before profits, and in Didcot last week I had the privilege of handing over the first cheque, for £3,000, to Mr. Ivan Gibbs to start a model aeroplane shop in the High Street. I take this opportunity to wish him very well.
  My knowledge of economics is very thin, but when I heard the speech of the right hon. Member for Ebbw Vale (Mr. Foot) yesterday my confidence in my skills as an economist were enhanced. I find the Opposition's approach singularly depressing and arid, when the Chancellor has produced a Budget which, in the main, has met with balanced criticism from many commentators, but is regarded overall as good.
  Mr. Robert Sheldon: Just to get the picture clear as to the success of the hon. Gentleman's venture, how many jobs does the hon. Gentleman reckon have been created so far?
  Mr. Benyon: The operation began last month, and out of the 42 inquiries many are still being processed. Until last week, Mr. Ivan Gibbs was unemployed. This is the first job that he has had in more than two years, so that is
  918
  one job that I have created in my constituency. I shall be happy to give way if the right hon. Gentleman wishes to tell me how many jobs he has created in his constituency.
  When I hear the speeches of the Opposition, my courage and confidence in my own economic performance is enhanced. I find it depressing when charges are made against the Government which are patently and simply not true. The idea put forward is that if we pump £9 billion into the economy—or £8 billion or £7 billion—that will create more jobs. I ask people who think that that is possible whether they have considered that investment in plant can lead to less employment, because new plant often means fewer jobs.
  I have never heard an argument which would convince me that if £6 billion were poured into the economy it would necessarily go into new jobs. I believe that Sir Terence Beckett is a superior economist to the right hon. Member for Ebbw Vale and that he is right when he says that as our businesses have been reduced in capacity because of the world recession—the economic holocaust that has hit us during the past two and half years—if extra money were put into the economy much of it would probably go into imports and rising prices, as has happened in the past. Therefore, I have yet to be convinced that we could do what has been suggested without its leading to further high levels of inflation.
  Our complex social security and tax systems have been built piecemeal and are now in serious disarray. I commend to the House an excellent article written by the hon. Member for Birkenhead (Mr. Field) on 5 March 1982, in which he said that
  "the Chancellor will make little mention of the hundred or so tax reliefs—or tax benefits, to describe them more accurately—which exempt more than 50 per cent. of the nation's personal income from tax.
  Here is an issue on which MPs across the parties should be able to find some agreement. A radical reform of all the tax benefits offers the chance to increase personal freedom. Tax benefits are granted only if taxpayers spend their money in a way which the Government thinks is desirable. Reform offers the chance of cutting the rates of tax—so increasing the taxpayer's freedom of choice—while increasing expenditure on social security benefits.
  Means-tested benefits build a ceiling over the heads of the poor, thereby cementing them into poverty. Others, like child benefit, act as a floor on which people can build by their own efforts without being penalised. Additional expenditure here allows claimants to spring themselves from poverty. The individual and collective gains on the freedom front should be clear to most taxpayers."
  I agree with that article without any exception. I hope that the Chancellor and his team will be able to make some strides and try to unpick some of the enormous complications from both our tax and social security system. Only in that way will we get a more sensible system. Lower levels of tax are still too high, and that is one way which will enable us to reduce them.
  The complexities of the social security and the tax systems confound experts. Most of our supporters and the well over 1 million small business owners know that the State is still alive and well, still on their backs and in their pockets. We were expected to simplify both those systems and to make tax cuts, which we have not done.
  Can we do it? Are we powerless to act? Is the enormous system that we have created so vast that we simply cannot change it? Are we too close to the current systems to see how absurd they are? Is the machinery of government so

  919
  vast that we cannot make the necessary changes, or have we been "Yes Ministered" out of the intentions that we had before we came into power?
  The tax and the social security systems infuriate our supporters, because it is there that the machinery of officialdom is at its most potent. At the moment the scheme is a hotch-potch of anomalies, expensive to run, complex, ambiguous, and regarded with trepidation and hostility by the taxpayer and those on social security benefits. In its application it operates a series of traps to catch the wary and the unwary alike.
  I commend the Chancellor for the simplifications that he announced yesterday in the capital gains tax legislation by starting to abolish that tax. I quote from a book entitled "The British Tax System", second edition, at page 239:
  "There is a maze of taxes on different kinds of income, each tax with its own rules for determining taxable income and liability. The interaction between these taxes is difficult to comprehend, and, because of this, is rarely brought out into the open when tax changes are discussed. To take one obvious example of the general problem, in addition to income tax there are distinct and separately administered surcharges on each of employment incomes, investment incomes, and income from self-employment. The first of these is levied non-cumulatively on current earnings of less than a stated amount, the second cumulatively on current earnings of more than a stated amount, and the third cumulatively on preceding year earnings in excess of one amount and less that another amount."
  Nobody could possibly design such a system on purpose, and nobody did. Only a historical explanation of how it came about can be offered as justification. However, that is not a justification, but a demonstration of how seemingly individually rational decisions can have absurd effects in aggregate. One hopes that the Chancellor will make it an urgent priority to start cutting away some of the thickets which confound many people in Britain, who simply do not understand.
  At the other end of the scale, many needy families who rely on benefits do not claim, either because they are too proud or because they do not know their rights. To police this complex system is very difficult and expensive. Many benefits go into the pockets of people who do not need them, but, far more commonly, many needy families do not get the benefits that they need.
  I was distressed yesterday by the fact that the Chancellor did not see his way forward to put right the invalidity trap. There are many invalidity pensioners whose incomes are too high for them to qualify for the ordinary rate of supplementary benefit but whose incomes fall below the amount they would receive if they were eligible for the long-term rate of supplementary benefit. As they do not qualify for the former, they can never qualify for the latter. Even though their situation is one of long-term sickness and disability, they are condemned to try to subsist on benefit rates which are below the minimum long-term rate of supplementary benefit set by the Government.
  Mr. Campbell-Savours: The hon. Gentleman has picked on two areas in the Budget. One is capital transfer tax and the other is the specific area of benefits for those who do not have many assets. May I remind the hon. Gentleman that the Chancellor, while not doing what the hon. Gentleman is now demanding, has allocated almost £170 million additional money to cover capital transfer tax and capital gains tax concessions to the better-off in society? In the light of what the hon. Gentleman was saying, does he think that the Chancellor has the balance right?
  Mr. Benyon: I am grateful to the hon. Gentleman for raising that point. I am all for simplifying the tax system. That must be done. I am distressed by the fact that the Chancellor did not put right the anomaly to which I referred, although, as I said earlier, I believe that he has done a considerable amount for the worse-off, but I do not think that the Chancellor got the balance right in regard to the invalidity trap.
  About 100,000 invalidity pensioners are caught in the trap, and because they happen to be on particular rates of invalidity benefit they can never get on to the high rate of supplementary benefit, which is one of the passport benefits enabling people to get free transport and other forms of assistance which cannot be obtained by people on invalidity benefit. As the costs involved are about £50 million, one hoped that the Chancellor would have felt able to bring it within his orbit and make the necessary concession. I hope that he will see fit to do so as soon as he possibly can.
  I believe that the entire crazy system of tax rates and benefits must be changed. We must continue what we had started to do. If we do not do it, who will? If we do not do it now, when shall we do it? The system is complex, unfair, expensive, disliked and misunderstood. I hope that the Chancellor will feel able to do what is necessary at the earliest possible time. It will take a long time to put the system right. I am not saying that it can be done overnight, but, unless we are looking at the problem and facing in the right direction with a plan, it will take 10 years to put it right. If we do not make a start soon, we shall never get there.
  8.29 pm
  Mr. Michael McGuire: Having sat through most of the debate, I want first to apologise to you. Mr. Deputy Speaker, because—uncharacteristically for me—I was forced to intervene a couple of times and I probably taxed your patience. As some people might say, I took advice. My objection about the broad nature of this debate on the Budget—I think it was shared by one or two Conservative Members—was to some of the comments made by the hon. Member for Mitcham and Morden (Mr. Douglas-Mann). I shall take up the remarks of the hon. Member for Abingdon (Mr. Benyon) because this is a debating Chamber, although we sometimes tend to forget that. He appeared to suggest, when the Opposition and some of his hon. Friends questioned whether the Government had done enough to tackle unemployment, that there is not a great deal that the Government can do to reduce the 3 million unemployed.
  The hon. Gentleman quoted figures and I know that they were a riposte to the right hon. Member for Chesham and Amersham (Sir I. Gilmour), a former Cabinet Minister and Lord Privy Seal, who is identified as leading the "wets". The hon. Gentleman said that if £5 billion—the amount suggested by the right hon. Gentleman—will reduce unemployment by a certain amount, why not pump in £10 billion or even £15 billion? The hon. Gentleman appeared to pour scorn on anyone who advocates positive action by the Government.
  What will the Government do if unemployment doubles? Will they then say that if there is nothing they can do when 3 million are unemployed there is nothing they can do when 6 million are unemployed? It would be electoral suicide to do nothing to reduce unemployment if it reached such a level. The main thrust of the Budget

  921
  should have been substantially to reduce unemployment. For that reason alone the Budget is a failure. It is not addressed to the main problem facing the country of more than 3 million unemployed—a figure which is likely to grow.
  Mr. Douglas-Mann rose—
  Mr. McGuire: I can see that the hon. Gentleman wishes to intervene. I did not make an intervention as such in his or any other speech. Other hon. Gentlemen have sat patiently, like me, and I do not intend to rob them of their time.
  The impression that the ordinary man will get of the Budget—
  Mr. Douglas-Mann: On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to misrepresent what another hon. Member said and then refuse to give way to him?
  Mr. McGuire: In the tradition of the House, I give way to the hon. Gentleman.
  Mr. Douglas-Mann: The hon. Gentleman has misrepresented what I said. I strongly believe that the Government have the power and the capacity to reduce unemployment. Labour Party policy, in many respects, has that objective, but it is crippling itself by its rejection of an incomes policy.
  Mr. McGuire: I was right to give way to the hon. Gentleman. It was fair to give him the opportunity to make that correction. I did not make it clear that my remarks were directed to the hon. Member for Abingdon who questioned whether £X billion would do the job.
  I intend to be brief. Some hon. Members took a long time to say relatively little. I hope that that accusation will not be hurled at me. I recognise that others want to speak.
  The main thrust of the Budget should have been directed towards tackling the cancer of unemployment, which is eating away the heart of the nation, and is frightening people. At one time unemployment was considered to be a visitation on what I call my class of people—the unskilled and labouring class. It is now affecting all classes, including the professions. The tragedy is that fear is stalking the land. Those with high qualifications and highly skilled people are terrified of losing their jobs. Confidence has gone. It was the duty of the Government in the Budget to find a way to restore that confidence, but they did not do so.
  I do not believe in the class warfare theory. We devalue politics, perhaps more on our side, by introducing arguments about classes. However, the Budget can be fairly described as a middle-class Budget. If it benefits any group it will benefit the higher paid. It ought to have benefited the poor.
  My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) gave details of the unemployment in his constituency and said that it ws 25 per cent. in one part. The tragedy of our present plight is that many of us can match those figures and some of us can beat them. Hon. Members who have been here for a few years will remember that Skelmersdale new town suffered some bad blows when the Labour Government were in power. We lost jobs galore, including about 3,500 in only a few months. The best guess that one can make of our male
  922
  unemployment rate is that it must be about 35 per cent. We cannot get the exact figures. The percentage is diluted because we are linked with a neighbouring town with a lower unemployment rate. Of course, it would not make the unemployed feel any better if we had the exact percentage rate, but we guess that it is in excess of the terrible figures given by my hon. Friend the Member for Cathcart.
  I do not believe that the public were much concerned about whether 4p or 5p was put o the price of a pint of beer. Of course they grumbled, and no politician would say that it does not matter how much tax is put on cigarettes, beer, whisky or petrol, but if people had seen that the revenue drawn from them in that way was to be used to reduce unemployment substantially they would have said that at least it would be well spent. That has not happened and, for that reason alone, the Government stand condemned.
  I do not say that Tory Governments welcome unemployment. No one likes taking actions that are electorally unpopular, but I believe that because Tory Governments have a fixation about increased public expenditure, which would be one of the quickest ways of reducing unemployment, they sometimes cannot see the wood for the trees and they make fundamental errors.
  In the North-West, the birthplace of the industrial revolution, we have an old industrial system and an overwhelming need for public investment. That would profit the nation. There would be no question of paying one to dig holes and another to fill them in. Imaginative investment in public works would quickly and substantially reduce the terrible level of unemployment.
  My hon. Friends and I meet Tory Members as friends and colleagues and no one claims that they deliberately want to put people on the dole. However, although they may not be indifferent or callous, their fixation about public investment stops them implementing the remedies that they know are needed.
  If unemployment rose and the cancer got even worse, would Treasury Ministers say that because there was nothing that they could do when the jobless total stood at 3 million there was nothing that they could do when faced with levels of 5 million or 6 million? They would not remain indifferent. Why, then, do they do little more than tinker with the problem when unemployment stands at 3 million? The Government are behaving as the equivalent of the captain of the "Titanic" rearranging the deck furniture while the ship is taking on water after hitting the iceberg. They have not addressed themselves to the real problem but are simply tinkering with it.
  Mr. Campbell-Savours: My hon. Friend makes an interesting point. Is there not evidence to suggest that the whole free market machine cannot fund the social wage and that what we used to argue in the Labour Party 10 or 20 years ago must change to comply with the new reality? What we were saying philosophically and ideologically is now becoming practical, and increasing numbers of British people, even those who do not vote for the Labour Party, recognise that the system cannot provide for the social requirements of the people. That is perhaps our biggest weapon.
  Mr. McGuire: If my hon. Friend the Member for Workington (Mr. Campbell-Savours), by that intellectual intervention, means that we cannot have unbridled capitalism and that we must tune finely a mixed economy to bring about that happy result, I agree with him.

  923
  If one is honest, one admits that even in this Budget there are welcome proposals. I especially welcome the modest increase in the cut-off figure for supplementary benefit to £2,500. However, it must be considered carefully, because we have found that even at that figure the measure will create unnecessary hardship and will rob some people who have been given a reasonable amount of redundancy pay and who have lost their job prospects for life. The proposal is not a panacea but a start. I hope that the Government will work on it.
  I hoped that the Government would do something about the death grant. I believe that they have offered to do so. It is now a mockery and it must be increased substantially. I take on board the fact that the Labour Party had the chance to increase it, but we did not and we stand to be condemned for that. However, I remember that when Conservative Members were in Opposition they used to attack us for such matters as not increasing the death benefit.
  I especially welcome the decision on the mobility allowance, which was long overdue. The 40,000 people who benefit from it will also be grateful.
  A point in the tax system that has never been given sufficient consideration is the age allowance. I address that remark to the Financial Secretary to the Treasury, who is sitting on the Treasury Bench. The age allowance has a long history. Contrary to what many people believe, it does not expressly help retirement pensioners. One does not need to be a retirement pensioner to benefit from it. From answers that I have received to questions that I have put down, the age allowance seems to cost Britain about £400 million a year net. I suggest that there are better ways in which one can use that money.
  For example, if I am not fully retired at the age of 65, my personal allowances will be increased per se simply because I am in that age bracket and in a certain income band, even if my wife is many years younger. There are better ways of helping people in that group. If it is designed to help pensioners—which it is not—one could probably increase the retirement pension by about £2 a week for a married couple and about £1·20 for a single person. There are other ways of using that money, but I shall not take any more of the House's time in suggesting them. I merely say that the allowance should be looked at to see whether it is relevant and necessary in today's circumstances. I hope that the Government will provide the answers.
  This Budget does not even pretend to deal with the serious problem of unemployment and the poverty that springs from it. However, no doubt it will receive the approval of the Conservative Party. I hope that the people will soon be given a chance to pass judgment, not only on this Budget but on all the other Budgets that have been introduced by the Conservative Party during its three calamitous years of office.
  8.45 pm
  Mr. Keith Best: The House will be grateful to the hon. Member for Ince (Mr. McGuire), because, although he was critical of the Government, he advanced his arguments in a fair manner and complimented certain aspects of the Budget with which he agreed. Sadly, that cannot be said of all his right hon. and hon. Friends. We are therefore all grateful to him for the manner in which he approached this debate.
  924
  This is a cautious Budget, and I suspect that its effects will be cautious, too. As my right hon. and learned Friend said yesterday, it is part of a step in a long-term approach and one that will involve more than one Parliament. In this House we tend to concentrate on immediate issues arid seek solutions to those issues in the short term, without contemplating any matter beyond the next election. This is the first Government in my memory to look beyond the next election. They decided that the problems affecting our economy need a longer-term solution than has been sought by previous Governments.
  I did not have the privilege of knowing the late Lord Butler when he was a Member of the House, but his political philosophy has shaped the way in which I think about politics. When I was beginning to show an interest in politics, Butskellism became part of the political vocabulary of this country. Of course, the situation then was quite different—something that is conveniently forgotten by some hon. Members who criticise the Government for what they are doing today. At that time we had an expanding economy and we were building 300,000 houses a year. The situation was thus quite different from that which exists under this Government—or, indeed, which existed under the Labour Government—as a result of external factors.
  Sadly, Butskellism is a dead concept. Many of us would like a greater convergence of policies on major issues between the two major parties, but, unfortunately that is not possible today because of the way that the Labour Party has veered to the Left. When the right hon. Member for Stepney and Poplar (Mr. Shore) delivers his catechism of what he might do, one realises that he would probably not be admitted as a member of the party of Gaitskell. That shows the way in which politics have polarised in this country.
  The Government are on extremely dangerous ground. My right hon. and learned Friend the Chancellor can be certain that, unfortunately, even the more sensible aspects of his Budget will not receive universal support from the Labour Party, as might have happened 25 years ago.
  Even though Butskellism may be dead, I hope that the ideals of the late Lord Butler are not dead. I should like to examine whether this Budget will enhance those ideals. I ask myself what is needed in a Budget. The Budget should deal with unemployment. Those hon. Members who watch Brian Walden's programme will realise that if the Government are to be re-elected and put their policies into effect in the long term, they must capture the 19 per cent. target vote, 45 per cent. of whom believe that unemployment is the greatest problem confronting, us. In my constituency the rate of male unemployment is approaching 25 per cent.
  There is also a need to ensure that those least able to look after themselves as a result of the recession are not made to suffer because of the recession. I investigate in my brief remarks whether the Budget has achieved that. First, I ask about unemployment. The whole House will want to know where the growth is to come from in the period of recession that we are experiencing.
  It will not come in the older manufacturing industries. That is why I was glad that there was no more than a 1 per cent. reduction in the national insurance surcharge. There had to be some reduction, because this was a matter on which industry had concentrated. It had become a talisman for industry, so it was right to propose a reduction of 1 per

  925
  cent., but no more, because it will benefit only older manufacturing industries. Indeed, one-third will go to the public sector, which has almost the worst record.
  In Anglesey and in most other parts of the country we need a stimulus for small businesses. I know that my hon. Friend the Member for Luton, East (Mr. Bright) will concentrate upon this. His record in this respect is particularly fine. We need more small workshops, and small business men need more access to loan capital. Without specifying or reiterating what is in the Budget, I believe that it will lead to an improvement in these areas. Perhaps it is not doing as much as some people would like, but, nevertheless, it is making a substantial contribution.
  The Manpower Services Commission, along with other bodies, reckons that the number of long-term unemployed is in excess of 1 million. Obviously that problem needs to be tackled quickly. I am glad that a scheme is to be worked out by the Manpower Services Commission to bring the long-term unemployed into doing useful community work.
  One of the greatest problems of unemployment is the absence of pride that it can create. There is the feeling of being superfluous to the society in which one lives and therefore a meaningless contributor to that society. This scheme should help to overcome that. Of course, it is not creating real jobs. I sometimes wonder what the rhetoric is about real or unreal jobs. It is necessary to involve people in doing something for the community so that they can feel part of it.
  The young workers' scheme has been criticised but Labour Members should acknowledge that there has been a heavy initial demand for application forms. By the second week of December more than 15,000 forms had been sent out in response to requests. That is another matter which should be dealt with carefully, because it will help young people. In Wales we are seeing the largest programme of capital investment ever, which I welcome. It is also right that the Budget should concentrate on housing. In Wales there are 100,000 houses lacking one or more of the standard amenities. There should be more concentration on improvement grants.
  The increased capital allocations to local authorities are also welcome, but there is a need for further expenditure on the construction industry, not least because the beneficial effects on employment are disproportionately good when one spends money on the construction industry. It is not necessary to draw up grandiose schemes. The Government should consider such things as grants for improving substandard properties for letting as well as for home improvement. I welcome what is being done there.
  I end by saying something about those least able to look after themselves. The whole House will be glad that my right hon. and learned Friend agreed to make good the 2 per cent. shortfall. I suspect that he realised that had he not done so he would not have got his Budget through the House. Quite a number of us on the Conservative Benches would have contributed to that.
  However, I am concerned that the 5 per cent. shortfall in unemployment and sickness benefit has not been made good. I am glad that in his statement today my right hon. Friend the Secretary of State for Social Services said that he would reconsider the matter. It comes down to a fundamental question of fairness and whether the House will feel that it has been misled. My right hon. Friend the former Secretary of State said on 30 April 1980 that
  926
  "as the employment benefit comes into tax so the rationale for the 5 per cent. abatement ends. It is an interim scheme in lieu of taxation. One will give way to the other."—[Official Report, Standing Committee B, 30 April 1980; c. 526.]
  I can construe that statement in only one way. I hope that the Government will reconsider the matter and make sure that it is remedied.
  I also hope that there will be no haggling over the £2,000—now to be £2,500—income disregard for the purposes of supplementary benefit. That matter must be reviewed constantly to ensure that there is no unfairness.
  Politics is not about reality—I suspect that Opposition Members are glad about that—but is about people's perception of reality, even if the two are completely different. If we on the Conservative Benches are perceived as belonging to an uncaring party, we shall be so labelled and we shall not have the support of the electorate. I believe that the Budget and today's statement by my right hon. Friend the Secretary of State for Social Services have ensured that any possible myth about that will be dispelled. The idea that the Government will not succour those in the greatest need will be seen to be a myth which cannot be given credence.
  My right hon. and learned Friend the Chancellor perhaps gave the greatest tribute to the late Lord Butler when he presented his Budget yesterday, because in it he was able to satisfy many of us on the Conservative Benches, who were beginning to have doubts, that the ideals of the late Lord Butler are not dead.
  8.57 pm
  Mr. Graham Bright: I thank my right hon. and learned Friend the Chancellor of the Exchequer for putting forward a package that I believe will substantially help to reduce inflation and taxation and assist industry to revitalise our economy. It has taken tremendous courage to pursue consistent policies during the world's worst recession for 50 years.
  I particularly welcome the special assistance that my right hon. and learned Friend has given to disabled people by exempting the mobility allowance from income tax. That has been particularly welcomed by many people in my constituency.
  I thank my right hon. and learned Friend also for the changes that he is introducing to help charities, but I hope that my hon. Friends will forgive me if I make a special plea to exempt them altogether from VAT. The Conservative Party must support that, because it helps people to help themselves.
  The Budget's main purpose is to help industry. The expansion of the economy, which every hon. Member wishes to see, is possible on a sound basis only if industry is free to improve its profitability and productivity, to attract more investment and provide long-term employment. That is clearly the objective of us all. It is right to help industry along that path by cutting the national insurance surcharge. All levels of business, both large and small, will benefit.
  I hope that this is the first step towards further reductions of this surcharge. I hasten to add, of course, that this is a tax on jobs and that it was introduced by the Opposition when they were the Government. Therefore, I hope that they will genuinely join us in wishing that this tax is further reduced.
  I am even more pleased that the Government have maintained and strengthened their support for small

  927
  businesses. There is no doubt that the Government have done more than any other in this respect. They have transformed the whole area in which small businesses operate, and raising the threshold for VAT and allowing for deregistration will ensure that very small traders will be kept out of that net.
  Small companies will gain extra benefit from the lifting of profit limits on corporation tax. However, I hope that the Chancellor will not rule out the possibility of eventually having a graduated scheme of corporation tax, which will help small businesses still more and, hopefully, iron out the hump that comes in the middle, which discourages the medium-sized company from moving forward.
  I know from personal experience the difficulties often faced by small companies in attracting new equity. They will be eased now that unquoted trading companies are to be less exposed to tax on the sell-back to them of shares held by United Kingdom residents. It will be easier in future for full-time directors to get relief on interest due on loans for investment in their companies.
  It is important to encourage working directors in small companies to invest in them. I also welcome proposals to increase the annual value of shares that employees can receive and to make it less onerous for employees or directors to take up share options. Conservatives believe that a property-owning democracy is more than an empty phrase and are determined to see real ownership more widely distributed among all those working in industry.
  The success of the business start-up and the loan guarantee schemes introduced in last year's Budget has come as no surprise to those of us who pushed hard for them. New funds from outside investors have been tapped by the income tax relief provided for the start-up scheme and the Chancellor's proposals to carry forward any unused balances from this financial year and to double the limit to £20,000 will make this imaginative scheme even more attractive. It could have been still further enhanced by a relaxation of the rigorous conditions imposed by the Inland Revenue under which it operates. If that could be expanded a little more during debate in Committee upstairs, it would help immensely.
  The expansion of funds available for the loan guarantee scheme by a further £50 million to £150 million this year and another £150 million next year is a testimony not only to its success in meeting a long-standing need, but to the Government's good sense in backing a proven measure. However, the limit of £75,000 on each loan is too low and excludes too many worthwhile schemes. It would be much more appropriate if we raised that level to help the medium-sized firms, which probably have more potential to expand and certainly more potential to provide employment, to a limit of about £250,000.
  The prospects of small companies seeking to generate internal funding and attract external equity or loans have been transformed in the past three years. I hope that my right hon. Friends on the Treasury Bench will give long and careful consideration to the Grylls report, which I commend to the House. It has the potential to help small businesses. It will help all businesses to borrow money and will assist many smaller firms who are paying the extra penalty of corporation tax.
  Encouraging production at lower costs with higher productivity is the target at which my right hon. and learned Friend the Chancellor aimed yesterday. The simple solutions of printing money and reckless borrowing
  928
  have often been tried and they have always failed. Inflation must be defeated to enable us to improve employment prospects.
  It is in industry that the battle is being fought, and to industry that every help possible must be given. Small businesses have a large part to play in the campaign. The emphasis placed on both by my right hon. and learned Friend yesterday is the reason why his Budget will be welcomed in the House and in the country. We are on the way to winning not only the battle against inflation, but the war to revitalise the economy.
  As a result of my right hon. and learned Friend's tactics and those of the Government, Britain has a great future. I am sorry that I have been unable to say more about small businesses, but this year's package is the third that the Chancellor of the Exchequer has presented for small businesses. As I have said, the area in which small businesses operate has been transformed. We have changed the climate, so that small businesses have much better opportunities than ever before. Indeed, small businesses probably have better opportunities than big businesses. That, I believe, is a step in the right direction.
  9.5 pm
  Mr. Robin F. Cook: The twill themes of the Government's record on unemployment and of the tax burden have run throughout the debate and I shall address myself mainly to them. Before I go through the issues involved, I shall refer to the speeches that do not fall conveniently under those two headings.
  My hon. Friend the Member for West Lothian (Mr. Dalyell) raised a subject of acute interest to his constituents and to all youngsters north of the Humber. which provides the catchment area for the MOTEC at Livingston. That MOTEC—which I know well—was set up by the Road Transport Industry Training Board and since its construction has been a showpiece for what can usefully be done by the public sector for training in the private sector. In addition, it caters for an industry that is notorious for containing a major proportion of small firms which are unlikely, or perhaps unable, to organise an in-house training programme.
  Not only would closure or reduction in the use of the facilities further reduce employment opportunities in, tragically, one of the worst unemployment black spots in Scotland, but it would also remove a valuable training facility, where 70 per cent. of the trainees come from outside Scotland and from the area of England that is north of the Humber.
  I hope that the Financial Secretary will answer the detailed questions asked by my hon. Friend the Member for West Lothian, particularly as I understand that he has been given advance notice of them.
  My former hon. Friend, the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), spoke at length. I am sorry that he is not in the Chamber, because I should like to put it on record that I was saddened by his contribution. In the past, he and I have collaborated closely on several issues connected with housing policy. We have sat on many Committees dealing with housing legislation. Through the medium of Hansard I should tell him that in the years since then it is not I who has changed, but he. I do not propose to say any more about his speech tonight. On reflection, he will probably agree that that is the kindest thing that I can do.

  929
  The hon. Member for Enfield, North (Mr. Eggar) was here a moment ago, but has apparently disappeared with meteoric speed. He suggested that the Budget showed the triumph of experience over expectations. As the hon. Gentleman described it as the Chancellor of the Exchequer's first political Budget, it might have been more fitting to say that it was the triumph of expediency over expectations. I regret to have to say in his absence that his exchange with my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) went to the heart of his contribution. It is bizarre that after three years of Conservative Government one of the most regular attenders at our economic debates should speak from the Conservative Back Benches and should welcome the fact that the Government have abandoned the central part of their economic policy. After all, the hon. Member for Enfield, North has been supporting that very same Government for the past three years. If they were so profoundly mistaken in thir central economic plank, the hon. Gentleman surely owed it to the House, to his constituents and to the country to say so more loudly than he has done in the past three years.
  The hon. Member for Luton, East (Mr. Bright) could not have expressed my attitude more succinctly or aptly when he said that the Government had transformed the climate in which small businesses operate. Indeed they have. The most notable feature of the change in climate is that small businesses are going out of business at a record rate, topping any level since records began.
  I found it curiously fitting that the night before the Chancellor brought his Budget Statement to the House the nation should be treated to the former Paymaster General appearing on television and advising his audience that, while Paymaster General and responsible for Government propaganda, he had been accustomed to writing out set phrases which he then passed to his colleagues in Government in order that they might mouth them together at the weekend, on the engaging principle that what is said often enough must be true.
  The right hon. Member for Stratford-on-Avon (Sir A. Maude) may have departed from the present Administration, but plainly his maxim lives on in the Treasury. In the past nine months, the Treasury has given every sign that it is trying to achieve economic recovery by the simple device of telling us every week that it has commenced. It is a process that started with the Chancellor at the end of last July, when, in reply to my supplementary question, he stated:
  "we are now at the end of the recession."—[Official Report, 30 July 1981; Vol. 9, c. 1148.]
  My colleagues will recollect that when we challenged him on that point in correspondence we received a letter justifying that statement on the basis that, although things were still getting worse, they were not getting worse at quite the same appalling rate that they had been before.
  By December, the Chief Secretary had redefined the process of emerging from the recession. He stated to the House during the debate on the December measures that the recovery that the Government were hoping to achieve was
  "a continued gradual emergence from the low point." — [Official Report, 8 December 1981; Vol. 14, c. 805.]
  That was possibly the most cautious definiton of recovery that could be advanced by a Minister until I heard
  930
  the Chief Secretary today. Today, if I understood him correctly—and I wrote down the words as they fell from his lips—the Chief Secretary further redefined recovery as "bringing the moment nearer when unemployment will stop rising."
  Recovery is not a process of bringing the moment nearer when unemployment stops rising, nor is recovery when unemployment stops rising. Recovery is the point at which unemployment substantially reduces. Recovery is when the Government succeed, at the very minimum, in getting unemployment back to the level which they inherited. We must set in context all the statements about recovery by examining what has happened to unemployment. What exposes the patter about recovery as the irrelevant rhetoric that it is is the daunting and awesome increase in unemployment over the past year.
  Over the past year—a year in which the Chancellor has talked incessantly about recovery—we have seen the numbers of unemployed swell by a figure that is equivalent to the total population of Edinburgh plus the total population of the city represented by my hon. Friend the Member for Blackburn (Mr. Straw). Against that background, any talk of recovery is an offensive complacency. Against that background the House can ask only one question of the Budget: will it raise or cut the level of unemployment?
  The Chancellor handsomely padded out his Budget Statement with piddling little measures designed to give the appearance of tackling unemployment. My favourite among those is the change in the tax law that will permit school leavers to start up their own busineses. I would not deny that a few dozen teenagers in Britain may be assisted by that change in the law. We would not wish to stand in the way of that change in the law, but to urge that measure as a serious contribution to tackling a level of unemployment among school leavers which in many areas exceeds 50 per cent. is a sick joke. Morever, it is a sick joke at the expense of some of the most vulnerable and weak sections of our community.
  The Chief Secretary criticised the Opposition for being less than enthusiastic about the measures that he had brought in to help the construction industry. I would tell the Chief Secretary, if he were able to be with us now, that the reason why we withhold our wholehearted enthusiastic support for what he has done for the construction industry is that when the modest tinkering that is proposed in the Budget is set against the background of what has happened to the construction industry in the past three years it becomes almost invisible to the naked eye.
  Ironically—unfortunately for the Chief Secretary—on the day on which the Chancellor made his Budget Statement, the Department of the Environment unveiled figures for construction output last year. It is the kind of mistake that the right hon. Member for Stratford-on-Avon would have avoided when he was Paymaster General in charge of propaganda. In the past three years, construction output in Britain has declined in real terms by £2 billion.
  For the Chief Secretary to invite us to be grateful because he is putting £170 million back after that massive cut is to take a neck of brass to urge the House to endorse what he has proposed. In particular among those cuts is the collapse in the council house building programme, which now runs at a rate lower than at any time in peace during the past 50 years.
  I therefore return to the question that I posed. Will unemployment rise or will it fall? The answer is provided

  931
  in the public expenditure White Paper. Unemployment will rise. Page 50 tells us that this coming financial year unemployment, excluding school leavers, will be 2·9 million in Britain compared with 2·6 million last year.
  I did not understand the Chief Secretary's response to the intervention of one of my hon. Friends. He said that those figures were working assumptions, not forecasts. We understand that. We appreciate that they are provided by the Government Actuary as working assumptions. Nevertheless, we are entitled to ask whether the Chief Secretary thinks that those working assumptions are reasonable, or whether he thinks that they are wrong. If they are wrong, why has he connived in the publication of a public expenditure White Paper that is based on those working assumptions? If they are not wrong—if they are a reasonable working assumption—the House is entitled to take the message from the White Paper that we shall witness a further increase in unemployment in the coming year of between 250,000 and 300,000.
  In a powerful speech, my hon. Friend the Member for Ince (Mr. McGuire) posed a pertinent question to the Treasury Bench. I hope that the Minister will answer it when he replies to the debate. If they believe that we can tolerate a level of unemployment of 3 million, at what level do they believe that we can no longer tolerate unemployment? What rise in unemployment is necessary to oblige them to change their reluctance to act to reduce the level of unemployment over which they have presided?
  Let the House be under no illusion. One of the reasons why the unemployment figure has gone up is the deliberate action of the Government in operating a tight fiscal judgment over the last three years. Indeed, alone among the major countries that belong to the OECD, this Government have responded to recession by sharply tightening their fiscal judgment. In each of the last three years, they have operated a fiscal judgment three times more restrictive than the average for the other seven largest members of OECD.
  This year, we witness a further turning of the screw with a provision that the PSBR will fall by a full 1 per cent. over the next year. As we go along that path, accelerate and put on steam towards the rocks, we hear the dulcet tones of the Prime Minister congratulating herself that she has paid no attention to what she described as the "siren voices" of those who warn us that she is heading straight for those rocks.
  We are entitled to say something about those siren voices, which in the past have sounded from the Conservative Benches—those Conservative Members who have not been wholly enamoured of the strategy on which the Government have embarked. Last year, after the Budget, member after member of the Conservative Party summoned up his courage, took it in both hands and, cupping those hands to his mouth, whispered in various ears in the Lobby that he disagreed with the Budget. Some Conservative Members went further. They threatened to do terrible things. They said that they would not stand for it and that they should be consulted. They said that if they had been consulted, the Budget would have been different.
  This year the Cabinet had that consultation. Those of the sirens that survived were able to be present at the consultation. After that process of consultation and after the markers that were put down last year, what has happened? The House is faced with a fiscal judgment that is tighter than the one about which Conservative Members complained last year. What will they do about that? On
  932
  the basis of the debate and on the basis of the press comments this morning, the answer is "Nothing". The evidence of tonight suggests that those who were only too anxious to condemn the Budget judgment last year will aquiesce in silence to the Budget judgment this year, worse though it is than last year.
  It must be put on record that no term ever invented by a politician for his or her opponents has turned out to be more accurate than the term "wets" which the Prime Minister used to criticise her critics in the Conservative Party. The term aptly sums up their response to the way in which she has ignored criticism that has been made by Conservative Members.
  I turn from one of the main aspects of the Budget debate, which is unemployment, to the other aspect that has concerned hon. Members who have taken part. That is the impact of the Budget on the nation's tax burden. That point was raised by a number of hon. Members, including the hon. Members for Macclesfield (Mr. Winterton) and Colne Valley (Mr. Wainwright) and some of my colleagues.
  In the first three years of the Government the tax burden on the nation increased from 35 per cent. to 40 per cent. of the national income. I noticed that when the Chief Secretary addressed the House he invited us again to congratulate him on reducing the total burden from 40 per cent. to 39 per cent. this year. It is now only four percentage points higher than when the Government embarked on office. No doubt next year we will be treated to one of the delightful bar charts that the Chancellor of the Exchequer used to illustrate his party political broadcast yesterday. He will use those charts to show how successful he has been in reducing the burden of taxation from the high level to which he hoisted it in the first place, as he did with inflation last night.
  The Chief Secretary got himself into a lot of trouble in. trying to estimate what had happened to personal taxation as a result of the Budget. [Hon. Members: "Where is he?"] I can understand that the Chief Secretary has possibly been mugged in the course of the last three hours and is concealed in a closet in the building across the road in case he feels tempted to intervene in the closing stages of the debate. However, we are encouraged to have the Financial Secretary with us because some of us noticed that he took considerable interest in that passage of the Chief Secretary's speech. He not only retired to consult those in the Chamber but retired without the Chamber to consult them in further detail.
  While we understand that during a set speech from which the Chief Secretary could not depart he could not respond to the questions that were put to him, I warn the Financial Secretary that the House will not understand if he fails to respond in detail to those questions when he replies to the debate a full five hours later.
  The Chief Secretary was invited to confirm or deny no more than a press notice that was issued by the Treasury yesterday. That press notice includes a table that states clearly and unequivocally that for every household with a couple on an income of less than £20,000 the effect of the increase in the national insurance contribution is to more than wipe out the benefit from the cut in income tax. Similarly, for every single household with an income of less than £10,000, the effect of the increase in the national insurance contribution is to more than wipe out the effect of the tax cut.

  933
  I can go further. I have today consulted the Institute of Fiscal Studies, which has applied the Budget changes to its own models. The intriguing result is that one requires an income of £30,000 before one comes out well off as a result of the Budget. Anyone earning less than £30,000, which I am bound to say means the great bulk of my constituents, is worse off as a result of the Budget. It is instructive to note that once again the relative distribution of the burden protects those who are most wealthy.
  The household on average pay is 1·33 per cent. worse off as a result of the Budget, whereas the household hovering around the £30,000 mark—highly paid but presumably, in the context of the Treasury's examination, not exorbitantly paid—is only 0·23 per cent. worse off. If we extrapolate the comparison back over the four full Budgets of the Chancellor, we find that the household on average pay is worse off as a result of those Budgets. The household on super pay is 18 per cent. better off as a result of the measures brought before the House by the Government to change the tax regime.
  I do not accept that it was necessary for the nation to sacrifice as much as it is invited to sacrifice to pay the tax burden to the Treasury. Even if it was necessary, it is morally and socially repugnant that those who earn most should be most relieved from the additional sacrifice that the low paid are called upon to pay. Nowhere is that additional sacrifice more marked than in the case of the unemployed who are dependent on unemployment benefit.
  The hon. Member for Anglesey (Mr. Best) referred to the 5 per cent. abatement brought in by the Government two years ago. The hon. Gentleman will reflect that the 5 per cent. abatement was explicitly justified on the grounds that it was in lieu of taxation. The implication left was that when taxation of unemployment benefit was introduced the 5 per cent. would be restored. From July this year unemployment benefit will be subject to taxation but the 5 per cent. cut remains. I put it to the Treasury Bench that even if, in the interests of the unemployed, Ministers are not prepared to restore the 5 per cent., they should nevertheless do so in the interests of their own reputation.
  If they are in any doubt about the importance of this issue to their reputation, I should like to refer to the submission by the Bow Group before the Budget which stated that the 5 per cent. abatement should be restored
  "on the grounds of fairness towards those in most need and"—
  I pay tribute to the political candour of the Bow Group—
  "political self-interest.… with the additional plea that the Conservative Party should not be seen to cheat."
  The unemployment benefit is taxed and the 5 per cent. is not restored. The Government have chosen to set aside the advice of the Bow Group and have chosen to cheat the unemployed of that 5 per cent. Only three months ago Mr. David Luxton, an officer of the Society of Civil and Public Servants which has been preparing for the taxation of unemployment benefits, stated:
  "The procedures are so complicated and the time so short to learn the new system that it is inevitable that gigantic blunders will be made".
  The people who will suffer from these gigantic blunders are those living on the lowest incomes of any household in the country. They are the people facing hardship. I invite the House to contemplate what would be the reaction if it was suggested that those who pay capital transfer tax might be subjected to a gigantic series of
  934
  blunders in the application of the tax regime. What riots we could expects from those who qualify for capital transfer tax. What letters to The Times we would have to endure. What block bookings of the Dining Room and the Terrace would have to be made as we were lobbied on the need to remedy these gigantic blunders. Yet exactly that fate now lies in wait for the 3 million men and women of Great Britain who are currently unemployed and struggling to survive on unemployment benefit.
  Last month, in a parliamentary question, the Secretary of State for Employment was invited to name those travel-to-work areas in which unemployment exceeded 12 per cent. He listed 150, one in 10 of which had an unemployment rate in excess of 20 per cent. —Corby 21 per cent., Ormskirk 22 per cent., Consett 25 per cent., and even the constituency of the Chief Secretary, Whitby 24 per cent.
  Those figures referred only to England. If the figures for Scotland and Wales had been included, the total would have been even greater. For the whole of Glasgow, unemployment is now 20 per cent. The unenviable record for Scotland as a whole is held by Bathgate, in the constituency of my hon. Friend the Member for West Lothian, where unemployment now stands at a shaming and scandalous 37·4 per cent. for both men and women.
  When I was a youth, my parents lived for a while in Galloway. Across the border in South Ayrshire there is a small town called Patna. By the roadside as one leaves the town there is a large boulder on which the figure "22" is inscribed in large characters. I must confess that I passed the boulder many times before it occurred to me to stop and find out what that figure represented. I found underneath an inscription dated 1933, put there by the men of Patna to record that the highest level of unemployment reached in Patna during the great slump was 22 per cent. The men of Patna were so moved by the humiliation and hardship represented by that figure that they immortalised it for all time on that stone.
  I can think of no more accurate measure of the Government's failure to act as stewards of the nation's economy than that they have created so many cases in which unemployment now exceeds 22 per cent. that that figure is now approaching a commonplace and likely to be accepted as such.
  Fifty years later, we look back upon what happened to that town in South Ayrshire as a tragedy because we know that it need not have happened. We know that with different Government policies and a different economic strategy that level of unemployment and that social outrage could have been avoided. I predict that 50 years hence, when historians and economists come to reflect upon the present period, they will regard with equal incomprehension the levels of unemployment that we are now invited to tolerate and their incomprehension will be the greater because they will know that the second major slump of the century coincided with exploitation of the rich and precious resource of North Sea oil which should have brought a period of unparalleled prosperity.
  The calamity that has been visited upon the British nation need not have happened, and it need not continue. There are alternatives to the policies being pursued by the Government. If they do not yet understand that, it is high time that they quit office and made way for those who do.
  9.33 pm
  The Financial Secretary to the Treasury (Mr. Nicholas Ridley): Perhaps it would be for the convenience of the House if I dealt with the matter which the hon. Member for Edinburgh, Central (Mr. Cook) raised about halfway through his speech and which was the subject of some excitement when my right hon. and learned Friend the Chief Secretary was speaking—the figures that my right hon. and learned Friend gave for the increase in the cash available to the personal sector after the Budget and after the increase in national insurance contributions last year.
  The figures that my right hon. and learned Friend the Chief Secretary to the Treasury gave were absolutely right. I will not go through them again because they will be published in Hansard. They did not mislead the House in any respect. They are the global total of extra cash resources which, without enormous accuracy but, give or take a margin, will be available to the private sector in the coming financial year. There is no conflict between those figures and the figures that were quoted from the press release.
  The figures from table 9, and the other tables in the Inland Revenue press release, attempt to show the effect on various sample types of taxpayers based on a number of hypotheses as to what will happen in the future. May I go through the range of hypotheses? Their combinations are almost legion. First, what increase of earnings will the family have from last year to next year? Obviously, the higher the increase in their earnings the better off they will be, and vice versa. Secondly, what inflation will there be between last year and next year? Inflation obviously affects whether people are better off or not. Do they pay mortgage interest, much of it or little of it? Will the mortgage interest rate rise or fall in years to come? The greatest question of all is how many children they have. If they have a large number of children, clearly the tax burden will be lighter than if they do not, because of the effect of child benefit. There is also the period of time over which comparisons are made. I agree that there are some families where the tax burden in percentage terms might be greater. —[Interruption.]—Yes—will be greater. However, it also depends on all the factors that I have mentioned. It is easy to gloss over the fact that we are talking about the future and about hypotheses. As I say, both statements are equally sustainable alongside each other.
  Mr. Cook: I am grateful to the hon. Gentleman for giving way. The courtesy of the Financial Secretary in these matters never fails to make a pleasing contrast to the Chief Secretary. I have difficulty in relating the qualifications that he is elucidating to the House to table 9, which is attached to the press notice issued by the Treasury yesterday. The hon. Gentleman referred to matters such as mortgage interest, tax relief and children. Child benefit has nothing to do with this table. Child benefit does not appear anywhere on it. The whole point about child benefit is that it brought to an end tax allowances for children. As for mortgage tax, there is presumably no reason—
  Mr. Ridley rose—
  Mr. Speaker: The hon. Member for Edinburgh, Central (Mr. Cook) has had his turn. I know that he win. make his point briefly in order to allow the Minister to answer.
  Mr. Cook: I have only one further sentence, Mr. Speaker.
  Mr. Ridley: I will not give way any more. I gave the hon. Gentleman the courtesy of five minutes out of my speech and I do not intend to give him another—
  Mr. Speaker: Order. I understood that the hon. Gentleman wanted one sentence only in order to finish.
  Mr. Cook: Will the Financial Secretary now confirm that for every married couple earning less than £20,000 the combined burden of national insurance contribution and income tax is greater than it was before the Budget?
  Mr. Ridley: I regret that I cannot confirm that because it depends on the increase in their income, on the rate of price changes, and on how many children they have. It depends on their mortgage. The hon. Gentleman is making me repeat a perfectly valid point which he seems not to have taken in fully. The hon. Gentleman seems to talk as if national insurance contributions were almost indistinguishable from income tax.
  Mr. Cook: They are.
  Mr. Ridley: Are they? National insurance contributions go towards paying for the benefit. It is well known that the House has asked the Government and the Government have pledged to maintain the real value of national insurance benefits, both long-term and short-term, and they have done so. Of course, it costs more to finance that, and at a time when living standards have in some cases been going down it is not surprising that the national insurance contribution is taking a greater proportion of some incomes.
  I should like to deal with some of the shorter points that were raised. The hon. Member for West Lothian (Mr. Dalyell) will not expect me to go at length into the matter of the Livingston MOTEC, but I gather that it is a responsibility of the training board. As far as I know, the board is greatly concerned about rumours that the Livingston MOTEC might close. I do not have any final knowledge as to the truth of the matter, but I hardly think the hon. Gentleman will want me to go further into that point in a Budget debate.
  With regard to the question of the capital disregard for supplementary benefit—raised by my hon. Friends the Members for Macclesfield (Mr. Winterton) and Anglesey (Mr. Best), and by the hon. Members for Ince (Mr. McGuire) and Colne Valley (Mr. Wainwright) —I think that the House is grateful and recognises that it is a very big step to increase the disregard from £2,000 to £2,500. We have done it in a genuine attempt to make a generous gesture. I feel that we cannot be expected to go further, having already made a 25 per cent. increase. However, what hon. Members have said about this important disregard has obviously been noted.
  The hon. Member for Glasgow, Cathcart (Mr. Maxton) seemed to suggest that, much as my hon. and learned Friend loves the Scots, one of the points of his Budget was designed to affect a certain by-election. The hon. Gentleman thought that the whisky price was connected with that.
  Mr. Maxton: It is not what I said. It is what the press said.
  Mr. Ridley: Even after the Budget, the real price of whisky is only 55 per cent. of what it was 20 years ago. Many people do not realise that. It will not be that which secures the victory for the Conservative candidate at Hillhead as much as my right hon. and learned Friend's Budget in the round.
  The hon. Member for Ince and my hon. Friend the Member for Abingdon (Mr. Benyon) both intriguingly invited us to go along routes of major reform of taxation. The hon. Member for Ince was interested in the age allowance. Although it is valuable to have the point raised, it illustrates that immediately we come up against the difficulty that in redistributing the age allowance among pensioners in general we should inevitably be taking some of it away from the aged.
  That is the difficulty with all tax reform. There is always someone who will be a loser, and that person very quickly makes himself vocal. That, in a way, is the difficulty with the whole question of income tax and national insurance contribution, which my hon. Friend the Member for Abingdon raised. It is an extremely important matter and we are studying it carefully. I am grateful to him for what he said on that subject.
  The hon. Member for Edinburgh, Central repeated a point made earlier about the unemployment assumptions for the Government Actuary. I refer to the sentences in the public expenditure White Paper which cover this:
  "It has also been assumed provisionally that unemployment (Great Britain, excluding school leavers, etc.) would average 2·6 million in 1981–82, and 2·9 million a year thereafter. This is not a forecast or a prediction. If the developments on pay and the world economic recovery are favourable, there is a reasonable prospect that unemployment levels in the later years may turn out to be somewhat lower than has been assumed."
  That is exactly what the Labour Government did. They assumed that the dynamism of any figure continued into the next year. That was merely in order to have a basis for making estimates. If something is rising, it is likely to rise in future. It is no more of an assumption than that. The hon. Gentleman should not read any view of the Government into those figures.
  We watched carefully the effect of the Budget on interest rates, both in general and for industry. The markets have received the Budget well. My hon. Friend the Member for Enfield, North (Mr. Eggar) spoke about the judgment that my right hon. and learned Friend the Chancellor had to make. That could be instantly confirmed or denied by the markets and they have been remarkedly steady today. That was also the case with the foreign exchange market.
  I know that these are early days and that it takes time fully to appreciate all these things, but, in terms of confirming the judgment, interest rates tended, if anything to edge down, but they are waiting for a move from another quarter. In effect, we have two interest rates for industry—investment incentives for plant and equipment and the much higher effective interest rate in most other cases, both for tax-paying and tax-exhausted companies.
  Investment incentives are available directly to a company that pays tax. In practice, finance leasing has also made them available to the tax-exhausted company. In 1981, leasing accounted for £2,100 million worth of business, which is a very high proportion of investment.
  938
  The problem of high interest rates for business remains. My hon. Friend the Member for Surrey, North-West (Mr. Grylls) did a splendid job in drawing the attention of the House and the country to that issue and to the search for solutions to the problems of interest rate burdens on companies.
  My right hon. and learned Friend the Chancellor thought long and hard about my hon. Friend's proposals. However, as he said yesterday, we have not been persuaded that they offer the best way forward to our common objective. We had some doubt about certain aspects of the proposals and were particularly worried about their selective nature and their effect on the efficient allocation of resources. The proposals are selective in their emphasis on bank lending, as opposed to other sources of finance. There is room for debate about whether British industry is under-borrowed from the banks, but I am not convinced that bank lending is a superior form of finance. Higher bank lending is no substitute for proper long-term funding.
  The scheme also favours tax-exhausted companies. It would not merely put them on the same basis as other companies, but would, in many cases, give them a positive fiscal advantage over companies earning profits and paying tax. I am not happy about creating such distortions, particularly when consultations are just starting on the corporation tax Green Paper, which raises big issues concerning investment incentives.
  There would also be selectivity in favour of certain businesses, such as manufacturing, and against others, such as some in the service sector. There is also the question of costs. The proposal is that tax-exhausted borrowers should pay interest net of corporation tax and that the Exchequer should eventually make up the difference by an annual cash payment to the banks. The cost to the Exchequer could be substantial, restricting the scope for the other forms of help to industry that my right hon. and learned Friend eventually chose instead.
  The fundamental problem is the low level of profitability of British industry, combined with high bank interest rates in the past. Our economic strategy is aimed at putting right those fundamental problems and creating the conditions in which businesses, whether tax paying or tax exhausted, will be encouraged to invest.
  For those reasons we are attacking the problem in other ways. We see the way forward as lying along two roads. The first is the use of more equity capital. Greater use of equity finance and less borrowing from banks would reduce short-term interest rates. The measures that my right hon. and learned Friend introduced yesterday are directed to encouraging the provision of equity capital, notably by the future indexation of capital gains tax.
  I wonder whether the significance of the future indexation of capital gains tax has been fully realised. Although we were unable to apply the relaxation to past gains, for the future no one who merely maintains the value of his investment will pay tax except in relation to his first year of holding the asset. Removing this distortion will undoubtedly make equities more attractive and equally index linked stock. Index linked gilts would not have been liable to capital gains tax anyway, but now any discrimination between them and index linked company debentures has been virtually removed. As the Financial Times says today,
  "These measures are likely to be remembered long after the details of the 1982 Budget are forgotten".
  Mr. Eggar: Although one recognises all those measures, do they not mean in total that it will be much more difficult for companies to issue fixed rate debenture stock?
  Mr. Ridley: I believe not. I was just coming to that point. It is the second way forward that long-term loans should be made easier for businesses, whether at indexed or fixed rates. I recognise that many business men consider that the cost of borrowing at present is too expensive and many are concerned about the immediate cash flow costs of paying the present nominal rates of interest. We are helping, in the way that we fund our deficit. By increasing the inflow into national savings and by issuing the index linked gilts, the Government have reduced their reliance on the long-term fixed interest market.
  For example, during the past year we have issued only £750 million of stock maturing in the next century, compared with over £3 billion in the year before. In that way we clear room for companies at this end of the market and long-term interest rates will also, I hope, be brought down.
  We are moving in the right direction. The long-term interest rate has fallen since last September. I hope to see many more companies coming forward with debentures. A way of avoiding heavy immediate costs would be for them to issue immediately indexed stock. The Government have demonstrated that there is a market for such debt. I appreciate that it could result in a higher cash flow cost in later years. A company would need to be satisfied that indexation matched its prospects. Lenders would also need to consider the risks. I would not suggest that indexation is an easy or simple answer, but it merits more consideration. No doubt the City will be thinking about the possibilities—there are many—after the important changes that my right hon. and learned Friend's Budget has made.
  Finally, I turn to the question that many right hon. and hon. Members have asked—the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) more than most—which is how reflationary is this Budget? The pre-Budget advice that we received in the Treasury was conducted almost solely in terms of rival bids for the amount of reflation that hon. Members believe to be desirable. They varied from a modest £2 billion or £3 billion from some of my hon. Friends to the absurd £9 billion from the right hon. Member for Stepney and Poplar (Mr. Shore). The bids from SDP members were somewhere in the middle.
  I have an interesting quote from a speech made in 1973
  "There has been a lot of talk about the formation of a new centre party. Some have been kind enough to suggest that I might lead it. I find this idea profoundly unattractive".
  Later it says:
  "I therefore have no desire to seek new combinations. I remember an old piece of doggeral about someone 'Playing on his fuddled fiddle, Somewhere in the muddled middle'. I have no fuddled fiddle and I do not propose to get one."
  That was the SDP candidate for Hillhead. Now, with a reflationary bid of about £4 billion, he is in the "muddled middle" himself.
  940
  I am not entirely sure what the term "reflation" means. The first time that I heard it was in 1963, when the late Reginald Maudling reflated. In those days we were on a fixed exchange rate and the consequences of reflation surfaced in the form of the famous £800 million deficit on the trade balance. At that time the Labour Party went for that £800 million trade deficit with a truly militant tendency. It said that that reflation was reckless. The Labour Party tried to snatch from us the mantle of being a party of financial responsibility, but it gave up any pretence of doing that a long time ago.
  Since then there have been three further reflations. The City University Annual Review for 1981 catalogued the results of those three further reflations of 1966–67, 1973–74 and 1978–79. Within a year or two of each of those reflations, inflation had, naturally, risen considerably. No one would have expected otherwise. Even more interesting, unemployment rose on average by about 50 per cent. after each reflation. In 1966–67 unemployment rose from 1·4 to 2·4 per cent. In 1973–74 it rose from 3·6 to 4·6 per cent. In 1978–79, when the right hon. Member for Stepney and Poplar had something to do with our affairs, unemployment rose from 5·5 to 8·7 per cent
  In each case the money supply eventually had to be brought back under control. In the 1973–74 reflation, the International Monetary Fund had to do it. In the right hon. Gentleman's reflation we had to do it. That is what caused people to complain of "stop-go"—something which perhaps hon. Gentlemen recently elected to the House will not remember. I believe that it was not "stop-go", but "go-stop", "reflation-deflation". It is not in the economic vocabulary now, and I am sure that no one wants to bring it back. In each of those reflations the money supply was deliberately expanded and then, a year or two later, it had to be contracted. In other words, they were not reflations but inflations.
  In this connection one is again asked "Is this Budget reflationary?" One cannot answer that question with a direct answer. It is a well-judged Budget which continues our progress in reducing the size of the public sector borrowing requirement and enables us to reduce taxation. We estimate that there was a PSBR of about £10½ billion in 1981–82. We now expect it to come down to £9½ billion in 1982–83, and that includes the £1·3 billion PSBR effect in 1982–83 of my right hon. and learned Friend's Budget proposals.
  In some ways that understates the effect of our tax reductions, which, net of NIS clawback, are worth over £2 billion, on an indexed basis, in a full year. As my right hon. and learned Friend said yesterday, they are worth over £3 billion if indexation is not assumed. So where the question of reflation comes in is difficult to see.
  Those are the figures. To say that the Budget is neutral, deflationary or inflationary seems to me to miss the real point, which is that the judgment on the Budget is by how much interest rates will be increased if taxes are cut and the borrowing requirement is increased. Just as many jobs can be lost by interest rates going up—
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

Petition

  Homeless Persons
  10 pm
  Mr. A. W. Stallard (St. Pancras, North): With your permission, Mr. Speaker, and that of the House, I beg leave to present a petition signed by supporters of the campaign for the homeless and rootless, accompanied by analogous petitions containing over 4,000 signatures of people who support that campaign.
  The petition condemns the continuing practice under the Vagrancy Acts of 1824 and 1935 of punishing and imprisoning people who are forced to sleep rough because there is nowhere for them to live and whose numbers, because of prevailing circumstances, are on the increase.
  The petition showeth
  that there is no place for the vagrancy and begging laws in the 1980s. Wherefore your petitioners pray that your honourable House will repeal the laws relating to the offences of sleeping rough, begging and being found on enclosed premises in the Vagrancy Acts of 1824 and 1935.
  And your petitioners, as in duty bound, will ever pray.
  To lie upon the Table.

Trials (Costs)
Motion made, and Question proposed, That this House do now adjourn. —[Mr. Bud gen.]
10.2 pm
Mr. Stan Thorne: Just a year ago Lancashire played host to a lengthy criminal trial which became known, for the manner in which the murderers sought to conceal the identity of their victim, as the "handless corpse" trial. It was held at Lancaster, amid strict security, and it is the cost of that security operation, and the burden of that cost upon those who are obliged to bear it, that prompts me to raise the matter though the mechanism of an Adjournment debate. I am indebted to county councillor Tom Sharratt for the detailed information that I wish to submit to the Minister, who will no doubt recognise the concern which exists among ratepayers in the Lancashire area.
The total cost of the trial, which lasted more than six months, cannot be calculated with any great precision. But it is certainly possible to make a fair estimate of the cost to the public purse: proceedings in court, £1·3 million; high-security conversion of cells at Lancaster prison, £8,450; courtroom alterations, including construction of a special dock, £50,000; police security, £820,000. The total estimated cost so far—and appeals have yet to be heard—is £2,178,450.
I am concerned with the £820,000 for the police security operation. Half of that sum will qualify, I understand, for Government grant, but the rest must come from the pockets of Lancashire's ratepayers, and I believe that is wrong. It is wrong because the crime which gave rise to the "handless corpse" trial arose from a vast international conspiracy and the murder itself occurred in Lancashire largely by chance.
The victim, Martin Christopher Johnson, a New Zealander said to have been a major figure in an international drug syndicate, could have been killed in any one of half-a-dozen places—Australia, New Zealand, Thailand, Singapore, or other countries to which the syndicate had extended its operations. Indeed, had his killers deferred his execution for 20 minutes more as they drove north on the A6 beyond Lancaster the murder would probably have taken place in Cumbria, and if they had waited another hour or so the scene of the killing might well have been in Scotland. The fact that it happened in Lancashire, and that the body was dumped in a Lancashire quarry, was, I believe, largely fortuitous. Nevertheless, as a result of that circumstance, and in consequence of the national policy that each area must bear the cost of its own policing, Lancashire's ratepayers find themselves saddled with this enormous bill.
It is not the first time that this sort of thing has happened. In 1975 the trial of the Birmingham pub bombers was held at Lancaster, because it was felt that no unbiased jury could be found in the Midlands. That trial, too, was for obvious reasons surrounded by tight security, and the cost of that operation, too, fell on Lancashire, It came to about £200,000, and Lancashire alone was obliged to pay up, even though the proceedings had nothing at all to do with Lancashire.
A similar burden has been thrust upon the county of Hampshire. There have been a number of top-security trials at Winchester, involving offences committed far beyond the boundaries of that county, but Winchester

943
Crown court is apparently well suited to the needs of tight security, and for that reason these trials have been held there. And, like Lancashire, Hampshire has been obliged to pay the costs of the security operations surrounding those trials.
Is it just and right that this should be so? When travel was difficult and crime generally local, it was obviously reasonable that the local community should bear the cost of bringing the malefactor to justice: hence the medieval concept of hue-and-cry, whereby every able-bodied person was required to join in the pursuit of the offender. But can such outdated ideas be maintained in an age when motorways criss-cross the land and villains from the capital can raid a town in the provinces and be back home in time for tea, when foreign capitals are only hours away by air and international communications make business of any kind as easy as picking up the phone? Crime, like any other big business today, is multinational, and I believe that the costs of fighting massive international crime—and that is what the "handless corpse" trial brought to light—should fall on the international community.
But I realise that that is some time away. What I will say for the present is that the costs of prosecuting major crime in this country should be borne at national level and not by the relatively small section of the community in which a crime may by chance happen to occur. I believe that there is a strong argument for establishing a national top security court where cases of this nature can be tried, the costs being borne out of the national Exchequer. So long as terrorism flourishes, both domestic and international, the need for such a court will remain, and I regret to say that I see no prospect of an end to it yet.
If I may digress for a moment from the Lancaster trial and security surrounding similar proceedings, let me point out that the county of Essex will presumably have to bear the costs of the huge security operation surrounding the hijacked Tanzanian airliner which landed, largely by chance, at Stansted the other week. Possibly even greater security costs will have to be met by those police authorities whose areas will be graced this summer by the presence of the Pope—a visit which, by any standard, must rank as a national and not a local event.
Let me return now to the particular question of who should pay the costs of the security operation at Lancaster last year. At the conclusion of the trial, Mrs. Justice Heilbron ordered that £1 million should be paid towards the costs of the prosecution by the man said to have been the "Mr. Big" of the international drug syndicate, in which the murdered Martin Christopher Johnson played such a significant part. He was Alexander James Sinclair, formerly known as Terry Clark, and by many other names, and was one of the five men convicted of Mr. Johnstone's murder. He will now remain a guest of Her Majesty for the next 20 years unless his current appeal is successful.
Mr. Sinclair is said to be a man of considerable substance, having amassed a fortune estimated at £25 million from drug racketeering within the space of four years. As I understand it, efforts are being made by the Government to secure the £1 million he was ordered to pay from his assets in Australia, believed to amount to £2 million, In New Zealand, too, Mr. Sinclair owns a partly completed house in the Bay of Islands which is said to be worth a quarter of a million pounds and he may have other assets there as well. There have been reports that he
944
possesses further assets in Hong Kong, Singapore and Switzerland, but it has not so far, as I understand it, been possible to identify them.
If the Government manage to secure £1 million from Mr. Sinclair's overseas assets to go towards the costs of his prosecution, why should they not simultaneously secure from the same source whatever sum may be appropriate to cover the cost of security surrounding his trial? The Government of New South Wales are considering legislation to ensure that the illicit fortunes of drug racketeers are confiscated on conviction. It must be a matter of regret that there is, apparently, no similar provision under British law, but it is an idea that could profitably be borne in mind by the Minister and may be translated into the Criminal Justice Bill before the House. That legislation might also include provision for diligent scrutiny of those defendants of considerable means who apply for legal aid. There is no reason at all why a man who has accumulated vast wealth from crime should expect the British taxpayer to foot the bill for his defence. Let him pay it himself, he is better able to afford it than we are.
What I have said will not help the ratepayers of Lancashire in the short run. As things stand, they must dig deep in their pockets to find £410,000, and £50,000 for alterations to the court. I suggest that in these exceptional circumstances the Government should acknowledge some special responsibility. I am sure that the Minister is familiar with the Police Act 1964 and that he will bear it in mind. An ex gratia payment to the Lancashire police authority would be appropriate in this case. I commend that suggestion to the Minister and I hope that he will respond to it.
10.14 pm
The Minister of State, Home Office (Mr. Patrick Mayhew): I am grateful to the hon. Member for Preston, South (Mr. Thorne) for having raised an important matter for Lancashire and for the manner in which he has done so. He has given us an opportunity to discuss and, hope, clarify the arrangements for meeting the costs arising from major court trials.
It is appropriate to recall the facts relating to the discovery of the murder and the inquiry into what became known as the "handless corpse" case. On Sunday 14 October 1979, the body of a man was found submerged in water in a quarry near Chorley in Lancashire. Inquiries revealed that the body was that of Martin Christopher Johnson, a native of New Zealand who had been a member of an international drug smuggling syndicate. As a result of extensive police investigations into the syndicate's activities, raids were carried out on premises in London, Scotland and Lancashire. A number of persons were arrested and the extent of the syndicate's operation then became clear.
It was subsequently necessary for officers from Lancashire to visit Singapore and America; and they also went to Australia at the invitation and the expense of the Australian Government. As a result of those extensive investigations, 12 persons were committed for trial at Lancaster Crown court on charges of murder, conspiracy to import drugs, and conspiracy to supply drugs. Two witnesses were kept under close police protection while the murder inquiry was being conducted and six witnesses in all were afforded police protection until the trial had been completed.

945
The trial was a long one. It began on 6 January 1981, and concluded on 15 July. High security had to be provided throughout that period within the precincts of the court and for the trial judge, Mrs. Justice Heilbron, and, as I have mentioned, for witnesses. Without that high level of security it is probable that attempts would have been made either on the lives of witnesses or to effect the release of some of the accused from the court.
The trial proved to be the most expensive hearing on record and almost the longest for a murder case. At the end of the trial, three of the defendants were acquitted. Sinclair, the ringleader, and four other defendants received life sentences, and in all the convicted defendants received between them a total of 175 years imprisonment. Sinclair was ordered to pay £1 million in costs; Maher £10,000; and Russell £20,000.
The murder of Johnson was a horrible crime committed by ruthless men engaged in an international criminal operation, as the hon. Gentleman rightly said. Through the work of the Lancashire force we have demonstrated again that in this country we devote every effort to bringing to justice those responsible for such serious crimes. The police give this work the highest priority, and that is right. It is what the people of Lancashire, and the country at large would expect. The press give a good deal of attention to lurid crime, but less publicity to the successful conclusion of a case. Our clear-up rate for homicide in this country is high, well over 90 per cent. We would all agree that the fundamental point which we should welcome is that the criminal law has been enforced properly and rigorously in this difficult case.
Clearly the police must devote considerable resources to such serious crime investigations. The costs of the police operation—the investigation and security for the trial—were heavy and the Lancashire police authority incurred additional expenditure estimated at about £820,000. Responsibility for footing the bill rests with the police authority, under our constitutional arrangements for the control of police forces. Under the Police Act 1964, the duty for providing and maintaining an efficient police force for the area rests with the police autority. The Home Secretary has a general statutory responsibility under the Act to promote efficiency and must approve various actions of the police authority, for example the most senior appointments.
The 1964 Act provides for a partnership between central and local government on policing, which is reflected in the arrangements for financing the police service. Police expenditure qualifies for a 50 per cent. specific grant from the Government, and is taken into account for the rate support grant settlement. So the Government, by one means or another, are meeting about 59 per cent. of the additional costs incurred by the Lancashire police authority. Beyond that the Government cannot go. It is fundamental to our philosophy of policing in this country that the police are closely linked with their own community. They are not the paid agents of central Government, and, because responsibility for providing an efficient police force rests on the police authority, under our arrangements that authority must also be responsibe for police finance. That is what the existing grant arrangements seek to achieve.
946
Central Government pay 50 per cent. directly and a bit more on top by way of rate support grant. This is part of the Government's general responsibility for the maintenance of law and order in the country as a whole.
The Lancashire police authority, for reasons I wholly understand and with which I sympathise—they could not have been put more persuasively or fairly than by the hon. Gentleman on behalf of his constituents and the county that he helps to represent—asked for special treatment. It said that the Johnson murder was part of an international inquiry, as the hon. Gentleman has emphasised, and that is true. It said that the force was involved in an expenditure that would not normally be expected. That is true as well. It said that exceptionally strict security was necessary for the trial. That is also true. These unusual aspects, argues the police authority, put the costs of the case outside its control. I accept that they were not to be anticipated.
I also know that Lancashire had to carry the burden of some IRA terrorist trials in the mid-1970s, because Lancaster can offer perhaps the most secure court facilities in the country, but we cannot escape the fact that it is the duty of the police to maintain and enforce the criminal law, and from time to time police authorities may find themselves picking up the bill in their areas for policing commitments that are out of the ordinary.
There is some scope within mutual aid arrangements for police forces to assist others that have to bear the burden of investigations or security arrangements begun by another force. Indeed, Merseyside police provided Lancashire with free mutual aid for one of the IRA trials in 1975. But the Home Secretary has no power, nor would he think it right in policy, to pay an additional contribution to police costs in investigating the case or providing security arrangements. We cannot go beyond the grant arrangements that have been approved by Parliament.
Any proposal for 100 per cent. funding of an extraordinary commitment in the line of normal police duties would carry with it the implication that the Home Secretary should have some direct control of the police operation in question. That is a serious consequence, and not one that this House or the police authorities would or should welcome. This is something that neither the Home Secretary, the police authority nor the chief constable would find acceptable. Furthermore, there would be a very practical difficulty of defining which operations should attract special funding arrangements. Where should we draw the line?
As the hon. Gentleman has said, Lancashire's problem is not unique. Other forces have had to carry the burden of exceptionally long and complex criminal investigations. The Yorkshire Ripper investigation, the Panther case and Operation Julie are some examples. It is nothing new for the police investigation of an offence to develop into a case with nationwide or even international ramifications. The Johnson murder was a crime committed in Lancashire—unfortunately for Lancashire. It was the duty of the Lancashire force to investigate it and to try to bring the culprits to justice, which to its great credit it did most effectively. The trial of those responsible fell in the ordinary course to be held in Lancashire.
The investigation was a great credit to the force and to the people of Lancashire who sustained that force. It is no coincidence that that efficient force is locally administered. The corollary to local organisation and accountability is local financial responsibility, which must mean taking the rough with the smooth.

947
I regret, therefore, that there is little comfort that I can offer. If—and it is a big "if'—any of the £1 million costs that Sinclair has been ordered to pay is recovered, it will be for consideration whether the police authority has some claim on that sum. However, we must recognise that that is a long shot. Sinclair has no assets in the United Kingdom. The order must be enforced against his assets abroad. The order was made, but it is one thing to make an order and another to enforce it so that real cash comes to hand. First, Sinclair's assets must be traced and, secondly, a way must be found of realising them within the law of the country concerned. That is a complex legal exercise, which is fraught with difficulty.
I see that local authorities would be attracted to the idea of a central court where cases requiring exceptional security could be tried. They would be paid for out of public funds so that the burden did not fall on local ratepayers. However, that would run against the spirit of the Beeching report recommendation that justice must be locally available to the people and that the courts must therefore be locally based. There would also be the difficult question of who would be eligible for jury service in a central court. Cases requiring security at such a level are extremely rare and could not justify the establishment of such a court.
Characteristically, the hon. Member for Preston, South has introduced the matter in a fair and reasonable way. He has brought before Parliament the concern in Lancashire about the exceptional police costs connected with the Johnson case. I wish that I could go further towards meeting Lancashire's requests, but, taking account of specific grant and rate support grant, the Government meet
948
about 59 per cent. of the additional costs falling on the police authority. I do not think that we could do more without upsetting the delicate balance between the Government and local authorities on the control and administration of policing in much more than purely financial terms. I have listened to what the hon. Gentleman said about recovering the costs from Sinclair. However, I regret that the prospects of that are not good. I should not say otherwise.
In the long run it would not be to the advantage of Lancashire or of the hon. Gentleman's constituents were we so to alter the balance that exists at present by virtue of Parliament's arrangements for the administration of policing in the country that greater control of police operations by consequence rested with the Home Secretary. That would not be to the advantage of Lancashire in particular or to the advantage of our country as a whole.
Therefore, although no one could have expressed his constituents' or his country's concern with greater fairness, objectivity or eloquence than the hon Gentleman, I regret that I must tell him that we cannot go beyond the arrangements that I have outlined. I wish that it were possible to do so. The speech that I have had to make tonight does not derive from any lack of sympathy with the problem or the burden that Lancashire has had to bear.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.

DEFENCE
  Nuclear Weapons
  Nuclear Weapons
TRADE
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EDUCATION AND SCIENCE
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PRIME MINISTER
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HOUSE OF COMMONS
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ENVIRONMENT
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  Building Research Establishment
  Building Research Establishment

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

Tributes to the late Lord Butler of Saffron Walden
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, it is my sad duty as Leader of the House to pay tribute to the noble Lord, Lord Butler of Saffron Walden, who, as the House will know, died on Monday. It is fitting that a tribute will also be paid this afternoon in another place by my right honourable friend the Prime Minister, because the noble Lord's greatest public achievements took place between 1929 and 1965, during which time he was a most distinguished Member of another place.
It is no exaggeration to say that the noble Lord had one of the most outstanding records of service to his country and to his party this century. He was a Minister of the Crown for no less than 27 years—in itself a remarkable record. As so many have said in tributes over the last day or so, he was in every sense of the word a great and accomplished statesman. We recall his early achievements in the pre-war Government in the India Office and in the Foreign Office. From 1941 until the general election in 1945, Lord Butler was President of the Board of Education. Many of your Lordships will still link the 1944 Act directly with his name and I, and I know many others, regard that Education Act as one of the great and fundamental reform measures of recent times. Nearly 40 years later it still remains the basis of our system of education.
After the war the noble Lord, Lord Butler, built up the Conservative Research Department and in so doing he laid the foundations for the return of a Conservative Government in 1951: as a vice-chairman of the Conservative Party, I should particularly like to pay tribute to this aspect of his work. Between 1951 and 1964 he served as Chancellor of the Exchequer, as Home Secretary and as Foreign Secretary. He became one of the finest politicians of his generation.
The noble Lord came to your Lordships' House in 1965 and I know that there are many of your Lordships who will remember him in this House with great affection. He became a most distinguished Master of Trinity College Cambridge, but he still found time to come to the House to give us the benefit of many fine and memorable speeches on the great issues of the day. We all recognise the truth about politics revealed in the title of his autobiography, The Art of the Possible. I am sure that the whole House will wish to join me today in expressing our sense of loss and our sympathy to his wife and family.
Lord Peart: My Lords, I should like to add a tribute from these Benches. Lord Butler was one of the outstanding statesmen of his day. He was a consummate
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politician but he was also highly regarded as an academic. He had a distinguished university career at Cambridge before entering politics, to which, indeed, he returned in 1964. He held every great political office except that of Prime Minister. But, most important, and what he will surely always be remembered for, particularly in the Labour movement, was the Education Act 1944—an Act that had the all-party support of the war-time coalition Government. It remains one of the most important and far-reaching reform measures of this century and one that has stood up to the test of very changing circumstances in the last 40 years.
The noble Lord was pleased to tell how he insisted on the word "comprehensive" being included in the Bill, and we in this House also well remember when he stood up for this Act during the passage of the Education Act 1980. When the clause dealing with transport was reached in Committee, he made a powerful speech and your Lordships rallied to him. He will always be remembered for his wit, his compassion and his contribution to art and learning.
Lord Byers: My Lords, we on these Benches would wish to be associated in full with the tributes just paid by the Leader of the House and by the noble Lord, Lord Peart. I count it as my good fortune that I served in the other place in the 1945 Parliament with politicians and statesmen of stature from all parties, of whom Rab Butler was an outstanding example. It was a fine Parliament and he shouldered a heavy workload in leading for the Opposition in many of the major debates of that exacting period of radical reforms. Before that, he had many achievements in his career—pre-war on the India Bill; as an influential proponent of speedier re-armament; as has been mentioned, the 1944 Education Bill; and for the next 20 years he was deeply immersed in practically all the major measures and important political issues as a leading member of the Government or the Opposition. Indeed, he did have a remarkable political record. At all times he was charming and courteous and he was often mischievous. Those who knew him will never forget that inimitable chortle and the glint of fun in his eyes. I wish that we could have seen and heard more of him in this House, but whenever he did come it was to very good purpose indeed.
My Lords, we send our sincere condolences to Lady Butler, with whom my colleagues and I on these Benches have for so long felt that we have shared a common political philosophy.
Lord Kennet: My Lords, in the absence of my noble friend, I wish to associate the Social Democrat Peers with what has been said. We salute in Lord Butler not only the founder of our education system, but also the master par excellence of the possible and a man who left half his name, along with half that of a most respected leader of the Labour Party, to an "ism" which is perhaps no more than a synonym for practical moderation. His characteristic and deceptively low-key sayings again and again threw light on reality, not only to those engaged in politics but also to the people at large, and there are few greater services that a politician can render than that.
Lord Caccia: My Lords, no one on these Benches can normally speak for others who sit there, but on this occasion I am confident that they would wish to be associated with what has already been said about Lord Butler of Saffron Walden. This perhaps especially as, of course, constitutionally in the other place they can have no voice. Even so, I speak with all due diffidence, for although I was one of a number of Permanent Secretaries who served him as their Minister, my direct experience was relatively short-lived, as his period of office as Secretary of State for Foreign Affairs was only to last barely a year between 1963 and 1964.
Characteristically, he made it plain when I first went to see him that he thought that it would be inappropriate for him to seek to adopt any new attitude or strike out on any new line of policy in the remaining months before a general election. He had, rather, decided to continue generally on course. As usual in foreign affairs, the going was sometimes bumpy. It was reassuring that he brought to his department a sense of calm in apparent crisis and a hunch, as Sir Edward Grey had remarked before him when Foreign Secretary, that things were rarely so good or so bad as when first reported.
Further, through his experience of administration and Government he did in his year of office put through the first reform of the terms of service of the Diplomatic Service since the Eden-Bevin reforms of the 1940s. In short, and to the great gain of that service, he was one of those Secretaries of State who showed in action that he cared for the good order and morale of those in his charge. It was yet another example of what has already been said of his eye for doing what was possible in the time available.
Within a year, in 1965, he had become the head of one of the greatest colleges in Cambridge, and I was then Provost of Eton. There, in education, I gained some means of knowing at first hand what the Butler Act of 1944 had achieved in the 20 odd years since its enactment. As has been said, this Act may well be judged as the single and most important contribution among many that he made to the history of our times. He it was who, by patience and persuasion, was able, with his Labour colleague, Chuter Ede, to get on to the statute book a measure agreed, as the noble Lord the Leader of the Opposition has just said, between parties and by religious denominations—an achievement that had eluded us between the wars.
With less diffidence yet with fitting deference, may I also speak on a personal note. I had got to know Rab, as he wished and expected his friends to call him, in his earlier pre-war days as Under-Secretary of State in the Foreign Office. That friendship continued unbroken in and out of office, as president of Trinity and thereafter. Here at home he was a lucky man, for no one should rightly regard him
"as an island entire of itself".
His first wife, Sydney, provided him, among much else, with the firm base, with the thrust and impetus which fortified him during the earlier part of his career and until her tragic, fatal illness, so courageously borne. Then he had the fortune to marry as his second wife someone who successfully surrounded him with charm and warmth, with unaffected devotion and admiration during his later years. I am sure that all who knew
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him—and not only on these Benches—would want their sympathy and prayers to go to Lady Butler. May she, as Homer put it:
"be smiling through her tears",
when she brings back to memory the happy days she did so much to create.
Noble Lords: Hear, hear!
The Lord Bishop of Lincoln: My Lords, with all brevity, may I say with what respect and gratitude Lord Butler's work was always viewed by all the Churches in this land. Obviously, I think particularly of the Education Act. It was his gifts which turned what might have been a mere compromise into the very remarkable dual system which we still have today. Lord Butler's understanding of religion as well as of education was wide as well as deep. He was deeply concerned with the education of the disabled, the less able as well as the high fliers, and he extended education into adulthood. On the basis of those insights, I think that the Churches very much hope to play their due part in shaping the education service for the multi-faith and multi-racial community of the future, and in so doing we shall be following his spirit.
I remember asking him to come and preach at Coventry when I was there some years ago. I shall always remember his reply to my letter. He said:
"I should love to come, but I do not preach very well because I always wait for applause which I do not get".
He did come and he did preach, and his sermon was splendid.
Lord Boyd-Carpenter: My Lords, as one who had the privilege of serving under Lord Butler as Financial Secretary during the epic first three years of his term as Chancellor of the Exchequer, may I add just a few words about my old chief. Some of your Lordships will remember that Winston Churchill entrusted the whole management of the finance and economy of this country to Rab Butler, and, although Rab had not had any previous experience in an economic department, he took an immediate and effective grip on the Treasury. It was a wonderful experience to see his handling of that department, containing, as it did then and does now, the élite of the public service and the complete mastery of the intricacies of macroeconomics, which he so rapidly acquired and which enabled him to handle a very grave economic crisis with conspicuous success.
I have always thought that his public service during those years has never been fully understood or appreciated, and yet he effected a turn-round in our national economy which had beneficial effects for very many years to come. It was a wonderful experience to serve under him; to hear what the noble Lord, Lord Byers, so well called his mischievous humour, his always assumed cynicism, and his profound skill in the management of men. I join with others in expressing our deepest sympathy to Lady Butler of Saffron Walden, whose care of Rab during all these recent years has been so marvellous. Our hearts go out to her. All of us who have worked with him are left with a profound feeling of gratitude to him not only for what he did for his country but for what he did for us.
Lord Paget of Northampton: My Lords, may I add just one word from these Back-Benches from one who was not alone here in regarding Rab as a dear friend. Nobody did so much as he did to civilise the vast transition in our social order which took place between the beginning and the end of the war. It was his influence that made that transition civilised and affectionate. I can assure your Lordships that love for him was not confined to his own party.
Baroness Trumpington: My Lords, as another ordinary Back-Bencher, a friend, and one who had the privilege of having Lord Butler as one of my two supporters at my Introduction to your Lordships' House, I should like to express my deepest sympathy to Lord Butler's widow and children. I would add that for several centuries the Butler family have served the City and University of Cambridge with great distinction. Lord Butler in his capacity as Master of Trinity College, High Steward of Cambridge University from 1958 to 1966, and as High Steward of the City of Cambridge from 1963 until his death, added his own particular brand of lustre to that tradition. I feel sure I echo the feelings of Cambridge people when I say that we shall not see his like again.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I hope I shall not be thought impertinent if I add a word of my own to the tributes which have been paid to the late Lord Butler. From the moment when I first entered another place in 1938 until his death two days ago, he and I were colleagues in one House of Parliament or the other, and members of the same party, and I like to think close friends. When I first arrived I can remember the Under-Secretary for Foreign Affairs fielding with almost incredible agility that terribly difficult series of Foreign Office questions which took place in the aftermath of the Spanish Civil War and in the run-up to the Second World War.
When I got back from the Middle East there was Rab entering into the negotiations for the Education Bill, which has been referred to so often and is perhaps his most enduring monument. I think it is now difficult to recall, and perhaps many people do not recall, the welter of apparently irreconcilable opinions with which the education world was then afflicted, and the incredible mastery and diplomacy with which Rab Butler was able to create not a compromise but a permanent structure.
When the party to which I belong suffered that landslide defeat in 1945, there was Rab in the Conservative research department laying the foundations of what subsequently turned out to be the post-war Conservative Party. I know that I speak not only for my own party when I say that the continuance of more than one powerful party in the state, the unofficial part of our constitution without which the more formal structures would not work at all, is one of the bastions, foundations, of our liberty; and Rab did that. Then followed the 13 years of distinguished service in the very highest offices of state one after another, all of which he brilliantly performed.
My Lords, that is only a part of the matter. There is something else that I would like to add. There was a school of thought—perhaps there still is—on both sides in politics that Rab was in some ways too irenic
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towards his opponents. That was the foundation of the word which was referred to from the Social Democratic Benches. I never shared that view. I believe he was acting as a Christian statesman should act by treating, even under the conditions of democratic polemics, his opponents as he would wish to be treated himself. I should like to say, in that connection, that in Hugh Gaitskell, whose premature and tragic death was mourned outside the ranks of his own party, he found somebody who treated him in the same way. I have never thought that English life in politics can be long protected without mutual behaviour of that kind.
Several times when he was Master of Trinity I visited him there. His understanding of, and love for, the young was so noticeable. And so we remember him today and his widow with affection and with regret at his passing. We think of the man: his love of the countryside and of country people; his patriotism and, for me, always the extraordinary intellectual power and equipment which he brought to public affairs. Like others, I shall remember that roguish sense of humour which showed that in all the great affairs with which he was concerned he took neither himself nor his colleagues, nor the vanities of this wicked world, too seriously. God rest his soul, and light perpetual shine upon him!

Fires in Penal Institutions
2.58 p.m.
Baroness Masham of Ilton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many prisoners and staff have been injured by fires in penal institutions during the last five years.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, our records for the years from 1977 to 1981 show that 66 prisoners and 10 staff suffered cuts, burns or other injuries as a result of cell fires. We do not have information collected centrally about injuries resulting from other fires.
Baroness Masham of Ilton: My Lords, while thanking the Minister for his reply, may I ask him whether he is aware that one of the main dangers is toxic fumes from the smoke from mattresses which are now used in our prisons and other penal establishments, and whether the Government are considering supplying other mattresses and giving breathing equipment to prison staff?
Lord Belstead: My Lords, we are now testing five different types of mattress to find one which is more resistant to fire than polyurethane foam mattresses and one which, if ignited, will give off less toxic fumes. So far as breathing equipment is concerned, we are also testing two types of smoke protection hoods in four different establishments. These hoods would not be used for fighting fires but for rescuing a prisoner from a smoke-filled cell.
Lord Boston of Faversham: My Lords, can the Minister say whether the number of fires has been increasing in recent years? Can he give any indication of the proportion of fires which appear to have been started deliberately? And is he satisfied that everything possible is being done by way both of the adequacy of supervision staff and of precautions?
Lord Belstead: My Lords, the number of fires has, broadly speaking, been increasing. I cannot, I am afraid, give the noble Lord figures of the numbers which have been started deliberately. As for precautions, I replied to the noble Baroness about the tests being carried out now on mattresses, because we believe that they are the main cause of fire in prisons, or, rather, the main hazard of fire in prisons arises from them.
Baroness Masham of Ilton: My Lords, would it be a good idea if the prisoners themselves made some of their new mattresses, so giving them employment and saving them being shut up in their cells for 23 hours a day?
Lord Belstead: My Lords, the mattresses which are now being tested are the products of firms which have developed them themselves. They would, I have no doubt, wish to secure the contract, if there is to be a contract, and we should have to look at the noble Baroness's suggestion in that light.

Local Authority Services and Private Contractors
3.2 p.m.
Lord Orr-Ewing: My Lords, I beg leave to ask the Question standing in the name of my noble friend Lady Gardner of Parkes on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many local authorities in the United Kingdom have put any of their services out to private contractors.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, I regret that comprehensive information on the number of local authorities that have employed private contractors to provide their services is not collected centrally at the present time. Nevertheless, I can say that the extent to which authorities are considering and taking up this option has increased significantly and is continuing to do so.
Lord Orr-Ewing: My Lords, does this extension of the private sector, in order to save money and achieve higher efficiency, extend not only to refuse collection but, for example, to catering and cleaning services? Would my noble friend agree that we should have the opportunity of judging the effectiveness of this move by auditing in order to show that there are real financial savings and improved services as a result of this application?
Lord Bellwin: The options are open, my Lords. There should be no service which is not compared so as to see what the private sector can provide by way
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of competitive value for money. Thus, the two suggestions which my noble friend makes are certainly valid, but there are very many more. As to the role of the district auditor, in future, under the 1980 Act, the auditor will be much more involved than in the past in looking at value-for-money possibilities within local authority accounts. It may well be that all authorities will want to know what are the possibilities of perhaps obtaining greater value for money than with their own in-house labour.
Baroness Birk: My Lords, would the Minister agree that putting services out to private contractors does not necessarily promote efficiency or result in direct savings? Is he aware that, by winding down the sub-units of road construction units and using independent consultants rather than direct labour, the extra cost is estimated at £13 million up to the end of 1983, though it may be much more, and that new construction and improvements to roads have had to be cut by at least £13 million?
Lord Bellwin: My Lords, I do not know the instance to which the noble Baroness refers. However, I cannot get away from the basic premise that it cannot be wrong to obtain competitive tenders for anything. I should have thought that any local authority which is really concerned about value for money would always want—and many of them are now doing it—to obtain tenders from whatever source, and, should it prove that they are not as competitive as their own workforce, then that is fine, but at least everybody should want to know.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that many people will be surprised and disappointed to learn that central Government are not collecting evidence on this issue and are not sorting out whether it is good or bad? Is he further aware that the point made by the noble Baroness, Lady Birk, should be confirmed or denied by the facts, facts which would be available if central Government took the trouble to get all the evidence collated?
Lord Bellwin: My Lords, we are in many ways in relatively early days on this matter. There is now such a significant movement in this direction that to attempt to compile statistics at this time might be self-defeating. Nevertheless, the point made by my noble friend is absolutely correct basically, and I assure him that we shall continue to watch matters very carefully. I can tell him, for example, that in the case of one service alone, I know of more than 100 authorities which are at present looking into the possibility of provision by the private sector. That indicates the extent to which the trend is growing, but I certainly take the basic thrust of what my noble friend said.
Lord Shinwell: My Lords, if the Minister is satisfied that a great deal of money can be saved by transferring the collection of refuse from local authorities to private contractors, may I ask him why he is confining it to the removal of refuse? Why not ask private contractors to undertake all the functions of local authorities and then abolish the local authorities? Consider the amount of money we should then save.
Lord Bellwin: My Lords, I was not aware that I had suggested that the removal of refuse was the only service. On the contrary, I suggested that all services should be looked at. If, however, as the noble Lord, Lord Shinwell, suggests, it should prove to be the case that all services can more competitively be provided by the private sector, then what greater incentive could there be for an authority, which is responsible for giving to its electorate that for which it was elected in the first place—namely, a proper level of service provided at a proper and most advantageous level of cost?
Lord Boardman: My Lords, can my noble friend confirm that, in those cases where facts and figures have been published, such as in the case of Southend's refuse collection, it has been shown quite clearly that this has benefited the ratepayers both in the level of costs and the standards of service?
Lord Bellwin: My Lords, from all the information available to me, I gladly so confirm, and I am glad my noble friend referred not just to the level of savings, substantial though they are, but also to the standards of service, because that, too, is a very important factor.
Lord Davies of Leek: My Lords, is the Minister aware that we are all concerned with seeing that value for money is obtained? Is he further aware that over the years we have set up between local authorities, local hospitals and all kinds of organisations dealing in radioactive material a system for getting rid of effluent and burying radioactive material so that the public shall not be damaged thereby? Will he ensure that, in the aim to get value for money, that aim is not measured without taking into account the serious responsibility undertaken by any private contractor who gathers refuse from the public for local authorities?
Lord Bellwin: My Lords, the noble Lord is referring to the subject of waste disposal, and I know he is aware that the private sector has worked together with the public sector for many years in providing that service, and of course the basic point he makes is absolutely right.
Lord Kaldor: My Lords, would the Minister agree that it is difficult to conceive how, in respect of certain vital services—street lighting, for example—the private sector rather than the public sector could provide it?
Lord Bellwin: My Lords, not at any time, despite my answer to the noble Lord, Lord Shinwell, would I say that every aspect of every service necessarily lends itself to the involvement of the private sector. It is a matter, as always, of common sense in deciding what is the right thing to do. But, then, unfortunately we do not always get that prevailing, do we?
Lord Bruce of Donington: My Lords, further to the point raised by the noble Lord, Lord Harmar-Nicholls, concerning the necessity for the collection by the Government of statistics relating to the relative performances of private contractors in various fields, may I ask the Minister to take steps to ensure that the information is not only collected but is also made public?
Lord Bellwin: My Lords, as I am sure the noble Lord, Lord Bruce of Donington, well knows, such information as we have is always available to anyone who requests it. I consider that in this particular case the answer I gave was a fair one; namely, that it is a moving situation and that the statistics that are required I do not have. Nevertheless, I would gladly make available to the noble Lord or to anyone else at any time such information as we do have.
Lord Orr-Ewing: My Lords, will my noble friend bear in mind that from both sides of the House there has now been a request for a measure of the comparative cost effectiveness of the different services? After the new auditing arrangements have come into force will my noble friend consider collecting and collating comparative statistics, so that we can measure what is good, what is moderate, and what is bad in this area?
Lord Bellwin: My Lords, I would commend your Lordships to read the recent survey carried out by Coopers and Lybrand for our department on service provision and pricing in local government. It is an extremely informative, arguably the most informative, publication on this whole subject, and could well be read with advantage by all who are interested.
Lord Glenamara: My Lords, will the noble Lord bear in mind that many of us would have no ideological objection to such arrangements, but what we would object to would be the removal or weakening of democratic control of the provision, supervision and monitoring of local services? If this movement gains pace, will the noble Lord see to it that democratic control is not weakened in any way?
Lord Bellwin: My Lords, the noble Lord is absolutely right. In no way should that control be weakened. In any case statutory obligations rest with the local authorities to ensure that the services are carried out; the end responsibility is still theirs. However, there is no reason why carrying out a service through the channel that we have been discussing need in any way be to the detriment of local authorities.

Social Security Benefits Uprating
3.12 p.m.
Lord Denham: My Lords, my right honourable friend the Secretary of State for Social Services will be making a Statement in another place this afternoon on social security benefits. In view of the length of the list of speakers for the debate this afternoon, and the length and complexity of the Statement, it has been agreed through the usual channels that, with the leave of the House. I should on this occasion arrange for the Statement to be made to your Lordships' House by inclusion in the Official Report. I will also arrange for copies to be available in the Library.
Following is the Statement referred to above:
"I with permission, Mr. Speaker, make a Statement required by the Social Security Act 1975 about the annual up-rating of social security benefits which will come into operation in the week beginning 22nd November. For the convenience of the House a detailed schedule of the new rates of benefits, which forms part of this Statement, has been placed in the Vote Office

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and will be included in the Official Report. The new rates reflect the estimate that the general level of prices will increase by 9 per cent. between November 1981 and November 1982. Benefits generally will be uprated in line with that forecast and in addition the 2 per cent. shortfall at the 1981 uprating will be made good—not only for pensions and other related long-term benefits, as we had already promised, but also for all other weekly benefits. This gives a total increase for most benefits of 11 per cent.
"Turning, first, to the uprating of national insurance benefits the standard rate of basic retirement pension for a single person will go up by £3·25 a week from £29·60 to £32·85. The rate for a married couple will go up by £5·20 from £47·35 to £52·55. The standard rate of sickness benefit and unemployment benefit will go up by £2·50 for a single person from £22·50 to £25·00, and by £4·5 from £36·40 to £40·45 for a married couple.
"The same percentage increase of 11 per cent. will apply to the earnings-related additional component to national insurance pensions; to pensions payable under the old graduated pension scheme; to those who receive guaranteed minimum pensions from contracted-out occupational pension schemes; and to public service pensions. It will also apply to all other weekly national insurance benefits, including industrial injuries benefits, and to war pensions.
"Child benefit will also be increased by over 11 per cent. from £5·25 to £5·85, an increase of 60p per qualifying child. One-parent benefit will go up by the same percentage from £3·30 a week to £3·65. So a one-parent family with two children not in receipt of any other social security benefits will find the amount paid for the children rising from £13·80 a week to 15·35.
"After taking the increases in child benefit into account, as has been the practice in previous years, the dependency additions for children paid with short-term national insurance benefits will he 30p a child, compared with 80p at present. The child dependency additions payable with retirement, widow's or invalidity pensions will increase from £7·70 a child to £7·95.
"Family income supplement is payable to people in work where tile family's gross income. apart from child benefit and one-parent benefit, falls short of a prescribed level. The prescribed level of income for family income supplement will go up by £8·50 to £82·50 weekly for one-child families and the additional amount for each further child will he raised from £8·00 to £9·00 a week. The maximum payment for a one-child family will rise from £18·50 to £21·00 a week, and the addition for each further child will go up by 50p to £2·00. This means that the increases will be particularly helpful to larger families with the lowest incomes.
"I turn now to supplementary benefit. As the House will be aware from the proceedings last week in the Committee stage of the Social Security and Housing Benefits Bill, we propose to increase the scale rates of supplementary benefit from next November in line with the forecast increases in the general level of prices, after excluding housing costs. This is because both under the present scheme, and when housing benefit is introduced, the housing costs of supplementary benefit claimants are met separately. Supplementary benefit is different in this respect from all other benefits. The treatment of housing costs distinguishes those costs from all other day-to-day living expenses that are covered by the supplementary benefit scale rate. The Government's approach recognises this, and—in effect—avoids double-counting while maintaining full price-protection for all claimants. In addition, as with other benefits, we will he making good the 2 per cent. shortfall. The effect of this will be that the increase in the scale rates will be 10·5 per cent., but housing costs will of course be paid on top of that.
"The ordinary supplementary benefit scale rate will therefore rise from £23·25 to £25·70 for a single householder and from £37·75 to £41·70 for a married couple. The long-term scale rate will rise from £29·60 to £32·70 for a single householder and from £47·35 to £52·30 for a couple. The scale rates for children will rise from £7·90 to £8·75 for children aged 10 and under, and from £11·90 to £13·15 for children aged 11 to 15.
"There has been a great deal of concern about the effects of the capital limit for supplementary benefit. This is the limit on the amount of capital a person can have and still get supplementary benefit. It has been argued that the current limit of £2,000 set in November 1980 is now too low. The Government recognise the force of the argument and proposes to raise the limit by 25 per cent. to £2,500. This will fully restore the value the limit held when it was introduced.
"We also propose a further small, but worthwhile, improvement in the supplementary benefit scheme. We are increasing
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the amount of occasional payments by way of a gift, for example, at Christmas or for a birthday, which can be disregarded. At present any excess over £20 is deducted from benefit. We propose to increase the amount that can be totally disregarded to £100.
"Supplementary benefit heating additions are now paid to over 2 million families. In 1980 we boosted them with a record increase. The 1981 uprating turned out to be more than enough fully to protect this increase against rising fuel costs. For 1982 we propose to increase the heating additions from this higher base in line with the expected rise in fuel prices between November 1981 and November 1982. The standard amount will rise from £1·65 to £1·90 a week, and the higher rate from £4·05 to £4·65.
"As the Chancellor announced yesterday, mobility allowance will no longer be subject to tax. I am sure the whole House will welcome that change, which will benefit some 40,000 recipients who have other taxable income. In addition, the rate of mobility allowance will be increased in November from £16·50 to £18·30. This means that since coming to office we have increased the rate of mobility allowance by 83 per cent. These measures will help even more disabled people to take advantage of the Motability scheme for leasing or buying cars on advantageous terms.
"I have also decided to make an improvement in the rules affecting invalid care allowance. The weekly amount which can be earned by someone who is looking after a severely disabled person will be increased from £6·00 to £12·00. The disregard has been £6·00 since the benefit was introduced in 1976 and the increase will restore its original value.
"A further improvement affects the therapeutic earnings limit, which helps people recovering from illness who want to get back into full-time work. The present earnings limit is £16·50. I intend to raise this by 21 per cent. to £20. The Christmas bonus of £10 will be paid on the same basis as last year in the week commencing 29th November. I also propose to increase the earnings rule limit for retirement pensioners in November from £52·00 to £57·00, the first such increase in three years.
"The total cost of this uprating will he close to £3 billion in a full year, of which about £2 billion will fall on the National Insurance Fund, the balance coming out of the Consolidated Fund. The House has already approved the changes in contribution levels in 1982–83 set out in the Social Security (Contributions) Act 1982, and I shall as usual further review contribution rates in the autumn. Any necessary changes will take effect from April 1983.
"These proposals mean that annual expenditure on social security benefits will rise to over £30 billion in 1982–3, which represents about 26 per cent. of all public spending. The changes I have announced mean:

full price protection of all weekly benefits;

the 2 per cent. shortfall in 1981 made good for all benefits;

the supplementary benefit capital limit increased to £2,500;

supplementary benefit heating additions protected against rising fuel costs;

the retirement pension earnings rule increased for the first time in three years;

mobility allowance taken out of tax and fully price-protected;

a doubling of the earnings disregard for those receiving invalid care allowance;

an increase of more than 20 per cent. in the therapeutic earnings limit for those receiving incapacity benefits.

"The measures will particularly benefit the elderly and disabled people. They will also give valuable extra help to all families with children. They are designed to bring practical help to those who most need it."
INCREASED BENEFIT RATES
(The Social Security Act 1975, as amended, is referred to as "the Act"; the Social Security Pensions Act 1975, as amended, is referred to as "the Pensions Act").

PART 1 BENEFITS PAYABLE FROM NATIONAL INSURANCE FUND (See also Parts 3 and 4)

Existing weekly rate £

Proposed weekly weekly rate £

Basic component of Category A retirement pension* (section 6(1)(a) of the Pensions Act), Category B retirement pension* (section 7 of the Pensions Act), widowed mother's allowance and widow's pension

29·60

32·85

Existing weekly rate £

Proposed weekly rate £

Category B retirement pension* (section29(7)(a)(i) of the Act)

17·75

19·70

Basic component of invalidity pension

28·35

31·45

Standard rate of unemployment and sickness benefit

Beneficiary under pension age

22·50

25·00

Beneficiary over pension age

28·35

31·45

Invalidity allowance:

Higher rate

6·20

6·90

Middle rate

4·00

4·40

Lower rate

2·00

2·20

Maternity allowance

22·50

25·00

Widow's allowance

41·40

45·95

Child's special allowance

7·70

7·95

Guardian's allowance

7·70

7·95

The weekly rate of graduated retirement benefit payable for each unit of graduated contributions will be increased by 11 per cent. from 3·86 pence to 4·28 pence.
The following sums will be increased by 11 per cent.:—

(a) additional components in the rates of long-term benefits calculated by reference to any final relevant year earlier than the tax year 1982–83;

(b) increases of retirement pensions for deferred retirement under Schedule 1 to the Pensions Act;

(c) increases of graduated retirement benefit for deferred retirement under Schedule 2 to the Social Security (Graduated Retirement Benefit) (No. 2) Regulations 1978;

(d) increments in guaranteed minimum pensions under section 126A of the Act.

*An age addition of 25p is payable to retirement pensioners who are aged 80 or over.

PART 2 BENEFITS PAYABLE FROM CONSOLIDATED FUND (But see also Parts 3 and 5 to 8)

Existing weekly rate £

Proposed weekly rate £

Attendance allowance

Higher rate

23·65

26·25

Lower rate

15·75

17·50

Non-contributory invalidity pension

17·75

19·70

Invalid care allowance

17·75

19·70

Mobility allowance

16·50

18·30

Category C or D retirement pension*

Higher rate

17·75

19·70

Lower rate

10·65

11·80

*An age addition of 25p is payable to retirement pensioners who are aged 80 or over.

PART 3 INCREASES FOR DEPENDANTS

Existing weekly rate £

Proposed weekly rate £

Increase for a wife or other adult dependant of:—

Category A or B retirement pension

17·75

19·70

Invalidity pension

17·00

18·85

Unemployment benefit and sickness benefit (where beneficiary is over pensionable age)

17·00

18·85

Unemployment benefit and sickness benefit (where beneficiary is under pensionable age) and maternity allowance

13·90

15·45

Non-contributory invalidity pension, in valid care allowance and Category C re tirement pension

10·65

11·80

Increase for a qualifying child of:—

Widow's allowance, widowed mother's allowance, invalidity, non-contributory invalidity, and retirement pensions, in valid care allowance, unemployment and sickness benefit (where beneficiary is over pensionable age) and child's special allowance

7·70

7·95

208

Existing weekly rate £

Proposed weekly rate £

Unemployment benefit and sickness benefit (where beneficiary is under pensionable age) and maternity allowance

0·80

0·30

PART 4 INDUSTRIAL INJURIES BENEFT

Existing weekly rate £

Proposed weekly rate £

Injury benefit:

(a) beneficiary 18 or over or entitled to increase for child or adult dependant

25·25

27·75

(b) beneficiary under 18 and not entitled to such an increase

22·50

25·00

Disablement pension:

(a) beneficiary 18 or over or entitled to increase for child or adult dependant—

Degree of disablement per cent.

100

48·30

53·60

90

43·47

48·24

80

38·64

42·88

70

33·81

37·52

60

28·98

32·16

50

24·15

26·80

40

19·32

21·44

30

14·49

16·08

20

9·66

10·72

(b) beneficiary under 18 and not entitled to such an increase—

Degree of disablement per cent.

100

29·60

32·85

90

26·64

29·57

80

23·68

26·28

70

20·72

23·00

60

17·76

19·71

50

14·80

16·43

40

11·80

13·14

30

8·88

9·86

20

5·92

6·57

Maximum disablement gratuity will be increased from £3,210 to £3,560.

Existing weekly rate £

Proposed weekly rate £

Unemployability supplement

28·35

31·45

Increase of unemployability supplement for early onset of incapacity for work:

(a) if on the qualifying date the beneficiary was under the age of 35, or if that date fell before 5th July 1948

6·20

6·90

(aa) if (a) does not apply and on the qualifying date the beneficiary was under the age of 40 and he had not attained pensionable age before 6th April 1979

6·20

6·90

(b) if (a) and (aa) do not apply and on the qualifying date the beneficiary was under the age of 45

4·00

4·40

(bb) if (a), (aa) and (b) do not apply and on the qualifying date the beneficiary was under the age of 50 and had not attained pensionable age before 6th April 1979

4·00

4·40

(c) in any other case

2·00

2·20

Maximum increase of disablement pension in cases of special hardship

19·32

21·44*

Maximum increase of disablement pension where constant attendance needed:

(a) except in cases of exceptionally severe disablement

19·40

21·50

(b) in any case

38·80

43·00

Increase of weekly rate of disablement pension for exceptionally severe disablement

19·40

21·50

Increase of injury benefit for dependent children

0·80

0·30

Existing weekly rate £

Proposed weekly rate £

Increase of disablement pension with unemployability supplement for dependent children

7·70

7·95

*or the amount (if any) by which the weekly rate of the pension, apart from any increase under sections 61, 63, 64 or 66 of the Act falls short of £53·60, whichever is the less.

Existing weekly rate £

Proposed weekly rate £

Increase of injury benefit for adult dependant

13·90

15·45

Increase of disablement pension with unemployability supplement for adult de pendant

17·00

18·85

Widow's pension—

(a) initial rate

41·40

45·95

(b) higher permanent rate

30·15

33·40

(c) lower permanent rate

8·88

9·86

Widower's pension

30·15

33·40

Allowance under section 70 of the Act in respect of each qualifying child—

(a) higher rate

7·70

7·95

(b) lower rate

0·80

0·30

Maximum under section 91(1) of the Act of aggregate of weekly benefit payable for successive accidents—

(a) beneficiary 18 or over or entitled to an increase in respect of a child or adult dependant

48·30

53·60

(b) beneficiary under 18 and not entitled to such an increase

29·60

32·85

Maximum weekly rate of lesser incapacity allowance supplementing workmen's compensation (Section (6)(c) of the Industrial Injuries and Diseases (Old Cases) Act 1975)

17·75

19·70

Weekly rate of allowance payable where disablement is not total (Section 7(2)(b) of the Industrial Injuries and Diseases (Old Cases) Act 1975)

17·75

19·70

PART 5 MAIN INCREASED SUPPLEMENTARY BENEFIT RATES

Existing ordinary weekly rate £

Existing long-term weekly rate £

Proposed ordinary weekly rate £

Proposed long-term weekly rate £

Supplementary benefit:

Couple

37·75

47·35

41·70

52·30

Single householder

23·25

29·60

25·70

32·70

Non-householder—

age 18 and over

18·60

23·65

20·55

26·15

age 16–17

14·30

18·15

15·80

20·05

Existing weekly rate £

Proposed weekly rate £

Any other person aged:

11–15 years

11·90

13·15

under 11 years

7·90

8·75

Existing ordinary weekly rate £

Existing long-term weekly rate £

Proposed ordinary weekly rate £

Proposed long-term weekly rate £

Boarders' Personal Expenses

Couple

15·40

17·10

17·00

18·90

Single person

7·70

8·55

8·50

9·45

Existing weekly rate £

Proposed weekly rate £

Personal expenses for dependent children aged:

18–19 years

7·70

8·50

16–17 years

4·60

510

11–15 years

3·95

4·35

0–10 years

2·60

2·85

210

Existing weekly rate £

Proposed weekly rate £

Non-householder housing addition

2·55

*

Heating additions to supplementary benefit

1·65

1·90

4·05

4·65

Dietary additions to supplementary benefit

1·30

3·05

8·70

*

Blindness addition to supplementary benefit (unchanged)

1·25

1·25

Addition for claimant or dependant over age 80 (unchanged)

0·25

0·25

Existing level £

Proposed level £

occasional gifts—level of disregard

20·00

100·00

Supplementary benefit—capital cut-off

2,000·00

2,500·00

*To be announced after the February index of retail prices becomes available.

PART 6
MAIN INCREASED WAR PENSION RATES
All ranks receive the same increases, officers' rates being expressed in pounds per annum.

Existing weekly rate £

Proposed weekly rate £

Disablement benefits:

Disablement pension for private at 100 per cent. rate

48·30

53·60

Age allowance with assessments of:

40 to 50 per cent

3·35

3·70

Over 50 and not exceeding 70 per cent.

5·25

5·85

Over 70 and not exceeding 90 per cent.

7·50

8·35

Over 90 per cent.

10·50

11·70

Unemployment allowances

Personal allowance

31·40

34·85

Increase for wife or other adult dependant

17·75

19·70

Increase for child

7·70

7·95

Invalidity allowances

Higher rate

6·20

6·90

Middle rate

4·00

4·40

Lower rate

2·00

2·20

Constant attendance allowance

Special maximum

38·80

43·00

Special intermediate

29·10

32·25

Normal maximum

19·40

21·50

Half and quarter day

9·70

10·75

Comforts allowance

Higher rate

8·40

9·30

Lower rate

4·20

4·65

Allowance for lowered standard of occupation (maximum)

19·32

21·44

Exceptionally severe disablement allowance

19·40

21·50

Severe disablement occupational allowance

9·70

10·75

Existing annual rate £

Proposed annual rate £

Clothing allowance

Higher rate

65·00

72·00

Lower rate

41·00

46·00

Existing weekly rate £

Propose weekly rate £

Death benefits:

Widow's pension—private's widow:

Standard rate

38·45

42·70

Childless widow under 40

8·88

9·86

Widow's children

10·85

11·25

Rent allowance (maximum)

14·65

16·25

Motherless and fatherless children

11·65

12·15

Age allowance for elderly widows

Ages 65–69

3·75

4·15

Age 70 and over

7·50

8·30

Adult orphans

29·60

32·85

Widowers'pension (maximum)

38·45

42·70

PART 7
FAMILY INCOME SUPPLEMENT

Existing weekly level £

Proposed weekly level £

Family Income Supplement

Prescribed amount for family with one child (gross income below which FIS is payable)

74·00

82·50

Increase in prescribed amount for each additional child

8·00

9·00

Maximum weekly amount for a one-child family

18·50

21·00

Increase in maximum amount for each additional child

1·50

2·00

PART 8
CHILD BENEFIT

Existing weekly rate £

Proposed weekly rate £

Child benefit—

each child

5·25

5·85

One-parent benefit—

first or only child of certain lone persons

3·30

3·65

PART 9
EARNINGS RULES
The amount specified in Section 30(1) of the Act (amount of weekly earnings which must be exceeded before a Category A or Category B retirement pension is reduced by reference to earnings) will be increased to £57·00.
The amount specified in regulation 8(1) of the Social Security (Invalid Care Allowance) Regulations 1976 (amount of personal weekly earnings above which invalid care allowance is not payable) will be increased to £12·00.
PART 10
THE THERAPEUTIC EARNINGS LIMIT
The amount of net earnings from permitted work (the "therapeutic earnings limit") which can be received without loss of benefit by claimants to sickness, injury and invalidity benefits and non-contributory invalidity pension will be increased from £16·50 to £20·00 per week.
The corresponding level of earnings which a beneficiary can be capable of earning without losing entitlement to an Unemployability Supplement to the industrial injuries disablement pension will be increased from £858 to £1,040 per annum.

Medical Care in the National Health Service
3.13 p.m.
Lord Hunter of Newington Lord Hunter of Newington rose to call attention to the need for improved medical care in the National Health Service in the 1980s and to the effect of the reorganisation of the administration of the health service on this objective; and to move for Papers.
The noble Lord said: My Lords, I owe a debt to the noble Lord, Lord Campbell of Croy, who has drawn my attention to a possible uncertainty in the Motion standing in my name. He has reminded me that the Scottish Health Service has separate legislation, and is in a different form, and I would confirm that what I have to say this afternoon concerns the Bill for England and Wales, and not the Scottish Bill.
In 1938, after 40 years in public life, Lord Horder claimed that it was "not very difficult" to define the needs of an ideal health service. These were:
"Firstly, we must help the fit to remain fit. Secondly, we must raise the general standard of fitness (health) by correcting certain tendencies towards lowering it inherent in modern life. Thirdly, we must do our utmost to control diseases due to preventable
212
agents. Fourthly, we must cure or alleviate disease when it occurs. These are our needs",
said Lord Horder,
"and they should be considered in that order, more and more in that order as civilisation progresses and as the grosser infections come under control".
So Lord Horder put health first, together with the health-creating services, which were seen to be those that provided better food, housing and recreation.
The year 1938 also brought the planning for the war and the organisation of the emergency hospital service, provision and co-ordination of local hospitals and the medical services through the EMS. The wartime service proved to be an effective instrument for the utilisation of all types of hospitals, and medical officers of health played an important part in it. Consultants from the voluntary hospitals visited local authority hospitals, or the new EMS hospitals, and there was a massive step forward in communication between the different parts of the hospital service, which had lived in isolation with different responsibilities for so many years.
During that time of course the general practitioner service and the medical officer of health services continued along established lines, but even during the war, with all the extra work (ARP, evacuees, and many others) the medical officers of health made substantial developments in the field of nutrition, prevention of infectious diseases and others—something we should not forget.
If one remembers that wartime experience, one appreciates that the plan for the National Health Service as it emerged on 1947 was not surprising. The main feature was to extend the hospital changes to which I have referred and bring all hospitals under state ownership, though that was not the issue that was publicly debated. There was to be a continuation of local government health services and general practitioner services—a tripartite division, therefore, with different and disconnected responsibilities within one National Health Service, but not unified. The Ministry of Health found its territory much widened to include all hospital services. The medical officers of health lost the responsibility for local government hospitals, but gained new responsibilities in the preventive and allied social fields.
We next enter the period from 1948 to 1968, the time when attempts at rationalising the hospital services were extended and when the voluntary and ex-local authority hospitals were run by regional hospital boards and boards of governors. That had to happen because the voluntary hospitals were bankrupt. A complicated relationship grew up, particularly in medical teaching centres, between boards of governors and regional hospital boards. That was the period of major capital investment in hospital medicine, which inevitably set the stage for developments in the 1970s and 1980s.
Expenditure by regional hospital boards and boards of governors on capital works was very modest in the first seven or eight years of the new service and did not in fact exceed £10 million in 1955. But in the late 'fifties and early 'sixties there was a rapid acceleration, according to a hospital plan for each region published in 1962. By 1968–69 capital expenditure had increased to £94 million a year.
The interesting, and I think important, thing is the delay for a decade after 1948 before capital building got under way, and, having been concerned with some of these things, one realises how difficult it was to get started. Planning took five to eight years. This poses very serious problems, my Lords, if you want to change course, particularly if the foundation of change is tied up with capital building. It is impossible to do it quickly.
By 1974 £124 million had been spent in the West Midlands alone. In other words, the hospital building programme was accelerating rapidly. It seemed as though the stage was set to create a massive range of new hospitals across the length and breadth of the land, and they would be the linch-pin of the new service.
However, by the late 1960s other factors were beginning to impinge on the concept of a hospital-based service. The reorganisation of local government was planned and, inevitably, changes in the social services. Secondly, the Department of Health and Social Security was established in 1968, thus replacing the old Ministry of Health. Medical care was now to be part of the social network.
The merger of health and social services was in practice only a gradual process of cross-departmental discussion and policy-making, and for a number of years co-operation was not very close. The effect on the health service of having a Secretary of State who also had to argue in the Cabinet for the needs of the social services is a very important matter. It would not be unfair to say that the interests of Dick Cross-man and his successor, and also David Ennals, were probably more in the social services than in health. One naturally became anxious as to whether the wide-ranging responsibilities of the Secretary of State would have an adverse influence on the expenditure on health. Although in volume terms the share of health in the social budget seems to have fallen, I am assured that the health share of the total public expenditure remains unchanged. The Minister, I would hope, will give us up-to-date figures on this matter.
The position is a complicated one affected substantially by the increase in the numbers of unemployed, but the evidence would seem to be that the Secretary of State's social services role has not had an adverse effect on health expenditure. Perhaps it could be argued that health may have done better than it might otherwise have done by having a Cabinet Minister in charge, even with a wider span of responsibilities.
But what is perhaps most relevant is the conflicting philosophies which formed the background to reorganisation in 1974. The hospital service, as we have seen, received a massive capital injection, and this in fact decided the future. The general practitioner services were substantially run in isolation, though the regional boards had developed important contact with them. But the key, as I have said, is the massive investment in the hospital part of the sickness services. Major expenditure was controlled by the department through the capital development programme and its recurrent costs. The magnitude of the change and the focus of major change is also illustrated by the staff changes which occurred in England. Between 1949 and 1969 the population increased from 43·8 million to 48·8 million, but the number of general practitioners
214
fell somewhat. The number of hospital consultants practically doubled. The number of registrars and senior house officers increased four-fold, a reflection of the major investment in the hospital services.
In the period between 1948 and 1974 the tripartite structure maintained the gulf between the parts of the health service, and those who thought about the whole complicated business of the delivery of medical care to the people of this country were very few, apart from the Chief Medical Officer and his staff. The new Department of Health and Social Security led the developments which culminated in the 1974 Health Services Act, which proposed the amalgamation of medical practice, health education, preventive medicine, hospitals and general practitioner services in one organisation. I am sure other speakers will deal with the success or failure of these efforts.
During the period 1948 to 1974, as some noble Lords will remember vividly, there were changes taking place in Government and also in the attitude of people to sickness and health. But to doctors the most exciting changes were taking place in the hospitals. Thus was because of rapid scientific discovery—the development of a new and effective range of treatments from penicillin to cardiac by-pass. It is well understood that in 1948 Britain had fallen behind in medical discovery because of the war, but in the next 20 years we developed a whole host of new specialties based on scientific discoveries. The places where this happened—in fact, the only places which were geared to receive these ideas and exploit them—were the London and civic university hospitals, which were equipped for research as well as for medical care. No one really appreciated the magnitude and cost of this scientific development, going on at the same time as socio-political change. Its cost has to be recognised as one of the factors in causing inequality of medical care in this country, but it must also be recognised that if it had not happened then British medicine as a whole would have suffered.
The medical student of the 1950s was brought in contact with this exciting world. He did not see very much—a little, perhaps—of preventive medicine; a little of general practice; perhaps a little about mental illness. He was more likely to hear of social revolution in the students' union than in the medical schools. Modest attempts were made to correct those deficiencies by the revision of the medical curricula in the early 1960s, particularly following Lord Todd's Royal Commission in 1968; but in spite of the scientific revolution and the medical advances to which I have referred, the intriguing position in which we now find ourselves seems to be that the pacemaker of change is no longer the hospital combined with scientific: advances and therapeutic medicine, but rather medicine has become part of an expensive social structure within which the health service will have to fight for the resources that it needs.
I have mentioned some of these wider political and medical changes and changes in attitudes. What about resource allocation and management in the health service? As might well be imagined, the development of the voluntary hospitals often reflected the wealth of a city as well as the public interest, and these and local authority hospitals all varied in quality for a number of reasons. The consequence was that the

215
hospital resources were unevenly distributed in Great Britain in 1948, when the service was initiated. Inevitably, as a consequence of the on-going commitment, the resources which the Government first provided were designed to meet the existing needs and took into account existing development plans together with an element of "development money". Between 1948 and 1970 there was a series of forward looks in resource allocation: but towards the end of that period it was becoming perfectly obvious to the new Department of Health and Social Security that "development money" was always outweighed by the vast bulk of resources attracted by existing programmes and commitments, and the growing capital programme to which I have referred.
The result was that after 20 years, with the possible exception of Wales, there were only a few substantial developments outside the well-off areas. The poor were getting poorer. At the same time there were, as I have indicated, good practical reasons for the increased costs: the massive and costly advances in diagnosis and treatment. It was hoped, I think, that as the capital programme grew and became more substantial, then the deprived parts of England would be rescued in the same way as Wales had been rescued by a capital investment with additional recurrent costs. Incidentally, I think it is true to say that Scotland was never deprived.
In 1970 the Crossman redistribution formula was introduced as an attempt to move away from what appeared to be an increasingly unsatisfactory state of affairs and the increasing awareness of the new department about the competing claims of the social services and other health measures, as well as hospitals for the sick. It was proposed to phase out the system of recurrent costs of capital schemes over a number of years; the additional monies would just have to be found by the boards. By 1975 it was quite obvious that this was not working. The recurrent costs of new hospitals varied from two to five times the recurrent costs of the old hospitals which they replaced. In consequence, the Resource Allocation Working Party (RAWP) was set up by Dr. David Owen, the then Minister of Health. Its interim report was somewhat similar to the Crossman formula, but it rejected the bed element in that formula and introduced the standard mortality rate as a measure of morbidity, which it is not.
It is not my intention to discuss the details of the RAWP formula, but it is a fascinating study illustrating the interface between political decision—fair shares for all—and practical reality. RAWP specifies equality as a principle, and it is clear in the concept that results are related to calculated need, if that can be determined, and not to rights or economic value. It was concerned with the needs of administering bodies, not of the patients. The needs of patients were not dealt with.
There are, of course, several alternatives within the notion of "equality", and the examination of an apparently simple formula leads one into some fairly difficult problems. The rates of approach towards the targets that were proposed were unrealistic, and have been modified again by ministerial statement. The whole process of resource distribution must be greatly revised if a proper distribution of resources between the
216
new district authorities is to be achieved, though the RAWP formula may well be reasonable in relation to regions.
The new look in recent years has been the provision of guide lines by the DHSS to regional and area authorities. An example of this is Care in Action—a recent DHSS publication—and it refers to nearly 100 reports, many made by professionally interested people about their own interests. These reports are recommended for study by Ministers. The weakness of this approach, as Sir Douglas Black has indicated, is the determination of each branch of the profession to do its "own thing". Some really hard professional synthesis and analysis is required—and it does not seem to be happening.
May I quote from Sir Douglas's report Inequalities in Health. He says:
"All professions tend to become over-committed to existing practice and their receptivity to the need for change is liable to become weak. The medical and nursing professions are like other professions in this respect. We are pointing out the uncomfortable fact that society cannot look to the professions working within the health services for an account of illness and health which is always as detached or as full as it might be".
Political and social decisions with medical consequences—often unsuspected—are inevitably made by Ministers. The reallocation of resources for the care of the elderly is one. Five out of six of all patients over the age of 65 admitted to British hospitals require short-term care and curative or palliative procedures, and they would be the first o lose if funds now applied to acute hospital care were withdrawn to pay for amenities during long-term care or for social services in the community for the elderly. The patient with blindness due to cateract requires an operation, not social support as a blind person. A wheelchair and a sympathetic social worker are poor substitutes for surgery when an individual requires arthorplasty of the hip.
There is an urgent need for proper consultation and debate on these and other issues and, paradoxically it seems to me, the least intensely involved in this are the medical profession. Many of their leaders do not seem to concern themselves with the complicated problems that we are discussing and yet it is the informed, critical, professional input into the system which is so vitally needed and which is, in my view, deficient.
Doctors must be prepared to compete and argue for the resources available and be prepared to strike a realistic balance with the demands of the social services and welfare, the needs of which are so much more easily understood by laymen, and also one can produce a politically satisfying result in months in many of the social services. The planning of complex modern hospitals takes many years. We do not hear cogent and convincing medical arguments. What we hear are constant complaints against the Government. It is simply self-defeating to spend our efforts on demanding more—particularly when effective co-operation does not seem to have been tried.
Now a further reorganisation of the administration of the health service is taking place. The area health authorities are to disappear and be replaced by district authorities with different responsibilities, as yet not finally defined, and by regional authorities with functions also undefined at the moment but undoubtedly

217
different from the present regional arrangements and, we are told, likely to be the subject of future review.
While these changes in administration are going on, is it not appropriate to look at the demands for medical care and the organisation of its delivery? Would it be too hold to suggest that the real need is the organisation of patient services and that the administrative changes proposed should meet that need effectively as well as political and democratic aspirations? Patients first! Let us look at it broadly and consider where the need is greatest and how most effectively we can use the resources.
The priorities are: health education and preventive medicine; the care of children; occupational health; the care of the mentally ill and mentally handicapped; the care of the elderly; and, of course, there must be some investment of resources to maintain and improve the quality of medical care. There is undoubtedly much to be learned about health education—who should do it and how to influence people to avoid or prevent diseases—but the main focus must be in the education of children. They are most at risk from malnutrition, from alcohol, tobacco, and easily-formed habits that go with them into adult life.
Many modern philosophies militate against success in health education. It is generally accepted that individuals have responsibilities in relation to personal health and their habits; but in some curious way any attempt to coerce them into meeting their responsibilities is an intolerable intrusion into personal freedom. Yet it is expected that the resources to meet the consequences are met without question by the state. What are the barriers to the assumption of responsibility for one's own health? Lack of interest; poor education programmes; perhaps until recently the general indifference of the health professions. So the reorganised health service must provide for health education, preventive medicine, and the care and health education of children, but it must also provide a safe environment for the work they do and that means occupational health—until now the Cinderella of the service.
The mentally ill and mentally handicapped are subjects of much concern which finds expression in the Mental Health (Amendment) Bill lately debated in your Lordships' House.
The final priority group was the elderly, which often means active people who, like old cars, need a little bit of care and attention and sometimes a spare part. Only a small number of them are infirm or confused and incontinent. At present, the majority of the elderly sick are treated in general medical and surgical wards. Should they not continue to be so treated?
It is easy now to see that in 1974 we should have built on what was good. The regional hospital boards had a quarter of a century of experience behind them. Their officers had developed channels of communication with the medical officer of health and his growing social services and also with the general practitioners.
The question that has to be answered now is: Can we get the National Health Service on an evolutionary path with sufficient flexibilities to make changes when patient needs demand? I think it is possible and that the regional health authorities can do this. But they must have the correct status and authority and not face the threats of further review. It cannot be done at district level. The boards at district level do not have a wide
218
enough vision to achieve the kind of balance in the situation that I have been describing. To attempt to achieve it by national direction, apart from general guidelines, I believe is courting disaster.
Can we get responsible medical planning and a proper balance between the needs of patients and new developments? Have we in fact too many clinical research centres? They have only developed in relation to medical schools and teaching hospitals. Should we not be doing something more in the way of the equivalent of product development in the engineering field? Should quality control systems of some kind be introduced to monitor the clinical work and its cost? I believe they should at least be seriously examined by the professions concerned, all of which believe in good practice. They should be "seeking quality"; but the place to begin might be to examine and debate Sir Douglas Black's report Inequalities in Health. My Lords, I beg to move for Papers.
3.39 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, I should like to thank the noble Lord, Lord Hunter of Newington, both for introducing an important subject for your Lordships' consideration this afternoon, and for giving us an overview of the National Health Service and part of its history from a position of very considerable authority. His name at the foot of the Report of the Working Party on Medical Administrators—and, moved from the foot to the top of it, adopted as the short title of that report—is already in the reference books and will pass inevitably into the history books of medical administration in due progression of time.
He posed a number of questions, some of which I hope to answer in the course of what I shall say now and the answers to the rest may not emerge until I reply to the debate. I am aware that the proportion of the national expenditure represented by the National Health Service at present is 12 per cent., but I could not tell him what it is I am comparing it with and what it is that he wishes me to compare it with from the time before the amalgamation of the department; so I will try to put the whole thing into perspective for him later. I shall not follow him back to the roots of the developing welfare state but shall content myself with looking first at the immediate past and present and then at the future.
I must, at the outset, establish the credentials of the present Government in the field of health. It has, after all, been the subject of a concerted campaign of denigration and slander the like of which is rarely seen in the politics of this country. The aim of this campaign would seem to be to try to establish in the subconscious minds of everyone in this country the totally erroneous idea that we have in some way diminished the National Health Service rather than increased it—and I hasten to add that I am not addressing myself to the noble Lord who moved this Motion. This Government have never decreased expenditure on the health service: indeed, they have consistently increased it, not just in cash terms but in real terms. Yet the ritual chant persists. People are seriously asked to look at our cuts. People who should know better follow party propagandist lines as

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slavishly as the courtiers who followed the line of that vain and mythical emperor when they said: "Just look at the emperor's clothes".
Our cuts in the health service have no more reality than had the emperor's clothes. Noble Lords who doubt me—and the emperor has some courtiers even in this House—should look at the Public Expenditure White Paper published yesterday. They will see it quite clearly stated there that for hospital and community health services—that is the services for which health authorities are responsible and whose future we are now discussing—the Government have provided additional cash planned to provide growth of about 4 per cent. between 1978–79 and 1981–82. In practice, the path of growth is never entirely smooth. For example, the last Government had left plans for growth of 2.1 per cent. in 1979–80, but had not provided enough money for the price and pay increases they had left in the pipeline. So we were in the position of getting into the driving seat of their motor-car and discovering there was not enough petrol in the tank. Up to the present year, the actual growth of health authority services has been a little less than 4 per cent. We estimate, in fact, that the level of services is now about 3½ per cent. above the 1978–79 level.
It is right that I should establish the basis from which we move into the future. We are discussing the future of the health service and we cannot do that unless we know where it now is; and I wish to establish firmly in your Lordships' minds what the position is, what the policy is, and what its credentials are for saying that it will do what it proposes to do. I see nothing to apologise for in that. The growth to which I have referred means more and better services. As the White Paper says, the growth has been used to meet the needs of increased numbers of very elderly people, to whom the noble Lord referred, to provide for advances in medical treatment, and to continue the process of remedying imbalances in service provision between health regions—and the noble Lord addressed himself to that as well. Therefore, we are looking at a position where there is more money, there are more nurses, there are more doctors and there are more patients being treated. These facts are facts of record.
We have done this because we recognise the pressures for more and better care. I have already mentioned the needs of the increasing number of very old people, and also the need to make some allowance for medical advances. Very old people need care that costs on average eight times as much as the care needed by people of working age. In fact, the overall extra cost of changes in the population structure to health authority services is now running at a shade over ½ per cent. of their total spending annually. One cannot ignore the costs of the care of the elderly in present demographic positions. The medical world is in a state of almost permanent revolution—I do not refer to the student revolution to which the noble Lord, Lord Hunter, referred but to the ferment of discovery and development in the technical medical fields.
I do not need to go into a great amount of detail to convince your Lordships that medicine has become more scientific, more effective—and more expensive. For example, haemodialysis costs on average between £6,700 and £11,850 per case per year, according to
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the type of dialysis given. In 1980 the NHS was spending about £32 million on dialysis, treating nearly 4,000 patients. Another enormously beneficial advance has been the development of joint replacement techniques, and the noble Lord made a pertinent reference to that and to the care which should follow it. It costs about £2,000 to fit a patient with an artificial hip-joint. At the moment, there are about 21,000 cases per year, costing in all about £42 million.
Both these examples are well-known, and they benefit a large number of patients. There are of course many other examples of new techniques that have evolved more recently; for instance, in the treatment of people with diabetes whose sight is at risk from their illness, in the treatment of heart disease and of cancer. The NHS must of course keep pace with these advances, which will continue in the decade to which the noble Lord directed attention. To do so it must scrutinise constantly and carefully its priorities and the use it makes of the resources it has, to make sure that it concentrates resources where needs are greatest when account is taken of the new benefits that can come from advances in medical skill. It is therefore very reasonable that we should have emphasised the need for health authorities to maximise their efficiency, by asking them to find a small part of the growth in services for the present year, and a small part of the further 1·7 per cent. growth planned for next year in this way. For the years beyond 1982–83 covered by yesterday's White Paper, we look to health authorities to find further efficiency savings to use for the development of their services though, as the White Paper explains, the provisions for these years are subject to review in the light of the availability of resources and the scope for further increases in efficiency in the NHS.
Future years will bring still further developments and your Lordships will see the obvious problem that this will pose. It is a difficult one and it will always, I fear, be with us because, quite simply, every developed country now has available to it more treatments and cures than it can ever afford to apply to the whole of its patient population. Within the professions there will continue to be, as I believe there always has been, the stark need to establish priorities—priorities not only for research but also for the application of the results of the research. It follows—does it not?—that there will be a continuing need, in particular, for research into preventive practices that will reduce demands on other resources. In the meantime, under any Government and under any economic circumstances, constraints upon resources continue to be an unavoidable factor both in strategic planning and in local decision making, even if they were almost infinite. Improvements in medical care which do not carry a cost penalty will therefore continue to be of very great importance. Sometimes what is needed is a simple change in the way that care is delivered. As an example, I would quote the longer-stay mentally ill and mentally handicapped patients. Many thousands of these are at present lodged, quite inappropriately, in very large institutions a long way from the communities from which they come. The buildings are so solid and have been there for so long that they look, as it were, invincible; as if there were no other answer to the problems which generations have asked them to resolve. Indeed, for many of their inmates they are the only home that they have known

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since childhood, perhaps 50 years or more ago; and we have to remember those people when we start talking about a more acceptable form of provision. To some people, what we have is the only home they have known.
Nevertheless, it is very refreshing indeed to see the successes that are now being achieved by a totally different approach, in which quite high-dependency patients are being cared for in small, homelike houses close to, or even within, the community. I should particularly like to commend the example being set in this way by the Wessex Regional Health Authority, which I recently visited. Accurate costings are difficult, but it seems to be the case there that this sort of provision for the mentally handicapped is no dearer, and may actually prove to be cheaper, than care delivered in traditional large-scale hospitals and homes. If it does prove cheaper, then that is the answer to the anxiety of the noble Lord, Lord Hunter of Newington, that a move to this kind of provision might be in some sort of competition with the kind of provision which is necessary in conventional establishments with expensive equipment. I have no doubt at all that the much more personal atmosphere that one finds in such a place, and the much more socially integrated lives which the people who live there can lead within the community, have their own important therapeutic value. I recall in that context a home which was recently opened in Andover for only eight patients and which may prove to be typical of a great many more in the years to which the noble Lord is addressing our attention.
Therefore, while I cannot speak too highly—and I strongly emphasise that—of the dedication of those who work in our very large traditional institutions (I believe that those qualities are as invincible as the very bricks and mortar in which they work), I think, nevertheless, that it is likely that one change we shall see over the next decade is a reduction in the size of a great many of our institutions. The scale needs to be humanised, and we are already seeing the process getting under way.
This will often mean a radical reappraisal of the route by which resources should be delivered from central Government to the eventual consumer—the patient. It may often be much more practical and much more appropriate for delivery of the service to be not by the health authority, as is now the case in Wessex, but by the local authority. But, doubtless, the best solution will vary from case to case. Noble Lords will be aware that we published last year a consultative document suggesting ways in which such patients could be cared for by local authorities. This would involve a transfer of resources—not, please note, necessarily increased resources—but it should help to ensure that a truly appropriate form of care is provided.
We have had many helpful comments on our proposals. These are being studied at the moment and we hope to be able to make a statement about them before long. What I can say now is that, whatever proposals are favoured, the specialist in community medicine will have a major role in implementing the new policy. This will necessitate liaison with the local authority—and here the specialist in community
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medicine has a unique position—and a significant planning and co-ordination task, for which the wide knowledge and experience of the community physician will be required. I shall return to him shortly, but I should like to stay for a moment longer with the idea that the cost of delivering a service is not immutably fixed.
It is not only in long-stay provision that a service can be delivered at the same, or even at a reduced, cost. Even at the other end of the scale, in the shortest stay units of all, there is something to offer. Studies at the day surgery units at North Tees General Hospital, for instance, and at Western General Hospital in Edinburgh have shown that the same quality of care—or, indeed, an improved quality of care—can be provided at significantly reduced cost in units which concentrate on minor surgery in specialised day surgery units. These are being developed increasingly throughout the National Health Service.
Incidentally, it is not always the case either that developments in treatment cause an automatic increase in the cost of a cure. If the examples I chose earlier gave your Lordships that impression, then I think I should refer, for instance, to the introduction of Tagamet, which often makes it possible to treat peptic ulcers without the use of surgery, and, indeed, without the need for a hospital admission at all.
More use of day surgery, more use of non-surgical treatment, more use of small-scale, cost-effective treatment units—these are more and more in the minds of clinicians. An increasing awareness of the comparative costs of different treatments and different drugs will be strengthened by the realisation that savings made in one area—and made without loss of the quality of the service given—can be used to improve the quality given in another. Here again, the specialist in community medicine has an important role, and this brings me back to him. He can provide information and advice on available resources and costs to the clinician. He also has an important role in the collection, organisation, interpretation and dissemination of information about National Health Service activities, especially in the clinical sphere. This is essential to the proper planning of services and in the stimulation of improving change. It is no good parts of the service developing in ignorance of what other parts of the service propose.
Community physicians also have important specific responsibilities in relation to environmental health, control of infectious disease and children's health services, and these I acknowledge. Today, however, I want to emphasise the contribution that they make to the management and planning of services generally. This aspect of their work is of paramount importance in making resources available for improvements in medical care. Their role is difficult to summarise briefly, but I need not attempt to do so. I need only refer your Lordships to Chapters 3 to 5 inclusive of the Hunter Report. If the noble Lord gets an increased distribution of his work by reason of that "puff", I am sure he will forgive me.
Co-ordination is very important. It is clear that clinicians themselves do not always have the time and resources to step back from the work that they are doing to identify ways in which their services could be provided more efficiently and effectively. There may be shortcomings in the way that non-clinical

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staff are organised, which reduce the effectiveness of the support that they provide to the clinician. Changes in admissions and discharge procedures may be needed to increase the efficiency with which beds are used. For instance, additional physiotherapy staff may be needed to help patients recover more quickly, so that existing beds can be used more effectively and better use can be made of existing theatre facilities. The specialist in community medicine can help clinicians to identify these possible improvements. He can also help to implement them. He, or indeed she, can examine particular clinical activities within the context of the framework of direct and support services which contribute to their outcome, and can then stimulate and co-ordinate action in different departments to bring about changes which will release resources to improve other aspects of medical care. Intelligent planning can vastly increase the efficiency with which resources are deployed and the actual level of service delivered for a given sum of money.
I spoke earlier of what this Government have so far achieved in improving the National Health Service. I did so because the proper jumping-off ground for a review of the future is a review of the present. Another important consideration is, of course, the organisational framework through which the service will operate. The intention of the last reorganisation in 1974 was that better management would lead directly to more effective use and more equitable distribution of resources in the National Health Service. Planning was seen as the key, and the hope in 1974 was that area health authorities would take on this planning role and thereby provide a base for improved medical care for all. This hope has not entirely been realised. One important—perhaps the most important—reason for this is that area health authorities were too isolated from those actually providing and receiving medical care: the local community and the doctors, nurses and other professional staff who provide services to patients.
The new management arrangements for the health service which are to come into effect next month will change all that. The 90 area health authorities and their 199 constituent districts—251 bodies in all—are to be replaced by 192 district health authorities. We have also abolished the sector or co-ordinating management tier within the district so that senior administrators and nurses at unit level will be directly responsible to district officers. That will mean that decisions will be taken much closer to the local community. Local decisions will reflect local priorities. It will also mean that decisions on planning, management and the deployment of resources will reflect much more closely the views of the clinical staff responsible for providing services to patients. Here again, I believe that what we have in mind will answer some of the anxieties expressed by the noble Lord, Lord Hunter of Newington, about the apparent divorce between clinical opinion and planning decision.
By abolishing two out of the former six tiers of management between Ministers and the staff actually providing services to patients, we also look for a significant increase in the speed with which major decisions can be taken and with which policy decisions can take effect within the National Health Service.
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Equally, if clinicians wanted to introduce a day surgery unit in the local district general hospital, there would, in the past, have followed consideration by unit management, by sector management, by the district management team and by the area team of officers before the issue reached the area health authority. In the future, such a decision will be taken by the district health authority after consideration by unit management and the district management team alone—once clinicians have identified the need. That is potentially a much more rapid process.
And, of course, the new arrangements will also provide better opportunities for the two clinical members of district management teams—the consultant and the general practitioner representing their respective colleagues in the district—to influence events. This is another response to the noble Lord's anxieties. They will be able to contribute much more directly than hitherto to the planning and management decisions of the authority and will thus be in a position to promote improvements in medical care.
The noble Lord referred to RAWP—the acronym developed from the name of the Resource Allocation Working Party—and I ought to respond briefly. The allocation of resources in the National Health Service is based on a formula embodying the recommendations of the Resource Allocation Working Party's report, Sharing Resources for Health in England. The working party's objective was to bring about a fairer distribution of resources in the National Health Service so as to ensure equal opportunity of access to health care for people at equal risk. The allocation process involves weighting regional populations to reflect their relative need for health care resources and then, after comparing the cash equivalent of this with their existing level of resources, distributing the available growth differentially in favour of those regions shown to be most in need.
The application of RAWP principles in determining regional allocations over the past four years has already brought about a significant redistribution of resources between the under-provided and the better provided regions. The revenue allocation of the worst-off region in 1977–78 was 10·9 per cent. below average and it is now 5·6 per cent. below average. The best-off region in 1977–78 was 14·9 per cent. above average and in 1982–83 it is 12·3 per cent. above average. We have to recognise that this process takes time, but it is taking place.
My last reflection on reorganisation is that the post-1974 structure has attracted criticism both from clinicians and from others examining the structure of the National Health Service—notably, the Royal Commission which reported in 1979. This is the complex and often bureaucratic system of professional advisory machinery. Its weaknesses included too many formal committees expected to consider a wide range of often routine matters in order to satisfy the belief that all decisions, of whatever importance, should have been considered and agreed by everybody—even those whose views were irrelevant. One of the changes we have made as part of the reorganisation is to introduce a much more flexible approach to consultation with professional staff. This will of itself release resources for clinical work and patient care.
In closing, I should like to turn to our view of the

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relationship between the National Health Service and the private sector of health care. Encouragement of the private sector has been an important part of our policy since we returned to office. We have explained many times why we wish to encourage private care and why this poses no threat to the National Health Service—indeed, the reverse. Even those who cannot afford it benefit from the fact that others use it. The development of private facilities increases the total provision of health care in the country. Moreover, it can relieve pressure on the health services, either directly or by allowing the National Health Service to direct resources to other areas. We see the public sector and the private sector as essentially complementary. They are partners, not rivals.
There are many ways in which the National Health Service can benefit through a more flexible relationship with the private sector. There are signs of a growing co-operation, and I hope that this will extend even to the planning stages. This Government have made already a significant increase in the volume of resources directed to health care in this country. They have brought about a significant increase in the number of people working within the National Health Service. They have devised an administrative framework which will, when it has settled down, bring about a significant improvement in the cost-effectiveness of management. I cannot see further than can the noble Lord into my crystal ball. However, I can say that we have here the basis for a sound progression into a future in which the money of the taxpayer is more and more effectively turned into the security and the health of the whole population.
4.7 p.m.
Lord Wallace of Coslany: My Lords, I am sure that the House is extremely grateful to the noble Lord, Lord Hunter of Newington, for raising his important and timely Motion on the National Health Service. When I first entered your Lordships' House I was told that whenever I rose to speak in the Chamber there would almost certainly be an expert on the subject listening to me. Following, as I do, the noble Lord, Lord Hunter of Newington, and having listened to the noble Lord the Minister, I am very much convinced, so far as the noble Lord, Lord Hunter of Newington, is concerned that we are listening to one of our acknowledged experts.
I cannot say that I enjoyed the opening part of the speech of the noble Lord the Minister. I wondered where he was. I thought he was up at Hillhead addressing a by-election, for he came out with quite a number of political brickbats. I do not intend to reply in kind. All I would do is to remind him that the Conservative Party voted against the bringing in of the National Health Service. The noble Lord the Minister cannot object to that because I was there at the time. I could of course fling brickbats across the Chamber but, quite frankly, this debate is not a subject for political brickbats. If I make anything in the nature of critical comment it will be only because of my own experience, though in a somewhat minor way, of the National Health Service. And it will be on a constructive basis.
In a very wide subject like medical care one has to consider related issues like good housing, unemployment
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and deprivation, particularly in the inner city areas. Today, however, we are primarily concerned with the National Health Service, mutilated—let us face it—as it has been by the bureaucratic, remote reorganisation of 1974, and now again going through further agonies of reorganisation. I am not making a party political point, just a statement of fact, when I say that both of these reorganisations were carried out by a Conservative Administration.
It is estimated that this reorganisation will result in financial savings of some 10 per cent. of management costs. I believe that a cash figure of £30 million has been mentioned. The calculations are somewhat obscure and should be treated with reserve. In view of the importance of this debate—at least, that is how I view it—I have taken the opportunity of consulting nursing and medical staff at my local general hospital, which I feel gives a typical overall picture of present day problems. The noble Lord the Minister has boasted that the Government have ploughed a great deal more money into the National Health Service, but from the comments I have received—particularly from medical staff—it seems that financial cuts are hitting hard at patient care.
Consultants comment that acceptance and implementation of the Short Report indicates a doubling of the consultant establishment, but at the hospital in question there are two consultant general surgeons, and although the South East Metropolitan Region has agreed to a third post, the money is not available. This is leading to a deterioration in the waiting lists. I am advised that financial shortages in the district concerned have led to attempts to close wards at both general and mental hospitals, which again affected patient care. This situation arises again in the accident and emergency department, where the threat of closure hangs over the Brook and Orpington hospitals. And there is the failure to expand the accident and emergency department at Queen Mary's Hospital, despite general acceptance of general need. Again, this is a threat to patient care.
A further example is understaffing at nursing level and among district nurses, in order to balance the books. This is yet another example of the threat to patient care. These were not political comments but comments made to me by consultants—with many of whose political allegiances I would probably not agree. The doctors consulted approved the general principle of spending more on what they term the "Cinderella services" for the geriatric, mentally handicapped and disabled—but not at the expense of the acute services. Reorganisation is welcomed by the doctors, as they hope that it will be more efficient, but add that that will only be so if the resultant savings are ploughed back into the services and do not make excuses for further cutbacks. Savings must be used to improve, or at least maintain, present levels of service to the public. The views I have just given are those of the doctors. Now I come to the reactions of the nurses and midwives. I am afraid that I must make a very serious statement; it is so serious that I have taken great care to check every word that I am about to say with the nursing service, with which I have been in touch.
As with the doctors, the nurses and midwives are delighted to see the end of the area tier on 1st April as, in their words, it was management from afar and with

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out any understanding of the local situation. Those are words which I believe the noble Lord, Lord Elton, uttered a short while ago. They say that the new form of administration may ultimately be all right as in many cases it should draw closer to patient level. But they add that there are still too many district health authorities dealing with too great a population. Management, they say, should remain functional—"general or midwifery", "psychiatric", "community", et cetera.
There undoubtedly exists a considerable amount of unrest, especially among senior nursing staff, at the widespread advertising of senior posts and the prospect of continuing to advertise people's posts a good way down the line, in the next 18 months, to nursing sister level. There is obviously a great deal of distress and despondency among senior staff, all of whom have to apply for their jobs—jobs they have done in a first class fashion for many years in some cases. I am informed that in some areas that widespread advertising had resulted in applications for senior posts reaching three figures. This is a serious situation, and it is a ridiculous situation bordering on chaos. Somebody in authority, in the famous words of the noble and learned Lord the Lord Chancellor, has gone "stark raving bonkers". This is a situation which demands a Government investigation. I say again that the alarm and despondency which already existed will gradually go down the line to nursing sisters and will affect staff morale—and that must affect patient care.
This upheaval and disruption to the divisions of nursing and midwifery will inevitably filter down to the patients where the existing functional divisions are being split, as is the case in many midwifery divisions, and their fragments attached to general nursing areas to form new units of management. Units of management they say, and I agree, should be kept small, and preferably functional, and decisions should be made as near to patient level as possible. Staff have more or less settled down after the 1974 reorganisation and it appears that some changes are being made now merely for the sake of changing once again. This is stupid and non-productive.
I have just given the views of people v ho are professionally and personally concerned with patient care at ground level. I am extremely grateful to them for the trouble they have taken to tell me of their grave concern at the possible threat to patient care. I have done my best to check that every word I have said so far has their approval. If we are not careful, career prospects will be blighted for those who are giving selfless and devoted professional care to their patients.
I should now like to refer to the question of management. My experience of management in the National Health Service has been, first, as a member of the old-type management committee and, secondly, as vice-chairman of an area health authority. The contrast between the two was remarkable. In the old HMC we were close to patient level with special committees, including finance—and I stress "finance". We even had a visiting committee on a rota basis. All that went with the new area health authority. We had no committees at all and no committee for finance. There was no visiting, at least in the early days. In fact the chairman even imposed a ban on myself and a few colleagues visiting our local hospitals. In the end, we had a very hard battle to get joint
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consultative committees set up for hospital staff. All we had was a monthly meeting where the law was laid down by the area management team and the chairman, who steam-rollered the decisions through. Decisions were taken without consultation with members. I sincerely trust that district management teams will operate differently. Members appointed to the new authorities must be consulted on decision-making and not be treated as mere pawns.
I come to the subject of committees. The view of the area team at that time was that they were a darned nuisance; they did not want them and they did not get them. But, on one angle of health administration, it is absolutely essential that a finance committee should operate in order to channel finance to the essential services with the overriding theme of patient care. Not only that, expenditure can be more closely controlled—as indeed we did in the old days, particularly in the dispensing of drugs. It is absolutely essential that there is a finance committee.
I quote an instance that occurred in the Bexley health district. The area health authority and the chairman in particular, the management team, had a great idea. The Bexley health district was accommodated in a large suite of offices, one of these tower blocks near Sidcup station. They entered into a contract of tenancy. Then the chairman thought it would be cheaper to go somewhere else. So they closed down an old maternity hospital and turned this into district authority headquarters, at Erith Road, Bexley-heath. But do you know what happened? They were supposed to be saving money. They overlooked the fact that they were on a contract of tenancy and had to find tenants for the offices they had vacated. True, a little bit of their office accommodation has now been let, but talk about economy and control of expenditure!—they are still spending thousands of pounds of public money in maintaining empty offices because they had not the wit to understand that it would not be an economy measure to close down the offices and shut a maternity hospital. That is fact and the department obviously knows a great deal about it—at least the regional health authority does.
What is not wanted in the new set-up is a continuation of dictatorship by management teams. That is not democratic control and must be avoided at all costs. The setting up of joint consultative committees for hospital staffs is, in my view, essential. Hospitals are remarkable venues for rumours and such committees can nip these in the bud, and much industrial strife can be avoided. In my experience, they are also excellent mediums for consultative suggestions for improving patient care, as well as keeping staff informed. I know for a fact that consultative contact with medical, nursing and ancillary staff can yield very positive results in improving patient care. It may be that each suggestion is small, perhaps the repair and maintenance of wheelchairs, but they are constructive suggestions, and teams of management and members must go out and consult with their staffs and invite their co-operation.
What I have said about joint consultative committees applies equally to community health councils, whose primary duty is to represent the consumer. I have a feeling, I am sorry to say, that the Government do not like community health councils, and are cer

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tainly placing financial difficulties in their way. My impression is that management teams regard them as an absolute nuisance—I nearly used other words which have been expressed—but to me this indicates their value. In discussing the National Health Service, the general practitioners tend to be overlooked. They are an essential and vital part of the service, often over-worked and too frequently operating from poor and inadequate premises. There is a need for more health centres, combining group practices, together with all the other services, such as chiropody, ante and post natal service et cetera. Such centres are, in my view, an important section of primary health care. Furthermore, family practitioner committees should be integrated with the district health authorities and not act as health authorities in their own right. It is essential that primary care services be planned across the board and in relation to hospital services.
Now I come to the subject of postgraduate medical centres; and that, of course, in relation to general practitioners. Postgraduate medical centres should, and do in some cases, provide the means to refresh general practitioners on new developments in medicine, by seminars, courses et cetera. Although there are 418 such centres existing, more are needed, particularly in the new hospitals. The Government in a recent Answer to me could not say how many more are projected.
Now I come to a little publicity if I may. I can mention one, Queen Mary's Hospital, Sidcup. Through lack of finance, a makeshift centre has been established; friends have helped with the carpets and so on. The most active and popular vocational training courses for general practitioners in the South of England are being carried out, as well as training of medical staff, in very inadequate surroundings. Public money is not available for a purpose-built centre. I must now reveal the fact that I have an interest, as I am chairman of an appeals committee to raise £280,000. In case your Lordships think consultants are well paid and do not bother about the financial aspect of the service, they do. I can say that up to this minute consultants have already covenanted a total of over £32,000, and the fund has reached £40,000. Now we are going to go public. So what the regional health authority failed to provide these doctors in the NHS are making their own personal sacrifice to achieve, a worthwhile objective. This is a spirit to be admired. I would add, somewhat hurriedly, that if there is any noble Lord in the Chamber at the present time, or any noble Lord who reads Hansard, who has access to large sums of money, he can contact me at a later date, and he will find my name in this brochure with the necessary forms. I think I heard somebody say, "That will be the day!"—you never know your luck; I have tried.
Just a few brief words, not very pleasant ones, on private medicine. I take the view that if a person wishes to spend money on private treatment, that is his or her affair. They want to buy priority. But my firm view is that the overwhelming priority in medical treatment is the medical need of the patient and the patient alone. On that basis, money should not buy priority. Private hospitals are developing at a rapid rate, with obvious Government encouragement. American interests are coming in. Their objective is not basically patient care; obviously, it is a business
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with the profit motive. What, however, concerns me, and a lot of other people, including many in the health service, is the fact that many doctors and nurses trained with public money are being taken on by private schemes. We cannot stop this, but at the very least private hospitals should make a token contribution either by a levy or a form of taxation. That, I feel, is only reasonable and fair to the taxpaying public of Britain, whether they use the National Health Service or not.
Social services operated by local authorities also play an important part in health care and there should be close links between local authorities and the new district health authorities. Unfortunately, under the new structure the loss of coterminosity between health authorities and local health authorities with social services responsibilities, may jeopardise joint planning between the two. Joint planning and financing should be strengthened to the advantage of the service.
There are many other points that I would like to make, but there is an excellent and lengthy list of speakers to follow, so I shall conclude. Some of us were in those early days fighting for a National Health Service. It was established in the 1945–50 Parliament and became the envy of the world—make no mistake about that. All I hope is that we shall resume that exalted status once again.
4.31 p.m.
Baroness Robson of Kiddington: My Lords, I, too, am extremely grateful to the noble Lord, Lord Hunter of Newington, for giving us the opportunity to debate this very important issue at this time. Obviously I am considering this Motion as a recently retired regional chairman. I agree whole-heartedly with what the noble Lord, Lord Hunter, and the noble Lord, Lord Elton, have said about our desire for an improved National Health Service in this country in the 1980s. However, I think that we must look at the economic possibilities and chances of improving the services within the constraints of the economic climate.
There was a debate in the other place on 18th February. On that occasion the honourable gentleman, now the Minister for Consumer Affairs, quoted some figures which were as follows: In 1978–79 the gross capital and revenue expenditure of the health service were £6,500 million. In 1982–83 the gross capital and revenue expenditure will be £12,100 million. In cash terms that is an increase of 87 per cent. After that he announced that the increase in real terms during that period was 5 per cent. As I understand it, the noble Lord, Lord Elton, has reduced that to 4 per cent. today—at least that was what I thought I heard the noble Lord say.
Lord Elton: My Lords, I took it to 1981–82. We come to the 5 per cent. in 1982–83, which we have not yet reached.
Baroness Robson of Kiddington: My Lords, it is 5 per cent., so I am quoting correctly. If one wanted to make a political point one could say that it is a terrible indictment of the economic policy pursued by this country in that period. However, that would not get us very far. What I think we should consider is what a 5 per cent. increase in real terms means for the National Health Service over such a long period of

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time. It is assumed that 1 per cent. to 1½ per cent. per annum is necessary for demographic growth. The noble Lord, Lord Elton, admitted in his address to us that ½ per cent. was necessary for the increasing elderly population that we are having in this country. If we need that amount of money for normal demographic growth, how are we to improve the service on the amount of money available to us?—particularly when we keep in mind something that the noble Lord, Lord Hunter, mentioned; namely, the massive investment in hospital building that went on in the 1960s and early 1970s, the revenue consequences of which, in inflated terms, have had to be taken on by the regional and area health authorities. That makes their economic or financial problems even greater.
On top of that, as has already been referred to, the Resource Allocation Working Party's re-distribution of resources between the regions has been superimposed. I happen to have been representing one of the so-called rich regions in the country. All of us, as regional chairmen, when we met the Secretary of State and discussed the RAWP formula, agreed that it was only fair. The problem that has been created is that RAWP was introduced at a time of economic decline and as a result the so-called rich regions, which have been given hardly any development monies, have suffered in comparison very greatly.
What are called so-called rich regions are not necessarily rich over the whole of their territory. There are deprived areas within regions and obviously the intention is that the regions should redistribute the regional resources to help the deprived areas. But, with hardly any growth money, the impact of change has been very small. If we consider a region like mine—which has a particular problem down on what is commonly called the "Costa Geriatrica"—the problems and our increase in expenditure have been enormously great. So when we are looking at what we want to achieve I think that we must look at it in cold economic terms because we will not achieve an enormous change in the service without extra input of finance.
The noble Lord, Lord Wallace of Coslany, also referred to the growth of private practice and private hospitals. Having been involved in the health service under various Administrations, it is my view that the greatest impetus given to the development of private practice and private hospitals was the action taken by the previous Labour Administration in attempting to close down private beds in the National Health Service hospitals. That is what gave the original impetus. Since then there has been great encouragement, I believe, by the present Administration to private hospitals. I have no objection in principle at all to private hospitals—
Lord Molloy: My Lords, I hope that the noble Baroness will allow me to intervene for a moment before she completes that phrase. I hope she will say that she has no objection to those who use the private wings of National Health Service hospitals and pay their bills. I understand that in the area in which the noble Baroness was involved there is close on now £1 million owed by people who were admitted and had private medical treatment but did not pay their bills.
Baroness Robson of Kiddington: My Lords, I do not approve of people using National Health Service hospitals as private patients and not paying their bills—nobody approves of that. Having been regional chairman, I am afraid that I am not aware of the £1 million to which reference has been made. I have had the odd case brought to my attention where we have tried to take action. However, I shall take advice from my former region on this matter.
As I was saying, I have no objection in principle, but we must be very careful about how we allow this development to take place because it would be tragic if, in certain parts of the country, the growth of private hospitals was such that the National Health Service was left with perhaps very little of the acute services, but all the mentally ill, mentally handicapped and geriatric services. That I would deplore.
I also think that there is a great danger in the present reorganisation. Under RAWP we were trying to equalise services all over the country. But it is doubtful whether a lot of, or any, private hospitals will be built in certain parts of the country. Therefore, in that way we would be creating a different service in one part of the country from that in another. I hope that the Government will keep this in mind when further applications for the building of private hospitals come up for review.
Also on private hospitals, I am interested in them being sited quite close to a National Health Service hospital. One of the benefits of having private beds in National Health Service hospitals was that the consultants were available on a full-time basis—they were within reach. I believe that this situation could also be beneficial if the private hospital was within reach of the National Health Service hospital.
I should now like to turn to the reorganisation itself and to the aims set out in Patients First. I do not think anyone disagrees that there is a general acceptance that smaller, locally-orientated health authorities are more likely to be sensitive to the needs of the community. But, as a former regional chairman, before proceeding I should like to pay tribute to the marvellous job that the areas did under very difficult circumstances, particularly the members of area health authorities, who were working under great difficulties. I should like to pay tribute to the service that they gave us while they were in existence.
As has been mentioned in Patients First, there is a cloud over the future of the regions and their role. With over 200 district health authorities, if there is to be uniformity—I do not mean uniformity in a boring sense, but real equality of service in the NHS—it seems to me that it is obvious that the region's role as a co-ordinating factor is vital.
However, before discussing the region's role in some detail, I have some comments to make on recent decisions which relate to the reorganisation and to the general policy of the present Administration. First, may I say how very much I welcome the Secretary of State's recent circular on accountability, which seems to recognise the need for a regional tier but as the accounting body; and the proposal of a yearly review by Ministers themselves coming to the regions and meeting regional chairmen and officers and reviewing their progress towards the stated priorities within the nation.

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Previously, up to a point this has been done at officer level and it had also been done, up to a point, at meetings between regional chairmen and Ministers. But yearly meetings, designed to be followed up, to look backwards and forwards at the same time to see where we are going as a health service, I believe will help to create greater understanding between Ministers and the service itself about the difficulties that we encounter. I hope that direct exposure to the service's difficulties will help to avoid too sudden changes in policy, because in the NHS quite often in the past we have suffered from pronouncements about priorities by various successive Ministers of Health who have had the best of intentions, and the general public take it for granted that it will happen tomorrow. It does not happen. Therefore, I think that the greater communication that exists on that level, and particularly the accountability of the region for what goes on in that region, is highly welcome.
What I regret very much is the decision that consultants' contracts and those of senior registrars should be held at the region. I am a great believer that a managing authority—and that is the district health authority—should hold the contracts of all the staff that it employs. I believe that this is essential if we are to achieve the economic use of the resources at our disposal. I am also sad that it appears that the Family Practitioner Committee is to be given even more complete independence from the main run of the NHS. I find this regrettable.
The expressed desire that we all have to move away from a hospital-based NHS to one of total health care, needs the establishment of improved primary health care services. I believe that the further divorce of the FPC from the general run of the NHS makes this difficult, particularly in London where 50 per cent. of the GPs are single-handed practitioners, often with lock-up surgeries and telephone answering machines. How can we create a good primary care service unless the health authorities have some control over that situation?
As a result, in those parts of London we have a much greater demand for hospital beds and high-cost services. Those districts are accused of having too many beds; they are accused of having too high costs and of taking too large a slice of the limited resources; whereas, in actual fact it can often be proved that they need those resources to give any kind of care at all in that particular community because of the lack of general practitioner services. I believe that that is a sad omission. A chance to remedy this should have been taken in this reorganisation, because I sincerely hope that we shall not have another reorganisation for along time to come.
I am also very disturbed about the continued emphasis on reduction in management's costs at a supposed saving of £30 million. As the noble Lord the Minister knows, the exercise started some three or four years ago, and at that time the NHS had an average management cost of about 6 per cent., 7 per cent. or 7½ per cent.—it varied between various regions. Over a period of three years it has been brought down to 5.14 per cent. The aim now is to bring it down to 4.62 per cent. I took what the noble Lord, Lord Elton, said about the removal of tiers and the savings in this way. If you compare the management costs of the service in this country with the management
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costs of services in the European Community, you will find them immeasurably higher in Europe; if you compare this with industry, you will find that it is very much higher in industry, although I admit that they have to sell their products; we do not have to sell—we are over-sold before we start. Therefore, that is not a fair comparison.
However, I think that we are running the danger of defeating the purpose of reducing management costs. I was 100 per cent. behind looking at management costs when we started the exercise, but management costs have become a popular sort of whipping boy, and I believe that too low management costs can mean high costs of waste and high costs of inefficiency. I believe that we can save more money in the general running of the service by having slightly higher and, if I may say so, in many cases more qualified managers within the service. I think that we should be very careful about reducing those costs too much because we may be defeating our own purpose.
I am particularly concerned about this, because during the restructuring—which will go on for a couple of years before it settles down—we shall need adequate financial control. I would not want to see any reduction in the cost of financial control of the service at the moment. Additionally, if we are to achieve the aim of Patients First—the exact aim about which the noble Lord, Lord Elton, spoke; decision-making down to the smallest unit—we need to strengthen the unit management; we need to up-grade that person. That will take some of the savings—indeed, it will take quite a lot of the savings—that we shall hopefully achieve in the management cost exercise. I would rather that we created in this reorganisation a local decision-making, efficient organisation without necessarily saving the £30 million than saving the £30 million and not improving on the management at the unit as we have it at the moment.
I should just like to return for a few minutes to the role of the region itself. There are two schools of thought about the region. There is a body of opinion which believes that to have a region above the DHA diminishes the resolve of other tiers to act on their own initiative. There is too much looking up: "I have always got a safeguard. I have a backdrop. I don't really have to take the decision myself". On the other hand, the absence of such a body would cause enormous diversity of policies. You could get parochialism, which would be both expensive and undesirable. You could get arbitrary and ill-advised decisions and general communication problems from district to district. The NHS is a highly complex organisation. There are inputs from industrial interests, local interests, clinical professionalism, and from the general public, all of which have to be co-ordinated. Although I am not a believer in an administrative pyramid, I believe that the role of the region is going to be more important after reorganisation than it was before.
No district under reorganisation can expect to be totally self-sufficient for all its services, and the quantity of inter-district service provision is going to be enormous, added to which the formerly area based services will have to be reallocated to one district or another to run on behalf of more than one, because there are many services—like the ambulance service, like works, for instance—that it would be completely and wholly uneconomic to run from each district.

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Not only would it be uneconomic but we would not have the expertise at so many different points. All this problem of changing over from what was a three-tier system to a two-tier system will necessarily make the region's role more important.
The other problem is that we had a system between the areas of cross-flow of patients for the purposes of allocating resources to areas. The cross-flow of patients between districts is going to be enormous compared with the cross-flow between areas. On the whole, between areas it was purely on acute services, but between districts it is going to deal with geriatric patients and take in the whole concept, and setting the standards for reimbursement is going to be very difficult. The financial problems of the regions are going to be enormously increased in the allocation process.
Apart from that, there are certain other services that in most regions were allocated to areas that will have to come back to the regions. In my region we followed a principle that for all highly expensive medical equipment we allocated the money to areas and they had to control that money. Frequently I received unhappy letters from the medical profession who claimed that the areas were not always sensitive to the needs of the service. But I resisted taking it back to the region because I believed that the area was the managing authority. You could not possibly distribute that money on a district basis, because if you split it up between 13 districts none of them would ever be able to afford some of the expensive equipment. Therefore, that is another link that would have to come back to the regions.
I am a great optimist. Having been in the service both before reorganisation as a governor of University College Hospital and after that as a regional chairman, I was never happy with the organisation as it was during my term of office, but I look forward with great optimism to an improvement in the service from a management point of view. But I also hope that the present Government will be sensitive whenever the economy picks up to the financial needs of the service.
4.56 p.m.
Lord Todd: My Lords, the matters to which my noble friend Lord Hunter of Newington has drawn our attention this afternoon are most important to all of us. All of us at one time or another are users of the National Health Service, and therefore our well-being and the well-being of the service are intimately linked. It is for that reason that I venture this afternoon to make a few brief and rather general comments.
Speaking, as I do, from these Benches, noble Lords will not be surprised to hear that I do not wish to speak on political matters, nor am I able to present such a massive array of statistics as we heard from the noble Lord, Lord Elton. I am also, medically speaking, a layman. I am not in any way connected with the medical profession, or with the National Health Service—at least, not nowadays. It is true that I had the honour to be chairman of the Royal Commission on Medical Education in the latter part of the 1960s, and I also served as chairman of the governors of the United Cambridge Hospitals for five or six years until the reorganisation of the service in 1974. When that reorganisation took place I am afraid that I declined to
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serve further, and that for the simple reason that I did not believe that the new organisation would work satisfactorily. I regret to say that my misgivings seem to have been largely borne out by subsequent events.
The three-tier system introduced at that time was bound to increase the bureaucracy which was already all too evident in the service. Growth in the size of any organisation—be it the National Health Service, industry, or anything else—is all too often accompanied by an even faster growth of bureaucracy. Communication between the component parts gets more and more difficult, and decisions get delayed and in the end a lot of them are avoided.
May I comment on something which the noble Lord, Lord Hunter, said when he pointed out that the Scottish health service differed from the English, and that what we were talking about was the health service in this country. I should like to make the comment to him that on all the information that I have the situation as regards bureaucracy is quite as bad in Scotland, at least in the Strathclyde Region, as it is anywhere else in the country. Therefore, I think that my strictures would apply to Scotland as well as to England.
In my opinion, the National Health Service has been no exception to this rule of increasing bureaucracy with increasing size. The process has been accelerated and emphasised by the way in which its staffing—the nursing, the medical, and the non-medical auxiliary staffs—has in recent years organised itself on a kind of industrial or unionised model, so that not infrequently the pursuit of industrial objectives redounds to the detriment of the primary object of the service, which is to cure the patient. There is an extremely interesting article bearing on that subject by Sir Douglas Black in the February issue of Health Trends, in which he emphasises:
"The welfare of Health Service staff, important though it is, is secondary in importance to the welfare of patients and the health of the community".
That statement should be pondered by the medical as well as the other staff in the NHS; the patients must always come first.
Under the reorganisation of the service, now to be introduced, we are to move to a two-tier structure in which the often cumbrous area authority layer is to be removed. That, I should have thought, can do nothing but good and should bring the service in the various regions into closer touch with local needs and speed up decision-making. I therefore wholeheartedly welcome the reorganisation.
The demand for medical care is, as a former Minister of Health, Mr. Enoch Powell, put it, infinite. Each new discovery in medicine provides the appearance of needs which up to that point did not exist. That is one of the reasons why the cost of the NHS keeps rising. But at a time of deep economic recession, such as the present, unlimited growth is not possible and for the foreseeable future we must cut our coat according to our cloth and select with care those areas on which we should concentrate our efforts for further development in the 1980s.
I shall not seek to identify and enumerate all the areas of urgent need in the 1980s and beyond. Some of those have already been mentioned by earlier speakers in addition to the noble Lord, Lord Hunter. I shall refer to only one, the care of the old, which has been

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increasing in urgency as the proportion of the elderly in the population has been growing. Now, and certainly in the past, much of the burden of this problem has been borne domestically. No doubt that will have to continue, but with changing living patterns—for example, the increase in full-time employment by women—the maintenance of domestic care will he difficult unless we get a further marked development of district services in which we can produce a real working relationship between primary health and social care in the community and the supporting services of hospitals, residential homes and special housing.
In my view, that is likely to be achieved only by a further massive development of the health centre concept as proposed in the report of the Royal Commission on Medical Education. It is true that since that proposal was made there has been a gratifying increase in the number of such centres, but many more are needed, and in particular there should be much more involvement in the centres of senior hospital staff, for there is too much separation between the health centres and the main hospitals in the health service. In considering the needs of the very old, one must not forget that a substantial proportion of them will need hospitalisation, not long stay but short stay hospitalisation in many cases. The need for short stay accommodation arises in part because some of the old people may have to be looked after in hospital for a short time, if only to relieve temporarily the strain on domestic arrangements: a spouse or daughter who must have some help occasionally if she is to avoid total breakdown.
From cases I know in my region of East Anglia, it appears that such facilities are at times quite lamentable. I know it is difficult to get nurses for geriatric hospitals. I also know that it is difficult to get medical recruits for that speciality. But the problem, already acute, is becoming more so each year and it is distressing to see the deficiencies when one knows that there are specialties in medicine and surgery the consultants in which are increasing in number far more rapidly than the number of patients requiring them. I wonder whether, if need be, the health service should consider making it perhaps even financially more attractive for nurses and medical staff to take up the geriatric specialty.
The matters about which I have spoken would of course cost money, but perhaps it would be possible to help find some of the funding by looking rather more carefully at some other areas. In recent years we have seen some astonishing developments in many aspects of medicine involving the introduction of what we may call high technology. I do not mean just heart transplants and whole body scanners but all such developments; the cost of such things was mentioned by the noble Baroness, Lady Robson. As Sir George Godber, for long a Medical Officer at the Ministry of Health, and later at the Department of Health and Social Security, pointed out some time ago:
"The illusion that high technology in medical care is the summit of National Health Service achievement has flourished in the medical profession and the public media. It is not; the common things occur most commonly and the quality of the NHS depends on the relief it gives for them. We do need the high technology, but we need it for the support it gives for simpler work, not for its own sake".
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I agree with that view and I suggest that, in accordance with it, costly high technologies in present circumstances should be confined to a few centres and not be allowed to proliferate virtually uncontrolled, thereby effecting a distortion of NHS funding to the detriment of the essential day-to-day work of that service.
5.8 p.m.
Lord Perry of Walton: My Lords, the noble Lord, Lord Hunter, painted on a very broad canvas a comprehensive picture of the development of the NHS. As one who has never worked in that service, I shall try to paint only a very small miniature. But since I shall be rather critical of some aspects of it, I feel it only right that I should make it plain at the outset that I consider the NHS to be one of the really glorious achievements of post-war Britain. If it did not eliminate the fear of being ill, it at least eliminated the fear of the economic consequences of being ill. It has throughout its life offered a consistently high standard of care.
I qualified in medicine during the war, before the NHS, and my contemporaries were almost all fired with enthusiasm for this new and bold concept which was clearly right in principle and, we hoped, about to he found right in practice, and I am therefore the very last person to denigrate the NHS on its achievements. But admiration for the service should not blind us to its shortcomings, and it is clear that all is not well. When I worked as a house surgeon in a voluntary hospital before the NHS was born, I earned the princely salary of 19s. 2d. a week and was on duty or on call for 110 hours out of the 168. Nurses, too, were appallingly badly paid, but were never in short supply. There was among the entire staff—doctors, nurses, administrators, porters, ancillary staff of every kind—a palpable sense of purpose. Morale was high; everyone shared in the team spirit.
I think the tragedy is that, despite all the achievements of the NHS, these things are gradually being lost. Looking at it from the outside, but with many friends in it, it seems to me that there has been a continued fall in morale, there is often a sad lack of team spirit, and indeed there is sometimes a sense almost of despair among the staff. Why should that have happened? Doubtless there are many factors. Indeed, in the 1979 report of the Royal Commission on the National Health Service there were 500 closely-packed pages of examination, diagnosis and suggested treatment. The diagnosis was penetrating, but I think that the commission was rather indecisive in suggesting treatment. I shall try to suggest one more radical cure, but I point out that even the very conservative treatment recommended by the Royal Commission has been withheld by Governments and the patient is no better. That may partly account for the growing popularity among patients and staff alike, and even among some trade unions, of private medicine.
By analogy, many of us have often said that state education ought to be so good that nobody would want to pay for private education. We have not yet reached that situation in education, but we reached it in medicine. There is no doubt that the National Health Service offers a range of facilities often unavailable in any private nursing home, and it is very

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sad that things are swinging the other way—and I think for relatively trivial reasons.
I believe that one of the main reasons for the current malaise is, very simply, lack of leadership—lack of leadership at the top and in the units on the periphery. It is not, I think, primarily a question of money; it is primarily a question of organisation. We have already been told that the new reorganisation will improve things, and I very much hope and think that it will, but even that reorganisation will not provide leadership; it is not about that. At the centre the National Health Service is the responsibility of the Secretary of State for Health and Social Security. As a politician and a Minister, he must do all the things that politicians and Ministers have to do. He must fight for funds for his department. Whether or not his fight is successful, he must maintain that the NHS continues to offer a fully comprehensive service, which it could do only if its finances were unlimited. He must answer to Parliament for all the criticisms and complaints that arise anywhere in the service. He has to do that as well as looking after his own constituency and being a member of the Cabinet.
Then he has to run his department. In 1979 the department had a staff of 93,000. It is built on a grand scale, but only about 5,000 of the staff are concerned with the National Health Service; all the rest—over 90 per cent—deal with social security. That is perhaps one measure of how much time any Secretary of State can possibly devote to the health service. As one former Minister not unassociated with my own party said:
"The department has become bogged down in detailed administration covering day-to-day management, but has been sucked in by the parliamentary process. The answerability of Ministers to Parliament may have given some semblance of control, but on some major aspects of health there has been very little central direction of control".
Thus there is very little chance for any Secretary of State to give the kind of leadership that will fire the enthusiasm of the staff of the NHS. Would it not be better for the Minister to appoint a full-time leader of the service, to give him an NHS budget, and to charge him with doing the job? The person appointed could state quite openly what could be achieved within the budget and what was beyond his means. He could be held responsible publicly for the standards of the service and could give leadership and a sense of purpose to the staff.
The report of the 1979 Royal Commission, having diagnosed this particular problem, concluded:
"This is an important matter about which it is not possible to be categorical at this time and it is one that Ministers should keep under review".
My Lords, that is what I meant by indecisive treatment. The report went on to state that the commission was not persuaded that the change would benefit the service. I am so persuaded, and I hope that Ministers will review the matter again and that they, too, will be persuaded.
Let me turn from the organisation at the centre to the organisation on the periphery. In the individual hospital one finds that the problems of leadership are even more acute. I should like to quote another extract from the report of the Royal Commission:
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"There were many complaints in the evidence about the quality of hospital administration in the form of allegations that the local administration could not or would not take decisions and that as a result of the development of different functional hierarchies getting quite minor problems dealt with was unnecessarily difficult and delayed".
A little later on the report stated:
"It is clear to us that the three main professions involved in the efficient management of a hospital—administrators, nurses and doctors—need to devise mechanisms to ensure that decisions can be made quickly and implemented effectively. This will best be achieved by the creation of an executive team representing these three disciplines, advised as appropriate by the other professions involved. It would have responsibility for the day-to-day management of the hospital".
I find that solution quite extraordinary. Rule by a committee, for that is what an executive team is, just cannot work unless one member of the team is in charge, is the boss. The chairman of the commission himself, Sir Alec Merrison, is, as I was, a vice-chancellor, and no doubt he has in his university, as I did in mine, an executive team. But there is never any doubt that the vice-chancellor is the chief executive and that he is ultimately responsible for everything. I just do not understand why it should be expected that a hospital, unlike a university, is supposed to be able to run efficiently without a chief executive, a boss—and I do not mean a dictator. This is a very serious matter indeed for both staff and patients.
I am aware that the system of having medical superintendents of hospitals did not always work very well, but ofttimes it did. The Royal Commission felt that a return to that system would be retrogressive, I doubt that. I am quite sure some single individual is needed to give local leadership. Perhaps any one member of the executive team could do so, but the leader should be appointed, not elected. He should do the job full-time, and he should be publicly responsible for every activity in the hospital.
Consensus management is a democratic concept, and is quite essential, but it ought not to mean rule by a committee. It should mean that the chief executive takes decisions in the knowledge that they will be acceptable. He must consult widely. There must be all kinds of committees, but to expect every decision to be arrived at by a committee is really to court disaster. I plead for a change in hospital organisation to put this right and to restore personal leadership and, through that, team spirit and morale to a service, of which we all wish to be justly proud.
5.19 p.m.
Baroness Lane-Fox: My Lords, to declare my very humble interest in the debate, I would say that for some years I was secretary of a children's orthopaedic hospital and then a member of two hospital management committees. I am now chairman of a large patients' association. In the presence of so many distinguished specialists on the National Health Service I hope to make just two or three points from the worm's eye view of the consumer. Progress of medical science has enabled very many of us to withstand the onslaught of killer virus, disease and accident. Thus longevity offers a new dimension to earthly existence. So the Government's recent consultative document, Care in the Community seems to be right on target. Its scope is almost as wide as life itself.
To take up the point made by the noble Lord, Lord

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Todd, I would say that the network of hospital aftercare and family can work properly only if there is no weak link. But it has a very much better chance of doing so where there is support from something like a Cross-roads scheme, or schemes of this kind, devised to give back-up support to the hard-pressed families and carers who dearly need a break and can be helped to recharge their batteries, feeling that there is somebody who is responsible and reliable taking their place for a time.
I am sure I need not remind your Lordships that within community care the district nurses play an all-important and irreplaceable part. To take just one section of the community alone, it is invaluable to severely disabled people to have daily visits from these nurses—nurses of many nationalities—whether it is for dressings or other advanced medical care, or just to bath and dress their charges. They call regularly, day after day, in all weathers, and in the teeth of transport difficulties.
What is very disturbing is that they have often to wage a running battle with the traffic authorities about parking. Those who manage to scrape together the money to buy a car find that this greatly helps them in their work. But when they have a patient requiring more care than can be given before the warden or the meter catches up, they are caught in a very difficult dilemma. If the immediate needs of the patient make it worth running the gauntlet, the nurse may very well then collect a fine. During the last year I have met many nurses who have paid up and sent off their fines with long and careful descriptions of what they were doing and where they were at the time.
I cannot believe that it is the wish of society to add to the burden of these excellent people performing such a very important piece of work. It is not only the clerical work that is involved but the fact that it can take many months to receive the repayment of fines, and what a dozen or so fines are involved this presents a considerable financial outlay. There seems to be a great need for district nurses to have a nationally-recognised sign for their car to denote their calling, always with stringent safeguards to avoid abuse, obviously. But the work the nurses perform relieves in-patient hospital costs and the ambulance service, so it surely deserves all practical help, by passport, from the wardens.
On another theme, I was very pleased to hear the comment of my noble friend the Minister on the private scheme. If we are realistic, everyone who wishes to see an improved hospital service must appreciate that even when economies are made more cash than is convenient is required. It is very hard to see that much more finance can be made available quickly, and it is on these grounds that I am won round to the advantages of the private health scheme. The assistance it can be to the National Health Service is well reflected in the last two years, when there was a reduction of National Health Service hospital waiting lists, which coincided with an increase in the number of members of the private schemes.
It happens to suit me, I may say, very much better to be treated on a general ward in hospital. It so happens that I am interested in the scene. But I know that for all sorts of good reasons this is not the case with very many people, and if they are prepared to pay handsomely for private treatment, of course they should be enabled
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to do so. I gather these people are present in all sectors of society, that it is purely a matter of personal taste, nothing whatever to do with one's walk of life. The private scheme can cater for these people who really want "to go private". In their private hospital scheme, the needs of the Cinderellas of the health scene are very much to be catered for. Beds for the elderly, the long-stay and the epileptics are very much included, and their acute beds form only a small proportion of the total. I hope that this might reassure the noble Baroness, Lady Robson.
What seems encouraging news is that the private schemes appear to be thinking of devising and developing a nurses' training scheme. This combined with their present facility to employ nurses through flexible rotas (dare I say it?) should take up a considerable amount of unused nursing potential and greatly reduce any suggestion of poaching from National Health Service sources. It is obviously the wish of your Lordships that overall medical care for the community should be constantly helped and improved. To keep pace with national and international proved lines of development, health care needs all the cash it can possibly get, all the cash the public is prepared to spend. My guess is that without the private sector health care resources could become impoverished despite the best intentions of the Government.
5.26 p.m.
Baroness Fisher of Rednal: My Lords, I, too, should like to thank Lord Hunter of Newington for giving us the opportunity to debate the National Health Service this afternoon. I stand here, I suppose, as a consumer, though I do not think that puts me in a category different from anybody else. If we had not got consumers and patients, we would not need health services, quite obviously. But from the course of the debate so far it would appear that the pattern of illness concerning the care of the elderly—that is, the heart disease, the strokes, the blood pressure, the arthritis and the chronic depressions of old age—will by definition require that much more care for most of the time is provided in or near the patient's home; and after hospital treatment one would expect treatment to be continued by the general practitioner and the community health service. Therefore, there is this great need in reorganisation for the effective and comprehensive primary and continuing health service to be firmly based, and if community care is to become a realistic possibility and not just an empty phrase then in my view definite guidelines will need to be established as the new organisation takes place.
I think it was Lord Hunter himself who stressed the need for greater co-operation between the local authority community medicine services that have to be provided and those provided through the area health authorities. Therefore, it is urgent, I think, and I would urge the Government to look very carefully at the most important aspect of local government social services, on the one hand, and health services, on the other, at their close collaboration and at their financing.
There are several district activities which are closely allied to the social services. The care of the elderly, the child health services and the special needs of the mentally handicapped are all arranged round services which are very often provided by the social services

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authority. But I think it is important in this reorganisation that the specialist in community medicine, which I was pleased Lord Elton described to us this afternoon, should have under his wing specialists in, perhaps, child health, the care of the elderly and the care of the handicapped, so that the local officers who operate in the social services will have a direct link and a named officer to whom they can make direct approaches to benefit particular patients. This is important to encourage that good working partnership at local level for the benefit of recipients between those who will be working from a practical point of view in the field and those whose task it will be to be responsible for strategic and operational planning.
Like other noble Lords and the noble Lord, Lord Elton, I think that what we have to aim for is the development of the much more comprehensive health centre as a priority, especially in the inner city areas. I was privileged quite recently to visit what I thought was a complete, comprehensive health centre. There were two group practices of doctors operating. There was a district nursing team, a health visitor and qualified midwife. There were sessional visits from the probation service, from the Marriage Guidance Council, from psychiatrists and physiotherapists. There were also nursery facilities available and video health films were shown in various parts of the building. This centre has become a place which encourages people to seek not only curative help for their problems but advice on illness prevention, and a place where social medicine is practised properly.
If we are to achieve greater equality in health care in our inner cities, and in certain other areas where there may be major cultural and other social factors which contribute to a higher than normal morbidity, special resources are necessary to set up this kind of centre. I should like to feel that the Government are considering this as one of their prime objects in the reorganisation of community medicine.
The noble Baroness, Lady Robson, drew attention to the unfortunate disadvantages operating chiefly in the London area regarding the standard of GP practice. In some areas in the city of London there are higher mortality rates. As the noble Baroness pointed out, there are often single-handed practices with elderly doctors who rely upon deputising services.
As a member of the General Medical Council for five years—and the noble Lord, Lord Richardson, is speaking later in the debate—I know this was a special concern of his when I served under his chairmanship on the GMC. There is the problem of the single-handed doctor and the sick doctor, who becomes a harassed person in the community and undesirable elements will be trying to use the doctor for practices in which he does not want to indulge. I should like to say in passing that we must also remember the very, very dedicated service and the excellent service which is given by members of the medical profession who practise in declining urban areas. As a former Member in another place, I know from my own personal knowledge. having represented an inner city area in Birmingham, the dedication which so many of those doctors gave to the patients in that particular area. They not only gave medical advice but also involved themselves in community activities.
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Like the noble Baroness, Lady Lane-Fox, and the noble Lord, Lord Todd, when we are talking about patients first—and I would be the first to say that the patient is paramount—I should like to draw attention to the need for relief for the person who is taking care in the community. As the noble Lord, Lord Todd, said, that is very often the daughter, the wife or the mother. One hopes that the good work which many voluntary societies do to be helpful in this respect, very often providing holiday homes to which patients may go for four or five or seven or eight days, will be encouraged by the Government, and that resources will be made available so that a rest can be given to those who are doing the caring. Caring in the community more often than not devolves very heavily on the loved ones who are taking care of their own. If that breaks down, there is a grave expense which has to be charged to health services—more often than not through the hospital service.
May I go on quickly to refer to improvements in medical care? I should like to make one or two comments regarding the expectant mother. There have been at least two reports from the other place on perinatal care which have drawn attention to some of the misgivings which expectant mothers have. If surveillance of all pregnant women from an early stage of their pregnancy is crucial—and this seems generally agreed—then the question arises regarding achieving the ways and means by which local take-up can be improved. The higher mortality figures appear greater in areas where medical advice and examination are not sought early enough.
There are a variety of reasons which are given and which are known as to why women do not attend hospitals. In some instances there is a very long journey to maternity hospitals. In others, it means that small children have to be taken with the expectant mother and there are no crèche facilities for looking after small children while a mother waits from one to two hours to see the consultant at the hospital.
There are a variety of reasons—and I give only one or two—why expectant mothers do not take advantage of check-ups in the early stages of pregnancy. If mothers will not do this and visit the hospitals, it is incumbent upon us to take the services to them. In many parts of the country there are library buses, and play buses visit inner city areas so that children can play outside their own homes. The mobile blood transfusion service goes round collecting blood. Is it impossible for us to have a mobile maternity bus that will be actually going along inner city streets and roads to encourage the people to walk from the front door? If it does anything at all to help to save the lives of babies it should be considered.
May I speak quickly upon a further extension of maternity care?—on the idea that patients come first. We have the technology and the skill to detect all serious abnormalities in the early stages of pregnancy. Any of these abnormalities can be detected through ultra-sound and other kinds of test. I know that these tests cost money. I also know that they need highly trained specialists to operate the scanners and the other kinds of medical apparatus that are available. But the cost of giving every women the opportunity for as thorough a scan as possible is small in terms of finance compared to the amount that will be required to care for a severely handicapped child.

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I should like to feel that the Minister could give us some satisfaction that hospitals offering ante-natal and maternity care are able to offer to all expectant mothers the opportunity for them, if they wish it, to be screened in order that serious abnormalities can be detected in the early stages of pregnancy.
I will not go into the area mentioned by my noble friend Lord Wallace—that is, that health is not only seeing the doctor but covers all kinds of things (and he mentioned housing). I should like to draw attention to just one thing. If we are thinking about accidents to children, the third highest category of accidents to children is death from drowning, and I would say to noble Ministers: "When you remember education cuts, very often they mean that the children are not allowed to go to swimming baths to learn to swim unless the parents can provide the fares."
It has long been known that differences are to be found in the health service available in the well-to-do areas and in the poorer areas of the country. I think the noble Lord, Lord Hunter, should be congratulated on the timing of this debate because it is timely that we again consider one of the fundamental principles of the National Health Service—and that was to divorce the care of health from the question of personal means. Inequalities in health care create two societies in British society. The concern of my noble friends on this side of the Chamber is that the belief that the National Health Service was one of the measures on the statute book that created equal opportunities in health care, regardless of the ability to pay, is being seriously challenged at the present moment. There is evidence that the gaps in health care are widening and operating against the more unfortunate in the community.
In conclusion, I should like to say that I believe that the National Health Service, despite its obvious shortcomings, which are related in the main to the non-availability of cash and resources, still provides a remarkably effective service for the population at large, and I would support with enthusiasm those noble Lords who have spoken perviously and who have emphasised the theme of improvement and evolutionary change rather than a change to a completely different system of health care.
5.43 p.m.
Lord Colwyn: My Lords, I am most grateful for and very interested in the remarks of the noble Lord, Lord Hunter of Newington, this afternoon. I found myself also in agreement with most of the comments of my noble friend Lord Elton, with the exception of the implication that more funds are being allocated to all parts of the National Health Service. I do not think that is so for the general dental services; but I will return to that in a moment or two.
I am firmly of the opinion that we are on the verge of massive changes in the technology of the prevention of disease, in the diagnosis and treatment of disease and also in the administration of health care. I believe that we shall see far-reaching changes in the 1980s and the 1990s which are perhaps now beyond the comprehension and the imagination of most of us here today. It is with sadness that one views the poor track record of preventive medicine. To say that is not to decry the brilliant epidemiological work of men such as
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Sir Richard Doll in linking cigarette smoking with cancer. As the noble Lord, Lord Hunter, stressed, the sadness lies in the public's lack of response to such information. This, as perhaps I need not remind your Lordships, is at best apathetic. It is almost as if the man or the woman in the street, when confronted with these facts, prefers to look the other way; and this, I believe, is the weakness of preventive medicine.
However, the practice of medicine has steadily improved over the years and life expectancy is slowly increasing as a result. This, too, brings its problems because we shall need to care for an ever-increasing number of aging and aged people and we must think carefully as to how this might best be achieved. We must ensure that these people have the facilities appropriate to their restricted activities and surroundings that allow them to spend the last years of their lives in dignity and comfort.
When looking forward to the 1980s, we can be sure of certain things but less sure of others. For instance, it is difficult to speculate on the enormous impact of modern electronics, principally in the form of the micro-processor, on health. Genetic engineering, the manipulation of genetic material within the cell, is in its infancy and already human insulin can be synthesised by bacteria. No one could have envisaged that a decade ago.
This afternoon we are trying to speculate on how medical care may be improved. I am certain that we shall rely more and more on allied medical skills. My noble friend Lord Ferrier is not able to be here this afternoon, but I am sure that if he had been with us he would have continued his powerful arguments on behalf of chiropractic treatments. I hope the Government will take note of the increasing importance of these skills, and those of osteopathy, to treat and cure the vast number of patients with orthopaedic and spinal problems, which should be cared for within the National Health Service.
I need not remind the noble Lord the Minister of the reported number of days lost from work because of these symptoms and of how their early treatment by specialised personnel would result in vast savings for our economy. I firmly believe that the sciences of homoeopathy, acupuncture, kinesiology and the study of stress-related illness will play increasingly major roles in health care in the 1980s. Their practice must be encouraged and aided.
I must declare an interest in that I am a dental surgeon and I must apologise to the House for aiming some of my remarks today to the increase in dental charges within the National Health Service that were recently announced. It is of great concern to my profession, and I feel that the Government's attitude to these charges will have a major influence on dental care in the 1980s. These regulations to massively increase the cost of dental treatment within the National Health Service come into force of 1st April. I must speak against them in the strongest possible terms and alert your Lordships to what is happening in our dental services and to the way in which regular dental treatment will soon be beyond the reach of a large section of our working population as we go into the 1980s.
Where extensive treatment is required, the maximum charge will go to £90—50 per cent. more than at present, and representing about one week's take-home pay for

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an average man. Where high-cost treatments are not included, the maximum charge will go to £13—a 44 per cent. increase and a very large sum for, say, a young mother to find out of her housekeeping money perhaps twice a year.
As your Lordships will know, and as I know very well indeed, only about half the population of this country see a dentist regularly. We still have a very long way to go if we are to achieve what the Department of Health's own review team suggested last year as an appropriate aim for the dental services—and here I quote—
"providing the opportunity for everyone to retain a healthy functional dentitian for life, by preventing what is preventable and by containing the remaining disease by the efficient use and distribution of treatment resources".
Your Lordships will notice that stress is laid on opportunity for everyone and not just those who can afford it. The report to which I referred came from the Dental Strategy Review Group, chaired by the Chief Dental Officer at the Department of Health and Social Services, the department's own dental adviser. He made many imaginative and far-sighted recommendations, including one very clear proposal that the level of charges to patients should be set as low as possible because of the obvious deterrent effect of charges on patients. This deterrent is not simply financial. So long as most other health services are free at the time of use, the very existence of dental charges amounts, in the public's mind, to a statement by the Government that dental health and regular dental care are not really important—not really worth bothering about.
With these latest increases, it seems that the Government are saying that the dental services are not worth protecting at a time of cuts in public spending. For the NHS generally, of course, spending levels are being maintained and there is still provision for some real growth. The Government have claimed, and deserve, credit for having seen the NHS as an important national priority. But, for the dental services, we are now seeing a withdrawal, despite the clear recommendation of the Dental Rates Study Group report.
According to information given to me by my noble friend Lord Elton, the amount spent on the general dental services in England will be virtually the same in 1982–83 as in 1981–82—that is, £378 million as opposed to £374 million. With inflation still running at 10 per cent., this is far from maintaining spending levels. It seems to me, and to the great majority of my colleagues in the dental profession, that these charges have been levied with total disregard for their dental health consequences.
As a poster which is circulated by the British Dental Association says, they are a tax on dental health which the dentist has to collect. And at these new levels they move us a long way towards a two-tier dental service, where decent modern treatment is reserved for those who can afford to pay for it. Your Lordships should take no comfort from the fact that the charges for plastic dentures show only a small increase. This is not encouraging prevention. We can do better for our patients today, and the National Health Service should be prepared to pay for better dentistry, instead of imposing these punitive charges on crowns and metal dentures.
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I should like to make one more comment on the subject. Your Lordships may be aware that the Parliamentary Under-Secretary of State has accused the British Dental Association of misquoting the former Minister and drawing an incorrect inference about dental charges from a statement which Dr. Vaughan made a year ago on prescription charges. I think that the matter may be clarified by a more recent statement by Dr. Vaughan, also about prescription charges, but with a clearer reference to the source document.
On 26th October, 1981, in a Commons Written Answer, Dr. Vaughan said:
"As announced in the White Paper 'The Government's Expenditure Plans 1981–82 to 1983–84'—command 8175—prescription charges will increase annually in line with costs ".—[Official Report.]
Cmnd. 8175 did not refer only to prescription charges. On page 117, paragraph 15, it says:
"Charges in all services (in all family practitioner services, that is) will increase annually in line with costs"
The Government's previous policy could not have been stated more clearly. And these latest increases breach that policy to the tune of £27 million in England in the coming year. It is unreasonable for the department to suggest that the British Dental Association are wrong in their claim that the Government have overturned their own policy. They clearly have.
Of course, prescription charges are in more common focus of political attention than dental charges. That is one of our problems in the dental profession, and it is why I am seeking to draw attention to these charge regulations today. Our dental services are under severe threat. I hope that your Lordships will recognise what is happening and will use all your influence from now on to protect those services.
I should now like to make a few comments on the current reorganisation, as it affects the general dental services. In 1974, dentistry finally achieved independence from medicine, in that the local authority dental service was no longer under the control of the medical officer. The profession can claim enormous success over the past few years, with a higher proportion of the population attending for treatment, more adults with their own teeth and a greatly improved standard of dental health of children. This is due partly to the change in the nature of treatment from extractions and fillings to the widespread use of preventive measures. I am sure than many of these changes might not have occurred had the dentists not been able to plan their own dental services.
The key issue in the maintenance of this drive towards better dental health in the '80s is for the profession to be properly represented in the decision-making process within the new dental health authorities. For this, it is essential to have a dental officer who is accountable directly to the district health authority. The purpose of the current reorganisation is to reduce expenditure on administration. Dentistry has never suffered from an excessive number of administrators and, indeed, the numbers were considerably reduced in the 1974 reorganisation. I am sure that that is the way it should stay, although it would be a great pity if the current policy of reducing the number of administrators were to apply even in an area in which a minimal level had already been achieved. Only one

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tier of dental administrators remained, certainly in England, and that was the area dental officers.
I am very pleased to see that the British Dental Association have followed up the chief dental officers' working party report on dental services and advisory machinery, and that the Government have confirmed that the changes in titles and definitions are intended to provide sufficient flexibility to meet the varying needs of the authorities, whether based on single districts or joint arrangements over a number of districts. Further, the Minister has confirmed that, where new-style district dental officers are appointed, they will be subject to arrangements for accountability, rights of access and attendance at meetings similar to those applying to the present area dental officers.
This new explanation of the plans for reorganisation in relation to dentistry has given my profession some encouragement and, I hope, dispelled our fears that provisions granted to our Welsh and Irish colleagues, and to district pharmaceutical officers, were to be denied to the dental profession within the English regions. Dentistry seemed yet again to be under attack, despite the contribution it has made to primary care services over the last 30 years. We were all very concerned at the way the situation was developing. I hope that the Minister can confirm the status of the new district dental officers, and that the existing guidance on the relationship between officers of different disciplines will continue to apply.
However, this still leaves one problem unresolved. It is the Government's fundamental philosophy that the new district authorities should have wide discretion over the appointments that they make. I would urge the department and the Government carefully to consider the phrase "where appointed" and to provide every encouragement for each of the districts or groups of smaller districts to appoint a district dental officer.
I must stress the importance that my profession put on this dental representation at district level. The dental profession is a separate and autonomous one, with an independent governing body. The autonomous nature of the profession must be preserved if patients' interests are to be adequately served. Medicine and dentistry are the only prescribing professions, and dental surgeons contribute considerably to the initiation of primary health care. The dental representation is, therefore, vital at all relevant levels where decisions are made. It is of concern that some of the new districts may be too small to require the whole-time service of an administrative dental officer. In these cases, I feel it is important that such factors as the local population, the social geography, the relationship with family practitioner committees and local authorities and, where applicable, the additional responsibility associated with a dental teaching hospital, are carefully considered.
The preservation at district level of dental officers will continue to make possible the process of integration of local authority executive council and hospital services. Already we are seeing signs of the elimination of the overlap between the community service and the general dental service, which will leave the district dental officers able to redeploy their resources to the areas of greatest need.
There is an increasing need for guidance on the areas suitable for the establishment of new general practices
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as the number of dentists in the general dental service rises. This should be done not by bureaucratic regulation but by advice from administrative dental officers on how to reduce geographical inequalities with provision of dental care. In most areas, the dental officers have been monitoring the rapidly changing pattern of dental disease in the child population for which they are responsible and, on the basis of the data collected, have been able to organise and reorganise their resources to meet the changing needs. It is vital that their function is able to be continued.
The remit of the community dental service has recently been extended to include the care of the handicapped, who, by the nature of their handicap, are ill equipped to compete in the scramble for a share of scarce National Health Service resources. I should be grateful if the Minister could confirm that the proposed district divisions will have no detrimental effect on the service; I feel that in some cases the best organisation can be achieved only through a unit larger than the proposed district. Can the Minister also confirm that the district medical officers, or administrators, will recognise that care of the handicapped has a dental dimension?
The Government have frequently stated that the emphasis in health care should be shifted from treatment to prevention. It is in this field especially that administrative dental officers, responsible for a population comparable with those of existing areas, have the opportunity to make a substantial contribution to dental health. It has recently been possible to establish schemes for the provision of emergency dental treatment. If these plans are to continue into the 1980s, they must be efficiently organised and serve a relatively large population if they are to be viable. I hope that the Minister can confirm that these schemes will be workable in the new small district units.
In his reply my noble friend the Minister will no doubt assure me that the increase in dental charges will not have any effect on the number of patients attending our surgeries. Although I must disagree with this in advance, may I suggest that another major factor is that of fear. It was a dental surgeon who first discovered and effectively used anaesthesia to perform the more unpleasant tasks of my profession, and dentists have always had the right to administer anaesthetics in their surgeries—for I believe that, in the skilled hands of those who are prepared to admit that fear is a major problem, we shall be able to approach and treat many of the patients who have not yet come into our surgeries. This form of treatment needs special skills and special training.
Developments in the field of dental anaesthesia and sedation over the past years have been such that the complexities and hazards related to this form of treatment have been under-recognised. The General Medical Services Committee have recognised that it is unacceptable that there should be restrictive and exclusive lists of practitioners recognised for specific activities, and as there is a fairly limited number of practitioners providing dental anaesthetics, the turnover and number of new entrants is relatively small. Because of the complexities associated with dental anaesthesia, few young general practitioners are seeking to enter the field without specific training, while entry into other training posts continues to increase.

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In formulating a policy for the 1980s, I would urge the Government to note that there is a need for dental anaesthetics to be given by those who are trained and experienced in their administration and the management of complications; that the most effective inducement to training is best based on the moral pressure arising from the individual practitioner's sense of professional obligation to provide proper services to patients rather than on an alteration of the fee structure related to an approved list of practitioners.
I should be most grateful if the Minister could agree to take note of the Seward inter-faculty working party report and agree in principle to make provision for the training courses which are required and for the administrative expenses associated with their regulations. The appropriate bodies have indicated that facilities should be available for the provision of this training, which may involve only about 20 at a time, in England and Wales. The Scottish scheme is already in operation and concerns only some two to four practitioners at a time.
I should now briefly like to mention a further aspect of medical care that has been described by many academics and clinicians as probably the single most important factor in the improvement of the quality of patient care. I refer to the use of computers within the hospital service and National Health Service generally. 1982 has been designated International Technology Year and I would ask the Government seriously to consider our position in this country in the field of information technology within the National Health Service.
In 1966, the Department of Health and Social Security started an experimental computer programme, with objectives broadly to investigate how computers could be used in the National Health Service to achieve better patient care; increased administrative efficiency; better use of resources; and better management and research facilities. At that time, relatively little was known about computers but, despite early problems, four major projects were started, three of which achieved limited success.
The DHSS then followed the recommendation of the 1971 Rothschild Report on Government Research and Development, which effectively cancelled the work until the 1979 reorganisation which included, for the first time, a formal arrangement for the introduction of computer services at regional level. Some contribution was, however, required from each region, although each was existing very much on a day-to-day basis.
By 1976, there was a considerable range of projects in the DHSS experimental programme, but there was a growing feeling that there was no immediate prospect of these projects being delivered to the National Health Service at large. The project on clinical records had collapsed and a hearing by the parliamentary Public Accounts Committee in 1976 had marked inhibitory effects on the department's attitude to risk taking in computer research and development, although attitudes were generally supportive in that they perceived the long-term benefits for the National Health Service.
Since 1976 there has been a failure to capitalise on available resources, a situation which was quite favourable in terms of knowledge and expertise already
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established. A natural home for the funding for further research and development would be the Medical Research Council which has declared an intention to concern itself to a greater extent with health services research, as well as with its traditional sphere of biomedical research, with the DHSS co-ordinating the subsequent dissemination within the National Health Service.
As the noble Lord, Lord Todd, stressed, it is of vital importance that the development of systems across the National Health Service is co-ordinated by some such authority. Unco-ordinated buying-in of packaged systems must be controlled so that the danger of incompatibility and the resultant difficulty of integration is minimised. This problem of transferability has been solved in the United States by private companies which supply groups of hospitals with products which are modular, transferable and integrable. The stimulus to the success of such ventures has been the need for American hospitals to charge patients, or their healthcare funding agencies, on an item-by-item basis. Such imperatives do not exist within the National Health Service, but only a moment's reflection is needed to comprehend that any system which can effectively be used for billing purposes is also an excellent collector of resource utilisation information. With such information, doctors, nurses, administrators and other health service managers would be in a much better position to plan the more advantageous use of resources than they are now.
Junior hospital doctors are overburdened by the vast amount of paper and record work that is essential for each patient. It is impossible for our doctors to be aware of up-to-date information about clinical data, the new methods of treatment, the new drugs—their side effects. Every day hundreds of hours are spent, particularly within the National Health Service, on duplication of work, on manual searching of records and in pathology. At present, doctors rely very much on memory. This cannot continue. The new information technology is of vital importance to medical care in the 1980s. May I ask the Minister and the Government to give a new lead?
There was a scheme at the Royal Free Hospital and application for funds for the installation of a computerised Problem Orientated Medical Information System—PROMIS. In September 1980 this was turned down, despite a recommendation to go ahead by the research and development and computer policy committees—and an offer of 7 million dollars-worth of help on development and software from America. The department turned down this application for funds to initiate the programme, even though development funds were provisionally allocated and only about 50 per cent. of their budget had been used for that period. The cost has now risen by three times; and the American group which offered this help has gone commercial and their offer is now no longer available to the DHSS. The group at the Royal Free are so convinced of its benefits to the National Health Service in the 1980s that they have had to form a company to deal with the commercial side of this operation to develop PROMIS.
Could the noble Lord the Minister confirm that this group will be given help and encouragement with their work on information technology and be seriously considered again for financial aid when available?

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Eventually the savings to the DHSS will be enormous compared with the small investment now required. The DHSS must develop and maintain its interest in systems of evaluation, and it is of great importance that the funds held by the department for computer research do not, by disuse, vanish back into the general pool. They should be in some way transferred to whatever organisation takes over the job of research management in this field, which has a vast potential for improving health care in the 1980s. I urge the Government to make the radical changes which are urgently needed to encourage this essential development in information technology.
6.10 p.m.
Lord Richardson: My Lords, I will endeavour to be brief. I was particularly grateful to my noble friend Lord Hunter of Newington for finding time in his far-reaching survey of the health services to mention medical officers of health and the great importance of their work in the past, which has been taken over by the community physicians. I was extremely pleased to hear what the noble Lord the Minister had to say about community physicians and their great importance, because I must tell you that community physicians feel that their position is threatened. There is a faculty of community medicine which was set up by the three Royal Colleges in Great Britain, and the president of that faculty has informed me that they are suffering considerable anxiety. One reason is historical. In 1974 they lost their security of tenure, which had been given to them by an Act of Parliament for a long period, for the very good reason that they could be in contention with their employers. They could still be in contention with their colleagues. That is the historical side.
The present side is that they are deeply concerned about the establishment which may be or may not be implemented for their specialty. They are aware, of course, that a district medical officer must be appointed to each district. The noble Lord the Minister gave your Lordships an idea of the importance of their work; prevention, communication and education being but a few aspects. I want to ask the noble Lord the Minister whether he would consider giving a very clear directive, or if not a directive an indication, to districts that they should employ an adequate number of people to carry out the very important jobs that these medical officers will be required to do. This is not only because their work is so important but also because, if an adequate establishment is not attained, the establishment will not attract into this branch of the profession the men and women who will be so badly needed—or if the numbers are achieved, perhaps the quality will not match up to the importance of the assignments.
I now wish to turn to the work done by doctors in hospitals and how in the 1980s it can be strengthened. In 1966 a working party was set up jointly between the Ministry of Health, as it then was, and the Joint Consultants Committee. The Joint Consultants Committee was an elected body and this was the first working party with the National Health Service which was so constituted. The importance of their work was to try to find out the most efficient way in which doctors could work in hospitals. This was so clear
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to the joint body that it ceased to have two sides and became a round table discussion. The burden of their recommendations was to show doctors how much of value could result for the care of their patients from their co-operation in the administration of clinical services within hospitals. This was a new concept. Doctors had regarded themselves as being there to "doctor" and administrators to administer. The first report from this joint working party was nicknamed "The Cogwheel Report" because its recommendations were interlocking and interdependent. The report discussed the nature of most medical work in relation to its management. This introduced into the mid-1960s the idea that doctors had a duty to their patients for the best use of resources and that those resources could never be truly plentiful. We all appreciate that now the need is very much greater and has become urgent.
Many communities in hospitals cannot possibly develop their medical services on the basis of money growth. Development now means the redeployment of services and both managerial and medical staff must know what they are about. It is unfortunate that there is no easy way of linking clinical activities to the costing returns. Statistical manoeuvres have been applied to try to find a link between information about hospitals and that about clinical practice, but there is a credibility gap which it is difficult to bridge. Nevertheless, I see it as being essential that the medical profession should become further involved in facing such problems, even if it means the use of some scarce resources in training, perhaps, a small number of doctors in techniques which are new to them. Indeed, I do not see how progress can be made without the active co-operation of doctors in this particular field.
This process involves the profession both nationally and individually. Nationally, the Royal Colleges already form views on clinical practices and the associated resources necessary for the training of future consultants. I would look to them to extend their descriptions of the range of resources required for consultant practice, and also to consider the level of provision of resources that will not put at risk their clinical services to their patients. These suggestions would need to be interpreted to meet local needs and regional circumstances. Here I come back to the "cogwheel" philosophy and the opportunity that must he provided for the review of current practice within clinical divisions and within the hospitals. This is where inaccuracies in the information—the credibility gap I mentioned—regarding the nature of clinical practice will be recognised, and where the lack of information with regard to cost will be felt most acutely.
If this work is to prosper, a lot must depend on the central department and the authorities within the service. I trust they will realize that the service to patients is speciality-based and will develop the information service with this in mind. I understand there is reason for encouragement in the discussions of the so-called Korner working parties on information, which have taken as their starting point the collection and analysis of facts which enable clinicians to review their clinical practice and take action. It is necessary now for the costing information to be brought similarly on to a speciality basis. I regret that time prevents

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me mentioning what I mean by speciality basis. It has not only a clinical but a statistical meaning.
My Lords, I want to draw to your attention that further efficiency can be and is being achieved by inspection of quality care by doctors themselves inspecting their own work. There have been long-esatblished methods such as the grand rounds in hospitals, clinico-pathological conferences, complication and cause of death conferences, outcome, literature review, and radiological diagnostic discussions. These over the years have been supplemented by more formal investigations, the confidential inquiry into maternal deaths by the Royal College of Obstetricians and Gynaecologists, the development of quality control schemes for laboratories, investigation of anaesthetic deaths, and the considerable efforts of the Royal College of General Practice, and more recently inquiries by the Royal College of Physicians of London into audit procedures.
The advancement of means of assessment of medical performance are very far from easy and have progressed only slowly. Nevertheless, recent debates at the British Medical Association conferences have shown clearly the recognition of the need for more formal review of quality control to help meet the paramount concern for excellence in the service of patients. This is a job for doctors. All the evidence from different parts of the world appears to show that they must do it themselves. Nevertheless, I would point out to the department and to the National Health authorities in general that this work, which is most important for patients, should receive such administrative support as it requires for its prompt and accurate furtherance. I see the use of resources and the quality of care as separate problems, but with a common purpose, and I believe that as they come more and more closely together so will patient care improve.
My Lords, I wish to end with a very brief reference to the importance of experimentation within the districts, experimentation in the delivery of primary health care, general practice care. In 1978 the department sought the views of various bodies about the problems of inner cities in relation to primary care. The Council for Postgraduate Medical Education for England and Wales was one of those bodies consulted. After their Deans' Committee, the postgraduate deans for medical teaching, and their general practice committee had fully considered the matter, they recommended to the Government the appointment to the staff of hospitals, including teaching hospitals, of general practitioners, the siting of some practices in general hospital grounds and in teaching hospital grounds, and involvement of teaching hospitals in vocational training for general practitioners, quite a lot through the postgraduate medical centres that should be in all teaching hospitals and in all sizeable hospitals. In this regard I was most interested to hear what the noble Lord, Lord Wallace of Coslany, had to say to us.
I happened to be chairman of the Council for Postgraduate Medical Education at the time, so I was much interested in a paper by Professor John Dickinson of St. Bartholomew's Hospital, in which he made proposals for a trial marriage between primary and secondary health care in one or two districts in inner London. The object was to allow the districts to
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manage a unified budget experimentally, without impinging on the independent contractor status and the entitlements of general practitioners. The Acheson Report on inner London primary care also made alternative suggestions to the present pattern of delivery. My plea is that the spirit of experimentation shall not be submerged under the difficulties of detailed administration, and that new ideas will contain within them a unifying concept based upon the obtaining of the maximum degree of co-ordination and the avoidance of fragmentation within the administration.
6.26 p.m.
Lord Wells-Pestell: My Lords, this century has seen the introduction of many developments of great social significance, but none so significant nor more important to the individual than the introduction of the National Health Service, which took place almost 34 years ago. In saying this I am not unmindful of the vision and action of the Liberal Government and its introduction of the national insurance legislation many years ago. I think those two things together are matters of very great significance which so far in the twentieth century have not been improved upon.
I have been reading the Second Reading debate of the National Health Service Bill, which commenced on 30th April 1946, and in spite of its aims and objectives and the crying need for such a Bill it did not then get the support of everyone. To this day a large number of people pay only lip service to it. I am convinced that deep down this is precisely the attitude of the present Government. To many of us, foolishly perhaps, it was a new Jerusalem, the foundation stone of something which was of paramount importance to the entire community that we had been talking about and working for for many years.
I attended my first meeting to discuss the setting up of a National Health Service 49 years ago, in 1933. It was a dream which came true, and with all its failings and limitations—and I accept that it has many failings and limitations today—it is still the envy of many countries, and, perhaps I could say, still the envy of the world as a whole. I can remember Aneurin Bevan, its architect, saying that money ought not to be permitted to stand in the way of attaining an efficient health service.
The noble Lord, Lord Hunter of Newington, to whom we are indebted for directing our minds today along the path of inquiry into the National Health Service, reminded us of the views of Lord Horder on this matter. Before I go on, may I say that I rather got the impression that the noble Lord, Lord Hunter of Newington, was suggesting to the Government that the time had come to separate the National Health Service from the social security side. I hope the Government will give consideration to it. I hope that when we form the next Government it will be one of the first things we shall do. But to go back to the noble Lord, Lord Hunter, and his reference to Lord Horder, I knew Lord Horder quite well and could speak personally of his intense feeling on the matter of providing adequate facilities for health care.
Adequate facilities cannot be provided without proper financing. It is no good the Minister saying to us that the Government have increased the expenditure in the health service by 3 per cent. or 4 per

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cent. in real terms, knowing as he must do that the amount allows for no real advancement or improvement at all when one takes into account the increased use of drugs, their increasing cost and all the other matters involved. On paper it is true; in effect it is not so.
The noble Lord complained about the hostility that the Government have been receiving about cuts and so on, and went so far as to say that it was not true. It is true. Every national newspaper at some stage or other has said this. I do not deny the fact that the Government have given an increased sum and that in real terms more money will be spent, for example, in this year than last year. What I am saying is that it is a question not so much of the spending of money as of what you get for it. In that sense area after area has found it necessary to contract.
If I may say so, I was not very impressed—and I say this very kindly—with what the noble Lord had to say. I do not think that it helped this debate very much at all. It was merely a review of the present situation, with almost no hope at all for dealing with our medical problems in the future. Let me be the first to admit that this may have been the case in 1979: I do not deny it. But after three years with the present Government I think that things are worse than they have ever been for decades.
No one opposite who knows the facts can deny that the poor in this country today are getting poorer, and that the rich are getting richer. It was said so on the BBC last night by a very competent person, and I do not think that anyone will deny that the rich are getting richer and the poor are getting poorer. This Government, when it comes to deal with the National Health Service, are something of a disaster as far as the ordinary people are concerned. I believe that the Government lack real understanding of the needs of ordinary people. An effective and comprehensive National Health Service is of supreme importance to the ordinary citizen. I am convinced that the Government lack the concern which they should have for the National Health Service. The effectiveness of the National Health Service is being sacrificed along with much else on the altar of privatisation. Private health facilities and their progressive extensions appear to be the Government's aim. To us—if I may say so, to the ordinary people of this country—it is a creeping disease of the first magnitude.
I should like to ask the Minister: will he tell your Lordships how many doctors are engaged full-time and how many doctors are engaged part-time in the private hospitals? With the greatest respect, I do not want percentages; I want numbers. I think that we shall probably find that at present about 10,000 doctors are engaged in private hospitals and the private sector. May I ask the noble Lord whether he would be good enough to let me, or your Lordships, know how many nurses are employed in the private sector? The only information which I can get is that the Nuffield nursing homes, which control 32 places, employ about 2,500 nurses, but they form only a small part of the private sector.
I ask for that information because I imagine that it costs the state about £50,000 to produce a doctor at present-day values. One can imagine, if there are 10,000 doctors—I may be wrong so far as that figure is
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concerned—the enormous amount of public money that has gone into the training of those doctors who are now serving the private sector, where people can jump the queue and get immediate medical attention because they can afford to pay for it. I know that your Lordships have heard me talk on this matter before, but I feel very strongly about it. I think that in principle it is absolutely wrong—morally and in every other way. Perhaps the noble Lord the Minister will tell us the cost of training a nurse. There are many people, of whom I am one, who feel that this Government intend to encourage the development of private medicine even to the point of the dismemberment of the National Health Service. I think that we are really moving along those lines.
The financial allocation is insufficient to meet the needs of the National Health Service. In Oxford, where I live, less than a week ago the regional health authority stated that it was getting so little money that it will become one of the most deprived regions in the country. That was said by the regional health authority in Oxford. Some of us think that Oxford is a very progressive city and has always had a very progressive medical section. But that was said by the regional health authority only a few days ago.
Perhaps the Minister can say whether private hospitals are still getting certain benefits from the National Health Service for which they ought to be paying. I do not believe everything that I read in the press, but one hears that there is a tremendous amount of blood, running into £1 million worth or more, that is going into private hospitals and for which they are not paying. One hears of all sorts of abuses that go on as regards the use of the National Health Service by (shall I say?) consultants and private patients. Will the Minister say how many private hospitals there are at present, and how many applications are being considered at present by the Secretary of State for extension of private hospitals and the erecting of new ones? If this goes on, more and more doctors will be lost to the private sector.
May I ask whether it is true that the Whittaker Foundation or the Whittaker Corporation of America is endeavouring to recruit 1,000 doctors and nurses from this country for Arab states? I hope that the Minister will be able to say whether or not that is true. Can the Minister confirm that opticians have made over £6 million from cut-price lenses which they bought cheaply abroad, by charging them at the standard rate.
There seems to me to be so much going on in the National Health Service that needs looking at. It may well be that the department knows the position, from my own experience I am sure that the department does not miss very much. But I think that we need in the DHSS—if there is not one already—a watchdog to see what is happening. It may well be that there are areas in which there can be co-operation, but it should not be at the expense of ordinary people.
I wonder whether the Minister can explain why 5,921 learner nurses withdrew from training in 1980–81, and why a greater number withdrew from training in 1979–80, and why a large number withdrew in 1978–79? Has it anything to do with conditions of work? Has it anything to do with conditions of employment? Has it anything to do with their living conditions? It seems to me that the answer is not as the noble Lord the

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Minister was good enough to give me in a letter quite recently, that there were 77,000 new learner nurses up to such-and-such a date. I am concerned why so many embark upon training and at some stage withdraw, because it seems to me that there is something wrong somewhere.
On 31st March 1981 there were 628,333 people awaiting admission to hospital, of whom 601,848 needed surgical operations—over 600,000 needed surgical operations. I understand that no figures are available since March 1981 and I am not complaining about that; one cannot get them, except at the end of the period. But of that number, all the urgent cases—which numbered 26,621—had been waiting for more than a month. With the growth of the private sector, this is fine. If you can afford to pay, you can go in tonight or tomorrow once the diagnosis has been made. But here we have a National Health Service where over 600,000 people are waiting, and of that number, over 26,000 are considered to be urgent cases. They may only have a hernia, varicose veins or a bad hip; but if you have a hernia, if you have a bad hip or if you have varicose veins, you know all about it and so do the rest of your family, because you are a liability. I believe that the Government must find the money to deal with this.
About half an hour ago I looked at the teleprinter and it said that tomorrow the Cabinet is likely to authorise the expenditure of £7,400 million on the Trident. I am all for defence. I am not a unilateralist; I am a multilateralist. I believe that we must have a good defence capability. But society is full of people who must have a Rolls-Royce, although there are dozens and dozens of cars that can do the job just as well as a Rolls-Royce. We cannot afford a Rolls-Royce defence capability. As someone said quite recently, if necessary we must have an old "banger", and there is competent opinion in this country that we can have a proper defence system without spending that amount of money.
Since the Government have been in power, they have gone in for a tremendous amount of asset stripping, selling parts of very successful nationalised industries and concerns—industries and concerns that belong to the people. They have sold parts of it and done a good deal of asset stripping. By taking only a small part of that money we could—not tomorrow, not even the next day or next week but eventually—have a National Health Service that would meet our needs.
I want to conclude by calling your Lordships' attention to something that Sir Douglas Black, the present President of the Royal College of Physicians, said. He expressed his concern at the Government giving positive encouragement to a great expansion of the private sector which, in his view, is bound to lessen determination to make the health service work more efficiently. He also said that he was concerned at Government predictions that the public sector would eventually provide 25 per cent. of all health care. At whose expense?—not at the expense of the individual who can afford to pay for it, but at the expense of people who cannot do so. He went on to say this:
"I believe a doctor whose education has been largely at public expense should give some return by devoting the greater part of his time and interest to the Health Service, not through compulsion but from a sense of fairness".
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I hope that members of the medical profession will be able to say that to some of their colleagues who are educated at the expense of the state and who then give the state little or nothing in return.
6.45 p.m.
Lord Porritt: My Lords, I think that it is probably poetic justice that I should have the privilege of following the noble Lord, Lord Wells-Pestell, in this debate, for it is the first time that this has occurred when we have been talking about medicine. On every occasion we have differed very considerably, which has not worried either of us because I believe that at heart we are aiming at the same end, and we have become firm friends. Despite the fact that it would seem that the noble Lord directs the busy little bee in his private practice bonnet directly at me every time he speaks about it, I hold no whatever and I shall not reply in kind, except very indirectly later in what I have to say.
Lord Wells-Pestell: My Lords, if the noble Lord will allow me to interrupt him, I would point out that it is much more convenient for me to look that way. I can look left, but as I have certain disabilities I cannot look over there, and I find it ever more difficult to look elsewhere. So I am afraid that he does get my glare most of the time. But I did not even know that he was exclusively in private practice.
Lord Porritt: My Lords, I appreciate the compliment. I am sure that I voice the feeling of all noble Lords when I say how much we owe to the noble Lord, Lord Hunter of Newington, for his very well-informed and very challenging speech which opened up this debate. I was glad to hear it, because when I read his Motion on the Order Paper I felt a little sad that we should, yet again, be considering how we could improve the National Health Service and how we could make a critical appraisal of yet another reorganisation, which incidentally is still not finished.
I naturally felt that one must recall all the many debates that have taken place in this House and in another place over the years, all the committees and commissions that have been set up to deal with the troubles and difficulties of the National Health Service, and the great number of meetings of interested parties that have been held, whether they are political bodies, medical bodies or social bodies. The net result is that, after all this time we are still struggling to achieve the purpose of the exercise—to find a system that is both financially viable and medically efficient.
Why is this? What has gone wrong with the initial, I am sure everyone would agree, excellent idea that started off the health service? When I thought what I was going to say and saw what I had, I felt that the years finally must be catching up on me, because I was going back. I wanted to take noble Lords back a little to what the health service was when it started and what has been happening to it in the meantime. It is a bad sign when one goes back and stays there but it is not a bad sign if, in going forward, one continues to use what one has learnt from past experience, and that is what I hope I shall be able to do.
I have always been a rather strong protagonist of a health service. I have always, from the very start,

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had my doubts about the health service. To try to adjust these rather complicated and contradictory view-points, in the late 1950s I accepted the chairmanship of a committee of the top people in the profession—35 eminent medical men representing all branches of medical and all specialities. That committee, the Medical Services Review Committee, worked for four long, strenuous, and devoted years. In the end it produced a unanimous report. I think you will agree that that of itself is no mean feat for 35 doctors, who do not usually agree. This was the profession's very real and genuine attempt to make the NHS a going concern after its first 10 years of experimental work. To make it a service that could provide the maximum for the patient—which surely is the goal towards which we are still, 24 years on from that date, struggling. A service, also of which we could be proud as a country.
The report was duly presented to the then Minister of Health, who shall be nameless, and was shelved. But, on several occasions since that time, it has been taken down off the shelf, dusted, and some of its recommendations have been accepted by the then Government, the then Ministry of Health, and incorporated in our medical legislation. That, I think, has been the trouble all along: bits and pieces. They took bits and pieces out of our report, they take bits and pieces from everywhere else, and they put these bits and pieces into a quilt which hopes to cover medical care in this country. Bits and pieces.
There has never been any system that in toto will meet the requirements both of the profession and of the community. This is the theme that I am trying to get at tonight; that we should go back a little and see what was aimed at at first, and whether we cannot do something about it. Many of your Lordships will not agree with what I have just said, but to my mind one of the great sadnesses and tragedies of the health service is that it has become, and is still being used as, a political football. This is what does so much harm to it. It should not be a matter of party politics; it should be a matter of treatment in time of trouble.
To ahieve the original ideal, with which I am quite sure none of us would disagree in principle, we need a lot more vision, a lot more tolerance, a lot more intelligence, and a lot more understanding. There has not been a mixture of those things in the consideration that has been given to the health service over many years. What is required is some radical rethinking, and a cessation of non-productive, doctrinal squabbling; an honest, straightforward appraisal of the facts of NHS life, as evidenced by 35 years of rather painful experience.
We have learnt a great deal, and without doubt we have, as we have heard already this afternoon, a very good health service, but it is not the best. Do not let us run away with that. No country yet has seen fit to copy our system, and if we had had the best system, they would have copied it. We have great facilities, but are our priorities right in using those facilities? Already the noble Lord, Lord Elton, has made mention of this, and the importance of getting priorities right. It is no good having good facilities if you use them wrongly.
We have a good profession, but its motivation
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has been permanently altered by its involvement in the service—an extremely interesting thought, which perhaps has not occurred to you yet. Can we at this late stage give up just plugging the holes in the fabric as they occur—and this is really what we have been doing for many years—and go back to the original idealistic concept, and, taking on board the hard lessons we have learnt, plan a service capable of facing up to the stark facts of today's world? It would seem to be still possible, but with a great sadness I have to say that I doubt if it will ever happen.
The grounds for this pessimism rest on the fact that over the years we have produced a new clientele of patients and a new profession. Both of them have come to accept the NHS as a fact of life. Both of them, while complaining of minor faults and drawbacks, nevertheless feel that the health service has justified, and is in fact still today justifying, its existence. This is a perfectly reasonable viewpoint, but of course it completely ignores the vast and ever-increasing costs, about which we have heard this afternoon, of the service. This increase, it should be pointed out, is far beyond what might be ascribed to global inflation. And yet we are still second to bottom of the league table of the EEC in the amount of money we spend on our health services.
No health service can afford to be comprehensive. The sooner we learn that, the better. The insatiable demands of the multifarious aspects of modern medicine make this a fallacy. They make it frankly impossible. Yet, while the demands on our National Health Service remain unlimited, as you know very well, the available resources, as you also know all too well, are limited.
As recently as 22nd February the noble Lord, Lord Elton, in our debate on junior hospital doctors said:
"The National Health Service is under pressure".
So it is. And so it will continue to be until the Government—any Government—are prepared to draw the line and define the limitation of their responsibilities and accept the necessity of calling upon adjuvant and parallel methods of supplying medical care.
One of these, of course, if I dare mention it, is private practice, but I do not intend to go into this in any detail today. Unfortunately, it still remains—quite unnecessarily, I think—a contentious subject. Let me just say about it that it is at the present moment directly, to the tune of £50 million a year, assisting the health service, and also indirectly to a very considerable extent. It is, as we have heard, booming and it would not do that if it was not fulfilling a need.
Let us remember that its clientele also now consists more of employees than employers, and let us recall—and do not let us forget this fact—that it was one of the prime requisites of the profession agreeing to the setting up of the NHS in 1948. Who insisted on that? The father of the National Health Service, Aneurin Bevan. He saw the great importance of this liaison. What a pity it has turned out to be that his idealism did not extend to allow him to see that his original premise—that the so-called free health service would reduce national ill health to an extent that the service would become financially viable—was untenable. Not surprisingly with him, surely a starry-eyed concept of human nature.

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In the fond hope that something may still be done to put the NHS on a sound basis, it may be salutary if I conclude by mentioning briefly certain aspects of the service that I would say still urgently require consideration. Before I do that, oddly enough, although I admit that I did not originally think it possible, the intervening years since the inception of the NHS have shown that a profession, as against a business or an industry, can be nationalised. This again is an interesting historical fact.
I think it would still, however, be vitally important that the profession should be carefully monitored to see what effect this transformation has had upon it. I realise that what I am going to say now will probably be a pipedream to a few of you and anathema to more. I suggest that all the things I am going to mention are really worthy of study in depth—study with a long-term, open-minded vista, and without doctrinal bias.
As has already been mentioned by the noble Lord, Lord Hunter—and I was interested to hear him say this—is the conjugation of health and social security into one Ministry sound? Is it sound either governmentally or socially? It certainly exaggerates the effect of the massive bureaucratic machine that has tended increasingly to clog up the wheels of administration, to the extent even that it has already demanded two reorganisations, which so far—we have not got to the second part yet—have produced only a slowing down of practical results, with ever-increasing expenditure.
In that the basic purpose of a successful health service must be to get the doctor and his patient into a closer, more human and fruitful partnership, the more it is decentralised and the more it is devolved to the periphery, where that contact is established, the more productive it will be. The achievement of such a policy has certainly not been helped during the years by the frequent changes of Ministers of Health; we had another only last weekend. Continuity of policy has been conspicuous by its absence, as, for instance, in the priority given to large, fully-equipped, modern, expensive hospitals as against the small, local, well known community hospitals. We have swung from one to the other as the years have gone by.
Then there is the problem, also mentioned today, of the predominance of support (to the tune of almost 80 per cent.) given to the highly specialised, scientific and technological medicine of the hospitals as against primary care medicine, with its vitally important adjuncts of medical education and preventive medicine The initial, essentially political division of the profession into three parts—hospital medicine, general practice and public health—has never yet been satisfactorily dissolved. As for the present tenuous hold on life of community medicine, I agreed with what the noble Lord, Lord Richardson, said on the subject. It is certainly the impression the profession has, that community medicine is not very healthy at the moment, and it was good to hear the noble Lord, Lord Elton, mention its recrudescence, recovery or whatever else one might care to call it. I hope it is true because it is a very important part of any future service. Incidentally, community medicine is the modern terminology for the old Public Health Service; and it amounts to that, although it has developed considerably.
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Then we have the contentious problems of the capitation system—if I dare mention them—based on quantity, not quality, a system avoided by every other nationalised health service in the world. Should we keep it? Must we keep it? By introducing a third party, a Government department, into the doctor-patient relationship, so primarily essential to good medical practice, is it not an insidious threat to the standards of that practice? If, as I think, in due course we are bound frankly to admit that there are limits to the extent the service can be funded from governmental sources, and we wisely decide to define those limits—that is, set priorities, as the noble Lord, Lord Todd, pointed out—should we not consider the many alternatives available to produce adequate funding, of which private practice (whether subsidised, given grants or backed by insurance schemes) is an obvious one?
Another sphere of activity that would seem to merit considerable rethinking is that of the nursing profession, revolutionised since the Salmon Report, which emphasised administration rather than bedside care. I have a feeling that the nursing profession, if given the chance, and particularly if they were somewhat better remunerated, would not be unhappy to revert to the primacy of individual patient care. The thorny problem of industrial relations between management and staff in our hospitals is crying out for solution. Some machinery must be found to prevent patient care from being jeopardised by strikes and industrial strife. Finally, let us not forget the great potential of organised voluntary help. We are at heart still a sympathetic and charitable people and there is much untapped and invaluable goodwill available, if and when required.
I feel, despite all my doubts and the difficulties that exist, that an honest, unbiased reassessment of the service, getting back to basic and fundamental principles, could still achieve results of enormous value to the future of the NHS. Which brings me to the 64,000 dollar question: Have we the ability, the resources or the will to do it? I hope so.
Lord Mishcon: My Lords, before the noble Lord concludes what everyone will agree has been a frank and delightful speech, may I ask whether, in his nostalgic recollection, he would include the fact that the old London County Council, on the basis of employing half a floor at County Hall, used to administer the hospitals of London?
Lord Porritt: I am glad the noble Lord made that point, my Lords, with which I entirely agree. In fact, I served in LCC hospitals for quite a while.
7.7 p.m.
Baroness Faithfull: My Lords, we are grateful to the noble Lord, Lord Hunter, for initiating this timely debate, particularly as there is a feeling abroad, an impression, that the National Health Service is at the crossroads, as was stated by the noble Lord, Lord Colwyn. I have been approached by members of the medical profession, the social work profession and voluntary agencies to speak on the balance as between the care of patients within the hospitals and the care of people in particular categories in the community, bearing in mind the present financial constraints.

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In the 1980s should we not be clear as to those who require in-patient services? The noble Lord, Lord Porritt, referred to the wise use of the various sectors of the NHS. Should we not consider that those who are in-patients should be those who are required to be cared for in hospital, with their physical and mental condition being treated, enabling them to return to normal life in the community? In short, should there not be a treatability criteria for those who are in-patients? I submit that there are many people in hospital today who should be cared for in the community, thus leaving the hospital services for those who are in need of them.
The Green Paper issued by the Government in July 1981, Care in the Community, was a splendid document. It stated in the introduction:
"Most people who need long-term care can and should be looked after in the community. This is what they most want for themselves and what those responsible for their care believe to be the best".
The Green Paper went on:
"There are many people in hospital who would not need to be there if appropriate community services were available".
Who are those people who, if there was a different community service, could be cared for in the community and not in hospital? First, I would refer to the 2,000 mentally handicapped, now called mentally impaired, children who are being brought up spending their lives in hospitals. Of these, two-thirds have lost contact with their parents because in many cases they are placed in hospitals far from home.
I should like to congratulate my noble friend the Minister on showing so much concern for these children. I know this to be the case, since I am vice-chairman of Barnardo's, and the Minister's department is working closely with Barnardo's to set up small units in the community where the children can receive good, individual, residental care, which is not always possible in hospitals. I submit that there should be a directive—perhaps this sounds very harsh—that no hospital should be allowed to accept any mentally impaired child unless the child cannot possibly be brought up anywhere else.
Secondly, there is the ever-growing need for day and residential care for the elderly. Many people have asked, "Why is the health service in so many difficulties?" There are many reasons for that. One reason—referred to by many noble Lords—arises from the tremendous growth in the number of elderly people, in particular those in need of psychogeriatric care. I do not know how many such people are occupying beds in hospitals which could be used for treatable cases. In any case such people would be happier cared for in a small community in the area in which they live.
Thirdly, there are those people who surely should be cared for in the community, as was shown in the Acheson Report, and here I refer to primary health care by GPs, mentioned by many noble Lords. The noble Lord, Lord Wells-Pestell, referred to Oxford, and I would point out that in Oxford, with a population of 110,000, we have no fewer than seven health centres, five of which are purpose built. They give a service of primary health care second to none in the country. I would point out to the noble Lord, Lord Richardson, that the centres were set up by a medical officer of health, working in very close collaboration with the doctors in the area.
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The practicalities of community care need to be better worked out. The problem lies in having divided responsibility as between the health service and the local authority social services.
Her Majesty's Government are surely to be congratulated, notwithstanding much of what has been said. In 1978–79 expenditure on personal social services was £1,460 million. The figure rose, and by 1980–81 it was £2,161 million. Those figures were obtained from the Chartered Accountants' Association, not from the Department of Health and Social Security. However, the figures do not allow for expansion to any great degree. What community services are required? As I have said, there is care in the community for mentally impaired children, in children's homes, and by way of adoption and fostering. There are units in the community, run by voluntary agencies and social services, for the elderly and the psycho-geriatrics. There is the home help service, the encouragement of voluntary effort, such as Crossroads, which has been mentioned, and home care assistants, as well as meals-on-wheels, and the need for social workers, which was mentioned by the noble Lord, Lord Todd.
Here the difficulty lies in the fact that local authority social services come under local government, while the hospital service comes under the health service. Local authorities are cutting back, and I would suggest that if the community services were what they should be, some people who are being cared for in hospital need not be there.
Some authorities have already set up joint planning committees following the circular. They have been only partially successful, for the very practical reason that there is joint financing of many projects between health service and the social services. The difficulty lies in the revenue consequences, which finally fall on the local authorities, who do not want to take on responsibility for something that they fear they might not be able to pay for in the years to come. I would suggest to my noble friend the Minister that this matter needs to be looked at very urgently.
Notwithstanding the very good Green Paper, I would point out that in Guy's health district the hospital services expenditure is £44.4 million and the community health services expenditure is £3.4 million. In the Lewisham health district the hospital services expenditure is £23.5 million and the community health services expenditure is £3.9 million; and the figures are the same for both the St. Thomas health district and the King's health service. If we are to provide a wise and better service for those on hospital waiting lists, a way must be found to develop community services. Only when there is an understanding, a partnership between the health services and the local authority social services and mechanisms by which they can work together will we be able to give the service which this country deserves.
7.17 p.m.
Baroness McFarlane of Llandaff: My Lords, I should like to add my congratulations to those already extended to the noble Lord, Lord Hunter of Newington, for initiating a debate that is so relevant to the quality of patient care, which I am sure is so near to all our hearts. I, too, have a great professional interest in the debate as a nurse, a midwife, and a health visitor,

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as well as a member of the Royal Commission on the National Health Service that reported in 1979.
The commission set itself the task of answering the question: How good a service have we? It is a difficult question to answer. It is difficult to answer merely in statistical terms. One of the very frequent complaints that we received was that up until then the service had been very acutely orientated; that is, the preventive services and the services for health promotion had been under-resourced and underdeveloped. As members of the Royal Commission, we felt that far greater emphasis should be placed on encouraging people in self-care activities, that perhaps the whole British public should be re-educated in their own health care. I think it true to say that very often the great British public expect health to come out of a pill box or a medicine bottle, and members of the commission felt that far greater personal investment in self-care should be sought.
However, I believe that that requires a far greater investment in some of the things that we have been hearing about in the course of today's debate. There is, for instance, investment in health education. The noble Lord, Lord Colwyn, spoke, I thought in desparing terms, about the contribution of the public to preventive health measures. I think the situation arises because we have not adequately researched health education methods. It seems to me that giving information is not enough. The calorie counter never motivates me to do without calories, and I think we have to do a great deal more research before we have assured methods of health education.
Many noble Lords have talked a great deal today about the contribution of community physicians. That contribution has changed over the years and is not only orientated to the preventive aspects of medicine but also to medical administration. Certainly this was a sector of the medical service that we, as members of the Royal Commission, found was a real shortage specialty. Not only were there inadequate numbers of community physicians but their support was not adequate—support in terms of statisticians and secretarial assistance—and very often the community physician of a district would be working alone, virtually, in trying to carry out their work. We felt that they were an extremely important specialty to encourage.
A number of noble Lords have talked about the need for quality control in the health service. Lord Richardson mentioned things like tier review and medical audit. I think the medical profession are certainly to be congratulated in the progress they have made in this direction, but I would suggest that the progress has been not nearly enough nor wide enough, and that there is room for a great deal more development in this direction. My own profession has been seeking to make a contribution to quality control by being far more precise about the objectives of nursing care; to look at the expected patient outcomes when we are stating objectives for care, so that we can use these as criteria against which to judge the effectiveness of nursing care. Having said that, I should like to see the day when the professions were working together in quality control and when we were not working
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separately as doctors, nurses, midwives and so on in this enterprise.
Besides the quality control factors, I believe that there are structural factors for the improvement of the quality of health care. I should like very briefly to mention education; and, again, I feel that there is far more room to support joint educational enterprises. My own chair of nursing is in the medical faculty, and I believe that nothing but good can come from nurses and doctors sharing common educational facilities and learning, as they are educated together, to work together later. I should like to see perhaps the older concept of the medical school replaced by the idea of a school of health service professions, so that those who will work together subsequently share common educational facilities.
The Royal Commission of course stressed the need for reorganisation of the Health Service, and this was supported by the research that was carried out by the commission. Now we are well towards implementing the reorganisation arising out of those suggestions, and removing one tier of management since the commission reported that obviously decision-making was slowed down by the numbers of different tiers and recommended that below the level of the regional health authority there should be only one operational level. But, given that, the commission found that the National Health Service is not a tidy structure, and great flexibility is needed so that the structure could serve the local function. It is this philosophy of flexibility in management structures that I should like to underline and plead that it be preserved. We seem to have a propensity for wanting a nice, tidy, neat structure that is the same in every place, and certainly the needs of the service are not the same in every place.
So I want to pass on to what I think are some of the problems arising out of the present reorganisation. Some of them were mentioned very cogently by the noble Lord, Lord Wallace. There are certainly many human problems suffered by those who are involved in the reorganisation. Many senior members of the nursing professions are now in the throes of competing for posts. Indeed, the posts of senior personnel have not been designated for the reorganised service that should be functional by 1st April. A leader in The Nursing Times on 3rd February indicated that of the 194 district health authorities, only 76 per cent. had appointed a chief administrator, 74 per cent. a treasurer 73 per cent. a medical officer and 65.9 per cent. a district nursing officer. Yet, very rightly, we now have problems of time-tabling, because the chairmen of the authorities are forging ahead in some places and pressing for details of management arrangements without, in many cases, the expert advice of nurses and doctors. Nursing is in a further difficulty in that the Whitley gradings for the nursing structure have not been agreed, so that it is very difficult to be definitive about the structure.
We were glad that the options for clinical units were provided for in HC88, making provision for specialist areas to be catered for. It is very strongly believed among nurses that special functional areas such as maternity care, mental handicap and psychiatric care certainly need a clinical expertise which is very special to those areas. So the tidy administrative structure that is co-terminous with the geographical location is

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not always what is required, and there is a very strong feeling that we need to preserve functional entities in these areas. Besides this, in some districts very large jumbo units are being created, and once again there is a feeling that some of the needs of the health service are being sacrificed to administrative convenience.
But having looked at some of the problems that are arising out of reorganisation, I feel we should also look to the potential of reorganisation. Because in it I see some opportunities, first of all, to evolve a structure more suited to the functions of health care delivery; and I believe that if nurses and doctors can discuss together sensitively the need for services and receive administrative and financial support in so doing, then together we should be able to evolve more effective structures.
In all this, too, it has given us as a nursing profession an ability to develop a far better clinical career structure. The noble Lord, Lord Porritt, made reference to the Salmon Committee Report. I am certainly one of those who felt that the Salmon management structure was at that time, when it was implemented in the nursing profession, an outdated structure taken from the industrial world. I believe that the core of nursing is about clinical care of the patient, and I believe that the nursing profession is now quite clear about this and wishing to forge ahead and develop its clinical role.
Having said that, there is need for very good management and very strong management of the nursing service. There is need for involvement of nurse management at every level of decision-making in the health service because decisions at every level in the health service affect nursing care. But the most important nursing function is to me the clinical function. We as a profession have now had a number of conferences and reports on the possibility of developing a clinical career structure.
In the new statutory machinery that has been set up under the Nurses, Midwives and Health Visitors Act 1979, we are now looking very fundamentally at the kind of person that we want to see emerge from basic nursing education, and we are sure that in the registered nurse we want somebody who can assess the patient's needs for nursing care, to plan care, be able to prescribe care on a scientific basis and evaluate the nursing care given. We wish to develop educational structures that will allow this to happen. It means that this will be the basic level of training and that there will be need for continuing education of nurses in order to occupy the clinically specialised roles that we see as being more senior in the clinical function of the nurse.
So we have in the United Kingdom Central Council of Nursing, Midwifery and Health Visiting, and the English National Board in this part of the world, structures that will enable us to go forward on this educational front. I believe that these are ways in which we can move forward in improving health care and make a contribution from the nursing, midwifery and health visiting professions. So I plead that we retain great flexibility in our management structures and then perhaps we can maximise on the motivation of professionals in the service. I must apologise, my Lords, because, since I have to travel elsewhere this evening, I shall have to leave before the summing-up of the debate.
7.33 p.m.
Lord Hayter: My Lords, everybody in this House is an expert on health. Apart from the expertise which I get as a patient—past, present and no doubt future—my own expertise is as chairman of the King's Fund. I am delighted to have as my distinguished colleague on that management committee the noble Lord, Lord Hunter, who introduced this debate.
Just as the department in the course of its career, as you have heard earlier, my Lords, changed its name and its function and became the Department of Health and Social Security, so the King Edward's Hospital Fund for London broadened its scope and is now more popularly known—I hope—as the King's Fund, because we have a firm conviction that health is not just a matter of hospital but of the whole of the environment, and that prevention is better than cure, although of course there are some ills that can be neither cured nor prevented.
From time to time, the King's Fund has taken up special issues, one of them being the post-graduate medical centres which were talked about earlier this evening. We started those. One was just after the war, when the quality of food in the mental hospitals was appalling. We took that on. More recently another big job that we tackled was that of medical records, By a happy coincidence, in 1979 we tackled the problems of inner city areas just at the same time as the London Health Planning Consortium set up its study group under Professor Acheson. Nobody has any doubts about the problems of the inner city areas. There is the trade recession; the closing of some of the casualty departments; the social environment with one-parent families, the number of children in care, which I am astonished to learn is two and a half times the national average. There are also the gravitation to London of the homeless and the hopeless, the alcoholics and the drug addicts; the growth in ethnic minorities, which has been discussed several times in this House recently; the migration out of London of the young, leaving the elderly behind; and the growth of daily commuters into London. In connection with that, Professor Acheson, in his report, said:
"Public transport services are said to have deteriorated in recent years".
He can say that again, particularly today!
There is also the unfortunate effect of the recent changing of boundaries, the boundaries not only being set up under the reorganisation of the health service, but the boundaries that were altered in local government. As a result, sometimes one has to tackle at least three statutory bodies to get the provision of primary care in any given locality in the inner city of London.
Then there are the problems which have already been referred to about the general practitioners. The sizes of the lists vary enormously. I was astonished to learn that 25 per cent. of the population in certain areas are not registered with anybody. This is probably due to the ignorance of the family practitioner committee's role, which could help those patients find a general practitioner. Then there is the unsatisfactory siting and construction of many premises. What a simple observation it is that, if one wants to go to a GP these days, there should at least be some

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parking facilities readily available. That is by no means always the case.
Then of course there is the complete lack at this moment of a viable retirement policy. General practitioners stay on for longer than they perhaps should from a medical point of view. The Acheson Report ended up with 115 recommendations. I felt that I could epitomise those into three categories. There were the ones which showed the vital necessity to keep a careful balance at the national level between the general medical services and the hospital services. We have of course been talking about that this evening. Secondly, there were those dealing with the need to co-ordinate primary health services. Thirdly, there were those relating to the realisation of the special problems in London and other inner city areas, such as the incidence of social problems and the generally weak tradition of primary care, as opposed to the needs elsewhere in the country.
What could or did the King's Fund do about this? Fairly soon we shall have devoted £500,000 to trying to identify, encourage and disseminate good practice in inner city areas, which we do by research projects, by conferences and publications. On the primary health care aspect, we funded a study of the accident and emergency department attendances, at the request, indeed, of Professor Acheson's committee, to see how much these substitute for the general practitioner. It again came as a surprise to me (though probably not to others of your Lordships) to find how often a patient does not know his GP and therefore always goes to the accident and emergency department. We supported two or three publications by the Royal College of General Practitioners dealing with these primary care patterns in London.
Then, an important current project: we are going to help the Medical Architecture Research Unit to help upgrade, renovate and convert GP premises in inner London. There are some wonderful ones but there are also some appalling ones, and we do not see why we should not try to help to raise the standard.
On the community development side, much has been talked about this evening. This is where we are trying to evaluate these inner city community projects. There can be no satisfactory pattern of health care without the active involvement of the community itself, and we realised that there was a need to coordinate these projects so that other communities could be encouraged to do the same work.
Again, on the long-term and community care side of the inner cities, several projects are in progress concentrating on the care of the elderly and on psychiatric illness. The community hospitals in the inner city represent a somewhat hopeful position because many small hospitals are now being scheduled for closure or change of use and there is perhaps a potential role as GP or community hospitals. This could have a great impact on inner city areas and we feel our role is to help such projects to maintain contact with one another and to assist in the evaluation. There is never any need to emphasise the information about London's needs. As your Lordships may know, the four Thames regional health areas segment the whole of London and we are trying to do what we can to cross this artificial boundary. One study we are doing
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is comparing the needs of the inner city of London with those of Essex, so that we can suggest more sensitive ways of allocating funds between the different areas in this country.
Perhaps I should also mention that we now have seminars for a number of health authorities in the regions and we also invite the chairmen of the new district health authorities to help them to think out their priorities and plans. I may have given your Lordships the wrong impression—that with all this going on there is no need for the Government to do anything. That is absolutely wrong. We are only just scratching the surface. The task is immense, and it is becoming quite clear that as we are proceeding with our own programmes the needs of ethnic minorities and needs which come from various directions are forcing us to pick and choose the projects that we can tackle ourselves.
I have two questions to put to the Minister. The first is in relation to the Acheson Report. Perhaps I could give two literal quotations: one concerns the letter which set it up and said that it was to be "an urgent inquiry". The second was:
"It is of the utmost importance to find a solution to which early effect can be given".
The letter was written in 1949; the report came out about a year ago—and what has happened since? I think most of us know that nothing has happened.
Secondly, in the report itself it was stated that there were many examples of innovation and good practice, and it was hoped that the King's Fund, among others, would collect and disseminate information. The pressures are on us and we can go only so far. If there is any possibility of the Government sharing this financial burden, as I think they should, we would be very eager to collaborate and we would not relax in any way our own endeavours.
Finally, in debate after debate, week after week in this House we have come back to money. That is fair enough. What we have got to realise, as the noble Lord, Lord Bellwin, was saying recently, is the importance of getting value for money. Let us put a gloss on the figures relating to national health, taking up the point made by the noble Lord, Lord Porritt—that the proportion of gross domestic product spent in this country on health services is lower than it is in the United States of America, Australia, Japan and all the EEC countries, with the exception of Greece. As the noble Lord, Lord Porritt, said, that illustrates the need for keeping an open mind on the amount of money that should be spent, although I can remember him telling me that there is no country in the world which can afford the health services it wants.
Also, when we are considering in our own homes matters of health or, even more important, matters of life and death, we do not consider money. We get on with it; and I think, in the context of the inner city areas, so should the Government. Finally, we are talking in the inner city areas about spending money now which will save money in the future. I would suggest that positive action by the Government in these inner city areas is, to use a non-political phrase, just plain common sense.
7.45 p.m.
Baroness Gardner of Parkes: My Lords, I am sure

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your Lordships would be quite willing for me, in speaking in this debate on improved medical care, to include some comments upon dental care, as I am a general dental practitioner. I know that my noble friend has earlier discussed a great many points concerning dentistry and I do not intend to speak for long. I am sorry that I was not able to attend the earlier part of the debate and therefore hope that I shall not be repeating things which have already been said. I was very interested in the comments just made by the noble Lord, Lord Hayter, and particularly his comment that money was being spent on the inner cities. Sadly, that is not the case in London, and RAWP, the Resources Allocation Working Party, was designed to move funds out of London and particularly to transfer resources to other areas. It was considered that Central London in particular was over-provided with good hospitals and good medical facilities and that the regions were under-provided, so this money should be transferred from the more fortunate to the less fortunate areas.
This approach also acts within the regions and certainly is seen very clearly in effect in the London regions, as money is being moved from the inner city, where the population is shrinking, to the peripheries of the regions. Conflict inevitably arises when the districts have to decide priorities in allocating their revenue budgets between community services and the acute services—for example, between health visiting and high technology medicine. In the light of the Acheson Report, which draws attention to the inadequacy of primary medical care in inner cities and to the great demands on the community health provision in those areas, some method must be found to make appropriate allowances for these problems in any reallocation formula such as the RAWP formula.
Although I should like to pass a few comments upon the inordinate hours spent by any patient attending an out-patient clinic—because waiting time seems to be nothing and you have to allocate a whole day for any attendance at a hospital—I had not really meant to speak on that point because I feel sure that it will already have been made by other speakers earlier. My intention is to discuss the primary care provision and to draw attention to the fact that there are so-called unattractive areas which, because they are unattractive, do not appeal to the practitioners who are needed to set up in those areas. For example, some parts of London are classified as open areas, and any doctor could go there. The time was when a doctor was expected to live within his area but now, in order to enable people to have a doctor at all in such areas, they have had to agree to a doctor living fairly far away from the surgery and simply being within driving distance if an emergency arises. Obviously, this is not a very good way of providing adequate primary medical care for the patients and it was certainly never the intention.
There is also the reverse problem. I have served since 1974—and I am just finishing—on the Westminster, Kensington and Chelsea Area Health Authority. We receive a very large number of complaints from patients in so-called affluent areas who cannot get a doctor to accept them on his list. That is usually because the doctors concerned have fairly small lists and restrict the number of their patients. In fact the Acheson Report draws particular attention to the
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single-handed doctors aged about 70; and we have quite a number of these in this area. If these patients appeal to the health authority, they are told that there is an adequate number of doctors in the area, although the reality is that it is very difficult to get onto a general practitioner's list.
The Dental Strategy Review Group is the body which has recently put forward a number of recommendations on improvement of the general dental services, and it has highlighted some of the problems which general dental practitioners face. Perhaps I should declare an interest here, because I myself am in practice. One of the suggestions made was that there should be a manpower policy to direct dentists to areas where they are needed. But knowing my profession, and its contrariness, I am sure that the last thing in the world to produce the desired result would be any form of directive to practitioners. However, I believe that incentives to practitioners could create a situation were dentists would go to those areas which are sadly in need.
Dentistry is changing dramatically and there is a great increase in the number of general dental practitioners. This is not unusual. It is a world phenomenon and it is not restricted to this country. We are now getting a surplus of dentists throughout the world and quite a fall in dental disease, largely due to fluoride in toothpaste. This means that time and patience may allow market forces to solve this matter and direct dentists to where they are needed, but I do not think we can wait long enough for that to happen.
At the weekend, I was at the University of Newcastle-upon-Tyne and there I met someone from the local area health authority. He told me that they have a map of the pattern of dentistry in Newcastle-upon-Tyne, which shows all the dentists peppered fairly thickly in the nice attractive areas. He asked what they could do to make dentists go into the other areas where they are so badly needed, and where patients could then have the benefit of dental care. When I was on the Inner London Dental Committee some years ago, all kinds of health centres were built at considerable expense, and dentists were encouraged to go into them. It was greatly resented when dentists would not go into those premises and it became clear why that scheme would not work For the benefit of this House I should make some points on that, because if we recognise the difficulties and adjust the pattern to match the problems we shall have the dentists going in.
First, it is essential to make premises available in those areas and not to restrict the type of practice. This may seem a contradiction in the terms of this debate, which has to do with improved facilities in the National Health Service; but it is not a contradiction. The dentist is usually an individual who values his freedom and his right to treat whichever patient he wishes. Usually, when a conscientious practitioner takes on a practice, he takes on pretty well everyone in sight. For example, I always say to people who come to me that I would not refuse anyone, unless the patient was simply going to be a time-waster and did not want dental treatment. If all someone wants to do is to come and have a long conversation he should do that privately, because there is no National Health provision for that.

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But most dentists accept patients who come in, although in those areas which are underprivileged or unattractive people will not be willing to pay out large sums of money for private treatment, so the possibility of private practice is virtually nil. I say this with experience of my own area where, at the most, there would be only 5 per cent. private practice. But the practitioner resents the thought that he does not have freedom, so past suggestions of writing into the contract conditions which restricted the type of practice were unsuccessful. Even more important, unlike the doctor, the dentist has the right to sell his practice if he wishes to move from an area or to retire, but in those premises which were previously provided none of those rights was to be given. That was not a good idea, because if a young dentist were encouraged to go to a poor area and build up a very good practice, he would find an automatic successor if he wanted to sell his practice. So we must certainly allow that freedom. If we did those things, we should have dentists going into those areas.
I do not want to speak very much on charges to patients, because I understand that my noble friend and colleague in the dental profession, Lord Colwyn, has already covered that point. But I would just stress that it is unfair that the regular and conscientious patient now pays pretty well the total value of his treatment, whereas the patient who neglects his mouth and lets a great quantity of work build up is getting a real bargain, even at the top £60, when he may be getting £1,000 worth of dentistry. The patient at the other end, who is getting £9 worth of dentistry, and with the new charges £10 or £12 worth of dentistry, is paying the total charge.
In the report of the Dental Strategy Review Group, there is a suggestion that within our dental services we need a lot more administrative dental officers, and I must deplore that proposal. I have been unable to find any evidence that administrative dental officers are necessary at either district or regional levels. I know that many organisations believe that to have an administrative dental officer adds status to the profession and to the health authority concerned. But this is a false belief. The real role of the dentist remains the treatment of the patients and the provision of primary care services. So we must look at our primary care services, in general, in the unattractive areas and see that patients are getting the treatment that they deserve.
There is too much pushing of work from one person to another, without the actual treatment being carried out. Some general practitioners—I am speaking now of doctors—run superb practices, operate appointment systems and have model arrangements. But in others, sadly, the patient is fairly unimportant. We want to get back to a closer identification of the patient with his own doctor. This direct personal relationship is very valuable.
Some of my patients have been coming in for more than 20 years, and are now bringing their own children. Very often, it is not treatment that they need—they may need virtually none—but they come in for the assurance that everything is all right, that little Johnny's tooth is not growing the wrong way and to ask at what age any treatment should be carried out. These patients should feel that they have a right to go to their doctor or
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dentist at any time, and to receive the interested care and attention of the practitioner.
The practitioner, in order to be able to meet that demand, must be given good working conditions which are maintained, and he must really be appreciated. The primary care services must not be regarded as a rather poor relation of the hospital services. The hospital services are essential, and they do fantastic things in terms of high technology, but I stress that the basic bread and butter medical services are the primary care services in medicine and dentistry.
7.59 p.m.
Lord Molloy: My Lords, this has been a most interesting and fascinating debate with contributions from people who are expert in a variety of ways, and also from those who have a different philosophy. But running through the entire debate was a degree of unhappiness about what has been happening to our National Health Service in the past two years. That might account for the belligerent attitude of the noble Lord the Minister in his contribution earlier. I think he must have sensed it, and I am very happy that he made his contribution in the way that he did, because he recognised a great deal and felt a little upset about it. I hope that when he makes his contribution at the end of the debate he will promise us that he will at least do his level best—and if he will do that it will be no mean contribution—to get the National Health Service back on the proper road where it ought to be. No Government have ever given this great service the wherewithal which it deserves.
I am grateful to the noble Lord, Lord Hunter of Newington, for giving us the opportunity to debate this subject. Here we are, in 1982, debating the need for improved medical care in the National Health Service, a service which was created a few years after the most horrendous war in history. Its creation was opposed tooth and nail by the party opposite, stage by stage. But they have been converted. That is why I hope they will do something about it and will bring honour to themselves by maintaining support for the National Health Service. The fact is, however, that in 1982 we are having to debate the need for improved medical care in the National Health Service, a service which seeks to provide a healthy British nation.
A healthy British nation is the basis of all our industry, commerce, education, defence and all the fundamentals of a civilised society. A real enemy of this country of ours would wish the massive rundown and destruction of our National Health Service—not so much because of the grief, the anger and the pain that this would cause but because of the fact that if we keep going down the slope of a mean, mingy, nasty attitude to our National Health Service the result will be reflected, as I have already said, in industry, commerce, education, defence and all the great fundamentals of our nation. That is what is at stake.
There is another way of destroying the National Health Service and, alas! there seems to me to be evidence that the Government are using this crooked way of trying to undermine a great service which is based on the Sermon of the Mount and the Good Samaritan. In order to save money, they are giving aid, wherever they can, to private medicine. The noble Baroness who spoke a few moments ago men

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tioned that people come to see her for a variety of reasons. Some of them have nothing particularly wrong with them. Nevertheless, they have adopted the good practice of going to see her. The noble Baroness said that she hopes that they will never be put off coming to see her by having to make a massive financial contribution. After an examination by a doctor had been made at home—this is how it used to be before the war—that was the end of the matter, because there was insufficient money with which to go to the chemist and buy the prescription. That was the crass, vulgar, absurdity which existed before we had the National Health Service.
It is clear from what has been said on all sides of your Lordships' House that it is hoped that those days will never return. Perhaps the worst thing of all would be if our National Health Service were to be sabotaged by the money grubbers who do not mind from what evil source their patients have got their money, so long as they have got the lucre with which to pay them. That is one of the worst evils. When one discovers that we are at the bottom of the league when it comes to paying for our National Health Service, one wonders where on earth we are going. What is the point of having a massive defence budget, of worrying about education, of trying to overcome the evils of unemployment if at the same time this great service is being undermined? It will prevent the recovery of this country, which we so desperately need.
With the introduction of the National Health Service in 1948, we saw a great principle made reality. Many noble Lords and noble Baronesses have paid tribute to the genius, ability and dedication of those who work in all aspects of medicine and hospitalisation. Their skills have been made available to all. There should be no discrimination when it comes to ability to pay. That is the great achievement of the National Health Service. Previously, one British family could afford a doctor while another British family could not afford a doctor, or any form of hospitalisation. The great "leveller" was the grave danger which we faced in 1939 and 1940.
This is part of the discussion that is taking place in our universities today. It is thought that we shall turn not so much into a corrupt society as into a cheating society if we go back to those pre-war days. Because of the National Health Service we have removed many other evil practices. In a civilised society it should not be possible to buy and sell patients. That evil has been removed. Nevertheless, the great fervour and impetus with which this service was launched after the Second World War has not been maintained. I believe that this will be detrimental to our nation. Let us face the fact—I am sure the noble Lord the Minister will—that many people who devote their skills and abilities to the National Health Service in a variety of ways are unhappy and, in many cases, very angry.
The noble Lord, Lord Colwyn, mentioned that dentists are opposed to extra charges. This will mean that all we are doing is storing up trouble, for we shall have to pay more and more for neglecting the teeth of our children and others. What we neglect today will cost us much more in the future. This is very simple logic which even Her Majesty's Government could understand if they really tried.
There is a much more serious aspect of deterioration within the National Health Service. Let us consider
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kidney machines. If you do not know somebody who needs a kidney machine you are not, of course, particularly concerned. As the great architect of the National Health Service, Aneurin Bevan, said, the trouble with us all is that we seldom arrive at the frontiers of understanding until our own soul is smitten with grief. If you have a son, daughter, or mother who needs a kidney machine but none is available and death approaches much more quickly, with pain and agony, then you begin to ask what we are doing about it. We cannot wait for hundreds of thousands of people to need kidney machines before we do anything about it. Our job in the House tonight is to appeal to the Minister and to Her Majesty's Government to ensure that those who are worried this evening about whether they will be provided with a kidney machine, or even with a share in one, have that worry removed. That is the responsibility of a civilised society.
A number of speakers have mentioned, quite rightly, the need for more hospitals. The argument has been put forward, and I have a great deal of sympathy with it, that more health centres should be created. But who is going to build the hospitals and the health centres? Why, the construction industry. And which, of all industries, has a massive amount of unemployment? How many electricians, carpenters, joiners, bricklayers, architects, quantity surveyors are out of work because of the policies of this Government? This is the point which the noble Lord opposite ought to note. Those who are out of work, and who, for doing nothing, are being paid a pittance, could well be building the hospitals, the health centres and perhaps the training schools where people could go to make their contribution, either in terms of preventive medicine or curative medicine or in terms of some other form of aid, help and expertise within the National Health Service, besides building the hospitals and the health centres.
When the United States were affected by the curse of the mid-1930s—as we are being afflicted now by the curse of monetarism, which is the policy of this Government—the way out they found was provided by British and Canadian economists who simply said to the then President of the United States, President Roosevelt, "What you have to do is to spend and prosper". We did the same thing in this country. Great works were initiated and great hospitals were built, both in the USA and in this country. Some of our greatest town halls were built and some of our finest hospitals were built, not out of any desire to aid the sick or the suffering but to get people off the scrap-heap and give them a useful job for which they could be paid. Why can we not do that now? It is quite right and proper to link this argument to the creation of a really good National Health Service. When one realises the number of construction workers and steel workers who are doing nothing—some of them having been forcibly made redundant—and yet here we are needing more hospitals, health centres and schools, it does seem to me and to ordinary people outside this House that we are bordering on lunacy.
I hope that something will be done by this Government. I do not want to see this Government returned at the next election, but if I was an evil person I might

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say, "You are doing fine. Carry on doing what you are doing". They would learn the lesson in time, but I do not want that to happen. I am much more concerned about the economy of this nation and the maintenance of our great health service. We have to improve medical care in the NHS. That means that the NHS must be allocated the funds which are necessary. There is also a need for more training in hospitals in conjunction with developments in new technology. New technology can make a massive contribution. The problem is, as I understand it from those who know much more about this than I do, that we are neglecting to train people in the use of this new technology. It seems that we are concentrating on producing new technology. Now that the new technology is there, what we have to concentrate on as well is how to make full use of it in the health services.
It also has to be said that financial rewards in the NHS are somewhat out of balance. Registrars, consultants, doctors and specialists are all absolutely vital and are entitled to their rewards—but so are those who work in the nursing and ancillary professions. There is some unease and unhappiness in that vital sector of our NHS. The motion we are debating calls attention to the need of a better health service but apart from the need for improved medical care in the NHS, there is a need for improved conditions for those who work in it. If we can achieve both, we shall be on our way to a very good National Health Service indeed.
With regard to nurses and ambulancemen, when one attends their conferences, discussions and negotiations, much of their time is taken up not only with debates on improving their own conditions but, between their trade union representatives and the staff side of the Whitley Council, there is also much discussion on how to improve the National Health Service. I have heard debates on child care, mental health, preventive medicine, and after-care for those who leave hospital—be they young or old—as part of discussions initiated by trade unions, in addition to those on all that they require for their members.
The overwhelming majority of those who serve in this great service welcome the unanimous report of the Royal Commission. Had the Royal Commission not been set up, we should probably have been asking ourselves, "What shall we do? There are many criticisms of the NHS and ought we not to look at what can be done? Let us set up a Royal Commission". There is much in the report of the Royal Commission with which I, with my little knowledge (although I have talked to people with much more knowledge than I have), do not agree. Nevertheless, the Royal Commission did agree unanimously that we should return to the first principles of the architect himself, Nye Bevan—that is, that the NHS should be provided totally free from the moment a child is born, and that he shall be guaranteed the best medical service that can be provided right through his lifetime. We have not progressed far enough with that. If this is the recommendation from the knowledgeable people who sat as members of the commission, then we ought to try to implement it as quickly as possible.
I believe that improved medical care means improved
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medical care both before and after hospitalisation. Patient care can only be first class if we demonstrate our sense of responsibility as legislators by caring for those who work within the National Health Service. I should like to see established a permanent national review body to submit regular reports on the National Health Service to Parliament. I would also like to see established within our parliamentary set-up a National Health Service completely divorced from the social services. It has been my experience in another place that dealing with the NHS and the social services is too much for one Secretary of State. I do not intend to argue this point at great length, but I do believe that the NHS is of even greater importance than social security, and that there is a fundamental necessity to return to the days when the social services were the responsibility of a Secretary of State—that we should now have a Secretary of State concerned solely with the National Health Service.
I want to compliment the Government on their reorganisation. The Government are absolutely right to abolish the present tier system. So much damage was done when this incredible system was introduced by Sir Keith Joseph. The Labour Party said that it was going to do something about this, but did not. At last, this Government say that they are going to do something about it. It was an appalling bureaucratic nightmare and there was no need for it. Nye Bevan launched the National Health Service without affecting the autonomy of small groups of hospitals, and his system worked admirably. Now we have a massive weight of administration which is costing a lot but contributing nothing whatsoever. I hope that the Government will pursue their aim very strongly in this field.
Why I feel as strongly as I do about our National Health Service is because, in this world in which we live, we read of so many evil things. We hear of a nation's entire people living in the equivalent of concentration camps and that, in other parts of the world, a person who can purchase an aspirin is almost regarded as being well off. We in this island still have a great role to play and a great example to set—not so much in the manufacture of nuclear weapons but in how to behave in a sane and civilised manner. The pursuit of happiness and the greatest good for the greatest number starts with the one thing that frightens us all; are we in good health or not? When it comes to someone who is stricken with a cancer or some other horrific disease, whether he is a multi-millionaire or a coal miner living in a small cottage the grief is the same. I want to see both cured, or ways found to cure them both. That is why I believe that is what the health service will do. That is why I do not want to see it gnawed at, either by meanness or by the creation of any sort of private medicine, because it does enable people to pursue happiness and it is for the greatest good of the greatest number. Therefore, if we want an efficient health service, we have to see to it that it is well financed, and, equally important, that it is staffed by contented men and women prepared to devote their lives to this great service to which they belong.
8.21 p.m.
Viscount Chandos: My Lords, I, too, am very grateful to the noble Lord, Lord Hunter of Newington, for

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introducing the debate on this important subject. I am particularly grateful for the fact that he has introduced it in this week, since coincidentally this is National Kidney Week, the week allocated by the Charity Commissioners to the National Kidney Research Fund.
My father was one of the earliest patients in this country to be treated by haemodialysis, and enjoyed to the full, despite inevitable difficulties, 15 years of life which he would not otherwise have had. I should like to say at the outset that the quality of treatment and care provided to him through the National Health Service by one of London's principal teaching hospitals was the subject of deep admiration on the part of myself, my family and all those others who witnessed the treatment.
The noble Lord, Lord Elton, gave haemodialysis as an example of the Government's commitment to expenditure, however heavy, on medical care. At the risk of being categorised by the noble Lord as one who looks only at the emperor's clothes, I would suggest that that commitment is not enough. I believe that the prospects of other sufferers from renal failure now receiving the same treatment as my father did ale being inhibited by this Government's policies, and that the position in this country has already deteriorated substantially compared to that in nearly all other Western European countries.
I would like, therefore, in view of the contributions made by other noble Lords today, to speak principally about this specific example of renal treatment, not so much in order to make special pleas for this area of medicine—although I believe it may justify a greater proportion of total resources being devoted to it—but much more as an illustration of the specific damage being done by this Government's attitude towards public expenditure.
I would draw the attention of your Lordships' House to the two-pronged squeeze on the services provided by the teaching hospitals, through the low growth in the Department of Health and Social Security's budget, combined with the cuts imposed on the University Grants Committee and passed on to the teaching hospitals. It is not generally appreciated by people outside the medical profession that the UGC's support of the hospital system in this country is not restricted solely to training and research, but to actual treatment of patients as well. The Select Committee on the Social Services has been hearing in another place of the tragi-comical stalemate between the DHSS and the UGC, with the DHSS unwilling to indicate whether it will take over the financing of posts that the UGC feels it cannot afford to support following its own cut in budgets, since the department feels that this will encourage the UGC to decide definitely that it will not finance those posts under consideration. While this stalemate is allowed to continue, vacancies for vital medical posts will not be filled and the services available to the public will deteriorate further. In effect, the teaching hospitals, with the central role which they play in the health service, are being squeezed twice over.
Renal treatment is one of those areas where the contribution of the teaching hospitals is particularly important. There are in this country less doctors per renal patient that in any other country in the western world, and, while this productivity might be laudable,
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it is at a cost to the patients, potential patients and the doctors themselves. What is more, the UGC cuts, if they are not balanced by an increase in the department's support, will lead to a position worse still.
In the teaching hospital where my father was treated, which has one of the foremost renal units in the country, four times as many patients are now treated as at the end of the 1960s, with hardly any increase in the number of doctors or nursing staff employed. The UGC cuts are likely to cause two of the senior six doctors posts in the renal unit to be eliminated, at a time when, as I have already suggested, the resources within the unit are already stretched to breaking point. I hope that your Lordships find it easier to reconcile this sort of evidence with the figures which the noble Lord the Minister gave us earlier on the Government's expenditure on the health services. I would suggest, with respect, that the effect of the UGC cuts might perhaps be considered by the noble Lord the Minister in assessing the true increase, if there is one, of the Government's expenditure on the health service.
My Lords, I would like very briefly to summarise the position of renal treatment in this country and how it compares with that available in some of our neighbouring European countries. Studies have shown, both in this country and throughout Europe, that the treatment of what is called end stage renal failure is successful in trems of the survival of the patient, compared with the treatment of other serious diseases such as heart attacks and cancer. What is more, the quality of life for patients saved by either transplant or haemodialysis is comparatively high—again I can add my personal confirmation of this—and certainly higher than that of people suffering many other chronic illnesses or disabilities. Between 80 and 90 per cent. of renal patients are deemed fit to work and can thereby make their economic contribution to the country and mitigate the costs of the treatment.
What is more, although the continuing costs of dialysis, and to a lesser extent the care of transplanted patients, is high, as the noble Lord the Minister observed, the additional call on hospital resources that are responsible for their treatment is not high. A recent study showed, for instance, that of those who had been receiving some form of chronic renal treatment for 10 years or more, two-thirds were not hospitalised at any time during the course of the year when the study was done. I believe, therefore, that it can be shown that renal treatment such as heamodialysis merits, on humanitarian and economic grounds, a fair share of the cake. On the whole, I believe it is getting it, more or less. What is wrong is that the cake is not big enough and is being eaten away by the current policies of the Government.
Because Britain started early in the treatment of patients with renal failure, the number of patients receiving treatment, as a proportion of the population, was reasonable at the beginning of the 1970s in comparison with some European countries, including France, which had lower levels of treatment. At the beginning of the 1980s almost every country in Europe had overtaken Britain in the proportional number of patients receiving treatment, and, as one would suspect, the figures for new patients being treated are, therefore, correspondingly worse.

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This can be most effectively illustrated by looking at the treatment of patients in different age groups. For patients suffering renal failure up to the age of 44 the United Kingdom provides a level of service not far from that provided by France, West Germany and Italy. But once patients in the older age groups are considered the appalling consequences of the limited resources available become apparent. In the age group 45 to 54 the number of patients per 1 million of the population accepted for renal treatment in the United Kingdom is about half of that in France, West Germany or Italy. In the age bracket of 55 to 64 the figure is less than one-third, and in the age bracket of 65 and over, the difference is so large as to make a mockery of comparisons. Of course renal treatment of older patients is not so successful as treatment of younger patients, either in terms of their survival rate or of their ability in some cases to adapt to those problems which inevitably follow the treatment. If resources are limited, therefore, doctors have inevitably to choose between potential patients on grounds of age.
We have grown used to regarding ourselves as the poor nation of Europe, so perhaps your Lordships will not be surprised that the treatment provided in France and West Germany is better, since their resources nationally are greater. But how can we justify the same disparity existing between the United Kingdom and Italy? If any of your Lordships were interested in seeing these and many other depressing figures in greater detail, I would commend to them the various annual reports of the European Dialysis and Transplant Association. I hope, at any rate, that the noble Lord the Minister will read the most recent reports before he gives haemodialysis again as an area of the health service of which the Government might feel proud.
This afternoon's debate has been long and so I shall not go into greater detail about this particular area of medical treatment. I do not propose, either, to say much about the many other important points that have been raised about the National Health Service by other noble Lords far more expert than I am. However, I would like in particular to support the views of my noble friend Lord Perry of Walton on the need for leadership both at the top of the DHSS and within individual hospitals. I feel, perhaps more than my noble friend Lord Perry, that there is also a problem of money, and I would like to make one point in that respect. The standards of the National Health Service have been declining relative to those of most other developed countries, and I have illustrated that in one specialist area. The present Government's policies seem likely not to halt the relative decline in the quality of services, but even to accelerate it. This position must be reversed and the target of comparability with countries of similar prosperity is the very least that we should aim for. It is the duty of the Government to provide the funds to allow this, and anything which allows the Government to shirk this responsibility is to be avoided. The growth of the private health sector should, perhaps, be seen in that context.
None the less, I believe that we should be realistic about how much can be achieved, at least within a short space of time, given the constraints that any Government will suffer on the level of public expenditure.
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The noble Lords on this side of the House think agree that this Government are imposing unnecessary constraints on themselves in this area; but those of us on this Bench believe that there are, and will be, constraints of some sort for any future Government. In view of that, I believe that it is important that the National Health Service does not turn its back on other sources of finance for projects relating to treatment as well as to research.
It is, of course, difficult for the National Health Service to admit that any particular piece of expenditure is desirable but cannot be afforded. But in the real world—particularly as the technology available in some areas becomes more expensive and more complex, as the noble Lord, Lord Hunter, said—this seems unavoidable. There is enormous enthusiasm among people in raising funds for medical purposes, and it is not surprising that a specific, tangible project often has greater appeal than some rather more intangible research. In the past these enthusiasms have sometimes been misguided or misplaced, and equipment has been purchased that has not been effectively used and, moreover, has subsequently led to a drain on the resources of the National Health Service in financing its continuing use. More importantly, the health service must not be allowed to avoid expenditure it would otherwise have undertaken, through reckoning that voluntary funds are, or might be, available for that project. Furthermore, the level of voluntary contributions to medical research must not be reduced either.
But having listed the problems, I still believe that the potential benefits of harnessing the energy of voluntary fund-raisers more directly to the needs of the health service, would justify the time needed to devise a satisfactory method of co-operation. Perhaps the noble Lord the Minister could consider with his advisers whether an undertaking by the Government to match any voluntary contributions greed projects, pound for pound, might not be a useful start. Not only would this achieve a net increase in the health service's resources, but, at least as important, it should foster greater involvement and pride in local hospitals among their potential patients. I would suggest to your Lordships that this would be a far fairer and more widely acceptable way of increasing the total resources of this country's health system, than encouraging the growth of the private sector.
8.36 p.m.
Lord Pitt of Hampstead: My Lords, I, too, wish to thank the noble Lord, Lord Hunter of Newington, for introducing this debate and also for the way in which he did so. The noble Lord's speech was extremely interesting. He took us right back and gave us a good historical background to the service and then he brought us right up to date. We are all very grateful to him for doing so. This debate has enabled us to hear many very good speeches on the subject of the health service, and in particular the speech of the noble Viscount, Lord Chandos, who has just preceded me. The noble Viscount made a remarkable speech for which I should like to congratulate him and I think that your Lordships would also like me to thank him.
The hour is late and I do not intend to delay the House for long. I would not impose a long speech on your Lordships tonight. However, I wish to draw

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to your Lordships' attention two matters with which I hope the Minister will deal. The first concerns the proposal that overseas visitors should be charged. I believe that that is a mistake. It would not bring in much in the way of revenue. I gather that the Secretary of State said that he would receive £6 million. As I view the situation there will, in fact, be expenditure involved in collecting that money as well as a fair amount of bureaucracy. I can assure your Lordships that this proposal creates a lot of ill will. Therefore, I hope that the Government will think again before pursuing it. In particular, I hope that the Government will not charge overseas students. I understand that the plan is to include overseas students in this programme and I hope that, whatever the Government do, they will at least exclude overseas students from this charge. That is the first matter to which I want the Minister to direct his attention.
The second matter which worries me is one to which I wish to draw the profession's attention and it concerns drug addicts. The area where I practise has a lot of drug addicts and for the past five years I have deliberately attempted to treat them. I shall not go into any of the details now as to the difficulties involved because it would take too long. But there have been grave difficulties. I was reading the General Practitioner a couple of weeks ago and I noticed that a doctor in Uxbridge was experiencing the same type of problems there. He too was trying to deal with the situation, also with difficulty.
My own observations led me to the view that more attention should be given to the treatment of drug addicts. I have been told by many of my colleagues that one cannot treat drug addicts, that they will give it up when they want to; that if they do not want to, they will not give it up and that there is nothing one can do about it. I do not necessarily agree with that, although it is true of many of them. I believe that there are some drug addicts who can, in fact, be motivated gradually to give up the drug.
In any case, my own findings are that one can motivate them to work, to hold down a job and to lead a reasonable life. One must recognise, of course, that the alternative is that they turn to crime, not only the crime of dealing in illicit drugs, but crimes which they commit in order to get the funds to pay for the illicit drugs. If one can motivate them sufficiently to get them to work and to lead a straightforward, regular life, that in itself would be progress. My own findings is that one can even get some of them to give up the habit.
But it is hard work and, frankly, I have had to give it up because I cannot cope with it—it is too much. But there is no doubt that there is a need for treatment of that sort. I know that the department may say, "We will provide more clinics". Yes, that will help, but I believe that what is required is more personal attention to these addicts. In other words, they need to have the attention of some physician who would really motivate them. Therefore, my suggestion—and obviously it is something which the department will have to negotiate with the profession—is that there should be an attempt to motivate more general practitioners to take on drug addicts, but that those general practitioners should be trained.
In other words, the situation should not be that any GP could proceed to try to deal with an addict, but,
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just as in other branches of general medicine, certain doctors should be trained and, as a result of that training, registered as doctors who deal with drug addicts. They should be given a financial reward for doing that job.
I throw that out. I do not want to make a long speech. It was one of the matters about which I wanted to talk tonight. I preferred to talk about those two matters in the few minutes available to me, rather than to make the speech that I was going to make about the service in general. In fact, I hope that the Minister will give some serious thought to the particular point that I have made about drug addicts and initiate some discussion with the profession (because it cannot be done in any other way) with a view to getting some programme for dealing with this matter.
On the service in general, I shall not say any more than this. In my view, we have spent too long on the question of structure and not enough time on the question of function. I hope that from now on the accent will be on function and that we shall try to recognise that the service is a service for patients, that it is how the patients get the best service that matters. The question of whether we have the right structure, although important, is of secondary importance.
8.45 p.m.
Lord Auckland: My Lords, the noble Lord, Lora Hunter of Newington, has received a large number of accolades today and, by any standards, the noble Lord has certainly earned them. This has been a marathon debate, but I think an extremely valuable one. I suppose that since 1958 I have taken part in about eight or nine debates in your Lordships' House on the National Health Service. Some years ago I initiated one myself. This has been the longest, but I believe the most productive, and at the end of an almost Wagnerian-type opera, it is almost time for Wotan's Farewell, so to speak, before the Front Bench reincarnate themselves, if that is the way to put it.
This is an especially timely debate, particularly after the very important Mental Health (Amendment) Bill, which has gone through your Lordships' House, not that this particular Motion is directed primarly to mental health. It is, of course, directed at the health service in general. My family and I are consumers solely of the National Health Service which, generally speaking, we find very satisfactory. Indeed, the admirable document, Patients First, which is the corollary to the report by Professor Merrison in 1979, in paragraph 6 says:
"The National Health Service is only one part of our welfare services. Families may need help from the services of local government, the social services, education and housing. We attach high importance to the National Health Service working together with these services, but we have come to the conclusion that this does not necessarily mean that they need to do this within common administrative boundaries. What is necessary and what will, we know, be readily forthcoming is the will to work together".
Possibly one of the problems of the National Health Service has been that the various organisations within it have not always managed to work together, not because I believe there has been a lack of will; part of it may be lack of communication, co-ordination or finance.

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The noble Lord, Lord Molloy, in the course of a very colourful speech, mentioned the building of new hospitals. My mind goes back to 1972, to the hospital plan of the then right honourable gentleman the Minister of Health, Mr. Enoch Powell, who I believe, in many respects, was a very good Minister of Health. I think that this hospital plan was very well thought out.
However, the building of a new hospital is not merely a question of bricks and mortar. I must declare a minor interest here as being very much an associate, non-executive director of a small civil engineering company, which is not concerned with building hospitals. But I have seen one or two hospitals in course of construction, and there are, indeed, some very good new hospitals. But the problem with new hospitals, as with new houses, is that the standard of construction and workmanship is not of the same high quality as it undoubtedly was in Victorian days, because, old as many of these Victorian hospitals are, they have weathered many storms, both literally and metaphorically, and one wonders whether the newer hospitals will.
It is important that a hospital is cost effective. It is not only a question of bricks and mortar, but of the appliances in the hospital. Several noble Lords have mentioned highly sophisticated new technical equipment. Indeed, only this morning I paid a short visit to a famous teaching hospital only three or four hundred yards from here and I saw some of the equipment there.
The noble Viscount, Lord Chandos, in a moving speech, mentioned the important question of renal dialysis. I wonder whether my noble friend can inform the House as to how many London teaching hospitals still have a renal dialysis unit. My understanding is that at least one teaching hospital not far from here no longer has a unit of this kind. I hope I am wrong in my supposition because this is an important factor. The cost of these units may be high, but not only in the live-saving potential of these units but in getting people back to work, they surely must save the country an immense amount of money. Of course, in many cases the skills of people working these machines, at least in the initial stages, may be very high and therefore training is needed, but this is a vital part of our National Health Service.
The real question—and I think this is the whole gamut of Lord Hunter's Motion—is as to how effective treatment can be given under the National Health Service in the 1980s. One problem is reorganisation. Whether the Merrison Report has got it right this time remains to be seen. One thing is quite certain: there has been no lack of trying on their part. It is an interesting report, and a long report. As I have said before in your Lordships' House, the National Health Service has perhaps been bedevilled, if that is not too cynical a word, by reports and Royal Commissions of various kinds.
I should like to make it clear that this is no disrespect to the worthy gentlemen who have chaired these Royal Commissions and given valuably of their time. But, as the noble Lord, Lord Porritt, in his admirable speech, stated, the trouble is that bits and pieces have been taken out of these reports, rather like a child nibbling at a meal which he does not very much like
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but knows that he has jolly well got to consume, or else. It seems to be part of the trouble of the National Health Service at the present time that there has been this surfeit of reports which various Governments and their advisers have had to look at and examine for their financial and other implications, and we seem to have had various pieces picked out, but perhaps not always the right ones.
The question of payment in the National Health Service—and this is far too late an hour to go into that matter in any detail—is one of great importance. The 62½ per cent. payment to nurses—I believe that is now the figure—will be welcomed so far as it goes. I must declare an interest here as my youngest daughter is a staff nurse at a London teaching hospital just beyond the City of London.
The last thing that the nurses would do is in any way to withhold their labour. She and her colleagues love their job. But the fact is—and I think that this Government must be given credit for having done quite a lot towards increasing nurses' pay—that the pay is not enough when compared with that of other people in the community. We talk about these words "student nurse". Most students learn largely by theory. A student nurse, or a medical student, often has a life in his, or her, hands. If there is not a staff nurse or a registrar handy there have been times when they had to take decisions. It is important to bear in mind, within the ambit of the National Health Service, that there is a first class back-up team.
Perhaps my noble friend can give the House some information as to the policy now for recruiting nurses within the National Health Service. Are the cuts, which are all-round cuts now in the various services in the country, having a serious effect on recruiting nurses? I know that my noble friend gave me an answer to a similar question recently, but I have to tell the House that the feedback that I have had from more than one hospital is that there is still much worry and concern. This is not so much particularly in London, but in the more remote areas outside London there are shortages caused through not enough finance being available for recruiting.
There is much else that I could say. Noble Lords from all sides of the House, I am sure, have been given very much ammunition. However, looking at the time now, I merely once again thank the noble Lord, Lord Hunter, for the admirable service which he has given to your Lordships' House. Now the big guns will come on to finish off these most useful discussions.
9 p.m.
Baroness Jeger: My Lords, we are indebted to the noble Lord, Lord Hunter, for giving us the opportunity for this debate. We have strayed down long byways and highways, perhaps beyond the intention of the noble Lord when he first put down this subject for discussion, and I will deal as briefly as I can with a few of the important questions which concern particularly noble Lords on this side of the House.
It is important to remember that it was basically through the concern of the public for preventive medicine that the National Health Service came into existence. Or, to put it another way, there was a consensus that there should be concern for health by collective action, built up through a system of social

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habits which are indispensable to civilisation. I am, of course, thinking of the early days of public concern for health, and that was in a way protective—one was anxious to protect the public against lunatics and infectious diseases, for example, rather than being concerned for the patient. It is interesting to see how the balance has shifted, and I am sure there is no one in your Lordships' House today who would feel that concern for the patient was not the primary concern.
In that concept of the National Health Service there was, of course, no room for individual commercialisation. People like the old sanitary inspectors and medical officers of health, as we used to call them, who insisted on social codes for collective wellbeing and not for individual greed, were really the pioneers of the NHS, as were the great names in medical research in the history of this and other countries. As I see it, the purpose of the NHS—this has been an underlying theme of today's debate—is to bring a similar sense of community concern to curative medicine. It has always puzzled me why there should have been a much more socially conscious understanding and acceptance of preventive medicine than curative medicine, and it will be for the good of the NHS if we can bring the two attitudes closer together.
I wish to refer briefly to the problem of private insurance, a topic which has received attention during the debate. The problem is complicated and difficult, and I do not pretend otherwise. However, the difficulty seems to be that the private schemes aim at the consumption of the apparatus of health but not at the creation of that apparatus. Many of the institutions involved do not want to know about mental health, geriatrics or incurables. They all make a profit—they have to, otherwise they would not be in business—and if they worked on the basis of the old friendly societies they would probably have a more conscientious case.
I make that point even at this late hour because I have seen so much distress among people who are not wealthy, who do not want to queue jump and who have a desperate and conscientious concern that they are doing their very best for their child, husband or old mother or father as the case may be. I recall how, in our very poor practice in Shoreditch, people would come and say, "If I took all my savings out to go private, would he do better?" I want to be able to say, "No, all the money in the world will not mean you will do better than sticking with the National Health Service", and we know that is true in many disciplines and cases of casualty and other cases of serious illness.
I was very impressed by the views of Aneurin Bevan. Indeed, I could not help but be impressed because when he came to talk to my husband, who was one of the few GPs in the House of Commons at the time (in those days we were working on the framework of the National Health Service) they would keep me up late into the night as they argued about the NHS. If there was one thing Aneurin Bevan was passionately keen about, it was that there should be amenity beds, by which he meant the purchase of privacy. It was not to be a purchase in order to queue jump or for any special extra kind of health service. If you were the sort of dotty person who could not bear anybody else around when you felt sick, you would then have the right to say, "Go away. I want to be alone". It is a pity that there seems to be less emphasis nowadays on the provision of amenity beds and too much public
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concentration on the provision of private medicine. We should not exploit the feelings of many people who want privacy in illness and force them to take the alternative of going completely private, which might be against their principles, might not be what they need and does not answer the problem they face.
The noble Lord, Lord Hunter, referred to the question of organisation and, while it is too late to go into the matter in detail, I must say that we do not have it right. There should be a much closer relationship between local government and the NHS structurally, especially as we are trying to bring the two closer together, so bringing the social services and community services closer together. It seems absurd that we should have the two different structures.
To refer again to Aneurin Bevan, he admitted that when the NHS was first brought into being it was thought inadvisable to attach it to the local government structure because, as he often explained, there was such a variegated pattern of hospital provision all over the country that it would have been unfair to base the service purely on the resources of one local area rather than another. To quote from his essay "A Free Health Service" at page 115 of his book In Place of Fear:
"A solution might be found if the reorganisation of local government is sufficiently fundamental to allow the administration of the hospitals to be entrusted to revised units of local government".
Many of us hoped that when the noble Lord, Lord Redcliffe-Maud, and others were considering changes in local government that might have been an opportunity to place the structure of the health service within the local government pattern so that there could be an elected responsibility and an answerability to the people who live in the area. Much more thought needs to be given to that point.
I have informed the noble Lord the Minister that I propose to mention one of the fatuous results of the reorganisation of the NHS in the area that I know best. In Camden there is a proposal for a NHS reorganisation which will produce two authorities; one of them will be in Hampstead and the other will be called Bloomsbury. But when we look at the map we find that bits of Bloomsbury are in Westminster. So there is an overlap from Bloomsbury into Westminster. One is not concerned merely about lines on the map. The stupidity of the situation is that it cuts across the borough boundaries, so that part of the Bloomsbury health area is to be in Westminster. Thus it will be partly accountable to Westminster Council and partly accountable to Camden Council. Those two councils have very different attitudes and very different policies, and I want to know what is to happen to my friends in the Westminster end of Bloomsbury compared with my friends in the Camden end of Bloomsbury. I tried to find out the reason for the proposal and it appeared that it had something to do with hospitals. It was a question of sorting out the Royal Free Hospital, Middlesex Hospital, and University College Hospital, and making sure that they had the right kind of catchment areas.
I think the trouble with the National Health Service is that it is too hospital-dominated. It is not a national health service at all, it is a national disease service, a national illness service. So long as we think in terms of a structure that suits hospitals, which provides them

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with proper catchment areas, rather than of the problems of the health and wellbeing of the community, we shall not get it right. I shall mention only one or two points which bear that out. I want to see the National Health Service much more orientated to prevention. Why have a Government who agree to sport sponsorship by tobacco firms while at the same time the Health Education Council is supposed to be conducting propaganda against smoking? That seems to me absolute rubbish.
I think that the attitude of the Government, and of the previous Government—let us be quite fair about this—to the question of the lead in petrol is absolute hypocrisy. Last year I was in America, where there is lead-free petrol, and all the new cars have to be manufactured so as to take lead-free petrol. As my noble friend Lord Wallace of Coslany said earlier, there are many environmental problems and questions of unemployment and bad housing that are really fundamental to the health of our people.
I should like to say a few brief words about the nurses—and I must admit that I am glad that the noble Baroness, Lady McFarlane of Llandaff, has left, because as I never got further than being a VAD I am terrified in the presence of even a ward sister, let alone so eminent a matriarch of the nursing profession as Lady McFarlane. I feel that the whole machinery of wage negotiations for nurses is wrong, bad, unprofessional, and undignified. We really ought not to perpetuate a system where nurses have to come up time after time, always trying to catch up with the wage levels and standard of living of others. I understand that conversations about changing the whole machinery are taking place and therefore I do not want to go into details about the present offer. But I think that the whole conception must be altered if we are to get this straight. It is undignified for the nurses and demeaning to the whole population. No one likes to sec a situation in which annually nurses come up for market bargaining. It is quite wrong.
I want to make just one point on a matter which was brought up by my noble friend Lord Pitt, about the charging of foreign visitors. I think that this is humiliating and disgraceful, and we have made our position clear. Sometimes people have said, "Why should we look after other people if they do not look after us?" There was a time when we liked to think that we led the world in this, that we were giving an example rather than a precept. It seems to me that this Government are levelling down the international concept of care. What is more, we are going to get into all sorts of practical difficulties. We are going to look after people from France, but not people from Austria; we are going to look after people from West Germany, but not from Switzerland, not from Sweden—not now from Greenland, I take it.
We are going to be in a situation where hospital workers are going to meet tremendous difficulties. I have read very carefully all that has been said in the official records and in the official documents, that questions are to be asked very tactfully: but no one has made it clear what happens if a person who is deemed to be chargeable tries to leave hospital without paying, perhaps because he cannot pay. Are we going to have policemen at hospital doors stopping people from
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leaving? Are we, as happens in some places in America, not to let them in until they produce their cheque book? This is a wrong path to be going down, my Lords. I could produce many more arguments against it, but I hope there will be another opportunity for us to go into this in more detail.
The other thing that terrified me about this debate was that I had to listen to two dentists. Of all the unloved people in the world, dentists come out on top so far as I am concerned. Quite seriously, I was glad that the noble Lord and the noble Baroness made their contribution tonight, because this is one of the most neglected parts of the National Health Service. Certainly, in inner London, where I live, it is almost impossible to find a National Health Service dentist. They are almost disappearing in certain areas of the country.
I was particularly glad that the noble Lord, Lord Colwyn, referred to the question of disabled people. I have had quite a few cases brought to my attention where I have been completely unable to help totally housebound people who have needed dental treatment; and when I have asked at various DHSS offices no one could tell me—perhaps the noble Lord the Minister can—how a totally housebound, perhaps geriatric person can get dental care. I think that these are some of the things that we need to be looking at.
I would say only this to the noble Baroness, Lady Faithfull, that I think she is a bit of a dreamer. She talked of some splendid document about community care, as she always does, and we know she has great experience; but, my goodness!, I wonder whether she has had as much experience as I have had of people sent out from hospital because they are supposed to get community care while the local council is being pressed by this Government to cut down on home-helps, on meals-on-wheels, on day centres and so on.
The last time I spoke to a neighbour whose husband had been sent out because the hospital said he was ready for community care she said, "Don't you know that the community does not bloody well care?" I apologise for the language, my Lords, but this is how this desperate woman felt. She said, "I am the community; there is nobody else but me—and that is what the hospital calls community care". As we are trying to emphasise the need for more care outside hospitals, I think it is all the more imprtant that we should try structurally to bring the local social services and community medicine together with the hospital services, but that we should also see that the allocation of finances is fair enough for the community to do its job.
My Lords, we are all very much indebted to the noble Lord, Lord Hunter, for bringing this matter before us and for giving us the opportunity of this debate. I am only sorry that there have been so many aspects raised that it is not possible to go into them more fully. I know that it seems late to your Lordships, but to those of us who were bred in another place the night is young and we will go on and listen at length to the noble Lord the Minister, who I am sure will reply in great detail to this debate.
9.20 p.m.
Lord Elton: My Lords, perish the thought that I should reply in great detail at an hour which your

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Lordships who are accustomed to this House only regard as being rather late.
Anybody who takes a copy of tomorrow's Hansard in one hand and a copy of Who's Who in the other, will very soon discover that the noble Lord, Lord Hunter of Newington, has in fact raised an astonishing constellation of talent and knowledge relevant to the field which he has put before it. We have a Nobel Prize-winner in the person of the noble Lord, Lord Todd; we have presidents or vice-presidents of Royal colleges and Royal societies, the noble Lords, Lord Richardson, Lord Hayter, Lord Auckland and Lord Porritt. We have noble Lords intimately connected with medical or nursing university education. I shall not go on giving the names, my Lords; they will be obvious to the reader.
We have heard noble Lords with wide experience of the management of the National Health Service through being chairmen or members of health authorities or boards of governers, who have been chairmen or members of Royal Commissions on health-related topics, who have been presidents of other vital medical associations such as the General Medical Council and the British Medical Association, many who have served as doctors, dentists and as members or chairmen of important health organisations, committees or councils, and even, indeed, the spouses of doctors. This is a formidable expertise and I include in that constellation the noble Baroness who has just sat down.
It will be obvious to your Lordships that I cannot reply to many specific questions, but the noble Baroness was kind enough to give me notice of a particular question before this debate, and I think it proper to address myself to it. She referred to Camden; and, unless I am mistaken, she is referring to our decision to create a Bloomsbury District Health Authority out of the current South Camden Health District, which includes University College Hospital, and the North-East Health District of Kensington, Chelsea and Westminster Area Health Authority (Teaching), which includes the Middlesex Hospital. These two districts are currently in different regions.
We felt it would be wrong to keep these two major hospitals, whose medical schools are now linked, in separate regions and districts, bearing in mind that these hospitals have begun to co-ordinate their clinical activities very closely. We appreciate that there may be some transitional difficulties, but we believe that this decision will encourage the integrated planning and development of both hospital and community services in the district. If the noble Baroness does not altogether agree with that, I must ask her to bear with me because there is no time to enter into exchanges on particularities.
On the question of nurses' pay, my right honourable friends the Prime Minister and the Secretary of State for Social Services have emphasised at meetings of the staff side of the Nurses and Midwives Whitley Council last December this commitment to developing long-term arrangements for settling nurses' pay. The noble Baroness has accepted that, and my right honourable friend the Secretary of State has now circulated a paper to both sides of the Whitley Council outlining possible approaches for handling nurses' pay in the
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longer term and suggesting a timetable for taking matters on. I understand that my right honourable friend hopes to discuss this paper with the Whitley Council shortly.
Some of the barbs which the noble Baroness propelled across the Table at me were a little fanciful. I am very tempted to rise by the spectre of Government directing local authorities to cut down on meals on wheels, and policemen wielding truncheons at the hospital door. However, I had better turn to more substantial and real dangers and opportunities.
We have been looking at an area of interest which occupies a very big slice of public expenditure, and it has been looked at by 20 speakers of vast distinction and very diverse approach. I cannot pick up every point, though I will write to noble Lords whom I do not address in my concluding remarks. I think it better to try to identify a theme.
The National Health Service is a structural part of our society, and we are all agreed on that. It will always be hungry for resources, no matter how much it receives, and it will always be expected to give a service better than it does give, no matter how admirable it may become. I am therefore not dispirited, as was the noble Lord, Lord Porritt, by yet another debate on improving health care. I do see the advantages of looking for value for money. Even the good Samaritan—quoted again, I believe, by the noble Lord, Lord Molloy—paid four pence to the innkeeper—and think what 2,000 years of inflation must have done to that hotel bill!
The noble Viscount, Lord Chandos, will understand perhaps better than anyone that we do want and need to extract every last fraction of value from every last fraction of a penny available to the service. There always will be acutely difficult choices to be made between research programmes, between treatments and even, I regret to say, between patients, no matter how great our resources. My concern is to get the best value we can for all treatments and for every patient. The Government's concern is to improve our total available resources so that this health service, as well as other services, can benefit from the return of prosperity. That is the reason why we must look for efficiency at every stage.
This leads me immediately to take issue, as kindly, I hope, as he took it with me, with the noble Lord, Lord Wells-Pestell, over the role of the private sector. He referred to hernias, bad hips and varicose veins. I say that the private sector, by its existence and its work, increases the capacity of the country to repair hernias, replace hips and deal with varicose veins, not at public expense, just when the country is most short of funds. He talked about a queue: my Lords, the private sector shortens the queue. We cannot pay for this out of an "Austin Seven" defence programme. Our potential opponents do not have Austin Sevens: they have, to use his analogy, Rolls-Royces, and, in this context, competition is not a matter of pride of place or keeping up with the Joneses. It is a matter of preservation of the peace and the survival of the country; and failure makes all our other efforts really rather pointless. We are all of us multilateralists now—I hope the noble Lord does not want to draw me into a debate on defence policy. I can give way just once, and as he is an old friend I will give way to him.
Lord Wells-Pestell: My Lords, I want the noble Lord to come to 1982, because we have not had Austin Sevens for years.
Lord Elton: My Lords, I do not know what his chosen vehicle would be, except that it would not be a Rolls-Royce. I can think of many other analogies but he has succeeded in throwing me out of my stride: he cannot want any more, and so I shall proceed. Nonetheless, we believe that there needs to be a greater involvement of the private sector, especially in training; and the Government have been discussing with the private sector a range of options for increasing its contribution to staff training. We have not ruled out the possibility, mentioned by noble Lords, of a voluntary levy, but we feel that the best way to proceed is by working with the private sector through its representatives to see how its training potential can be expanded. Apart from an extension of its own arrangements for basic nurse training, if that proves feasible, other possibilities are joint arrangements with the National Health Service, post-basic courses and sponsorship of lectures.
The noble Lord, Lord Wells-Pestell, asked me a whole series of specific questions, to which I will reply in writing. At one stage he threw out the line that,
"the department does not miss very much".
I can tell him—and your Lordships, having heard his speech, will understand exactly why—that, whatever the department does not miss, it does miss the noble Lord very much. The private sector is important and I hope it will become more so, but I do not want my reply to be dominated by a sector which at present deals with substantially under one-tenth of our patients.
Therefore, for the same reason that I welcome contributions from the private sector, I welcome every word of support for the voluntary sector, and I was glad to initiate last year a pound-for-pound scheme on exactly the lines that the noble Viscount, Lord Chandos, commended to your Lordships. The fund with which the noble Lord, Lord Wallace of Coslany, is associated, and to which he gave such a well-merited, I do not doubt, piece of publicity earlier this evening, is typical of what is happening across the country. I recall with pleasure being at Stoke Mandeville with Jimmy Savile to see the laying of the foundation stone by HRH Prince Philip. Also, of course, services are provided by voluntary organisations of immense importance—hospital car services, hospital shops and so on. And, of course, my noble friend Lady Macleod and her League of Hospital Friends must figure here.
But, to come back to my main theme, for the same reason that I welcome the contribution of the private sector, I welcome the contribution of all noble Lords who have emphasised the importance of preventive measures, of good primary care, whether springing from the planning and other work of community health specialists, which was endorsed by many noble Lords; and of increased care in the community, which was endorsed by my noble friend Lady Faithful!, who is charming but no dreamer in this field. She is a practical worker with great experience in it.
It is for the same reason that I welcome the contribution of the noble Lord, Lord Richardson, and I will, in particular, note the passage in which he linked
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clinicians and managers in the Health Service in a two-fold quest for increased efficiency and effectiveness in clinical and support services. Work is progressing within the department on these matters, including the development of performance indicators. I join him in urging clinicians to take a greater interest in the information collected about activity and costs in the National Health Service, which provide the database for this initiative. It cannot be stressed too highly that performance indicators are tools to aid the search for more effective use of resources, and not sticks for beating consultants with. But their usefulness depends on the accuracy and timeliness of the data, and I have noted his comments about the value of involving clinical staff more directly in management. I think we shall see this increasingly as the unit becomes a focus for day-to-day management of services.
He and others also referred to the Achtison Report on primary health care in inner London. That report was published last May, and the then Minister of Health asked all the responsible authorities to consider it as a basis for action. He also asked health authorities, professional organisations and other interested parties for their comments on the report, and on the report of the joint working group on the primary health care team—the Harding Report—which was published simultaneously. A large number of comments on the two reports have been received, and we hope soon to be able to make an announcement about our response to the recommendations for which my department is responsible. This, I think, will be of close interest to noble Lords opposite as well as to my noble friends. Not only are there very powerful arguments in humanitarian terms for prevention and primary and community care: in many cases, they can represent a cost-effective alternative to hospital care.
Coming back to the reason which is behind everything I say, which is so close to what the noble Viscount, Lord Chandos, said, I welcome the interest shown by noble Lords in the reduction of management costs. Central control of management costs was introduced in 1976 by the previous Administration, and from 1976 to 1980 the proportion of National Health Service resources spent on management fell by around 10 per cent. We believe that, without detriment to patients, we can achieve a further 10 per cent. reduction, as a result of cutting out two tiers of management and a general streamlining of management structures. I do not believe that we are thereby coming to that level where cheap management becomes expensive management, if I may so put it. I do not think that the comparators which the noble Baroness, Lady Robson of Kiddington, quoted are strictly comparable. I believe that there is room for this improvement. We are not alone in this belief.
Coming back again to the same reason, I welcome the approval of the noble Baroness, Lady Robson of Kiddington, of our reduction of the level of decision-taking on many matters. There is general approval of the Patients First policy, though it must continue to be allied with flexibility. I cannot agree with my noble friend Lord Colwyn that we should be giving directives about the status of individual posts in the team beyond the absolute central core and minimum. That was a fault of the organisation as it was before.

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It denies flexibility of management. You cannot ask for a reduction of management costs and then dictate a whole hierarchy of places.
I welcome also, with a little more surprise, the support which we received from the noble Lord, Lord Molloy, for this. It takes me time to get used to the approval of the noble Lord, Lord Molloy. In his concluding remarks he very properly compared, I will remind your Lordships since the noble Lord is not here to do so himself, our condition with the whole population of the third world. We really do have a health service which is outstandingly good in world terms. Here I must say, as I have said before, that this Government have a good and a creditable record in this field. If it does not annoy noble Lords, and particularly the noble Lord, Lord Wallace of Coslany, I must remind your Lordships in the least contentious terms I can find, that health authority current expenditure is planned to be some 5¾ per cent. higher in 1982–83, in real terms, than the amount spent in 1978–79. Health authorities are also expected to generate additional growth through increases in efficiency. This has been achieved at a time when public expenditure generally has been restrained and most programmes have had to be cut in real terms as part of the battle against inflation—and while we have continued to redress the imbalance in resource terms between regions. That needs to be put in its demographic context.
The increase in demand for the elderly varies a little from year to year. The noble Baroness and others have referred to this question. We estimate that the increase will be about 0·8 per cent. in 1982–83 while the Government have provided for 1·7 per cent. of growth in services. In 1983–84 the additional demand is expected to be ½ per cent., roughly, and the savings which health authorities are expected to make by better use of existing resources will pay for this. As a faint reprise, we have had Wagner quoted as our model. I think he concludes with crashing brass. I want to be more tactful and just to say the words: more money beyond demographic need, more nurses doing their nursing, more doctors treating patients, and above all, more patients being treated and cured. I do not say that in any spirit of contention, and I hope that it will not be taken in that spirit. What I think all noble Lords will agree with is that all those who work in the National Health Service, whether clinicians, or nurses, or managers or ancillary staff, are partners in a vital part of our national life, a part upon which almost all of us are dependent at one time or another in our own lives. Plainly they have the close interest of every Member in this House today, and for that I think your Lordships should be grateful to the noble Lord, Lord Hunter of Newington, for moving this most productive Motion.
Lord Wallace of Coslany: My Lords, before the noble Lord sits down—I fully appreciate that he has had a very difficult job in replying to a long debate—may I say that I raised a very important issue regarding nurses and the crazy way in which the re-selection of nurses is being made. It is a very important matter. Will he therefore give me an undertaking to look into it? If necessary, I will assist him.
Lord Elton: My Lords, I thought I had reached an elegant conclusion in 18½ minutes. I am now going to stumble into an untidy finish after 20. If I take the noble Lord's question aright, the gift of ministerial posts, if it is in the hands of anybody, is not in the hands of Under-Secretaries of State. From the expression on the noble Lord's face I have obvioulsy misunderstood his question. The best thing I can do is to talk to him immediately after this debate and sort it out with him then.
9.40 p.m.
Lord Hunter of Newington: My Lords, all that remains for me to do is to congratulate all noble Lords who have taken part in this debate and particularly the noble Lord, Lord Elton, for rounding it off in his usual fashion. I was glad that the noble Lord, Lord Porritt, finished his speech in hope because he has given me and a great many others hope and encouragement for the past 40 years. I suspect that he was one of the people who persuaded the medical profession to go along with the National Health Service at its very beginning, although I suspect also that he would deny this.
Listening to the debate, two or three things occurred to me which I should like briefly to mention. I shall study carefully what was said by the noble Baroness, Lady McFarlane of Llandaff, about district authorities. I got the impression that one or two of them are getting a little ragged, that chairmen were getting out in front, and that difficulty was being experienced in forming the teams. One realises that the juggernaut is moving almost as we are thinking.
My second thought has to do with the regional authorities. I would have thought that they should each be concerned from the beginning with research and development in one part of the health service and that, between them, the authorities would cover every part of the health service. This should be a part of their lives for the future. Thirdly, I believe that the advisory services need to be reorganised and properly linked with the centre. Perhaps a great deal of protocol is necessary in respect of the distinction between the department and the regions and their advisory systems. I believe there should be one efficient channel of medical information at the right place in the whole service, and that we should get rid of this separation. Finally, I believe that in the future units should know what they cost and must be able to get the benefits of their savings. I would consider the whole question of matching funds if they achieved this.
These are only some very rough comments but I am left with one last lingering thought. It concerns the point made by the noble Lord, Lord Perry of Walton. I have a great regard for him because he has created one of the great centres of education in this country, which is being copied all over the world—unlike the health service. It was his point about consensus management. I wonder if we really have got management right? But then, there will be lots of time to talk about that another day. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Lloyd's Bill
Brought from the Commons, read a first time and referred to the Examiners.
  THE DITCHLEY PARK CONFERENCE 1982
  THE DITCHLEY PARK CONFERENCE 1982
  CATEGORY A PRISONERS AND PAROLE
  CATEGORY A PRISONERS AND PAROLE
  PREVENTION OF TERRORISM ACT: REVIEW
  PREVENTION OF TERRORISM ACT: REVIEW
  ARTERIAL DRAINAGE SCHEMES
  ARTERIAL DRAINAGE SCHEMES
  MOTORCYCLE DRIVING TESTS
  MOTORCYCLE DRIVING TESTS
  SHIPHAM: SURVEY REPORT ON EFFECTS OF CADMIUM
  SHIPHAM: SURVEY REPORT ON EFFECTS OF CADMIUM