House Of Commons
Monday 13th January 1975
The House met at half-past Two o'clock
[Mr. SPEAKER in the Chair]
Oral Answers To Questions
Aircraft Industry (Exports)
asked the Secretary of State for Trade if he will publish the export figures for the aircraft industry in the years 1970, 1971, 1972, 1973 and 1974.
Net exports of aerospace products were £201 million in 1970, £221 million in 1971, £287 million in 1972 and £343 million in 1973. Figures are not yet available for 1974. All of these figures exclude guided weapons which were not separately distinguished in the trade statistics prior to 1973. The figures quoted are net exports as they exclude the imported value of re-exports.
I thank the Minister for that answer. Does he recognise that exports by the aerospace industry represents about 50 per cent. of its output? Does he believe that this fine performance will improve under the Government's proposals for nationalisation?
The answer to that question is "Yes". On the details of what nationalisation will involve, I ask the hon. Gentleman and other hon. Members to await the announcement that is expected fairly soon by my right hon. Friend the Secretary of State for Industry.
Does the hon. Gentleman accept that that constitutes failure to the nation, in the terms that he usually uses when making the case for nationalisation?
No. I am well aware that failure to the nation is only one of the reasons for nationalisation. This industry, which has a good export record, is also highly dependent on Government assistance.
Eec Trade Deficit
asked the Secretary of State for Trade what is the trade deficit with the EEC for 1974 to the last convenient date.
asked the Secretary of State for Trade what was the trade deficit with the EEC in 1974 up to the latest date available compared with the equivalent period in 1973.
On a balance of payments basis, the visible trade deficit with the EEC in the first nine months of 1974 was £1,368 million, seasonally adjusted, compared with £768 million in the corresponding period of 1973.
Will the Secretary of State tell us, on a balance of payments basis again, what percentage that represents of our total non-oil deficit on trade? If the figure is somewhat similar to what it was last month—that is, 96 per cent.—may I ask how long this country can go on at such a rake's progress before the myth is finally exploded that it was to our trading advantage to go into the Common Market?
The proportion of our non-oil deficit on trade, accounted for on a balance of payments basis by our deficit with the EEC, is 96 per cent.
I did not mislead the hon. Gentleman last time. With my usual and characteristic understatement, I used a slightly different basis of figures which gave a more favourable result.The whole matter of the EEC and our continued membership will, as I am sure the hon. Gentleman will be glad to know, be brought to the people of this country, I hope, within the next few months.
Will my right hon. Friend explain why he misled the House, no doubt unwittingly, a few weeks ago? This point was emphasised in the Observer which gave my right hon. Friend a chance to reply to its counterproposal, which he refused. Why did he do that and why did he mislead the House in the way that he did?
I have not misled the House either wittingly or unwittingly, except in this one small particular when I understated the reality of the situation. Frankly, it is no use my hon. Friend's seeking to bolster his case by drawing upon the statistical department of the Observer newspaper—
No. It was my right hon. Friend's Department.
—when Her Majesty's Government have rather better statistics at their command.
On the subject of myths, will the Secretary of State lay the myth that joining the EEC has somehow been detrimental to our overall visible balance of trade pattern? Does he acknowledge that for many of the products that we wish to import, particularly foodstuffs, the EEC now represents a cheaper market for us than the rest of the world, and therefore it is only prudent that our imports from that market should increase?Finally, does the right hon. Gentleman regret the lowering of tariff barriers which has taken place between us and the remainder of the Community?
Whether or not the membership of the EEC has been detrimental to our trade is something which can be judged only by the actual outcome of our trading relations with the EEC. The onus of analysis and explanation certainly lies upon the advocates of membership rather than on those who have persistently warned against the dangers to this country's economy that could follow from our own membership of the Community. As for foodstuffs, it is true that during 1974 some foodstuffs in the EEC were cheaper than world prices—and that has been true, I should think, of about one other year in the past 30 years. But what we have to consider, surely, as a House—and certainly what the Government will consider—is not the advantage that there may or may not be in one particular year but what the expected advantages are over a longer period.
If we take selective restrictive measures to try to put right this disastrous deficit and the Common Market takes umbrage at that, will my right hon. Friend ensure that less strong-willed members of the Government do not retreat from that situation if it should make our renegotiation that much more difficult?
I do not think that my hon. Friend need be concerned about this. This is a matter of judgment, of where our interest lies. If we did come to such a view, we should of course act accordingly. But, as the House will know, my view and that of my colleagues is that we must, in this very difficult year for international trade, be guided by the pledge that we gave at the OECD not to restrict trade in any artificial way
Is the right hon. Gentleman aware that he has certainly given the impression consistently that it is his view that the overall deficit is significantly larger as a result of EEC membership and that we are therefore very glad to have his retraction this afternoon and his statement that we cannot draw that conclusion from the figures? Does he further accept that, contrary to what he has said in correspondence, it is not the case that his officials' views and the official statistics support the view that the overall deficit is greater as a result? If he has any evidence to that effect, will he publish it as early as possible?
I was invited by the right hon. Member for Down, South (Mr. Powell) to draw just such a conclusion when this matter was raised on the last occasion. What I said was that I remained genuinely puzzled at the extent of our trade collapse in relation to the EEC, but I have also said that I should be surprised if, at the end of the day, when we have analysed these things thoroughly, there were not some obvious relationship between membership and the trade out-turn.
asked the Secretary of State for Trade what estimate he has made of the effect of United Kingdom membership of the EEC on the deterioration in our visible trade balance at current prices between the first half of 1973 and the first half of 1974.
The crude trade deficit doubled between these six months' periods from £481 million to £964 million, a development brought about by a number of factors. I do not wish to reach any hasty conclusion about the effects of membership, but I am greatly concerned at the magnitude of the deterioration in our trade balance with the EEC.
Is the right hon. Gentleman aware that in the House on 18th December his right hon. Friend the Foreign Secretary expressed the view that our membership of the EEC had made very little difference to our trading deficit with the EEC countries, one way or another? Does he agree with that view? As I understand that his own preference is for a free trade area, what improvement would that make in the position?
I think that the hon. Gentleman is entirely right to emphasise that whether our future relationship with the EEC is that of member or one of free trade association, we have to improve very considerably on our economic performance in relation to trade with the Community. Of that there can be no doubt whatever.The essence of the difference is simply that whereas under the EEC membership arrangement we have what I consider to be the ongoing and general disadvantages of having to import EEC food at the expense of food which is normally available at a lower price in other parts of the world, this would not be the case if we had a free trade area arrangement. Secondly, we should not have the same problem, about which we are now renegotiating, of having to make a large net contribution to the EEC budget and also to sustain very unwelcome capital flows.
asked the Secretary of State for Trade what was the visible trade deficit of the United Kingdom with the previous EEC Six in 1974.
Estimates on a balance of payments basis are not available. The "crude" trade deficit—that is, the difference between exports value fob and imports value cif—in the first 11 months of 1974 was £1,914 million, or £2,088 million at an annual rate.
Is my right hon. Friend aware that this huge deficit with the EEC, accounting for almost the whole of our trade deficit in 1974, contrasts with a negligible deficit with the Commonwealth preference area for the same period, and that this result is wholly contrary to the wild promises we had of a great trade surplus with the so-called great home market of the EEC?
I hope the House will take note of what the figures really are. We can have disagreements among ourselves about the way in which we interpret these figures and about the explanation of the figures, but we shall get nowhere unless we face the facts. The facts are as I have given them to the House and as my right hon. Friend has stated them. They account not for the whole of our non-oil deficit but really for by far the greater part of our non-oil deficit in our trade with the whole of the world. This is, therefore, a matter of the greatest concern to the Government, as it should be to the whole House, regardless of what view one takes on the wider question of membership.
Does the Minister appreciate that in a recent survey taken by the CBI amongst its members, 84 per cent. believed that they would gain long-term advantages by our being in the EEC, but—what is more significant—78 per cent. believed that it would be disastrous if we were to pull out?
While we should take seriously the views of business men—and I think it was the views of business men which the hon. Gentleman was quoting—and listen to them, as indeed we do on many occasions, we should bear in mind that in matters of this kind those views are not necessarily correct. Let me give the hon. Gentleman an example. Businessmen generally in Norway and Sweden were in favour of those two countries joining the EEC. I think the hon. Gentlemen will agree with me that the present outlook of both those countries is very strong indeed—and they have pursued policies of dealing commercially with the EEC but without membership.
Is my hon. Friend aware that when the discussions about entry into the EEC were going on, those who were in favour of our so doing said that membership would be immediately to our benefit? That has now been forgotten. Will my right hon. Friend ask Sir Christopher Soames, who is acting as a Tory propagandist and is holding a series of meetings—paid for by Brussels—in his propaganda drive, to ensure that these facts and figures are truly put over, instead of the false propaganda from Brussels and the Tory Central Office?
I have already made clear to Sir Christopher, and publicly, my own views on his participation in the internal debate in this country. I do not believe that in the longer-term sense, even from the point of view that he takes, he will add to the prestige of being a Commissioner by taking part in what is going to be a very strong and vehement debate in this country, and I very much wish that he would desist.
Is the right hon. Gentleman aware that while, of course, we accept the figure which he provides, we object to the superficial selection of statistics in order to draw certain conclusions? Will he study very carefully what his right hon. Friend the Foreign Secretary said when answering Questions just before Christmas, which gave a totally different impression from the one which the Secretary of State himself had given a few days before? Will the right hon. Gentleman ask his right hon. Friend who asked the original Question not to go round making wild unattributable remarks as to what was claimed before entry but, rather, to consider what was said in this House and by responsible commentators outside, which gives a very different picture?
The Foreign Secretary and I are in very close touch with each other. We study each other's speeches and remarks with the interest and attention that the House would expect.I am afraid I have forgotten the other point in the hon. Gentleman's supplementary question.
The right hon. Gentleman who asked the original Question quoted statements alleged to have been made before the debate took place. Will the right hon. Gentleman discourage this approach—because the statements made in this House and outside by responsible commentators did not reflect the views which are now being stated?
The hon. Gentleman knows that I myself played some part in the debate. My recollection is that people whom we thought were very responsible on the then Government Front Bench gave very clear indications that, in their view, prosperity and security were secure only if this country joined the EEC. If the hon. Gentleman wants to look at the most authoritative statement of all, let him read what was said in the White Paper of July 1971—the key document which was put to this House in the debate in the following October—and see what it said about the effects upon members and their prosperity.
asked the Secretary of State for Trade whether he has any proposals designed to improve the United Kingdom's balance of trade within the EEC.
Her Majesty's Government's economic and commercial policy is directed to the improvement of United Kingdom's total balance of trade including trade with the EEC. The British Overseas Trade Board has the advice of the European Trade Committee and provides a wide range of services, in addition to those of ECGD, to assist British exporters. Particular proposals designed to improve our trade balance with the EEC would, of course, have to be consistent with our international obligations.
As the Government proposals appear to be singularly ineffective in relation to the EEC, and as the Secretary of State has agreed this afternoon that the food deficit is over 50 per cent. of the balance of trade deficit, would it not be in the interests of this country to have some specific proposals geared to the EEC very much along the lines of the suggestion that the hon. Member for Sheffield, Heeley (Mr. Hooley) made earlier?
The question of specific proposals, in terms of proposals that might directly operate upon exports and, indeed, upon imports in trade with the EEC, as the hon. Gentleman must know, are inevitably limited by the terms of the Treaty of Accession and, in turn, by the Treaty of Rome. Therefore the room for manoeuvre may not be as great as the hon. Gentleman expects.
Is it not a fact that the main reason for the increased deficit with the EEC is that we are now able to obtain from the EEC food and raw materials much more cheaply than from anywhere else? Is it not also a fact that the alternative which has been widely proposed by those who are opposed to membership of the Common Market—that is, a European free trade area—would leave us with exactly the same deficit with the Common Market as we have today?
My hon. Friend may have missed the reply that I gave a few minutes ago to a similar question. I will make just one essential point to him, namely, that the difference between a free trade area and membership of the EEC is that the ability to buy food in the markets of the world would be far greater than it is now. Further, we should not have the balance of payments burdens of the Community budget contribution, together with certain obligations in respect of capital movements.
asked the Secretary of State for Trade whether he is satisfied with the way in which his Department is discharging its statutory obligations regarding insurance companies.
Yes, Sir, although we shall all be happier when more of the detailed regulations provided for under the 1974 Act have been made and are fully effective. As regards particular companies, I cannot, for reasons of confidence, mention names, but the Department has been instrumental in protecting many thousands of policy holders in the unprecedented circumstances of the last year.
In view of the regulations under the 1974 Act, which are being published by the right hon. Gentleman's Department to prevent any further failures of insurance companies, does he not agree that it might be sensible to see how the existing regulations take effect before launching new legislation to establish a statutory fund, which could well put up the premiums of those who have made a prudent investment in their insurance?
I should certainly like a longer period to operate in full the powers provided by this House in the 1974 Act. My own assessment of the situation is that we now need an additional resource not provided by that Act and that we should bring it into play as soon as we can.
Will my right hon. Friend give special consideration to the sad plight of the many thousands of unfortunate policy holders who insured with the Nation Life Insurance Company Limited of Teddington, Middlesex, about which I have recently written to him?
Yes, I am well aware of the difficulties and worries that the policy holders of Nation Life are experiencing. We are, within the complex law affecting insurance and liquidations, doing our best to get as speedy an answer as we can for them.
asked the Secretary of State for Trade when he expects to introduce legislation to compensate those members of the public who have lost deposits as a result of the collapse of travel firms, in accordance with his undertaking following the financial failure of Court Line.
asked the Secretary of State for Trade what proposals he has to increase safeguards for holidaymakers; and if he will make a statement.
asked the Secretary of State for Trade if his proposals for the protection of holidaymakers are ready; and if he will make a statement.
I expect to be able to introduce a Bill very shortly, and I would ask hon. Members to await the submission of my proposals to the House.
As the Government have admitted liability to compensate those Court Line holidaymakers who were deceived by the Government's inept intervention, will the Secretary of State now say where the money will come from?
The hon. Gentleman knows that no such liability has been admitted or even implied. He will also know that the rôle of Government in the affair is being investigated, and no doubt will be thoroughly investigated, and that the House will, before very long, I hope, get a full report on it. But leaving that aside and turning to the question of the proposed Bill, it would be better, instead of my trying to anticipate major features of the scheme, if we waited until the details were published.
Is there not an embarrassing contrast between the alacrity with which the Government promised action before the General Election and the delay to which their proposals have since been subject? Is the right hon. Gentleman aware that, as a result, retail travel companies are outbidding one another in desperate attempts to secure the public's confidence by promising to refund within 24 hours, and then being trumped by further promises to refund within 12 hours, and so on? As we are now at the peak of the booking season, can the Minister at least tell us from what date the scheme will operate?
I cannot take it upon myself to make specific commitments in advance of the agreement of this House, but when the Bill has been published I hope that it will be found possible on both sides to make speedy progress with it, so that we can assist holidaymakers, including those who lost their holiday last year.
Does my right hon. Friend accept that it would be better to take these travel firms into public ownership, instead of propping them up? Will he explain when the Labour Party's promise to take back into public ownership those sections which were hived off by the previous Tory administration will be put into effect?
I should certainly hesitate to give any priority to the air travel industry, in terms of public ownership, if I were to decide that that was the right thing to do. But in the air travel business there is, of course, a substantial public sector, represented by the extensive holiday activities of British Airways.
Contrary to the point made by my right hon. Friend the Member for Romford (Mr. Neubert), is the right hon. Gentleman fully convinced that legislation for the future protection of holidaymakers is still the answer? Has he not seen the growing number of voluntary arrangements within the travel industry since the unfortunate Court Line situation? Would he not be better advised to have some consultations with the industry to see whether the public can be given security without the cumbersome legislation which he may be envisaging?
I remind the hon. Gentleman that the scheme which we have discussed and to which we are hoping to give legislative form in the near future was discussed very extensively with the travel organisations, and particularly with ABTA. Although it is true that one or two specially well placed travel firms can offer very generous and secure facilities to their customers, this is not something that can be reasonably expected of the great majority of travel firms.
As future holidaymakers now booking holidays will want to know where they stand, will the right hon. Gentleman give the House an assurance that they will not have to contribute any part of the cost of holidays lost by Court Line customers?
The contribution which the travelling public will be asked to make will depend entirely on the date of the coming into effect of the levies proposal.
Industrial Equipment (Export Contracts)
asked the Secretary of State for Trade if he will discuss with the Export Credits Guarantee Department the possibility of providing cost escalation insurance for export contracts secured by British firms producing large scale industrial equipment.
This matter is already under discussion following representations from industry.
I am grateful to my hon. Friend for that reply. Is he aware that this industry is involved in multimillion pound contracts which by their nature cannot be fulfilled in less than a period of years, and that the lack of an insurance against cost escalation is causing the industry difficulties vis-à-vis its competitors in France and Italy which are operating such schemes?
I am well aware of the difficulties facing a number of British exporters because of the problem of inflation, but we could not provide for such a scheme on an insurance basis. It is also important not to take any action which would discourage our exporters from resisting inflation and, indeed, discourage the acceptance by overseas buyers of reasonable price increases. These are all factors which we must take into account.
asked the Secretary of State for Trade what was the total value of the export of British-made hovercraft in 1974; and how this compares with the previous three years.
The figures, which are published, show exports for civil purposes valued at £1·5 million fob during January-November 1974, and £2·3 million and £0·9 million respectively for 1972 and 1973. Hovercraft were not separately distinguished in 1971.
Does the Minister agree that those figures show the importance of the British hovercraft industry? What proposals has he for helping the further development of the industry and protecting it from unfair competition from a highly subsidised Russian hydrofoil?
On the first point, aid to British industry is a matter for my right hon. Friend the Secretary of State for Industry. On the second point, a Russian hydrofoil is operating on the Thames and there are allegations that it is being unfairly subsidised. My Department is willing to look at any allegation of dumping in respect of this service on the Thames, and so far no application has been received.
Exports And Imports
asked the Secretary of State for Trade what was the ratio of the percentage increase in exports to that in imports to and from the EEC for all goods for the following periods: (a) 1970–73, and (b) between the first half of 1973 and the first half of 1974; and what were the ratios over the same periods for Great Britain's trade with the rest of the world.
asked the Secretary of State for Trade if he will publish comparable statistics showing, since the United Kingdom joined the Common Market, the movement in the United Kingdom's export and import ratio, first, with the EEC and, secondly, in the rest of the world.
Between 1970 and 1973 the percentage increase in exports fob to the EEC(Six) was 58 per cent. of the percentage increase in imports cif; for the rest of the world it was 79 per cent. Between the first halves of 1973 and 1974 the corresponding figures were 75 per cent. and 52 per cent. for all commodities. With respect to trade with the EEC(Six) the ratios of exports fob to imports cif were 82 per cent., 73 per cent. and 67 per cent. in 1972, 1973 and the first 11 months of 1974; corresponding figures for trade with the rest of the world were 89 per cent., 80 per cent. and 72 per cent.
Does the right hon. Gentleman agree that although trade with the Community and the rest of the world has been on a downward trend, the decrease so far as the Community is concerned is much less? Will he therefore now admit that our trade with the Community is encouraging, and clearly shows the benefits of British membership in terms of both exports and employment?
I wondered what could possibly be the real meaning of this extraordinarily complicated Question, but if I have understood it correctly, the figures suggest the precisely opposite conclusion to that which the hon. Gentleman has so assiduously laboured to draw. I find no such conclusion inherent in the figures. I can only suggest that we both put on wet towels tonight and see whether we can examine them and find good sense in them.
Irrespective of the merits of the figures themselves, does my right hon. Friend agree that the ratio of percentage increase depends a great deal on the base on which one starts, and that that is a very tenuous principle on which to base any argument, wherever it may lead? In relation to the total trade with the EEC, will my right hon. Friend say whether there are any trends in any particular commodities which have caused the imbalance to which he drew the attention of the House on an earlier Question?
Leaving the statistical point on one side, on the question of the particular commodities or groups in our trade with the EEC where there has been a considerable deterioration which I would think stands out in the past two years—although there has been a fairly broad deterioration—is, first and obviously, the food trade, where we are now paying a very much larger sum for food imported from the EEC, and, second, imports of steel from the EEC.
Does the Secretary of State's inability to read these trend figures correctly show his opposition to our continued membership of the EEC on any terms? Has he concluded his consultations with his conscience, on the question whether he can remain a member of a Government who recommend the continued membership of the EEC? If so, will he advise the House of the outcome of those consultations?
The hon. Gentleman has drawn even more labyrinthine inferences from these obscure figures. I suggest again what I suggested earlier—that we should look very carefully at these figures. I should be very surprised indeed if they supported the point that the hon. Gentleman is seeking to make.
Laker Airways (Skytrain Service)
asked the Secretary of State for Trade when he now expects permission to be given for the inception of the Laker Airways Skytrain service to the United States of America.
I cannot anticipate the outcome of the review of Laker Airways' Skytrain licence which the Civil Aviation Authority has undertaken.
Setting aside the delay that is now being caused by British Airways' attempt to enforce the IATA cartel on the North Atlantic, does not the hon. Gentleman agree that the United States Government have been in breach of the Bermuda Agreement for about two years by refusing to allow services to operate? In the event that the CAA does approve it, will the hon. Gentleman say whether the Government will take firm action—if necessary, retaliatory action—against the Americans until they give permission?
The hon. Gentleman has, somewhat characteristically, distorted the position of British Airways, but in respect of delay on the part of the United States administration we have on a number of occasions made both formal and informal representations. The situation is now in the hands of the CAA and it would be quite improper for me, having regard always to the fact that my right hon. Friend may be the final arbiter of this matter under the appeals procedure—if an appeal is eventually launched—to make any comment along the line suggested by the hon. Gentleman.
Can my hon. Friend tell the House of any possible justification for allowing this Johnny-come-lately airline to cream off this part of the market at the expense of British Airways?
I must resist any temptation I may have to be drawn into this argument, having regard to the procedures now being invoked.
asked the Secretary of State for Trade whether, and by what amount, the United Kingdom is in trade imbalance with Japan; and what was the extent of the imbalance in each quarter of 1972, 1973 and 1974.
As the answer involves several figures I will, with permission, place a table in the Official Report. This shows that our "crude" trade deficit with Japan averaged £36 million a quarter in 1972, £43 million in 1973, and £57 million in the first three quarters of 1974.
Does not my hon. Friend regard that imbalance as very serious? Does he agree that there seem to be some grounds for suspicion that Japanese competition in Britain is not entirely fair? Will he look at the matter urgently?
We have had a number of representations about Japanese imports, particularly motor cars, but allegations of unfairness are completely unfounded. Our general trade with Japan is expanding very fast. This is one of our major priority markets. Japanese exports to this country have risen substantially, but, so, equally, have our exports to Japan. We believe in multilateral trade, and the fact that we may have a deficit on current account with one country does not necessarily mean that we should seek means in our power to restrict imports merely on that ground alone.
Why have West German exports of motor cars to Japan expanded by 20 times the amount that ours have? What was the reason in 1974 for extra imports from Japan of over £20 million worth of iron and steel?
I take it that the extra imports of iron and steel from Japan must have been because of a shortage of steel production in this country. Japan has, indeed, been exporting a great deal of iron and steel to the rest of the world. That helps to account for the way in which it has managed to overcome its balance of payments deficit on account of the oil price rise.Japanese imports of motor cars have risen substantially, which shows that, in fact, there are no import restrictions on motor cars sent to Japan. It is sad that we have not been able to do rather better in comparison with Germany and the United States in terms of exporting whole vehicles to Japan, which is a growing market for motor cars.
Following are the figures:
|UNITED KINGDOM TRADE WITH JAPAN|
Overseas. Trade Statistics basis, not seasonally adjusted
London And Counties Securities Group Limited
asked the Secretary of State for Trade whether the investigation by his Department into the affairs of the London and Counties Securities Group Limited has been completed; and if he will make a statement.
The inspectors have reached the concluding stages of their inquiries and I hope to receive their report soon. I am not in a position at present to make a statement.
Would my hon. Friend care to inform us whether the report is being held up because of the failure, as yet, to interview the Leader of the Liberal Party, as one of the directors of London and Counties Securities? In view of the recent revelations about the difficulties of another secondary bank—indeed, many others, for that matter—will he also say whether there is any truth in the widely reported comments that 30 secondary banks are receiving aid from the Government, and thus from the taxpayer, and whether this fits in with Government policy of wealthy directors scooping the pool?
There is no reason to attribute the fact that the report has not yet been provided for us to any failure to interview anybody. As I have indicated to my hon. Friend in my answer today, and, indeed, as I have said on previous occasions, we are hoping to get this report quite shortly now, and it will be for my Department to consider what steps should then be taken.My hon. Friend should table a specific Question on the wider ranging points he has made if he expects to receive a proper reply to them.
Will the Minister expedite the publication of this report, because the Leader of the Liberal Party will no doubt gain considerable electoral advantage from the personal sympathy which these monotonous and malicious attacks upon him are bound to engender?
The question of the publication of the report is one that we have to consider in the light of our findings about the report itself. If we, as a Department, consider that the situation could lead to prosecution, it could well be that we would then take the view that publication of the report should be deferred. This is in accordance with the usual practice.
Does the hon. Gentleman accept that London and Counties Securities was the first of many, and many to come? Will he say how many other companies are being investigated by his Department at present?
I am surprised that someone of the hon. Gentleman's experience apparently does not know that if he wants a detailed answer to a question of that character he should table a specific Question. I could not possibly answer that question here and now.
asked the Secretary of State for Trade if he will pay an official visit to the Christchurch and Lymington constituency to address a meeting of leading business men and industrialists on Her Majesty's Government's trade policies.
I cannot promise to make such a visit at the present time.
Is the Secretary of State aware that I have reserved 21st March for him should he decide to come? If he does come, will he please tell my constituents whether he fully supports the views expressed in the last few days by the Prime Minister and the Chancellor of the Exchequer about the need for a slightly more realistic look at the state of the economy in 1975?
I am entirely at one with my colleagues, and, indeed, with a very large body of opinion in the country, in thinking that in this most difficult year on which we are now embarking we need to have the utmost realism in all our economic policies, and that we must face, above all, the very serious problems which we know about and which we have not yet done enough to solve. I am thinking particularly of the continuing balance of payments deficit, on which this country must make greater progress, as well as the general success of our policy to maintain employment and curtail inflation.
Is it not clear from the wording of the original Question that the leading business men and industrialists in Christchurch and Lymington have no confidence in the ability of their own Member to explain the Government's trade policies or anything else?
asked the Secretary of State for Trade what meetings he has had with members of the European Commission.
I have had frequent meetings, both formal and informal, with members of the European Commission.
Does the right hon. Gentleman appreciate that when, after each of these meetings, he goes out of his way to make clear that it is his hope and intention that we should leave the EEC, it is directly discouraging to the mounting of the export drive towards Europe which he says is needed, and that he is contributing to the collapse of industrial investment and rising unemployment? We recognise the sincerity and strength of the right hon. Gentleman's views, but may I ask whether he finds this attitude possible to reconcile with his responsibilities as sponsoring Minister for trade and his need to give confidence to industry in a time of crisis?
I am, along with my colleagues, embarked upon a fundamental renegotiation of our terms of entry to the EEC, and the matter is to be put to our own people for decision. That, if you like, brings an element of uncertainty about the future of the formal relationship between Britain and the EEC. As long as the present Government—who have every intention of living up to their word—are in power the decision will be for the British people. If that causes uncertainty to British industry I can do nothing about it, but I say—as I say on all possible occasions—that whether we are in or out we shall have a very substantial continuing trading relationship with the EEC. I shall, therefore, find no difficulty in urging British industry to bend every possible effort to improving its trading performance with the EEC.
Is it not patently obvious, since we were trading much better with the EEC as it existed before we entered, that it would be far better if we got out, so that we could restore our trading position with those countries? In view of the October deadline and the serious economic situation facing this country, would it not be better if my right hon. Friend had a word with his Cabinet colleagues, perhaps this week, and suggested that we should hurry the matter along by several months—perhaps getting the Leader of the House to organise an all-night sitting, as was done on the Prevention of Terrorism Bill—so that we could get out quickly?
The issue whether it is better to get out is not to be judged solely in terms of the trading context. There are wider considerations, and I think it right that the whole business should be brought together and presented to our people for their decision. As for hurrying it along, I assure my hon. Friend that there will be no delay on our side, and I do not believe that there is now any wish to delay on the side of the EEC, either. I am, therefore, very hopeful that we shall be able to resolve the matter soon—certainly before the summer.
asked the Secretary of State for Trade what discussions he is having about trading arrangements after the decision has been taken about Great Britain's membership of the European Economic Community.
I would refer my hon. Friend to the answer which I gave to my hon. Friend the Member for Southampton, Test (Mr. Gould) on 6th December.
Does my right hon. Friend see the need for contingency plans based on whatever decision may be made, especially in the light of the appalling figures which he gave this afternoon about our trade deficit in relation to the EEC?
I certainly accept the need for forward planning to cover all kinds of situations, and not just the situation which could be expected if our people were to decide against continuing British membership of the EEC. We have to keep all possibilities and all available action under review, and that we are doing.
Civil Aviation (Review)
asked the Secretary of State for Trade if he will now make a statement about his review of civil aviation.
The review is continuing, and I hope that it will be completed in the spring.
Will the Minister say a little more about the constitution of the review board, about the way in which the airlines are to be consulted, and on the question whether Parliament is to receive any sort of Green Paper about the future of the airlines?
The consultations will be very wide, covering the whole of the industry. My right hon. Friend will consider the report when it is available, in order to determine whether the whole of the report should be published and what action we should take. Parliament will therefore be fully consulted on the matter.
Will my hon. Friend bear in mind that many of us on the Government side are still opposed to the whole concept of a second force private enterprise airline? Will he bear in mind also that many of us strongly opposed the way in which British Overseas Airways Corporation's routes were handed over to British Caledonian without compensation, and will he recognise that merely handing those routes back will only mean the collapse of an airline and, perhaps, about 5,000 redundancies? Does my hon. Friend now accept that the most sensible way out of this rather stupid dilemma is the nationalisation of British Caledonian?
We are looking carefully into the matters about which my hon. Friend and many others of my hon. Friends have expressed strong views in the past. But that goes to the very heart of the review, and it would be impossible for me at this stage to comment upon the points which my hon. Friend has raised. The question of nationalisation, of course, is a much wider issue.
Will the Under-Secretary of State give three undertakings: first, that as much as possible of the evidence which is given and of the report of the inquiry will be published; second, that we shall have it, if at all possible, in the form of a Green Paper, so that the House may discuss it without being pressurised on the issues one way or another; and third, that the whole business will be carried out as quickly as possible, in order to end some of the present uncertainty in the industry?
I have already undertaken that my right hon. Friend or I will report to the House fully on this matter once the report is in our hands. On the second point, the hon. Gentleman should not be so impatient. We shall consider the request for a Green Paper, and we shall make our decision at the appropriate time. It is not possible for us to make that decision now. I certainly undertake that the inquiry will be conducted as rapidly as possible, but it must be a thorough inquiry, and that is how it will be done.
asked the Secretary of State for Trade what was Great Britain's visible trading surplus or deficit with South Africa in the most recent annual period for which figures are available; and if he will make a statement.
The "crude" balance of trade with South Africa, that is, the difference between exports fob and imports cif, was in surplus by £47 million in the 12 months ended November 1974. In recent years, our "crude" trade balance has generally been in surplus, although in 1973 there was, unusually a deficit. The improvement in 1974 owes much to a sharp rise in our exports to the South African market.
Do not those encouraging figures show once again that South Africa is one of our most valuable and reliable trading partners? Will the Secretary of State make it clear that it is his policy to encourage the expansion of trade with South Africa?
That question was answered in plain and unambiguous terms by the Foreign Secretary just before Christmas. South Africa is a major trading market for this country, but I should add that many other countries are now strongly entrenched in the South African market.
Aircraft Noise (Mole Valley)
asked the Secretary of State for Trade what action he is now taking in relation to the so-called Mole Valley minimum noise route.
Evaluation by the Civil Aviation Authority and my Department from the operational and other points of view of the various routeing proposals prompted by the Department's consultation document is nearing completion. I shall circulate a further document giving the results of this work as soon as possible. Thereafter, hon. Members, local authorities and others involved will be invited to a meeting to discuss the matter.
Is the hon. Gentleman aware that minimum noise routes are maximum noise routes for those who have the misfortune to live under them? Has the body to which he referred considered splitting the route, and, if it has, will the hon. Gentleman ensure that the route is split widely enough to ensure that people living within the split are not disturbed by noise from both sides of it?
Every time he speaks on this matter the hon. Gentleman makes the same comment about minimum noise routes. I am well aware of the difficulties imposed on certain people who happen to be affected by noise. I cannot anticipate the result of the inquiry. In my original answer I indicated the nature of the consultation which is to be undertaken, and I should have thought that that would satisfy the hon. Gentleman.
asked the Secretary of State for Trade what is his policy towards the supply of computers to foreign Governments.
Subject to our international obligations, we encourage the export of computers to both public and private purchasers.
Is the Minister satisfied with the advice which he received from the Defence Department and the Foreign Office in the case of the supply of computer specialists to aid the installation of a Univac computer for the Turkish Defence Ministry? Does the hon. Gentleman think that this is in accordance with our policy of fairness of treatment for all people in the island of Cyprus, when that installation was being used for the disposition of Turkish troops there?
The case to which the hon. Gentleman refers involved the sale of an American computer and not a British one. Her Majesty's Government were not involved, and the computer will not be supplied from the United Kingdom.
Trawlers (Safety Devices)
asked the Secretary of State for Trade whether he has yet reached a decision regarding the use of the EPIRB, or any similar safety device for fishing trawlers; and if he will make a statement regarding the promulgation of regulations in this matter.
There is a good case for some trawlers carrying these devices, and we are inviting the fishing industry to discuss with us the classes of vessel and the fishing areas for which they would be appropriate. We have also launched a research and development project covering alerting and locating devices related to maritime casualties.
I am obliged to my hon. Friend for his answer, but is he aware that the last time he spoke in the House—18th November, I think—was two days before we had the findings of Commissioner Barry Sheen on the "Gaul" disaster, and on that very day a demonstration was held in St. Andrew's Dock, in Hull, by Marine Electronics, showing the working of one of these new radio buoys —I shall not give the full name—with his officials present? Will my hon. Friend comment on their opinions on the efficacy of this buoy, since all others there—deckhands, union officials, vessel owners and skippers—felt that it was a huge success and would be of enormous help in avoiding such disasters as the awful loss of the "Gaul" last year?
We are always anxious, as I am sure the whole House is, to take whatever precautions we can to avoid the sort of disaster that occurred with the "Gaul" and other ships. However, it woud be wrong if I were to suggest that any one demonstration would produce a complete answer to these problems. We have undertaken profound research into the development of this sort of alerting and locating equipment. IMCO is looking very carefully at the matter and has made certain recommendations, and I can assure my hon. Friend that we are giving the highest priority to this research.
Unemployment Statistics (Compilation)
(by Private Notice) asked the Secretary of State for Employment why the unemployment statistics for December are still not available and what efforts he is making to ensure that full information is available to the House.
As I have already informed the House, the Civil and Public Services Association decided to impose on 9th December a ban on all work connected with compiling the unemployment statistics in the local offices of the Employment Service Agency. As a result, there was no unemployment count in December and so there are no figures to be published. The position was explained in the Press notice issued by my Department on 19th December.I am glad to say that I have just heard that the dispute has now been settled. The Employment Service Agency expects normal work to be resumed next week. I am afraid this means, though, that it will not be possible to carry out a full-scale count in January. In these exceptional circumstances I intend to consider whether it will be possible to make an approximate estimate of the level of unemployment. If I can, I will give it to the House as soon as it is available.
We are grateful to the right hon. Gentleman for his statement and we are glad that the dispute has been settled. Is he aware that it is a serious situation that no figures are available at this critical time? Surely the Government already have in their possession estimates of the figures. Is the right hon. Gentleman suggesting that ever since the dispute began the Government have been "flying blind" and have had no figures? Could not these approximate figures be made available at once so that the country may judge how the unemployment situation is progressing?
There is no disagreement between us on the need to supply the House and the country with accurate figures as quickly as they are available. I agree with the right hon. Gentleman on that score and that is why we have done everything in our power to achieve a settlement in the dispute. I am glad that it has now been settled.There is no truth in any suggestion that we are suppressing figures, and I am sure that the right hon. Gentleman would not wish to make that suggestion. We are not suppressing any figures. The estimates that are made are the estimates that could be made by anyone. In one or two local offices figures have been available, but they do not provide any basis on which we could give accurate figures to the House. As I stated in my reply, however, we are considering, as we now get figures, whether it will be possible to make an estimate. If it is possible to give the Houses figures which are in some way accurate, we shall do so as speedily as we can. We are not holding back any figures.
I must press the right hon. Gentleman further on this point. Is he saying that since the dispute began the Government have not had for purposes of economic management approximate figures or estimates of unemployment? If that is the case, it displays a degree of inefficiency of which I would have thought even this Government were not capable. If the Government have these approximate figures, why will they not give them to the House? The House will accept them as being approximate. All sorts of other people are bandying figures around, and it would be for the convenience of the House for it to have the figures that the Government now have available.
It is true, as the right hon. Gentleman says, that some other people are bandying figures around, headed by the Sunday Telegraph yesterday. The figures which are being bandied around are without foundation—[An HON. MEMBER: "How do you know."]. Because the foundation for any such figures is not available. I have told the right hon. Gentleman—and he would have been wiser to have accepted what I said—that as soon as the Government have the opportunity of presenting figures which are accurate we shall do so, but we cannot do so at present. We are not suppressing any figures. It is precisely because the dispute has prevented us from compiling the figures that we have been unable to present them to the House. It is my responsibility to see that accurate figures are presented to the House as soon as we have them.
Scotland (Ambulance Controllers)
(by Private Notice) asked the Secretary of State for Scotland if he will make a statement on the ambulance service in Scotland following the strike by ambulance officers.
Ambulance service control officers in some areas of Scotland decided yesterday not to handle requests for ambulances. In some situations this extends to calls for ambulances to transport emergency cases.The latest position reported to me is that in Glasgow and the west of Scotland, except Dumfries, no services are being provided by the controllers although it appears that genuine emergency calls are still being acted upon. In Edinburgh, Lothians and Borders emergency services only are operating. In other areas normal services are operating. It is too early to assess the effect of this action on the services to patients. I regret that the staff have thought it necessary to take this action, especially since the grading and salary structure for the control officers is to be discussed at the next meeting of the Whitley Council, which is organised on a Great Britain basis, on 17th January.
Although we in Scotland have suffered from an unprecedented wave of strikes in the public services, this dispute, which involves only about 90 men, is the most serious because it poses a direct and immediate threat to human life. Will the Minister take all possible steps, if need be by having direct contact with those involved, to appeal for a return to work, and will he make it clear to them that a settlement may be forthcoming fairly speedily? In view of the desperate seriousness of the situation which could arise if a settlement is not reached, will the Minister give an assurance that if there is a breakdown in the emergency service he will give immediate consideration to the provision of some form of alternative service for emergency cases?
I agree that we are facing a serious situation, although my understanding is that steps are being taken to cover the danger to human life. I have been in contact with the Transport and General Workers' Union and I am to meet Mr. Alex Kitson and two other official representatives of the union tomorrow afternoon to discuss the situation. Depending on how the discussions go, one would hope that there would be a speedy settlement. The Government will keep a close watch on the situation.
How much warning did the Government have of the controllers' action?
We were given very short notice because the settlement which provoked this dispute was agreed only on 5th December, and so far there has been no formal claim by the controlling officers. We have taken the initiative to have the matter discussed in the Whitley Council. In my view we did not get proper notice of the dispute.
I join in the expressions of regret that the dispute is taking place, but is the Minister aware that some of these men are paid less than the men they organise? How is it that this disagreement about wage levels has gone on for over a year?
The hon. Member is wrong. The situation over wage levels which provoked the current dispute has not been in operation for more than a year. The ambulance crews settled their pay claim on 5th December to operate from 7th November 1974. There can be no question of delays in this matter. In the normal course of events the controllers would be having a pay settlement on 1st April 1975 and the current disparity in salaries would have been taken care of then. But, as I have said, the health departments took the initiative in raising the matter in the Whitley Council. The Whitley Council's next meeting is on Friday. That is speedy action by the Government. There is no question of the matter being delayed a moment longer than necessary.
Business Of The House
With permission, Mr. Speaker, I will make a short business statement.The business announced for Tuesday 14th January included a debate on EEC documents relating to doctors and dentists. However, the discussion by the Council of Ministers has since been deferred and I have therefore decided to postpone our debate. It will, of course, take place before the decision is taken by the Council.
I thank the Leader of the House for making that statement. Why does he deem it right to postpone the debate? Is it because he imagines that further documents will be issued before the Council of Ministers reaches a decision, and that the House will then have them available, or is it just to suit the convenience of the Government?
It is partly the latter. My right hon. Friend the Foreign and Commonwealth Secretary has just returned from Africa, and he has asked for time to study these important documents. As the Council has decided to defer consideration of them until the February meeting, I thought it appropriate to ask the House to defer its consideration of them.
As this is a business statement, may I take the opportunity to raise the second item on the Orders of the Day, which is "Financial Assistance to Opposition Parties". This seems to have crept in, certainly since we received our Whip. Many of us want to examine the matter very carefully and to have it properly debated. The first day back after the Christmas Recess is not the day on which to debate such a matter.
On a point of order, Mr. Speaker. It was my intention to raise that matter with you as a point of order. Should I do so now, or should I raise it at the end of the present discussion?
It may help if I intimate my view on the matter, should it be reached today. The hon. Member for Newham, North-West (Mr. Lewis) has given me notice of his intention to move a manuscript amendment, in line 1,
I would intend to select that amendment."Leave out '1975' and insert 'following upon the first General Election held after October 1974.'"
Thank you very much, Mr. Speaker, for your kindness in saying that. May I now raise with you the general question mentioned by the hon. Member for Banbury (Mr. Marten), that the item did not go on to the Order Paper until Friday? I was very fortunate in that I was able to put down an amendment, but—and this is my point—I am told that because the amendment was put down during the Recess it cannot go on the Order Paper. Therefore, I am precluded from having it tabled and printed, as would normally happen when an hon. Member puts down an amendment.This is shabby treatment. The House is being treated with contempt. Both sides of the House and, I assume, the Liberals knew what was going on. We have not had an opportunity to consult our constituents or to put what would probably have been a number of amendments. Is there any way in which you can safeguard hon. Members' rights, Mr. Speaker, by saying that the matter should not be proceeded with until hon. Members have had an opportunity to consider it and to table their amendments? The item was not put on the Whip and it was not included in the statement of business before we went into recess.
It is utter nonsense to say that the House is being treated with contempt, when the object of the motion is to help the House. The whole object of the motion is to help the Opposition parties in the House. However, if it is the wish of the House to defer it, I am quite happy about that. There is no problem at all. The motion is for the benefit not of the Government but of the Opposition parties. If they wish to defer consideration of it, I am happy about that.
There are two points. There is the question of substance, of the intent of the motion being to help the Opposition parties. The other question is whether putting it down for debate today is of help to the House. Many hon. Members will feel that to take it on the first day back, without an opportunity to consider possible amendments, is perhaps taking it rather more quickly than is usually the case. I wish to make it plain that this was not done by arrangement between the Front Benches. The Government are entitled to put down a financial resolution of this kind, and it does not normally appear in the business statement. But it was not done by arrangement between the Front Benches. I believe that the House would gratefully accept the right hon. Gentleman's proposal.
The right hon. Gentleman is correct in saying that such a motion does not normally appear in the business statement, and this motion did not appear in the business statement. This is the last opportunity for some time when it will be possible to start on the motion at a reasonable hour. That is why it was put down for today, but, if it is the wish of the House, I am happy to withdraw it.
The matter was raised as a point of order for the Chair. It would appear that the Chair no longer needs to take any decision. What I had proposed to do was what I thought it right to do in the circumstances, which was to accept a manuscript amendment, but that will not now arise.
National Health Service (Medical Profession)
With your permission, Mr. Speaker, I wish to make a statement on the situation as regards the medical profession in the National Health Service.This is an argument about pay, and, for hospital doctors, about contracts. The general medical practitioners met me on 8th January. They expressed their serious concern that the pay of general practitioners was shown by the recent Review Body report to have fallen behind that of comparable income groups. I agreed with them that it was essential to avoid delay in securing from the Review Body recommendations, to take effect from 1st April 1975, covering the whole profession, and the dental profession. The Government evidence will be submitted this week. I gave them assurances about the Government's attitude to the report when it is received. I have put in the Library of the House a copy of the joint statement issued after the meeting. I am sure that the decision of the general practitioners not to take industrial action but to wait for the report from the Review Body was wise and in the best interests of the National Health Service. The assurances which I gave to the general practitioners apply to the medical and dental professions as a whole. Also on 8th January I met the junior doctors' representatives. I agreed with them that the essential thing was to complete our evidence for the Review Body for the pricing of their existing contract as at 1st April 1975. I am also glad to be able to tell the House that I reached agreement with them that a new personal contract would be issued to each junior doctor during this summer, to take effect from 1st October 1975. Both sides intend to submit evidence on the pricing of the new junior doctors' contract before 1st April with a view to enabling the Review Body to take account of the new contract in its April 1975 report. Again, I have put in the Library of the House the joint statement issued after the meeting. Finally, I come to the consultants. The initiative for a new contract came from them and it has never been the aim of the Government to impose any new contract on them. Nor have I sought to use the negotiations to impose a full-time salaried service. The option of all consultants to remain on the present contract has always been open. None the less, progress had been made in a working party chaired by my hon. Friend the hon. Member for Plymouth, Devonport (Dr. Owen). When, shortly before Christmas, we were faced with threats of industrial action unless we immediately announced the Government's firm decisions on the contract proposals. I met the profession and presented proposals to them. I have placed copies in the Library of the House of the profession's letters and the Government's response. I believe these proposals to be a reasonable offer which meets the consultants' wish to have a closed contract which is work-load sensitive and which is of value to the National Health Service. I invited the negotiators to study it carefully and to meet me for further discussions, and I regret that this offer was refused. I made it clear that certain principles were not negotiable but that there were areas where principles and detail were difficult to distinguish and that I should be happy to discuss these. The leaders made it clear to me that they were not prepare to drop their demand that the existing differential between the consultant who works only for the NHS and the consultant who engages in private practice should be abolished. This was not prepared to do. Nor are the Government prepared to accept a system of payment based on items of service. There are, however, many details of the Government's proposals which remain to be discussed and clarified, not least the details of the new standard contract and the proposed working hours. The proposals for career structure supplements also proved to be controversial. These proposals are designed to bring more remuneration to hard-worked consultants, often in under-doctored areas and in less popular specialties. They are important for the balanced development of the NHS, and it should be possible to negotiate criteria and methods of payments for these supplements which are right for the health service and fair to consultants. The Government recognise that it is difficult for the profession as a whole finally to accept or reject any new contract until they see it actually priced by the Review Body. The consultants, together with the junior doctors and the GPs, are in any case due for a review of their pay in April of this year and the Government would not wish to delay this. I understand that the Review Body is proceeding to do this on the basis of the consultants' existing contract, but, if the profession so desired, the Government would be willing exceptionally to ask the Review Body also to price a new contract before there had been a final commitment by the profession to accept it. It is normal to negotiate modifications to contracts in the existing Joint Negotiating Committee. I should be happy for such negotiations to take place at once in this forum, with the professions' representation modified as they may wish. In the meantime I regret to inform the House that the industrial action by consultants, though uneven, is damaging the interests of patients in some parts of the country, and I am sure the whole House will deplore such action, which contributes nothing to the solution of this dispute.
I join the right hon. Lady in regretting the consequences of industrial action that is now being taken within the National Health Service. More important, I welcome the statement that she has made today. Does she recognise that she has made an unhappy contribution to the development of the dispute by her intransigence at many stages of the negotiations? Does she recognise the extent to which the House welcomes the difference between the statement that she made on 20th December, to the effect that the new contract had to be taken as a whole, and the statement that she has made today that indicates that much wider areas of the contract are now open for negotiation? That is a matter that will be widely welcomed.Does the right hon. Lady recognise the extent to which it is welcomed that she is now prepared to consider further negotiations on the basis upon which the service supplement should be paid and about the differential between full-time and part-time practice? Will she give the House the assurance that she will now deplore, in terms as strong as those which she has just used, industrial action being taken by other unions within the service which has already secured the closure of private beds in the Westminster and Moorfield Hospitals? A great deal of importance must be attached to that. Have we the assurance that the right hon. Lady will ensure that the negotiations are undertaken not with the primary purpose of advancing the dogma of her party but for the primary purpose of advancing the interests of patients?
I noted with interest that the right hon. and learned Member for Surrey, East (Sir G. Howe) was extremely careful not himself to deplore the industrial action of the consultants. He carefully chose his words merely to deplore the consequences. I suggest that he sets the House an example by having an equality of condemnation for industrial action in any form. He knows that he has tried selectively to condemn industrial action or pressure by certain unions in this dispute.I also recognise that since the dispute started the right hon. and learned Gentleman has tried to make a settlement more difficult by apportioning blame unilaterally, by totally failing to try to understand the contract and never by one word urging the consultants to discuss the details as I begged them to do on 20th December. There is no change between the tone of my statement and what I said to the consultants on 20th December. It is true that the contract must be taken as a whole. If there is to be a closed contract certain consequences must flow from that. The consultants are asking that they should have a clearly defined basic commitment and that every extra session above that should be paid for separately. Clearly, in those circumstances there must be a definition of the basic commitment, otherwise we would not know the terms of the extra work for which we would be paying. As I have said in my statement, there is an area of detail—I put this to the consultants on 20th December—that should be studied and clarified. I begged the consultants on 20th December not to commit themselves either way on the proposals that we put before them—we did so necessarily at short notice because we were under an ultimatum from them— but to take them away, study them and meet me again after Christmas. I am very sorry that they were not willing to do that. I have made it clear—I do not know whether the right hon. and learned Gentleman has appreciated this—that certain points of principle are not negotiable. I repeat that included in those points is the maintenance of the existing differential of reward between those who work in private practice and those who are totally and exclusively committed to the NHS.
Obviously the consultants are behaving in a somewhat bloody-minded manner. However, does my right hon. Friend agree that some of them are rather underpaid? Is she aware, for example, that at present a consultant surgeon in the NHS receives about £10 for spending the whole of the morning or afternoon performing major operations? Will she bear in mind that they need some financial assistance? Furthermore, will she consider using the good offices of the Presidents of the Royal Colleges to try to settle the dispute?
I accept the point that my hon. Friend the Member for Loughborough (Mr. Cronin) has made. That is why the consultants are in any case due to have their remuneration reviewed in April. I have no doubt they will make a strong case to the Review Body. It is recognised that they have fallen behind to a certain extent. Therefore, that is not really the issue. The issue is not whether they should, like everyone else, have their pay reviewed at the appropriate time but whether it should be reviewed on the old contract or on the basis of a new one, which is in itself designed to give remuneration for certain work which the consultants carry out for which they are not now paid.
Will the right hon. Lady for once manage to restrain the warmth of her emotion and gift for polemics'? Cannot we try to deal with the issue of the consultants and private practice in a logical manner? Will she make a start by recognising that the profession still has a lot to do to put its house in order—for example, consultants who are appointed early to a post and then keep it for 30 years?Furthermore, will the right hon. Lady recognise the valuable experience that is brought into NHS hospitals by private practice—particularly that of foreigners and the many consultants who use NHS hospitals as colleges? These people build up world-wide reputations as clinicians and provide experience for health service staff at all levels that would otherwise be lost to this country.
The dispute over the new contract to which I have just been referring is nothing in itself to do with the pay beds issue. The hon. Gentleman must know that it is the Labour Party's policy, stated in two election manifestos, to phase pay beds out of our National Health Service hospitals. We stand by that, and so I cannot agree with the point put by the hon. Gentleman.
My right hon. Friend and the Government are to be commended and not pilloried for the contract which has been placed before the consultants, in that many of us on this side of the House applaud those surgeons and other consultants who are full time in the NHS. Should not the consultants in England and Wales take a leaf out of the book of the consultants in Scotland, 80 per cent. of whom operate whole time in the NHS?Leaving aside the question of the contract itself, would my right hon. Friend care to give the House an approximate figure of the total amount of extra money which would be going to the consultants, in the light of the fact that the new contract would pay them for overtime for which they have not been paid before and are not being paid at the moment? General practitioners have been mentioned. I am sure that the Government will accept the deliberations of the Review Body. Will my right hon. Friend indicate how many recommendations of the Review Body have been accepted by the Government—for example, what percentage increases have been paid to the general practitioners in the last three years?
I am glad that my hon. Friend the Member for East Kilbride (Dr. Miller) welcomes the new contract. Although not supported in every detail, it has received substantial and considerable welcome in some remarkable quarters. In the columns of The Times, The Guardian and the Economist, to name only a few, there has been a recognition that the basic principles of the contract are designed to help hard-worked and underpaid consultants and to get a more balanced development in the National Health Service.Like my hon. Friend, I pay tribute to those who work full time in the NHS. Over the country as a whole, 45 per cent. of the consultants are whole time in the NHS. I say advisedly to the House that I am not prepared to penalise the whole-timer by removing from him the differential he at present enjoys because he is totally and exclusively committed to the NHS. My hon. Friend also referred to the question of putting a figure on the contract. He will appreciate that it is not for the Government to put a figure on any contract or claim. That is a matter for the Review Body, an independent body, on which that responsibility has been placed. I accept that one of our difficulties is that always when one produces a contract it looks bare and cold in its details. What the consultants need to know is what the contract will mean to them in terms of remuneration. That is why I have said that the Government are willing, exceptionally, to ask the Review Body to price the new contract, even if it has not been wholly accepted by the profession and in advance of acceptance. The Review Body does not usually like to do this, but in the circumstances, in order to help the consultants, the Government are prepared to ask it to do so.
Is the right hon. Lady aware that the Liberal Party supports her aim to phase out private beds in the National Health Service hospitals and to separate private treatment from NHS treatment?During the recess the right hon. Lady said that the consultants were using industrial action to blackmail the Government. What did she mean? Was it not always so? Is not all industrial action taken to blackmail the Government? Will she now, as I do, condemn the attempts of staff within the NHS to blackmail the Government and Parliament into phasing out pay beds quicker than perhaps the right hon. Lady thinks possible?
I have said all along to the unions in this matter that they should leave it to Government and Parliament to settle. Unlike the right hon. and learned Member for Surrey, East (Sir G. Howe), I have said it unequivocally. When I said that the doctors were trying to blackmail the Government, I had in mind the fact that we were pressurised into producing our proposals very quickly, not only by threats of industrial action but by action itself on the part of the consultants.In my constituency I received a telegram from consultants locally saying, even before they had seen the contract, that they were starting industrial action on 17th December because of the Government's delay in producing their proposals. We were told by the BMA in its letter of 13th December that it would not tolerate any further proscrastination. It agreed to meet us on 20th December only on the understanding—all this can be seen from the correspondence that I have placed in the Library—that
The Government hurried to do that and I call it blackmail when the BMA, having exercised this kind of pressure to produce fresh proposals quickly, instead of taking back our proposals to discuss them with its membership, told us that the doctors were going to take action because of the Government's intransigence. I call that blackmail."… you will make a full statement of the Government's position, on the nature of which, of course, the members of the Staff Side will make their decision as to the future."
Is my right hon. Friend aware that, unlike the case of the BMA, the comments coming from consultants meeting throughout the country seem to suggest that they are not obsessed with the pay bed question, and that what they are looking forward to is a decent, well-paid contract at the end of the day? Therefore, does she accept that she has earned the praise of the profession in her attempt to get the right balance between acceptance of the contract, after the pricing has been arranged, and discussion of the relationship of consultants in the pay beds issue? That is an important change.Finally, will my right hon. Friend accept that if the Review Body's recommendations at the end of the day are extremely generous to the services put in by the consultants, trade unionists will not use that as a precedent, in the same way as they also will not use as a precedent a generous award being made to the miners?
I am grateful to my hon. Friend for what he has said. He is right in saying that we have managed to separate the issue of the new contract from the issue of the pay beds. Indeed, the BMA itself has made it clear, and Dr. Brian-Lewis, in his many television appearances, has made it clear, that the pay beds issue is separate from this argument. I think that there is considerable misunderstanding among the consultants throughout the country as to the exact implications of what we are proposing, which makes it all the more sensible that the details should be examined and discussed.With regard to getting the new contract to the Review Body for pricing, I must say, because I want to be perfectly fair to both the profession and the House, that the Government make it clear in this case, as in the case of the junior hospital doctors, that they reserve the right to put in ex parte evidence, and, again as I have told the doctors, cannot give any cast-iron guarantee about their treatment of the report.
If, as the right hon. Lady insists, and as has been stated by the medical profession, the current dispute is separate from the pay beds dispute, is not that all the more reason why the right hon. Lady should accept the invitation proffered by the hon. Member for Cornwall, North (Mr. Pardoe) and deplore the industrial action, directed to the pay beds issue, being taken by other staffs in the hospital service? Will she not respond now more genuinely than she has in her last answer to the fact that she herself, by her style and manner, has gone a long way to arouse and multiply the concern felt by the medical profession in this dispute? Will she not recognise that the truculence with which she denounced the medical profession for having moved into industrial action so quickly missed the point, which is essentially that the cause of the strife and dispute is the initial decision on the pay beds issue, coupled with the decision by the Government in the contract negotiations to force through very substantial changes in the basis upon which consultants can continue to do private work alongside NHS work?Until the right hon. Lady recognises these factors and also her responsibility for restoring confidence amongst these leading people with whom she has to work, she will not come near to resolving the dispute.
In the past few weeks I have met three sections of the medical profession, all of whom came to those meetings full of frustration, doubt and anxiety. I refer to the general practitioners, the junior hospital doctors and the consultants. Since my score in terms of the creation of confidence at those meetings was two out of three, I leave the House to draw its own conclusions as to where responsibility for any failure to reach understanding in this particular case lies.The right hon. and learned Gentleman constantly returns to the point about deploring industrial action. Hansard will clearly show in this afternoon's exchanges the contrast between what I have said and what he has said on this matter. I have said that I deplore industrial action in the hospitals from whatever quarter it comes. The right hon. and learned Gentleman merely deplores the consequences of the action of the consultants. I challenge him to deplore their industrial action now.
With your permission, Mr. Speaker, I will make a statement on aviation security following the hijacking of a British Airways BAC 111 last Tuesday.The events of last Tuesday have been widely reported and we shall be studying them closely. A man has been charged, and as the case is sub judice the House will appreciate that it would not be right for me to go into details at this stage. But I am sure the House will join with me in congratulating the police and British Airways on their efficient handling and the successful conclusion of this unfortunate affair. I should also like to express my appreciation to Captain Lea and his crew for their conduct throughout their ordeal. At the time of this incident all airlines had been requested to undertake, and had implemented, a full search of passengers and hand baggage on all international scheduled flights and flights to Northern Ireland, and a random check covering at least half the domestic flights. I have now asked airlines to institute full searching of passengers and hand baggage on all domestic, as well as international, scheduled flights. The conduct of the operation has, I think, shown the value of the recent designation of Heathrow Airport under the Policing of Airports Act 1974, under which responsibility for security at the airport was taken over by the Metropolitan Police. It has already been decided that Gatwick, Stansted, Glasgow, Edinburgh and Prestwick should also be designated, and I have now called for an examination of the possibility of designating further airports. The review of our security arrangements for British aircraft, particularly at overseas airports, which I called for on the occasion of the hijacking at Dubai in November, is now nearly complete. However, without waiting for its full results, we have already initiated useful consultations with foreign Governments about protective measures accorded to aircraft of British airlines on the ground. I shall be reporting to the House again in due course.
The House is grateful to the right hon. Gentleman for his statement on hijacking and joins him in expressing appreciation to the police, British Airways and the captain and his crew. Given that prevention is better than cure, does he now agree that it was a mistake for the Government not to accept the Opposition's amendments to the Policing of Airports Bill which would have instituted checks at provincial airports some time ago? Are there any public airports now without 100 per cent. checks, and, if so, how many?Secondly, may I ask the right hon. Gentleman this further question, because the implications are important: are we to understand that it is now Government policy for Ministers to accept direct responsibility for the reaction to any hijacking? Finally, will he accept that a single hijacker is significantly different from an organised group? Although we are all very glad that no lives were lost in this instance, does he not agree that there is no room for complacency either in Government or of the kind we saw in some television interviews during the incident? Will he give an assurance that he will do everything possible to disperse any such complacency?
Certainly. I do not believe there is any justification for complacency. There are inherent difficulties in the whole matter. The House will appreciate that it is not only in the United Kingdom that attacks are made on aircraft when hijacking takes place. Indeed, we have been dealing with the first hijacking that has occurred inside the United Kingdom. To reply to the first question put by the hon. Gentleman, I think it is true that it was the general belief that a 50 per cent. random check on domestic scheduled flights would be a sufficient deterrent. Clearly, that was wrong because in the event this hijacking took place. Speaking for myself, I accept the view that it would have been better had I agreed to 100 per cent. checks on all domestic flights at an earlier date. I would only say that we have reacted promptly to the first hijacking that has taken place in Britain and we now have a full check on all domestic flights.On the question of airport security, we are extending it as rapidly as possible under the designation procedure and there is a continuing check by security officials in my Department, sometimes helped by the Ministry of Defence, in discussing with local airport authorities any problems that may arise. The hon. Gentleman is right to draw attention to the fact that there is a clear distinction between a one-off hijacker and an organised group of terrorist hijackers, but it does not always become clear what one is dealing with until one is well into the affair.
Is my right hon. Friend aware that under the previous Conservative Government and the present Government there has been considerable complacency about the vulnerability of provincial airports and domestic flights? Will he take steps to ensure the centralised control of policing of these airports in liaison with the airlines using them? In view of what happened on this occasion, will he further ensure that in future procedures will be discussed between ground control and crew in advance to provide mutual understanding in the case of an emergency, so as to avoid the kind of friction and misunderstanding which can otherwise develop?
There is indeed consultation between the authorities in charge of security and British Airways. I agree, however, that there is a very good case for strengthening the liaison so that as far as possible in advance those who might be engaged in countering a hijacking are fully briefed as to the part that each will play or may be asked to play. I appreciate that my hon. Friend the Member for Manchester, Blackley (Mr. Rose) has taken a great interest in security matters, particularly at Manchester Airport, and I believe he raised this question during the time of the Conservative Government. I assure him that we will do our utmost to bring about an effective liaison between all those concerned with aviation safety, and this matter and others are already being discussed this week in the National Aviation Security Committee.
Will the right hon. Gentleman agree that as he tightens security at major and minor provincial airports there will still remain the small airports, such as Lydd in my constituency, which have international flights, although they encompass journeys of only 20 or so miles? Will he satisfy himself that similar security arrangements apply to the smaller airports?
There is a problem with the smaller airports, but I assure the hon. Gentleman that we shall be giving careful consideration to what can be done to improve security there.
Does not the Secretary of State consider it regrettable, and indeed reprehensible, that the Government, the Press and the police allowed the impression to hang around for two days that the hijacker was an Arab when it was known throughout the incident that he was not?
I do not think any of us willingly gave the impression that the hijacker was an Arab. It appeared to us that he was somebody of Middle Eastern origin. All I can say is that as soon as the facts were established the proper information as to the origin of the arrested man was made known.
May I thank the right hon. Gentleman for his readiness to accept that it might have been wiser to have gone in for more security at domestic airports? I find it encouraging that he has taken that attitude. May I urge upon him the greatest haste in designating the other airfields which he has already mentioned, and, in particular, may I ask him to try to put some life into the Scottish Office, which has been dilatory about its airfields?Finally, I find little to criticise and much to praise in the way that the affair was handled. I think that nothing has happened in the last few days, certainly as far as Ministers or those in charge of security are concerned, which should give any hijacker, whether organised or disorganised, any encouragement to attempt another such incident.
I thank the hon. Gentleman, particularly because we know that he is very close to what is going on in our air services and at our major airports.We will indeed make all due haste in carrying out the programme of designation of airports that we have already announced, but there are certain practical problems that have first to be overcome in handing over airport control from existing authorities to the kind of police control that we now have at Heathrow. However, I assure the hon. Gentleman that there will be no unnecessary delay. As for the security and possible designation of airports in addition to those I have already listed, my right hon. Friends the Secretary of State for Scotland, the Home Secretary and I shall be discussing that.
As one who was meticulously searched this morning, as indeed was every other passenger, might I ask that the searchers, who were very courteous, be allowed the same kind of discretion as is allowed to our good customs officers? It is ludicrous often to see at Edinburgh Airport elderly grandmothers being searched, and others besides those.
My hon. Friend will readily accept, I think, that the trouble is that we are not always sure that a grandmother is a grandmother. I assure my hon. Friend that I made a visit on Friday to a number of provincial airports and I spoke to passengers on domestic scheduled flights who were queuing up in inevitably hastily contrived checking arrangements. I asked them what they thought about it. There seemed to be no hesitation on the part of the people to whom I spoke that there should be a thorough 100 per cent. check, and they were willing to put up with the inconvenience that went with it.
Is the right hon. Gentleman aware that the people of this country, and particularly those in my Constituency of Uxbridge, are deeply grateful for the successful rôle played in this episode by the Metropolitan Police? However, is he aware, further, that the establishment of the Metropolitan Police in the London borough of Hillingdon is well under strength? Will he therefore consult urgently with his right hon. Friend with a view to bringing it up to strength so that future episodes of this kind can be dealt with as efficiently as this one?
I think that we are all grateful to the Metropolitan Police for their handling of this affair. As the hon. Gentleman knows, the question raised about the strength of the police is a matter for my right hon. Friend the Home Secretary.
I should like to pay tribute to Captain Lea, who is one of my constituents, for his very cool handling of this affair. May I suggest to the Secretary of State that the operation went off better than it might have done? May I ask the right hon. Gentleman if he will answer the question first raised by my hon. Friend the Member for Worthing (Mr. Higgins) about the ultimate responsibility in a hijacking situation in the United Kingdom? Does that responsibility lie with the captain of the aircraft or with higher authority?
There cannot be a simple answer to what might appear to be a very simple question. I think the reason for that arises out of the whole nature of the situation in which hijackings occur. As I understand it, the captain of an aircraft is in charge of that aircraft, and will always be so. However, the captain's command of the aircraft, certainly while it is on the ground, is something that in any event he can exercise only with the co-operation of massive and sophisticated services, from refuelling to air control, and so on. It is impossible, as it were, to deal with that question simply. However, obviously there has to be, and there must be, a dialogue between the Metropolitan Police, who are in control of Heathrow, and the captain of the aircraft who is affected, and out of that dialogue the best decisions, or best decisions possible, will, we hope, continue to be reached.
Orders Of The Day
[7TH ALLOTTED DAY]— considered.
I beg to move,
Before I comment in detail on the work of the Public Accounts Committee in the last Parliament, I wish to discharge two other happy duties. First, may I pay a tribute to those who have helped the Committee to do its work, namely the Clerk, who has been its most willing servant, the Treasury Officer of Accounts, Mr. McKean, and the Comptroller and Auditor General's immediate colleagues and staff in the Exchequer and Audit Department, those unseen and, I would say, invaluable watchdogs of the public purpose, whose conscientiousness is as deep as its effect, and, not least, Sir David Pitblado, an old friend from Treasury days, and in Washington, who is a most devoted public servant, whose career has been one of continuous distinction and who is now a great servant of this House. Second, I thank the members of the Committee in the last Parliament for their personal support and hard work, not least for their ready attendance at the sessions of the Committee. It is always difficult for members of the Committee, a number of whom I am pleased to see in the Chamber this afternoon, to carry out all the duties required of a Member of Parliament in these onerous days, when the Committee is carrying out so much work and is meeting in so many sessions. The constant support of the members of the Committee was a great encouragement. Perhaps I might congratulate them on the penetrating analysis of their cross-examination, which was never carried out at too great a length. Those tributes are no mere politeness. The Committee worked under a severe handicap. Due to the General Election in February last, the Committee was not appointed until half-way through April, and we did not hold our first deliberative meeting until 6th May. That meant that time for its detailed researches was extremely limited. Difficulties continued, for, though the report was agreed on 24th July, it was not printed until last December with its ancillary papers. That is the reason this motion was not moved, as is customary, of course, before Christmas. I hope the House will feel that the Committee achieved a very great deal in a very little time. How well it acquitted itself as to the quality of its work, right hon. and hon. Gentlemen will be able to judge for themselves. I need hardly say that the Committee has carried out its work in an entirely non-party spirit. Perhaps I might remind the House of the rôle of the Public Accounts Committee as it has developed in the 113 years of its existence. As historians in this House will recall, the Committee played a major part in the 19th century in assisting and stimulating the establishment of accounting regularity and making sure that public funds were spent only for the purposes for which they had been granted by Parliament. That remains a primary duty of the Committee, but happily we do not have to spend much time upon it, because serious lapses now are rare. The knowledge that if they occurred they would be brought before the Committee perhaps fortifies the sound practices which have for so long been established in the public service under the guidance of the Treasury. For many years, therefore, the Committee has been able to devote its time to wider aspects of economy and efficiency, dealing with such questions as the elimination of waste and extravagance, with the development of sound systems of estimating and contracting and with improvements in financial administration. In short, the Public Accounts Committee looks to see whether Departments obtain value for the taxpayers' money. At all times, the Committee must adopt a critical attitude. But I hope that it is true to say that its members consistently aim to be constructive. I hope that we shall always be fair, never pernickety, ever ready to take a broad view, stern when there have been lapses or foolishnesses, yet supporters of innovation, encouraging of modern techniques for accounting, with perhaps an adventurous outlook in their adoption, and certainly supporters of flexibility of management. I should never wish to hear it said in this House or outside it that the Public Accounts Committee did anything other than endorse the most competent and modern administrative methods. I have said a few words about the history of the Committee for a special reason. In my view, it is time to reappraise the system of financial control exercised by the House of Commons. However, first I wish to come to the details of our work in the last Parliament. Our First Report, as usual, was on excess expenditure, some cases of which inevitably arise every year. We recorded that we saw no objections to the sums needed being provided by excess Votes, and the House of Commons subsequently voted those sums. Two of our Reports, the Second and the Fourth, dealt with Northern Ireland accounts, to which I shall refer in a moment. I turn now and mainly to the Third Report of the Committee of last Session, because that is our chief report. That is based, as usual, upon the examination of witnesses on subjects set out in the Reports of the Comptroller and Auditor General on the 1972–73 accounts. First, I draw attention to our passages on the Industry Act. Right hon. and hon. Members will find them in paragraphs 41 to 44 in the Third Report. The control of Government assistance to industry has been a subject considered in specific instances by several previous Committees. The Committee of Session 1973–74, under the chairmanship of the present Paymaster-General—and we are delighted to see the right hon. Gentleman in attendance—had started an early and thorough examination of the administration of the various forms of Government financial assistance to industry under the 1972 Act. When Parliament was dissolved in February last year, the Committee was examining the then Department of Trade and Industry on the basis of a memorandum prepared at the Committee's request by the Comptroller and Auditor General on the measures being taken to provide effective control. The evidence was referred to us, and we completed that examination, though in the knowledge that there might be some alterations in policy resulting from the change of Government. As we said in paragraph 44 of the Third Report, we were pleased to find that the Department had made considerable efforts to establish a sound framework of financial control. This is a matter which has attracted some notice, and perhaps I might draw the attention of those interested in the subject to the memorandum and the papers given by the Department which are published with the evidence and with our report. The story cannot be allowed to end there. Huge sums of public money are now involved in support to industry, and, with the agreement of the Committee, we shall need to return at once both to the subject in general in order to establish the principles upon which assistance is being afforded and to specific cases as they occur. In the light of current public comment on this scene, I have no doubt that the House will expect this promptness of the Committee which the House has just reappointed. A study of the contents table shows how wide a range of subjects was examined. There were 27 in all. To enable the House better to follow the broadest aspects of our work of surveillance, I have grouped them under five separate heads. First, we looked at the arrangements for control of large projects such as the RB211 aero engine, where about £170 million of public money is involved. Also under this head is the multi-rôle combat aircraft, where sums amounting to many times that amount will be spent on research, on development and presumably on production. Under a second chapter head, we considered the various systems of financial control exercised by the Government. There was the Industry Act 1972, to which I have referred, and I do so again deliberately as it is so important. Then there were other matters such as the Farm Capital Grant Scheme. As my third example, I select the Forestry Commission, which has now produced a new form of accounts. We thought it proper to examine these in some depth, and what we had to say about the subject is recorded. To express a personal view, although I believe that the Forestry Commission does much good work, I feel that it is time that this House looked carefully at what I regard as the open-ended commitment which the Forestry Commission is allowed for the continuous acquisition of land for forestry in the United Kingdom. We come, fourth, to cases where proper financial control and methods should be reaffirmed. We looked, for instance, at inventory control in museums and for stocktaking of Government stores. It is surprising how much money is represented in the aggregate. Then there were cases where matters had gone wrong. One which struck the Committee was where some ocean tugs were to be constructed by the Royal Navy. Instead of the project taking two years, it took four, and the amount of additional money required, due to poor systems of control, which I am pleased to say that the Admiralty now proposes to revise, amounted to £700,000. Those are the chapter five heads covering the chief matters into which we inquired. There were many others of importance on some of which we had no need to report. I move to some of the subjects of inquiry into which I wish to go in detail, where there are significant lessons to be learned in the modern context. First, I take one under the head of major projects. Looking into major projects in which the Government engage is an important aspect of the Committee's work. Last year, we took evidence for the first time on the proposals for the construction of a Thames barrier as a protection against tidal flooding. We were concerned to learn that this showed a pattern of large escalating estimates of costs. The first estimate was £100 million. That became £168 million. The latest estimate was no less than £250 million, at December 1973 prices. So often in the past Committees have seen this sort of situation and how important decisions on the type and siting of the barrier, in this case, have been made on too tentative a cost estimate in the first instance. That was why, in paragraph 107, we said:That this House takes note of the First, Second, Third and Fourth Reports from the Committee of Public Accounts in the last Session of the last Parliament and of the Treasury Minutes and Northern Ireland Memorandum on those Reports (Command Papers Nos. 5786 and 5823).
I am sure that all my colleagues on the PAC will agree about the imperative need for realistic estimates of costs before decisions involving hundred of millions of pounds are taken. It is surely all the more necessary in present conditions where unjustified increases in costs through lack of control can be masked by those flowing inevitably from inflation. In an inflationary situation it is all the more important that Government Departments, Ministers, and this House do not approve projects unless they are certain that realistic estimates of costs have been made in the first instance. Another important review by the Committee was its study in depth of projects for the manufacture of the MRCA, to which I have already referred, in collaboration with the Governments of Italy and the Federal Republic of Germany, and for the manufacture of three types of helicopter in collaboration with the French Government. The House will be aware of my particular if non-commercial interest in the helicopter industry. Estimates of the cost of United Kingdom participation in both projects have substantially increased for a variety of reasons. Among them were reductions in the orders of the participating countries and changes in exchange rates. I am raising and bringing this matter especially to the notice of the House of Commons because I think it is of significance in the context of our membership of the EEC. We saw the undoubted political and defence advantages springing from the collaboration that I have described and the financial advantages to be gained from sharing development costs with others and increasing production runs. But we drew attention to the problems that can arise when one partner changes his requirements during the course of expensive development and to the administrative problems raised by cost and work-sharing arrangements against a background of differing national levels of cost and industrial productivity. According to the Treasury Minute, both the Treasury and the Ministry of Defence are alert to these problems, but I have little doubt that a future Public Accounts Committee will wish to examine further the procedure to deal with them. Collaboration with other countries may be important—some may argue that it is vital—but I suggest that in no case will it ever be more vital than good financial common sense and control. It is easy to visualise situations where, for idealistic reasons thought to be practical, this country, in collaboration with others, embarks upon a project the nature of which, in the natural order of time, changes, involving vast increases in cost, but, because the project has been begun, people feel that, for political reasons, it is impossible to vary it. I sound a note of warning in this regard."We do not underestimate the difficulties of estimating for a project of this nature, but we consider that realistic estimates of costs should be available when such important decisions are taken."
Last summer some of us went to Panavia in Munich. We were given a categorical assurance by Mr. Madelung and his Panavia colleagues that the collaboration did not in itself raise the unit cost of the MRCA but that a reduction in orders certainly did. Is the right hon. Gentleman denying that?
There is no "Yes" or "No" answer to that question. We can strike a balance sheet of advantage and disadvantage. Clearly it is easy to begin these projects for reasons of good will, reasons which are wholly political, and to continue them irrespective of changes which occur in partnership, design, and so on, en route and to pay too little attention to the cost as a result. The answer to the hon. Gentleman's question may be "Yes", but I should not like to be categorical, because something can be said on the other side. It is possible to argue that with a long run, for example, production costs are less, though it must be admitted that there are now fewer partners in the arrangement than was originally envisaged.The Expenditure Committee had inquired into a number of aspects of the MRCA project in December 1973—in fact, while the report of the Comptroller and Auditor General to the PAC was being prepared—and the Committee reported to the House last February. We took that report into account while taking evidence on the Comptroller and Auditor General's Report. I think that those who had the patience to read both reports will have seen that the work of the Expenditure Committee and the PAC were, in effect, complementary to each other. As the first chairman of the Expenditure Committee it gives me much pleasure to record that fact, and I suggest that that matter is significant for a reason to which I will return later. I come now to two particular criticisms. Another subject on which the Committee made detailed inquiries was the settlement with the receiver of Rolls-Royce Ltd for assets transferred to Rolls-Royce (1971) Ltd. We were concerned that the receiver of an apparently bankrupt firm, with substantial potential liabilities to customers for breach of contract, was subsequently able to pay all creditors in full and to distribute no less than the staggering sum of £26·9 million to stockholders. Indeed, I believe that a further sum is available for distribution. What I have to say is analogous to the reply that I gave to the hon. Member for West Lothian (Mr. Dalyell). One cannot always have certainty in some of these matters involving judgment. We may never know whether the bargain struck by the Government was a good one, but it seems that the outcome for the creditors and stockholders has been vastly better than they could reasonably have expected. I am still of the opinion that public money was spent to excess in that matter. Another point arises on the subject of Rolls-Royce. The Committee was concerned to learn that the flow of information from Rolls-Royce (1971) Limited to the Department of Industry had not been satisfactory and that the Department was not satisfied with the monitoring arrangements designed to safeguard the Government's considerable investment in that company. I am glad to see from the Treasury Minute that one of the items of information—the company's preliminary five-year forecast for 1975 to 1979—has been received by the Department and is being discussed with the company. But I note with regret that the Treasury Minute makes no comment on the monitoring arrangements. This simply will not do. I hope to be assured by the Financial Secretary, whom it is a pleasure to see here, that these arrangements are in good shape. There is another matter of principle which I ought to mention which arose from another case which we examined—namely, the leasing arrangements by British Rail for the purchase of rolling stock and equipment. In paragraph 131 of our report we expressed considerable surprise at and general disapproval of the manner in which the arrangements had been introduced and operated. We thought that a point of general principle emerged. These arrangements were made privately. They were not reported to the House. In paragraph 136 we expressed ourselves as follows:
Hon. Gentlemen who were members of the Committee will recall that we felt strongly on the matter, for it seemed that the truth was being withheld from Parliament. We thought that to be serious and wrong. But I am glad to observe from the Treasury Minute:"We trust that any future government financial assistance to the Nationalised Industries will be provided by more orthodox and overt means so that Parliament are aware of the true position."
We also considered some of the more traditional areas of financial control on which past committees have long ago established the basic rules. Without retailing any of those, I would just comment that I am pleased to see from the Treasury minute that the Treasury and the Department of Employment accept the principle, for instance, that full account should normally be taken, in grant-in-aid negotiations, of all realisable assets held by grantees and that grants in aid should not be issued in advance of need. I could continue to comment on many more similar matters, but I know that some of my colleagues on the Committee will wish to comment. However, I feel that I have said enough to illustrate the scope and, I hope, the value of work done. I said that I would say something further on the work of the Committee on Northern Ireland accounts, in respect of which perhaps my right hon. Friend the Member for Down, South (Mr. Powell) will wish to comment later. For two years the committee has had the responsibility for examining Northern Ireland accounts on the basis of the reports of the Comptroller and Auditor General for Northern Ireland, and we examined Northern Ireland accounting officers in the normal way. I was always pleased during last year that this was the case; it seemed to me to emphasise, better than anything else probably could, the unity of the United Kingdom. The Committee of 1972–73 had most valuable assistance from the Comptroller and Auditor General for Northern Ireland, Mr. Lowry, who has now retired. I should like, on behalf of the Committee, and, I am sure, of the House, to thank him for the work that he did and for all his years of service, and to wish him a happy retirement. Our Second Report was on two cases of excess expenditure in Northern Ireland, which raised no difficulties, but in the Fourth Report we were particularly interested in a case in which the Department of Commerce set up a Northern Ireland company to take over the assets of a factory which would otherwise have closed down and later disposed of part of the shareholding to a foreign company. I regret to say, but I say plainly, that we were not satisfied that the Department made adequate inquiries or took adequate advice before disposing of part of its shareholding. I am glad to see from the memorandum of the Northern Ireland Department of Finance on our Fourth Report that it is recognised that a greater degree of investigation may be necessary in such cases. I do not want to dwell on the matter, except to say that in my opinion much more investigation is required in matters of that sort. So much for our work. I come back to what one can regard as matters of principle about the Committee itself. Parliament is not, nor should it seek to be, an executive authority, but it must surely have the will and the machinery to exercise, as need may require, a control over the executive of the day—and, old-fashioned people like me who believe very much in the power of the back benches would argue, to dominate it. It is not our business, therefore, on the back benches to do the business of Government. It is our business to criticise, to check and to call to account those who act in the name of the State. I question, as I did at the beginning, whether we set about this affair as skilfully and competently as we might in the modern context. It is said that good government invariably depends on good opposition. That may be. I would say with as much emphasis that governments will always mismanage their expenditure to a greater or less degree unless the House as a whole—I underline and emphasise the words "as a whole"—is prepared to examine and scrutinise the administration in some depth and on a continuing basis. Question times and debates are of immense importance but today this other process of detailed examination has a new importance, to which I am not sure we give sufficient attention. Any consideration of these matters invokes the history of this place. The fight for parliamentary supremacy in this country is a record of the importance of financial control, as we all know. Yet we all know, too, that in 1975 Estimates laid before this House are never reduced and that control over finance, over spending, is largely non-existent. We vote millions of pounds on the nod and our debates on Supply are excuses for topicality. These debates are important, certainly; I just say that they do not do the job and that we are not doing the job. So expenditure increases, relatively and absolutely, and economies are never made. We do not have control of the total and we have almost no control over the particular. I would even go further and say that Government expenditure now is wholly out of control. That would be bad enough if it were not for the fact that I have the feeling—I do not know whether other hon. Members share it—that the real tragedy is that so much of our expenditure is not fully effective. If I felt that we always gave aid from the generality of the taxpayers to those who needed it most, I should have no complaints. I do not feel that. I do not feel it in my own constituency even, in which I watch thousands, ten of thousands, even hundreds of thousands of pounds spent on patching up old hospitals which smaller sums would have rebuilt just a year or two ago. I repeat: our expenditure of the taxpayers' money is not fully effective, and that is the tragedy. If our control is to be effective, hon. Members must be well informed. That means the facility for research and, I am convinced, it means the reports of specialist committees—perhaps published more frequently than we were able to publish this document last year, for the reasons that I have explained —and it means that they must be comprehensive. I think that we have made some progress. There is this work of the PAC—more of the category of an inquest, of course, into past affairs as a general rule—and, as I have said, if I am re-elected chairman, I hope that we shall be able to speed up its work a little. Now we have the Expenditure Committee, some attempt to look ahead, to compare actual expenditure with forecasts and to consider policy alternatives. But in spite of the devoteed work of members of that Committee and of my distinguished successors as chairman, it still has no staff worth speaking of, at any rate in terms of numbers—I do not speak of quality—and its work has not yet come fully to fruition. It is not for me, in this speech, to point to remedies, but I say clearly that I believe that we must consider further advances in our techniques. As the right hon. Member for Birkenhead (Mr. Dell) said some time ago, perhaps we should now consider amalgamating the PAC and the Expenditure Committee; perhaps we should take lessons from the Ways and Means Committee in the United States. I am sure, too, that we should examine revenue alternatives. All that is perhaps for the future. Meanwhile, I hope that the House will maintain the impact of the recommendations of its pre-eminent Select Committee upon the executive of the day and to this end give a non-partisan and unanimous blessing to the Committee's work in the last Parliament."It is agreed that any specific Government financial assistance to nationalised industries should be provided overtly."
This debate allows us to consider not only the reports themselves but the wider and more important question of the scope, authority and responsibility of our system of State audit as discharged by the Public Accounts Committee and the Comptroller and Auditor General. These questions are illustrated by the Third Report.As the right hon. Member for Taunton (Mr. du Cann) has just said, since its foundation in the 1860s the scope of our system of State audit has expanded from simply an examination of the regularity of expenditure—that is, whether the expenditure was properly authorised—into examinations of evidence of waste, of extravagance or inadequate control of spending. But the central purpose is still to ensure that funds are spent on purposes for which they are authorised and that financial procedures are generally effective. The question now is whether, given the enormous increase in public expenditures post-war, much of it in technically complex areas of construction, aerospace and industrial development, our system of State audit is adequate to cope with new demands. I and others who have written on this subject have expressed some fairly fundamental criticisms of the system, particularly in comparison with the scope and powers of State auditors in comparable countries. I think that these criticisms are borne out by the Third Report. These criticisms fall under three main headings. First, we who have written about and discussed the subject have been concerned about the limited powers of the Comptroller and Auditor General compared with those of other State auditors. For example, our State auditor has no power to prescribe the form of the accounts he is auditing. This represents a limitation on his investigations. It is my belief that we have singularly uninformative public accounting routines in this country. Increasingly, in other countries the arrangement of Votes and Vote sub-headings is being replaced by the analysis of public spending on a programme basis, which enables the legislature to examine the objectives of items of expenditure and their results in terms of effectiveness and efficiency. Although in this country there has been some move by the Treasury to organise the Estimates into programme categories, this has only marginally improved the situation and we are still a long way from being able to inquire into the results of public spending programmes compared with what they were intended to achieve. It seems to me, from the Third Report of the Public Accounts Committee, that the public interest would have been better served if, in the case of the hospital contruction reports and the report on the Thames tidal defences, the Comptroller and Auditor General had had the authority to design and oversee the implementation of effective preconstruction cost control systems, rather than complain afterwards that they were inadequate. In several of these reports the recommendation is that the sponsoring central Government Department should see to it that proper management information and cost control routines should be applied. I am not sure that these recommendations are particularly useful, given that British Government Departments themselves rarely operate any recognisable forms of budgetary control or costing, nor do they have the necessary expertise in systems design. It seems to me that it should be the responsibility of the Comptroller and Auditor General to design, for example, a system to evaluate the cost effectiveness of job creation in the regions rather than the responsibility of the Department of Industry. Our arrangements compare unfavourably in this regard with those of the Comptroller General in the United States, who heads the General Accounting Office and has statutory powers to direct principles, standards, forms and systems on accounting and has installed management accounting, cost and project control and planning systems in American Government departments and agencies. An audit is as effective as the information with which it is presented. We need far better management information on Government spending programmes in this country, and only an independent body such as the PAC, served by the Comptroller and Auditor General, is likely to introduce it. Secondly, the field of activity and the scope of our State auditor is less than that of those in other countries and less than is required by today's conditions. Our State audit is excluded from large areas of public spending—from the nationalised industries and local authorities, for example. Some 66 per cent. of local authority spending is provided by central Government, yet there is no specific accountability to the House for what happens to that money. The British Museum, as we can see from paragraph 169 of the Third Report, can remove spending from public accountability by setting up a limited company for its publications. It may well be that the growing tendency to set up trading funds in Departments in order to serve managerial accountability will similarly remove more public expenditure from oversight by the PAC. Equally important, the PAC is still primarily concerned with the regularity and propriety of expenditure and not with its efficiency or effectiveness. The Government pour money into private industry and other bodies without ever inquiring into the managerial efficiency of the spender. This is exemplified by the Rolls-Royce case. Here, the Government, in the words of the report, are
But the Government find out, only long after the event, that the company's inventory control procedures are quite unsatisfactory. Not only that. There is still an inadequate means of monitoring the company's performance to safeguard the considerable sums of public money invested in it. It is surely not good enough to"sole shareholder, banker, principal customer for military aero-engines and provider of launching aid for civil projects."
The State auditors in France, Germany and the United States have powers to inquire into and improve the operating systems and management efficiency not only of Government Departments but of private companies which benefit from subsidies or other payments of public funds. The American General Accounting Office has carried out many assignments leading to major reorganisations of departments and agencies. The French Central Committee of Inquiry into the Cost and Efficiency of the Public Services has made recommendations on the organisations, structure and procedures of nationalised industries and universities. The German Federal Commissioner for Efficiency has simplified administration and paperwork and carried out cost reduction exercises and reorganisations throughout public administration. Our State auditor should become what they are—top-level management consultants to the legislature, empowered to seek out and report on managerial malfunction wherever it exists among spenders of public funds. It was interesting to me to read in the Third Report about the inquiry into the Forestry Commission. The discussion revolved largely around the figure of 3 per cent. as a satisfactory return on capital for a forestry enterprise, and not whether or not the Forestry Commission was properly organised or managed. This, I think, illustrates the unsatisfactory narrowness of our system of State audit. It identifies major defects in costing, project control, management information, reporting, and accounting after the event, and it does not set these in the context of the management of the bodies which are supposed to be operating these systems. Finally, I doubt whether the Exchequer and Audit Department is sufficiently expert. It takes in school leavers and puts them through a three-year course. Unlike other State audit bodies, it does not employ qualified cost accountants, engineers, economists and management analysts. Ours is the only State audit in which the auditors are of a status inferior to that of those whose decisions are being audited. Three-quarters of the staff of the United States General Accounting Office have professional qualifications. State auditors in France have to be qualified at postgraduate level in public finance and their average age of entry into auditing is 27 compared with our auditors, whose age of entry is 18. The investigating staff of the Federal Commissioner in Germany are often postgraduates with an average entry age of 30. The Comptroller and Auditor General's independence of the executive is frequently held up as an example of how well we do things here. Yet the Treasury prescribes the form of the accounts and the Civil Service Department decides the number, grading and status of the audit staff. Other State auditors have far more independence in these matters. In sum, I believe that our system of State audit has not moved with the times or the requirements of the task. This is no reflection on the Public Accounts Committee or the Comptroller or his staff. It is simply that the technical environment has developed faster than our constitutional procedures. In my view, we now need a State auditor empowered to examine and report on the financial management, administrative efficiency, procedures and organisation of Government, public bodies, quasi-governmental bodies and all recipients of substantial public funds. This would give much more force to public accountability in this country, which I consider is now superficial, and would also be a powerful and positive influence on the improvement of the management of our public institutions."trust that it will not be long before arrangements are satisfactory in every respect."
I intend to refer only to the Fourth Report from the Committee of Public Accounts and shall not, therefore, enter upon the wider ground covered by the right hon. Member for Taunton (Mr. du Cann) and the hon. Member for Norwich, South (Mr. Garrett) concerned with the scope and efficiency of our Public Accounts Committee and the material which is submitted to it.Nevertheless, the two matters on which the Committee concentrated its Northern Ireland findings in the Fourth Report are each of considerably wider bearing than might appear at first sight. The first of those was the brucellosis control scheme and the story of "so near and yet so far" which it illustrated. Beginning with high hopes, based, as the Department itself said, upon being "able to operate in a comparatively small and well-defined area", it was found at the end of the period that not only had far more expenditure been incurred than had been expected but that the result was scarcely an improvement upon the starting point. The cautious wording of the report and of the Department does not conceal the principal reason for that, which indeed was spelt out in the reply by the departmental witness to Question 465 He said:
The brucellosis control scheme is to a considerable extent in the position of a Danaid engaged in filling the celebrated jar of the Danaids, and the hole in it is the readiness with which, legally or illegally but without sufficient control, the international frontier is crossed not only by persons but also by animals and goods. There has in this respect been in recent months, not to say recent weeks, the beginning of a change of attitude. I think it is likely that from now onwards the frontier between the United Kingdom and the Irish Republic will be progressively organised as an international frontier between friendly States ought to be organised—for the mutual benefit of both States; for let there be no misunderstanding: the State on each side of a frontier has an equal vested interest in the proper and lawful control of the use and passage of that frontier. As I say, we are still in the rudimentary stages of the proper organisation of control. The initial steps taken in recent weeks, which arose, as such long-term policies often do, out of some immediate emergency—in this case, the occasion of the passing of the Prevention of Terrorism (Temporary Provisions) Act in November—are simply a start upon a process which will be continuous and constructive. The only point in this context which I would like to emphasise is that this organisation of the frontier should not be regarded as a temporary measure related to the current dangers and difficulties in the Province. It is a measure which in many respects is justified in its own right and will continue to be fully justified after peace and normal conditions return to Northern Ireland. Perhaps we could not have a better reminder of the lasting importance of proper control of that international frontier than the comments of the Public Accounts Committee upon the brucellosis control scheme. I pass now to what is perhaps the major matter; that is, the industrial development project with a computer firm in Belfast to which there is already a commitment of £7½ million of public money. I think that £7½ million will shortly be proved an underestimate; but at any rate that was the sum definitely committed at the time when the Northern Ireland Comptroller and Auditor General made his report. The first thing which I find absurd—it is quite clear that the Committee too found it absurd—is the pretence of anonymity surrounding the company to which this relatively huge subvention is made. It is not acceptable that a company which receives public money on this scale should be even formally anonymous in reports tendered to the House. In any case, no person with knowledge of the circumstances or knowledge of the industry, reading the evidence tendered to the Committee, reading for example the lengthy question posed to the witness by the hon. Member for Eastleigh (Mr. Price), would have any difficulty in identifying the firm. Nor was there any substance in the allegation at first put forward that the Department of Commerce was under some obligation to conceal the identity of the firm. In fact, the covenant was a covenant that the company itself should not disclose the terms of the offer. There was nothing, and rightly nothing, which bound the Department to conceal from the Public Accounts Committee—which it did not—nor from the House nor from the public the identity of the firm which was receiving the subvention. The second unsatisfactory aspect was the rôle of the advisory committee. Statutory advisory committees in the context of public money made available to private firms are today very much in the news. Therefore, I think it is relevant that the report should have informed the House that the advisory mechanism clearly did not work properly in this case. What happened was—the House will find this set out on page 21 of the Fourth Report—that a mass of papers was thrown at the advisory committee before the weekend and an answer was demanded from it immediately after the weekend. It is not good enough for an advisory committee to be made part of a statutory machinery of subvention and then for the advice to be asked and secured in so cursory and ineffective a manner. It is quite true that the chairman of the advisory committee evidently did his best—he did his best to master the facts, which were complicated enough, and to brief his committee when the members turned up and met; but I am sure that this was not the intention of the House in constituting an advisory machinery. The intention must be that advisory bodies have adequate time and opportunity to brief themselves independently of the Department before they come to tender their advice. I do not know whether in the present case, had those conditions been fulfilled, the advisory committee would have given its assent to what the Department was proposing; but certainly an unsatisfactory aspect has been shown up by this investigation, and I trust that the lesson will have been noted for further cases and that the advisory committee will always be given adequate time and opportunity. A third administrative aspect, which was raised by the Comptroller and the Auditor General for Northern Ireland, was the appointment of one of the Department's own civil servants as head of the joint company which was formed by the Department. I do not think the fact that the civil servant was one who was not a career civil servant alters the principle of the matter. The Comptroller and Auditor General for Northern Ireland observed in paragraph 113 of his report—he was stating an important principle—that"Looking at the picture, when we plot a map showing the outbreaks, which tend to be concentrated almost entirely, but not quite, around the border areas, this does indicate, I think, that a good deal of our trouble is importation. Certainly some of it, indeed a good deal of it, is illegal."
He was putting it there very mildly. It is psychologically virtually impossible—indeed, I am not sure that it is desirable—for the person who is appointed to head a company to separate his duty towards that company from his position as the official of the Ministry from which the subvention is proceeding. It is therefore right, I would have thought, as a matter of principle, that the arm's length relationship between companies receiving subsidies and the Department giving them should be carried to the point of a separation of personnel between the top management of the company and the Department's own civil servants. Coming from those matters of administration to the economics of the individual case, there are three questions that I should like to put to the Minister, who I see is very properly in attendance this afternoon. The first is: can he give the House any further information on the financial prospects? Already the Committee was able to ascertain that the estimate of a maximum of £3 million loss had been exceeded, on the information which was before it at the time. What I should like to ask is whether he can add to the information which was given to the Committee. For example, it turned out that the estimated loss for the year 1973, which was only £1½ million at the time of the report of the Comptroller and Auditor General, is now known to be virtually £2 million—Question 526. Yet, curiously enough, the estimate for the year 1974–75 was that it would be down from £2 million in 1973–74 to £1·3 million only. Any indication of a lurch toward, solvency on the part of a company with this kind of history must attract the liveliest interest, and as one-third of the firm's financial year October-September—at any rate, a quarter of that financial year—is already past, I am eager to know whether the Minister has any information which would suggest that the rate of loss making is falling, and, in particular, whether it is at all realistic to suggest that in this calendar year this company will move over into profitability. Connected with that, there is a second question which goes back to the point about the total public commitment. That public commitment of £7· million is a past commitment. It was a commitment which took account indirectly of expected total losses of £3 million over three years, but it is not a commitment which includes a prospective loss. I should therefore like the Minister to make it clear to the House, supposing losses are continuing, upon whom the liability for meeting those losses would fall. Are they not due to be added to the existing commitment of £7½ million? The third financial question that I should like to put relates to the commitment of the American concern to take up the further 35 per cent. of shares in the joint company. Page 22 of the Fourth Report states that the transfer rights of that company have to be exercised by February 1975—that is, by next month, whether the beginning or the end of the month is not clear. Very great anxiety was rightly expressed both by the Comptroller and Auditor General in Northern Ireland and by the Committee about the circumstances in which the American company, instead of taking a 50 per cent. share as was the intention—and incidentally was the intention which was submitted to the advisory committee—was going to take up only 15 per cent. of the shares. Incidentally, the Department did not come back to the advisory committee and ask if it wished to alter its information when it heard that the American firm was going to take up only 15 per cent. of the shares. In view of the anxiety which this change stimulated, it would surely be interesting to know whether the American company is, in fact, going to take up the remaining 35 per cent. of its 50 per cent. share in this joint company. I cannot imagine that, if it intends to do so and has to do so by next month, the Department will be unaware of the intention. I hope, therefore, that the Minister will be able to tell the House—it will be some relief at any rate—that the arrangements for the transfer are going ahead and that they will be implemented next month by the due date. Looking back upon this whole scheme so far, this involvement of £7½ million plus of public money in this firm, what are the lessons which can already be drawn from it? It was, one knows, an extra-statutory scheme—Question 550—so that while this House in legislation and the former Northern Ireland legislature laid down in statutory form the conditions which it thought appropriate when public funds were to be infused into undertakings for the purposes of industrial development, the Department in this case went beyond its statutory entitlement. It did so, we are told, because of what was considered to be the urgency and the importance of avoiding the imminent unemployment of some 1,500 employees in the firm as it stood in 1971. The House ought to mark its keen interest in such an extra-statutory proceeding. The procedure of this House has always made arrangements for circumstances in which a Government may be called upon to act in ways not covered by statutory authority; but it is really a cause for unease if, in circumstances of the precise kind which have been envisaged in the basic legislation, a Department is found to have acted extra-statutorily. Perhaps that, too, is a point to which the Minister will refer if he intends to intervene in the debate. I come to the fundamental fact about the whole operation. As was stated by the Department in answer to Question 525,"… where a 'dialogue' is continuing between the Ministry and the company bargaining for the use of public funds, the question of a person acting in a dual capacity with a potential risk of conflict of interest is, I suggest, worthy of examination."
for keeping the firm in operation at the end of 1971. Those were the words. Hon. Members who have studied the work of the Committee and the report of the Comptroller and Auditor General will have great difficulty in ascertaining that there is today any more commercial justification than there was in 1971. So we are brought face to face with a balance, one of those balance sheets to which the right hon. Member for Taunton was referring: on the one hand, the expenditure of £7½ million plus of public money in what, on the face of it, is an operation originally without commercial justification, and highly doubtful upon the material submitted to the Committee and to the House; on the other hand, the continued employment of some 1,500 persons. But that balance sheet, thus presented, is not complete. It omits a vital fact. Paradoxically, at the same time as there are high unemployment figures in Northern Ireland there is a shortage of labour there for a large number of profitable jobs ready and waiting to be done. The movement of labour, as well as the creation of additional demand for labour, is vital for the success of the economy of Northern Ireland. There is no future for Northern Ireland, any more than there is for the economy of this country as a whole, in loss-making activities. There are circumstances in which such activities may have to be maintained, but it is not upon them—this is a truism—that the prosperity of the part or of the whole depends. I suggest that the Department, at any rate at the time when this scheme was entered upon, too readily assumed that the continued employment, in an operation for which there was no foreseeable commercial justification, of 1,500 persons was a sufficient reason for going ahead. Of course, the difficulty in casting up this kind of balance sheet is that one is comparing the known with the unknown. One is comparing the employment of these people, here and now, visibly at work in this factory, with what we cannot in the nature of things know; that is, what they would be doing, the use to which their knowledge, their effort and their experience would be put, if, owing to the factory's closure, they found their way, or a way was found for them, into other applications. But if we always use the power of the State, if we always use public money, to secure continued employment in directions for which there is no commercial justification, the transfer to profit making, to creative application, will not take place. Therefore, we have to take the responsibility—the Government have to take the responsibility, and the House and individual Members have to take the responsibility of supporting them—of making commercial viability the standard from which we are determined not to depart. Thus, in my view, the considerations which the Committee in its study of this one quasi-anonymous instance put before the House have a very much wider bearing."there was no commercial justification"
I shall not comment on what has been said by the right hon. Member for Down, South (Mr. Powell) because he has plainly made a deeper study of the particular instance of the 1,500 jobs in Northern Ireland than I have, although I was a member of the Committee and I remember the witnesses giving evidence. However, I think it possible that the right hon. Gentleman did not give sufficient weight to the special situation in Northern Ireland, the civil unrest there, and the feat that 1,500 people would become unemployed, would not quickly be re-employed, and would in the event be turned out on to the streets of Northern Ireland—or at least many of them would—thus possibly causing even greater civil unrest than there is at the moment. I think that that was a factor taken into account by the Committee, and pressed upon the Committee by the witnesses who gave evidence.As the first member of the Committee to speak from this side I wish at the outset to pay a sincere tribute to our Chairman, the right hon. Member for Taunton (Mr. du Cann). I pay my tribute to him for the sincere, efficient and courteous way in which he conducted his chairmanship during the year. It was a great pleasure to serve under him. It was an excellent experience for me to do so, and I look forward to serving under him again in the coming Session. The right hon. Member for Taunton referred briefly to the Rolls-Royce settlement, the settlement arrived at between the liquidator of the old Rolls-Royce company, the Government and the new Rolls-Royce company, and I wish to elaborate a little upon that matter because I believe that one or two lessons may be drawn from it. As the House will recall, the receiver of the old Rolls-Royce company eventually transferred to the new Rolls-Royce company, which was under the control of the Government, the aero-engine assets and certain other assets, including the RB211 assets, of the old Rolls-Royce company. The negotiations for that transfer were conducted in the first few months of 1971, and the assets were transferred in May 1971. The whole matter is dealt with in the Committee's Third Report, paragraphs 11 to 32. As a result of that settlement the new Rolls-Royce company, the Government-controlled company, took over all the liabilities and obligations arising from the RB211 contract, and it also paid the liquidator—the Chairman of the Committee referred to this—£87½ million for certain other assets, including aero-engine assets, of the old Rolls-Royce company which were considered to be of national importance. In consequence of that settlement the liquidator of the bankrupt company was able to pay the creditors in full, and I understand that the shareholders of the old, insolvent company were able to receive interim dividends equivalent to about 40p per share. I understand also that there may be a further final dividend, so that at the end of the day the shareholders of the bankrupt company will have received from the liquidator something equivalent to 50p per ordinary share. To put those figures in context one should remember that on 2nd and 3rd February 1971, a few days before the storm broke and before the public realised that Rolls-Royce was in great difficulty, the shares of the old company were fluctuating on the Stock Exchange at prices between 45p and 35p a share. One can thus say that the shareholders of the old company got back all their money in the sense that they have received, or will receive, sums equivalent to the quoted value of their shares on the Stock Exchange before Rolls-Royce was pronounced insolvent. What I find especially disturbing in that situation is that many of the shareholders, many of the persons who have been compensated, bought their shares after the news that Rolls-Royce was in great difficulty and when the shares were valued at an extremely low level on the Stock Exchange. They have thus made enormous profits from the liquidation, and many of those shareholders, I understand, are foreign companies or nonresident banks. Commentators in the financial Press and elsewhere have sought to explain away what must be a rather embarrassing situation by attributing the result to some extent to the financial skill and negotiating prowess of the liquidator. We are told in the papers that he secured a splendid deal on behalf of the creditors and shareholders of the old company. No doubt the liquidator is a man of great skill, but I suggest that he obtained the £87½ million not only as a result of his skill but as a result of wrong and uncommercial decisions made by the British Government in the days immediately following the collapse of the old Rolls-Royce company. If the Government had approached the matter—this is a personal view; the Committee did not find it—in a commercial way the liquidator, in my opinion, would have received far less than he did for the non-RB211 assets, and the shareholders of a bankrupt company would not have been put back into the position they held before the company was declared bankrupt. The House will wish to know how it came about that the liquidator was able to extract £87½ million from the Government. The root cause of the difficulty—the Committee found this—lay in the heads of agreement drawn up between the liquidator, the Government and the new company right at the beginning, immediately after the Rolls-Royce collapse. Under that agreement, the Government agreed that if they were able to renegotiate the RB211 contract—the House will recall that they were able eventually to do that and to arrive at a new modified contract—the RB211 assets would be taken over by the Government from the liquidator at the nominal sum of El, ignoring any potential profits, or, more probably, ignoring any losses which might still arise for the new Rolls-Royce company; but as part of that agreement the other aero-engine assets and other profitable assets of the old company were to be transferred to the Government and the new company at full market value and no account was to be taken of any potential RB211 losses in arriving at that market value. Therefore the receiver got a very good deal from the outset. He was relieved of the onerous RB211 contract with its possibility of heavy losses and substantial payments to be made by way of indemnity, and at the same time he was to receive full market value for the other aero-engine assets. A prudent commercial buyer would hardly have entered into negotiations on these terms and of that kind. The prospects for the RB211 were uncertain, but the Government agreed with the liquidator to ignore that uncertainty. Any commercial buyer, instead of ignoring it, would have taken it into account in discounting the price to be paid for the profitable assets. That uncertainty should have been a factor in determining the money which the Government were to pay the liquidator for the part of the Rolls-Royce business which was profitable and which would be transferred. Bearing in mind the constraints which the Government imposed upon themselves as a result of the heads of agreement it would not be fair to say that the figure of £87½ million, which was eventually paid, was not fair and reasonable. I do not have the information on which to base an assessment, but the Committee received a paper, which was not printed, which set out the profits of the profitable assets for 1972. It seems to me, although I am no expert in these matters, that taking one year's profits, it could be said fairly that possibly the Government did not pay too much when they paid £,87½ million. However, the damage was done previously under the heads of agreement, because these should never have provided for the RB211 to be separated from the rest of the business for the purposes of valuation. As a secondary matter the Committee also found that the Government had paid too much attention when negotiating with the receiver to his claim that there were possibly foreign buyers who might wish to purchase the profitable assets of the Rolls-Royce company. It surprised me to discover, after we had inquired of the Treasury witness and after a paper had been submitted, that the Government do not seem to have any power to prevent non-resident persons from purchasing for cash the assets and businesses of British companies. One always assumes that under the exchange control regulations or under some section of the Income Tax Acts the Government have reserve powers to prevent such purchase if it were considered in the national interest to do so. Apparently that is not the case. So the receiver was able to use the argument that a foreign buyer might want to buy certain assets in order to push up the price the Government had to pay him. If the heads of agreement had not separated the RB211 from the other assets such an argument would not have been open to the receiver because no foreign buyers would have wanted to buy the RB211 contract with all the complications that involved. What lessons, therefore, can be drawn for the future from the Committee's post mortem on the purchase of the business and assets of Rolls-Royce by the last Conservative Government? It seems to me that the valuation of assets and the complex business of conducting these negotiations should not be left to hard-pressed Ministers and their civil servants—and I say that with the greatest of respect—but should be entrusted to a body which could build up an expertise in these matters. It may be that the IRC, if it had been in existence at the time, could have conducted the matter in a more satisfactory way, but I do not know because I have no experience of the IRC or of how it works. If we are to set up a National Enterprise Board I hope that it will be given power to conduct negotiations of this kind, to acquire shares and assets and to build up the necessary expertise. Decisions on whether a company should be acquired in the national interest will always be political decisions and will always have to be taken by Ministers accountable to this House. Once that decision has been taken, however, the only way to deal with the matter is to have a body capable and equipped to purchase the assets on a sound commercial basis. I see no other way in which it can be done. Finally, I refer to the fact that the Treasury does not seem to have the power to prevent acquisition of assets in this country for cash by foreign purchasers. The Government must look at this matter again. We are now in a world where a few countries, certainly the oil producing countries, seem to have limitless supplies of cash. May be one of these days one of these interests will want to buy in Britain assets which we consider in the national interest should be retained here. The purchaser would not have to borrow money or mortgage shares or come within the exchange control regulations. We all want to encourage investment, but there must be a point at which it would be prudent for the Government to make sure that they have the necessary reserve powers to prevent such an acquisition if that were in the national interest. The Americans seem to have these powers. Therefore I ask the Government to consider whether it would be possible to tighten up the rules to prevent such purchases. The collapse of Rolls-Royce produced a most complex and difficult situation. It is easy to be wise after the event, but it can be fairly said that the last Conservative Government were not properly equipped to deal with the immediate situation which followed the collapse of Rolls-Royce. Wrong decisions were made at the beginning, and they cost the British taxpayer substantial sums of money, although it is difficult to come to the exact figure of how much was lost.
I wish to echo the sentiments of the hon. Member for Llanelli (Mr. Davies) in thanking the right hon. Member for Taunton (Mr. du Cann) for his chairmanship of the Public Accounts Committee on which I was honoured and privileged to serve on this occasion, and to congratulate the right hon. Gentleman on the report he has produced. My absence from the Committee in future will not be because I regard it as work which is not of great importance. I regard it as work of pre-eminent importance, but it looks as though two Finance Bills will be separated only by the Easter Recess and there therefore does not seem to be much time to fit the Public Accounts Committee between them.We are here discussing an important part of Parliament's most important function which is, I have always been led to believe, the control of the executive. If we were to ask ourselves whether Parliament had successfully controlled the executive in recent years I do not think that in all honesty the answer would be a resounding "Yes". I doubt whether Parliament in its present form is capable of doing so. In our modern parliamentary system the executive is too free—too free to legislate and too free to spend. A by-product of this is that in recent years both Conservative and Labour Governments have found it all too easy to get their legislation accepted by Parliament but have then been unable to get it accepted by the country. I know that controlling the executive is not just a question of controlling money, but I suggest that if we control money and if we control public expenditure effectively success in everything else we have to do in this House might come very much easier. It is true that if we cannot control public expenditure no one—our constituents, the public at large, the Press or the rest of the media—will believe that we are likely to be successful in much else. This was the first occasion on which I have sat on the Public Accounts Committee. The Committee has, over a great many years, done very good work in ferreting out the odd scandal and those things that fall far short of the scandalous. It is probably a judgment that will be counfounded by events, but I do not think that any of the reports which we are debating today contain any element of the scandalous in public expenditure—wasteful, perhaps, but not scandalous. No matter how efficiently the Committee does its task, it is inevitably shutting the stable door after the horse has bolted. Lessons can be learned, and I hope that they will be learned. The Treasury Minute indicates that some at least have been learned already. Nevertheless, the power of the Committee to ensure that the enormously increased level of public expenditure is good and necessary, and that the spending is efficiently done, is inevitably limited. However good the Committee or the Exchequer and Audit Department may be, public money will be spent and will be wasted as long as the House meekly assents too easily to almost any tom-fool level of expenditure one cares to put forward. The problem is bound to increase. The hon. Member for Llanelli spoke in some detail about Rolls-Royce and the RB211, with which we dealt in great detail in the Committee. The pages of the report dealing with the situation after the collapse of Rolls-Royce are an example of what a Government do in an emergency. The right hon. Member for Down, South (Mr. Powell) spoke of what had happened on items of expenditure in Northern Ireland. It is true that the Committee had to look at the items to which he referred—certainly to the last to which he referred. We all came tacitly to the conclusion that what had been done might not have been exactly right but that if we had been in the position of those concerned we would have found that there was no alternative, because there was a gun at their heads. In other words, it was almost blood money. It was certainly civil order money to keep the streets from flowing. Therefore, we had great sympathy with those civil servants who might have stepped outside the normal bounds of financial prudence in these matters. But it is all very well to use the excuse of an emergency, whether in Northern Ireland or an industrial emergency in Rolls-Royce, for not ensuring that money is properly spent, according to the standards one would normally apply. We are confronted at the moment, in the Press anyway, with the case of a civil servant in the Department of Industry who has filed a memorandum with an eye to a future Public Accounts Committee investigation. I do not want to go into that matter in detail. Whether that civil servant is right, whether the board set up by Parliament to advise the Minister on matters of money and industry is right, or whether the Minister is right, is not the point at present. The Minister may well be right. Hon. Members would be wrong to set their faces against new types of industrial enterprise just because they were new, and to say that no public money should be put into them. What is wrong is that a Minister, having been advised by the board set up by Parliament to examine industrial grants that a certain enterprise does not merit the expenditure of public money, and having been opposed by his own accounting officer, should still not have to return to the House on the matter. Any measure that allows a Minister to make such a decision without returning to Parliament for a by-your-leave, as the Industry Act does, should never have been passed by the House. In theory, our control of nationalised industries, of expenditure in industry, or Government participation or intervention in industry, is all quite simple. We do not have the right to question Ministers about the detailed day-to-day management of the industries into which the Government put our money, or of fully nationalised industries. The trouble is that the day-by-day management may well be running up huge debts, and we shall then be asked at some time in the future to write off those debts. That is when public money is spent. We shall be faced with a fait accompli, never having been asked in advance. We shall be in the situation that we were in over Rolls-Royce, and perhaps almost in the situation that we were in in Northern Ireland. We shall have a gun at our head, and shall be told that there is no alternative but to write off the debts of British Rail or the coal industry. We have no satisfactory control over the use of public money in industry. It is towards achieving such control that we must look when we think about the Rolls-Royce case and much else in the Committee's reports. How can we make sure of public accountability? Labour Members will say that it is easy that we just make sure that wherever the Government put public money we take a share of equity for the nation. But that does not solve the problem. It is right that we should take a share of the equity. My party and I have long advocated that, and I am delighted that the Government are determined to do it. But we should be fools if we thought that it would solve the problem. We have only to see how far the big institutional shareholders have exercised any control over the expenditure of what is, after all, their money in some of the major industrial enterprises in which they have invested, to realise that. The majority of civil servants and politicians have no experience of business practice. There should be far more interchange between the two if we are to go on intervening in industry. There must be efficiency audits for all nationalised industries and for all Government participation in industry, whether or not fully nationalised. It is not good enough to have a debate once a year on the Committee's reports and to say that certain money was spent wrongly. It is not just a question of how the money was spent. That may not be all that is wrong. Certainly in our deliberations it was often difficult to say not only whether public money had been wasted or should not have been spent but whether it had been spent to its optimum effect. There are two issues on the control of public expenditure. The first is how much we spend in total, and the second is whether each bit is spent well. The Committee under its present chairman and with the present Comptroller and Auditor General, is well-equipped to carry out the second of those tasks. It is well staffed through the staff of the Comptroller and Auditor General—far better staffed than any other Committee of the House. The Committee might benefit greatly from more publicity for its proceedings. I do not want to short-circuit the argument about whether we should allow our proceedings in the House to be televised, but it occurs to me that, although some people may think them very dry, some of the exchanges in the Committee and some of the issues we investigated not only merited the probe of the television cameras but would have made good television—although I say it as perhaps one who should not, having been a member of the Committee. It would have enormously concentrated public attention. Of course, that is entirely outside the question of whether we televise the proceedings of the Chamber. There seems no reason for us not televising some of the proceedings of Committees such as the Public Accounts Committee. In my view, the overall level of expenditure is outside the control of the House. We cannot any longer make any pretence to be controlling public expenditure. The Expenditure Committee is largely ineffectual. That may not be the fault of the members of the Committee. We have an annual debate which is a rather desultory affair. Moreover, unless the Committee is debating, discussing and investigating expenditure in the context of forecasts of likely revenue for at least the same period ahead as it is considering expenditure the whole exercise is futile. Expenditure and the forecasts of likely revenue have to be examined in the same money terms. There should not be one sort of funny money for expenditure and another sort of money for revenue. There is much merit in the idea—I understand that the Chairman of the PAC accepts this—that we should amalgamate the PAC and the Expenditure Committee. But we need to bring a strongly reinforced forecasting of revenue into our deliberations. No one ever set out to produce a Government borrowing requirement of £6,000 million but we have it all the same. If we examine the record—
Perhaps £4,000 million.
Perhaps the right hon. Member for Down, South would like to make his point.
I was moved to recall that Mr. Anthony Barber set out to produce a net borrowing requirement of £4,000 million.
I am grateful to the right hon. Gentleman for that remark. I would not have expected him to pass it by.If we examine the record of the public sector deficit or the borrowing requirement over the past six years it cannot be suggested that it has been determined by logic, reason or economic good sense. It has been determined by too many Chancellors trying to win too many elections in too few years. It is an inherent and natural characteristic of political parties to invent new methods of spending public money. Once the promise has been made in an election campaign or inserted in a manifesto our parliamentary system—this is the nub of the matter—makes it a darned sight too easy to push it through. Once the matter has found its way into a manifesto it is as good as enacted in terms of public expenditure. Far too little research is done into the items which find their way into party manifestos. That applies to all political parties. Even if we increase the research facilities available to political parties, anyone who has experience—and many of us have—of the problem of trying to stop party conferences voting to spend vast sums of public money by reason, statistics or any other such criteria, will know that if the party gets into power no amount of research will control expenditure. There is a need for an independent research institute to cost party promises before elections. If that were done we should not be subjected to the charges and counter-charges of Chancellors and Shadow Chancellors about how much each proposal will cost. This House will never control public expenditure in any meaningful way until the tax system is indexed. "No taxation without indexation" should be the slogan of parliamentarians in 1975. Large sums of public expenditure have been undertaken by Government without the necessity to go back to the House. That is because inflation has whipped up the revenue that the Government receive. It may be that now the Government are suffering what can only be called taxation starvation through almost negative indexation they will be more receptive to indexation. How can the House control expenditure when the parliamentary and party systems, and the Whip system, make it so easy for Governments to get away with murder? If we wanted to do the job properly perhaps the real answer would be a separation of powers such as the Founding Fathers established in America. Short of that, the only way in which Parliament will be able to control a Government's expenditure in future is by changing the electoral system and ensuring that Governments cannot carry every item of expenditure that they wish.
So far the debate has consisted of what is so often the practice on similar occasions—namely, one compliment after another being paid to the Public Accounts Committee. It seems that Select Committees are treated with greater respect than perhaps they deserve and that administrations are treated with less respect.I was particularly disappointed with the PAC's approach towards Giro cheques. I was disappointed by the spirit of the questioning and by the tenor of the report. I do not like the Treasury evidence either and am critical of the tone of the Treasury Minute which replies to the PAC's report. It is understandable that Conservative right hon. and hon. Members are unsympathetic towards the Giro system. Perhaps that applies particularly to the right hon. Member for Taunton (Mr. du Cann), who refers to himself as a banker when putting questions during the cross-examination of witnesses.
It might be of assistance if I explained that I have never been opposed to Giro cheques. As a believer in the expansion of the banking habit and a believer in savings, I welcome any improvement in the facilities for money transfer. I am exactly the antithesis of what the hon. Member for Newcastle-under-Lyme (Mr. Golding) describes. I am a supporter of the Giro system.
I am pleased to have heard that assurance. I am sure that at a later stage in the Session we shall be glad to hear it repeated. I would have hoped that the questioning would have been more sympathetic. As the right hon. Member for Taunton has made clear, the Post Office Giro is a publicly-owned bank. One would have expected the Government and Labour Members to support the extension of the Giro system and its facilities. I hope that the Government will quickly come to the House to ask it to extend its powers so that it can become even more competitive towards the joint stock banks.To an extent I believe that the inquiry was nit-picking. What does not emerge from the questioning and from the report is that the money that is under examination is all public money. It is not a case, for example, of the Department of Employment or the Department of Health and Social Security dealing with an external, private bank. This is a matter of transfer payments within the publicly-owned sector. All of it is public money. Therefore, to a great extent the work of the Committee would have been better directed towards examining the accounting procedures when public bodies, including the nationalised industries perhaps, are dealing with privately-owned companies. That would have been more to the point than dealing with the question of transfer payments. We on this side, particularly the Government, should be more aware of the Labour Party's policy expressed in 1973. The policy statement then declared specifically:
It is for this reason that I am disappointed that it emerges, from the questioning, the Committee's report and the Treasury Minute, that no directive has yet been given by the Treasury to Government Departments to use Giro more extensively. Indeed, the Treasury witness, in reply to Question No. 1662, said:"Labour's Giro is now a major public banking facility. We would ensure that Government Departments and nationalised industries use Giro as extensively as possible for their money transfer business."
I would have hoped that a different policy would have been adopted by the present Government. I would have preferred them to have said, as the Labour Party said in 1973, that Government business should be conducted where possible through. Giro. I believe that this should be done not only because it is Labour Party policy but because the profits of Giro go into the public purse—that public purse which the Public Accounts Committee is supposed to be protecting. The money that goes through Giro is finance available to the State, and is again a saving to the public purse. Perhaps most important of all, Giro offers better facilities for many of its customers than the joint stock banks do. One witness, Mr. Errington, stated in paragraph 1681:"… it is the intention that there should be fair competition between Giro and other means of making payments, the joint stock banks, the Paymaster Geneal's office, and so on."
The Government should quickly decide to implement Labour Party policy on this point."I think that the facilities provided by the Post Office in the way of spread of points of payment, hours of opening, accessibility and so on, probably meet the needs of the majority of our clients very much better than any bank would do."
As the hon. Gentleman has seen fit to suggest that the questioning in the Public Accounts Committee might have been influenced by the fact that the chairman is a banker, would he tell us what his own interest is? I am not at all certain, but I have a feeling that it might be to do with those who work in Giro.