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Commons Chamber

Volume 884: debated on Tuesday 21 January 1975

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House Of Commons

Tuesday 21st January 1975

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Employment

Foreign Domestic Workers

1.

asked the Secretary of State for Employment if he will review the system of granting permits to domestic workers from overseas with a view to eliminating the exploitation of such workers.

My Department has recently carried out a review of this and various other aspects of the work permit scheme, and has sent proposals for a number of new safeguards to the CBI, TUC and Manpower Services Commission. I am now awaiting their comments and hope to make an announcement in the near future.

I thank my hon. Friend for that answer. Does he accept that his Department is responsible for ensuring that the conditions for foreign workers are fair, and will he accept that the onus for proving that such conditions are fair should rest upon the employer who is seeking to bring foreign labour into the domestic trade? Will he consider establishing a system of compulsory registration for agencies involved in this business, so that the worst of them can be eliminated?

I accept that responsibility and I am anxious to ensure that there is no exploitation of foreign workers. As for the agencies, we intend to tighten up the regulations to control agencies and to make sure that people are not exploited by having to repay excessive fares. I accept responsibility for trying to improve conditions for foreign workers.

Equal Pay

2.

asked the Secretary of State for Employment whether he intends to use the services of the proposed Equal Opportunities Commission to ensure that the objectives of the Equal Pay Act 1970 are fulfilled.

Yes, Sir. The main responsibilty for enforcement of the Equal Pay Act will rest with the industrial tribunals, but as the White Paper on "Equality for Women" indicates, it is envisaged that the Equal Opportunities Commission should have the power to assist individuals in presenting complaints and conducting legal proceedings, and that it should advise the Government about the operation of the Equal Pay Act.

I thank my hon. Friend for that reply. Does he agree that the Act needs the most careful monitoring, which will require all support at this difficult time? Does he accept that the Act also involves the principle of unimpeded progress towards majority rule?

The last principle is one which one always supports. The Act needs monitoring, and my Department does that. My hon. Friend will have noticed that through advertisements we have been most anxious to draw the requirements of the Act to the attention of employers and employees.

Is the Under-Secretary saying that his right hon. Friend the Secretary of State supports majority rule, or that he supports minority rule?

I am sure that the hon. Member for Yarmouth (Mr. Fell) will have the chance to put that question later.

My hon. Friend's reply betrays more than a hint of male chauvinism. Does he recognise that many women simply will not go to the industrial tribunals upon which he places so much reliance? Is he aware that four years after the passage of the Equal Pay Act women are still getting, on average, less than 55 per cent. or 60 per cent. of male wages? Is it not time, bearing in mind that employers will have to do something about this matter next year, that the Government pulled up their socks?

I must reject any suggestion that the Government have been inactive in giving effect to the provisions of the Equal Pay Act. Women's take-home pay is likely to be less than that of men's because they work less overtime—

I accept that some women will not present their own cases to tribunals. That is why we are giving the Equal Opportunities Commission the power to present claims on behalf of women. The more women who join trade unions, the more likely it is that their objectives will be achieved.

Social Contract

3.

asked the Secretary of State for Employment if he remains satisfied with the operation of his policy on wage levels; and if he will make a statement.

5.

asked the Secretary of State for Employment whether he is satisfied with the working of the social contract.

7.

asked the Secretary of State for Employment what progress he has made in ensuring the success of the social contract.

24.

asked the Secretary of State for Employment whether he is still satisfied with the working of the social contract.

31.

asked the Secretary of State for Employment whether he is satisfied with the operation of the social contract.

The social contract covers the whole range of Government economic policies, and the degree of progress in its fulfilment cannot be covered in the answer to one Question. If Questions are referring more specifically to the TUC guidelines about wage negotiations involved in the social contract, my reply is that it has had a considerable measure of success and continues to provide the best basis for the conduct of Government policy.

Will my right hon. Friend stiffen his resistance to the goo-like blandishments coming from the Opposition Front Bench and from my right hon. Friend's colleagues in the Treasury, to the effect that Britain could solve its economic problems by this Government sacrificing the living standards of the workers they represent? Will my right hon. Friend circulate his Cabinet colleagues setting out the terms of the social contract, which are, as the TUC believes, that there should be one wage increase per year based on take-home pay and not gross pay, and equated with the rise in the retail price index, and that this in itself will ensure that the living standards of workers represented by trade unions will be maintained? Many people feel that in this way my right hon. Friend could now make a contribution towards a wider understanding of current wage agreements.

I hope that I shall resist such blandishments from any quarter, including that of the right hon. Member for Lowestoft (Mr. Prior) and his friends. We have had constant discussions with the TUC, including the discussions this week. I believe that there is a full understanding between the TUC General Council representatives and the Government about what we mean by the guidelines, and that there is agreement that one of the ways in which we can assist in dealing with the country's economic problems is to secure the best possible allegiance to those guidelines.

Is it not clear that the huge pay settlements supposedly within the social contract represent the biggest single threat to full employment at present? Will the right hon. Gentleman take immediate measures drastically to revise the guidelines within the social contract so as to secure a major reduction in the average level of wage settlements?

I do not think that what the hon. Gentleman suggests is the right way to go about it. Any attempt to rewrite the guidelines along the lines he suggested would only cause confusion and injustice. It certainly would not contribute to the end we have in mind of a successful fight against inflation. I believe that the best way is by securing a strict allegiance to the guidelines as they stand. I also believe that that is the desire of the trade unions, along with ourselves.

Will the right hon. Gentleman say—preferably in two words, if not in two sentences—whether the present rate of wage settlements, to which the Chancellor of the Exchequer has drawn attention, is a mark of the success or the failure of the social contract?

Some of the settlements are successes and some are failures. We have not sought to conceal that. I have had a correspondence on the subject with the right hon. Member for Lowestoft, who accused me of having in some mysterious way concealed these matters. I have not done so. I hope that our exchange of letters on the subject will be published in the Official Report. Then the hon. Gentleman may see even more clearly what view we take of these settlements.

Does my right hon. Friend appreciate that he should not get involved in appearing to lay the blame for inflation upon workers and their attempts to improve or even maintain their standard of living, especially in the light of the recent announcement by the Government that they will agree to salary increases of up to £8,000 a year for those at the top of the armed forces and in the higher echelons of other institutions within our Establishment? Surely my right hon. Friend cannot reconcile that sort of increase with some of the paltry rises that my right hon. Friend, in particular, constantly talks about—and seemingly talked about again last night.

The Boyle Report—if that is the document to which my hon. Friend is referring; I expect it is—certainly presented the Government with great difficulties, because it did not take account of the TUC guidelines and, in a sense, was produced without relevance to them. The Government did not accept the report in anything like its full degree. For any further comment on that matter, however, I refer my hon. Friend to the statement made by my right hon. Friend the Prime Minister on the subject.

I hope that my hon. Friend will not wish to abandon the guidelines, because we believe—there is no difference between me and my right hon. Friend the Chancellor on this subject—that the maintenance of the guidelines is important not only from the point of view of ensuring that we assist lower-paid workers, which is part of the guidelines, but in order to prevent what would be the greater danger of unemployment if they were not adhered to.

Will the right hon. Gentleman explain how his oft-repeated plea for free collective bargaining can be reconciled with policies aimed at achieving full employment?

Yes, Sir, but that is a much bigger subject than anyone would seek to deal with in a short answer. We are trying to work the matter out in this way because the attempt to combine statutory policies with any policy of maintaining full employment collapsed completely. We are not going back to the statutory method of trying to control these matters.

Will my right hon. Friend draw the attention of the Press to more meaningful figures than those given such publicity in the newspapers this morning? In particular, will he draw attention to the real income after tax, which is the figure with which hon. Members on the Government benches are concerned?

The worst example of misleading figures in the newspapers this morning was the headline in The Times saying,

"Earnings may be rising by 37 per cent. a year, figures show".
To express the recent monthly rates of increase in wage rates or earnings in annual terms is misleading nonsense—[Interruption.] That is what the Leader of the Opposition did in the election, with his figure of 40 per cent. That figure was based on statistical bosh, and the figure in The Times is also based on statistical bosh. The newspapers should be more careful in printing these figures.

If the social contract is concerned with lower-paid workers, why did the Government reject the idea of a statutory minimum wage within the social contract? Is 28·5 per cent. taken as being within the social contract, in terms of average wage increases?

I shall take the hon. Gentleman's last point first. It is a very important matter, and nobody minimises its significance. About two-fifths of the 28·5 per cent. annual increase quoted in the reports today and in the figures published by my Department is the result of threshold agreements reached in accordance with the stage 3 code. A further 0·5 per cent. stems from the London allowance, in accordance with the recommendations of the Pay Board. In addition, nearly 2 per cent. is attributable to special cases for coal miners, railwaymen and postmen, leaving roughly 14½ per cent.—about the same as the figures we were getting under the basic stage 3 rules—[Interruption.] These are the facts of the matter. My figures happen to be correct—very different from those used in The Times.

The question whether assistance for the low-paid could be achieved by a statutory minimum has often been debated. There are grave difficulties. The TUC agreed at its last congress to set a £30 target for the low-paid. The Government have done their best to go along with that aim and I believe that under those arrangements the low-paid have had better assistance under the present Government than they have had for many years.

In his last answer the right hon. Gentleman has shown that he either does not understand what is happening or is deliberately trying to mislead the House on the information available. Does he not know perfectly well that the 28·5 per cent. includes the threshold payments, which should have been taken into account in the assessment of new wage increases? Were the figures given by the Chancellor of the Exchequer on Panorama last night—when he said that one out of four settlements fell outside the social contract—based on information available to the right hon. Gentleman's Department, or was what the Chancellor said just speculation? If it was based on figures available to the Department, why cannot the House have the same information?

If the right hon Gentleman had done me the courtesy of listening to the past two speeches that I have made in the House he would have learnt that I referred to 75 per cent. of settlements having been within the social contract. That is exactly the same figure as was referred to by my right hon. Friend the Chancellor. Perhaps I should translate these percentages into other kinds of figures for the benefit of the right hon. Gentleman. What the Chancellor said in that respect accords exactly with what I said on previous occasions. If the right hon. Gentleman is asking whether and how we should give futher figures on these matters, I must point out that many of the figures are given, with some of the details, in the Department of Employment's statement which was published yesterday. Everyone who knows anything about the figures knows that. If the right hon. Gentleman will study the reply that I sent to his letter, on the question why we think it would be wrong for the Government to adjudicate on every settlement, we may be able to have a proper discussion of the subject. I repudiate entirely the argument that the Government are withholding any figures from the House. We publish the figures on the same basis as did the previous Conservative Government.

Race Relations

6.

asked the Secretary of State for Employment if he will initiate an equal opportunity in employment programme in order to improve race relations in the field of employment.

As I stated in reply to a Question on 3rd December, we are planning to extend the Department's work in promoting equal opportunity between workers of different races. I hope to hold discussions in the near future with the various agencies concerned with this field to consider how the work can best be developed: [Vol. 882, c. 398.]

I am grateful to my hon. Friend for that reply. Does he agree that the problem is widespread, that it represents a great loss of talent and skill to the community at large and that it causes a great deal of frustration to those on the receiving end of discrimination? Does he accept that such frustration can easily lead to anti-social and even criminal behaviour?

I agree with my hon. Friend. It would be wrong not to use the full range of talents of people who have settled in this country and who are of a different colour from that of the white indigenous population. Having good race relations is of benefit not only to the minority but to the white community.

Does the Minister agree that the problem is exacerbated at a time when unemployment is increasing? Will he give an indication of any special action being taken by his Department to deal with the problem in the present circumstances?

There is no evidence before me—the figures are not available at present—of special problems arising out of unemployment. We are trying to develop language programmes. A Question has been tabled on that subject. If people have a skill and a command of the English language their chances of re-employment are much greater than if they suffer the disadvantage of not speaking English.

National Union Of Mineworkers

8.

asked the Secretary of State for Employment whether he will arrange to meet the Executive of the National Union of Mineworkers to discuss industrial relations.

34.

asked the Secretary of State for Employment what meetings he has had with the executive of the National Union of Mineworkers or the National Coal Board on industrial relations; and whether he will make a statement.

My right hon. Friend has had no such meetings, nor has he any plans for them.

Will the Minister tell the House what his right hon. Friend's attitude would be and what action he might take were the NUM to press for wage increases which, by common consent, were totally outside the terms of the social contract and which, because of that, the NCB refused, with the result that industrial action was threatened?

I can think of few areas in which it is less appropriate to answer hypothetical questions than in industrial relations. If any difficulty were to arise in negotiations, including that to which the hon. Gentleman has referred, I would indicate that the Advisory Conciliation and Arbitration Service is available to employers, managements and union negotiators.

Christmas Holiday

9.

asked the Secretary of State for Employment what study he has made of the number of firms which in 1974 had an eight-day holiday from Christmas to the New Year; and if, as a boost to the social contract, he will initiate discussions with the Trades Union Congress and the Confederation of British Industry on the possibilities of having an eight-day national holiday week covering Christmas to New Year's Day.

I do not think it would be timely, in present circumstances, to pursue this proposal for an extended national holiday at Christmas and the New Year.

No special study is in hand of the practices of firms during the Christmas and New Year period in 1974.

Does my hon. Friend accept that working people generally have been adversely affected by rising prices, and that it would be extremely helpful if some indication were given that there was a positive side to the concept of the social contract? We all accept that holidays are basically a matter for local negotiation, but does my hon. Friend agree that an initiative of this sort taken by my right hon. Friend the Secretary of State might be welcomed by the CBI—bearing in mind the disruption which takes place in the week in question—and by the TUC? Further, does he agree that the additional days which might be involved would be more than offset by the boost in productivity which would be generated?

I would hope that any negotiations which led to increased holidays would produce the desirable result to which my hon. Friend has referred. The wage guidelines that the TUC has issued in connection with the social contract do not make specific mention of public holidays. However, negotiators are recommended to make progress towards an annual holiday entitlement of four weeks.

Will the Minister take into account the fact that this country has fewer public holidays than most other European countries? Secondly, does he agree that what is happening is that an eight-day holiday from Christmas to the New Year is in existence? Will he give that his official backing?

It is correct that there are other countries in Europe which have longer holidays than we have. I understand that our position is similar to that of the Netherlands. Some other members of the Community have more public holidays. Practice varies widely among member countries. I know of no suggestion that there should be a common approach between all countries on this matter.

Would it be a better boost to the social contract if a clause were inserted into that slightly doubtful document to the effect that for a complete year's work people could have a bonus of a few extra days off?

As the overwhelming majority of people working in British industry and services put in a complete year's work I think that the hon. Gentleman's suggestion would result in a general bonus.

Trade Union Membership

10.

asked the Secretary of State for Employment whether the TUC has informed him of the date on which the TUC review body on exclusions and exemptions from union membership will come into operation.

No, but the TUC has said that it intends the independent review committee to be in operation early this year, and I understand it has been giving the matter consideration with a view to achieving this.

Does the Minister realise that many ordinary people still think it grossly unfair that the only redress against exclusion or expulsion from a trade union is an appeal to a body appointed by the TUC? Will he try to persuade the TUC to agree that there should be an appeal from this home-grown tribunal to the ordinary courts of the land? Further, will he try to get the TUC to agree that the procedure of the tribunal should be subject to the supervision and approval of the Council on Tribunals?

The appointment of the members of the tribunal will be made in consultation with the Chairman of the Advisory Conciliation and Arbitration Service and my right hon. Friend. The legislation which we are introducing and the steps that the TUC is taking to set up the tribunal in no way infringe the common law rights of people affected by exclusion or expulsion in the closed shop situation. I take the view that the majority of people will not consider this matter anything but a most reasonable and practical step in dealing with what is admitted to be an important but a small minority problem.

Advisory Conciliation And Arbitration Service

11.

asked the Secretary of State for Employment whether he remains satisfied with the work of the Conciliation and Arbitration Service.

Yes, Sir. The Advisory Conciliation and Arbitration Service continues to receive an increasing number of requests for advice on a range of industrial relations matters and for assistance in settling disputes. We have received tributes from all quarters—employers and trade unions—on the splendid way in which it has started its work.

In view of the Secretary of State's desire to give the House the fullest possible information on these matters, will he say how many settlements assisted by the ACAS have been in breach of the social contract? If he is serious in maintaining—he has done so constantly this afternoon—that strict allegiance to the guidelines is his main purpose, should he not instruct the ACAS to withdraw publicly from any negotiations at the point where the parties begin to discuss proposals which are in clear breach of the guidelines?

The hon. Gentleman misunderstands what we believe to be the purpose and possibility of success of the Advisory Conciliation and Arbitration Service. The chairman of the service, Mr. Mortimer, has publicly said that in present circumstances the service must have regard to the broad conceptions of the social contract and that it is right, when called in to assist, for it to inquire whether the parties to the dispute have taken account of the social contract. However, the responsibility for settlements rests with employers and unions. The service is absolutely independent of the Government. It is entitled to make up its mind on the basis of the facts put to it. If we interfered with that independence in the way the hon. Gentleman has suggested we would destroy the effectiveness of this body as a conciliative and arbitrating body. We have no intention of doing so. I believe that many disputes have already been settled because of the intervention of the service. Many more will be avoided because of the service, and I advise the hon. Gentleman, if I may be presumptuous enough to do so, to assist us in making the service work instead of attempting, by this kind of question, to undermine its independence.

Is my right hon. Friend aware that even before negotiations reach the stage where the service he has mentioned is called in, the whole atmosphere at shop-floor level is shrouded by the evil penumbra of the legislation introduced by the Conservative Party? Does he realise that this makes it terribly difficult for unions and management, which have not been at all assisted by the absurdities of the Industrial Relations Act which has done so much damage? May I say—

In response to my hon. Friend's question, I assure him that we are seeking to do our best to get rid of all the evil penumbra of the 1971 Act. We have not long to wait before that is achieved. Even before the abolition of that Act we have got this service into operation. It is not yet operating on a statutory basis. This will come in our later legislation. We believe that the service is in working order, and the House ought to pay tribute to the way in which Mr. Mortimer and his colleagues are doing the job.

Shipyards

12.

asked the Secretary of State for Employment whether he is yet in a position to estimate the effect on employment in civil shipyards of the cuts in the Royal Navy and the decision to concentrate naval work in the Royal Navy shipyards.

Until final decisions are taken on the proposals contained in the statement of my right hon. Friend the Secretary of State for Defence, following consultation with our allies and interested parties including shipbuilders, we cannot estimate the effects that changes in the defence programme will have on shipbuilders.

Is the right hon. Gentleman aware that the defence review provides for substantial reductions in the number of warships in the Navy and for no less than a one-third cut in the number of Royal fleet auxiliaries? Does he not accept that this must affect employment, particularly in yards which are situated in areas of present high unemployment? Will he press the Government to withdraw restrictions on the sale of warships to countries like Greece and Portugal?

The last part of that question is a matter for my right hon. Friend the Secretary of State for Defence rather than for my own Department. There will be an effective transfer of ship refitting from commercial yards. The only significant effect will be on those yards which undertook the refit of Royal fleet auxiliaries, including the yard in the hon. Gentleman's constituency. The absorption of this work into the Royal dockyards will take place only as capacity becomes available.

Since my hon. Friend has recently talked to Swan Hunter, the shipbuilding firm which has yards in my constituency and that of my hon. Friend the Member for Wallsend (Mr. Garrett), will he say whether it was the view of Swan Hunter that this would be likely to increase unemployment on a dramatic scale? Was that firm worried about employment prospects? I am told that it is not so worried.

My recent talks were with the shop stewards and management of Swan Hunter, in the ship repair division. They did not indicate any general concern about this effect. They were satisfied that they could operate efficiently and highly competitively. I hope that they will co-operate in this exercise in the belief that the Government are committed to maintaining the highest possible level of employment and that we are conscious that a great deal of shipbuilding and ship repair work takes place in the development areas.

Textile Industry

13.

asked the Secretary of State for Employment if he has had any recent talks with employers or trade unionists from the textile industry.

My right hon. Friend met Mr. Fred Dyson, Secretary of the National Association of Unions in the Textile Trade, on 14th November and discussed some of the problems facing the industry.

Is my hon. Friend aware that the textile industry is facing its worst crisis for 30 years, that over 50,000 people have been on short-time working of one form or another since Christmas, that more than five mills have been closed in the past two months and that many of the difficulties the industry is facing are caused by our membership of the Common Market? Will my hon. Friend discuss with his colleagues the possibility of obtaining some concessions—if we are not to leave the Common Market—so that the textile industry in this country is not killed off?

I appreciate the concern inside the textile industry. The figures I have, for November, show that 18,200 operatives in textiles were on short time. This is about 4·2 per cent of all the operatives in the industry. The import matters raised by my hon. Friend are the concern of the Department of Industry. I am sure that Ministers in that Department will study my hon. Friend's remarks.

Is the hon. Gentleman aware that what is happening in the textile industry is also happening in the shoe industry? Is he aware that both industries are seriously threatened by imports, not from the Community but from very much outside that, from COMECON countries and also from the Indian subcontinent? He said that these are matters for the Secretary of State for Industry, but I felt that the tone of his reply implied that his Department was not particularly interested in the problem. I hope that that is not correct. Will he confirm that the Department is taking an acute interest in something which involves substantial unemployment in many constituencies?

I give the hon. Member the fullest assurance that there is close co-operation between my Department and the Department of Industry. We are concerned whenever there is short-time working.

Does my hon. Friend accept that the figures he has given are a little outdated, since the situation in textiles changes from day to day? Will he impress upon his colleagues that we hope that in future they will be meeting more than one trade union official in the textile industry? Is he aware that the workers in the industry are becoming increasingly militant about the situation and that Members of Parliament representing textile interests are also becoming increasingly bloody-minded?

I ought to remind my hon. Friend that, apart from my right hon. Friend having a meeting with Mr. Fred Dyson, there have been meetings between the Under-Secretary of State for Industry and the National Joint Industrial Council for Hosiery and Knitwear, and a further meeting between the Secretary of State for Industry and the textile group of Members of Parliament. There is concern about this industry and wherever there is short-time working.

Is the Minister aware that there is considerable concern in the textile industry about the proposals contained in the consultative document relating to the Employment Protection Bill? We welcome the fact that consultations have been held with the unions, but may we have an assurance that careful consideration will be given to representations being made from the other side of this important industry?

I cannot give the hon. Gentleman a lot of help, but of course my right hon. Friend takes very seriously all representations made to him. I understand the point that is made.

Unemployed Persons

14.

asked the Secretary of State for Employment what is the latest unemployment figure for Birmingham.

On 9th September 1974, 20,135 people were unemployed in the Birmingham travel-to-work area. I regret that later figures are not available because of industrial action.

My right hon. Friend said last week that he hoped shortly to give the House some estimate of the figures for January. Present indications are that he will be able to give national and regional estimates later this week.

Is the Minister aware that the employment situation in Birmingham is giving rise to serious concern and that the current problems within the car industry—in particular, those of British Leyland—are adding to the fears? Will he ensure, in the investigations into the future of British Leyland, that employment and its prospects remain a top priority? He must be aware that if British Leyland catches a cold Birmingham and the West Midlands might catch pneumonia?

I am sure that that point is fully taken by my right hon. Friends. It will be helpful to my hon. Friend to know that British Leyland has so far no plans for short-time working and has recently received new export orders worth £10 million for commercial vehicles. I hope that that healthy atmosphere will continue.

Is the Minister aware that the people in Birmingham will regard it as very strange and highly suspicious that no reasonably accurate estimate of the numbers of people unemployed has been brought forward today? What rise has there been in the number of unemployed building industry workers in Birmingham? Is it not tragic that men in this category should be out of work when there is such a need for housing in the city?

I am sorry, but I cannot give the hon. Gentleman the figures. My right hon. Friend has made clear that he will make them available to the House as soon as possible. I congratulate the hon. Gentleman on taking such an interest in the housing programme now that he is on the back benches.

Is the Minister aware that trade union officials in the West Midlands are saying that the unemployment figures are rising rapidly and that they are concerned about them? Will my hon. Friend make representations to the Department of Industry that IDC policy should be less stringently applied to the West Midlands?

Of course, the unemployment situation is taken into account when IDCs are granted. If I recall rightly, the Department of Industry recently granted an IDC for an extension to the British Leyland works in the Midlands.

Is the Minister aware that the lack of success of the social contract is resulting in unemployment reaching higher levels than would otherwise be necessary? Will he impress on his right hon. Friend that the social contract involves the maintenance of a high level of employment and should not be just an excuse for causing unemployment, as is happening at present? Will the hon. Gentleman also ask his right hon. Friend to look at a reply which I gave in the summer in answer to a supplementary question, to the effect that the Opposition would co-operate in a review of the unemployment statistics so that the whole House and the country could be better aware of the true unemployment figures, and so that we might get a better balance into our economic judgment?

The latter part of the supplementary question hardly arises out of the original Question, and it is not a matter to be pursued here. In reply to the first part of the supplementary question, of course, one purpose of the social contract is to maintain the Government's objective in economic policy, which is a high level of employment. The observance of the social contract and a high level of employment go together.

Immigrants (Language Training)

15.

asked the Secretary of State for Employment what steps he is taking to encourage language training for immigrants at their places of employment.

The Government have launched a scheme to encourage local education authorities to establish language training units at the place of work. Proposals have now been submitted by authorities covering the main areas of need, and schemes for 18 authorities have already been approved. A national centre financed by the training services agency has been established to support the units and will become fully operational early this year. I am in correspondence with the Chairman of the Manpower Services Commission about the general development of language training in employment, and he has assured me that the training services agency will aim to ensure that where a need for language training exists it is properly met.

I thank my hon. Friend for that encouraging reply. I ask that the scheme should go ahead as quickly as possible because it will give all immigrants the opportunity to learn the language, it will help race relations and health and safety at work, and result in greater efficiency.

I am grateful for my hon. Friend's support. Language training helps immigrants to develop their skill and potential, increases productivity and helps race relations.

Will the hon. Gentleman ensure that the opportunities afforded by the national training centre are equally available to women in employment as they are to men?

Yes, we shall certainly make sure that training facilities are available irrespective of sex.

Does the scheme extend to National Health Service hospitals? Does the Minister accept that a true understanding of the English language is immensely important in securing accuracy of diagnosis?

The facilities which we are developing for language training will be available throughout the whole of industry if the services are called upon.

Eec Heads Of Government

Q1.

asked the Prime Minister what further talks he intends to have with the Heads of State of EEC Governments before the decision is taken to make a recommendation to the British people on the United Kingdom's future in or out of the Common Market.

Q3.

asked the Prime Miinster when he next plans to have an official meeting with EEC Heads of Government.

Q5.

asked the Prime Minister whether he plans to invite the Heads of EEC Governments to meet him in London.

Q6.

asked the Prime Minister when he next intends to meet the other EEC Heads of Government.

I expect to meet other Heads of Government at the next meeting of the European Council, which, as I explained to my hon. Friend the Member for Nuneaton (Mr. Huckfield) on 17th December, is for the Irish Government to convene.

Does my right hon. Friend agree that it is important that he should explain to the other Heads of State that he speaks for the Government, in view of the conflicting statements which have been made by Cabinet Ministers on British membership of the Common Market? Will my right hon. Friend make clear that the almost neurotic speech made by the Secretary of State for Trade in Brighton on Friday and the apparently deliberate misuse of figures produced by his Department do not represent the official policy of the Government?

I do not accept my hon. Friend's strictures on these statistics, or the misuse of them, but I accept that our partners in Europe are well aware, in all negotiations, that my right hon. Friend the Foreign and Commonwealth Secretary—who is our representative on the Council of Ministers—and I speak for the Government, and I shall do so at the next meeting of the Heads of Government.

Does not the Secretary of State for Trade, as a member of the Cabinet, have a collective responsibility for the Government's attitude towards the renegotiation? As the Secretary of State has declared himself as having no confidence in our future within the EEC, should not the Prime Minister ask for his resignation?

No, Sir. I read the speech very carefully. It contains a number of statistics from which my right hon. Friend drew conclusions, as he had the right to do—[Interruption.]—as he had the right to do. My experience of Common Market debates both within parties and between them from 1961 onwards is that in statistical matters on the Common Market truth is many-sided—[Interruption.]

Order. Last week complaints were made about the few Questions that the Prime Minister was able to answer. It would be much easier to get on if there were less noise.

We are concerned with renegotiating, in accordance with our manifesto, the terms entered into by hon. and right hon. Gentlemen opposite, and that we shall do.

Will my right hon. Friend discuss with his colleagues our adverse trade balances with other countries in the Common Market, including £800 million with West Germany, £600 million with the Netherlands, £400 million with France and £200 million with Italy? Is my right hon. Friend satisfied that we have sufficient freedom within the Common Market to take the corrective action necessary to remedy these adverse balances?

I answered that question last week. Certainly we have taken up these questions. They are very serious. That is what my right hon. Friend was talking about at the weekend.

Is the Prime Minister aware that his hon. Friend the Member for Fife, Central (Mr. Hamilton) has a great deal more courage than the Prime Minister himself and that the Heads of Government in the EEC and millions of people in this country are crying out for leadership from him on this and on other issues? Is there any chance that, sooner or later, the Prime Minister will start to do what he believes to be right with the nation rather than what he hopes will be popular with his party?

On this question I shall, unlike my predecessor, fight for British interests in these negotiations.

Will the Prime Minister promise the Heads of State when he meets them that in initiating the results of the referendum he will establish a clear position on the question whether the people of Scotland have either supported it or, as is more likely, rejected it and the consequences thereof?

I cannot anticipate the votes of any part of the United Kingdom when the decision is taken. I assure the hon. Lady that I intend to make a statement on Thursday on all relevant aspects of the test of British public opinion on this matter. The arrangements which we are proposing will be subject to the final authority of this House in the matter of legislation.

Will my right hon. Friend make clear to the Heads of State when he meets them that he has no intention of attempting to gag or remove any Minister who is trying, in his own sincere way, to advocate party policy, and that if he attempted to do so it would invoke a great deal of anger?

I agree with my right hon. Friend. The difference between the Labour Government and their Conservative predecessors is that we are not a Cabinet of cronies.

Order. I had already called the right hon. Member for Devon, North (Mr. Thorpe).

I have always backed the idea that on this issue there should be a free vote, unlike the right hon. Gentleman the Prime Minister, who is moving in that direction, which I welcome. Will he say whether, if it be a fact that the Government are negotiating in good faith with the hope that they may reach a solution which they will be able to recommend to the British people, they will find the speeches made by the right hon. Gentleman the Secretary of State for Trade and the Secretary of State for Industry—who are pathological, if not congenial, in their hatred of the Common Market—hopeful or helpful to the negotiations, or whether they are treated by our European colleagues as irrelevant?

I do not accept the strictures which have been made, as I made clear to my hon. Friend the Member for Fife, Central (Mr. Hamilton). The right hon. Member for Devon, North (Mr. Thorpe) talks of a free vote. I must tell him that the Labour Government will get, without support from his or any other Opposition Party, a free vote of the whole British people. I should make an exception, because the hon. Member for Rochdale (Mr. Smith), when speaking in the election, said that he supported a referendum on this matter—[Interruption.] Yes, he said so at the time. But the right hon. Gentleman fought the two recent elections opposing the right of a free vote of the British people.

In the public debate for which the Prime Minister called yesterday—which has been going on for 15 years—will he recognise that the important element is the debate in this House and that this House should have the opportunity of coming to its own conclusion again—and should do so this time on a free vote of the whole House? Will he give an undertaking that as he has not the political courage to enforce collective responsibility in his Cabinet, at least he will have the political wisdom, this time, to give a free vote to everybody on his own side of the House?

I have already said that I shall be making a statement on this matter on Thursday. Traditionally, the question of a free vote is a matter of advice by the Chief Whips of any party. [Interruption.] I can remember this having been said many times by Mr. Macmillan when he was Leader of the Conservative Party. Since he is looked back on with great nostalgia, I thought I would remind the House of that fact. The right hon. Gentleman the Leader of the Opposition referred to the public debate for which I called yesterday. I think that he and I may be in agreement on that matter. I said that in regard to the test of public opinion later this year the rules must be made by this House and that we not only intend to have a debate on the result of the renegotiations for which the right hon. Gentleman asked today and last week but also, when we have put forward our proposals for a test of opinion, that it would probably be right, after consultation through the usual channels, to have a debate on the general rules for the test of public opinion by the free vote of the British people, which the right hon. Gentleman, when Prime Minister, refused to give them.

Inflation (Minister's Speech)

Q2.

asked the Prime Minister whether the public statement on inflation made in Washington, DC, on 10th December by the Secretary of State for Prices and Consumer Protection represented Government policy.

Q4.

asked the Prime Minister if the public statement on inflation by the Secretary of State for Prices and Consumer Protection in Washington, DC, on 10th December represents the policy of Her Majesty's Government.

I would refer the hon. Members to the reply which I gave to the hon. Member for Mid-Sussex (Mr. Renton) on 19th December.—[Official Report, 19th December 1974; Vol. 882, c. 528.]

In her statement on 10th December the right hon. Lady forecast inflation at a rate of 17 per cent. We now have a rate of 19 per cent., and wage rates have risen by 28 per cent. What has happened to the Prime Minister's newfound determination in this matter? How could Ministers yesterday go to the TUC and tamely say that they are satisfied with guidelines which have produced this disastrous combination of figures, which, so far as I can see, are without parallel in the Western world?

The hon. Gentleman has read a particular report of my right hon. Friend's speech. I have read what she actually said, which does not bear out the hon. Gentleman's summary. With regard to the meeting with the TUC yesterday, we did not say that we were satisfied with the situation. We said exactly what I said in the House last week—namely, that we should like to see more compliance with the social contract. I remind the hon. Gentleman that the figures which have been published by the Government show that two-fifths of the increases in the past year have been due to the threshold payments under agreements reached in accordance with the Conservative Government's statutory policy, which on thresholds we supported. In addition, some of the special increases awarded since then were in respect of people who had suffered serious anomalies under statutory controls, such as the miners, the railwaymen and the postmen—and London weighting had not been substantially reconsidered for some seven years.

Is my right hon. Friend aware that there is considerable confusion about the purpose of the social contract? Does he think it appropriate to spell out the purpose of the terms contained within it? Does he agree that if it is the purpose of the social contract to maintain workers' living standards—workers whom the Labour Party are here to represent—then what the social contract refers to is take-home pay and not gross wages? Does this not suggest that it is take-home pay that should equate with rises in the retail price index?

There is no ministerial responsibility for any confusion that there may be in my hon. Friend's mind. There is no confusion whatever, as was made clear yesterday by the leaders of the TUC with whom my colleagues and I discussed these questions.

Will the Prime Minister not answer the question put to him by the hon. Member for Tottenham (Mr. Atkinson)? Will he not inform him that there is no possibility whatever that take-home pay can be maintained in the corning year?

No, Sir. The argument yesterday, the argument last week in the House, and the argument throughout, has been about the guidelines. We consider those guidelines to be right. We believe that they will make a marked impact on the rate of inflation that we inherited from the Conservative Government—[Interruption.] We believe that this will happen. We should like to see greater compliance with the social contract than the 75 per cent. figure we have seen so far. The House will have seen the report made by independent commentators—not members of the Labour Party—showing that in the latest period the rate of increase has been falling. The fact that the rate of increase has been higher in public industries than in private industries is due to the essential catching-up operation, which was inevitable after the statutory policy pursued by the Conservative Government.

Is my right hon. Friend aware that the social contract has had a far greater impact on local bargaining than could ever have been expected in the circumstances in which it was introduced after the Tory repressive legislation? Is he aware that local trade union officials throughout the country are doing their best to ensure that it will succeed?

Yes, Sir. My hon. Friend has had much more experience of these matters, in terms both of national and local bargaining within the trade union movement, than most of those who have been putting questions this afternoon. I entirely agree with him. He is, of course, concerned with one of the public industries that were gravely attacked by the previous Government, not only during the statutory period but during the period of the Leader of the Opposition's confrontation with the Post Office workers a little earlier.

Is the Prime Minister aware that there is no justification for the argument that he constantly puts forward that threshold agreements are the cause of the massive increases the figures for which were published yesterday? The guidelines of the TUC are that the threshold payments should be taken into account in settlements which are now being made. The plain fact is that the threshold agreements are not being taken into account—hence the very high figures that we saw yesterday. As, in the lifetime of the present administration, since March last year, the rate of price increases has doubled and the rate of wage earnings has more than doubled, and the Secretary of State for Prices and Consumer Protection says that in this year it will get worse, when will the Prime Minister have the political courage to take action, instead of merely talking?

In the first place, I do not accept the right hon. Gentleman's statement about thresholds. The latest increases—those which appeared in yesterday's figures—included a considerable number in which the threshold system was incorporated into the wage settlements. This was inevitable; the Leader of the Opposition must have had it in mind when he introduced thresholds. I do not accept that either prices or wages—this is what the right hon. Gentleman said—are double what they were a year ago. He is totally wrong about that.

International Monetary Fund (Meetings)

With permission, I should like to make a statement about the recent international monetary meetings.

In Washington last week I attended meetings of the Interim Committee of the International Monetary Fund and of the Group of Ten, and had some valuable private conversations with colleagues in the United States and with finance ministers of other countries attending the same meetings. In the two main meetings I acted, following the earlier EEC discussions under my chairmanship in London, as spokesman for the agreed views of EEC Governments. Communiqués were issued recording the outcome of the IMF Interim Committee meeting and the decisions taken in the Group of Ten on a separate subject. With permission, I will circulate the full texts of both in the Official Report.

The meetings were held in an atmosphere of widespread concern about the risks of serious recession during 1975—a concern which I have voiced for many months. But there was also a gratifying determination to accept the reality of these dangers, to urge and to take appropriate domestic and international measures to mitigate them, and to reach immediate decisions on the major proposals under consideration at our meetings. The economic measures announced by the United States during the week were welcomed in this context. Details of the decisions are set out clearly in the communiqué, but I should like to underline the main features.

First, there was unanimous agreement to extend and enlarge the IMF oil facility for 1975, to authorise new borrowing up to SDR 5 billion, and to keep the operation under constant review; it was also unanimously agreed that, while the facility will broadly operate at market-related interest rates, arrangements will be made for borrowers from among the most severely affected developing countries to pay much lower rates.

Second, the Group of Ten agreed that a solidarity fund should be established in the OECD as a safety net for its members in case other international measures proved inadequate. Each participant would have a quota which would serve to determine both its obligations and its borrowing rights. Total quotas would be about $25 billion, available for two years. Some important features still have to be worked out, but the target is approval by OECD Ministers within a few weeks.

Third, there was agreement on the main features of the current review of IMF quotas. The total size, which indirectly determines the level of normal IMF resources, should be increased by 32·5 per cent., from SDR 29·2 billion to SDR 39 billion. Within this total increase, the combined share of OPEC countries should be doubled and the combined share of other developing countries should remain unchanged. This will, of course, involve some reduction in the relative share of the industrial countries. Country by country changes are to be worked out in the IMF within this framework.

Finally, agreement in principle was achieved—with some details settled—on a range of amendments to the IMF Articles. Many of the amendments, full details of which are to be worked out by the IMF Executive Board, will be designed to improve the usability of the SDR and IMF general resources in the context of present and prospective monetary conditions. But the most interesting features are the progress towards agreement to recognise the legality of the floating of currencies and towards new arrangements concerning gold, designed to abolish the official price for gold, eliminate obligatory payments of gold by members to the IMF, and allow freedom for central banks to enter into gold transactions under conditions which will ensure that the rôle of gold in the international monetary system will be gradually reduced.

Some strenuous bargaining was involved in the achievement of these results. That they were in the end achieved, and through concessions on particular points from every participant, underlines the determination of all to make progress without further delay.

I believe that the two major results of the meetings are the additional measures of recycling and financial support which have been agreed and the important moves towards resolving long-standing arguments about gold, legality of floating, and so on, which will help us to rebuild a more effective International Monetary Fund.

Overall, with the oil facility, the OECD solidarity fund and the prospective increases in quotas, we now have a greatly improved battery of weapons to meet the financing difficulties which many countries are bound to face in the coming months. This means that those countries can face their difficulties with much greater assurance of support. The whole world in turn can be more confident of avoiding further reductions in trade and economic activity which might otherwise have been unavoidable.

It is clearly of the greatest importance that there should be good international arrangements to deal with the petrodollar recycling problem and to reduce the risk of individual countries being driven to take "beggar my neighbour" policies and push the world into a general slump. Therefore, we welcome the real progress which was clearly made at Washington last week and we assure the right hon. Gentleman of our general support in these matters. Perhaps I could ask him a few questions.

First, the size of the IMF facility, I understand, is SDR5 billion or $6 billion but this compares with the $12 billion to $14 billion that the EEC agreed at its meeting the previous week was required. Has the right hon. Gentleman anything to say about the size and what the chances are of increasing it above 5 billion if necessary?

Second, would the right hon. Gentleman make a further statement in due course about the solidarity fund when the important features to which he refers have been worked out—hopefully, over the next few weeks? Third, in relation to the OPEC countries' quotas to the IMF and their projected increase—doubling, I think the right hon. Gentleman said—have those countries been consulted and have they agreed to that?

Finally, would the right hon. Gentleman agree that the unanimity with which the EEC approached the Washington conference helped in its success? Is it not a fact that our membership of the EEC strengthened our position in getting the benefits which he is claiming?

First, let me express my gratitude for the welcome that the right hon. Gentleman has given and for his assurance of support from the Opposition.

On the question of the size of the IMF facility, every country represented at these meetings except the United States would have preferred a much larger sum, but it was agreed that the needs of the situation would be kept under constant review and it is open to the Interim Committee to reconsider the matter later in the year if the requirement appears larger. Apart from the possibility of increasing the amount of borrowing from the OPEC countries, it may be possible to make use of the IMF's own resources, and the IMF has resolved to investigate that possibility. So I think that we have some assurance there.

On the question of the OECD solidarity fund, I shall certainly make a statement to the House as soon as an agreement is reached in detail on this matter. It may be desirable for the House to consider and to vote on the question before final decisions are taken. It will certainly be so desirable, I think, in the Congress of the United States. This is one reason why it may be many months before this OECD solidarity fund is possibly able to operate.

On the question of consultation with the OPEC countries, I had, as I think I told the House some weeks ago, the opportunity of discussing these ideas before they were agreed with the Government of Saudi Arabia when I was there in December, and I was assured of their general support. But the OPEC countries were directly represented at the Washington meeting and all voted for this proposal, although there will undoubtedly be a strenuous negotiation about the precise rate of interest which is offered to these countries in the light of the exceptional security which a borrowing by the IMF entails.

On the last question, regarding the Common Market, it was undoubtedly of immense value that the European countries were completely united on this matter from a week before the meeting took place. This illustrates for me the advantage of European countries concentrating on co-operation on issues where there is a clear common interest to be pursued rather than pursuing the theological intricacies of the Treaty of Rome. In this particular respect I am reminded very much of the advantage I found as Secretary of State for Defence some years ago, when Britain's entry to the Common Market had been vetoed by the French Government, in setting up a Eurogroup inside NATO which was able to exercise a very powerful European influence.

I congratulate my right hon. Friend the Chancellor on his leadership and success at the world-level negotiations last week. Does he not now think it urgent that this country's economic strength begins to correspond to the prestige and place that we still enjoy in world councils? Is he satisfied that the second IMF oil facility is adequate? If not, does he think that it can be topped up, and, if so, from where?

I am grateful to my hon. Friend for his earlier remarks. I think that the success of the negotiations last week showed that Britain could command immense influence in the world if, as I said earlier, she concentrates on trying to organise support from like-minded countries on issues on which a clear common interest is to be achieved.

With respect to my hon. Friend, I think that I very largely answered his second question when answering the right hon. Member for Carshalton (Mr. Carr). However, if I may repeat what I said, although I and all the other members of the IMF except the United States were disappointed at the final size agreed for the expanded IMF facility, we have agreed to keep this under review. The possibility of increasing borrowing from OPEC countries is there, and it may be possible to make use of the existing resources of the IMF.

What inference is to be drawn from the fact that the only reference to interest rates was the exceptional treatment to be afforded to developing countries? Does the right hon. Gentleman have anything to report as to international discussion or corporate thinking in regard to interest rates as a factor in capital investment and thereby in combating recession?

The right hon. and learned Gentleman has very ingeniously sought to move the discussion rather some distance from the matters on which I made the statement. But in answer to what he has said may I say, first, concerning the IMF facility, that the money will be borrowed from the OPEC countries at market-related rates taking account of the special security offered to lenders by the fact that the IMF is a guarantor of their loans. On the wider question which I thought the right hon. and learned Gentleman sought to introduce, it is the Government's aim to secure a fall in interest rates world-wide. No doubt he will have noticed that it has been possible in the last few days for the United Kingdom to reduce both minimum lending rate and base rate. I hope that he welcomes this.

I congratulate my right hon. Friend the Chancellor on the very important progress that has been made, and I recognise the important rôle played by the IMF in these negotiations. Does not the Chancellor agree, however, that if we are to give the OPEC countries the real security they require in recycling their funds, some form of international bank and international currency is becoming essential? Does he regard his meetings as a first step to that end?

I certainly do not regard the agreements reached last week as in any sense solving the oil problem or even solving the problem of the gigantic petrodollar surplus. While I was in Washington I said that I hoped that, in addition to further moves in the direction we laid down last week, it may be possible for us shortly to discuss some means of setting up an international intermediary body which would make it possible for the OPEC countries to invest some of their money in increasing productive capacity in the consumer countries so that the transfer of resources which will take place when the OPEC countries are capable of absorbing imports to the value of the oil they now export may take place without any fall in the standard of living in the consumer countries.

Is the right hon. Gentleman aware that we welcome almost any international measures in this situation? However, is he also aware that his remarks about the reduction in the rôle of gold are likely to raise a hollow laugh throughout the world? Will he be a little more forthcoming about his promises of action on the domestic front in his statement? Will he accept that our ability to borrow and, therefore, our chances of averting a sterling crisis have so far been entirely due to the promise of North Sea oil and that confidence in that is now ebbing? Is it not a fact that if we are to avoid a sterling crisis within the next four months, we must choose between a statutory incomes policy or massive and unacceptable unemployment?

The hon. Gentleman is an expert in hollow laughter, but I did not find this to be the reaction of my colleagues at the IMF. When the hon. Gentleman has had an opportunity to study what I have said more carefully, I think he will take a more balanced and less frivolous view. On the second part of his remarks, I do not find his crocodile tears any more helpful than his hollow laughter.

In the context of the right hon. Gentleman's reference to IMF oil quotas for 1975, did he discuss IMF quotas for succeeding years? Did he take into account the fact that Scottish oil will be flowing in the succeeding years, and the fact that that oil will very shortly belong to Scotland?

On the question of the increases in quotas, we agreed that the increases will stand for some years. I am not in a position to tell the House at this moment the number of years after which we propose to consider a further change in the quota system. On the second part of the question, I assure the hon. Gentleman that we took into account all relevant considerations.

Does my right hon. Friend agree that this will not be the last international discussion on these matters and that good understanding between European countries will continue to be important? If this country were of its own choice, and not of someone else's choice, to vote to come out of the Community, does he think that this would make it easier for him to get on with his European colleagues or more difficult?

I am afraid that some hon. Members are consistently trying to draw me some distance away from the subject of my statement. I commented on the point that my right hon. Friend has made that the type of co-operation we achieved on this matter a fortnight ago, which contributed so greatly to the success in Washington, was very analogous to that which we achieved in the Eurogroup of NATO in the later years of the 1960s when Britain was not a member of the Common Market and France, though not a member of the Eurogroup, was.

Does the Chancellor not agree that, after this impressive start on recycling, it is now essential for the consumer countries to reach agreement with the OPEC countries on the terms of reference by which the price of oil itself will be governed? Will he tell the House something about his ideas on the appropriate forum for this kind of discussion? There have been differences of opinion between France and the Americans. Will he expand a little on his ideas on the kind of framework—the rules and restraints—governing the encouragement of direct investment by OPEC countries in the West?

I know that the hon. Member is a close student of these methods. However, some of the questions raised by him would require a lengthy speech rather than a rapid comment.

I have always believed that the right point of entry to a dialogue with the oil producers on the whole range of problems raised by the recent increase in prices is an issue on which a common interest can be recognised from the start. We have that in the IMF facility. I believe that the discussions we have had with the producers on finding a stable and reliable location for part of their funds may open the way to wider discussions.

The President of France and the President of the United States reached an agreement at Martinique to begin discussions with the oil producers in which the less-developed countries would also take part. It is envisaged that the initial discussions on this matter probably at official level, will take place in the spring. The Americans attach great importance to the fact that we have reached agreement on a solidarity fund inside the OECD and that ministerial agreement on the details will be completed before the negotiations with the oil producers take place.

Beyond that I think I should be trespassing on the patience of the House if I attempted to describe my ideas in more detail.

Is there any quid pro quo for the apparent French aquiescence of the Minister's action with regard to the financial rôle of gold?

The most difficult issue within the fund is the difference of view between France and all the other member countries on the rôle of gold. Great progress was made in the meeting in Washington last week in narowing the area of difference on this matter. We hope that we shall finally close the gap in the coming months so that it will be possible to present Parliaments all over the world with an agreed package of amendments to the articles of the IMF which can be put to the various Parliaments at the same time.

Put into simple English, does not the Chancellor's statement mean that he has succeeded in borrowing a great deal more money to finance a higher rate of inflation for the future? Is he sure that that is wise and prudent?

Put into simple English, the answer is "No, Sir". The world recognises that for several years, perhaps for many years, it will not be possible for the oil producers to absorb imports of goods and services to the present value of the oil they export. Unless there is a collapse of the international monetary system, or unless the consuming countries are compelled to reduce the level of their industrial activity to a point which would require widespread unemployment, some means of recycling those funds must be found. I am glad to tell the hon. Member, in the simplest English, that the agreements we made last week remove one of the major factors which could otherwise have produced a gigantic international crisis on the scale of the 1930s.

Following are the communiqués:

Press Communiqué of the Interim Committee of the Board of Governors on the International Monetary System

1. The Interim Committee of the International Monetary Fund held its second meeting in Washington, D.C. on January 15 and 16, 1975. Mr. John N. Turner, Minister of Finance of Canada, was in the chair. Mr. H. Johannes Witteveen, Managing Director of the International Monetary Fund, participated in the meeting. The following observers attended during the Committee's discussions of the matters referred to in paragraphs 2, 3, and 4 below: Mr. Henry Konan Bedié, Chairman, Bank-Fund Development Committee; Mr. Gamani Corea, Secretary General, UNCTAD; Mr. Wilhelm Haferkamp, Vice President, EC Commission; Mr. Mahjoob A. Hassanain, Chief, Economics Department, OPEC; Mr. René Larre, General Manager, BIS; Mr. Emile van Lennep, Secretary General, OECD; Mr. Olivier Long, Director General, GATT; Mr. Robert S. McNamara, President, IBRD.

2. The Committee discussed the world economic outlook and against this background the international adjustment process. Great concern was expressed about the depth and duration of the present recessionary conditions. It was urged that anti-recessionary policies should be pursued while continuing to combat inflation, particularly by countries in a relatively strong balance of payments position. It was observed that very large disequilibria persist not only between major oil exporting countries as a group and all other countries, but also among countries in the latter group, particularly between industrial and primary producing countries. Anxiety was also voiced that adequate financing might not become available to cover the very large aggregate current account deficits, of the order of US$30 billion, in prospect for the developing countries other than major oil exporters in 1975.

3. The Committee agreed that the Oil Facility should be continued for 1975 on an enlarged basis. They urged the Managing Director to undertake as soon as possible discussions with major oil exporting members of the Fund, and with other members in strong reserve and payments positions, on loans by them for the purpose of financing the Facility. The Committee agreed on a figure of SDR 5 billion as the total of loans to be sought for this purpose. It was also agreed that any unused portion of the loans negotiated in 1974 should be available in 1975. The Committee agreed that in view of the uncertainties inherent in present world economic conditions, it was necessary to keep the operation of the Oil Facility under constant review so as to be able to take whatever further action might be necessary in the best interests of the international community. It was also understood that during the coming months it would be useful to review the policies, practices, and resources of the Fund since it would he appropriate to make increased use of the Fund's ordinary holdings of currency to meet the needs of members that were encountering difficulties.

4. The Committee emphasised the need for decisive action to help the most seriously affected developing countries. In connection with the Oil Facility, the Committee fully endorsed the recommendation of the Managing Director that a special account should be established with appropriate contributions by oil exporting and industrial countries, and possibly by other members capable of contributing, and that the Fund should administer this account in order to reduce for the most seriously affected members the burden of interest payable by them under the Oil Facility.

5. The Committee considered questions relating to the sixth general review of the quotas of members, which is now under way, and agreed, subject to the satisfactory amendment of the Articles, that the total of present quotas should be increased by 32·5 per cent. and rounded up to SDR 39 billion. It was understood that the period for the next general review of quotas would be reduced from five years to three years. The Committee also agreed that the quotas of the major oil exporters should be substantially increased by doubling their share as a group in the enlarged Fund, and that the collective share of all other developing countries should not be allowed to fall below its present level. There was a consensus that because an important purpose of increases in quotas was strengthening the Fund's liquidity, arrangements should be made under which all the Fund's holdings of currency would be usable in accordance with its policies. The Committee invited the Executive Directors to examine quotas on the basis of the foregoing understandings, and to make specific recommendations as promptly as possible on increases in the quotas of individual member countries.

6. I. The Committee considered the question of amendment of the Articles of Agreement of the Fund. It was agreed that the Executive Directors should be asked to continue their work on this subject and, as soon as possible, submit for consideration by the Committee draft amendments on the following subjects:

  • (a) The transformation of the Interim Committee into a permanent Council at an appropriate time, in which each member would be able to cast the votes of the countries in his constituency separately. The Council would have decision-making authority under powers delegated to it by the Board of Governors.
  • (b) Improvements in the General Account, which would include (i) elimination of the obligation of member countries to use gold to make such payments to the Fund as quota subscriptions and repurchases and the determination of the media of payment, which the Executive Directors would study, and (ii) arrangements to ensure that the Fund's holdings of all currencies would be usable in its operations under satisfactory safeguards for all members.
  • (c) Improvements in the characteristics of the SDR designed to promote the objective of making it the principal reserve asset of the international monetary system.
  • (d) Provision for stable but adjustable par values and the floating of currencies in particular situations, subject to appropriate rules and surveillance of the Fund, in accordance with the Outline of Reform.
  • II. The Committee also discussed a possible amendment that would establish a link between allocations of SDRs and development finance, but there continues to be a diversity of views on this matter. It was agreed to keep the matter under active study, but at the same time to consider other ways for increasing the transfer of real resources to developing countries.

    7. The Committee also agreed that the Executive Directors should be asked to consider possible improvements in the Fund's facilities on the compensatory financing of export fluctuations and the stabilisation of prices of primary products and to study the possibility of an amendment of the Articles of Agreement that would permit the Fund to provide assistance directly to international buffer stocks of primary products.

    8. There was an intensive discussion of future arrangements for gold. The Committee reaffirmed that steps should be taken as soon as possible to give the special drawing right the central place in the international monetary system. It was generally agreed that the official price for gold should be abolished and obligatory payments of gold by member countries to the Fund should be eliminated. Much progress was made in moving toward a complete set of agreed amendments on gold, including the abolition of the official price and freedom for national monetary authorities to enter into gold transactions under certain specific arrangements, outside the Articles of the Fund, entered into between national monetary authorities in order to ensure that the rôle of gold in the international monetary system would be gradually reduced. It is expected that after further study by the Executive Directors, in which the interests of all member countries would be taken into account, full agreement can be reached in the near future so that it would be possible to combine these amendments with the package of amendments as described in paragraphs 6 and 7 above.

    9. The Committee agreed to meet again in the early part of June 1975 in Paris, France.

    COMMUNIQUE OF THE MINISTERIAL MEETINGS OF THE GROUP OF TEN in Washington on 14th and 16th January 1975.

    1. The Ministers and Central Bank Governors of the ten countries participating in the General Arrangements to Borrow met in Washington on the 14th and 16th of January 1975, under the Chairmanship of Mr. Masayoshi Ohira, Minister of Finance of Japan.

    The Managing Director of the International Monetary Fund, Mr. H. J. Witteveen, took part in the meetings, which were also attended by the President of the Swiss National Bank, Mr. F. Leutwiler, the Secretary-General of the OECD, Mr. E. van Lennep, the General Manager of the Bank for International Settlements, Mr. R. Larre, and the Vice-President of the Commission of the EEC, Mr. W. Haferkamp.

    2. After hearing a report from the Chairman of their Deputies, Mr. Rinaldo Ossola, the Ministers and Governors agreed that a solidarity fund, a new financial support arrangement, open to all members of the OECD, should be established at the earliest possible date, to be available for a period of two years. Each participant will have a quota which will serve to determine its obligations and borrowing rights and its relative weight for voting purposes. The distribution of quotas will be based mainly on GNP and foreign trade. The total of all participants quotas will be approximately $25 billion.

    3. The aim of this arrangement is to support the determination of participating countries to pursue appropriate domestic and international economic policies, including co-operative policies to encourage the increased production and conservation of energy. It was agreed that this arrangement will be a safety net, to be used as a last resort. Participants requesting loans under the new arrangement will be required to show that they are encountering serious balance-of-payments difficulties and are making the fullest appropriate use of their own reserves and of resources available to them through other channels. All loans made through this arrangement will be subject to appropriate economic policy conditions. It was also agreed that all participants will jointly share the default risks on loans under the arrangements in proportion to, and up to the limits of, their quotas.

    4. In response to a request by a participant for a loan, the other participants will take a decision, by a two-thirds majority, on the granting of the loan and its terms and conditions, in the case of loans up to the quota, and as to whether, for balance-of-payments reasons, any country should not be required to make a direct contribution in the case of any loan. The granting of a loan in excess of the quota and up to 200 per cent. of the quota will require a very strong majority and beyond that will require a unanimous decision. If one or more participants are not required to contribute to the financing of a loan, the requirements for approval of the loan must also be met with respect to the contributing participants.

    5. Further work is needed to determine financing methods. These might include direct contributions and/or joint borrowing in capital markets. Until the full establishment of the new arrangement, there might also be temporary financing through credit arrangements between central banks.

    6. Ministers and Governors agreed to recommend the immediate establishment of an ad hoc OECD Working Group, with representatives from all interested OECD countries, to prepare a draft agreement in line with the above principles. In their view this work should be concluded in time to permit approval by the OECD Council by the end of February 1975.

    Divorce Law Reform (Scotland)

    3.54 p.m.

    I beg to move,

    That leave be given to bring in a Bill to amend the law of Scotland relating to divorce, dissolution of marriage and judicial separation and to the power of the court to award interim aliment; and for purposes connected with the matters aforesaid.
    It is now five years since this House carried through a far-reaching reform of the English law on divorce. Five years later the Scottish law on divorce remains obstinately stuck at the point from which the rest of the island departed in 1969. That, of itself, is not a compelling argument for reform. There are certainly anomalies which arise in the situation, but these we could thole if the Scottish law were satisfactory. However, it is not satisfactory. It is still firmly rooted in the doctrine of matrimonial offence. No couple in Scotland can obtain a divorce unless one spouse is prepared publicly to accuse the other spouse of adultery, desertion or cruelty. No marriage in Scotland can be ended unless the partners are prepared to pursue each other through the courts, one accusing the other. It is a formula for creating the maximum bitterness, humiliation and recrimination in the ending of what was once a personal matter. It is also a formula which guarantees the minimum likelihood of the couple coming to a sensible and lasting agreement on such questions as custody, access to children and maintenance payments.

    Any hon. Member who has witnessed a couple going through the mill will be aware of how true the words of the Scottish Law Commission were when it observed in its report on divorce that the progress of the average defended case was "quite enough to kill any marriage stone-dead even if it may have had a flicker of life in it up to the trial."

    If I obtain leave of the House to introduce the Bill, I shall introduce a measure similar to the Bills brought in by my hon. Friends the Members for Fife, Central (Mr. Hamilton) and Aberdeen, North (Mr. Hughes). It would scrap matrimonial offence as the basis of divorce, and replace it with the concept of irretrievable breakdown. Such a formula would enable the State decently to bury a marriage which was already dead without obliging the courts to enter into a moral judgment as to which spouse killed the marriage.

    I do not accept the argument that such a reform would make divorce any easier. It is a remarkable but true fact that the rate of increase in divorce in Scotland has accelerated faster in recent years than has been the case in England under the new law based on irretrievable breakdown.

    Any couple in Scotland who both wish to obtain a divorce can obtain it under the present law provided they both agree to convince the court that an offence has occurred. Nevertheless, I admit that there are two distinct groups who would be able to obtain a divorce under this Bill but cannot do so at present. First, there are those couples who agree that their marriage is at an end, yet no matrimonial offence has taken place and they are not prepared to invent one. I have received a large mailbag since it was announced that I intended to try to bring in this Bill. I refer to one of those letters written by a gentleman living in the Borders. He and his wife agreed to part seven years ago. There was no adultery, no cruelty, and no wilful desertion, and neither spouse is prepared to pretend that there was. Neither spouse is prepared to take up the year's residence in England to obtain an English divorce under the present law. Therefore, there is no hope of their obtaining a divorce.

    There is no point in deluding ourselves that by refusing to recognise that this marriage has broken down we are somehow strengthening the institution of marriage. We are not. We are simply making the law look an ass.

    The second group enabled under the Bill to obtain a divorce who cannot now do so are those couples in respect of whom there has been a matrimonial offence but the spouse who is regarded in law as innocent is unwilling, or refuses, to bring an action for divorce.

    I propose to include in my Bill a clause similar to the English provision whereby either party can bring an action for divorce after five years' separation. In previous debates hon. Members have seen this provision as enabling middle-aged husbands to discard ageing wives of whom they were tired. The belief that younger women are irresistibly attracted to middle-aged men reveals considerable male conceit.

    The most persuasive letters I have received arguing in favour of this clause have come from women. I refer to one letter I received from a woman writing from the West Coast who deserted her husband seven years ago because he battered her. Like many battered wives, she concealed the humiliation, and because neither neighbours nor relatives knew what happened she had no evidence or witnesses on which to ground a suit for cruelty. Since the husband will not divorce her for desertion she has no hope of freedom to marry the man she has since met. I see no possible social objective which is served by compelling her to live in adultery rather than in the married state. Nor is hers an isolated case. Looking at the figures for England, last year a clear, though narrow, majority of cases brought under the five-year rule was not brought by ageing male Casanovas but by women. I expect experience in Scotland to be similar if we reform our law in this way.

    I recognise there are hon. Members who have very serious reservations regarding the provisions for reconciliation and maintenance payments to be included in any measure. I respect these reservations, and in many ways I share them. But I ask those hon. Members to note that we have been going over this ground for several years and that the Bill now on the shelf goes a long way to meeting these objections. In particular, the provisions for reconciliation are more generous than the present law and would enable a couple to attempt an experimental re-run of their marriage where at present they fear to do so lest they lose their grounds for an action for desertion.

    Nearly every major body of informed opinion in Scotland accepts the case for reform, including the Church of Scotland and virtually the entire legal profession. I understand that the matter is now of such little controversy that it is unlikely to be opposed today. Why, then, do we still fail to reform the Scottish law on divorce five years after the reform of the English law and 10 years after the report of the Scottish Law Commission urging reform in very strong terms? Heaven knows, it is not for the want of trying.

    This is the fifth attempt to introduce such a Bill since the English measure was passed. All the previous attempts have failed through lack of parliamentary time. This House made a very generous allowance of time available for the passage of the English measure, and that was not a Bill coming in the first eight on the Ballot. It really is high time that we made a similar facility available for a parallel reform of the Scottish law. It would be intolerable if this House continued to delay indefinitely the introduction of this necessary reform. It is one which would have a very significant impact on the lives of many of my countrymen, who will not lightly forgive this House if we continue to neglect them.

    Question put and agreed to.

    Bill ordered to be brought in by Mr. Robin F. Cook, Mr. W. W. Hamilton, Mr. John P. Mackintosh, Mr. Norman Buchan, Mr. David Steel, Mr. Malcolm Rifkind, Lord James Douglas-Hamilton, Mr. George Reid and Mr. James Sillars.

    Divorce Law Reform (Scotland)

    Mr. Robin F. Cook accordingly presented a Bill to amend the law of Scotland relating to divorce, dissolution of marriage and judicial separation and to the power of the court to award interim aliment; and for purposes connected with the matters aforesaid: and the same was read the First time; and ordered to be read a Second time upon Friday 14th February and to be printed. [Bill 62.]

    Orders Of The Day

    Finance Bill

    (Clauses 5, 14, 16, 17, 33 And 49)

    Considered in Committee [ Progress, 15th January].

    [Mr. GEORGE THOMAS in the Chair]

    4.3 p.m.

    On a point of order, Mr. Thomas. It relates to Clause 16 and the selection of amendments. I do not query the selection as a matter of accuracy. However, the clause gives relief for certain businesses which may otherwise find themselves in financial difficulties. That relief is restricted to companies. Knowing that other people were in financial difficulties in running their businesses, it was our wish to extend that relief to sole traders and partnerships, whose need is just as great. I understand that the Opposition amendments which were tabled to enable us to discuss the scope of the tax are out of order and that the reason is that the Budget resolution has been very tightly drawn to restrict the relief to companies. What is more, another amendment has been ruled out of order because of the Budget resolution which prevents those with accounting periods falling between 31st March and 5th April from profiting by the clause.

    I do not question the accuracy of your judgment. My complaint is about the Budget resolution. I understand that the Government cannot put down Budget resolutions which are so wide that hon. Members may raise any matter throughout the whole of the income tax Acts on what is, after all, a second Finance Bill. But this resolution prevents us from discussing the real scope of the tax.

    Is it possible for the Government to put down an enabling resolution so as to enable hon. Members to discuss it? I should not like those who cannot claim the relief to think that we have not had their interests at heart.

    I am obliged to the right hon. Member for Finchley (Mrs. Thatcher). She has interpreted the ruling much better than I was about to try to do. Resolution No. 16, which this House approved on 12th November, is narrowly drawn, and Providence protects me from responsibility for the way that the Government draw their resolutions. I am afraid that I can only rule that the amendments are out of order because they are beyond the scope of the resolution.

    I have looked at this difficulty in many ways to try to help the right hon. Lady. I am afraid that she must wait until the next Budget.

    I am grateful to you, Mr. Thomas, but I am a little more impatient than that. Will it be in order to raise these matters on the Question "That the clause stand part of the Bill"?

    On a further point of order, Mr. Thomas. Like the right hon. Member for Finchley (Mrs. Thatcher), I do not query the accuracy of the selection of amendments. However, perhaps I might question its fairness. Neither the Scottish National Party nor Plaid Cymru is represented on the Standing Committee considering the Finance Bill. No amendment tabled in the name of either party has been selected for discussion. I suggest that none of those of us who represent the true voices of Scotland and Wales will be able to take part in any discussion of such important matters as agriculture, forestry and fishing.

    If the hon. Member for Perth and East Perthshire (Mr. Crawford) tabled these amendments to the schedule, which is the proper place, he could have his discussion in the Standing Committee.

    Further to that point of order, Mr. Thomas. The whole point is that the schedule is being considered in the Standing Committee, in which neither the Scottish National Party nor Plaid Cymru is represented. We have no voice on the Standing Committee. Indeed, the only hon. Member representing a Welsh constituency serving on the Standing Committee represents an industrial area of Wales which has nothing to do with these important social problems. That is why it is essential to discuss these matters in Committee here, if we have a chance to do so.

    The hon. Member for Caernarvon (Mr. Wigley) knows that there will be a Report stage. At that stage it will be possible for him to table his amendments and, if they are selected, to discuss them.

    Clause 16

    Relief For Increase In Stock Values In Financial Year 1973

    I beg to move Amendment No. 13, in page 12, line 5, after 'excess', insert:

    'or such part thereof as the company shall claim'.

    With this, we may discuss the following:

    Amendment No. 79, in page 12, line 5, after 'excess', insert:
    'or such smaller amount as claimed;'.
    Amendment No. 14, in page 12, line 6, leave out 'excess' and insert 'claim'.

    Amendment No. 80, in page 12, line 39, after 'period', insert:
    'or such smaller amount if so claimed'.
    Amendment No. 75, in page 14, line 32, at end add:
    '(11) A company shall be entitled to claim any part of the relief available under this section.'.

    I am sorry that we are starting the debate on this very important clause with a fairly narrow group of amendments, and I join my right hon. Friend the Member for Finchley (Mrs. Thatcher) in protesting about the way in which our discussions are having to take place.

    When I thought about how to begin my remarks, my mind went back to a headline in Accountancy Age of 26th April, which read:
    "Barnett slams the Budget alarmists."
    The Chief Secretary went on to say that the Budget would have only a very small effect on company liquidity. I quote briefly from that speech. He was reported to have said:
    "Some companies take the view that tax should be reserved early in the year and that once reserved is no longer available for investment or any other general use. If that point of view is accepted—and it is certainly applied by a large number of companies—the surcharge on ACT does not affect net liquidity as it was in any event part of the fund reserved for corporation tax."
    In fairness, the Chief Secretary went on to say that other companies took a different point of view and regarded their tax reserves as being available for more general use. But we must assume that the right hon. Gentleman believed what he was saying, and the fact is that he said that tax reserves, by implication, were not available for general use and, therefore, that the alarm which went up about ACT and the additional corporation tax was misconceived. As he said, he "slammed" the alarmists.

    I do not think that the right hon. Gentleman was right, but one must assume that he thought that he was right. If so, by the same token, a deferment tax, which is really what the Government offer in Clause 16, is of very limited benefit. It is interesting to note that the general accountancy bodies have recommended that the sum released should be set aside in a special deferred tax account and regarded as a sum which, at some time in the future—it might not be this year—will be clawed back. It will not be available as the company's general funds. It will be available, according to the right hon. Gentleman's earlier arguments, only for a very limited time or as a major source of investment in the company's business.

    The fact that Clause 16 is in the Bill suggests that those who were alarmed last March and whom the right hon. Gentleman accused of being alarmist were justified in their actions, because the clause is evidence that the right hon. Gentleman has changed his mind and now accepts that the Budget last March, which, in his typically loyal way, he defended, did company liquidity considerable damage. Clause 16 is an admission that the right hon. Gentleman's remarks then were wrong. To paraphrase the Leader of the Liberal Party on another occasion, we are all alarmists now.

    Secondly, in the run-up to the February election the Labour Party attacked the Conservative Government by implication for the high level of company profits then being declared in annual accounts. It was a constant theme of the Labour Party's campaign. Labour spokesmen attacked what they described as appalling profits, saying that they were a scandal.

    By implication the Bill reveals once again that the Labour Party was making an entirely spurious and badly-based attack. The very profits then supposed to be so scandalous and unacceptable and evidence of all sorts of terrible motives in the Conservative Government are the profits which are now to be relieved by Clause 16. Far from these profits being scandalous, we are told now that they are deserving of relief, must be relieved, and that company profitability, far from being excessive at that time, was barely enough to finance the additional strains on stock and so on. Thus, once more, one of the sticks used by the Labour Party to beat the Conservative Government is revealed as having been based more on a figment of the Labour Party's imagination than on reality.

    Clause 16, if anything, is the Chancellor of the Exchequer's rather complicated way of admitting that the reasoning behind the increase in corporation tax and the surcharge on advance corporation tax has been totally abandoned. It is rather typical of the Chancellor that he has chosen to make this admission by way of an extremely complicated provision. However, many of us believe that the clause, while giving a welcome relief, is slightly unfair. For example, it takes no account of the company that ran down its stock through efficiency and used the money to invest in buildings. That company gets 40 per cent. relief, but it is at a disadvantage against the possibly inefficient company which built up its stocks to a level which was unnecessary at the time. It is an arbitrary relief.

    4.15 p.m.

    It would have been a much cleaner way of giving the relief, and perhaps would not have prejudiced the findings of the Sandilands Committee, if the Government had simply abandoned the ACT surcharge and possibly cut corporation tax, thus reversing some of the Chancellor's measures of 24th March.

    Many problems arise from the rather peculiar way in which the relief is being given—for example, the fact that it really is a deferral and not a relief. As the Chief Secretary to the Treasury will know from his great practical experience, a number of companies could well find themselves at a disadvantage as a result of Clause 16 rather than at an advantage, unless Amendment No. 13 and others associated with it are accepted. These amendments have the simple basis that the company should be allowed to take as much of the relief as will benefit it, that it should have a choice about the amount of relief it claims.

    There is no need for me to recite the various other reliefs which are open to companies which might be adversely affected if they were forced to take the whole of this relief. My hon. Friends who have put their names to the associated amendments will deal with such aspects. But I want to refer briefly to three—group relief, liability to shortfall, and relief from double taxation.

    A company could well be at a disadvantage if it were forced to take the whole of this relief. We do not see that, in accepting the amendments and making the tax a little more flexible, the Government would be doing anything to prejudice their objectives. We accept that the Chief Secretary is sincere in wanting to give relief to companies, that he wants to give a benefit to them or relieve their cash problems. He would give a greater relief if he allowed apportionment.

    I suggest that many of the old standard Treasury answers about cost and so on are not available to the right hon. Gentleman today, although I am sure that someone somewhere will have managed to put a cost on a highly improbable set of circumstances, with all the variables involved.

    We accept that the right hon. Gentleman has now admitted that he made a mistake last March and that he is sincere in wanting to give relief. We think that the relief could be more effectively given, at no greatly increased cost to the Treasury, if this small group of amendments were accepted.

    I am obliged to the hon. Member for Hertfordshire, South (Mr. Parkinson) for the very agreeable way in which he moved the amendment and for his kind quotations from my speeches, which I found interesting to hear again.

    The hon. Gentleman pointed out that this is a deferral of tax. That is right. We have never hidden from the House of Commons that that is the intention of the tax, for a variety of reasons, some of which we shall come to on other amendments.

    The hon. Gentleman made the point that the joint accountancy bodies to which we both owe some allegiance would have liked us to go much further. I know that they would like us to go much further on this and other issues, but we have to disagree with them.

    The hon. Gentleman said that this is a short-term method of dealing with the problem. That is precisely what we have made clear. It is a short-term method of dealing with it, because we are giving what is, in effect, certainly not a complicated form of relief, as the hon. Gentleman suggested, but a rough and ready form of relief. We have admitted that, because we are awaiting the report of the Sandilands Committee, which we hope will be available for us for the spring Bill, when we would hope to bring in a form of relief which will be more suitable and which will meet many of the points the hon. Gentleman made.

    For example, we accept that there will be companies which will not obtain relief under this clause, not necessarily because they are not limited companies or because they have less than £25,000 worth of stock but for a variety of other reasons, but would be, we hope, helped in the following years' relief that we intend to give and we have committed ourselves to giving.

    I do not dispute that what we are doing in the clause is an arbitrary reform of relief. I do not propose on this narrow amendment to get involved in the argument about whether the March 1974 Budget was right or wrong. I am talking now about the substantial relief that we are giving under the clause. Because of the very nature of the representations we have received from many quarters and the fact that we recognised that many companies were having liquidity problems, we sought to help them in the short term with the tax that they would otherwise have had to pay in January of this year.

    Because of that, and because of the administrative problems there would otherwise have been, given the short time span until January to enable the Revenue to make the necessary repayments where appropriate or not to collect the tax, it was crucial that the relief would be rough and ready and that by the nature of things some companies will not be helped which otherwise we would have wanted to, as the hon. Gentleman wants to.

    The question of the ACT surcharge is a totally different matter. The hon. Gentleman said that he would have preferred action to have been taken there. That will be repayable to companies anyway, whereas this form of relief is a positive reduction in taxation in this year just at the time when there is a liquidity problem.

    I hope that the hon. Gentleman will recognise that we have tried to meet an immediate problem. We will meet the later issues in the spring Budget.

    It is true, as the hon. Gentleman said, that in certain instances there will be companies which will not be able to use the relief this year. The hon. Gentleman cited companies which would have been able to take group relief, some shortfall problems, and the question of double taxation relief. The hon. Gentleman is right in one sense. On the other hand, any surplus losses created by the relief given under the clause will be available to carry forward against future profits, and in that sense I do not think that it is particularly ungenerous.

    Indeed, I submit that what the hon. Gentleman proposes would make the situation more complicated rather than less complicated. It would add refinements that would make it more complicated for the Revenue in dealing with the very large number of claims which will be submitted despite the fact that we have limited it.

    Further, if the Committee were to allow this right of disclaimer in order to carry forward some of the relief to another year, it would go right against the whole purpose of the clause. The purpose of the clause is just to give some help for this year. What will be done in the second and later years the House of Commons will have an opportunity to decide when we have the spring Finance Bill. If we start using some of the relief which would otherwise have been available for certain companies this year and allow it to be carried forward, it will get very confused with the relief, which may be different—we do not yet know what it will be—which we propose to introduce in the spring Finance Bill.

    I therefore hope that it is clear to the Committee that this clause is by no means the final version of the form of inflation-accounting relief that we shall eventually have in mind and that to add this further refinement and complication would not improve the situation but worsen it. I hope that the Committee will feel able to agree with me that it would be better to accept this admittedly rough and ready relief and come to the more refined form of relief when we have the spring Finance Bill.

    When Chancellors of the Exchequer are preparing their Budgets it is one of the functions of their permanent advisers to remind them of certain well-tried principles of public finance of which they are in a sense the custodians. I imagine that when the Chancellor of the Exchequer was contemplating the proposal embodied in Clause 16 one such principle was brought to his attention—that is, that taxation should not be used for the purpose either of lending or of borrowing, that lending and borrowing is a separate relationship between Government and the citizen from that of taxation, and that the endeavour to confuse the one with the other always leads to more trouble than it is worth.

    In the opposite sense of borrowing by taxation, we have all lived through the long and dreary experience of post-war credits which were the converse form of the use of taxation for a borrowing-lending purpose. Here, instead of offering a relief from taxation, instead of dealing with a problem directly fiscally, the Chancellor of the Exchequer has framed provisions which are a form of lending by the Government to corporations under the guise of taxation.

    I predict not only that this will, as this and the succeeeding series of amendments show, cause inequities, irritations and difficulties in the short run but that the object of recouping the money and clawing it back in due course will be frustrated. That is one of those things which never happen in real life when one gets to them next year or the year after.

    The circumstances of each Finance Bill ought to be looked at as they stand, and they should be looked at fiscally. In framing instead a form of loan, the Chancellor of the Exchequer has created inequities between one taxpayer and another taxpayer. The present series of amendments draws attention to one inequity. It forces upon one group of taxpayers a loan which they may not want, a loan which may be disadvantageous to them. We shall come later on in the clause to other inequities.

    I therefore believe that the principle which the Chancellor of the Exchequer has attempted to follow is wrong, and my hon. Friends and I will support the Opposition in marking their disapproval of that principle and of its consequences by this and subsequent amendments.

    I had not proposed to intervene in the debate, but I am bound to tell the Chief Secretary that after having listened to his speech I was left in such a state of perplexity that I was ready to conclude that possibly he had not understood the full scope and measure of relief which he is attempting to introduce by the clause.

    It is not perhaps appropriate or necessary to debate the context in which we find the clause, although I would observe that, as I understand it, the Chancellor of the Exchequer is now endeavouring to redress the wrongs which he did to the corporate sector in his March Budget.

    4.30 p.m.

    I believe that if the clause were looked at with a clear eye, it is possibly all that the Chancellor could hope to pilot through with the support of his own party. If he had gone to his party and said "I did wrong in March. I deprived companies of cash resources which they could ill spare. I wish to make amends and reduce the rate of corporation tax", that would have been the simple and honourable way of dealing with the problem. However, he would never have got the support which he badly needs from the 60 or 70 Left-wing members in his party for such a measure, so he searched for a more dubious way of giving relief.

    One can see the apparent lack of interest on the Government benches. The Chancellor no doubt said to himself that 90 per cent. of his party would not understand it and only the remaining 10 per cent. might understand, sympathise and approve. The Chief Secretary appears to nod his head or dissent—I do not know which. I do not know whether he was party to these tactical thoughts of the Chancellor, but it is against that background that I judge the clause.

    The Chief Secretary told us that this is a rough and ready clause. The measure of relief that it gives is haphazard in the extreme. The more efficient company which has a close measure of stock control and has limited stocks at the end of the appropriate accounting period will get little benefit from this measure of relief. The less effective company may get a considerable and perhaps unjustified measure of relief. This is inevitable when relief is dished out on this rough-and-ready basis in order apparently to obscure the issues underlying it. I hope that the Chief Secretary will come to this point later in this evening's proceedings.

    Why is there to be no relief for debtors? The number of debtors at the year's end is considerably increased by the impact of inflation. Again, why exclude services? This shows that it is a crude measure of relief. Because it is a crude measure of relief I believe that the Committee should endeavour, so far as it can, to refine it. I believe that my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson), with his keen accountant's mind, has hit on one simple expedient which could be accepted by the Government, and that is to allow companies to select how much of the relief they wish to take up. My hon. Friend has demonstrated situations in which it would not be advantageous for a company to take up the full measure of relief to which it is entitled under the clause.

    As has been pointed out, to refer to this as relief is a misnomer. I do not know whether I would call it a loan. At any rate, for the advantage gained in the present accounting period there will be comparable disadvantages in later accounting periods. It is very much a case of "timeo Danaos". I look upon any purported gifts from the Chief Secretary in this context with suspicion. This is a doubtful gift, and if it is a doubtful gift at least one should give the taxpayer the opportunity to reject it in part. Let him say "I will take so much."

    I know the bureaucratic mind—not that I accuse the Chief Secretary of having a bureaucratic mind; I refer to the gentlemen in the Official Box who will be passing him notes—

    I am delighted to know that the Chief Secretary is so confident in his grasp of the complexities of this horrifying Bill that he will be able to battle alone, unsupported not only by his hon. Friends but also by the gentlemen in the Box. This will be a unique occasion to see the Chief Secretary battling unaided, with his native wit and intelligence and with his profound grasp of the complexities of the matter.

    Since I know that the bureaucratic mind gropes around for precedents, I remind the Chief Secretary that there is an established respectable precedent for allowing the taxpayer to decide how much of a particular relief advantage he may claim. That is in the most recent measure dealing with capital allowances. It escapes my mind whether it is the Finance Act 1971 or the Finance Act 1972 but the Chief Secretary, without the assistance of the gentlemen in the Box, will know at once.

    There is a respectable precedent. This will refine the rather crude form of advantage which the Chief Secretary is offering. I urge him to consider a little more closely than he appears to have done the implications of what my hon. Friend is attempting to do and which he has rather summarily and, as I conceive it, without sufficient perception dismissed. I ask the Chief Secretary to reconsider this point, because it does not seem to me that he has done full justice to the implications of this measure and this amendment.

    I want to address most of my remarks directly to the amendment and I do not want to prejudice what we may discuss later on the clause.

    The right hon. Member for Down, South (Mr. Powell) spoke about lending and borrowing problems. It is more a question of accelerating or retarding tax payments. The date on which one pays a bill, as every householder knows these days, is of the utmost importance. It amounts in a sense to a loan, but it amounts only to an acceleration or retarding of payment.

    The right hon. Member for Down, South was out of the House last summer while we discussed the advance corpora- tion tax, which is the same thing but in the other direction. What we are now discussing is a reversal of what we were discussing in the summer on the question of the ACT. It is true that these accelerating or retarding provisions make for a certain amount of inequity as between different groups, but so would any relief, particularly on the sort of rough-and-ready basis of this relief. I do not complain about the roughness or the readiness of it. We welcome the readiness and we have to accept the roughness.

    To come to this question of part claims, the Chief Secretary said that it would be more difficult for the Inland Revenue if part claims were allowed. I do not think it would be. A claim would have to be agreed, of course, but in any case the Exchequer has to agree a total claim, so I do not see that it would be more difficult for the Exchequer to agree a part claim than it would be to agree a total claim. It would make the position easier for taxpayers.

    At the moment there are some—not many—who, because of the circumstances in which they find themselves, will be on the horns of a dilemma as to whether to claim or not to claim in total. It would be easier for them if they were able to claim in part, as the amendment would provide. If they are on the horns of this dilemma and they see what the Chief Secretary said, that the spring Budget and the spring Finance Bill will sort it all out in the longer term and that more permanent and presumably less rough and ready measures will be introduced, they will not be able to wait for the spring Finance Bill to receive Royal Assent because they have to claim within three months of Royal Assent to this Bill, which, whenever it may come, is very unlikely to be within three months of Royal Assent to the spring Finance Bill so far as one can see. They will, therefore, be placed on the horns of a very real dilemma.

    The amendment, which allows people a part claim, would get them out of this difficulty. There are other amendments to extend the period to three months and so on, but this amendment seems to provide one way out of the difficulty and it is perhaps the way we should choose until we get a better explanation from the Chief Secretary.

    I take first the important point raised by the right hon. Member for Down, South (Mr. Powell) on the principle of whether taxation should ever be used for lending or borrowing. I hesitate to say it to the right hon. Gentleman, but I think he has missed the serious point in the whole sphere of taxation, that it is not unusual for a taxpayer to obtain tax relief in a certain way and then at a later stage to have to repay that relief. A simple example immediately springs to mind. If a company buys a piece of plant it will obtain capital allowances on it. If later it sells the plant at a profit in excess of the written down figure for tax purposes it will have to repay that tax relief. The principle is not dissimilar for the form of relief we are considering here.

    I was going to deal with this point on a later amendment, but since the right hon. Gentleman raised it I shall take it up now. The right hon. Gentleman made the point that the way in which we are giving this relief will cause great inequity between taxpayers. If we did it the way he and others are suggesting and gave it as a final relief in one year, that would create much greater inequity with other taxpayers. If a company obtains substantial relief under Clause 16 because its stock has substantially increased, possibly in volume as well as in value, and then it goes out of business shortly after the year end and sells the whole of the stock at the inflated value, it will then have had substantial tax relief which I would hope the right hon. Gentleman and many others will not think it equitable for it to have.

    In that sense the principle is the same as with capital allowances. I hope, therefore, that the right hon. Gentleman realises that this is why, when we were considering what is admittedly a rough and ready measure, we decided to implement it on a postponement basis rather than on a permanent basis or on a basis complicated by the refinements that the hon. and learned Member for Dover and Deal (Mr. Rees) suggested.

    The Chief Secretary's comments go right to the heart of the problem of accounting in an inflationary year. If there is to be a system of inflation accounting there is no way of making it both right and fair on a continuing basis and at the same time right for a business which will come to an end at the end of that year. Different provisions have to be introduced for each case.

    The hon. Member is entirely making my point. We accept that our proposition is not inflation-proofing, and it cannot be. We are awaiting the report of the Sandilands Committee and we did not have time to put in the refinements which many hon. Members would like or the type of refinements suggested by the hon. and learned Member for Dover and Deal in respect of relief for debtors, services and so on. It is precisely because we wanted to do something quickly, which I am sure all hon. Members want, that we brought in this haphazard measure. I was delighted that the hon. Member for Gloucestershire, South (Mr. Cope) said that he welcomed the readiness and accepted the roughness of the scheme. I am obliged for that. We wanted to help companies quickly. We could not therefore provide relief by set-offs against other years or other companies. No one pretends that this is the ideal way of dealing with the problem in the longer term, but it gives a substantial measure of tax relief and helps the liquidity of a large number of companies in January this year, and I should have thought that would be supported by all members of the Committee.

    For these reasons I hope that the Opposition will feel able to accept that the amendment does not serve the purpose that I have outlined.

    4.45 p.m.

    My right hon. and hon. Friends have said enough to bring home some of the bizarre consequences that will flow from the wish of the Chief Secretary and the Government to resist these amendments. The Chief Secretary's insistence is on an all-or-nothing approach, and so the picture is conjured up of the Inland Revenue seeking to force a company which would prefer to take part of the relief or loan or whatever it is to take the full amount, to drink the last dregs from this chalice. This is a very peculiar twist in the many gyrations which the Government's taxation policies have already produced, and which the Chief Secretary has had the ill luck to promote at the Dispatch Box.

    These very modest amendments, which were moved with extreme reason and calmness by my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) deal simply with whether the Chief Secretary should stick so doggedly to the all-or-nothing approach in the case of companies which because of their tax situation may actually suffer a loss this year, a year in which, the Chief Secretary was saying a few moments ago, the Government want to help companies. The Chief Secretary did not go so far as to say that the Government want to correct and overcome the damage done to companies by their earlier measures. If his aim is as stated the Chief Secretary should know that there are companies which will not be helped. They will be made to suffer because this is a rough and ready proposition, because the Chief Secretary insists on it being all or nothing, because in those haunting words that we have heard before—"We wanted to do something quickly". That expression would make a marvellous epitaph on this administration's tombstone.

    The Government have acted quickly and have produced a rough and ready scheme which produces the bizarre situation in which companies which the Chief Secretary said he wanted to help will be hindered and made to suffer. I think that he also said in his opening comments that losses incurred as a result of companies taking the scheme in full and it adversely affecting their overseas tax situation could be carried forward. I do not understand what he meant by that. However, if he meant that some other relief is to be generated in future years, that may be so, but it contradicts his proposition that he is trying to relieve the situation of the past year.

    The Chief Secretary, his senior colleagues and the Government are leading themselves along a path to incredible complexities and difficulties with taxes of this kind. The contribution by the right hon. Member for Down, South (Mr. Powell) was the first and a timely indicator of the impossible situation into which the Government will wander before we go very much further with this Committee stage.

    The Chief Secretary could easily have conceded this amendment. It was proposed in a perfectly reasonable way. By resisting it he will make much more trouble for himself and will arrive in a curious situation. I can see no reason why he should not have accepted the amendment. We shall examine the arguments that the Chief Secretary has advanced for resisting the amendment and we shall consider whether to raise the whole matter again on Report. I will not advise my hon. Friends to press the amendment but I make clear to the Chief Secretary that he should not for one moment interpret our moderation in the matter either as typical of our feeling towards the measure or as an indication of the way in which we intend to proceed. We think he could have given way, but he has chosen not to do so. That is disappointing but it is not surprising, because this administration seem bent on binding and entangling themselves about with the worst and silliest forms of tax provision, not merely since the "window tax", which is the description Ian Macleod gave to SET, but since taxation was first devised to molest, bind and shackle man.

    Amendment negatived.

    I beg to move Amendment No. 18, in page 12, line 33, leave out subsection (4) and insert:

    '(4) For the purposes of the Corporation Tax Acts other than this section and Schedule 3 to this Act in any case where a company is entitled to relief under this section:
  • (a) the company's opening stock value shall be treated as increased by an amount equal to its 1973 increase in stock value, and
  • (b) the value of the company's trading stock at the end of the period of account which ends on the day before that on which the opening stock value is determined shall not be increased by a like amount.
  • and all such adjustments shall be made in any assessment to Corporation Tax for any relevant accounting period as are necessary to give effect to any relief under this section'.
    As has already been made clear, we partly welcome what the Chancellor of the Exchequer has done. It is a remarkable reversal on his part and one which the Chief Secretary, with an engaging lack of patriotism for his own past ideas, has just brushed aside. I shall not quote to the right hon. Gentleman the letter I wrote to the Chancellor in May about company liquidity and the answer I received, which was extremely complacent.

    The question that will be asked in these debates is whether the Chancellor has gone far enough. Profits caused by inflation will now be largely ignored for tax purposes, but it is noticable that the same principles have not been included in the Price Code. Both realism and consistency require that the same principles should apply. There is the question of companies which are not paying enough tax to benefit from the provisions, a category which might be thought to include companies such as British Leyland. There is also the matter of the speed with which the deterioration of the cash position of British companies is going on. This can be seen from the debt that the corporate sector has had to raise. In 1973 it raised in debt from the market £0·7 billion. In 1974 that had soared to the astonishing figure of £4·1 billion. The whole matter must be seen in the context of the projected £5 million deficit for the corporate sector in 1975, which at the time of the Budget the Chancellor scoffed at and treated as highly alarmist.

    What has brought about this astonishing reversal in the Chancellor's attitudes? I suppose that the figures that have appeared for both investment and unemployment, when the unemployment figures were being published, have worried him. But I do not believe that the provisions of the clause, unless they are made more certain, and unless some of the threats about clawing back tax deferred are removed, will have the effects that the Chancellor hopes and intends. I believe that investment will fall even faster and that unemployment will rise even faster than would otherwise have happened unless some of the uncertainties are removed.

    What happens in 1974–75 is perhaps even more important than what happened in 1973–74. In 1972 stock appreciation as a percentage of trading profits was 16½ per cent.; in 1973 it was 29½ per cent.; and in the first half of 1974 it had risen to an astonishing 65¼ per cent. The problem is growing, and we must not underestimate what will be required to deal with it.

    The reasons for the uncertainty caused by the Chancellor's proposal relate to the special way in which he has chosen to give this relief. Under his system, the closing stock in one year becomes the opening stock in the next year. This leaves open the possibility that the relief may be clawed back at some future date.

    What the amendment proposes is that instead of being subtracted from the closing stock, which then becomes an incorrect opening stock, the relief should be added to the old opening stock, leaving the closing stock as the correct amount. Unless there is an amendment along the lines we suggest, companies may find that in a few years' time, when they have either reduced stocks in value or volume or have a nil closing stock position, there is a large claw-back. That could happen when a company was closing down, or it could happen simply because it had become more efficient and was using less.

    Furthermore, if the restriction in relief to amounts above the 10 per cent. of trading income continued, particularly if there were falling stocks or stable prices, the relief could be clawed back each year.

    By the method proposed in the amendment, the closing stock would remain at its higher, correct figure and could be used as the opening stock in the next period, when perhaps the closing stock might be diminished in volume or value perhaps in a closing-down situation. This method would lead to a correct assessment of the tax position.

    Under the Chancellor's proposal, the tax would be clawed back in a closing-down situation or when stocks were being used more efficiently. In a closing-down situation, even though stocks might be sold off at cost, a high profit figure would appear because of the artificially lower opening stock resulting from the method proposed by the Government.

    One objection to the amendment might be that the Government's figure allows the balance sheet to balance whilst ours does not. We have had consultations on this matter, and the answer is that when £X relief was added to the opening stock one would also add £X relief as a contra to the capital loss account.

    The object of the exercise, both on our part and the Government's part, is to avoid the payment of tax on an artificial part of profits. Our method would attribute the amount to previous years' profits, but only—this is the difference—after those profits had been assessed for tax. The Chancellor's method is to say that the profit has not yet been made —a device which could lead to the clawing back of the relief given. In addition, the Chancellor's method of giving relief undervalues companies, a tendency that would increase as inflation accelerated.

    The disadvantages of the Government's method are that it is simply a deferral of tax; that it gives no certainty for the future; that as stocks fall, perhaps through greater efficiency, the tax could be clawed back; and that, even if the present method continued and we reached a period of stabilisation of profits and tax, companies would then be in need of greater amounts of money to refinance expansion after a period of recession and slump. If a company ceased trading, the creditors would be badly affected under the Government's method because the Inland Revenue would have a substantial claim in a period in which stocks were lower, in a closing-down situation.

    The method that we are proposing is one which would give greater assurances to industry. It is a cleaner and simpler method which would ensure that the relief given would not be clawed back at a higher rate of tax at some future date. The rate of corporation tax, which was 40 per cent., is now 52 per cent. The rate might well increase again at a later date.

    I do not believe that as the relief is framed at present any accountant or banker when trying to assess a company's financial strength could view the relief granted as being anything other than a deferred liability. Therefore, the banking system will not be able to give credit and to underwrite the investment of industry in the way that the Government hope and expect.

    I believe that the Chancellor has not gone far enough in the methods he has proposed. I believe that there will be considerable uncertainties and fears that the tax will be clawed back in future. Unless the Chief Secretary is able to accept the amendment, or one very much like it, I believe that the results that the Government wish to see from the relief will not appear.

    [Mr. ALAN FITCH in the Chair]

    5.0 p.m.

    It is always agreeable to listen to the way in which the hon. Member for Kingston-upon-Thames (Mr. Lamont) presents his case. At least on this occasion he did not tell me what I should not say. That is his customary practice. If we both abided by that practice we would have very much quicker debates.

    The amendment seeks to change the method of relief so as to make it a final relief rather than as was intended—namely, a deferral or postponement. I dealt with the matter briefly in my reply to the right hon. Member for Down, South (Mr. Powell). In most cases the deferral would be indefinite. Any normal trading company would have an indefinite deferral. In any event we made it clear that the clause is only a temporary measure until we have the spring Finance Bill. We have made that clear.

    I think that the Chief Secretary said something extremely important and I want to ensure that I heard him correctly. Did he say that it would be a permanent deferral for a trading company?

    I said that in most cases it will be a permanent deferral. If a trading company continues trading with its stocks at normal levels and it has its normal levels on the 1973 accounts at which it gets its present relief, and if inflation does not take a major turn downwards but stays at one level, there would be no question of any claw-back of the relief and the position would stay as it was. That would be the position until such time as a company closed down, sold off its stocks or took a similar course of action.

    Let us take the hypothetical figure of 8¼ per cent. when considering the rate of inflation and let us suppose that the rate dwindles from 19 per cent. to 8¼ per cent. Does it follow that the right hon. Gentleman would expect the relief to be clawed back? Is it only if inflation is at a constant 19 per cent. that the deferral is indefinite?

    I am sure that the hon. and learned Gentleman understands the position clearly. I have a feeling that he is having me on. If a company has a final stock of £100 and there is 20 per cent. inflation in the stock value, there will be a stock value of £120 at the end of the following year. A company would then be able to get relief under this system. If the following year the rate of inflation was only 2 per cent. the value would still be higher than the previous £120. I hope that that is reasonably clear. I can see that the hon. and learned Gentleman has the point.

    In saying that the relief will be indefinite—I believe that the right hon. Gentleman used the word "indefinite"—all that the Bill does is to alter the valuation of the closing stock. I am ignoring the amendment for the moment. There will be an alteration of the value of the opening stock as it becomes the closing stock. Therefore, there is an immediate claw-back under the Bill.

    I was coming to that point. I have been interrupted three times before I have hardly started. The hon. Gentleman presupposes that we shall do nothing else in any future Bill. We have made it clear that if nothing else were done and the clause stood it would be a deferral that would continue indefinitely. However, we have made it clear that there will be changes in the spring Bill. We shall have a refinement of the form of inflation accounting of stock plus anything else that we might do for companies when we have the Sandilands Report. If we do not have the report in time we shall have to do something else to ensure that there is additional relief. I thought that I had made that absolutely clear.

    I am not sure whether my comprehension is correct. If there is no further legislation it seems that deferment will be for one year only and that subsequently the tax will have to be paid. If that is not the case I shall be greatly obliged to the right hon. Gentleman if he will make it clear how it will be deferred.

    There will be deferment for one year if there is no legislation to change the clause as it stands. That is clear. However, we have made it even clearer still that we intend to change it. As I have said at least half a dozen times, this is a rough and ready measure which we are introducing for one year only. If we continued with the same kind of relief it would be for many companies a continuing permanent deferral. We are not saying that this form of relief will be permanent. We are saying that in the spring Bill and, we hope, with the benefit of the Sandilands Report we shall introduce a more relevant form of relief.

    If we did nothing else and the clause were to stand I accept that the fears which have been expressed would be understandable and that people would be right to have such fears. However, we have made it clear that we shall do something else. There is no question of automatic claw-back of the relief. I hope that I have been able to assure the Committee that the automatic claw-back of the relief is not in contemplation. If we did not intend to claw back the relief it could be argued that the amendment would be the best approach. Each year there would be a final form of relief. I have already argued that it is not the best approach to have a permanent form of stock inflation-accounting for companies and to have a permanent position year by year. I hope to show—I tried briefly to do so in reply to the right hon. Member for Down, South—that it would be inequitable to allow relief on a final basis.

    I have made it clear on a number of occasions that this is a provisional form of relief. It is an advance instalment that will eventually, as we have made clear, apply to all traders and not only to companies with stocks in excess of £25,000. It is a method of giving immediate relief to companies with liquidity problems. By the very nature of things it is a rough and ready measure. It would be wrong, when the relief that we are now giving gives larger companies, or at least those with a stock in excess of £25,000, an advance instalment of the eventual permanent relief that will be on the statute book, not eventually to make large companies subject to the same rules that will be applicable to everyone else. That is why this is a temporary measure and why we do not believe it is right to give this relief on a permanent rather than a deferral basis.

    The Committee would be grateful for an assurance that none of the relief so given will be clawed back. When the Chancellor spoke on 12th November of this postponement of tax liability he said:

    "If no further steps were taken, the tax forgone this year would automatically be clawed back in the following year. But this, of course, is not contemplation."—[Official Report, 12th November 1974; Vol. 881, c. 265.]
    What we would like is an assurance that those words were a pledge. Can the right hon. Gentleman give us that assurance?

    I can give the hon. Gentleman and the Committee the assurance that it is not contemplated that there will be a general claw-back. There will be instances when relief will be clawed back. I hope the Committee will agree that it is right that there should be. Suppose a company was given 100 per cent. tax relief on a piece of plant and then it sold that plant at the full price. The tax relief is clawed back. That is not unusual. I am sure that hon. Members would agree that in such an instance it would be wrong to allow the company to retain the relief. The same principle applies to stock.

    I am sorry; I must disagree with the right hon. Lady. It does. Suppose a company had increased its stock in this year we are talking about by, let us say, £100,000—not because of inflation but because of increased volume. The Government gave it this relief so that the increase was wholly tax-free. The day after that year ended the company completely sold the stock. It surely would not be right for that company to have the whole of the £100,000 tax-free.

    We are not at cross-purposes here. The right hon. Gentleman knows that usually there is a different provision for cessation and there is nothing to prevent him from putting up special provisions for cessation which would be quite usual. I do not accept his analogy of capital allowances and balancing charges. It is wholly different. The balancing charge comes on a specific event for a specific amount. It is misleading and clouds the position to bring in what is not a true analogy.

    I do not agree with the right hon. Lady. This instance would not only apply to cessation of business. A company could carry on trading. Its stock could have been excessively high at the 1973 year end. The stock might then have come down permanently to a much lower level. It cannot be right to give an enormous amount of relief to the com- pany. This is not meant to be a permanent relief for companies which have not had inflationary increases in stock. It is to misrepresent and misunderstand the purpose of the clause to suggest that that is so.

    The purpose of the clause is to give immediate relief to companies who have had inflationary stock increases. If they had not had such increases on a permanent basis it cannot be right to continue such relief indefinitely. I cannot believe that the right hon. Lady would want to spend taxpayers' money in that way. We are giving a substantial amount of relief in this way. To go beyond that, as the amendment seeks to do, would be indefensible. The hon. Member for Kingston-upon-Thames said that it would be wrong to pay tax on artificial profits. I submit that it would be even more wrong to pay tax relief on artificial losses or where there have not been losses at all.

    5.15 p.m.

    For the sake of clarity, may I ask whether the Chief Secretary is willing to give an assurance to the Committee, and to the wider audience which is taking such an interest in this discussion, to the effect that the Government will introduce measures in the spring Finance Bill which will be no less favourable to companies which benefit from the present arrangements, except only if there is a reduction in the stock level of a company carrying on a continuing business or in the theoretical possibility of an increase in the value of money and deflation takes place as opposed to inflation? The Committee needs this clear assurance because the Chief Secretary's illustrations have not made entirely clear the form of assurance he is giving.

    So far I find that I am being incited, as a result of the Chief Secretary's replies, to speak when I had not intended to. The replies of the right hon. Gentleman constantly leave me with the impression that he has not really grasped the inwardness of the amendment or the inwardness of the relief which he is endeavouring not to foist on the business community. [Interruption.] I say "foist" because it is an echo of our debates on the last amendment. The Chief Secretary would not have it that a company could pick and choose about relief. However, I do not want to reopen that particular wound which the right hon. Gentleman has inflicted on the commercial life of the country.

    The amendment is meant to ensure that, while there will be an advantage for a company which claims this relief in relation to the accounting period ended 1973, there will not be a corresponding disadvantage in the subsequent accounting period. The Chief Secretary appears to have missed the point. The point is that there should not be a corresponding disadvantage. The Chancellor, in his ill-judged March measures, inflicted considerable damage on the cash flow of companies. This modest measure of relief is an effort to redress that damage, to a limited degree. We are concerned to see that this, in turn, will not be offset by a corresponding disadvantage in subsequent accounting periods. That is all the amendment seeks to do.

    To talk about relief being perpetuated indefinitely opens up new vistas not related to the amendment. My hon. Friends and I noted with great interest that in the light of the Sandilands Committee's report, whatever it may be, there may be an endless vista of relief for companies. This is good news. This is not what the amendment seeks to claim. It will be noted far and wide what the Chief Secretary has offered. It will be noted that he has become more generous since our debates in the dog days of June and July. We are happy to note his change of heart. I ask him to move away from the generalised generosity he has offered us—which we accept with gratitude—to the specific point made in the amendment, which is that there should not be a corresponding disadvantage in the next accounting period for any company that claims the advantage or relief in 1973.

    As the Chief Secretary will have divined, it will be a matter of fine calculation for companies whether to claim the relief. Many people will not know whether or not to claim it. They will not be entirely reassured by the Chief Secretary's breezy statement that the Government will adopt Sandilands and perpetuate the relief indefinitely. For the moment, all we ask for the people who have to make this crucial decision is that the Chief Secretary should accept the amendment, which ensures that the relief will not be taken away by a corresponding detriment in subsequent accounting periods.

    I hope that I have made myself clear to the Chief Secretary, who has not intervened. I hope, Mr. Fitch, that he will have the opportunity of catching your eye to show that he has had a change of heart from five minutes ago.

    The Chief Secretary seems to have been saying that he knows that the system is a rotten one, arbitrary and unfair, but, a terrible mistake having been made in March, it is the best system that the Treasury could cobble together in a hurry before something respectable is done in the forthcoming Budget. We agree that it is a shabby way of attempting to deal with the company liquidity problem and accounting at a time of inflation. We are trying to find out more precisely from the Chief Secretary with what he proposes to replace the system. We do not wish to anticipate his right hon. Friend's Budget, but the Chief Secretary argued against the amendment chiefly by saying that there is something better in the pipeline which will put it right.

    Will the Chief Secretary please cease talking about reliefs? We are talking not about a relief for the corporate sector but about getting away from a system in which, because of inflation, companies are taxed on phoney profits, which are not genuine profits but the paper creation of a mixture of inflation and orthodox accounting principles of the so-called "doomsday machine" which are putting respectable, profitable and efficient companies into bankruptcy. A measure to prevent that happening because of the high degree of inflation is not relief but a measure of justice. May it be established that we are not talking about measures of relief but about measures taken to avoid imposing ever higher burdens of taxation at a time of rapid inflation?

    Will the Chief Secretary make clear that what he is talking about as a replacement for this one-off clause is not merely a more refined system of providing for the element of inflation in stock appreciation to be taken into account but inflation accounting in the fullest sense, taking into account the effect of depreciation, which is a major point in company accounts and profits, and that it will be introduced in the forthcoming Budget? Will the right hon. Gentleman say that it will not be confined to stock appreciation, important though that is, but will be introduced regardless of whether the Sandilands Committee has reported by that date? We want full inflationary accounting. It is a form of indexation. The Chief Secretary knows the importance attached by many Opposition Members to indexation at a time of rapid inflation, not merely for the corporate taxation sector but for individuals.

    When the matter of corporate liquidity was discussed in Committee on the Finance Bill eight months ago, the Government's attitude was summed up by the Paymaster-General. I do not wish to pick on the Paymaster-General, who is probably the most well-informed member of the Treasury team on economic matters, but he said:
    "I turn now to the question of company liquidity. There was a discussion about Government statements on company liquidity, and figures were given as to the net position compared with the figures which the Government had quoted after taking account of company indebtedness. The £14,000 million referred to as the current company indebtedness, which is to be set off against liquidity figures stated by the Government, is not expected to be called in."
    He came to the astonishing conclusion that we had no evidence of a serious liquidity problem. He went on to say:
    "If there were to be such a problem, that would obviously be a factor of which we should have to take account."
    Later he said:
    "According to our information, there is much liquidity in the possession of companies."—[Official Report, 21st May 1974; Vol. 874, c. 232–4.]
    That was manifestly nonsense at the time and it is now. Was it bigotry? It could hardly have been unawareness of the fact of inflation. Surely it could not have been lack of awareness of the consequence of inflation on profits. It could not have been unawareness of the existence of the rigid Price Code and price control which existed then and is continuing to cripple company liquidity.

    How did the Government manage to get it so wrong then, and what is their view now? Do they think that there is a serious liquidity crisis now? Do they think that Clause 16 is adequate, or do they think that further steps need to be taken to improve company liquidity at a time when there will be a chain reaction of bankruptcies, starting with smaller companies because they are not so likely to be bailed out, if something is not done to recognise the position of British industry?

    I always like to try to help the hon. and learned Member for Dover and Deal (Mr. Rees). The hon. Member for Blaby (Mr. Lawson) asked whether I know what he wants. The answer is "Yes", and I hope that one day he will get it.

    As the right hon. Gentleman has answered a question which I did not ask, will he please answer the questions I did ask?

    The hon. Member for Hitchin (Mr. Stewart) asked for an assurance about the relief given by Clause 16. I thought I had made absolutely clear that if we did nothing else but Clause 16 there would be a claw-back. The Chancellor said that there would be new measures in the spring Bill, and that is why there is no general claw-back after this year. There is no question of that, and I give that assurance.

    I have been accused by the hon. and learned Member for Dover and Deal of "generalised generosity". It is true that this form of relief is arbitrary, but anything that we could have done in a short time would have been arbitrary.

    Using corporation tax would have been much more arbitrary. It would not necessarily have gone to the areas which suffer from inflation. I was surprised at the view taken by the hon. and learned Member for Dover and Deal.

    5.30 p.m.

    I cannot give way to the hon. and learned Gentleman. No doubt I shall be hearing him often in these debates. He told me that he is easily incited, and I know that only too well. But when he said that I am foisting relief on companies, I think that is taking things a little too far. If he likes to think that we are foisting relief on companies, I should have thought that would be generally welcome.

    As I have said before, and I say again, in regard to the assurance we gave companies as to whether they should be happy with this relief and as to whether it would all be clawed back next time, the answer for most companies is that it will not be clawed back. Most companies will maintain stock levels and there will be no question of clawing back of relief. But the whole purpose behind the amendment is to give relief permanently. For the various reasons I gave previously, that cannot be right. It would not be right to give relief on a permanent basis, and I hope that the Committee will reject the amendment.

    I do not think we can accept the Chief Secretary's assurance, because he has given some rather contradictory assurances. He said first that the relief will not be clawed back, and he then said that it might be taken back in certain circumstances. He then got a little muddled about permanent relief. There is nothing in the amendment to

    Division No. 63.]

    AYES

    [5.32 p.m.
    Adley, RobertCooke, Robert (Bristol W)Goodlad, Alastair
    Aitken, JonathanCope, JohnGorst, John
    Alison, MichaelCormack, PatrickGow, Ian (Eastbourne)
    Arnold, TomCorrie, JohnGower, Sir Raymond (Barry)
    Atkins, Rt Hon H. (Spelthorne)Costain, A. P.Grant, Anthony (Harrow C)
    Awdry, DanielCrouch, DavidGriffiths Eldon
    Baker, KennethCrowder, F. P.Grimond, Rt Hon J.
    Banks, RobertDavies, Rt Hon J. (Knutsford)Grist, Ian
    Beith, A. J.Dean, Paul (N Somerset)Grylls, Michael
    Bell, RonaldDodsworth, GeoffreyHall, Sir John
    Bennett, Dr Reginald (Fareham)Douglas-Hamilton, Lord JamesHall-Davis, A. G. F.
    Benyon, W.Drayson, BurnabyHamilton, Michael (Salisbury)
    Berry, Hon Anthonydu Cann, Rt Hon EdwardHampson, Dr Keith
    Biffen, JohnDunlop, JohnHannam, John
    Biggs-Davison, JohnDurant, TonyHastings, Stephen
    Blaker, PeterDykes, HughHavers, Sir Michael
    Body, RichardEden, Rt Hon Sir JohnHawkins, Paul
    Boscawen, Hon RobertEdwards, Nicholas (Pembroke)Hayhoe, Barney
    Bowden, A. (Brighton, Kemptown)Elliott, Sir WilliamHeath, Rt Hon Edward
    Boyson, Dr Rhodes (Brent)Emery, PeterHeseltine, Michael
    Bradford, Rev RobertEyre, ReginaldHicks, Robert
    Braine, Sir BernardFairbairn, NicholasHiggins, Terence L.
    Brittan, LeonFairgrieve, RussellHolland, Philip
    Brotherton, MichaelFell, AnthonyHooson, Emlyn
    Brown, Sir Edward (Bath)Finsberg, GeoffreyHordern, Peter
    Buchanan-Smith, AlickFisher, Sir NigelHowell, David (Guildford)
    Buck, AntonyFletcher, Alex (Edinburgh N)Howell Ralph (North Norfolk)
    Budgen, NickFookes, Miss JanetHowells, Geraint (Cardigan)
    Bulmer, EsmondFowler, Norman (Sutton C'f'd)Hurd, Douglas
    Burden, F. A.Freud ClementHutchison, Michael Clark
    Butler, Adam (Bosworth)Fry, PeterIrving, Charles (Cheltenham)
    Carr, Rt Hon RobertGalbraith, Hon T. G. D.James, David
    Chalker, Mrs LyndaGardiner, George (Reigate)Jenkin, Rt Hon P. (Wanst'd & W'df'd)
    Channon, PaulGardner, Edward (S Fylde)Jessel, Toby
    Churchill, W. S.Gilmour, Sir John (East Fife)Johnson Smith, G. (E Grinstead)
    Clark, Alan (Plymouth, Sutton)Glyn, Dr AlanJones, Arthur (Daventry)
    Clarke, Kenneth (Rushcliffe)Goodhart, PhilipJopling, Michael
    Cockcroft, JohnGoodhew, VictorJoseph, Rt Hon Sir Keith

    prevent him having a totally different method of relief. I understand that the Chancellor of the Exchequer wants to give the relief during a period of inflation. We want that, too. However, by his method he is not giving relief during a period of inflation; he has deferred relief during a period of inflation.

    Our amendment makes certain that relief will be given this year and cannot be taken back. It is not a permanent relief, but it is a certain relief for this year. Therefore, I think that we should vote on this amendment. The point about volume will be taken care of by the limitation to 10 per cent. on trading income. Even if it were not taken care of, the relief is inadequate in view of the liquidity position of many companies. It would not hurt the Chancellor to give a little extra relief on increased volume as well, to make certain that the companies get relief and that it is not taken away from them next year.

    Question put, That the amendment be made:—

    The Committee divided: Ayes 239, Noes, 273.

    Kaberry, Sir DonaldMorrison, Peter (Chester)Shelton, William (Streatham)
    Kellett-Bowman, Mrs ElaineMudd, DavidShepherd, Colin
    Kershaw, AnthonyNeave, AireySilvester, Fred
    King, Evelyn (South Dorset)Nelson, AnthonySims, Roger
    King, Tom (Bridgwater)Neubert, MichaelSinclair, Sir George
    Kitson, Sir TimothyNewton, TonySkeet, T. H. H.
    Knight, Mrs JillNott, JohnSmith, Cyril (Rochdale)
    Knox, DavidOnslow, CranleySpence, John
    Lamont, NormanOppenheim, Mrs SallySpicer, Jim (W Dorset)
    Lane, DavidPage, Rt Hon R. Graham (Crosby)Spicer, Michael (S. Worcester)
    Latham, Michael (Melton)Pardoe, JohnSproat, Iain
    Lawrence, IvanParkinson, CecilStainton, Keith
    Lawson, NigelPattie, GeoffreyStanbrook, Ivor
    Le Marchant, SpencerPenhaligon, DavidStanley, John
    Lewis, Kenneth (Rutland)Percival, IanStewart, Ian (Hitchin)
    Lloyd, IanPeyton, Rt Hon JohnStokes, John
    Loveridge, JohnPink, R. BonnerTaylor, R. (Croydon NW)
    Luce, RichardPowell, Rt Hon J. EnochTaylor, Teddy (Cathcart)
    McCrindle, RobertPrice, David (Eastleigh)Tebbit, Norman
    Macfarlane, NeilPrior, Rt Hon JamesTemple-Morris, Peter
    MacGregor, JohnPym, Rt Hon FrancisThatcher, Rt Hon Margaret
    Macmillan, Rt Hon M. (Farnham)Raison, TimothyThomas, Rt Hon P. (Hendon S)
    McNair-Wilson, M. (Newbury)Rathbone, TimThorpe, Rt Hon Jeremy (N Devon)
    McNair-Wilson, P. (New Forest)Rawlinson, Rt Hon Sir PeterTrotter, Neville
    Madel, DavidRees, Peter (Dover & Deal)Tugendhat, Christopher
    Marten, NeilRees-Davies, W. R.van Straubenzee, W. R.
    Mates, MichaelRenton, Rt Hon Sir D. (Hunts)Viggers, Peter
    Mather, CarolRenton, Tim (Mid-Sussex)Wakeham, John
    Maude, AngusRhys Williams, Sir BrandonWalder, David (Clitheroe)
    Maudling, Rt Hon ReginaldRidley, Hon NicholasWalker, Rt Hon P. (Worcester)
    Mawby, RayRidsdale, JulianWalker-Smith, Rt Hon Sir Derek
    Maxwell-Hyslop, RobinRifkind, MalcolmWalters, Dennis
    Mayhew, PatrickRoberts, Michael (Cardiff NW)Weatherill, Bernard
    Meyer, Sir AnthonyRoberts, Wyn (Conway)Wells, John
    Miscampbell, NormanRoss, Stephen (Isle of Wight)Whitelaw, Rt Hon William
    Mitchell, David (Basingstoke)Ross, William (Londonderry)Wiggin, Jerry
    Moate, RogerRossi, Hugh (Hornsey)Winterton, Nicholas
    Molyneaux, JamesRost, Peter (SE Derbyshire)Young, Sir G. (Ealing, Acton)
    Monro, HectorSainsbury, TimYounger, Hon George
    Moore, John (Croydon C)St. John-Stevas, Norman
    More, Jasper (Ludlow)Scott, NicholasTELLERS FOR THE AYES:
    Morris, Michael (Northampton S)Shaw, Giles (Pudsey)Mr. John Stradling Thomas and
    Morrison, Charles (Devizes)Shaw, Michael (Scarborough)Mr. Hamish Gray.

    NOES

    Abse, LeoColeman, DonaldEvans, John (Newton)
    Allaun, FrankColquhoun, Mrs MaureenEwing Harry (Stirling)
    Anderson, DonaldConlan, BernardEwing, Mrs Winifred (Moray)
    Archer, PeterCook, Robin F. (Edin C)Fernyhough, Rt Hon E.
    Armstrong, ErnestCorbett, RobinFlannery, Martin
    Ashley, JackCox, Thomas (Tooting)Fletcher, Ted (Darlington)
    Ashton, JoeCraigen, J. M. (Maryhill)Foot, Rt Hon Michael
    Atkins, Ronald (Preston N)Crawford, DouglasFord, Ben
    Atkinson, NormanCronin, JohnForrester, John
    Bain, Mrs MargaretCryer, BobFraser, John (Lambeth, N'w'd)
    Barnett, Guy (Greenwich)Cunningham G. (Islington S)Freeson, Reginald
    Barnett, Rt Hon JoelCunningham, Dr J. (Whiteh)Garrett, John (Norwich S)
    Bates, AlfDalyell, TamGarrett, W. E. (Wallsend)
    Benn, Rt Hon Anthony WedgwoodDavidson, ArthurGeorge, Bruce
    Bennett, Andrew (Stockport N)Davies, Bryan (Enfield N)Gilbert, Dr John
    Bldwell, SydneyDavies, Denzil (Llanelli)Ginsburg, David
    Blenkinsop, ArthurDavies, Ifor (Gower)Golding, John
    Boardman, H.Davis, Clinton (Hackney C)Gould, Bryan
    Booth, AlbertDeakins, EricGourlay, Harry
    Bottomley, Rt Hon ArthurDean, Joseph (Leeds West)Graham, Ted
    Boyden, James (Bish Auck)de Freltas, Rt Hon Sir GeoffreyGrant, John (Islington C)
    Bradley, TomDelargy, HughGrocott, Bruce
    Bray, Dr JeremyDell, Rt Hon EdmundHamilton, James (Bothwell)
    Brown, Hugh D. (Provan)Dempsey, JamesHamilton, W. W. (Central Fife)
    Buchan, NormanDoig, PeterHamling, William
    Buchanan, RichardDormand, J. D.Hardy, Peter
    Butler, Mrs Joyce (Wood Green)Douglas-Mann, BruceHarrison, Walter (Wakefield)
    Callaghan, Rt Hon J. (Cardiff SE)Duffy, A. E. P.Hart, Rt Hon Judith
    Callaghan, Jim (Middleton & P)Dunn, James A.Hattersley, Rt Hon Roy
    Campbell, IanDunnett, JackHatton, Frank
    Cant, R. B.Dunwoody, Mrs. GwynethHayman, Mrs Helene
    Carmichael, NeilEdelman, MauriceHealey, Rt Hon Denis
    Carter, RayEdge, GeoffHeffer Eric S.
    Carter-Jones, LewisEdwards, Robert (Wolv SE)Henderson, Douglas
    Cartwright, JohnEllis, John (Brigg & Scun)Hooley, Frank
    Castle, Rt Hon BarbaraEllis, Tom (Wrexham)Horam, John
    Clemitson, IvorEnglish, MichaelHowell, Denis (B'ham, Sm H)
    Cocks, Michael (Bristol S)Evans, Ioan (Aberdare)Hoyle, Douglas (Nelson)

    Huckfield, LesMeacher, MichaelSpriggs, Leslie
    Hughes, Rt Hon C. (Anglesey)Mellish, Rt Hon RobertStallard, A. W.
    Hughes, Mark (Durham)Mikardo, IanStewart, Donald (Western Isles)
    Hughes, Robert (Aberdeen N)Millan, BruceStewart, Rt Hn M. (Fulham)
    Hughes, Roy (Newport)Miller, Dr M. S. (E. Kilbride)Stoddart, David
    Hunter, AdamMiller, Mrs Millie (Ilford N)Stott, Roger
    Irvine, Rt Hon Sir A. (Edge Hill)Mitchell, R. C. (Soton, Itchen)Strang, Gavin
    Irving, Rt Hon S. (Dartford)Molloy, WilliamStrauss, Rt Hon G. R.
    Jackson, Colin (Brighouse)Moonman, EricSummerskill, Hon Dr Shirley
    Jackson, Miss M. (Lincoln)Morris, Alfred (Wythenshawe)Taylor, Mrs Ann (Bolton W)
    Janner, GrevilleMorris, Charles R. (Openshaw)Thomas, Mike (Newcastle E)
    Jay, Rt Hon DouglasMorris, Rt Hon J. (Aberavon)Thomas, Ron (Bristol NW)
    Jeger, Mrs LenaMulley, Rt Hon FrederickThompson, George
    Jenkins, Hugh (Putney)Murray, Ronald KingThorne, Stan (Preston South)
    Jenkins, Rt Hon Roy (Stechford)Newens, StanleyTierney, Sydney
    John, BrynmorNoble, MikeTinn, James
    Johnson, James (Hull West)Ogden, EricTomlinson, John
    Johnson, Walter (Derby S)Orbach, MauriceTorney, Tom
    Jones, Alec (Rhondda)Ovenden, JohnWainwright, Edwin (Dearne V)
    Jones, Barry (East Flint)Owen, Dr DavidWalden, Brian (B'ham, L'dyw'd)
    Judd, FrankPadley, WalterWalker, Harold (Doncaster)
    Kaufman, GeraldPalmer, ArthurWalker, Terry (Kingswood)
    Kelley, RichardPark, GeorgeWard, Michael
    Kerr, RussellParker, JohnWatkins, David
    Kilroy-Silk, RobertParry, RobertWatkinson, John
    Lambie, DavidPavitt, LaurieWatt, Hamish
    Lamborn, HarryPerry, ErnestWeetch, Ken
    Lamond, JamesPhipps, Dr ColinWeitzman, David
    Latham, Arthur (Paddington)Prentice, Rt Hon RegWellbeloved, James
    Leadbitter, TedPrice, C. (Lewisham W)Welsh, Andrew
    Lever, Rt Hon HaroldPrice, William (Rugby)White, Frank R. (Bury)
    Lewis, Ron (Carlisle)Rees, Rt Hon Merlyn (Leeds S)White, James (Pollock)
    Lipton, MarcusRichardson, Miss JoWhitehead, Phillip
    Litterick, TomRoberts, Gwilym (Cannock)Whitlock, William
    Lomas, KennethRobertson, John (Paisley)Wigley, Dafydd
    Loyden, EddieRoderick, CaerwynWilley, Rt Hon Frederick
    Luard, EvanRodgers, George (Chorley)William, Alan (Swansea W)
    Lyon, Alexander (York)Rodgers, William (Stockton)Williams, Alan Lee (Hornchurch)
    Lyons, Edward (Bradford W)Rooker, J. W.Williams, Rt Hon Shirley (Hertford)
    MacCormick, IainRoss, Rt Hon W. (Kilmarnock)Williams, W. T. (Warrington)
    McElhone, FrankRowlands, TedWilson, Alexander (Hamilton)
    MacFarquhar, RoderickRyman, JohnWilson, Gordon (Dundee E)
    McGuire, Michael (Ince)Sandelson, NevilleWilson, Rt Hon (Huyton)
    Mackenzie, GregorSedgemore, BrainWilson, William (Coventry SE)
    Mackintosh, John P.Selby, HarryWise, Mrs Audrey
    Maclennan, RobertShaw, Arnold (Ilford South)Woodall, Alec
    McMillan, Tom (Glasgow C)Sheldon, Robert (Ashton-u-Lyne)Woof, Robert
    Madden, MaxShore, Rt Hon PeterWrigglesworth, Ian
    Magee, BryanShort, Mrs Renée (Wolv NE)Young, David (Bolton E)
    Mahon, SimonSilkin, Rt Hon John (Deptford)
    Marks, KennethSillars, JamesTELLERS FOR THE NOES:
    Marquand, DavidSilverman, JuliusMrs. Betty Boothroyd and
    Marshall, Dr Edmund (Goole)Skinner, DennisMr. Joseph Harper.
    Marshall, Jim (Leicester S)Smith, John (N Lanarkshire)
    Mason, Rt Hon RoySnape, Peter

    Question accordingly negatived.

    5.45 p.m.