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Commons Chamber

Volume 885: debated on Monday 3 February 1975

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House Of Commons

Monday 3rd February 1975

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Industry

Finance For Industry

1.

asked the Secretary of State for Industry what arrangements his Department is making to monitor loans offered to companies by Finance For Industry.

None, Sir. My Department does not monitor loans made by private sector financial organisations.

I thank the hon. Gentleman for that reassuring reply to British industry as distinct from the other less assuring activities that his Department is undertaking. Will he do what he can to assist the small and medium-sized firms which are facing grievous difficulties and problems by ensuring that the FFI helps such companies with their loan finance, if not by interference or by orders, then by encouraging it to do so?

As I made absolutely clear, the Government do not interfere with the activities of the FFI. Perhaps the hon. Gentleman would let the FFI know that. If hon. Members will read the Industry Bill, they will find in it great reassurance for the future of industry.

Can my hon. Friend give the House any estimate of how much money has been lent by the FFI, how many jobs have been created by such loans, and how many of those jobs are in Gateshead?

I cannot give my hon. Friend that information, because the FFI is a private sector financial organisation. If my hon. Friend were to ask me about the operation of the Industry Act I should be in a much better position to answer him.

Industrial Development Advisory Board

2.

asked the Secretary of State for Industry if he will make it his practice to lay before Parliament the full texts of all the reports of the Industrial Development Advisory Board and regional development board reports that advised against the provision of public money to particular projects.

The procedure was laid down in Section 9 of the Industry Act 1972, which sets out the circumstances in which advice given to me must be made public. I shall certainly keep the House as fully informed as I can.

As the Secretary of State, in his Industry Bill, is taking unto himself quite unprecedented powers, outside the control of Parliament, would it not be an excellent thing if he were to take the initiative in these matters, so that the House was much better informed? As he is always preaching, to others, consultation, participation and the sovereignty of Parliament, will he not take an initiative and practise what he preaches?

I am happy to give the House information whenever I can. Some information which the Industrial Development Advisory Board receives from companies is confidential and it would not be right to publish it. I make it clear that it is advice to the Minister, and under our system of government Ministers make decisions and are then accountable for them. I am not prepared to accept that an advisory board, however distinguished, has the right to usurp the functions of members of the Cabinet or Members of this House.

Will not the right hon. Gentleman make it clear that in Clause 1 of his new Bill he is not only muzzling the board but is proposing that it shall not be allowed to bite, and that it shall be allowed to bark only once a year, in its annual report?

You, Mr. Speaker, would rule out a premature Second Reading debate or Committee stage of the Industry Bill, but the House will have noticed that the Industrial Development Advisory Board will continue to operate. Indeed, in some ways, in so far as the National Enterprise Board will have delegated responsibilities, it will continue to operate even in those respects. We shall have the opportunity of debating that matter. I am making the simple point that I am accountable to the House for what I do, and I am happy to make public the advice that I receive as and when necessary. I have made no attempt to conceal it. I am very happy that these matters should be discussed in the light of the fullest possible information.

May I congratulate my right hon. Friend on his readiness at all times to co-operate with the trade union movement and with employers' organisations?

I am grateful to my hon. Friend. I have sought as far as possible to make the discussions about alternative policy in the Department of Industry completely open, so that everybody may know what the alternatives are and can join in by contributing his views, but in the end I must be accountable to the House of Commons and the electorate for the decisions taken.

If the right hon. Gentleman wishes to make all the deliberations of the Department of Industry as open as possible, will he publish the advice given by his Department's First Permanent Secretary on matters concerning Kirkby?

The hon. Gentleman is asking a different question about the relationship between civil servants and Ministers. If it were argued that the advice given by civil servants to Ministers should be published, two things would follow immediately. It would bring the Civil Service into the heart of political controversy and it would mean that where Ministers could shield behind official advice they would be abandoning their accountability to the House. Before the hon. Gentleman presses that point he should consider the implications of what he said. If he is saying that as a Minister he never did anything that Ilk civil servants did not advise him to do, it would represent the abandonment of his ministerial responsibility.

European Economic Community

3.

asked the Secretary of State for Industry if he can give an estimate of the number of firms which have lost money because of United Kingdom entry to the EEC.

Information on which to base such an estimate is not available.

Does not my hon. Friend agree that it would be of benefit to the House if the information could be collected, particularly as the CBI continues to say that it is in the interests of British industry to stay in the Common Market, whereas it is obvious that it is not in the interest of many companies to do so?

It would be beneficial to the House and to the country as a whole if more information could be made available, no doubt on a sector-by-sector basis. The industrial case for entry was dependent on the positive dynamic effects which were to be achieved according to paragraph 53 of the 1970 White Paper, which depended on British industry's responding favourably to greater economies of scale, greater specialisation and a sharper competitive climate. As the House knows, the result is a very large increase in the balance of payments deficit, which has increased from £180 million in 1971 to £2,076 million in 1974.

Without commenting on the deliberate attempt to use the Question to knock the Common Market, may I ask the Under-Secretary of State whether he is aware that the overwhelming majority of British industry—including the nationalised sector—is strongly in favour of remaining in the European Community? Why, therefore, are he and his right hon. Friend anxious to get out of it? Will the hon. Gentleman also tell the House, on the authority of his right hon. Friend, whether he is answering in this matter on behalf of the Cabinet or on behalf of the anti-European minority, or whether he is speaking for himself?

I am not aware that giving simple facts about the experience of British entry into the EEC is in any way giving a one-sided view or distorting the question. I shall continue to give the facts. On the question of the responsibility for this view, the hon. Gentleman well knows that it has been the proper decision of the Government not to depend on the decisions of any particular group, whether it be the CBI or any other, but to take account of the fact that industry is considerably more than the board rooms, and to extend the decision fully to the people of this country in a democratic referendum.

18.

asked the Secretary of State for Industry what discussions he has held with representatives of industrial companies regarding the desirability of this country remaining a member of the European Economic Community.

25.

asked the Secretary of State for Industry what discussions he has had with leaders of British industry about British membership of the EEC.

I and my Department continue to receive views from both sides of industry and its representative bodies on a wide range of Community matters, including the question of membership.

Does the right hon. Gentleman recognise that whenever and wherever he speaks on the subject of EEC membership he does so as holder of the office of Secretary of State for Industry? Is it not therefore incumbent upon him, to avoid misleading and confusing the electorate, to make it clear that the views he expresses are not those of the majority of industrial management because, in the normal course of events, the very title that he bears might lead people to believe that that was so?

I had no idea that anybody assumed that as the Secretary of State for Industry I was the spokesman for the Confederation of British Industry. If that view prevails, I am glad to take this opportunity of establishing that it is not so. By providing for a referendum we ensure that everybody will have one vote —the hon. Gentleman, myself, the President of the CBI and every elector. This decision will not be made by the Government; it will be made by the British people. It would have been a lot better had the decision been made in that way in 1972.

Is the right hon. Gentleman aware that a survey recently conducted on behalf of the European Representation Fund showed that of 220 leading companies, 91 per cent. wished Britain to stay in the Common Market?

Yes, but the hon. Gentleman is in the terrible muddle of assuming that the only people in industry who matter are those who own it. We are providing for everyone to have a vote. Even if polls are accurate—who knows whether they are?—we are determined that this matter should be resolved through the ballot box in the proper way. Polls of this kind have very little bearing, except as part of the anticipation of the result.

When he speaks again on this subject will the right hon. Gentleman bear in mind that the so-called representatives of industry have been chronically mistaken on other crucial political issues before this country and that this is a subject on which no section of the electorate should have privilege compared with any other?

I recall that in 1967 the argument being put forward by industrialists was that if we applied to join the Common Market there would be a flood of sustained investment. That did not occur after 1967 and it did not occur after 1971. There was the biggest investment slump for some years in the periods immediately preceding and following Britain's being taken into the Common Market by the previous Government.

I am grateful to the Secretary of State for referring to industry's investment intentions. Coming back from the referendum to the question of industry, which is the subject today, the right hon. Gentleman will no doubt have seen the survey in the Financial Times this morning which shows investment at its lowest point ever, expectations of growth at the lowest point, and the forecasts for inflation and unemployment at the highest rate. Does he accept that uncertainty over Europe is one of the factors that is bringing about this disastrous state of affairs?

My comment to the hon. Gentleman is twofold. First on 8th February 1974—when the hon. Gentleman was in Government—the Financial Times reported that industrial confidence was at the lowest point for 16 years. [Interruption.] I have the cutting and shall give it to the hon. Gentleman. The rest of the hon. Gentleman's supplementary question is a powerful endorsement of the need for the Government's new industrial policy.

European Commission

4.

asked the Secretary of State for Industry why there has been a delay in the joint studies between the European Commission and his Department.

There has been no delay whatsoever in any study considered to be suitable for joint sponsorship between my Department and the European Commission.

I am glad that the Secretary of State has been able to deny the rumours that have been spread about this subject. Will he reassure the House by saying how many studies have been undertaken in partnership with the European Commission, and at what cost?

I am not denying rumours; I am stating plainly to the House that the Press reports that appeared were false. That is not denying a rumour; that is making a clear answer to a published statement. Three studies were under consideration. One was the proposal in respect of Professor George's project, on which I made a public statement in Wales in July and later in the House, when I made absolutely clear that if a study of this order had to be considered largely to benefit the Labour movement in South Wales it would be sensible to get its views on how the study might be undertaken. It was nothing to do with the fact that the European Commission was in partnership but it was to do with the sponsorship of the study. The study connected with steel has been held up because the steel review is not completed. The third study is the responsibility of the Department of Employment, but I understand that an application for a joint EEC sponsor has already been made. Those are the three studies to which the hon. Gentleman referred.

On how many issues of internal regional and industrial policy does my right hon. Friend find that he is expected to consult the Brussels Commission before he reaches a decision?

My right hon. Friend knows very well, and I confirm, that under Articles 92 to 94 of the Treaty of Rome the Commission has powers over all State aids and, hence, regional aids. Therefore, in this respect I find myself required to consult the Commission, and the power rests with it on all these matters.

Ferranti Limited

5.

asked the Secretary of State for Industry if he will make a statement about his discussions with Ferranti.

35.

asked the Secretary of State for Industry when he now expects to complete his discussions on the future of Ferranti Ltd.; and if he will make a statement.

A statement will be made when we have completed our studies of the financial prospects of Ferranti Limited and have discussed arrangements for the future of the company with the employees and the management.

Has any money been made available to the company since the Department was first told that the company was in difficulty? Why has there been this apparent delay in getting an outline agreement?

In reply to the first part of the supplementary question, the Government have given the company's principal banker a guarantee under Section 7 of the Industry Act to ensure that adequate finance is made available for the day-to-day running of the company. On the question of the delay, I regret the time that this has taken, but a series of very complicated issues has to be resolved. There is the question not only of the capital structure which is most suitable for this company but of the percentage of the equity which the Government should take, the relationship between the Government and the company in terms of control, the form in which other capital requirements of the company can best be met, the sources and terms of the non-Government capital, and the price at which the Government will subscribe to the equity. Those are a series of unrelated complicated issues which take a long time to resolve, but I am hopeful that we shall resolve them very shortly.

Does my hon. Friend recollect that on 9th December he confirmed that he had received the accountants' report on the financial affairs of Ferranti and assured me that a statement would be made shortly? Does he appreciate that the longer this matter drags on the more the confidence of both management and employees of Ferranti will be undermined? Will he help me to clarify the matter to my constituents by giving me his understanding of the terms shortly?

When I made that statement I was hopeful that we should be able to make a statement before now, but for reasons which are outside our control there have been changes in the precise financial position of the company—changes which have become apparent only since we received the accountants' original report. It is because we have had to take account of those changes that we have not so far been able to make a statement. I reiterate that, bearing in mind the consequences to which my hon. Friend has rightly drawn attention, we are determined to ensure that the tripartite talks take place as early as possible.

9.

asked the Secretary of State for Industry whether the Government intends to increase its holding in the Ferranti Company; and, if so, what percentage share it intends to hold.

In consideration for any financial support the Government may give to Ferranti Limited we shall require a substantial part of the shares of the company. The size of that shareholding will depend upon the extent of the support to be given and the most suitable capital structure for the company.

Is the hon. Gentleman aware that probably the main reason for Ferranti's financial difficulties was that it kept open the Oldham transformer works for social reasons because it provided a good deal of employment, and that this brought it into serious financial difficulties? Does he think that Ferranti should not have done that and therefore remained solvent? If he thinks that Ferranti should have done it, why is it that those industries which pursue social objectives are the ones in which a public stake has to be taken?

The decision to maintain employment and production at the Oldham transformer works was taken on commercial grounds, without any pressure from the Government. By that decision the company must stand. I am glad that it took that decision, which I believe was a proper one. On the second question, it is our view that if a Government put substantial funds into a private company, they should take a commensurate stake. We take a different view from that of the last Conservative Government, who, for example, put £40 million of aid into ICL at a time when the total nominal share equity was valued at less than that, and took no share equity at all. We think that that is quite wrong.

If the Minister feels so strongly on this point, will he explain why the Government are at this very minute doing the opposite of what he said and putting money into the Kirkby co-operative without any share in the equity?

The purpose of having a share stake is to ensure that the actions of the company are duly accountable in accordance with the money stake which has been given. In the case of Kirkby Manufacturing and Engineering Company Ltd., rigorous arrangements and procedures are laid down to ensure full monitoring. One of the conditions for the continued payment of tranches in proof of need is to ensure that the co-operative is acting in accordance with the purposes for which it was set up and that there is no danger of its going into liquidation.

Why should private individuals in a co-operative be subjected only to monitoring, when the rest of the Minister's suggestion is that the private sector should be accountable in some way?

The workers who work in the Kirkby co-operative are fully satisfied with the conditions of accountability. As for the Ferranti workers, it is entirely in accordance with their wish that public money put in will be accountable, and they are satisfied with the methods which we suggest.

On a point of order. In view of the very serious double standards revealed in the answers to those questions, I beg to give notice that I shall seek to raise the matter on the Adjournment as early as possible.

Multinational Companies

7.

asked the Secretary of State for Industry whether his Department is considering fresh studies of the effects of multinational companies on the freedom of action of the United Kingdom Government.

My Department keeps all aspects of multinational company operations under close review.

Is my hon. Friend aware that in the past fortnight there have been two disgraceful instances of the unilateral declaration of massive redundancies by American-owned firms in this country? Will he confirm that the Government maintain full freedom of action on these matters and on larger concerns, such as the negotiations which are now going on with Chrysler? Does he not feel that this is a matter for urgent Government study?

My hon. Friend is quite right. The Department has been very concerned about the cases to which he refers. The Government certainly do maintain full freedom of action. These are matters of great concern and the Government are looking closely at the position.

Have the Government made a study of the benefits to the British economy of the operations of many of these multinational companies? If not, why not?

A number of reports and studies have been made over many years on the whole question of inward investment. The Government have not said that there should not be inward investment; they have encouraged it. On the other hand, it is equally true that there are aspects that require the closest possible study.

Government Aid

8.

asked the Secretary of State for Industry what is the total of aid to private industry from public funds other than under the Industry Act 1972 since 1st March 1974, such as regional employment premiums, research and development, project launching aid, &c.

About £400 million net of repayments.

Does my hon. Friend agree that where there is massive public support for a private industry, public accountability should be extended? Is he aware that the proposals in the Industry Bill will be warmly welcomed on this account on the Government side of the House?

I am delighted to hear what my hon. Friend says about our proposals in the Industry Bill. That is the whole point of the Bill—that the money that we spend should be the subject of accountability both to the House and to the country as a whole.

Can the hon. Gentleman give, for the same period, the amount of aid from private industry to public funds?

I am afraid the hon. and learned Gentleman will have to ask the Chancellor of the Exchequer that question.

National Enterprise Board

10.

asked the Secretary of State for Industry when he expects to be in a position to make appointments to the National Enterprise Board.

The board will be formed when the Industry Bill receives the Royal Assent. Appointments to it will be announced shortly afterwards.

When the appointments are made and the organising committee is set up, will it be responsible to the Cabinet Office or to the Secretary of State for Industry? If the future board is responsible to the Secretary of State, how is it possible for the chairman, Sir Don Ryder, to be responsible to the prime Minister and the committee or the board responsible to the Secretary of State? It does not make sense.

The Industry Bill is sponsored by the Department of Industry, and therefore the chairman of the organising committee will be responsible to the Secretary of State for Industry. Sir Don Ryder is, of course, the industrial adviser to the Government. In any case, he has not yet been appointed as the chairman of the organising committee.

When my hon. Friend makes appointments to the National Enterprise Board, will he ensure that they are of people who have sympathy for public ownership and not simply members of the great and the good from the City establishment?

The Government would be very wrong not to make certain that people who were placed on the board were in favour of what the board intended to do. Of course the Government will make certain that the right type of people with the appropriate experience, from industry, the unions and the academic world, are appointed to the board.

Will the Minister clarify one point? As I understand it, Sir Don Ryder is at the moment chief industrial adviser to the Government in the Cabinet Office and is therefore answerable to the Government as a whole. After the Second Reading of the Industry Bill, if it passes through the House, do I understand the Minister to say that Sir Don Ryder then, as chairman-designate of the National Enterprise Board, will become answerable to the Secretary of State for Industry?

Once the Bill has had its Second Reading, the organising committee will be established and the chairman-designate will take his position. He will then be responsible to the Secretary of State for Industry. The hon. Gentleman must know that as the Bill is supported and backed by the entire Government—if he does not believe me he should read the names of its sponsors—it means that whoever is responsible is responsible to the whole Government.

Companies (Government Shareholding)

11.

asked the Secretary of State for Industry what measures of controls are being exercised or will be exercised over those companies in which the Government has taken a shareholding.

The Government take whatever measures they consider appropriate to protect their investment, according to the nature of the enterprise and the form of assistance being provided.

Does the hon. Gentleman agree that it appears from the Industry Bill that in future the only control is to be conferred on his right hon. Friend the Secretary of State for Industry, and that the only body not to get control or information will be Parliament itself?

According to the Bill, an annual report will be published. Also, the 1972 Industry Act of the hon. Member's own Government continues as before; therefore the Minister will be as responsible to Parliament as he has always been in the past.

Why is it that one of the two Government directorships of BP has been vacant for 15 months, since the death of Mr. John Stevens?

That is the responsibility not of this Department but of the Chancellor of the Exchequer.

North Staffordshire

13.

asked the Secretary of State for Industry what steps he proposes to take to diversify the industrial structure of North Staffordshire.

I agree that diversification would be desirable, but we have to give priority to the needs of the assisted areas where unemployment rates are much higher.

Is my hon. Friend aware that he is taking a blinkered view if he regards existing unemployment as the sole criterion for deciding whether to assist areas in diversifying their industrial structure? Does he realise that in North Staffordshire we are desperately short of new industries, that earnings in the pottery industry—our main industry—are below the national average, and that many people are leaving the area because of the poor economic prospects? Will he take those facts into account in considering the future of North Staffordshire?

Yes. We shall take all those factors into consideration in deciding whether an area should be written up as an intermediate area. We take into account not only unemployment but the movement in population and all of the other considerations which my hon. Friend mentioned.

Is my hon. Friend aware that North Staffordshire has suffered in recent years because of the designation of South Cheshire by the last administration as an intermediate area, and that it is very difficult to provide career prospects for young people in North Staffordshire without this diversification?

I appreciate the points made by both my hon. Friends in this direction. As I have said, the whole question of designation is under constant review. When we look at all the factors mentioned, these are taken into account in our deliberations.

Nationalisation

14.

asked the Secretary of State for Industry when he expects to introduce his Bill for the nationalisation of the shipbuilding, aircraft and guided missile industries; and if it is the Government's intention that these measures, if Parliament agrees, should pass into law this year.

I intend to introduce legislation to bring these industries into public ownership as soon as possible, in the present Session, so that vesting can take place in early 1976.

Will the Secretary of State answer two questions? Will he give these important industries, especially the aircraft industry, a little more time to prepare their response to his consultative document? Another two or three weeks would not do the right hon. Gentleman any harm and would help the industry greatly.

Will the Secretary of State say also why he believes that nationalisation is desirable when the management of this great industry is convinced that it will not produce a single additional aircraft and when the workers as a whole do not want it?

The hon. Gentleman got in two questions. The first was about time. I do not think that anybody can complain about the time. This was in our programme well before the election—in both manifestos, in the August White Paper, and in the Queen's Speech. In addition, the hon. Gentleman himself helped to tell the industry about our policies for it. I think that the period of consultation is adequate.

On the second question, about the case for public ownership of the aircraft industry, to anticipate the answer to a Second Reading debate in a supplementary question would be an abuse of the House. I have made the Government's view clear. I shall be happy to debate the matter when the Bill comes forward.

Bearing in mind that the right hon. Gentleman refuses to pay any money for the time taken by the employees of the companies that he proposes to nationalise, is unwilling to pay for the travelling expenses of those employees, and, furthermore, is prepared to go behind the backs of the employers in order to consult their employees without the employers' permission, is it surprising that certain of those companies refuse to put working capital into contracts which are required for the Ministry of Defence? Will he consult the Secretary of State for Defence about the situation?

The announcement made in the Queen's Speech was a Government announcement embracing the views of the Cabinet, including the Secretary of State for Defence. Perhaps the hon. Gentleman can help me. Did he say that one of the complaints was that I was talking to workers without the permission of their managements? Is it really the view of the Opposition that employers in private industry are entitled to give or to withhold permission to their employees to talk to the Government of the day? If it is, it throws an interesting light on the view of the Conservative Party on matters of consultation.

In view of what the right hon. Gentleman says, will he clarify the position in regard to publicly-owned industries, in respect of which Members of Parliament are not allowed to talk to employees without permission?

If that is the case in point, I think that the hon. Gentleman will find that I gave formidable support to the view I deeply hold—that Members of Parliament should be allowed to go to the plants in the public sector to see the workers there. I represented that view very strongly to the person concerned in the case which I know the hon. Gentleman has in mind.

Motor Vehicles

15.

asked the Secretary of State for Industry whether he is satisfied with the contribution of the motor industry in providing employment in development areas.

The motor industry already makes an important contribution to employment in the assisted areas. But we keep under constant review how this might be strengthened.

In view of short-time working and dangers of redundancies in these areas, does not the Minister feel that the Government's tax and hire-purchase restriction policies are conflicting with his Department's policy of trying to secure employment in these areas for people working in the motor industry? What assistance does his Department think should now be given to this industry?

The relaxation of hire-purchase and credit controls is for my right hon. Friend the Chancellor of the Exchequer. So far as we are able, we in the Department are trying to assist in what is undoubtedly a difficult situation in the motor car industry. On 20th January, my right hon. Friend the Secretary of State wrote to Mr. Riccardo, the president of the Chrysler Corporation in Detroit, asking for his analysis of the strategic situation facing Chrysler in all its companies, and especially in its United Kingdom operations. At present, this is the company causing most concern.

Is the Minister aware that the current imbalance in trade between this country and Japan in motor cars is having serious affects on both the short-term and long-term employment prospects of people in the motor car industry? In view of the seriousness of this situation, will my hon. Friend urge the Secretary of State for Trade to carry out an immediate investigation to discover why, in 1973, although we imported more than 80,000 Japanese cars, we could export only just over 1,000 cars to Japan?

My hon. Friend is right to draw attention to this great imbalance, especially in Japanese cars. However, the proportion of the domestic market now taken by Japanese cars is still relatively small, although I agree that it is fast increasing and is based on an imbalance of trade with Japan. I shall draw this matter to the early attention of my right hon. Friend the Secretary of State for Trade.

Is my hon. Friend aware that in my constituency, which has a considerable investment in the motor car industry, there is some evidence that if the Ministry is to assist firms which are in difficulty it must do so not just in terms of paying cash but in terms of considerable financial advice, especially at board level? In view of the earlier remarks made by the Minister of State, may we have a clear statement of policy from the Ministry about its intentions where taxpayers' money has been invested in this industry?

We intend to provide assistance in response to applications which we receive under our powers in existing legislation, which, in effect, means Sections 7 and 8 of the Industry Act 1972.

It is our policy to monitor very carefully any previous input of funds. If my hon. Friend has a specific instance in mind, I shall be pleased to give it early attention.

With regard to exports to Japan, is the Minister aware that those of us who are concerned to see us maximise our trade with Japan are encouraged that the British Leyland export manager is going out to Japan? The Germans are able to export 23,000 cars to Japan a year, compared with our 1,000. I am sure that we can improve on that because it is a very lucrative market if worked upon properly.

I agree with the hon. Gentleman. I hope that the visit which is being made by the representative of BLMC quickly produces the results which he foresees. On his return, we shall give any assistance which we are able to give in accordance with his findings.

Shipbuilding And Ship Repairing

16.

asked the Secretary of State for Industry when he intends to announce his future proposals for the shipbuilding and ship repairing industries.

Will the Secretary of State give an assurance that the Bill to take the shipbuilding industry into public ownership—which he said in answer to an earlier Question would come this year—will include the ship repairing industry? Does he agree that it would be ridiculous to take one industry into public ownership without the other?

Will the right hon. Gentleman give an undertaking that when this widespread nationalisation takes place it will not in any way cut back on the repair and shipbuilding that is currently taken on by the Royal Naval dockyards?

The hon. Gentleman's question raises a matter that concerns the Secretary of State for Defence as well as myself. The intention is that this industry should be in a better position to take orders from everywhere.

British Steel Corporation (Closures)

17.

asked the Secretary of State for Industry when he expects the tripartite talks to take place on the steel industry in Scotland; and when he expects to make a statement on the future development of the industry.

26.

asked the Secretary of State for Industry when he expects to make an announcement regarding the British Steel Corporation's closure review.

My right hon. Friend proposes to make a statement tomorrow on our review of the British Steel Corporation's proposed closure of plants. To assist hon. Members, I shall place copies of the interim report by my right hon. and noble Friend the Minister of State in the Library of the House and in the Vote Office at 10 o'clock tomorrow morning.

The tripartite meetings with the BSC and the TUC Steel Industry Consultative Committee to discuss the proposed closures in Scotland have been arranged for 17th and 18th April.

Is my hon. Friend aware that steelworkers in Scotland are greatly concerned that no decision announced tomorrow should affect or prejudice the future of any works in Scotland before there has been a full opportunity for representatives of the trade union committees in those works to make their comments to the Government and to the BSC, as promised by Ministers? Is he further aware that there is great dissatisfaction with the BSC's proposals in Scotland, and that this matter will require the fullest consideration by the Government before any decision is made?

I assure my hon. Friend that any threatened closure of Scottish plants—in particular, the one in Lanarkshire to which I think he may be referring—will not come about before the review is completed. On the assumption that the review is not too long delayed, there will be no reduction of operations before that time. I also assure my hon. Friend about the procedure regarding Scottish closures. It was originally agreed that that procedure would take place after discussions about the English and Welsh closures. My right hon. and noble Friend the Minister of State visited nine Scottish plants between 11th and 14th November. The tripartite talks on the Scottish closures, which were originally fixed for 16th December, have had to be postponed for reasons that I shall not give. They will now take place at the earliest time that can be arranged, which will be 17th and 18th April.

Is the hon. Gentleman aware that this long series of meetings has surprised Scottish steelworkers, in that they have not led to the abandonment of plans hitherto announced? Is he further aware that steel consumers in Scotland, in common with the workers, believe that what is needed is an autonomous Scottish Steel Corporation, with the appropriate degree of public control?

Regarding a Scottish Steel Corporation, I believe that there is sufficient interconnection between operations in modern steel making to ensure that if there were a separation off of a purely Scottish steel making sector there would not be the economies of scale to make Scottish plants viable and competitive. I assure the hon. Gentleman that the BSC's proposals will not lead to the effect on steel in Scotland that the SNP believes. Since the review began, the BSC has announced a decision to build a direct reduction plant at Hunterston, which will be extremely important for that peninsula, and a signficant proportion of the £400 million proposed in the BSC's Strategy for Scotland has already been announced. Furtherfore, there is to be an extension—[Interruption.] This is an important enough subject for me to set out these facts. Furthermore, there is to be a planned increase in Scottish steel making capacity from 3·5 million tons now to over 4·5 million tons in the early 1980s. That is a great achievement.

Motor Cycles

19.

asked the Secretary of State for Industry whether he has yet taken a decision on the future of the motor cycle industry in this country; and if he will make a statement.

I have not yet made final decisions on this matter. Discussions continue with the parties concerned. I shall make a statement in due course.

Does the right hon. Gentleman accept that, following the withdrawal of the objection by the Small Heath stewards and workers, the Meriden co-operative is now in a position to go ahead, and that if it is to go ahead it means that there must be a three-factory industry which, in turn, will require a considerably greater injection of public money? Therefore, what is the point that the Minister has not yet decided?

The hon. Gentleman is right. The trade unions in the firms are pressing for a three-factory solution, on the basis of public ownership, to provide the capital investment that has been notably lacking hitherto under the private ownership structure. We are now considering that matter. The withdrawal of the hesitations by the Small Heath workers to the Meriden co-operative is indeeed welcome news.

Will my right hon. Friend bear in mind that many of my constituents have been on picket duty at this factory since September 1973? Will he also bear in mind that there is a need not to miss the American peak sales season for the second year running? My constituents are grateful for my right hon. Friend's sympathetic attitude, but will he now do all he can to expedite the start of production at Meriden?

I am aware that workers at Meriden have been very patient and have waited a long time, under conditions of real hardship, to establish their co-operative. I had hoped to be able to establish it in November, but was unable to do so at that time because of the industrial anxieties at Small Heath, which appear now to have been relieved.

Footwear

20.

asked the Secretary of State for Industry whether he will now make a further statement on the progress of the Under-Secretary of State's discussions with the British Footwear Manufacturers' Federation regarding problems of the footwear industry.

I invited the footwear industry to make proposals on how Government and industry together might determine how best to assure a successful future for the industry.

On 29th January the footwear federation wrote to my officials to take up that invitation formally. Officials are therefore in the process of seeking nominations from employers' and employees' organisations to a steering group to oversee a study of the industry.

I welcome the Government's stated decision to do something unspecified about the unfair dumping that is going on from COMECON countries. What will that something be, and when will it happen?

Action with regard to dumping is a matter for my right hon. Friend the Secretary of State for Trade. Representations should be made to him—I believe they have been made to him—and I am sure he will act on them quickly.

With regard to further action for which we are responsible, I give the hon. Gentleman the assurance that the discussions with the three COMECON countries, Czechoslovakia, Poland and Roumania—to which I referred during an Adjournment debate—have started and, as I said then, no solutions to the problem will be excluded from the agenda for the talks.

Many of the factories worst afflicted by difficulties in the footwear trade are in developing areas such as the one that I represent, and the consequence for the workers there is fearful. Will my hon. Friend undertake to be really tough in his attitude towards those countries which are dumping footwear here and depriving my constituents and workers in my constituency of a secure future?

I should very much like to be able to give my hon. Friend clear and precise assurances in terms of the way in which we are handling these negotiations, but I cannot, other than to say that I have borne in mind what he said.

Does the Minister accept that these discussions have gone on with different Governments all through the 1970s? Is he aware that the footwear industry is once again under extreme pressure and that it looks to the Government for help? Will the Minister therefore give an undertaking to show the industry that the Government are determined to get positive action in, say, the next three months?

Representations on antidumping were made in 1972–73 but were withdrawn at the time. I assure the hon. Member, however, that we mean business this time, and I am sure that we shall be able to achieve positive action within the sort of time scale he has in mind.

Questions To Ministers

On a point of order, Mr. Speaker. May I raise a matter with you without any fear of sour grapes, since my Question was answered? Many hon. Members are deeply concerned at the progress being made at Question Time. There were some very long answers today. May I urge that this will be looked at?

Further to that point of order, Mr. Speaker. Will you suggest to the junior Minister concerned that if he wishes to make a statement he should do so? We all realise that the Minister is learning as he is going along, but will you suggest to him that if he insists on conducting warfare between the Labour Party and the Scottish National Party he should not do it at Question Time?

I shall confine myself to a general observation. I think that many Questions and many answers are too long.

Legal Aid

63.

asked the Attorney-General what proposals he has for the further extension of the system of legal aid; and if he will make a statement.

My noble friend has commissioned a study into the whole problem of the unmet need for legal services and will consider its findings when these are available. In the meantime, arrangements are being made for some £50,000 to be provided on an emergency basis to those law centres which are in severe financial difficulties. In addition, my right honourable Friend the Secretary of State for the Home Department has recently approved under the urban programme financial assistance towards the costs of new law centres in Manchester and the London borough of Haringey.

I am grateful to the right hon. and learned Gentleman for that reply. Will he confirm that this study will include consideration of the extension of legal aid to various forms of tribunal?

Other studies are going on with the object mentioned by the hon. Gentleman. Indeed, the whole area of unmet legal services is under study in one way or another.

Is the Attorney-General aware that in many parts of the country it is impossible for ordinary people, without access to sophisticated legal services, to obtain advice? Will he say when he expects the findings of the report to which he referred?

That is the very reason for the various studies that are being conducted. In particular, my noble Friend very much hopes that the studies in relation to law centres will be able to provide a solution to many of the problems to which the hon. Gentleman referred.

European Community Law

64.

asked the Attorney-General whether he has given consideration to the implications for the United Kingdom of the judgment of the German Federal Constitutional Court in Internationale Handelsgesellschaft mbH v. Einfuhr-und Vorratsstelle fur Getreide and Futtermittel concerning the relationship between European Community Law and the constitutional law of an individual member State, particularly in the context of guarantees of fundamental rights; and if he will make a statement.

I am aware of the judgment to which the right hon. and learned Member refer, but do not think that, having regard to the very different constitutional context in which it was given, any inferences can be drawn for the United Kingdom.

Has the right hon. and learned Gentleman observed the suggestion in the judgment that in a national constitution protection is given to the guarantee of fundamental rights, at any rate pending the codified cataloguing of fundamental rights in the Community? Will the Attorney-General say whether he envisages the possibility of affording such protection to a member State such as Great Britain, which, unlike Germany, has no written constitution?

The question of affording those protections as a built-in part of our law—as is the case in the German Federal Republic—would raise far wider issues than that to which the right hon. and learned Gentleman referred. I am aware that there have been proposals to that end, particularly that of Lord Justice Scarman in the Hamlyn lectures, but a great deal of study would be needed before the Government could commit themselves to that course of action.

Does my right hon. and learned Friend accept that in other decisions—recently there has been a decision in the European Court, on the freedom of establishment—there has been a substantial erosion of the rights of British courts in relation to British citizens? We are considerably worried about this because it arises in such a way that no publicity is given to it and it is only when individual citizens come up against the difficulties that they realise how little protection they have from this Parliament.

I agree with my hon. Friend if she is saying that Parliament should have as much protection as possible against the acts of the Executive in this field, and, indeed, in any other, but the matter to which she refers raises a different question.

Law Society

65.

asked the Attorney-General when it is intended to appoint a lay observer under Secton 45 of the Solicitors Act 1974.

My noble Friend the Lord Chancellor has appointed Rear Admiral B. C. G. Place to be a lay observer with effect from 17th February 1975.

I thank my hon. and learned Friend for that reply. Will he undertake to keep a close watch on the situation during the next year or so? It took four years of parliamentary struggle to persuade the Law Society to, have a lay observer, and it is important that the system works well.

I am sure my hon. Friend will accept that I am as anxious as he is to ensure that this will provide an effective voice for the layman.

English Nationalist Assembly Leaflet

66.

asked the Attorney-General if he will refer to the Director of Public Prosecutions a leaflet from the English Nationalist Assembly, copies of which have been sent to him, to consider prosecution under the Race Relations Act.

We all wish to get to the next Question. I thank my right hon. and learned Friend for the action that he has taken over this quite disgraceful matter.

Mr Richard Crossman's Memoirs

67.

asked the Attorney-General if he will make a statement on his discussions with representatives of the Sunday Times on the publication of the late Mr. R. H. S. Crossman's diaries.

I have not myself held any discussions with representatives of the Sunday Times on this matter. There have been discussions between those representatives and the Secretary to the Cabinet.

May I offer warm congratulations to the Government on their relaxed attitude in this matter? Apart from anything else, is it not desirable that these diaries should be published at a time when many of the dramatis personae can give their own version of events?

I am grateful to my hon. Friend for the first part of his supplementary question, and I am also grateful to all parties for their relaxed attitude to this matter.

The second part of the question raises constitutional issues which do not fall to be dilated upon within the scope of this Question.

Everybody likes to be relaxed, but is it not important to uphold the rule of law and the principle of Cabinet responsibility, and not to permit publications which would appear to impair that principle?

Everybody agrees that the principle of collective responsibility of Ministers has to be upheld, but in these matters there must be a balance—as the right hon. and learned Gentleman knows from his period in office—between the right of a Member of Parliament who has been a Minister to write his memoirs to protect himself from criticism, and the public interest. There must, in all these cases, be a balance between those two criteria.

Will the Attorney-General consider recommending to the Government a change in the present 30-years' rule? Although it is only a few years since we altered the rule, it seems that it needs further alteration to bring it into line with current practice.

My responsibility is to enforce the law—in a reasonable way, I hope—and not to legislate. I am sure the hon. Gentleman's point will have been noted, but it is not one for me.

Sugar

With permission, Mr. Speaker, I wish to make a statement. Agreement was reached in Brussels on 1st February on future arrangements for the supply of sugar from the developing countries. This involved two separate negotiations.

The first was between the ACP sugar group and the British Government. This concerned the price the Government should guarantee for sugar shipped to the United Kingdom in 1975. The price agreed was £260 per ton cif. I regard this as a reasonable compromise. It does not involve a rise in retail prices. In itself it is somewhat above our equalised price, but the equalisation scheme takes account of the lower costs of our own beet sugar and of sugar imported under the Community subsidy arrangements.

This agreement on price made possible the conclusion of the second negotiation. This was between the ACP countries and the European Economic Commission acting on behalf of the Community and in accordance with the mandate agreed by the Council of Agriculture Ministers. Agreement was reached on a protocol which embodies the principle of indefinite duration of access arrangements. The ACP countries will be able to send up to 1·4 million tons in a full year if they choose. The first full year will begin on 1st July. But special quotas have been agreed for the six months from January to June 1975. With reasonable assumptions about the figures for St. Kitts, Belize and India, the total for these months is about 380,000 tons. It is clear that in future more of the sugar will be shipped in the second half of the year. The basic price guaranteed in future years by the Community will be negotiated annually, within the price range obtaining in the Community, taking into account all relevant economic factors.

I regard this as a very satisfactory agreement. It greatly eases our own supply situation in this difficult year. More important, it fulfils entirely the assurances given to the Commonwealth developing countries. They can now send, if they choose, a full 1·4 million tons for the indefinite future, and at no time will they get a price below the range of Community prices. This agreement gives them the security they need, and it gives us the promise of a continued supply of cane sugar for our refineries and for the British consumer.

I welcome, as I am sure the House does, that the tripartite negotiations between the EEC, the United Kingdom and the 46 ACP States have been concluded subject to formal ratification. Will the right hon. Gentleman say whether the allocations to manufacturers, which averaged about 66 per cent. last year, and fell to little more than 50 per cent. early in January, will now be restored in full? The supply situation is still critical. The 380,000 tons to which the right hon. Gentleman referred compares with 500,000 tons received last year, and current stocks are at an all-time low.

Secondly, the Minister said that the ACP countries will be able to send the quantity referred to if they choose. If for any reason they fall short in their deliveries, from where will the shortages be made up and at what price? Thirdly, there is no long-term agreement on price. Am I right in believing that there is likely to be a surplus in the European harvest in 1975–76 because of the increased beet quotas which the right hon. Gentleman helped to negotiate? Will this not affect the Minister's scope to give ACP countries a supplement in addition to the basic price next year? In these circumstances what assurances can the right hon. Gentleman give about long-term supplies?

Finally, everyone will be glad that the price will not have to go up to the consumer, but it has already doubled since last autumn. When does the right hon. Gentleman expect that the United King dom will enjoy what is described in the agreement, with his colleagues in the Council of Ministers as common prices throughout the Community? The right hon. Gentleman has acknowledged that the consumer in Britain is paying more for sugar than consumers in any other country in Europe. When does he expect that the price will be the same throughout the Community?

I cannot be precise about a common Community price. It is much too early to answer that question at this stage. I shall be in Brussels next week negotiating prices which affect sugar beet in particular—[Interruption.] I hope that the hon. Member for Westmorland (Mr. Jopling) will ask a question standing up. As for the prices negotiated, we are committed to taking 1·4 million tons at a price which will be related to the price in the Community, but world conditions may mean that that price will be above the Community price. I cannot be specific about the trend of world prices, but that is a matter for discussion every year between the supplying countries, the Community and ourselves. I cannot therefore give a specific guarantee on that score. This matter is laid down in the protocol.

As for the refineries, I am glad that Tate and Lyle has made a statement that it welcomes this deal. I hope the arrangement we negotiated with the Community, in which account was taken of traditional supplies to the countries which refine sugar, will hold firm. I am anxious that we should guarantee adequate supplies to our refineries.

I compliment my right hon. Friend on his usual excellent performance in bargaining about food, particularly on behalf of the smaller Commonwealth territories. For what length of time has this deal been made—for one year, two years or five years? It is vitally important that islands like Mauritius and the Fijis should be able to plan ahead and rely on a period of continuity.

The deal for 1·4 million tons has been negotiated for an indefinite period. However, because of world conditions we provided in the declaration by the Community that we could negotiate, in the light of economic circumstances and world conditions, a supplement to that guaranteed price, and that will enable us to negotiate annually a price that we think might be helpful to the developing countries. This will help them.

The right hon. Member for Cambridgeshire (Mr. Pym) raised one point that I forgot to reply to. We believe that countries like Mauritius will sell us much more sugar than under the Commonwealth Sugar Agreement. Some other countries may sell us less, but the intention is that we should be supplied with a global amount.

Can the right hon. Gentleman say a little more about quantities? I acknowledge that a substantial concession has been agreed in guaranteeing the basic quantity of 1·4 million tons, but this will not be much good if the countries concerned choose to send only half that quantity. Can the right hon. Gentleman also say more about the shortfall for this year, which we acknowledge must occur? Finally, will he start negotiating prices for next year rather sooner so that the same problem may not happen again then?

The figures have still to be worked out with the supplying countries. Some of the countries had no political representatives at Brussels this weekend, but we have had assurances that they will quickly supply the quantities that they will sell us, and Mauritius has categorically stated that it will send more under the CSA. We may have had difficulties at the beginning of this year, but we are certain that we will achieve about 380,000 tons, which compares very well with the figure we had under the old Commonwealth Sugar Agreement.

I welcome the arrangements announced by the right hon. Gentleman. What will be the subsidy for the 1975 season from the EEC through the equalisation grant? Can the right hon. Gentleman say more about the indefinite period of price level that he hopes to negotiate? Would this be over and above £168 a ton, which is the present Community level?

As I have pointed out, that is a matter for negotiation. I cannot give a specific figure, and it would be wrong for me to attempt to do so. We have to take account of the Community figure in relation to the negotiation of the supplement, for which we—the British—are responsible in total. I cannot give a specific figure.

I congratulate my right hon. Friend on a first-class agreement in the circumstances. He has negotiated two successful tranches so far. If it appears that we shall not get the full supply of 1·4 million tons under this agreement, when will the third tranche be negotiated?

As my hon. Friend will recall, we had imports of 200,000 tons which had already been subsidised, and only last month the Council of Ministers agreed to extend the scheme to a further 300,000 tons. I believe that it may well be extended further, but we will have to see what the supply situation is.

Does not the right hon. Gentleman recall his statement when he returned from Brussels on 21st November? He said then that he had reached agreement to ensure an adequate supply of sugar throughout the Community for the 1974–75 marketing year at a common price. Between the beginning of November and now, the price of sugar has risen from £133 to £185 per ton. We do not seem to be getting anywhere nearer to a common price. What is the present position in the light of the right hon. Gentleman's undertaking on 21st November about a common price?

As I have already said, I cannot give a specific figure. I cannot say when there will be a common price situation in the EEC. I hope that there will be, but I cannot be more precise. The hon. Gentleman is being unreasonable in pressing me on this aspect. I want a supply of sugar. I have negotiated a supply at the price I have stated. The agreement has been accepted by the Community and by the ACP countries, and I believe that it is good for Britain and good for those areas as well.

Order. I am determined to preserve, as far as I can, time for the debate on devolution. I suggest that hon. Members who have other questions about the sugar agreement put them down in the usual way.

Eec (Acp Countries)

With permission, I would like to make a statement on the conclusion of the Protocol 22 negotiations between the Community and 46 developing countries in Africa, the Caribbean and the Pacific, in which, as my right hon. Friend the Minister of Agriculture, Fisheries and Food has just told us, the sugar negotiations had a vital rôle to play.

I told the House in my statement on 31st July, after the conference in Kingston, Jamaica, that a major concern to us was the need to safeguard the interests of the Commonwealth countries concerned. I am glad to be able to report that I believe that our joint British and Commonwealth efforts have succeeded. In Brussels on Saturday morning we agreed the text of a convention which, after submission to African, Caribbean and Pacific Ministers in Accra on 11th February, will be signed in Lomé, the capital of Togo, on 28th February.

The agreement has rightly been described as historic. In its detail, it embodies a new economic relationship between the developing countries concerned and the industrialised nations of the Community. It is my hope that it may, in the longer term, contribute towards a new international order in the relationships between industrialised and developing countries, for example, in influencing the conclusions of the United Nations Conference on Trade and Development next year.

The agreement provides for the free entry into the Community market of industrial products, and almost complete free entry for agricultural products from the developing countries. I need not say more about sugar, but I should mention particular points of concern to Commonwealth countries which have been satisfactorily resolved—beef, which is important to Botswana, Swaziland and Kenya, and bananas and white rum, which are important to the countries of the Caribbean.

A most important new element in this convention is that there is no requirement for reciprocity, except a provision for at least most favoured nation treatment to Community exports in the mar kets of the countries of Africa, the Caribbean and the Pacific. The Community has thus taken a valuable major step away from the requirement for reverse preferences which was built into the previous convention, and towards the kind of trade relations for which UNCTAD has called.

A further most important innovation, for which the groundwork was laid in Kingston, is the new scheme of stabilisation of export earnings for commodities. It will cover such commodities as cocoa, coffee, cotton and copra, and one, but only one, mineral, iron ore. This scheme was one to which the developing countries attached very great importance.

In relation to aid, the Community offer of approximately £1,600 million—including payments on commodity stabilisation—plus a further £200 million of softened loans from the European Investment Bank, has been accepted by the ACP countries, although it is less than they would have wished. They made it clear, however, that they regarded development as being essentially a matter for them, and that they did not wish to bargain on the figure.

I am glad to report that on one major question of great concern to the ACP countries—the title of the new convention—it was possible to reach agreement. The concept of association is to be dropped. The new convention will simply be known as the ACP/EEC Convention of Lomé. To some extent, this is a symbolic change. But it reflects a new relationship, which replaces paternalism by co-operation. I cannot pay enough tribute to the rôle which our Commonwealth countries and their negotiators have played in securing this. I have been very glad to be able to understand and support them in so much that they were seeking to achieve. I would also like to express my own personal warm appreciation of the steady and consistent contribution made by Sir Michael Palliser and his staff in securing such a successful outcome to these negotiations.

There are, of course, many details of the new convention which the House will wish to know. I propose as soon as possible to make the text available to the House.

As far as British renegotiation objectives are concerned, the situation, following the agreement in Brussels on Saturday, is that a great deal will now depend on a successful conclusion to the meeting of Development Ministers to be held in March, when I will be seeking to ensure that Commonwealth and other developing countries not covered by the convention should receive their due share of EEC aid.

In general, we warmly welcome the satisfactory conclusion of the negotiations, which, when I last was involved in them myself, looked to be very difficult and as if they would take a very long time.

I have four short questions to put to the right hon. Lady. First, as we are moving away, as she said, from the concept of association, what is to be the collective name for the 46 developing countries which would have been associated if association had continued?

Secondly, the stabilisation scheme is of great moment, and I welcome the fact that the right hon. Lady is to publish details of that scheme and other matters in the convention. Will the stabilisation scheme have financial limits? Will it cover, in particular, a drop in export earnings? Can she give a little more information about that aspect?

Thirdly, I also welcome what the right hon. Lady said at the very end of her statement, but what will be the effect of aid to countries outside the convention, countries, particularly, in the Indian sub-continent?

Lastly, what will be the effect on our aid programmes—both our bilateral and our multilateral aid programmes—which affect the 46 developing countries? Is this to be additional, or in what way will it affect what we do at present?

May I say how delighted I am to see the right hon. Gentleman in his place again?

I suspect, although there is no formal agreement about this, that the collective name, rather traditionally established during these negotiations, will become the ACP—that is, the countries of Africa, the Caribbean and the Pacific.

Secondly, there is a financial limit to the export stabilisation scheme. An amount in the calculations of the monetary side of all this allows for the export stabilisation scheme. It is very intricate. I am sure that the right hon. Gentleman will want to study it in detail. The answer is broadly that the export stabilisation scheme is confined within a financial limit.

On the third point, about aid to the Indian sub-continent, this is exactly at the other end of the problem that we have, in that I now have to seek to persuade the Community Development Ministers that there should be a worldwide, roughly 50–50, distribution of aid as between aid to the ACP countries and aid to those countries which are not, under the old nomenclature, associated.

Fourthly, as to the effect of our aid programme, obviously we have to make allowances in our aid programme for the fact that there will be EDF aid to some of our traditional clients, but this is something that we shall have to take on a case-by-case basis, because we shall clearly want to see what the programming of commitments is to those countries which have traditionally benefited from British aid. We shall have to see what the balance arrives at.

May I congratulate my right hon. Friend on what is by any standards obviously a very remarkable achievement.

Am I right in saying that the amount involved, though it is a very impressive figure, is considerably less than that which the original countries themselves bid for? That being so, is this a final and conclusive figure, or is there any suggestion of its further increase or supplementation at a later stage?

Finally, may I reinforce the point raised by the right hon. Member for Bridlington (Mr. Wood) that there is bound to be continuing and grave concern for those countries outside the ACP, which include those countries which are the most chronically poor in the world?

The size of the European Development Fund relates very precisely to the five years which will be governed by this convention. It is true that the ACP countries would have preferred more, but I think I should tell the House what Mr. Ba, the President of the ACP countries, said to us during the negotiations. He said "We, the developing countries, regard development as a matter for us. We do not wish to bargain with you about this." In the end we have got an arrangement on timing which in effect increases by a certain proportion the value of this aid. In other words, the aid is confined to a rather shorter period, which increases the amount available during those five years. I emphasise that, in my view, whereas the aid side of this was on the whole predicable and is important, it is the trading relationship side which marks the advance.

As for the second point relating to the Indian sub-continent, or renegotiation objective, which was stated as getting a better deal for Commonwealth and developing countries, is in part embodied in the convention, which means that we have better trading relationships for the Commonwealth countries in association with the Community. It will be partly embodied in the negotiations of my right hon. Friend the Secretary of State for Trade and President of the Board of Trade on imperfections in the generalised preference scheme of the Community. It will in part be embodied in my continuing negotiations with the Development Ministers on a fair share of EEC aid for the countries outside association, namely those of the Indian sub-continent.

Is the Minister aware that it is very pleasant to be able to congratulate her warmly only days after previously having done so? This is a considerable advance on the pattern established by the Yaoundé Convention.

The right hon. Lady paid a tribute to the Commonwealth negotiators and to Sir Michael Palliser. Is the agreement not also the clearest evidence of good will on the part of our Community partners?

Will the right hon. Lady say whether the safeguarding of our Commonwealth partners, to which she referred, could as successfully have been achieved from without the European Community as she has managed to do it from within?

Finally, what effect, if any, might our withdrawal from the Community have on the agreement? Would it, for example, mean that the Commonwealth countries might be in the position of having to choose between the EEC market and the British market?

As everybody knows, we have a referendum coming. Depending on the results of that, it will be for the Com monwealth countries concerned to make their own decisions about what they will want to do. They will have options open to them. My impression, for what it is worth, is that the genuine trade advantages offered by the agreement, which I would hope could be the forerunner for wider international agreements of this kind, would be likely to mean that most of them would consider withdrawal rather carefully, but they might wish to have a dual relationship with us and with the Community. I do not know. It will be for them to decide.

As to whether one could have achieved the same result from without the Community, it is undoubtedly true that if we had been outside the Community we could not have done so. However, if we had not been members of the Community the issue would not have arisen, because the Commonwealth countries would not have been in association with the Community or moving into association with the Community, at least for the most part. That is therefore a rather hypothetical question.

This is a great advance. I emphasise how much the advance is due to the maturity, sophistication and understanding of our Commonwealth member countries. They have transformed the situation of the old paternalism with its relationship primarily with the francophone countries. They have made the relationship between the Community and the developing countries grow up.

May I join other hon. Members in thanking my right hon. Friend for the hard work she has done? Can she confirm that the free entry foodstuffs include temperate foodstuffs which are produced in large quantities inside the Common Market?

Secondly, will my right hon. Friend say something about the liability for this stabilisation fund? Would it not be possible, in the event of any change in the EEC, for this stabilisation fund to be extended beyond the bounds of the EEC into some wider regional or world organisation?

On the first point, I would refer my hon. Friend to the full details of the text of the agreement. I apologise for not being able to give all the details today, but they are so intricate, as my hon. Friend will understand, that I thought it better to rest on producing the whole text to the House as soon as possible—within a few days, I hope. Certain temperate products are included. Broadly I should say that the Commonwealth countries and the ACP countries in general, although they would have liked the inclusion of some other products, were ready to accept the agreement we reached on which products should be included. It was obviously a matter of bargaining and negotiation.

On the second point, I envisage that the stabilisation and export earning scheme embodied in the convention could be the precursor of a wider agreement, perhaps, at UNCTAD. After all, if we have nine industrialised countries ready to agree with 46 developing countries on such a scheme, I believe that the barriers to agreement on an international scheme at UNCTAD must be very considerably reduced.

May I return to the question of what the consequences would be if we were to withdraw from the European Community. In that situation, would it not be necessary for us at least to unscramble the package and to carry out fresh negotiations about the extent to which free access was available to the developing countries concerned and the extent to which we participated in the export earnings stabilisation scheme, to mention just two examples?

We shall have to take these matters one at a time. We are still engaged in renegotiations, and when they are complete there will be the referendum. It would probably not be reasonable for us to predict precisely what would be the right course following the referendum. We must allow that to sort itself out.

I congratulate my right hon. Friend. Was account taken of what the Select Committee on Overseas Aid said about the problem of oil prices for Pakistan, India and Sri Lanka? To what extent was the effect of oil prices on those countries' earnings taken into account in the discussions? Will the agreement compensate them for it?

No, Sir. The matters to which my hon. Friend refers have been under hard discussion in the other forum, the Council of Development Ministers. These matters will be returned to at the meeting of that forum in March. My argument has been exactly as my hon. Friend has indicated—that there must be some help from the EEC to these poorest and largest countries which are very hard hit by the rise in oil and commodity prices. But that was not a matter for this forum in the Protocol 22 negotiations. It is for the other forum, the Council of Development Ministers.

Will the right hon. Lady tell us a little about the free market for industrialised goods of the 46 within the Nine of the European Economic Community? Do I understand it to be an absolutely free access? If so, what effect does that have on the elaborate existing provisions for the protection of such industries as the textile industry?

I think that the hon. and learned Gentleman will find when he looks at the detailed text of the agreement that textiles do not arise in this context. The industrialised products concerned were carefully defined, as emerges in the text.

SEVERAL HON. MEMBERS rose

House Of Commons (Administration)

I told the House on 9th July last that now that the Compton Report on the House of Commons Administrative Services was available, I proposed to consult about setting up the Committee of Members required to give it preliminary study.

The Committee will consist of eight Members; I am glad to say that the right hon. gentleman the Member for Middlesbrough (Mr. Bottomley) has accepted by invitation to be Chairman. Others Members are:
The hon. Member for Berwick and East Lothian (Mr. Mackintosh).
The hon. Member for Bridgwater (Mr. King).
The hon. Member for Penistone (Mr. Mendelson).
The right hon. Member for Renfrewshire, East (Miss Harvie Anderson).
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel).
The hon. Member for South Shields (Mr. Blenkinsop).
The right hon. Member for Yeovil (Mr. Peyton).
The Committee's terms of reference will be to consider Sir Edmund Compton's Report upon his review of the Administrative Services of the House of Commons, and matters arising therefrom, and to recommend what, if any, changes are desirable.

The Joint Secretaries to the Committee will be Mr. M. T. Ryle, Department of the Clerk of the House, to whom all communications regarding the Commit-the should be addressed; and Mr. Michael Townley, Cabinet Office.

I welcome the appointment of the Committee, Mr. Speaker, but, as you are responsible for its appointment and its terms of reference, I should like to put to you the following point. It seems to me that there was no sufficient reason why the Committee should have been established in this most unusual manner—that is, by yourself announcing to the House its composition and terms of reference rather than its being done in the normal manner for a Select Committee, by a motion dealing with the setting up of the Committee, its composition, and the terms of reference.

I have heard explanations why it has been done in this way on this occasion, but I should like the point to be taken on board that to one Member, at least, the reasons do not seem sufficient, and it would seem better on later occasions for all Committees of the House to be set up by the House.

I am grateful to the hon. Gentleman for putting his point so courteously. He and I have discussed the matter, and he knows that I have discussed it widely. I decided that I should follow the precedent, which has been for a Committee of this sort to be decided on by the Speaker.

I thought the matter over very carefully, and gave those whom I consult on such matters a great deal of time to think about it. That is why it has taken so long to announce the Committee. I have come to this conclusion, which I believe is the correct one.

Complaint Of Privilege

I wish to raise a matter which I submit is a breach of privilege and a contempt of the House, Mr. Speaker.

It may be that the abuse of which I complain is without precedent, but as "Erskine May" points out at page 132 of the Eighteenth Edition, a matter
"may be treated as a contempt even though there is no precedent of the offence."
The offence of which I seek to complain, of which I have given you the earliest possible notice, Mr. Speaker, relates to an advertisement which appeared in the Daily Telegraph on Saturday 1st February and, I believe, in some other newspapers. Under the heading "Advertisement", it reads:

"TED HEATH IS STILL THE TORIES BEST BET …

If you agree, say so now.

Send a telegram to your M.P.,

c/o House of Commons, London, S.W.1.

Ask him to VOTE HEATH in next week's ballot.

Signed: 'Friends of Ted Heath.'"

Those final words are the only evidence of the source of the advertisement.

If we allow this kind of thing to happen it will open up the most dangerous possibilities of anonymous groupings, supplied with anonymous funds, seeking to influence Members of Parliament, for whatever purpose, in the discharge of their duties as Members. Therefore, the matter should be given careful consideration. It is a precedent which we cannot allow to pass unchallenged.

I hope that after due consideration, Mr. Speaker, you will come to the conclusion that there is a prima facie case of breach of privilege. How do we know who the people concerned are? They might be a foreign Power, a subversive organisation, the Mafia, or Heaven knows what.

It is important that if a group seeks to lobby Members of Parliament its identity should be disclosed, and the funds it is using for the purpose of its lobby should also be made known to the public.

If the hon. Gentleman is relying on something in a newspaper, he must bring a copy to the Table.

Copy of newspaper handed in.

The hon. Gentleman is correct in saying that he gave me considerable notice of the matter, and I have had an opportunity to consider it.

I would hesitate to accuse an non. Member who has been a Member such a long time—indeed, for as long as I have been a Member—of anything like frivolity. I have considered the matter carefully, and have taken advice on it. I cannot give it precedence over the business of the House.

Devolution

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Pavitt.]

It may be for the assistance of the House if I clear up one matter which has been put to me. I have given careful thought to the practice of the House which prohibits any reference in an Adjournment debate to matters requiring legislative remedy. Standing Order No. 16 gives me discretion to disregard this practice to some extent if I feel that its enforcement would unduly restrict discussion.

My predecessors and I have always been somewhat reluctant to use this discretion in respect of the half-hour Adjournment debates at the end of business, since the main usefulness of those debates is to call Ministers to account on matters of administration for which they have actual responsibility. However, in a full-length debate such as we are to have today and tomorrow, the canvas is exceedingly broad and it would be a manifest impossibility to exclude from discussion the fact that legislation would ultimately be necessary to implement some of the proposals which have been or which may be advanced.

I should deprecate in an Adjournment debate detailed discussion of the actual provisions of a Bill, but I feel that this is a different situation. The Chair should intervene only if an hon. Member were to involve himself in the details of a proposed Bill, and in general I think that the matter must be treated as I have indicated, with the Chair exercising the wide discretion which it is given.

4.11 p.m.

The Lord President of the Council and Leader of the House of Commons
(Mr. Edward Short)

This two-day debate provides the House with its first full opportunity for a debate on devolution since the publication of the White Paper in September last year. The White Paper decisions provide the context for the debate. They were the decisions on the major issues. Since publication of the White Paper and the Government's return to office, a great deal of time has been devoted to the subject both by Ministers and by officials. As a result, we have identified and appreciated most of the problems which arise within the context of the White Paper decisions.

Many Scottish and Welsh Members, I know, are especially interested in the Government's timetable for introducing the devolution legislation. I said last week, in reply to the hon. Member for Carmarthen (Mr. Evans), that it was too soon to give a firm indication of the timetable, apart from repeating my hope that the Bill will be ready by the end of this year. The issue is extremely complex, particularly for a country such as ours which has never had a written constitution. It has considerable and far-reaching constitutional implications. While I assure hon. Members that we shall continue to press ahead as fast as possible, I cannot succumb to pressures for speed at the cost of hasty and ill-judged decisions.

I have already promised to try to keep the House informed. I have mentioned the possibility of publishing a White Paper towards the middle of this year, but I should not do that if I felt that the preparation of a White Paper would impede the preparation of the Bill.

This debate will, no doubt, concentrate on Scotland and Wales, but I hope that hon. Members from England and Northern Ireland will take part, for, while we are giving priority to the establishment of the Welsh and Scottish Assemblies, we must consider the question of devolution also in the United Kingdom context. I hope that, later this year, we may begin consultations in the English regions such as we had in both Scotland and Wales in the summer of last year.

We are committed to preserving the unity of the United Kingdom. We are looking forward to the development of a new relationship between Scotland, Wales, the English regions and the central Government. We are not looking back to the 17th century, to the position before the Act of Union of 1707. The two-and-a-half centuries since that date have inevitably moulded us into one nation—[HON. MEMBERS: "Oh."]—yes, of course—although we retain with pride and cherish many of the cultural variations between Scotland, Wales and England. Our economies, our societies, and our aspirations are all closely intertwined, and I believe that the vast majority of people in all parts of the United King- dom recognise this unity, welcome it, and wish to preserve it.

On the other hand, my right hon. Friend the Prime Minister has acknowledged the
"strong feeling not only in Scotland and Wales but in many parts of England of a greater desire for participation in the process of decision making, moving it nearer, whenever this is possible, to the places where people live".
This is really the heart of the matter. A "down south" Government does not meet the aspirations of people in all parts of the United Kingdom—in my own North-East, as well as in Scotland and Wales—for greater participation involving their skills, their energies and their judgments in decisions which affect their daily lives closer to home, closer to their own problems and to their own priorities.

In my view, and in the Government's view, it would be dangerous for us to ignore these aspirations in the regions of the United Kingdom.

As we work out our detailed proposals, all our decisions will be guided by the following major objectives. First, the Assemblies must meet the aspirations of the people of Scotland and Wales for a closer involvement in the running of their own affairs but must not threaten the unity of the United Kingdom. Second, while we must devolve really significant functions, we must retain to the United Kingdom Government and to Parliament the functions essential to the sovereignty of Parliament and to the overall management of the United Kingdom economy.

Third, the Assemblies must be able to work quickly, efficiently and constructively in their area of decision making and in co-operation with central Government. Finally, we must devise systems which are sufficiently robust to withstand, without fundamental alteration, changes in political circumstances as well as the economic and social pressures which may confront us in the future.

These principles are fundamental to our thinking, as we made clear in our September White Paper. In that White Paper we announced some very important broad decisions, to which we are now fully committed. It may help hon. Members if I briefly remind the House what they were.

We decided, first, that there will be directly elected Assemblies in Scotland and Wales; second, that the Scottish Assembly
"should have a legislative role and legislative powers within fields in which separate Scottish legislation already exists;".
and third, that
"the Welsh assembly should parallel the Scottish counterpart in assuming certain powers of the Secretary of State in respect of delegated legislation. The Welsh assembly would also be given responsibility for many of the executive functions at present carried out by nominated bodies within Wales, and by the Secretary of State himself".
We decided also that the two Secretaries of State and the full existing representation here at Westminster for both Scotland and Wales should be retained.

Finally, the White Paper stressed the equal importance that we attach to accountability in England, as well as in Scotland and Wales, and we decided that we were not at that time in a position to make firm proposals for the English regions.

Many hon. Members will wish to debate these proposals. I greatly welcome this, and I shall listen with great interest to their views, but, if I may say so, I hope that the House will devote more of the time now available to us to discussing the more specific and very complex matters on which the Government, and eventually the House, must take decisions. I turn now to these problems.

The right hon. Gentleman referred to the matters about which the Government have made up their mind, and he referred to there being a directly elected Scottish Assembly, as was said in the White Paper, but, unlike the White Paper, he did not exclude proportional representation. Does that mean that his mind is still open to the need for electoral reform? I remind the right hon. Gentleman—I hope that he is seized of this fact—that in Scotland at present the Labour Government has 36 per cent. of the votes but 57 per cent. of the seats. How does he justify that as an example of democratic participation?

I hope that the hon. Gentleman noted the implication in what I said, when I referred to directly elected Assemblies. They would be directly elected, and not by any system of proportional representation.

Is the right hon. Gentleman suggesting that proportional representation is a form of indirect election? Does he say that all the Members of the Eire Parliament are indirectly elected? Surely, direct election means that people cast their vote, regardless of the system which is followed. Is the right hon. Gentleman's mind completely closed to other systems?

My mind is not shut at all. I was using the term simply in the sense in which it is normally understood and in which the right hon. Member for Devon, North (Mr. Thorpe) understands it.

Perhaps I may begin with the Assemblies. We believe that the two Assemblies should meet in Edinburgh and Cardiff, at least at the outset. The Scottish and Welsh Offices, in consultation with the Property Services Agency, will undertake local consultations with a view to identifying one or more public buildings that might be suitable for the purpose.

We said in the White Paper that members of the Scottish and Welsh Assemblies would be elected on the same basis as Members of Parliament. I should very much welcome the views of the House on how many members each Assembly should have and on what basis of what constituencies they should be elected.

If we use parliamentary constituencies, we shall probably have to work, at least at first, on the basis of multiples of the existing numbers of Members of Parliament in Scotland and in Wales. It might very well be difficult to draw new boundaries within a reasonable time, because that would involve the setting up of an independent body to advise us on the new constituencies.

Then there is the question of qualifications or disqualifications for membership. Should a Member of this House, for example, be able also to sit in the Scottish or Welsh Assembly? There is also the timing of elections to consider. Should they coincide with elections to this House, or with local authority elections, or with neither?

Even more important, should the Assembly be elected for a fixed term, or should there be a power of dissolution. If there is such a power, who should exercise it? This question of the power of dissolution is very closely related to the next issue that I want to discuss, perhaps the most vital of all—the form of the Executive.

My right hon. Friend suggested that there could be multiples of members based on the existing system. That implies by definition that the existing parliamentary constituencies should be divided. If we are to retain the present system, is it not right that we should divide them rather than have some kind of variation of assessment, such as we have not had before, except way back in 1945?

That is exactly the kind of issue on which we should like the views of Members. If we decide to have a two-member parliamentary constituency, should the constituencies be divided? If we did that, we should need to have an independent advisory body, and that would delay the process; or should it simply be the first to pass the post?

Let me turn to the form of the Executive, and perhaps I may take Scotland first, if the right hon. Member for Devon, North will allow me to continue. I am asking for his views among others, but perhaps he will give us his views standing up rather than sitting down, as now. The Scottish Assembly will have substantial legislative power in devolved subjects and executive powers as well in these and probably in other fields. Where is the executive power to promote legislation, to instruct civil servants and to implement policy, to lie? This is the first time that we shall have a written constitution for any part of the United Kingdom—with the exception of Northern Ireland—and all this must be made crystal clear in the written constitution.

Broadly speaking, there are two alternatives. One is for these powers to be vested in an Executive, as is the case here at Westminster. The other is to vest them not in an Executive but in the Assembly itself. The Assembly might then operate on committee lines, each committee consisting of a cross-section of party members and specialising in a particular aspect of government. Of course, some variations are possible. For example, if power is vested in an Executive, there might nevertheless be scope for the committees of the Assembly to have a consultative role in relation to policy and to oversee the activities of particular Departments.

A committee system of this kind, with executive powers vested in it, has the great advantage of involving the minority parties in decision making and it would encourage much more open government. On the other hand, an executive system seems likely to be less cumbersome for the legislative function to be devolved to Scotland. Indeed, there are some doubts whether a committee system could effectively initiate legislation, and I should like the views of hon. Members on that.

I wonder whether the right hon. Gentleman would reconsider the observation that he made a few moments ago? It was not unimportant. He said that there was no written constitution for this country in the sense and context in which he was speaking. I submit to him that that observation is correct only in respect of this House and the exercise of total and supreme sovereignty within this realm, but that all other exercise of authority and all devolved exercise of authority are and always have been statutorily controlled, so that in that sense there is no necessary innovation.

The right hon. Gentleman is absolutely correct. I talked about it in respect of Parliament and the exercise of the supreme sovereign authority of Parliament.

In the case of Wales there is perhaps a stronger case for arguing that a committee system would be the more appropriate. The White Paper envisaged that the Welsh Assembly would have powers of subordinate legislation and the execution of policy, but not of primary legislation. The main requirement is to go for the system that best meets the needs and the wishes of the Welsh and Scottish people and also makes for effective co-operation and co-ordination between Cardiff, Edinburgh and London. I shall be very much interested in and influenced by the views that hon. Members express in this debate.

Perhaps I may now say a word about co-operation. If devolution is to work, there will have to be continuous consultation and co-operation so that in practice problems arising between the different levels of government may be settled amicably by mutual agreement before they come to a head. This calls for more than good will. It calls also for efficient administrative marchinery to make this co-operation work It is a matter for consideration whether machinery of this kind can or should be provided for in the devolution Bill itself. There could be advantages in doing so, although to some extent the arrangements will need to be worked out in the light of practical experience.

But it would no doubt be too optimistic to think that there will never be causes for confrontation between the Scottish, Welsh and United Kingdom authorities. This raises one of the most difficult questions—whether there should be some formal means of dealing with the situation that would arise when powers devolved were exercised in such a way as to conflict seriously with the vital interests of the United Kingdom as a whole.

Let me say straight away that I certainly would not favour giving powers with one hand and taking them away with the other. If any formal power of the kind I have suggested is taken, its use would have to be confined to the most exceptional circumstances. We cannot expect the three authorities always to see eye to eye on policy. There would be little point in devolution if they did. The right way in which to resolve differences of this kind is by discussion and in the last resort, through the ballot box.

However, one can imagine circumstances in which the Scottish or Welsh Assembly, acting quite properly within its devolved powers, might propose some action that made it impossible for the United Kingdom Government to carry out vital functions that remained their own responsibility, for example, defence. One could also imagine circumstances in which the Assembly, either by accident or perhaps even by design, acted ultra vires and claimed to exercise some power that had not been devolved to it.

It could be argued that, as this Parliament will remain sovereign in all matters, it will be sufficiently to rely on its sovereign power to pass legislation to deal with such a situation and that no simpler or more specific powers are therefore required. On the other hand, there could be a case for special provision to cover such situations without having to fall back on the general principle of overriding sovereignty and full-scale Westminster legislation.

Can my right hon. Friend say what he means when he says that if this had to be resolved it would in the last resort be through the ballot box? What does he mean by that?

I mean in an election, of course. If such a provision were made, many would argue that it should be exercised only with the special approval of both Houses of Parliament. I stress again that I cannot imagine its use except in the most exceptional circumstances. This is an extremely difficult problem and I shall very much welcome the views of the House. To some extent the view we take on it could interact with the way in which we devolve powers to Cardiff and Edinburgh.

Let me explain. If such a reserve power were available, it is arguable that the powers devolved might be specified in somewhat less detail than would otherwise be the case. I do not say that that would be so but that it is a possible situation.

Let me now turn—

Have I understood the right hon. Gentleman aright in that the ballot box to which he refers is the ballot box for the Assembly? Or is it the ballot box for this Parliament? One can visualise rather different results depending upon which ballot box is used. It would help if we knew.

If there were a fundamental dispute going on for a long time, the electors would express their views about it both in the elections to this House and in the elections to the Assembly.

My right hon. Friend has not so far mentioned the question of the English Parliament. Is he envisaging a situation when either Wales or Scotland would be in conflict on a matter of vital interest affecting the United Kingdom as a whole and when, for example, 71 Scottish Members here would be sitting in judgment upon the decision of their nation north of the border? Would that be tolerable to English Members over a period?

My hon. Friend can deploy his argument if he is fortunate enough to catch your eye, Mr. Speaker. All I am saying is that while I very much hope that there will not be such a confrontation, in drawing up a scheme of this kind we have to cater for the fact that such a confrontation could occur. All I am asking is whether there should be some simpler form of machinery than legislation here to deal with it.

In view of the far-reaching significance of what the hon. Gentleman is talking about, and bearing in mind that there are many here who hold the integrity of the United Kingdom very dear, may I ask whether, since the Government have decided to hold a referendum on the issue of the Common Market, they will hold a referendum in each of the constituent countries before embarking on this dangerous course?

No, Sir. Membership of the EEC is something quite different. It affects our permanent relationship with countries outside the United Kingdom. This is a domestic matter within our own boundaries.

This brings me to the powers to be devolved. Some very difficult problems are thrown up by the task of determining exactly what functions, what subjects, the Assemblies should be responsible for. It is easy enough to have a general idea of what we would like them to do. In referring to the Scottish Assembly, the White Paper gave as examples "housing, health and education". But to bring about effective devolution, such general subjects as these have to be defined in a way which has not been necessary in the past, when they have been the sole concern of one sovereign government.

Of course various precedents are provided—by federal countries, for example, and by arrangements for Northern Ireland. But federalism is not what we are proposing, and the circumstances of Northern Ireland are not those of Scotland and Wales. Indeed, as the White Paper makes clear, there are differences between the requirements of Scotland and Wales.

A final decision on the precise selection and definition of the devolved functions—obviously a vital element in the devolution Bill—can be made only after an exhaustive review of a wide range of departmental activities. Inevitably this is a difficult and time-consuming task. The Kilbrandon Commission did not pretend to have completed that task. It took some useful evidence and made general recommendations, but it very properly pointed out that it was unable to reach any precise conclusions, since firm decisions could be taken only after more detailed inquiry and consultation with the various interests concerned than it would have been appropriate for it to undertake. It is that more detailed inquiry on which we are now engaged.

In considering devolution, one especially difficult area of government is trade, industry and employment. On the one hand, as Kilbrandon pointed out, the scope for devolution here appears to be limited by a number of powerful factors—such as international obligations, the requirements of central economic management, practical considerations relating to the organisation of industry on a United Kingdom basis, and so on. So much so that the Kilbrandon majority virtually came down against devolution in these areas. With some exceptions in agriculture and fisheries, neither industry nor employment is in the list of functions suggested by the Commission for legislative Assemblies—the most advanced form of devolution which Kilbrandon considered.

On the other hand, there is no doubt that for the Scottish and Welsh people, trade, industry and employment are especially key areas. They want a chance to exercise decisive influence in these matters, which are so important to them in their daily lives. We recognised this in the September White Paper. The question is: how should we satisfy the desire for more decision taking in Scotland and Wales in these areas, without disrupting the economic unity of the United Kingdom as a whole and, equally important, without prejudicing the interests of English regions with similar economic problems?

Obviously we cannot so arrange matters that Scotland and Wales will continually get more and more—by way of industrial assistance, for example—while the English regions get correspondingly less and less. That is not the object of devolution. A fair balance must be maintained. But there is a great deal to be said for enabling a wide range of executive decisions in the industrial sphere to be taken in Scotland and Wales, not in London. We should devolve as much in this area as we can consistent with the overall management of the economy. The Secretary of State will have an important continuing rôle to play in this field. There are no easy solutions in this field, but we are reviewing all the options in an effort to find a way through this difficulty.

I turn now to the crucial question of finance. This question presents the dual problem of being not only difficult in itself but also incapable of a final solution until the other components of devolution have been decided. We have already said in the White Paper that the Scottish and Welsh Assemblies will each receive a block grant voted by the United Kingdom Parliament. Within the total grant, it will be for the Assemblies to judge among competing priorities—as between, for example, hospitals and roads or schools and houses. This freedom to choose between programmes is in itself very important.

This raises the question of differing standards which many find worrying. If the Assemblies are free to choose between programmes, differing standards will result. There is nothing wrong with that provided that they do not become too depressed in any one direction. It is an inevitable consequence of devolution—

Does the right hon. Gentleman not accept that this idea of a grant from Westminster means that we would have to rob Peter to pay Paul? Does he realise that this is not the solution for Scotland and that any Scottish Assembly must have the right to raise its own funds directly, for its own purposes?

I am coming to that. We have decided that the bulk of this finance will come from a block grant. The disparities I have been talking about ought not to be carried to the extent that they inhibit the overall management of the economy or perhaps arouse so much resentment that the cohesion of the United Kingdom is affected.

Against that background, we have to decide exactly how the grant is to be arrived at. We have also to consider the possibility of some limited taxation powers. They must be limited, because a sweeping devolution of independent tax powers would not make sense in a small compact country such as ours where the Government's powers to manage the economy could be impaired.

I have given way many times. This is a two-day debate. I give way for the last time.

I thank the right hon. Gentleman for his courtesy in giving way. I wish to intervene because this is such an important matter. Have the Government decided whether any proportion of petroleum revenue tax, or the corporation tax exigible from oil-related activities in the North Sea, will go to Scotland or will remain in Whitehall?

We are discussing problems in this debate and asking for hon. Members' views. I do not think that the people of Wales and Scotland would welcome a system which gave them the privilege of paying very much higher taxes than their fellow United Kingdom citizens. Too much devolution in taxation would make only for disunity and instability. But there may well be a case for giving Scotland and Wales some flexibility—and, after all, every district council has some taxation powers. I am saying that I believe that the Scottish Assembly should have some powers. For example, if it wanted to embark on some special project which could not be financed out of its normal grant, it might achieve its purpose by levying a small amount of taxation on Scotland.

But to do that it would have to be authorised to use some specific tax or taxes. The question is: which taxes, and to what extent, and would the arrangements for Wales need to be the same as those for Scotland? Decisions on these questions will have to fit in with the requirements of central economic management, and hon. Members who have studied the possibility of replacing the rating system by a system of local taxation will realise how difficult it is to find some form of local taxation. Some formidable administrative problems will also have to be taken into account. As with other problems of government, the financial aspect is one of the most difficult.

Those, then, are the major problems facing us in writing a constitution for Wales and Scotland—two important parts of the United Kingdom—for the first time. The basic decisions were announced in the White Paper. We are therefore well past the stage of broad general ideas. What is needed in this debate as well as in the Government's work on devolution is a concentration on the detailed possibilities and on the question how they will work out in practice.

Given that concentration, I believe that this debate can make a valuable contribution to the planning of viable constitutional arrangements which will, I hope, check and reverse the growing feeling of alienation in areas of the United Kingdom which are more remote from London and, in so doing, strengthen rather than weaken the union. The gains in national unity which could flow from devolution if we were to plan wisely, as well as the fragmentation of the United Kingdom which could be the consequence of an unwise, ill-planned scheme, demand that we consider every possibility and its consequences exhaustively. This will, of course, take time, but the scheme which emerges will, I believe and hope, endure.

4.45 p.m.

The Lord President of the Council may find that because, properly and understandably, he has been so immersed in considering some of the considerable details involved in devolution he has perhaps left the House behind him. Before we can make a decision on the details—and I accept that the views of right hon. and hon. Members in this debate are very important—we must consider some of the deep and fundamental issues involved in the question of devolution.

I am sure that the Government are right to give plenty of time for this debate. I hope, as the right hon. Gentleman does, that it will not be confined to Members from Scotland, Wales or, indeed, Northern Ireland. After all, the decisions which we shall take in this Parliament will not simply affect the people of Scotland, Wales, or, depending on other discussions, Northern Ireland. They are of vital importance to the people of England and to the whole of the United Kingdom. I hope therefore that English Members will not feel the same inhibitions as have all too often been felt concerning Scottish affairs.

I vividly remember as a new Member nearly 20 years ago being repeatedly put on the Scottish Grand Committee. I do not think that the reason for it was the normal disciplinary one. If so, it was a poor start for a future Chief Whip. I think that the reason was that I was a Scotsman, even though I represented an English constituency. I was the first English Member to serve on the First Scottish Standing Committee, but I did so on the strict understanding that in no circumstances would I open my mouth, nor did I—to vote, yes, but not to speak.

Now English Members must speak out because we are engaged on making fundamental changes in the constitution of the whole of the United Kingdom. None of us should underrate the importance of that. I thought that the Lord President took much of this for granted and rather bypassed the important considerations set out in the Kilbrandon Report, in which my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) played an important part. I hope that the right hon. Gentleman the Lord President will not take that amiss, but the House has not had an opportunity to consider many of the fundamental issues.

I was, however, glad to hear the Lord President make clear that the Government do not regard this as some minor parliamentary exercise or manœuvre designed simply to placate Scottish and Welsh feelings with little or no basic change in our present parliamentary system. If there are still those who hope to get away with it on those lines, some of the difficulties and repercussions of particular decisions outlined by the right hon. Gentleman surely should awaken them to reality.

I hope, therefore, that we can all start from the basis that we shall possibly embark on legislation in this Parliament which will mean the most far-reaching reform of the United Kingdom constitution since the Act of Union in 1707. We should be very unwise to minimise the grave responsibility which we are taking on. Perhaps because I realise this only too well I have to admit to considerable anxiety. I want to see genuine consideration of and a frank approach adopted to these difficult problems by the Government and, above all, plenty of time given to this matter.

The hon. Members for Western Isles (Mr. Stewart) and Carmarthen (Mr. Evans) and their hon. Friends are always pressing for strict timetables. While I understand their pressures, I hope that they will reflect that they above everyone else must be anxious to ensure that what comes out of our deliberations is in the best interests of the people of Scotland and Wales. They must not expect the House to come quickly to decisions which they and we might bitterly regret later on.

Will the right hon. Gentleman bear in mind that this is not the beginning of a discussion on self-government for Wales and Scotland? In 1895 the Prime Minister of the United Kingdom came to Cardiff to declare himself in favour of a parliament for Wales. That marked the end of a long campaign at that time. This is no new idea, and in those circumstances the right hon. Gentleman cannot plead for time.

I certainly consider it right to plead for time in considering the details of the legislation which is to be put before us and in the planning of that legislation in which we are engaged. It is one thing to say that the matter has been discussed, but many things have happened since the days to which the hon. Member for Carmarthen referred. The United Kingdom has survived, and it has done so on the basis of the United Kingdom as one country.

Like the right hon. Gentleman, I do not today intend to discuss the problems of Northern Ireland, although I have at least a passing interest in what he described as a "Down, South", or "South Down" form of Government. Nor do I intend at this stage to become involved in the English regions. I stress that the repercussions of what is decided for Scotland and Wales are bound to be felt in the other areas. For example, although Northern Ireland's constitutional future depends on the outcome of the Conven tion which—rightly, in my judgment—the Secretary of State is shortly to set up, whatever is settled for Scotland and Wales must inevitably have a bearing, one way or the other, on the future size of Northern Ireland representation in the House of Commons. Equally, the North of England, which the right hon. Gentleman and I know so well, will be watching carefully to see whether what my constituents regard as the preferential treatment now accorded to Scotland is to be extended still further.

Although we must have these thoughts in mind, I am sure that it is right to concentrate in this debate on Scotland and Wales. Later, like the right hon. Gentleman, I shall seek to deal with Scotland and Wales separately because, as he does, I recognise that the background and the problems involved are not the same in Scotland and Wales.

First, I wish to refer as a background to the form of devolution and the general objectives which I believe we must have in mind. We on the Conservative benches stand unequivocally for the unity of the United Kingdom under a sovereign Parliament here at Westminster. The union has enabled us in Great Britain and Northern Ireland to stand firm against all our enemies and, for all our failings, to build a great, free and, judged by any standard, prosperous nation. After years of endeavour together it would surely be a complete tragedy for all our people if we were now to seek each to go our separate ways.

We Conservatives are also completely convinced that all of us throughout the United Kingdom would be the poorer for it in many ways, not all of them purely material. Personally, I feel that all the more strongly because, although I now live just in England and represent a constituency which, being named Penrith and the Border, proclaims its proximity to Scotland, I remain proud to be a Scotsman. I was born in Scotland. My forebears—apart from one Cumbrian grandmother—were all Scottish, and so were my wife's. I served in a Scottish regiment and I tried twice, alas unsuccessfully, to represent a Scottish constituency in the House.

The right hon. Gentleman said that he twice tried to represent a Scottish constituency. Would it not be difficult for a Scottish Conservative to do so in these days, and might that not reflect the Scottish view of the Scottish Conservative Party?

I do not agree. I was standing in very different times. The hon. Member for Dunbartonshire, East (Mrs. Bain) represents the constituency for which I fought. Not many hon. and right hon. Members would imagine that it would be particularly easy to beat the late Lord Kirkwood on Clydeside. The hon. Member for Argyll (Mr. MacCormick) completely misses that point.

If Scotland were to become a separate nation, I and many other Scots men and women who live in other parts of the United Kingdom would have to decide whether to retain Scottish nationality and lose our rights in England or to become naturalised English citizens. That is, if England would have us. That would apply the other way round for the many English people who live in Scotland. One cannot brush that aside; it is very important. Many of the people concerned would feel it deeply. It would surely be absurd, after all these years, for United Kingdom citizenship, which we all take for granted, to be abandoned. Many people who accept it as something they expect today would find that they were proud of it at heart when there was a possibility of their losing it.

The economic case against separation has been extensively and powerfully argued in the Kilbrandon Report. If one agrees with that report, as I do, it is pointless