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Orders Of The Day

Volume 886: debated on Thursday 13 February 1975

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Supply

[10TH ALLOTTED DAY]— considered.

Equality Of Opportunity

4.11 p.m.

I beg to move,

That this House, regretting that class divisions in this country perpetuate basic inequalities, calls on Her Majesty's Government to encourage greater equality of wealth and opportunity, particularly through partnership in industry.
May I begin by saying how much my colleagues and I welcome a definite move to establish class in this House by the granting of a Supply Day to my party. I express the hope that in a democracy the rights granted to minorities will be granted more frequently in future so that in consequence members of minorities will not be counted as second-class Members of this House.

This debate is concerned with the class struggle, the existence of class barriers and the possibility of removing those barriers, especially in the industrial area. Whatever our views may be, there can be little doubt but that a majority of this country's citizens take the view that class divisions still exist. The British Market Research Bureau Limited showed that in 1964 50 per cent. of people interviewed thought that they belonged to a certain class. In 1969 that percentage had fallen to 30 per cent. but by 1970 it had risen to 43 per cent.

A National Opinion Poll taken in 1972 asked the question,
"Do you think that there are different social classes in Britain or not?"
Of the people answering that question, 91 per cent. answered "Yes".

The whole complicated nature of the bureaucratic machine conspires against real progress. By its very nature it classifies people. Whether we consider education, housing, health, law or industry, the class-based structure of our society is evident. Much of this class basis springs from wealth or poverty. The so-called Welfare State, far from abolishing class, encourages it.

If, for example, a person increases his earnings, withdrawal of benefit follows. Consequently there may be no effective change in circumstances or class. It is no part of my argument to say that we make the weak strong by making the strong weak. That is totally untrue. What I do argue is that it is vital to rethink and replan society's structure so that we may help people to better themselves and thus to reduce class barriers.

I do not believe that we can abolish class in a democracy. Nor do I argue that that is necessarily a desirable objective. What I do strongly argue is that the job of the State is to ensure that people have equal opportunity, regardless of wealth or poverty, and that class in itself should not be a passport to privilege in any area of society.

It would assist the House enormously if the hon. Member could explain precisely what he means by the word "class". Is he using it in a political, sociological or economic sense?

If he allows me to make my speech in my own way—a plea I have often heard coming from the Tory Front Bench—the hon. Member will find out just what my argument is. Basically the answer to his question is that I am using the word in a social and economic sense.

What we need to do is to ensure that class is not a passport to privilege. I have mentioned wealth and poverty. They are extremely relevant although I concede that they are not the only relevant factors. Much of our class division springs from poverty or from the improper use of wealth. Certainly as a society we have identified poverty. Indeed we have institutionalised it. What we now need is an attack on poverty and an effort to ensure that help is given where it is needed, so that people are encouraged and helped in a way which allows them to help themselves. The credit tax system to which my party is totally committed is one way to do this. I have no doubt but that my hon. Friend the Member for Cornwall, North (Mr. Pardoe) will be saying more about this in reply to the debate if he catches your eye, Mr. Speaker.

I turn to class barriers and privileges in other areas, to which I have already made passing reference. My party is totally committed to the comprehensive education system. We do not worship at the shrine of comprehensive education but we do believe that it is a system which can be justified on social as well as on educational grounds. If it has any merit as a system, it is surely that it helps abolish class privileges. In further education there are still far too many young people entering technical colleges who are the sons and daughters of the semi-skilled and unskilled members of society while in terms of university entrants I view with some suspicion the way certain universities appear to have such a large percentage of their intake from the public schools.

We could at this point enter into the subject of job opportunities, especially in the Civil Service. There is also the subject of commissions in Her Majesty's Forces. This morning I took the trouble to look at the background of every Member of the House. It is intriguing to observe how educational privilege seems to play its part in the lives of hon. Members, irrespective of party.

I referred earlier to the law. I am not seeking to argue that there is one law for the rich and another for the poor. What I do argue is that the law is more easily available, more readily accessible, to the wealthy than to the poor. That tends to lead to a division on a class basis. I know that there is legal aid, but my experience, both in this place and before I came here, is that the legal aid system is far too costly. It is almost prohibitive, with the result that the system is often prohibited to many members of the community. I welcome such things as neighbourhood law centres which are being established in various parts of the country. I would like to see much easier availability of legal aid.

Thinking in terms of society structure, we think of the family, which inevitably leads to housing. The provision—or lack of provision—of housing in this country is still a standing disgrace. The people are entitled to a better housing deal. I have no doubt that treating housing as a social service would go a long way towards abolishing class privilege.

In my earlier days as a member of the Rochdale town council I had great pleasure in being able to carry a resolution, of which I was very proud, to provide that a large number of houses should be available to the social services department as opposed to the housing department for use in the alleviation of social problems. We are aware of the number of houses without bathrooms. I suspect that even today there are people who believe that if working-class electors are put in a house with a bathroom they will put their coal in the bath. That is what was said before the war, but strangely enough they did not put their coal in the bath; they used it for bathing.

Great efforts should be made to build more houses. Many houses are grossly under-occupied. I am not referring to three-bedroomed houses in which live only the old man and his wife, because the family has left. It is possible for people to own not one house but two, three, four or five. People sometimes own two houses just so that they can live in each of them for six months of the year. That is one of the gross inequalities which helps to breed class privilege, to which I am sure all hon. Members strongly and emotionally object.

We need to rethink our housing policy. I do not put forward the following suggestions as something that we should necessarily do but merely as suggestions that might be considered. For example, is it possible for all rents for houses to become mortgages? Is there a need to devise a controlled selling price for houses? Should there not be a substantial tax on houses used as second homes that are not required for full-time occupation? If we are serious in our desire to remove class distinction, we have to tackle housing.

I come to the National Health Service. The Liberal Party is in favour of the abolition of pay beds. I do not seek to further that debate today, but, as I have said on numerous platforms in the last two years, I object to wealth being able to buy health at the expense of people who do not have wealth. I do not object to wealth being able to buy health, but I do object to wealth being able to buy health at the expense of other people. I am thinking especially here of queue-jumping. Then it is an abuse of class, wealth and privilege.

Does the hon. Gentleman agree that if we must have class divisions we might find new forms for them? For example, the decent professional man who might be well off, and the farm labourer and coal miner who behave decently could be the good and honourable class. The asset-strippers, shyster lawyers and greedy people could be the wicked class. That is the sort of class stratification we need.

I do not strongly disagree with the hon. Gentleman, although I may have different qualifications for some of the people he mentioned.

So far I have argued that class exists and that the differences between classes come from wealth or the lack of it. There is need for a reappraisal of the system and structure of our society. I should like an inquiry to be made by a Select Committee, a Royal Commission or a similar body on the best way of deploying the country's assets for the alleviation of poverty. It is not necessary to identify poverty, because that has been done. We need to find ways of tackling poverty.

Much of the wealth owned by people is concerned with their earnings. Earnings are concerned with the structure of industry and with a man's ability to earn within that structure. There is still a great deal of class within industry. Some years ago I remember visiting a company and not being allowed to ride in a certain lift because I was with a manager, and having to go in a certain lift because I was with a director. In the cloakroom there was one towel for the director and one towel for 500 workers. There are still class distinctions of that kind in industry, but I am glad to say that they are on the wane. People spend much of their lives in industry and commerce, so perhaps it is not a bad place to start with a new structure.

My Liberal colleagues and I start from the principle of the right of all people to participate in decisions affecting their lives and livelihood. It is morally right to extend the democracy of politics to industry, and it would help efficiency. The workers will not for long tolerate the existing position, and that is why I believe that it is vital for the country to tackle quickly the matter of worker participation and the democratisation of the industrial process.

There is a workers' co-operative at Kirkby in my constituency which no doubt the hon. Gentleman will remember visiting prior to the General Election. I listened with interest to his remarks on industrial partnership, participation and democracy. If he and his Liberal colleagues are sincere in those statements, why have they not come out in public support of the co-operative in my constituency? Will the hon. Gentleman give the support of the Liberal Party to that workers' co-operative?

I am delighted at the hon. Gentleman's intervention, although I am somewhat astounded that he should have heard my remarks on partnership in industry before I have made them. The hon. Gentleman and I have had correspondence about Kirkby. It is no part of my party's policy to prop up lame ducks. I am not saying that the factory at Kirkby is a lame duck, but the hon. Gentleman gives me the opportunity to put my finger on one weakness in the House of Commons—the unavailability to Opposition parties of information that is available to the Government.

As I told the hon. Gentleman when I wrote to him, in principle we welcome the situation at Kirkby, but what I cannot do, and cannot be expected to do, is to say that I am in favour of that particular arrangement in that particular plant, because figures that are available to the Government Front Bench are not available to me. If those figures were available and if, having seen them, I were satisfied that the Kirkby co-operative was a viable proposition, I should welcome the move.

A Liberal Government dealing with Kirkby would go much further in terms of democratisation and worker co-operation than has the Government Front Bench, or further than the hon. Gentleman has urged his Front Bench colleagues to go. If massive sums of public money are being put into a company, it would be a good thing for part of that money to be used for the purchase of shares within the company in the name of the employees of the company.

The hon. Gentleman surely is aware that the Government have purchased shares and that those shares are in the names of the employees of that company.

If that is the situation, I welcome it. But I was not aware that that was the exact situation, and I should like to check the facts, although I do not doubt the hon. Gentleman's knowledge of the subject because I know the deep interest that he has taken in this factory.

I was saying that we start with the right of all people to participate in decision making. But I stress—and this is one of the few differences between the Labour Party, the trade union movement and the Liberal Party on this matter—that my party believes in the right of all workers to participate, and not merely workers who are members of the trade union movement. We welcome people belonging to trade unions. We shall encourage people to join trade unions. It was my party which legalised the British trade union movement. However, it is a fact that 50 per cent. of our workers at present are not members of trade unions.

If we proceed, at any rate in this day and age—quite irrespective of what the future may hold—with worker participation and we confine that participation merely to members of the trade union movement, automatically we exclude 50 per cent. of our workers from the right to participate and, therefore, we perpetuate the class distinctive system against which this motion is directed.

We want to insist, and we would introduce legislation to say, that there should be works councils in all our factories and that those works councils should be given teeth. When I was 19 years of age I was secretary of a works council, and I was aware that many works councils were apologies for works councils. They were crumbs shoved off the table by employers hoping to keep their workers quiet and happy. That is not the type of works council which I and my colleagues anticipate.

The works councils which we hope the Government will introduce will have rights by law and power by legislation to demand knowledge, access to factual information and the right to play a part in the decision making of their companies where those decisions affect directly the workers in those companies.

The danger of saying that representation on works councils shall be denied to anyone who is not a member of a trade union is that there is a possibility that jobs for the boys will be created. It was 25 years ago that I was a guest of the DGB in Germany—the equivalent of our TUC. I remember talking to a number of trade union leaders there. They were extremely concerned at the implication of trade unionists representing them directly in terms of management. This is a situation against which we must safeguard. If the works councils and ultimately director representation, to which I shall refer presently, were widened, I believe that many of the dangers to the trade union movement and to the very reason for its existence would disappear.

I cannot understand why a Labour Government should be so reluctant to give workers these rights and so reluctant to take action in this matter when workers throughout free Europe have had these benefits for many years. Our workers are getting a raw deal in this respect in comparison with their colleagues in Europe.

The hon. Gentleman said that works councils needed to have teeth to deal with matters directly concerning the workers. Will he define what he meant by matters "directly concerning" the workers? Does he include such matters as location policy and pricing policy, as well as local decisions at plant level, especially in the multinationals?

The answer to all those points is "Yes, absolutely." I invite the hon. Member for Rossendale (Mr. Noble) to read the Ten-Minute Bill introduced by my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) in the last Parliament, which spelt out the powers that we would give to works councils. They include many, if not all, of the matters to which the hon. Gentleman referred.

The second change that we would like to see has a special relevance to wealth. We believe that there should be compulsory sharing of profits. Again, I find it difficult to understand why the Labour Government should not be prepared to consider some form of compulsory profit sharing. In the present economic climate and in the present inflationary spiral climate, I should have thought that this was extremely desirable. In many cases companies are making more profit. Although it is necessary to have a level of wages which is compatible with a good controlled economy, it is equally desirable that if inflation continues at its present level, workers should at least be able to get some financial benefit from the profits which accrue as a consequence of inflation and from the basic profits which accrue as a consequence of their efforts.

We understand and accept that profit and capital are vital to the successful prosecution of industry. That is why we recognise that workers and shareholders should have equal rights in industry. That is why, if shareholders are able quite properly to draw a return on investment of their capital, equally workers should be able to draw a return on the investment of their labour in relation to the profit that that labour makes.

I turn now to the method of management or of policy making within industry. Our considered view is that there should be a two-tier board structure in industry, especially in the larger companies. We should have a top policy board appointed jointly by workers and shareholders. I may say that, at the moment anyway, the Liberal Party has a distinctive policy on this matter. I say "at the moment" because I suspect that when the merit of the policy dawns on the Labour Party and the Conservative Party, they will, as is their practice, pinch it. But we are always willing to educate them in these matters.

We suggest that supervisory boards should be appointed from one list of candidates, that workers and shareholders should be made members of their companies, and that any member of a company should be empowered to nominate to the list of candidates from whom the supervisory board was elected. Once the closing date for candidates had gone, just as in a political election or a General Election, there would be an election for the board, and that election would be based on the single transferable vote system of voting. Fifty per cent. of the votes would go to the employees and 50 per cent. to the shareholders.

There is no mathematical problem in working this out. The fifty per cent. of the votes going to the workers would be exercised by works councillors in proportion to the number of workers whom they represented on the works council. There is no problem because it does not matter how many votes are created to meet the mathematical calculation provided that the number created is divided equally between workers and shareholders.

An election on the basis of the single transferable vote system from a common list of candidates means in practice that for a candidate to be elected he has to obtain a minimum of 51 per cent. of the votes cast. The advantage of that system is that, instead of a director or a member of the supervisory board representing the workers and one representing the shareholders—thereby not preventing class distinction but encouraging it—the result would be that each director would have to obtain votes from both sides, and, therefore, he would be able to claim legitimately to represent neither exclusively. The supervisory board, which is responsible for the policy of the company, appoints the day-to-day directors of the company on a contractual basis. The day-to-day directors are responsible to the supervisory and policy board for the successful prosecution of the company's affairs.

I said that one of the main causes of class distinction was the availability of money and of income. Poverty is relevant to that argument. The Liberal Party is the only party which has constantly supported the introduction of a statutory minimum wage, a subject which I have raised on more than one occasion over the last two years. We are delighted to have the support of the Transport and General Workers' Union in this fight. We believe that the TGWU is right. I am aware that the TUC has said that it would strive for a minimum of £30 a week. However, as a director of a company, I should like to put to the Government, if I may do so without preaching, that it would be far easier for me to introduce a minimum wage in my company if every other company also had to introduce the same minimum wage. However, my problem, in competitive terms, is that if I introduce a high minimum wage, and my competitor does not, I am not able to sell my goods in the same market. Consequently, if I cannot sell the goods, there is not much point in producing them.

If all employers were compelled to pay a statutory minimum wage, they could still live with it. My belief is that the introduction of a statutory minim um wage would do more than anything else to alleviate poverty. I have never made any secret of this on any political platform. At the time we introduce the statutory minimum wage, people in the higher income brackets must be prepared to take a lower percentage wage rise than they would have taken if the statutory minimum wage had not been introduced. I accept the implications of the policy and I have never ducked that issue.

Giving a man another £5 a week is not very useful in terms of alleviating poverty if everybody higher up the ladder also receives another £5 a week, because the first man is still on the bottom rung of the ladder. We must remove the bottom rung. That means merging the bottom two rungs and bringing the other higher rungs closer together.

I have pleaded for a more socially just society, a society based not on class barriers but on equality of opportunity and on help for the underprivileged. It has never been part of my case to argue for scroungers. I argue for the encouragement of people who want to work and who are willing and able to work. The State has the right and the duty to look after people who are unable to work because of either physical or mental disability or because work is not available. I do not argue on behalf of people who can work but who do not work.

I want a more just society. After the views I have expressed, it will come as no surprise if I say that the recent Boyle review and awards on top salaries are to be deplored. That is incompatible with the spread of wealth in this country—a programme on which the Government were elected.

I assure the Minister, for whom I have a high personal regard, that my colleagues and I will be prepared to back the Government fully if they take a stand against massive increases for people already receiving massive salaries. We need a levelling up of wages. I believe that that should have Government priority. I hope that the Minister will be able to indicate today the Government's thinking on those matters and particularly say when we may expect a comprehensive industrial policy aimed at democratising industry and aimed at eliminating and reducing poverty by helping the lower-paid members of our society. That is what the Liberal Party believes in. I am grateful for the opportunity today, albeit a rare one, to express that view.

4.46 p.m.

I listened carefully to the remarks of the hon. Member for Rochdale (Mr. Smith), especially when he laid emphasis upon what class people believe they belong to. The hon. Gentleman quoted from his own opinion polls. What is important is not the self-assigned class but the objective class. Poverty, inequality, and opportunities available to people from different classes are even more important.

The hon. Gentleman touched briefly on some of the causes and the consequences of the gross inequalities of income, of wealth and of opportunity in our society. However, I should like to dispose of one of the many issues upon which he touched. He made great play of the fact that the Labour Government excluded those who were not members of a trade union from the definition of workers. That is not the case. Had he taken the trouble to look at the Industry Bill, which will be debated next week, and if he had paid close attention to the recent public pronouncements of the Secretary of State for Industry, he would have understood that we defined workers as all those who by hand and brain play a productive part in the enterprise. No attempt has been made by the Government—and I would not support such a move—to draw a barrier between those who are manual workers and those who belong to professional management. We see them as a team working together for the good both of the enterprise and of the country. I notice that the hon. Gentleman does not challenge that point.

I welcome the fact that the Liberal Party has put down this motion, which draws attention to the class-based nature of British society. I regret that the Liberal Party spokesman failed to make a deep analysis of that class-based society and the causes and consequences of it. He touched briefly on the structural realities of our economy which divide different categories of people into different socioeconomic classes and which lead from that to a series of other consequences.

This is also an appropriate moment to discuss class because we now see the rise of a new middle-class association of whom the hon. Member for Hendon, North (Mr. Gorst) is spokesman. It is selfish, spiteful and incestuous in the pursuit of its privileges and vested interests. That association complains bitterly that its members can no longer afford to send their children to private schools, that they cannot afford a foreign holiday twice a year, that they cannot afford a second car, and that they cannot afford private medicine. At a time when there are 4,000 men and women unemployed in Kirkby, when there are 80,000 fatherless families, each of whom receives less each year than the hon. Gentleman's friends pay in a year to send one of their sons to Eton or Harrow, they have the temerity, the cheek, to complain of injustice.

It is appropriate to talk about class in a week during which we have had demonstrated that the Conservative Party, by its choice of leader, has declared a class war. The Conservative Party has elected a leader who comes forward championing the ladies of Finchley and as the champion of a new disgruntled middle class. The right hon. Lady talks about thrift. Is she telling my 4,000 unemployed constituents to be thrifty? Is she telling the 80,000 fatherless and 70,000 motherless families to be thrifty? Who is she telling to be thrifty?

The right hon. Lady talks about self-reliance. Are we really to believe that 3 million pensioners living on supplementary benefit ought to be self-reliant?

The right hon. Lady talks about people whom she calls shirkers, not workers—a nice emotive phrase that will evoke a great response in those resentful, closeted areas of the country which she and the hon. Member for Hendon, North represent.

Who are the shirkers? They are the people who sail merrily on the QE2 at a cost of £28,000 per head. Those are the shirkers. The right hon. Lady should come clean and say clearly and unequivocally who are the shirkers in our society. They do not belong to the class that I represent. They do not belong to the broad mass of working people in this country.

Part of this parcel of so-called essentially exclusive middle-class virtue which somehow they have appropriated to themselves is the right of choice. Let us be clear what they mean when they talk about choice. We have no choice. There is no choice for 90 per cent. of the children who fail the 11-plus examination. There is no choice of educational opportunity for the vast majority of schoolchildren whose parents cannot afford to send them to private schools. When Conservative Members talk about freedom of choice, they are really talking about a small group and proclaiming their defence of vested interest.

Is the hon. Gentleman aware that two weeks ago the Labour Party denied family allowances to the first child of single-parent families? How does the hon. Gentleman reconcile that hard-hearted attitude with his impassioned speech?

I do not support my Government in everything they do. I deplored the Government's not giving more help more readily to one-parent families, but I think the hon. Gentleman will accept that family allowances have been increased and that the increases are to come into effect very shortly.

The Government are faced with a whole range of competing demands and priorities. As the hon. Gentleman and his hon. Friends frequently tell us, resources are limited, and it is they who constantly complain about increasing borrowing limits. It therefore ill becomes them to complain that we are not paying out enough money to one section of the community, and at the same time to complain that we are spending too much.

The hon. Member for Rochdale spoke, I think sincerely and compassionately, about those members of our society who are deprived, but when we are talking about deprivation, which class have we in mind? There is only one class of people who live in inadequate homes. It is the people who live in inadequate homes who go to slum schools. It is the people who go to the slum schools who live in a poor and inadequate environment. It is the people who come from slum schools who go to the dead-end jobs. They are the people who have nothing to look forward to but poverty. They are the people who, time and again, are involved in a vicious circle of poverty and deprivation, a circle that is rarely broken out of by any of them individually.

It is this social group of people who bear the brunt of all the unpopular measures taken by successive Governments, be they Labour or Conservatives. They are the first people to lose their overtime, and the first to go on short-time working. They are always first in the dole queue, and yet Conservative Members have the temerity to complain of being unable to afford two holidays a year, an extra car, private medicine and private education for their children.

The motion put forward by the Liberal Party is designed to look at ways of healing class divisions. Does the hon. Gentleman accept that everything he has said, irrespective of the merits of some of his comments, is designed to exacerbate, rather than to heal, class divisions?

If the things I have said are designed to exacerbate the situation, I do not apologise. They are things that ought to be said, but are not said often enough. We hear a great deal about the problems and tribulations of one section of society. We do not hear enough about the much more real and damaging problems that confront the people whom I represent. I was sent here to represent them, and that is what I intend to do.

The hon. Gentleman says that the Liberal motion is designed not to exacerbate class conflict—and I do not wish to do that—but to ameliorate it. But what proposals have they put forward? They have advanced the normal Liberal panacea that has been travelling around for the last 60 years.

The hon. Member for Rochdale put forward the panacea of industrial partnership. He catalogued some of the evils that exist and referred to the lack of opportunities in our society, and then offered the remedy that workers should have workers' councils, that they should share profit, and that somehow, by waving a magic wand, all the social evils, inequalities and poverty to which he referred would disappear. The hon. Gentleman linked his remarks about the problems that exist—superficial though his analysis was—to the new Jerusalem of the industrial partnership.

I am sorry that the hon. Gentleman did not listen more carefully to what I said, especially on the issue of industrial partnership. With respect and humility, may I tell the hon. Gentleman that there is little he can teach me about poverty. I assure him that I experienced poverty as a child in a one-parent family.

Does the hon. Gentleman not recall that I said that a good place to start healing the divisions in society is in industry? I did not say that it should end there.

The hon. Gentlemen and I are both members of one-parent families. Perhaps the hon. Gentleman has nothing to teach me about poverty, but that is not a matter which we should discuss on the Floor of the House. He may well have said, "At the beginning", but in Liberal Party pronouncements and in Liberal Party documents over 40 years Liberals have always talked as if it were the final panacea to end all our evils.

I do not want to discuss that but to turn to the merits of the case. I do not in any sense attack the sincerity of their proposals but their naivety. The proposals before us are fundamentally naive. They show a fundamental misunderstanding of the nature of the economy, the nature of an industrial society and the nature of collective bargaining. The Liberal Party's proposals are based, as always, upon the assumption that an industrial society is a unitary society. It is not it is a pluralistic society. The Liberal Party refuses to accept what is reality—namely, that there is conflict in industry, that there will always be conflict in industry and that that conflict is a conflict of interests. It is a conflict, however, that can be canalised and institutionalised. The right hon. Member for Devon, North (Mr. Thorpe), the Leader of the Liberal Party, may call me a Marxist for saying that, as I understand he did.

I should not like to accuse the hon. Gentleman of anything so profound. I said that that was the basis of Marxist-Leninist philosophy. If he cares to adopt that philosophy, that is a matter for him.

The right hon. Gentleman shows his ignorance of industrial sociology. If he examines the Donovan Report he will find the sentiments that I am expressing about a pluralistic programme. He will find them expressed throughout the Donovan Report and by all the Oxford academics, including Bill McCarthy, Professor Khan Freund and Fred Newton, all the way along. That is the opinion of the respectable academic establishment that has been used by both parties when in power. If that is Marxist, we have infiltrated in a great way into the established corridors of power.

I am saying that there is a conflict. We must start with the realistic recognition that there is a conflict. It is not necessarily a class conflict, but it is a conflict or a dichotomy of interests. It is a conflict which must be recognised and accepted as such. It can be canalised and institutionalised so that its energies can be harnessed for the good of the community. That is a fact and the reality of an industrial society. That is the basis on which collective bargaining is based and on which our society has worked so successfully for such a long period.

We cannot impose, as the Liberals would impose with the best of intentions, a framework of democracy upon industry. There is already democracy in industry. We already have industrial democracy. Collective bargaining is the beginning, however imperfect it may be and however many shortcomings there are. This is the beginning of the bargains and compromises and the two sides of every issue which are so important in industry. It would be wrong and disadvantageous to the community and to industry to impose on what is necessarily an organic growth something which is artificial and structured.

Does the hon. Gentleman accept that my hon. Friend the Member for Rochdale (Mr. Smith) was talking not just about Liberal theory but about what is working perfectly well today in one of our most successful competitor's society—namely, West Germany? Although we would not wish to implant that system in every detail in this country, the fact is that it has been proved to work successfully.

The hon. Gentleman will realise that that system was set up by the British TUC immediately after the war. Perhaps he will also accept that there are a variety of other factors and constraints in the situation which make the West German system totally different from our situation.

Yes, exactly, but that is a different point and not related to the way in which the Liberals would impose industrial democracy. Is the hon. Gentleman saying that we should wipe the slate clean in a unilateral or totalitarian fashion? I am making the point that we must start with the facts as they now stand.

We cannot impose the kind of change which the Liberal Party wants in the manner which it suggests.

Is my hon. Friend aware that the situation in Western Germany is changing rapidly and that there is a considerable struggle taking place, in that demands are being made to extend the 50 per cent. representation on the boards outside the small public sector and that the employers are fighting tooth and nail to prevent that extension? Does my hon. Friend recognise that West German employees are beginning to raise their aspirations in the same way as British workers?

I accept that, but I want to go further still. Perhaps to some extent I support the Liberal Party's proposals. I was going to say that many of the trade unions in Germany are reacting to and opposing the partnership proposals which have been implemented in their country. They are finding them a very strong influence in their pursuit of collective bargaining. They are moving much more towards the British position as it is today. Paradoxically, that is happening at a time when many people in Britain and in my party would like to see Britain emulating the German model.

The hon. Member for Rochdale talked not only about sharing power but also about sharing wealth. That is important. I welcome the proposal of the Liberal Party that there should be a sharing of profits and wealth. Although the hon. Gentleman did not say this, the point has been made in many earlier Liberal documents that such sharing is a means of getting workers to identify with the company and that it is in effect a way of buying off strikes and industrial disputes. That is a false assumption. All the studies that have been carried out on profit sharing, whether of the John Lewis partnership, Flanders et al, the Acton Society Trust or a whole series of profit sharing organisations, show clearly that workers who are the recipients of profit sharing do not identify with the company. The studies show that they still see it only as an indication to their wage packet and as another element in their wages. It is still to them a calculative relationship and not a normative relationship. It will not bury or hide or in any sense aid industrial relations. To suggest that the sharing of profit, apart from the desirability of sharing wealth, is a means of buying off trouble is misconceived. All recent evidence suggests that that approach is wrong.

Do I gather from what the hon. Gentleman is saying that the only solution to the problem is worker control or State ownership? If that is so, will he explain why the greater percentage of strikes tend to occur in nationalised industries rather than in privately-run industries?

That is because they are not worker-controlled. I think that that answers the hon. Gentleman's point.

I come to my conclusion. The Liberal Party's proposals, although well intentioned and sincere, are misconceived. They would be mischievous in their implementation. They show a total ignorance and lack of understanding of industrial society, of the way in which trade unions work and of the way in which collective bargaining functions and has developed. If they are concerned about the inequalities in our society and about the poverty and deprivation, if they are concerned to share out wealth and, even more important, to share out power, perhaps the Liberals would be better advised to support the Labour Party and the present Government in their proposals for an extension of public ownership and an extension of worker-controlled industry. That will save them many onerous burdens and much homework. All they have to do is to come along on Tuesday and to vote for the Industry Bill.

5.10 p.m.

I strolled into the Chamber this afternoon in all innocence and not intending to make a speech. I came in because I thought that the Liberal Party had a rather interesting motion and that it might be worth listening to the debate. Having heard some of the things that have been said by the hon. Member for Ormskirk (Mr. Kilroy-Silk), I find myself in the rather unusual position of wishing to fire a small whiff of grapeshot on behalf of the Liberal Party.

Nowadays—and we are talking about 1975—class divisions are not real and not important. They are a myth kept in existence and trumped up by certain political parties, and more so by certain individuals in those parties, for their own purposes, whatever they may be.

I should agree with some of the points made by the hon. Member for Ormskirk only if there were a rigid social economic system in this country, without flexibility. If the person who was born at the bottom of the pyramid could not advance himself out of that level and knew that he was condemned to live his whole life as a serf, that would be terrible and I should be manning the barricades with the hon. Gentleman.

But, looking objectively and fairly at the matter, which is what the Liberal Party wants us to do, there is a high degree of social mobility in present-day Britain. There are example all round us—politics, this House, the leaders of the parties. For instance, the recently elected Leader of the Conservative Party is an outstanding example of somebody who has pulled herself up by her own bootstraps. I hope that my right hon. Friend the Member for Finchley (Mrs. Thatcher) will read that in Hansard and take it as the compliment that it is intended to be, and is. We have ony to look at local politics also to see the wide variety of people who hold positions of great influence, power and honour.

The hon. Member for Ormskirk referred to industry. The richest man in British history was a little backstreet bicycle repairer from Oxford who became Lord Nuffield. He was the richest and greatest philanthropist that this country has ever known.

I take as my next example the Armed Forces. I know that if I do not raise this matter somebody else will! There is rightly a high percentage of promotion from the lower deck in the Navy and from the ranks in the other Forces. This comes about in the Navy, because, for instance, in a submarine everyone is in the same boat. If hon. Members on both sides of the House, but particularly on the Government Benches, realised that in this nation we are all in the same boat, a lot of the nonsense would go out of politics.

I cannot admire the way in which the hon. Member for Ormskirk expressed his myopic viewpoint. I fear that his view emphasises that the wing of the Labour Party to which he belongs represents only one section of the population. I suggest that the hon. Gentleman speaks myopically for only one section—not for the whole of the population, which I believe is what Members of Parliament are sent to this place to do. I admit that the hon. Gentleman is set a bad example because the Chancellor of the Exchequer, in a speech which he will not be allowed to forget, spoke about one section of the community being taxed until there are "howls of anguish." [An HON. MEMBER: "Hear, hear."] Yes, "Hear, hear."

I should like to know what will happen when the process of redistribution, which is going full speed ahead now, is completed. Where will it end? What will happen when the redistribution is complete. Speeches like that made by the hon. Member for Ormskirk only perpetuate the myth about which I spoke in my opening sentences.

There are poor people not only in Britain but in every country in the world. There are also an unrecognised but large number of "new poor" in Britain as a result of the politics of recent years. The new poor are retired professional people living on small fixed incomes in a time of galloping inflation. They are the retired majors and colonels and retired Service widows. They are the people who have served their country overseas in many different capacities and have therefore not paid social security contributions and are now unable to get help from that source. I have had letters from two constituents about that very problem only this morning.

The new poor are the daughters who stayed at home, in houses which are now much too large for them, to look after their parents and have been "left on the shelf" in consequence.

They are the self-employed who are in desperate straits and a high state of indignation at the policies of this Government.

The new poor are people who have saved all their lives and invested, perfectly sensibly, in stocks and shares only to find an economic blizzard blowing which has knocked the bottom out of their incomes and the value of their capital.

The new poor are also the landlords—it is not a crime to be a landlord—who have been caught by the Rent Act which gives security of tenure to furnished tenants.

I admit that homelessness is terrible. On countless occasions in my constituency I have said that there is no worse predicament for any man than not to have a roof over his head and his family. All hon. Members know from constituency cases how important this matter is. It is the No. 1 political problem. No one will be happy about anything if he has not got a roof over his head. I give the Labour Party credit for having put this measure through in an attempt to deal with the problem of homelessness, but I think that it was mistaken.

I could quote innumerable constituency cases of people coming to me and asking what they should do. A lady who came to see me at my last interviews said, "I am a widow. My husband and I lived in a house which was too big for us after our family had gone away. We therefore let some friends have a furnished tenancy on one of the floors. My husband has died and I am compelled to sell the house to meet death duties. I cannot do so because I have furnished tenants."

The situation relating to resident landlords is taken care of in the Rent Act, as the hon. and gallant Gentleman would know if he had taken the trouble to read it. I suggest that he is trying to mislead the House and the country in the way that many of his right hon. and hon. Friends have done about the true meaning of the Rent Act.

No. I hope that my general tone shows that I am not trying to mislead the House. I suggest that if the hon. Gentleman represented a rural constituency—I do not know his constituency—he would understand the difficulties that security of tenure for furnished tenants involves. Many premises are left empty because the landlords feel that they might as well give them to tenants as let them. Hon. Members representing rural constituencies cannot fail to be aware of this problem.

I am not and do not pretend to be an egalitarian. I believe that egalitarianism takes away hope from the individual. The ambition to better himself is the only real motivation for driving a man to get up early in the morning and go off to work every day. Why else should he do it? If he has not got the opportunity to better himself and his family, he is merely working as a serf or slave.

To observe the logical extension of this process one has only to visit Moscow where such a system largely prevails. I went to Moscow for the first time in my life about two years ago. I have never seen a more miserable, shuffling, down-at-heel, out-at-elbow and, most of all, sad and cheerless population. They know that whatever they do they will not have the chance to pull themselves up. A Moscow bicycle repairer will never have the opportunity to make himself into a Lord Nuffield.

All of us have our own panaceas for putting the situation right. Possibly there is no one panacea which will bring about a full cure for our economic difficulties, but there is one which would go a long way towards it and which could be easily achieved. My suggestion is that it should be possible to pay wages by cheque. [HON. MEMBERS: "Oh."] I am sure it is extremely funny to Labour Members, but if more people were paid by cheque, a weekly worker, with a large number of notes in his hand on a Friday, would get away from the feeling, "This need last me only until next Friday". I remember some years ago sitting beside a magistrate in Portsmouth who said to me, "Why do you in the Navy pay your sailors fortnightly when they come from weekly wage-earning households?" He added, "We magistrates always know when it is pay week. A sailor puts down a fiver for a drink and forgets to pick up his change. The second week they have not two brass pennies to rub together, and 'borrow' somebody's motor car to get back from their leave".

Instead of wage earners being handed a wad of notes which must be got rid of somehow or other by next Friday, if they were paid by cheque into their banks they would probably hesitate and say to themselves, "Why do we have to take all this out?" In that way some of that money would stay behind in the account and week by week the remaining money would grow. Those people will say, "We can do something for ourselves. We are getting on in the world". That is the nub of the matter. It would do an enormous lot to help us break away from the attitude displayed in the speech of the hon. Member for Ormskirk.

The hon. Member for Rochdale (Mr. Smith) talked about the dangers of privilege and the great disparities of wealth. Therefore, when the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) advances the good idea of giving everybody a cheque, may I ask him whether the value of each cheque is to be of a similar denomination, or are some people to have huge cheques and others cheques which will hardly be worth putting in the bank? I think the hon. and gallant Gentleman is on to something.

I am on to something; and there is a difference in the value of cheques made out to the Inland Revenue, too.

There is one additional serious point in respect of payment by cheque. In view of the prevalence of bank robberies, such a system would do a very great deal to improve the security of firms which each pay day have to handle large sums of cash. Therefore, I believe that a suggestion of this nature—which is a constructive proposal and not a purely destructive suggestion—will do a great deal to assist in a number of ways. It is certainly a more up-to-date arrangement for the computerised age in which we live, and a better suggestion than merely raking over the ashes of industrial problems of a century ago.

5.25 p.m.

Shades of Tony Hancock! I am not sure whether I have been listening to the "Navy Lark" or the "Man from the Ministry".

I should like to return to the point at issue—because this is a very serious debate—and it relates to the fact that the Liberal Party accepts that our society is a class society. At one stage in this debate it appeared that stalwart defenders of working people were propagating the gospel according to St. Marx and All Engels written in the Cyrillic script. But one needs to examine this subject a little more deeply than it has been probed in some Opposition speeches.

Of course, class is a passport to privilege. We should be babies, lacking in any real knowledge of the society in which we live, if we thought otherwise. Class surrounds us morning, noon and night—and those who live in poverty realise what it is.

I know that the hon. Member for Rochdale (Mr. Smith) had a rough time when he was young and at one time he entered the ranks of the Labour Party. I am surprised that he went backwards and did not realise that in earlier years he was on the right track. However, he chose to desert that cause.

I should like to deal with one or two of the aspects dealt with by the hon. Gentleman. On the subject of housing, it is surely self-evident that the richest people in the community live in the noblest and best houses. Noel Coward wrote about the "stately homes of England", but the reality is there for everyone to see. When one visits the residential areas of great cities, one does not find living there the ordinary working people but the middle class, the upper middle class and the wealthy people. Also in evidence are grotesque blocks of flats built for workers who are virtually put up on shelves. But the people who plan those blocks do not live there. They live in the better residential areas of cities.

The same classes of people want to maintain private education. They want the best things for themselves and for their families. The class structure still exists and the people way down at the bottom of the structure suffer all the time. People have the nerve to put forward plans for payment by cheque and hand down these ideas from the bridges of their ships without ever realising the sort of society in which we live. Such people do not live at that level; they live a long way from the ordinary people. Hence their desire to continue private schooling and to perpetuate private beds in hospitals. At the same time they pretend that there is no class society or any great divisions within society. If one dares to say otherwise, there is a witch hunt carried out against one immediately.

In health, education and housing it can be clearly seen how the classes are terrifyingly delineated—as was instanced by a Front Bench Tory Member who made a fool of himself a little while ago when he spoke about socio-economic classes and all the rest of it.

Again, in the Armed Forces it is the ruling class who are at the top. They always have been and will see to it that they always are—unless some of us change that system of society. The generals, the admirals, the top officers do not come from ordinary working people—or practically never. If ever one of the working people percolates through to that rarified atmosphere that becomes their evidence of democracy—like Napoleon talking about every soldier having a field-marshal's baton in his knapsack. That is claptrap. There are only a few field marshals or admirals and virtually none of them comes from the ranks of ordinary people.

It is a rarity even for working people to get anywhere in Parliament. The House is dominated by the upper class on that side and the middle class on this side. Tory Cabinets have come not just from the upper stratum but often from the same school. As for the Armed Forces, Gilbert and Sullivan put it beautifully with that tune about someone polishing the handle of the big front door because he was the
"Ruler of the Queen's Navee!"
That is why, with their beautiful music, they became so popular.

I can assure the hon. Gentleman—I shall be very happy to talk to him afterwards—that he is talking nonsense about promotion in the forces. However, on the subject of Gilbert and Sullivan he should know that the individual referred to was not a naval officer at all but the Minister for the Navy of the time.

I thank the hon. and gallant Gentleman, but I would hazard a guess that my hon. Friend did not have to polish up the knocker on the big front door but came to his position by other methods.

If the hon. Gentleman requires protection, I can tell him that he need not give way if he does not wish to do so.

On the subject of polishing up the knocker, all officers under training in the Royal Navy do their first year working exactly the the same routine as sailors. I know this. I have done it myself. I have been in a commando squadron which does it. They know what it is like to be asked to bale out the bilges when the ship is rolling. This is fundamental to their subsequent position as officers. I hope that the hon. Gentleman will not try to mislead the House on this point.

I congratulate the hon. and gallant Gentleman on the work he did on the quarter-deck.

The point that I have been making applies especially to the judicary. The justice regularly meted out to working men and women by the courts is Draconian and brutal. A short time ago, a poor girl who needed medical treatment stole a baby. The brutal treatment meted out to her by the judge convinces me that we should examine the disparity between sentences. It should be pointed out that the brutal conduct is often not that of ordinary people but that of the bench.

Another example is that of the group of pickets at Shrewsbury who were jailed by a brutal judge for—

Order. I must warn the hon. Gentleman about criticising the judiciary. He may only comment in general terms other than on a substantive motion.

Thank you, Mr. Deputy Speaker.

Very often, vast blocks of shares amounting to millions of pounds are moved about with vast profits for those concerned. To many of us on this side it is a terrible thing to make vast profits while hardly lifting a finger. Yet if an ordinary person steals a loaf of bread or a packet of cigarettes, the punishment is Draconian.

The hon. Member has repeatedly used the phrase "ordinary working man" or "an ordinary person". What precisely does he mean by that? Is he an ordinary working man? Am I? Who is?

I need not explain what an ordinary working man is. The hon. Gentleman knows as well as I do. That is why I am deliberately using that expression.

Our answer to this problem is what is called Socialism. Our manifesto has clearly said that we want a major redistribution of wealth to give the masses of people much more than they have. There must be fairness. Thus, many of us think that a miner working determinedly at the coal face is worth £100 a week or £5,200 a year. Will hon. Members opposite deplore that payment, when they often get massively more without working nearly as hard?

When working people who spend their lives in factories struggle for a reasonable wage, hon. Members opposite say that we live in a democracy because those people have the right to strike. When will they defend any workers who strike? Having listened to them defend the right to strike, I have yet to hear one of them raise his voice in defence of working people when they are actually striking. When it ever does happen, I am sure that Big Ben will strike, "Out of order". But striking is democracy and picketing is democracy. If we on this side planned a picket, we should be doing something which is proper, democratic and good, but we know that the laws are so framed that we could get into deadly trouble over conspiracy.

When I talk about Socialism I do not mean profit sharing. I mean taking over on behalf of the working people who do the work the means of production, distribution and exchange, so that they have within their power the running of their own lives, without someone on high dictating to them. The poor, the downtrodden, the oppressed, the aged and the sick have first call on us. Neither the Liberal Party nor the Tory Party has this in mind, no matter how well-meaning some of their members are.

This society is riddled with class. This means that the dispossessed will continually struggle to rectify that situation in a fair way—struggle for a more intelligent distribution of the things which should be held in common. I would welcome it if any hon. Member opposite who shares this view would say so. Although they often imply that these are their aims, they then try to halt or hinder this development or pass laws which stop people getting the fruits of their work.

5.39 p.m.

The speech of the hon. Member for Sheffield, Hillsborough (Mr. Flannery) may be thought to reflect the curse of class divisions which has haunted and still haunts an otherwise admirable city like Sheffield, something which the Liberal Party has worked for years to try to get rid of. It is making a small contribution on the Sheffield City Council to that end at present.

The important point about the motion is that it is about class, tied up with great inequality of wealth. It is not about class itself. The hon. Member for Sheffield, Hillsborough was not quite correct when he said that the Liberal Party had stated today that ours is a wholly class society. That is not an accurate reflection of our point. What we are getting at this afternoon are those aspects of class which are based on gross inequalities of wealth.

As to class itself, whatever some other hon. Members may daydream, Liberals are realistic enough to understand that class itself is a fact of life. It is only when it is tied up with gross, persistent and inherited inequalities of wealth that it becomes a menace to our society. I observe that in the Colne Valley constituency—as in most of our small industrial townships—long before the days of Victor Grayson, one of its earlier Members in this House, there were at least three or four clubs. As a matter of fact, in a perfectly innocent way, this adds a great variety to areas such as the Latin quarter of Slaithwaite. These clubs reflect certain class differences in a wholly innocent fashion. Different groups go to different clubs, according, for instance, to the hours at which they happen to knock off work: according, perhaps, to their inherited attitude to drinking—the Methodist quota for drinking compared with an attitude derived from other social backgrounds—and so on. This is not a target for our attack at all.

We are concerned with the rigidity, the persistence and, above all, the inheritance of class differences which, although they do not permeate our society, still cripple it in many respects.

I welcome the fact that the hon. Member has brought the debate back to the motion rather than the side issues which have been introduced by hon. Members on the Government side, but will he address himself to the apparent contradiction in the motion? On the one hand, it calls for equality of opportunity. On the other hand, it calls for equality of wealth. Is not this rather like starting a race from one point and having no winners at the end?

I must confess that the hon. Member's reasoning quite escapes me. We shall have to have a conversation outside the Chamber, because the point is lost, I am afraid.

I am as much concerned for those who are prisoners of what might be called an upper-class background. I have observed this, from a fairly neutral position, to be as crippling in some cases, mentally and spiritually, as being born in poverty. Indeed, it can be more crippling. Matthew Arnold, in his great work "Culture and Anarchy', said:
"Our society distributes itself into Barbarians; Philistines; and Populace—to denote roughly the three great classes into which society is divided."
It would be wrong to let this debate be conducted without some word of sympathy to those who are born Barbarians, that is, the huntin' classes, and those who are born Philistines—by which Matthew Arnold was denoting the middle classes.

I do not know whether I am a Philistine, a Barbarian or a member of the populace. I do not know to what class I belong. One thing is certain: I did not choose it and cannot change it.

I am sure that the House will have noted that observation.

The rigidity of these harmful class distinctions undoubtedly derives from inequalities of wealth. I want to refer to only three of the many categories in which this inequality is reflected—land, investment on the Stock Exchange and the banking system. I deal first with land. We on the Liberal bench would have no need to introduce this motion today were it not for the appalling tragedy of English and, I think, Scottish history—of the common people being deprived, by Enclosure Acts and in other tyrannical ways, of their rights in the land of this country just at a time when the first industrial revolution created an enormous demand for factory labour. Many people's forebears, including my own, were driven from the countryside because their common rights had been taken away from them by an unreformed House of Commons, and they lost their stake in their own country.

That is why the Liberal Party—not the Liberal Party alone, I am glad to say—has for three generations stood for the recovery of land values for the community and for their expropriation without any compensation whatever from the minority who at present enjoy them. The whole system of land ownership in this country is a denial of a progressive society. I only regret the fact that the brave but very ill-thought-out attempts of the Labour Party, on three occasions since the end of the last war, to recover land values for the community have ended in a derisory and abortive situation. This must be put right. The inequalities in landed wealth must be corrected by a 100 per cent. tax on site values. The sooner we get started with the valuations the better.

I come to the Stock Exchange. Here it is quite legitimate to adopt something almost approaching the attitude of the hon. Member for Sheffield, Hillsborough, because the London Stock Exchange—the great centre—is still to an astonishing degree a citadel of sheer naked privilege. There is virtually no professional examination. It is a question of whom one knows rather than what one knows. Worst of all, there is an increasing tendency to freeze out, and not to want to know, the small investor.

I should like particularly to comment on the shocking news that the official Stock Exchange Committee has now launched a proposal that none of its members trading on the London Exchange shall be allowed to charge less than £7 for a transaction, no matter how small the amount of money being invested. This sort of thing is a crippling blow to efforts to get the small saver interested in rescuing himself from the nonsense of so-called national savings—the fraud of national savings—and to become interested in industrial investment.

This arises because members of the Stock Exchange, with only a very few distinguished exceptions, have no concept of what it is like to be investing only £100. They do not deal in small parcels of that kind. Therefore, I have no doubt that to them, the proposed minimum charge of £7 as commission is a mere flea-bite. Most hon. Members from their constituency experience, know that it will be a total blockage to any kind of wider interest in share ownership.

That is why I support so strongly the comments made by my hon. Friend the Member for Rochdale (Mr. Smith) about compulsory profit sharing. In a time of rapid and extremely dangerous inflation, profit sharing can be done by most companies in the form of a distribution of their shares. There need, therefore, be no addition to the inflationary pressure. I am disappointed that even without the assistance of changes in the law which we advocate so many industrial concerns have lamentably failed to follow the example of Imperial Chemical Industries, which for about 20 years has been making an annual distribution of shares. From many of my constituents who work for ICI I know this to be an admirable scheme, within the limits of the present hampering law.

There is no sphere in which class divisions are more regrettably evident than in the two entirely different forms of saving which are considered appropriate in this country—on the one hand, for the so-called wage-earning classes, and, on the very different hand, for those who already have much wealth at their disposal. For the ordinary wage earner it is the nonsense of national savings, which for years have been producing a negative rate of interest—unless one is lucky on the premium bonds. For the tiny minority of rich, the Stock Exchange exists—not only in this country but all over the world. An increasing number of those who happen to be in the know are, I understand, operating from this country on foreign exchanges. The spread of profit sharing through handing out shares and virtually making people investors, without any nonsense of a £7 minimum commission, would be a dynamic start towards dissolving the class differences in forms of saving.

I come now to the ordinary clearing banks. I was listening with great sympathy to the suggestions made by the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles). Most of us who have worked in industry and commerce realise what a primitive system it is to send employees, every Thursday, to the bank surrounded by men wearing helmets and carrying clubs in order to collect great sums of money to be brought back and put into the wage packets of the employees. Of course, there is a great deal to be said for the payment of weekly wages by cheque. However, there is considerable resistance to this suggestion, at any rate in Yorkshire, because the banks will not open their doors at hours when ordinary working people can get there to draw out their money. I regret this unholy alliance of bank directors and the National Union of Bank Employees to keep the banking system out of the hands of the ordinary wage earners. I regret that bank bosses and union bosses have united to allow these extraordinary and vulgar marble palaces, which are erected in every High Street, to remain clean without any risk of people spitting on the floor or in any way defiling them.

I therefore salute the nationalised bank—the Trustee Savings Bank—and I was delighted when it started its cheque system in the teeth of opposition from the clearing banks, only about a year ago. I welcome the enlightened way in which the Co-op Bank caters as best it can for the needs of the ordinary people. However, as Labour Members will readily concede, it is a misfortune that the Co-op Bank is unable to have premises in every High Street in the way that the lordly four main clearing banks do. There is a class element there which should have been eradicated years ago. Recruitment to the boards of our clearing banks is something which Gladstone, if he had been spared, would probably have reformed after he had purged the Civil Service of that same class basis.

It is a strange and sad comment on our society that we are far more classless in our arrangements for spending money than we are in our arrangements for helping people to save it. I could not conclude a speech on class differences without commending that great solvent of class distinction, Marks and Spencer. It does more to abolish class distinction than anything in Russia—I cannot speak for China. It has a totally classless system where the tycoon and the office worker alike buy shirts, and so on, of excellent quality, and please their wives with the designs of that splendid firm, which has done so much for the various branches of the textile industry. However, there is no Marks and Spencer of savings. Although we shall be discussing many more serious aspects of this matter before the debate ends, I hope that the whole of the savings movement will be reviewed by the Government. That would prove that they mean what they say in their declaration that they are out to reduce class differences.

5.53 p.m.

I agree entirely with my hon. Friends the Members for Ormskirk (Mr. Kilroy-Silk) and Sheffield, Hillsborough (Mr. Flannery) on the question of class divisions. I agreed with most of the beginning of the speech of the hon. Member for Rochdale (Mr. Smith), until he went back to the woolly-mindedness of industrial partnerships and the long-lost causes that the Liberals persist in supporting. At the beginning of his speech I was almost ready to say, "Come back Cyril, all is forgiven", but then he relapsed into the policies of the past.

The motion refers to equality of opportunity and the need for greater equality, and I wish to examine that on a regional basis. I accept that the class divisions in our society perpetrate the inequalities, but the regional distribution of wealth is the factor which enables these inequalities to persist. Take the North-West, for example. Many hon. Members have persistently tried to initiate a debate on the region, which has a population of 6 million. It still depends to a very great extent on declining industries like cotton, coal and, in the case of my constituency, footwear, which inevitably pay low wages. But it is not simply that these industries enable the inequalities to exist; the very nature of Government policies since the war, with their stop-go characteristic, has meant that the regions have been hardest hit and that the inequalities there have been even greater.

The environment, in terms of pollution and dereliction, is another example of inequality. There are parts of the country where Conservative Members would not deign to live. Those Members who complain about the problems of living in rural areas should examine some of the industrial slums of Manchester and Salford and consider the effects of living there. In the North-West, mortality rates are way above the national average. The area lags far behind the rest of the country in the provision of health facilities. In my part of north-east Lancashire—an area of 300,000 people—there is no institution of higher education of any form.

In my constituency, 15·7 per cent. of the houses have no fixed bath, compared with the national average of 8·9 per cent., and 19·4 per cent. have no inside toilet compared with the national average of 11·3 per cent. Of the homes in Rossendale, 53 per cent. have four rooms or fewer, compared with the national average of 39·9 per cent. These figures come from the 1971 census.

These are grave inequalities, and they force us to conclude that regional policies over the years have failed. That is why I agree with my hon. Friend the Member for Ormskirk that the Industry Bill will deal with this sort of problem on both a class and a regional basis. For the first time, aid will be given on a regional basis. I accept that the Industry Act 1972 contained powers to this end but it provided effective aid only for specific projects. The Industry Bill will also release the energies of the people through its propositions for industrial democracy.

This brings me back to the comments by Liberal Members about profit sharing. The hon. Member for Colne Valley (Mr. Wainwright) may have observed that the ICI workers who receive their shares race down to the nearest brokers to get them cashed as soon as the value goes up. He has probably heard complaints, too, that when they enter into negotiations with the management the shares are plonked on the table and the trade unions are told "You have so much in your share value." This has held back trade union negotiations, not only at ICI but at many other places.

There is a need not simply to look at the basic reason for inequality, the class division, but to re-examine the issue of regional policy. I am convinced that in the Industry Bill we are moving in a direction which will take us further than the proposals that the Liberal Party has put forward this afternoon.

If we are to get things right in this country and to give everyone a fair deal we must, in addition, have the opportunity to debate effectively the question of regional policy, and we must see that the right regional programme is put forward.

6.0 p.m.

I am grateful to the hon. Member for Rossendale (Mr. Noble) for his courtesy in sitting down at 6 o'clock, because rather complex negotiations have been going on through the usual channels to establish the trio to end this Supply debate. This is a historic occasion. My researches show that the last time the Liberals chose the subject of a Supply debate was in 1939–36 years ago.

I looked back to see what sort of debate they had had. We are on the tenth allotted day, but it was on the sixth allotted day that the Liberals chose the subject in 1939. The opening speaker was Lloyd George, followed by Clement Attlee, Neville Chamberlain, Winston Churchill, Anthony Eden and Sir Archibald Sinclair. The debate was wound up by R. A. Butler. No doubt in 40 years' time people will be looking back on our debate today. I hope that I shall not be accused of undue modesty when I say that I doubt that we shall number, between us, five Prime Ministers and two very senior Ministers, and names which will still be well known throughout the country. It is interesting to see how situations change.

Part of the reason why this debate has not been as well attended as previous debates is that at this very moment my own party has rival attractions upstairs, where the new Leader of the Opposition is talking to Conservative Members. One can understand why the benches behind me are somewhat thin.

Another reason is that the subject chosen for today's first debate is rather difficult, in the sense that it permits a wide-ranging debate on a vast number of subjects, as we have seen. As soon as one begins to talk of class, equality of opportunity and the distribution of wealth, leading on to the whole concept of the organisation of industry and relation within industry, one realises that it is a subject on which all of us could speak for some time.

I want to confine my remarks to some of the points that have been raised in the debate. Whether we are a class-conscious society or a society which is too conscious of class, I am not quite sure. What is certain is that in political terms the importance of class has been declining. We cannot look at a subject of this importance without turning to our sephological bible, namely, the Butler and Stokes book on political change in Britain, a new edition of which has just come out. I would like to quote one paragraph of Chapter 9, which speaks of the whole business of the class alignment as it affects politics. The authors say:
"There are good reasons for believing that the electorate has become progressively less inclined to respond to politics in terms of class and that the class appeals of the parties themselves have become much more muted. By far the most important of the social trends which have weakened the inclination to see politics in terms of class is the betterment of the electorate's economic condition. The affluence of the postwar world is much more than an illusion of the party propagandists. Real incomes have risen steadily to levels far above those of the prewar world. Although British economic growth has not kept pace with that of some other advanced countries, it has still sufficed to bring within the reach of the mass market entirely new categories of goods and services. Even those pockets of poverty untouched by a high-wage and high-employment economy have been substantially reduced by a diversity of state welfare services. The concentration of wealth in the hands of a few may have continued to be as great as ever, but the great bulk of wage-earners are far above the poverty standards of the 1930s."
Few would dissent from that brief analysis. People may argue—we have heard them today—that a lot more needs to be done, but we should recognise that class is now less important, and that the reason has been the forces which an improving economy and a spreading of prosperity have brought to bear on the situation.

The wider distribution of wealth, the elimination of poverty and the improvement of the quality as well as the standard of living, are all widely acceptable objectives. All hon. Members seek their achievement. The differences between us are about how best to attain them.

Does the hon. Member also agree that there are wide differences in the speed at which different sections of the House would wish to see them attained?

Yes, I agree. Implicit in the question how best the objectives can be attained is the question of the methods used and the speed at which they are used. As the hon. Member for Rochdale (Mr. Smith) so rightly said, and as the motion says, we need to increase opportunity.

My time is limited. Perhaps the hon. Gentleman, who has had his say, will forgive me if I do not give way.

We should not confuse equality of opportunity with equality of performance, which so often happens. Too much concentration on equality can have harmful side effects. As my hon. Friend the Member for Hendon, North (Mr. Gorst) commented, if there is total equality, what is the point of having horse races or athletics? The difference in performance, the fact that some will achieve more than others, adds a diversity and a richness to our society. If we do not accept that there will be such differences, we quickly move towards the politics of envy and the restrictive depressing doctrine which animates so much of what we heard from Labour Members.

We heard that doctrine in authentic terms from the hon. Members for Ormskirk (Mr. Kilroy-Silk) and the hon. Member for Sheffield, Hillsborough (Mr. Flannery). I see from "The Times Guide to the House of Commons" that one was a university lecturer and the other a headmaster. I suppose that their students ought to be thankful that they have come here and perhaps we ought to be thankful, because they will not be preaching some of their sharply divisive cant to the students with whom they would have been concerned.

The intervention of my hon. Friend the Member for Ealing, Acton (Sir G. Young) punctured the points being put by the hon. Member for Ormskirk. It showed just how shallow the hon. Gentleman's sentiments were. His vote did not follow his voice. We are used to hon. Members who, in their speeches, often make comments which show that they are uneasy about the policies which their party or their Government are following, but the hon. Member showed by the strident way in which he was putting his point an unwillingness to let his feet follow his voice. When it came to voting for help for the one-parent family in the Budget not so long ago, I understand—I hope that I do not do him an injustice—that he voted against the provision of that allowance.

The hon. Gentleman talks about the politics of envy. Is not he aware that it is the hon. Member for Hendon, North (Mr. Gorst) and others who now sit on the Opposition Front Bench who are sustaining the politics of envy and resentment? The hon. Gentleman talks about speaking with one voice and voting with another. Can he explain how the Conservatives, during the last four years, talked about wanting to help the lower-paid, the widows, the pensioners and others, but did nothing about it, yet came to this House last week full of hypocrisy and humbug?

The hon. Gentleman has underlined the point I was making. He is still unable to show that his vote will follow his voice. In this House, people do not pay all that much attention to those whose voices are very strident but whose feet are very obedient.

The amount of national wealth and a concentration on increasing it are more important than its distribution. We used to hear a great deal about the national cake. If I had to choose between a cake which was getting bigger, and of which there would be larger slices for everyone, and a cake which remained the same size, or diminished, with everyone concentrating on ensuring that no one got a crumb more than he should, I would out for increasing the size of the cake. Our whole history has shown that when wealth is increasing within the nation it is spread more widely. The quotation I have given underlines that point.

We are debating this subject today against the background of the latest index of industrial production published today. There has been no reference to the index so far, yet it tells us that, even after allowing for special influences, the latest figures continue to suggest a decline in total industrial output in recent months, with a marked fall in the output of manufacturing industry. We therefore have a declining index of production, with less national wealth, unemployment rising sharply, and part-time working on the increase. We do not know just how widespread part-time working is, because we lack the figures.

Yet, instead of undertaking a serious consideration of the problem of increasing the national wealth so that there will be more to distribute and more available to deal with the many problems that we have in our society, hon. Members opposite have tended to contribute nothing more than the same old party claptrap, which no doubt would go down quite well on the hustings but has little place in the serious arguments we have here.

Much of the debate has concentrated on participation and partnership in industry. An outside observer would perhaps think that we are caricaturing much of what goes on when we deal with legis- lation affecting industry, particularly legislation affecting those who work in it. To the vast majority of people working in industry, employers are not the tightfisted, devious and scheming tyrants which hon. Members on the Government benches sometimes suggest. Nor are employees all lazy, selfish troublemakers, waiting to strike for some absurd reason or another.

The vast majority of those who work in industry are reasonably satisfied with the conditions. Of course, they want things to be better. But many of them are proud of the firms they work for and of the products they make. We often do a disservice to industry by not recognising that, looked at in the round, there is much more that we can be proud of in the relationships within industry than might be thought from the criticisms which we rightly make from time to time about things in our industrial scene which hurt the national economy.

The physical conditions in industry attract perhaps more concern from those working in it than their relationship with the bosses. Noise, dirt, monotony, the way the work is organised—all these things often lead to criticism. In this context, it is good that the Health and Safety at Work Act—an agreed measure—bringing about consultation through safety committees, is now the law of the land. I regret that the Labour Party is deciding to impose a rather narrow party view of the representation on safety committees. I endorse the view of the hon. Member for Rochdale that, in such matters, not just representation from the unions is necessary but representation from those who work in the plant. Sometimes it will be right and proper for that representation to come through the unions, but sometimes it will not.

We should not adopt a dogmatic position. We want better communication in industry. We want more consultation. We want better foremen, and better shop stewards. We do a disservice to industry generally when we confuse their rôle and functions and assume that the one should be doing the job that the other is doing. We need both good foremen and good shop stewards if we are to achieve success in the relationship and partnership that are necessary in industry if it is to succeed in creating more national wealth.

If industry does not succeed in creating more national wealth, much of our talk about dealing with the problems of poverty and distress, and improving the evil conditions under which too many people live, falls by the wayside. It is bound to unless we can agree that we must find ways of creating more wealth.

Although wealth and its distribution and creation have tended to be a dominant theme in the debate, they could lead to far too narrow a view being taken of the whole concept of what makes our community and society tick. We must accept that there are other criteria—for example, achievement, service to the community, and voluntary work, whether it be in trade unions, in dramatic societies, in brass bands, or in local charities—much of it done by people without great wealth, often by people living in deplorable conditions who make great sacrifices in order to help others who are less happy or less well endowed in some respect or another than themselves.

The over-simplified Marxist analysis that we have had from some of the interventions of hon. Members opposite does a disservice to our national community. This is not the way to approach this question. An intervention from the Liberal benches made the point that the speech of one hon. Member was exacerbating divisions between classes rather than trying to bridge them. To my astonishment, the hon. Gentleman in question accepted that that was his intention. This is not what we require. I hope that that sort of voice will not be heard again. Even if we have not achieved the importance of some of the speeches made in the Liberal debate in 1939, perhaps this debate will have been worth while in exposing the naked nastiness which has come from the Labour side of the House this afternoon.

6.20 p.m.

I congratulate the hon. Member for Brentford and Isleworth (Mr. Hayhoe) on his researches at the start of his speech. However, I did not detect that he had completed those researches. He did not mention the fact that under the late Dick Crossman we had a morning for a Supply Day.

I understand from those who are supposed to know these things that it was not a Supply Day. There was then the choice of subject on the motion to adjourn. I have gone into this rather carefully.

I must congratulate the hon. Gentleman again, for having done his researches even more carefully. It was as near to a Supply Day as possibly makes no difference. We thought of it that way, anyway.

We have had an extremely interesting debate. In tabling this motion, we sought to draw attention to the relics of the class basis of British society. Unfortunately, they are not all as insignificant as the words "relics" might indicate. This is a subject that is all too rarely discussed, possibly because others have an interest in perpetuating it.

Some of the speeches we have heard from the Labour benches, in particular the speech from the hon. Member for Ormskirk (Mr. Kilroy-Silk), were from those who wished to do nothing to sweep away the class divisions in our society. Some of them, though by no means all, were speeches by those who wish to exploit class divisions. Their speeches did this.

Without being offensive to the hon. Member for Ormskirk, I would say that far too many politicians on both sides of the class division continue to wage the class war because they see it as a tool of their trade. They live almost like parasites upon it. The party system in this country has lived like a parasite upon it for far too long.

The hon. and gallant Gentleman the Member for Winchester (Rear-Admiral Morgan-Giles) believes that there just are no class divisions. Perhaps in Winchester that is so. We are occasionally told that this is all nonsense, that there is none of these great differences in our society. Perhaps foreigners see it rather better than we see it. I quote some words from Arthur Koestler on this subject, when he was addressing the British Academy in 1973. He remarked how extraordinary outsiders find the refusal of the British even to admit the reality or the existence of what he called
"the strongly and resentfully-held class divisions of the country"
divisions which he regarded as leading to
"psychological malaise and economic misadventure".
Those are harsh words.

To quote rather lesser authorities, but, nevertheless, ones that took some time looking at this country recently, the distinguished authors—and they are distinguished—of the Hudson Report, not all of whose conclusions one would necessarily go along with, said this:
"In presenting our preliminary thoughts on the problems of Britain to British audiences over the last year and a half we have found that any introduction to class issues, any attempt to make dispassionate comment on the nature of class attitudes in the country, produces either passionate denials of the very existence of class barriers or the assertion that they differ in no way from the class structures of other countries."
The authors said that our class divisions differed fundamentally from the class divisions in other countries and that this country was a more class-obsessed society and certainly a more class-divided society than any other.

We believe that this subject is fundamental, that it underlies to a large extent the inadequacies of the two-party system particularly. We Liberals aim to be a classless party and we have magnificently achieved that aim. If we look at the voting figures for the two General Elections in 1974 we find that the percentage of each socio-economic group which we polled was almost exactly identical to the percentage of the total electorate we polled. In those two elections we polled on average 19 per cent. of the poll. In the A/B socio-economic group we polled 20 per cent., in C/1 22 per cent., in C/2 20 per cent., and in D and E 19 per cent.

If we examine the figures for the other parties we can immediately see what is wrong with the two-party system. It is a class-based system. It is because it continues to fight the old-fashioned, almost prehistoric class war in and out of this House that party politics in this country have come into such disrepute.

We have to look beyond my personal views for the persistence of class divisions and for the persistence of privilege through the hereditary principle. This is certainly partly responsible. Titles are tied up with this to a limited extent. Certainly the inheritance of wealth is greatly responsible for it. Even more, perhaps, there is the inheritance of opportunity.

There are some things which, as legislators, we cannot easily change. Many ideas have been proposed in this debate, and we do not claim a monopoly of those ideas. The hon. Member for Brentford and Isleworth and some hon. Gentlemen from the Labour benches put forward policies which could go some way towards meeting the problem. We cannot do very much to influence parents. I well remember the preface which Lord Boyle wrote when he was Minister of Education, to "Half our Future", the Newsom Report on secondary schools. He referred there to acquired intelligence. It was a new phrase to me. He was not the originator of it, but it was a new idea at that time. There is no doubt—and research has shown this, as it did before that report—that we shall have born into slum homes children who are educated in slum schools and who will go on to live slum lives in slum jobs.

We can make some pinprick on this pattern through education. We can start in the homes, certainly in the environment into which people are born. We can continue in the schools and we can try to do a great deal to change the pattern of work, by introducing retraining which will create social mobility, even later in life, and by doing some of the things which my hon. Friend the Member for Rochdale (Mr. Smith) mentioned on the industrial partnership front.

Housing is immensely important and some Labour Members mentioned this. I liked the speech of the hon. Member for Rossendale (Mr. Noble) who cited figures of inadequate housing in his constituency. We know these situations. As politicians we have lived with them for far too long. We just have to make an attack upon the housing shortage and housing inadequacy because they discourage geographical mobility and all too often trap people in the environment and the class in which they were born. Geographical mobility is not quite the same as social mobility, but geographical and social mobility often go hand in hand. Housing is the greatest barrier to increasing this aspect of geographical mobility. Housing perpetuates class divisions.

I remember during the last election campaign a hotelier in my constituency who was voting Liberal had guests down from the north staying in the hotel. When he told the guests that he was voting Liberal there was an immediate note of surprise. The guests said that where they came from they could not imagine anyone like the hotelier voting Liberal. They said that where they came from people voted Liberal only if they lived on council estates. I am happy to say that quite a lot of council tenants in North Cornwall voted Liberal but, luckily, many other people also voted Liberal, and voting Liberal is not so connected with the housing situation there as it is in other parts of the country.

Many hon. Members have mentioned the importance of education, although education is probably unable to right the wrongs that are done by birth. Many right hon. and hon. Members will have been sent within the last week or so a document put out by the Committee of Rectors of Polytechnics. I have been worried for a long time at seeing in the Public Expenditure White Paper every year the appalling predominance of expenditure on universities, which are obstinately and cussedly middle-class institutions, however much we should like them to be otherwise, compared with the derisory expenditure per head on primary schools. Expenditure per head on universities is six times the expenditure per head on primary schools. One notices also the disparity between expenditure per head in universities and expenditure per head in polytechnics and technical colleges. The document states that the amount of capital provided for building a place for a university student is nearly three times that for building a place for his colleague in the further education system or in teacher training. There is no reason for that. I hope that the Government will take steps to improve that position.

My hon. Friend the Member for Rochdale dealt at length with our plans for industrial partnership. One hon. Member said that not industrial partnership but Socialism is the answer because it is by Socialism that we can nationalise, take power over people and administer industry in their interests. But who is to administer industry in whose interests? Does the individual who works for British Rail feel that he has any greater control over management decisions or that he is consulted more by management over fundamental decisions affecting his working life than does the worker in ICI? No. I do not think that he does. There are many other private industries which are better examples than ICI of the case I am putting forward.

What are we to do about this? We do not have a monopoly of ideas, and I am sure the Minister will put forward some of his. First, we have to practise positive discrimination in favour of the underprivileged. That is the aim of our social, housing, industrial and incomes policies. I hope that it is also the underlying basis of Government policies.

Can the Minister convince us today from figures within his Department that we can rely alone on free collective bargaining to help the low paid? Free collective bargaining has not done so before. The document "Labour and Inequality" put out by the Fabian Society during the previous period of Labour Government shows what free collective bargaining does to the poor. It always leaves them behind in the race, as, indeed, does inflation. It is nonsense to think that inflation or free collective bargaining will redistribute income in favour of the lower paid. It does not, it never has, and it never will, without some form of incomes policy which is a good deal tougher than, I fear, the social contract will ever be.

I should like the Minister to produce his Department's figures, but I can tell him, because I have looked at most of the available figures, that they all show that this cannot be left to the law of the jungle. It cannot be left to the present trade union structure. We have to do something more to get incomes on a more equal footing.

On the question of top salaries, Barbara Wootton, in her splendid book which is just out on incomes policy, raises a matter about which many of us have felt slightly guilty in the past. She asks why those who earn £4,500 a year—a Member of Parliament's salary level—raise their eyebrows at the thought of miners earning £3,000 a year. She wonders whether it is suggested that the comfort, general ease and interest of life in the mines—which we all know so well—compensates miners for the difference in pay, and whether the life of a Member of Parliament is uninteresting and miserable. I must admit, being immersed in Committee on the Finance Bill as I am, except for the delight of this afternoon, that I am beginning to feel that way myself. Barbara Wootton asks whether life as a Member of Parliament is so miserable that we need extra money to bribe us to come here. We cannot make out a case for either of those propositions.

People simply do not understand why we persist in paying what to them are grotesque salaries—for instance, to top civil servants. I do not believe that we are justified in doing it. Perhaps we should pay them by results. Heaven knows what they would be paid if we did.

I know that in the Select Committee the Labour Party sabotaged the tax credit system. I know because I was a member of the Select Committee and I saw the two-party system at its worst. That is happening again to the wealth tax. Select Committees do not operate independently and do not assess matters in an open and fair-minded way. They do it with malice aforethought to sabotage the Government's proposals. I have no doubt that hon. Members on the Labour benches sabotaged the Conservative Government's tax credit system.

I will quote from a document on negative income tax, which is not quite the same, produced by the Amalgamated Union of Engineering Workers. It states:
"There is abundant evidence to show that the Welfare State has not produced any significant redistribution of income in Britain since 1945."
That is true.

The Conservative Government went to work passionately in favour of a tax credit scheme, slightly different from the one for which we have argued, which they brought forward, to their credit. Whether or not the Labour Party opposed it, and for whatever reasons, I ask the Minister to read the evidence which Professor Brian Abel-Smith gave to the Select Committee. He is a good Socialist and a member of the Child Poverty Action Group. He was convinced that a tax credit system would enable us to deal with poverty far better than any system we have now.

To the Liberals, equality of wealth is almost as important as equality of income. Of course, we cannot have absolute equality. I do not know what the Government mean by saying that they are in favour of the redistribution of wealth and then introducing two taxes, the wealth tax and the capital transfer tax, which will have only one effect. They will not redistribute wealth from rich to poor. They will redistribute wealth from almost everyone to the Government. There are those who believe that the Liberals should not play the rôle of Robin Hood. The trouble with the Chancellor of the Exchequer is that with his capital transfer tax he is not—like Robin Hood—taking money from the rich and giving it to the poor. He is taking it from the rich and giving it to the sheriff.

That is not what we understand by popular ownership. We want popular ownership and the Government want public ownership. I accept that inherent in Liberalism is a conflict between the important aims of liberty and equality, and we often have to choose between them. Although neither is absolute, and our aims on each are constantly changing, there can be no true liberty in a society in which inequality is as great as it is in ours today.

There is an even more fundamental and pressing problem than that. It is that effective democratic action depends upon a minimum degree of social unity. This country is losing that minimum degree of social unity, and that is why I fear for the effectiveness of our democratic system in the future.

6.40 p.m.

I congratulate the Liberal Members who have tabled the motion. If some of my hon. Friends have spoken on the subject with some vehemence and bitterness, the House should not be surprised. The Labour Party has always raised people who are bitter in their opposition to inequality of wealth and opportunity.

First, let me point out that the Government have already taken several measures to encourage equality of wealth and opportunity and that they are committed to many more. In elaboration of this, I should first like to mention education and remind the House that in the debate on 27th January the Secretary of State for Education and Science outlined the Government's achievements so far. There are two main points in this: first, the impetus given to the change-over from selective to comprehensive education, and, secondly, the redistribution of resources in favour of those who tended to get left behind through the new education disadvantage unit and assessment of performance units, through the funds made available for HND students, adult education, the fight against adult illiteracy, and the extra allowance for teachers in social priority schools.

Now let me mention what the Government are committed to in the field of education. First, there is the withdrawal of the grant from the direct grant schools. Secondly, there is the withdrawal of tax relief and charitable status from public schools. Thirdly, there is a move to a fairer system of student grants, and, finally, there is a continued priority for nursery schools and day-care provision.

I now turn to the health service. The Government are committed to their manifesto pledge to phase out pay beds from National Health Service hospitals. This will enable the total resources of the NHS to be made available to the vast majority of people who look to and rely entirely upon the NHS for the treatment they require. Apart from that important aspect, it will also ensure that these resources will in future be made available according to medical need and that no one will be able to buy his way to the head of the queue. The Government believe that such a step will strengthen the NHS. In the light of what the hon. Member for Rochdale (Mr. Smith) said today, I am sure we shall have his support in that aim, if not in many others.

I now turn to the redistribution of wealth through taxation. In this field, the Government are committed to use the taxation system to promote greater social and economic equality. This requires a redistribution of wealth as well as income. The Government have already taken several measures to this end. Wherever possible, they will concentrate tax increases on the better-off; they will introduce in the present Finance Bill the capital transfer tax, which will put an effective tax on inherited wealth; and they have published a Green Paper on the Wealth Tax, and set up a Select Committee to examine the issues involved in introducing such a tax. The Government hope that the introduction of a wealth tax will
"contribute to the creation of a more equitable society in which social divisions characterised by differences of wealth are reduced and in which the social and economic power created by the provision of wealth is less concentrated than at present".
On the question of the equality for women, the Government published a White Paper last September and the Home Secretary will be bringing forward legislation in the near future. This legislation will aim to promote equal opportunities for men and women in employment, education, and in the provision of all goods, services and facilities. It is hoped that such legislation will come into force in December 1975, at the same time that the main provisions of the Equal Pay Act 1970 become operative.

The Manpower Services Commission is pursuing its expansion, which aims to provide training for those who wish to change their job or skill, or who wish to acquire a skill, or were not able to do so earlier in their lives.

I now turn to the important question of industrial relations. The Government are committed to a planned programme of industrial relations legislation. This is intended to strengthen trade union organisation, to increase the protection and rights of employees, and to make industry more democratic. The Trade Union and Labour Relations Act 1974 and the amendment Bill repealed the Industrial Relations Act 1971. In addition, it reaffirmed the rights of employees to belong to a union and to take part in peaceful picketing, and strengthened the protection against unfair dismissal.

The consultative document on the Employment Protection Bill was published in September last, and the Bill will be published in the near future. It will provide extensive new rights for workers. These will include, introducing a guaranteed week for those laid-off or put on short time, paid materinity leave and reinstatement in the same job for women employees; provisions to encourage reinstatement in cases of unfair dismissal, extensive rights to notice, and to arrears of pay in the event of the liquidation or bankruptcy of their company, and the right to membership of a trade union and the time off to take part in trade union activities.

The Bill also strengthens the rights of trade unions, especially in collective bargaining. This is essential if we are to achieve what I understand to be the aim of the Liberal Party, namely, a massive move forward against the inequality of low pay. This is done by providing for claims about trade union recognition to be referred to the Advisory, Conciliation and Arbitration Service and ultimately to a Central Arbitration Committee, and by putting a duty on employers to disclose to independent trade unions that they recognise, information needed for collective bargaining purposes.

Other matters with which the Bill will deal are the establishing of the Advisory, Conciliation and Arbitration Service and the Central Arbitration Committee on a statutory basis, the reform of the Wages Council, and improved procedures for handling redundancies, including consultation with trade unions.

The Industry Bill was published on 31st January. It makes several important contributions to the development of industrial democracy. These include the setting up of the National Enterprise Board, which will seek to promote industrial democracy in enterprises it controls; providing for the disclosure of information to the Secretary of State for Industry and to relevant trade unions about the activities and future plans of certain key manufacturing firms, and providing for trade union involvement in voluntary planning agreements.

Workers co-operatives are perhaps the most advanced form of industrial democracy. In deciding to offer assistance to IPD, Kirkby, to Meriden, and to the Scottish Daily News, the Government took into account not only the normal industrial and export considerations, but also the importance of these projects for experiments in industrial organisation.

I share the concern of the hon. Member for Rochdale, about the introduction of workers' co-operatives in what he calls "lame duck" situations. If he cares to tell me the Liberal Party's views on how to achieve industrial democracy in the thriving and highly profitable sectors of industry by worker co-operatives, I assure him that I shall listen to him with rapt attention.

The Government have set up a tripartite steering group with the TUC and the CBI on changes in work design and organisation. An important part of such changes is to give work groups on the shop floor greater autonomy. The steering group has led to the establishment of a work research unit in the Department of Employment, which is stimulating this sort of development in firms.

The Government will wish to consider all the possible options of future policy in industrial democracy. Any policy must have regard to existing company practice in the United Kingdom and take care not to undermine the position of trade unions.

Employee representation at board level might be the logical end of an extension of industrial democracy. It would involve major change in company law; many complex questions about directors' responsibilities, and so on, are involved. The Government are considering how advances can best be made.

Two-tier boards would involve worker directors on supervisory boards with control of company's strategy and financial objectives and right to appoint management board, which provides day-to-day management of the company. It is one of the possible developments which the Government are considering.

The EEC Draft 5 Directive is a proposal that would require all companies to adopt a two-tier board structure, with employee representation on the supervisory board. The EEC Commission is to publish a Green Paper on worker participation before further decisions are taken. The British Government will seek to ensure that any final directive is compatible with our own system, bearing in mind that we may be seeking to change our system between now and the time when the directive is issued.

I now turn to the question of works councils. These have sometimes been used by managements to try to undermine union-based procedures for consultation and negotiation and weaken the position of trade unions as representatives of the work force. The distinction between consultation and negotiation is often artificial. In any case, consultative machinery should be union-based, and integrated, or at least closely linked with, collective bargaining arrangements.

I want to say a word on the question of profit-sharing schemes. There are serious objections to a system by which workers' savings are invested in the shares of the company in which they are employed. If a company gets in difficulties a worker stands to lose both his job and savings. We shall seek through the Employment Protection Bill to introduce protections for workers when companies go into liquidation and become bankrupt.

I turn now to producer co-operatives and the Co-operative Development Agency. Most of the worker-owned concerns currently operating in Britain are either co-operative productive societies or companies affiliated to the industrial common ownership movement. The proposal in Labour's Programme 1973 to set up a co-operative development agency is being studied by the Government in consultation with the Co-operative Union and other interests. The Department of Industry is considering what sort of assistance would be appropriate for undertakings wishing to set up as co-operatives or to change to a co-operative structure, and how such assistance could best be provided.

The Government will continue to examine ways to develop shop floor autonomy and to strengthen collective bargaining machinery. Progress has already been made in these areas, with the setting up of the work research unit, and the legislation in the Trade Union and Labour Relations Act and the Employment Protection Bill.

The hon. Member for Rochdale pointed out that one of the differences between the Liberal Party and the Labour Party on the subject of industrial democracy was that we talk about "trade union representation" and the hon. Gentleman and his colleagues talk about "worker representation". The hon. Member for Brentford and Isleworth (Mr. Hayhoe) spoke in similar terms.

When it legislates on industrial democracy the House will have to take into account that workers' rights to representation in this country have largely been won by men and women combining together in trade unions. They have not been brought about in the first instance by action taken in the House. By com- bining together in trade unions, men and women have been able to reach collective decisions in a way that non-unionists will never be able to do. It would therefore be flying in the face of our history and experience and of the natural development of worker representation if we were to seek to legislate for industrial democracy without recognising that trade union organisation must play a premier part in that development.

Trade unions provide other services which are necessary to the development of industrial democracy. They provide training of representatives to deal effectively with such complex issues as negotiations on wages and conditions, health and safety, training, and productivity. No one denies that if a worker representative is to play an effective part on a supervisory board he will need knowledge of company structure and finance. If he is to be trained in such matters, he will look naturally for independent training to the TUC or the trade union movement.

I have been challenged to say something about the way in which the Government's policy has affected lower-paid people. I appreciate the genuine concern of a number of Liberal Members about lower-paid people. I shall not go into the question of wages councils other than to say that we realise that this is a major area—major in the sense that it covers some of the lowest-paid people—and that it is necessary to reform it. We shall produce proposals for the reform of wages councils.

For a number of years there have been many low-paid people among the public sector manual workers. At the end of the pay round of stage 3 under the Counter-Inflation Act the wage levels of such public sector manual workers ranged from £20·50 to £24·50 a week. Shortly after, the Trades Union Congress indicated its guideline target of £25 for low-paid people. The following Trades Union Congress raised it to £30.

In all the wage negotiations for public sector manual workers since then, their wage levels have increased significantly. The increases which they have achieved under the social contract wages policy as low-paid workers in a significant area have brought them forward at a faster rate, relative to the majority of other working people, than ever before in the history of this country. In most cases they have been achieved through negotiations carried out on their behalf by their trade union representatives. If we can, by legislation, enable that process to continue, we shall help to solve the problem in an important area of low-paid people.

As a Minister in the Department of Employment it is not surprising that in considering the question of class differences I should reflect on the job-oriented nature of our society. If it is to be changed, many of the benefits of modern technology, capital intensive manufacture, and so on, must flow through in the form of better manning of services, schools and hospitals. There must be more time for the pursuit of leisure activities and of activities other than those involved in earning one's living if all people are to be fully and effectively employed and work is to be shared.

It requires a redistribution of wealth to ensure that the profits from industry are used for the service of the community. We may disagree about the finer points of some taxation legislation, but this consideration is central to solving the problem of properly paying service workers and properly manning many of the services. That is a concept embodied in many of the Government's measures.

Tonight I invite all hon. Members who believe in the removal of gross inequalities of wealth and opportunity to support the many measures that the Government will introduce to achieve that aim.

We have had an excellent and worthwhile debate. With the leave of the House, I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

Public Administration

7.2 p.m.

I beg to move,

That this House calls for an immediate review by Her Majesty's Government of public administration, particularly in local government and the National Health Service, in the light of its deterioration in quality, increasing cost, and growing remoteness from the people.
The motion deals with the premier growth industry in the country, that is, the public administration industry, and I shall echo the feelings of millions of people that unnecessary public expenditure is getting out of hand. There is a widespread feeling that in the present state of our economy much of the expenditure incurred under the guise of public expenditure is wasteful and that we need to do something about it urgently.

Yesterday we learnt that for the fifth month in succession our industrial production had gone down. Yet at the same time, month by month the cost of public administration in all spheres is rising. When shall we be choked by the cost of public administration? Many people are groaning under the weight of taxation. Far too high a proportion of wage packets, of salaries and of earnings generally is taken away by way of tax or rates, directly or indirectly. Our country is absolutely groaning under a burden of taxation.

There is a feeling in many sections that we are not receiving good value for money, and that the money a man spends himself is better spent than that proportion of his earnings that is spent by the public administration.

The major responsibility for that state of affairs rests fairly and squarely upon the shoulders of the last Conservative administration, which was one of the most prodigal in our history. I shall cite figures to show that that was indeed so. I say that at the outset because, although I shall say some harsh things about public administration, I know that there are many conscientious and honest councillors, people on nominated bodies and officials, who are doing their best to economise and who are well aware of the serious deterioration in our economic position.

They are well aware of the mounting costs with which they are faced, such as increased costs for electricity and transport and for almost everything else. They are conscientiously doing their best to reduce public expenditure as much as they can. The truth is that they are completely caught up in a system that was thrust upon them by the previous administration. However hard they try, they find it impossible to achieve the kind of economies that the economic state of the country calls for, unless they receive substantial help from the Government.

We remember the speed with which the so-called local government reform Bill was pushed through the House. The legislation for England and Wales was combined. Every attempt to have a separate debate on separate Bills dealing with these matters was turned down. The last Conservative administration was determined to push through its Bill.

The same happened with the so-called reform of the National Health Service. Everything was done at a gallop. Both services became overloaded with staff. Local authorities were foisted with agreements that had been entered into centrally but applied locally. I shall attempt to show that the taxpayer was taken for a trot in many ways.

I should like to give a few figures. I shall talk about public administration generally. I shall give figures concerning the National Health Service and local government as samples.

I am sorry that the right hon. Member for Leeds, North-East (Sir K. Joseph) is not present. I wrote to inform him that I should be mentioning him during this debate. In the year 1969–70, the total expenditure on the National Health Service was £1,466 million. The estimated expenditure for 1974–75, after the so-called reforms of the right hon. Member for Leeds, North-East will be £3,241 million.

That figure is an enormous increase. Certain services were removed from local government to the health service which form a small proportion of that expenditure. In Wales, for example, the figure is £2½ million in relation to £207 million total expenditure. We therefore have an idea of the cost of the services transferred. This represents in a period of five years a two and one-third increase in expenditure. That is an impossible situation to contemplate.

Wales is a smaller unit. Therefore, one can more easily contemplate the figures. In Wales there is an increase from a cost of £97·1 million in 1969–70 to £207·7 million in 1974–75. Whatever the rate of inflation, it is nothing like the increase accounted for by these figures.

However, is anybody saying that we have a much better National Health Service today, that the patients are better looked after, or that the doctors are more content? Of course not.

The right hon. Member for Leeds, North-East has made some striking speeches lately about overmanning in industry. There may be a great deal of truth in what he says. Who is responsible for the overmanning in the National Health Service? Who was responsible for the steady growth in the ratio of administrative staff to medical and nursing staff in the Health Service? He was! In 1970, when the right hon. Member took office, the ratio was one administrator to 31·8 people on the medical and nursing side. In 1973 it was one administrator to 27·8. Regrettably, I have been unable to obtain the figures for 1974 when the great re-organisation took place, but we know how Parkinson's Law has worked overtime in many of these areas.

What is more, from Answers to Parliamentary Questions I discovered that the phrase "administrative staff" does not include clerical staff. The phrase is
"… administrative staff other than clerical grades."
But in 1970 the administrative staff, including clerical grades, in the National Health Service numbered 58,262. By 1973, it was 69,417. The rise between 1973 and 1974, about which I have been unable to obtain figures, much to my regret, has been astronomical. This is the work of the party that claims to represent taxpayers and ratepayers, to be the party of good management, the party concerned about people.

In local government we see the handiwork of the right hon. Member for Worcester (Mr. Walker), who, again, I am sorry not to see in his place, because I also wrote to him saying that I intended to refer to his handiwork in this debate. The official Opposition are gluttons when it comes to expenditure. In 1970–71, the annual expenditure on salaries and wages alone in local government in England and Wales was £2,708 million. By the time the right hon. Member for Worcester completed his term of office, that had already risen in 1973–74 to £4,300 million. In that period, the number of staff had increased by nearly 300,000. At the very least, the figure today is 100,000 more than that.

I shall not refer to the expenditure on water services and on other public bodies. It is sufficient for my purposes to cite the two examples that I have given. If there was ever a contribution by any Government to inflation, through excessive expenditure this was it.

We read in our newspapers this evening of the miners being awarded £198 million additional pay, which is the highest in their history. Perhaps it cannot be justified, but it is small fry compared with these figures which I have cited, and at least the miners produce coal, which is a cheaper source of energy than oil from the Arabs, whereas the administrative industry actually produces nothing. It feeds upon itself.

I can imagine the feelings of wage earners when they read that under the proposals of the right hon. Member for Worcester for the reform of local government, Mr. Race, the ex-chief surveyor of Derbyshire, aged 49, who was not appointed in the new authority, has said publicly that his compensation over a period of 14 years will be in excess of £100,000. If the previous Government and the local authorities had all this money to throw away, can they be surprised that they found it impossible to persuaded working people to accept wage restraint, as undoubtedly they should have done?

Between 1970 and 1974, the taxpayers were taken for a ride. NALGO, as the union concerned—and I do not blame it for doing its best for its members—ran rings round whoever was negotiating on behalf of local government. Who could possibly have devised the scheme whereby salaries were paid in relation to population and the salaries of deputies were linked to those of chief executives? The result has been that many chief executives doing exactly the same job as they were doing a year ago are now paid twice the salary, and the same applies to their deputies.

Where was the right hon. Member for Worcester, when this was happening? How unfair this is to people in sparsely populated areas whose officials are paid very much less than in other areas. One has only to see the scales of salaries in some Yorkshire areas, for example.

It is not surprising that this was an enormous contribution to the inflationary pressures. These so-called reformers followed the illusion, so cherished by the former administration between 1970 and 1974, that bigger was better. We had the Conservative administration worshipping at the shrine of Mr. Big. It was said that we should have economies of scale. Where are they? The country looks now for the economies of scale so dear to the hearts of the right hon. Member for Leeds North-East and the right hon. Member for Worcester.

Parkinson's law has been rife. We see the number of high officials who have been appointed, whose status depends on having adequate staffs round them. Large authorities grow under their own momentum. We have the floodgates open, and the country is groaning under the weight. What is more, it is clear that they not only grow under their momentum but do so at public expense. It is to that that we object.

The perpetrators of these reactionary reforms between 1970 and 1974—this centralisation process and this feeding the flames of bureaucracy—also followed the illusion that any problem could be solved automatically by devoting greater expenditure to it. However, many of our problems need a little more sense applied to them in order to bring them nearer to the people. I believe that the two-tier system of local government itself was a nonsense.

I am not alone in holding these views. A gentleman in Yorkshire sent me some newspaper cuttings. I quote from the Skyrack Express of Garforth of 20th December 1974:
"The West Yorkshire County Council—and indeed all county authorities—should be dismantled and given a minor rôle, the Leader of the Conservative group on Leeds Metropolitan Council, Councillor Irwin Bellow, said this week."
It is a pity that he did not realise it before and bring influence to bear on his right hon. Friend who represents that city. We see now the enormity of the cost. The Conservatives set in train a leviathan that can no longer be controlled.

A very interesting study was published in the Financial Times of Wednesday, 29th January by Mr. Joe Rogaly. It is a very interesting study of local government dealing with one of the new areas, the Sandwell authority, in the Midlands. The article has delectable pictures of five town halls that the authority has inherited. The article analyses the expenditure of the authority. Those of us who have read his articles before know that Mr. Rogaly is a perceptive writer. He concludes by saying:
"I said it was a headache; there is surely no cure short of striking out the two-tier system of local government and making natural borough units directly responsible for collecting most of the money they spend. Otherwise councillors all over will continue to believe, as Sandwell's finance chairman does, that there is no relation between increases in rates and voting at subsequent local elections.'"
The truth is that nearly every householder in the country dreads the next rate demand. When they receive the rate demand, it is right that they should ask "Who perpetrated this nonsense?" Where were the people who are now complaining about rates in 1972 when certain notorious measures passed through the House? We have had tremendous duplicity.

For example, there are planning departments at county and district levels. I understand that the hon. Member for Ludlow (Mr. More) has a great deal more sense than many of his right hon. and hon. Friends. I am sorry that he was not more vocal in 1972.

I intervened to say that I thought when the hon. and learned Gentleman said "duplicity" that he meant duplication.

The hon. Member for Ludlow (Mr. More) should have been as wise as I was and should not have been drawn.

Of course, Mr. Deputy Speaker, you have great experience.

With our declining economy I do not believe that the country will be able to accept the present degree of public expenditure. We should embark on certain remedies now. That is why the motion suggests that the Government should carry out an urgent inquiry. For example, it is clear that planning departments could be merged and that the district councils could be responsible for planning. There is no need to have two tiers. We should start to cut our coat according to the cloth.

There should be a five-year moratorium on all prestige projects. From all over the country I have been sent details of a variety of prestige projects. One of the most interesting is reported in an article in the Halifax Courier of 17th August 1974. The article is headed: "Luxury touch for councillors". The article reads:
"A fitted toilet and deep-pile carpet—and even TV and catering facilities are fitted in 'Executive One'—the new £16,000 luxury bus just delivered to the West Yorkshire Passenger Transport Authority for special use by county councillors."
That is only one of the more romantic examples. Throughout the country we know that prestige projects are being put forward. We should seriously think of getting rid of one local government tier. It will be expensive to do so but it will be infinitely more expensive to proceed with the present system.

I say to the Government, as I said in the devolution debate, that if they are to have in Wales and Scotland yet another tier of government, and to super-add it to the two existing tiers, the burden will become intolerable for the ordinary people of Britain. They have to work by the sweat of their brows to earn and to pay taxes. When they find that government and the administration, for example, of the National Health Service are getting remote from them and costing more and more money, and when they realise that they have no control over such expenditure, they tend to despair. I believe that we shall see a massive reaction later this year.

Perhaps I have said enough to introduce this subject. I am sure that there are right hon. and hon. Members on both sides of the House who now realise the great errors that were committed in 1971, 1972 and 1973, whatever view they took in those years. It is a late stage to put matters right, but remedies can be put in hand. The matter brooks no delay.

We are having the worst possible relationship between government and the governed. The governed feel that they are remote from the processes of government. They feel that those who have charge of their affairs in the Government—this applies particularly to the previous Conservative administration, which bears a heavy responsibility—are at fault for having spent money foolishly. They believe that their wishes were disregarded and that the people who believe that bigger was better had their own way.

The ball now lies firmly in the present Government's court. They have a great deal of work and thinking to do to put right many of the wrongs that occurred between 1970 and 1974.

7.28 p.m.

I congratulate the hon. and learned Member for Montgomery (Mr. Hooson) and the Liberal Party on their success in extracting from the official Opposition one Supply Day. I hope that this will be a precedent and that the Liberal Party will have much success in this respect in future.

I felt a great deal of sympathy for some of the things that the hon. and learned Member for Montgomery said about the National Health Service. I believe that the reorganisation of the NHS was the most disastrous thing to happen to it. Sooner or later we must get round to streamlining the service and getting rid of the top heavy administration and the bureaucratic character of the present system. That cannot be done this year or next year.

Until 31st March 1974 I played a part in the National Health Service as chairman of one of the biggest management committees in the country. I know of the upheaval created by the reorganisation. I would not wish to inflict on those with whom I then served the job of going through another reorganisation in the near future. None the less, another reorganisation must come sooner or later. I wish to go on to talk about local government because only last year I put my views on the record about the NHS reorganisation.

I do not blame the Liberal Party for taking the opportunity to exploit the difficulties facing local government and members of local councils. An urgent inquiry is proceeding and it would be unfortunate if, before the committee reports, we were persuaded to start the whole process again. Equally, I do not believe that local government can survive another reorganisation so quickly.

In my local authority there are no prestige schemes. I have spent more than one morning this week examining the estimates before they are presented to my local authority's finance committee. I am the chairman of that committee. It is a heartrending task to cut spending when one knows the aspirations of the local people. Therefore, I shall put on record my own feeling about local government. I do not entirely join with the hon. and learned Gentleman in his criticism of local authorities, and particularly of local councillors. Our system of local government has been admired by people from all over the world. It has attracted the dedicated work of thousands of people who, until this year, gave their time and effort without reward and, even now, give it for little more than out-of-pocket expenses.

I believe that our system of local government is under strain and is threatened by a number of factors. Unlike the hon. and learned Member for Montgomery, I believe that most are largely outside the control of local government, or are imposed on it by central Government.

The first major problem is that it is suffering under the strain of an entirely unsatisfactory reorganisation, which the Tory Government were warned would be expensive, would perpetuate the wholly inefficient and wasteful two-tier system and would in some places have a third tier in parish councils and a fourth tier in neighbourhood councils. The Government's effort would be better directed to assisting local councils and councillors to be more efficient than to inflict a fourth tier on the system. Apart from being less efficient than most purpose authorities, it means the duplicating and overlapping of staff, making communication with the ratepayer more difficult, and the organisation of the services more complicated and expensive.

The present system requires greater numbers of staff. In Kent, under the Royal Commission's arrangements, we might have had, at most, three chief planning officers, but because we have 14 district councils we have 14 chief planners and a county council chief planner. Therefore, instead of three chief planners, we have 15.

The cost of reorganisation has been great. In one of our largest counties the staff provisions encouraged nearly all the chief officers—some of them more than 10 years away from the age of 65—to take advantage of the retirement provisions without applying for a new appointment or being declared redundant. The cost falls on the General Rate Fund, which ought not to bear that burden as well as meaning the premature loss to the service of some of its most experienced officers.

Local government has also suffered, because in a time of inflation it is the labour-intensive industries which suffer, and local government is perhaps the most labour-intensive of all industries in this country. Its services—education, police, fire brigade, refuse collection, parks—genuinely demand increasingly large numbers of staff. When we examine the estimates in any year we see that two-thirds of the total expenditure is on salaries. Local councillors have little control over wage and salary negotiations. Indeed, in the case of the London weighting allowance, the Price Commission—a Government agency, set off a mad, irresistible scramble for increases which left a totally chaotic state. People working within a mile or two of each other, some working for the GLC, are getting the £416 London weighting allowance while others are getting the outer fringe allowance of £120. That makes no sense, and will encourage the demand by unions that there should be a provincial allowance which would stretch not only from the inner four-mile limit of Charing Cross to the outer fringe, but from Charing Cross to Brighton.

Another fact which has created great difficulty for local authorities has been the increasing burden of interest charges because of high interest rates. This has pre-empted large amounts of current expenditure. I believe that higher quotas for borrowing at special rates for local authorities would have been a useful means of stabilising local government expenditure.

A variety of actions from central Government have created difficulties for local councils. On the one hand, new commitments have been pressed on local authorities by successive Governments in which the authorities are little more than agents for the central Government and where, because of the block grant or the rate support grant, the amount provided is either inadequate or not properly identifiable in the total. On the other hand, successive Governments, while talking of greater freedom and powers for local government, have steadily removed functions from it. Last year it was water, sewerage and health functions. The process goes steadily on as the years go by. That makes the proper allocation and utilisation of local resources impossible. Instead, we have a proliferation of local administrations, all of which are involved in services which should be common to all.

Despite these difficulties, our local government record is still remarkable. It can be illustrated in several ways. In 1972–73 rates amounted to £2,617 million—less than half the total of consumer expenditure on alcoholic drink and gambling at £5,481 million. There is no reason to suppose that that balance has been upset in the last 18 months. Even now the rates of a typical council house are no more than about £2 a week.

As to the increasing burden of rates, it was established in 1938 that for every pound that the average citizen spent on goods, he paid 7½d or 3p in rates. By 1972–73 the figure was just 5p. The householder does not bear the whole burden of rates. In 1972–73 rents and other charges were 37·4 per cent., Government grants 36·4 per cent., and rates only 26·2 per cent. As domestic rateable values are less than half the total rateable value and the domestic ratepayer receives domestic relief, the proportion of local expenditure borne by the householder is less than 14 per cent.

There are several urgent problems to be dealt with before the Layfield Committee can recommend a sensible system of finance. Someone must determine whether local authorities should become more and more the agents for central Government or, in the words of the Chartered Institute of Public Finance and Accountancy, relatively independent autonomous units and given freedom and the framework within which to operate. The institute believes, as I do, that only democratically accountable most-purpose authorities can balance priorities in local needs with the resources available. If they are to be the latter, relatively independent autonomous units, they need to have a substantial proportion of their income from local taxation under local control.

While I have always believed that there are real difficulties in local taxation, I am attracted to the proposal put to the Layfield Committee by the Association of District Councils for a tax credit system to those who pay rates to enable us to overcome the regressive and inequitable aspect of rates. Major items like education should go to central Government, with perhaps some limited power to levy a local income tax. If the Minister and others, including the hon. and learned Member for Montgomery, feel that some authorities have behaved extravagantly—I do not wish to defend every authority—the right thing is not to condemn all authorities, because I believe that my authority and many others have acted responsibly.

I gave certain examples of wasteful expenditure, but I agree that it is because of what central Government did that the bill has risen so much.

Perhaps we are on common ground on this issue. As I said, if it is felt that some authorities have behaved extravagantly, we should not condemn them all but accept the offer made by the local authority associations to join in an attempt to ascertain the facts.

We should appreciate the intolerable burdens and difficulties under which local councils have to operate. My council and, I am sure, other councils appreciate the generous support given to them by this Government in awarding £1,000 million for this year and £2,000 million for 1975–76, bringing the total of Government subventions for next year up to about 65 per cent. more than ever before. But local authorities look forward with hope to the findings of the Layfield Committee to give them some relief from the pressures about which we have been talking. Anything that damages or destroys con- fidence in local government does irreparable harm to the whole of our democracy.

7.40 p.m.

What a pleasure it was to see the serried rank of the Liberal Party on its great day in the triumph of the first of its Supply days. It reminded me of a whole row of chickens one of which—indeed two of which—had just laid eggs. My only worry was—where was the right hon. Member for Orkney and Shetland (Mr. Grimond)? He had escaped the Whip, he was not present on parade, and was not here to give us his views on this important topic.

I congratulate the hon. and learned Member for Montgomery (Mr. Hooson) on his speech. It seemed to me that he took the debate away from bureaucracy into the area of local government organisation and rating, which are vital matters, and the right hon. Member for Dartford (Mr. Irving) took the matter even further into reform of local government and the problems it faces.

I believe that both hon. Gentlemen got it wrong. Local government expenditure is rising so fast and appears to be so out of control—just as Government expenditure suffers from the same terrible defect—not because of any reorganisation or slackness or extravagance by councillors, but because there are no mechanisms to control the bureaucracy either within central or local government. We must look to organic solutions to these problems, whether imposed from within or without, solutions that must go much closer to the heart of the problem.

It is always difficult to talk about the Civil Service, because it is alleged that its members cannot answer back. With shameful regularity, this argument has been used to discourage any discussion about the bureaucracy by the bureaucrats themselves. They have the Minister of State, Civil Service Department, who is to reply to the debate, to speak for them. But I would far rather they could write and speak for themselves in newspapers and other media in any way they chose. The time has come when we must have a public debate about how the bureaucracy is run, organised, controlled and, indeed, how efficient it is. We cannot go on hiding behind ministerial responsibility and the Official Secrets Act as if the machine were perfect and its only faults were Ministers, who caused our troubles and problems.

There is a tremendous gap between that system and the private sector where directors, accountants, national enterprise boards, boards of inquiry and management consultants constantly overhaul organisations and produce financial reports, accounts and returns on capital employed to the point where we cannot wade through the available information. As to the other half of the economy there is total silence and a complete absence of information. We must begin by having that information.

Half of our GNP passes through the Treasury and a third of our economic life is produced in the public sector. To have so little in the way of information is to have no information at all about whether it is provided with great efficiency, with average efficiency, or with the greatest inefficiency. Without that information we cannot tell whether there is a job to do in improving the situation, or what methods are required to improve matters.

There is a general feeling among many members of the public that our bureaucracy is too big and is growing too fast. But we are not aware whether that is true. This is because the information given us is totally useless because we do not know in terms of industrial, commercial and semi-industrial activities indulged in by the State the return on capital employed; nor do we know the unit costs of output; nor do we know how those costs compare with those of similar countries that have similar services provided in their public sectors.

The first task, I regret to say, is to break down the public sector into hundreds of sub-units; to find out what those units are trying to do; to measure their output and the amount of capital they employ; to estimate the relative trends in unit costs; and to begin to get some financial information about the performance of the public sector.

I am not talking about Ministers and their advisers. That is a totally different branch of the Civil Service, but it is a difficulty that the Minister of State and my hon. Friend the Member for St. Marylebone (Mr. Baker), as a former Minister, have both experienced, namely, that as they are Ministers, advised by the Civil Service and responsible for it, they are the people who will find it hardest to do much about the problem because they are both charged with responsibility for conditions and pay, and also for organisation. At the same time, they are honour bound to defend what they find. Nor do they, with the greatest respect to both of them, conceivably carry the political guns necessary to do that job when they are not members of the Cabinet. Therefore, a very important task is to obtain the information.

The second task is to identify those who head the units of the Civil Service and to make sure that the public know who they are, and to ensure that they are accountable to the public for their performance.

Is the hon. Gentleman aware that virtually all these recommendations were made by the Fulton Committee in 1968 and that it was a Conservative Government that held up the implementation of the very reforms that the hon. Gentleman says are required?

I am not remotely interested in party points. I am sure the hon. Gentleman agrees that Governments of both complexions have succumbed to the system, however good their intentions when they came into office.

I do not believe that the information that I require is yet available. Fulton may have suggested that it should be available, but that surely is an indication that the machine has smothered Fulton. That is what I am complaining about.

We must next find a way of motivating the Civil Service machine differently. The real difficulty is that if one runs a sizeable part of the public sector, honour and glory come not from making a bigger profit, or by using more effective methods, or making greater use of personnel, or achieving greater output for less effort and expense, but from having a bigger empire. Once a man is responsible for not 100 men but 200 men, the size of his office increases, the horse power of his motor car becomes larger, the office carpet richer and grander. That is the motivation on which we have been content to rely.

Professor Naskinen did an analysis of this after five years in the Defence Department in America. He suggested various ways in which that motivation could be changed. The first, which is obvious but I am afraid unacceptable, is that bureaucrats who succeed in increasing the efficiency and performance of their part of the machine should be paid more and that those who succeed not and whose efficiency is low should be paid less. This, of course, raises appalling problems. It is like denationalising the public sector, and it is very inegalitarian. I do not expect any support from Labour Members, who like to see salaries all the same and regimented.

But if that is too difficult, Professor Naskinen suggested as a second alternative that it might be possible to add to the empires of civil servants who managed well and detract from the empires of those who managed badly. He suggested that the man who ran a successful weapons procurement agency in the Defence Department and managed to get his unit costs down might be given a couple of hundred schools to add to his empire, whereas the man who ran his schools badly would have not a couple of hundred schools but would be reduced to 100 to show how badly he had done.

If that still shocks hon. Members—it does not shock me, but it is a novel and perhaps slightly over-powerful idea for this country—he fell back on a third suggestion, perhaps less successful in terms of motivation, but the most successful in terms of conditions in Britain. It was simply that those who had the best performance should have a bigger motor car, a bigger carpet, three weeks' holiday instead of two, and that those who did not do so well would find their "perks" diminishing. "Perks" are status; if we cannot use the profit motive, the money incentive, we must go back to the weakest of incentives, which is "perks".

Would the hon. Gentleman agree that Members of Parliament who arrive at nine in the morning should be paid more and those who arrive later should be paid less?

As one who left at nine in the morning today, on the hon. Gentleman's analogy I should probably be the best paid of all hon. Members in the Chamber. I must point out, however, that my ambition was to stop legislation—he surely thinks that the product of this place is legislation—so I have done the most and worked the hardest to reduce the production of this place. The hon. Gentleman must think this out: whether I should be paid the most or the least, or whether the right hon. Member who sits on the opposite side of the House but who is not here and has not been here since November is not perhaps the hon. Member who helps most the productivity of this place because he has wasted no time, impeded no Bill and allowed no check to the legislation passing through.

But the hon. Gentleman diverts me. He cannot and should not be allowed to mix up the profession of politics, the market place of ideas, with the economic function of providing goods and services in the public sector.

So I put forward the views that Professor Naskinen suggested for discussion about how to motivate the bureaucracy in America, and I do not put them forward with much seriousness in the context of the British situation. But if this debate does no more than draw attention to the problem, it will be a great start. Secondly, if we could begin to have the information, it would be possible to evolve.

Thirdly, whichever party governs in the next years ahead, even if it is the Liberal Party, could we have more public discussion about its plans for making the political will supreme over the machine and how to make the machine, in itself, self-regulating organically from within, either by motivating it in the sort of way that Professor Naskinen has suggested, or by some exterior discipline, such as arbitrary limitation of numbers, which in my opinion never works, or a commission to go through each department chopping here and cutting there, which in my opinion never works either.

We must have more thought about what should be done. I, as a Conservative, as a believer in human incentive, think that what we should do is devise incentives for our bureaucrats that will enable them to feel pride if they cut the Civil Service and shame if they allow it to increase and to link status with the sort of efficiency in the public service that we should all like to see but that I suspect few of us believe we actually have at present.

Order. May I remind the House that 12 hon. Members want to speak in the next 65 minutes?

7.56 p.m.

I welcome the debate and the choice of subject by the Liberal Party and I hope that we have many more like them. It is important to discuss the machinery of government at times, instead of simply the policies that Governments have to decide. However, we should not have to be talking about the machinery of government two or three years after the most thorough-going reform of local government and the Health Service that this country has ever had.

The 1972 and 1973 Acts were born with great hopes. May of us thought that they would improve local government, health services and the whole structure of public administration, but the hopes of those Acts have been in no way fulfilled. It is in no partisan spirit that I say that both were disasters. I can see no tangible benefits from them. I took the trouble this morning to look through the White Paper which came before the Local Government Act 1972. That is always a good thing to do—to see the objectives and hopes at the time. In all aspects of life hopes and realisation are separated by a fair-sized gap, and nowhere is that more true than with the White Paper and the Local Government Act.

I wish that some of the architects of those reforms would, even at this late date, try to explain their benefits to the community, to local government officers, councillors and hospital patients. There was a whole list of objectives in the White Paper. It said that the new local government system would have, if not complete financial independence, at least real financial autonomy. Now the party opposite is talking about getting rid of any independent financial base for local authorities at all.

There are other objectives, such as making the system intelligible and understandable to the ordinary man and woman. Even now I find that planners in local government and people working in local authorities are not themselves clear about the division of functions and the precise responsibilities that they have. It is a hopelessly complicated structure, in which many people whose job it is to understand the system are still unable to do so. The disadvantages and mistakes of those two reforms are pretty plain for almost anyone to see.

Having said that, I think that it would be a great pity if we compound what I regard as the disasters of those two reforms by being unwilling to look at the way in which our public administration system in the future could be improved. Other hon. Members have mentioned the problems of saying to people just after these reforms "We may have to do the job again quite soon", but if the pattern that we have now is to remain so for the rest of the century we are just compounding disaster on disaster. Surely we have to think more in terms of what is right and what sort of principles are right for the future. It is right that in this debate we should try to think of some of the principles.

I want to dwell for one moment on what I see to be the origin of the problem of public administration and its structure in this country. The origin is quite a simple one. Simply stated it is this. The scope and activity of Government during this century have extended in a way that no one could possibly have imagined or would have believed conceivable at the beginning of the century. New services have come into being, and government has extended into areas where no one really thought that it would. Completely new responsibilities have come along, and so on. Of course, I should add that, for the most part, these new responsibilities are welcomed by the great majority of the population they are designed to serve.

However, these new responsibilities have been simply grafted on to an existing structure. This even applies with the reformed structure we have at present. They have been added to local government. The Civil Service has got bigger. New ad hoc authorities have been created. There has never been an attempt to say that we want a public administration which will be right for the country, and that we shall not deal with this matter in an ad hoc way, adding a little here, creating a new department here or there, or having a new regional authority there. That is exactly how the process has gone during the last 40 to 50 years.

I should like to commend to the House and to the Government just three or four principles we should bear in mind in trying to discover what is the right system of public administration and the most effective public service in the decades which lie ahead, Some, at least, of the principles I want to recommend are as follows.

First, I suggest that we think of the principle of unity. By "unity" I mean unity of service. That is, that we should accept that the job of a public administrator, whether he is in the Civil Service, local government, a hospital board, a water authority or any regional authority, is essentially similar. The job of public service is similar to some extent, and very frequently the jobs are interchangeable. The country would derive great benefit if we were to see the structure as being essentially similar and that people should transfer from one job to another. Administrators in London should spend time in the regions, and people from the regions should spend time in London. In many respects that is the kind of system which has worked very well in France over the years. In the long run we should work towards a unified public administration service to be applicable to all types, shapes and conditions of public authority.

I spent some time working across the river for what was then the London County Council. That council and its unions seemed to spend most of their time explaining why the London County Council was completely different from any other local authority and why the job of working there was also completely different. I happened to think that the London County Council was similar to other authorities—and faced problems similar to those of central Government. Unity of service, therefore, is one crucial principle.

Another crucial principle is uniformity. I was unable to speak in the debate on devolution, but uniformity is relevant to that matter. We should try to adopt similar patterns of public administration throughout the country. The same applies to services. It is wrong to create new structures for new services. The decision to treat the Health Service differently from other regional or local services was a mistake. It should be treated uniformly with the social services and other vital aspects of our national life.

I commend also the principle of simplicity. We should endeavour to make our administrative structure as simple and as intelligible as possible so that not only we and the administrators can understand it, but the people it is designed to serve can understand it as well. We should attempt to provide for decisions to be made at the lowest level, the level which the people in local communities understand.

Most important, we need to ensure that the principle of democracy applies at the top of our administrative system. All hon. Members should be concerned at the fact that 60 years ago democratic control in Britain, with a much smaller administrative machine and considerably smaller services, was in the hands of about 630 MPs and a few thousand part-time local councillors. Sixty years on, in spite of a vast increase in the bureaucracy and the scale and scope of public administration, democratic control still remains with about 635 MPs and a few thousand part-time councillors.

No action has been taken to strengthen the democratic control of the top of the public administration system. If there is any virtue in a system of haphazard public administration it is at least that it will not be efficient enough to overrule the wishes of the democrats who should be in control. If we are, therefore, to strengthen our public administration we must strengthen the democracy which controls it. We cannot for long tolerate a system which is entirely dependent on MPs being, in a nation of more than 50 million people, the only paid full-time representatives to carry ultimate responsibility for a huge machine in which many of us can see so many mistakes.

If we give effect to these principles the people we want to serve will benefit enormously in the long run.

8.4 p.m.

We are all grateful to the hon. Member for Lichfield and Tamworth (Mr. Grocott) for his comments about the need for a new look at our systems of public control. I wish to concentrate on that aspect of the motion which deals with public administration and to deal with the control of public expenditure. With the current state of our economy the control of spending is one of the most important priorities.

The level of public expenditure in 1969–70 was £32·5 billion. By 1973–74 it was £39·25 billion. Such figures are difficult to comprehend in lay terms. They are perhaps more easily understood if we say that the level of expenditure envisaged every year amounts to between £1,200 and £1,300 for every taxpayer. For 1974–75 the estimated figure has now risen to £43 billion. That is the measure of the problem which we are asking our Civil Service and public authorities to face. Incidentally, those funds have to be not only disbursed but collected, so there is a double task.

In the last few weeks I have had the opportunity of referring to some of the expenditures that have gone through the House. For example, there was the expenditure in connection with the Public Works Loan Board, which was £8,000 million, and the Prices Bill, which was £1,700 million. On Monday evening this week—I do not think that there was a speech from the Labour back benches the whole evening—the House approved expenditure of £21,000 million, some of it through the process of affirmative order.

On a number of occasions I have asked what satisfactory controls we could have when Parliament approved such action. It has been made clear to me that we could rely on the sanctions and activities of the Civil Service Department to ensure that money was not spent without most careful and cautious control. How is it controlled, and what are the resources used for the control?

I ought to declare a personal interest, being a chartered accountant, although I cannot say that my activities as a chartered accountant relate to what I am talking about this evening. There are 61,000 chartered accountants in this country. As they have emerged as a profession they have had a continuing dialogue with the Government and private enterprise and nationalised industry. In their rôle in management they have extensive participation in decision making.

The position in the Civil Service is astonishing. The Fulton Report has been mentioned. I should like to make two brief quotations from it. Paragraph 3 of Appendix D says:
"In Chapter 2 we refer to accounting as an example of a specialist skill where the Civil Service has not recruited sufficient qualified people nor deployed them in positions of proper responsibility. In this appendix we develop this point at rather greater length."
In paragraph 5 we read:
"There can be no doubt that the present position is unsatisfactory and calls for substantial and early improvement."
I would welcome that.

Sir Harry Page has given a Civil Service view of the accounting profession and the rôle it should play, saying:
"I cannot avoid the conclusion that the Civil Service have not yet recognised accountancy as a profession. Accounting is apparently to them something which you learn, if I may exaggerate somewhat and use a phrase from the Lancashire textile industry, by 'sitting next to Nelly', now supported in certain departments by day-release study."
That speaks eloquently for the judgment of the Civil Service on the accounting profession.

I have tried to see what progress the Civil Service has made. The situation is interesting. I have gone through the list of people employed in administration in the non-industrial list. In April 1974 there were 342 accountants—a reduction from 1972, when there were 354. That is astonishing, when we are employing 265,000 civil servants in the general category of the administration group. When we look closer at some of the other categories of employment we see how ridiculous and nonsensical that recruitment level is.

Does the hon. Gentleman realise that the situation is far worse than he says, because the bulk of accountants used in the Civil Service are employed on vetting costs of outside contractors and not on budgetary control or costing inside the Civil Service?

I was coming to that point. I shall refer to the number of accountants employed in the Ministry of Defence, where I believe most of these gentlemen are placed.

The Civil Service has 261 economists, 401 statisticians and 1,307 information officers, compared with 400 accountants to control our expenditure of £43 billion. The legal department has 797 people, excluding departmental legal employees. An ominous statistic is that there are 3,302 paper keepers. That in itself reflects a level of expenditure which might be better applied to economy rather than to paper keeping. In the circumstances, the figure of 400 accountants is a ridiculous and irrelevant number against the total Civil Service of 700,000 people.

The Melville Burney Report in 1972 sought to identify some of the areas in which accountants could be actively engaged. Certain activities peculiar to government are also peculiar to accountants—for example, control of the Consolidated Fund, the National Loans Fund, the National Insurance Fund and the preparation of estimates. In the public sector, there are allocations of resources between competing demands—very much a function for accountants—and also such activities as the payment of welfare benefits, health and social security benefits, unemployment benefit, and financial reimbursements, revenue disbursements and the planning of Government funds. These are all special to Government activities.

Then there are affairs in ordinary business life which have something in common with Government activity—for example, project planning, capital expenditure programmes, financial objectives, profitability and cash flow. Indeed, the creation of cash flow must be at the nub of the Government's affairs at the moment. There are also such activities as costing and cost benefit analysis, management accounting and internal auditing. The difference between accounting and auditing seems to escape the Government machine.

The presentation of the Government's expenditure proposals is traditionally in a ritualistic printed form. It is astonishing that presentation of figures in a printed form makes them seem beyond suspicion and question. The same applies to local government. Its figures when printed seem inviolate. Yet it is all based on a system of accounting about 300 years—possibly even 1,300 years—out of date.

No self-respecting golf club would allow its accounts to be prepared in the way in which the Government present their figures. It is single-entry bookkeeping, the receipts and payment account in the lowest possible form, taking no account of expenditure incurred, of the value of the assets created, or of the future capital costs incurred by the Government. That must be nonsense. It adds strength to the case that we should have professional competent accountants in the team.

I have referred to the number of professional accountants employed in the Civil Service, and to the areas in which they are employed. Out of the 342 so employed, 193 are employed in the Ministry of Defence on procurement exercises. In the Inland Revenue there are 27 accountants. When we reflect on the whole consultation process, with the 60,000 accountants who are privately employed in industry and in practice, the number of 27 seems to strike a nonsensical chord. In the Department of Industry there are 81 accountants.

There is a total of 44,000 in the administrative group in the Ministry of Defence. There are 17,000 people in the Inland Revenue, of whom 27 are professional accountants. In the Department of Industry there are 4,746 people, of whom 81 are professional accountants. The best is yet to come. The most perfect and pure place of all is Her Majesty's Treasury, where there are 1,189 people in the administrative group and one qualified accountant. He is the king of them all, the king of the Treasury. The Export Credits Guarantee Department was given an allocation of £21 million last Monday. This department runs a parallel course with the Treasury because it, too, has one qualified professional accountant. It is enough to say that very little progress has been made since the Fulton Report or the Melville Burney Report. This is a matter to which the Government must direct their attention as soon as possible.

There are things which can and should be done. There was a recommendation that a head of the profession should be appointed. I understand that there has been a long and earnest search among those in the accounting profession. Yet that search has been doomed to failure. We have had to have recourse to the desperate remedy of competitive advertising to find someone. I welcome the fact that we are to go into the open market to seek the right person for the job. It is a matter of urgency that the head of the accounting profession in the Civil Service should be appointed as rapidly as possible, taking full responsibility for it.

There needs to be active participation and integration of accountants in the Civil Service, recognising the modern rôle they can play. It is not enough to say that economists can do the job as well. That is not to recognise that we have moved on. Galileo invented the system of double-entry book-keeping, which has been very successful and effective and which has, perhaps, even improved a little, as the Chancellor noted when recognising inflation accounting needs and inflation costs relief.

We need to have these professionally qualified people. We need to recognise the differentials between auditing and accounting. It is not enough to say that because we have well qualified and competent district auditors they can carry out modern accounting functions. We are living in times of change in the Civil Service. The accounting profession has sought to recognise that. I hope that the Government will recognise this urgent need.

8.24 p.m.

Although there was an element of special pleading for a well-known profession in the remarks of the hon. Member for Hertfordshire, South-West (Mr. Dodsworth), most of us share his concern about cost control in government and the ability of those who pursue the effectiveness of Government to do so by the study of published accounts and records. We share the hon. Member's concern about the way in which those records are presented and the difficulty that even those with considerable professional knowledge of the subject have in making sense of Government accounts as they are traditionally presented.

I should like to refer to some of the themes that the hon. and learned Member for Montgomery (Mr. Hooson) developed. I, too, recall that we were told that size and economy were linked and that we had to have an increase in the size of public bodies, particularly in areas such as local government, largely because of cost. We were told that cost benefits would flow. We have since discovered that greater size, greater remoteness and greater cost go together and that there is a frighteningly close relationship between them.

The reasons why larger units tend to bring higher costs are numerous. My hon. and learned Friend the Member for Montgomery referred to the way in which population scales were used to arrive at salaries. There are other factors. Larger units attract more administration, and a higher and higher pyramid is constructed. A structure is developed that contains more and more administrators and deputies and eventually a "more chiefs than Indians" situation develops.

Until recently, transport costs were not considered in relation to reorganisation. It was assumed that, however large the area, the cost of transport to officials within the area would be insignificant. Petrol costs have increased, and if administrators have to be sent scurrying over a large new county area to inspect large numbers of outstations that do not have a sufficient degree of responsibility, transport costs become very large. Leaving out of account increased fuel costs, petrol costs for official journeys have substantially increased over the past few years.

More expensive ways of doing things develop in large units. No longer is the local contractor brought in to do a simple job. Elaborate regional or area procedures are used, and the advantages of central purchasing are offset by the failure to operate economically at local level.

We are all familiar with the characteristic public service estimates system, which I hope the Government will examine. Most public bodies still seem to operate within a framework that generates a mad March hare mentality at the time of the year when money left over from last year's estimates must be spent lest the following year's estimates are reduced. There should be a sensible way of proceeding with estimates from one year to the next without the necessity of spending money to establish a claim for money in future.

We have seen the consequences of increased size in local government reorganisation. My own county of Northumberland is the exception. It has been reduced in size and, as a result of local government reorganisation, has been left with acute problems in paying for services for a large and scattered area from which has been removed its urban industrial source of revenue.

I have a great deal of sympathy with the Northumberland County Council in the problems of running such a large scattered area with such limited resources. But the council's intention to spend £7½ million on a new county hall in the present stringent economic situation does not suggest that it is taking the Government's warning to heart. I hope that the Government will not smile favourably on that project, justified as it is by the existing county hall not being situated in the new county. That is a minor inconvenience that the residents of Northumberland will survive for a few more years if they can be spared having to spend £7½ million to put the matter right.

These trends are more evident in the health and water services. In both they are accompanied by two other failings. One failing that the new structure of the health and water services shows is the removal of any element of democratic control, particularly local democratic control, from services that touch the individual at crucial points in his life.

That is most true of the health services. We are creating the cumbersome, ineffective machinery of community health councils as a substitute for democracy, and that illustrates the failure of what we are doing. Many members of the party responsible for this change believe that this is a satisfactory alternative. I hope that the community health councils will do a useful job, but there is a world of difference between a body that can register complaints and advise people on how best to remedy them, and a body that, as a result of the ballot box, exercises community choice about the policies and decisions of major services. That is what should have been provided for the health services and it has not been provided. [Interruption.] The hon. Member, from a sedentary position, defends his Government's attitude, but his feelings are not shared by members of other parties.

The other great failure of the reorganisation of health and water services is that the services are separated from each other. They are separated from the great body of local government services, such as social services, which are closely related to the health services. The more we put public services into separately administered boxes, the less we can operate them with any kind of co-ordination, and the less we can decide priorities between them, because each individual service sets its own priorities and there is no local or regional judgment about them. We prefer this range of services to be brought under a single regional administrative body, together with services administered by the county council, to having them separated in this way and run undemocratically.

I now propose to refer to some of the practical aspects of the situation with regard to health and water services. When I look at my area, I cannot help but dissent from the opinion of the hon. Member for Lichfield and Tamworth (Mr. Grocott), who spoke about uniformity in the pattern of administration. The failure of uniformity is only too well illustrated in the reorganisation of the health services. A pattern that might suit some areas does not necessarily suit those to which it has been applied. A pattern revolving round a district general hospital cannot be applied effectively in an area where there are no district general hospitals, and here I am speaking of Northumberland. A pattern designed for one area produces bad administration if it is applied rigidly to another area in which it is unsuitable.

We have developed in the health services a pattern of administration with more tiers than a royal wedding cake. We have level after level of administration, when we could achieve the object more satisfactorily by having perhaps only two levels. We have regions, areas and districts, and within districts there are sectors.

At area level we have created an administrative structure that covers too large an area and removes effective decision making from individual hospitals and clinics, from the locality where the job is being done. We have developed the habit of putting behind desks people whom we have trained at considerable expense to do professional jobs. That is one of the worst features of the health service. Not only have we seen a proliferation of administrators, but we have taken trained professional people and said "The best thing to do is to make you an area medical officer. That is the pinnacle of your promotion ladder. You can put down your medical training and equipment, sit behind a desk and be an area medical officer".

We have said to nurses that we want them not to run the nursing service in one hospital but to be area nursing officers, or the area officer for three hospitals. We tell them that their job will be to travel and see that everything is all right. We tell them that they are not required to do any nursing. We take our most valuable resources of trained and competent people and make them administrators. We create levels of administration that we do not need.

Much of this cannot be right, and since February I have pleaded with the Government to try to halt some of this rolling bandwagon of unnecessary administration. I get the impression that the hon. Member for Plymouth, Devonport (Dr. Owen), who has borne so much of the responsibility for health service reorganisation, is not very interested in trying to stop the movement of the bandwagon that has developed. He seems content to let the machinery set up by the previous Government roll on. It would have been impossible immediately to unscramble what had gone before, but the hon. Gentleman could have done more to stop some of the developments that have taken place.

Perhaps the greatest nonsense is the new water authority. In my area we have created a water authority, which is explicitly responsible for the water cycle. That is the justification for setting it up. All the stages of the water cycle must be considered by one body—water supply, sewerage, and so on. But in most of my constituency the water authority does not provide the water supply. Water is provided by private enterprise water companies, which have bigger headquarters than the water authority. They send out their own charges separate from the water authority. The water authority does not even provide the sewerage services. Most of these are provided on an agency basis by local authorities. Many people have the same job as before, but now they are acting as agents of the water authority.

We have created an organisation which, although it has some functions, is not carrying out the major functions because there are efficient ways of doing that through local authorities and the water companies. We create an organisation to be the overlord, and we find it necessary to pay a man more than £5,000 a year to be the part-time chairman. We provide him with a motor car, and we consider that to be an improvement in administration.

It would be a mistake to suppose that if our administration were better designed and more economical and without waste, we should do away entirely with the problems and burden of rising costs on taxes and rates. Such aspects as the cost of providing teachers and nurses put strains on the system. We cannot wipe out those costs. But whereas at one time it may have been reasonable for us to carry a surplus on the administrative side, and although we may have felt able to absorb such costs without worrying unduly, we can no longer afford this luxury. We cannot create more expensive and visibly extravagant administrative structures without undermining any attempt we may make to seek sacrifices from the community.

Mention has been made of the various groups, such as the miners, to which we have appealed. What weight can we attach to such appeals if they are made against the background of administrative waste? It is a waste produced by the system more than by the individuals who operate it. Many of the people concerned in simply doing their jobs are bound up with the morality and assumptions of the system to which the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) referred in an interesting speech. I do not agree entirely with the hon. Gentleman, but I hope that hon. Members opposite will share with us a genuine desire to get away from the assumption that the object of life of an administrator is to get more "perks", a better carpet, or a grander status, or to create a bigger empire or gain greater financial rewards. The object must be to provide the best service, and we must try to get rid of the idea that the "perks" and financial rewards are the object of the exercise. We should be striving towards a society in which people obtain the most job satisfaction if they provide the best service to their fellow men.

8.37 p.m.

I greatly welcome this debate and congratulate the Liberal Party on initiating it. The Liberal Party seems to be getting the reputation of being a thinking man's Opposition. That is borne out by the two subjects chosen for debate today. I welcome the debate because it treats a subject which the House tends to neglect except at the time of the annual battle on the rate support grant. Too much public administration escapes detailed public scrutiny of its effectiveness, resulting in debilitation of public accountability.

The first element of any analysis of the cost and quality of public administration should be the definition of the boundaries of public administration. I regret that those boundaries are not clearly marked. I have recently been trying to chart them by tabling a series of Written Questions to Ministers, and I have learned of 350 bodies external to the Government to which Ministers either make appointments or give public funds.

My right hon. Friend the Secretary of State for the Environment appears to be responsible for 170 of them. My right hon. Friend the Secretary of State for Defence says that he is responsible for so many that it would involve disproportionate cost to public funds to discover the number. Trudging through the bureaucratic undergrowth which grows in the shade of the great Departments of State one comes across the Submarine Museum, the Mobile Radio Committee, the Freight Integration Council and the Committee on Bird Sanctuaries in Royal Parks. My guess is that there are more than 500 quasi-governmental bodies, all representing a charge to public funds, and whose public accountability is negligible. The examination of the scope, function, cost and value of them should be made the responsibility of a permanent review body.

I turn briefly to a major issue of the management of central Government. Seven years ago an exhaustive inquiry into the management, organisation and staffing of the Home Civil Service was carried out by the Fulton Committee. I must disclose an interest in its work because I was employed by the committee as its management consultant. The committee's recommendations have led to an improvement in the management of the Civil Service in general. Personnel management has become recognised as a leading function and not a junior branch of cost control. There have been developments in managerial accountability, improved training, enhanced promotion, and opportunities for technical staff.

However, the most important Fulton recommendation, that there should be a unified career class system to enable the best professionally qualified people to reach the top jobs, has never been implemented. The top few grades of the Civil Service have been amalgamated, but we still have the situation in which very few young, professionally qualified officials can ever obtain sufficient general management experience earlier enough in their carrers to fit them for the top administrative jobs.

Fulton put a lot of noses out of joint when it called the Oxbridge mandarins who run our Civil Service amateurs. A lot of that criticism was overdone and unjustified. However, the top and dominant jobs in the Civil Service for the control of spending still go to the generalist, the all-rounder who—surprise, surprise—more often than not is an Oxbridge classicist or historian rather than the professionally qualified accountant, economist or engineer. Without such specialists in its higher cadres the Civil Service is ill-equipped for policy research, quantitive analysis or the management of intervention. It is imperative that the Government carry on with the implementation of the Fulton recommendations, which are as essential now as they were in 1968.

When we consider the quality of service, or the service cost and the remoteness of local government health and water authorities, the question once again hinges on public accountability. The last Conservative Government carried out a series of major changes in those areas without understanding the nature of public administration or the managerial or organisational imperatives at work in public administration. Enamoured of the managerial ideas of a decade or two ago they concluded that efficiency and effectiveness depended on the creation of large, integrated management structures. They failed to notice more recent research which showed that, in industry in general, the bigger the organisation the lower the return on capital. We can parallel that experience throughout any kind of organisation.

The results of this folly can be seen in the reorganisation of the National Health Service, which is a classic example of how not to do it. It sought to combine the three main strands of health care—general practitioners, hospitals, and the local authority health services—into one multi-layer bureaucracy, employing one-twentieth of the country's workforce. The emphasis on the reorganisation of the National Health Service was on professional management and the integration of services.

In some ways the effect was just the opposite. The organisation failed to provide a chief executive at any organisational level—at no regional or district level is there a chief executive—relying instead on what is charmingly called consensus management, or the ability of medical, paramedical and administrative specialists to agree on a course of action, to implement it, and to monitor themselves as to how well they were implementing their course of action. An important element of professional management, the accountability of an individual executive, was totally lost. Moreover, the top level posts in the system were occupied by civil servants in the Department of Health and Social Security whose career pattern is in the Civil Service at large and not in the Health Service.

Therefore, the professionalism they were so keen to implement stopped at the regional level. There is no indication, on the matter of integration for services, that general practitioners are any more integrated in the system than they were before, since the health authority has no direct control over them. The reorganisation may have tried to integrate the personal health services of local authorities with hospital services, but it is possible to argue that it was more important that the local authority health services should continue to be integrated with local authority social and housing services.

As a result of the reorganisation, the local authorities lost their medical officer of health, who had great influence on the range of decisions made in local authorities. He was an officer who had great weight in council deliberations. So the local authorities lost a medical input into housing policies, into social policies, into amenity policies and into education policies. Perhaps most important of all, the medical officer of health was publicly accountable to an elected local authority, whereas the new structure has minimal public accountability, is remote, and is inadequately rooted in the community.

All this has happened at a time when more public involvement in health issues such as smoking, diet, accidents and occupational hazards is probably of far greater significance than a neat administrative structure based on hospitals—that is to say, community care. Preventive care should now be the emphasis of general health care for the public, and that was the view of the medical officer of health who is now abolished and made a bureaucrat in a hospital-dominated health organisation.

Finally, the organisational structure of health has too many layers. There is no clear reason for a regional health authority. The Finance Division of the Department of Health and Social Security oversees a regional treasurer, who oversees an area treasurer, who oversees a district finance officer, each one existing to collect data from or to distribute them to the others. Meanwhile, there is no adequate budgetary control system, nor any way of publicly demonstrating the costs and benefits of different courses of action. Individual area health authorities, such as that in Norfolk, make exceptional efforts to make the system work and to try to overcome years of neglect in terms of investment in health facilities. In the end, it may work. Nevertheless, the reorganisation of the National Health Service is illustrative of the general tendency of the last Conservative Government to fail to grasp the need to organise public administration on a human scale.

On the general question of cost, in my experience, which is fairly extensive and covers both the activities of private industry and of public authorities, organisations in public administration have never struck me as being as inefficiently run as private industry, and, on the whole, service to the public is rather better and more understanding.

The failure of this motion, which has good intent, is that it is too highly generalised. A review of public administration will serve no purpose. We have to examine the situation sector by sector. We need a review body for the quasi-governmental bodies, to which I referred earlier, which are accountable to no one. We need executive action by the Civil Service Department on the continued reform of the Civil Service. We need a different approach to each of the health authorities, the water authorities, the police authorities and the local authorities by a combination of actions—sometimes by specific inquiries, possibly by statutory review bodies, into the results of recent reorganisations, by Government action to democratise their governing authorities and by their own efforts to involve the community. Of all these, the last—the conscious effort to publicise and consult the community—seems to me to be the most important.

8.48 p.m.

This has been an interesting debate, and perhaps at the outset I might take up one or two of the very constructive points made by the hon. Member for Norwich, South (Mr. Garrett). He spoke about looking at these problems sector by sector. In that, I believe that he is on to a very important approach to the subject.

Then the hon. Gentleman made a very strong point about the rate of return on large units being typically low. I hope that he will repeat that argument when we discuss the nationalisation of manufacturing industry, where the same principle applies.

We shall all have our opportunities.

I wish to concentrate my remarks on one sector and to deal with the problems arising within water authorities. This is a matter of great concern to many right hon. and hon. Members, and I know that the hon. Member for Isle of Wight (Mr. Ross) takes a very keen interest in it. I shall try as far as possible to strike a co- operative attitude in trying to resolve some of the problems.

The hon. and learned Member for Montgomery (Mr. Hooson) touched on a constructive note only in virtually the last sentence of his speech. He gave us his usual knockabout comedy stuff, but that does not help us. It does not help to backtrack, to suggest conceptual arguments or to score party points. It is to no one's shame to say frankly that the water authorities have been shown to produce enormous administrative difficulties and a true lack of accountability. I hope we shall soon have an opportunity to debate such matters. They have been raised over many months, and we have not had a chance to hear the Government's thinking and to explore the views of right hon. and hon. Members.

I shall make what I hope are one or two constructive suggestions. In moving ahead I believe that we need to regard the authorities as nationalised industries in all but name. It follows that we need to consider the problems of accountability in the same light as they have been considered over many sectors of our nationalised industries. In particular, I must point to the difficulty that we face in obtaining information. I am sure that over recent months many hon. Members have experienced grave difficulties in trying to investigate the capital and revenue accounts of the water authorities.

It is true to say that on captial account the representations of many hon. Members have been reflected in the Secretary of State's decision to cut back capital expenditure this year. If we look to revenue account we immediately find grave difficulty in disentangling meaningful figures and getting any real idea, on a year-to-year basis, of a definition of the new life of the authorities. There must be ways in which that form of accounting can be made more open and freely available to all hon. Members.

We must also consider some of the other problems that have come about as a result of the composition of the authorities. I am sure that many hon. Members will have shared the experience of hearing senior officials—this has happened in my authority, the Southern Water Authority—say that the difficulties which they have experienced stem from the basis on which so-called elected representation brings people to the boards who are not in any sense answerable to their electorate. Without in any way making invidious comparisons between individuals we must consider ways in which more accountability will be available at that end of the scale.

Similarly, if we consider the balance between the number of so-called elected representatives and permanent officials and outside persons it is clear that the way in which the balance of the board is constituted needs careful consideration. There should be a more clear-cut majority of elected representatives.

Next, I turn to the debt burden of the authorities. We have a unique opportunity to regard the authorities as nationalised industries. The precedent for writing off capital debt is well established in the nationalised industries. It might be said that it is almost too well established. I would favour, for the new authorities, the writing off of their capital debt and the implementation of a "pay-as-you-go" system. That would enable us to have a more meaningful system of accounting and a far more justifiable set of charges made to the public.

In terms of the relationship between the authorities and the National Water Council it seems that we are still breaking fresh ground. Already there are signs of total wastage within each authority. Matters which could more properly be dealt with by the council are being dealt with at the lower level. There is, for instance, the question of advertising. I am pleased to find that my local water authority has now begun to issue advertisements in which it puts forward the positive arguments that water at 10p a ton is still one of the cheapest purchases and that it does not receive rate support grant as do local authorities. Those are positive arguments, and I can think of no reason for their not being put forward by the National Water Council in acting on behalf of the industry as a whole.

The National Water Council should be part of any thinking that the Government may have about their wider, revised approach to the relationship between, on the one hand, those who pay their charges and, on the other, the Government, with the various individual authorities in the middle.

I turn now to the feeling of consumers about their complete lack of contact with the authorities. I should have thought that this problem was capable of remedy if we could encourage the idea of consumer councils or some local body which could deal with many of the difficulties which come up at this time of year, with flooding, and so on. At present there is no way in which these matters can be resolved. Indeed, the hon. Member for Berwick-upon-Tweed (Mr. Beith) said that local councils are now acting as agents for the water authorities over sewerage, and so on. This is a recipe for difficulty in satisfying the consuming public.

I favour direct billing, because it not only enables the authority to have direct contact with the public; it helps to produce a better relationship and a more efficient basis on which to adjudge charges.

I join those who have complimented the Liberal Party on choosing a subject which has been valuable in allowing some of us to explore matters which we seem all too infrequently to have the chance of exploring. It is not fair to say that this Supply Day has been wrested from us. It is a matter on which the official Opposition have been glad to facilitate the Liberal Party. I believe that the Government might, in turn, show equal willingness in approaching the subject which some of us have mentioned tonight.

8.57 p.m.

I apologise to hon. Members who have not had the good fortune to catch your eye, Mr. Deputy Speaker, but I felt that I ought to intervene now as the record of the previous Government, for which I had part responsibility in this area, has received rather less than wholehearted praise.

I should like to add my congratulations to the hon. and learned Member for Montgomery (Mr. Hooson) and the Liberal Party for choosing this interesting subject for their Supply Day. What we have been discussing since four o'clock is the nature of the society that has developed around us and that will affect our lives for many years.

There have been some interesting and well-informed speeches. I liked the con- tribution by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) who seems to have made the subject of the Civil Service his own in his pamphlet of about six months ago. The contribution by the hon. Member for Lichfield and Tamworth (Mr. Grocott) on the principles of public administration was interesting and thoughtful.

I start with the proposition that we are over-governed. I believe that it was a senator in Texas who, after he had seen and taken in the full scope of the Federal budget of the United States of America, said "Thank God the American people do not get all the government that they pay for." Unfortunately, because our Civil Service is better, more thorough and more scrupulous than that of the United States, we get all the government that we pay for, and a bit more thrown in.

Figures have been bandied about in the debate. There are slightly fewer than 700,000 civil servants and 2,700,000 local authority employees. In the last 10 years the number of local government employees has increased by nearly 800,000—1,900,000 to 2,700,000. There has been an enormous increase in that area of responsibility. This is the evidence of the growth in bureaucracy.

We must ask ourselves why there has been such a growth and why there has been such an enormous increase in the number of local and central government employees. The answer lies in this Chamber. It is our responsibility as Members of Parliament or as members of the Government. There is no problem on which we are approached by our constituents, whether that problem relates to education or help for the disabled, that we feel cannot be solved by some extension of governmental activity. We all as Members of Parliament regularly say that the Government should be doing something about the matter. The fact that we take that attitude means that somewhere in Britain there will be more local government employees or more civil servants.

Each Conservative administration on assuming office has been determined to do less and has ended up by doing more. Each Socialist Government on assuming office has been determined to do a vast amount efficiently and has ended up by doing an even vaster amount inefficiently. One does not know what a Liberal Government would do if it had the opportunity, since the Liberals have not had a chance to do anything since 1915.

The hon. and learned Member for Montgomery, in a waspish speech, made great play with the enormous increase in bureaucracy resulting from local government reform and the reform of the National Health Service. But what would the Liberals do about the problem? They have in their manifesto a proposal to deal with the problem of prices and incomes by the imposition of a tax on inflation. Will the House contemplate the number of civil servants who will be required to implement that proposal? Each wage-earner and salary-earner would have to have his income assessed this year compared with last year, and every increase would have to be examined individually to see whether it was due to promotion, extended responsibility, higher productivity, and so on. Therefore, we should need a new army of evil servants to implement the Liberal proposals.

Does the hon. Gentleman realise that the Liberal proposals suggest an average of company salaries, in other words, that it is the average pay in which we are interested?

Even so, the proposals would mean an enormous increase in the Civil Service to undertake the work on that basis, quite apart from any unfairness that it would cause. If the rôle of government is to be reduced and the size of bureaucracy either at local or central level is to fall, it can be done only by reducing the tasks or functions of government. There is an inbuilt momentum in any bureaucratic system for it to grow.

Some play has been made about the size of the Civil Service. In the period of the last Socialist Government the central Civil Service saw a substantial increase of 50,000 people. That led us to make a rather bold pledge in our 1970 manifesto to cut the size of the Civil Service. It fell to me in 1972 and 1973 to try to implement the pledge. As a result of considerable effort by my Governmental colleagues, we managed to achieve a modest reduction in the size of the Civil Service from the 702,000 civil servants whom we inherited in June 1970 to a figure of 694,000 in January 1974.

I would agree with the important point made by the hon. Member for Cirencester and Tewkesbury that simple head-counting is not appropriate when considering methods of control. That method equates a Permanent Secretary who earns £17,000 with a paper keeper earning £1,500 a year. I believe that we must develop much more sophisticated controls—as suggested by a number of hon. Members—and that there should be control of total resources, in other words, of cash spent in the administration of Government Departments.

The actual cash spent is vast. If one looks at the Estimates before the House at the moment and extracts just those items relating to the pay and pensions of the Civil Service in all the great Departments of State, one finds that it is £2,000 million. The central Departments of State are responsible for about £22,000 million of expenditure, so the cost of administration is nearly 10 per cent. of what is spent. That is an enormous figure and what is surprising is that there is very little effective control of it.

No Select Committee, not even the Public Accounts Committee, nor the Expenditure Committee, deals with that sort of expenditure. They deal with the expenditure of Departments in fulfilling their responsibilities, but they do not examine the entrails of the Departments to see whether that £2,000 million is being spent efficiently. This is a major gap in our systems of control over the administration of our country.

In view of the admirably enlightened concept that the hon. Gentleman has just been expressing of the proper way to consider the extent of Government administration expenditure, can he assure us now on behalf of his party and its Central Office that they will abandon the primitive head-counting propaganda that has always been part of their stock-in-trade?

Policies evolve and I am thinking aloud tonight. I should not wish to commit my right hon. Friend the new leader of my party to being either for or against a head count. My experience is that there has to be proper control of total cash resources. We burke the issue if we believe that that is not the case.

Is the hon. Gentleman aware that the cost of administration as a topic falls into the area of the General Sub-Committee of the Committee on Expenditure and that it is Members of his party who have turned that sub-committee into a discussion of rival schools of economic management?

I am not privileged to be a member of that sub-committee, but if the hon. Gentleman is, I hope that he will draw my wise remarks to its attention.

What else can one do about the efficiency of the Government machine? First, there must be a greater readiness in the Civil Service to adopt new techniques, particularly based on computers. The whole social security system in America is computerised. If a claimant goes into a local office in one of the Southern States, the clerk will type his details on to a computer, and the record, with suitable security checks, will come up immediately. That is infinitely more efficient than the system used by our own hard-pressed social security officers.

I agree entirely with my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) about the need for more accountants in the Civil Service. I am not making an apology for my past, but the situation is not quite as bad as he made out. When we were in office we extended considerably the principle of management accounts in Government service. In the Civil Service Department, the Minister is responsible for the Stationery Office, a great sprawling industrial empire. When I was responsible for it, I appointed a financial director, an accountant from outside, to introduce management accounts so that we could know where we were making or losing money—it was mainly the latter that we measured. I also appointed a marketing director to try to sharpen the cutting edge on the selling side.

There is a great rôle for businessmen in government. We introduced six in 1970 and in some areas they have had considerable success. Sir Derek Rayner reorganised the procurement side of the Ministry of Defence. He has now returned to Marks and Spencer. He introduced a system which, in this year and next, will make substantial savings in public administration—several tens of millions of pounds. So I agree entirely with what my hon. Friend said about the need for this expertise. I hope very much that the head of the accounting organisation that we set in train will shortly be appointed.

I want to return to something I said earlier about my belief that if bureaucracy—or "bureau-cracy", as Sir Gerald Nabarro used to call it—is to be reduced in Britain, we have to look at the functions of government. One of the extraordinary things about the last 100 years is that our Victorian forebears prided themselves on finding cheaper, quicker and more effective ways of doing things. We in this century have spent a great deal of time in finding more expensive, more elaborate, slower and less effective ways of doing things. We want throughout the whole Government machine a much greater spirit of innovation and much more enthusiasm of the sort that our forebears had.

Indeed, if one is thinking of cutting out functions, one of the areas in which one can make the greatest savings is our tax system. I find it extraordinary that we have as many people employed by the British Inland Revenue as are employed by the American inland revenue department, and the Americans have three times the number of taxpayers. How can they do it? They have a system of self-assessment with random checking. But the Inland Revenue in this country believes that we are all potential tax fiddlers and that every little tax return must be checked. That is not an efficient way of doing things.

When we were in office, we intended to introduce a form of negative income tax, the tax credit scheme. I was very much in favour of that for broad political and social reasons and because it would have brought together the social services and the taxation system. But a spin off would have been that it would have saved 15,000 civil servants. We should resist the imposition of new taxes and new systems of government.

On Monday and Tuesday of next week we shall be discussing the Industry Bill, which will set up, among other things, the National Enterprise Board. We shall be creating another great army of civil servants who will be receiving reports from industry, filing them away, very occasionally reading them and, as it were, performing merely a rather useless administrative function.

The right hon. Member for Dartford (Mr. Irving) talked of his enthusiasm for local income taxes, but they are bound to increase the amount of government and the amount of interference in the life of the citizen. Therefore, I am very much of the view that if we are to reduce the rôle of government, we in this House have not always to be finding ways of extending government. We are to blame if the country is over-governed, and no one else.

Two hon. Members touched upon a very much broader and, to my mind, a fascinating issue—the whole question of how one controls the Civil Service. My hon. Friend the Member for Cirencester and Tewkesbury has written on this subject and he mentioned it today. The hon. Member for Lichfield and Tamworth also mentioned it. It is very pertinent now that the Crossman diaries are coming out. Who controls the civil servants and who governs the country? When reading the Crossman diaries I was reminded of something Crossman wrote three years ago, in his Godkin lectures in America, about the relationship between the Civil Services and the Government. He said:
"If we think of the civil servants as marine animals and the politicians as fishermen operating on the surface,"—
that is about the relationship—
"The civil servants know that the boatloads of politicians now anchored above them are certain to be changed within five years. They also know that any idealogical crusade to carry out the mandate will be blunted by failure, electoral unpopularity and sheer exhaustion. So they are prepared to concede quite a lot under the first impact of an election victory, but when that is over the civil servants resume their quiet defence of entrenched departmental positions and policies against political change."
That was Dick Crossman three years ago and when I read it I could not help recalling the little rhyme of Humpty Dumpty in "Through the Looking Glass" when he said:
"I sent a message to the fish,
I told them 'This is what I wish',
The little fishes of the sea,
They sent an answer back to me.
The little fishes' answer was,
'We cannot do it, sir, because."
As I know from my experience as a Minister, that is so often the attitude of the Civil Service, but I do not believe that the Civil Service runs the country. Ministers run the country and if they fail to impose their political will upon their Departments, it is the Ministers who fail, not the Departments.

I turn to the last phrase in the motion which refers to the "growing remoteness from the people". This is in many ways the central theme of tonight's debate. Many people feel that they can have little influence even on the matters closest to their lives and nearest to their homes. The Government not only appear remote, they are remote, and there is a growing divide between the governing and the governed.

This alienation of the citizen has many manifestations. The private householder wakes up one day to find that a motorway is planned to go through his back garden. The person seeking social security benefits meets a very young clerk at the local office. The clerk is probably inadequately trained and the applicant thinks that he is rude and unsympathetic. Anyway, the claimant cannot understand the system because it is all so complicated—I doubt whether any hon. or right hon. Member fully understands the complexity of the social security system.

The belief of ordinary people in Britain that the House is remote and unresponsive to their needs, secretive about its procedures and out of touch with the common man is yet another manifestation. So are the anti-Europeans who fear that the institutions of Europe will promote even greater remoteness. The alienation shows itself in the young married couple who find that the society in which they live makes it almost impossible for them to own their own home. All this leads to the widespread belief that in some way politicians—of any party—and our political institutions are not representing the people.

I do not believe that we should despair with this analysis. Our problem is the problem of a mass electorate that is infinitely better informed and infinitely more politically aware than it has ever been, but it is frustrated by its inability to get its word in edgeways. What should we do?

The first modest step would be to ensure that all those points where ordinary people come into contact with officialdom—the social security office, the employment exchange, the tax office and the housing department of the council—the officials make great efforts to be responsive, understanding and sympathetic. Many people feel that civil servants actually enjoy operating complicated and meaningless controls. The social security offices particularly need humanising along the lines of the housing advice centres. There is a good centre in Lambeth where people are treated as clients, not as one damned awkward case after another.

Secondly, in local government, now that we have large councils, there is in some areas a need for some other representative body. I am reluctant to suggest yet another tier, but there is a need in some areas for neighbourhood councils. If there is a local natural demand for them, the Government should be prepared to meet it. But at a local level I only wish that local councillors could make themselves more available and better known in their areas. I only wish that the deliberations of local councillors were more open and that the councils publicised their plans more prominently. I should like ratepayers each year to get a simple statement of the short-term and long-term projects that their councils will be undertaking.

I started with the proposition that we were over-governed, and the consequence of that could be an almost unstoppable move to bigger and bigger units. Bigness means remoteness; remoteness means unresponsive government; and unresponsive government leads to discontented people. Size, therefore, is crucial.

Some hon. Members will be familiar with Schumacher's book "Small is Beautiful", in which he says something along the following lines. The battle of the future will be between two groups of people. The first consists of those who believe in keeping a crisis away by speaking of breakthroughs: "A breakthrough a day keeps the crisis away". We are all familiar with the politicians on both sides of the House who find this idea an easy refuge. But these breakthroughs almost invariably mean a greater, more instant subjugation of man under the requirements of the system.

The second group, which Schumacher calls the homecomers, brings things back to the human scale, to real human requirements. The homecomers will require more creativity. Any intelligent fool can make things bigger, more complex and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction. I suspect that most of my colleagues are with me in belonging to the second group.

I hope that if the debate is read widely outside the House, people throughout the country will see that we are aware of this remoteness, that as Members of Parliament we are aware of this growing divide. We must try to do something about it.

9.22 p.m.

I thank the hon. Member for St. Marylebone (Mr. Baker) for a very good contribution to the debate. It was good-natured, and the hon. Gentleman took some of the bantering earlier in the right spirit. The hon. Gentleman went a little wide of the mark when speaking of our inflation tax, but I ask him not to come back to me on that, because I do not pretend to understand it either.

I agreed with what the hon. Gentleman said about local councillors. I am winding up the debate for the Liberals because I happen to have been a county councillor for about seven years. For my last year I was chairman of our policy and resources committee. I admit that the county is the smallest in England and Wales, but we had quite a task in dealing with the problem of the changeover in local government. I agree that councillors could give a great deal more assistance to the electors. I am sure that many in some areas give that service, but when I was a county councillor I cannot remember more than about five or six calls a year to me to inquire about this, that and the other. Yet hon. Members are expected to handle everything. When one says "You should see your councillor", people reply "You are an MP. You deal with it. It is your job."

I had the notion of taking the policy and resources committee with me to meet the public and explain the priorities we had decided, to explain how we were spending money to try to bring them much more into the picture. I hope that if this debate is read some of those in power may follow up that useful suggestion.

The debate has been of a high standard. I cannot speak as well as many of those who have taken part, for whose contributions I am grateful. The Government should take careful note of what has been said.

Our words here have not been intended as an attack on local councillors, local government officers or civil servants, but rather as an attack on the system under which they are obliged to operate. I entirely agree with the hon. Member for St. Marylebone that the responsibility for that lies in the House. Since I have been here, in the past year, we have passed legislation, particularly the Control of Pollution Act, which, I am sorry to say, is not being brought into operation for financial reasons. When that Act comes into force it will mean more work for local authorities and more employees.

The cost and quality of public administration are burning issues with ratepayers and taxpayers. If Layfield decides to put the whole cost on to taxpayers I bet that there will be an outcry from them, as there is now from ratepayers, who feel that they are being overcharged for less efficient and more remote services.

I have sympathy for the Government over the present structure of local government in England and Wales. It was not of their seeking. They were landed with the baby. Unless they take immediate steps, however faltering in the first instance, to tackle the problem, they will face this summer a grassroots revolt frightening in its dimensions, the consequences of which hardly bear thinking about.

In its leader on Monday last week, commenting on the devolution debate, The Times got it right when it said:
The order of events in the reform of local government was exactly wrong. First they carved up local areas and distributed functions; now they are looking simultaneously at local finance and parliamentary devolution. They should have looked first at devolution (if any), then at local organisation and finance together. The result of putting the cart before the horse is that in England and Wales new local authorities have started life in a financial mess, lacking power and sufficient responsibility in that department of their affairs; and in Scotland, which is in line for the strongest dose of devolution, a pattern of local government is being laid down that fits ill with a Scottish national assembly.
All of us, certainly those of us on the Liberal bench, say "Amen" to that. Of course Kilbrandon should have come before Redcliffe-Maud.

My hon. and learned Friend the Member for Montgomery (Mr. Hooson) quoted some frightening statistics. I had intended to add some of my own, but I have little time left, so I will confine them to very few. In Nottinghamshire, the Nottingham Evening Post has been drawing attention to some of the goings on in the county since local government reorganisation. Some 1,331 jobs have been added to the authorities in the county at a cost of about £2,700,000 The Local Authorities' Conditions of Service Advisory Board conducted a survey of salaries. It was published last May, and I believe that it has since been updated to August, but I have not the figures for the latter month. The survey showed that the merging of 1,390 separate authorities into 422 larger ones had led to a 4·7 per cent. increase in the number of posts and a 4·5 per cent. increase in salaries. Much has happened since then.

Staffing in local authorities has considerably increased. It is a growth industry. This can be seen if one looks at the advertisements in the national Press. A typical example was in The Times on 31st January. There was an advertisement for a deputy county prosecuting solicitor for Lincolnshire. It is a newly-established post and the salary was given as £5,641, rising to £6,196. An assistant prosecuting solicitor was also wanted. That, too, is a new post. Another advertisement is by the Tyne and Wear County Council for an archaeologist and an assistant archaeologist. The Manpower Services Commission advertised for a Director of Manpower Intelligence and Planning, at a salary of £12,000. The advertisement said:
The Director, now to be appointed, will be responsible for assessing the manpower intelligence, forecasting and planning needs of the Commission; making recommendations as to how these needs may be met and setting up the capability for achieving the agreed objec tives. The latter function will include assisting in the recruitment of necessary staff.
It is true that the total figure for the Civil Service—and here I give credit to the hon. Member for St. Marylebone—has shown a slight drop. The total of 690,000 had risen to 695,000, but during his period of office it fell to 687,000, but I fear the worst when next year's figures are published.

On October 10th the Sunday Times surveyed the percentage increases in non-industrial jobs in various countries between 1962 and 1973. The total number in non-industrial jobs in Japan was 7 per cent. of the population, in Italy 7½ per cent., in West Germany 8 per cent., in France 15 per cent., in the United States 19 per cent. and in the United Kingdom 29 per cent. In 1962 in the United Kingdom there were 11,749,000 industrial jobs and 11,537,000 non-industrial jobs. In 1973 there were 9,991,000 industrial jobs and 12,747,000 non-industrial jobs.

In his Financial Times "Case Study of the Exploding Costs of Local Government" Joe Rogaly said:
"Local government in England and Wales is a mechanism that re-distributes income in the most glaring display of public inefficiency since the Americans started to pay their farmers not to grow corn."
The Chancellor rightly tell us that unless we modify present wage increases we shall go bankrupt. Some of us have been saying that for a long time. At long last the right hon. Gentleman is saying it.

The first thing to do is to put a check on further recruitment in national and local government. There should be the immediate review for which we call. Today the loan debt of local authorities stands at nearly £21,000 million. It is costing £1,880 million per annum to service this debt. I agree with the hon. Member for Arundel (Mr. Marshall) that some of this will have to be written off. This has happened so often with nationalised industries. It is a crippling burden which it is impossible for them to carry.

We know that it is the Government's view that further reorganisation, following upon the traumatic upheavals in local government, which I went through along with other hon. Members who have had local government experience, would only worsen matters. We must have due regard for that view, but I suggest that it cannot be avoided if the voice of the people is to be heard on such bodies as regional water and hospital authorities.

Many hon. Members have spoken about this with greater knowledge than I possess. Like the hon. Member for Arundel I constantly receive complaints about the way in which representatives of local authorities, particularly those serving on water boards, are being outvoted by those who have been directly appointed to these bodies. In my area the Southern Water Authority has made a sudden decision to equalise charges. This is a burning issue because it was understood that this was to be phased over six or seven years.

We on the Liberal benches believe in the necessity of directly-elected regional assemblies in England, with independent revenue raising powers, under whose umbrella these sorts of bodies would operate. Having read the whole of the debate on devolution which took place on Monday and Tuesday I recommend to the Minister the advice given him by his hon. Friend the Member for South Shields (Mr. Blenkinsop). The hon. Member is not present but I told him that I would be referring to his speech. His was a sensible solution, which dealt with how we might make a start in the North-East.

As we see it, the county will ultimately have to go. The districts will become all-purpose authorities, and a new structure will be brought in at grassroots level by expanding the rôle of the parishes. Many small towns could have opted to have town council status but did not do so. The rôle of the parish must be extended into urban areas and they must be given increased powers. I endorse the evidence which the Minister will recently have received from the National Association of Local Councils which, I understand, also sent a preliminary draft for a clause to amend the Local Government Act 1972. Till these measures can be introduced it is desperately important that counties and districts should establish the closest contact. Liaison committees should be compulsory in an effort to avoid duplication.

Planning is a typical example of this. I draw to the attention of the Minister the views of Professor James, former Chief Planner at the Old Ministry of Housing and now Professor of Planning at Sheffield University. In a paper delivered to the Town and County Planning Association in December he concluded that the present division of planning powers was hopelessly wrong. He said that till it was rectified there would be a waste of money and of skilled manpower, and increasing frustration. He called for the withdrawal of planning functions from the counties at the earliest moment. It is his view that planning should be administered at regional and district level. In my constituency we have set up an area planning organisation serving the county and two districts. We did not break up our original planning team. This is a practice which could be applied in other parts of the country.

There should be greater freedom in transferability of jobs between authorities. Let us have another look at our attitude to work study. I know that this is a problem tied in with wage structures. It seems to have finished up with about two or three blokes on the job and extra staff in county hall who are getting far more money than the men whom they replace. There is room for looking at that again.

In the debate we have expressed the view, now widely held throughout the country, that the present structure of local government is a disaster. We have had the structure for a year, so we have had sufficient experience of it. People of all political persuasions are becoming increasingly restless.

Any review that is undertaken must ask these questions. Are the services provided efficient in relation to costs? Is it possible for greater productivity to be achieved? Should the standards in some services be cut? Should some services be discontinued? Are the management structures established by Bains and so faithfully followed by almost all authorities working out as well as was originally envisaged?

I have tried to outline some preliminary steps which the Government should take now. In our present economic situation, and in view of the rightful indignation of ratepayers and taxpayers, far more drastic action is needed. I do not pretend that it will be easy, but it will be catastropic if we sit back and do nothing.

9.35 p.m.

The quality and cost of administration, whether at national and local government or at National Health Service level, is a matter of crucial concern, particularly to a Labour administration committed to policies designed to enlarge the area of State provision. Therefore, I welcome this opportunity to speak in this debate, concerned as it is with the contribution made by civil servants, local government officers and public servants in their endeavours to administer and implement legislation enacted by the House.

The motion refers to the deteriorating quality of public administration and comes to the hardly original conclusion that national and local government and the National Health Service should be subject to yet another immediate review. What a splendid phrase it is—"an immediate review". It is almost as if those whose names are appended to the motion were completely unaware that what national and local administration is suffering from is a surfeit of reviews and reorganisations.

Impressive contributions to the debate have been made by hon. Members on both sides of the House. I was particularly taken with the contribution of my hon. Friend the Member for Norwich, South (Mr. Garrett) who referred to the work of the Fulton Committee, to which he made a significant contribution. I have carefully noted what he said about unified grading and the Oxbridge recruiting policy which obtained at one time in the Civil Service. I was equally impressed by the speeches made by the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) who made a thoughtful contribution, and the hon. Member for Isle of Wight (Mr. Ross) which was characteristically modest.

The debate, however, has not been without its quixotic features. A challenge has been mounted by the Liberal Party—a party which, on the evidence of recent General Elections, is not likely to be entrusted by the British people with responsibility for public administration, and interventions have been made by Tory ex-Ministers and hon. Members who bear a heavy and direct responsibility for those features of public administration which seem to be the main basis of concern.

The motion lumps together the whole vast field of public administration as though all the problems were the same and needed the same kind of attention. It goes on to suggest as particularly pressing candidates for review local government and the health service. These services are still reeling from the effects of the reorganisation initiated by the previous Conservative Government. The motion commits the ultimate in double-think by complaining about both increasing costs and growing remoteness from the people. I am the last to be complacent about either of those problems, to which several hon. Members referred.

To assume that one can solve remoteness from the people on the cheap without incurring increased costs is to live in a world of make-believe. Those who have been involved in tackling this problem know that increasing participation and involvement is costly in time and money. It is an essential area for us to concentrate on, but it is not an area where we can hope for cost reduction.

Anyone can find, in the broad fields of public administration, cases of inefficiency and shortcomings. It would be ridiculous to assert that they do not exist. Indeed, they have always existed. Accusations are particularly easy to level at local services at this time because, for two separate reasons, they are going through a period of exceptional strain. I refer to reorganisation and inflation.

Less than 12 months ago there occurred in England and Wales the biggest single upheaval in local administration that has ever been adopted in a single operation. Local government, the National Health Service and the water industry were all reorganised. The form of the changes was decided by our predecessors. The present Government were opposed to many of the features of the new systems, and we take no responsibility for the result.

But we accept that, these reorganisations having taken place, it would be naïve to expect the new authorities to be other than still in a state of relative change at this stage in their existence. Indeed, no matter what shape the reorganisation had taken, a period of some years would have been necessary before the new systems settled down.

The motion says that the cost of local government services is increasing. That is true. People are paying more pound notes from their pockets in rates, but it is absurd to blame local authorities for all of this increase. By far and away the major element is inflation.

Where there are increases in real expenditure, these arise in endeavouring to meet the demand for better services which we all want. We are getting more teachers per child in the schools, and better social services, and those who talk about the increased cost of local government should go out and meet their constituents in their own homes. They should meet the elderly people who are being catered for by meals on wheels, extra-domiciliary services, and so on, which are provided on a far larger scale than ever before.

Will the hon. Gentleman explain how an assistant archaeologist, or an assistant prosecuting solicitor, delivers meals on wheels?

One can make amusing interventions. I was referring to the social services. If the hon. Gentleman cannot tell the difference between social services and archaeology, perhaps I can help him when the debate is over.

Does the hon. Gentleman agree that if the same number of meals on wheels, and the same number of domiciliary visits are being made and organised by a staff that is twice as large as before reorganisation there appears to be some cause for concern, even to him?

I pay serious attention to the point made by the right hon. Gentleman. Let him identify the authorities where he alleges that situation exists. It is all very well making generalised comments. If the right hon. Gentleman will provide me with detailed information, I shall be happy to examine it.

If I may continue, I accept that it is, unfortunately, essential in the present economic conditions to reduce the rate of growth of public expenditure. Following the recent rate support grant settlement, we have sent a circular to local authorities explaining in considerable detail how they should go about this and I am sure they will respond, however unwilling they may be to see some of their hopes frustrated.

A number of hon. Members referred to the Layfield Committee. As is well known, this committee was established by my right hon. Friend the Secretary of State for the Environment, and it will deal with local authority finance in its broadest context including, of course, the way in which local authorities spend money and the controls that there should be upon them.

Much play has been made with allegations of overstaffing and duplication and of the creation of top posts with high salaries in local government. I listened particularly to the hon. and learned Member for Montgomery (Mr. Hooson), who suggested that public administration in certain localities was overloaded with staff. Give us the details and we shall examine them. I share the concern expressed and I assure the House that such allegations are a matter of concern to the Government. I should perhaps explain that staff numbers have increased to meet the demand for a wider range of local government services. But central Government and local government have now agreed that there should be no increases next year in their present staff numbers beyond the small amount needed for inescapable commitments.

On salaries, the Government have put a proposal to the local authority associations and to other relevant bodies that certain top salaries in local government, in the water industry and the National Health Service, should be reviewed by an ad hoc independent committee under the chairmanship of Lord Boyle. Reorganisation inevitably means fewer and larger executive local authorities. All schemes of reorganisation have pointed in this direction, including the proposals put to the Redcliffe-Maud Royal Commission by the Liberal Party. To that extent, local government has become more remote and those who, like the Liberal Party, favour regional or provincial authorities are advocating authorities more remote than any we have today.

What we need to concentrate on is action to strengthen the links between the citizen and the local government system—for example, through the Government's proposals for neighbourhood councils, greater public participation in the planning process and other practical steps of this kind.

I turn to the question of the National Health Service. I was impressed by the perceptive comments of my right hon. Friend the Member for Dartford (Mr. Irving). I carefully noted what he said. It should be remembered however that all the major parties were agreed that reorganisation of the National Health Service was right and timely and that unification of the former tripartite structure of the health service was the right solution. The reorganisation was primarily concerned with administration, though the underlying aim was to provide a better service more responsive to the needs of individuals.

The reorganisation has meant fewer health authorities in England—a reduction from over 600 separate authorities to just over 100. I would have thought that that was a welcome simplification for the public and it has provided better co-ordination with the personal social services. The Government are determined that the area health authorities should be given real responsibility and freedom to get on with the job with the minimum of interference from above. That means being free within the resources available and the broad framework of established policies to respond to what people locally want.

When in opposition, however, we criticised the provisions in the reorganisation Bill governing the constitution and membership of the health authorities as being too bureaucratic and insensitive to local opinion.

I suggest that the hon. Gentleman waits until I deal with his speech when it will be demonstrably clear that no bureaucracy has written my speech.

The Parliamentary Labour Party, when in Opposition, criticised the provisions in the National Health Service reorganisaton Bill governing the constitution and membership of the health authorities as too bureaucratic and insensitive to local opinion. It was too late to change these arrangements when we came into office but we published last year a discussion paper setting out ways of making the present health authorities more democratic in their membership, and of strengthening the voice of the local community in the management of the services. Specific provision has, of course, been made within the reorganised service for local people to make known their views on the provision of health services in each health district through the community health councils. When in opposition we criticised the Tory proposals in the reorganisation Bill and were able to get them considerably strengthened. Since coming to office we have taken a series of decisions, all aimed at making the councils into more effective voices for the local users of health services. These councils will, we believe, form a real and effective bridge between management and consumers and further strengthen the local voice in the planning and management of health services.

I have already referred to our proposal that salary levels for the new management posts should be—and will be, I hope—referred to an ad hoc independent committee under Lord Boyle. We shall—as we said on taking office last year—keep the working of the reorganised service under continuing review. But a decision now for any root and branch review of NHS administration within 12 months of a major reorganisation cannot be justified.

I believe that reasonable opinion in the country recognises the exceptional problems facing local authorities and health authorities today caused by the aftermath of reorganisation and by the pressures of inflation. We may not agree with the shape of the reorganisation—certainly the Government do not support all the changes made by their predecessors. But we accept that reorganisation has taken place. The staff of local government and the Health Service deserve credit for their unremitting work in carrying through the reoganisation, while ensuing that services are maintained. What is now needed is a period during which members and officers can get the new systems working without the uncertainty of further imminent upheaval.

Perhaps I may now turn to central Government administration. Parliament has always paid critical attention to the size of the Civil Service and I do not complain about this. But it is also right that due regard should be paid to the magnitude of the tasks civil servants are asked to perform.

The Civil Service is an easy target for ill-informed and carping criticism, by those who do not bother too much about the facts. But let us look at some of the facts. The motion refers to the rising cost of administration. In fact only one-fifth of public sector manpower is in the Civil Service, and I am not counting the nationalised industries—hardly, I suggest, evidence of a bloated bureaucracy. Nor is the Civil Service populated by the mandarins that the journalists would have us believe. I am sorry to obscure the judgment of some of the pundits with more facts, but the facts speak for themselves.

I have noted the plea that the hon. Member for Hertfordshire, South West made for more professionally qualified accountants within the public administration. I thought that he advanced an informed and amusing plea. I have carefully noted it.

It should be recalled that in the civil departments of the public administration only 12 per cent. of the staff are engaged on central administration such as advising on policy and providing personnel and finance services.

The motion calls for an immediate review of public administration. The Civil Service underwent a major review not many years ago, under the chairmanship of Lord Fulton. The Fulton Committee made a number of recommendations designed to improve the quality of management and administration in the Civil Service. What we need now is not a further review and further reorganisation but the careful and continuing monitoring of performance, a readiness to adapt to changing circumstances and needs, the constant seeking after greater efficiency and greater responsiveness.

Within the Civil Service there is a constant search for new methods of organising work and applying new techniques. Apart from the staff inspection machinery procedures I have mentioned, both the CSD and other departments have powerful management services units. Indeed the Civil Service can justly claim to be in the forefront of thinking about improved methods of working, especially in such areas as computers and opera tional research. The Civil Service is also ready to seek outside skills and expertise where this is necessary. In the last seven years there have been some 300 consultancy assignments over a wide range of Civil Service work. The stereotype of the pin-striped tea drinker who has only recently exchanged his quill for a fountain pen could not be further from the truth.

Hon. Members on both sides of the House are rightly concerned with the quality of administration and its responsiveness to those whom it serves. These are matters about which no Government can be complacent. Nor can they be dealt with by some all-embracing review. We need to look at each of the services that the Government provide to consider how best they can respond.

As a Government, we are anxious to humanise public administration and to ensure that it responds more effectively and sympathetically to the needs of modern day society. Of course, we need to do more, and several honourable Members who have spoken in this debate have mentioned their particular concerns. But the debate has demonstrated clearly that there is no panacea to be sought in a grandiose and fanciful all-purpose review of public administration as a whole.

Dustbin politics are no substitute for genuine concern—concern that the individual should find public agencies helpful and accessible as in the new job centres of the Employment Services Agency, and concern that people should understand their rights and be able to obtain them, as in the Government's emphasis on helping the consumer. None of us can be complacent about the overall standard of administration or relax in our efforts to look for improvements in quality and efficiency.

Naturally, I want to deal with the criticisms made in the speech of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I hope that I shall be forgiven if I single out the hon. Gentleman's contribution. I do so because the hon. Member for St. Marylebone (Mr. Baker) seemed to approve of his hon. Friend's speech in this regard.

The hon. Member for Cirencester and Tewkesbury has not only spoken in this debate. He wrote a very illuminating piece in the Daily Telegraph Supplement only a matter of days ago on the same subject. The hon. Member for St. Marylebone suggested that the hon. Gentleman was a authority on the Civil Service, having written a pamphlet about it some six weeks ago. However, in his article, the hon. Member for Cirencester and Tewkesbury trotted out his old hobby horses about the Civil Service being too big, too little accountable and too irresponsible. But how can he expect his allegations to be taken seriously when he refers to "our 800,000 bureaucrats" in the Civil Service? Surely an hon. Member who is interested in official statistics knows that there have not been as many as 800,000 civil servants since the day his mother tore up his ration book to light the fire in the parlour.

The hon. Gentleman went on to say that what was needed was a huge cut in the number of public servants. Later, he moved into the world of fantasy by suggesting that there must be an outside axeman charged with going into each of the corridors of Whitehall and cutting the numbers down to size. It was all blood curdling stuff. He might at some time consider including it in a future Tory policy statement under the heading, "Bring Back the Mad Axeman of Tewkesbury" but such ideas have little relevance for the real world of public administration. It is a fact that our civil and public servants make a real and positive contribution to community life and to our national welfare and well-being. I hope that on occasions more hon. Members on both sides of the House will recognise the real contribution that is made by such people in endeavouring to do a worthwhile job—

It being Ten o'clock, the debate stood adjourned.

Business Of The House

Ordered,

That the Motion relating to Building and Buildings (S.I., 1974, No. 1944) may be pro-ceded with at this day's sitting, though opposed, until half-past Eleven o'clock.—[Mr. Dunn.]

Building Regulations

10.1 p.m.

I beg to move,

That this House takes note of the Building (Second Amendment) Regulations 1974 (S.I., 1974, No. 1944), dated 22nd November 1974, a copy of which was laid before this House on 9th December.
Our object is to debate insulation, hence the Prayer that has been tabled in the name of myself and my hon. Friends to annul the Building (Second Amendment) Regulations 1974. For the benefit of the Under-Secretary of State, Part F is the only section with which we are concerned.

It is only fair that I say immediately that we support any move to conserve energy. I note that the Minister is slinking down in his seat. He is obviously conserving his energy. If we reduce our import bill that will give us all cause for satisfaction. Our concern is that the Government, in presenting these regulations, have muffed a great opportunity to do considerably more. There is always the hope that my hon. Friends—and there are not many of us present—

The Minister should not get too worked up about that Not many of his hon. Friends are sitting behind him.

We are hopeful that there will be a change of heart. It is a staggering thought that 40 per cent of the United Kingdom's energy requirement is devoted to home heating and that 70 per cent is immediately wasted. Perhaps I need not mention such things as draughty windows, walls and roofs. They apply in Manchester just as much as in Shipley and Bradford.

If the matter is as important as the hon. Gentleman states, why was it not done during the Conservative Government's four years?

Government Whips should be silent. I cannot put up with that sort of opposition. This is a matter that should have been tackled many years ago. We must share some of the blame. The fact that the energy crisis is now with us makes it more imperative than ever that more action should be taken. It does not need much action to reduce the wastage from 70 per cent to 25 per cent. It is incredible that we are the only developed nation in Europe that allows naked cavity wall construction to continue. Immediately 35 per cent of heating is lost.

I am sure that all hon. Members are aware that the in-filling of cavity walls would immediately rectify that heat loss. What is proposed in the regulations is to perpetuate a situation that has continued for far too long. The Minister and his hon. Friend the Minister for Housing and Construction have written to a number of my hon. Friends instancing the cost. Of course, there is an extra cost involved, but we are talking about a maximum of £150. That seems to be a reasonable sum and not an intolerable burden if in the process the nation can save hundreds of millions of pounds.

Is it not a fact that many people, including elderly people living in older units of accommodation, are finding it impossible to heat their homes as they would wish? Under this Government the situation will get worse. The improvements which we suggest mean that every new house and all houses that are modernised will come up to the standard that I have mentioned, and that within three to five years the extra cost will have been saved. I find it hard to believe that there can be any disagreement on this objective. But how do we set about it?

The Government have made a serious error in opting for a figure of 1·0 as the thermal transfer coefficient or U value. Those of us who have been involved in the building industry could understand the old figure of 1·7, because that was derived from the old British thermal unit. I believe that the old figure was 0·3, and it recognised a certain standard which had to be worked to for cavity brick walls. Improvements had to be made. But why do the Government come forward with a regulation of 1·0?

The Minister is never reluctant in coming forward. The hon. Gentleman gives various explanations for his actions and I hope that he will enlighten us on how this figure was arrived at. Was it selected as the half-way stage between 1·7 and 0·6? If my arithmetic is not at fault, it is near enough the half-way stage. By doing that the Government will give the nation the worst of all worlds. They will cause the maximum disruption to an important sector of the building industry and will not achieve the energy savings which are necessary in the national interest.

Who wants this magical figure of 1·0? I shall be interested to find out. Who are the faceless people—I presume they are in the Department of the Environment—who settled on it? It was certainly not the industry.

The Minister for Housing and Construction claimed that most of the bodies consulted—I believe the figure was 190, but I am not sure that they all duly reported—were in favour of the proposal. Who are these people? There can be no more than 20 interests involved in the industry. Indeed, it is suggested to me that the number could be fewer than 10. The views of the people who are in day-to-day involvement in the industry and make their livelihoods in it have more right to be listened to than the other 170 bodies which were presumably circulated.

I was fascinated to learn that among the bodies consulted on the matter of insulation, which is a fairly technical subject, were the British Theatre Technicians, the British Pest Control Association, the National Association of Lift Makers, the Youth Hostels Association, the National Federation of Master Steeplejacks and the Lightning Conductor Engineers. No doubt they are important bodies, but for the Minister to say that of the people consulted the majority were in favour is a little dishonest. I believe that he should have placed more weight on the views of those organisations which depend for their livelihoods on the right decision being taken. I suspect that when those bodies were consulted they ex pressed the view that, whatever they said, energy savings would be the result and therefore they must be in favour of this move from 1·7 to 1·0. But we submit that it does not go far enough.

The people who are not satisfied are those who manufacture bricks and blocks apart from the three firms which have a vested interest in settling for 1·0, which immediately gets rid of 75 per cent. of those firms who have the market at the moment. Those three firms will be happy to corner that market. However, that is not what the debate should be about. The brickmakers have only 10 per cent. of the market. I am talking of interior walls. The regulations are law now and they will have to conform to them. However, we hope that our parliamentary system is such that the Minister will be swayed not just by my powers of oratory but by one or two proposals which have been presented to him in the meantime.

The brickmakers say that if they have to conform to the figure of 1·0, it will result in 5,000 redundancies. One can well understand what this will mean for the aggregate block manufacturers who have 75 per cent. of the market. I do not know what will be the figure of redundancies in that industry but it could be considerable. I submit that all this difficulty could have been avoided if action had been taken to remedy the hardship.

The joke is that the industry is advocating higher standards. Why should we in Parliament object to a vested interest demanding higher standards? Too often in this House we compromise to mitigate hardship. But here we have an industry that wants to go further than the Government's regulations.

I find it difficult to accept the argument advanced in a recent Adjournment debate and in recent correspondence that if the standard of 1·0 is maintained hundreds of small firms will face the need to re-equip. Many firms have not the capital. Firms in the industries covered by these provisions face liquidity problems, as do most other industries at present. The depressed state of the building industry should make us hesitate to take any action which will put firms in an even more parlous state. At best, the firms are working at far below capacity. We need to see that their confidence is restored. Even the Secretary of State for Industry—and I am sorry that he is not present for this debate—avaricious though he may be, is hardly likely to enter this arena and take over a number of small firms because that activity does not have the appeal possessed by other sectors of industry.

The tragedy is that by opting for this figure the Government are making a considerable blunder. If the Government were to go for a figure of 0·6, there would be no disruption in the industry; the firms could continue to manufacture the same product. The industry is supported by the union and by the lightweight concrete block makers and all want a figure of 0·6. They believe that ultimately we shall arrive at that figure anyway and all that is needed to arrive at a figure of 0·6 is for insulation material to be filled into the cavity between outer and inner walls.

On 9th December the Minister wrote to my hon. Friend the Member for Chelsea (Mr. Scott) in the following terms:
"We have carefully considered the practicability of going to a very much higher standard. We are however … far from certain whether the insulating materials industry for existing houses and other types of building would be able to handle the much higher demand, which would also involve the development of new materials, skills and techniques. We would either have to accept a long delay until we were sure the insulating materials industry could cope, or accept a grave risk of supply shortages and rising costs."
I must challenge that statement—indeed, I go further and say that it is entirely wrong. The materials involved—foam-filling, fibre-glass or dry-rot walling—are produced by such "small" companies as Shell, ICI, Monsanto, and Pilkington. These are firms who could not cope with the increased demand since they do not have the resources! What nonsense! I have been told categorically that there can be no question of any shortage, that if 0·6 is accepted they could easily cope with the upsurge of demand, which can easily be ascertained. It is wrong of the Minister to give as his reason for not moving to 0·6 the shortage of these materials.

The Structural Insulation Association, which I gather is the leader in its field, confirms that it, too, has made inquiries and has reached the same conclusion as I have. Therefore, someone in the Ministry is mis-informed. Perhaps the Under-Secretary will explain how this has come about. The argument against moving to higher standards on that basis is therefore demolished.

Let me move on to the Under-Secretary. In an Adjournment debate on 4th February, he said:
"We are satisfied that these new standards can be achieved with no significant increase in the capital cost of new housing and without shortages of insulating or structural materials.
We are by no means convinced, however, that this would be the case if we were to lay down an even higher standard at the present time. Apart from the obvious undesirability of adding further to the cost of new housing, we are uncertain whether the necessary skills and techniques required to achieve a higher standard are yet sufficiently developed. This applies not only to the manufacture of materials but to the skills and techniques employed on the building site itself.
We also need to consider very carefully the possible side effects of going to standards of which there has not hitherto been any widespread experience in this country. We are, for example, examining the problem of interstitial condensation which I understand to be the undesirable development of condensation within the structure of highly insulated walls."—[Official Report, 4th February, 1975; Vol. 885, c. 1342–3.]
The side effects of the shortage of men to carry out this work and uncertainty about whether the necessary skills and techniques exist are also eyewash. We are not talking about men who need years of experience in the computer industry or about sophisticated skilled engineers. This is a simple process of blowing in material to fill a cavity. I know, again from inquiries that I have made, that there is no difficulty in recruiting men. A number of first-class companies already operate this service.

What about the side-effects of condensation? The Under-Secretary says, of course, that he needs more time. This is a favourite ploy of Governments, of whatever party. More time for what? Perhaps the hon. Gentleman will tell his experts that instead of doing research that has already been done, they should send one or two of their number to the western seaboard of Europe, to Norway, Sweden, Denmark and other countries where the climatic conditions are similar to ours, where they have been using this infilling for decades and where they have had no problems of condensation in working to 0·6. This, again, is an excuse for not going the whole hog and accepting that the needs of this nation are now such that any move to conserve energy must be given the fullest priority.

I trust that the Minister accepts that our motive in tabling the Prayer is not to vote against the regulations. We want only to draw his attention to the fact that he has made a mistake and that, in the national interest, in the interests of the home owner or council tenant and the interests of the industry, he needs to go further. The Government's proposal to move to 1·0 will save about 8 per cent. of our total energy bill. By moving very quickly to what we suggest, 0·6—we shall give the Minister all help to facilitate that, about which he will be relieved—the saving in the energy bill would be 20 per cent.

As a nation we must become totally committed to the conservation of energy. There is no more fruitful area for savings to be made than that which we are debating. I trust that the Government will take heed of what has been said, because any further delay will be unforgiveable.

10.20 p.m.

It might be for the convenience of the House if I intervene early in the debate in order to set out a number of facts relevant to these regulations. I shall be ready, with the leave of the House, to respond to the debate if there are points which require answer afterwards.

Listening to the hon. Member for Shipley (Mr. Fox), I was not quite sure whether he was the bright dawn of the new régime or the last fizzling spark of the old one. Certainly he seemed to be taking on the guise of his right hon. Friend the new Leader of the Opposition in wishing to dissociate himself from the activities of his own Government, since, as I shall illustrate, his vehement attack was directed against decisions made by his right hon. and learned Friend the Member for Hexham (Mr. Rippon), his hon. Friend the Member for Southend, West (Mr. Channon) and his hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre).

Will the Minister confirm that early in my speech I said that action should have been taken in this respect long before the energy crisis came upon us?

Yes, I accept that, of course. But it is necessary to make it clear to the House that by making statements of that kind, which we are getting in showers from the Opposition Front Bench, the Opposition cannot pretend that the period from June 1970 to February 1974 never existed. Right hon. and hon. Members of the Opposition held office in the Department of the Environment and made decisions, and those decisions have had repercussions. The hon. Gentleman cannot pretend that that did not happen just by saying that he wishes that other things had been done during that period.

This is the third occasion in four months that the House has debated this important subject. There was the interesting Adjournment debate of the hon. Member for Sevenoaks (Sir J. Rodgers), the Adjournment debate of my hon. Friend the Member for Redcar (Mr. Tinn) a few days ago, and now this Prayer—which I am very happy we are debating even though it is, unfortunately, a little out of time now.

Building regulations are usually taken for granted, which is perhaps a tribute to the way they are written, the way they are observed by designers and builders, and the way they are enforced by local authorities. But they are important, and with the new powers in Part III of the Health and Safety at Work etc. Act to make building regulations for a wider range of purposes, this importance will increase. In particular, building regulations will have a part to play in ensuring that new buildings will provide a decent standard of comfort without using a lot of expensive fuel. Energy conservation, as the hon. Gentleman pointed out fairly, and thermal insulation must be in all our minds. I therefore make no apology if I repeat what I have said before, and if what I say tonight bears the same resemblance to what I said last week as the books of Chronicles bear to the books of Kings.

The second amendment to the Building Regulations deals with matters of considerable technical complexity. Yet I can understand why hon. Members want to have them examined in debate because they bear on questions of much public interest and importance. The part of the amendment which deals with thermal insulation of dwellings—and which completely rewrites the existing regulations on the subject, as the hon. Gentleman said—is of special interest in the context of the present dramatic increase in the fuel prices. I understand, as the hon. Gentleman indicated, that those hon. Members who put down the Prayer against the order are all concerned especially with this part of the amendment. To judge from the weight of correspondence with the Department in recent weeks—indeed, in recent months—it is also the concern of many other hon. Members.

May I take this opportunity to explain that it has not been possible to send detailed replies to all who have written to us. I intend, therefore, to devote my opening remarks to the subject of thermal insulation in the belief that this is what hon. Members will want to discuss, though I gather from the hon. Member for Melton (Mr. Latham) that he intends to cause us some inconvenience by raising other subjects.

The amendment includes, however, a number of other important measures. The three most important of these are: first, the revision of the "deemed-to-satisfy" provisions for structural work of concrete in order to take account of the limit states design method. This is embodied in a code of practice issued on the subject by the British Standards Institution and work designed in accordance with this code—CP 110—will be "deemed-to-satisfy" the mandatory requirements.

Second, the "deemed-to-satisfy" provisions for structural work of timber have been revised to take account of a new system of grading timber, known as stress-grading. Stress-grading enables the right timber to be selected, thus leading to economies in use.

Third, "deemed-to-satisfy" provisions which relate to the use of high-alumina cement concrete for structural use have been withdrawn so that local authorities can reject plans which show that high alumina cement concrete is to be used structurally.

I will content myself for the present with the broad statement of the existence of these measures. If hon. Members do raise any points about them, however, I hope there will be time in my concluding remarks to answer them.

I will turn, then, to the new Part F, which revises the requirements for the provision of thermal insulation in dwellings. This part of the regulations has been entirely re-written. It lays down higher standards of insulation for external walls, floors and roofs and for the first time specifies a method of taking account of the effect of window openings on the insulating efficiency of perimeter walls.

To judge from the letters we have received, and from the debate on the subject on the Adjournment initiated by the hon. Member for Sevenoaks last November, there is concern about our proposals on one broad issue and on one particular provision. At this stage I hope the House will forgive me if I once again place on the record comments which I have made previously to a more restricted audience.

The broad issue is whether, in the context of the growing need to conserve fuel, our amendment goes far enough. It is said that our standards have been the lowest in Europe, including Scotland which has its own separate building regulations, and that we should take the earliest opportunity of remedying this obvious deficiency.

I do not think there is any great profit in the comparative study of European standards. For one thing, our own proposed revision will undoubtedly be the precursor of changes elsewhere. It is, in any case, very difficult to make valid comparisons, given the diversity of standards between, and, in some cases, within, European countries. This diversity applies not only to the requirements themselves but in their application and enforcement.

I will limit myself to saying that, although it seems likely that, in recent times, no country in Europe has had standards lower than ours, we have now increased our standards, even if not to the levels which are appropriate to the much colder winters of Scandinavia.

I was somewhat astonished to hear the hon. Member for Shipley say that the climate in Norway, Sweden and Denmark was similar to ours. I have been in Copenhagen in March when the sea has frozen over. That is not uncommon there, but it does not often happen off Flam-borough Head.

As the House has been told by my right hon. Friend the Secretary of State for Energy, we have agreed to take part in work which the European Commission proposes to undertake on fuel conservation in buildings. This will include all building types, not merely dwellings, and all methods of conservation, not merely insulation.

Part of the answer to the criticism that we have not gone far enough lies in the statutory powers under which the amendment was made. Under the Public Health Acts we can make regulations solely in the interests of public health and safety, and it is under these powers that the second amendment has been made. Our object was to reduce condensation in dwellings, several years' of study having shown that thermal insulation can play a significant part in doing this. Moreover, unlike the other factors involved, such as heating and ventilation levels, thermal insulation can be controlled by building regulations.

Nevertheless, the new regulations will make a significant contribution to fuel economy. We are, roughly speaking, doubling the amount of insulation required. To take a fairly simple example, the amount of insulating quilt to be inserted in a roof will have to be increased from 25 mm. to 50 mm.

The hon. Gentleman did me the courtesy of quoting a fairly long passage from the speech I made in response to my hon. Friend the Member for Redcar (Mr. Tinn). I shall repeat those words, because they are relevant to the subject we are discussing. We are satisfied that these new standards can be achieved with no significant increase in the capital cost of the new housing, and without shortages of insulating or structural materials. But we are by no means convinced that this would be the case if we were to lay down even higher standards at present.

Is the hon. Gentleman in a position to confirm or deny reports which have appeared in the trade Press that Ministers take the view that the new measures will add £35 to the construction cost of a new house?

I should not like to reply immediately, because I have not seen the reports. I shall look into the matter before answering the hon. Gentleman.

Apart from the obvious undesirability of adding further to the cost of new housing, we are uncertain whether the necessary skills and techniques required to achieve a higher standard are yet sufficiently developed. This applies not only to the manufacture of materials but to the skills and techniques employed on the building site itself. We also need to consider very carefully the possible side effects of going to standards of which there has not hitherto been any widespread experience in this country.

That is the important matter, because, despite what the hon. Member for Shipley says; climatic and other conditions vary considerably. We are, for example, examining the problem of interstitial condensation. The House will be aware that under the Health and Safety at Work etc. Act, which became law in July last year, we shall have express power to make building regulations in the interests of conserving fuel. The regulations before us are to do with condensation, and any fuel savings are incidental. We have no status to do otherwise.

We have in hand an urgent study, which we hope to complete in the next few weeks, of possibilities for fuel conservation in buildings of all kinds. Our object is to identify the types of building, the technical means most likely to produce savings and the feasibility of achieving them. This involves taking into account the likely pattern of national energy supply over a considerable period. It also means considering action for both the short term and the long term.

I stress again that the possibilities include not only thermal insulation in its various forms but other possibilities which might lead to equal or greater savings. I cannot yet forecast the extent to which housing will be identified as requiring priority over other building types, or whether further increases in thermal insulation standards are likely to give greater immediate benefit than improvements in, say, the control of ventilating or heating systems.

The hon. Gentleman referred to the experts in my Department. They are immensely knowledgeable and very devoted. I pay tribute to the work they have done on this matter and the detailed work upon which they are engaged for the further study to which I have referred. I have asked them to pay particular attention, as a matter of urgency, to the possibility of extending the thermal insulation requirements for dwellings to other buildings, such as hotels and institutions that are occupied continuously in the same way as houses and flats. The House will, I hope, understand that I do not think that it will be right for us to make new regulations until we have assimilated the results of this work.

I therefore ask the House to accept our view that the substantial increase in thermal insulation standards set out in the second amendment represents the furthest extent to which we should take mandatory regulations at present.

There is one other point I would like to make before leaving this general issue of the right level of insulation at the present time. Because the regulations are mandatory, we must be sure that their requirements can be met and that the benefits they bring will be worth while. But the standards they set are minimum standards. There is nothing to stop anyone building to a higher standard.

I turn to the particular provision on which our regulations have caused concern. This is the requirement that the thermal transfer coefficient, or U-value, of the external walls of a dwelling should be 1·0. I am astonished at the heavy weather the hon. Member for Shipley made of this requirement, the extravagant language he used, the passion that entered his voice over this decimal figure. He described our choice of 1·0 as a blunder of considerable magnitude. I have been associated with blunders in my time, and no doubt shall be again before I am done, but this blunder was originated and circulated by the Conservative Government.

In so far as there has been any real doubt and any careful consideration, it has been by the Labour Government. I held up the proposal for several months while I carefully studied its implications and whether it was right. Only after extremely careful consideration did we decide to bring this amendment forward. It was the Conservative Party which rushed recklessly like lemmings into this 1·0 standard. I hope that the hon. Gentleman will not get worked up over this matter in his polemical way.

I should explain to hon. Members who have not been present at our previous interminable debates on this subject that the U-value is a measure of the rate of heat flow through a structure, so that a low U-value represents a high standard of insulation, and when standards of insulation are increased the U-value is lowered.

A committee representing many manufacturers of lightweight aggregate concrete blocks and the Brick Development Association has complained strongly to us and to many hon. Members that this new standard will put them at a grave disadvantage compared with the makers of aerated concrete blocks who are a relatively small sector of the construction materials industry.

The hon. Gentleman involved himself not only in extravagant language but in extravagant arithmetic. He spoke of hundreds of small firms being in danger. There are fewer than 200 firms involved in the entire industry. Not all of them are small firms. The employment in the 183 firms on the Department of Employment's statistical classification of makers of concrete building blocks of all types is just over 25,000. There is a problem here, and I have never denied that there is a problem. As I am deeply concerned about questions of employment and redundancy, even in high employment areas, I have always taken this matter carefully into account. It was one factor which caused me to ask for these amendments to be delayed before being presented.

It is possible to exaggerate the impact upon employment and upon redundancy. For reasons which I do not criticise, those who have been closely involved have pushed their case as hard as they can. The hon. Gentleman has clearly been somewhat deluded by the fact that he believes that many hundreds of firms are in danger. It clearly is not so.

The reason given for believing that this standard will disadvantage certain firms is that, since the outer leaf of the usual two-leaf external wall structure of a dwelling will usually continue to be made of brick, the inner leaf will, if it is to satisfy both our new standard and to be made of blocks of conventional weight and size, have to be made of low density blocks which can be supplied only by the aerated block manufacturers.

The committee proposes, as the hon. Gentleman has championed, the adoption of a greatly reduced U-value of 0·6 or 0·8 which, it believes, will enable all producers to compete on an equal basis. The committee wants everyone to have a handicap so that its handicap will be reduced. The committee says that the standard we propose will cause widespread bankruptcies, unemployment and a shortage of building materials. We are accused of rushing the matter through without adequate consultation. Far from rushing it through, we have taken it very slowly, and far from not having adequate consultation we are accused of consulting too many people, and organisations which are irrelevant, such as the Pest Control Association. The hon. Gentleman need never fear. I shall meet the Pest Control Association charge head on.

I take some exception to the accusation that we have acted hastily without due consultation. Apart from the brick industry, whose importance and interest is self-evident, we are aware that there are about 120 firms making lightweight aggregate blocks. Many of these firms are small; they are scattered widely over the country. They supply local markets and are valuable for that reason. We are not likely to dismiss their problems without consideration. We least of all as a Government have not dismissed the problem of ducks, however lame.

Our proposals were first circulated just over a year ago, in January 1974. We asked for replies by a specific date, but we were willing to consider representations after that date, and officials of the Department met members of the committee as late as August. As a result, I personally considered the points now being made for the committee to hon. Members, and they were considered by my Building Regulations Advisory Committee. I discussed them very carefully also with my hon. Friend the Minister for Housing and Construction.

There was another meeting with the committee in November, shortly before the order was made. As to our choice of organisations to be consulted, it must be remembered that building regulations deal with matters other than thermal insulation, in some of which the advice of the Pest Control Association is valuable. I might add that the overwhelming majority of organisations with a relevant interest in thermal insulation are in favour of our proposals. Most responsible opinion is in favour of our proposals. I will not say that we have full-hearted consent, but the support is overwhelming.

I have already discussed our reasons for not going to a much higher standard at the present time. I do not doubt that a U-value of 0·6 or 0·8 would be of great convenience to some manufacturers of building materials—to say nothing of the insulating materials industry—who would need to supply a third insulating membrane between the two structural leaves, which can still suffice under our present proposals. There are, however, wider interests to be considered, and I have explained why we think they will best be served by the standards we have proposed.

I now come to the practical difficulties facing the block makers. We do not deny that there are very real difficulties and that some firms, especially small ones, will find it more difficult to adapt than others. We do, however, deny that they have an impossible task. As I said earlier, the block makers do not believe that they can, at least in the time available, reduce the density of their products without special capital equipment. I will turn to the time factor later.

As to the practicability of the problem, we believe that it can be solved by the introduction of cavities into the blocks; by the use of an aggregate of different density or by a combination of both. I have an example waiting outside the Chamber. I would have brought it in if the Clerk had not warned me that it might be regarded as an offensive weapon.

Another possibility could be the addition of insulating material to the blocks. It is said that the insertion of cavities is a difficult process which will make it necessary to alter existing moulds or machinery, will reduce strength and often increase the rate of breakages. We do not deny that these difficulties exist but we think that they can be overcome.

There are two technical information notes available from the Department. I have them here, and I shall be happy to supply them to any hon. Member or to firms in his constituency. There is also the guide issued by the Institute of Heating and Ventilating Engineers, whose method of calculating the U-value forms the basis of the new regulation. These should be a help to firms. We know of a number whose adapted products are already on the market.

Some firms are also producing aggregates of suitable low density. These are sometimes referred to as "man made", and it is alleged in consequence that the power station and colliery clinker and slag at present used by the block makers will become unsaleable. It is further said that the new materials are not only themselves oil based but need expensive fuel to produce them.

In fact, the man-made aggregates are largely made of the traditional waste products. Few employ oil-based ingredients, and we have no evidence that their production is excessively fuel consuming. We know at least one firm which is producing such aggregates for sale to blockmakers, together with suitable block production machinery.

It is true that the firms which started to make their redispositions earlier had a head start. They have, like everyone else, after all, had over a year's notice. I would not accuse any firm of being backward. But it ill becomes anyone in this House to oppose new and improved regulations on grounds of Luddism, which, to some extent, does underlie some of the opposition to the new standard.

But there is still time for other firms to make redispositions. There appears to be a widespread belief that on 31st January, the date the new order took effect, all new housing will start to be built to the new standards. This is not so. The end of last month was the deadline after which all plans for new housing submitted for approval will have to comply with the new standard. Since, in the public sector at least, it takes from one to two years to move from the submission of plans to the start of work above foundations, the demand for materials for houses built to the old standard will not suddenly stop. In the private sector the time lag is not so great, but it nevertheless exists.

I should, however, make it clear that it has become apparent from surveys we have made that a large proportion of houses in the public sector are already built with external walls at about the new standards. Most of these walls have the usual one leaf of brick and one of block. Nevertheless, it would certainly not be in the interest of block makers to delay adapting their products.

We do not accept that the lightweight aggregate block makers will be forced out of the market for external walls, nor are we convinced that this market is as important to them as they claim. The Committee states that 70 per cent. of their production and 10 per cent. of bricks goes into the inner leaf of external walls. Our estimate is that only about one-third of lightweight aggregate block production and 2 per cent. of bricks does so.

The committee believes firmly that their products have many advantages over other types of blocks, particularly in sound insulation properties. We would expect them to exploit these advantages in competing for work in other structural parts of buildings, not only houses.

We do not believe that firms doing this will find, as the committee alleges, that builders will order only one type of block, for the sake of convenience. Surveys we have made of 22 public sector projects show that an average of two sorts of brick and three sorts of block were used for each project.

It is true that a sector of the brick industry whose products lend themselves particularly to use in the inner leaves of external walls may find themselves with difficulties. Given the very large market that exists for bricks, however, I am sure that they will also be able to adapt.

Is the hon. Gentleman seriously challenging the industry on its figures and saying that the 70 per cent. figure given to hon. Members is a deception and that it should be only one-third and that the 10 per cent. figure given by the brick industry should be only 2 per cent.?

I wish that the hon. Gentleman would not involve himself in such extreme language. I do not claim that a deception has been practised. Errors can be made without involving deception. The hon. Gentleman makes a large number of errors, but I would never accuse him of deliberate deception. We cannot accept the figures put forward by the industry. We say that the 70 per cent. figure its puts forward should be about one-third and that its 10 per cent. figure should be 2 per cent.

I am glad that the hon. Gentleman has given me the chance to emphasise that matter. It is a good example of the way in which people seeking to make a polemical case in their own economic interest state their case as strongly as they can. I do not blame them for that. I would not blame anybody for defending his economic interest. I hope that the hon. Gentleman will not object if we in the Department who are responsible for making matters clear make clear that the figures put forward are not accurate.

My Department is never wrong.

I hope that I have been able to convince the House that my Department is never wrong and that we have not been inconsiderate in our treatment of large and important sectors of the industry and that we are right in believing that they will be able to meet the new standards.

To conclude, we believe that our proposals represent a major advance in the thermal insulation of housing, but one that it would be imprudent to attempt to improve on without further study of priorities of the development of materials and techniques and without greater knowledge of possible side effects. We firmly believe that the new standards represent a challenge which all sectors of the construction industry can and will surmount.

I do not deny that it will be difficult for the makers of light-weight aggregate blocks and for some brick firms. I do not deny that some may prove to be unsuccessful. But I do deny that the result will be the catastrophe that the block makers committee seems to fear, that has been supported by the hon. Gentleman.

I should like to pay a tribute to the Minister's superb Department. However, has that Department made any estimate of what it will cost the industry to meet the new criteria which are being laid down by this House?

I cannot give the hon. Gentleman aggregated estimates, since such estimates would be extremely notional.

I thank the hon. Gentleman for his tribute to my Department, which has managed to survive two of the most disastrous Secretaries of State for the Environment in our history and come out smiling.

10.51 p.m.

Unlike my two hon. Friends, I cannot claim to be an expert on building in general or building regulations in particular. I am here because I was very impressed by the arguments put to me by one of my constituents, Mr. Allison, as he showed me round his concrete block works some weeks ago, and by other arguments which I have heard since.

The Allison group, which is in my constituency, is a well-known and major employer in the East Riding of Yorkshire. It started from small beginnings, has grown, and now takes part in a wide range of activities, of which this is one. It is a go-ahead firm. It is progressive and competitive, and cannot be criticised as backward. It is not frightened of change. However, the people in it are businesslike people and if they are to make changes they need reasonable time in which to do so.

The irony of the situation is that the industry is willing to make changes. It is committed to improving thermal insulation and is willing to co-operate with the Government. It is ridiculous for the Government to rush through changes of this sort if they severely damage three-quarters of the industry, cause unemployment and reduce competition within the industry.

To give an instance of the co-operative attitude of the industry, I understand that the Department of the Environment has suggested the introduction of cored blocks. A solution which the manufacturers are prepared to accept is the introduction of new machinery which would be better able to make core blocks, without undue loss of output. This is a major development, and the industry will be unable to achieve results if these regulations are introduced now, even allowing for the passed plans to work through the system. The delivery dates on new and suitable types of block machinery, prior to the new demand, are about 12 to 18 months ahead. For the most part those machines are imported.

The foreseeable and inevitable consequences of allowing the new figure to go into the regulations will be the creation of an artificially induced shortage of walling materials, an escalation in price because of the scarcity of those few materials which are usable, a near-monopolistic supply situation which will replace the present competition between producers, and unemployment, particularly in my constituency, as orders for otherwise suitable blocks fall off.

The Department of the Environment has admitted that it is uncertain as to the insulating materials industry's ability to cope with higher demand, which will involve the development of new materials, skills and techniques. Supply problems will also arise from the adoption of too impractical a standard. Already insulating materials are in much demand outside the building industry, as well as for home improvements. They will be put under further demand pressure by the roof and ceiling requirements of the new regulations, where there is no practical alternative. Even if a figure of 1·4 W were adopted, shortages in these materials could arise. For this reason, in walls where alternative constructions are available, these should be employed.

The difference in annual fuel consumption in domestic buildings built in one year between a 1·0 W figure and a 1·4 W figure for walls would be less than the additional fuel required annually to produce the extra oil-based and oil-consuming lower density materials, and to deliver them the substantial extra distances from their fewer remotely located centres of production. At the price of chaos, very little would be achieved.

The whole operation of revising these regulations has been conceived in haste and in isolation from the main manufacturers, and executed in little short of panic. They ask for time—time to bring up the standards in sensible stages, time to adjust production, and, transcending all, a proper understanding of the practical consequences of the changes being wrought.

10.57 p.m.

I am grateful for the intervention of the hon. Member for Howden (Sir P. Bryan), because he dealt with this matter as I intend to—mainly on a constituency basis.

I was surprised by the partisan and absurdly controversial speech of the hon. Member for Shipley (Mr. Fox). It was quite uncharacteristic of a debate of this type.

As my hon. Friend the Under-Secretary will know, in my constituency I have received a number of varying representations, some tending to go some of the way with the hon. Member for Howden in suggesting that there could be considerable difficulties, and others welcoming the second amendment and pointing out that the manufacturers concerned have been satisfying this type of criterion for some time.

This movement from 1·7 to 1·0 could cause some difficulty if there were too much time pressure on manufacturers. I agree with the hon. Member for Howden that it is important for manufacturers of light-weight blocks especially to be given adequate time in which to make these changes.

I was comforted by some of the comments of my hon. Friend. In a way which was comprehensible to a non-technical individual like myself, he described some realistic adaptations which could convert existing production to satisfy the 1·0 figure.

My hon. Friend's point about the difference between housing submitted for approval and the actual production of it, in both the public and the private sector, means that manufacturers who face difficulties will have a little time to play with. I am sure that people facing difficulties of this type will receive sympathetic consideration from the Department. Nevertheless, I ask my hon. Friend to look carefully at any problems which may be reported to him.

Some manufacturers have suggested that they may be ready to move towards a 1·2 figure but not a 1·0 figure. There seemed to be a general measure of agreement among many of the manufacturers I spoke to about the figure of 0·6. The hon. Member for Shipley must have more expertise than I in this, but the manufacturers I spoke to were happy with the 0·6 figure. They put forward what seemed to me to be powerful arguments. They said that the only base for using a figure as low as this would be to use some foam in-filling.

There are a number of reputable and great companies like ICI in this field, but the feeling among many that I spoke to was that to meet the demand which would be created by a rapid movement to 0·6 there would be a rush into this foam in-filling by small producers to meet the demand. They gave me to understand that at present there was a waiting time of from eight to 10 weeks at a normal time, and clearly there are difficulties in that direction.

It was further pointed out to me that it is not realistic to make comparison with what happens in other countries. We have had references to Scandinavian countries from the hon. Member for Shipley, but we cannot make realistic comparisons in this direction because the use of foam in-filling of this sort means not only cast forming but in-filling to meet the structure required. To use foam in-filling may add considerably to the cost of production of housing produced in this way.

In contrast to what was said by the hon. Member for Shipley, and more in line with what the hon. Member for Howden said, there has already been some time, and there is still some time to come. There has been consultation with industry in general.

The only reason I chose to intervene was to make an appeal—which my hon. Friend has largely met—that his Department should be sympathetic about adaptations which will take place and are taking place. Some people concerned with light-weight blocks are making adaptations. I hope that those in his Department will be sympathetic to the time factor involved in these adaptations, and will bear carefully in mind what the industry generally said about the difficulties of moving to a yet lower figure. I hope that, as in the past, there will be thorough and adequate consultation if there is future movement towards an even lower figure, as I am sure there will be.

11.5 p.m.

I want first to declare an interest as a non-executive director of a private house building company.

In following the eloquent speeches by the hon. Member for Cannock (Mr. Roberts) and my hon. Friend the Member for Howden (Sir P. Bryan) I want to concentrate on three matters. First, the proposed lowering of the U values; secondly, the use of urea formaldehyde as a deemed-to-satisfy material; and, thirdly—as I indicated to the Under-Secretary—the new requirements for the use of high alumina cement, which has not been mentioned tonight.

The only controversial feature of the F regulations is the new U value for external walls of 1.0 watts per square metre degrees centigrade. That was discussed at length in the Adjournment debate on 4th February, raised by the hon. Member for Redcar (Mr. Tinn). I was present on that occasion, as the Under-Secretary knows, but I chose not to intervene in his speech so as not to take up private Members' time and because I had reason to believe that we would be debating the matter again.

On that occasion the hon. Member for Goole (Dr. Marshall) mentioned the concern of the aggregate block producers. The Department cannot complain that it was not warned about the matter.

I moved an amendment in Committee on the Health and Safety At Work, Etc. Bill on 14th May 1974 when I said:
"One of the things that worries me, and the building trade, is that the proposed improvement of the thermal insulation of external walls means that it will not be possible to use many of the lightweight concrete blocks now widely used with bricks in cavity construction. One effect of this could be to create a heavy demand for those blocks that have better insulating properties—a demand which it may not be possible to satisfy for some time."—[Official Report, Standing Committee A, 14th May 1974; c. 275.]
On 16th May I suggested that
"perhaps a year's respite would be necessary between making the regulations and bringing them into force."—[Official Report, Standing Committee A, 16th May 1974; c. 278.]
The Minister of State, the hon. Member for Manchester, Openshaw (Mr. Morris) in his reply to me on 16th May, courteously preferred not to comment on my detailed points but said that the views of the block manufacturers would be taken into account by the Department.

I am sure that that happened. Nevertheless, the proposal for a 1·0 U value is exactly the same as when the document was first circulated for comment by the DOE—as the Under-Secretary said, by the former Conservative Government—on 25th January 1974.

Let there be no doubt about the views of the aggregate block producers, which were well put by Mr. Eric Morton in Building Design on 6th September 1974 when he said:
"The new standard will put our blocks out of compliance unless a third membrane is added. But this cannot be done overnight, and will cost a lot of money."
He pointed out that many firms had just completed capital investment programmes.
"One company in Widnes has spent over £2 million. This could all be wasted. … The axe will fall on a lot of companies unless this stupidity is put right."
Along with a number of hon. Members I have received representations from firms in my constituency about this matter. When I raised with the Minister the fears of Interfuse Ltd. of Syston, which said that it would be forced to close its works and declare 47 employees redundant, and pointed out that it had already closed a £250,000 plant in Melton and discharged all the employees because of the general trading situation, the Under-Secretary replied to me on 9th December:
"We believe that there is sufficient capacity in the construction materials industry to meet the increased demand resulting from the new standards without a significant increase in housing costs."
The hon. Gentleman added that the old blocks could be used for any buildings other than housing.

In the Adjournment debate on 4th February the Minister went further and said that it would, in effect, be one or two years before the new standards actually came into effect.
"The end of last month was the deadline after which all plans for new housing submitted for approval would have to comply with the new standard."—[Official Report, 4th February 1975; Vol 885, c. 1345.]
That would appear to meet the point that I made in Standing Committee about the need for one year's delay.

There are two quite separate arguments here. First, I cannot accept the theoretical argument that old blocks would be all right for other types of buildings than housing. I do not believe that any builder is likely to want more types of blocks in his possession than are necessary or that any merchant would be keen to stock them.

The producers say:
"We have already received inquiries from the public and private sectors regarding ongoing schemes, as the clients wish to have their houses on the market competing equally with those to be designed after January from an insulation point of view."
Similarly, the Under-Secretary of State's argument about sufficient capacity is misleading. As my hon. Friend the Member for Shipley said, the producers themselves have pointed out that only three manufacturers, who were responsible for 35 per cent. of the block output, are currently able to meet the specification. The effect undoubtedly will be to give them a substantial competitive advantage if they are able to cope with the increased demand. I doubt whether they will be able to do so. I do not want to go into the question whether it should be 1·0, or 0·8, or 0·6, or whatever.

I now turn to the question of costs, which is a complicated area. The Department of the Environment was quoted in Building Design of 13th December as saying:
"The new standard will add only £35 to the cost of construction of a new dwelling."
Yet in page 1 of the Housing Development Directorate's note of December 1973, dealing with thermal insulation in housing—and, of course, since December 1973 building materials and labour costs have sharply increased—it is said that
"the cost of roof insulation and the use of aerated concrete blocks and cavity wall filling is said to be between £60 and £100 per dwelling."
I have looked into the costings of the Department of the Environment and I am advised that it did some comparative costings on the basis of a semi-detached two-storey building. It reckoned that the additional cost of meeting the more stringent insulation requirements would be approximately £35, made up respectively of £10 for a lightweight block substituted for a clinker block, £10 for the improved roof insulation and the remainder in order to improve the sound transmission for perimeter walls adjoining party walls. This would be necessary as the cavity wall, made up with a brick outer skin and a lightweight inner skin, would not meet a building regulation requirement regarding flanking sound transmission.

I am advised by architects that their investigations do not produce the same conclusions. The lightweight inner leaf referred to by the Department would not normally be able to carry more than about one floor without being overstressed. It is therefore necessary either to make the inner leaf 140 mm or to make the wall a normal brick-built cavity wall with some insulation added. They go on to say that the additional cost of all these things would add about £260 per house. We need these matters clarified if the Minister catches the eye of the Chair before half past 11 o'clock. I am sure that the House will appreciate the complicated nature of the calculations. In the document "Thermal Insulation in Housing" there is a series of algebraic symbols so complicated that it would be impossible for Hansard to understand it if I were to read it to the House.

I now turn briefly to the question of urea formaldehyde, which, in Schedule 3, page 39 of the regulations is made a "deemed to satisfy" material. Here again, I must immediately say that I warned the Minister about this in Committee on 14th May. I said:
"instances have been reported to the building industry of rain penetration having occurred in walls which have been filled in this way."—[Official Report, Standing Committee A, 14th May 1974; c. 276.]
On 16th May, I said:
"urea formaldehyde foam cavity fill should not be considered a 'deemed to satisfy' material for these insulation purposes"—[Official Report, Standing Committee A, 16th May 1974; c. 277.]
My views are partly confirmed by the Under-Secretary of State's comment on 4th February, when he said:
"if cavity filling is not done properly, or it is done to the wrong house, trouble follows." —[Official Report, 4th February 1975; Vol. 885, c. 1340.]
It is no secret that many people are jumping on the energy-saving band wagon. There may be cases of urea formaldehyde being used in unsuitable situations. The result could well be disastrous for the house-owner—a damp house with higher condensation and higher rates—all to save a bit of oil! I note from Contract Journal of 6th February that the Agrément Board is bringing out an approval system for proper contractors capable of doing the job properly. The Government must accept some share of the blame for bringing this regulation forward before all the practical difficulties have been sorted out.

That brings me to the question of high alumina cement which is banned by Regulation 9 for structural work but specifically not banned for non-structural work. There is nothing new about the use of this material. It was first used by the French company Ciments Lafarge in 1913 and was used regularly during the First World War in the construction of gun emplacements.

There is nothing new about the material deteriorating. I know of four cases in France in the 1920s, which eventually led the French Government to control its use in 1928 and 1935. There was a case of a cooling tower in England in 1954 which deteriorated because of the jets of warm water playing on it; and HAC was banned altogether in Bavaria in 1962 after the ceilings of six agricultural buildings collapsed. The rest of Germany also banned the use of HAC in a number of situations. Therefore, there are plenty of precedents available, none of them happy ones.

Before closing with a general recommendation, I should like to put a question to the Under-Secretary of State—a question which has been posed by Mr. Scott of the Structural Action Group. These regulations are not retrospective They specifically say that the regulations
"shall not apply to any work completed before the date of the coming into operation of the regulations".
What, then, is the Department's advice relating to the estimated 50,000 existing dwellings where HAC is used? I understand that at the seminar held on 29th November on "Building Defects and Failures", organised by the Building Research Establishment and the Institute of Building, the view was expressed that no firm conclusions or decisions on HAC could be reached until further exhaustive tests and reports were completed. This leads one to wonder when the Department will be in a position to give more positive advice. We need to know that soon.

One strand which comes very strongly out of all this is that much more needs to be done by the Department to improve the knowledge of the policy-making side regarding these technical problems. The U-value issue seems to have been inadequately thought out, at least from the costings side, and the urea formaldehyde case bears all the signs of a semi-panic reaction to the demand for energy conservation. With all the European evidence that is available, HAC should probably have been banned, structurally, years ago. The clasp system has suffered several recent disasters, and calcium chloride and urethane foam are, to put it no stronger, extremely controversial materials. There was also the disastrous design failure at Ronan Point.

This leads me to the view that the Department should strengthen its policy-making side by merging the Agrément Board and the BRE, and make the head of the BRE report directly to the Secretary of State. Furthermore, I should like to see the BRE with a proper "doom-watch" section, whose job it is continually to evaluate new technologies before they are permitted or obtain "deemed to satisfy" status. Public opinion has become alarmed—and with some reason. It is time that the Minister took a firm political initiative.

11.18 p.m.

I wish to thank my hon. Friend the Member for Melton (Mr. Latham) for his valuable contribution to the debate. It was a pleasure to listen to somebody who obviously knows the subject in depth. I hope that some of the matters he raised will be dealt with by the Under-Secretary of State in his reply.

I share the concern that has been expressed on this matter. I have received a number of representations from constituents involved in the block-making business. I wish to thank the Secretary of State and the Department for their courteous replies to each case, although I must admit that my constituents have not been entirely satisfied with the replies which I have forwarded to them.

In an intervention a little earlier I raised the matter of the cost involved to block makers in meeting the changed criteria. I am somewhat surprised that the Minister has not come forward with some estimate of the cost involved. I am sure we all know of the many small firms which now face severe liquidity problems, especially in view of the depressed state of the building industry. Therefore, I feel that an unfair burden is being placed on this section of the manufacturing industry.

Has the Department considered making some special grant, subsidy or financial assistance available to help these people to meet the changes that must be made? Since Parliament is asking the industry to make changes, has the Minister any announcement to make about plans which will bring a solution to some of the problems faced by industry in these troubled times?

I was a little unhappy that the Minister dealt so severely with my hon. Friend the Member for Shipley (Mr. Fox). The Opposition have had an exciting experience this week, and my hon. Friend has recently returned from an exciting part of the world, so I hope that he will be forgiven for presenting a dramatic case. From what goes on outside we should learn that it is often those who behave dramatically and in an outspoken manner who win their case. The block-making industry has a fine advocate in my hon. Friend, and he certainly pushed their case to the utmost.

I am concerned about the timescale of implementation of this measure and about the cost.

11.21 p.m.

Order. The Minister will require the permission of the House to speak again.

I was about to request that, Mr. Deputy Speaker, but I have been pre-empted by your wisdom, as I so often was in Standing Committee.

Immense assistance, Sir.

I am obliged to the hon. Member for Macclesfield (Mr. Winterton) for bringing some of the vast drama of the veldt into this debate on mundane and sometimes incomprehensible matters. The hon. Member for Melton (Mr. Latham) on the other hand, surprised me. We have had the benefit of his great expertise on technical building matters a number of times, and it seemed that tonight he was overstating a case and knew that he was overstating it. I do not blame my hon. Friend the Member for Cannock (Mr. Roberts) or the hon. Member for Howden (Sir P. Bryan) for putting forward constituency cases; that is one of the most valuable ways in which a debate of this kind can proceed. But those who do not have a constituency case to push can be a little more detached and can use their opportunities for detachment to a greater extent than did the hon. Member for Melton.

I cannot accept the allegation that we have rushed this matter. The reverse is the case. The hon. Member for Melton quoted himself—we always enjoy that: his words are always interesting—speaking in debates in Standing Committee in May. It is now February. Any criticism I may have had from outside is not that we have acted too fast but that we have been too slow, and that some of the advantages of this amendment may have been jeopardised or forgone thereby. But we thought it right to consider the matter carefully, for the serious reasons mentioned by the hon. Member for Howden. These questions involve small firms and the employment of individuals. Although not many of these firms employ more than a few people, it is important to take account of these considerations before proceeding. So we certainly did not rush into this decision: we gave it considerable thought.

My hon. Friend the Member for Cannock was very persuasive about the 06 standard. The hon. Member for Shipley (Mr. Fox) seemed to regard it as over-whelming. But in fact 0·6 would require alterations in the usual form of structure as well as cavity fill. It would not be a very economic way of going about things. As I work it out from the figures made available to me, it would take about 16 years to recover the extra cost of going down to 0·6. Our figures show that that extra cost would be £80 per house. The energy saving in cash terms of 0·6 as against 1·0 would be only £5 more. I hope that the hon. Member for Shipley will take account of that, especially as he rightly laid considerable stress on the energy aspect of this amendment, even though I pointed out that we did not, at that time, have the most appropriate vehicle for dealing with energy considerations.

The average cost of building a semi-detached house—let us be charitable—in the Minister's part of the world and mine, is about £10,000. Is the hon. Gentleman really saying that an outlay of £80 per house is an exorbitant amount?

I am not in the least saying that it is exorbitant, but one has to look at the return on cost, and £80 extra expenditure, in addition to the extra expenditure involved in going to 1·0, in return for an energy saving of £5, is not a very economic proposition. That is all I put to the hon. Gentleman.

The hon. Member for Melton talked about those who have put in large capital investment because of the new standard which has been introduced. I have been advised that adaptations need not require large extra sums in capital investment and that quite modest sums in capital investment are all that are required. In this connection, I was charmed by the hon. Member for Macclesfield, who is one of the most realistic, brutal and Thatcheresque Members of the Opposition, movingly asking us for grants, subsidies, and things like that. I thought that these were all now taboo on the Opposition side of the House.

I live with the Daily Mirror, which is a better thing to read. But I say this to the hon. Gentleman. When it comes to grants and subsidies in terms of industrial re-equipment, my right hon. Friend the Secretary of State for Industry is an absolute repository of money to be made available. His new Industry Bill, to which the House will have the privilege of giving a Second Reading next week, will make even larger sums available for industry which finds itself in trouble. Therefore, I very much hope that the hon. Gentleman, with his customary breadth of mind, will join us in the Division Lobby in the somewhat unlikely event of the House dividing against Second Reading of the Bill next Tuesday evening.

I take very seriously indeed the remarks of the hon. Member for Melton about high alumina concrete. I have been seriously concerned indeed, not only by the problems of high alumina concrete but by other problems involving structural defects which come to light most disturbingly and involve not only the problem of high capital cost in rectification but risk to human beings of a kind that we cannot disregard. To date, we have not yet got right the protective measures which need to be taken in order to avoid these things rather than to put them right when they have been discovered. Generally they are discovered only in a very unfortunate way, and a way involving accident and possibly fatality.

I assure the hon. Gentleman that I have been personally concerned to try to look into ways of achieving what he describes as a "doomwatch" method; certainly to try to find ways of avoiding the vast and expensive defects which we suddenly discover and which cause local authorities to come to us with their absolutely horrifying problems, problems of cost of incalculable dimensions—literally incalculable, because we do not know the extent of the problem. I hope that the House will feel that this matter has been considered—

It being half-past Eleven o'clock, the debate stood adjourned.

Statutory Instruments

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),

Dangerous Drugs

That the Misuse of Drugs Act 1971 (Modification) Order 1975, a draft of which was laid before this House on 21st January, be approved.—[ Mr. Coleman.]

Building And Buildings

That the Noise Insulation (Scotland) Regulations 1975, a draft of which was laid before this House on 21st January, be approved,—[ Mr. Coleman.]

Northern Ireland

That the Diseases of Animals (Northern Ireland) Order 1975, a draft of which was laid before this House on 13th January, be approved.—[ Mr. Coleman.]

Question agreed to.

Adjournment

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

Picc-Vic Railway, Manchester

11.31 p.m.

I want to start this debate with a very simple proposition. It is that the Greater Manchester area wants to make travel easier for its 2·7 million inhabitants. I hope that the House and the Minister will feel that this is a very simple and sensible case. I can assure the Minister that those 2·7 million inhabitants take that point of view.

In an area of 50 square miles we believe that this can be done by building an underground rail link between two main line stations—Piccadilly and Victoria. By connecting with the electric rail system at both these stations some 50 miles of fast no-change travel can be opened up right through from Bolton, Bury, Radcliffe and Prestwich in the north, to Stockport, Cheadle Hulme, Wilmslow and Alderly Edge in the south. This is the first step. Eventually an east-west route could be made connecting Altrincham and Urmston with Glossop, Marple and Hyde. I am certain that many of my hon. Friends in the constituences of the Greater Manchester area will confirm my belief that this is a very sensible approach to the problems of modern transport.

Almost two months ago the Minister for Transport wrote to the leader of the Greater Manchester Council about the project. The letter was a bitter disappointment, because it revealed that the council's allocation of transport supplementary grant and key sector borrowing powers for 1975–76 would be insufficient to allow a start to be made on the project in the coming financial year. The letter was also received with very great disappointment by the leaders of the Conservative and Liberal groups on the council.

It was disappointing not only because of the decision it contained but because it was such an inadequate answer to the case that the council had made for Picc-Vic. It said merely that the scheme required a very large investment, that it would take five years to build and that
"it is at the margin of acceptability."
The Minister did not indicate the criteria on which he judged Picc-Vic to be marginal, nor did he adequately explain the basis of his approach, which dictates that a large scheme like Picc-Vic, which produces benefits only at the end of the construction period, must be ruled out in favour of smaller lumps of investment producing a quicker return but without a guarantee of greater benefit in the long run.

The proposals for improving the Greater Manchester rail system and the Piccadilly—Victoria scheme are of the greatest importance to the 2·7 million inhabitants of Greater Manchester, to the economy of the area and also to the North-West as a whole. Our great industrial cities have grown up around communications and unless these are kept up to date our prosperity is threatened.

The character of the city centre is changing. There is much greater concentration on region-serving functions, such as major shopping and professional activities. We rightly pride ourselves that outside London we are the largest banking and insurance centre. We are an important cultural and entertainment centre. We can rightly claim further education facilities equal to anything else in Western Europe. The increasing concentration on region-serving functions emphasises most forcibly the need for a satisfactory level of accessibility to this regional centre.

Manchester decided in the early 1960s that its transportation policy must put the emphasis on public transport and not on new road building. In my opinion and the opinion of many of my hon. Friends representing constituencies in the Greater Manchester area, the oil crisis and everything else that has happened since 1970 confirms the soundness of this decision.

The scheme to improve the local railways and put in a central tunnel link replaced an earlier proposal for the Manchester rapid transit scheme. Picc-Vic was recommended by a Government-sponsored transportation study which began in 1966. The House gave statutory powers in 1972, and the scheme has now been fully designed and prepared. This debate arises because of the great importance we attach to this proposal and the fact that Government support seems to have vanished at the starting post.

Not only hon. Members but our constituents understand our present economic difficulties and the need to restrict expenditure. What we cannot understand is that the Government are not giving any clear backing to the scheme for the future when the economic climate improves. Without that clear backing, how are we to plan our transportation system? If we mean what we say about supporting public transport and comprehensive policies the Government should give an assurance that the improvement of our run-down local rail system and the construction of the central Manchester link is a recognised part of national policy.

Frankly, there is a feeling in the area that the policy of successive Governments on local railways has been obstructed by Civil Service red tape and a hidden departmental bias towards roads. How else are we to explain the fact that over the last five years hardly one penny of Government grant for public transport schemes has been made available in Greater Manchester when other conurbations have had their schemes approved? How else are we to explain the fact that in the transport programme and policy decisions Greater Manchester gets the lowest grant allocation per head of any metropolitan area, although it has this great backlog to make up because of the decision years ago to go for public transport rather than roads? How are we to explain the fact that the transportation grant per head in London, which pays nothing towards its local rail system, is almost double that for Greater Manchester? How are we to explain the fact that the White Paper on Public Expenditure shows motorway construction, in real terms, continuing to rise and highway construction expenditure continuing at over £600 million a year, in real terms, while public transport investment for conurbations remains at a little over £100 million?

How long shall we continue to say that we back public transport and then spend many times more on roads? How long shall we continue, nationally, to lag behind the local authorities, such as the Greater Manchester Council, in their attitudes on this vital question? If a major conurbation authority such as Greater Manchester is determined to invest in public transport, surely the Government should be giving clear backing and not sitting on the fence?

I greatly appreciate the fact that my right hon. Friend the Minister for Transport has agreed to visit Greater Manchester next week. I hope that he will look at our appalling railway inheritance for himself, and that when he conducts a series of discussions with members and officials of the Greater Manchester Council he will be able to show that the Government mean what they say about public transport. I also hope that he will give assurances that the Picc-Vic project has the support of the Government and that the scheme will be sanctioned to start within the lifetime of this Parliament. Even if we have to accept a short delay because of the economic crisis, I hope that the Minister will ensure that a fair share of national funds will be made available for rail improvements, based on the Picc-Vic scheme, so that Manchester may begin to make up some of the ground it has lost over the long years of planning and discussion.

11.42 p.m.

As a Member for Bolton, I intervene in the debate because Picc-Vic is not simply a rail project but a transportation artery upon which the economic and social life of my constituency could well depend. We are concerned not only that my right hon. Friend the Minister has refused permission to proceed in 1975 but that no date has been given for the initiation of the scheme. Our town plan is at the least, delayed by the uncertainty, if not placed in jeopardy, as is the office building that we intended to carry out, to take advantage of the central Manchester office survey, which indicated that 22 per cent. of the firms interviewed would move out of the city centre, some of them, presumably, to Bolton. Our entire transportation strategy and miscellaneous projects arising therefrom are also in jeopardy.

What concerns me also is that the borough is becoming more and more a wasteland of desolate cleared sites awaiting transportation projects which never seem to materialise. When I entered the House I had to ask the Department of the Environment for money to help rescue tenants and residents whose homes had been jeopardised by a road scheme which will not come into being until next year at the earliest. On the interchange development of the Picc-Vic scheme, for example, almost 12 acres of central development land now lie sterile, without financial return to the ratepayers, in a year when rates are soaring.

In the midst of an oil crisis, has my right hon. Friend considered how much traffic could be moved from the private motor car to the rail system if the go-ahead were given? Did he consider how many roads will have to be extended, renewed and developed if the project is not allowed to go ahead?

I remind my right hon. Friend that the Strategic Plan for the North-West emphasised that the crying need of the region generally was for the improvement of the quality of life. Because of the wider bearing of the project on the social and economic life of my constituency, I challenge my right hon. Friend to visit Bolton, to see the situation at first hand and discuss the wider implications and effects of his decision.

11.45 p.m.

I intervene in this debate on behalf of my constituency which, with that of my hon. Friend the Member for Bolton, East (Mr. Young) provides the northern link for the Picc-Vic scheme. The Bury link of the Picc-Vic scheme is more than a mere road/rail link interchange. It is the linchpin for local plans that have been discussed and devised over many years. Let no one assume that this is just a question of a tunnel in the middle of Manchester. It is a question of whether the second most important city conurbation in the country should have a comprehensive transport policy related to the needs of the whole community.

My hon. Friend the Member for Manchester, Moss Side (Mr. Hatton) has placed a comprehensive case before the Minister. I stress that it is not just Manchester that is concerned about the scheme. My constituency of Bury and Radcliffe is completely identified with and gives full support to the Picc-Vic project. My local authority's town centre development plans, car-parking provisions, patterns of movement and land usage are completely integrated with the Picc-Vic proposal, and several important local projects in Bury are held up awaiting its progress.

My town cannot wait much longer. It cannot wait, as the Government say, "until the oil flows". We need to know now when finance will be available for this once-in-a-century project. According to the latest figures the Bury area has the greatest population growth in the North-West. The Picc-Vic scheme to us is what the Manchester Ship Canal was to Manchester in its day. Our prosperity as a viable constituency is at stake, and I urge the Minister to make a firm commitment.

11.47 p.m.

I am grateful to my hon. Friend the Member for Manchester, Moss Side (Mr. Hatton) for raising, this subject, which I know is of great interest to the people of Greater Manchester and, indeed, elsewhere. That interest is underlined by the large attendance in the House at this late hour on a Thursday night.

As my hon. Friend said, I have accepted an invitation from Greater Manchester Council to spend the whole of next Wednesday in Manchester seeing the programme which has been devised and having intensive talks. So I have anticipated the request of my hon. Friends the Members for Bolton, East (Mr. Young) and Bury and Radcliffe (Mr. White) to visit the area to see for myself what is involved.

I cannot give way. Three hon. Members have spoken, which is unusual in an Adjournment debate, and I have only 12 minutes in which to answer all the questions that have been raised.

I shall give more detailed figures at a more convenient time, but I shall deal briefly with the suggestion that the Government are not supporting public transport and are still spending all their money on roads. According to the paper on public expenditure which has just been produced, on public transport—railways primarily—we are spending, at November 1973 prices, £495 million, against £370 million for roads, of which £50 million is for maintenance. I hope that no one would argue that we should not maintain our roads. Local transport expenditure is £293 million for new road construction, car parks, and so on, against £296 million for public transport. If maintenance for over 200,000 miles of roads is added, it puts the figure at £578 million, but, again, no one would argue that we should ignore the maintenance of our large network of roads.

First, I make it clear that I have not told the Greater Manchester Council that it cannot build the Picc-Vic tunnel. I can understand that it would like me to make the decision, but it is not for me to do so. Under local government reorganisation, we have set up new local authorities and the House has approved, in the Local Government Act 1974—passed under the Conservative Government—a new system of grants for local transport which are based on total programmes of expenditure, not individual schemes. Within the overall programme, it is for local authorities to decide where their priorities lie and to choose between the competing demands of road investment and maintenance and improvements to public transport.

I accept that, in the figures I was able to announce for 1975–76, I was not able to make such provision for the Picc-Vic scheme as a whole to be taken in the next financial year. But the House must understand that, under the new system of transport grants, it is not possible for me to indicate a date in the future when it might be possible, because, to a large extent, the decision depends on Manchester's own priorities as well as on the possibility of the Government being able to increase that total amount of transport expenditure for the country as a whole.

I understand the natural concern of Manchester to improve its transport system, as the Picc-Vic scheme indicates. Many other parts of the country also have schemes that they would like to have, and it is just not possible at the moment to see how they can all be accommodated. My problem lies in trying to allocate scarce national resources between the 46 counties, and for the next four or five years those resources will be very limited.

The forecasts published in the public expenditure White Paper provide for no growth in local transport expenditure at all. Indeed, if bus subsidies are included, there is a fall over the five-year period. Next year's local transport expenditure has to be at the same level as this year's, apart from special and unprecedented assistance for public transport's revenue position.

It is against this background that I have had to consider Greater Manchester's transport expenditure for next year. In this first year of the transport supplement grant, we have had enormous problems arising from the existing commitments which had been made and projects started under the old system, whereby each scheme was separately approved for grant.

Of the money for the transport supplement grant this year, 90 per cent of the total expenditure available was already committed; indeed, 93 per cent of the grant is committed to schemes from previous years, leaving a total of only £85 million for new expenditure, only £24 million of which lay above the threshold under the complicated scheme we inherited, attracting grant of £17 million.

If the whole of this had been given to Manchester, it would not have been enough to ensure that it could begin the Picc-Vic scheme. While it is true that Manchester's share, taken on a per capita basis with other counties, is low, this is because it did not have the continuing commitments that some other counties had. As far as I was able, I made some compensation, in that for new projects, Manchester has a very much higher share than any other metropolitan county, with an average of £3 per head as against the national average of £1·80 per head. Indeed, Manchester has the highest per capita amount for new expenditure of any county bar one, and still has the highest of the metropolitan counties.

It is true that under the old system the Picc-Vic scheme would have been approved as a whole, but in essence it is not just one scheme. It is not only a case of building the tunnel; it is also very important to upgrade the railway system that would go towards the tunnel.

On the figures that Manchester submitted, £62 million was for the tunnel and £70 million for the upgrading. On Manchester's own evidence, the greater benefit will come from the upgrading of the railway links rather than through the use of the tunnel, because a great amount of the traffic will be from the north or south to the centre of Manchester. In the 1975–76 figures there is a sum which we believe will permit Manchester to begin the upgrading of the railway system. This would immediately benefit those—an increasing number, I hope—who use the railway for their travel-to-work and business journeys.

Therefore, we are not unaware of the importance of the scheme, and within the very limited sums available a modest beginning could be made in 1975. I hope that we shall be able to discuss problems of this kind with the Greater Manchester Council next week. My hon. Friend the Member for Moss Side, from his distinguished record of over 20 years in Manchester local government, will know that I shall want to listen most carefully to what Manchester say. I attach great importance to next week's visit.

However, I never believe in making easy promises which cannot be fulfilled for a number of years, and I must say, therefore, that the background nationally is not good. It appears from the public expenditure surevy that over the next five years £3,500 million will be available for local transport expenditure, apart from subsidies for bus and rail services and expenditure on major roads in new towns. Of that amount, about £2,000 million will he absorbed by capital expenditure on schemes already begun, and by ongoing expenditure on items such as road maintenance, lighting and road safety. That leaves, although it sounds a lot of money, only £1,500 million for new projects—only £6 per head.

The Picc-Vic project would cost £10 per head at current prices and, although I know that Manchester does not stress its roads, it has got in a bid for £100 million on public transport interchanges and roads—another £7 per head. That makes a demand of £17 per head against the national average of £6.

That is the nature of the problem. It represents one-sixth of the total local transport expenditure likely to be available for the whole country over the next five years. It may be possible—although there are difficulties about this—to find alternative ways of financing the project. I shall be happy to discuss them with the Greater Manchester Council. But at the end of the day, however it is financed, it is a call on national resources and it has to be accommodated within the total available nationally for local transport expenditure.

However, I assure my hon. Friends that I want to be as helpful as possible, because I realise the importance placed on the project in Manchester. It represents an imaginative attempt to solve the city's problems by the use of public transport, but, in the light of local government expenditure and the nation's economic difficulties, it would be wrong to think that Manchester could pre-empt so large a proportion of the money available for the nation's transport system, because, unhappily, the situation in Manchester is to be found in other parts of the country.

Question put and agreed to.

Adjourned accordingly at one minute to Twelve o'clock midnight.