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Commons Chamber

Volume 886: debated on Monday 17 February 1975

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House Of Commons

Monday 17th February 1975

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions




asked the Secretary of State for Trade if he intends to make an official visit to Norway.

The Secretary of State for Trade and President of the Board of Trade
(Mr. Peter Shore)

I intend to arrange a visit to Norway within the next few months, but I have no firm date as yet.

I welcome the right hon. Gentleman's announcement. Will he take this opportunity to learn that Norway operates on a different economic scale from this country and consequently that if Britain were to leave the Community there would be little chance of our obtaining the sort of free trade agreement with the Community that Norway obtained?

I hope to learn a number of things from my visit to Norway, and I hope to observe the obvious prosperity which Norway is enjoying in spite of the many gloomy forecasts to the contrary exactly three years ago.

Is my right hon. Friend aware that before the referendum in Norway the public were told that all sorts of appalling consequences would follow if they did not join the EEC, and that none of them has followed?

My right hon. Friend is right. There are, of course, special factors such as oil which have helped, but the story of Norway in recent years has been one of a highly successful economy.

Laker Airways


asked the Secretary of State for Trade what representations he has received from Laker Airways on the Skytrain; and whether he will make a statement.


asked the Secretary of State for Trade what representations he has made to the United States Government since 3rd October 1974 in connection with the application by Laker Airways for permission to operate transatlantic Skytrain services.

My right hon. Friend received the Laker Airways' letter of 15th January addressed to all Members. Since there may be an appeal against the Civil Aviation Authority's recent decisions on Skytrain, I should prefer to avoid comment.

A number of formal and informal representations, one of which I made myself, have been made to the United States Government specifically about their delay in issuing a permit, the last being on 3rd October 1974. Thereafter, in the light of the imminent need for the Civil Aviation Authority to review the fare and the licence as a whole, further representations would have been inappropriate, but the United States Government were kept informed of the proceedings.

Is not the delay by the Civil Aeronautics Board in the United States in licensing the Skytrain intolerable? Can the hon. Gentleman say whether, in the most recent representations that he made, he laid down a deadline by which the British Government would expect the licence to be issued?

The delay was most unfortunate. The Civil Aviation Authority's expression of opinion about it is one which I wholly support, but I think it would be impossible for me, in the light of the circumstances now prevailing, with the possibility of an appeal coming to my right hon. Friend the Secretary of State, to lay down any deadline.

I appreciate the Secretary of State's past record of robust defence of independent British interests in this matter. May I ask whether he will be prepared to consider retaliatory action against American carriers if the American Government remain in breach of the treaty? Is the Secretary of State prepared to ensure that this matter is raised with President Ford when he visits this country after Easter?

I wholly endorse the hon. Gentleman's view about my right hon. Friend's robust defence of British interests which is continually deployed at Question Time in the House. So far as retaliatory action is concerned, having regard to what I have already said it would be inappropriate for me to comment other than to say that such action does not generally produce effective results.

Does the hon. Gentleman agree that there has been tremendous delay over this matter? Presumably the appeal will be made by a British airline, Will the hon. Gentleman give an assurance that whatever appeal is made will be dealt with expeditiously so that the matter can be settled so far as this country is concerned?

I have already commented on the delay. If notice of appeal is filed—and that has not yet taken place—the appeal will be conducted fairly and expeditiously.

Eec Countries


asked the Secretary of State for Trade if he will make a statement on the latest figures for the United Kingdom's trade balance with the Common Market countries.


asked the Secretary of State for Trade what are the balance of trade figures with the EEC for the latest three-months period.

The visible trade deficit with the EEC Eight, on a balance of payments basis and seasonally adjusted, is provisionally estimated to have been £614 million in the fourth quarter of last year.

While not wishing to take up the time of the House rubbing salt into that wound, may I ask the Secretary of State to take this opportunity of explaining in clear words that when Britain leaves Europe we shall not turn our backs on Europe or be isolated from Europe, which are the current defeatist themes of the dispirited pro-Marketeers?

The hon. Gentleman knows very well that I have never taken the view at any stage—nor do I hold the view now—that if we decided at the end of the day, with the assistance of the British people, to withdraw from the EEC this would lead to a great disaster for our trade. I do not believe that. It would be a great mistake for people to try to conduct the debate on this matter in terms of bogies and scares of the most unconvincing kind.

Will the Secretary of State give us an assurance that he will cease his malevolent misinterpreta-of these figures, more epecially since the Foreign Secretary contradicts what he says, while all the other objective authorities do the same? Will he give us an assurance that if, as seems likely, the Government make a recommendation that the renegotiated terms are acceptable to them, he will have the guts to resign?

I am not sure what a malevolent interpretation is, but I will always listen very carefully to my hon. Friend on the subject of malevolence. I have said nothing so far in my answer about the interpretation. All I have given is a factual reply.

If my hon. Friend will allow me to complete my sentence, I was saying that the figures for the last quarter of 1974 showed a trade deficit on a balance of payments basis with the EEC Eight of £614 million. I stick by those facts.

Since the right hon. Gentleman's Department recently informed the House that in 1974 as a whole one-third of our exports went to the EEC and one-third of our imports came from the EEC, does not this show that the problem of our trade deficit with the EEC is only part of the problem of our global trade deficit?

Yes, indeed. We have another absolutely major factor in our trade deficit, which is above all the price of oil. The oil deficit is greater than the EEC deficit. However, if we eliminate the oil trade—which according to some points of view it would be fair and reasonable to do—there is no blinking the fact that the greater part of our non-oil deficit is attributed to the deficit with the EEC or is accounted for by the EEC deficit.

Do not these figures show, upon any interpretation, that the rest of the EEC countries have as great an interest in retaining industrial free trade with this country as we have with them?

I think, on the basis of the experience of the last two years, that it is an undeniable fact that the EEC has found it much easier to get into the British market than British exporters have found it to get into the EEC.

Has my right hon. Friend noted two answers given to me last week, one of which showed that the proportion of our total deficit with the EEC and with the world was lower in 1974 than in the previous year and in 1969 and the second of which showed that from 1971 to 1974 our exports to the EEC more than doubled, representing a much greater increase than our exports to the Commonwealth, which increased only by 40 per cent.? Is not it a fact that if we withdraw from the EEC British exporters will be severely hurt and our balance of payments may not be any better than it is now?

I cannot accept the point made in the last part of my hon. Friend's supplementary question. I think that depends entirely on two factors: first, what kind of arrangements should be made with the EEC to cover our trade and, secondly, how much importance in the total mix we are to attribute to a given level of tariffs. These are obviously matters which we can discuss, although I do not think we should draw alarmist conclusions. The share of our deficit attributable to the EEC marginally decreased last year but only because we were faced last year with a fourfold increase in the oil bill. But that does not mean anything.

Will the Secretary of State tell us the facts concerning our invisible balances with the EEC? Did not the question of the hon. Member for Oxford (Mr. Luard), and did not the Secretary of State's answer a few days ago relate to the non-oil deficit? Is not it therefore irrelevant to make the point which the Secretary of State has just made?

I have always been very careful in the House to distinguish between the total deficit and the non-oil deficit. I do not think anyone can accuse me of making any attempt to confuse the two. I fear that many lion. Members on both sides have recently confused the two. I have done my best to sort it out in the most straightforward way. If people cannot bear the facts, I cannot help them.

I think that some figures will be available soon as regards invisible trade with the EEC, but I shall get in touch with the hon. Gentleman.


asked the Secretary of State for Trade if he will undertake a detailed analysis of trade of the United Kingdom with the original six members of the Common Market.

Trade between Britain and the EEC is continually under review and, of course, detailed statistics are regularly published.

Does my right hon. Friend agree that the increase in the trade deficit to approximately £2,000 million has not only been against the trends forecast by some hon. Members but that one would have expected the opposite to take place bearing in mind the floating of the pound some years ago? Can my right hon. Friend suggest to the House any trends in trade with the EEC which account for this extraordinarily large deficit?

I can only help my hon. Friend in terms of the categories of trade in which there has been the principal deterioration. I have already told the House that the main categories in which we have suffered serious deterioration are food, steel, chemicals and across the whole range of what one might call semi-manufactures. There is not a clear pattern which emerges from this.

Are we to understand from the right hon. Gentleman's previous reply that he has no figures for the balance of trade in invisibles between this country and the EEC? In view of the way in which, by innuendo, he continually seeks to give the impression that since we joined our overall deficit with the EEC is worse than it would otherwise have been, will he confirm that he has no data which supports this view?

The hon. Gentleman must not attribute sentiments to me and then ask me to deny them. That is a frivolous approach to the question. I do not have with me figures of invisible trade with the EEC. I shall be happy to give those figures as soon as they are available. However, they are not collected on the same regular basis as we collect figures for invisibles globally.

Is my right hon. Friend's memory as good as mine, bearing in mind the selective sets of statistics which have been exchanged between both sides of the House, including the Minister, since half-past two? Does my right hon. Friend think, as I do, that no Minister in any Government has ever thought other than that entry to the EEC would be a difficult task and that benefit would come later rather than sooner?

I have the greatest respect for my hon. Friend and his memory, which I am sure is superior to mine on many matters, but what he has just said is not correct. I remember clearly how during the period of negotiation, members of the Conservative Front Bench proudly and confidently proclaimed that there would be great benefits for the British people. My right hon. Friend the Member for Battersea, North (Mr. Jay), in particular, was looked upon as being utterly ridiculous when he gave the figure of up to £1,000 million as the balance of payments deficit.

Does the right hon. Gentleman recognise that what the hon. Member for Kingston upon Hull, West (Mr. Johnson) said is essentially true, and that in his heart he must know it? I have just returned from a convention in Switzerland at the weekend which was attended by business men from inside and outside the Community and from North America, and not only they but their wives and families and most other people outside this country believe that if we leave the Community it will be seen by our friends round the world as the final folly of a once great nation.

There is undoubtedly a difference between business sentiments and the sentiments of the great majority of people in the country. But there was a difference also in Norway, and the predictions and gloom there turned out not to be justified.

Is not the outstanding fact which emerges from all the figures that, whereas we had virtually no trade deficit with the EEC Six in 1970, our trade deficit with the Six last year was almost equal to our whole non-oil trade deficit with the world?

In 1970 we had a very small deficit with the EEC. Last year we had a deficit of just on £2,000 million. The deficit with the EEC was equal to the whole of our non-oil deficit.


asked the Secretary of State for Trade what proportion of the deterioration in the trade balance with the original six members of the EEC since Great Britain's entry has been due to relative movements in exchange rates; and what steps he is now taking to improve the balance by taking advantage of the reduction in prices of British goods in Europe due to the exchange rate movements.

Our trade has been affected by a number of economic factors and there is no certain way of identifying the individual effect of movement in exchange rates. In qualitative terms, the sterling float has strengthened our competitive position in European markets and elsewhere. The Government and the British Overseas Trade Board have recognised the importance of this and have been urging exporters to examine their pricing policy to take advantage of the increased competitiveness both for themselves and the balance of payments.

Does my right hon. Friend agree that after a devaluation there is an initial deterioration of the trade balance, which he has pointed out with regard to Europe, but that it also provides the opportunity for greatly improved exports to the countries affected? Does not my right hon. Friend therefore agree that there are excellent opportunities for exports in Europe?

I hope that there are great opportunities for Britain's trade. Indeed, we have to make those opportunities because the present state of our trade, in spite of the recent improvement, is unsatisfactory, and we jolly well have to get back into balance. As for the initial effects of devaluation, it is difficult to get this question right because there has been a two-phase movement in the exchange rate in relation to the EEC. This was not a single-date devaluation but a float which began in June 1972. There was an initial fall of perhaps of 10 per cent. or more by the end of that year followed by relative stability and then further devaluation in 1973. We have now had some 16 months of relative stability in exchange rates, and I have yet to see the improvement in our export performance that we had hoped for.

In view of the right hon. Gentleman's contradiction of the Prime Minister's recent remarks, will he say whether the disposition of collective irresponsibility in commenting on EEC matters has now begun?



asked the Secretary of State for Trade what effect he estimates his new guidelines for tourism and its promotion in the United Kingdom will have on the volume and value of tourist activity in the West Country Tourist Board area.


asked the Secretary of State for Trade what consultations he has had with the travel, hotel and catering industries in the formulation of his policy guidelines for the tourism industry: and if he will make a statement.

The new guidelines are designed to maximise the benefits of tourism for the national economy as a whole rather than to define the position of particular districts or interests. The three national tourist boards and the British Tourist Authority, who are very closely in touch both with regional problems and with the trade, are being consulted about implications of the guidelines. Until their analysis has been received and studied I should not wish to add to my right hon. Friend's lengthy written reply to my hon. Friend the Member for Leeds. West (Mr. Dean) on 21st November last.—[Vol. 881, c. 525–6.]

Will the Secretary of State give us an assurance that, in developing the untapped potential of tourist areas outside the established centres, no damage will be done to the existing tourist areas and that there will be no reduction of money spent on the promotion of tourism in areas such as the West Country, where this is the No. 1 industry?

I cannot give the hon. Gentleman that assurance at this stage until the results of the review are known and studied. The Government appreciate the importance of tourism to the West Country. However, promotion must be seen as a local and commercial responsibility as well as an Exchequer task. Government funds are available to prime the pump but resources are too limited to make an indefinite subsidy. Above all, there are the less prosperous areas which, with appropriate help, can attract tourism and benefit from it to the benefit of us all.

Is the Minister aware that his right hon. Friend's recent statement was welcomed by many people as evidence that the Government were prepared seriously to rethink the tourist policies? Is he further aware that my interest in the industry enables me to look at how other countries promote tourism? Will he, for instance, take note of the fact that the Hungarians have embraced capitalism in their promotion of tourism in Western Europe and that the Swiss do as he suggested should be done and fully incorporate the views of commercial interests in the promotion of their tourism? Will the Secretary of State keep an open mind on the total rethink of the tourist policy being pursued by the Government?

I am grateful for the hon. Gentleman's remarks. I assure him that the Government's mind is open on this issue. However, until my consultations are complete we do not wish to add anything to what I have said.

Will the Secretary of State bear in mind, if the Government are successful, as we hope they will be, in developing tourism, particularly in areas such as the West Country and Wales, where the resident population may be low, the strain on the local economy in terms of car parks and other facilities? Will he have discussions with his colleagues in the Department of the Environment and the Welsh Office to consider whether financial assistance can be made available to local authorities for this purpose in the next financial year?

When we have the result of the review and the comments of the British Tourist Authority and the tourist boards, we shall undertake such discussions as are appropriate including, if necessary, discussions with the Department of the Environment.

European Economic Community


asked the Secretary of State for Trade if he will make a statement on his assessment of the trade-diversion and trade-creation effects on the United Kingdom balance of trade arising from United Kingdom membership of the EEC.

Although there has undoubtedly been a switch towards the EEC in the sources of our imports, particularly foodstuffs, I am not ready to make any overall assessment of the effect of membership of the Community on trade creation and trade diversion.

Does my right hon. Friend agree that there was general agreement on all sides, and indeed in the White Paper itself, that there would be trade-diversion effects which would lead to a loss in terms of Britain's balance of trade, but that those who advocated British membership of the EEC continued to argue that this would be more than offset by the trade creation within the EEC? Is it not rather strange reasoning that those advocates should now use the losses due to the trade-diversion effect as some justification for our massive deficit with the EEC?

There is a great deal of sense in what my hon. Friend has said. There is, however, a difficulty in any event over the period that we experience about isolating these two effects in so far as they ever could be separately identified and, further, doing it against the background of many other factors that are at work in our trade. It would be a worth while study, no doubt, but a very difficult one to make.

Will the Minister confirm that more than half the crude trade deficit with the EEC Eight last year was accounted for by the food and live animals sector? Has not that deficit increased because our food importers are buying cheaper food from Europe?

The hon. Gentleman should look carefully at the food items and distinguish those that may be cheaper in Europe than they were in the rest of the world during the year 1973–74 and those that were dearer. He must consider the mix of those two facts before reaching any conclusion. On the hon. Gentleman's first point about half the deficit—

No, almost certainly the hon. Gentleman is wrong about that. I think he will find that it is more like one-third.

Insurance Policy Holders


asked the Secretary of State for Trade when he expects to introduce the promised legislation to protect policy holders.

In view of the possible delay and the danger of retrospective legislation, will the Minister look at the position of Nation Life policy holders? Will he, for example, consider engaging in further discussions with the insurance interests to see whether agreement can be reached to a joint declaration between the Government and the Life Offices Association indicating that, when the amount from the liquidator from realisable assets is known, those who have effected these contracts can know that the Government and the insurance industry combined will then be prepared to make up the difference between that percentage and perhaps 80 per cent. to 90 per cent. of the original investment? Does the Minister realise that great worry and concern exist among a great many people and that joint action by the Government and the insurance companies would be most welcome?

I appreciate the anxiety and distress that have been caused as a result of this unfortunate failure, but I cannot agree that Nation Life should be encompassed by the Government's scheme. This scheme is to be financed by a statutory levy on the insurers and it would be wholly unreasonable to expect them to pay out for losses in respect of companies that fell before the announcement was made by my right hon. Friend on 29th October last year.

Does my hon. Friend realise that there are thousands of people throughout the country who get involved in this sort of thing and that the dreadful thing is that I am told that even today Nation Life is taking contributions from individuals? Will he have another look at the problem, because it is a great pity when working-class people are so kidded on by financiers of this kind to invest in concerns such as Nation Life and then lose their money to the extent that they will lose it?

It is true—this is one of the principal reasons for the introduction of our scheme—that ordinary people who have no expertise in these matters and who rely on the expertise of others, which is not always forthcoming or available, find it very difficult to distinguish between one company and another and one policy and another. Therefore, it is a fundamental aspect of our scheme that we should help such people. It is quite another thing to introduce the scheme on the basis of retrospection to a degree where the insurance industry could not possibly have recognised that it was being called upon to help this organisation.

Airport Charges


asked the Secretary of State for Trade if he will make a statement about the consultations held between his Department and the British Airports Authority over the authority's proposed increases in airport charges.

A proposal by the British Airports Authority for an increase in airport charges is being examined by my Department, and I expect to inform the authority shortly whether the increase is approved.

Will the Minister confirm that among these proposals is one for a 35 per cent. increase in charges at Gatwick, for instance, to start on 1st April, which is a tremendous burden for the airline operators to have to take aboard bearing in mind that they were told six months ago that only a 25 per cent. charge was likely? Secondly, will the Minister use his rights to veto this extraordinarily inflationary proposal by the British Airports Authority?

No, Sir. It is perfectly true that there is to be a 35 per cent. increase on 1st April 1975, but it has to be borne in mind that the last increase was on 1st April 1972; charges were adjusted on 1st April 1974. As for the 25 per cent. point, the situation has changed and in those circumstances the calculations of the British Airports Authority had to change.

Within the context of devolution, and given the express wish of the Scottish Council that such a body should be set up, will the Minister establish in Scotland a Scottish airports authority to take over the running of airports there which are currently managed by the British Airports Authority?

That is quite another question. The point will be examined, but I cannot give the hon. Gentleman any assurance that a separate airports authority will be established, because I am not at all sure that simply to manufacture another organisation would improve efficiency, which is the important criterion.

Japan (Trade Missions)


asked the Secretary of State for Trade how many trade missions visited Japan in 1974; and how many are planned for 1975.

Twenty-seven missions visited Japan in 1974. So far plans are firm for 22 missions in 1975.

Is my hon. Friend aware that that information is very welcome? Will he urge upon British industry the importance of exploring the Japanese market, which is one of the largest industrial and consumer markets in the world? Has his attention been drawn to the recent ineptitude of British Leyland in its approach to that market?

I am well aware, as are the Government and British exporters generally, of the importance of the Japanese market. I welcome any signs on the part of any major British company in particular which has so far neglected this market that it is seeking, through the British Overseas Trade Board and other bodies, to get into this fast-growing market.

Will the Minister do his best to ensure that the message conveyed by these missions to the Japanese is that the Government intend to proceed not by restricting imports into this country from Japan but rather by encouraging an increase of existing exports to Japan, including fine worsted cloth?

I am happy to give that assurance. That remains Government policy. We want to see a further increase in the volume and the value of British exports to Japan, which have increased greatly in the past two years, thanks largely to the British Overseas Trade Board and the many British exporters who have taken part.

Will any of these missions concern itself with ensuring that our exporters in this country are given a fair crack of the whip in getting their goods into Japan? It seems that a huge tangle of red tape is erected by Japan to make it very difficult for our car exporters in particular to get into that country.

There is a later Question on the Order Paper about car exports and imports which I do not want to anticipate. On the general point about red tape and restrictions in Japan, the position has eased a great deal in the past few years. I believe that British exporters who may well have been put off three or four years ago will find a different situation when they seek the advice of the British Overseas Trade Board and visit Japan themselves.

Will the Minister make a careful study of the correspondence he has received from Pressac Limited—a firm in my constituency which manufactures components for the television and motor industries—about the serious effect to employment that results from what it believes may be unfair importing practices?

The Government are always willing to look closely at any sign of unfair trade practices such as dumping or subsidisation in any form. We always have to be approached in the first place by the industry concerned. We are happy to advise it upon the evidence that it requires and the submissions it should make. I believe that the Pressac matter is under consideration.

Burmah Oil Limited


asked the Secretary of State for Trade if he has received an application from shareholders of Burmah Oil Limited for an investigation under Section 164 of the Companies Act in order to determine why the directors sold a substantial asset of their company at less than it was worth.

Is the Minister aware that according to the latest count the shareholders have lost about £117 million as a result of this sale? Will he tell the House whether the Government put any pressure upon the directors of Burmah Oil to the effect that they would receive the Bank of England guarantee only if they made the sale at low value? Will he say whether that is true?

I have no knowledge of any such pressure, but that is a matter for my right hon. Friend the Secretary of State for Energy.

Commonwealth Countries


asked the Secretary of State for Trade what was the crude trade balance between the United Kingdom and our other Commonwealth trading partners in each of the years 1970 to 1974, respectively.


asked the Secretary of State for Trade what is the trade surplus or deficit with the Commonwealth for 1974 to the latest convenient date; and what is the comparable figure for 1973.

The "crude" trade deficits—that is, the difference between exports valued fob and imports valued cif—with the Commonwealth in each year between 1970 and 1974 were £468 million, £174 million, £312 million, £637 million and £580 million respectively.

Why is the right hon. Gentleman getting so worked up when on those figures, particularly in the latter years, there has been a deterioration in our trade with the Commonwealth which proportionately has been much worse than the effects of our trade with the EEC? Does he now suggest that we should leave the Commonwealth?

The hon. Gentleman is entitled to put whatever interpretation he wants on the figures, but they seem to me in a sense to show a certain stability. They begin in 1970 with a deficit of £468 million. Last year there was a deficit of £580 million. There has been some up-and-down movement in the middle. That does not indicate any great change. I would point out that there is a component of oil in the 1974 figure. Presumably that relates most of all to our trade with Nigeria.

Does my right hon. Friend agree that the selection of figures for periods relating to Commonwealth and EEC trade does not help the great argument? Is he aware that there will be a feeling abroad that the persistent argument that we are hearing for remaining within the EEC seems to suggest that it was some sort of miracle that Britain existed at all before the EEC was created? Does he agree that the logic of that thinking that the protagonists of the EEC should bear in mind is that, for the miracle to continue, the sooner we get out the better?

I agree with my hon. Friend that the figures should be treated with the most scrupulous care. I entirely agree with his other remark. One of the most disagreeable features of the whole debate about the EEC is that the protagonists of entry on any terms are constantly seeking to denigrate this country and to create a mood of gloom and doom about our national future.

Airline Flights (Security)


asked the Secretary of State for Trade if he has plans to introduce sky marshals as security guards on passenger flights of British airline companies; and if he will make a statement.

I have given careful consideration to the use of armed guards on flights of British airlines, but I am not satisfied at present that this would on balance be in the interests of the safety of the passengers and crew.

Is the hon. Gentleman aware that in the Middle East at least one national carrier has introduced sky marshals with conspicuous success? Should he not give further consideration to introducing sky marshals equipped, for example, with low-velocity rifles? They would seem on the evidence so far to have improved security on some Middle East carriers.

I am aware of success in this respect concerning E1 A1. That is unquestionably the case. However, each Government must make their own decision on the basis of the threat or the risk as it appears to them. Unhappily the position of Israeli aircraft is unique. United States airlines which deployed the use of sky marshals for some little time have now, so far as I am aware, abandoned the concept in the interests of passenger safety and because of the pressure exerted by crews. Our own crews are distinctly worried about the possibility of sky marshals being carried. That is the position even if we were to take into account the possibility of the use of different weapons such as those the hon. Gentleman has mentioned.

Light Aircraft (Insurance)


asked the Secretary of State for Trade whether he will seek powers to make the possession of third-party insurance compulsory for the owners of light aircraft.

The insurance of light aircraft against third-party risks is the subject of current consultation between my Department, the Civil Aviation Authority and representatives of owners and operators. It would be premature to anticipate the outcome of these discussions.

Does the Minister agree that the financial consequences for a pilot's dependants can be catastrophic if he is not adequately insured in the event of his death while piloting an aircraft or while carrying passengers in an aircraft? What sort of third party cover does the Minister have in mind?

I entirely agree that failure to insure or failure to carry a sufficiency of insurance could have calamitous results. I am concerned about the matter, but the risks that have hitherto been embraced do not seem to cause us to enter into any panic about the situation. As the hon. Gentleman will know, there is absolute liability. What I and the CAA are seeking to encourage is that pilots should take out insurance to a value of £100,000. That, on expert opinion, would seem to be the right sort of figure. I hope that we shall obtain an effective response and that it will not be necessary to introduce legislation.

Arab Trade Boycott


asked the Secretary of State for Trade what representations he has received from British companies about the operation of the Arab trade boycott; what replies he has sent; and whether he will make a statement.

I regret that I cannot quote individual cases, but the Department has received representations from United Kingdom companies which are worried by the effects of the boycott. Her Majesty's Government deplore all trade boycotts other than those internationally supported and sanctioned by the United Nations, and while the position is explained to interested traders any subsequent decision is a matter for the commercial judgment of the firm concerned.

I thank my hon. Friend for that rather resounding declaration. I welcome the terms in which it was made. Has his Department taken note of and studied the effects of current American legislation against the Arab boycott? Does he think we should introduce similar legislation?

Yes, my Department is aware of American legislation, but we are not certain that if similar legislation were introduced in this country it would be likely to be effective or add much to our knowledge of the working of the boycott. It would also add to the already heavy burden of documentation placed on our exporters. So far as I am aware, the existence of the legislation does not prevent American exporters from providing boycott declarations.



asked the Secretary of State for Trade if he will pay an official visit to the USSR.

I plan to visit the Soviet Union in May this year for the fourth meeting of the Anglo-Soviet Joint Commission.

I thank my right hon. Friend for his reply. May I suggest that he tries to go a little earlier in view of the success of the Prime Minister's mission, which ends today, and in view of the fact that the expanding trade with the USSR which is available to us would go a long way to offsetting our appalling trade deficit with the Common Market? Will my right hon. Friend bear in mind that Britain is now about seventh in order with the Soviet Union whereas we used to be first among all the Western European countries—a position now held by West Germany?

Our trade with the Soviet Union has been at a regrettably low level for a long time, considering the size of its industrial base and the size of our industrial base. Like my hon. Friend, I very much welcome the obvious success which my right hon. Friend the Prime Minister has enjoyed in his visit to Moscow. Whether that should incite me to visit Moscow ahead of the Joint Commission is a separate matter. A great deal of work has been done and we shall follow it up as necessary. However, I have definitely in mind the Joint Commission meeting in May.

When the right hon. Gentleman goes to Moscow, will he correct the impression given by the Prime Minister during the playing of the national anthems and take off his hat and not keep it on, which the Prime Minister did, as we saw on television last night?

I cannot comment on the incident because I did not see it. However, I think that the hon. Gentleman's intervention was extraordinary and rather unworthy.

Export Promotion (Eec Countries)


asked the Secretary of State for Trade what advice, in the light of the EEC negotiations, his Department is giving to British exporters seeking to establish new sales outlets in the Common Market.

The full range of the Department's export services continues to be available to such exporters. The current renegotiation of the terms of our membership of the EEC has in no way weakened our encouragement to exporters.

Does not the Under-Secretary of State think that his Department should explain to exporters the likely effect of the EEC negotiations leading, as the Secretary of State for Trade wishes, to Britain's withdrawal from the EEC? Is it not a fact that British exporters who are starting new sales outlets in the EEC may find themselves without the tariff advantages which they now expect to enjoy?

I do not accept that the present uncertainties about membership seriously limit the value of the advice which my Department can give. In the event of a decision being taken to withdraw—and that obviously is by no means certain—I am confident that Europe must continue to be a major market for all British exporters.

Is the hon. Gentleman aware that many business men who have exported to the Continent for many years are getting quite desperate about the increase in documentation, or plain bumf, occasioned by our entry to the EEC? Many of them look back almost nostalgically to the days before we entered when it was easier to export than now.

We are aware of the difficulties resulting from complicated documents not only in the EEC but in other markets. I can assure the House that my Department is working with our partners in the EEC and other parts of the world to standardise, on an international basis, trade classification and other documentation procedures to speed up the flow of exports, which must be in the interests of all of us.

Eec And Efta Countries


asked the Secretary of State for Trade what was the average monthly deficit in 1974 on an Overseas Trade Account basis in United Kingdom trade with the eight other members of the European Community and with EFTA.

Does my right hon. Friend agree that the figure for the European Community contains a significant oil element? Does he also agree that, as the EFTA population is only one-fifth of the EEC population, we did rather worse on a population basis with EFTA than with the EEC last year?

I agree that the figure for trade with the European Community contains an oil element, but it is relatively small in the context of our total trade with the EEC. The EFTA deficit is larger than I would wish and reflects almost wholly the doubling of the price of forest products of all kinds, for which EFTA is our principal source of supply.

The right hon. Gentleman said that the figures should be treated with the most scrupulous care. Does he recall that at the end of October in his departmental publication his statisticians gave their reasons for our deficit with the EEC but they did not mention membership of the Community as being one of them? When will the right hon. Gentleman do as he has been asked and publish the facts on which he bases his insinuations that our membership of the EEC is the principal cause of the size of our deficit?

I have not said that. The only conclusion I can draw from what the hon. Gentleman said is what the House would expect, and that is that there is no censorship wihin the Department of Trade. If the statisticians of the Department wish to draw attention to certain factors and features, I am perfectly happy that they should do so.

Japan (Motor Vehicles)


asked the Secretary of State for Trade if he is yet in a position to make a statement about the imbalance in trade in motor vehicles between the United Kingdom and Japan for 1974.


asked the Secretary of State for Trade if he will restrict the import of Japanese cars in Great Britain.

The imbalance narrowed last year mainly as a result of a fall of 11 per cent. in imports and now amounts to £61 million. I look forward to a further reduction in 1975, now that the British industry is better able to meet demand at home and abroad. I have no proposals for import restrictions.

Has the Minister studied recently the prices of Japanese cars in this country, particularly in view of the rate of inflation in Japan? If he has not made such a study, will he accept that it would show that there is cause for fear about dumping? Will he make such a study?

I do not think that it is for the Department to undertake the study. It is for the British industry or the Society of Motor Manufacturers and Traders to undertake such a study in support of any claim they may wish to make that Japanese motor cars are being dumped here or subsidised. If and when we receive such evidence, we shall obviously give it very serious consideration.

Will my hon. Friend inform the Japanese Government that in the present depressed state of the market we cannot continue with the situation in which for every British car imported into Japan the Japanese export 100 cars to Britain? Will he inform them that if that situation continues he will reconsider his decision and impose quotas on Japanese cars?

If my hon. Friend's comments were based on the feeling that the fault lay entirely with the Japanese, there might be a case to answer, but I can assure him that the major reason why we have not exported many cars to Japan has been the shortage of capacity in this country. In this connection I refer my hon. Friend to a statement by the Deputy Chairman of BLMC on the radio on 2nd February when he said:

"Up to now we have not tried"—
that is, selling cars to Japan—
"because we have not had the vehicles available."

The House will be glad to hear the Minister's comments about dumping. Would it not be wrong to extend any protection to a British industry which is suffering from inflationary wage settlements?

I have every confidence in the British motor car industry as a result of trips that I and my right hon. Friend have made to various markets abroad. There have been no complaints to me while overseas about quality, reliability or price The main complaints have been about delivery and the shortage of capacity in Britain.

Has my hon. Friend any information about reported Japanese intentions to export completely knocked down cars to Britain on a large scale? Will he investigate this matter in order to ensure that this method is not used to conceal dumping?

I have not heard the reports and I am grateful to my hon. Friend for drawing my attention to the matter. If those reports were correct I do not think that the company concerned would be acting wisely or realistically, and I would consider any evidence put to me about unfair trading practices such as dumping.

Manufactured Goods (Eec Countries)


asked the Secretary of State for Trade if he will show the average level of tariffs imposed on United Kingdom imports of manufactured goods from EEC countries at the present time and prior to United Kingdom membership of the EEC, the corresponding figures for United Kingdom exports to EEC countries and the present value of the trade involved in each direction.

The average levels before accession were estimated to have been 10 per cent. for United Kingdom imports and 8½ per cent. for EEC imports. These have now been reduced to 4 per cent. and 3·4 per cent. respectively. In 1974 United Kingdom exports to and imports from the EEC Six were £3,813 million and £5,759 million on a balance of payments basis.

Does my right hon. Friend agree that the figures he has given, together with the figures he gave earlier this afternoon, demonstrate once more that the balance of advantage in this arrangement has accrued to the EEC countries and not to us? Will he therefore confirm my view that if Britain should decide to withdraw from the Common Market it is most unlikely that the EEC countries would act against their own interests in restoring tariff barriers and, therefore, that the point about tariff barriers should not be taken seriously in the debate about Britain's continued membership?

Undoubtedly in the early period of our entry into the EEC the balance of advantage in trade has clearly been gained by the other countries. That is the general picture. Of course I wholly agree with my hon. Friend when he says that there would be very strong reasons on both sides of the Channel for maintaining a free trade arrangement if the British people decided to withdraw.

Why does the right hon. Gentleman keep rabbiting on about the terrible EEC deficit? [HON. MEMBERS: "Because it is true."] Will he say why he disagrees profoundly with the Prime Minister, who said quite categorically on 14th January that both sides of the House had always expected that in the initial period there would be a deficit situation as United Kingdom exporters built up their trade?

I seldom disagree with my right hon. Friend the Prime Minister, but on that occasion I think he must have been revealing his well-known generosity of character in being so kind to the Opposition.

Food And Live Animals


asked the Secretary of State for Trade what proportion of the United Kingdom deficit with EEC countries in 1974 arose from trade in food and live animals.


asked the Secretary of State for Trade by how much the trade deficit in food and live animals has increased in percentage terms between (1) the United Kingdom and the six original members of the EEC and (2) the United Kingdom and the rest of the world between 1971 and 1974.

In 1974 the crude trade deficit—that is, the difference between exports valued fob and imports valued cif—in food and live animals with the Six accounted for 33 per cent. of our crude trade deficit in all goods with the Six. Between 1971 and 1974 the crude trade deficit in food and live animals increased by 297 per cent. The corresponding figure for the rest of the world is 37 per cent.

Will the hon. Gentleman help the House by relating that answer and the Secretary of State's earlier answers to the answer given by the Secretary of State for Prices and Consumer Protection last week that food Prices in this country were now rather lower than they would be if we were outside the EEC? Is not the only way of reconciling these two Government statements to agree that our food importers have been switching on a massive scale to supplies within the EEC as these are cheaper and more secure?

One can draw several conclusions from the switch in our trade, but none of them has necessarily to be picked out as being more important than another. For example, it is a fundamental principle of the common agricultural policy that there is Community preference and that one gives preference to food supplies from within the Community irrespective of price comparisons between supplies inside and outside. We should also take into account the depreciation of sterling. The argument as to whether food is or is not cheaper inside the EEC was effectively answered by my hon. Friend the Minister of State for Agriculture, Fisheries and Food on 23rd January, when he gave a list of commodities in three sections: first, those for which prices were lower inside the EEC; secondly, those for which there was no significant difference; and thirdly, those for which prices were higher outside the EEC.

Is my hon. Friend aware that the most fundamental issue facing the people of the United Kingdom is the facts of the case? Every Britisher must know why Britain was taken into the Common Market and whether it is in our interests to remain in or come out.

Yes, Sir. My hon. Friend and the hon. Member for Mid-Oxon (Mr. Hurd) have raised a fundamental point which will feature largely in the referendum campaign.

Will the Minister confirm that our total crude trade deficit with the Eight last year was £2,215 million and that food and live animals accounted for £1,224 million, which, by my arithmetic as opposed to the Secretary of State's, is rather more than half of the total trade figure?

May I clarify this statistical confusion? Some answers are given, depending on what the questioner wants, relating to the EEC Six while others relate to the EEC Eight. The answer that the hon. Gentleman has mentioned relates to the EEC Eight. My hon. Friend's answer related to the EEC Six.

National Health Service (Consultants' Contract)

With permission, Mr. Speaker, I would like to make a statement about consultants in National Health Service hospitals.

In my statement on 13th January I told the House of the events leading up to the consultants' rejection of the Government's proposals of 20th December for a new consultant contract and their decision to start industrial action. I indicated that while two principles were not negotiable—that is, the maintenance of the existing differential between whole-time and part-time consultants, and the introduction of a system of payment by items of service—there were other aspects of the proposals which could and should be further discussed. I proposed a return to the negotiating table as quickly as possible.

The consultants responded by asking for clarification of certain points, and although sanctions were continuing, I agreed exceptionally to meetings between their representatives and health departments' officials on 23rd January and 5th February. The clarification talks have been useful, I think, for both sides, but by their very nature they cannot reach the detailed agreement which must come as a result of negotiation. Following those meetings I wrote to the professions on 11th February explaining my position on the points the consultants' representatives put to me. I have placed a copy of my letter in the Library. I also told them that I would be happy to place copies of their replies in the Library, and this I have done.

First, let it be quite clear that a new contract is not being foisted on consultants against their will. They came to me when this Government took office and told me of their long-standing dissatisfaction with their contract. At their request I set up a working party to deal with their complaints. I was not then, and I am not now, forcing—or even urging—them to take a new contract. In common with the majority of contracts of employment for senior professional people, the present contracted commitment for whole-time and maximum part-time consultants is open-ended. It is not limited to 38½ or 31½ hours.

The purpose of my proposals of 20th December was to meet the consultants' complaint that this system did not adequately reward the very long hours many of them do. Their representatives in the joint working party had themselves asked that the consultant's present open-ended commitment should be replaced by a closed contract which would clearly define his basic commitment and ensure that additional work could be contracted and paid for separately.

The Government have accepted this principle and I believe that negotiations should be resumed in order to discuss how it should be implemented. As I told the House on 13th January, and as my hon. Friend the Minister of State spelt out again in the debate on 23rd January, we are not insisting on a precise "nine till five" formulation of the new standard contract, and we accept the need for flexibility, provided the basic commitment is specific enough for a system of extra payments to be built upon it and provided the whole-time differential is maintained.

I also attach great importance to replacing future payments of distinction awards by a new system of financial supplements which would be widely available to all consultants. The aim would be to provide financial recognition for special contributions to the National Health Service, particularly in those specialities or in geographical areas where understaffing has created difficulties. I believe there is considerable support in the profession itself for this kind of change, though here again I am willing to negotiate criteria and methods of payments which would be right for the National Health Service and fair to consultants and which would protect those who have benefited under the old scheme.

Because I recognise that many of these concepts are novel and require considerable discussion, I am anxious that our discussion of them should not hold up the Reviewd Body's repricing of the existing contract, which we want to see completed if at all possible by 1st April. The Government recognise that consultants have had to wait 12 months for their substantive review and that they are due for an increase in pay, and are ready to give the consultants the same assurances that I gave to the general practitioners.

My Department has already submitted its evidence explicitly recognising the need for pay increases, and I have now supplemented this with new figures on the present state of recruitment and the manning of hospitals in the NHS which reinforce the case. I am also today submitting evidence to the Review Body supporting important improvements in the consultants' incremental scale which would considerably shorten the scale and particularly help the younger consultants by removing the present danger of overlap between the senior registrar's and the consultants' earnings. In addition, I have told the consultants that I am willing to submit joint evidence with them on other matters to which they attach importance, such as the introduction of a London allowance for medical and dental hospital staffs and the financial recognition of family planning work. It would, of course, be necessary for negotiations to be resumed for joint evidence to be possible.

Since agreement on more fundamental changes in the existing contract will necessarily take some time, I have, as I have already told the House, offered to invite the Review Body to price the new arrangements without commitment and at a later stage. I am also prepared to ask it to do this within the context of the present review so that the arrangements could enter into effect within the same 12 months period. But it will clearly be possible to do this only if the Review Body has some indication of the lines of the new arrangements before it reports in April on the existing contract. This is another reason why negotiations should be resumed immediately.

Any decision to lift sanctions and resume negotiations rests with the professions' committees, and I understand that they are to meet on Thursday to consider my letter and the replies I have received. I regret to inform the House that in these replies the profession's negotiators, while recognising that there is common ground between us on a number of points, conclude that a recommendation for the immediate lifting of sanctions is unlikely.

I can only hope that after considering my letter and statement today the profession at its meetings on Thursday will decide to resume negotiations and to lift its sanctions which are damaging the Health Service and causing hardship to thousands of patients. I will, of course, inform the House of the outcome.

The right hon. Lady will appreciate that there has not been time to study the correspondence which has been placed in the Library and that her statement is necessarily long and complicated. Does she accept that I certainly express the hope that meaningful negotiations can be resumed in this difficult dispute as soon as possible?

Does the Secretary of State recognise, however, that the anxiety of the consultants does not spring from any belief that she is foisting a new contract upon them but from a belief that, however she may protest against it, the negotiations were being used as a means of eroding principles to which the consultants attach great importance and that it is therefore necessary for her to go a long way to restore the confidence of the medical profession in the genuinity of the negotiations? Will there be any provision for an independent chairman of or independent participation in the negotiations? In other words, will any outside independent person be brought in to help to bring the two sides together? Above all, does the right hon. Lady recognise the necessity of making it plain that she is now interested in promoting the best interests of the National Health Service and of its patients and is no longer interested in promoting the pursuit of Labour Party dogma?

Regarding the last unnecessary peroration by the right hon. and learned Gentleman, I think that, as the Labour Party was the creator of the National Health Service, we can be trusted to be the effective custodians of its interests. This is what our party policy is all about, and we are proud of it.

I was glad to note that the right hon. and learned Gentleman expressed the hope that the negotiations could be resumed. I ask him to couple that hope with the necessary corollary that sanctions which are damaging the interests of thousands of patients in the NHS can be lifted on Thursday so that those negotiations can take place.

The whole purpose of the two clarification meetings which have exceptionally taken place and of the exchange of correspondence was to reassure the consultants about certain misunderstandings which may have arisen. I recognise that right hon. and hon. Members have not yet had the opportunity of reading my letter, which has been placed in the Library today, but I am confident that when they have done so they will realise that there is no case whatsoever for refusing to get back to the negotiating table.

Is my right hon. Friend aware that the House will deeply appreciate the seriousness with which she takes this matter, her assiduous efforts to arrive at a solution to the problem and her realisation that the consultants, who in the main are dedicated men and women, have a case for increased remuneration? Will she confirm that she is adhering to the principle that consultants who serve the National Health Service full time will not be disadvantaged compared with part-time consultants who supplement their incomes in other ways?

Yes, I can happily give my hon. Friend that assurance. I have told the consultants that, contrary to some mythology that was spread around, I am not proposing to outlaw or to prevent them from engaging in private practice. But I have also said that part of the longstanding compromise to this effect, which was first initiated in 1948, is the existence of the differential in favour of consultants who decide to concentrate all their thoughts and energies on the NHS. It would be intolerable for me to go back on that very fair principle.

I assure my hon. Friend that I recognise that the consultants have a case for a pay increase. When hon. Members study my statement they will see the lengths to which I have gone and to which I am still prepared to go to see that their case is put fully and fairly to the Review Body in its considerations, which we hope will result in a report by 1st April. Therefore, there is no ground whatsoever for the dispute to continue.

The consultants asked for a new contract. I did not initiate it. I am not trying to impose one on them. I suggest that we should get together in giving points and joint evidence to the Review Body to get the urgent need for a pay increase met quickly and then take more time discussing the details of a complicated contract to take the place of the present contract.

Does the right hon. Lady recognise that what is in question here is the career structure for consultants, that the promotion pyramid is far too broadly based, and that therefore we also have in question the number of consultants' posts? Does she recognise that, apart from the question of consultants' posts, there is still a great deal to be done to discipline the progression of consulants so that they do not believe that they have a freehold on those posts as soon as they are appointed to them? Finally, does the right hon. Lady recognise that the profession would very much hope to be allowed to put its own house in order on this aspect and that it should not be imposed by the Department?

No, certainly not; I am not imposing. But I am offering to discuss. I agree that the scale needs shortening drastically, particularly to help the younger consultant who at present faces an overlap of the senior registrar's earnings on his own. We have been asked for our support in that respect and we have given it. For the rest, I repeat that all these matters are for negotiation.

Will my right hon. Friend confirm that, while she has made it clear to the consultants that she is not against private practice, she will continue to make it abundantly clear that she is opposed to private practice in National Health Service hospitals, which is a very different matter? Is she aware that there is great concern in the country that sanctions are being continued by the consultants and that it is to be hoped that these will end rapidly? Will she tell the House whether the merit awards in their new reincarnation, as it were, will be made public so that every doctor working in a hospital knows exactly who gets merit awards and what the amounts are?

My hon. Friend is entirely right on the first point. I have made it clear—and the consultants are aware of it—that this Government intend to proceed with the fulfilment of the Labour Party manifesto commitment to phase private beds out of the NHS. Discussions which were separately proceedings on that matter have been interrupted because of this dispute. However, that remains our policy.

My hon. Friend is right to deplore the damage that sanctions are doing. I hope that the whole House will unitedly and loudly call for the lifting of sanctions as quickly as possible.

It is our intention that the financial supplements awarded under our proposed new system should be made public and should be on the basis of clearly defined and publicly known criteria.

On two occasions the right hon. Lady mentioned the overlap between senior registrars and consultants. Will she make clear that it is her intention that this overalp should disappear from future arrangements?

Yes, Obviously it is not for me to fix the incremental scale. It is for the Review Body. However, we accept that the present scale is unsatisfactory in a number of respects. It needs to be considerably shortened. We are giving evidence to the Review Body to the effect that the scale should be so reviewed as to prevent this overlap from taking place.

Will my right hon. Friend accept that the great majority of right hon. and hon. Members will be ever grateful to her for making today what will prove to be a very useful statement? We all hope that the consultants will respond to the generosity of that statement by lifting their sanctions next Thursday. Does my right hon. Friend recognise that the major problem facing a conclusion of the dispute is money? We appreciate her difficulties in not being able to anticipate the outcome of the Review Body's study of this matter, but will she accept that, even if the Review Body ultimately came up with as much as a global lift of 35 per cent., that would still be within the guidelines set by the TUC?

That would depend on the basis on which the argumentation was advanced. But I must say that the figure quoted by my hon. Friend is rather different from the one in the letter to me from the Hospital Consultants and Specialists Association, which I have placed in the Library today. That letter demands an increase of 119 per cent., "or else".

Can the right hon. Lady answer that part of the question put to her by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) which referred to independent participation in the negotiations? Does she think that it is possible to have an independent chairman?

I am glad that the hon. Gentleman reminded me that I had not replied to that part of the right hon. and learned Gentleman's question. The answer is "No". The proposal is to use the normal negotiating machinery. I think that the professions felt this to be right. The independent element comes in when we reach the point of pricing the contract, or the arrangements which flow from the negotiations. This is the job of the Review Body, and it is independent of the Government. There is the normal negotiating machinery—the joint negotiating committee—and it seems to us and, I think, to the professions that that is by far the best medium for negotiations.

Agriculture (Prices)

I should like, Mr. Speaker, to report to the House the decisions reached last week by the Council of Ministers (Agriculture); and the Government's own determination of guaranteed prices following the Annual Review.

In my view, the most important decision of the Council was to make radical changes in the Community régime for beef. Under the new arrangements, it will be open to any member country to switch the emphasis of support away from permanent intervention and on to a variable premium, financed to a substantial extent from Community funds. The United Kingdom will take up this option. During the beef year beginning in March, the Community will pay about £47 million towards the cost of the premiums we shall pay on clean cattle sold for slaughter.

The average premium throughout the year can be up to about £5 per live cwt. but may vary above or below this figure at particular times. The total cost of the premiums will vary according to the state of the market, but at most would be about £135 million over the year. These premiums will enable the Government to assure producers of a fair return. I shall announce details of the scheme later; but my aim will be to provide an average return to producers of between £22 and £23 per live cwt.

It is an essential feature of the new arrangements that the premium cannot be paid on beef sold into intervention. This reduces the effective buying-in price to a level which will mean that support buying cannot take place on more than a limited scale.

This new system has been introduced on our initiative. I regard it as a major reform of the common agricultural policy. It gives the producer an assured return without forcing consumer prices up to unacceptable levels, and without building up mountains of frozen beef. This is the right way to give support.

The other main group of decisions concerned the level of common agricultural prices for the coming year. The increases average between 9 and 10 per cent. They relate, however, to support prices for Community producers. Their effect on food prices in this country, together with that of the transitional step we make towards common price levels, should be less than 2 per cent.

The biggest common price increase is of 15 per cent. for sugar. As a result of monetary changes, our own sugar beet growers will benefit from an effective increase of about 17 per cent. bringing the total sugar beet price to about £16 a ton. I hope this will encourage an increase in the sugar beet acreage.

The common target price of milk is increased by 6 per cent. in March and 4·7 per cent. in September. These increases, together with the transitional step, will result in higher prices for butter and cheese; but the Council also made provision to raise the contribution from Community funds to the general butter subsidy from about £26 to about £48 a ton.

The Council also agreed on minor changes in the monetary arrangements applying to the common agricultural policy. The percentage increases in common farm prices, when expressed in national currencies, will be slightly smaller in countries with appreciating currencies and larger in countries whose currencies have depreciated. For the United Kingdom this change means a new representative rate reducing monetary compensatory amounts by 2½ points, over and above a reduction of 1¼ points which is being applied on a general basis to countries with depreciated currencies.

Finally, the Council reached agreement in principle on the Directive on Less Favoured Areas, which deals mainly with aid for hill farming. We obtained an amendment so that the payments are not reduced for pensioners, a point to which this House attached importance. The contribution from Community funds will be a minimum of 25 per cent., but this is to be considered next month with a view to an increase. I expect the United Kingdom to be a net beneficiary.

I turn now to the determinations of guaranteed prices which the Government have made in the light of the Annual Review.

First, the guaranteed price of milk will be increased by some 5p per gallon, and is expected to average about 34·75p per gallon for the year from 1st April. The standard quantity will be increased by 50 million gallons so that it should continue to include all milk sold by the marketing boards. As a consequence, the maximum retail price of milk will be increased by 1p per pint on 2nd March.

The guaranteed prices for wheat, barley and oats will be increased to £51·80, £46·80 and £44·60 per ton respectively.

The guaranteed price for potatoes will be raised by £6 to £28 per ton.

The guaranteed price for fat sheep will be increased by 6p to 35·5p per 1b. The guaranteed price for wool will be increased by 5p to 31p per 1b.

The hill sheep subsidy will be raised by a further 60p per ewe over and above the increase made in December. The Exchequer cost of the increase in the level of support for the sheep sector in 1975–76 is estimated at about £34 million, including £9 million for continuing last December's hill sheep subsidy increases.

With the introduction of the new arrangements for beef, I propose to lay an order restoring the calf subsidy to the level obtaining before the increase of £10 made last March.

Finally, it is intended that the guaranteed price for pigs should be set at £4·03 for the period till July, when the basic price applying in this country under Community arrangements will be increased to substantially above that level.

With permission I shall circulate in the Official Report the full details of these determinations, and a note of the main economic data arising from the Annual Review. I am confident that the new beef régime, the increases in Community prices applying in this country, and the increases in our own guaranteed prices together represent a settlement that is good for our farmers and also takes due care of the interests of the British consumer.

This is a complex package which cannot be properly analysed in minutes. May I ask the Leader of the House, through the right hon. Gentleman, whether we can have a full day's debate in Government time on this arrangement, and on agriculture generally?

This package is good in parts. I welcome at once the award the Minister has announced for potatoes, sheep, wool and sugar. I share his hope that the award for sugar will lead to an increased acreage but I have some doubt whether it will be adequate.

I welcome the new beef arrangements which the right hon. Gentleman has negotiated. However, they seem to be for one year only. If that is so, is it right to regard this as a major reform? It is still short of being an absolute guarantee for beef producers, which we believe to be desirable. This is certainly a move in the right direction, but the right hon. Gentleman will be aware that his aim of achieving prices of £22 to £23 per live hundredweight is short of the break-even point. Can the right hon. Gentleman assure the House that he will continue to negotiate for a more realistic level?

The consolidation of the 7·7p together with the percentage increase for milk is to be welcomed. However, the loss of the calf subsidy, or £10 of it, and the remaining uncertainty about the future of the beef market must be subtracted from this award. It seems that the producers may or could receive less cash for their milk next winter than they received this winter. Can the right hon. Gentleman undertake that this will not be so? Is he aware that we want to be satisfied that the net effect will be to stop the decline in production and encourage a re-expansion?

Is the right hon. Gentleman aware that pig producers today are in a position that is barely viable? Since so much of the breeding herd has been slaughtered, is it not essential to restore profitability and with that confidence, to safeguard future supplies? Is he aware that I do not believe that his statement makes that clear?

Is the right lion. Gentleman further aware of the present anxiety among arable farmers and the possibility that they will become dependent on guaranteed prices in 1975? Cereals have been a saver for many farms last year. Is this not the time to jump the transitional period altogether and go straight to Community guarantees?

Why has the Minister not referred to the poultry industry? He must be aware of the crisis in the egg sector. It is no good the right hon. Gentleman shaking his head. This statement deals with "Agricultural Prices for 1975–76". Even with a level of imports as low as 1 per cent. or 2 per cent., total disruption can be caused in the domestic market. That is just what we have seen. Will the right hon. Gentleman now negotiate and ban these imports, as the French have banned our exports?

How far does the right hon. Gentleman think that this package goes to cover the vastly increased costs in agriculture? Is he aware that those costs are agreed at about £700 million? Do the awards announced today cover much more than half those increased costs? If not may I ask whether he has any hope of stemming the decline in output and achieving the aim we all share, namely that of restoring expansion?

I would, of course, welcome a debate on this subject. It is right that we should have one. This is a complex matter. My right hon. Friend the Leader of the House deals with the business of the House and no doubt the right hon. Gentleman will be pressing him on this. I shall have a word with him.

I am glad that the right hon. Gentleman has welcomed a large part of the award. He mentioned potatoes, sheep and sugar. He criticised the calf subsidy arrangement but welcomed the milk arrangements. This is a good and big award. The right hon. Gentleman must know that the calf subsidy was only a temporary measure. It had to go. We had to do this to achieve the beef régime. The right hon. Gentleman has rightly asked whether the beef régime is a temporary arrangement, whether it is just a supplementary arrangement or a fundamental change. This is an option for all member States—

It is not a derogation on the part of the United Kingdom. It is just as much a part of the régime we have agreed as the other parts. The régime is examined every year. That was so under our own annual review procedure. This is just as important to the régime as permanent intervention for those who accept it. I hope that no one will be pessimistic about this. I believe that the award represents a major breakthrough. I agree that there are problems in the poultry industry, especially with eggs. The Minister of State has been meeting representatives of the industry. I have still to get evidence about the question of the quantity of imports. It is not an easy matter because as members of the Community we have to be careful that we, too, are not breaking the law.

I know that that is the hon. Gentleman's contention.

Under the new arrangements there will be increased prices for pigs.

May I press the Minister a little further on this subject of milk? Can he first of all give an assurance to the House that producers will receive more cash next winter than they have received this winter? While it is true that I welcomed the consolidation of the percentage increase we have to take away the calf subsidy and the uncertainty in the beef sector. What I asked the right hon. Gentleman is whether he is satisfied that the net effect will be to expand production and stem the decline.

We had a major award which was welcomed by the industry. This is an addition. I have the detailed figures here. The United Kingdom guaranteed price for milk for 1975–76 was raised by 5p a gallon over and above an increase in the guaranteed price last October. This consolidates into the guaranteed price the 7·7p per gallon made from last October, and gives some more. This is a fine award.

May I congratulate my right hon. Friend on what appears to be a satisfactory agreement and especially on his success in obtaining acceptance of the principle of deficiency payments which will, hopefully, be permanent? Can my right hon. Friend say exactly what element of intervention buying he thinks will be involved at any time? Can he, further, say more precisely what effect he thinks this agreement will have on the retail price of butter? Can he explain, dealing with the less favoured areas, how the amendments will help the pensioners?

That has been accepted in principle. I put this to the Council. The whole matter is to be examined again in a month's time with a view to giving increased support above the 25 per cent. I think this was generally welcomed by participating countries. As for this question of the premium, the main effect will be on what we call the variable premium. There is a fixed element which we still have. It is this premium which is so important. I have had discussions with the unions today. They welcome this in principle and we are working out a mechanism to determine how this should apply. We have an option to take a contribution of £10 million from the Community for the butter subsidy. This is a matter for my right hon. Friend.

As a critic of the Minister may I first say that he deserves congratulations on what is a cautious and satisfactory review without being inspiring or a signal for expansion. Will the right hon. Gentleman reconsider the question of increases in sheep prices? On the face of it they appear to be considerable—6p a lb. on lamb and 5p a lb. on wool—but this has long been the Cinderella of the farming industry. Is he aware that figures disclosed this week show that at present prices, the transport costs for carcases of New Zealand lamb will be double the price received by the farmer in New Zealand next year? Does the right hon. Gentleman think that he has done enough to bring about expansion in the sheep sector? Personally, I do not think he has done enough.

Secondly, in regard to fertilisers, expansion depends on getting greater production from the hills. The Conservative Government removed the subsidy on basic slag. Why has not the Secretary of State put back to the subsidy during this review?

Thirdly, in the light of the fact that the review is said to recoup only half the increase in costs, will the Secretary of State undertake to keep the matter under review throughout the year? If there is a greater escalation in costs, the review may not look so good. Although it may turn out that nothing will need to be done, will he give an undertaking that he will be prepared to review the matter again in the autumn?

I am grateful for what the hon. and learned Gentleman said at the outset of his supplementary question in regard to the review. On the question of sheep and wool, the United Kingdom guarantee price for sheep has been increased by 6p a pound to 35·5p per pound. That is an increase of over 20 per cent. for sheep, and for wool the figure goes up by 5p per pound to 31p, which, again, is nearly a 20 per cent. increase. These are considerable increases, and I am certain that the hill farmers in the North-West will welcome this increase. We must also recognise that the hill sheep subsidies are being increased by 60p per ewe on top of the large increase last September. I think that that will inspire the necessary confidence. Obviously, I am prepared to take a continuing look at these matters after seeing how things work out in relation to guarantees and prices. I note what the hon. and learned Gentleman said.

On the question of slag, I find it difficult to restore subsidies once they have been removed. I restored the lime subsidy, but I have not brought back the fertiliser subsidy. I made a decision and at this stage I thought that we should concentrate on other matters. I shall look at the matter carefully.

May I crave indulgence to congratulate my right hon. Friend—[HON. MEMBERS: "Oh."] Wait for it. I was about to congratulate him, within the straitjacket of the Common Market, on having carried out an exceedingly good job. How will the variable beef premium work out throughout the year? In view of the strong feelings on the Labour benches on the question of intervention will he explain how much intervention he had to agree to in securing these agreements? On the subject of poultry, is my right hon. Friend aware that what the Tories are asking for—namely, a ban on imported poultry—is quite outside his control because the Tory Party took us into the Common Market and thereby precluded us from having, the power to stop the import of eggs?

In regard to the working of the variable premium, I have already stated that the premium will not be paid on intervention beef. There will not be a United Kingdom beet mountain. I have always accepted a modest form of intervention as support. Member States then have an option, which some will not use but we have it. We believe that it could apply to other member States. For that reason we do not rely on permanent intervention. I have already answered a question about eggs.

The Secretary of State spent a good deal of time in Brussels on the price review. Would it not have been better if we had had a purely national price review?

We have had a part national review. The simple fact is that this is the situation we have had to face. I know that the hon. Member for Banbury (Mr. Marten) holds certain views, but I believe that it is right that while we are in the Community I should go and negotiate what I think is in the best interests of our farmers.

Will my right hon. Friend say what cost will have to be borne by the agricultural industry? Is it about £700 million, as suggested? Secondly, although I join my hon. Friend the Member for Bradford, South (Mr. Torney) in congratulating my right hon. Friend in what he has achieved in the course of ongoing negotiations, particularly in the beef sector, is it not the case that this is a rather unnecessary exercise imposed upon him at present by our membership of the CAP and can hardly be said to bring us one iota forward in restructuring the CAP as laid down in our manifesto?

I can give the exact figure. It is, so far as we can estimate, £692·1 million. If my hon. Friend examines the matter carefully he will see that what we have achieved is a deficiency payment. How he can say that we have not made any advance on a system which relies purely on permanent intervention is beyond my comprehension. This represents a big advance. I hope that my hon. Friend, who believes in our party's manifesto, as I do, will accept the situation.

Did not the right hon. Gentleman's experience in these negotiations reveal to him that the CAP, far from being a straitjacket, lent itself to flexibility in negotiation? Was it not that factor which enabled him to obtain the advantages about which he told the House this afternoon? Therefore, in the light of his experience, would it not be crazy from the point of view of the British farmer to come out of the CAP?

I shall not comment on the future. All I can say is that I have achieved something which is quite different from the system which has been operating in the Community. I hope that my Labour colleagues will accept this. Added to that situation, I have tried during day-to-day business and in terms of renegotiation to take the view that we must introduce a measure of flexibility into the CAP. I have attempted to do this, and it is no good burking that fact. This is one example of where I have achieved something. Therefore, I hope that the House will accept it.

Is the change in the beef régime intended to be permanent? Will the Government ensure that it is embodied in some more permanent instrument than will emerge from an annual negotiation? Secondly, if it is a satisfactory régime for that commodity, is it intended to extend the régime to other commodities?

Beef is quite different from other commodities. One must judge each commodity separately. Anybody who knows the farming industry knows that one cannot apply a rigid rule to all commodities. One system may work well, whereas another may not work well. Therefore, I hope that I should not be expected to enter negotiations in the Community on that basis. Apart from that, I have made the statement. It may well be that this matter will be referred to in the final renegotiations. I cannot say at this stage. This is as secure an arrangement as I can possibly achieve.

Although I am sure my right hon. Friend has done his personal best in the circumstances, will he not agree that, apart from the welcome arrangement on beef, which is of rather doubtful permanence, so far there has been no major reform of the CAP and no material change in the Treaty of Accession?

I hope that my right hon. Friend has read my party's manifesto. If he has, he will see that we argue that we want a deficiency payments system. We have never acepted permanent intervention. We have made an achievement and I do not know why my right hon. Friend should cavil.

Will the Minister consider again the subject of milk? Does he not realise that he has done nothing like enough to restore confidence in the industry? If he looks at the facts in regard to the drop in the number of inseminations, he will realise that what the Department has done will do nothing to restore the position in the dairy industry. What is needed is a sum of 3p to 4p a gallon on top of the winter price—for, unless he awards this figure, I believe that we shall not get the milk which the consumer requires.

The hon. Gentleman is being too pessimistic. He knows that the dairy producer has got the highest award he has ever had and that it is a reasonable award. What I have announced today is additional to that. Therefore. I hope that the hon. Gentleman will not spread gloom around but will appreciate that this is a good award.

My right hon. Friend has mentioned that the variable premium scheme for beef may cost up to £135 million. Will he clarify for the House how he will decide whether that will be not available for intervention? He said that this money will not be available for intervention buying. Will he decide, or who will decide, and on what basis, whether beef will be given the premium or whether it will be put into intervention?

The mechanics will be decided by Her Majesty's Government. I stated earlier that I have had meetings with farming unions today and we have agreed to work out details which we see as essential in order to give long-term security in relation to beef production. In relation to the application of the variable premium, relating it to seasonal needs, we think that this is the right way to go about it. It will be decided by Her Majesty's Government.

Will the right hon. Gentleman say whether the figure he mentioned for sugar beet of £16 a ton includes the allowance for haulage and the allowance for pulp, because, if so, I can tell him that he will not get the full acreage which he requires and which he stated the other day should be 500,000 acres?

I have looked at the haulage question, I but I think that it does not include that. All that I can say is that the full Community price in effect is here, and we get the old common price plus 15 per cent.

Will my right hon. Friend say something about the impact of his statement today on the industry in Northern Ireland? Will he further build on the efforts he has made to encourage the industry to sit down now and plan for the growth that we very much need in order to guarantee that we can feed the people of this country and cut down on our imports?

On Northern Ireland, I had a Northern Ireland official with me. I have discussed matters today with the Northern Ireland farming leaders as well, and I recognise that there are problems affecting Northern Ireland, regarding the relationship with Eire in relation to the representative rate. I accept that, and we are having discussions with them to make sure that their industry in Northern Ireland is not harmed.

I was asked about the long term—and I would agree about the need for a long-term policy. I hope that all hon. Members, of all parties, would want a long-term policy. I hope to produce very soon a White Paper on this matter. I believe that this price review and what we have achieved in relation to the beef régime will help considerably to provide confidence.

The right hon. Gentleman said that the costs had increased by £692 million this year. He did not give the value of the determinations he has just announced. What estimate has he made, also, for increased costs in the forthcoming year? Is he aware that unless returns are, at worst, in line with increased costs, there is no hope of any increase in production?

I gave that cost figure. I could not go beyond that. It is too far ahead. I understand the concern, however, and we shall keep a continual watch. It will affect different sections in different ways.

I welcome the moves that the Minister has made towards a more satisfactory return for producers of beef, milk and other commodities. However, will he say whether he and, equally important, the farming unions regard this price review as the basis for a genuine expansion in home production of food, which is so important not only from a balance of payments point of view but also in releasing our imports of food for the Third World—or will it simply have the effect at the same time of increasing Community imports into this country, such as French eggs?

The question raised by the hon. Gentleman is perfectly valid. I have met farming leaders, here and in Brussels. On the Brussels negotiations—the part which affected the United Kingdom—I think there was broad agreement. I met today farming leaders from Scotland, Northern Ireland and England and Wales. I get the impression that they think it is a step forward. On the other hand, they are holding their council meeting this afternoon, and no one could predict how they will react. I hope that they will recognise that this is something reasonable.

Do I understand my right hon. Friend to say that the Community's minimum contribution was 25 per cent. but that he was aiming for a good deal more? How much is he hoping to secure, bearing in the mind that the greater the contribution, the more we shall be dependent upon them in respect of their influence upon our policy if for any reason we stay in the Common Market and then incur the disfavour of the Common Market community?

I am not sure what my hon. Friend means by the 25 per cent., and whether he means that it is in relation to beef.

The Directive concerning less-favoured areas? I believe they have decided to do that; they have accepted it in principle. We shall meet again next month with a view to upping that amount.

Will the right hon. Gentleman answer the question of my hon. Friend the Member for Devizes (Mr. Morrison)? Will the farmers be better off as a result of this price review? The right hon. Gentleman has calculated their costs, but he refuses to tell the House what this award is worth.

Yes, I believe they will be better off. Much of this depends on how the market works out. I shall not stick my neck out on something theoretical. I do not indulge in hypothetics. One gets one's fingers burned like that. I do not know how the market will go; no one does. But I believe that this points the way.

In telling us what the anticipated effect on food prices would be the Minister did not include, I think, the element for monetary compensation amount differential. What will be the effect on this country of than change in monetary compensation amount?

I mentioned that. I did not give a specific figure. I believe that it will be about 1 per cent.

Is it not imprudent for the Minister to give the impression that the new beef régime is a permanent feature of the CAP when, I think, it is not?

I have tried to show that it is as permanent as anything can be permanent—[HON. MEMBERS: "Oh."] "Of course it is: in the same way as intervention is permanent intervention, accepted by other sections. It is as permanent as it can be.

I am sorry that I have not been able to call every hon. Member who rose, but I shall remember those whom I have not called when we come to the debate.

Following is the information:



Determination at 1974 review

Revised determination

Determination at 1975 review

Increase over 1974 review determination

Increase over revised 1974–75 determination

Wheat (per ton)£39·62£42·97*£51·80£12·18£8·83
Barley (per ton)£35·73£38·78*£46·80£11·07£8·02
Oats (per ton)£34·20£37·12*£44·60£10·40£7·48
Potatoes (per ton)£22·00No change£28·00£6·00
Pigs (per score dwt.)£3·49£4·03†—‡
Sheep (per lb. edcw.)29·50pNo change35·50p6·00p
Wool (per lb.)26·00pNo change31·00p5·00p
Milk (per gallon)26·27p29·74p§34·75p≑8·48p5·01p

* It was announced on 17th July 1974 that the 1974–75 guaranteed prices for wheat, barley and oats were raised to £41·27, £37·26 and £35·67 respectively in the light of increases in CAP prices agreed in March. These guaranteed prices have been further raised in the light of the decisions of the EEC Council of Ministers in September-October 1974.

† The revised determination is effective from 28th October 1974.
‡ The pigs guarantee is to be terminated after 27th July 1975 in accordance with the Act of Accession.
§ This is the estimated average effective level of the guarantee, taking account of the increase in the guaranteed price to 29·79p per gallon at the beginning of October 1974, following the 5 per cent. increase in CAP prices then agreed, and the introduction of a special additional payment of 4·18p per gallon at the same time.
≑ Average. The guaranteed price will be related to a standard quantity of 2,950 million gallons. It is intended to assure the Boards an average price of 34·0 pence per gallon for production during the period 1st April-15th September 1975 and 35·5 pence per gallon on the remainder of the standard quantity or on the residue of production whichever

is the less.

1. Income, output and productivity
The figures in the following table update the series shown in Table 18 of the 1974 Annual Review White Paper and incorporate revisions to the figures in the earlier years:


June-May years

Net Income at current prices

Net Product at constant prices

Labour Productivity



3-year moving average







1974–75 (forecast)1,133 117131

* Adjusted to normal weather conditions.

2. Gross capital formation


In plant machinery and vehicles

In buildings and works

Work-in-progress and stock valuation changes


1974 (forecast)3092664301,005
3. Aggregate cost changes
Net cost change relating to all products: +£692·1 million.
4. Public expenditure
Public expenditure under the common agricultural policy and on national grants and subsidies in 1975–76 is estimated at £306 million. This figure is subject to Parliamentary approval of the Estimates and does not take account of the Review determinations.

Hospitals (Sutton And Cheam)

On a point of order, Mr. Speaker. I am sorry to take up the time of the House, but I should be grateful for your guidance and intervention on a matter which has been causing me some concern since 5th November 1974, when I raised under the Adjournment debate procedure the future of the Belmont and Henderson Hospital site, which is of acute concern in my constituency.

During the course of the reply which the Minister gave, he said, as reported at column 1036 of Hansard:
"Otherwise offer of the property must, in accordance with the rules for disposal of Government land, go first to other Government Departments, then to the London Borough of Sutton and to the Greater London Council."—[Official Report, 5th November, 1974; Vol. 880, c. 1036–37.]
I believe that what was stated during that debate was that the land would be first offered to other Government Departments, then to the London Borough of Sutton, and then to the Greater London Council. I believe that there have been certain omissions and errors because the statement was not accurately recorded and reported by Hansard.

That is the problem that I wish to raise, Mr. Speaker. You will understand that it is of critical importance to me in that the omission of the word "then" in fact means that the London Borough of Sutton would not enjoy first priority and first refusal of the land.

My hon. Friend the Member for Pudsey (Mr. Shaw) was with me on that occasion. As we left the Chamber, he said, "Well, you have received the assurance you were seeking." There were also four or five constituents of mine in the Public Gallery on that occasion, from the constituency, who were indeed pleased to receive that assurance.

Finally, I had a letter some weeks after this from a Liberal Greater London councillor, saying:
"I think you would like to know that some weeks ago I wrote to the Minister asking him for clarification of the sentence in Hansard which refers to the order in which land surplus to Government Departments' requirements is offered to other authorities. I attended your Adjournment debate and did not think the words reflected what the Minister had said at this point. I would be interested to have your comments".
That is from a councillor who is not of the same political opinion as myself. I should be grateful for your assistance, Mr. Speaker.

Further to that point of order, Mr. Speaker. Certainly I should be saying an untruth to the House were I to suggest that I could remember exactly what I said in an Adjournment debate on 5th November. But I have gone through the file which the Department keeps on the matter, and I have a copy in front of me of the exact speech notes I used on that occasion. All that I can confirm is that the words in Hansard are the exact words printed in the speech notes I used on that occasion, and there was certainly no intention on my part to mislead the House or the hon. Gentleman. In fact, I thought that what I had clearly indicated was that the offer of land would go to the London Borough of Sutton and to the Greater London Council jointly, because in fact, if one reads on to column 1037, one finds that I referred specifically to both of them having urgent housing needs. I can find no evidence to suggest that I in any way misled the House or attempted to do anything about the report in Hansard.

Further to that point of order, Mr. Speaker. I believe it has been established that there has been an omission from the Minister's reply. I believe that this statement would establish an important principle, and consequently I must refer to the half-dozen constituents and the councillor not of my political opinion who were present and who felt that the Minister distinctly said then—

Order. The hon. Member has dealt with that. I have heard what he has said, and what the Minister has said, and I shall consider the matter.

Statutory Instruments


That the Civil Aviation (Navigation Services Charges) (Fifth Amendment) Regulations 1975 (S.I., 1975, No. 122) be referred to a Standing Committee on Statutory Instruments.—[Mr. Pendry.]

Orders Of The Day

Industry Bill

Order for Second Reading read.

Before I call the Secretary of State for Industry to move the Second Reading of the Bill, I should tell the House that we have already lost an hour of the time that should have been available to debate this measure. An extra hour has been allowed for today's debate, but more than 40 hon. Members want to speak. I hope, therefore, that even though this is a two-day debate and we have the extra hour, Members will be reasonably brief in their speeches.

4.31 p.m.

I beg to move, That the Bill be now read a Second time.

This Bill, based on policies long advocated by my right hon. and hon. Friends and clearly set out in our manifestos, contains the Government's proposals for far-reaching democratic Socialist reforms affecting the relations between the community, management and workers and is designed to deal direct with the problems of manufacturing industry that lie at the heart of Britain's present industrial and economic weakness.

The reforms contained in the Bill have three prime objectives. The first is to reverse the long decline in British manufacturing industry by providing a new and important source of public investment which in its turn will help to sustain and expand employment. The second is to inject both the national and the regional interest, and the interests of working people, into the strategic decisions made by major industrial firms, and to improve our use of existing plant and equipment. The third objective is to extend industrial democracy in those firms to make them more accountable and thus help to bring about the shift in the balance of power towards working people which we see as a prime necessity if our underlying problems are to be overcome. I should add that we intend to meet these objectives by winning active support for these policies.

The Bill provides for the development of new instruments for those purposes. First, it extends and strengthens the Industry Act 1972 which we inherited from our predecessors. We are proposing that the power to acquire up to 100 per cent. of the shares of a company by agreement, which had been limited to assisted areas, should be extended to the country generally, and to remove the restrictions imposed by the old Act which made a public shareholding possible only as a last resort. We are also making it possible for these shares when acquired by the Government to be retained, since in our view, if public money is to be invested in private firms, it is reasonable that the taxpayer should benefit fully from his investment.

We are removing the time limit on Section 8 of the Industry Act under which it would have expired in 1977. We are retaining the Industrial Development Advisory Board, and I shall shortly be announcing some fresh appointments to it, but I must make it clear to the House that the responsibility for reaching decisions rests with the Minister, who is accountable to the House of Commons, and I have no intention whatever of shielding behind outside advice or of avoiding my responsibilities for policy decisions.

I apologise for intervening so early in the debate, but an important aspect of the whole legislation is to whom the Minister is to be accountable. Is he to be accountable to the House, or to the Commissioners in Europe? Will those Commissioners have a right of veto, and will they be subject to any control by the Council of Ministers? What is the position concerning the provisions which my right hon. Friend has just announced? Will this House be free to come to a decision on these matters?

I shall deal with the Industrial Development Advisory Board. I do not want to touch on matters of renegotiation, but my hon. Friend will know that Articles 92 to 94 of the Treaty of Rome, coupled with Article 189, make its regulations applicable in this country and that Section 2 of the European Communities Act means that the Bill when enacted will be subject to the provisions of those articles in the treaty.

The Bill also establishes a National Enterprise Board with the functions and powers set out in Clauses 1 to 8, which give it the power to work anywhere in the United Kingdom, including Northern Ireland.

Clause 2 specifies the purposes, functions and powers in greater detail, based upon the policy contained in the White Paper published last August. As the sponsor of the Bill and the new Board, the Secretary of State will be accountable to the House of Commons for the work of the board, because with the power to give specific directions contained in Clause 6 the accountability will be greater than for a normal nationalised industry.

The board will also work under the general supervision of the Government, in exactly the same way as the Bill and the White Paper on which it is based were subjected to detailed collective scrutiny and approval before they were published.

The National Enterprise Board will have an initial statutory tranche of £700 million with power to increase this amount if Parliament approves to £1,000 million. This sum is, of course, additional to the £550 million provided for under Section 8 of the 1972 Industry Act, subject to parliamentary approval for successive tranches, and an unlimited sum already provided by statute under Section 7 of the 1972 Act.

The National Enterprise Board will have no compulsory powers of acquisition. The White Paper set out the Government's specific nationalisation proposals, which will be dealt with by normal legislative process separate from the National Enterprise Board.

The Board will have responsibility for promoting industrial democracy, which we believe must develop organically out of the needs, experiences and aspirations of those who work within the firms in which the NEB will participate.

Clauses 9 to 13 provide powers in relation to the transfer of control of important manufacturing undertakings to non-residents, and these powers should be welcomed in present circumstances.

Clause 14 deals with Planning Agreements which, though voluntary in character, will provide that regional development grants under them will not be reduced during the lifetime of each Agreement. This is an important response to the demands from industry that there should be greater certainty in its dealings with the Government.

The Planning Agreements will, we believe, allow us to move towards a more successful and constructive tripartite dialogue between Government, management and workers in the firms concerned, and managements will also get the benefit of greater disclosure of Government forecasts to help them in their own planning. These Government forecasts will be more likely to be accurate because they will be based upon a greater disclosure from the firms.

Clause 15 amends the Industry Act along the lines that I have already indicated.

Before my right hon. Friend leaves the subject of Clause 14, which refers to regional policy, will he assure the House that the Government's powers under this clause, and the regional policy generally, can be exercised without the permission or without the interference of the EEC Commission?