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Commons Chamber

Volume 888: debated on Monday 10 March 1975

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House Of Commons

Monday 10th March 1975

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Industry

West Midlands

2.

asked the Secretary of State for Industry what steps he is taking to reduce unemployment in the West Midlands and to increase investment in the region ; and if he will make a statement.

:I am aware of the concern expressed recently about the economic situation in the West Midlands. When the National Enterprise Board and the planning agreements system come into operation, we shall be in a position to do more to encourage industry to raise the level of investment.

:I appreciate that reply, but cannot my hon. Friend take emergency action now to increase investment and reduce unemployment until the board becomes fully operative? Is he aware that the North Staffordshire area, which is within the West Midlands region, has special problems? Will he undertake to consider those problems and take them into account in any moves he makes to attract new, modern industry into the region?

:With regard to my hon. Friend's first point, it would be wrong for me to anticipate the Budget of my right hon. Friend the Chancellor of the Exchequer. My Department is aware of the problems in the West Midlands and of the similar problems in other parts of the country. We are examining them, but it would be wrong for me to suggest that we could take emergency action.

7.

asked the Secretary of State for Industry what proposals he has to revitalise industry in the West Midlands in order to end short-time working in subsidiaries to the motor industry.

:The West Midlands and the motor industry are going through a very difficult period and we shall continue to keep a close watch on the situation.

:Is my right hon. Friend aware that the Goodyear tyre plant, which is the largest employer in my constituency, has been on short time for several weeks and that several hundred redundancies have now been declared? Does he appreciate that that is a very serious situation? Further, is he aware that the industrial building industry is in difficulty and that the future completion of a Government skillcentre is in jeopardy? Does he not think it necessary to take urgent steps to see that that matter is remedied?

I suggest to my hon. Friend that when individual firms run into difficulties there should be talks between the unions and the management concerned, and that an approach should be made to my Department. Something can be done in some of these cases. Beyond that, as my hon. Friend will realise, the world situation is a difficult one against which to resolve these problems rapidly.

:Is the right hon. Gentleman aware that many people in the West Midlands work in small businesses and that the very existence of those businesses is being put in jeopardy by the Chancellor's capital transfer tax proposals? Will he have discussions with his right hon. Friend to ensure that his good endeavours on one front are not sabotaged by his right hon. Friend on another?

:I take the point that the hon. Gentleman is making, but it would be wrong to suppose that the current difficulties facing small firms in the Midlands, which may be making components or supplying to the large motor firms, are currently affected by the Budget proposals to which he refers. That is a separate point, which I have no doubt the hon. Gentleman is taking up with my right hon. Friend.

Companies (Disclosure Of Information)

3.

asked the Secretary of State for Industry why, if the disclosure of information might be held to be prejudicial to the interests of an undertaking, he is requiring in the Industry Bill an undertaking to disclose that it is appealing against a direction to furnish such information.

:When a company makes an application that may restrict the information available to its workers their representatives should know of this, and be able to argue their case.

:Is it not more in line with the Maoist derivations of the right hon. Gentleman's philosophy on industrial affairs that a company should be given the right to appeal for the protection of non-disclosure, but to be obliged to disclose, before its case is heard, that it is seeeking such protection? Is not that a negation of British natural justice?

:The last great incursion of Mao Tse-tung into British politics was the warm welcome he gave the former Leader of the Opposition when he visited China last May. The Maoist contribution to current debate is to give warm support to British membership of the Common Market.

In our view, people who invest their lives in British industry are entitled to know more than they are now allowed by the shareholders to know about the future of the companies in which they work. It is no good Conservative Members constantly saying that we should tell the truth to the British people if, when we ask industrialists to do the same about the firms in which those people work, they always line up with those in favour of secrecy.

:Is my right hon. Friend aware that from the interventions from the Opposition on this sort of topic we take it that they approve of such closures as that of the Imperial Typewriter Company, in Hull, where the workers, having been told that there was nothing to concern them about their future, received one month's notice a fortnight later? A total of 1,400 jobs have been lost. The company is up and off with the British taxpayers' money, and there is a great deal of unemployment in my constitutency.

I agree with my hon. Friend that it is a public scandal that men who have worked for many years in industry should be laid off by managers who have told their workers nothing about the problems which lead to the closure.

Will the Secretary of State tell us which paragraph of the White Paper states that companies will be compelled to disclose information where they have no intention of entering into planning agreements?

The hon. Gentleman must not seek to reproduce at Question Time the debate in the Committee which is going through the Industry Bill line by line. We have made it absolutely clear.—[Interruption.] Does the hon. Gentleman wish to intervene?

Perhaps the hon. Gentleman will allow me to answer the question. It was made absolutely clear in the White Paper that the disclosure of information by management to workers and Government was a central part of our proposals.

Private Investment

4.

asked the Secretary of State for Industry if he will give the figure for private industrial investment in 1974 ; and how this compares with 1973.

Capital expenditure by manufacturing industry in 1974 is provisionally estimated at about £3,260 million, at current prices. This represents £2,115 million at 1970 prices—10 per cent. greater than in 1973. This figure relates mainly to private industry, but includes publicly-owned manufacturing concerns.

Is it not clear from those figures that industry was investing more in 1974 than in 1973, contrary to what the right hon. Gentleman has alleged? Will he now publicly admit that the policies of the previous Conservative Government were producing an increase in investment and that it would be wise for him not to interfere with that improvement?

I am afraid that I do not accept that argument, in that the so-called "Barber boom" had come to a halt by the summer of 1973, before the oil crisis. The previous Conservative Government left office following the disaster of the three-day working week and the investment in the pipeline at that time may have continued until the end of the year —but the forecasts for future investment were low when the hon. Gentleman's Government left office.

Does my right hon. Friend agree that the figures are an argument for the increased investment in the public sector which he proposes to carry out?

My hon. Friend is quite right. The one sustained area of continued high investment and high investment intention is the public sector. That has come out clearly from the recent NEDC reports. It is our intention to introduce the National Enterprise Board and to make good use of the Conservative Government's Industry Act of 1972. That indicates our view that public sector investment must play a leading part in re-equipping British industry.

Does the right hon. Gentleman not agree that if investment stood high in 1974 as a result of commitments in the pipeline in 1973, it makes nonsense of his attempts to try to blame the Conservatives in 1970 for falling investment which was already planned in 1969?

British Steel Corporation

5.

asked the Secretary of State for Industry what is the total number of BSC employees working on less than a five-day week.

The corporation informs us that some 4,500 employees are at present working less than five days a week on their normal duties, but the corporation has so far found alternative work for nearly all of these, so as to provide full five-day working.

Is the Minister aware that there is grave concern amongst the employees of the British Steel Corporation about their future? Does he agree that nationalisation is not necessarily an answer to full employment, and that it can lead to redundancies just as much as private industry?

In fact, the record of the British Steel Corporation on redundancies is a great deal better than it would have been if the corporation had been a number of private concerns. That is shown by the fact that only half of the job losses resulting after 1967, after nationalisation, led to redundancies. In 50 per cent. of all cases there was redeployment. I can give the hon. Gentleman an assurance that the BSC is taking all steps to try to overcome the present situation. It is making up 80 per cent. of average earnings under the terms of the guaranteed working week agreement made between the corporation and the unions. That is a great deal better than arrangements made with private concerns in similar circumstances.

Concorde

6.

asked the Secretary of State for Industry when he now expects the Concorde aircraft to go into operational service.

As my hon. Friend the Under-Secretary of State for Trade said in reply to the hon. Member for New. bury (Mr. McNair-Wilson) on 26th February, the question of the date on which British Airways and Air France should begin commercial services with Concorde will be a matter for discussion at the Secretary of State's forthcoming meeting with the French Minister for Transport which is to take place in London on 25th March 1975.

Does my hon. Friend agree that it is vital that Concorde goes into service at the earliest possible moment? Does he further agree that not until Concorde is in service shall we get foreign orders for the aircraft? I impress upon the Ministry that it is vital for jobs in my area—I am sure that my right hon. Friend the Secretary of State for Industry will agree with this—that the aircraft gets into operational service at the earliest possible moment.

I entirely agree that it is of the greatest importance to ensure that Concorde is brought into operation at the earliest possible moment. That is why we are taking every step to ensure that that happens. Provided that the certification programme can be completed later this year we hope that it will be possible to start limited service before the end of this year.

Is the Minister aware that among the steps that we hope the Government will take is that of ensuring that both the British Embassy in Washington and British Airways do everything possible to help those in America arguing against Senator Proxmire's Bill, so that the aircraft can enter service in the United States at the same time as it enters service elsewhere?

We are doing all that we can to assist in the discussions to which the hon. Gentleman refers. I think he will be pleased to know that the recent publication by the US Federal Aviation Administration of an environmental impact statement on Concorde is an important step forward. Of course, there are other steps to be taken. There has to be a period of public hearings and representations before the FAA decision is finally made. We shall seek to assist in those disussions in the way that the hon. Gentleman has described.

Johnson Firth Brown

8.

asked the Secretary of State for Industry what further discussions he has held with the trade unions and/or management concerning the future of Johnson Firth Brown consequent on the collapse of Jessel Securities.

Since my reply to my hon. Friend on 9th December, my right hon. and noble Friend the Minister of State has had discussions with both these parties about the acquisition by Government of Jessel Securities' shareholding in Johnson Firth Brown Ltd. However, hon. Members will know that the shares have now been otherwise disposed of.

Is my hon. Friend aware that there is strong resentment amongst the workers in Johnson Firth Brown about the interference of the European Coal and Steel Community in this matter, and its interference with the proposals of the British Steel Corporation for taking a share in this important company? Does he agree that the special steel industry in Sheffield is far too important to become the catspaw of city financiers in London? Further, will my hon. Friend give an assurance that the NEB, when set up, will study that industry with a view to a sensible reorganisation?

On my hon. Friend's first point, I certainly agree that it is a matter of deep public concern that the European Commission imposed conditions which were as unacceptable as they were in this case—namely, the divesting of William Beardmore's and the JFB Foundry, in Glasgow, employing 1,000 men. That is a condition which even before it was carried out caused acute job anxiety in that firm, and which would certainly have undermined its viability if it were outside a larger group. I agree, too, that a decision on the reorganisation of the special steel sector should not be left to a board which allowed itself to be argued into a self-damaging situation as a result of political suspicions which were entirely unjustified. I give my hon. Friend the assurance that we shall retain an NEB option to reorganise the industry in the proper interests of wider industrial benefits to this country. That is what we now propose to do.

Is the Minister aware that what the ECSC is doing in this area is reflecting the view that a monopoly raises grave problems? Does he agree that if the logic of his argument is carried forward, we shall have a continuing series of monopolies right across our industries, irrespective of the interests of both consumers and the work forces employed in those industries? That is what the argument is about.

I do not accept that the ECSC is entitled to take power from this House in the way that it proposes. Though there may be competition considerations, it is utterly unacceptable to the Government—and, I hope, to all Members of this House—that a condition should be imposed which puts at risk the jobs of 1,000 men.

South Yorkshire

9.

asked the Secretary of State for Industry, if he will take action to reduce the high unemployment in certain areas of South Yorkshire, by reclassifying the South Yorkshire intermediate area as a development district.

While unemployment in South Yorkshire is certainly too high, particularly in certain areas, the general level is about the national average and, therefore, reclassification cannot be justified at the moment.

Does my hon. Friend realise that we are not standing for that? Is he aware that unemployment in the Mexborough district has been running at between 6·5 per cent. and 6·7 per cent. in recent years and that young people in the area have to go outside it to find suitable jobs? When will the Government do something to ensure that South Yorkshire has more viable industries and more diversification to provide some alternative to the pits for our young people?

The Government's policy in relation to the classification of areas·and it has been the policy of all Governments—is to do it on a broad-band basis. We understand that within the broad bands some parts have a very high level of unemployment. We are looking at the whole matter, but at this stage I am afraid that I cannot give my hon. Friend the answer that he wants, which is to upgrade certain areas within the broad band.

Is the Minister aware that the newly-constituted area of South Yorkshire was created for local government purposes and that for any treatment of the kind proposed in the Question the whole industrial area of the former West Riding should be considered as one unit?

Local government boundaries and areas for intermediate, development and special development areas do not necessarily follow the same lines. I reiterate that this area is an intermediate area. It gets certain assistance from the Government. Nevertheless, there are problems within the area. We understand this. The position at the moment is that there is a general recession throughout industry, which not only applies to the Yorkshire area concerned but extends into development and special development areas with even higher levels of unemployment.

Workers' Co-Operatives

10.

asked the Secretary of State for Industry whether he will publish the guidelines currently being used by his Department to determine the terms under which financial assistance is offered to workers' co-operatives.

Guidelines for assistance under Section 7 of the Industry Act 1972 were announced on 2nd October 1972, and notified to the House on 1st November 1972. The considerations governing Section 8 cases are wider, and both are covered by the Act itself. These apply to all applications for assistance under these sections of the Industry Act 1972, irrespective of the type of company involved. The final responsibility lies with Ministers.

Will the Secretary of State say when, on any previous occasion to that concerning the Kirkby co-operative, the taxpayer has provided 100 per cent. of the capital of a company on the basis that it is non-returnable to the Exchequer whether the co-operative succeeds or fails?

I cannot answer that specific question without notice. However, I can say that this was the first co-operative supported under the Industry Act 1972. I have noticed the bitter hatred expressed by the Opposition to all workers' co-operatives.

Does the Secretary of State realise the importance of having guidelines? Will he explain why two separate cases—Aston Martin and Meriden—were considered not viable, though both had export potential, both were rejected by the IDAB, but the Secretary of State opted for one and not for the other?

No guidelines were written into the Bill passed by the previous Government. The matter was left to Ministers, subject to the advice of the IDAIR, with no obligation to accept that advice. In the case of Meriden, a marketing arrangement had been reached with NVT, whereas in the case of Aston Martin the absence of adequate marketing arrangements played some part in reaching our decision. The latest proposals for support from Aston Martin would principally have benefited the creditors and not the future of the business. It was on those grounds that I felt unable to accept them.

15.

asked the Secretary of State for Industry if he will make a further statement about Government financial assistance to the Meriden Workers' Co-operative.

With the completion of the necessary agreements, assistance has been provided to enable the co-operative to begin production.

Is the right hon. Gentleman still satisfied that the amount of assistance being given will enable the co-operative to reach viability? Is it his intention that it should continue to remain a subcontractor to Norton Villiers Triumph, or does he want it to be something more?

I certainly adhere to the decision that I took and recommended to the House. This co-operative is an important example of what may be achieved by these means.

As the hon. Gentleman knows, the arrangement with NVT is time dated for two years for marketing purposes. I hope that with the launching of the cooperative, which I understand began production today, we may open a slightly happier chapter for the British motor cycle industry.

Does the right hon. Gentleman accept that the Aston Martin workers in my constituency think that they behaved far more responsibly than the workers at the Meriden co-operative? Even at this late hour, will the right hon. Gentleman agree to meet those concerned to see whether the proposals put forward, which involve a degree of worker participation, can be reconsidered to save this famous company?

I have never refused to meet people who have asked, through their Member of Parliament, to see me. That is the practice that I aim to follow. However, the parallel that the hon. Gentleman sought to draw between Aston Martin and Meriden is not a close one. I pointed out in answer to an earlier supplementary question that the marketing arrangements at Meriden are established through NVT. The marketing arrangements for Aston Martin are not so established. All the support in the latest proposal would have gone to the creditors, not to establish the business on a viable basis.

The right hon. Gentleman has already given the House an assurance that the maximum aid to the co-operative is £4·95 million. Will he now answer the question put to him by my hon. Friend the Member of Newbury (Mr. McNair-Wilson), namely whether that is sufficient to make the co-operative viable? If not, what will happen when the money runs out?

It is an old principle as the hon Gentleman knows, that Ministers cannot answer hypothetical questions. I answered the question by adhering to the statement that I made to the House in recommending support of the Meriden co-operative on the basis I proposed. I stick to that view.

Scotland (Minister's Functions)

11.

asked the Secretary of State for Industry what functions he has in Scotland, and what functions he will retain after the proposed transfer of certain powers to the Secretry of State for Scotland.

31.

asked the Secretary of State for Industry what role he envisages for his Department in Scotland after the setting up of the Scottish Development Agency.

At present my right hon. Friend's functions in Scotland are the same as in the rest of Great Britain. Following transfer of responsibility for regional selective assistance in Scotland to my right hon. Friend the Secretary of State for Scotland and the setting up of the Scottish Development Agency which will be answerable to him, my right hon. Friend will retain throughout Great Britain his existing responsibilities for general and sectoral industrial policy, statutory responsibility for the British Steel Corporation and the Post Office, and responsibility for industrial research and development, together with certain aspects of regional industrial policy. In all these matters in so far as they affect Scotland, we shall, as always, consult my right hon. Friend the Secretary of State for Scotland.

Is it possible to avoid duplication between the Scottish Development Agency and the National Enterprise Board?

As my hon. Friend knows, the Secretary of State for Scotland has published a consultative document on which he will be seeking advice from interested parties on the general question of the Scottish Development Agency. But we have always consulted very closely on this matter and there is no difficulty in making this distinction. These matters are being worked on at present.

Will the National Enterprise Board be regarded as a complement to, rather than a competitor of, the Scottish Development Agency? Is my hon. Friend aware that what Scottish industry requires is meaningful decentralisation within the context of a comprehensive United Kingdom plan for industrial development'? Does he agree that, just as political devolution is preferable to complete political separatism, industrial devolution is to be preferred to complete industrial separatism, in order to serve the best interests of the Scottish people and people elsewhere in the United Kingdom?

I agree with my hon. Friend. The whole purpose is to allow this degree of decentralisation, in that certain decisions will be taken in Scotland about Scottish affairs. However, the broad overall aim is to preserve the industrial integrity of the United Kingdom.

Is the hon. Gentleman aware that great concern has been expressed by industrialists in Scotland about a remark by the Minister of State for Industry during the Second Reading of the Industry Bill in which he said that the writ of the NEB would run in Scotland, that the Scottish Development Agency would be subservient to the NEB, and that this would lead to even greater centralisation of decision-making in Scottish affairs?

Which Minister will be responsible for ending the shameful practice whereby industrialists such as the Tinsley Wire Company, Coatbridge, settle in Scotland with Government financial aid and then, after capturing the Scottish market, move to England, throwing 120 men out of work and without regard to the social and economic consequences to the work force?

I am very conscious of problem. My hon. Friend and I know this one very well. That is why we are introducing the practice of planning agreements. We believe that these will be valuable and useful in this regard.

Industry Bill

12.

asked the Secretary of State for Industry which provisions of the Industry Bill are affected by EEC regulations.

I explained in my reply to the hon. Member for Tynemouth (Mr. Trotter) on 25th February how the exercise of the powers proposed in the Bill might be affected by membership of the EEC. All State aids that might be offered under the Industry Bill would be subject to the control of the European Commission under Articles 92–94 of the Treaty of Rome.

Is my right hon. Friend aware that the Italian tobacco industry, which is at present under State control, will, under the regulations of the EEC, end its control within one year? On 31st January the Italian Journal Stampa Sera reported that one year's notice has been given for State control to end and that private tobacco companies are already moving in to provide their own monopoly in the private sphere. This will not be to the advantage of Italy and it is unlikely to be to the advantage—

Is my right hon. Friend aware of the circumstances that I have outlined?

I thought that my hon. Friend was asking whether I was aware of something. I was not aware of the details of that case. However, my hon. Friend should be in no doubt that the powers exercised by the Commission under the Treaty of Rome are powers that the previous Government entrenched in our domestic legislation in Section 2 of the European Communities Act 1972.

Does the right hon. Gentleman agree that on 3rd March his right hon. Friend the Foreign Secretary told the other EEC countries that the Government could now accept the terms that had been negotiated? Does he agree with this set of negotiations?

The hon. Gentleman knows that the Cabinet has not yet determined its view on the renegotiation package. I am surprised that the hon. Gentleman, who is always shouting his head off about the powers of the National Enterprise Board, should not be concerned about the powers of the European Commission over the House of Commons.

13.

asked the Secretary of State for Industry how many representations he has received from both sides of industry since the publication of the Industry Bill.

42.

asked the Secretary of State for Industry how many representations he has received from both sides of industry since the publication of the Industry Bill.

My right hon. Friend has received a number of representations from both sides of industry and from the City, which he is considering.

Have not the heads of industry expressed their deep alarm at the unprecedented powers being taken by the Secretary of State and the spirit in which those powers are apt to be applied? Does the right hon. Gentleman deny that his intention in seeking further State control, intervention and ownership is to try to achieve a Socialist Britain after his own pattern, rather than an efficient free enterprise industry?

The hon. Gentleman should be aware that we have received approximately 30 letters from various bodies. They have not been quite so critical as the hon. Gentleman suggests, although some obviously have been critical and negative in their approach. The Government intend to carry out the manifesto upon which they were elected in both February and October last year.

In order to give the Bill an even chance of success, will my hon. Friend consider making a statement at the earliest possible opportunity to avoid further confusion about the whole process of the sharing of information and the Planning Agreements?

The Bill is now in Committee. Naturally, there will be the closest parliamentary scrutiny by both sides of the Committee and statements will be made and explanations given relating to the points to which my hon. Friend has referred. If my hon. Friend has a specific point in mind, I suggest that he gets in touch with me or my right hon. Friend and we shall answer that point.

In addition to the representations received from both sides of industry, may I ask what representations the Minister has had from the Home Policy Committee of the Labour Party—in which I believe his right hon. Friend has some distant interest—and what attitude he is taking towards those representations?

Surely a number of standing committees continually discuss the programme and policy of the Conservative Party. The Labour Party has a Home Policy Committee, which is a standing body, which I believe is entitled to express its opinion on present and future Government policies.

Is my hon. Friend aware of strong representations from workers on Tyneside, for example, for the rapid passage of the Industry Bill and, indeed, the introduction of Bills for the nationalisation of the shipbuilding industry in order that worker participation may become a reality?

My hon. Friend is absolutely right. One of the most interesting features of life as a Minister in the Department of Industry is the number of deputations that one receives from trade unions and workers on the shop floor who insist that we get this Bill through at the earliest possible moment.

British Leyland Motor Corporation

14.

asked the Secretary of State for Industry if he will make a statement on his future plans for British Leyland Motor Corporation Ltd.

The team led by Sir Don Ryder is at present conducting, in consultation with the British Leyland management and trades unions, an overall assessment of British Leyland's present situation and future prospects. I have undertaken to report to the House as soon as possible on the team's recommendations and their financial implications.

As there are disturbing rumours that Sir Don Ryder is thinking in terms of 30,000 redundancies, does the right hon. Gentleman foresee a situation in which he can guarantee that there is no likelihood of plant closures as a result of Government assistance?

I invited Sir Don Ryder to undertake these discussions with the management and unions. I have had no report, or forecast of a report. When the Government receive the report they will discuss the matter internally and with the unions and management. However, I have had no indication of the kind that the hon. Gentleman conveyed in his supplementary question.

Is my right hon. Friend aware that industrialists not unconnected with this company consistently argue that politicians who fail should be removed? Does he feel that industrialists who fail should also be removed?

I understand my hon. Friend's general point. The House would be better advised to wait until we have the report from Sir Don Ryder and his team before we jump to conclusions about any solutions which may emerge from it.

Tracked Hovercraft Vehicle

16.

asked the Secretary of State for Industry, in view of the fact that the tracked hovercraft vehicle, in its original building at Earith, is the only vehicle of its kind in the world and is of historic interest and potentially of scientific value, if he will take steps to ensure the suitable preservation and public display of this vehicle.

The vehicle, RTV31, is the property of Tracked Hovercraft Ltd., which developed it with funds provided by the National Research Development Corporation. The project was terminated two years ago and the disposal or preservation of any residual equipment is the responsibility of NRDC and THL.

Will the Minister bear in mind that it was Government money which was used to develop this most promising invention, in which we have a world-wide lead and which has now become a museum piece? Does his answer mean that the Government are taking no responsibility whatever for its preservation for the future in case it should have further scientific value?

The right hon. and learned Gentleman is quite right to refer to the fact that when the previous Conservative Government cancelled this project £5million of public money was lost without any benefit in sight. As for his question about preservation of the project, this is not a unique vehicle. Other air cushion vehicles are being developed elsewhere, notably in France. As I sought to make clear, the question of the vehicle's display and preservation is a matter primarily for NRDC. but if it makes such a specific request to us we shall certainly consider it.

As much of the expertise for the project came from my constituency, and as there is great disappointment that it is not possible to proceed with it, will the Government keep an open mind on the suggestion that my right hon. and learned Friend has made and positively respond if an appeal for help on a modest scale reaches them in the near future?

National Enterprise Board

17.

asked the Secretary of State for Industry whether he intends to give the National Enterprise Board specific directions to acquire shares in profitable manufacturing industry.

This is unlikely, because the Industry Bill already provides the necessary powers.

Whose agreement will be necessary before shares are acquired in profitable manufacturing industries?

As the hon. Gentleman knows full well, the position is that there are no compulsory powers in the Industry Bill or in the White Paper.

Does my hon. Friend agree that a large section of people were disturbed by Sir Don Ryder's view, expressed on television to Mr. Christopher Chataway, that nationalisation is a method of regenerating collapsing British industry in order to hand it back, ultimately, to private enterprise? Will my hon. Friend take note of that and make it clear that large numbers of working people hope that profitable industry will be nationalised on behalf of working people and not taken over only when it is in a process of collapse, as it inevitably is under capitalism?

I personally am not aware of Sir Don Ryder making such a statement, although I understand that something similar was supposedly said— although it was denied afterwards—by the chairman of a nationalised industry. It is clearly laid down in the White Paper and in the statement of the National Enterprise Board that one of the functions of the board is that it should enter into profit-making industry.

18.

asked the Secretary of State for Industry whether he will make it a condition of appointment to the National Enterprise Board that no persons appointed shall take up further appointments at the termination of their contracts with any firm with whom they have had financial dealings in the course of their work at the NEB.

This is a very complicated problem, but one which is important, and we are looking into the issues involved. At this stage, it is not possible to give a definite answer one way or the other.

I thank my hon. Friend for that neutral answer. In view of the special and privileged relationship between members of the NEB and industrial firms, is it not desirable that there should be an interval before such members take up appointments with private industry with which they may have had financial or advisory dealings? In those circumstances, will the Minister ensure that the rules governing such continuing appointments are assimilated to those governing the appointment of senior ex-civil servants when they leave the public service to take up appointments with private enterprise?

My hon. Friend is right. There are well-established rules for the Civil Service and the Armed Forces. There is no general code for public corporations. However, I have taken on board the point that my hon. Friend has made. I cannot go further than saying that we are looking into the issues involved.

South-West Region

19.

asked the Secretary of State for Industry whether he is satisfied that the present extent and character of regional policies take sufficient account of the specific needs of the South-West assisted areas, particularly in respect of the promotion of primary and local craft industries and the problems facing small firms.

Yes, Sir. Substantial assistance is available under the Industry Act 1972 by way of regional development grants and selective financial assistance, and also regional employment premium for manufacturing firms. The Development Commission, through the Council for Small Industries in Rural Areas, provides financial assistance by way of loans and technical and advisory services in rural areas. In addition, my own Department's Small Firms Information Centre in Bristol is available to help small businesses find solutions to their problems.

Does not the Minister agree that the economic structure of the South-West differs in character from that of the other assisted areas and, therefore, that greater flexibility in applying existing regional policies is essential if our specific problems are to be solved? In particular, does he not agree that the Small Firms Assistance Centre should be transferred from Bristol to a site within the assisted area itself, because Bristol is nearer to London than it is to Bodmin?

We have 10 such centres throughout the country, and they are very helpful. We have considered this matter and I am satisfied that this can be done from Bristol at present. In any event, may I say, wearing my hat as someone having responsibility for the Post Office, that a Freephone service is available for any small industrialist who wants to contact the Bristol office? We have not found any difficulties about that so far.

Does the Minister realise that in the South-West the small firms are subcontractors or smaller parts of major industry, and that these are usually the plants that close down first? Will he consider giving more money and greater assistance to COSIRA, to ensure that there is greater investment in the rural areas?

Secondly, I support my hon. Friend for Bodmin (Mr. Hicks), in that the West Country does not consider that the unit in Bristol understands much about the problems of Devon and Cornwall. The Minister would be well advised to have the Small Firms Assistance Centre moved out of Bristol to some area in Somerset, Devon or Cornwall.

We have devoted much thought to the question which would be the best place for the centre. I have been given to understand by those in the area that so far the needs of smaller companies are being met. As regards the hon. Gentleman's question about investment in rural areas, the whole question of COSIRA falls within the purview of my right hon. Friend the Secretary of State for the Environment. We can put this point to him.

Co-Operative Development Agency

20.

asked the Secretary of State for Industry if he will be introducing legislation to establish a co-operative development agency during the course of this session of Parliament.

The proposal to establish a co-operative development agency is under consideration, but it is unlikely that decisions will be taken in time to introduce any legislation that might be considered appropriate this Session.

Does my hon. Friend agree, however, that the co-operative development agency, as envisaged in the Labour Party manifesto, could play a very important part in extending co-operation in our economy and that co-operation is a very desirable form of social ownership, which has proved its worth over many years, in distribution and elsewhere?

I entirely support the sentiments my hon. Friend has expressed. That is why the concept was originally put into the manifesto. We have great hopes that it will be able to achieve the extension of social ownership and all that goes with it in a society that is still basically capitalist.

As, in the first co-operative that has got off the ground, the cost of saving each job is modestly estimated at £30,000, is this the new standard that the Government intend to apply to saving jobs? If so, and if 30,000 jobs are at risk in British Leyland, has the Minister calculated the cost? It is about £900 million.

The hon. Gentleman should take into account the fact that we shall not be confined to firms in which private enterprise has already totally failed.

Will my hon. Friend quell the animal noises emanating from hon. Members opposite by telling the House that the first co-operative got off the ground about 135 years ago, and that it has proved a great success? There are those of us in the co-operative movement who are very anxious to see this item in the manifesto proceeded with speedily.

My hon. Friend is right. There are many existing co-operatives in France, Italy, Spain and Sweden which are very successful forms of social enterprise.

Regional Policy

21.

asked the Secretary of State for Industry, if he will make a statement on the EEC plans for exercising measures of control on the United Kingdom's industrial and regional policies.

All the industrial and regional policies of all member States involving State aids are subject to the provisions of the Treaties of Rome and Paris, which conferred power of decision upon the Commission. It is one of the Government's renegotiation objectives to ensure the retention by Parliament of the powers which we need to pursue effective regional, industrial and fiscal policies.

As there has been no apparent progress, so far, on the latter point which the Minister mentioned, does he not agree that there is still some way to go before the pledge on which the party opposite was elected can be honoured? Will the right hon. Gentleman make this point to his cabinet colleagues in the near future?

I do not think I can anticipate the discussions which are currently taking place, but I sought to answer the hon. Gentleman's question.

Personal Injury (Liability And Compensation)

51.

asked the Attorney-General if he can yet say when the Royal Commission on civil liability and compensation for personal injury will report.

Is the hon. and learned Gentleman aware that there are 250 cases of severe vaccine brain-damaged children who have been waiting since May 1973 for the Royal Commission to report? Is he also aware that the Secretary of State for Social Services declined to award compensation to them until the report is made? Will he press his right hon. Friend the Secretary of State for Social Services to award the compensation now rather than wait for the report? In any case, will he confirm that the Royal Commission will not be able to recommend retrospective awards?

The hon. Gentleman will be aware that my noble Friend and I are no less anxious than he is that the report should be available as soon as possible. This is a very wide-ranging inquiry. The second part of the hon. Gentleman's question is a matter for my right hon. Friend the Secretary of State for Social Services. Whether retrospective legislation will be appropriate will depend to some extent upon what is recommended, but I shall see that what the hon. Gentleman has said is passed to my right hon. Friend.

Is the Solicitor-General aware that the findings of the report are likely to involve matters of far-reaching importance to individual freedoms? Will he use his good offices with the right hon. Gentleman the Leader of the House to ensure that when the findings are made public there will be debate about them on the Floor of the House?

Perhaps we should wait until the report is available. I shall certainly see that what the hon. Gentleman has said is brought to the attention of my right hon. and learned Friend.

Magistrates (Training)

52.

asked the Attorney-General what is his policy towards adding to the membership of the Lord Chancellor's Advisory Committee on the Training of Magistrates so as to include representatives of those persons involved in the work of magistrates' courts.

My noble Friend's policy is to ensure that the committee is well qualified to give him the advice which he requires on the training of magistrates. He is satisfied that it is so. It does include several members who are directly involved in the work of magistrates' courts. It has also called for the views of those, including the relevant representative bodies, who may be able to assist it in its task. With permission, I shall circulate in the Official Report the membership and qualifications of the committee, which have already been published in the Press.

I am grateful to the right hon. and learned Gentleman for that reply. Does he agree that most members of the advisory committee are magistrates or magistrates' clerks? Does he accept that there are other court officers, such as probation officers and possibly even police, whose advice and experience would be of some value to the advisory committee? Will he consider drawing upon such sources of experience?

Of course the experience of people such as the hon. Gentleman has suggested is extremely valuable. The committee has invited memoranda from a substantial number of organisations, including some to which the hon. Gentleman has referred. The work of the committee is sufficiently advanced to make reconstitution inappropriate, and we hope that work will not be slowed down in that way.

Does my right hon. and learned Friend not consider it timely to consider the training of the judiciary generally? Does he not think it right to impose mandatory training on all judges, particularly High Court judges in matters of sentencing?

Mandatory training is not a matter for me. My hon. Friend will be aware that judges do have sentencing conferences from time to time, and in the course of those conferences they meet people of all kinds of different disciplines. That is of great assistance from the point of view of the question which my hon. Friend asked.

Following is the information:

LORD CHANCELLOR'S ADVISORY COMMITTEE ON THE TRAINING OF MAGISTRATES

Members

The Honourable Sir Leslie Boreham (Chairman). Judge of the High Court, Queen's Bench Division.

Sir Thomas Skyrme, KCVO, CB, CBE, TD (Vice-Chairman). Secretary of Commissions to the Lord Chancellor and a Justice of the Peace for the City of London.

Mr. E. R. Horsman, OBE (Secretary). Training Officer in the Lord Chancellor's Office. Formerly Clerk to the Justices of Eastleigh, Romsey and Totton. One-time President of the Justices' Clerks' Society.

Sir William Addison, DL. Chairman of the Council of the Magistrates' Association. A Justice of the Peace for the County of Essex and Chairman of the Epping and Ongar Division.

Mr. W. H. Clarke. Justice of the Peace for the County of Hereford and Worcester. Member of the Executive and Treatment of Offenders Committees of the Magistrates' Association and of the Central Council of Magistrates' Courts Committees.

Mr. D. A. Crockatt, MBE, DL. Justice of the Peace for West Yorkshire. Member of the Council of the Magistrates' Association and Chairman of the Training Committee of the Council.

Mr. C. J. S. French, QC. Barrister at Law Recorder.

Dr. D. E. Gray, MBE, PhD. Senior Lecturer, Department of Extramural Studies, University of Birmingham. Justice of the Peace for the West Midlands and Chairman of the Solihull Division. Member of the Central Council of Magistrates' Courts Committees.

Mr. F. H. Hatchard. Clerk to the Justices for Walsall.

Mr. J. B. Horsman, OBE. Clerk to the Justices for Wigan. President of the Justices' Clerks' Society.

Mr. R. L. Jones. Assistant Secretary, Home Office.

Mr. D. W. Jones-Williams, OBE, MC, TD, DL. Commissioner for local administration for Wales. Formerly Circuit Administrator for Wales and Clerk of the Peace and Magistrates' Training Officer for the County of Merioneth.

Mrs. N. M. Lowry. Metropolitan Stipendiary Magistrate.

Mrs. N. M. McGregor. Justice of the Peace for Inner London. Member of the Central Council of Magistrates' Courts Committees.

His Honour Judge Mynett, QC. Circuit fudge. Mr. Eric Taylor. Solicitor.

Insurance Companies (Winding-Up)

53.

asked the Attorney-General whether, following the enactment of the Insurance Companies Amendment Act 1973, rules have been made under Section 365 of the Companies Act 1948 with respect to the winding-up of insurance companies.

Does the right hon. and learned Gentleman not agree that it would have been of great assistance to the liquidator of Nation Life if such rules had been made? Will he now give urgent attention to this problem?

In the particular circumstances of that case it is highly unlikely that rules made in advance would have been of great assistance, but the position, now that we have had this case—it is the first one in a generation in which a company dealing with life business has had to be wound up—is that the lessons which are to be drawn from that liquidation will certainly be very much borne in mind, not merely in connection with any rules and regulations which may be brought forward but from the point of view of the Bill which my right hon. Friend the Secretary of State for Trade will be introducing this Session.

Maintenance Orders (Committal Warrants)

54.

asked the Attorney-General if he will advise magistrates' courts to make it their practice that when persons in respect of whom committal warrants have been issued for nonpayment of maintenance apply under Section 18(4) of the Maintenance Order Act for a hearing to ask for the committal to be quashed on grounds of inability to pay maintenance due to unemployment, such persons should be granted a hearing.

No, Sir. The question whether an application under Section 18(4) of the Maintenance Orders Act 1958 should be referred to the court is a matter within the judicial discretion of the magistrate hearing the application, whose duty it is to consider all the relevant circumstances.

Although the court has the power to decide whether to allow a hearing in such cases, as prison is regarded as the last resort in maintenance cases, is it not an abuse of the court's undoubted power to refuse to allow a hearing in such cases? Will the Solicitor-General comment on the refusal of Winchester Court to give a hearing to my constituent, Paul Watts, in such a case?

This is a statutory discretion vested in magistrates, and how it is exercised in certain cases must depend upon the facts and the occasion I am aware of the case to which the hon. Gentleman has referred. I understand that he has had a personal interview with my noble Friend the Lord Chancellor and my hon. Friend the Minister of State, but they have no authority to give directives to magistrates on how they shall exercise a statutory discretion.

Northern Ireland Judiciary

56.

asked the Attorney-General whether he will make a statement on the strengthening of the Northern Ireland judiciaries.

My noble Friend is satisfied that there is at present no need to strengthen the judiciary in Northern Ireland, but the position will he kept under review and further appointments will be made should they prove to be necessary. The hon. Member may like to know that very considerable progress has been made in reducing delays before the trial of defendants in the Courts.

Is the right hon. and learned Gentleman not aware that there is concern at some very serious cases of delay between arrest and trial? Will he and his noble Friend keep this matter constantly under review? That said, may I ask him whether he thinks it appropriate that we should pay tribute to the courage and devotion to duty of the judiciary despite threats and actual assassination?

In reply to the last part of the hon. Gentleman's question, of course I entirely agree, and I am sure the whole House will agree, with what he said, particularly in the light of some of the tragic incidents which have taken place.

In reply to the first part of the question, we have kept this matter very much under review. We have been very concerned and, of course, we shall continue to keep the matter under review. As a result of doing so, in co-operation with the judiciary in Northern Ireland and the Lord Chief Justice in particular, and others, special measures were introduced. I can give the House some figures. In September 1974 the average length of time, in weeks, between committal and trial was 22 for scheduled offences and 10·7 for non-scheduled offences. By February, those figures had fallen to 7·5 and 9·8 respectively—a remarkable reduction.

Is the right hon. and learned Gentleman aware that despite the heavy arrears, there is considerable satisfaction at the rate of progress in reducing them and that, more than is generally recognised by the public, a high proportion of the serious offences of terrorism and violence are now resulting in sentences in the courts?

Yes, Sir, that is also true. I can give a further figure. At the beginning of September last year, 633 persons had been committed and were awaiting trial. At the beginning of this month, which is the last counting day, that figure had been reduced to 203.

National Health Service (Consultants' Contract)

(by Private Notice) asked the Secretary of State for Social Services whether she will make a further statement on the hospital consultants' dispute.

At the time of my last statement to the House, on 17th February, I was awaiting the profession's reaction to my letter of 11th February. Its response was to ask the Prime Minister to intervene. Copies of the correspondence between the Prime Minister and Dr. Stevenson have been placed in the Library of the House.

In his replies my right hon. Friend the Prime Minister explained that he did not intervene in pay matters because these were for the independent Review Body on Doctors' and Dentists' Remuneration, that when I put to the consultants proposals for a new contract I was doing so with the full authority of the Cabinet, and that he was willing to see the consultants' representatives on any wider National Health Service issues as soon as sanctions had been removed. He pointed out also that by limiting their hours of work unilaterally consultants were not honouring the accepted obligations and that in consequence the interests of patients were being damaged. I regret to say that this situation is arising in many parts of the country.

As my right hon. Friend the Prime Minister has told the consultants, the Government are satisfied that sufficient common ground exists for a settlement to be reached when negotiations with the Health Departments are resumed. I hope that, having studied the Prime Minister's replies and the assurances they contain, the consultants will decide to drop sanctions and get round the negotiating table.

I thank the right hon. Lady for her statement, but many of us will be extremely disappointed at how little she has had to say today and at the unsatisfactory nature of the Prime Minister's replies to the consultants. The right hon. Lady will know that I am a consultant. Will she agree that nothing in her statement and her recent actions will have helped to resolve the present dispute? Does she recognise also that waiting lists are now lengthening to a most dangerous extent, and there is now the likelihood of serious damage to the care of patients in the National Health Service?

Will the right hon. Lady agree that a major difficulty is that many leading hospital consultants have no confidence in her whatever? Will she, please, not play party politics over this matter, and may I suggest to her—I say this knowing that it will not be easy for the right hon. Lady —that the most useful thing she could do now would be to put her personal feelings to one side and to reopen negotiations at once, or, failing that, will she hand over the discussions to an independent arbitrator?

I suppose that it would be asking too much to expect a consultant to be objective about a consultants' dispute. The hon. Gentleman will, therefore, not be surprised that I reject all his propositions except the one to the effect that this dispute is damaging the interests of patients. May I ask him, in reply, to discharge his duty and call on consultants to withdraw sanctions first, in the certain knowledge that, as the Prime Minister has stated, I have in this matter been acting not personally but with the full authority and knowledge of the Cabinet, and second, recognising that there are no grounds left that would prevent a settlement if the consultants were at least willing to show the shadows of a compromise?

Will my right hon. Friend acknowledge that, in addition to the opinion of a large number of people in the country, there is a growing body of opinion among consultants who are irritated, annoyed and impatient with the small group of consultants who put monetary advantage above the necessity to do the best for their patients?

I think that my hon. Friend is right. We had an example of that on the television only yesterday when Professor McColl, professor of Surgery at Guy's, appeared on the programme "Weekend World" and was asked by the interviewer whether the whole profession was behind its negotiators in demanding that we drop the current differential in favour of the whole-time consultant. He was asked what he thought the reaction would be if I were to accede to that pressure, which is now almost exclusively the issue before us, and he replied:

"… there would be a riot if you take away the extra payment …".
It is clear, therefore, that the profession is divided on this issue, and that in standing by the principle of maintaining the present differential I am acting in the interests of the National Health Service as a whole.

Will the right hon. Lady recognise the unhappy fact that the consultants have lost confidence because of her dictatorial and unfeeling attitude? Does she realise that this dispute is not fundamentally about pay but about the freedom of the consultant—[An Hon. Member : "To make more money."] —to do his duty and fulfil his responsibility to his patients without political interference?

In view of that unhappy fact, will the right hon. Lady consider the plea which has already been put, and will she ask the Prime Minister—as often happens in similar circumstances—to set up an independent arbitrator acceptable to the consultants so that their grievances and views may be properly aired?

I certainly realise that by the time I took office the profession had totally lost confidence in my predecessors —the hon. Gentleman and his right hon.Friend who refused even to set up a working party to examine the consultants' demand for a closed contract. The first thing I did was to set up such a working party, in response to what I felt was the legitimate grievance of consultants that hours had lengthened to a degree which could not be remunerated within the context of the present open-ended commitment. There is no dispute between the consultants and me about that.

As to the request for an independent arbitrator, I must ask, first and foremost, what such a person would be asked to arbitrate about. It could not be about pay, because that is a matter for the independent review body and is currently before it. It would, therefore, be necessary to define exactly what the arbitrator would have to arbitrate about, and that the consultants have never made clear because in their own minds they are divided and confused.

Is my right hon. Friend aware that in the Southampton area a small minority of consultants are acting in a thoroughly despicable and disgraceful manner? Does she know, for example, that one of my constituents who had an appointment with a consultant on 28th February had it cancelled at the last minute and an alternative date given in January 1976? Is that not a thoroughly disgraceful state of affairs?

Such action is totally tragic from the point of view of our National Health Service, the interests of which the consultants say they have at heart. I believe that action of that kind is deplored by a large number of members of the profession itself. There is an increasing consciousness that the breach of their accepted obligations is doing violence to the medical ethic by which the profession claims to stand.

Surely the Secretary of State is not claiming that Professor McColl speaks for all the consultants. Is her understanding of this dispute so small that she does not understand the real feelings which exists among consultants throughout the country on this issue? At this stage will she reconsider her view and either set up an independent inquiry or take some new initiative?

Of course, no individual spokesman speaks for all the consultants. I believe this to be one of the real difficulties. There is a conflict of interest here between the whole-timer and the maximum part-timer, between the man who can and does earn large sums from private practice and those other consultants in the Cinderella areas, the neglected specialities, who depend totally upon the whole-time emolument. What I am doing now is—[HON. MEMBERS : "Nothing."] I am defending the whole time emolument. I am defending, and will defend a proper reward to those who are devoting themselves full-time to the health service in areas where there are not fat private practice pickings to be made.

The best way the Conservatives can bring this dispute to a conclusion is to condemn the intolerable behaviour being indulged in by so many consultants.

Is my right hon. Friend aware that the banality of the current situation is reminiscent of some of those troglodyte attitudes adopted by ignorant and greedy people when the National Health Service was first established? Will she give the House an assurance—not that my right hon. and hon. Friends and I require it—that she will stick to her guns in defending this great service because other members of the health service, like the members of the COHSE, are looking to her to do so? She will have their support for her campaign, and that support will be given not merely in the health service but by all the sick and ailing.

The answer to my hon. Friend's question is "Yes ", and in defending the health service I shall be standing by a compromise which has obtained for many years, a compromise which the consultants are now trying to breach unilaterally. On the one hand the consultants want to retain the option agreement which permits them to choose, after having accepted an appointment, whether they will serve whole-time or only maximum part-time, and on the other hand they are trying to drop the other part of the compromise which has also given a differential in favour of the man who opted to go whole-time.

The only way out of this trouble is by a compromise. I have compromised. I suggest that before the Conservatives ask me any further questions they should read all the correspondence that both I and my right hon. Friend the Prime Minister have had with the consultants. In it they will see that I recognise the importance to the consultants of the option agreement. I am therefore not proposing to interfere with it. In return I ask them not to interfere with the present agreement on the differential. That is reasonable.

Is the right hon. and noble Lady aware that more than 10 per cent. of consultant posts are vacant, and is she aware that the trend in filling registrar appointments is becoming very dangerous? While she plays politics and refuses to do her job as Secretary of State, the National Health Service will bleed to death in both the consultant and the registrar grades.

I am very grateful that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) recognises my nobility of spirit. Of course I am aware of the recruitment problems. That is a matter currently being looked at by the review body, the independent body on pay. That is a matter for it, not for me. As I have told the House on previous occasions, my Department has given evidence to the review body supporting the increase in pay and pointing out the latest recruitment and manpower figures and the implications these have for the coming award.

I have always made clear that consultants have the right to be adequately remunerated. I am willing to negotiate with them a limited contract which would give them extra pay for the long hours many of them do. There is no difference between us on that score. I therefore see absolutely no reason why the dispute should continue a moment longer or why sanctions should be retained.

Industrial Civil Servants (Dispute)

With permission, Mr. Speaker, I will make a statement on the unofficial action being taken by industrial civil servants.

As from this morning the industrial civil servants employed by the Property Services Agency on providing maintenance and services to Government buildings in the Whitehall area and to the Houses of Parliament have begun unofficial action for an undefined period. I understand that about 420 people may be involved.

This unofficial action is being taken in support of a claim by the trade unions concerned on behalf of all industrial civil servants for an interim increase pending their next annual settlement in July. The Lord Privy Seal has recently met trade union representatives to discuss the unions' claim and pointed out the difficulties involved in reconciling an interim increase with the TUC guidelines. A response to the claim can be expected soon.

My right hon. Friend the Lord President will be dealing with the possible effects of this unofficial action on the business of the House. Services to Government Departments could also be affected.

In the light of the position as I have described it I very much hope that those concerned will lift the unofficial action and return to normal working.

The right hon. Gentleman's alacrity in making a statement about a dispute which concerns the House of Commons will compare very unfavourably with his reluctance to make statements concerning disputes which affect millions of people in other parts of the country. I hope that Labour Members will appreciate the feelings of commuters coming in to London about that. Does any interim increase fall within the terms of the social contract?

Dealing with the first matter that the right hon. Gentleman raised, on the last occasion, which concerned the signalmen, I volunteered a statement to the House and Conservative Members complained when I did so. Moreover, those who criticise me on this matter will realise why I took the attitude I took on the signalmen and will realise that it was a sensible course. On the right hon. Gentleman's second point, the difficulty about a proposal for an interim payment is that it would have breached the guidelines on the 12-month rule, and we were and still are concerned about that.

Will the right hon. Gentleman accept that there will be genuine sympathy for him over the regularity with which he has to come to this House and deplore unofficial strikes in support of claims in breach of the social contract to which we know he is wedded? When will the Lord Privy Seal be making a response to the claim which has been made?

The negotiations have not broken down. Discussions are continuing over the claim through the normal negotiating machinery, and that is where we say the discussions should take place. We hope that they will proceed speedily there.

As for the first part of the right hon. Gentleman's question, I am not quite sure where he stands on the social contract, and he had therefore better think up his own view before he makes comments about other people's views.

Does my right hon. Friend appreciate that the workers concerned feel very deeply about this issue, as is evidenced by the stoppage? My right hon. Friend gave figures of the numbers involved, but I understand that this is a solid stoppage of work throughout Whitehall. Does he accept that these workers are generally very low paid and that the position has been exacerbated by increases given to non-industrial staff? These people certainly seem to have a grievance. They were caught by the pay freeze and by phase 3, I understand from fellow members of the Transport and General Workers' Union, to whom I have been speaking. Is it not obvious that Whitehall and the Houses of Parliament can no longer rely on low-paid workers and grace-and-favour circumstances?

I certainly apppreciate what my hon. Friend says. I am sure that those who are taking this action feel their grievance strongly. But it is also the case that they have had considerable increases since the settlement of last July. It is true that they were caught under the end of phase 3, but since then they have had threshold increases and some and possibly all of those taking action today have also had considerable increases in London weighting. [HON. MEMBERS: "That is the same "]. It is not the same. It is not the case that they have not had any increase since the July settlement.

When the July settlement was reached —and this touches on the feeling of grievance—it was agreed that there should be a joint study of the way in which the rates of pay in the industrial civil service were compared with those in comparable work in outside industry. I cannot anticipate the outcome of that study, but of course that outcome will play its part in the discussions now taking place.

If the action today is unofficial, what steps is the union taking to persuade its members who are participating to go back to work?

The union representatives of these workers, as of other industrial civil servants, have shown a most proper respect for the procedures throughout the whole of these discussions, They have sought to secure a settlement of this matter through the normal negotiating machinery, and I think that it would be wise for those taking this action today to do the same.

Is not the situation likely to become more acute as the custody guards on Government buildings escalate the dispute by Thursday? Would my right hon. Friend agree that to meet that claim would not be in breach of the social contract?

I should have to look at that, but I think that that would be in breach in the respect that I have mentioned. Certainly it would be most unfortunate if there were any escalation of the dispute. The discussions now taking place through the normal machinery may help to end the dispute. That is what I wish, and I am sure that that is what the whole House wishes.

Houses Of Parliament (Facilities)

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

As my right hon. Friend the Secretary of State for Employment has just said, the present situation is that industrial civil servants manning the PSA works depôts which look after the Houses of Parliament and buildings in Whitehall have gone on strike today. The strike is unofficial and the total number of staff involved is about 420.

Strikers are picketing the Houses of Parliament and other Government buildings in Whitehall. Certain other categories of staff, in particular those responsible for lift maintenance and the inter-departmental dispatch services, are not willing to cross the picket lines.

No major breakdowns in services have been reported and it is hoped to continue to run all essential services so that the work of both Houses will be able to continue.

Steps are being taken to provide whatever papers are essential to enable the House to function, though, as in the past, there may be some inconvenience to hon. Members.

House of Commons catering staff are working but are unwilling to light gas appliances which are normally lit by the unofficial strikers. I regret that this means that only a cold meal service is available. Coffee is available in the Members' Guest Room and will be available after lunch and dinner in the Harcourt Grill Room. Tea and coffee are available in the Members' Smoke Room.

Is it not a fact that this is the first time that workers employed in the Houses of Parliament have themselves been the subject of pickets of this kind? Does not the progressive influx of industrial action of this kind into the Palace of Westminster itself betoken evil times for the future? If, as the Secretary of State for Employment has made clear, the claims now being discussed are themselves in breach of the social contract, will the Lord President of the Council encourage his colleagues to do something to secure a settlement of this dispute that actually upholds the social contract? Will he not also himself be prepared to strike a blow by going to strike a light in the Tea Room to set these fires going?

The reply to the right hon. and learned Gentleman's first question is that I understand, although I am not sure, that there was a previous occasion when the House was picketed.

Is my right hon. Friend aware that some of us have attended the House of Commons today only at the insistence of those on the picket line in order to put their case in the House and that we shall continue to do so for as long as this unofficial strike lasts? The strike may become official when the union executive has considered the matter.

My right hon. Friend the Secretary of State for Employment mentioned other increases. Is my right hon. Friend aware that London weighting and threshold agreements are not part of any wage increases as such? Is he aware that this situation is a relic of the statutory incomes policy of the last Tory Government and something that we should clean up as soon as possible?

Is he also aware that although it might have been wrong for his right hon. Friend to interfere in the railways dispute, for that interference would have been Government interference in industrial free collective bargaining, as the custodian of this place my right hon. Friend should have some part not as a mediator, but in a capacity in which he can solve the problem?

I am sure that, as my right hon. Friend has said, it will be the wish of hon. Members in all parts of the House that the dispute should be settled as quickly as possible. We hope that the strikers will go back to work so that the normal process of negotiation, which has not broken down, may continue.

Is the right hon. Gentleman aware that some of us have come to the House to represent the voters who return us from our constituencies? Would he give an undertaking that if action is taken that would impede the discharge of parliamentary functions by an hon. Member, he will immediately make a statement to that effect, because although, if we are denied hot food and lifts, we shall still be able to discharge those func- tions, and probably be rather healthier in the process, there is a sessional order and we are getting near to seeing a breach of it?

Any question of privilege would be a matter for you to decide in the first place, Mr. Speaker. You would have to say whether there was a prima facie breach of privilege and it would then be for the Committee of of Privileges, and I should not venture to comment on that. However, I understand that for there to be contempt of Parliament and therefore a breach of privilege two elements would have to be satisfied. One is that there would have to be physical obstruction real physical obstruction—and the other is that the dispute would have to be angled solely and exclusively towards impeding the work of Parliament and not just be part of a general and broader dispute. Those are the two conditions. However, it is of course initially a matter for you, Mr. Speaker, and ultimately for the Committee of Privileges.

Is my right hon. Friend aware that this dispute could be settled within five minutes? All it needs is for him to say that the Government will treat these people as generously and as quickly as they treated the top paid civil servants and that they will give these people an increase of as many thousands of pounds as they give each year to the judges and the top paid civil servants. If he says that, they will be back within five minutes.

There is machinery for dealing with the salaries of top civil servants and judges and there is machinery for dealing with the salaries of the civil servants who are now on unofficial strike. The negotiations are going on. They have not broken down. I hope that my hon. Friend will add his voice to ours in urging these people to go back to work.

If they do not go back to work, what does the Lord President propose to do about it? When are the Government going to stand up to these juvenile cowboy and Indian games of crossing picket lines and all the other nonsense? Why not face up to it and give some kind of reward and recognition to those who stand up to group action and break strikes.

My job is to try to ensure that the House is able to carry out its functions and to carry on normally, and this I shall do to the best of my ability.

Is my right hon. Friend aware that these men have very good reasons for striking? They were promised an interim increase by January but they have not received it, although non-industrial civil servants have received an increase of £3 a week, plus three extra days' holiday a year, plus extra shift allowances. If non-industrial workers have received the award, why is it that industrial workers have not been given it?

Is my right hon. Friend aware that, because their wages are so low, these men are having to work on Saturdays to support their families? Is my right hon. Friend further aware that there are 6,000 men involved in London who will be called out shortly if this promise is not kept, and it has not been? It is all very well for Conservative Members to talk about inconvenience, but they have no idea of the inconvenience suffered by these men every day of their lives.

My hon. Friend is wrong. No promise was made of an interim settlement. I repeat that the negotiations have not broken down. They are going on, and I hope that all hon. Members will wish the dispute to be brought to an end as quickly as possible.

Is it not clear that if, as the Lord President says, the Houses of Parliament are being picketed for only the second time in their history, the negotiations have in any practical meaningful sense broken down and the members concerned are demonstrating their disquiet at the failure of the negotiations to produce results?

Can the right hon. Gentleman say clearly, first, whether the claim being made is in breach of the social contract? Secondly, is the Government's position in breach of the social contract? Will the right hon. Gentleman accept his responsibility to clarify this rather cloudy document at least in this respect which affects us so directly? He must see that one side or the other is not welshing on this important document.

My right hon. Friend said clearly that an interim payment would be in breach of the 12-month rule, and that is the difficulty.

Lotteries Bill (Standing Committee)

May I, Mr. Speaker, ask for your guidance on the way in which the Lotteries Bill is being put through the House? First, only 1 hour and 45 minutes was allowed for the Second Reading debate, as a result of which a number of hon. Members on both sides of the House did not have an opportunity to enter into the discussion.

Secondly, Standing Committee B, which is due to meet tomorrow to consider the Bill, is composed of 17 Members, only one of whom was against the Bill. It occurs to me that —

Order. The hon. Member began by asking for guidance, but he is putting forward what is clearly not a matter for the Chair. We have had this out before. I must ask for the support of the House in preventing matters being put to me which are not matters of order.

It is not for me to comment on the actions of the Committee of Selection. The hon. Member has put down a motion on this. He must seek in other ways to have that matter debated. He must bring pressure to bear on his Front Bench or ask the Leader of the House about it, but the matter cannot be raised with me as a point of order because I have no power to do anything about it.

:I appreciate that, Mr. Speaker, and I am most grateful to you for your guidance. The reason why it would be inappropriate to raise the matter on Thursday is that the Committee is due to meet tomorrow. By Thursday the Bill may be well advanced in Committee and it will be difficult to get its progress reversed.

I see the hon. Member's point, but I think he must seek some other way of raising it. I heard the Patronage Secretary saying something under his breath. Perhaps the hon. Member will follow the matter up in that way.

Orders Of The Day

Finance Bill

[4TH ALLOTTED DAY]

Order read for resuming adjourned debate on Amendment (No. 92) proposed [6th March] on consideration of the Bill, not amended in the Committee and as amended in the Standing Committee.

Clause 39

Free Loans, Etc

Which amendment was : In page 30, line 35, at the end, to insert the words :

but no period beginning before 6th April 1976 shall be a chargeable period.'—[Dr. Gilbert.]

Question again proposed That the Amendent be made.

4.4 p.m.

The House, or at least some Members, may recall that when we were rather abruptly interrupted at midnight on Thursday we were dealing with Clause 39, the free loans clause. It is a curious piece of drafting, and it has come to be known by hon. Members who have been following these things through as the lost clause in the Bill because, first, the Chief Secretary and the Financial Secretary had some difficulty in interpreting it when it came forward for discussion, and then the Opposition amended it in Committee to the point where in effect it was completely sterilised and removed from effective existence. The Chancellor of the Exchequer then postponed its operation until April of next year and when last seen was forlornly looking for a juridical formula to make the underlying aim of the clause effective again.

Our interest, besides our general interest of wishing never to see such an absurd provision in any Act on the statute book, is to deal with the undertakings given in Standing Committee by the Financial Secretary that if ever such a provision appeared on the statute book certain aspects would be protected from its more lethal effects.

There was the undertaking given in response to an amendment that gross in terest indicated in the clause—that is, the notional interest flowing supposedly and deemed to flow from loans given at no interest or low interest—would be added to the net income of the donor, from which certain consequences follow—for example, whether that income could possibly be liable in any form to capital transfer tax, but that is for the Government to sort out.

Secondly, there was the undertaking that any loans given as part of a partnership, partnership operations or in the financing of close companies where this is customary, as I think Treasury Ministers have learned—although the drafters of the clause did not know beforehand—as part of the whole financing operation of close companies, would be protected, and will be so when a clause comes forward in April 1976 presumably in the Finance Bill of that month and when the Chancellor produces this juridical formula for which he is so desperately searching.

Those are the two undertakings and we should like them on the record so that we may be satisfied that there is no suggestion that this postponement will be long enough for people to forget about these little local difficulties and for the Government to bring back this nonsensical clause unamended, which would be very damaging.

The hon. Member for Guildford (Mr. Howell) has put his finger on a couple of points about which he wants reassurance, and the hon. Member for Blaby (Mr. Lawson) raised many more on Thursday evening, largely in repetition of our Standing Committee proceedings. I shall, of course, during the coming year examine all the points that I undertook in Committee to examine and I am sure that both hon. Gentlemen will accept that the Government have no intention of using the period of recollection in tranquility for resiling from any of the commitments given earlier in our proceedings on the Bill.

I am sure the hon. Gentleman does not want to make it appear to the House that the commitment was merely to examine. In a number of cases the commitment was to table amendments on Report to meet the points that had been made.

The hon. Gentleman is right. The commitment varied according to the context of what we were debating, and I take the hon. Gentleman's point completely. We have met the whole range of difficulties by this Government amendment which ensures that the clause shall not come into effect until April of next year, and I am sure the hon. Gentleman will welcome that.

I could go further now if the hon. Gentleman would like me to do so. On the particular question of loans to close companies and partnerships, I am happy to repeat the categorical undertaking that I gave in Committee that the revised legislation will incorporate an exemption in accordance with the principle of Amendment No. 917 tabled in Committee. It will cover loans to close companies and partnerships where the transferor is a participator in the company or a member of the partnership, and loans to companies will not be confined to the close company situation.

The Opposition were seeking reassurance on one other point, namely, that the gross consideration for the use of a loaned asset should be treated as part of the transferor's net income or, if less than full consideration is charged for the use of the asset, the gross difference between the normal consideration and the consideration actually charged. So that we have the record straight, I will repeat what I said in Committee :
" It is considered that subsection (1)(c) must mean without further words that the amount deemed to be transferred is capable of being treated as both normal expenditure end as income of the transferor ".—[Official Report, Standing Committee A, 12th February 1975 c. 1570.]
None the less, I will again consider whether there is any need for revision of the clause to make this intended result doubly sure. It was one of the many cases in which the Opposition insisted that it all meant something different from what we insisted it meant. On many occasions my right hon. Friend the Chief Secretary and I have been at pains to lean over backwards to try to meet Opposition objections, although we did not think that the passages were ambiguous.

Will the hon. Gentleman deal with the point made on Thursday by my hon. Friend the Member for Hove (Mr. Sainsbury) concerning dividend waivers, which is covered by Amendment No. 438?

The hon. Gentleman is being uncharacteristically impatient. I intend to refer to all the items raised in our debate on Thursday.

Amendment No. 91 would deny the application of Clause 39 to the provision of dwelling houses. It goes further than Committee Amendment No. 451 in the name of the hon. Member for Blaby (Mr. Lawson). That amendment excluded only houses for dependent relatives. Government New Clause 7 exempts transfers of value for the maintenance of dependent relatives, and that exemption is available in respect of any charges under Clause 39. Therefore, there is no need for any special provisions on the lines of this amendment to benefit dependent relatives.

I referred last week to the problem of houses for employees and former employees. I intend to revert to that matter, and I shall be looking at it again during consideration of possible amendments to Clause 39.

Amendment No. 92( a) would defer the operation of Clause 39 until after 6th April 1980. It will come as no surprise to Opposition Members to learn that we regard deferment until April 1976 as going as far as we can justify. I could not recommend my hon. Friends to accept Amendment No. 92( a).

Amendments Nos. 415 and 419, broadly speaking, deny the application of Clause 39 to loans to businesses, whether or not incorporated, by persons who carry on the business or are shareholders, to business partners and to non-profit-making bodies, members of clubs and churches. I have already given an undertaking to revert to the substance of those amendments at a later stage.

Amendments Nos. 416, 418, 445 and 499—of which the only one you called, Mr. Speaker, was Amendment No. 416—all bear on the same point and provide alternative wordings. Clause 39(1)( c) provides that :

" the transfer shall be treated as made out of the transferor's income."

The amendments would embellish those words, which we consider to be sufficient in themselves. We undertook, in column 1571, to consider the point again in Committee. I remain of the view that the

words in subsection (1)( c) mean without further addition that the amount deemed to be transferred is capable of being treated as both capital expenditure and as income of the transferor. For that reason, Amendment No. 416 is not necessary.

The hon. Member for Blaby asked about Amendment No. 438, to which the hon. Member for Hove (Mr. Sainsbury) spoke on Thursday. The amendment is self-explanatory, but it is not in place attached to Clause 39. If he will look at the earlier clauses, particularly Clause 20, he will see that that is the appropriate clause to which to attach the amendment. A dividend waiver cannot be concerned with the use of money or other property without consideration. As we have gone past Clause 20, it might be convenient for me to say to the hon. Gentleman that at first sight a waiver would be caught by Clause 20(7), but there is a let-out in certain circumstances under Clause 20(4), and the chargeability or otherwise of a dividend waiver would depend on the facts of the case as covered by those two subsections.

4.15 p.m.

I should like to get absolutely clear this matter of great practical significance. Suppose a person who feels that he does not need a dividend from a company in which he has a substantial interest decides to execute a waiver under paragraph (c) and no consideration moves the company. He would be conferring a gratuitous benefit on the company because its funds would not be depleted by the amount of the dividend which would be payable to him. Would that person be treated as having made a transfer to the company?

The answer depends upon the facts of the case. In general the intention would be that the transfer should not be chargeable, but there could be circumstances in which the waiver of a substantial dividend accrued to an individual member of the family in a close company situation. The circumstances would determine whether the waiver were chargeable.

I appreciate how difficult it is to probe these delicate matters across the Floor of the House, but I am a little disturbed about the Financial Secretary's answer. He referred to a substantial shareholder—I cannot see why it should matter whether a shareholder is substantial—and seemed to suggest that there might be a transfer not to the company but to the other shareholders who took their dividends. That alarms me a little. Would the Financial Secretary be kind enough to elaborate on that?

This is very much a Committee point, but I will do my best to assist the hon. and learned Gentleman. The essence of the matter is that if the effect of the waiver were to create a considerable benefit for another shareholder, which could happen in a close company situation where there are few shareholders, a chargeable transfer could be deemed to have taken place. I cannot go into the matter in greater detail because it depends on the facts of the case, as I am sure the hon. and learned Gentleman appreciates.

Is the hon. Gentleman referring to a benefit to the shareholder or to the company?

I was referring to a benefit to a shareholder. Where a close company is virtually owned by three or four people, if one shareholder waived a dividend the major part of the benefit would fall to another shareholder, as distinct from the situation which obtains in a public company with many shareholders. This would depend on the circumstances on each case.

Surely that would not be a transfer of capital but a transfer of income. The shareholders who benefited would have a larger income and would therefore be liable to larger income tax. How can the Government claim that the transaction which my hon. and learned Friend has described is a transfer of capital? It is surely a transfer of income. That is why I maintain that this clause should not be in the Bill. It is a clause which taxes income.

The hon. Gentleman is flogging a horse that has been flogged quite a bit. He has already raised this point about whether the clause should be in the Bill and whether it is in order. He has done so many times and it has been found to be in order many times. I do not think it is profitable for me to follow that point yet again. The question is whether there is an intention to convey a gratuitous benefit. If there were such an intention by the exercise of a waiver, there would be a liability to capital transfer tax. It all depends on the facts of any individual case and whether the intention to create a gratuitous transfer was paramount.

In view of the difficulty we are having on this point I wonder whether the Financial Secretary would agree to look at it again and see whether he can find some form of words which would make the situation clearer to shareholders, companies and their financial advisers.

Whenever I say that I will look at something again I am castigated by the Opposition for not understanding the Bill. I understand the Bill very well. I am prepared to look again at the matter. The relevant part of the Bill to which this amendment should attach is Clause 20. I do not think we can advance consideration of the point later. If the hon. Gentleman would like to write to me about any set of circumstances he has in mind I would be happy to look at it.

I promise not to castigate the hon. Gentleman again but may I ask him whether, in the examination which will take place before this is brought forward in April 1976—with the juridical formula—there could be new definitions or explanations underpinning the clause, explaining to the lay and expert public how it is that if Clause 1(c) says that the transfer should be treated as made out of income from the transferor and Schedule 6 says that if it is made out of income it is exempt, chargeable transfers can arise under the clause? This is bound to puzzle anyone who tries to following our proceedings outside.

As I have said in Committee, the Inland Revenue produces a massive and comprehensive set of explanatory notes to the Bill. It intends to produce a revised set of notes to take account of the amendments made in Committee. I am sure that it would be possible to cover the point made by the hon. Gentleman. I think that is all I need to say at this stage except to commend Amendment No. 92.

Amendment agreed to.

Clause 40

Annuity Purchased In Conjunction With Life Policy

Amendments made: No. 93, in page 30, line 38, leave out ' 26th' and insert 27th '.

No. 95, in page 31, line 25, leave out ' 26th ' and inset 27th '.— [ Dr. Gilbert.]

Clause 42

Associated Operations

Amendment made : No. 97, in page 32. line 21, leave out 26th' and insert 27 '.— [ Dr. Gilbert.]

I beg to move Amendment No. 539, in page 32, line 32 at end add—

' (4) Where a transfer is made between spouses, then any two or more operations including that operation shall not be associated operations if they would not have been associated operations but for the transfer between spouses '.

No. 706, in page 32, line 32, at end insert—

' (4) The foregoing provisions shall not apply so as to make any transfer of value a chargeable transfer where that transfer is by one party to a marriage to the other and that other party subsequently or previously has made a transfer of value of an amount equal in value to the first mentioned transfer '.

No. 234, in Schedule 6, page 94, line 43, at end insert—

' (5) An arrangement between two spouses to enable each to contribute £5,000 as a gift within sub-paragraph (2) shall not be treated as an associated operation for the purposes of this Part of this Act '.

I thought that some of the confusion surrounding Clause 42 had arisen as a result of the original Press notice issued by the Inland Revenue, to which the Chief Secretary referred in Committee. The right hon. Gentleman admitted then that it had been a little misleading. Although I did not serve on the Committee I have read the passage in question. The Chief Secretary assured the Committee that transfers involving husband and wife would not be associated operations for the purpose of the Bill.

Until a few moments ago, when I saw a letter written by the Chief Secretary, dated 7th March, to my hon. Friend the Member for Gloucestershire, South (Mr. Cope) we had hoped that this would be a short debate. That letter has raised the whole question yet again and we shall have to start where we began the debate in Committee. During the course of the Bill the Chancellor has constantly made it clear that he has no wish to inhibit transfers between husband and wife. On many occasions he has emphasised the great benefit the Government are giving to the community generally by allowing these transfers in a more generous way than was the case hitherto.

Many delegations have been to see Treasury Ministers. I take one example, the delegation from the CBI which was concerned about small businesses. I can speak only on the basis of hearsay since I was not present. This delegation, like others, has been told by the Chief Secretary or other Ministers that if only the business man arranges his affairs in a sensible way and takes full advantage of the avoidance devices, which Treasury Ministers are prepared to explain to the business man, the full rigours of this tax will be much mitigated.

When Ministers speak from the Treasury Bench they constantly sound off about the evils of avoidance and how they are doing their best, as public-spirited citizens, to stop these loopholes. On the other hand, when delegates see Ministers they are told of the ways in which liability for capital transfer tax can be mitigated. The transfer between husband and wife has been demonstrated on several occasions as being one of those means. I shall not be breaching any confidences if I say that in private meetings my hon. Friends have an expression known as the "Gilbert and Sullivan Shop." I understand this to be a shorthand expression for explaining the kind of transactions which the Government understand might go on to minimise capital transfer tax liability. In spite of what was said in Committee a nagging doubt remains about Clause 42 which is much aggravated by this letter, to which I shall refer.

Treasury Ministers come and go, some rather faster than others, but the Inland Revenue's obsession about tax avoidance goes on for ever. Frequently its obsession about stopping up the tax avoidance loopholes leads to considerable fall out that is contrary to the interests of the ordinary taxpayer. The right hon. Gentleman may be certain of the Government's intentions on Clause 42 but in some mysterious way, as has often happened in the past, we may find the Revenue, in subsequent years when new Treasury Ministers have taken office contesting some transactions between husband and wife. In that situation the Inland Revenue may convince those new Ministers that what they are doing is fully within the terms of the clause.

I turn to the Chief Secretary's letter received today. It is confusing. It says:
" In a blatant case where a transfer by husband to wife was made on condition that the wife should at once use the money in making gifts to others, a charge on a gift by the husband might arise under the clause."
If there is a condition in the transfer, the situation could arise where Clause 42 might override paragraph 1 of Schedule 6. Where there is a condition, we are perhaps moving nearer to the "associated operations" type of case. The letter continues :
"It might even arise apart from the clause because in that case the wife would be a mere conduit pipe for passing the husband's gifts to their intended recipients."
That was obviously drafted by the Inland Revenue. The Chief Secretary has been extremely busy and may not have had as much time to devote to the study of this letter as he would have liked. 4.30 p.m.

There is a definite distinction between what is contained in Clause 42 and what we are being assured by Treasury Ministers. We must sort out that difference in this short debate. The letter continues:
" There would, however, be no question of invoking the concept of the 'associated operation' so as to treat a gift made by a wife as one made by her husband merely because the wife's assets had come from her husband."
That is all right, but a general paragraph is included to ensure that the Revenue can always go for a situation it does not like. The letter continues:
"You will, I am sure, accept that there will, however, be other and more complex situations involving transactions between husbands, wives and others where the Revenue would wish to invoke Clause 42.
I am sure they would, but it is vital to have two assurances from the Chief Secretary. The first is that in no circumstances wil transfers between husband and wife be caught under Clause 42 unless the right hon. Gentleman can give us very specific examples where that general undertaking might have to be broken. Furthermore, I hope that he will be able to show the exact connection between Schedule 6, paragraph 1(1) and Clause 42.

In the Bill this matter is mentioned in the final three lines of Schedule 6, paragraph 1(3). I have read those three lines over and again and find them obscure. We seek an undertaking from the Chief Secretary so that we shall know whether in future years the Inland Revenue could come down on such a transfer.

Despite the limpid, not to say deathless, prose of the Chief Secretary's letter to my hon. Friend the Member for Gloucestershire, South (Mr. Cope), I must admit that I am confused and not a little alarmed. I understand from the letter that if a wife is acting as no more than a conduit pipe—a well-worn phrase but a somewhat unattractive one as applied to the relationship between husband and wife—in other words, when the wife is acting as no more than an agent of her husband, naturally the gift must be a gift by the husband. However, I am a little confused, and I hope that the right hon. Gentleman will be able to assist the House on how far motive creeps into the test.

I have done the best I can in construing Clause 42, and by a sudden flash of recognition I recognised that it derived from Section 478 of the Income and Corporation Taxes Act 1970 and that it had an even longer and more dishonourable history than that. In that section there is an overriding protective subsection letting out such transactions if it can be demonstrated that the person involved had no fiscal motive. I cannot detect that overriding protection in Clause 42. We are told that "associated operations" means
"… operations which affect the same property, or one of which affects some property and the other or others of which affect property which represents, whether directly or indirectly, that property…".
I should like to ask how motive comes into that provision if there is a mere physical connection between properties involved in a series of transactions. It seems to me that if there is an associated operation the consequences to the unwitting taxpayer could be incalculable.

I should like to put two examples to the Chief Secretary. Suppose the right hon. Gentleman were to approach me for a loan and were to say "I wish to set up a settlement in favour of my family. I wish to put funds into it, but it will involve my realising some securities. which, in the depressed state of the present market, I do not wish to do. Will you cover me for three months?" Knowing the good will that exists between the Chief Secretary and myself, after our long exchanges upstairs, I might say "Yes, I shall make a loan to you interest-free" in the knowledge that he would use that as the nucleus of a trust fund for his children. I hope that I would be innocent of any tax avoidance motive in involving myself in that transaction, but in that situation would I be regarded as having made a transfer to the Chief Secretary's children? If so, will he tell me by how much?

It might well be that the Chief Secretary would endorse my cheque to the trustees and say "Here is your trust fund ". It seems to me that one would have two operations affecting the same property On a strict reading of Clause 42, that would seem to involve a transfer between me and the beneficiaries of the C