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Commons Chamber

Volume 888: debated on Tuesday 18 March 1975

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House Of Commons

Tuesday 18th March 1975

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Private Business

Corn Exchange Bill

Merseyside Metropolitan Railwaybill

Queen's Consent, on behalf of the Duchy of Lancaster, signified.

Ocean Transport And Trading(Delivery Warrants) Bill

Standard And Chartered Bank Bill

Read the Third time and passed.

Eastbourne Harbour Bill Lords(By Order)

Order for consideration, as amended, read.

To be considered upon Tuesday next.

British Railways (No 2) Bill(By Order)

London Transport Bill(By Order)

Orders for Second Reading read

To be read a Second time upon Tuesday next.

Oral Answers Toquestions


Equal Pay


x asked the Secretary of State for Employment if he will now refer those organisations he considers have not made sufficient progress towards the implementation of equal pay to the Industrial Arbitration Board.

I expect to refer a number of collective agreements to the Industrial Arbitration Board very shortly.

Is my hon. Friend aware that many thousands of women are suffering considerable loss of income because of the tardy implementation of equal pay by employers and the failure of the previous Conservative Government to activate the order under the Equal Pay Act? Will my hon. Friend give an assurance that he will refer those collective agreements which still contain discriminatory references to women to the Industrial Arbitration Board in the near future rather than at the end of this year?

I share my hon. Friend's regret that the Conservative Government did not make an order under Section 10 of the Equal Pay Act. Subject to the latest state of progress on equal pay, I hope to refer up to four agreements within the next week or so.

Industrial Dispute (Rail Services)


asked the Secretary of State for Employment what records his Department keeps regarding the extent of disruption of rail services by industrial disputes.

My Department keeps no records of this kind. Details of any disruption to rail services are given to the Government by British Rail.

Does the right hon. Gentleman agree that it would be a good thing if a record were kept of the extent of the inconvenience and the loss of working hours caused to commuters who suffer from endless go-slows, work-to-rules and inter-union disputes which occur on the railways during the winter months almost every year? Would it not be a good idea to institute an inquiry into industrial relations in this nationalised industry before embarking on the nationalisation of other industries and bringing them down to the same level?

I do not think that the kind of inquiry which the hon. Gentleman suggests would be helpful. I deplore the inconvenience and trouble which so many commuters were put to in the recent dispute. I would not describe that as an inter-union dispute. The results of the attitude taken by the Government, the National Union of Railwaymen and the board show that we were taking the right course. I know that there were earlier disputes on the railways, and I hope that the general restructuring agreement reached last year will contribute to ensuring that we do not return to difficulties of that kind.

Is my right hon. Friend aware that thanks to the efforts of the NUR and the sensible approach of his Department to the signalmen's dispute the matter was concluded satisfactorily and fairly speedily? Will my right hon. Friend ignore the nonsense uttered by Opposition Members who would not know a railway signal box from a greenhouse?

I agree with my hon. Friend that the NUR deserves congratulations for the effort it made to bring these difficulties to an end. I believe that the signalmen have taken the right course in seeking to settle the matter through the machinery of the NUR.

Social Contract


asked the Secretary of State for Employment what proportion of pay settlements, in the public and private sectors, made since 1st October 1974, were in breach of the social contract.


asked the Secretary of State for Employment what proportion of pay settlements, in the public and private sectors, made since 1st October 1974, were in breach of the social con- tract; and which of the TUC pay guidelines, apart from the 12-months' rule, was breached most often.

We do not have comprehensive information of this kind about pay settlements which would make possible sufficiently precise answers to these Questions.

Does my hon. Friend agree that apart from the lack of availability of the figures the Government, on that rather sad and miserable day just before Christmas, blasted the biggest hole in the social contract when they announced a massive increase in the salaries of judges and top civil servants? Why, therefore, does my right hon. Friend get terribly het up over the low-paid workers like the pickets outside the House of Commons—who take home less than £30 a week—because they might be breaching some terrible guidelines?

On the first part of my hon. Friend's supplementary question, we had a debate on this subject some weeks ago in which I gave my views on the subject, and I do not wish to add anything further to that. On the dispute to which my hon. Friend refers, the guideline of the 12-months' rule was not laid down by the Government but by the General Council of the TUC and was approved at the congress of the TUC. We regard that guideline as being of great importance. Moreover, we believe that observance of that guideline can assist low-paid workers, because the Government have done their best to carry through and to assist in carrying through any guideline in the social contract accepted by the TUC designed specifically to assist low-paid workers.

With regard to the dispute that my hon. Friend mentioned, an answer to the claim is coming from the Government this week, and I hope that it will assist the situation.

Is it not outrageous that the right hon. Gentleman cannot give factual information to the House about the difference between public sector and private sector settlements? Why cannot he give information about the guidelines which are breached most often? If he does not have the information, or is not prepared to share it with the House, how can he go no pretending that the social contract is doing anything to help sustain a policy against inflationary wage settlements?

It is a question of what figures are available and what kind of figures should be kept by the Government in dealing with the situation. We do not believe that we should keep figures on the basis that, say, the Pay Board did, or previous Governments did, when they were carrying out a statutory policy. We do not think that that would be the right course. As I told the House on 23rd January, my Department is reasonably well informed about settlements covering two-thirds of the working population, but that information relates to only a small proportion of the total number of settlements concluded. As I have repeatedly made clear, it is neither necessary nor appropriate for me to say in every case whether it is inside or outside the TUC guidelines.

Is my right hon. Friend aware that the guidelines established by the unions provide priority for lower-paid workers, that the guidelines are imprecise, and that it will never be possible to determine whether each and every settlement is within the social contract or outside it?

My hon. Friend is correct on both points. Certainly, as soon as the guideline referring to low-paid workers was passed and accepted by the congress last September, the Government indicated that they would do their best to ensure that it would be observed. We regard it as one of the most important guidelines of them all, but we want all the guidelines to be accepted and observed.

As the Government look like running into difficulty with the electricity supply workers and the National Union of Railwaymen, should not they and the TUC sit down together again and decide how much the country can afford in pay settlements, rather than have the priorities first and the resources second? They should reverse that, otherwise they will have another year of great difficulty.

There are certainly some difficulties around. I am not seeking to deny that, or obscure it. But the nego- tiations of the electricity supply workers are still proceeding, and it would be most unwise of me to make any comment about them. The same applies to the railways. There is a meeting on Friday at which discussions will take place. One of the things which the Government have done as part of the social contract is to say that we should restore free collective bargaining, and we wish that to proceed in both those cases and in others.

Surely the right hon. Gentleman can give us the figures for the public sector, even if he cannot give us the figures for the private sector. How can hon. Members or people outside the House who are interested in the matter gain any idea whether the social contract is working if the right hon. Gentleman refuses even to give figures which are within his control?

I have had lengthy discussions with the right hon. Gentleman on this subject. I do not believe that it would assist in carrying through a sensible wages policy or in seeking to resist inflationary claims if the Government were to publish the results of each claim and pass their verdict on it. That would have the opposite effects to those which hon. Members might desire. That is the answer I have given the right hon. Gentleman on many occasions. It does not mean that we are concealing any figures, or anything of the sort.


asked the Secretary of State for Employment what discussions he has had with the TUC regarding the implementation of the Government's side of the social contract.

I and other Ministers have had frequent discussions with TUC leaders on the social contract, including the implementation of the Government's side.

Did the right hon. Gentleman read the article in the previous week's issue of the New Statesman by Wilfred Beckerman? Will he now admit that the trade unions, whatever their intentions, are no longer able to deliver their part of the social contract, however imprecisely it may be formulated? Instead of pretending that the emperor has some clothes on, will the right hon. Gentleman not give some thought as to how the unions can be enabled to take some of the power. and some of the responsibility which should go with that power, and how they can be given an interest in maintaining the degree of wage restraint which is necessary to ensure full employment?

I read the article by Wilfred Beckerman in the New Statesman. I attach a due amount of importance to any article I read in that journal. I have also read—and I attach even greater importance to it—the economic review produced by the General Council of the TUC. If the hon. Gentleman will read that document he will see how responsibly the members of the General Council and other trade unions have taken their responsibilities under the social contract. They are now seeking to observe the guidelines. We wish to see the guidelines observed as strictly as possible because we think that that can make a major contribution to overcoming our inflationary problems. Anyone who reads the economic review of the TUC will see how that organisation approaches the matter in a way that can be helpful to the country as a whole.

My right hon. Friend has just said that the trade unions are carrying out their part of the social contract. He will be aware of the considerable concern that is felt due to the rising level of unemployment. Will my right hon. Friend say whether he regards a total of 1 million unemployed as a breach of the social contract on the part of the Government?

I think that the present level of unemployment is too high. I think that the level of unemployment that prevailed when we came into office last February was already too high. I do not accept in any sense the statements made by leading Opposition spokesmen that these are dubious statistics and give a false impression of the dangers of unemployment. Of course we wish to guard against unemployment. That is one reason why we are asking everybody to observe the guidelines as strictly as possible. The more strictly those guidelines are observed, the better we shall be able to overcome our unemployment problems, as well as some other problems.

In view of the firm reference made by the Secretary of State to advice recently tendered by the TUC suggesting an increase in public spending of over £900 million a year, may we assume that he would regard an increase in taxation in the Budget as a breach by the Government of the social contract?

Nobody will know better than the hon. Gentleman that I cannot anticipate the Chancellor's Budget Statement. If I were to answer the hon. Gentleman's question now, I should be doing so in some respect. I do not intend to be tempted in that direction at all. What I was saying was in reply to a question which was put to me about reading matter, and I was giving some advice on that score. On this occasion the hon. Gentleman would do better to read the TUC economic review than the New Statesman.

Does my right hon. Friend agree that if in the next year we have the levels of wage settlements which we have seen in the last year, the increase in unemployment will be an inexorable process which we shall not be able to halt.

My hon. Friend is perfectly correct, in the sense that if wage settlements are at much too high a level they may increase the dangers of unemployment. If wage settlements in particular industries are based at too high a level, that again could cause unemployment. But there are many other causes of unemployment—world-wide causes—which must be dealt with by other measures. Therefore, the question must be put in proper perspective. I do not accept the idea that in the present situation wages alone are the cause of unemployment.

Is the right hon. Gentleman aware that he is now indulging in double talk? On the one hand he says that he deplores the high level of unemployment, but on the other he says that he is perfectly satisfied with progress on the social contract. Does he not realise that in so far as he has failed over the social contract he is now responsible for allowing unemployment to rise? When will he make that clear to the nation?

I did not know the right hon. Gentleman was such an enthusiastic supporter of the social contract. It is a novelty for him to say that the social contract, as he interprets it, would be the salvation of the country.

I was not engaging in double talk. I was stating what surely everybody in the House will accept—namely, that in the present economic situation if wage settlements are pressed beyond the guidelines in the social contract they may contribute to the dangers of high unemployment. I also said that there are other causes of unemployment to be taken into account.


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


asked the Secretary of State for Employment whether he is satisfied that the social contract, as currently interpreted, is not leading to higher unemployment and rising inflation.


asked the Secretary of State for Employment if he is satisfied with the working of the social contract; and if he will make a statement.

A great deal of progress has been made on both the Government's side and the trade union's side in fulfilling the social contract. But firmer adherence to the spirit of the TUC guidelines is vital to reducing the danger of higher unemployment and keeping down inflation.

I sympathise with my right hon. Friend's problems, but will he comment on one basic dilemma? The power workers are now demanding free collective bargaining as part of the social contract but are using that freedom to demand terms which clearly are outside the social contract. Does my right hon. Friend agree that if the power workers or any other trade union group pursue this line they will destroy the social contract and seriously damage the Government?

For the same reasons that I have already given, I shall not comment on negotiations now in process in the electricity supply industry. That would be a most foolish course for any Minister to take at such a moment. Those negotiations are not yet concluded. If it is the fact that the restoration of free collective bargaining leads to some other difficulties as well, those difficulties are far more likely to be overcome in this way rather than by returning to the old statutory system.

Why does not the Secretary of State acknowledge what everybody at home and abroad acknowledges, namely, that the social contract as now administered is the cause of inflation and rising unemployment? Why does he not face up to his responsibilities and admit it and do something about the situation, before it is too late?

The hon. Gentleman has not even troubled to examine the facts. I deny absolutely the suggestion that the social contract is in any sense the cause of inflation. We want to secure a stricter allegiance to the guidelines laid down in the social contract. We believe that the social contract, with all its different aspects, still offers much the best way of trying to overcome the danger of inflation.

My right hon. Friend said that the statutory incomes policy led to the conflict and confrontation of last year and that this had been replaced by the social contract. Has any suggestion been made by the Conservative Party as to what should replace the social contract? If the Conservatives have no alternative, will they stop sniping at the TUC's efforts to try to reach an understanding with the workers which will get us out of our difficulties?

I do not think that my hon. Friend is fair to the Conservative Party, which has been far too busy replacing its Leader to undertake the task of replacing its policies.

Is the right hon. Gentleman aware that the failure of the social contract is placing intolerable burdens on retired people? [HON. MEMBERS: "Oh."] Certain Labour Members may make noises, but that is a fact. Will the right hon. Gentleman have a word with Mr. Jack Jones, who displays great sympathy towards the pensioners, and tell him that the best way to help the pensioners is for the Transport and General Workers' Union to observe the terms of the social contract?

One of the most essential parts of the social contract was the raising of pensions. The Government undertook that course. It was an integral part of the social contract.

Factory Inspectorate


asked the Secretary of State for Employment why he is re-organising the Factory Inspectorate.

This is a matter for the Health and Safety Commission and executive and I am asking the chairman of the commission to write to my hon. Friend.

Will my hon. Friend convey to the commission the fact that the factory inspectors appear to be deeply unhappy about the proposed changes, which involve not only specialisation—of which they approve—but an excessive degree of centralisation? Is he aware that the number of officers would he reduced from over 100 to 18, and that this would lead to inefficiency, excessive travelling and loss of support staff? Does he agree that what we need is to devote more resources to the service, on which workers' lives depend. and not to make people subservient to a bureaucratic and cheeseparing system?

The House will recall that during the passage of the Health and Safety at Work, etc. Act I outlined the Government's plans for a substantial expansion of the inspectorate and substantially increased resources for the purpose. I understand that some discontent has been expressed by some inspectors. It is not clear how much this is part of wider and more complex issues of pay, grading and other matters, which are the subject of negotiations which are not yet concluded.

Does my hon. Friend agree that law without punishment is only advice? Will he give an indication when he will be able to recruit the qualified staff to administer his Act?

I have referred to the negotiations which are taking place, a central part of which is about pay and grading. I am confident that the outcome will be much more attractive terms, which will encourage faster recruitment of inspectors.



asked the Secretary of State for Employment if he is satisfied with the current working of the law on picketing.

Will the right hon. Gentleman give the House the assurance that whatever changes are made in the law of picketing he will not give pickets the legal right to stop people who do not wish to be stopped, as the overwhelming majority of people think that that is a right that should be reserved to the police?

The hon. Gentleman raises a question that we have discussed on previous Bills, and no doubt will discuss again when the Employment Protection Bill is before the House. I ask him to wait for that Bill. I hope that he will not have to wait very long.

Does my right hon. Friend agree that many Labour Members are disturbed about the law on picketing? Does he further agree that any law which allows unlimited sentences, even life sentences, on pickets, is necessarily bad. and that it is time we had legislation that set right the entire law on picketing in favour of the pickets?

The important question that my hon. Friend raises is a matter for my right hon. Friend the Home Secretary, who is considering possibilities of a change in the law on the subject. The aspects of picketing law which would fall within the Employment Protection Bill are the provisions which would protect peaceful persuasion on picket lines. That is what we shall discuss when we have the Bill before us.

Is the right hon. Gentleman aware that his answer to the supplementary question asked by my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) will cause considerable alarm, because the implication is that the Employment Protection Bill will contain measures to change the law on picketing, and a change along the lines described earlier would be wholly unacceptable to many people?

My reply did not say what the hon. Gentleman attributes to me. I asked the House to await the Bill. I do not know why that should cause such alarm.



asked the Secretary of State for Employment if he is satisfied with redundancy procedure arrangements in industry.

No, Sir. I am far from satisfied. The Government will be introducing measures shortly in the Employment Protection Bill to require employers to consult the trade unions concerned before deciding on redundancies and to notify my Department well before they take effect.

I thank my hon. Friend for that answer. Does he appreciate that there is concern amongst my hon. Friends? We have not yet seen the Bill but our attitude towards it is the attitude of the Opposition to the social contract, namely, that it does not exist. Will my hon. Friend give a categorical assurance that the Bill will be before us before Easter?

We hope that it will be before the House before Easter. It will probably be before us during next week.

Scotland (Departmental Functions)


asked the Secretary of State for Employment if he will list the functions of his Department in Scotland.

As throughout Great Britain, my Department in Scotland provides manpower intelligence and participates in economic planning, collects statistics of employment, earnings, industrial disputes, and retail prices, and collates statistics of unemployment and vacancies. It administers regional employment premiums, deals with claims for rebate and guarantee payments in connection with redundancy payments, and provides the Wages Inspectorate, the Race Relations Advisory Service, and the Unemployment Benefit Service. It also provides lay support staff to the industrial tribunals and is responsible for supervision and inspection of the careers service provided in some areas by education authorities and in others by the Employment Service Agency.

It collaborates with the Scottish Office and other Departments of State with the employment service and training services agencies of the Manpower Services Commission, the Health and Safety Executive of the Health and Safety Commission and the Advisory, Conciliation and Arbitration Service, which also have the same functions in Scotland as in England and Wales.

Whew! What would be the benefit either in terms of better service or of return to the Scottish taxpayer if these functions were hived off to a Scottish Assembly?

That is a different matter, which is already being discussed in the devolution discussions that are taking place. I know that at this stage my hon. Friend would not expect me to intrude in those discussions. I thought that he and the rest of the House would like to know how much work we are doing in Scotland.

Is the right hon. Gentleman aware that he may be assured that we are most impressed by the long list of functions that his Department carries out? At least we are impressed, although it appears that the right hon. Gentleman's hon. Friend, the Member for West Lothian (Mr. Dalyell), is not. Does the right hon. Gentleman accept that there is a dominant feeling in Scotland that there is a need for a service which is much closer to the Scottish people? Is he aware that the Scottish people are becoming increasingly concerned that the social contract is not providing enough for them, in that costs in Scotland are comparable to those in the South-East of England but there is no London weighting for the people of Scotland? Will the right hon. Gentleman take into account the need to redress the balance and to bring social justice to the working people of Scotland?

I have looked at the figures which compare wage rates in Scotland with those in the rest of the country. The figures that I have seen do not bear out what the hon. Gentleman is suggesting. Indeed, I think that he is making a wrong deduction from the figures. As he knows very well, the organisations to which I have referred confer great benefits on the people of Scotland. I think that the hon. Gentleman fully appreciates that.

In the collection of unemployment statistics to which my right hon. Friend referred, has he come across any employment exchange which has more registered unemployed than the 4,023 so registered at the Brixton employment exchange?

My hon. Friend travels a long way to get to his own question. I am happy to look at the situation in Brixton even if I have to get there via the North of Scotland.



asked the Secretary of State for Employment what are the latest annual percentage increases in average earnings, for the public and private sectors, respectively.

I regret that the information is not available.

If, as seems likely, constraints on high wage settlements in the private sector are now beginning to apply and will increasingly apply over the coming months because of the economic situation, what action will the Department take to reinforce the Prime Minister's recent comment that the money is not available for excessive settlements in public industries? If those exhortations prove to be insufficient, what practical steps will the Department take to reinforce it?

Both the Government and the TUC would like to see a closer adherence to the social contract wage guidelines than there has been in some recent cases. Both sectors will be using the influence that is open to them to keep future settlements in that area. In both the private and public sectors economic and financial constraints are operating at the moment which will be borne in mind by negotiators on both sides when determining the level of wage increases. That would have to apply whether or not there were social contract guidelines.

Even if, last year, the annual increase in the public sector were greater than in the private sector, does my hon. Friend agree that that increase is against the trend of experience in the past 10 years, during which time private sector earnings were generally very much higher than public sector wages?

It has been the case that public sector negotiators have represented to us that the general constraint over the past 10 years has been adverse to the public sector as compared with the private sector. I think that the position under the social contract guidelines has reversed that, particularly in the low pay area, where public sector manual workers have gained enormously from the TUC low pay target. To that extent we can find a large part of the explanation of some of the larger percentage increases that we find in the public sector over the past few months.

A few minutes ago the Minister of State said that he did not have the information to be able to give the House average earnings in the public sector. In a subsequent reply, almost immediately afterwards, he said that they were far too high. If he does not know what they are, how can he say what judgment he has made?

I did not say what the hon. Gentleman attributes to me. I said that in the public sector a number of the higher percentage increases were largely attributable to the fact that there were many low-paid people in the public sector —especially public sector manual workers —who have benefited particularly from the low pay guidelines. This can be determined by examining the published figures which are available to all hon. Members as regards settlements in the private sector and as to the number of manual workers in that area.

Public Service (Ilo Conference)


asked the Secretary of State for Employment who will represent Her Majesty's Government as the ILO's technical tripartite conference on the Public Service from 7th to 18th April in Geneva.

Mr. R. W. Williams of the Civil Service Department will represent the United Kingdom Government at this conference.

Will my hon. Friend ensure that the delegate supports absolutely a charter to give protection to public servants throughout the world and also to ensure that he shows sympathy towards the demands of trade unions in the underdeveloped countries?

I am sure that whoever the gentleman is he will be adequately briefed. My hon. Friend will be aware that the TUC is sending not only a delegate but two advisers, one of whom is a member of my hon. Friend's union.

Employment Agencies


asked the Secretary of State for Employment when he expects to receive the Manpower Services Commission's study of private employment agencies.


asked the Secretary of State for Employment if he has yet discussed with the Manpower Services Commission the making of a study into the effect on employment and the mobility of labour of fee-paying employment agencies and the Employment Services Agency.

I have not yet discussed with the commission the possibility of its undertaking such a study. The matter is still under consideration, since it raises important questions as to the scope of any study and the most appropriate thing.

Is it not time that the Manpower Services Commission was asked to undertake such a study? Is my hon. Friend aware that private employment agencies are rapidly increasing and are now supplying anything from secretaries to lorry drivers to airline pilots? Will my hon. Friend confirm that the Government still intend to enable the commission to be the only employment agency in the country?

My hon. Friend is no doubt aware that we are proposing to introduce regulations consequent on the Employment Agencies Act, but this will be delayed because of our announced intention to transfer the responsibility for administration and enforcement of regulations and licensing provisions to my Department. We do not rule out the fact that following experience gained it may ultimately be possible to transfer this responsibility to the Manpower Services Commission.

Is my hon. Friend aware that there is a good deal of dissatisfaction with this Act on the Labour side of the House? Does he appreciate that there would be almost unanimous, if not unanimous, support for the complete abolition of profit-making within this area? Is he aware that the sooner it is brought into public ownership the better it will be?

I must remind my hon. Friend that when the Employment Agencies Bill—a Private Member's measure—was before the House it was not opposed but enjoyed a large measure of support from hon. Members on both sides. I made it clear on 18th February, in reply to a question from my hon. Friend the Member for Nuneaton (Mr. Huck field), that we have by no means ruled out the possible ultimate abolition of private fee-charging agencies.

Health And Safety Commission


asked the Secretary of State for Employment when he expects to make an announcement on the location of the office of the Health and Safety Commission.

The Health and Safety Commission has informed me that it proposes to put in hand a study of the question of its ultimate location. I am not yet able to say when the advice of the commission will be available.

Is my hon. Friend aware that even after a period of national growth in service employment the Yorkshire and Humberside Region's percentage of workers in the service sector is more than seven points below the national average of 56? Does my hon. Friend realise that it is devoutly hoped in Sheffield and district that the choice for this office will ultimately fall upon that city and its surrounding countryside?

Since I travel with my hon. Friend to and from Doncaster every week I am sure that he will not allow me to overlook the powerful case which Sheffield has. I am sure that, equally, he will recognise the strong claims of other areas.

Does my hon. Friend accept that the Sheffield travel-to-work area, in practical terms, includes many constituencies like my own and that in the Hemsworth constituency there is an almost total lack of service employment facilities? Does he further accept that in the South Yorkshire coalfield area there is a desperate need for this type of service employment?

I assure my hon. Friend that the needs of South Yorkshire in this respect are least likely to be overlooked by me. I shall certainly bear in mind what he has said and will draw his remarks to the attention of all those concerned.

Advisory, Conciliation And Arbitrationservice


asked the Secretary of State for Employment what are the criteria for the intervention of the Conciliation and Arbitration Service in an industrial dispute.

The Advisory, Conciliation and Arbitration Service can help in a dispute only if both parties accept its assistance. In most cases, the service becomes involved following a request by one or both of the parties, but it will sometimes take the initiative by offering assistance. In determining whether to intervene a major consideration is often whether the appropriate procedures for resolving disputes have been exhausted, or whether procedures have conclusively broken down. In all cases the decision rests with the service.

I thank the Minister for that reply. Will he tell me whether the criteria he has laid down would be sufficient to justify the early intervention of the Advisory Conciliation and Arbitration Service in the dispute now going on at Westminster Hospital? In the meantime, will he take this opportunity to deplore the use of the sick, rich or poor in the interests of an industrial dispute?

We are always concerned that the sick and the poor should not suffer as a result of any activities. Trade unionists who take action have this very much in mind. The criteria I have outlined do not of themselves prevent the use of the ACAS in the case mentioned, but in any case where the dispute is unofficial the official union machinery has to be consulted because the conciliation officers of ACAS have to maintain a proper relationship with the official machinery if they are to be able to help in a great number of official disputes.

Does the Minister not feel it appropriate to go rather further than that with the Westminster Hospital? Is it not absolutely outrageous that the working of this great hospital should be interrupted because of an unofficial dispute of this kind, apparently with no consideration whatever for the well-being of the patients? Is the Minister aware that there is a grave threat to National Health Service patients as well as to private patients? Does he not recognise that if the arbitration service is to carry some credibility we must have a rather stronger statement from the Government about such behaviour?

I am always willing to examine any dispute and to get in touch with ACAS to consider with it whether the service can be of assistance. I readily give an undertaking to do that in this case. I must, however, insist that discretion must lie with the ACAS conciliators on the question whether they can help, once they have examined all the circumstances. There are particular difficulties applying to unofficial disputes. It would be bad for the service as a whole and for industrial relations generally if, by intervening in certain unofficial disputes, ACAS totally disrupted its relationship with unions, with the result that it could not help in future official disputes.

President Ford


asked the Prime Minister if he has any plans to invite the President of the United States of America to Great Britain.


asked the Prime Minister whether he will invite President Ford to make an official visit to London.


asked the Prime Minister whether he will issue an invitation to President Ford to visit Great Britain.

President Ford knows that he will always be welcome in this country but I am not aware that he has any plans at present to visit Europe.

I wonder whether my right hon. Friend would go to the United States Embassy to see the new American Ambassador, Elliot Richardson, who told the Foreign Relations Committee on 12th February that the CIA was working closely with its British colleagues. When my right hon. Friend got to the embassy he might bump into Cord Meyers, who is heading a number of CIA men operating with diplomatic immunity at the American Embassy. Will he do something positive, such as set up a commission of inquiry to investigate these appalling affairs?

If anything comes out of the official American inquiry that requires investigating in this country I shall not hesitate to set up an inquiry. My hon. Friend may have been concerned about reports of the CIA engaging in industrial espionage here. These reports have been categorically denied and I have no reason at all to think that the denial was inaccurate.

The Prime Minister will be aware that there is another visitor to our shores this year who will be much less welcome than President Ford, namely, Mr. Shelepin. We appreciate the dilemma that the Home Secretary is in when a visa is applied for in such a case, but will the Prime Minister confirm that when Mr. Shelepin comes here neither he nor any of his Ministers will meet him?

I do not think it is likely that he will be coming in the suite of President Ford, who is the subject of this Question. My right hon. Friend the Home Secretary answered a question on the subject raised by the hon. Gentleman yesterday. I have never noticed from the Conservative Party the same opposition to the visit of the Fascist Caetano, whom we opposed and whom the Tory Government invited.

Is my right hon. Friend aware of the disclosures of Mr. William Colby, of the CIA, to the United States committee investigating this matter, confirming the part played by the CIA in destabilising—as it said—the elected regime in Chile? Can my right hon. Friend say positively that the CIA is not playing the same part in Portugal and that the British agency is in no way responsible? Can he be absolutely certain that CIA agents would not attempt to undermine or destabilise a Labour Government in its pursuit of Socialist policy?

It would take more than them, I think. I have not had the privilege of seeing the evidence to which my hon. Friend refers. I have not been going through that evidence; I have had more important things to do. If my hon. Friend would care to send me a copy or draw my attention to any particular reference I should be glad to look into it. If anything comes out of the inquiry in the United States which suggests the need for an inquiry here, one will be held.

With reference to the last supplementary question, may I ask the Prime Minister to discuss with President Ford if he comes here the situation in Portugal? Does the right hon. Gentleman not agree that an extremely disturbing situation exists there, which has grave implication for the interests of this country? Does he not further agree that it would be a great tragedy if a dictatorship of the Right were to be replaced by a dictatorship of the Left?

I share the concern which has been expressed about what has been happening in Portugal in the past few days. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs made a public speech urging upon the Portuguese the need to maintain and strengthen the democratic system in their country. I repeat that when there was a Right-wing dictatorship there, the Cabinet of the Conservative Government strongly supported the visit of Mr. Caetano and voted the Labour Party down on a motion saying that he should not be invited, in view of the Portuguese atrocities.

Does my right hon. Friend recall that in September 1971 Sir Alec Douglas-Home demanded the recall of 90 Soviet diplomats who were alleged to be engaged on intelligence-gathering activities in this country? Would the activities of CIA agents be equally inadmissible? If those agents were found in the United Kingdom would my right hon. Friend demand their recall, too?

I think that the number was 105. Certainly, if there were any evidence that CIA agents were doing what those 105 agents were alleged to have done, I would agree with what my hon. Friend said. If any evidence comes to my attention, either through the inquiry being undertaken on behalf of the United States Government or in any other way, I shall not hesitate to make all essential inquiries, not excluding an independent inquiry, into the matter.

Eec Heads Of Government


asked the Prime Minister when he now next expects to attend a meeting of Heads of Government of Common Market countries.


asked the Prime Minister when he now next plans to meet the EEC Heads of Government.


asked the Prime Minister when he now next proposes to meet the heads of EEC Governments.

At our meeting in Dublin on 10th-11th March, the Heads of Community Governments agreed to meet again in good time to prepare for the International Energy Conference later this year, but no dates have yet been arranged.

Does the Prime Minister recall that at an earlier summit meeting he endorsed a statement by the Heads of Government that economic and monetary union remained their objective and that their will had not weakened? Yet he is now reported as saying that economic and monetary union is either dead or at least on the list of endangered species. Is not it clear that on this issue the Prime Minister is presenting one face to Europe and another face to Britain? Will the right hon. Gentleman say clearly whether he does or does not support the objective of economic and monetary union?

There is no problem. I have told the House that this remains an idea of the Community. After the Paris summit meeting I told the House that we regarded this as a very remote possibility indeed. We were not expressing concern about it. I likened it—as I shall in my statement this afternoon—to our aspirations in favour of general and complete disarmament. But that will not happen by 1980, either. Members of the Community are clear about our views. I shall be referring to the matter in a statement which, with permission, I hope to make after Question Time.

Is my right hon. Friend aware that many Government supporters, and other hon. Members, are grateful, after the Dublin summit meeting. that there will be no need for another summit before the British people have a chance of making their voice heard on the question whether we remain a member of the Common Market? We congratulate the Prime Minister and the Foreign Secretary on the work which they did in Dublin, which is also in accordance with the terms of the Labour Party manifesto.

I thank my hon Friend for what he said about this matter. Since the regular three-or-four-times-a-year summit meetings began, the practice has been not to arrange the date of the next summit as the old summit breaks off. On both occasions we have fixed the date by communication afterwards. No decision has been taken about the date of the next summit, whether before or after the referendum.

Since there is no immediate need to meet the other Heads of EEC Governments, will the Prime Minister take steps, instead, to reassure British nationals in those countries—who often do valuable work for this country by promoting our exports—that they will not be disfranchised in what will be a national referendum rather than a constituency party election?

This matter was raised in the debate on the referendum, while my right hon. Friend and I were in Dublin. My right hon. Friend the Lord President of the Council undertook to consider representations relating to points made in the debate. This matter is being considered.

Will my right hon. Friend give an assurance that, regardless of how long it takes to bring the Heads of Government together, it need not take three months to seek the views of the British people? Can the referendum take place soon, before everybody is sick to death of the whole business?

I have a great of sympathy with the point made by my hon. Friend. I should like to see this take place sooner, and so, I guess, would the whole House. [Interruption.] I would guess that the House and the country would like to see this matter brought to a conclusion as soon as possible. The Bill will be introduced in the near future. I hope that right hon. and hon. Members in all parts of the House, provided they are given enough time in which to decide the matters of contention, will co-operate to the full in setting as quickly as possible the earliest date for the referendum.

North-East Lancashire


asked the Prime Minister if he will pay an official visit to North-East Lancashire.

I thank my right hon. Friend for that reply. However, may I convey to him the disappointment of the people of North-East Lancashire? If my right hon. Friend visits that area he will meet thousands of textile workers who, anticipating the forthcoming debate on textiles, expect action on cheap imports. He will also meet thousands of footwear employees who are suffering from short-time working as a result of cheap imports from Eastern Europe. What assurance can my right hon. Friend give those footwear workers that action will be speedily taken to reduce the level of imports and to give those workers a secure future in the industry?

I visited my hon. Friend's constituency early last September and met the representatives of the neighbouring local authorities on the North-East Lancashire Development Association. As regards this Question, my hon. Friend will recall the answer— I hope he feels it was a positive answer—which I gave to a Question by the hon. Member for Melton (Mr. Latham) last Thursday. A debate on this matter is now arranged for Thursday. My right hon. Friend the Secretary of State for Industry will meet the Members of Parliament representing the affected areas. I know the Rossendale footwear project very well, and I agree that the footwear, textile and other industries are threatened by the kinds of imports to which I referred the other day.

Will the Prime Minister tell the House whether he plans to suspend the principle of collective Cabinet responsibility on the important question of import controls?

Will my right hon. Friend also bear in mind that one of the problems in North-East Lancashire is the decline in the population, and that we need more white-collar jobs and new industries in the area?

I am well aware of that point. My hon. Friend will know that I discussed the matter, our hope in the future to obtain a redeployment of civil servants into that area, and the present difficulties about doing that. In case there is any doubt about the answer I gave while I was dealing with a minor liquidity crisis here—I spilt my glass of water—I meant that there will be no suspension of collective responsibility. That is a once-and-for-all answer in relation to the referendum, whereas every week there is a retrospective dissociation by the present incumbents of the Opposition Front Bench from the actions of the previous Conservative Government.

Is the Prime Minister saying that on Thursday the Secretary of State will make an announcement about stopping footwear imports dumped by East European countries?

The hon. Gentleman had better await the statement by my right hon. Friend and the debate on it. He is giving urgent consideration to the matter, and we have been in touch. Many hon. Members representing North-East Lancashire have had much experience of this in the past. However, I cannot foreshadow what my right hon. Friend will say in the debate.

Will my right hon. Friend accept my approval of the fact that he has listened to back benchers, and will he accept also that I should like him to do it a good deal more over forthcoming weeks? Is he aware that import controls are needed as a matter of urgency to protect the West Riding wool and textile industry, and that in order to do this he should show our independence of bureaucrats in Brussels and impose import controls freely and independently, as he has the right to do?

Apart from the general question of import controls as a means of safeguarding our balance of payments, my hon. Friend is now referring to protection against unfair competition. Over the years, successive Governments have taken action in that direction. There is nothing in principle against it, and we are examining these matters for evidence of unfairness, subsidies or wrong pricing. My hon. Friend will be aware that as part of the Lom é Convention, which has been welcomed in all parts of the House, we, in common with other European countries, are providing increased access for the products of primary producing countries. I am sure that my hon. Friend is not against that.

European Community

Mr. Speaker, with permission, I should like to make a statement on the European Community.

I regret that this will inevitably be somewhat lengthy, but this is one of the most important parliamentary occasions in our history, and I feel a duty to state the Government's position here in the House, rather than make a short, even perfunctory, statement here and a lengthy statement outside the House where it is not subject to parliamentary questioning.

Her Majesty's Government have decided to recommend to the British people to vote for staying in the Community. [Interruption.] Although this statement is lengthy, I hope that I can take time off for injuries.

Last Wednesday, after Dublin, I told Parliament that the renegotiations, begun last April, had now gone as far as they could usefully go and that, while some of our objectives—if Britain remained in the Community—could be pursued in the continuing meetings of the Council of Ministers, we had now reached the point where Government, Parliament, and then the country, must take the decision.

The House will be familiar with the renegotiation objectives we set out in the manifesto for the February 1974 General Election, and confirmed in October.

While the judgment of hon. Members, and of the electorate, may, in taking their decision, go far wider than the terms achieved in the negotiations, I feel it is right to give the House my assessment of what has been achieved.


The manifesto called for:
"Major changes in the common agricultural policy so that it ceases to be a threat to world trade in food products, and so that low cost producers outside Europe can continue to have access to the British food market."
My right hon. Friend the Minister of Agriculture gave precision to these objectives in his statement to the Council of Ministers on 18th June, on which he reported to the House on 19th June. He asked for:

  • 1. The establishment of firm criteria or pricing policy, taking account of the needs of efficient producers and the demand/supply situation.
  • 2. Greater flexibility, taking account of the need for appropriate measures to deal with special circumstances in different parts of the Community.
  • 3. Measures to discourage surpluses and to give priority to Community consumers in the disposal of any surpluses which arise.
  • 4. Improvement in the marketing régimes for some major commodities, particularly beef, with a view to avoiding surpluses.
  • 5. The improvement of financial control.
  • 6. Better access for certain commodities from outside the Community, with particular regard for the interests of Commonwealth producers and of the consumer.
  • Now as to the outcome.

    On the supply of food at fair prices, in the three CAP price settlements since the Government took office the Minister of Agriculture has succeeded in keeping price increases below cost increases, and thus in real terms reinforcing the downward trend in CAP prices. This would benefit consumers and taxpayers and also is designed to reduce the risk of surpluses.

    Increasingly, price proposals are being related to the costs of efficient producers and the supply/demand situation, and this approach is reaffirmed in the Commission's report on the CAP stock-taking for which we and Germany asked.

    On the greater flexibility for special circumstances and improved systems of market regulation, especially beef, the Minister has secured changes for beef under which member States are no longer obliged to maintain high prices for producers by buying beef into store and denying it to consumers. Instead, they can let it go to consumers at reasonable prices and make up returns to producers by deficiency payments partly financed by the Community.

    In addition, special encouragement has been given for sugar production in the United Kingdom. More generally, the monetary arrangements have been used to differentiate the percentage price increase between member States. There has been more flexibility in the use of national aids.

    On the requirements of measures to discourage surpluses and to pay more regard to consumers, the downward pressure on CAP prices is itself a safeguard against surplus production—together with our proposals, now being pursued, for the reduction of support buying prices for milk products and cereals when surpluses start to arise. Then there is the recent practice, which I understand is to be continued, that any surpluses which do develop are run down by cheap supplies to Community consumers rather than being unloaded on world markets. We have had this in the beef subsidy for pensioners and in the increased butter subsidy. British consumers again benefit from the monetary import subsidies paid to countries which have devalued and from special measures to keep Community prices below world prices, particularly the sugar import subsidy which is financed by the Community.

    On the objective of improved financial control, some progress has been made—better estimates of costs and budgetary implications of new proposals, tighter monitoring of expenditure and the introduction of precautions against fraud.

    On access for third-country foodstuffs, in 1971 we condemned from the Opposition benches the failure to provide security for Commonwealth Sugar Agreement producers. We constantly criticised the lack of arrangements for Commonwealth Sugar Agreement supplies after the end of 1974, which in fact turned out to be a time of world sugar famine—hence the crisis and the high prices we faced. But we have now got assured access for up to 1·4 million tons of sugar from developing countries, for which we pressed from 1971 onwards, so this objective has been achieved.

    During this period of shortage, British refiners and manufacturers have purchased 170,000 tons of sugar to maintain continuity of supplies with the aid of Community subsidies of £36 million.

    On access for New Zealand dairy produce, in the autumn of 1974 we secured an increase of 18 per cent. in the prices paid to New Zealand to ensure continued supplies, and at Dublin we got agreement on the broad lines of the continuing arrangements for access of New Zealand dairy produce after 1977.

    No commitments had been made in 1971, but so far as butter is concerned the Commission has been instructed to prepare in the next three or four months a draft based on the maintenance of butter imports from New Zealand to Britain at around the level of 1974–75 deliveries—in other words, none of the degressivity which had been understood was to be brought about—together with price proposals to which the New Zealand Government attach the greatest importance.

    On cheese, the Protocol to the Treaty of Entry ruled out any more access for New Zealand cheese of the kind provided for in 1973–77. But last week's statement has left the matter open, and we have given notice that we shall pursue it in the Protocol 18 review. We shall press this urgently indeed.

    Improved access for other foodstuffs has been secured as a result of GATT negotiations, the trade sections of the Lomé Convention, the Mediterranean agreement and the Community's 1975 Generalised Scheme of Preferences which has now been agreed; improved access, too, for tropical oils, Canadian cheddar, soluble coffee and lard, though no achievement yet on access for certain other foods such as canned fruit and hard wheat. We have requested levy-free quotas for hard wheat and flour, and put on record that we shall at an early date seek elimination or reduction of the tariff on New Zealand lamb.


    Community Budget

    The manifesto commitment was:
    "New and fairer methods of financing the Community budget. Neither the taxes that form the so-called 'own resources' of the Communities, nor the purposes, mainly agricultural support, on which the funds are mainly to he spent, are acceptable to us. We would be ready to contribute to Community finances only such sums as were fair in relation to what is paid and what is received by other Member countries."
    It rapidly became clear that we could best secure our objectives not by seeking to overturn the system of financing the budget from "own resources" but by correcting its unfair impact by a mechanism which would provide a refund to us.

    I reported to the House a week ago, and set out the corrective mechanism proposals, which as I said were an improvement on the Commission's proposals, and which satisfactorily met what we then proposed, involving a refund of up to £125 millions a year.


    Economic and Monetary Union

    The manifesto commitment is as follows:
    "we would reject any kind of international agreement which compelled us to accept increased unemployment for the sake of maintaining a fixed parity … We believe that the monetary problems of the European countries can be resolved only in a worldwide framework."
    Since that commitment was made there has been a major change in the attitude of other European Governments to the practicability of achieving EMU by 1980. As a long-term objective it was restated in the Paris communiqué, but for all practical purposes it has been tacitly abandoned. For example, the second stage, due to start on 1st January 1974, 15 months ago, has never been adopted and practical work has been virtually at a standstill for a long time.

    There is no prospect of our coming under pressure to agree to an arrangement, whether in relation to parity commitments or otherwise, threatening the level of employment in Britain. As for EMU remaining as a long-term Community objective, its realisation in the foreseeable future, as I hinted at Question Time, is as likely as the ideal of general and complete disarmament which we all support and assert.


    Our election manifesto of February 1974 stated our objective as:
    "The retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies."
    Regional Policy

    Since the turn of the year, and in the context of our renegotiations, the Commission has had an intensive discussion with us and other member Governments and has now formulated the principles under which it proposes to implement its rôle in the co-ordination of regional aids.

    The Commission's hierarchy of assisted areas conforms to ours. No forms of national aids are ruled out in principle, and there is no intereference with our existing regional aids. There is a particular problem relating to assistance given by the Highlands and Islands Development Board, for which a derogation is being obtained. In discussing the way in which regional aids might be changed to meet new circumstances, the Commission has furthermore acknowledged that national Governments are the best judges of what is required in their own country and that the Commission will be prepared to consider changes in national aid systems compatible with the Common Market, when they are justified by problems of employment, unemployment, migration and by other valid requirements of regional development policy which constitute essential national problems. The Commission has further accepted that urgent action by Governments may be necessary and that treaty procedures will not hold this up.

    Industrial Policy

    We have not met with any serious difficulties from the EEC in the conduct of industrial policy during the past year. We have reported aids given under Sections 7 and 8 of the Industry Act 1972. Article 222 of the Treaty of Rome specifically permits nationalisation; and Government participation in the equity of a firm does not in itself raise problems under the treaty. The Commission has accepted that in urgent cases we shall provide aid without first giving it an opportunity to comment. In such rescue cases a solution might be that when we prepare a plan to restore the firm concerned to viability we should discuss it with the Commission within the following six months. This would not be an onerous requirement.

    The Commission has not yet commented on the Industry Bill. The proposals for the National Enterprise Board and for Planning Agreements have much in common with arrangements in other member States. They are in no way incompatible with the treaty, provided that the Government's powers are not exercised so as to damage the competitive position of undertakings in other member States—a principle which we accept, as we have in the case of regional policy.

    I should add that, as regards State aids, we had just as stringent an injunction on us as members of EFTA, and non-Market EFTA countries which have agreements with the EEC have accepted obligations just like the EEC obligations without having any part in EEC decisions in these fields.

    I believe that this meets our objective. Steel is more difficult, partly for inherent reasons, partly because of action taken by the previous Government when they repealed Section 15 of the Iron and Steel Act.

    I am satisfied that potential problems over prices can be resolved by close contact between the Government and the Steel Board, and possible difficulties about mergers are also capable of a solution.

    There is nothing in the Treaties of Rome or Paris or in practices or policies under the treaties which precludes us from extending nationalisation of the present private sector—even total nationalisation of the industry.

    On the control of private investment there were, until the repeal of Section 15, powers under legislation passed by this House to prevent investment by non-British non-Community country steelmasters—and the much publicised mini-mill proposal at Newport could have been dealt with if Section 15 was still in force. It is not against the treaty in any way to use it.

    My right hon. Friend the Foreign and Commonwealth Secretary gave notice at the Council of Ministers on 3rd March that it might be necessary to ask for treaty revision if there is no other way of solving this problem. If, as part of the control of the economy, the Government—any Government—have to hold back the level of new investment in the public steel sector, it is unacceptable that the private sector should be free to expand where it wants and by as much as it wants, thus adding to the inflationary pressure on resources, quite apart from the location and regional problems, for example, in areas where steel men have been made redundant by technological change.

    Since it is well known that other member countries have met with those and similar problems and have found administrative means of dealing with them without asking for an amendment of the treaty, I told the other Heads of Government in Dublin that we would study the methods they have used, whether by environmental controls, planning controls, industrial development certificate controls, or other means.

    Were this to fail, we could still have recourse to extending public ownership or to proposing treaty revision. Concerning this continuing objective, the reference in the manifesto objective to fiscal policies has not proved difficult. There are proposals for certain measures to harmonise the structure of some indirect taxes, but any which were objectionable to us would require our agreement. I will come to this again on VAT.


    Capital movements

    The manifesto commitment says:
    "Equally we need an agreement on capital movements which protects our balance of payments and full employment policies."
    We have made use of the relevant Articles of the Treaty of Rome to revert to broadly the same exchange control régime as applied before entry. We can continue to take action under those Articles to protect our balance of payments.


    The Commonwealth and developing countries

    The manifesto said:
    "The economic interests of the Commonwealth and the developing countries must be better safeguarded. This involves securing continued access to the British market and, more generally, the adoption by an enlarged Community of trade and aid policies designed to benefit not just 'associated overseas territories' in Africa, but developing countries throughout the world."
    I have referred to Commonwealth sugar and New Zealand dairy products

    Another major achievement was the Lomé Convention. What was achieved —and a great tribute is due here to the work of my right hon. Friend the Minister for Overseas Development—was the transformation of a paternalistic arrangement with a restricted range of mainly ex-French and Belgian Colonies or Territories, in which they had to offer the Community reciprocal trade benefits, into a relationship based on co-operation with 46 countries in Africa, the Caribbean and Pacific—22 of them from the Commonwealth. The new convention governs access without requiring reciprocity, a completely new scheme for stabilisation for commodity earnings, and much increased aid. The convention has rightly been described as historic. For this and other reasons, almost all Commonwealth countries, advanced and developing, have expressed their hope that Britain will stay in the Community.

    As to Asian countries such as India. Sri Lanka, Bangladesh and Pakistan, a good deal has been achieved for them already. They have benefited from EEC emergency aid to those countries most seriously affected by the oil price rises. India has an agreement with the EEC, and the other three are negotiating them. The Generalised Scheme of Preferences has been much improved, and earlier this month the Council of Ministers agreed to work for continuing improvements to the scheme, with particular emphasis on the interests of the poorest developing countries, including those of the Indian sub-continent.

    But it cannot at this stage be claimed, putting aside what has been achieved, good and less good, that all the problems so far as Asian countries are concerned have as yet been solved. In principle, yes, but there is so far no commitment about the necessary financial provision.


    Value Added Tax (VAT)

    The manifesto commitment is:
    "No harmonisation of value added tax which would require us to tax necessities."
    The proposals now being discussed in the Community are concerned with agreeing a uniform assessment base for VAT. They provide for our system of zero rating. We will be able to resist any proposals which are unacceptable to us.

    Contrary to the situation four years ago, this VAT problem of harmonisation is no longer a real threat. So far from harmonising, a number of countries are insisting on increasing the number of VAT rates within their own tax systems and it seems there is no danger to our freedom here at all. That was not the position four years ago.

    To sum up, therefore, I believe that our renegotiation objectives have been substantially, though not completely, achieved.

    I have set out at some length the outcome of the negotiations on each objective mentioned in the manifesto, including those where the passage of time has diminished or eliminated the threat that we foresaw.

    What now falls to be decided is whether on these terms, the renegotiated package as a whole, the best interests of Britain will be best served by staying in or coming out.

    It will be seen from what I have said that the Government cannot claim to have achieved in full all the objectives that were set in the manifesto on which the Labour Party fought and won two elections last year. Some we have achieved in full; on others we have made considerable progress, though in the time available to us it has not been possible to carry them to the point where we can argue that our aims have been completely realised.

    It is thus for the judgment now of the Government, shortly of Parliament, and in due course of the British people, whether or not we should stay in the European Community on the basis of the terms as they have now been renegotiated.

    So I do not believe that in taking this decision, if that is the decision which the country takes, we are entering into a narrow regional grouping to the detriment of our world-wide relationships. My first regard, ever since I entered this House, has always been more to the Commonwealth than to Europe. We have to face the fact that practically all the members of the Commonwealth, deciding on the basis of their own interests and what is good for them, want Britain to stay in the Community. Of course, it is a fact that many have diversified their trade away from Britain in the past four years. In many cases they felt themselves forced to do so as a result of the 1971 decision and terms. But a number also, New Zealand for example, have entered on a radical reorientation of their political stance related to the region surrounding them and are developing their economic policies in a similar direction.

    Again, I would not commend what I have announced to the House if this meant in any way weakening our transatlantic relationships. Relations with the United States are closer and better than they have ever been at any time, certainly in this generation, and in some contrast to what they have been in very recent times. Nothing in today's decision will in any way weaken that relationship.

    Her Majesty's Government have decided to recommend to the British people that they should vote in favour of staying in the Community on the terms which I have described. I have given the Cabinet's view. I have only this to say before I sit down.

    First, while perhaps some of these things might have been improved even if the Government had not entered into these tough negotiations—I say might have been—the renegotiations have themselves been more than a catalyst of change, they have been an initiator of change.

    The second thing is this: many of us, including myself, have at various times been half terrified by reading the legal jargon, the apparently fussy legalism and theology, not to mention some speeches and statement of enthusiastic supporters, and not to mention interference in things, such as beer, milk, hops and un-eviscerated chickens. Much of this nonsense has now stopped—certainly those fussy Commission intiatives to which I have referred on those items. The Foreign Secretary and I have found the Market much more flexible than I think either of us expected, both in individual questions and in what we have noted as a substantial shift of power over these past 12 months. It is remarkable how flexible it can be when there is a British Government who are prepared to stand up for British interests, and not the kind of people who negotiated in 1971. They never even gave the Market a chance to be flexible.

    Renegotiations, agricultural and financial crises, whatever the causes may have been, all have played their part in putting more power into the hands of national Ministers meeting in the Council of Ministers. I believe that few would have thought, even a year ago, that we would Minister of Agriculture negotiated on have got agreement, through what the beef, to what in practice is freedom to return to the principles of Tom Williams' Agriculture Act of 1947 in the matter of deficiency payments, which had been specifically excluded as a means of farm price guarantees as a result of the 1971 negotiation package. We got that changed, and no one would have thought that likely a year ago.

    A fundamental change not in the Treaty but in the practice has been brought about by the new system of Heads of Government summits of a regular, routine character, started with that convened by President Giscard d'Estaing in Paris last September, and continued by the December meeting, and now the Dublin meeting. This system has, already, de facto reasserted a degree of political power at top level, not only over the month-by-month decisions but over the general method of operation of the Market. This does not mean it has become a Europe des patries. It is a Community. But, as compared with even a year ago, vital interests of individual nations are now getting much more of a fair hearing, and the political power in asserting those interests has certainly increased more than appeared possible in the battles of 1971, 1972 and 1973: more, in my view, than even a year ago, when the result of the February election made the manifesto objectives for the first time no longer a domestic, political argument but a governmental mandate for renegotiation.

    My right hon. Friend the Leader of the House will announce our proposals for a two-day debate immediately after the Easter Recess. [Interruption.] If the Opposition do not want it, we can always use the time in some other way. What I have said this afternoon, including the announcement of the Government's decision, means that, for that parliamentary debate. the case now rests, and thereafter, following the referendum campaign, the case will then rest for the people to decide.

    Is the Prime Minister aware that we welcome his decision to recommend that we stay in the Common Market? We also welcome his statement that it has not been necessary to change a single clause in the basic treaties to carry out these negotiations, that they have all been completed within the exist ing terms and that, presumably, in due course of time there will be other improvements also within the existing terms, in the normal course of events. Is he aware that we also welcome his statement that practically all Commonwealth countries wish us to stay in the Common Market and his statement that the special relationship of this country with the United States will not be changed in any way but that it is his intention to strengthen it?

    May I put to the right hon. Gentleman one main question? He was quite clear that this is the recommendation of Her Majesty's Government. Do the normal principles of collective responsibility apply to that decision? That would be the normal interpretation of a statement so clear and unequivocal, that Her Majesty's Government had decided to recommend the British people to vote for staying in the Community. I think that it will be a great pity if the one clear statement of the Prime Minister turns out to be unclear. If he does not intend to carry out the normal principles of collective responsibility, will he spell out the criteria which have decided him to depart from those principles on this occasion, so that we may know when it will occur again?

    I am grateful to the right hon. Lady. She welcomed the fact, I think I heard her say, that we have not in these negotiations, these very fundamental changes in the terms, had to ask for any changes in the treaties. Surely that information was not new to her. It was in the White Paper that we published in April of last year, so she must have been aware of that. We said then that we hoped that it would not be necessary to ask for changes in the treaties. What in fact we have done is changed the 1971 terms without changes in the treaty, although, as I have said today—I also mentioned it last week, I think—we have given notice of the possible need to ask for treaty changes; for example, in respect of steel and even possibly in respect of New Zealand.

    I welcome the fact that the right hon. Lady has acknowledged what she knows to be a fact, as the House does, about our relations with the United States. She will, of course, take full collective responsibility for the lower ebb of relations with the United States before we improved them last year. Presumably—[HON. MEMBERS: "Cheap."] There is no doubt about that, and it has been made clear publicly by the United States Government in recent weeks.

    As for the right hon. Lady's question about collective responsibility, I announced in January the policy that I intended to follow on this unique matter, on a matter on which not only this party has divisions but the Conservative Party has divisions and, indeed, all major parties—

    Expecting, as the the Latin lesson says, the answer "No" I said that all "major" parties had divisions in them. This is true, and the same applies to many families and households in the country.

    I announced that this would be the position. But the last person that I am going to listen to on collective responsibility is the right hon. Lady. We all welcome back to the councils of this House the right hon. Member for Sid-cup (Mr. Heath). We hope that he has come back rested and refreshed. But he will have noticed that, in his absence, there are very few major elements of the policy of the Government which he headed, and of which the right hon. Lady was a member, on which there has not been dissociation—

    I have answered. [Interruption.] I can understand their sensitivity on this, when no one had the guts to dissociate himself when the right hon. Gentleman was in charge of the Government but only when his back was turned—

    —including the right hon. Gentleman. Remembering when the cock crowed for the right hon. Gentleman, I would say that at least he had the decency to abstain from his present Leader about a fortnight later.

    With regard to the question that the right hon. Lady has put—[HON. MEMBERS: "Hear, hear."]—I have answered it. I answered this in January. I said that I was agreeable to this agreement to differ in the unique circumstances of this referendum. The referendum is unique, as the right hon. Lady herself has said. I believe that it is right in the circumstances, so that a fair and free debate can take place in the country on the most important decision that we have had to take in this generation.

    May I first welcome this statement? May I congratulate the Prime Minister on the consistency that he has always shown on European matters? Is he aware that when, in the early part of 1967, he said that he would not take "No" for an answer, we knew that that was exactly what he meant—no more and no less? Would he, in fairness to himself, confirm that the words he used were "I have given the Cabinet's view."? May we take that at its face value or any other value? May we, as those who agree with the Prime Minister, wish him well in obtaining the full-hearted consent of the Labour movement? Finally, since the Prime Minister rightly attaches importance both to the sovereignty and to the representative nature of Parliament, if the recommendation which he is rightly and enthusiastically pressing upon the British people is resisted, will he not find it very difficult to remain in office?

    First, I thank the right hon. Gentleman for what he said about consistency. In 1961, when Mr. Macmillan—[Laughter.] Yes, he is going to get it now. When Mr. Macmillan said that they were applying for entry because it was the only way that they could find out what the terms were, we all said that we would judge by the terms. In 1967 we were told after we had visited six countries that if we wanted to know the terms we should apply. We said that we were applying for that very reason. That is what we said in our manifesto in 1970. That is what the Conservative Party said in 1970. The Conservatives' mandate was to negotiate, no more, no less, and they were not going to do it without the full-hearted consent of the people.

    We have been consistent here. I regret that the right hon. Gentleman is falling below his usual standards—or his brief writers are—when he refers to the statement about taking "No" for an answer. That was made specifically, I think, on 25th May 1967, but I should have to check that—

    The 17th: I am obliged. That was said in the context that day or the day before of President de Gaulle's decision to veto any negotiations. It was on the question of the veto that I said that we would not take "No" for an answer. But no one at that time would have said that he would negotiate and get in whatever the terms. Even the Tory Party never said that. They very nearly succeeded in doing it, but they never said that they would accept whatever terms were offered—and no more did I. I now believe that the terms have been sufficiently improved.

    The right hon. Gentleman asked about Cabinet judgment. Yes, Sir, this is a Government decision. Not all Government decisions are taken unanimously—as we now know from the right hon. Lady. She did not agree with anything that was done in those days. I have undertaken that when my right hon. Friends have had time to consider their position and when we have discussed the matter a little further, any one who wish publicly to dissociate themselves shall identify themselves—if they do not, I will—in order that the position can be clarified. I gave that assurance in January. I repeat it now.

    Is the Prime Minister aware that in the coming battle on the referendum he will be leading a coalition of the Labour, Tory and Liberal Parties and that my party in Scotland will be fighting against that coalition? [HON. MEMBERS: "Some of them"]. Is he also aware that the temporary triviality announced today could have been arranged within the present Common Market set-up and that it is simply ground bait until the referendum has taken place and was quite unimportant within the context of the Treaty of Rome? Does he accept that in Scotland there will be great dissatisfaction that nothing has been done on fishing, steel and energy, but that primarily we shall fight this on the issue of sovereignty, because we are a people who know what it means to have lost our sovereignty?

    The hon. Gentleman's assertion that I am leading a coali- tion of the Labour, Conservative and Liberal Parties is as offensive to the Leaders of the Liberal and Conservative Parties as it is to me. In fact, of all the coalitions, judging by the various things that have been said at elections, the various ways that votes have been won and the variegated membership, there is no coalition so diversified in the history of this country as that led by the hon. Gentleman.

    Regarding the hon. Gentleman's other point, this could not have been got easily. It required extremely difficult and tough negotiations.

    The issue at present is not the cynicism or, indeed, the jealousy of hon. Members of the Opposition about these negotiations. Does my right hon. Friend not agree that Ministers and, indeed, back benchers on the Government side of the House who have been demanding better terms and are now presented with much better terms must be the most consummate contortionists if they are now to present the case for pulling out of Europe?

    I am grateful to my hon. Friend for what he has said. For my part, I did not notice the appearance of jealousy on the faces of hon. Members opposite—a little cynicism perhaps, yes, behind their twittering; but I did not notice the jealousy in particular.

    Is the right hon. Gentleman aware that, whatever view may be taken of the details of the statement he has made, the people of this country will not, over time, submit to be taxed otherwise than by the authority of this House, nor to live under laws which are not made by this House?

    I did begin by saying that while I was setting out the terms achieved in detail, which matter to a great many of us and to a great many outside the House, some right hon. and hon. Members would decide their attitude on broader considerations. Everyone knows where the right hon. Gentleman has stood on these matters.

    And on other matters.

    As my right hon. Friend has said—and on other matters.

    I do not think that those who take the view that virtually whatever the terms we ought to be in or whatever the terms we ought to be out will be very much affected by these terms. But many of us, including myself, take a very serious view of the question of the terms. That was why I spelled them out to the House.

    On what I know is an anxiety of the right hon. Gentleman, I would say this to him. I am sure that his deep studies of this question will not lead him necessarily to take a different view. I believe that there is much more assertion of political power now than there was a few years ago. We saw it particularly in Dublin last week. Many criticisms have been made by many of us, including myself, about the irresponsible—in the best parliamentary sense of that word—powers of certain of the institutions, but these are now coming much more under a degree of control as a result of the initiatives taken at the Heads of Government conferences. The political element is now much more powerful than it was a year ago.

    Does my right hon. Friend remember that in 1972 we had literally dozens and dozens of divisions in the House over several weeks on the issues put before us by the then Conservative Government? Will my right hon. Friend give an assurance that every one of those divisions has been resolved and that we have no disputes now like those we had then?

    On that occasion we voted primarily against the terms, which have been very much improved. But I said then, and so did many of my hon. Friends, including some who were quite strong pro-Marketeers on the principle as well as even on the terms, that—as we had made clear in the 1960s —had we done the negotiations and got terms we considered suitable, we would have legislated in a way that was very different from the way in which that was done in order to put the decisions on the statute book. They have been put on and now ratified by various orders, and many of these divisions are, therefore, in a sense, dealing with what was relevant in 1971. We shall continue at all points—indeed, we are now doing it —examining the legislation to see whether there is any need for change in the legis- lation, either on individual items or, where appropriate, on powers.

    Will the Prime Minister tell the House, for the sake of clarity, how many members of the Cabinet, and who they are, have supported his position, and how many have opposed it, and who they are?

    There is a Cabinet decision that I have announced. I have undertaken that after a few more discussions I shall see that the House is informed as to who they are. We never had very much information about the number of times the right hon. Lady dissociated herself.

    Is my right hon. Friend aware that although the Opposition will make certain ritual noises of disparagement, they must be aware that the improvements that he and his colleagues have secured are substantial and of great benefit to the country? Further, taking up the question asked by the hon. Member for the City of London and Westminster, South (Mr. Tugendhat), will my right hon. Friend give an assurance that in view of the constitutional interest in the agreement to differ, which most of us believe to be a sensible arrangement, the House will be informed of the number and names of the dissidents before we all read them in the newspapers?

    That is something that can never be undertaken by any Government or any party. But I am glad that my right hon. Friend supports what has been said, and I thank him for what he said about the negotiations. I hope that he will not be too critical of the Conservative Party, because a party that has not a single policy on which its members can agree, and the members of which have dissociated themselves from every policy that it had, can do no more than make ritual noises of disparagement.

    Does the Prime Minister realise that the last 12 months have seen serious damage to the reputation of this country in Europe as a result of all that he is now claiming to be so beneficial? Will he now make it his business to repair that damage and to set this country back in the councils of Europe to where it was when he took over the Government?

    The right hon. Gentleman is quite wrong about the last year. Indeed, the Community is now a great deal more realistic in the way that it operates. I certainly do not intend to restore the position of Britain in the Community to what it was when the right hon. Gentleman was the Minister responsible, because we do not grovel before the other side; we fight for British interests.

    Will the Prime Minister appreciate that there is no enthusiasm for this venture among the ordinary people of this country who form the heart of the British Labour movement? Would it not now be the decent thing to do, before any recommendation is made, first to present these renegotiations to the annual conference of the Labour Party, particularly bearing in mind all the fudging on this issue that has taken place in that body in recent years? Or are the Prime Minister and the Foreign Secretary now in the hope that they might do very well from Tory voters in the south-east of England?

    I recognise, of course, the authority of my hon. Friend to speak for all the ordinary people in Britain. For myself I prefer to await the result of the referendum. It will give them a rather more articulate form of expressing their individual views. Of course, there will be a party conference on this question, but my hon. Friend will be aware, because perhaps he was involved in this, that there are a number of leading figures in this party, of whom I am one, who for very many years found the decisions of the party conference extremely irksome, and I am sure that he did, too, as did most people on the centre or left of the party at that time.

    Does the Prime Minister appreciate that we on the Opposition side can see the sub-committees of the Cabinet sitting there on the Front Bench? Does he appreciate that we realise the difficulties he has in getting unanimity in his party? The charade which has gone on over renegotiation is an example of that. However, will he be honest to the country and agree that what he has announced only confirms what my right hon. and learned Friend the Member for Hexham (Mr. Rippon) said during the original negotiations—that we would get better terms when we were in but that we would first have to join?

    I do not agree with the hon. Member. We have got better terms because we asked for them, demanded them and pressed for them. I believe that these terms could have been got in 1971. I do not agree with him and I do not believe that any Heads of Government in Europe would agree with him either.

    Is my right hon. Friend aware that there are large numbers on this side of the House who always thought that he would do it? Can my right hon. Friend assure us, on a more serious note, that the powers that are being spelled out for the National Enterprise Board and the Scottish Development Agency will in no way be inhibited in the immediate or long-term future? Will he further assure the House that if the referendum result should go against the Government this will in no way soften and override the decision of the Government now reached?

    As for my hon. Friend's opening remarks, praise from him is praise indeed, even if he went on to suggest that it was not on a serious note. As for my hon. Friend's assertion that this was always likely or, as he would think, certain, my right hon. Friend the Foreign Secretary and I can confirm that even a month or two months ago when we were not getting our terms these matters were very much in doubt. My right hon. Friend and I agreed and so warned the EEC that we would have no alternative but to recommend the House, the party and the people to reject continuing membership. Even last week there were times in Dublin—[HON. MEMBERS: "Rubbish."] Conservative Members are so conditioned to accepting everything put in front of them that they do not appreciate these matters. My hon. Friend is quite wrong in suggesting that until very recently there was no question of the outcome.

    As for the National Enterprise Board and the Scottish Development Agency, and so on, we see no threat in the powers or the attitudes of the Community to what is proposed. On all matters affecting industry, trade, regional development, steel and the rest we are conditioned by the requirement, which is reasonable and which we have always tried to observe, that we do not use any of these methods, machineries or policies for giving us an unfair advantage in international trade, for example, by subsidy or price fixation. We were tightly held on these matters as members of EFTA. The restrictions in EFTA were very tight, and rightly so, and I understand that the EFTA convention with the EEC requires it to observe EEC rules on the question of internal methods which might distort competition between nations.

    As one who has always taken the broader view to which the Prime Minister referred, and who did not attach very great importance to the fact that he was trying to renegotiate, may I ask whether he agrees that the political control and flexibility which he said had increased in the recent year or two is very much related to the change of personalities of the leaders within the Nine, and that, equally, if these personalities should change we could well go back to the situation of previous years? Will the Prime Minister reflect upon one aspect in his manifesto which, as he knows, I carry very close to my heart, that if the referendum says we stay in—and I do not want to argue that point now—it will he right for the Government to play a full part in the development of a new and wider Europe? In that context will the Prime Minister say clearly whether the Government are in favour of a directly elected European Parliament, and how is political union defined?

    There may be something in the hon. Member's point. There have been changes of personalities. Seven of the nine Heads of Government have changed in the last 12 months and there have been changes in the political complexion of member States in that time. The majority of the Nine are either Social Democrat or Democratic Socialist led, or are coalitions involving such parties.

    That makes some difference. We must guard against retrogressive and reactionary changes within the leadership of the Nine, although that lies within our control only in the case of one country.

    On the question of the European Assembly and elections, I refer the hon. Member to the statement made in the communiqué issued after the Paris meeting in which our position was entirely reserved on all these matters until after the referendum.

    In renegotiation of the terms, was any consideration given to the relationship between Wales and Brussels? Since the Common Market has now decided to establish a permanent office in Wales and to put it under the charge of Mr. Gwyn Morgan, a past assistant general secretary of the Labour Party, should not Wales now have an office in Brussels?

    It is entirely appropriate that the Commission should recognise all the important areas, the individual regions, within the United Kingdom. However, I heard nothing said in any of the talks in which I was involved—I do not know whether my right hon. Friend the Foreign Secretary heard anything—saying that they wanted to negotiate directly with the hon. Member's party or with anyone else who has been an elected Member of Parliament for Wales. They were dealing with the duly constituted Government of the United Kingdom of Great Britain and Northern Ireland.

    On the hon. Member's other question, he knows, especially in relation to internal matters of trade and industry and so on, that these are very much part and parcel of what we have been discussing and on which in due course we shall be legislating in relation to devolution.

    Does my right hon. Friend appreciate that it comes somewhat ill from him to make rather snide comments about the Labour Party and the National Executive Committee in responding to the question by my hon. Friend the Member for Newport (Mr. Hughes), especially when we take into account that it was a joint meeting of the Cabinet and the NEC that drew up the manifesto to decide the terms? If that is the case, why did my right hon. Friend not report back to the NEC and ensure that, before any decisions were made by the Cabinet, this joint meeting also declared itself and upheld the Labour Party conference? But then it might not be my right hon. Friend's last word.

    When my hon. Friend has had about 20 years' experience of the national executive and conference he will speak with even more authority than he does at the present time. I have never been in doubt about my hon. Friend's credibility on almost any subject, but he must realise that many of those who have taken exactly the same view as he takes on most issues had to spend years of their life fighting against conference decisions and the executive, and fighting for their rights as Members of Parliament—and my hon. Friend knows exactly to whom I am referring—over many years. I do not think, therefore, that he can stand on his head and say that the conference and the executive should now be regarded as respectable because they are a little nearer now to his way of thinking than the thinking of those who fought against them in the past.

    I certainly do not accept what my hon. Friend says. He will be glad to know that I have already talked to the general secretary of the party and that there is to be a special meeting of the national executive committee. I am sure that he is not suggesting that I should not have made a statement to Parliament before I met the national executive. There is to be this meeting of the executive committee next week and we have been discussing the advancement of the projected date of the annual conference. I hope he will be very pleased with all that.

    Could the Prime Minister help the House in a very real practical difficulty? When the list of dissenting Ministers is published, are we to take it that, over the range of EEC subjects, statements, letters and answers to hon. Members from those Ministers are worthless as statements of Government policy?

    I am always anxious to help the House and hon. Gentlemen. I will make it my business to deal with the exact question of the conduct of business in respect of such matters when I give the information that the hon. Gentleman is seeking.

    Will the Prime Minister accept that, given the substantial success of the Government in securing terms meeting those set out in the Labour Party manifesto, large numbers within the Labour movement will welcome the statement that he has just made as being the only decision that is fully consistent with both the words and the spirit of the manifesto, and will he agree that, provided the British people now decide that Britain should stay in the Common Market, this will not only provide this country with an opportunity of playing a more important role on the world stage than otherwise would be the case but will also provide an opportunity for the Labour Party to play a more important rôle in building democratic Socialism in Europe?

    I am grateful to my hon. Friend, and of course I respect his deep knowledge of and interest in these things. I am sure that I would be the last person to suggest that our influence in word affairs depends solely upon this particular aspect. It depends to a very high degree on our transatlantic relationship and it depends upon our Commonwealth relationship, and I am also happy to feel that relations between this country and the Soviet Union are very much recovered from what has happened in the past.

    I would remind hon. Members that there is to be a two-day debate on this subject immediately after the Easter Recess.

    Business Of The House(Consolidation Bills)


    That, notwithstanding the practice of the House, Amendments proposed to be moved to the Social Security (Consequential Provisions) Bill [Lords], and the Social Security Bill [Lords] and the Social Security (Northern Ireland) Bill [Lords] may be accepted by the Clerks at the Table before the Bill have been read a second time.—[The Prime Minister.]

    Statutory Instruments


    That the draft Social Security (Mariners' Benefits) Regulations 1975 be referred to a Standing Committee on Statutory Instruments.

    That the draft Companies (Fees) Regulations 1975 be referred to a Standing Committee on Statutory Instruments.

    That the Anti-Dumping Duty Order 1975 (S.I., 1975, No. 368) be referred to a Standing Committee on Statutory Instruments.—[Mr. Stoddart.]

    Parliamentary Commissioner(Amendment)

    4.35 p.m.

    I beg to move that leave be given to bring in a Bill to amend the Parliamentary Commissioner Act 1967.

    On 22nd March 1967, almost exactly eight years ago, Royal Assent was given to what is now the Parliamentary Commissioner Act of that year. The Act provided that the commissioner should have power to investigate any action taken by or on behalf of a Government Department where a written complaint was made to a Member of this House about injustice sustained by a citizen in consequence of maladministration and where the complaint was forwarded to the commissioner with a request that it should be investigated.

    The Act, in my view rightly, prohibited the Commissioner, except in particular circumstances, from investigating matters where the aggrieved citizen had a right of appeal to a tribunal or a remedy in any court of law. The Act also provided that the commissioner should have no authority to question the merits of a decision taken without maladministration by a Government Department in the exercise of a discretion vested in that Department. Schedule 3 of the Act laid down 11 categories of Government action which are not subject to investigation by the Commissioner even though the other criteria apply.

    The Bill which I seek to introduce would delete entirely one of those 11 categories from Schedule 3, namely, paragraph 10. That paragraph precludes the Commissioner from investigating any Government action even though there should be maladministration resulting in injustice to a citizen involving appointment, removal, pay, discipline, pensions or other personnel matters relating to service in any of the Armed Forces of the Crown and in the Civil Service. My primary concern this afternoon is that the Commissioner should in future have power to investigate injustice arising out of maladministration in regard to the payment of pensions for retired members of the Armed Services and retired civil servants.

    At present the Parliamentary Commissioner cannot investigate complaints by a former Service man or a former member of the Civil Service alleging maladministration, whether in the calculation of payment or commutation of his pension. An argument was advanced by the Government of the day in 1967, to my regret an argument in which my own Front Bench and the Government at that time acquiesced. I see my right hon. Friend the Leader of the Opposition at this moment delaying her exit. I am in respectful disagreement with my right hon. Friends who at that time did not agree to amend the 1967 Act in the way in which I now submit that it should be amended.

    The argument which was put forward both by the Government in 1967 and by my right hon. Friends was that the Government were in a different position vis-à-vis the governed than they were in relation to their own employees or former employees. With respect, I find that argument unconvincing. For example, the Parliamentary Commissioner can investigate a complaint of maladministration about the payment of a war disability pension which does not arise out of service in any of the Armed Forces of the Crown but cannot investigate a similar complaint which arises out of service in any of the Armed Forces of the Crown.

    Several of my constituents, some former members of the Armed Services and some former civil servants, have written to the Government Department concerned complaining about what they consider to be errors made in the calculation of their pension. They have been dissatisfied with Governments of both parties about the answers which have been given. They have asked that their complaints should be referred to the Parliamentary Commissioner, but in every case I have been compelled to reply to my constituents that under the law as it now stands the Ombudsman has no power to look into the matter.

    The whole purpose of setting up the Parliamentary Commissioner was to give hon. Members a better instrument for the protection of the rights of the citizen, a protection better than could be provided by hon. Members. To the extent that decisions of a Government Depart- ment are excluded from consideration by the commissioner, the whole purpose of the Ombudsman is frustrated and, indeed, violated.

    In its report published in 1970 the Select Committee on the Parliamentary Commissioner recommended the exclusion of paragraph 10 from Schedule 3 of the Act. The same recommendation was made by the Select Committee in 1972. In its last report published in 1973 the Select Committee reported unanimously as follows:
    "Your Committee note with regret that the Government continue to deny to Members the help of the Commissioner in investigating the personnel grievances of Crown Servants."
    I said that the primary purpose of the Bill would be to permit the commissioner to investigate the pay and pensions of members or former members of the Armed Forces or of the Civil Service, but there is also a secondary purpose; namely, to enable the commissioner to investigate maladministration resulting in injustice in respect of appointments, removals, discipline and other personnel matters relating to the Armed Forces or the Civil Service. Under the 1967 Act, even if amended by my Bill, the commissioner could not investigate any matter relating to the commencement or conduct of civil or criminal proceedings in any court of law arising out of the Service Discipline Act. Nor could the commissioner investigate—in my view, rightly—the merits of a decision taken without maladministration by a Government Department or other authority in the exercise of a discretion vested in that Department or authority.

    However, this second change in the law which the Bill would achieve has been recommended, again unanimously, by the Select Committee on three occasions. Under the provisions of Section 5(4) of the 1967 Act, the Queen may by an Order in Council amend Schedule 3 so as to exclude from its provisions any matters which the commissioner is at present prevented from investigating. Thus, it would be possible to achieve the purpose of the Bill simply by Order in Council. Unfortunately, the Government Front Bench, like my own right hon. Friends when in Government, has not felt able to lay before the House the Order in Council which would achieve at a stroke precisely the purpose of my Bill. Hence, the necessity for the Bill.

    Finally, I emphasise that the effect of the Bill, if it becomes law, will be to give additional protection to citizens to whom protection needs emphatically to be given; namely, those who are serving, or who have served their country, either in the Armed Forces or in the Civil Service. At a time when the power of Government is growing, when the size of Government is growing and the rights of the individual seem to many to be overlooked, the Bill would extend the power of the impartial and independent Parliamentary Commissioner to investigate complaints of maladministration resulting in injustice to the citizen. It is for that reason that I beg leave to introduce my Bill.

    Question put and agreed to.

    Bill ordered to be brought in by Mr. Ian Gow, Mr. Michael Marshall, Mr. Tim Renton, Mr. Tim Rathbone, Mr. Douglas Hurd, Mr. Peter Hordern, Mr. John Biffen, Mr. Peter Rees, Mr. Ivor Stanbrook, Mr. Antony Buck, Mr. Walter Clegg and Mr. Neil Martin.

    Parliamentary Commissioner(Amendment) Bill

    Mr. Gow accordingly presented a Bill to amend the Parliamentary Commissioner Act 1967; and the same was read the First time; and ordered to be read a Second time upon Friday 2nd May, and to be printed. [Bill 116]

    Orders Of The Day

    Social Security Pensions Bill

    Order for Second Reading read.

    4.46 p.m.

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

    This is the third time in just over five years that a Secretary of State for Social Services has come to this Dispatch Box with legislative proposals for a new pension scheme, but the talking about and planning for a new scheme have been going on for a much longer period.

    The first Bill in this series took five years to devise and failed to reach the statute book. The next took over two years and, although it became an Act, the second pension plan it contained never started. This Bill has been produced in only one year and we have every hope that it will not only become law but will also be implemented. It could be said that we are getting better at it. Certainly, we have benefited from experience gained in the two previous attempts.

    Our White Paper "Better Pensions" claimed—rightly, in my view—that we had drawn on the best features of the two previous plans and added some important new ones. So we now have what I firmly believe to be the best scheme so far.

    It is a matter of history that the first new plan was produced by a Labour Government and scrapped by a Conservative Government. The second plan, produced by a Conservative Government, was stopped by a Labour Government. That was not just an argument between political parties. There was widespread disagreement throughout the country about the best way to reform our pensions system.

    I do not want to be drawn into an inquest into what has gone before. I have drawn attention to it, however, because it was very much in my mind when we embarked, as we felt we must after much anxious consideration, on devising a third set of new scheme proposals. In view of the unhappy background I was determined that this third round should be conducted with the utmost speed and that it should produce a scheme which, while fulfilling the main requirements as we saw them, would also be as acceptable as we could make it to all concerned, including both sides of industry and the occupational pensions movement. In short, we wanted to produce a scheme that not only adequately met the needs of future generations of pensioners but also would command general acceptance and would stick. I hope that we have succeeded.

    We were encouraged and gratified at the generally favourable reaction to our proposals published in the White Paper "Better Pensions" about six months after we took office. We made it clear that we should discuss these proposals with the TUC, the CBI, the main pensions organisations and other interested bodies, and take fully into account their comments and suggestions before translating the proposals into legislative form, and that we have done. The consultations have been very valuable and I much appreciate the helpful spirit in which the suggestions for improving or amending our proposals have been made.

    As I have said, the general response was encouragingly favourable, but there were some aspects which gave cause for concern and on these we have tried to meet, as far as we felt able, the reservations expressed to us. As a result, the Bill which I commend to the House contain some changes compared with our original proposals and I readily acknowledge that it is all the better for them.

    In the short time that has elapsed since the Bill was published, we have been much heartened by the generally friendly reception to its proposals. I have with me a pile of complimentary Press comments which must be unique in their unanimity. They are certainly unique in my period of Ministerial activity. Their main feature is one of hopefulness that here at last is a general structure which will endure and which will enable the State and the occupational pensions movement to get on with the job of developing, in partnership, the provision of proper pensions in retirement, widowhood and chronic ill-health.

    There is bound to be some uneasiness, however, until the House has at least approved in principle the sort of scheme proposed in the Bill. I hope that the House will do that today, clearly and unequivocally, thus confirming and adding to the general feeling of optimism that, through the scheme, we can end the uncertainties about the future development of pensions which have impeded progress for too long.

    The details must be scrutinised and thoroughly discussed. We shall note all that is said during the debate and during the subsequent detailed examination in Committee. In the light of that, we shall not hesitate to make such changes as seem to us to be justified and possible.

    It is a detailed Bill and I think that rather than going through it clause by clause it would be more helpful to the House if I concentrated on the main features. The details are set out in the Explanatory Memorandum published at the same time as the Bill. I should first explain that the Bill proceeds largely by way of amending existing legislation. That legislation is in the process of being consolidated. The Social Security Act 1975, which is the principal Act that the Bill amends, is the consolidation measure which is expected to receive Royal Assent soon, having been approved by the Joint Committee of both Houses appointed to consider all consolidation Bills. Under that Act, national insurance contributions for employed people will be put on an earnings-related basis from the beginning of next month. This Bill, when it can be implemented, will put retirement, widows' and invalidity pensions also on to an earnings-related basis.

    When Beveridge produced his great national insurance scheme 30 years ago everyone believed that his proposals would end poverty and deprivation in old age. Certainly the changes he inspired were revolutionary, but history and inflation over the years have falsified many of his hopes. There is now widespread recognition that his aims cannot be achieved by a system of flat-rate contributions and flat-rate benefits. We have had to start again. I believe that the proposals before the House will mark an advance in our provision for old age greater and more enduring even than the breakthrough which Beveridge achieved.

    The measure of our failure to date lies in the fact that 2 million out of our 7 million retirement pensioners, and no less than half of the elderly widows, have to depend on supplementary benefit. To escape from this poverty trap there has been an increasing reliance on occupational pension schemes. So far from ending the existence of two nations in old age, the Beveridge formula has encouraged its growth, with 8 million more fortunate workers enjoying entitlement to earnings-related pensions through their firms' private schemes while the rest have had no prospect of ever being covered by private schemes.

    This Government recognise the importance workers attach to their occupational pensions. Like the previous Government, we seek to integrate these schemes into a wider provision of earnings-related benefits for everyone. But there is a major difference between the approach of the Bill and that of our predecessors. Instead of whittling down the standards of pension provision to a level that private schemes can afford, we have fixed the standards at the level necessary to remove poverty in old age, widowhood and invalidity, and then provided forms of State help to private schemes to enable them to meet the targets that we have laid down. This is a unique form of partnership between the State and private schemes which has been widely welcomed. This holds out the hope that the new scheme will endure.

    What are the principles which inspire the Bill? First, the pension must be adequate for everyone, which means that we must have a redistributive formula to help the low paid. Secondly, it must have a much shorter maturity period than in our predecessors' scheme, so that the older workers can benefit. Thirdly, we must recognise the changed status of women in our society. We must get away from Beveridge's reliance on the dependency principle and provide that when women go out to work they shall share equal responsibilities and enjoy equal rights. Fourthly, we must end the discrimination against the manual worker and ensure that he enjoys equivalent benefits to those enjoyed by white-collar workers under final salary type schemes. Last but not least, we must guarantee the value of the pension against inflation by inflation proofing it. It is here that the State's helping hand to private schemes is most relevant.

    How does the Bill fulfil these principles? I deal first with the level of pension. The main formula is quite simple. The pension will have two components—a basic component which will start at whatever is the amount of the flat-rate pension when the scheme begins, and an additional component giving, after 20 years, one quarter of a person's average earnings between the level of the basic component and a ceiling of seven times that level. The pension that will result can best be illustrated by imagining that the scheme has been in operation for at least 20 years and that the basic component is £11.60—the amount of the single flat-rate pension starting next month. In that event a man on very low earnings—say, an average of £20 a week —would personally get £13.70. If he was married, the combined pension for him and his wife would come to £20.60—more than he earned at work.

    As I have said, the formula is deliberately designed to give the low paid a higher proportion of their earnings than the well paid. Thus, the £30-a-week man would earn for himself and his wife a joint pension of £23.10 a week—over three-quarters of his earnings. At £40 a week, the joint pension would be nearly two-thirds of his earnings. Even at £60 a week the joint pension would represent more than half pay at retirement. The same would also be true at £70 a week, if one were thinking of take-home pay after deducting the national insurance contribution he would have had to pay while at work.

    The maximum pensions payable under the new schemes in present-day terms would be around £29 a week for a single person and nearly £36 a week for a married couple relying on the husband's record alone. In addition, there would be any graduated pensions which he and she had earned. If the wife had an insurance record of her own, their joint pension could be higher still.

    Because of the shortened maturity rate. men and women now in mid-career, with 20 or more years to go before retirement. will be able to qualify for full pensions. For those with less than 20 years to go the basic component will be payable in full. From the start of the scheme, the additional component will build up gradually at the rate of 1¼ per cent. a year. Even for this group the eventual pensions will be significantly better than they would have been under our predecessors' scheme. For example, the £50-a-week man who retires 10 years after the scheme starts will be able to retire with a joint pension for himself and his wife of about half his take-home pay.

    Possibly the most vital aspect of the whole Bill is its provisions for fully protecting the value of all pension rights. Each year's earnings during a person's working life will be revalued in line with the general movement of earnings since the year in question, so that his or her eventual pension will fully reflect the improvements in living standards which have taken place.

    Moreover, after the pension has been awarded its value will be maintained by regular reviews at least once a year. The basic component will be kept in line with the general movement of earnings and the additional component will be increased in line with prices. I need hardly stress the importance to pensioners of having these firm guarantees of full protection against inflation. In the original White Paper I described that protection as
    "one of the most precious assets of the new scheme."
    We have even extended price protection to the pensions and pension rights under the graduated pension scheme due to be wound up in April—pensions which under our predecessors' proposals would have been left to shrink in value year by year until they effectively disappeared.

    There is a second exciting new breakthrough in pensions policy in the Bill—the innovation of basing pensions on a person's earning during his or her best 20 years rather than throughout working life. Full pensions will still depend on maintaining a contribution record throughout working life, but the rate will be based on the 20 years, not necessarily consecutive, during which a person's earnings after revaluation were the highest. This will particularly help those whose highest earnings come in early or middle life, as in the case of many manual workers. It will help those whose working life is affected by prolonged sickness or unemployment and those, usually women, whose working life is interrupted by the demands of bringing up a family or looking after an aged or infirm relative.

    I give one example to illustrate the value of this provision. If a man earned an average of £60 a week from, say, the age of 25 to 45 and then, because of injury or redundancy, had to take a job at £30 a week for the rest of his working life, his pension would be based on the £60 average, not the £30, giving him and his wife a joint pension of £30·60—more than he was earning just before retirement.

    As a corollary, and in order to make sure that women fully benefit from this provision, there is the help we propose for those with home responsibilities. Full pensions will normally depend on maintaining a contribution record throughout working life, but where a person, normally but not necessarily a woman, has to interrupt working life to rear a family or to care for an aged or infirm relative, we think that it is wrong that he or she should be penalised. We therefore propose that such years should count as qualifying years for the purpose of maintaining full pension rights. The Bill leaves the details to be prescribed by regulations which will be brought before the House in due course.

    This brings me to the new deal for women which permeates the whole Bill. We believe that it is no longer tolerable to treat women as second-class citizens entitled to third-class benefits—a by-product of excessive reliance on the concept of dependency. Our starting point must be the married woman's option, which has always been the alibi for the inferior treatment which women have received. The Bill revokes this option for women who marry after the new scheme starts. But we recognise that the abrupt withdrawal of the option from women who have it now could cause considerable difficulties. Therefore, in their case the Bill provides for the option to he continued in circumstances to be laid down in regulations. I am having further discussions with interested organisations before deciding what those circumstances should be. In return for assuming equal responsibilities, women will in future receive equal rights. They will pay the same rate of contributions as men with the same earnings and will receive the same rate of benefit.

    The Bill also abolishes two forms of discrimination which women have suffered even when they have been contributing in their own right—the half test and the lower rates of sickness and unemployment benefit. It gives them the same right of access to occupational pension schemes as men in situations in which they enjoy equal pay.

    Before the right hon. Lady moves off the interesting subject of the treatment of women under the Bill, does she not think that it would be of great assistance to the House if she talked, in some detail perhaps, about the retirement age of women and men respectively? I hope that she will say that she was just coming to that before I intervened.

    The answer is that I was indeed just coming to it. It is such a detailed Bill, with so many points, that I should keep the House intolerably long if I spoke in too much detail. My right hon. Friend the Minister of State will be winding up the debate, and he will take up any detailed points that I have not been able to cover in the time available to me.

    I have asked the Occupational Pensions Board to advise me on what further provisions are needed to end discrimination against women in occupational schemes.

    The Bill also greatly improves the provision for widowhood. Widowed mothers and other widows entitled to full pension will inherit the whole of their husband's earnings-related pension entitlement, both the basic and additional components. It is as simple as that. Women who are widowed or who cease to have dependent children when they are between 40 or 50 will inherit a proportion of their husband's pension entitlement.

    Moreover, when a widow retires or if she is widowed after pension age she will be able to draw any additional component which she has earned in her own right as well as the basic and additional components which she has inherited from her husband, subject to the maximum which could be paid on a single person's record.

    I shall be honest with the House, and admit that we have now tipped the scales the other way, because women will still be able to draw their retirement pension five years earlier than men. There is no justification for this logically, but there are two reasons why I think the decision is right. First, it would be wrong to raise to 65 the pension age of women who have been contributing on the assumption that they would retire at 60. Yet to bring the men's pension age down to 60 would be quite beyond our means at the present time. It would cost £1,400 million a year. Even the introduction of a flexible retirement age for both sexes, which I accept is the ideal solution, would cost more than we can afford. Secondly, the lower retirement age for women is some compensation to them for the lower wages they have been drawing all these years, when, as everyone will agree, many women have been exploited and have been paid merely sweated wages. No one can pretend that they will get real equality in pay and job opportunities for some time ahead.

    But we have one consolation to offer the men. For the first time in the history of national insurance we are introducing a form of widower's benefit. In the case of a pensioner couple where the wife dies first the widower will be able to inherit the pension rights she had earned, subject to the maximum I mentioned. Also, a widower under 65 who is ill when his wife dies will have the right, if his illness lasts or has lasted at least six months, to an invalidity pension calculated on his wife's earnings record if that is better than his own.

    Nor have we forgotten the disabled worker. As the Disablement Income Group has long pressed—

    I apologise for interrupting the right hon. Lady again, but, before she leaves the whole question of women, will she accept that there is a school of thought, at least outside the House, which considers that a woman contributing to the age of 60 is likely to receive the same pension as a man contributing to the age of 65? Would she care to comment on whether that is the case under the Bill?

    That will be the position under the Bill if a woman has had the same earnings. The answer is "Yes".

    The right hon. Lady has reassured us that there are some consolations for men in the Bill. Perhaps she will accept that the rather favourable treatment that she proposes for women as regards retirement age is compensated for by the unfair treatment that she is proposing as regards the married woman's option. The explanation that she has just given us about the entitlement of a married woman to add her own pension rights to make up what is necessary over and above that which she takes from her husband means that there is a maximum put on the level of pension or benefit which a contributing husband and wife can earn together. In fact, a woman who pays a full contribution and whose marriage subsists receives very much less in return for her own contribution than a man who pays the equivalent contribution. Does the right hon. Lady accept that she is enforcing a bad bargain on married women by doing away with the option?

    I have no doubt that the hon. Gentleman will try to prove that assertion. It must be remembered that the Conservative Party never had the courage to abolish the married woman's option. It was a supporter of the old system which was always used as an alibi to give women inferior benefits even when they had contributed fully—for example, lower sickness and unemployment benefits. That was a bad bargain for women if ever there was one. Of course, it was justified by the existence of the married woman's option. I totally repudiate the hon. Gentleman's suggestion that under the Bill women will get a bad bargain, even taking into account the abolition of the married woman's option and the ceiling set on what can be added to their pensions through their own earnings.

    I have rather a lot of detail to go through and I merely say at this stage that I repudiate the hon. Gentleman's suggestion. No doubt my right hon. Friend the Minister of State will deal with it more fully when he winds up the debate. The hon. Gentleman will then have had a chance to justify in greater factual detail the false accusation that he has just made.

    We have not forgotten the disabled worker. As the Disablement Income Group has long urged, invalidity pensions in the new scheme will be earnings-related in the same way as retirement pensions. What is more, the Bill provides for an improvement in the ages governing the higher rates of invalidity allowance. It is proposed that the highest rate shall be paid to people who fall ill before 40, instead of the present 35, and the middle rate to those whose incapacity began before they were 50, instead of 45.

    Up to now I have described the main benefit proposals in terms of those who will rely entirely on the new State scheme. I turn to those who have the good fortune to be in what the White Paper describes as "well-founded occupational schemes". As I have said, our aim has been to create a harmonious partnership between the State and good private schemes. In practical terms this has meant providing a facility for contracting out of part of the State scheme by those people who could look to their occupational scheme to provide at least equal benefits.

    Contracting out can relate to only part of the State scheme. We recognise that there are some things which can be done only by the State scheme. In drawing up the conditions for contracting out we have had very much in mind what good schemes are already doing. We have tried not to require of them anything which would be unreasonable or impracticable.

    I will explain the division of responsibility between the State scheme and the private schemes. The State scheme will provide everyone with the basic component of all pensions. It will also provide the whole of invalidity pensions—namely, both the basic and additional components. The contracted-out occupational scheme will undertake to provide the equivalent of the additional component of retirement pensions and half that component for widows' pensions. Where widows are concerned the State scheme will provide the other half. Once pensions have been put into payment, responsibility for increasing both the basic and additional components to take account of inflation will fall to the State scheme even where a pensioner is receiving some or all of the additional component from his occupational scheme. That is the kernel of the system of partnership which has been widely welcomed as being a practical recognition of the difficulties that we face.

    I turn to private schemes. There are two main conditions proposed for contracting out. The first condition relates to the structure of the scheme. It must provide a retirement scheme based on final salary, or on average salary revalued in line with the growth of earnings with an annual accrual rate equivalent to at least one-eightieth or 1¼ per cent. of pensionable salary as defined by the scheme rules. That gives the sort of build up of pension rights which the vast majority of final salary schemes already provide, and it accords with the rate of build up in the State scheme for those who are within 20 years of pensionable age when the scheme starts. For widows' pension the accrual rate must be not less than five-eighths per cent. of pensionable salary —namely, one-half of the minimum accrual rate of retirement pension.

    The second condition relates to the pension of the individual. The scheme must guarantee the contracted-out individual a retirement pension of at least the amount of additional component which he has forgone in the State scheme during the period of contracting out. This is described in the Bill as the "guaranteed minimum pension". For widows' pension the guaranteed minimum must be at least half the husband's guaranteed minimum pension at the time of his death.

    The Bill also lays down the conditions which must be satisfied when a person leaves contracted-out employment before retirement. If he leaves within five years or if his scheme has ceased to be contracted-out, he can be bought back into the State scheme. Otherwise his pension must be preserved or transferred to another contracted-out scheme.

    When a person in the State scheme changes jobs his earnings in the job he has left will be revalued in line with the growth of earnings generally, thus protecting the value of his preserved pension. This is a valuable right and clearly those who are contracted out cannot be allowed to suffer by comparison. We proposed in the White Paper that contracted-out schemes should be required to revalue the preserved minimum pension of early leavers in the same way as the State scheme would have done if they had not been contracted out. During our consultations with those concerned the point was made that this commitment would be open-ended and, being uninsurable, would be difficult in most occupational schemes to undertake for early leavers. We accepted that that was a genuine difficulty. The Bill now provides that occupational schemes may, if they wish, limit their liability to revalue preserved minimum pensions to 5 per cent. a year. If this option is taken, the State scheme will provide the balance that is needed to maintain the value of such pensions in line with the growth of earnings generally in return for a single payment by the employer to meet the estimated cost.

    So much for the provisions of the scheme. Can we afford it and how shall we pay for it? I remind the House that in just over two weeks' time a new system of earnings-related contributions will commence that was enacted by our predecessors. The joint contribution for an employee will then be 14 per cent. of earnings up to a ceiling of £69 a week.

    I am extremely anxious, as I am sure is the right hon. Lady, that as many women as possible should be included in good occupational schemes. Unfortunately I can foresee a danger in that it will be more expensive for such schemes to include women. I feel that there should be a higher proportion of rebate for women. That would persuade companies which have a high proportion of women in their employ to embark on good schemes. There are many companies in my constituency which have a high proportion of women employees and I fear that they will be reluctant to embark on the sort of scheme that we have in mind.

    I must point out that companies cannot be discouraged from including women if they are including men in the same employment situation.

    No. I have had to go on for rather a long time and there are one or two other points that I feel I should cover. It is not a question now of a firm being able to say "We shall leave out women because they are more expensive"—

    This is a point of detail which we shall have to consider. It has been put to us, and my right hon. Friend the Minister of State in his reply will tell the hon. Lady why we have rejected the idea.

    The joint contribution for an employee will be 14 per cent. on earnings up to a ceiling of £69 a week—5½ per cent. from the employee and 8½ per cent. from the employer. This system will continue under the new scheme, though the percentage rates of contribution will need to be somewhat higher for those in the State scheme.

    The upper limit of earnings on which contributions will be paid will also be higher. The proposal is that this should be set at around seven times the amount of the basic component, which in April 1975 terms would give an upper limit of around £80 a week.

    As for the percentage rate, the Bill provides for an initial joint contribution for employees in the State scheme of 16½ per cent. of their earnings—split as to 6½ per cent. on the employed and as to 10 per cent. on the employer. The Government Actuary estimates that this joint rate will need to rise after 30 years to somewhere in the region of 18 to 18½ per cent. However, these initial rates are not yet firm. They should be regarded for the moment as illustrative only because, as the Government Actuary makes clear in his report which was published with the Bill, there are a number of factors which will have an important effect on the finances of the scheme in the early years. The most important of these is the number of employees who are contracted out and the rate of increase in earnings.

    We shall need to review all the factors involved nearer to the start of the scheme when the indications will be clearer. If we can possibly do so, we shall reduce the 16½ per cent. rate shown in the Bill. If it looks as though the 16½ per cent. will be needed, the Bill requires me to lay a report before Parliament explaining why. Whatever the initial contribution rate for those in the State scheme turns out to be, those who are contracted out will pay less and the reduction will reflect the cost of providing, through the occupational pension scheme, the amount of benefit which would otherwise have come from the State scheme.

    We originally proposed, on the advice of the Government Actuary, that the appropriate reduction on this basis should be 6½ per cent, at the start of the scheme. But here again we have made another concession in the light of representations made to us. It was put to us that the figure was too low in view of the risks which contracted-out schemes would be taking on. We have therefore increased the figure by ½ per cent. to 7 per cent., and to compensate for these risks the further ½ per cent. reduction will go to the employer. The Bill therefore provides for a reduction of 4½ per cent. in the employer's contribution and 2½ per cent. in the employee's contribution on earnings above the level of the basic component. The contracted-out rates must be reviewed at not more than five-yearly intervals.

    The Treasury supplement to the finances of the new scheme will remain at 18 per cent. of all contributions as at present, but with this important difference: it will be 18 per cent. of the contributions which would have been received if there had been no reduction for contracting out. This will result in a substantial increase in the Treasury supplement. For instance, in the scheme's first year the supplement will be nearly £200 million higher in current terms.

    Finally, I should like to say a word or two about the starting date. We have already said that we shall bring the new scheme into force as quickly as possible, and in any case no later than April 1978. That is still the position. But if we possibly can we should like to start the new scheme one year earlier—namely, in April 1977. Throughout the recent consultations we have been urged from all sides—the TUC the CBI and most of the pensions organisations—to bring in the scheme at the earliest possible moment. This we shall certainly do. However, I do not at this stage want to raise false hopes about a 1977 start because it will not be easy to achieve. To succeed we shall need not only to enact. the Bill by the summer but also to work out the details to go in the regulations and the essential operational requirements for running the scheme.

    That will be a tall order, but we shall do our best. We should know by the autumn of this year whether sufficient progress has been made for a 1977 start to be achieved, and a firm decision about the starting date will then be announced.

    We cannot hope to abolish poverty in old age overnight. The Labour Government have already done a great deal to improve the value of existing pensions. We have committed ourselves to uprating these pensions in line not just with prices but with earnings. The next increase begins in about three weeks' time and we have promised a further increase later this year. We have also promised that with the introduction of the new pensions scheme we shall further review the position of existing pensioners in the light of the development of the economy.

    The Bill establishes a pensions system which will be comparable with the best elsewhere in the world. It will provide pensions at an altogether new level, sufficient to ensure that people in their declining years will be able to spend them in dignity and security.

    I end on the note with which I began. The message we are getting loud and clear from the people of this country is "For heaven's sake, let us settle once and for all the great pensions debate that has been taking place for far too long". They are looking to this House for an equally clear response. I believe that the Bill provides the opportunity. I am proud of it and confidently commend it to the House.

    5.27 p.m.

    I realised when I first came to debates on the social services that I was joining an exclusive club. I had not realised until this afternoon just how exclusive that club was.

    The right hon. Lady the Secretary of State for Social Services said that this was the third pensions Bill we have had in the House in the last six years. There was a Bill, which later became an Act, sponsored by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), and before that measure there was a Bill introduced by the late Richard Crossman, who is remembered with affection on both sides of the Chamber. I must admit that I await with some anticipation the time when his diaries reach his pensions period. If the late Mr. Crossman considered Harry Hyams as his housing adviser, I am intrigued to know who were his candidates as pensions adviser. Sadly, we have not yet reached that stage in the diaries, but I have with me a copy of a lecture delivered in Liverpool by Mr. Crossman in 1972. That perhaps is a proper starting point to the debate and gives a proper sense of humility about policymaking in pensions.

    The Crossman scheme dated from a sudden speech which he was called upon to make at the Labour Party Conference in 1955. Replying to a debate on pensions, and in order to avoid defeat, he committed the Labour Party to national superannuation. As a conference speech it was a great success. The only trouble was that nobody on the national executive knew what national superannuation actually was. Crossman was asked what it was, and his endearingly frank reply was, "I'm not sure myself. I've got a pamphlet on it. I have just read it. It is marvellous". But events have moved on. The pensions task has been passed on not to the Dame of Whitehall but to the Secretary of State for Social Services, who perhaps will excuse me for calling her the Dame of the Elephant and Castle.

    I know that the right hon. Lady now has to leave us, but I am sure she will concede that whatever divides us on policy and methods, there is no monopoly of concern on this subject. The elimination of poverty in old age is an aim common to all parties and to all Members of Parliament. It is one of the tragedies that this whole area has been bedevilled by uncertainty in the last few years. As we pointed out in our Paper "Strategy for Pensions". as long ago as 1971 the Government said,
    "The present state of uncertainty about the development of State and occupational pensions has lasted too long and must be brought to an end. Pension provision can only thrive when there is confidence in the future."
    The aim of a second pension described by the right hon. Lady as opposed to basic pension is a principle which we welcome. We are also encouraged by the concessions which the Government have announced for the occupational schemes—concessions for which we and the pension industry pressed. We hope that those concessions are a statement of intent by the Government.

    Another reason why we should remember Richard Crossman is the refreshing frankness which he brought—certainly in retrospect—to what could reasonably be expected from a pension scheme. We should be equally frank today.

    In the Secretary of State's Press statement which accompanies the White Paper she observes that a scheme would eliminate means testing in old age. The same point was made by the Minister of State last month in Scotland when he said that the new scheme
    "will bring to an end the massive dependence on means-tested benefits which is the sad hallmark of retirement for millions of men and women today."
    It is right to express this as a hope. Nobody will be more glad than I if that hope is realised. Let us emphasise in our statements that essentially we are talking of the future, especially future generations of retirement pensioners. This Bill will do nothing to take any of the 2 million pensioners already dependent on means-tested supplementary benefits off those benefits.

    I enter that cautionary note for several reasons. I accept that no scheme under which pensions are gradually built up over the years can made a sudden and dramatic impact on those dependent on means testing. Nevertheless, it is important that this is understood outside this House, for otherwise the hopes of many thousands of pensioners will be raised unnecessarily.

    If, as the right hon. Lady and the right hon. Gentleman seem to suggest, the Government want to work towards ending means-tested benefits, why do they not consider how this can be done, set out their proposals in this document and give an undertaking to consider afresh the tax credit scheme proposed by the last Tory Government? That was a scheme which could lift up to a million pensioners from supplementary benefits by providing an income as of right. That would be a real contribution to the debate.

    The Bill will certainly be compared with the 1973 Act introduced by my right hon. Friend the Member for Leeds, North-East. When the Government took office in February last year that Act was on the statute book. That is a distinction which the Minister failed to make between the "Crossman Bill" and the "Joseph Act". By refusing to go ahead with that Act the Government missed an opportunity and wasted valuable time. They missed an opportunity, because several big companies would, by now, have had all their employees in the same sort of final salary scheme. They wasted time, because all employed people not previously adequately covered for a second pension would have started to build one up from next month. As the position stands—and I note what the Minister said—they will not start to do this until 1977 at the earliest, and in all possibility 1978.

    I do not intend to repeat all the arguments put forward in the debate last July. Many of us believe that whatever reservations Labour Members have, there was a base on which to build. Lord Houghton mentioned this when he spoke at the 1973 Financial Times Pensions Conference. He said:
    "I am convinced that it would be a great mistake for a Labour Government … to suspend the operation of the new scheme."
    Sadly, that advice was not taken. The result has been delay and an unnecessary continuance of the uncertainty which has been the complaint of virtually everyone in the pension industry. That uncertainty and delay could have been avoided had the Government accepted the 1973 Act when they took office.

    As the hon. Gentleman wishes to continue with the reserve scheme and as it is common ground between the parties that it is essential for occupational schemes and pension provision to be inflation proofed, may I ask the hon. Gentleman one technical question. By what means is it possible to give a guarantee to inflation proof a money-purchase scheme, which is what the reserve pension scheme was?

    I shall deal with that point later. I do not think that any of us made the claim that our Act was the final word. We said that there was a base on which to go forward. Clearly there is more between us then just simple timing.

    During the gestation period of the pension scheme that we hoped to introduce the rate of inflation was under 7 per cent. There was nothing like the problem we have today of trying to inflation proof pensions.

    My hon. Friend makes an absolutely crucial and central point. The right hon. Gentleman laughs, but it is a point which, as he knows as well as anyone—he has been consulting the pension industry—is absolutely crucial to the Government's consideration of the Bill. If the right hon. Gentleman does not believe my hon. Friend, he has not been listening to the representations of the industry.

    There is more between us than just timing, important as that is. There is a difference in approach. Above the basic pensions level our scheme relies on properly funded pensions, on real savings—something which I imagine the Government would also wish to promote. Apart from other benefits it is anti-inflationary.

    The Government scheme is "pay as you go." Contributions are used immediately to pay for the current cost of pensions and other benefits. The promises in the Bill depend upon the ability and the willingness of future generations of taxpayers to foot the Bill. It is a blank cheque drawn on the future. It has no anti-inflationary effect and relies upon other parts of Government economic policy, especially the fact that our tax-t ion policies should be designed to encourage rather than discourage the growth of national wealth.

    Let us be under no illusions. We are imposing a new and heavy burden on our children and grandchildren. The fundamental difference between the parties is the greater emphasis that we place upon occupational schemes. This is central to the debate. Let me summarise why I believe that our emphasis was and is right.

    Occupational schemes depend on real savings. They are anti-inflationary and the money is present to pay for the pension when it falls due. It is money saved, or deferred wages. Occupational schemes provide an invaluable source of finance for industry. If the number of occupational schemes were reduced, there would not only be a loss of savings but industry would be faced with the problem of finding another source of finance. Occupational schemes are inherently more flexible than the all-embracing State scheme. An occupational scheme is more sensitive to the needs of the individual. It can vary the age of retirement in line with the demands of the job and can place heavier emphasis on, for example, a disability pension in jobs of high risk. Occupational schemes can help industrial relations. They are an integral part of the terms of service and, rightly, are becoming an increasingly important subject of collective bargaining. They are geared directly to the needs of the employees of a firm.

    The advantages were summarised the other day when it was said that the occupational scheme was
    "…conducive to good industrial relations. It adds to savings on which investment is based and it can operate as a potent weapon against inflation. Occupational pension provision has therefore a vital part to play in the development of a fair and firmly-based prosperity".
    Those were the words of the Minister of State. They were fine, encouraging words, expressing sentiments which we share. Nevertheless, I am sure that the Minister will not expect us to rely entirely on those words. He will expect us to examine the fine print of the Bill, to decide what are the prospects of these hopes being realised and to attempt to judge the economic context in which occupational pension schemes will be operating.

    It is true that this Bill makes concessions as compared with the earlier White Paper. These followed the right hon. Lady's consultations with the pension industry, which we have been consulting, too. We welcome the direction of those changes. It is right to stress at once that the first fear and concern of those involved in providing occupational pensions relates not to anything in the Bill but to inflation. The Minister of State yesterday went to Scotland to talk to a conference held by the Faculty of Actuaries. As he knows, the Faculty has undertaken to let me have a summary of its views. One fear common to virtually every speaker at that conference was the fear of the effect of inflation on occupational schemes. That is shared by the entire pension industry.

    There will be no disagreement between us on this. What the occupational pension movement and the professional bodies are worried about is not inflation per se but the fact that wage inflation is moving at a higher rate than the yield on investment. If that situation were to continue for a long enough period it would create immense difficulties for final salary schemes. It is the gap which is worrying the industry.

    I am grateful to the Minister of State. That is exactly the point I was coming to.

    The Bill proceeds on a number of assumptions which, as the right hon. Gentleman says, crucially affect the contracting-out arrangements for occupational schemes. The Bill assumes that average earnings will rise by 8 per cent. a year and that prices will rise by 5 per cent. a year while the occupational schemes will get a 9 per cent. return on investment—1 per cent. above the figure for annual earnings.

    The last figure is crucial. I am sure that the right hon. Gentleman, being a fair man. would concede that at the moment these are certainly big assumptions. When does the Secretary of State think we shall reach that happy position of a 5 per cent. annual price increase? Does she expect that position to have been reached by the time the Bill comes into operation? I see in the Daily Mail this morning that the current assumption of the Government is that the rate of inflation over the next 12 months will be about 22·6 per cent. These are the working assumptions. The fact that inflation currently makes a nonsense of them reveals the desperately serious prospect for better pensions.

    If the present rate of super-inflation continues, or worse still degenerates into hyper-inflation, no State or occupational scheme could hope to keep pace. We can only hope that in the Cabinet deliberations that take place the Secretary of State is sturdy in her warnings on this.

    We should be under no illusion about the position. Pensions are not something which can be considered in isolation from other economic policies. The Government Actuary makes the assumption that the rate of investment of occupational schemes will be ahead of the increase in average earnings. He is right, because unless that happens the outlook for the occupational schemes is hopeless. In turn, that means a profitable private enterprise system for the economy, a point acknowledged by the right hon. Gentleman when he appeared on the "Money Programme" earlier this month. It is a point which will have to be acted on by the Government in restoring confidence and profitability to British industry.

    The occupational schemes depend for their existence on private industry being profitable. So, too, do millions of members of those schemes. All the words in the world will not solve this problem. It needs determined and united Government action. At the moment there are over 11½ million people covered by occupational pension schemes. Of these, about 8 million are in schemes based on final salaries. The report by the Government Actuary on the financial provisions of the Bill is remarkably cautious about the number who are expected to be members of contracted-out schemes. Yet if, at the least the 8 million employees already covered by final salary schemes are not contracted-out the effect on savings and investment will be serious.

    If these schemes are forced to adjust and to sit on top of the new State scheme their scope and contribution would be reduced. That is why we should take serious heed of the warnings from the occupational schemes. Only last week Mr. Gordon Dunlop, the Chief Executive of Commercial Union pointed out that in present inflationary circumstances, open-ended commitments made to staff by companies operating pension benefits tied to final salaries were:
    "a high road to bankruptcy".
    His warning deserves repeating. In 1970 the pension contributions by that company amounted to 10 per cent. of the total salary bill. By last year the figure had risen to 25 per cent. This year it is expected to rise to at least 30 per cent. If that trend were to continue staff pension costs would be equal to the total salary bill by 1980.

    Commercial Union is not alone in this. I gather that since the publication of the report a week ago other companies have been in touch, telling it of similar difficulties which they face. Maurice Oldfield, who manages Allied Breweries' scheme has also pointed out the difficulties his scheme will face unless inflation abates. I think that he appeared on the same programme as the right hon. Gentleman. He said then that the Allied Breweries scheme was faced with a return on its investment which was 3 or 4 percentage points lower than the rise in prices and lower still than the rise in average earnings. He went on to say that if that sort of situation continued for more than three or four years it would not be possible for occupational schemes to continue in their present form.

    The stark truth is that unless inflation reduces there will be many schemes which will have to cease final salary arrangements simply because they cannot afford the topping-up required. If that happened many people would end up, not better off in retirement, but considerably worse off. What we should now consider is whether the Bill provides means by which these 8 million people are likely to be contracted out.

    The right hon. Lady has made two important concessions about contracting-out. The first is in respect of early leavers, those who leave the firm but retain a preserved pension. The effect of the change is that the scheme now faces a known annual commitment of 5 per cent. to meet the cost of inflation. As I understand it, it is not intended that occupational schemes should be excused in respect of any balance over 5 per cent. What is intended is that they should make a once-for-all payment to the State scheme. I ask the Minister to tell us what precisely are the calculations involved here and what consideration has been given to Maurice Oldfield's suggestion that liability should be confined to the 5 per cent. without any question of a lump sum.

    I thought that Maurice Oldfield was joking. I thought that his suggestion was not serious. It was never put forward formally by a large number of organisations which discussed the matter with me. I think that Maurice Oldfield was—I say this with no rancour —trying it on in a pleasant way during a television programme.

    However, I should like to help the hon. Gentleman with this matter. The type of proposition now contained in the Bill was brought to us by him and was suggested by more than one organisation. Since I understand that the pensions business is anxious to have detailed information on the matter, I hope to issue draft actuarial tables shortly. These will illustrate the cost of the State scheme premiums for scheme leavers where the scheme has chosen to limit the liability for revaluation in GMP to 5 per cent. per annum. A copy of the draft tables will be available in the Library of the House and they will be published on the first possible date. I hope that will be of some assistance to the hon. Gentleman.

    The last part of the right hon. Gentleman's statement will be helpful and widely welcomed. I am not sure whether the occupational schemes will welcome his remarks about Maurice Old-field joking, since a number of people have said that we need to consider what I take to be an absolute rejection of that point.

    It is possible to go further, for the concession does not affect the inflation-proofing liability of contracted-out occupational schemes in respect of those who remain with their firms for the whole of their working lives until retirement. Here there is a largely unknown commitment to revaluing in line with average earnings in respect of the period up to the date of the award of the pension. Perhaps the Minister of State will say whether consideration has been given to the suggestion of limiting the liability of occupational schemes to a specified rate of inflation in the same way as is proposed for early leavers.

    The second concession announced by the Government is the contribution reduction for members of contracted-out schemes, which has been increased by ½ per cent. to 7 per cent. The reason given is that the assumptions about the level of interest rates and increased earnings are subject to a margin of error, and the ½ per cent. is suggested to compensate for that risk, although the Government will realise that many in the pensions business believe that that figure does not appear to compensate them for the risk they are taking. Will the Government accept that as a general proposition?

    I revert to the point made by my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman), since it was not taken up by the Minister. A feeling is developing that there should be different contracted-out contributions for women, or perhaps a generally greater contribution reduction. The grounds are the simple actuarial reasons that women on average live longer and retire sooner. There are some fears that if a concession of this kind is not made it could have an effect on the decision to contract out. My hon. Friend made that point. There is a fear that firms who offer good occupational schemes, but who employ a high proportion of women, may decide not to contract out unless they obtain an arrangement of this kind. That would not be in line with the Minister's policy, which we support, of increasing the rights of women.

    We believe that we must achieve a contracted-out target of at least 8 million people who are now covered by occupational schemes. We would welcome an assurance from the Government that that is also their target. If that is the case, three actions are urgently necessary. Urgent steps must be taken to control inflation and to restore profitability and confidence in industry. Contracting-out arrangements, at least for the first five crucial years, should be made more generous.

    To those who argue that what we are proposing is over-generous, I answer that in present circumstances some special inducements are necessary. In a situation where the return on investments is nowhere keeping pace with the rise in earnings and prices, such inducements are justified. A special effort is needed to persuade firms with good schemes to contract out rather than simply sit on top of the State scheme.

    To those who argue that the State will gain in contributions if only a small proportion of occupational schemes contract out, I answer that the effect over the years will be a growing liability on the State scheme which will increase the burden of pensions costs on future generations.

    My hon. Friend the Member for Rushcliffe (Mr. Clarke) will deal with some points in more detail. However, I should like the right hon. Gentleman to consider this point: the industry-wide occupational schemes must be organised on money-purchase lines. Under the 1973 Act such schemes could have contracted out. I cannot see how they can meet the contracting-out requirements of this Bill. However, they are valuable schemes, and the Minister of State, as I unders