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Commons Chamber

Volume 889: debated on Monday 24 March 1975

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House Of Commons

Monday 24th March 1975

The House met at half-past Two o'clock

Prayers

[Mr SPEAKER in the Chair]

Oral Answers To Questions

Trade

Skytrain

1.

asked the Secretary of State for Trade what steps he is taking to persuade the United States authorities to fulfil their obligations under the Bermuda Agreement so as to enable Laker Airways Limited to receive its Skytrain licence.

10.

asked the Secretary of State for Trade what representations he has made to the American aviation authorities on the subject of the Skytrain project.

As my right hon. Friend stated in answer to my hon. Friend the Member for Feltham and Heston (Mr. Kerr) on 21st March, Skytrain is to be considered as part of our review of civil aviation.

Does the Minister accept that that is a rather disappointing reply? We had hoped for more action in this matter.

It would be palpably absurd, having regard to the recommendations of the Civil Aviation Authority in relation to the market reaching a healthy state, which it did not expect would happen for about 12 months, for us to do other than I have said, particularly in view of our own policy review.

Can the Minister do anything to assure us that the heart of the Government and the heart of the Secretary of State for Trade really are in the Skytrain project, and that he will not be deterred from pressing the United States authorities simply because Mr. Laker is what might be called a buccaneer of private enterprise?

With respect, those are not the relevant considerations. The fact is that Skytrain would be a scheduled service, and one of the main questions in our policy review is to determine what part publicly-owned and privately-owned airlines should play in regard to scheduled services.

Does the Minister accept that he has a duty to ensure that treaty obligations are observed? What does he propose to do about the CAA's statement? We are conscious also that the only reason why the Skytrain service has not been operated for the past two years is that the United States authority has engaged in unconscionable procrastination. What action has the hon. Gentleman taken and what action does he propose to take now in the light of the CAA's statement?

I answered several Questions about that at this Department's last Question Time, when I agreed that there had been unconscionable delay on the part of the FAA in America in arriving at its decision. What I am saying now is that we would expect the American authorities not to take any adverse action which might damage and prejudice our rights under the Air Services Agreement. We have made that absolutely plain. For the reasons that I have already adduced, however, which I think, with respect, are very reasonable, we are not proposing to take the matter any further than that for the present.

Exports (Eec)

2.

asked the Secretary of State for Trade how many firms have, in the calendar years for 1973 and 1974, sought his Department's advice concerning new exports from Great Britain to the EEC.

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

I regret that this information is not available.

Will the Secretary of State at least confirm that the EEC took one-third of all British exports during 1974? Has he any reason to believe that if we were to leave the EEC our ex-Community partners would be willing to sign a free trade agreement with us? if they were so willing, why should this have any good effect on our trade deficit?

I certainly confirm that our present trade with the EEC is roughly one-third of our total trade. On the second question, about whether or not a free trade agreement would be concluded if we left the EEC, I have expressed the view previously at this Box that I think this is a very likely outcome of the fact of our withdrawal. [Interruption.] I have said it before and I say it again. I think it is a likely outcome. It so happens to be in the interests of both sides, and perhaps, if anything, marginally more in the interests of the countries of the Eight, which are exporting to us more, unhappily, than we are exporting to them.

On the last part of the hon. Gentleman's question, as to whether I believe that this would be better, I repeat what I have already told the House—namely, that if we had a free trade agreement with the Eight instead of a Common Market agreement, we should not be obliged to buy food from the EEC when it was cheaper elsewhere, nor would we be obliged to contribute to the budget more than we ourselves got back.

Why are we exporting less to Europe than we might be? Is it the fault of private industry, or what are the reasons for it?

Many factors are involved. I recall very well from the debates that preceded entry that many of us took the view that the general effect of joining —that is to say, the change-over in the pattern of trade preferences that membership of the Common Market would bring—would be an adverse situation for our visible trade. That was the position we assumed. In addition to that, there was a countervailing argument, which my hon. Friend will recall, that it could be that certain dynamic effects might be produced which would offset this alleged impact effect. But the dynamic effects, so far at any rate, have not emerged, and the effect has been a far greater deficit in our trade than I think anyone in the House realised. There are other factors, including depreciation of the pound and changes in the relevant exchange rate.

As the Question refers to the narrow matter of exports, may I ask the Secretary of State why the export of motor cars to the Common Market declined by 25 per cent. in 1974 when the Common Market was supposed to be such a great benefit and as there are so many cars awaiting export?

What is clear is that the manufacturers of motor cars on the Contient of Europe were much better prepared to take advantage of the enlarged market than was British industry which had been pressing on successive Governments so strongly the advantages, as British manufacturers saw it, of our membership of the Common Market.

On a point of fact, where is food cheaper elsewhere? It will not be cheaper in New Zealand for much longer.

That is a matter of judgment. [Interruption.] There are two factors involved. The judgment is about what is the medium-term probability of price increases in the Common Market and in the rest of the world. That is a very important factor.

As for the immediate situation, I remind my hon. Friend that there has been a ban on imported beef into Europe for the past nine months. The reason for that ban is that the beef elsewhere is undoubtedly in good supply and is cheaper than it is in Europe. in addition, as my hon. Friend must know, the taxes and the prices we have to pay on imported butter and cheese indicate that those commodities are far cheaper outside the European Community than they are within.

Does the Secretary of State for Trade accept that, if the answer he gave a few minutes ago to my hon. Friend the Member for Mid-Sussex (Mr. Renton) was correct, we should have to negotiate new terms for trade with the EFTA countries and that any new terms we might negotiate might not be favourable?

I should be very happy to undertake the task of negotiating new terms with the EFTA countries. I have been in touch with them for some time. I have no reason to believe that there would be any interruption in the long-established free trade arrangement between Britain and EFTA.

London And Counties Securities Group

3.

asked the Secretary of State for Trade whether the special investigation being carried out by his Department into London and Counties Securities Group has been completed; and if he will make a statement.

I have now received the inspectors' report and I am considering it. I am not in a position at the present time to make a statement.

Will my hon. Friend, when he is considering this report, devote a great deal of time to the essential part which was played by the Leader of the Liberal Party in keeping going this bankrupt concern at the time when he was—

Order. There is a personal implication in that. The hon. Gentleman must not do that, except by motion.

Yes, that is a personal implication, but nevertheless it is a question which in my view has to be answered. It has to be answered—

Order. The only way in which the hon. Gentleman can keep within the rules of order and make such an implication is by substantive motion.

It is rather strange that a lot of personal imputations are made against me, but I do not go crying to the Chair. I am prepared to stand the criticisms that are made against me because of my stand in politics. I am asking my hon. Friend the Under-Secretary to take full consideration of the way in which the Liberal Leader—

Order. The hon. Member may not do that. I have ruled that it is a personal implication.

—of the way in which all the directors of the bankrupt London and Counties Securities Group kept that concern going when it was obvious to many people within the City and to those writing the financial columns that it was a bankrupt concern. Will my hon. Friend take cognisance of the domino effect that that had on other secondary and fringe banks? Will he learn one important political lesson out of this, namely, that we must have public accountability for all banks and insurance groups?

It follows from the fact that I am considering this matter that I shall consider all relevant circumstances.

South Africa (British Firms)

4. Mr.

asked the Secretary of State for Trade if he will make a statement about the implementation of proposals in the White Paper "Wages and Conditions of African Workers Employed by British Firms in South Africa".

I have asked over 500 British companies to publicise improvements in wages and working conditions of African employees of their South African affiliates. A First Secretary (Labour) has taken up post in our Embassy in Pretoria.

May I ask the right hon. Gentleman how he reconciles the code of practice in the White Paper with the change of law in South Africa—the second General Amendment Act 1974—which makes it illegal to declare information outside the Republic? I gather that this includes labour relations. Does not this make a nonsense of the policy in my right hon. Friend's White Paper?

My present understanding is that the legislation to which the hon. Gentleman refers was devised for a specific purpose, that it was not at all related to employment questions and that, although couched in general terms, it is unlikely to prove a serious obstacle in the present context.

Will my right hon. Friend give serious consideration to a proposal that we should enact legislation requiring British companies which have widespread commercial interests abroad to pay decent rates of wages and have decent working conditions wherever they are operating?

That is a much wider question. We have to give consideration not only to conditions and the wages which are paid by our own companies overseas. We cannot operate in this area unilaterally without taking account of the relevant conditions and the competitive rates of pay and other provisions operated by other companies, both companies domestic to the country concerned and other foreign companies.

Motor Vehicle Exports (Japan)

5.

asked the Secretary of State for Trade how many British motor cars it is expected will be sold in Japan in the coming year.

British manufacturers sold 1,805 motor cars to Japan in 1974. It is not possible to give a precise forecast of sales in 1975.

Is my right hon. Friend aware that 86,899 Japanese cars were imported into this country last year and that the discrepancy between the figures is a scandal? Is he aware that those of our electors who work at Rists and Michelin's in North Staffordshire and car workers generally are looking to the British Government to take action to stop the import of Japanese cars on this scale until the Japanese import ours?

I am aware of the very great disproportion in trade in motor cars between this country's exports to Japan and our imports from Japan. It is a remarkable contrast in numbers. I should be justified in taking action against Japanese cars only if it could be properly and seriously presented to me that the Japanese were engaging in dumping and that this was a significant cause of the present distress in the British motor car industry.

I remind my hon. Friend that, although these numbers are worrying, they account in themselves for only about one-fifth of our total car imports at present. Therefore, it would not be justifiable to select one source of supply and attempt to check imports from that source without looking at the whole situation.

Is the Secretary of State aware that those of us who are trying to help with the exports of our motor cars to Japan are greatly handicapped by strikes, which cause bad delivery performance, and by failure to observe the social contract, which increases costs? Will he assure the House that we shall not retaliate because of those factors and impose import controls which are bound to work against this country?

I have already made clear my attitude towards import controls in relation to motor cars. It is a question of whether they are being dumped and causing material injury to the United Kingdom home industry. No such representations have been put to me.

In looking at the performance of our motor car industry in its selling to Japan, it would be wrong to attribute blame to strikes in the United Kingdom. It is an astonishing fact that as long ago as 1965 we were selling about twice the number of cars to Japan as we sold last year. The truth is that for one reason or another British motor car firms have until very recently not made any serious attempt to enter the Japanese market. I believe that they are beginning to make such an attempt. I believe that they will have some success.

Tourism

6.

asked the Secretary of State for Trade whether he will merge the British Tourist Authority with the national tourist boards.

The Development of Tourism Act 1969 established these bodies as four separate units. We have no plans for amending the statute.

Does not the Minister agree that having two autonomous bodies responsible for formulating and implementing tourist policy is thoroughly wasteful and can lead only to confusion? Will he introduce a unified structure of tourist administration?

My Department is not convinced that the remedy suggested by the hon. Gentleman on this and on other occasions is the appropriate remedy. Each of the bodies concerned has specific expertise which we consider to be valuable. For those reasons I do not believe that it would be helpful to change the present régime.

Does the Minister appreciate that tourism is one of the most important industries in Scotland? Will he ensure that when the Scottish Development Agency is established the Scottish Tourist Board will come under it and that it will have full control over its own finances?

Is the Minister aware that the review presently being undertaken by the Secretary of State appears to consist almost entirely, if not entirely, of consultation with Government-sponsored bodies and that those who work in the industry in a commercial sense are not being consulted? Is it too late to reconsider whether the hon. Gentleman's Department should consult such bodies as the British Hotels, Restaurants and Caterers Association—I happen to be on the association's national council in an unpaid capacity—before coming to any conclusions about this important review, which itself is welcome?

No doubt the hon. Gentleman, in following the best course possible to assist the cause in which he has just declared an interest, will ensure that representations are made to my Department. My understanding is that the consultations are not within the narrow confines which he has just suggested.

21.

asked the Secretary of State for Trade if he will publish a table showing the amount of Government support through the English Tourist Board to the West Country Regional Board as compared with the contributions made to the Scottish and Welsh Tourist Boards; and if he will show the number of tourists in the year for the West Country, Scotland and Wales.

With permission, I will circulate the tabulated replies in the Official Report, although, as will be apparent, there is no appropriate basis for comparison given the different range of responsibilities of national and regional tourist boards.

Does not that reinforce the case for the West Country having a tourist board with status equal to that of the Scottish and Welsh boards? Will not further examination of these figures show that more tourists go to the West Country than to Wales and Scotland put together? Will the Government give an assurance that before any cuts are made in tourist board budgets a per capita calculation will be made to ensure that the West Country does not suffer?

I do not agree that there is any point in establishing a separate West Country board. If, as is the case, fewer tourists visit Scotland and Wales than the West Country, that justifies the Government's view that by giving assistance to those two areas they will increase the number of tourists going to Scotland and Wales, which I should have thought would be the desire of all hon. Members.

Is not the hon. Gentleman aware that there is a West Country Tourist Board and that what we are asking for is status, not a new board?

By adding his voice to that of his hon. Friend, the hon. Member does not help to reinforce the argument. There are in fact Scottish and Welsh Tourist Boards.

Following is the information:

TABLE 1
Grant-in-aid 1973–74:
Scottish Tourist Board£712,000
Wales Tourist Board£537,000
English Tourist Board£1,750,000
Contribution by the English Tourist Board to the West Country Tourist Board's 1973–74 income of £116,000£30,000

TABLE 2
Information about the number of tourists in the year for the West Country, Scotland and Wales is not available. The following table provides estimated number of nights spent by holiday visitors in these three areas in 1973 which is the latest year for which figures are available:
Million Nights
The West Country111·6
Scotland57
Wales55·5

Source:

International Passenger Survey.

British Home Tourism Survey.

The tables above, however, are not an effective basis of comparison. The cost of generalised promotion, information services, research and other schemes of assistance for the tourist industry undertaken by the three National Boards and benefiting individual areas, in the case of England is borne by the English Tourist Board and is not represented in the allotment made to the West Country Tourist Board.

Trade Mission (South Africa)

8.

asked the Secretary of State for Trade how many Government-supported or Government-sponsored trade missions will visit South Africa in 1975.

During 1975 17 missions are expected to visit South Africa under the Government's Outward Mission Scheme.

Is my right hon. Friend aware that that is an extremely disappointing answer? Does he agree that it would be better for relations with that country and other African countries, as well as better for race relations throughout the world, if we suspended trade missions to South Africa altogether? Would it not be better to encourage British firms to trade with countries such as Nigeria, Kenya, Zambia and Tanzania rather than to invest in a racially dominated country such as South Africa?

I have not received any representations from other African countries, or from any country, protesting in any way against the normal flow of trade between this country and South Africa. Therefore, I think it would be wrong to draw the conclusion that I feel is in my hon. Friend's remarks that we are in any way jeopardising our trade relations, which I accept are very much improved, with growing markets in black Africa.

Will the right hon. Gentleman give an indication of the number of people in this country whose jobs are entirely dependent upon the success of these missions to South Africa?

No, I cannot. Of course, our exports to South Africa account for about 3 per cent. of our exports.

Trade Deficit (Eec Countries)

9.

asked the Secretary of State for Trade what is the size of the United Kingdom's trade deficit with countries of the EEC to the latest date for which figures are available for 1974.

14.

asked the Secretary of State for Trade what is the visible trade deficit with EEC, on a balance of payments basis and seasonally adjusted, for the last 12 months.

In 1974 the visible trade deficit, on a balance of payments basis, with the EEC Eight is provisionally estimated to have been £2,035 million. Comparable figures are not yet available for later periods.

Is my right hon. Friend aware that everyone in the House will find those figures deeply disturbing? Can he give us any kind of assurance that the situation in 1975 will not be even worse? Has he any evidence from estimates that he might already have in the Department that perhaps we are beginning to turn the corner in 1975 and that we can at last begin to see the long-awaited benefits of EEC membership?

I certainly agree with my hon. Friend in what he has to say about the seriousness and the gravity of these trade figures. I regret to have to tell him that the evidence is that the deficit is growing quarter by quarter. If I were to give, as I will, in reply to my hon. Friend the available figures for the past three months, the position would be clearer. The figures are on a crude trade basis and not on a balance of payments basis and they may slightly overstate the eventual outcome. However, on a crude trade basis the present deficit for the past three months—namely December, January and February—is running at a rate of £2,600 million a year.

Does the right hon. Gentleman recall the debates in 1972? I refer him in particular to what the then Chancellor of the Duchy of Lancaster said quite clearly on 20th June—namely:

"our entering the Communities…will be a positive and substantial contribution to our balance of payments, and will not result in any deficit at all"—[Official Report,20th June 1972; Vol. 839, c. 318.]
Is the right hon. Gentleman aware that it was on that sort of statement that some of my hon. Friends were persuaded to vote for the Common Market?

There is no question but that events have disproved that forecast. It is not only the authority of the then Chancellor of the Duchy of Lancaster that one has to draw upon for persuading people in that period of the advantages of membership. Similar statements were made, although in broader terms, in the 1971 White Paper. That was the then Government's major recommendation to the British people and to Members of Parliament that they should join the EEC.

Does my right hon. Friend confirm that a major reason for the large deficit lies in the import of manufactured goods from Germany in particular and from other EEC countries? Will he tell the House how the problem could be ameliorated by exit from the Market and the creation of a free trade area?

I thought I had answered that point in answer to a previous supplementary question. It seems that I shall have to do it again. I said to the House—it obviously was not listening at the time —that a free trade area agreement would face us with broadly similar problems in terms of industrial goods except in so far as higher food prices might affect the structure of costs in Britain's industry and, therefore, our export prices. What I said was that outside the European Community we would have the advantage of such cheap food as there is, and I believe that the supply of such food is much larger than my hon. Friend suggested. Further, we should not have to make a contribution to the Community budget and we should have far better control over capital movements.

In reply to an earlier question the Secretary of State said that if we were to withdraw from the Common Market there would be a very advantageous position for Britain in negotiating new trading arrangements in a free trade area. Is that the view of the Cabinet, is it merely the view of the five dissenting Ministers or is it merely wishful thinking?

I have been asked this question before and I stand by the answer that I have given.

On a point of order, Mr. Speaker. I apologise for raising a point of order now rather than later, but I shall not take up very much of the time of the House. The Secretary of State said quite categorically in his first answer to this set of questions that the deficit to the EEC on the manufacturing account was growing. There is no truth—

Order. The content of an answer cannot possibly be matter for a point of order.

Burmah Oil (Bp Shareholding Sale)

11.

asked the Secretary of State for Trade if he will call for an investigation under Section 164 of the Companies Act into the sale by Burmah Oil of its shareholding in BP.

Why not? Have not the Government, by twisting the arm of the Bank of England, cheated many thousands of small shareholders and savers, including pensioners, out of at least £100 million?

The hon. Gentleman ought to rearrange his prejudices once in a while. In fact, nobody has cheated anyone in this matter. The hon. Gentleman asks whether Section 164 might be used to set up an investigation. I do not consider that there are adequate grounds for any such action under that section. Moreover, the section is wholly irrelevant to the purposes to which the hon. Gentleman alludes.

Does not the hon. Gentleman realise that many people feel seriously disturbed about this sale, undertaken in a hurry, at what appears to have been a very low price? Many pension funds and unit trusts were shareholders in Burmah Oil. Will not the Minister, therefore, encourage an investigation into this sale?

In my judgment, there are no grounds for an investigation under Section 164 or Section 165 of the Companies Act. My right hon. Friend the Secretary of State for Energy informed the House on 21st February that the price agreed was the average stock market price from 31st December to 22nd January, the day before the transaction was completed, but leaving out of account any day's price below that of 31st December. I should have thought that that was a fair arrangement.

Eec Membership

13.

asked the Secretary of State for Trade what recent representations he has received from representatives of British importers and British exporters about the effects on the United Kingdom's overseas trade of British membership of the EEC.

I continue to receive views from many sections of industry and trade and their representative bodies on a wide range of Community matters, including the effect of membership on our trade.

Is it not bogus for the Secretary of State to go on using the trade deficit as an argument for leaving the EEC while proposing a free trade area which would leave the deficit more or less unchanged? The right hon. Gentleman has already admitted that point as regards industrial goods. As regards foodstuffs, is he not aware that his right hon. Friend the Secretary of State for Prices and Consumer Protection said in the House last week that prices of food imports which might be lower if we shopped around outside are just about balanced by the prices of foods which are lower precisely because we are within the Community? Is not the whole argument, therefore, bogus?

I am inclined to say— and I shall say—that I have nothing to add to my previous reply.

Is my right hon. Friend aware that it is now possible to buy more cheaply outside the EEC not merely the beef, mutton, butter and cheese which he mentioned but also wheat, maize and most other grains as well?

This is an important matter, and that is what I was trying to establish in my replies on an earlier question. It is necessary to recognise that there has now been a considerable change in relative price levels as between European and world food prices. My right hon. Friend has very properly pointed out that the EEC levies on wheat and maize have again been reimposed. My personal view is that this will be the trend which we shall see unfold over the next two or three years. Obviously one cannot be certain that that view is correct, but if it is we shall have all the burdens of the Common Agricultural Policy while at the same time denying ourselves the possibility of cheaper food elsewhere.

Despite the Secretary of State's campaign and constant innuendo in the House about the trade deficit, did he not recently say that he deliberately withheld judgment on the issue of whether our trade imbalance was the result of our membership of the EEC? Will he withhold judgment until after the referendum, or will he eventually make up his mind before it?

As I said before—I say it again—my view, a view that the House heard many times in 1971 and 1972, was that the overall trade effect of our joining the Common Market would be detrimental to this country. That was my view then, and I have seen no evidence since to make me withdraw it. But what I have expressed surprise about is the enormous size of the adverse trade deficit.

Order. I remind the House that we are soon to have a two-day debate on these matters.

Import Controls

15.

asked the Secretary of State for Trade what consideration has been given to import controls in the light of Great Britain's current and prospective trade deficit.

12.

asked the Secretary of State for Trade if he will make a statement regarding his Department's policy on import controls.

As my right hon. Friend the Prime Minister made clear in the House on 4th March, we reject the general policy of import controls since we do not believe that they would lead to an improvement in our balance of payments.

Last Monday, speaking from the Dispatch Box, the Under-Secretary of State said—these were his precise words—that the Government were dedicated to the principle of free trade. May we be assured that that dedication will be able to withstand the powerful influences of the Department of Industry, which, we suspect, harbours quite a number of those who would be much in favour of import controls?

The general policy of this Government and of succeeding Governments has been in favour of a progressively freer international trade regime. But that has been based upon the premise that we are dealing with a long-term expansion and growth in world trade as a whole, and the problem which the whole world is facing now is that that expansion of world trade is coming to a stop and we are all confronted with particular problems of deficit on our balance of payments. Although one or two countries are now exceptionally in surplus, this is a grave problem. My approach, and my view on the matter, is that in this special post-oil crisis situation, when there are only one or two countries in surplus, it would be a great folly if we were to impose restrictions on each other's trade, because this would lead, as sure as anything, to retaliation and a snowball effect. Therefore, we must find alternative ways of financing these deficits rather than turn in upon ourselves and rend the expanding world trade system from which we have all derived such benefit in the past quarter of a century.

In this context will my right hon. Friend look into the position of the steel industry, bearing in mind that for every ton of steel which we export to Western Europe we are importing no less than 17 tons from Western Europe into this country and that as a result of that sort of development some of my con stituents are now going on short-time working? Does that not indicate that an over-concentration on the Western European market is not exactly in British interests, and does it not show also that the Common Market countries have a substantial vested interest in retaining our market?

The answer to the last part of my hon. Friend's question is that that is of course so, but my general remarks about our trade policy and the difficulties which we face at present do not exclude separate and special consideration of particular commodities where a case can be made legitimately, as I said in reply to an earlier Question, that they are causing market disruption, that goods are being dumped, and that material injury is being caused.

Food And Live Animals

16.

asked the Secretary of State for Trade what proportion of the United Kingdom trade deficit with EEC countries is attributable to trade in food and live animals.

In 1974 the "crude" trade deficit—that is, the difference between exports valued fob and imports valued cif—in food and live animals with the EEC Eight accounted for 55 per cent. of our crude trade deficit in all goods with the Eight. In January and February 1975, taken together, the proportion was 48 per cent.

I thank the Secretary of State for that reply. Those results represent a large percentage of our trade deficit with the EEC. Will the right hon. Gentleman agree that that trade deficit came about in large part as a result of foodstuffs being purchased from the Community for the benefit of the consumer but to the disadvantage of our trade deficit?

There are two matters here. Some part within that undoubted switch of food trade to the EEC will have been due to the fact that exceptionally, in 1973 and 1974, food prices in Europe were lower than elsewhere, but another part of it is due to the treaty arrangements and the requirement to give preference to food trade within the EEC even when it is more expensive than foods available elsewhere.

Is the Secretary of State aware that the last time his Department made a formal statement about the reasons for the large size of our deficit with the EEC it mentioned the cheaper cost of food in the EEC but did not attribute the size of the deficit to our membership of the EEC? Since the Secretary of State said recently that he wanted people to take their decision in the referendum in full knowledge of the facts, is it not his duty to state his opinion about the factors which account for the large size of this deficit?

I would hesitate to embark upon that exercise and no doubt I should earn your rebuke, Mr. Speaker, if I were to make that statement at the moment. Perhaps the hon. Member, who is no doubt a devoted reader of the Economist, should have a look at the last issue, where he might find some of the answers.

General Agreement On Tariffs And Trade

17.

asked the Secretary of State for Trade what are the objectives of the Government in the current round of GATT negotiations in terms of average percentage reductions in tariffs on industrial goods; and if he will make a statement.

We wish to see the largest possible reduction in tariffs on industrial goods as can be negotiated bearing in mind the need for reciprocity. We also wish to ensure that the deepest cuts are made in the highest tariffs. The negotiating directives for the Commission which the EEC Council agreed at its meeting on 10th February are a worthwhile step towards these objectives.

Will the Secretary of State say whether Britain will have a negotiating status in its own right at these talks? Is it the case that in broad terms the Community is aiming at cuts of between 25 and 50 per cent. on industrial tariffs? Does not the general move towards freer trade in industrial goods mean that if Britain leaves the Common Market industrial tariffs will be no impediment, or very little impediment. to British exporters?

It is in our interest and that of the developed countries as a whole that we should resume post-war progress towards greater free trade and the elimi nation of trading barriers. I am therefore glad to say that the general objective of an overall cut of between 25 and 50 per cent. has been agreed. It is, of course, a fact that the Commission, not the British Government or any other Government, will be undertaking the negotiations with other countries in Geneva in the course of the multilateral trade negotiations.

Will the Secretary of State contemplate adding to the agenda, unless it is already there, consideration of the dumping problem? It seems to many of us who respect the point that the right hon. Gentleman made about the need for a free flow of trade that there are an increasing number of instances where dumping is a significant problem and where, for some reason or another, the British Government do not seem willing to act, certainly in the short term.

We are certainly willing to consider any serious case that is put before us alleging dumping. The protection against dumped imports is one of the matters which will be discussed during the course of the multilateral trade negotiations.

Foreign Trade Statistics

18.

asked the Secretary of State for Trade what estimate he has made of the extent of the problem of producing separate Scottish and English foreign trade statistics in terms of Civil Service manpower.

The separation is not practicable and I do not think that I could justify the cost of making the suggested manpower estimates.

Is there any evidence to show that if the statistics were available they would show a benefit either to the Scottish taxpayer or the Scottish economy?

It is difficult to answer that question. Indeed, I could do so only after I had undertaken the exercise, and, as I have said, I do not think I should be justified in that course of action.

Does not the Secretary of State's reluctance to publish the figures indicate his fear that they would show Scotland to be in a basically healthy balance of payments situation and that the only beneficiaries of the figures would be the Scottish National Party?

There might be a case for carrying out this exercise if only to alleviate the anxieties of the SNP. However, I have no reason to believe that it would show the kind of figures which the hon. Gentleman would undoubtedly like to see.

Book Exports

19.

asked the Secretary of State for Trade what action he is taking to promote the sale of British books in overseas markets.

The industry's sales promotion efforts overseas are encouraged and helped by the extensive range of export services provided by my Department.

Does the Secretary of State recognise that the considerable support given by the Government to book exports has been completely nullified by the enormous increase in the overseas postal charges? For the first time, our book exporters are now paying much higher postal rates than any of their foreign competitors.

Of course, I regret very much that the increase in postal charges has had to be passed on to those who export books, magazines and so on from the United Kingdom. However, it would be quite wrong to assume that the export trade in British books would be damaged over any period of time by the present increase in charges.

Does not the Secretary of State agree that the increase in overseas postal rates will produce a relatively marginal increase in revenue for the Post Office but will significantly jeopardise £150 million to £200 million of exports? In these circumstances, should not the trading consideration have prior claim?

I do not think that the purchase of British books is crucially affected by the increase in postal rates.

Will my right hon. Friend please do something about the whole postal question including the effect on book exports? There has been an 1,800 per cent. increase in charges over those imposed 30 years ago and about a 300 per cent. increase in the efficiency of postal deliveries. Surely we should be able to get some improvement, if only to restore us to the position attained 30 or 40 years ago.

I do not agree with my hon. Friend. This is a question for my right hon. Friend the Secretary of State for Industry.

Will the Secretary of State consider the important point made by my hon. Friend the Member for Beckenham (Mr. Goodhart) that we are now at a disadvantage in overseas markets compared with our chief competitors? If that is so, surely something should be done to redress the balance.

If a case of that kind can be seriously put to me, I will of course discuss it further with my colleagues in the Department of Industry.

Trade Balance Tables

20.

asked the Secretary of State for Trade what information he has supplied to the EEC Commissioner for Trade, Mr. Gundelach, concerning Great Britain's balance of trade.

I have sent Mr. Gundelach a set of tables showing trade between the United Kingdom and the EEC over the years 1970 to 1974. These tables have formed the basis of replies made to earlier Questions and a copy is now available in the Library of the House.

Has my right hon. Friend done so in reply to the replies which Mr. Gundelach gave in the European Parliament on 19th February? Has his attention been drawn to Mr. Gundelach's statement there that the trade deficit with the EEC was only 32 per cent. of our total deficit and that he believed that membership of the EEC was not therefore disadvantageous to the United Kingdom?

I think that in his reply Mr. Gundelach confused the situation because he failed to make the simple distinction between total trade, including oil, and non-oil trade. It is that basic error which led him to conclusions which I think were false.

Will the Secretary of State undertake to put into the Vote Office the documents that underlie that error, as I think that there will be some doubt about the statement he has just made?

I think that the facts will emerge absolutely plainly from the set of tables. They are quite full and I recommend all hon. Members who are interested to study them carefully.

I accept that Mr. Gundelach's reply was misleading and that it referred to a proportion of the total deficit. However, is my right hon. Friend aware that even if one takes the non-oil deficit, as my right hon. Friend pointed out to me in a reply not very long ago, the proportion represented by our non-oil deficit to the EEC is lower today than it was in 1972, the last year before our entry?

I do not believe that to be so. The proportion of our non-oil deficit due to trade with the EEC in 1974 was more than 100 per cent. of our total non-oil trade deficit.

Did not the Secretary of State tell Mr. Gundelach that he had deliberately withheld judgment of whether our trade imbalance was the result of our membershsip of the EEC? Was that not totally inconsistent with an answer that he gave earlier today?

I did not say that to Mr. Gundelach. What I said was exactly what I told the House a short time ago, that is, that I have always taken the view —before we joined the EEC—that the trade effects would be unfavourable but that the extent of the deterioration would obviously bring in factors that were not readily identifiable and not easy to quantify.

Later

On a point of order, Mr. Speaker. In my supplementary question I attributed to the Secretary of State for Trade a remark concerning his view on the trade imbalance and EEC membership. I said that the right hon. Gentleman had remarked in reply to Mr. Gundelach, the EEC Commissioner:

"I have deliberately withheld judgment on the issue of whether our trade imbalance was the result of membership of the EEC."
That is a direct quotation from the Press statement issued by the Secretary of State, commenting upon Mr. Gundelach's re marks. That being so, it seems that, I am sure inadvertently, the Secretary of State has denied that he made a remark when clearly it was made and was obviously directed to Mr. Gundelach. I hope that the right hon. Gentleman will clarify this.

It is true that in the Press release that I put out, commenting on Mr. Gundelach's address to the European Assembly, I said:

"I have deliberately withheld judgment on the issue of whether our trade imbalance was the result of membership of the EEC."
That has been my practice in answering questions until today. That is what I have said in the past. But in view of what I thought frankly was a very one-sided statement made by Mr. Gundelach of the figures, and his explanation of hem—[Interruption.] This is the explanation. I wrote to Mr. Gundelach on 20th March this year making the two points that I made to the House earlier today—that is, recalling that my view had been that there would be a deterioration in our trade before we joined but adding the point, which I emphasised in the House today. that the extent of the deterioration was a matter on which we could not at this stage hope to give any serious and final judgment.

Order. I am not prepared to allow this matter to be debated now. I allowed the hon. Gentleman to raise a point of order because I thought it might be that the Secretary of State wanted to change something he had said. As that is not so, this is not a matter for the Chair. It is not a matter of order.

With great respect, Mr. Speaker, I believe that it is a matter for the Chair. The Secretary of State has misunderstood the point I made. He said quite clearly at Question Time "I did not say that to Mr. Gundelach". I understand that he is now admitting that he did. I should have thought that he would feel it right to correct the record and that this would be a matter for you to arrange, Mr. Speaker.

It is not a matter for me at all. I have no responsibility for what the right hon. Gentleman says. It is a matter for him.

Concorde

22.

asked the Secretary of State for Trade if he can now make a statement about the start of Concorde services with British Airways.

As I said in reply to the hon. Member on 26th February—[Vol. 887, c. 196]—the question of the date on which British Airways and Air France should begin commercial services with Concorde will be a matter for discussion at tomorrow's meeting between my right hon. Friend the Secretary of State for Industry and the French Minister of Transport.

Will the Minister give me a categorical assurance that Concorde will operate on the same date with Air France and British Airways, that there will be no question of Air France operating it before British Airways does?

I would hope that that will be accomplished. I understand that British Airways has every intention of starting its services simultaneously with Air France.

May I urge my hon. Friend to impress upon British Airways the need to get Concorde into service at the earliest possible moment and not to allow this to be delayed by any problems concerning the North American route? If it is not feasible to start that route at the same time as Air France, will another route be considered?

British Airways is well aware of the need to start services simultaneously with Air France, as I have said. The routes are a matter for British Airways to decide and it will keep the Government closely in touch with its plans.

Will the hon. Gentleman assure the House that he will be more pressing in his discussions in this connection that he was in connection with Laker Airways?

Energy

Conservation

23.

asked the Secretary of State for Energy whether he will make a further statement of energy conservation.

Energy saving is a continuous process and our programme will continue over a long period. The recently launched publicity campaign is already having effect and this, with the other measures taken so far, represents a substantial first step. My right hon. Friend will introduce further measures as appropriate.

Why has the Minister still not launched a programme to utilise the fuel at power stations more efficiently by recycling the waste heat, which at present comprises two-thirds of the fuel input and which is now wasted in cooling systems? Why are the Government still planning and building new power stations without programmes for utilising waste heat for industrial and domestic purposes?

The hon. Gentleman has raised an important subject that has been brought to the attention of the Department and is being considered.

Has my hon. Friend yet concluded his consultations with the automotive industry with a view to encouraging fuel saving, particularly by a greater use of diesel engines, which would show a great saving of fuel?

On this and other subjects my right hon. Friend is advised by the Advisory Council on Fuel Conservation, which is a highly expert and representative body. Any recommendations that it may make will receive very serious consideration by my right hon. Friend.

What steps is the Department taking to study and implement the proposals put to it by the National Industrial Fuel Efficiency Service?

Proposals put by the NIFES have been among proposals that have been put to the Department. As my right hon. Friend has repeatedly said, all such proposals receive serious consideration. I must emphasise that my right hon. Friend looks very much to the advisory council for advice and guidance in these matters. Many suggestions for energy conservation have been made, but careful consideration has to be given to their capital cost and many other factors must be taken into account.

Environment

Piccadilly Line (Heathrow Extension)

27.

asked the Secretary of State for the Environment if he will make a progress report on the Piccadilly line extension to London (Heathrow) Airport.

The London Transport Executive plans to open the first stage from Hounslow West to Hatton Cross in July. The section from Hatton Cross to Heathrow Central is expected to be opened in the second half of 1977. Tunnelling work on this section is complete and track laying is about to start. Work is continuing on the construction of the station at Heathrow Central.

Has the Minister given any thought to an express Underground service from Gloucester Road to London Airport? Does he think that passengers carrying their baggage will want to go into an Underground train that has to stop at every station?

That was naturally taken into consideration when the route was planned. The hon. Gentleman will realise that there would be great problems in running a regular express service along with an ordinary commuter service—unless he is proposing the building of a totally separate line.

Would not my hon. Friend agree that whatever slight disadvantages there may be for air travellers, as distinct from those travelling by rail, this development will be generally welcomed in London? Does he recall that at first the plan by the Conservative administration allowed for extra charges on this line but that it was later decided to provide the sort of grant that was given for the Victoria Line? Is not that an improvement on policy?

When the service is running, certainly in the first few years, there should be a considerable improvement in traffic conditions on the M4. It was obviously because of the large volume of traffic travelling to Heathrow that a grant was ultimately made, and that is very important.

National Finance

Gross National Product

29.

asked the Chancellor of the Exchequer what has been the increase in gross national product of Great Britain, France, Germany and Italy, respectively, from 1958 to the latest date for which figures are available.

With permission, I will circulate the figures in the Official Report.

Is the Chief Secretary aware that the figures, which I presume he has studied, will show that the original Six have benefited enormously, particularly after the first few years of the Community? What evidence has he to show that this country will not benefit equally materially once we are able fully to take advantage of entry as a full member of the Community?

The hon. Gentleman has put a very complicated question. I hope that he will wait until he has seen the answer in the Official Report.

Following are the details:

The increases in gross national product at current market prices, from 1958 to 1973, measured in their own currencies on the internationally used definition are as follows:

Per Cent.

Equivalent annual rate (per cent.)

United Kingdom2097£8
West Germany2719£1
France36810£8
Italy32710£2

Estimates of gross national product at constant prices are not available internationally. The estimated annual rates of increase in gross domestic product at constant prices between 1958 and 1973 are as follows:

Per Cent.

United Kingdom3£1
West Germany5£0
France5£5
Italy5£3

Members Of Parliament (Pay And Conditions)

31.

asked the Lord President of the Council in view of the fact that the majority of Members of Parliament are members of their appropriate trade unions, whether he will arrange to meet the general secretaries of these unions to negotiate a trade union agreement on hours, wages and working conditions of Members of Parliament. within the social contract.

I have been ask to reply.

This would not be appropriate.

You will recollect, Mr. Speaker, as will all hon. Members, that we have recently had an unfortunate dispute affecting the efficiency of the House. Is the Minister aware that the only body of workers now working for any reputable organisation but not having trade union recognition are those who work for the Government and that, irrespective of party, the Government have persistently and consistently refused to grant Members of Parliament trade union rights and recognition comparable with the rights given to every other worker, including every State employee? If other Members do not want to have their trade union recognised, am I not entitled to call for recognition myself?

We in this House are part of a sovereign Parliament, and we should take the responsibility for these matters ourselves. Members' pay and allowances are already referred to the Top Salaries Review Body.

Questions To Ministers

On a point of order, Mr. Speaker. Question No. 30 on the Order Paper is a Question to my right hon. Friend the Prime Minister by my hon. Friend the Member for Sheffield. Attercliffe (Mr. Duffy). who is not here. I had always understood that Questions to the Prime Minister could be put only in the last quarter of an hour of Question Time on Tuesday and Thursday. Is it now possible to put them on any day? [HON. MEMBERS: "Yes."] I am much obliged.

Fish Imports (Blockading Of Ports)

(by Private Notice) asked the Minister of Agriculture, Fisheries and Food if he will make a statement regarding the action of the Humberside trawlermen in blockading the ports of Immingham and Grimsby.

I have invited representatives of the fishermen to meet me tomorrow afternoon to discuss the position.

Is the right hon. Gentleman aware that the trouble is now spreading rapidly, and that 35 minutes ago the port of Fleetwood decided to join the dispute? Whilst I in no way condone the blocking of waterways, may I ask whether the right hon. Gentleman realises the seriousness of the problem, not only in that the port of Immingham and other ports are closed but because of the grave problems which the fishermen face? When the Minister meets them tomorrow, will he make it clear that he will take action to help them, particularly over the importing of frozen fish from Norway, Poland, Iceland and other non-EEC countries?

I am aware of the seriousness of the situation. That is precisely why I decided to meet the fishermen's representatives quickly.

I do not condone the tactics used by the fishermen, basically inshore men at Immingham and Grimsby, but is my right hon. Friend aware that last Wednesday we debated the issue and all hon. Members, including me. were unanimous in asking my hon. Friend the Minister of State to take action by selective controls on imports, essentially from non-EEC States such as Norway, Iceland and Poland?

I am aware of that, but my hon. Friend must remember that we are dealing with friendly countries. I should like to reach an amicable solution. That is why I shall have talks with the fishermen.

Will the Minister recognise the immense cost to the port of Tyne which the present stoppage is causing? Is he aware that six ships are unable to enter the river, four more are due, and five cannot leave, and that if the stoppage continues it will quickly have an effect on employment in the port? It is certainly very costly. Will the right hon. Gentleman recognise the need for urgency in holding his discussions?

I do. The hon. Gentleman, who represents part of that area, states the position correctly. That is why I am anxious to meet the fishermen's representatives quickly.

Is the right hon. Gentleman surprised that the fishermen's anger has boiled up into this regrettable action? Does he recognise that many fishermen feel angry that he does not seem to have given the problems of inshore fishing the attention they require in the Dublin talks or in the review of fish prices which was eventually and belatedly agreed by the Department of Prices and Consumer Protection? Will he take urgent action on these problems?

I cannot accept that. I believe that the aid we give will give some help to certain sections involved in the dispute. I want to resolve the dispute. That is why I am meeting the representatives.

Is the Minister aware that many of the men taking part in the blockade have boats under 40-feet long? Does he agree that they have every right to be incensed when they have been excluded from the subsidy arrangements?

I cannot accept that, because the aid I gave will help some of these people. We are talking about certain direct action. I am prepared to see the men concerned, and I hope that I can discuss with them sensibly what the solution should be.

Is the Minister aware that the fishermen of Fleetwood are not only angry but desperate? Otherwise, they would not be taking this action. There is a clear case of dumping. We asked the Government last week to do something about it. That is the way out of the problem. I hope that the right hon. Gentleman will take that action as quickly as possible.

I am aware of the problem, and I know that the fishermen of Fleetwood and the hon. Gentleman feel strongly about it. That is why I am taking urgent action to meet the fishermen's representatives and discuss it with them.

is the Minister aware that I have had great difficulty in per suading the Sussex inshore fishermen not to take illegal action? I sincerely hope that they will not, but unless the right hon. Gentleman and the Ministry can do something about the problem of beam trawling in relation to these inshore men, he will have a great deal of trouble on his hands.

I am aware of the problem. I am grateful for what the hon. Gentleman said about taking action.

The House will be glad that the Minister is aware of the concern, which is very deep, particularly with regard to unfair competition and the way in which imports are coming into the country. There is also anxiety about the Government's determination to ensure that international arrangements are fulfilled and, if necessary, policed. We are glad that the right hon. Gentleman is to meet the industry. When did he last meet the industry? Will he make a full statement tomorrow, or on Wednesday, about the results of his talks, how he sees the position, and what he can do to help the fishermen?

I have met the major representatives of the larger section of the industry, and my hon. Friend the Minister of State has been in touch with the industry about which we are talking. I am anxious to meet representatives of the industry. They will come from Northumberland, North Yorkshire and, I hope, other areas. We feel that they have a problem, and I shall consider it.

If necessary—if we come to a solution, although I do not believe that it will be immediately, because the law of the sea is a matter for discussion elsewhere. I shall raise such matters affecting the industry when I next go to Brussels.

In view of the nature of the action being taken by the fishermen, is it not extremely important that the Minister should tell the House what the outcome of this meeting is so that we may take the matter a stage further?

I am always anxious to keep the House informed, and I shall do so in this case.

Will the longshore fishermen from Yarmouth be allowed to join the deputation visiting the Minister tomorrow?

If they make contact with my Ministry, I shall give every consideration to that.

Can the Minister say whether the action of the fishermen contravenes the law?

This is a matter for the harbour authorities to decide. I do not wish to become involved at this stage in arguments about whether they are taking illegal action. I am prepared to see them and to discuss their problems with them.

In spite of the Minister's denial of any responsibility for this sad occurrence, because of the limited nature of the help given to the fishing fleet—especially the point made earlier about the exclusion of small fishing craft —I hope that the Minister will include that point in his talks tomorrow.

May I prevail upon my right hon. Friend, whilst he is attempting to mediate in this important matter, not to use any influence he may have along the lines followed by the previous Tory administration when it allowed, or perhaps cajoled and persuaded, the powers that be to use the Conspiracy Act against people fighting for what they believed to be their justified rights?

I am anxious to meet the representatives of the industry concerned, and I hope that we shall hold constructive talks.

Animals For Slaughter (Export)

I beg to ask leave to move the Adjournment of the House, under Standing Order 9, for the purpose of discussing a specific and important matter that should have urgent consideration.

I have evidence that the Government assurance given about the implementation of the O'Brien Report on the export of live animals is not being honoured.

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart) rose—

Order. I understood that this application was being made to me, not the Minister.

It was not I, Mr. Speaker, who called the Minister.

As a result of the BBC "Midweek" programme of 20th March, which showed the transportation of lambs for the duration of 34, 39 and 48 hours without food, rest or water, I interviewed the director of the programme and am now in receipt of additional evidence to show that the Minister of Agriculture, Fisheries and Food grossly deceived the House in his assurances of 16th January, and that as a result of discussions today between the Ministry and the BBC—

Not even on an application under Standing Order 9 is it in order to say that the Minister has grossly deceived the House. The hon. Member must not use that phrase.

May I withdraw it and use the phrase "inadvertently misled the House"? As a result of discussions today between the Minister and the BBC, they are well aware of the fact that the House was inadvertently misled.

Having voted for the adoption of the report as a result of the promises of the two Cabinet Ministers, I herewith make application to move the Adjournment under Standing Order 9 so that the House will have a chance to reassess the situation.

The hon. Member gave me notice of his intention to make this application. I have considered the matter. I have also considered what he has said today. No doubt this is an important matter. My decision is only whether it should be pursued under Standing Order 9. In my view this is not an appropriate matter to be pursued under Standing Order 9. The hon. Member can pursue it in other ways.

Will the right hon. Gentleman make a statement in the House on this matter before Easter?

Orders Of The Day

Housing Finance (Special Provisions) Bill

Order for Second Reading read.

3.43 p.m.

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

This Bill is the last chapter in the long-drawn-out story of the Housing Finance Act 1972. I shall hope to convince the House that its provisions are both necessary and just. I shall also show that, contrary to much public comment, this is not a unique solution to a unique problem. Conservative Governments have more than once made comparable decisions. Indeed we face here a problem which has troubled governments throughout history from ancient Athens down to President Ford and the Vietnam deserters today: when is clemency justified and when it is not? I believe in this case that it is, and I shall quote a number of precedents.

Since the Bill stems directly from the Tory Housing Finance Act 1972, I must take the House back briefly to the circumstances under which that Act was passed, for the Bill is designed to clear up the mess, which was then created. It may be hard to recall now just how controversial that Act was. I said on Second Reading,
"it is the most reactionary and socially divisive Measure that is likely to he introduced in the lifetime of this Parliament—and that is saying a good deal."—[Official Report, 15 the November 1971; Vol. 826, c. 48]
It was not only the statutory increases in rents. More basically, it was the blow to democratic local government. For the Bill removed the responsibility for fixing rents for their dwellings from elected local authorities a responsibility which they had exercised for 50 years or more under many different Governments—and gave it to non-elected, non-accountable rent scrutiny boards. And this was done at the same time as the Local Government Bill was being introduced, which purported to implement the Conservative Government's White Paper pledge
"to return power to those people who should exercise decisions locally".
As the House knows, we strongly contested the Bill in all its stages. It was clear that there was a real danger of local authorities refusing to implement some of its provisions. I warned the Government during the Committee stage that,
"local authority opinion is outraged by the growing threat to local freedom and local independence".
I went on to add,
"There will certainly be some, and there will possibly be many, local authorities which will refuse to implement the Bill…I am talking about law-abiding, peaceable people who are devoted to the service of local government, and to whom it would never ocur to break the law in any normal circumstances."— [Official Report, Standing Committee E 22nd March 1972; c. 4177–8]
The Government were unfortunately not persuaded. They wholly failed to grasp the intensity of the anger felt by locally elected authorities at their loss of freedom and independence under this Act.

The situation was greatly exacerbated by the way the Act was brought into force. The council rent provisions came into force during August 1972, a fortnight after Royal Assent, at the height of the holiday season, when many councils —indeed like this House—were in recess. They required councils to pass the necessary resolutions at once in order to serve the statutory notice for rent increases to come into effect at the beginning of October. Hon. Members opposite must know that this was hardly the way to implement a new, complex and highly controversial Act.

There was also the uncertainty caused by the so-called "Newcastle" amendment. This allowed authorities to seek from the Secretary of State a lower rate of mandatory rent increase if they could convince him that the mandatory rate would cause rents to rise above the probable fair rent level. After hours of argument in Standing Committee, the Government had this eleventh hour change of heart, and Section 62(4) was added to the Bill.

Authorities were thrown into further confusion. In the interests of their tenants, many of them sought this dispensation. Week after week went by before they got their concessions, and they then had to decide how to average out the rent increases over all their dwellings.

So, confusion and muddle. Anyone with knowledge of local government must understand the deeply felt resentment, both at the contents of the 1972 Act and at the haste with which it had to be implemented.

The outcome was that some authorities decided that they would not make the mandatory rent increases required of them under the Act. I ask the House to accept that this was not an explosion of some extreme Marxist militancy but the strongly felt reaction of mainly moderate but sorely tried men and women.

During this period, as many Conservative Members will recall, I made my position quite clear. I said that the behaviour of the Tory Government was dangerously provocative, and I recognised the dilemma in which Labour councillors were placed. But at the end of the day, and without making myself universally beloved by Left-wing audiences, I had no doubts: the law of the land must be obeyed.

In Standing Committee I said that
"it is no part of my duty as a democrat, a Socialist and still less as an elected Member of my party's parliamentary committee, to condone, let alone encourage, defiance of the law." —[Official Report, Standing Committee E. 22nd March 1972, c. 4178.]
And to Labour's Special Conference on the Bill, in July, I said
"I cannot advocate non-implementation. I am in favour of constructive opposition".

I have only just started. I shall give way later.

How should the Conservative Government have dealt with this situation? Their own Act gave them ample powers. They had the power to send housing commissioners into any local authority which refused to implement the Act. The commissioners would have taken over all the housing powers of the authority and been responsible for collecting the rent increases laid down by the Act. As some Tory Members know, many late-implementing authorities were in fact expecting the Government to send in housing commissioners. Some of them actually, indeed repeatedly, asked the Government to send them in. Many of them thought—I know this from what they said at the time—that they were acting within the law in refusing to implement themselves, so long as they asked the Government to appoint commissioners. They were wrong; but I can understand their confusion.

In the event, about 35 authorities in England and Wales failed to raise their rents as required by the Act. A number have convinced the district auditor that there were reasonable grounds for their delay: a fact which underlines what I said earlier—that authorities were in genuine difficulties over implementing the Act. But in the remaining cases—a score or so—the district auditor may well find that the rent losses were due to misconduct, and that it is therefore his duty to surcharge the councillors involved. These losses could total about £1½ million; and the councillors concerned number about 400. I can only be tentative on these points, since district auditors, as the House knows, do not make up their minds finally until they have fully heard all the parties involved.

What are the options facing us in this situation? One possibility, which I assume is what most of our critics want, would be to do nothing; and to let the law take its course. What would be the result?

The point of a surcharge is to recover money. It is not—let there be no misunderstanding here—a penalty for a crime, because these are not criminal matters; neither is it a fine. But the amount of the lost rent income is absurdly out of scale with the generally modest means of the councillors who would be surcharged. I understand that in some cases the surcharge divided evenly between councillors could amount to well over £10,000 each. Any surcharges, of course, are made "jointly and severally". That means that if some of the councillors cannot pay their share, the rest have to make up the difference.

Here I might say two things in parenthesis. First, it is interesting that in 1973 the then Conservative Secretary of State for Scotland—Mr. Gordon Campbell, now no longer with us—considered, as under Scottish law he must, whether or not certain Glasgow councillors should be surcharged for expenditure on publicity material opposing the Housing (Financial Provisions) (Scotland) Bill. That was the equivalent of the Housing Finance Act in Scotland. He decided, after considering the merits of the case, that although he considered the expenditure to be unlawful there should, nevertheless, be no surcharges. A Conservative Minister then took a sensible decision, so I am hardly setting a completely new precedent this afternoon.

Secondly, the previous Tory Government, as Conservative Members will recall, introduced changes in the law relating to audit under which, in fixing the amount of a surcharge, account may be taken of the means of the person concerned. Indeed, under the Local Government (Scotland) Act 1973, the Secretary of State may himself make such a judgment in precisely the kind of situation in which we now find ourselves. This is not the moment to discuss the many differences between the law in Scotland and the law in England and Wales. But it is clear that the Conservative Party fully accepted in 1973 the futility of heaping enormous surcharge, liabilities on individuals of modest means.

Can my right hon. Friend say whether, if these were not Labour councillors, this legislation would be going through today? If the answer is "No", does not that bear out the criticism that is being levelled at us that this measure has been brought in to protect certain individuals within our party? If the answer is "Yes", does not this give carte blanche to any Member on the Conservative benches, or councillors, to refuse to implement any legislation which we shall put through in this Session?

If my hon. Friend will bear with me for a little while he will see that my entire speech is directed to attempting to answer that argument, which I shall deal with fully and precisely later, namely, the question of precedent and possible incitement in the future.

To return to the situation in England and Wales, what would follow these surcharges if they were to be made? No doubt many of the councillors would appeal to the courts—first to the High Court, then to the Appeal Court, then perhaps to the House of Lords. The process would drag on and on, possibly for years. Week after week the sores opened by the Housing Finance Act would be publicly exposed, the old dissensions remembered and the damaging wrangling repeated. All these councils would be operating with their minds on the sterile disputes of the past when they ought to be concentrating on the challenge of the future, and, above all, on the overriding task of providing a decent home for everyone.

We cannot say for certain what conclusions the courts would reach. But it is likely that many of the surcharges would be upheld. So what then?

Will the right hon. Gentleman explain to the people of Derbyshire why he thinks it is just that those who were not a party to the illegality of Clay Cross should pay a surcharge on their rates? Will he further explain whether he will follow this by introducing legislation which will let off the next group of lawbreakers, those who decide that they will not pay the debts of Clay Cross?

The hon. Gentleman may just possibly conceive it likely that I shall be coming to Clay Cross in some detail later in my speech.

To go back to what I was saying, first, the councillors would become disqualified from civic office. Whole councils would be decimated; and some hundreds of by-elections would be fought in an atmosphere of unremitting bitterness—a bitterness which would endure for years ahead. Secondly, we should see the humiliating spectacle of the district auditor trying to collect the money. It is not simply a question of sending out a bill and waiting for the cheque to come in.

Many of these councillors stand to be made bankrupt, to have their life savings taken away and their earnings attached, and to lose their possessions, even their homes. As I have said, most of them are not militant extremists. They are respectable men and women who acted on principled—though mistaken—notions of right and justice. Many of them have given a lifetime of service to local government, often at considerable personal cost and I cannot believe that Conservative Members would really want to collect the full pound of flesh from these people.

In any case, what would be the result? As I have said, the whole aim of the surcharge procedure is to collect the lost money. Even if we went through the process I have described, with bailiffs, bankruptcies, and so on, we should still not make up the lost rent income, or even a tenth of it. A deficit would remain to be met and, as the law stands, it would fall on the rates and hence largely, via the rate support grant, on the taxpayers. That is precisely what I wish to avoid.

The right hon. Gentleman said that the whole aim of the procedure was to recover the money. However, he has just said that one of the results of proceeding with the letter of the law would be the disqualification of the councillors concerned. Disqualification is not concerned with the recovery of the money. The disqualification is a judgment on the conduct of the councillors as such. Surely there is a difference here with which he should deal. Perhaps the right hon. Gentleman was intending to come to it.

I discussed the effects of the disqualification a minute or two ago when I referred to the effect on the councils concerned with the endless series of by-elections ahead. I said that I thought that that would create an atmosphere of unremitting bitterness which the House would not wish to see occur. The case against letting the law take its course seems to me to be overwhelming.

Another possibility would be to allow the putative surcharges—the amount of rent income lost by late implementation —to become a charge on the central revenue and be met by the national taxpayers. We are wholly opposed to this. It would be quite wrong for the taxpayers to foot this bill, and we are determined that they should not. I shall explain this point in some detail later. It is for these reasons that we have chosen the solution set out in the Bill. I shall be interested to hear the Opposition's alternative.

I have dealt so far with the generality of councils involved in the present situation. I turn now, the hon. Member for Derbyshire, South-East (Mr. Rost) will be glad to hear, to one particular and difficult case—that of Clay Cross.

This case is different in one essential respect. Unlike all the other councils involved, the Clay Cross councillors have already been surcharged to the tune of £7,000—a surcharge arising from the extraordinary audit of their accounts carried out in November 1972—and they have already been disqualified from office.

On Clay Cross we have taken two decisions. First, we do not intend, despite the resolutions at the Labour Party Conference, retrospectively to annul the £7,000 surcharge, nor to use public funds to discharge the financial liabilities incurred by those councillors. The surcharge was a decision upheld by the courts, and we have no intention of retrospectively upsetting such a decision of the courts. So, contrary to some public comment, but fully in line with the advice given by my right hon. and learned Friend the Attorney-General, there is no indemnification for this surcharge and no recompense from public funds. The money to meet the surcharge will not be found by the Government, nor by the ratepayers of North-East Derbyshire. It must be found from private sources or the surcharge will stand.

Secondly, the disqualification. My right hon. Friends the Lord President of the Council in October 1973, the Foreign Secretary in January 1974 and the Prime Minister in this House in April 1974 had already committed a Labour Government to shortening the period of disqualification which the councillors have suffered as a result of the surcharge. This Bill carries out that commitment. [Hon. Members: "Why?" That is what I am about to attempt to explain to the House.

This decision has been widely criticised both as retrospective and as an undue interference with the judiciary. But it is not retrospective. By the time that the Bill is passed, the councillors will already have been disqualified for a considerable period, and no one can retrospectively alter that.

As to the rule of law, if we had tried to reverse the High Court judgment and rescind the surcharge, criticism would surely have been valid, though I shall remind the House in a moment that a past Conservative Government did exactly that in 1927 in very similar circumstances.

The surcharge of £7,000 still stands. But we propose to terminate the disqualification when this Bill becomes law, partly because we consider it wrong for the Clay Cross councillors to remain disqualified for failure to implement the Act when other councillors are released by this Bill from the threat of disqualification, and in order finally to get the bitterness and rancour out of this whole situation.

No. I propose to finish this passage on Clay Cross and then I shall give way to my hon. Friend.

I would remind the critics of this decision that when the Housing Commissioner was finally sent into Clay Cross, The Times, which has thundered so heavily against our proposals, editorialised as follows:
"Once the case"
—that is, Clay Cross—
"had become an isolated one, it would have been better to stop the arrears mounting up, for they could only add to the drama of the affair…The surcharge is a necessary weapon of last resort, but it is unwise for a Government unnecessarily to give anyone the opportunity of making a martyr of himself."
Unfortunately, that is precisely what the Conservative Government did. I would also remind the critics that, if Clay Cross had been in Scotland, these councillors would not have been disqualified, for in Scotland no disqualification attaches to a surcharge, whatever its size.

Does my right hon. Friend, as a relatively fervent admirer of the EEC and European rights, understand that the striking out of the Clay Cross appeal in the High Court by Mr. Justice Megarry, on the one hand, and, on the other hand, the auditor surcharging these people £6,985 is a violation of Article 21 of the Universal Declaration of Human Rights? My right hon. Friend said that this could not have applied in Scotland. Does it not strike him that in this European context it could not apply either?

I am happy to say that my right hon. and learned Friend the Attorney-General has just returned from Strasbourg and he will be better informed on these matters than I can possibly claim to be.

I look on this decision as an act of partial amnesty. I believe that it is now time to close this miserable chapter in the history of our local government and to wipe the slate clean so far as the defaulting authorities are concerned. This, as I have made clear, does not mean wiping out the lost rent income at the taxpayers' expense. Rather it means giving the local authorities a second chance to recover the rent income lost by their default. I believe that any responsible Government, of whatever persuasion, would have come to the same broad conclusion.

There are worries—I profoundly respect them, and here I answer my hon. Friend the Member for Liverpool, Toxteth (Mr. Crawshaw)—about whether we are setting a dangerous precedent which might encourage others to break the law in future. The question is this: is this one of those exceptional cases where to apply the full rigour of the law would be neither just, compassionate nor sensible?

I am not making a party political point here, but I note that historically, contrary to what the Leader of the Opposition said in her outburst last Friday, the Conservative Party has more than once followed this principle. I quote three examples. First, the events—not dissimilar—leading up to the Audit (Local Authorities) Act 1927. Surcharges far beyond the means of the councillors involved had been made by the district auditor at the London boroughs of Poplar, Bethnal Green and Woolwich. This was part of the continuing story of what came to be known as "Poplarism". Faced with the probable imprisonment of 97 councillors and the wholesale annihilation of these three councils because of the bankruptcy of their members, Mr. Neville Chamberlain, then Minister of Health, could as little stand idly by as I can today. The 1927 Act therefore contained what he himself referred to as an "indemnity clause" which he introduced in these words:
"I might have left them"—
these 97 councillors—
"to their fate. I have not taken that view…one might fairly take the opportunity of wiping the slate clean as far as the past is concerned. and giving the benefit of the doubt to those particular cases."—[Official Report, 15th June, 1927; Vol. 207, c. 1033.]
So Mr. Neville Chamberlain removed the surcharge—incidentally, first imposed during a previous Parliament—and the threat of imprisonment, referring specifically to the need to exercise clemency in such a situation.

Secondly, the wartime Government of Sir Winston Churchill, no enemy of the rule of law—

Before my right hon. Friend leaves that important matter, I should like to point out that Mr. Chamberlain said that he removed the surcharge on the Poplar councillors because there was a reasonable element of doubt which could have been in the minds of the councillors because the Court of Appeal had overthrown the district auditor's view and sided with the councillors. As there could be a reasonable doubt among the councillors, he said that he was prepared to remove the surcharge on them.

With great respect, my right hon. Friend is not factually correct. After the case had gone to the Court of Appeal, it went to the House of Lords, a higher court, which sided with the district auditor and decided that the surcharge was correct. Therefore, Mr. Chamberlain changed the law in such a way as to overthrow a decision of the House of Lords.

I propose to complete the precedents and then if the hon. Gentleman wishes me to do so I shall give way.

Secondly, there is the example of the wartime Government of Sir Winston Churchill—by no means an enemy of the rule of law—and the Betteshanger miners in 1941. Again, adherence to the letter of the law would have led to an impossible situation. Four thousand miners were on strike in Kent, and under the National Arbitration Order the strike was illegal. Prosecution of 4,000 men was in practice impossible. The local gaol could accommodate only a few at a time, and it would have taken years to work through the list. So a compromise was reached, the production of coal resumed, and the case was quietly forgotten.

I say nothing of the case, of which no doubt we shall hear from the lawyers on the benches opposite, of the five dockers and their mysterious rescue by the Official Solicitor. When the Leader of the Opposition last Friday described the Clay Cross affair as being
"like something by Conan Doyle or Agatha Christie",
I thought how much more aptly that description would apply to the bizarre actions of the Official Solicitor.

I take as my third example the action in 1971 of the Conservative Secretary of State for Wales, the right hon. and learned Member for Hendon, South (Mr. Thomas), who, using his powers under Section 228 of the Local Government Act 1933, retrospectively sanctioned the illegal expenditure on school milk of Merthyr Tydfil County Borough.

In each of these cases a sense of proportion and fair treatment prevailed. In each of them a way forward had to be found which least damaged the national interest and the rule of law. In each case a way was found.

I said that I would give way. I propose to finish this sentence about the precedents and I will then do so.

In each case a way was found, and in each case I find it impossible to believe that the rule of law was in any way undermined as a consequence.

The right hon. Gentleman will be aware that there was provision by statute for the Minister to take a certain course, and for the course which I took, in respect of school milk. However, there is no such provision by statute in respect of a deficiency found under the Housing Finance Act. Does the right hon. Gentleman agree with regard to the examples which he has given that in 1927, in particular, if one incurred a civil debt one was liable to imprisonment if it was not paid? That is very different from what we are considering today. When the penalty for a councillor for failing to obey the law can be disqualification, why is that penalty to be removed by this Bill?