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Commons Chamber

Volume 893: debated on Monday 9 June 1975

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House Of Commons

Monday 9th June 1975

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Industry

Shipbuilding And Aerospace

1.

asked the Secretary of State for Industry if he can now give a timetable for the implementation of the Government's plans for the nationalisation of the shipbuilding and aerospace industries; and if he is yet in a position to give an estimate of the cost to public funds.

We intend to do our utmost to see that the Shipbuilding and Aircraft Industries Bill is made law in the present Session. As I explained to the House on 17th March, it would not be appropriate to estimate the costs at this stage because of the large number of unquoted securities to be acquired.

Does the Secretary of State not agree that, although he has, as usual, neglected to answer the question about the cost, it is quite obvious that the British aircraft industry has not failed the nation and that, therefore, he should drop the disruptive proposals for nationalisation? Better still, in view of the decisive rejection by the British people last week of one of his other crackpot proposals, should he not resign?

I need not explain to the House the Government's commitment to the implementation of their excellent election programme, which they put before the people twice last year and upon which they were elected. If the hon. Gentleman really believes that what happened last week represented an election victory for the Conservative Party he may have misunderstood the results.

Is my right hon. Friend aware that his answer today will be greeted with much happiness by people who work in industry and who are extremely anxious to see these plans carried through as soon as possible? Is he further aware that at present delay is causing great concern to all aspects of the industry, and that the sooner this measure gets on the statute book the better?

I agree with my hon. Friend that, whatever political view there may be about the measures that we are pledged to introduce, there is general agreement among management, unions and workers that the uncertainty is damaging. Therefore, when I answered the Question I made it clear that we intend to proceed in accordance with our pledges to the British people.

Will the right hon. Gentleman not reconsider his proposal, particularly in regard to ship repairers? I have in mind particularly Bristol Channel Ship Repairers Ltd., which operates from small yards in South Wales and which depends on a specialist connection? Does he not agree that there is no case whatever for nationalising this firm?

The hon. and learned Gentleman will know that the ship repairing industry was included in our proposals, but I am not surprised that he had Bristol Channel Shiprepairers in mind, as that company has spent, perhaps, £500,000 drawing the position to the attention of the people.

Is the Minister aware that Hawker Siddeley shop stewards in my constituency have no doubt whatever about his sincerity and determination to carry out the measures? They are worried about future orders when we are in this position. Therefore, will the Minister please bear in mind that the HS146 is a good aircraft and that they want to build it?

I am very well aware of the anxiety among Hawker Siddeley workers about the HS146, which my hon. Friend will know was dropped by Hawker Siddeley and not by the Government. One of the reasons we are anxious to proceed is that we want to remove the uncertainty and to look at the future of the industry. Meanwhile, the House knows that we are making arrangements to ensure that in the interim the damage is minimised. I shall shortly be making a statement about the underwriting of one foreign order to ensure that it does not go by the board before the Bill is completed.

Does the Secretary of State for Industry agree that the one lesson of last week is that the country is tired of the doctrinaire and divisive policies that are associated with his name? Does he not understand that the saving of £300 million that could be achieved by dropping this measure is the easiest way of giving confidence to the industry and of restoring the prospects of employment in it?

It is comments like that that make it increasingly difficult for me to take the hon. Gentleman seriously as a Shadow Minister.

Motor Vehicles

2.

asked the Secretary of State for Industry what his present estimate is of the export market for British cars and commercial vehicles to the EEC in 1975 and 1976.

Official forecasts of car and commercial vehicle exports by destination are not prepared. Despite depressed overseas demand, exports of these products to the EEC in the first four months of 1975 were 17 per cent. higher by value than in the same period last year.

Does not the Minister agree that in order for the country to achieve the targets of car exports to the Continent laid down, for instance, in the Ryder Report, the Government must do something about the rate of inflation in Britain? In that connection, will he tell us what the present rate of inflation is, compared with the estimate of 221 per cent. in the Ryder Report for the year ending September?

The hon. Gentleman is well aware of the present position on the question of inflation. Our concern in motor vehicle production is to ensure that there is a level of investment, particularly in British Leyland, over which we have more direct influence, to ensure that labour productivity and capital productivity may be greatly increased. It is our firm belief that if this is done the increase that Ryder sees in exports to the EEC, from 3 per cent. to 4 per cent. of the market, in a rising market, can. and indeed will, be achieved.

Will my hon. Friend turn his attention to a far more important export question, namely, the grotesque imbalance in trade in motor cars between this country and Japan? Will he make an immediate investigation—and inform his right hon. Friend of the results of it—to determine precisely what harmful effects this is having on the British motor car industry?

As my hon. Friend will know, the Society of Motor Manufacturers and Traders Ltd. has made an anti-dumping application in respect of Japanese car imports into this country. We are indeed reviewing that with all urgency. I ask my hon. Friend also to take into account that, although there has been a large increase—as he would say—of 88 per cent. or so in the level of Japanese imports compared with a year ago, there has been a similar marked rise in British exports to Japan of all manufactured goods.

British Steel Corporation (Chairman)

3.

asked the Secretary of State for Industry if he will now dismiss the Chairman of the British Steel Corporation.

Does my right hon. and much-maligned Friend—much-maligned by the media, that is—agree that Monty Finniston may well be hoping that my right hon. Friend the Minister will be sacked? In that event Monty Finniston may be hoping that he can resurrect the idea to sack 22,000 steel workers and also refer back to the proposal to denationalise the steel industry once the taxpayer has put it on its feet?

My hon. Friend knows that my sole concern in this matter was that the board of the British Steel Corporation should discuss fully with the trade unions concerned the problems caused by a downturn in the steel industry. I am very happy to say that out of the talks that took place in London between the TUC Steel Committee and the board of the British Steel Corporation the proposal for the 20,000 redundancies this year was dropped. That was my sole concern. The other matters that my hon. Friend raised are not for me.

How does the Secretary of State reconcile the Government's stated intention that nationalised industry should behave commercially and without undue subsidy with his own decision to interfere directly in the operations of the BSC? Is he so far removed from the chairman of the corporation that he must carry out his negotiations with him by public correspondence?

If the House considers the latter point carefully it will appreciate that there is some merit in trying to get away from the private arm-twisting that has occurred under all Governments and to bring some of these issues into the open. The hon. Gentleman is wrong in supposing that I did more than suggest to the chairman that he should discuss these matters with the trade unions concerned, and not with me. I did not discuss the matters with him. I remind the House that when the steel corporation last cut back in production in 197172 and made closures it led to the massive imports last year that came in because the steel capacity was not there to meet the demand.

4.

asked the Secretary of State for Industry what further discussions he has had with the Chairman of the British Steel Corporation; and if he will make a statement.

15.

asked the Secretary of State for Industry what plans he has to meet the Chairman of the British Steel Corporation.

I last met Sir Monty Finniston, the Chairman of the British Steel Corporation, on 28th April. No date for a further meeting has yet been arranged.

Is my right hon. Friend aware that the central issue in the steel industry is one not of personality but of policy and that the steel corporation, in its understandable search for commercial viability, must not be allowed to imperil the jobs of steel workers in efficient steel firms like those at Stoke-on-Trent, nor must it be allowed to place Britain in an unduly dependent position with foreign steel works?

I make no apology whatever for having deliberately sought to ensure that the interests of British steel workers were taken into account fully by the board of the British Steel Corporation, for considering fully the implications on steel communities that depend on steel plants, and for trying to take a longer view ahead than some might think or appear to think necessary to safeguard our steel capacity, so that when world upturn comes that capacity will be there to meet it.

Recalling the recent confrontation between the Secretary of State and the Chairman of the British Steel Corporation, may I ask whether the Minister is now satisfied that the chairman continues to have that freedom and day-to-day responsibility which is necessary to run a competitive and profitable steel industry?

The hon. Gentleman speaks of confrontation, but he should not be guided entirely by what was reported. The chairman, who has total freedom of speech—I fully support that, and always have done—made a statement which caused great anxiety among steel workers and in steel communities. I asked him to see me, and at my meeting with him I asked him to have consultations with the TUC Steel Committee about the matter. That was what happened. The accounts given in the Press were ill-founded, for at no stage did I do more than seek to ensure that a nationalised industry chairman had good working relationships with his own employees, and I believe that that commanded wide support in the industry and outside.

Will my right hon. Friend say that before making important decisions affecting the steel industry he will always consider the views of the TUC Steel Committee, and particularly those of its chairman, Mr. Sirs, whose views are greatly respected by the members of our Parliamentary Steel Group?

I am grateful to my right hon. Friend for what he said. I maintain the closest contact with the TUC Steel Committee. I saw the confederation, and it was with its good will that I urged the chairman of the steel corporation to discuss these matters with the steel workers and not seek to push through a proposal that did not have their understanding and agreement.

I appreciate that the Secretary of State may not have further oportunities to meet Sir Monty Finniston, but will he nevertheless assure the House that he or his successor will try to meet the Chairman of the British Steel Corporation less frequently—perhaps once a year—and allow the BSC to get on with its day-to-day management unhindered?

It is a good thing that the community interest, like the interest of the trade unions concerned, should be reflected in tripartite meetings taking place between the Minister, the board of management, and the workers concerned. Although I appreciate that the hon. Gentleman put his question in fun, I do not think it is sensible that there should be a division between a nationalised industry and the sponsoring Minister, and it is even more undesirable that there should be a gap between the board of a nationalised industry and the workers, who, after all, create the wealth in the industry.

Does my right hon. Friend accept that there has been a longstanding tradition for the corporation to take carefully into account proposals from the people employed in the industry and that throughout the steel areas his own intervention and his insistence that the corporation and its board should again, on this occasion, carefully consider the alternative proposals put forward by the steel committee have been welcomed? Will he now further consider advising the steel corporation, in co-operation with the trade unions, that there should be a policy of stocking certain quantities of steel so that when the upturn comes British steel could be drawn upon and that some of those stockholders of steel who ordered great quantities of foreign steel last year should curtail some of those orders and not continue with their orders abroad, but switch some of those orders to our own steel corporation and private steel companies?

I am grateful to my hon. Friend for what he said about the attitude of the trade unions, which, throughout—there is a long history in this matter—have been entirely constructive in their approach to the British Steel Corporation. I think that a measure of their constructiveness can be found in the fact that the BSC board accepted their recommendations.

As to the matter of stockpiling, we are considering it. If a stockpiling scheme were to be introduced I would want to be sure that its employment implications were favourable. There are various types of stockpiling, some of which could be more favourable in that respect.

Rb211–524 Engine

5.

asked the Secretary of State for Industry when he will be in a position to announce further funding for the RB211–524 engine to be jointly developed by Boeing and Rolls Royce (1971) Limited; and if he will make a statement.

The Rolls-Royce RB211–524 aero-engine is fully committed for use in the Lockheed TriStar. Rolls-Royce (1971) Ltd. has recently put forward fresh proposals for the use of the engine in the Boeing 747. These are being urgently considered and I hope to make a statement very soon.

Is my right hon. Friend aware that the formal Boeing deadline for co-operation in this programme runs out tomorrow? Can he assure us that the programme will not lapse through a too ready insistence by the Government on the two-order guarantee, and certainly that Rolls-Royce will not be asked to go along with this project for a few more weeks purely with its own money?

When will my right hon. Friend persuade his colleagues in the Cabinet that this is a most important project, not just for jobs but for the future of British technology in breaking into this great new market?

I appreciate the concern of my hon. Friend, of others in Derby, and of other Rolls-Royce workers who know how important it is that other applications for the engine should be developed. I am in very close touch with Boeing. I hope that we shall find time to complete these discussions. I am sure that the Cabinet and my colleagues are all well aware of the importance of this engine. I must tell the House that at any time the placing of any further order for the Boeing with that engine would, of itself, trigger off full development.

Is it true that the Minister has approved this loan but that it is awaiting Cabinet sanction because the Prime Minister has taken away from the Minister his executive powers to grant loans without Cabinet approval?

The hon. Gentleman must know very little about government if he thinks that any single Cabinet Minister would be in a position, without explicit Cabinet approval, to authorise the expenditure of sums of money running into tens of millions of pounds.

May I impress upon my right hon. Friend the importance of this development? Not only will it have a tremendous effect on the Rolls-Royce areas which are producing the engine; it will have a spin-off effect in my constituency, where there are Rolls-Royce factories in East Kilbride and in Blantyre?

Yes, I accept that. When it was originally decided to go forward with the RB211 the previous Government endorsed that decision in their arrangements, and we decided to authorise the engine with the TriStar—so successive Governments have shown that they are aware of the wide range of applications for this engine. It so happens that it is difficult that it should be happening at this time and that we should have to reach this decision when airline orders are a bit sluggish.

I understood the Secretary of State to say that Rolls-Royce recently put forward proposals. Is he aware that these proposals have been before his Department for over 18 months and that Rolls-Royce needs a decision? The lack of decision is costing Rolls-Royce and Boeing money. Will the right hon. Gentleman attend to the matter and look after the jobs of the workers who are waiting for the engines and the customers who want it?

The hon. Gentleman is unfortunately misinformed. Rolls-Royce made its proposals on 21st April. It made substantial amendments. It provided figures on which my Department could start independent calculations on 8th May, and the revised brochure putting forward its proposals was received on 16th May. The hon. Gentleman has, no doubt, been quite accidentally but wholly misinformed about this business.

Planning Agreements

6.

asked the Secretary of State for Industry how many major firms in the private sector have indicated support for the concept of planning agreements.

A number of views have been expresed both to my Department and in the media. They reflect a range of attitudes and concerns. The Government have said that they intend to extend their consultations with both sides of industry about the best means of implementing planning agreements. Firms will be better able to form a view as those consultations progress.

Does my hon. Friend accept that there is no area of our industrial policy on which the Opposition are less well informed than the degree of support for the concept of planning agreements? Does he recognise that amongst moderate opinion in this country there is a great deal of support for the development of planning agreements, which alone can set us on the path of economic recovery?

My hon. Friend is quite right. There can be no doubt that planning agreements are the best means of promoting the extra investment that this country desperately needs and for securing better industrial relations by widening consent through joint decision-making in industry. There is much wider support than the Opposition have indicated. After the White Paper was published in August last year, my Department discussed it with 13 of the largest manufacturing companies, of which nine generally favoured planning agreements.

Does the hon. Gentleman agree that there would probably be much more industrial enthusiasm for planning agreements if companies could look forward to the Government's being under a statutory obligation to reveal their plans for the economy and for particular industries?

The hon. Gentleman should well understand—since he has spent many hours in the Standing Committee considering the Industry Bill—that the Government have made it quite clear that they will provide short- and medium-term sectoral information to companies for the first time. This is of considerable advantage, and industry has told us how valuable it feels this will be.

Will my hon. Friend give us an assurance today that in the discussions which are likely to take place with the various interested bodies, particularly the CBI, there will be no retreat on the part of the Government in the face of the CBI's opposition? Will he also indicate that the views of his own hon. Friends on the Industry Bill Committee, calling for compulsory planning agreements for the larger companies, will be taken into consideration in relation to the whole question of the future of the Industry Bill?

I can certainly give my hon. Friend an assurance that following the consultations both with the TUC and with the CBI, which we have always been pledged to undertake, there will certainly be no secret changes. There will be full discussion in the light of any further representations that may be made to us by either side of industry, following the clarification of many points that have arisen in Committee.

As to the further matter, of compulsory implementation of planning agreements, that is a point which has been made to us, but the Government believe that as a result of the guarantees that we shall give under Clause 14 of the Bill the great majority of large companies will see that it is very much to their advantage to undertake planning agreements with the Government voluntarily.

Since the hon. Gentleman has made clear that the bulk of public companies have no objection to voluntary planning arrangements with the Government, does he not realise the damage caused by the Government's insistence on compulsory disclosure powers and the damage that this could do to many companies' overseas competitive positions?

Will the hon. Gentleman confirm that the suggestion in The Times today, that the Government may be prepared to drop these compulsory disclosure powers in return for voluntary planning agreements, is one which the Government will support?

The hon. Gentleman would be unwise to believe all he reads in the Press. I can certainly tell him that the Government have always been committed to the compulsory disclosure of information. It was in the White Paper, and we have not in any way departed from that position. The only change which was made—and that was in response to representations from bodies which included the CBI—was that we have deliberately separated the compulsory disclosure powers from those associated with the planning agreements, in order to meet the suggestion that planning agreements should be wholly and completely voluntary.

British Steel Corporation

7.

asked the Secretary of State for Industry if he will publish his current estimate of the British Steel Corporation's investment programme for the succeeding five years, together with totals of the work force required over the same period.

The latest forecast of expenditure on the British Steel Corporation's capital investment programme was published in January of this year in the White Paper on Public Expenditure to 1978–79, Cmnd 5879. The forecast carried the qualification that the phasing of the programme is under continuing examination by the corporation.

The corporation's development plans provide for a reduction in the number employed by the corporation from 225,000 at the present time to some 195,000 by the turn of the decade. These figures do not take account of further improvements in productivity which may be negotiated within the industry.

Does not that typically woolly answer hide the fact that the Government have spent 15 months trying to make up their minds about investment strategy as it affects Scotland and Wales? Does the Minister agree that we urgently need to hear the Government pronounce, given the confusion engendered by his right hon. Friend the Secretary of State, with all the queries and doubts he is raising about jobs lost within the EEC?

The Government have been carrying out the pledge which we made in successive election manifestos to undertake a full-scale review of the British Steel Corporation's closure and investment strategy. I do not believe that there is any delay or procrastination in the investment programme as a result of this review. All the major projects that were put to us last year—those that concern Teesside, Scunthorpe and Sheffield—have been authorised. The only major project put to us this year was that concerning Port Talbot. We received it at the end of January, but did not get the additional information required to take a view on it until the beginning of May. It is a major project, with implications for Shotton, but I believe that even on that we shall be able to reach a decision shortly.

Is my hon. Friend aware that many of the present difficulties of the corporation were caused by delays in approving investment proposals during the Conservative Government's period in office, up to 1974, and that had there been adequate investment then, not only would there have been more adequate steel supplies last year but employees in the steel industry would be in a much happier position today?

My hon. Friend is right. There certainly has been a marked lack of investment in the steel industry, particularly in the period before nationalisation. One of the great effects of public ownership will be to put the steel industry on a par with competitive industries abroad.

Industry Act

8.

askd the Secretary of State for Industry whether he will publish a further White Paper on the working of the proposed Industry Act.

The Government will consider the publication of a further White Paper on the working of the proposed Industry Act in the course of the review of the Bill which we have undertaken to carry out.

I am sure that the whole House will be interested to hear that remarkable revelation from the right hon. Gentleman. May I remind him that neither the Bill nor the White Paper makes any mention of the Government's intention to nationalise one or more of the main clearing banks? In view of the committee which the right hon. Gentleman is chairing outside the House tonight, will he say whether it is his view that the National Enterprise Board has powers to nationalise one of the banks?

As we say, that is another question. I invite the hon. Gentleman to consider very seriously whether a paper written in a party office and coming up to a party committee—a paper which it so happens I had not read until I saw a reference to it in The Times, a document of options—is legitimately to be taken as the subject of a supplementary question. The House will know full well that in our programme for Britain, which we published two years ago, the Labour Party indicated our preliminary thinking about the matter and said that further work would be done on it. The matter does not arise on the question the hon. Gentleman put, but all political parties properly undertake forward policy work and it would be a great pity if that work were not undertaken and the results put before political leaders for consideration.

Does my right hon. Friend agree that while the Industry Bill, the related White Papers and the paper he may publish, are all very important matters for proper discussion, all these things will come to naught if we ever repeat the disastrous experiment which ended up in Britain's being put on a three-day working week, for which we are still paying a very heavy bill? Conservative Members should concentrate on that and the damage they have caused this country when they try to anticipate any evils that this Government may do.

The House knows that this country's manufacturing industry suffers from a period of decline that has gone on for some time. That decline is due partly to a lack of adequate investment and partly to a failure to make necessary reforms in industrial policy. Undoubtedly, the final few weeks of the siege economy we inherited from our predecessors made it worse.

Will the right hon. Gentleman answer the question put to him by my hon. Friend the Member for Canterbury (Mr. Crouch)? Do the Government intend to use the powers taken in the Industry Bill to nationalise a major bank? Do they intend to nationalise a major insurance company? If the powers exist—as it has been admitted in Committee they do—are we now to assume from the right hon. Gentleman that the Government have no intention of using them?

European Community (Industry Ministers)

9.

asked the Secretary of State for Industry when he next expects to meet other Ministers for Industry within the EEC.

11.

asked the Secretary of State for Industry what plans he has to meet his opposite numbers in the other EEC countries' Governments in the near future.

I hope to meet the Ministers with industrial responsibilities in all the Common Market countries as soon as possible.

What do the industry Ministers of the Eight think of the view of the Secretary of State that Britain's membership of the Community has cost us 500,000 jobs, and will cost us another 500,000? If the right hon. Gentleman still holds that view, how can he with any honour remain a member of this administration?

The hon. Gentleman may somewhat misunderstand the process of the referendum. The degradation and humiliation of members of the present Government who took the view that I took ends with the people's vote. It does not begin with it. The thing that was hardest to take was to be a member of the Community on the diktat of a Prime Minister of a previous Government without the assent of the British people.

I have already this morning telephoned Mr. Spinelli, the industrial Commissioner in Brussels. He has suggested that he comes to London on Thursday for talks—a suggestion which I greatly welcome. I have already made informal contacts with the TUC and the CBI, because many people in this country are anxious about unemployment and will expect a British Government, now put into the Community by the British people, to work for the safeguarding of employment prospects and their interests within the Community.

Will my right hon. Friend now give an unqualified and unreserved assurance to the House that he will work unremittingly with our friends in Europe to ensure the success of our continued membership of the Common Market?

As I have just told the House, I have made contact with Mr. Spinelli. I have also written letters to my colleagues in the other Common Market countries. I do not require lessons in political morality from an hon. Member who regularly signs the oath of allegiance and continually snipes at the Royal Family.

Even if the Secretary of State wishes to dodge giving an exact and clear answer to the first supplementary question, will he at least explain to the other EEC industry Ministers, when he next sees them, why he thinks the British public overwhelmingly and decisively rejected his ludicrous assertion that unemployment of half a million was due to our membership of the EEC?

I do not believe that this is the right place to refight the referendum campaign, but I do not apologise to the House for putting forward views that were honestly held in a referendum which I had played some part in bringing about. Having said that, the British people have invited the British Government to work constructively within the Community to safeguard their interests, to safeguard their jobs, to see that the policy of the present Government is implemented, and to work constructively within the Community. I shall do my best to do those things.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the right hon. Gentleman's reply I beg to give notice that I shall seek to raise the matter on the Adjournment as soon as possible.

In view of the many statements that were made during the referendum campaign to the effect that staying in the Market would safeguard industrial jobs inside the United Kingdom, will the right hon. Gentleman, at his first meeting with the EEC industry Ministers, discuss the possibilities of increasing investment to help extend the manufacturing base in Dundee, in view of the loss of 800 manufacturing jobs in NCR plants in Dundee, notice being given on polling day? Will the right hon. Gentleman make an early statement on this matter?

The hon. Gentleman's anxiety about jobs is shared widely throughout the United Kingdom, but it may well be that this anxiety is one that I shall need most carefully to assess and express. I am happy that I shall have an opportunity to do so. I have already made initial contact with the chairman of the Finance Committee of the TUC. I shall take the opportunity of discussing these problems not only with the British trade union movement but with trade unions in all other countries in the Community.

Does my right hon. Friend concur that most of his duties are involved in discussions with trade unionists and not with Ministers in the EEC? As my right hon. Friend has established excellent relations with trade unions, will he note that many of us would strongly resent any removal of him from his present post and any appeasement of City gentlemen who are clamouring for his head on a plate? It is said that if that does not take place the City will not play. I quote Mr. Horace Cutler.

It is my intention—this is why I spoke to Jack Jones in this sense—that my contacts, which have been close, with the trade unions in this country should be extended to link with the trade union movements of other countries. Having said that, if the Opposition want my head on a charger the leader of the Conservative Party will have to be a lot more seductive as a Salome than she has been so far.

Manufacturing

10.

asked the Secretary of State for Industry if he will publish figures, for actual and anticipated investment in manufacturing industry in 1973–74, 1974–75 and 1975–76.

Investment by manufacturing industry, measured at 1970 prices, amounted to £1,975 million in 1973–74 and £2,110 million in 1974–75.

The results of the latest survey by my Department of manufacturers' investment intentions, covering calendar years, are published today and suggest that the volume of investment by manufacturing industry in 1975 could be of the order of 15 per cent. lower than in 1974.

Does the Secretary of State not appreciate that investment in industry depends on confidence in industry? He suggests that my right hon. Friend the Leader of the Opposition has not been seductive enough. When will he become seductive enough to encourage industrialists to invest in this country without being clobbered in terms of his wish to nationalise industry?

I think that many of us have been disappointed in the investment record of manufacturers in this country for a number of years. That applies all the more when we compare our record with what is happening in other countries. No doubt that is why the Conservatives introduced the Industry Act 1972. That is why we have put forward an Industry Bill this year to establish a National Enterprise Board and to bring about the system of planning agreements. We have done so because we believe—I am sorry that I probably do not carry the Opposition with me—we can increase investment in that way.

With what degree of accuracy can we regard the estimates for 1975–76 in view of the unfortunate fact that private industry is still too dependent upon the whim of the private investor, far too many of whom appear to be too willing to take money out of industry and to invest it elsewhere?

The results for 1976 are necessarily more tentative, but they suggest that the figures will be of the same order as 1975. We hope that before then the plans which we have put before the House will be implemented in the form of an Act of Parliament and that they will inspire a great deal more investment than we have had over the past few years.

Is not the real reason for the Secretary of State's head being on a charger that, in fact, the answer given by his hon. Friend the Under-Secretary of State is not the full answer, in that today his Department published its assessment of investment intentions which are 15 per cent. down for 1975 and provide for no recovery in 1976? Is that not a clear indictment of the Secretary of State's stewardship and an indication of the need for a change?

I have already said in my initial answer that we expected the figure to be 15 per cent. lower than the 1974 figure. I have also indicated why, in two General Elections, we felt it necessary to put forward some substantial changes in industrial policy. That is why we are pressing ahead with those measures as fast we we can.

Is my hon. Friend aware that the construction industry is one of the major transgressors of all British industries, in that it exports capital abroad to build, principally in the Common Market countries? Does my hon. Friend agree that we need investment in building in this country and not in building office blocks in Paris and Brussels? Will my hon. Friend ensure that some curbs are put on the building industry so as not to allow it to take money out of this country for that purpose?

The latter part of my hon. Friend's question, regarding exchange control, is a matter for my right hon. Friend the Chancellor of the Exchequer. Like everyone else, I am much more concerned that the construction industry should be involved in substantial works in industry in this country rather than in speculating, no matter whether it be in this country or abroad.

British Leyland

12.

asked the Secretary of State for Industry if he will give his latest estimates for the numbers of people employed and the capital investment required in British Leyland for the next three years.

31.

asked the Secretary of State for Industry if he will give his latest estimate of the investment and employment needs of British Leyland.

Sir Don Ryder's report about British Leyland, which the Government have accepted as a basis for future policy towards that company, sets out estimates of the company's future capital expenditure requirements. The company's future employment needs will be a matter for discussion between the work force and the management.

Does the Minister agree that sums coming from the Government can be raised only by taxation imposed upon private individuals and private firms, and that the burden of that increased taxation is likely to drive many private individuals and private firms out of business? Further, does the right hon. Gentleman agree that as a result more jobs will be lost by this support operation than may be preserved by it in the short term?

I do not agree with the hon. Gentleman. The firm in question is responsible for £500 million worth of exports, upon which our capacity to continue as a major manufacturing nation depends. A large number of jobs are at stake both in British Leyland and in the various sub-contracting firms. I believe that what we have done in deciding to jobs and re-equip British Leyland for the future was right. I wish that the CBI, in its general approach to our industrial policy—whatever the general criticisms in any individual instance—would recognise that the firm, including the professional management, sees the merit of what we are putting forward. I wish that this approach to British Leyland had found a much wider favour among British industrialists.

Will my right hon. Friend make a statement on the important question of industrial democracy and worker participation—a matter touched upon but not developed in the Ryder Report?

My hon. Friend has heard my comments about industrial democracy. It is an important idea. It is a wind of change blowing through British industry. I do not believe that it can be captured and frozen into a single manifesto statement or clause in an Act of Parliament. In general, what is happening is that the people who invest their lives in industry expect to have as much control as those who invest their money. Therefore, I am in full accord with the general proposition advanced by my hon. Friend.

Will the right hon. Gentleman reconsider the decision to give long-term investment to British Leyland and also reconsider giving short-term loans to British Leyland, so encouraging the firm to stand on its own feet and conduct its own financing?

I do not think that that general proposition relates very closely to the problems of a major world motor car company—a company which, as the Ryder Report made clear, has suffered a systematic decline in investment and a company which requires substantial sums of public money to get itself on its feet again. I do not believe that the hon. Gentleman's proposition is either sensible or realistic.

European Court (Interpretation Procedure)

63.

asked the Attorney-General whether he is satisfied with the procedure under which United Kingdom courts of justice may request the European Court to rule on points of interpretation.

Is not the Attorney-General gravely concerned that there are now serious areas of uncertainty in our law in relation to Common Market law, as instanced by that distinguished authority Lord Diplock in his remarks to a Select Committee? Will the right hon. and learned Gentleman and his colleagues encourage our courts to increase their reference to the European Court to help remove the area of uncertainty?

It is a matter of discretion for the courts in the majority of cases—though there is an obligation in some cases—whether they refer to the European Court a matter which raises a point of Community law. It is not for me to urge them or to press them to do so. I have no doubt that where necessary they will continue to do so.

Has the right hon. and learned Gentleman yet given consideration to the judgment of the European Court of Justice on the second question referred to it by the Chancery Division of the High Court, in the case of van Duyn v. the Home Office, to the effect that directives made under Article 189 can be directly applicable in member States in the case of individual rights? Do Her Majesty's Government propose to make recommendations to the Commission in regard to the formulation of directives following that important judgment?

That is not a matter for me, but I shall see that my colleagues are made aware of the right hon. and learned Gentleman's remarks.

Departmental Inquiries

64.

asked the Attorney-General what further inquiries undertaken by his Department have not yet been completed.

69.

asked the Attorney-General what is the number of inquiries undertaken by his Department that have not yet been completed.

It is not clear to me what type of inquiries my hon. Friends have in mind. My Department rarely undertakes inquiries.

Will the Attorney-General say whether the Poulson inquiries are still continuing? Has he seen the letter in The Times today from Mr. Muir Hunter, counsel for the Poulson creditors, about remarks concerning outstanding materials still to be quarried? Does he still hold the view which he expressed last November, when speaking to the Oxford Labour Club, that 300 people have question marks over their names arising from the Poulson inquiry, including, presumably, the Shadow Foreign Secretary?

The answer to the first two questions put by my hon. Friend is "Yes". The answer to the third question is that the number of 300 has in the meantime diminished.

Since the Attorney-General's Department is responsible for inquiries conducted by the Director of Public Prosecutions, and since that Department plays a vital rôle in maintaining public confidence in the administration of the law, will he assure the House that the DPP's office will be adequately staffed and will have a structure to ensure that it can fulfil its rôle efficiently and speedily?

There is great difficulty in filling the legal establishment of Government Departments generally, and particularly the one which my hon. Friend mentioned. I am grateful to him for giving me the opportunity to say that work of that kind is extremely rewarding.

Will the Attorney-General make clear his function and that of the DPP in this matter? Is it not correct that the DPP conducts no inquiries himself but may direct that inquiries be conducted? There seems to be a great deal of ignorance in the House as to the exact functions of the Attorney-General's Department and of the DPP in relation to inquiries of this nature.

The inquiries are of various kinds in relation to the Poulson case, to which I assume the hon. and learned Gentleman is referring. Such inquiries may be conducted by the Department of Trade or by the police. The Director of Public Prosecutions advises, and in necessary cases conducts the prosecution.

British And European Courts

65.

asked the Attorney-General whether he is satisfied with the co-ordination between British courts and European courts.

Does not the Attorney-General agree that, for example, the absence of legal aid in the European Court is a serious shortcoming in the free availability of justice? Does he propose to make representations about the matter or to take any action?

I am grateful to the hon. Gentleman for making that proposal. I am aware that there are many instances where the legal aid that is available in our courts is not available in the courts of other European countries. The hon. Gentleman referred to the European Court. These obviously are matters which should now be looked into.

Small Claims Courts

66.

asked the Attorney-General if he will introduce legislation to extend the system of small claims courts which exclude legal representation.

No, Sir. My noble Friend the Lord Chancellor is satisfied that the county courts, in which a new procedure to deal with small claims was introduced in October, 1973, meet the need for a forum for the disposal of small claims. The rules discourage legal representation in those cases where it is uneconomic or unnecessary.

Does my hon. and learned Friend not agree that the £75 limit for small claims in the county court is far too low? Does he not agree that it should be possible for claims involving sums larger than £75 to go to court without fear of having to meet the costs of lawyers engaged by well-heeled opponents? Is it not time that a Labour Government made civil claims open to all, without involving the fat fees which are so often payable to members of the legal profession?

My noble Friend the Lord Chancellor has invited the County Courts Rules Committee to consider increasing the £75 limit, and that will go a long way to meet my hon. Friend's point.

Writs And Summonses

67.

asked the Attorney-General how many and what percentage of cases commenced by the issue of a writ or summons failed to reach trial in each of the last three years for which records are available.

About 1¾ million civil proceedings—not including divorce—are started annually in the High Court and county courts. Each year, about 45,000 are tried and nearly 1¾ million disposed of without trial. Records do not show, of the cases tried or otherwise disposed of in a year, what proportion was instituted in that year or in any other given year.

Is my hon. and learned Friend aware that some years ago I was promised that statistics would be made available concerning those cases which settle at the door of the court, with the result that a vast amount of time and expense is wasted? Will he ensure that those statistics are made available as soon as possible, so that justice may be done far more swiftly and cheaply than is the situation at present?

I shall bring my hon. Friend's comments to the attention of my noble Friend the Lord Chancellor.

Railway Accident, Nuneaton

(by Private Notice) asked the Secretary of State for the Environment whether he will make a statement about the railway accident which took place at Nuneaton on Friday morning, 6th June.

Yes, Sir. At 01.57 on 6th June 1975 the 23.30 Euston to Glasgow sleeping car train became derailed on the approaches to Nuneaton station. The derailment started on a section of line on which alterations to the track were being made, and which was subject to a temporary speed restriction of 20 miles per hour.

The train was headed by two electric locomotives. These became detached from the train, the second one ending up across the down platform. Behind them, all but the last of the 15 vehicles in the train became derailed and several of the sleeping cars zig-zagged and were severely damaged.

I regret to inform the House that, according to my latest information, six people lost their lives in the accident and 38 were injured. Of the injured, 10 are still detained in hospital. I am sure the House will join with me in expressing condolences to the bereaved and injured.

An inspecting officer of railways from the Department went to the site immediately the accident was reported and examined the situation together with the railway officers.

An internal inquiry by British Railways opened this morning. This will be followed as soon as possible by a public inquiry, which will be conducted by Major C. F. Rose, an inspecting officer of railways. The date and place of his inquiry will be announced shortly.

May I, on behalf of the people of Nuneaton and, indeed, the whole House, express my deepest sympathies to all those who suffered in any way as a result of this tragic accident? May I also pay tribute to the work of the emergency services involved—the police, fire, hospital and voluntary services, particularly the WRVS?

While welcoming my right hon. Friend's statement about the inquiry, may I ask whether he agrees that, instead of some of the widespread speculation which has taken place about the cause, in the interests of the railway industry, the travelling public and all those involved, it would be far better to await the outcome of the inquiry?

I am very much obliged to my hon. Friend for his comments. He has given extremely sound advice in advising all to await the outcome of the inquiry. But, as in similar matters, I have no influence over what the media report. I am sure that the House will want to endorse my hon. Friend's very proper tribute to all those involved in the emergency services.

May I, on behalf of the Opposition, extend our sympathy to the bereaved and wishes for a speedy recovery to those who have been injured? We are particularly glad to see the right hon. Member for Workington (Mr. Peart) here and to know that he escaped serious injury.

Does the Minister accept that it is imperative that the travelling public be reassured that the warning system for speed restrictions on any section of line is an efficient as possible? Will he make representations to the British Railways Board to ensure that any improvements are carried out immediately, not after the two inquiries about which he has spoken?

I am sure that the British Railways Board will want to take any action that seems appropriate without waiting for the inquiry. But it would be wrong to prejudge the inquiry by assuming that the accident was due to any particular cause. I thank the hon. Gentle- man for his kind references to my right hon. Friend.

Does my right hon. Friend accept that the National Union of Railwaymen will also wish to be associated with the expressions of condolence to the relatives of the bereaved and to extend its own good wishes for a speedy recovery to those who have been injured?

When temporary speed restrictions are in force or are enforced at short notice it is the practice of the British Railways Board to ensure that each train approaching such a restriction is warned, usually by means of a hand signal and a detonator. Will my right hon. Friend consider extending that safety provision to all temporary speed restrictions, particularly on high speed main lines?

I think that my hon. Friend is getting a bit involved in what would be a proper subject for the inquiry. The inquiry, as well as establishing as far as possible the cause of the accident, will also have power to make recommendations, if it sees fit, as to how similar events might be prevented in future.

Does the Minister accept that many right hon. and hon. Members on both sides of the House frequently travel on that particular train and have a very high regard for the sleeping car attendants and catering staff for the services that they have provided for many years? May I ask the right hon. Gentleman to express the wish that, if any have been injured, they are soon out of hospital and back to work?

I am obliged to the hon. Gentleman for his remarks. I will see that his message is sent. It is tragic that one sleeping car attendant was among those killed. In case the public get the wrong impression about railway accidents, I should point out that this is a very tragic and unfortunate matter. In 1974 only one passenger was killed on the railways throughout the whole of the country.

We on the Liberal Bench would like to extend our condolences to the relatives of those who lost their lives in this tragic accident. It is a pleasure to see the Minister of Agriculture, Fisheries and Food back on the Government Front Bench this afternoon, and I congratulate him on his narrow escape.

Will the Minister assure the public that he is satisfied with the general maintenance of track in these days of highspeed travel? There have been a number of derailments, but, thankfully, not serious. Is the right hon. Gentleman satisfied that track maintenance is up to the standard of meeting the high-speed travel that the public get these days?

Naturally, I am as concerned as the hon. Gentleman to ensure maximum safety. One of the features of the Railways Act that we passed last year was that the Government, by means of grants, now take responsibility for permanent way expenditure. I do not think that because of this accident there should be any cause for concern. The temporary speed limit here was invoked because maintenance of the kind that the hon. Gentleman wants to see continued was, in fact, being carried out.

European Community (Membership)

With permission, Mr. Speaker, I should like to make a statement.

As the House knows, last Thursday the British people voted to stay in the European Community.

What has impressed all of us, and no less our friends in Europe, the Commonwealth and more widely, has been not only the high turn-out and the clear and unmistakeable nature of the decision, but also the consistent pattern of positive voting over almost every county and region of the United Kingdom.

It is now almost 14 years since the British Government first applied in July 1961 for negotiations to join the Community.

The issue of membership has cut across party lines, and the Government recognise the deep sincerity with which views have been held on both sides. The debate is now over. The two tests set out in our manifesto of successful renegotiation and the expressed approval of the majority of the British people have been met. The historic decision has been made. I hope that this House and the country as a whole will follow the lead which the Government intend to give in placing past divisions behind us, and in working together to play a full and constructive part in all Community policies and activities.

I am well aware that the period of renegotiation and the referendum has been difficult for other members of the Community. I pay tribute again to the constructive spirit in which they have dealt with our renegotiation proposals. In his statement to the Council of Ministers in Luxembourg on 1st April last year, at the outset of renegotiation, my right hon. Friend the Foreign and Commonwealth Secretary said that, if we were successful, there would be
"a firm basis for continuing British membership of a strengthened Community".
I now say to our partners in the Community that we look forward to continuing to work with them in promoting the Community's wider interests and in fostering a greater sense of purpose among the member States.

I would also wish to say to our friends and allies in the Commonwealth who made clear their hope that we would remain within the Community—and to all the developing countries—that we shall hope to bring even more to our relationship with them following the clear decision of the British electorate last Thursday.

I have already made clear the Government's general approach to Community policies. But it also follows from the decision to remain in the Community that this country should be fully represented in all the Community's institutions. I have said that if renegotiation succeeded and if our recommendation was endorsed by the country we should feel it right that this House should be fully represented in the European Assembly. A recommendation to this end will now be made to the Parliamentary Labour Party.

The House will have noted the statements by the General Secretary of the TUC and the Chairman of the TUC International Committee making clear that the TUC is now likely to enter fully into the work of the Economic and Social Committee of the EEC and to work with the European Industrial Labour Movement in a way which can only mean strengthening the trade union movement throughout the Community and here in Britain.

What we can achieve in our attack on both the economic problems we face at home and wider world economic problems depends basically on the efforts which we ourselves make. But, with the uncertainty over our membership of the European Community at an end, we can continue our efforts with greater confidence to find solutions to the great problems, both domestic and international, which confront us.

The decision will also, I am sure, give confidence to those overseas who have been considering plans for investment in Britain. There are signs that this is already happening.

The improvement of our own economic situation and our contribution to a more equitable world economic order can best be made from a settled position within the Community. We now have that settled position, and we are determined to make a success of it. But our future will continue to depend on what we are prepared to do by our own efforts, our skill, our technology—and our restraint, a restraint which demonstrates our concern for the interests of those members of our national community least able to help themselves.

Is the Prime Minister aware that we join him in rejoicing over this excellent result, which confirmed the earlier parliamentary decision? We are particularly pleased with the number of people who came out to vote for Britain's staying in the EEC and also with the strong "Yes" from each of the four parts of the United Kingdom, which confirmed the strength of the British ties which unite us.

Secondly, I do not wish to enter into the controversy over the referendum, but is the Prime Minister aware that there have been lessons to learn from putting a single issue to the people, particularly a single issue in foreign affairs? I hope it will be the end to the time when people feel that most of the issues which interest the British people are domestic issues. This occasion has shown that the British people are fully aware of the importance to them of what happens in other countries and of the importance of Britain taking a full part in those affairs and having a clear voice in them.

Thirdly, is the Prime Minister aware that all of us on this side of the House, and many on the other, would wish to hand the campaign honours to my right hon. Friend the Member for Sidcup (Mr. Heath) and the parliamentary honours to my hon. Friend the Member for Saffron Walden (Mr. Kirk), who, with his team of Conservative Members, has represented Britain in the European Assembly and has added greatly to that Assembly?

Also, one cannot let this occasion pass without paying tribute to the vision of Sir Winston Churchill and the courage of Harold Macmillan, who made the original application.

As we have supported the Prime Minister throughout on the European issue, it would hardly seem an occasion for controversy between him and our Front Bench—the controversy may be pursued elsewhere—but we regard it as vital now that he takes the necessary steps to restore business confidence and to deal with our economic problems, and we expect to hear more about that in the future.

I thank the right hon. Lady for what she said. [An HON. MEMBER: "What did she say?"] She said that the vote last Thursday confirmed Parliament's vote. That is so, but for the first time throughout these many years of controversy we have now had the full-hearted consent of the whole of the British people.

I noted—or at least I think I noted—what the right hon. Lady said about the meaning of the referendum. She will forgive me if I say that what she tried to convey was a little obscure. I shall need time and perhaps a little éclaircissentent to understand fully what she said because I recall that she argued strongly against and voted against the referendum. But when I have had time to study her statement I shall give close thought to it.

I shall obviously not comment on her fraternal or sororial comments on the activities of her right hon. Friend the Member for Sidcup (Mr. Heath), but I was very touched that she felt able to say that. In answer to the challenge from the Shadow Leader of the House, I should like to go along with it and endorse it.

With regard to what the right hon. Lady said about confidence in the economic situation, she is right, and that is what I was saying in the concluding words of my statement. She will recall with enthusiasm, I think, the economic debate that we had on the eve of the Whitsun Recess.

Is the Prime Minister aware that we should like to welcome his statement? Is he further aware that some would like to agree with the right hon. Lady the Leader of the Opposition that the contribution of the right hon. Member for Sidcup (Mr. Heath) amongst Conservatives has been outstanding as to both quality and quantity? Some of us believe that there have been others as well who played some part in the campaign, both for and against. Sometimes those against have been as much help as those who have been for.

Would the Prime Minister agree that this is a clear indication that the British people want this country to play its full part in the European Community, and is he satisfied that the members of the team that will be taking part in the day-to-day business of Europe will all be total in their commitment both to membership and to the policies, whatever they may have thought a week ago?

While I congratulate the right hon. Gentleman on improving on his Oxford Union speech, I agree, if he will allow me to say so, with what he said about the fact that in the referendum campaign there were some right hon. and hon. Members on both sides who contributed greatly to the support for their cause, and there were some about whom my own views on counter-productivity certainly applied, on both sides of the campaign. [HON. MEMBERS: "Name them."] Not at this moment. As for the right hon. Gentleman's speculations about the future, these are matters for me. In due course, when I have anything to say on the matter, I will say it.

In fairness, would not my right hon. Friend agree that, although one debate is over, inevitably a new one begins? Would he not agree that the full purpose of the Common Market is economic and monetary union? What are his views about that?

My hon. Friend is always right, that when one debate ends another begins. I have noticed that he often starts the new debate before the old one is over. He has taken a different view about this matter. As for EMU, I have nothing to add to what I said in the debate on 8th April or the statement that I made on 18th March when we reported the results of the renegotiations. Both my hon. Friend and I were elected on a manifesto which said:

"if these two tests are passed, a successful renegotiation and the expressed approval of the majority of the British people, then we shall be ready to play our full part in developing a new and wider Europe."
Since those two tests have been passed, I look forward to my hon. Friend showing the same enthusiasm as the rest of us in fulfilling the manifesto.

While of course one accepts the result of the vote in the referendum, would the Prime Minister, as the constitutional leader of the "Yes" campaign, formally reaffirm the basis on which the "Yes" vote was clearly obtained—namely, that the Government would oppose any move towards a federal State? Can we have a clear answer to that, please?

Since I have been asked by right hon. Members opposite to pay tribute to one distinguished campaigner sitting below the Gangway, I am sure that I am expressing the views of the whole House when I say that the hon. Member for Banbury (Mr. Marten), although he expressed views different from those that I was expressing, conducted his campaign with great dignity during the referendum. With regard to political unity, I have nothing to add to what we said in the campaign, including particularly the statement by my right hon. Friend the Foreign and Commonwealth Secretary, who said that he thought that the matter which the hon. Gentleman raises was one for our children and our children's children.

While one would congratulate my right hon. Friend and the Foreign Secretary and the other Ministers—particularly the Home Secretary on the significant part which he played in the pro-Europe campaign—will he make it clear that the Labour Members who may go to the European Parliament will become full members of the Socialist group?

As I have said, this is now a matter for consideration by the Parliamentary Labour Party. I do not intend to give directions to it; indeed, I have no power to do so. I hope that the Liaison Committee, representing both the Government and the Parliamentary Labour Party, will consider this matter. I hope that there will be a delegation to the European Assembly, and I hope that that delegation will be fully representative of the party and not consist just of one point of view. I believe, if I may say so, that the Conservative Party showed great wisdom in including in its delegation a minority who had taken a different view from the majority view. As to joining the Socialist grouping in the Assembly, this must obviously be a matter for the Members and for the Parliamentary Labour Party. I hope that they will do so. I know that every Socialist in the Assembly and the Socialist-led Governments in the Community very much hope that this will be so.

While not particularly happy with the result of the referendum and feeling that it would be honest to admit it right from the outset, I think it would be churlish not to offer some commendation to the Prime Minister on the success of his policies. But will he note, in so doing, that the Scottish people in their vote were less enthusiastically for the Market, that for over 42 per cent. of the Scottish people the Market will be on trial in future in what it does or seeks to do? Finally, as the pro-Marketeers fought the campaign in Scotland under the slogan "Scotland in Europe" rather than "Britain in Europe", will he seek to give substance to that claim by ensuring that when he brings forward proposals for the establishment of a Scottish Assembly he will give it powers to enable it to be represented directly by Scottish Ministers at the Council of Ministers? Will he also agree that many people in many parties apart from mine will agree with that policy?

I am grateful to the hon. Gentleman for his honest and frank admission and for his generous reference. The vote in Scotland must be a matter for interpretation—not, I think, by me. Everyone will make his own interpretation, and some may be different from mine. One of course recognises that there were dissociatory votes in the Shetlands and the Western Isles. My interpretation is that they were dissociating less from Europe and the United Kingdom than from certain politicians in Scotland.

Does my right hon. Friend recollect that many of us said that even if the "Yes" vote was no more than 43 per cent. of the electorate we would accept it, and that that is the position today? Does he also recollect that we agreed to put off until after the referendum the whole question of how Parliament delegates authority to a Minister to use a veto in the Council of Ministers, which, because of the fifth-rate democracy which still exists in the Community, is the one way Parliament decided that we could make our influence felt and be able to understand the decisions to be taken by an attending Minister at the Council of Ministers? Therefore, will he not now give some indication as to how Parliament can delegate authority to a Minister to use a veto in certain circumstances authorised by this Parliament?

My hon. Friend has been absolutely fair in what he has said this afternoon in recalling what he said on past occasions before the referendum about the acceptance of certain decisions in the referendum. Many of us saw him on television on Thursday. I particularly welcomed what he said early in the day, quite spontaneously—that it would be his view that the Parliamentary Labour Party should be represented in the Assembly, although I think that it was equally his view that that should be a representative delegation, as I said, and not just one representing the national majority.

With regard to parliamentary scrutiny, whether in respect of decisions taken or in respect of decisions still to be taken—where, of course, as some of us have argued, the political power in the Council of Ministers has become much clearer in terms of national interest, and also, as a result of the summits, in the summit meetings—the Government certainly intend, with the good will of the House, to develop the scrutiny arrangements to make them more effective. I trust that there will be an early debate on the recent Report of the Procedure Committee on European Secondary Legislation.

While one congratulates the Prime Minister on the result, will he keep to his determination not to repeat the constitutional experiment of the referendum? Second, since it is almost universally agreed that the outcome of the referendum was not only a vote to stay in Europe but a vote against extremism and abuses of power in this country, will he now make changes both in the policies and in the composition of his Government to meet the deeply-held desires of the majority of our people?

I certainly give the right hon. Member for Bournemouth, West (Sir J. Eden) the assurance he seeks in his first question. I regard this as a unique situation, necessary in the light of 14 years of disagreement in this country, which cuts across parties. The Government's insistence on going ahead with the referendum has been justified by the result and by the clear decision that has been taken. I would not read anything more into the decision than that it is a decision of the British people, having heard all the arguments, read the documents by both campaigning organisations and having had the report from the Government. It was limited to a clear view that Britain should remain in the Community. It was not a vote for anything else, nor were the questions put about anything else. I certainly would pot regard the right hon. Gentleman as the best judge of which side of the House is the side that generates more extremism as opposed to more consensus.

As it is agreed on all hands that in the Government's words:

"Continuing British membership must depend upon the continuing assent of Parliament"
is it not clear, whether anyone likes the deduction or not, that this result can be no more final than that of any single General Election?

I saw the right hon. Gentleman on television and I heard him put exactly that point of view. Of course, it is a fact and it has been laid down by constitutional authorities at all levels, including by the former Lord Chancellor, Lord Hailsham, that no Par- liament can bind its successor. That is true. The right hon. Gentleman would be the first to agree that the decision this time was not based on the shifting of parliamentary votes or on any vote in the House before or after General Elections. This was a first—and I hope it will not be necessary to have another—and total decision of the British people, where every vote counted as one—even more than they do at General Elections where there are safe seats one way or the other—where everyone had the right to vote or abstain and where there was a massive endorsement of the proposition put forward by the Government.

Although I agree with the Prime Minister that this was, indeed, a famous victory—and I congratulate him and all those who took part—I was glad that the right hon. Gentleman read the section which said:

"play a full part in the future life of the Community".
Would my right hon. Friend ask his right hon. Friend the Leader of the House to look into the question of direct election to the European Parliament, in the hope that this country can accept the same agreement as the other members to try to achieve this by 1978?

I welcome the kind words of my hon. Friend about the result of a referendum which he totally opposed from start to finish, but nevertheless in which he played a distinguished part. The question of the future development of the Assembly is a matter for progressive consideration by all parties in this House and by every right hon. and hon. Member. I have said that this House should be fully represented there. There will be plenty of time—certainly there is no urgency about it at all and it was not an issue in the referendum—to consider the future methods of selecting those who take part in the work of the Assembly.

Would the right hon. Gentleman give consideration to the possibility of raising with the Council of Ministers the implementation of a suggestion which I had previously made both in this House and in the European Parliament; namely, that where the Council is engaged in a strictly legislative function as distinct from a merely consultative one, it should deliberate in public?

Certainly we shall consider the right hon. and learned Gentleman's proposal. He will note that I had him in mind when I referred earlier to the fact that the Conservative Party had the wisdom to include in its delegation to the Assembly certain of those who had not been over-enthusiastic about entry. This is a matter that needs to be considered. The Council of Ministers has become a much more significant part of the Community institutions. It is now functioning much better because of the recognition by each member of the ministerial Council that they have to give full effect to the political concerns and anxieties of their colleagues. This is reinforced by the precedent set by President Giscard d'Estaing, which is now a regular part of the functioning, of having three summit meetings a year. Whether these meetings would gain by being in public, as the right hon. and learned Gentleman said, is something I should like to think about. We made great progress in Paris in December and in the summit in Dublin in the spring. I doubt if we should have made the same progress if the television cameras had been on us.

Does the Prime Minister recall that at the Paris summit the Heads of Government requested Mr. Tindemans to undertake a mission to each member State to review the views of various members as to further progress to union? Does he also recall saying to me in a Written Answer that Mr. Tindemans will be coming later this summer if the British people so wish? Does he realise that there are many people in institutions in Britain who, although loyally accepting the burden and the existing obligations of membership, would not wish to go further towards union? Can the Prime Minister tell the House whether Mr. Tindemans is coming, what arrangements he has made for his visit and whether those persons and institutions will be able to make their views known to him?

I should like to thank my hon. Friend, knowing the strong line has has taken, about the way in which has has wholeheartedly accepted the result. We look forward to a visit by Mr. Tindemans in the near future. He will be coming within a week or two. I should like to consider with my right hon. Friend the Foreign Secretary, and in the light of the practice Mr. Tindemans has followed in other countries he has visited, whether he should receive representations from all sectors of opinion or whether he will deal with the Government.

In welcoming the Prime Minister's statement and further to the question by the hon. Member for Berwick and East Lothian (Mr. Mackintosh), may I ask whether the Prime Minister will urge his eight colleagues in the Community towards an early implementation of Article 138 paragraph 3 of the Treaty of Rome, which calls for direct elections by universal suffrage, because of the importance of this to Scotland? It will mean Scotland electing men and women direct to the European Parliament instead of them being selected for us by the Westminster administration.

I note that point. I have already answered it by saying that these are matters that we shall have to consider in this House.

Perhaps, Mr. Speaker, I might pick up a point from an earlier question by my hon. Friend the Member for Newham, South (Mr. Spearing). I should have said that although Mr. Tindemans will be dealing with the British Government direct, I am sure he will be meeting other parties. When the Tindemans' proposal was first aired, my right hon. Friend the Foreign and Commonwealth Secretary and I when welcoming it in Paris said that we hoped he would make it his business to feel free to receive representations, for example, from industry and commerce and the trades union movement, and to visit Wales and Scotland as well as London. On the point about Mr. Tindemans listening to views from those who took a different point of view in the campaign, this must be a matter for him to consider.

Can my right hon. Friend say anything about the effect of the vote last week on the Government's proposals on devolution? Will the Government be going through with their proposals on that matter, and will they be doing that without any inhibition placed on them by Brussels or elsewhere?

There is no change whatever in what we announced to the House about the devolution proposals. Whatever the various interpretations placed upon voting in Scotland or in Wales, I am not aware that anything was decided last week which in any way calls upon the Government to reconsider their proposals on devolution. I have made it clear, and so have my right hon. Friends, that so far as the Commission and the organisation of the European Community is concerned this has no bearing at all on the freedom of this House to decide its policy in relation to devolution.

Is not one of the clear lessons of the referendum result that those trade union leaders who, at the Labour Party conference, cast massive block votes against British membership were entirely unrepresentative of the views of most of their members?

The country was asked to decide, and the country decided. Everyone can form a view about how persuasive any particular person or voter was—even how persuasive the hon. Gentleman was. The situation is that this was put for a decision to the whole British people and the whole British people responded with singular unanimity, area by area, on the propositions put to them. What I am proud and pleased about is that there has been this free debate in the country, in the Conservative Party, in our own party and certainly in the trade union movement. But the hon. Gentleman, who no doubt followed the proceedings of our party conference with great interest—as some of us sometimes follow the proceedings of his party's conference, which I think is held in his constituency—will have noticed, nevertheless, that the backcloth to the platform said "Conference advises—the people decide." The people have decided.

In his statement to the House after the Dublin summit and in his Glasgow speech a week ago, my right hon. Friend the Prime Minister referred to the need to open negotiations with the other Common Market countries on the need to reassert governmental control over the steel industry. Can my right hon. Friend now give us an assurance that these renegotiations will proceed with all possible speed?

Yes, Sir. I am grateful to my hon. Friend for raising this matter. He will recall that he intervened during my speech on 8th April, and I gave way to him because he was the Member for Newport, though I thought that he was about to raise a Newport question. What I then told him will be followed up. We have expressed anxieties about steel. We have outlined the basis on which we intend to follow it up. This could not be done while the referendum campaign was in progress. I am not sure whether my hon. Friend was at my meeting in Cardiff last Wednesday. He may have been otherwise engaged. I hope that he will study what I said in Cardiff on the steel industry of South Wales and the very full answer I then gave to my hon. Friend's question even before he put it.

If the Prime Minister recognises that the European cause and the cause of the Commonwealth go together, may I ask him whether Her Majesty's Government are exploring the aim of Mr. Trudeau, the Canadian Prime Minister, expressed in the City of London for a contractual link between Canada and the Community?

Yes, Sir, certainly. I was in communication with the Canadian Prime Minister on that matter several months ago—indeed, almost a year ago. I discussed it on his recent visit. We discussed it at the Commonwealth conference. I discussed it with him in Ottawa in January and again, more recently, in Brussels a couple of weeks ago. Certainly we are very much concerned in pursuing these and similar arrangements between other Commonwealth countries. The hon. Gentleman will, I think, be aware of the wholehearted support of the Commonwealth for Britain's remaining in the Community.

May I assure my right hon. Friend the Prime Minister, from very recent contacts with European parliamentarians, with what delight and relief this final resolution of the matter will have been greeted in Europe? May I congratulate him—wily old wizard that he is—after a a few false fits and starts, on a quite considerable political achievement, with which should be coupled the contribution, not inconsiderable, of the right hon. Member for Sidcup (Mr. Heath)? Does not my right hon. Friend agree that the result of this can only be enormously to enhance Britain's future prospects?

As an old student of R. D. Blackmore, I always take tributes from Carver Doone in the spirit in which they are intended. My hon. Friend, who I think was very active in a different sense on the Market some years ago, will know that from 1962 onwards—indeed, that was in the time of the leadership of Hugh Gaitskell—the party conference has always said it was prepared to support whole-heartedly the European effort with Britain inside it on certain conditions, but also it believed that we should not be in it if the terms were not right. That has been the position of every conference since then, saying "Never out on principle; never in on principle. It depends on the terms and whether it is best for Britain." The country has now decided that it is best for Britain, the Commonwealth, Europe and the wider world.

Following the referendum, will the right hon. Gentleman say whether he intends to appoint a special full-time Minister of Cabinet rank, under his right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, to concentrate on European affairs and attend the Council of Ministers?

My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs will remain in complete charge of our relations with the Community, and he will have appropriate assistance in the form of Ministers of State as he has had up to now.

Is my right hon. Friend aware of the fact that, while many of us are naturally very disappointed—we would not be honest if we did not say that—at the decision of the people in relation to continuing in the Common Market, we nevertheless accept that decision without any question? However, will my right hon. Friend now put to the Home Secretary and those who were pro-Marketeers in the accepted sense of the word and who fought strongly over the years on the argument that it is better for Socialism to be in the Common Market, that they should, together with us all, now formulate a very important Socialist programme, such as control of the multinationals, the extension of public ownership on a Community scale, the building of a national health service, and in this sense that we now get down to a full-blooded Socialist programme for Europe as a whole?

My hon. Friend is clearly on to a very important point. He is aware, I think—as was argued in the last two or three weeks; rather against him, I think—that of all the nine Governments there, six are either Labour Governments or Socialist Governments or of Socialist leadership under a coalition Government, or a Socialist minority participation. Then there is, of course, Italy, where the Socialist parties have supported a Government with no Socialist representation. I am sure that what my hon. Friend has said will bear fruit and be fully considered, not only by Her Majesty's Government but by all the others. Certainly there is very great interest not only among the Socialist parties of Western Europe but others, about the whole problem of multinationals in Europe.

The Prime Minister said that this was the end of the argument. Does he agree that it must be the beginning of a new chapter of more effective British influence within the Community? To that end, may I ask him to give two undertakings? First, will he undertake now to work—perhaps with a little more personal enthusiasm than he has sometimes shown in the past—to make the Community the success it was originally set up to become? Secondly—nearer home, and with that end in view—will he now ensure that Her Majesty's Government are composed of Ministers who wholeheartedly consent to the future developments of the European Community?

The hon. Gentleman is right that this is the beginning of a new stage. Of course, he probably underrates—because he may not have been following these things—the extent to which the ongoing work in the Community has been going on and has been helped by the positive contributions of my right hon. Friend the Foreign Secretary and my right hon. Friend the Minister of Agriculture, who has made a real success of agriculture negotiations in place of the shambles which characterised European agriculture when we took over the responsibility. When he talks about the situation nearer home, and refers to Her Majesty's Government, of course I have the responsibility always of considering changes in these matters. I do not propose to learn from anyone who is responsible for appointing the kind of panorama that I see on the Opposition Front Bench, including the hon. Gentleman. We have a far more purposeful and united Government than we have ever seen from those who now occupy the Opposition Front Bench.

Orders Of The Day

Statutory Corporations (Financial Provisions) Bill

Order for Second Reading read.

4.22 p.m.

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

The main part of the Bill is a very short-term extension of the Conservative Government's Bill which introduced payments for price restraint for certain nationalised industries. There are three main reasons why we believe that these payments should be phased out quickly. First, it is essential to reduce the level of public expenditure, for with very limited financial resources, every pound spent on subsidies is a pound less for vital investment. We are determined to make room for that investment. Second, to prevent the wasteful use of scarce resources. It is, for example, crazy, at a time when we urgently need to conserve energy, to subsidise the price of energy—not least electricity which is generated at the margin almost entirely from imported oil. Third, to reduce the borrowing requirement, and encourage the industries to greater efficiency in order that they will be able to finance more of their own massive investment programmes.

The Bill has five separate and distinct purposes. Apart from extending the powers under present legislation to compensate the gas and electricity industries and the Post Office for deficits which they incur because of price restraint, it increases the borrowing limit of the British Steel Corporation and of the National Bus Company. It makes some amendments to the borrowing powers of a number of the public corporations and it provides for the Government to take over from the industries concerned the financing of the Electricity Consultative Councils and the Gas Consumers' Councils. I propose to deal with each of the clauses briefly and then go on to discuss the implications for the public sector borrowing requirement and public sector wages.

Clauses 1 and 2, together with Schedule I, deal with compensation for price restraint. They extend for a further period of time, and with some changes in the methods of payment, the powers in Clause 2 of the Statutory Corporations (Financial Provisions) Act which the Conservative Government enacted in February 1974. The industries covered are exactly the same. The period is the financial years 1974–75 and 1975–76, and there is provision, subject to Affirmative Resolution of the House, to extend it to 1976–77.

The first of these two years was intended to be covered by the previous Act. The 1974 Act set a limit of £500 million on compensation for the two years 1973–74 and 1974–75. My predecessor, introducing the Second Reading debate on 21st November 1973, estimated that the deficit for 1973–74 would be in the range of £175 million to £200 million. He thought it might even be more. He was right. It was £355 million, leaving only £145 million for 1974–75. However, on the latest information from the industries, the total deficits for 1974–75 look like being of the order of £650 million, and this is despite the very big price increases which we endorsed in 1974.

We shall not know the exact figure of compensation until the audited accounts are ready and until we have decided whether or not to pay compensation for the whole of the deficits. But in the meantime, the breakdown in round figures is £255 million for the electricity industry in England and Wales, £23 million for the Scottish electricity boards, about £40 million for the gas industries and about £330 million for the Post Office. The total is in line with the estimates in the Public Expenditure White Paper and at the time of the Budget. As the residual amount still available under the 1974 Act is, of course, inadequate to meet these 1974–75 sums, we are seeking fresh parliamentary approval to deal with them.

Turning now to 1975–76, I would point out that the Financial Memorandum states that the total subsidies for that year will depend on, among other things, changes in the industries' costs, prices and revenues during the year. At the time of the Budget we estimated, on the basis of the latest information from the industries, that the total would be £100 million. Of this, £70 million was for the Post Office and the rest for the energy industries.

It is hoped that the gas industry, subject to a price increase in the autumn, will break even this year and so will not need a subsidy. The electricity industry in England and Wales put their deficits at up to £30 million or so this financial year and the two Scottish boards hope to break even. It is, of course, far too early to forecast reliably what the results will be, but we hope that these industries will remain on target in phasing out their deficits.

I turn now to the Post Office. It has—subsequently to its forecast of £70 million—reviewed its financial prospects for the year, and I regret to have to tell the House that this has revealed a substantial deterioration, mainly due to higher inflation. My right hon. Friend, the Secretary of State for Industry is having discussions with the Post Office and the trade unions to see what urgent steps might be taken to remedy this situation. Obviously the Post Office, along with the trade unions, is looking for further sensible economies. But I would be misleading the House if I did not make it clear that any such economies which may be achieved will not be enough to cover the revised deficit, and further tariff increases this year cannot be ruled out. I should also make it clear that the Government will look very critically at any claim for compensation above a level of £70 million. As my right hon. Friend, the Secretary of State for Industry, has already indicated, he will be reporting on the situation to the House when the discussions are completed.

The Chancellor said in his Budget Statement that these price restraint subsidies were likely to have been phased out completely by April 1976. It remains our firm intention to keep to this timetable so that subsidies in 1976–77 will not be necessary.

The Chief Secretary was talking about £100 million for the possible deficit for 1975–76. I think he indicated that his right hon. Friend had mentioned that figure, but his right hon. Friend also mentioned a figure of £70 million for 1975–76. Are we to take it that the £70 million has grown to £100 million? What has happened?

The £70 million was in 1974 survey prices. It is £100 million in current price terms.

Would the hon. Gentleman tell us what is the current revised estimate of the deficit of the Post Office in the financial year 1975–76?

It is too early to say precisely what the estimate will be, but, as I have indicated, every effort will be made—and discussions are going on between the industry and the workers in the industry to ensure that efforts are made—to reduce whatever the deficit might be. Certainly, concerning subsidies, as I have indicated, it is our firm intention to ensure that there will be no subsidies in 1976–77. We have provided, as a contingency, for the powers to be extended to cover that year 1976–77, should it prove necessary, but it is a provision which I very much hope we shall not have to use.

Before turning to the next part of the Bill I would like to comment briefly on one point on the criteria for payment. The maximum sum for which an industry is eligible is the amount of its deficit on revenue account. I want, however, to make it quite clear that the amount of the subsidy could be less.

Each industry has made its estimates of its likely deficits and the Departments sponsoring them will monitor those estimates and demand explanations of any variations from them. If these variations are not for acceptable reasons, the subsidy will be corespondingly reduced. We are not, for example, prepared to finance unacceptably high wage settlements. I will say more about that in a moment.

I turn now to Clause 3, which provides for an increase in the borrowing limit of the British Steel Corporation from £1,250 million to £2,000 million. That would be a large increase at any time. But, when we have a borrowing requirement of £9,000 million, it is important that those employed in the industry should understand that it is not enough simply to say the funds are needed for investment. Given the obvious limitations on the amount that we should or could borrow, £750 million allocated here means that much less somewhere else. Consequently, the industry has to show good reason why it should have a priority call on these scarce financial resources. It will not simply have to satisfy the Government that it needs the funds. It will have to show why it should have a higher priority than those in other industries to whom I shall inevitably have to say no.

It is against this background that I want to turn to the case for Clause 3. The present limit has in fact lasted for a year longer than our predecessors expected when they introduced it in 1972. However, £900 million is outstanding against it, and, for reasons that I shall give, I believe that it is right to make an increase now to fund the corporation's increasing cash requirements and to leave a margin of safety for contingencies and monthly fluctuations in working balances.

An important factor in this timing has been that the corporation is currently able to finance a smaller proportion of its requirements from its own resources than either it or the Government would wish. In 1973–74, it found 75 per cent. from its own resources and it made a profit of £56 million even though, in line with the policies of the previous administration, it held its prices substantially below justifiable levels at a time when demand for steel was strong and it had an opportunity to earn more.

In 1974–75, the corporation expects to show a profit of a similar amount. This has been achieved in spite of disappointing production during 1974 which was partly due to disruption caused by the three-day week and partly due to difficulties with raw material supplies and labour disputes. However, its capital requirements in 1974–75 were substantially higher and its own contribution towards financing fell to an estimated 35 per cent. in the year.

In recommending this increase of £750 million, I must make it clear that the corporation's financing requirement is likely to increase sharply in 1975–76 and to continue at a high level for some time. Although at constant prices its capital expenditure this year and next is likely to be in line with the figures in the Public Expenditure White Paper, the corporation is faced with sharp increases in plant costs, and it now estimates that the out-turn figure for this year may be more than £500 million.

The right hon. Gentleman said that these increased costs reflected the rising costs of purchasing plant. Can he say how much of that increase came during the 15 months before the announcement about the review of the investment programme?

There is no real increase here. I am talking about an increase brought about by increasing costs of plant due to inflation expected in 1975–76. The £500 million is the higher out-turn over the previous figure given.

The corporation also has to finance the increasing value of stocks, and a proposal for a counter-cyclical stock building scheme is under consideration. Coinciding with this, its ability for self-financing has been sharply reduced in the short-term by one of the worst recessions in international steel demand since the war.

Taking all these factors into account, it is estimated that the corporation could require external financing of up to £550 million if it were to break even in 1975–76, and more if it were forced into a substantial deficit by present trading conditions. The increase proposed is, therefore, a short-term measure, and the House will have a later opportunity to consider, very probably in the next parliamentary session, what further adjustment of the limit is required.

The proposed limit will enable the corporation to continue its major programme of modernisation and expansion, which is essential to meet United Kingdom demand, to compete in the world steel market with increased exports, and to provide an assured long-term future for its work force.

I must, however, emphasise that in carrying out this programme we look to the corporation to be fully viable. There must be no doubt about this. We look to it to be viable and also to provide a return on the public funds, including public dividend capital which will continue to be invested in it.

I am interested to hear the right hon. Gentleman say that. I understand that, for the first time, the British Steel Corporation is considering what might be described as a stabilisation fund under which it will stockpile steel products rather than, as before, exporting them at lower prices in order to keep plant working at 100 per cent. levels. Is that what the right hon. Gentleman meant? Can he say what is the total sum of money likely to be involved in this, and is it being done in conjunction with and in consultation with steel plants in the EEC?

It may be that the hon. Gentleman was not present during Question Time. If he had been, he would have heard my right hon. Friend the Secretary of State for Industry refer to this very point. The matter is under consideration. I am not saying that it will necessarily be done. We are discussing these matters with the corporation now.

In view of the enormous financing requirement of the British Steel Corporation and the need for a more adequate self-financing ratio, can my right hon. Friend say what is the Government's policy towards the revaluation of the corporation's assets? At present, the corporation is depreciating its assets at historic costs, which grossly underprovides for full depreciation. It is to be hoped that there will be an early revaluation.

Such matters as depreciation and inflation accounting will fall for discussion when we have the Sandi-lands Committee's Report. All these matters will be considered.

The Bill also provides, in Clause 4, for an increase in the borrowing limit of the National Bus Company from £130 million to £200 million. The current limit was set in the Transport Act, 1968 which brought the company into existence. Its fleet now totals some 20,000 vehicles, and the company's subsidiaries operate about one-third of the stage carriage services in England and Wales.

Substantial investment, which will in part have to be financed by borrowing, is required for replacement of vehicles and improvement of garages and bus stations. The cost of these has increased steeply over the last six years, and an increase in the company's borrowing limit, of which almost £100 million is accounted for by the company's commencing capital debt, is clearly justified. The extension proposed should, on present estimates, be sufficient to cover the company's borrowing for the next five years.

Clause 5(1) is a tidying-up measure. Its object is to bring the foreign borrowing powers of all statutory corporations into line with one another. In future, borrowing in foreign currency will in all cases simply need the consent of the Secretary of State and the approval of the Treasury. The simplification of the borrowing powers of the statutory corporations listed at Schedule 2 of the Bill will have no effect upon the ability of the Government to control the terms upon which they borrow in foreign currency.

Clause 6, with Schedule 3, provides for the transfer of financial responsibility for the Electricity Consultative Councils and Gas Consumers' Councils from their respective industries, which currently provide their funds, to the Secretary of State for Prices and Consumer Protection or, in the case of the Scottish Electricity Consultative Councils, to the Secretary of State for Scotland.

The clause will bring the councils into line with the other statutory nationalised industry consumer councils for transport, coal and the Post Office, which are already financed by the Government. It will increase the independence of their respective industries and so enhance the invaluable work they have done over the years on behalf of gas and electricity consumers.

A paramount concern has been to ensure that the Bill has no adverse effect on the pay and conditions of service of the staff, chairman or members. In this connection, we have received assurances from the officers' present pension funds that no action will be taken to alter their pension arrangements without the fullest consultations.

I turn now to the broader effect of the Bill on the public sector borrowing requirement and public sector wages, with particular reference to the industries named in the Bill. We have catered in our estimates for borrowing by the National Bus Company and for the relatively small new expenditure on consumer councils. So far, we are on target in our objective of phasing out the price restraint subsidies to the gas and electricity industries, so these provisions add nothing to the estimates of the borrowing requirement.

It will, however, have been clear from what I have said that the situation of the Post Office and the British Steel Corporation could lead to an increase. In the case of the Post Office, this would be so if its deficit in the year were more than £70 million, irrespective of whether any such addition was financed by subsidy or by borrowing by the Post Office. This underlines the importance of the current efforts to bring the Post Office's deficit under control. The British Steel Corporation will certainly borrow more than the £420 million estimated in the Financial Statement and Budget Report. I have said that the total could be up to £550 million and more if it is in substantial deficit this year.

To a considerable extent, this is a situation to which we shall always be liable if nationalised industries are forced into deficit, as were the gas and electricity industries and the Post Office, or are not allowed to earn anything like adequate surpluses as in the case of the BSC. They start off with a high borrowing requirement and, if anything goes wrong, that is compounded. For example, as I have said, the BSC wishes to build up stocks as a counter-cyclical measure. There may well be good sense in that, and we are looking at it now. But if it were to go ahead the Government would have to advance the money for it because the BSC does not have the reserves to deal with it from its own resources.

This brings me to the central problem, which is vividly exposed in two parts of the Bill—namely, that as a country we cannot go on finding finance for subsidies and at the same time have the resources that we desperately need for new investment. We have done that for far too long. It has been the perfect example of trying to have one's cake and eat it. We have eaten too much, in both public and private consumption. Inevitably, the result has been less cake, or, rather, less investment.

A large borrowing requirement used for investment in viable industries would be of much less concern to the Government and—much more important—of less concern to our creditors than a large borrowing requirement used for consumption. That is why, as I have said, we have to phase out the price restraint subsidies as quickly as possible. Indeed, it is essential that the nationalised industries not only return to break even but earn a surplus in order to finance a higher proportion of their capital requirements from their own resources and to build up reserves to cushion themselves in lean years.

I hope, therefore, that, when these industries get out of deficit, there will be discussions with them on the setting of new financial targets which will give them clear guidance as to their financial objectives and a strong incentive to contribute to their own financing needs.

The right hon. Gentleman is putting the main emphasis of his criticism on price restraint. Will he comment on the position of the Post Office, from which it seems clear that the freedom to raise prices, with the consequent drop in traffic on the postal side, may itself be partly responsible for increasing the deficit?

I am coming to precisely that point. I am glad that the hon. Gentleman is so perceptive as to know the problem.

All that being said, the fact remains—and I have no wish to conceal it—that the financing of the steel industry in 1975–6 and possibly the Post Office will add to the estimated borrowing requirement. This does not necessarily mean that the borrowing requirement as a whole will turn out higher, because, given the magnitude of the figures—total receipts and payments of £98,000 million and a whole host of different items—the outturn could well show offsetting reductions.

One way of offsetting that increase could be smaller wage settlements in the public sector. Certainly it must be recognised that continuing high settlements must have serious consequences for the nationalised industries. It must affect demand for their products and services, and therefore affect their investment and employment, for there is no bottomless purse with which to pay for high wage settlements.

Because we cannot both have our cake and eat it, we must put the resources into new investment. That is why, even if we could, we are not prepared to continue subsidies for the industries covered by this Bill. In the case of others, such as British Railways, which receive subsidies for social reasons, they will continue to do so, but the levels of subsidy will have to be kept under the strictest control.

It cannot be emphasised enough that, if we are to improve the total wealth of the nation and the wellbeing of the workers in these industries, limited resources cannot be used to subsidise overmanning and inefficient use of labour. It must be clear, whether for industries referred to in this Bill or not—and it is particularly true for labour-intensive industries—that high wage settlements must mean either big price increases or cuts in costs, or both.

I hope that the reduction in costs can be made by increasing productivity. But the improvement in productivity would have to be real, and there can be no question of simply paying for a high wage settlement and living in hopes of increased productivity. We have done that for too long.

The alternative of large price increases can be self-defeating in some industries. We are seeing signs of it in the postal services, where large price increases result in falling sales, making it even more difficult for the industry to pay its way, and in the longer term it must affect employment prospects. In short, it is crucial that workers in the public sector, as well as those in the private sector, see that their own financial prospects are bound up with the financial prospects of the industries for which they work.

I hope that this Bill will be the last of its kind. It will be in the best interests of the workers, their industries, and the country, that it be the last of its kind. In that hope, I commend it to the House.

4.48 p.m.

In the spirit of generosity which must mark our return from referendum politics, I congratulate the Leader of the House on showing all his customary imagination and verve in having chosen, as the first broadcast Bill in the House, something entitled the Statutory Corporations (Financial Provisions) Bill—hardly an exciting title. One hopes that if ever there is another such Bill—and we dearly hope that there will not be—we may change the title, for it does not really express what the Bill is about at all.

If the British public, having been inflicted with several weeks of television entertainment from the political stars and male prima donnas of the House of Commons, do not rush to their radios to hear more about the Statutory Corporations (Financial Provisions) Bill, it will be because of the title and not because of the very important contents which it embodies.

On a point of order, Mr. Deputy Speaker. To put the hon. Member for St. Ives (Mr. Nott) out of his misery, would you explain that the present proceedings are not even being recorded for broadcast?

The hon. Gentleman has taken me by surprise. We are all disappointed that we shall not be heard, but we shall listen to the hon. Member for St. Ives (Mr. Nott).

Of course, the media and the trade unions run the country, but I had understood, although I may have been wrongly informed—I do not want to dwell on the point—that this debate would be part of the edited broadcast of the House. The debate is being recorded, but whether it will actually be broadcast is not for me to say.

Now that the referendum is behind us and the Labour Party's internal conflicts are resolved, Parliament can get down to some of the very real problems that face the country. In my view, the Bill will be of more importance to the income, employment and general welfare of the British people over the next year or two than the Common Market, about which I trust we have learned a little during the past three weeks.

I do not believe that the House would wish to debate today what happened in the past. [Interruption.] If we are interested in what happened in the past, it is because it might teach us something about the future. But there is little point in jobbing backwards.

We would all agree that so confused and unsatisfactory is the present relation. ship between the public corporations and Ministers that we should now go back to first principles and start again. I hope that the Government will take the view that I am making a relatively non-partisan speech. In putting forward a few ideas—I do not put them any higher than that—I must make clear which areas I shall tackle, otherwise the hon. Member for Newcastle-under-Lyme (Mr. Golding) will leap to his feet and refer to the Post Office. Therefore, I want to set out what I shall and what I shall not deal with in the debate.

Although I believe that many, if not most, of the problems of the public corporations derive directly from their ownership by the State and that the Government's financial problems are greatly enhanced by the present size of the public sector, I shall leave it to my hon. Friends, if they so wish, to advance the arguments for denationalisation and the folly of extending the public sector further. My concern today will be with the efficiency of the existing corporations contained within the Bill and perhaps with the railways, which are outside the Bill. For the sake of time, I do not intend to deal with the wider arguments for and against nationalisation or the present Government's policies in this area.

Secondly, the Government have designated the Bill as a Treasury Bill. I do not want to deal with the problems of particular industries except in so far as they demonstrate some of the problems of financing these industries, ministerial control and investment procedures.

Thirdly, I do not want to get involved in argument about whether the nationalised industries are more or less efficient than the private sector and to what extent this is the fault of the politicians or the fault of management. I leave that matter aside. There is plenty of statistical material which points both ways. The figures can be made to prove anything. The British public—the consumer—would need a great deal of convincing that the public corporations are more efficient than private firms. However, I leave the matter there.

We can look at certain public corporations in isolation and judge them for what they are. In this connection I have seen the motion on the Order Paper in the names of the hon. Member for Motherwell and Wishaw (Dr. Bray) and some of his hon. Friends, criticising some of the management and some of the procedures of the British Steel Corporation.

Fourthly, I am sure that the Government will agree that it is not possible to treat the public corporations as some kind of homogeneous entity. Most of them are very different from each other. This is an extremely diverse sector, and the solutions that may well apply to one probably do not apply to others. One could perhaps divide them into three groups, although I noticed that in an Adjournment debate just before the Whit-sun Recess the hon. Member for Bristol, North-East (Mr. Palmer), who takes a great interest in nationalised industries, divided the nationalised industries into two groups.

For my purposes, I should like to divide these industries into three groups. First, there are those corporations like the National Bus Company which are in open if not always fair, competition with private firms. Secondly, there are those potentially profitable public utilities like gas and electricity which, while competing with each other and also with coal and oil, are nevertheless, in the short term at least, monopoly enterprises. Finally, there are those corporations like the railways which, rightly or wrongly, seem to have been given a licence to opt out of the disciplines and rigours which are applied to most other public sector enterprises and to all private firms because they are said to be an essential service. I believe that is a very odd notion.

Clearly the arguments against the subsidisation of public corporations are too well known to be rehearsed by me, but I shall list them briefly. Demand in the medium term is artificially increased, leading to a misapplication of resources. Consumer spending is increased at a time when it needs to be reduced. Energy consumption will be encouraged in the fuel industries, where it needs to be discouraged. The knowledge that the public purse—and I am glad that the Chief Secretary referred to this very important point—is always open will encourage a continuous and pernicious effect on wage bargaining, as exemplified by the recent comments of Mr. Weighell.

I turn now to a few thoughts about a new financial régime for the industries. As I know how difficult it is for Treasury Ministers and Ministers generally when they are in office to get anything specific and positive organised on the question of targets and a new financial régime for these industries, I shall attempt to perform a constructive rôle in this regard and make a few points about targets. First, the financial targets set out in Table I of the 1967 White Paper are inappropriate now to an era of high inflation and high interest rates.

The price restraints introduced by the Conservative administration did no more than destroy what I believe is now an outmoded instrument of control. For instance, if we deal with the Gas Corporation with its large capital requirement to exploit the North Sea, or indeed any other of the major nationalised industries which is funding old debts at higher interest rates, the old targets could have been achieved whilst making a heavy loss. This is because the old targets which we were using were expressed as a gross return, without taking interest into account, on net assets taken at historic cost.

I believe that if one looks back to the original financial obligations of the nationalised industries, as set out in their separate statutes, one will probably find something which is of greater relevance to modern conditions than the financial targets which were subsequently introduced after the 1961 and 1967 White Papers.

I take the Gas Corporation as an example. Its obligation was to meet the total outgoings properly chargeable to revenue and to make such allocations to reserves as the corporation considered adequate. That was a very simple and specific set of criteria contained in the original statute which set up the Gas Corporation.

I shall now explain why I believe that is probably a cleaner and simpler target, although not one that I am totally satisfied with, than the kind of targets expressed, without taking interest into account, on historic net assets. A new target of a sort is embodied in the Price Code. Under paragraph 98 of the order, the nationalised industries may achieve a surplus of 2 per cent. on turnover or 10 per cent. on net assets. Clearly, this is hardly adequate as the basis of a new regime, because it takes no account of the varying potential profit from one industry to another and it incorporates differences of treatment in accounting practice between the industries, particularly with regard to depreciation.

It would seem that in an era of high inflation and high interest rates any target involving a return on existing net or gross assets is largely meaningless unless there is to be an almost continual process of asset revaluation. This brings in the whole question of the Sandilands Committee. I cannot see that it is realistic or practical to contemplate a target which depends for its efficiency on an almost continual process of revaluation in the whole of this huge sector.

The target was expressed, disregarding interest. Interest was not in, but if we were to bring it in, I do not think that it would be sensible to relate the interest rate to the National Loans Fund rate. It would be more sensible to limit it more nearly, to to what these corporations would have to pay, on the Government's credit rating. which I fear is declining but which is nevertheless still high in the domestic market, but to what these industries would have to pay, assuming that they were profitable, if they were borrowing in their own name.

Over the years—I do not mean this as to the immediate future—we should look again at the question whether we should go only for the orderliness of the gilt-edged market. It was this reason which led the Radcliffe Committee to suggest that the nationalised industries should borrow via the predecessor of the National Loans Fund. In my view the committee may have placed too high a priority on a neat, orderly, gilt-edged market against, perhaps, the advantages in the medium-term of allowing some of these industries to come back into the market for their funds. This is a question that we should consider for the future.

For instance, I cannot see that it is reasonable for the National Bus Company to be borrowing from the National Loans Fund at Government interest rates if it is in open competition with other bus enterprises. If we are to have competitive public corporations, we must put them on a fair and proper basis of competition with private sector firms. The present borrowing arrangements clearly must mean that the National Bus Company is not competing on a fair basis with private firms.

However, whichever way we look at it, I think we are driven back to one basic principle in the 1961 and 1967 White Papers; namely, that financial targets are secondary matters desirable for monitoring efficiency, but only on the basis that they differ in different industries, and only then after proper principles have been applied to the control of investment and the determination of prices. The White Papers made it very clear that targets should reflect sound investment and pricing policy and not vice versa.

This brings me to the question of how we are to determine prices, if we say that pricing policy should be decided prior to targets being decided. We cannot do better than look at the 1961 White Paper's recommendation, which was that in the last resort pricing must be based on marginal costs, or; in layman's language, we must fix public corporation prices so that each extra unit of output is related to the resources necessary to produce it, or, if it is not a monopolistic system, the price which a competitive market will bear.

I am well aware that that leads one into all sorts of difficulties about peak load, the trade cycle, cross and social subsidisation and about whether to take short-run or long-run marginal cost as the basis for the pricing of products. I nevertheless believe that we shall not do better than long-run marginal cost as the basis on which the prices of the nationalised industries are set.

I am sorry to have burdened the House with that. I hope that I have not been too boring or too technical, but these are matters that we must discuss. Very little flows out of any Government in this area. When the Chief Secretary was in opposition and I was a Minister at the Treasury he made a number of suggestions to which I listened with great interest. It was very interesting to have the Opposition's views on the matter. I therefore hope that the right hon. Gentleman will not think that I am being unduly unhelpful in this debate.

I do not know whether the organisation in Whitehall for dealing with the nationalised industries is properly arranged. I have an impression—I put it no higher, because things might have changed—that the Treasury-Department of Industry relationship is unsatisfactory with regard to the control and monitoring of the nationalised industries. I do not think that the Treasury's rôle should be one of detailed comment on each major investment project. I do not believe that that is right. I think that the Treasury should set capital investment and subsidy limits at the beginning of a period or even perhaps have a bi-annual look at the subsidy and capital investment limits and then let the departmental responsibility flow from there.

The responsibility is not ultimately that of the Treasury. The Treasury is in charge of the money. I do not think that we want to continue with a process whereby Cabinet committees continually meet, re-meet and meet again to discuss in large interdepartmental meetings whether a small investment project is justified for a particular nationalised industry. That does not seem to me to be the right way of conducting these matters within the Government.

At Question Time today, the Secretary of State for Industry made a very arrogant remark to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost). He said "The hon. Gentleman does not know how government works." My hon. Friend may not know how government works, but he has a better hunch about how it should work than the Secretary of State. Perhaps the Secretary of State should sometimes examine existing procedures rather than assume that they are for all time proper and right.

Another feature requiring attention is the wholly unjustified statutory protection given to industries in the public sector against outside competition. There is no reason why private companies should not engage in electrical generation. There is no reason why the Post Office should continue to have a monopoly of letter delivery. It would be much more efficient if the milk, the newspapers and the mail were all delivered on a contractual basis in rural areas; it would save a great deal of money.

I do not believe that the monopoly position of the statutory corporations is justified in the way that it has been upheld since the beginning of time. I believe that the Post Office letter delivery monopoly dates from the end of the seventeenth century. That is no reason why it should continue.

I believe that the monopoly of the Post Office in the delivery of the letter mail dates from 1697, so my right hon. and learned Friend or I have our dates wrong.

Again, why should the Post Office have the monopoly in the installation of telephones? The gas and electricity industries do not have the monopoly in the installation of appliances. Why cannot the private sector apply to exploit a new coalfield? The licence for the exploitation of a new coalfield is issued by the National Coal Board.

The existence of these monopolies within the public sector does not increase its efficiency. It would be a great help, certainly for pricing policy, if we had much less of this kind of statutory monopoly within the public sector.

Again there is the matter of the whole relationship of the labour force to the management in the public corporations. I wish the Secretary of State for Industry were here. Why should we not have a number of the mining areas broken down into workers' co-operatives? I would be perfectly happy to see some of the public sector run on the basis of competing workers' co-operatives. Why is it that the whole basis of co-operation amongst workers has to be kept in the private sector? The idea of setting up workers' co-operatives in the public sector is very interesting. Let them compete with one another. It would help efficiency, and would make employees very much happier at the same time.

I now come to the specific clauses in the Bill. First, however, I must make clear to the Chief Secretary that we are not seeking to deny to public corporations the finance necessary to meet the Chancellor's objectives of a phasing-out of price restraint subsidies. Neither do we wish to deny them the necessary public expenditure which is not financed out of revenue. But the Bill raises new issues of principle and of public expenditure control.

The White Paper in January forecast price restraint subsidies of £250 million in 1975–76. That was a substantial improvement on the current year, which is about £650 million, and we welcome it. Even more did we welcome the Chancellor's Budget statement, not two months ago, that subsidies for price restraint would come down from £550 million in 1974–75 to £70 million this year and were likely to be phased out completely by April 1976. Apart from juggling around with current prices, the Chief Secretary confirmed that that is the present position.

However, that is not what we find in the Bill. Not two months later, in spite of what the Chancellor said in his Budget Statement, we find no figure whatsoever. All we are told is that the total subsidy in respect of 1975–76 will depend upon, among other things,
"changes in the industries' costs, prices and revenues during the year".
This is about six weeks after the Chancellor himself predicted a figure of £70 million.

Why is the Bill open-ended if the Chief Secretary is right in saying that the Chancellor's figures are still relevant? Even in 1976–77, a year beyond the date at which the Chancellor said they would be phased out completely, the Treasury will retain order-making powers to bring forward unspecified amounts for price restraint. The legislation goes far beyond the legislative powers which we sought when we were in office. It is, in fact, contrary to the Chancellor's own expressed objectives. Perhaps the Minister of State, Treasury will say more about that when he winds up.

In the Bill which we brought forward—and the Chief Secretary will remember that we were not particularly proud of our Bill—we set a figure of £500 million as the top limit. There is no top limit in this Bill, and we do not find it acceptable on that basis.

However, we have to look behind the figures for price restraint, because they tell us relatively little. What we have to look at is the true financial position of these industries. What counts is the amount which they are forced to borrow. In Table 12 of the Financial Statement it appears that in the current year the public corporations will finance more of their capital expenditure out of revenue than in the year before. Apparently the borrowing requirement of the public corporations will be rather less than it is in the current year. If this materialises it will be a reversal of the trend, and one that we welcome.

Looking at the position over a period of years, we find that the self-financing ratio of the nationalised industries has greatly worsened. In 1971 the figure was about 42 per cent. This is the amount by which the nationalised industries were financing their capital expenditure out of revenue. That is approximately double the figure for 1974–75. Apparently less than £700 million was provided from internal resources towards the capital expenditure of nearly £3 billion in 1974–75. I am again referring to Table 12 of the Financial Statement. A figure of £700 million out of externally-generated resources is by no measure an adequate amount of capital expenditure to be financed out of revenue. Indeed, the Chief Secretary made that point.

What we need to know—and perhaps the Minister of State will take this point on board—is the formula which Departments use to decide how much of capital expenditure is financed out of revenue. It is no use our fiddling around with amounts like £70 million of price restraint if as much as £700 million can be moving around the borrowing requirement because a particular industry is financing less of its capital expenditure out of revenue. We get nowhere unless we have a specific and published figure which will tell us exactly what we want to know namely, the movement of overall borrowing requirements of these industries. In this respect Table 12 is a great help to us.

It appears that the Treasury is imposing some cash limits on the nationalised industries, and in some cases this is leading to a fall, in real terms, in the increase in capital expenditure. The Government are having to meet rising real incomes in the public sector. Capital expenditure is being cut back, as the Chief Secretary said, in order to finance escalating money incomes in the nationalised industries. It is not good enough just to talk about a cash limit overall. What we have to think about is a cash limit on the revenue accounts of the nationalised industries.

Perhaps I may quickly suggest some guidelines. First, as we have repeatedly demanded, there must be a cash limit beyond which no public corporation can come to the Government for one single extra penny. That in the last resort is a matter of political will. That does not apply to a subsidy for price restraint. It applies also to any money received from, the National Loans Fund or borrowed under a Treasury guarantee in the Eurodollar market or anywhere else.

Secondly, each industry must have a fixed formula which requires it to finance a specific percentage of capital expenditure out of revenue. That formula should be published and may not be varied, so that we know exactly how much capital expenditure is going to be financed out of revenue. Publishing it will help to strengthen that discipline within the system.

Third, in order to set the cash limit, the Treasury will have to take a view on the permitted increase in the total salary bill in the coming year. By all means, let the unions bargain with the management about the distribution of the increase, but the cash limit itself is a matter for the Government. It is not a matter for the trade unions. The actual cash limit which is imposed upon the nationalised industries is a matter for the House of Commons. It is not a matter for tripartite discussions. If it is decided to raise it in the NEDC, that is one thing, but the overall cash limit is a matter for the Government and the House of Commons. It is certainly not a matter for bargaining. It must be set in accordance with the overall needs of the economy at any one point of time. If a corporation goes beyond its cash resources, it can finance the increased salary bill only by raising its prices. In the case of the Steel Corporation at the present time, it could not raise its prices. Therefore, the only answer in that case is redundancies. It follows as night follows day.

It is no use the Chief Secretary's saying "We are considering a stockholding scheme for the British Steel Corporation." We must have a figure and stick to it.

I accept that there is a particular problem of recession in the steel industry which may be unique in its size since the war, but it is avoiding the issue if the Government provide more working capital for the holding of unlimited stocks. It is not an answer to the problem.

In the case of a monopoly supplier the price increase must be subject to regulation by the Monopolies Commission or some other price regulation body, ideally outside the Government. The utility industries are not monopoly suppliers in the long term, because, for example, gas competes with electricity, coal and oil, but over three to five years they are monopoly suppliers, and we must have an outside agency which can say "You are making use of your monopoly position. You cannot go beyond a certain point."

My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) has persistently mentioned these principles in debates in the House, although unfortunately the commentators are fixed upon an idea that one does not have a policy for pay and prices unless it is in the form of the policy we had in 1972. That is an over-simplification, a naive way of looking at the problem.

The only alternative to the kind of cash discipline I have been talking about is a statutory pay policy. We know that the sanctions in such a policy do not work. We cannot put 100,000 railway workers in gaol.

I note that I have total agreement from my hon. Friend.

The only sanction we can exercise is by controlling the purse strings, which are in the Government's hands.

If we return to a statutory pay norm, backed up by legal powers, we shall have to have a statutory prices norm as well. Could there be anything more damaging to the economy than to have imposed upon the country a stringent price norm which would make the Government's £10 billion or £12 billion borrowing requirement, or whatever it may be now, look like peanuts? We should be back to subsidising the nationalised industries to an unlimited extent. Therefore, we cannot think of a statutory prices policy at present.

Moreover, a more stringent prices policy would bankrupt the whole private sector. The private sector could not survive present rates of inflation with a more stringent statutory prices policy.

We oppose the Bill, but not because of anything to do with the Government's nationalisation plans, which lie outside this measure. The Chief Secretary spoke bravely, but we do not see his words translated into Government action. There is still no real determination to impose cash limits on the public corporations so that the total wages bill does not continue to be financed by endless printing of money. The Chancellor is already backing away from his brave words about price restraint. There are no limits in the Bill, which is open-ended. For those reasons we intend to divide the House at the end of the debate.

5.25 p.m.

The House cannot but take very seriously the warning given by my right hon. Friend the Chief Secretary to the Treasury about the need for efficiency and the need to prove the profitability of any proposed new investment. But I would have found his warnings even more convincing if I did not believe that within two years he would be writing to his right hon. Friends asking them to increase the investment programmes of the nationalised industries for which they were responsible, to do so with maximum efficiency, but at all costs to do so quickly.

However dire may be the warnings from Treasury Ministers, until the rules by which they seek to control nationalised industry investment and pricing are related to the general state of the economy, and those rules are clearly understood to adapt to the changing state of the economy, they will ring very hollow within the nationalised industries, where people know that no sooner will they have got round to implementing them than the advice will have been changed.

Likewise, when the hon. Member for St. Ives (Mr. Nott) said that he felt the need for tighter cash control on the corporations, again one could not but be impressed by what he said. But I think that he would be the first to admit that he did not begin to explore the complexities of the problem as they arise in practice. I shall later make suggestions about how those complexities might be tackled.

The hon. Gentleman's point about the valuation of assets is important, in terms not so much of a corporation's overall performance but of the relative profitability of different operations within a corporation. It is for this reason that the practice of annual revaluation has been regarded as good accounting practice in some firms—for example, the firm for which I worked, Philips, where for 30 years there has been an annual valuation of assets, and has been found to be a viable basis of operation. It is a far more realistic way of taking account of inflation than expecting companies to produce a return on assets which follows the short-term or even the longer-term interest rates in the open markets.

I am delighted to hear that the hon. Member for Colne Valley (Mr. Wainwright) agrees. I hope that the hon. Gentleman will speak on this matter, drawing on his own accounting experience.

The corporation about which I should like to speak in detail is the British Steel Corporation, which makes heavy calls upon public finance in the Bill, and which faces severe problems not unrelated to its financial performance in the past year and in the current year.

The overall background is familiar to hon. Members—new processes replacing old, with the inevitable result that there will have to be plant closures, redeployment of men and the introduction of new industries into the areas affected. The problems have been greatly exacerbated by the acute recession in the industry, not only in this country but in Europe and world-wide.

No one who is used to working with the steel industry, steel workers as well as steel managers, will fail to acknowledge the realism with which the situation is understood by workers as much as by managers. We in the House are unfair to our constituents if we are not completely honest with them about the acute difficulties which they face. They see them on the shop floor, and feel let down when they see people skating around them and producing easy solutions.

The pattern of events has now reached the stage where the Government's closure review has covered England and Wales and the results have been announced. The results for Scotland will shortly be announced. No sooner had the specific plans for particular works been announced than the recession led the BSC to break its commitments on the timetable of closures in England and Wales. This happened within weeks of its having reached agreement on England and Wales, and led it to anticipate talks on the Scottish situation. The corporation claimed that this was merely the short-term closure of works. It said that it was going to close works in the short term for two years and thereafter perhaps in the longer term, but a closure is a closure is a closure for a worker who is sacked. Nowhere is that more obvious than in Ebbw Vale, in Lanarkshire, in Shelton or Shotton. There are communities throughout the country which are completely dependent on steel. They have been through this experience so often in the past that they know what is coming to them if certain policies are allowed to continue.

The twisting of words—that is what it has been when talking about short-term and long-term closures—is behaviour which inevitably invites accusations of bad faith. However, no sooner had these problems been raised by the steel trade unions and by Members in the House than the BSC abandoned its proposals for redundancies of 20,000 or 50,000 of which the chairman had spoken.

Overnight those proposals were abandoned. But were they abandoned? A statement was made jointly between the BSC and the unions that there would be no closures in the short term and no compulsory redundancies. However, the chairman of the corporation concluded with the elegant phrase that there was more than one way of skinning the cat. Quite who the cat was he did not say.

The BSC and the TUC Steel Committee, in a joint statement of 19th May, make the position reasonably clear. For example, when referring to overtime it says simply and straightforwardly:
"All unnecessary overtime will be eliminated."
That is a common sense agreement which I am sure the unions had no difficulty in accepting. However, on 30th May the BSC explained to the unions that overtime is to be defined in terms of hours. It said:
"Overtime is here defined as any hours in excess of 40 hours and any shift which carries premium time. Therefore, 42 hour rates should be reduced to a 40 hour week."
Anyone who has dealt with shift cycles In process industries will realise that that statement means that shift rates of pay will be eliminated by the overtime ban. That is not what was agreed by the unions. That is not what is said in the BSC-union agreement of 19th May.

The BSC is now saying that the guaranteed week applies not to the earnings of the shift workers as they had been working previously but merely to day work rates without the overtime premium, without the 42-hour week. That has resulted in a reduction of earnings of one-third on the guaranteed week. In a works where the workers are on the guaranteed week for two weeks, and full earnings for one week there will be an overall reduction of 22 per cent. The workers are having imposed upon them not the status quo but a reduction of earnings. For the average production steel worker, that means a reduction of his income to a level below that which he would be receiving on social security benefits.

The workers are driven to seek better pay. In the works which are threatened with closure there will be many workers who will seek to get out first to find a job in a trade. The tradition in the steel industry is that when the building industry goes into recession bricklayers, plumbers, plasterers and joiners find work in the steel industry. Those men will now leave—perhaps that is fair enough—but what will happen after that? There will then be affected the harder core of men who are dependent throughout their lifetime on the steel industry. They will be living below social security rates.

The BSC and the steel unions agreed that redundancy payments should be made for voluntary redundancies. It was agreed that that should apply where both the BSC and the unions agreed that the manning was surplus to requirements. That was the clear statement that emerged from the meeting of 19th May. But now the BSC is saying that redundancy payments will be made only if it is mutually agreed that overmanning existed at full output level. For example, if there are four furnaces in a works and a certain manning level is required for them, and if only one furnace is operating, as in the case of the Lanarkshire Works in my constituency, the BSC will not pay redundancy payments for any worker who leaves below the level required to operate four furnaces. That is a twisting of the statement which was agreed between the BSC and the unions. That is why the unions hold the corporation in such low regard at present.

In the works threatened with closure there is already migration. For example, 40 men left the Lanarkshire works last week. There has been a migration of 3 per cent. of the labour force in one week, which means that within six months the manning in those works will be reduced to a level at which the works can no longer operate. The workers who depend completely on the works will not leave, but the works will cease to be viable in the longer term.

In this situation it has been a matter of great concern to me that the steel workers and the responsible branch officers have not always been able to find the support to which I think they are entitled. In the difficult situation that they face they have not always been able to find support from the union hierarchy. There was no report back to the trade union branches from the joint BSC-union meeting on 19th May other than the published statement, until a meeting which is now going on in my constituency.

In the Scottish office of the Iron and Steel Trades' Confederation there is only one telephone, which is constantly engaged. It is unfortunate that divisional organiser Arthur Bell has been off ill at this time. The men have an uneasy feeling in the works threatened with closure, which are the works needing union help most of all, they are not getting the support which they should have.

I have the greatest respect for Bill Sirs, the new General Secretary of the Iron and Steel Trades' Confederation. I wish him every success in his job. He has a major task as regards the organisation of his union and the service which it provides for its members, as well as in the modernisation of a wage structure which at present allows members to have their wages arbitrarily reduced by approximately 20 per cent. in circumstances which were never anticipated by the men.

The reaction to the present situation is that the men take whatever action is open to them. In the Clydebridge Works in the constituency of my hon. Friend the Under-Secretary of State for Industry—Rutherglen—the men have blacked any slabs from Ravenscraig. In the Lanarkshire works in my constituency ingots have been blacked from Glengarnock.

The BSC is losing control of the flow of work within the corporation itself. In my view, the works committee has put forward reasonably clear claims as regards the Lanarkshire works. It has submitted a claim for two furnaces and 10-shift manning and pay at the appropriate level compared with the one furnace 5-shift manning which the BSC is seeking.

It is disturbing that little action is to be seen in terms of the provision of alternative employment. For years we have talked about the development of major industrial sites in Scotland—for example, Cambuslang and the Etna and Range Road sites at Motherwell. Not a stone has been turned on any of those sites. They have been in the ownership of the BSC since vesting. There has been no provision for the redevelopment of resources to help in the creating of alternative employment. Activities within the BSC should be expanding but in the case of the sites that I have mentioned—I am fully aware, Mr. Deputy Speaker, that you are looking at the clock.

The hon. Gentleman has a guilty conscience. I was just looking anywhere.

I am grateful for that assurance, but I assure the House that my usual brevity has been overcome by the knowledge that the House is not over-full at present.

In the case of subsidiary activities other than steelmaking which should be expanded to provide alternative employment, it is well known that there are acute management problems. Redpath Dorman Long has embarked on the construction of oil drilling equipment in partnership with ENI and I understand that the losses on platforms are running at about £l5 million. I also gather than ENI is disenchanted with the partnership and is trying to pull out of it. This is a serious reflection on the management which the British Steel Corporation has been able to put into its diversified activities. I hope that the corporation in its wider social responsibilities and also financially will see that its management problems here are put right forthwith.

The hon. Gentleman seems to be unfairly attacking the BSC for failing to take up its social responsibilities in associated industries. Does he not wish to pay tribute to the corporation for the work it has done in, for example, building up the existing stainless steel effort in the South Wales area, site clearance in Hartlepool, and so on? I hope that he will touch on some of those matters. Finally, does he accept the overall investment strategy of the BSC? He seems to be concentrating on the short-term problems on which he feels strongly from a constituency point of view.

I pay tribute to the BSC for what it has done, but the effort has been totally inadequate in scale and is regarded by the workers as a cynical piece of window dressing. There is an entirely different scale of activity when we compare what the BSC has done with the activities undertaken by the Dutch State Mines in Limburg in South Holland. As regards the long-term investment programme of the BSC, I accept the need to introduce large-scale BOS steel-making backed by electric arcs. I will send the hon. Gentleman a note which I have written on this subject and which I have discussed with Ministers. I should like to have his support since it envisages a phased investment programme with a proper discharge of BSC's social responsibilities.

I cannot help feeling that these problems of closure of works and the redevelopment of employment to take up the workers made redundant in communities which are totally dependent on steel are marginal to the economic success of BSC in the sense with which we are concerned in this Bill. We must ask how good BSC is in making steel and in selling it. The Press has built up the image of the BSC's chairman as a white knight ruthlessly seeking efficiency frustrated only by pettifogging complaints by trade unionists, Ministers and employees threatened with redundancy.

I shall not weary the House with a catalogue of mistakes and disasters which have occurred in the BSC in the last couple of years. This encompasses blast furnaces needing relining simultaneously on the same site, a burnt-out mill motor, a spilled furnace, broken cranes, grandiose and impracticable planning sys- tems, the shortfall of output below design capacity, defects of investment and pricing strategy, and industrial relations problems—the latter the only set of problems which BSC has been prepared to admit. There has been a total lack of realism by the BSC chairman in dealing publicly with problems which anybody who has been in large-scale industry knows exist and appreciates are inevitable. It is difficult to compare performance between one industry and another in these respects. Certainly it appears that the BSC has not yet had time in its eight years of existence to develop proper operating standards and management structures to deal with the difficult plant which it is now operating.

On this wider perspective it cannot be said that the chairman of the BSC or anybody else in the corporation is being frustrated by Government policy. I have attempted to outline the problems which the BSC should be tackling instead of making such heavy weather of its closure programme.

Action is certainly required to complete the closure review as quickly as possible. One accepts that the BSC should operate in the spirit of the Government's policy and of trade union objectives involving no closures without the provision of alternative employment. We need to get on with the creation of new jobs and to share work between works until the required phasing has been met.

The corporation and the Government need to phase closures to fit in with alternative employment and to improve union lines of communication. I appreciate that this aspect is not a BSC responsibility, although the corporation can play its part in establishing trade union representation in planning committees at the works, divisional and corporate level. There should be proper training of management within BSC and a truce in the war with the Government. I very much regret the atmosphere which has built up between the corporation and the Secretary of State for Industry. I speak as a long-standing friend of Sir Monty Finniston. whom indeed I introduced to Dick Marsh in the first place when we were nationalising steel, but I certainly do not regard the blame as lying in the court of the Secretary of State. Undoubtedly, Sir Monty has given great service to the corporation. He has designed a strategy with which the corporation will be occupied for many years to come. I would ask him to think carefully whether his own objectives, let alone those of the country as a whole, are best served by remaining in a state of armed opposition to the Government and by using all the implements available in the media.

The hon. Gentleman has embarked on a critique of BSC. but has left us a little unclear about his view of major policy. Earlier today the Secretary of State for Industry was asked whether he was in favour of day-to-day intervention by Ministers in the work of the nationalised industries, and replied that the community—by which no doubt he meant himself—was in favour of day-to-day intervention. Is the hon. Gentleman in agreement with that view, or is he saying that Sir Monty should go, or is he saying that Sir Monty, as chairman, should be left to employ his skills to maintain the industry in the best interests of the country and the work people?