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Commons Chamber

Volume 893: debated on Thursday 12 June 1975

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House Of Commons

Thursday 12th June 1975

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions

National Finance

Exchange Guarantees


asked the Chancellor of the Exchequer what is the extent of the exchange guarantees currently outstanding to foreign holders of sterling.

Will the Paymaster-General confirm that it is not the Treasury's intention to give any new guarantees for sterling, as it cannot be prudent for sterling to be held at an artificial level while the Government at last search for an effective anti-inflationary policy?

There has been a considerable change in the situation since these guarantees existed and since last December, when they were abolished. We have no such intention.

Bank Of England (Governor)


asked the Chancellor of the Exchequer when he will next be meeting the Governor of the Bank of England.

I maintain close contacts with the Governor of the Bank of England, meeting him on a regular basis and also as and when circumstances require.

When the Chancellor next meets the Governor of the Bank of England will he tell him that he will not for much longer be able to rely on the revenue from Scotland's natural resources to prop up the ailing English pound? These resources will be used to make the Scottish pound one of the healthiest currencies in Europe and will cure our awful areas of deprivation. Is the right hon. Gentleman also aware that the remark he made recently in Scotland, that Scotland cannot stand on its own economic feet, was an affront and an insult to the people of my country?

I am not aware that, so far, there have been any revenues from offshore oil, although I hope they will begin with the first flows of oil from the North Sea this week.

The hon. Gentleman will be aware—and will not, I hope, dispute the fact—that Scotland has been getting a great deal more help from the United Kingdom Government than has the rest of the United Kingdom. During a worthwhile visit to Scotland last weekend I came to the conclusion that the views of the hon. Gentleman on Scotland no more represent the views of the Scottish people than do his views on the Common Market.

Will the Chancellor note that members of the official Opposition who speak for Scotland have no desire to be associated with members of the Scottish National Party who whine constantly on Scotland's behalf and fail to represent the generous spirit of the Scottish people as members of the United Kingdom.

I shall certainly bear that in mind, as I bear in mind the recent evidence of a desire by Scotland's offshore islands, in whose waters the oil is, for separation from Scotland?

In view of the strength of the Scottish economy, as described by the hon. Member for Perth and East Perthshire (Mr. Crawford), will the Chancellor make a start by withdrawing all the heavy subsidies from England on rates and taxes in Scotland, because the English economy is obviously in a terrible state?

No, Sir, I shall not. With respect, the hon. Member should not be led astray by the exuberance of the Question Time atmosphere into ignoring the serious problems of urban deprivation in the Glasgow area—probems which deserve, require and have obtained exceptional help from the United Kingdom Government.

Value Added Tax


asked the Chancellor of the Exchequer how many representations he has had asking him to review the 25 per cent. VAT on television rentals; and if he will make a statement.


asked the Chancellor of the Exchequer how many representations he has now received on the proposed rate of VAT on hired television sets.


asked the Chancellor of the Exchequer how many complaints he has received about the increased rate of 25 per cent. VAT on televisions.


asked the Chancellor of the Exchequer what representation he has received requesting him to review the 25 per cent. VAT on television rentals; and if he will make a statement.

My right hon. Friend has received over 1,200 representations about VAT on television rentals. The great majority of them have been about the application of the 25 per cent. rate to rentals under existing hiring contracts.

Does not my hon. Friend agree that the 25 per cent. value added tax on television rentals is an unfair and excessive burden, particularly for pensioners? Will he investigate alternatives, such as photographic films, together with cuts in defence expenditure, to produce the £100 million revenue required?

I understand and share the concern of my hon. Friend about the effect of these proposals on pensioners. However, we have to keep these matters in proportion. The average increase in the rental of monochrome sets will be about 35p a month. For colour sets it will be about £1·10 a month. Any concession related to pensioners or any other section of the community would, unfortunately, be open to abuse and extremely difficult to police.

Is the Minister aware that this is a punishing imposition on poorer people and that the unfairness is specially resented by those renting old television sets under contract? Scores of constituents have written to me asking why the Chancellor has not restricted this extra tax to new sets, because that at least would be regarded as a fairer approach.

There is nothing new in the impact of this change under VAT law. It was inherent in the provisions of the Finance Act 1972, which was heartily endorsed by the hon. Gentleman and his hon. Friends. I agree that there has been considerable concern about it. However, it is not necessary for retailers to pass the amount on in the case of the very oldest sets. I happen to rent an old monochrome set from the Dudley Co-operative Society, which I am glad to say has absorbed the charges.

Does my hon. Friend agree that there is a great feeling of public outrage not simply about this increase in taxation but about its retrospective nature, in that it applies to contracts taken out prior to the new operative date, and that it applies to people who unfortunately, perhaps because of financial hardship, had fallen behind in their rental payments on the operative date?

I should emphasise to my hon. Friend that there is nothing retrospective about the application of these provisions. No payments made with respect to hiring contracts before 1st May will be affected in any way. This is purely an ongoing situation. I should also draw my hon. Friend's attention to the fact that at such time as the higher rate of VAT may come down in the future it will be the renters who will benefit. The people who will have bought their sets at the higher rate will be stuck with paying for them at that rate.

The Minister says that we must keep this matter in proportion. Does he not agree that it affects 12 million people, including the poorest sections of the community? Would it not have been far fairer to cut public spending rather than put this additional burden on the elderly and those who can least afford it?

The hon. Gentleman will be well aware that the present Government have done more for the elderly than his party ever considered doing. We have arranged for pensions not only to go up in line with rises in the cost of living, but to go further and rise with general increases in the standard of living as reflected in wage rates.

My hon. Friend must understand that there is real disquiet among retirement pensioners about this matter. Will he be a little more flexible and at least say that he will discuss it with his right hon. Friend the Chancellor of the Exchequer? Perhaps it would be helpful to pensioners owning old sets if he spelt out a little clearer, here and now from the Dispatch Box, what he means by saying that the extra VAT on old sets need not be passed on by retailers.

Of course, I recognise the concern which has been expressed by my hon. Friend and by other hon. Members, but the decision whether to pass on the VAT must be a matter for the commercial judgment of the firm concerned. We must recognise, of course, that when VAT was first introduced not all rental firms increased their rentals by the amount of the tax. It is very much a question of the firm's commercial judgment whether it can absorb all or part of this increase itself or must pass it on to its customers.

Do not the points raised by hon. Members on both sides of the House reveal the folly of departing from a uniform tax, and are not the Government returning to all the ridiculous anomalies that we had with purchase tax?

If the hon. Lady is under the impression that the original VAT at a single rate was free of anomalies, I could spend a great deal of time disabusing her of that illusion, but I should be abusing the time of the House. My right hon. Friend decided, quite correctly, that it was time to reintroduce a proper system of discrimination into indirect taxation in this country, and his proposals received the approval of the House.


asked the Chancellor of the Exchequer what is his estimate of the cost to the Revenue of increasing the exemption limit for VAT from £5,000 to £7,000 so as to allow for the fall in the value of the £ sterling since the limit was originally fixed at £5,000.

To increase the VAT exemption limit to £7,000 would cost about £15 million a year.

May I ask the Financial Secretary to increase the limit? May I point out to him that many thousands of small traders are now being brought within the complexities of the VAT regulations? Does he agree that, with inflation, now is the time to raise the limit? It must be increased at some time. Surely this is the time to do so.

I do not necessarily follow the hon. Gentleman in all of his inferences. We have had no recent representations from any trade bodies, and only a few suggestions from individuals, that the limit be raised.

Does not the hon. Gentleman agree that this figure is quite unrealistic in present circumstances and that many individual self-employed shopkeepers will take up so much time in filling in these forms that they will be unable to get on with their business?

I ought to make it clear to the hon. Gentleman that registration is not without certain benefits, as it enables a firm that is registered to reclaim the input tax deduction. I recognise that there are costs and benefits which run both ways in this situation. It would also not be entirely to the advantage of firms already registered to be relieved of registration, because they would also have to pay tax on their existing stocks and assets.


asked the Chancellor of the Exchequer whether he will now seek to raise the point at which firms have to register for VAT.

Does my hon. Friend agree that by far the greater proportion of the VAT revenue is obtained from large concerns and that the cost of collecting that proportion is comparatively low? Does he also agree that as inflation attracts more and more small concerns into the VAT net the administrative cost and burden of VAT is massively increased with a correspondingly small increase in revenue?

I am seized of the general points which my hon. Friend makes, but I cannot usefully add anything to what I said in reply to an earlier Question. The effect of registration is not clear-cut, one way or the other. There are benefits to small traders to offset the administrative costs that registration brings for them.

As we might have to begin to harmonise VAT with our partners in the Common Market, will the Minister tell us the starting points for VAT in some of the Common Market countries?

As far as I am aware, the highest registration level in any Common Market country is £1,800 a year, and discussions—which are by no means binding on us, and no decisions have yet been taken—are centring around a possible figure of £1,600 a year.


asked the Chancellor of the Exchequer why VAT at 25 per cent. is levied on labour charges for repairing washing machines.

It is desirable that, in general, the 25 per cent. rate of VAT should apply both to the servicing of, and to spare parts for, goods which are themselves chargeable at 25 per cent., so as to reduce anomalies and to remove incentives to distortion of trade.

Does the Financial Secretary agree that literally millions of wives, mothers and working women regard a washing machine as a necessity and not as a luxury? Will he reduce this rate of tax from 25 per cent. to 8 per cent. and certainly give that reduction priority over any reduction in the VAT on television rentals?

I welcome this opportunity to make clear yet again that we have never suggested that the 25 per cent. rate was being applied solely to luxuries. My right hon. Friend the Chancellor made it clear that so many things that used to be considered luxuries are no longer considered so—items like television sets and washing machines. It was inevitable, if he was to raise the revenue he thought necessary in the public interest, that certain things which are to be found in every home and are not considered luxuries would have to carry the higher rate of tax.

Is the Financial Secretary aware that the vast majority of washing machines manufactured in the United Kingdom are made in Wales—at Llandudno Junction and Merthyr Tydfil, and that these are in areas of high unemployment, in special development areas? In the light of that, will he reconsider the 25 per cent. level of VAT on washing machines, so that there can be a boost for this industry and for these areas?

I accept the general proposition in the hon. Gentleman's remarks, but my right hon. Friend made it quite clear in his Budget Statement that the impact on his proposals upon employment was one which had caused him the greatest concern. We estimate that over every section of industry affected by VAT the total effect on employment of all the measures will be no more than about 20,000 jobs, which, regrettable as it is, means considerably less for the washing machine industry alone.

Does my hon. Friend agree that, whatever the grievance about VAT, this tax is part and parcel of the price we pay for entering the Common Market? Does he further agree that, whatever the lamentations on this subject now, there will be even more lamentations as and when the tax is harmonised with the rest of Europe?

My right hon. Friend's Budget proposals were directed solely to the economic position of this country, and were—as he was the first to acknowledge—a regrettable but necessary result of the inflation we found here a home.


asked the Chancellor of the Exchequer whether he will take steps to ensure that traders' VAT records can be reconciled with their financial accounts.

It is part of the duty of a Customs and Excise officer, when he visits a trader for VAT purposes, to verify that VAT records and financial accounts are consistent.

Does the Financial Secretary agree that the job of the Chancellor is to collect taxes fairly, with the smallest number of snoopers and the least inconvenience to the taxpayer? Does he agree that this could be achieved if he would call off the stupid civil warfare between the Inland Revenue, on the one hand, and the Customs and Excise, on the other, which prevents the reconciliation of trading accounts, which are sent to the Inland Revenue, with the VAT records, which go to the Customs and Excise?

It is news to me that there is warfare or anything but total harmony between the officials of the Customs and Excise and the Inland Revenue. Certainly no representations have been made to me on that account. It is worth emphasising that the Customs and Excise does not require VAT records and accounts to be kept in a special form. This is entirely a matter for the retailer. There is a need to police reconciliation between cash accounts and what has been charged for supplies of goods and services.

£ Sterling (Value)


asked the Chancellor of the Exchequer what is now the value of £1 sterling expressed in terms of the value of £1 sterling on 28th February 1974.


asked the Chancellor of the Exchequer what is the purchasing power of the £1 sterling at the latest available date, compared with 1st March 1974.

Taking the internal purchasing power of the pound as 100p in February 1974, its value in April 1975, the latest date available, is estimated to be '79p. This estimate is based on the changes in the General Index of Retail Prices.

Is the Minister aware that that really frightening answer is a direct result of 16 wasted months of Socialism? Will he tell his right hon. Friends the Chancellor of the Exchequer and the Prime Minister that their policies, if allowed to continue as they have in the last 16 months, are in danger of turning this country into a banana republic without bananas? Will he now give an assurance that the Government have decided to pluck up courage, ignore the rantings of the Tribune Group, and start fighting inflation, before that 79p becomes 50p by the end of the year?

The hon. Gentleman will be well aware of the proposals that my right hon. Friend brought forward in his last Budget for combating inflation. The hon. Gentleman will also no doubt be well aware of the extremely constructive proposals that have recently emanated from the TUC in this direction, many of them put forward by people who might have a great deal of sympathy with the objectives of the Tribune Group.

Will my hon. Friend the Minister say how many Opposition Members have offered to exchange their £1 notes for 79p?

Will the Financial Secretary assure me that the reason why the Chancellor has not answered this Question is that the figure is really so appalling? Does he agree that to reduce the rate of inflation would involve a cut in Government expenditure, which would involve the abandonment of the Community Land Bill and, indeed, the Industry Bill?

The reason I am answering this Question is that it always falls to the junior Minister at the Treasury to answer Questions on the purchasing power of the pound, under both administrations.

As for cutting public expenditure, the hon. Gentleman will be well aware of my right hon. Friend's proposals in that respect, both for this year and for next year. Therefore, I hope that, arising out of his supplementary question, the hon. Gentleman will be able to recognise the difference between public expenditure which is merely connected with the acquisition of assets and that which has an effect on demand for resources.

Has the Treasury, in contemplating the exchanges this week, been encouraged by the immediate boost given to confidence in sterling by the outcome of the referendum last week—as the electorate were deceived by being promised?

I am glad to be able to reassure the right hon. Gentleman that the exchanges today are quite stable.



asked the Chancellor of the Exchequer what is his estimate of the current rate of inflation; and what action he is taking designed to reduce it.


asked the Chancellor of the Exchequer what is the current rate of inflation.


asked the Chancellor of the Exchequer if he is satisfied with the current rate of inflation; and if he will make a statement.


asked the Chancellor of the Exchequer what his estimate is of the current rate of inflation; and what action he is taking to reduce it.

The increase in the retail prices index in the 12 months to April was 21·7 per cent. I explained in my Budget Statement the damage which would be caused if inflation continued at this rate.

In view of this runaway inflation, is it not high time, as some of us have been pressing, that the Government acted with a sense of urgency? If the Government now bring forward counter-inflation measures that are tough and relevant, including an effective voluntary incomes policy, is the Chancellor aware that, whatever view may be taken by some of his hon. Friends below the Gangway, he will be supported by a large number of people, of all parties and none, inside and outside the House?

Let me say seriously, first, that I recognise that inflation is by far the most serious and urgent problem which the Government and the people of this country have to face. I hope that the Government will have the support of all men of good will, in all parties and none, in any measures that they find necessary to tackle it. In reply to the earlier part of the supplementary question, I refer the hon. Gentleman and the noisy gaggle on the third bench above the Gangway to the remarks contained in the Financial Times editorial this morning:

"The temptation to search for some more immediate and dramatic gesture … could now prove a dangerous one. … The Chancellor's belief that the rate of inflation is now nearing its peak has a good deal of evidence to support it."
I ask the House to recognise that the attack on inflation is not one for the Government alone. It requires the sup- port of both sides of industry and, inevitably, to obtain support for action on the scale and of the severity required takes some time. The Government are determined to reach conclusions on this matter in the coming weeks with a view to halving the rate of inflation within the next 12 months.

Does my right hon. Friend understand that there are still many hon. Members on the Government side of the House who believe that we were sent here with a mandate not to interfere with the free collective bargaining process? Among the reasons for the present high rate of inflation are the relaxation of price controls and the relaxation on business rents. If my right hon. Friend wants to conquer the problem, he has to look in the direction of import controls and matters of that kind—if the Common Market countries let him. Therein lies his answer, and that is the policy he should be pursuing.

I understand the points made by my hon. Friend—and that is why I do not agree with him. My hon. Friend must recognise that the TUC, well-nigh unanimously, last year committed itself to guidelines for collective bargaining which it now recognises have not been fully upheld. The TUC is searching for more stringent guidelines for the next wage round and for ways of ensuring that they are complied with. I hope that the TUC will have the support of my hon. Friend in the conclusions which it seeks to reach on this matter.

Will the Chancellor now answer the original Question, which is being asked by the whole country? When will this rabble of a coalition Labour Government start to govern—before or after national bankruptcy?

From the fierceness of some of the supplementary questions asked from the Opposition benches, I have the impression that the Opposition are fully aware that the Government are governing but do not like some of the things that the Government are doing.

If we are discussing inflation—I saw the hon. Member for Oswestry (Mr. Biffen) nod his head when I made that last remark and I hope he will nod his head again to my next remark—it is the view of a large section of the Conservative Party that the scale of inflation from which we are now suffering is due to the total failure of the previous Conservative administration to control the money supply.

Is my right hon. Friend aware that several of the largest firms in the country do not attribute inflation to wages and salaries but draw our attention to the high cost of oil? What is my right hon. Friend doing about that?

Last year the fivefold increase in the cost of oil was one of the major causes of inflation. The increased cost of our imports, not only oil but sugar, commodities and many food stuffs, was a major factor. The major cause of inflation this year is excessive wage settlements, and I think that that is the general view of both sides of industry. On the question of what I am doing to bring down the cost of oil, I assure my hon. Friend that the Government are co-operating with all other consuming Governments in negotiations with the oil producers in the hope of producing greater price stability. My hon. Friend will recognise that the level of oil prices cannot be determined by the Government.

Does the Chancellor agree that the present rate of inflation is dangerous and, if it continues, could be disastrous? Is he planning new measures to come into operation over the next few months? To avoid uncertainty, are the Government still absolutely opposed to any form of statutory wage constraint?

Yes, Sir, I made clear only the other day in Glasgow that the Government oppose legislative interference in the bargaining process, and I gather that the great majority of right hon. and hon. Members on the Opposition benches agree with us on that matter. We are engaged in continuous discussions with the leaders of the TUC to try to achieve a satisfactory arrangement for collective bargaining during the next wage round. The Government, like other public authorities, also have responsibilities as an employer, which they intend to carry out.

Does the Chancellor agree that if the present under-utilised manufacturing capacity were henceforth utilised, it would reduce labour costs and would be the biggest contributory factor to reducing the overall level of inflation? How does that square with the answer that my right hon. Friend has just given?

My hon. Friend will be aware that no one wishes more than I to be able to take the measures which I know to be available to achieve fuller use of capacity in this country but, so long as wage settlements run at their present rate and produce inflation at its present rate, those measures would greatly aggravate our problems both on the side of inflation and on the side of balance of payments. So long as we have to finance 5 per cent. of our spending by borrowing from foreigners, my hon. Friend cannot ignore the attitude which foreigners take on this problem. I hope that I shall have my hon. Friend's support in ensuring that we get the rate of inflation down to a level which will enable us to take our own decisions without regard to considerations of that kind.

Does the Chancellor recognise that if we face this matter with the seriousness it deserves, he can no longer go on blaming the present inflationary situation on the policies of the previous Conservative Government? As he has acknowledged, the major cause of the high rate of inflation now is the extent to which wage settlements have roared ahead—and, we would argue, have been encouraged to roar ahead—because of some provisions of the social contract? Will the Chancellor further accept that the nation is thoroughly alarmed and disturbed by the apparent failure of the Government to come to grips with this problem? Does he realise that the nation would be willing to support the action which is necessary to tackle inflation as our major and overriding problem? Will he echo the words used by the Paymaster-General yesterday when he said there was an overwhelming need for urgency in bringing a better balance both in our overseas payments and in our Government accounting? That is the urgent action which the country awaits.

Personally I do not disagree with very much of what the right hon. and learned Gentleman said, but he will be well aware that a very large number of his right hon. and hon. Friends—one of them sitting beside him at this moment—take the view that the present level of wage settlements would have been impossible without the increase in the money supply which was organised by the last Conservative Government. I remember the hon. Member for St. Ives (Mr. Nott) making this very point himself just before he accepted appointment in the present Shadow Cabinet. If the right hon. and learned Gentleman is to be taken seriously he must ensure that the leader of his party, whom we are sorry but not surprised to see absent again from the Opposition Front Bench, does not make speeches like the one she made last night, in which she recommitted the Conservative Party to introduce a tax credits system which would add over £2 billion to the public sector borrowing requirement in 1975 according to figures published by the last Conservative Chancellor.

The Chancellor is well aware that the first stage towards a tax credits scheme is nothing more than the child endowment proposition which the Chancellor is putting forward as his own policy. Since the right hon. Gentleman referred to me, is he aware that many of my right hon. and hon. Friends and myself believe that the greatest single obstacle to a counter-inflation policy at the present time is the Prime Miinster, who seems incapable of doing anything but trimming on every single issue?

I regret to say that I am not surprised that the hon. Gentleman chose to try to defend his rather mixed record in this matter by attacking my right hon. Friend the Prime Minister, but it remain a fact that the leader of his party committed herself to introduce a tax credits scheme as soon as the Conservative Party returned to power. Fortunately, we know that that event is likely to be very long delayed.

Confederation Of British Industry


asked the Chancellor of the Exchequer when he next intends to meet the CBI.

I meet representatives of bath the CBI and the TUC regularly at NEDC. The next meeting of the council is on 17th June. I also meet representatives of these organisations separately on occasion, but have no immediate plans to do so.

When my right hon. Friend next meets the CBI will he discuss with it the evidence put forward in a recent article in the Economic Journal, to the effect that British manufacturing companies pay very little tax? Is he aware that in 1973 British manufacturing companies apparently paid only 14 per cent. tax on their profits, and, in view of this, will he inquire of the CBI why these companies continually complain that they have no incentive to invest, when this low rate of tax is due to their ability to defer tax with investment?

I shall certainly read the article to which my hon. Friend has referred, and if it seems suitable to do so I shall draw it to the attention of the CBI. However, the tax burden which has fallen on British manufacturing industry in recent years has been very substantial. This was one reason why I arranged for tax relief on stock appreciation, both in the last Finance Bill and in the one now passing through Committee.

When the Chancellor next meets the CBI will he confess to it that he now discerns a connection between the appalling rate of increase of inflation since he became Chancellor and the appalling increase in the net borrowing requirement since he became Chancellor, which now works out at 50p per week per man, woman, and child?

I think that there is a connection between the two, but not in the direction that the hon. Member suggests. The fact is that the very high borrowing requirement is largely a consequence of inflation, and has not been its cause.

Is my right hon. Friend yet in a position to say anything to industry about budgetary proposals in respect of the ferrous foundry industry?

There is a wide welcome in the ferrous foundry industry and in the industry served by it for the scheme of investment assistance which I announced in my last Budget.

When the Chancellor meets the CBI will he take the opportunity of making clear the Government's overriding determination to fight inflation, of spelling out the implications of that policy, of making it clear that a continued link between price increases and wage increases will pave the way to further inflation, and of securing his own understanding of the fact that a large public sector deficit, now increased by £20 billion over two years, is one of the most significant causes of inflation, that it must be reduced, that the consequences of that must be carried through in cash limits on Government spending and in the acceptance by the Government of their own role as a major employer in the British economy?

I do not think the CBI has any doubt about the priority which I give to the struggle against inflation—but if I may attempt to straighten out the right hon. and learned Gentleman in his rather confused supplementary question, he must recognise that a large public sector deficit, such as we now have, is damaging to the economy in many respects. I am seeking to reduce that deficit. It is not primarily damaging because of its effect on inflation. West Germany currently has a public sector deficit—and, indeed, is planning for a deficit as large as we have in Britain—yet its rate of inflation is scarcely one third as high.

National Insurance Contributions


asked the Chancellor if the Exchequer what representations he has received from self-employed people requesting that national insurance contributions be made subject to tax relief.

We have received a considerable number of representations on this matter. The suggestion was the subject of a Finance Bill amendment discussed by the House on 10th June, and I refer the hon. Gentleman to what my hon. Friend the Minister of State said in reply to that debate.

Has the Minister seen reports in today's Press that yesterday in Belgium there took place the first national strike of the self-employed—a strike that caused the interruption of many important services? Is he not slightly afraid that if the Government go on turning down reasonable requests from the self-employed, such as the one to which the Question refers, the time may not be far ahead when the same thing will happen in this country?

I have not seen the reports to which the hon. Gentleman refers. There have been many debates on the subject in this House. On 26th February my right hon. Friend the Secretary of State for Social Services indicated that there was to be an inquiry into certain aspects of this matter, which would include tax aspects. I hope that the hon. Gentleman will stand on that for the moment.

Now that all contributions to the National Insurance Fund are earnings-related, does the Minister accept that there is a situation different from that which existed in 1965, when tax relief on such contributions was withrawn? Is there any chance, in this new situation, of the Chancellor's reviewing the desirability of tax relief on all such contributions?

It is not our view that there should be any change in the tax position from what now exists. However, the tax aspects of the matter can be looked at in the context of the inquiry announced by my right hon. Friend.

Borrowing Requirement


asked the Chancellor of the Exchequer what is his latest estimate for the borrowing requirement for 1975–76.


asked the Chancellor of the Exchequer what change there has been in the public sector borrowing requirement since his Budget Statement.

It is not customary to give forecasts of public sector borrowing except at Budget time.

Is the Minister aware that the borrowing requirement is thought to be at the heart of our economic problem in relation both to inflation and to the worsening balance of trade? Will he deny implications that the borrowing requirement has risen even in the two months since the Budget? It he were able to make such a statement, it would have a good effect on confidence in our currency.

If the hon. Gentleman is referring to an article in The Times Business News the other day, my view is that one cannot base on two months' figures the implications which the article made. As for the borrowing requirement being at the centre of our problems, my right hon. Friend has placed great emphasis on the fact that it should be brought down. There are many other aspects of our problems to be considered.

Will the Minister give an assurance that if the public sector borrowing requirement goes above the estimate which the Chancellor originally put forward in his Budget estimate—whether as a result of changes in Government policies or inflation through wage settlements beyond the assumptions made when the borrowing requirements were drawn up—the Chancellor will bring before the House proposals to cut back public expenditure borrowing requirements to the original estimate?

My right hon. Friend has already indicated his intentions in respect of public expenditure in the past year and the cuts which he intends to make in the increase in the rate of public expenditure. He has also indicated on many occasions, as, indeed, all Chancellors do, that from time to time he will take whatever measures are required.

Will the Minister refute the suggestion made by his right hon. Friend that the public sector deficit in Germany is the same as in this country, since in Germany it is a much smaller proportion of the gross national product than is the case in the United Kingdom? What steps do the Government intend to take to deal with the juggernaut of public service expenditure here, arising largely from the so-called reorganisation of local government and the National Health Service under the Conservative Government? What do the Government intend to do about that expenditure, whose main components are wages and salaries?

There has been an increase in the borrowing requirement in Germany. On the question of local government expenditure, the hon. Gentleman knows of the existence of the council, under the chairmanship of the Secretary of State for the Environment, which has been set up to discuss these matters.

Women In Public Life


asked the Prime Minister what actions Her Majesty's Government propose in response to Commonwealth Conference discussions on the role of women in public affairs.


asked the Prime Minister how, following discussions at the Commonwealth Heads of State Conference, Her Majesty's Government propose to provide for the full participation of women in our national and international affairs.


asked the Prime Minister whether he will make a statement on the role of women in the political, economic, social and cultural life of the United Kingdom following the discussions at the Commonwealth Conference in Jamaica.


asked the Prime Minister if, following the Commonwealth Heads of State Conference communiqué, he will make a statement on the role of women in public affairs.

This Government are fully committed to the objective of securing equal status and opportunities for women in all aspects of our national life. A comprehensive Sex Discrimination Bill—which makes sex discrimination unlawful in employment, education and in the provision of the general run of goods, facilities and services to the public—is now before the House.

Bearing in mind the words of Mrs. Burnham, of Guyana, that the best way to achieve women's liberation is through Socialism, will the Prime Minister explain the sudden reduction in the role of women in the Ministry of Overseas Development, following the replacement of the only Member of Parliament in Scotland who is both a Socialist and a woman by a successor who is neither?

I have not found the matter confusing. With regard to the Commonwealth Conference, a leading part in this question has been taken not only by Mrs. Burnham but by her husband Mr. Forbes Burnham, the Prime Minister of Guyana. On the other issue raised by my hon. Friend, there was no discussion of these matters at the Commonwealth Conference in Jamaica.

May I invite the Prime Minister to join me down memory lane by recalling the occasion when he attended a most enthusiastic rally to mark 50 years of votes for women? Has he noticed that there are only 27 women Members of Parliament out of a total of 635 Members in this House? Does he agree that that is not a particularly attractive ratio? Has he noticed that my party does best, because we have two women Members of Parliament out of 11 Members in our ranks, while the Liberals, the Ulster Unionists and, I regret to say, Plaid Cymru have not one woman Member of Parliament to brighten up their benches? If we consider Scotland, we find that the Labour and Tory Parties have only one woman Member each. Should not the Prime Minister—

Let me correct the hon. Lady. The ratio, although small, is highly attractive. I recall that last week the hon. Lady asked me to go to Stornoway with her, and this week she wants me to join her. As for the celebrations of 50 years' votes for women, I did join the function that the hon. Lady referred to, and I also took part in a reception marking International Women's Year. I believe the hon. Lady made a valid point. I believe that all the major parties can be subjected to the criticism—it is a fair one—that we do not have more women Members of Parliament, particularly in the more winnable seats. That is no derogation of the high quality of many Members in all parts of the House, not least in my own party.

Will my right hon. Friend accept that many of us would welcome the appointment of a woman and a Socialist as chairman of the commission which has recently been announced to deal with discrimination against women? Will he ensure that the commission not only has the legal armoury that lies behind the Sex Discrimination Bill but has adequate funds and staff to deal with the task that lies before it?

I know that that is the intention of my right hon. Friend the Home Secretary. As my hon. Friend knows, it is widely conceded that the Sex Discrimination Bill, which has now been reported from Committee, is the most comprehensive legislation of its kind in the democratic world. It is the intention of my right hon. Friend and his colleagues at the Home Office to ensure that it is a question not only of legislation but of a follow-up by the administration.

What did the Prime Minister mean when he referred in his first answer to "comprehensive sex?"

The word "comprehensive" governed the Bill, not the sex. I referred to a comprehensive Sex Discrimination Bill. I hope that that is clear to the right hon. Gentleman. In case he was raising wider questions, I think that these are matters for consenting adults in private, for which the Government have no responsibility.

I welcome the fact that in a number of Commonwealth countries women have obtained high, if not the highest, positions in their political systems, but does my right hon. Friend share my concern that during International Women's Year the prospect of there being a woman Prime Minister in Britain is no nearer now than it was six months ago?

I do not agree with my hon. Friend in this matter. There are more women members in this Government—as, indeed, there were in previous Governments which I headed—than was the practice under Governments of other parties. I believe that the present Cabinet is the first to have two women Cabinet members. I look forward to more.

As some people in public affairs are capable of cutting through the trivia to the real problems of the nation, may I, as a woman in public affairs, ask the Prime Minister what action he proposes to take to deal with the main problem facing the nation—that of inflation?

I agree with the distinction made by the right hon. Lady, but when she spoke for 50 minutes in the debate on economic affairs she did not cut through any trivia. She did not get to the real problems, or offer any real solutions. Nor, I understand, did she take advantage of the 45 minutes during which my right hon. Friend the Chancellor answered Questions today to put any relevant questions. I refer her to the answers given by the Chancellor of the Exchequer this afternoon.

The Prime Minister can talk out Question Time but he cannot talk out the crisis facing the nation. He talked out the economics debate. How much longer is he going to dodge the real issue?

Had the right hon. Lady been listening to my right hon. Friend she would have heard what he said, especially about our discussions with the TUC as well as with the CBI. I would have hoped that she would have reports on the matter. I am surprised that she has not warmly welcomed the initiative taken by the TUC this week. I am surprised that she has not welcomed the initiative taken by Jack Jones, and the warm follow-up which is being given to these matters by the Government. The right hon. Lady has said that she is opposed to a statutory pay policy. If she has any ideas apart from those which we are following—which she condemns—she should let the House know what they are.

Prime Minister (Official Engagements)


asked the Prime Minister if he will list his official engagements on the 12th June.

In addition to a meeting of the Cabinet and a number of official meetings with my colleagues and others, I took the opportunity of the President of Romania's stop in London to entertain Mr. Ceausescu to breakfast at Chequers this morning.

Will the Prime Minister take time to study the newspaper reports of yesterday's meeting of the TUC economic committee, which gave an enthusiastic welcome to Jack Jones's proposals to restrict wage increases next year? In view of that, and the other indications of the trade unions who want to pursue reasonable wage policies, will the Prime Minister and the Chancellor take an early initiative in this matter?

Yes, Sir. I referred to that matter in answer to a question by the right hon. Lady.

My hon. Friend will be aware that in the speech which I made to the CBI just before the recess I welcomed the initiative taken by Mr. Jones on the question of flat rates, because many of these problems are due to differentials—people maintaining percentage differentials which increase cash differentials. I said that these initiatives were well worth studying. My hon. Friend knows that that and other proposals which I have put to both sides of industry are being pursued by the Government. The House knows from its experience last year and from the wise words of the right hon. Lady the Leader of the Opposition that this problem must be solved by consent and agreement. That is what we are pursuing. It might help if what is being achieved by the trade union movement were sometimes praised by the Opposition, and not always criticised.

I believe that on 8th June the Secretary of State for the Environment said that the country was on a suicide course. Regrettably, judging by events, that seems to be true. Does the Prime Minister agree with that statement? When will he take action to get us off that course?

I described the action taken before and since the speech made by my right hon. Friend—action which we are continuing to take. My right hon. Friend warned everyone concerned with wage claims to ensure that as far as possible there was full compliance with the guidelines. We now know that the TUC is taking new initiatives in these matters, which are of great importance. A little encouragement from the Opposition benches might help.

Does the Prime Minister agree that one of his official engagements today should be to meet the new Secretary of State for Industry, to start thinking about those areas of British industry in which the Government might invest, through the National Enterprise Board, to get Britain ahead again—rather than just to preserve existing employment—to promote change, and to get us into the growth areas, the winning areas for Britain?

My hon. Friend knows that that is one of the major purposes of the Industry Bill and of the National Enterprise Board. Last year I insisted that we made more rapid progress than was then being made with both the drafting of the White Paper and the introduction of the Bill, so that the Bill could be put before the House and passed into law this Session. I regard it as essential in relation to investment, to the point mentioned by my right hon. Friend, and to the future industrial development of this country. I have made that clear on many occasions. My hon. Friend can rest assured that I shall take every measure posible and exert all the pressure possible to ensure that the Industry Bill, and all that it means in terms of the National Enterprise Board, becomes a reality at the earliest possible moment. I look to my hon. Friends and hon. Members in various parts of the House to help in getting it through.

Although this is not on the Prime Minister's list of engagements for today, has he any plans which he might formulate today to meet either the board of British Rail or the National Union of Railwaymen? If so, what advice will he give them?

The right hon. Gentleman is fair to put this question. He will understand that the Government are naturally watching this matter very carefully and are greatly concerned about it. Talks have been going on between the two sides. This is a matter of the highest importance. Perhaps the right hon. Gentleman would not press me immediately about any engagements—I am certainly not making any today—in this matter.

World Food Production


asked the Prime Minister how Her Majesty's Government will support the view of the Heads of State Conference in Jamaica on the need to increase world food production.


asked the Prime Minister what actions the Government propose to give effect to the Commonwealth Conference view of the need to increase world food production.

As I informed other Heads of Government in Kingston, we have adopted an aid strategy geared to the poorest countries and to rural development. We intend to intensify our efforts in these directions.

Does my right hon. Friend agree that adverse movements in the terms of trade for primary products often have a disastrous effect on the economies of developing countries? Does he agree that these are best countered by a framework of commodity price indexing? Will he let the House know his thoughts on this matter? Will he tell the House whether the Government will have anything substantial to contribute in that respect to the meeting of the Commonwealth Finance Ministers in August and to the special session of the United Nations General Assembly in September?

Yes. My hon. Friend will be aware that the point he raised was at the centre of my proposals on commodities, including food and other primary commodities—namely, that boom and bust in commodity prices has the worst possible effects on developing countries—and our determination, with other countries, was to obtain some redress or reversal of the balance between the developing and the developed countries in these matters. That was the purpose of my proposal. It was widely welcomed by the Commonwealth and has been welcomed by many other countries since then.

Indexing is a highly technical and difficult matter. I said in that speech that it must be studied. I spelled out some of the practical difficulties. If my hon. Friend has not read my speech I shall be glad to send him a copy, as it might weary the House if I went into all the technicalities of indexation while answering this question.

The working party that was set up was due to meet this week and is expected to produce its report in time for the Ministers who attend the special session of the United Nations in September. It will also be available to the Commonwealth Finance Ministers because they meet in the same week in September.

Has consideration been given to the possibility of a formal approach by the Commonwealth to the member nations of the OPEC group, many of the richest of whom are extremely keen to develop food production but have been finding difficulty in identifying suitable schemes and, when they do so, in finding technicians for development?

I think that the idea is right but that the machinery proposed by the hon. Gentleman—that the Commonwealth as a whole should meet the OPEC countries for this purpose—is not necessarily right. A number of OPEC countries have, with considerable generosity, approached developing countries in Africa, Asia and elsewhere and given them considerable financial and higher technical assistance. We are all concerned over this matter.

I welcome these developments, but I am not sure that it should be a kind of bilateral Commonwealth-OPEC approach.

Does the Prime Minister accept that hon. Members on both sides of the House welcome the increase in food production to feed a hungry world? What is the Government's attitude towards the Common Market policy of encouraging people to discontinue horticultural production rather than providing money to allow them to continue?

While not wanting to take the House back into those exciting weeks which ended last Thursday, I should have thought the opposite was the case. It may be true with regard to individual products. But the hon. Gentleman will know that the widening up of the developing world to the markets of Europe, and, indeed, more widely, is essential to what I know he has in mind.

Does the Prime Minister agree that it is not only the production but the distribution of food which is important? What proposals will the Government be making to other members of the European Community in future to prevent the immoral accumulation of surpluses deliberately taken off the market?

I certainly agree about distribution. I think that distribution costs are important. This ties up with what the Prime Minister of Jamaica strongly pressed on me. There have been recent inquiries in this country, for example, about the distribution of fruit and other produce from the Caribbean, to see whether the costs were excessive. That is the line on which we should be working at this time. My hon. Friend will know that we recently had a conference in this country, on our initiative—the Commonwealth Ministerial Meeting on food production and rural development, at which these questions were considered.

Regarding food surpluses in the Common Market, my hon. Friend will know that as a result of the negotiations undertaken by my right hon. Friend the Minister of Agriculture, a number of steps, such as tighter price and cost control, are likely to lead to a much lower accumulation of surpluses in future. We ourselves are not involved in storage. We have secured other means of dealing with surpluses. My hon. Friend will also know that when a mountain developed, since the renegotiations began, it was the British Government who insisted that, instead of selling it off to the Soviet Union, as was done by the previous Government, it should be made available to pensioners in Britain at specially subsidised cheap prices.

Business Of The House

May I ask the Leader of the House to state the business for next week?

The Lord President of the Council and Leader of the House of Commons
(Mr. ]]]]HS_COL-661]]]] Edward Short)

The business of the House will be as follows:

MONDAY, 16TH JUNE—Supply [18th Allotted Day]: there will be a debate on housing which will arise on a motion for the Adjournment.

Remaining stages of the British Leyland Bill.

TUESDAY, 17TH JUNE—Supply [19th Allotted Day]: there will be a debate on the Army on a motion for the Adjournment of the House.

Second Reading of the Public Service Vehicles (Arrest of Offenders) Bill [Lords].

Proceedings on the Export Guarantees Bill [Lords] and on the Nursing Homes Bill [Lords], which are consolidation measures.

WEDNESDAY, 18TH JUNE—Remaining stages of the Sex Discrimination Bill.

THURSDAY, 19TH JUNE—Second Reading of the Criminal Jurisdiction Bill [Lords] and of the Safety of Sports Grounds Bill [Lords].

FRIDAY, 20TH JUNE—Second Reading of the Children Bill [Lords].

MONDAY, 23RD JUNE—Supply [20th Allotted Day]: subject for debate to be announced later.

Is the Leader of the House aware that Standing Committee E considering the Industry Bill was suspended today for the second day running? Will he tell us whether the Government are conducting a review of that Bill and are including the TUC and the CBI in that review? Will he confirm that the Prime Minister's promise to the hon Member for Nuneaton (Mr. Huckfield), that the Bill would follow exactly the provisions of the White Paper, still stands? What are the Government's plans about the future of the Bill?

On the first part of the right hon. Lady's question, if it is in order to answer it, I am sure that the Committee will be meeting again later this afternoon at 4.30 [Interruption.] We shall wait and see. It broke up this morning, but I am sure that it will meet again at 4.30.

I replied to the last part of the right hon. Lady's question in the debate on the Adjournment for the Whitsun Recess.

In view of uncertainty about the Aircraft and Shipbuilding Industries Bill, will the Lord President tell us what time is likely to be made for it, because there is great worry ill the industry about investment programmes in both the public and the private sectors? I know that my right hon. Friend shares that concern, but can he give us an indication of what the Government intend to do?

I understand that concern. The Bill was published to remove the uncertainty. We shall certainly deal with it as quickly as we can.

Will the Leader of the House ask the Secretary of State for Employment to make a statement early next week about the threatened rail strike, which could cause so much damage to the economy and inconvenience to the public? Will he also ask the Secretary of State for Trade to make a statement on the Government's plans which appear to be threatening the future of British Caledonian?

I will certainly pass on those two points to the appropriate Ministers. However, the first is a matter between British Rail and the union.

May I draw my right hon. Friend's attention to Early-Day Motion No. 523 signed by myself and 45 other hon. Members, again drawing to the atttention of the House the serious difficulties facing the textile industry?

[ That this House concerned with the serious crisis facing the UK textile and footwear industries which has led to widespread redundancies and short-time working, urges Mr. Chancellor of the Exchequer to stimulate demand for UK textile and footwear goods by zero-rating for VAT purposes all UK produced knitted goods, clothing, all household textiles and all UK produced footwear.]

May I also bring to the attention of my right hon. Friend the latest unemployment statistics issued by the Department of Employment, which show that in the period December 1974 to March 1975 there was an employment decline of 6 per cent. in hosiery and knitting compared with 2·4 per cent. in the rest of manufacturing industry? In view of the Early-Day Motion and the latest statistics, will he again arrange for an early debate on the hosiery and knitting industry in particular and on the textile industry in general?

I understand and share my hon. Friend's concern about this matter. It was for that reason that immediately before the recess, the Prime Minister announced the help that the Government intended to give. The plans and discussions on how that is to be done are continuing with all haste.

Will the Leader of the House confirm that time will be found for the customary debate on the Floor of the House concerning the Scottish economy before we rise for the Summer Recess?

Will my right hon. Friend arrange for the Secretary of State for Foreign and Commonwealth Affairs to make a statement on the Government's intentions regarding the unfortunate individual who has been sentenced to death in Uganda?

My right hon. Friend the Foreign Secretary and the whole of the Government are viewing this matter with grave concern, and the Foreign Secretary is doing all that he can to help. I am sure that the House would not wish me to say any more than that at this moment.

Could the right hon. Gentleman say whether we are to have a White Paper next week on the dilution of the Industry Bill or shall we have to wait a little longer for it? It would be helpful to everybody, including his hon. Friends, to know just how far the White Paper will take us.

I am sure that my right hon. Friend the new Secretary of State for Industry will make a statement on this matter when he is able to do so. Indeed, I understand that he has already said something about this in the Committee this morning. He said something about it before Members of the Committee walked out. If the hon. Gentle- man will look at the report of the proceedings he will see exactly what was said.

In view of the crisis that exists in the British footwear manufacturing industry, may I once again ask my right hon. Friend to consider a debate on the Floor of the House? We have not yet had a debate about this very great subject which is worrying many of my constituents. May we have it next week?

I am sorry, but I cannot promise a debate next wek. This is in the same category as textiles, of course, and what I said previously about textiles applies equally to this matter.

In view of the confusion on the Industry Bill and certain steps that have been taken in another place regarding the Scottish Development Agency Bill, can the Leader of the House give some indication when we are to have Welsh Development Agency and Scottish Development Agency Bills?

I cannot give a date today. I am answering only on the business for next week. But it will be very shortly.

Will the Leader of the House make arrangements for an early statement in this House regarding the Government's proposals for dealing with all outstanding matters in connection with the Poulson bankruptcy proceedings?

I believe the right hon. Gentleman has had a Question down to the Prime Minister today on this, and I have nothing to add on that.

I answered this question about 20 times to my hon. Friend. I do not yet know whether we would think it worth while to have a White Paper in the autumn, but if we did, certainly we should have one, but I will not commit myself to one at this stage.

In view of the speech yesterday by the Paymaster-General, in which he stressed the crucial importance of public expenditure, when is the Leader of the House to give us a day for the customary debate on the Public Expenditure White Paper?

There will be opportunities for debates on the economy. I doubt whether that White Paper would now represent an adequate basis for a debate, but certainly there will be opportunities for debating economic matters.

Could my right hon. Friend tell us when there will be an announcement putting clothing on the bare bones of the statement by the Prime Minister before the recess on the textile industry, which urgently awaits proposals?

I said a moment ago that we were considering this urgently, and a statement will be made at the earliest possible moment. Policy has been decided, and it is now a matter of the details of how it should be worked out. Certainly, there will be a statement at the earliest possible moment.

Is the Leader of the House aware that the volume of legislation is now so heavy that other important business of hon. Members is being seriously disrupted? Standing Orders provide that meetings of Standing Committees take precedence over other affairs, and, there being the unprecedented number of five Standing Committees sitting this afternoon, this must make great difficulty for hon. Members attending to their ordinary duties. For example, meetings of traditional and significant groups on both sides of the House, such as the Parliamentary Labour Party and the 1922 Committee, are held up or suffer interruption. Will the right hon. Gentleman be good enough to look into this matter and will he pay attention to the fact that it is causing great resentment all over the House? Will he please see that we are not interrupted in this way again?

I very much regret this. These two Committees—the 1922 Committee and the Parliamentary Labour Party—are, I agree, extremely important parts of the machinery of this Parliament. I believe that the 1922 Committee has been displaced today for the first time. The Parliamentary Labour Party is displaced quite frequently, I might say. However, I do not think that either of these problems should be left in this situation. My right hon. Friend the Chief Whip and I are looking into this and hope to ensure that as far as possible it does not happen again. Today's unfortunate coincidence probably will not recur.

Would my right hon. Friend—[HON. MEMBERS: "Order."] This is a silly place at times. Would my right hon. Friend convey to the Prime Minister, on the question of the Poulson inquiries and on the point made by the right hon. and learned Member for Hex-ham (Mr. Rippon) about a tribunal being set up under the 1921 Act, that he should bear in mind that some hon. Members—certainly many on this side of the House—and thousands and perhaps millions outside would not look very kindly on a tribunal being set up merely with a view to moralising about what has happened with regard to Poulson without any further proceedings being taken? Will he insist that if we are to have a tribunal of any kind, he will make it abundantly clear that any further outstanding proceedings must be carried on relentlessly, right to the very end?

I am sure I agree entirely with the last part of what my hon. Friend has said, but the Prime Minister answered a Question by the right hon. and learned Member for Hexham (Mr. Ripon) today. It was a Written Question and no doubt my hon. Friend will read the answer.

Is the Leader of the House aware that I listened with great interest to his broadcast about the future proceedings of the House in which he said that we would have enabling Bills setting up a skeleton of legislation and that thereafter the rest of the details could be settled? Is he aware that such a Bill already exists in Standing Committee G, the Community Land Bill? Is he further aware that this Bill has been condemned by Justice as unconstitutional and would he please spend next week in Committee seeing what a shambles it is?

In that broadcast I was merely commenting on long-term aspects of how I saw Parliament developing in the future. This trend has been going on for a very long time. Modern government is becoming so complex that Parliament has been forced to legislate much more on principle. I said that, providing there is adequate machinery for scrutiny of executive acts, this was acceptable. [Interruption.] [An HON. MEMBER: "It is not."] That may be, but I was expressing my point of the view and the hon. Gentleman can express his. We can debate the future way in which our Parliament is to develop and the way we see it. I was expressing a personal point of view, and I shall continue to do so.

Did my right hon. Friend read in yesterday's Daily Express an article by Chapman Pincher dealing with the new boss of MI5 and MI6? In view of the statement in that article of the similarity with the Russian KGB, will he comment on the article and arrange for a debate on this subject in this House?

I read the article. I understand that it was lifted out of that scurrilous and mendacious journal called Private Eye. I am very glad to say that the Chapman Pincher article was wrong in every respect.

I wonder whether I could take the right hon. Gentleman back to the point about a debate on public expenditure raised by my hon. Friend the Member for Blaby (Mr. Lawson). He will recall his commitment to give us time to debate the White Paper. I believe that that is a bit old now but a debate on public expenditure remains urgently necessary. May I also put a point on the Industry Bill, that in the not impossible event of his right hon. Friend not being exactly clear about the Government's intentions, would he please arrange for a statement on the Floor of the House next week so that the question whether we are to have a White Paper will be cleared up?

Lastly, may I say to the right hon. Gentleman that having the debate on the remaining stages of the British Leyland Bill at dead of night is very unsatisfactory indeed and simply perpetuates the way the Government have handled this matter throughout. People have been condemned in a Star Chamber manner on the strength of a report that they have never seen. That is quite outrageous.

Dealing with British Leyland, I agree with the right hon. Gentleman that this is not the most convenient time. However, the House has embarked on the British Leyland project—[Interruption.] The House of Commons gave it a Second Reading, and, having embarked on the project, we must proceed with it as quickly as possible. I concede that this is not a very convenient time.

Nobody has committed us to a White Paper, but I shall certainly convey to my right hon. Friend what the right hon. Gentleman has said. What the Government are doing is the normal practice at the end of the Committee stage of a Bill. We are considering everything that has been said. I shall certainly bear in mind what the right hon. Gentleman has said.

The third point which the right hon. Gentleman raised was public expenditure. I said that certainly there will be an opportunity to debate "economic affairs" but let me now say "public expenditure". I do not think that the White Paper will now be the best basis for that.

Is my right hon. Friend aware that Standing Committee G is making very slow progress and that the reason why it is in such a shambles is that the Conservative Opposition cannot appreciate the important concessions given to the Churches and charities? Will my right hon. Friend confirm that tomorrow either he or the Government are likely to receive Lord Boyle's report, which will be published early next week?

On the first point, I cannot comment on the state of the Committee. However, my right hon. Friend the Prime Minister met the Church authorities immediately before the recess. I should like to give an assurance that we are urgently considering the impact of the Bill on the Churches.

On the second point, I cannot say whether we shall receive Lord Boyle's Report tomorrow. It will go direct to my right hon. Friend the Prime Minister. However, when we do receive it we shall consider it as urgently as possible. I understand the concern of most hon. Members about this matter.

Will the Leader of the House tell us when he will fit in the long-awaited debate on steel, because there is great anxiety in all areas of the industry and the time is long past when we should have such a debate?

There was an opportunity on Monday to debate this matter. A large number of speeches were made, but certainly if it is the general wish of the House for further time to be found to debate steel I shall be prepared to do so.

The Leader of the House will be aware that last night between 12.15 a.m. and 1.45 a.m. the usual night shift was dealing with Community matters, considering the economic guidelines paper. Will he please expedite the debate to be held on the Procedure Committee's Report so that we can get down to serious discussion of this extremely important paper, instead of having the purely spurious debates which we have late at night at present?

Certainly I shall look at the point that the right hon. Gentleman has raised.

Personal Statements

One cannot win them all, Sir.

On a point of order, Mr. Speaker. I wish to raise with you what seems to me, and I think to certain other hon. Members, to be an abuse of the conventions of the House.

I intend to make no comment whatsoever on the contents of yesterday's personal statement, since that would be totally improper. However, I had always understood that it was the convention that a Minister who resigned was allowed to make a personal statement. I had not understood that the House had consented to extend this practice to a Minister who had been fired. Had this been the case—[Interruption.] This is a more important point than some of my colleagues seem to appreciate. Had this been the case, I dread to think what the House would have had to suffer on the historic occasion when Mr. Macmillan sacked a number of his Ministers. We should probably still be listening to personal explanations and the airing of personal grievances.

Secondly, I had always understood that personal statements should contain no words reflecting on fellow hon. Members.

Thirdly, I had always understood that a personal statement had to he cleared by you, Mr. Speaker, before it was made. On the one occasion when I thought it proper that I should make a personal statement I had to clear that statement with your predecessor before I was allowed to make it.

May I add that yesterday's statement seemed to me to be an abuse or rather another example of the abuse we are having to suffer through the broadcasting of the proceedings of the House.

I should be grateful, Mr. Speaker, if you would let me have your consideration of the Flatters I have raised.

The hon. Member for Warley, East (Mr. Faulds) has raised three points. I do not agree for a moment, so far as it lies within my right to express an opinion, that the broadcasting of the proceedings of the House had anything to do with this matter.

On the point the hon. Gentleman raised about the difference between resignation and being fired—or whatever the word is—as he indicated, I am not without personal experience of this situation. In my view, it is a distinction without a difference.

On the serious point of the nature of a personal statement, in my view such statements vary. It is quite appropriate that in certain cases they should be submitted to Mr. Speaker and should be approved by him. However, the House would be putting too much upon Mr. Speaker if he was expected to approve the terms of a resignation statement. In that instance it must be left to the judgment of the right hon. or hon. Member concerned. In my view, the Chair should not be brought in to give an approval.

I still think that the rule is right that in all circumstances the permission of the Chair should be sought, as it was in this case, and also that in other cases, not resignation cases, not only the permission of the Chair should be sought but the terms of the statement should be approved by the Chair. The hon. Member will have to be content with that ruling.

I am very grateful to you, Mr. Speaker, for what you have said. I should like to put one point to you. When a personal statement is made by a Minister who has left office, for whatever reason, it is done against the background of enjoying the sympathy of the House. I cannot help feeling that it is wrong and a departure from what is desirable if, in the course of making that statement, some highly polemical and very controversial remarks are made.

I am much obliged for the advice of the hon. Member for Penistone (Mr. Mendelson) but I do not propose to take it.

It seems to me, in those circumstances, that there is a very grave danger of exploiting an opportunity in an unworthy fashion.

As I have said, I think it is a matter of judgment. I have read one or two resignation statements. I should be very surprised to find that they were all totally uncontroversial.

Parliamentary Papers

On a point of order, Mr. Speaker. I am sorry not to have given notice of this matter, but it arose only this morning. Can you advise hon. Members about the difficulties regarding parliamentary Papers?

In the Standing Committee considering the Community Land Bill we are experiencing the greatest possible difficulty as a result of a further dispute in the printing of Hansard. This morning there were very great problems. The Editor of Hansard has been most kind in allowing us to see the duplicated copies of the typed version of the notes. However, we have not got the proper Hansard. We were advised that it was not proper for us to transmit the contents to our outside advisers. This is causing very grave difficulty to hon. Members on the Committee in proceeding with their business.

This is a matter of which I would very much have preferred to have notice, because then I would have had a chance to look into the situation and tried to help. I shall certainly look into it and see what can be done.

Business Of The House

Motion made, and Question proposed,

That the Motion relating to Members' Interests (Declaration) (No. 2) and any amendment thereto which may be selected by Mr. Speaker may be made after the time for opposed Business, and if so made, the Questions thereon shall be put forthwith.—[Mr. Walter Harrison.]

Before the business motion is proceeded with further I should indicate, with regard to the two motions, that it is my intention to select both amendments. Both the motions and the amendments may be discussed together. The motion now before the House would enable them to be voted upon after 10 o'clock.

I appreciate the point you have made, Mr. Speaker, particularly in respect of the amendment of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), because it enables it to be taken after 10 o'clock.

There is a secondary effect of a business motion of this type which I think has been drawn to the attention of the House and the Government previously and which is less desirable. This is that it would be possible, although we hope that it will not happen, for the next business, on this occasion the Social Security Pensions Bill Report stage and Third Reading, to last much longer than expected. If it finishes at around 7 p.m.. which I understand is the desire, we shall have three hours to discuss the important business of Members' interests, but if it does not, or if on a future occasion the previous business lasts longer than expected, the amount of time available for the second business will be correspondingly reduced.

It is conceivable, although I think improbable, for the Social Security Pensions Bill to take us within an hour or even half an hour of 10 o'clock, and therefore we should have only that amount of time to deal with the motion and amendments on Members' interests.

Therefore, Mr. Speaker, I ask through you whether the Government will undertake that if the business on Members' interests is not started before 7.30 p.m., they will consider adjourning it at 10 o'clock so that it can be taken later if more hon. Members wish to speak.

I think that the Chair comes into this. It is for me to allow a motion to adjourn a debate. The Government cannot put such a motion without my permission. We must see how we go. I have no doubt that the matter will be considered in a reasonable light. I think that it is the desire of the whole House that the two motions and the amendments should be properly debated. We shall deal with the situation that the hon. Gentleman described if we come to it.

Question put and agreed to

Orders Of The Day

Social Security Pensions Bill

As amended ( in the Standing Committee and on Re-committal), further considered.

Clause 33

Annual Rate Of Earner's Pension

4.3 p.m.

I beg to move Amendment No. 22, in page 22, line 34 at end insert—

'(8) In the case only of a scheme certified by the Occupational Pensions Board to be an industry-wide scheme for earners employed by more than one employer in the same field of industry the rules of the scheme may provide, as an alternative to the other provisions of this section, for determining pensions by reference to the earner's average salary revalued where, in the opinion of the Occupational Pensions Board, the benefits of the scheme, taken as a whole, are likely to be more favourable to most earners than would be the case if the rules of the scheme were in accordance with subsection (2) of this section'.
This is a modest amendment aimed at achieving the maximum number of occupational pension schemes without sacrificing the high standards which the Government understandably wish to achieve. It is a recognition of the fact that in some cases the basic requirements for an earner's pension as laid down in the clause would be close to impossible of achievement.

We have in mind an industry such as the building industry, where there is considerable mobility, and where there are many small firms which on their own could probably not sustain an occupational pension scheme. I do not in the least quarrel with the Government over the high standards which they have laid down in the Bill as the test of good pension schemes. I can see that they do not wish to have the contracting out requirements watered down beyond a certain level. We are with the Minister in that aim.

I am talking of a narrow range of schemes where transfer of pension should be facilitated, because transfer of employer within the same industry is very much the order of the day; where some small employers have no more than five or 10 people on their staff; and where small employers abound. The small employer is understandably put off an occupational pension scheme by the thought of the administrative work involved. Anyone who has had anything to do with the administration of a private pension scheme within an organisation of any size will have sympathy with that view. We believe that this fear of the administration involved in a small scheme can be relieved by the participation of the employer in an industry wide scheme. Therefore, by the amendment we wish to encourage the development of such industry wide schemes.

It may be asked why such schemes cannot be fitted into the contracted-out requirements laid down by the Bill. There are a number of reasons, some of which I shall put briefly. A large employer could accept the need for cross-subsidy between employees of different ages, but with different employers that is not easy. An employer with young employees would be asked to subsidise companies with older employees, so that there would be an additional barrier to the acceptance of good pension schemes and all that that means for the employees. Whilst endorsing the Government's approach, which is that there should be high standards for schemes, the amendment asks the Government in turn to accept that in some industries it would be almost impossible to achieve them.

It would be a tragedy if an over-rigid attitude by the Government prevented many people from joining a scheme which in most other respects is perfectly satisfactory. The Government should be with us in this attempt to increase the number of people in occupational pension schemes.

The Government's fear is that acceptance of the amendment would mean lowering standards and encouraging the development of schemes such as past schemes of which few of us can be particularly proud. The Government probably see, as we do, that there are still many people who, even if the amendment is accepted, will never be in an occupational pension scheme. I think particularly of the catering industry, where men flit from hotel to hotel or restaurant to restaurant, and in and out of the industry. For those people, the opportunity to become a member of an occupational pension scheme is probably not even a starter, even though some of them may spend most of their lives in the same industry.

The building industry, upon which I focus particular attention, is different. It may be possible to include many industries ancillary to building under the aegis of one body in such a scheme. This would mean that we should be opening the opportunity of membership of occupational pension schemes to about a million people, as far as I can estimate. The Government will have to have strong reasons for refusing the amendment, if they mean what they say about encouraging the development of occupational schemes, because the difference between being able to bring up to a million people into an occupational pension scheme and not being able to do so is considerable.

In summary, I put the amendment forward for the following reasons. The first is that, without unduly diluting the Government's requirements for pension provision, encouragement should be given to industry-wide schemes whose common denominator will often be an employers' federation or the like. Secondly, it would be an encouragement to the mobility of labour, and in those industries where mobility of labour is already the norm, it would ensure the continuity of pension arrangements. Thirdly, failure to accept the amendment would prevent many people from becoming members of an occupational pension scheme.

Remembering the good will between both sides in the earlier stages of our consideration of the Bill, I hope that the Government will be able to accept this modest amendment.

I support my hon. Friend's amendment. In Committee, I moved an amendment designed to achieve the same objective and withdrew it following an undertaking by the Minister of State to consider what had been said and to try to find ways in which centralised and multi-employer schemes would be able to contract out.

I think the whole House is grateful to the right hon. Gentleman for the study he has given to the problems which these scemes face under the Bill, and also for considering the detailed proposals which I have put to him. I believe that these schemes have a big job to do in the future and that they will grow in importance and in extent. They would have been encouraged by special arrangements made under the 1973 Act but there is not similar encouragement by similar special arrangements in this Bill.

Why are these schemes important? My hon. Friend has referred to this and I agree very much with what he says. Perhaps I can give two examples of the most obvious types of areas where they are important. The first is the situation where there is a big turnover of labour between firms in one industry. Building and construction is the most obvious example. In cases of this kind the centralised scheme covering one industry can do much to solve the otherwise daunting problems of transferability or preservation of pension rights which might in such circumstances deter employers from introducing schemes or continuing schemes they have already. This is the first and most obvious area where the centralised scheme lends itself to the conditions of the industry and solves problems which would otherwise be very acute.

The second area is that of the small employer who, in many cases, will wish to provide benefits of occupational pension schemes but finds it difficult to do so on his own. The umbrella of a centralised scheme covering one industry, or where there is a common factor such as membership of a chamber of commerce, can be the only effective way in which that small employer can provide his employees with the benefits of an occupational scheme.

If these and other areas are to be covered successfully by these types of multi-employer schemes, it is essential that they are able to fulfil three criteria. The first is that they must be simple. If they are not simple, the employer concerned is likely to feel that he cannot embark on the obligations which are likely to be involved. Secondly, the financial obligation must be measurable and not open ended. Thirdly, they must avoid cross-subsidies between participating members, many of whom will be in direct competition with each other.

On those three criteria, the final salary formula, which is the basic formula in this Bill, is ruled out. They cannot hope to maintain those characteristics of the final salary formula. The most suitable formula would be, I believe, a contribution test.

I think it would be wrong to rule out a scheme, such as, for example, the Merchant Navy scheme, which has a contribution of 15 per cent., just because it does not fit in with the tidy framework laid down in the Bill. The fact is that a scheme with a contribution of that level going into it is almost bound in any circumstances to be able to meet, and more than meet, the levels of pension laid down in the Bill. It would be very wrong to exclude these schemes because they do not happen to fit.

I hope that the Minister of State, having reconsidered this matter, will be able to see his way to providing for a contribution test. If he cannot see his way this far—I understand the difficulties, because we have discussed this in some detail—then there are, I believe, two other possibilities. One is the "average salary revalued" formula, which may be—I do not think it is—a way round the difficulty. The second is the fixed contribution, with some means of the employer meeting any shortfall that there may be. These are two other possible routes, though not as satisfactory as the other. If the Minister of State has rejected the contribution test proposal, which I still favour, I hope he will at least assure us that he will see that is no obstacle in the Bill as it stands at present to these two possible routes.

I hope he will also agree—as he has said that he will—to look at a model scheme to ensure that these types of multi-employer arrangements are not excluded for insubstantial reasons.

I therefore support my hon. Friend. I hope that the Minister of State will be able to go as far as we desire. If he cannot do that, I hope he will back up the expression of support for these schemes which he gave in Committee by assuring the House either that there are no obstacles in schemes on the lines I have mentioned, or, if there are obstacles, that he will ensure that the necessary amendments to the Bill are introduced in another place.

4.15 p.m.

The Minister of State, Department of Health and Social Security
(Mr. Brian O'Malley)

I am very grateful to the Opposition for moving this amendment. I gave an assurance during the Committee stages of the Bill that I would consider in detail the whole question—and it is a difficult question—of centralised schemes and of multi-employer schemes. Since the Committee stage I have made such a detailed investigation and I should like to report my conclusions.

First, I should make it clear that there is no difference between my attitude, the Government attitude and the attitude of the Opposition, expressed by the hon. Members for Brentwood and Ongar (Mr. McCrindle) and for Somerset, North (Mr. Paul Dean), in the comments they have made this afternoon setting out their belief that it is important that employees should be able to be members of good occupational pension schemes. One does not want to see a situation in which, because a man or a woman works for a small employer, or in an industry with a very high degree of labour mobility—for example, the building industry referred to by both hon. Gentlemen in their speeches a few moments ago—there is exclusion from good occupational pension provision because of the peculiar circumstances of employment.

The hon. Gentleman referred to the Merchant Navy officers' scheme. It is my understanding, as it is his, that that scheme, which is a money purchase scheme, has a total level of contribution amounting to 15 per cent. With a level of contribution of that kind, one can expect, even within the limitations of a money purchase scheme—I have never hidden my views about the desirability or otherwise of money purchase schemes and the difficulties inherent in them—a respectable level of benefits. Therefore, in the concluding stages of a succession of debates before the Bill goes to another place, we must first attempt to ensure that any arrangements we make do not hinder the membership of occupational pension schemes by employees in the type of employment I have described.

I have made it clear from the outset—in a Press notice of a speech I made some months ago and in all the discussions that I have had and comments I have made in Committee and elsewhere that I do not think there is any major future, certainly not within the contracting-out arrangements in the Bill, for money-purchase schemes. I advised hon. Members and organisations that the very mention of a scheme based on money-purchase principles could not be expected to produce a favourable reaction from trade unionists and employees generally.

The basic difficulty about money purchase is that by its nature it does not give a guarantee that it will meet inflation. The White Paper on which this legislation is based described a better pension as being one guaranteed against inflation. While the Government do not wish to hinder the development of occupational pension provisions for men and women, I have made it clear that I could not accept pure money-purchase principles.

There has been a genuine attempt at reconciliation on this matter. It was said first of all that there was no possibility of what I have always feared—that if we allowed money-purchase type provision in multi-employer schemes we would be driven to open wide the gates for such schemes for the generality of employers. Assurances have been given to me on that point, in Committee and by outside organisations, for which I am grateful. Propositions were put to me during my consultations aimed at guaranteeing the guaranteed minimum pension, thus meeting one of the two contracting-out conditions. Since the end of the Committee stage I have been engaged not only in a detailed departmental examination of this but in discussions with outside individuals to see whether we can go any further.

I have tried to see whether we could allow employees in the types of employment concerned to be in good occupational pension schemes recognised for contracting-out purposes and meeting the two contracting-out conditions. This has always been the difficulty. I understand that it is for this reason that this amendment has been put forward. Conservative Members will say that if this amendment was written into the legislation there would be a guarantee that every individual would receive a pension which met the two conditions. They would say that it would be expected that contributions would be set at such a level that in the generality of cases people would get a pension which would comply with the two conditions. Factors such as investment yield, inflation patterns and the relationship between the investment curve and wage and salary movements would be involved.

I cannot accept the amendment because it would not mean that the two conditions were met. Since we last discussed these matters there have been a number of developments. I said that I thought that this was my FSSU. Hon. Members will remember that that issue was not settled when the 1973 Act ended its Committee stage. Indeed, a party was held only yesterday to celebrate the reorganisation of that scheme. We are moving into a situation when there can be a settlement of this issue, when there can be guarantees to the individual employees that the contracting-out conditions can be met. We are reaching the point when it will be possible for multi-employer and centralised schemes to be set up and recognised for contracting-out purposes by the Occupational Pensions Board.

I must first deal with a detail. In Committee the hon. Member for Somerset, North moved an amendment dealing with the treatment of a number of separate schemes operated by a group of associated employers as one scheme for the purposes of contracting out. The amendment was to meet the desire of the CBI that a parent or holding company of a group of associated companies should be able to make elections in respect of each scheme operated by the group and to operate the subsequent procedure for notification of termination on behalf of subsidiary companies. I undertook to look at this.

It is the considered view of my Department that on the basis that the schemes operated by the group would be multi-employer schemes, the wishes of the CBI can be met by using the powers in Schedule 2 (7). Provided that a centralised scheme meets both contracting-out conditions, the Government are ready to make changes in the structure of the administrative arrangements for contracting out to facilitate the contracting out of those schemes.

I turn now to what I see as being the way forward. The hon. Member for Somerset, North mentioned the prospect of average salary revalued. I understand the problem of cross-subsidisation, particularly in fiercely competitive industries. Nevertheless, it may well be that this is a way forward in some of the types of employment with which we are here concerned. I refer the hon. Gentleman to an article written by a Mr. John Sparks in The Times on 21st May in which he set out what he believed to be a broad basis for such schemes whereby there could be reserve arrangements, avoiding the difficulties and pitfalls that have been discussed in so much detail recently.

We have there all the indications of the ingenuity of the pensions industry to devise arrangements. As it has said that it could meet the second contracting-out condition, I am extremely hopeful that it can also meet the first one without having final salary type arrangements written into the funding of the schemes.

What is in a name? The Occupational Pensions Board is concerned with solvency and whether pensions will be payable at a certain level. If there was an existing money-purchase scheme, all the benefits before the inception of the new scheme would be on the old-established basis and it would be only slowly, over a number of years, that a new pattern would begin to emerge in respect of the post-1977–78 period. Even now I am awaiting receipt of a model scheme from a large and influential group in the pensions industry.

4.30 p.m.

I am hopeful that with the customary ingenuity of the pensions industry it will overcome not only the second but also the first contracting-out condition. Therefore, I advise the House that although I cannot accept the amendment because it does not meet the two contracting-out conditions, on the basis of the discussions and thought given to this subject so far there is no need to amend the Bill to meet the needs of the multi-employer and the centralised schemes.

The type of arrangements that I have described in reply to the amendment tabled by the hon. Member for Brentwood and Ongar will assist. However, the Occupational Pensions Board would be able to accept multi-employer and centralised schemes on the basis which is now emerging not only in the article by Mr. Sparks published in The Times of 21st May but also on the basis of the type of model schemes which I expect to receive in the near future from important and influential pensions organisations in this country.

I was heartened to hear the Minister tell the House that he had no wish to exclude anyone who, by the application of a reasonable pensions scheme, could be brought within the orbit of private pensions provisions. He spoke, quite fairly, about the difficulty that exists of complying with both the contracting-out conditions in schemes of the type about which we have been talking under the amendment. This is the heart of the difficulty with which we are faced and the reason why the Opposition felt that they had to put forward the amendment this afternoon.

The Minister spoke about the money purchase schemes and the almost emotional objection which is felt in some quarters to the provision of those schemes. I understand that, although I do not go quite as far as the Minister in my objections to them. When I put forward the amendment I had no wish to suggest that we should be turning the clock back. As the Minister believes that money purchase schemes would, by and large, be doing just that, I can quite understand that he wants to lay down conditions so that as many people as possible can be covered by them, but that they can be guaranteed the return on their contributions which the people in large occupational pension schemes can reasonably hope to enjoy.

The Minister did not quite answer the point made by my hon. Friend the Member for Somerset, North (Mr. Dean) when he said that any arrangements made to accommodate the type of schemes we are talking about would, first, have to be simple, secondly, have to have the financial obligations measurable and, thirdly, have to take into account the fact that cross-subsidisation was difficult. I do not want to press him particularly on that, but as he went on to say, fairly and favourably, that without the acceptance of the amendment our objective could be achieved, I hove that he can—also by simplicity—tell us that he has understood what my hon. Friend was saying and that that triple requirement, plus anything else, might well, without amending the Bill, be built into the type of scheme about which we are talking.

I entirely agree with the hon. Gentleman about the merits of simplicity. The difficulty is always that we cannot allow simplicity to become an enemy of equity. However, it will be possible, on the evidence that is coming forward, to devise schemes for which there can be a money purchase basis but in which the final salary level of provision is guaranteed. This is a matter of funding, and we should not call them money purchase schemes at all in future because the nature of the animal has changed. They have become inflation-proofed and it would be to the detriment of the development of good centralised schemes if we were to use that terminology.

I understand perfectly what the Minister says. It was useful that he intervened to place on record that he understands the need for simplicity. I, in turn, must concede that I understand the difficulty of achieving simplicity. If anyone had listened to our deliberations yesterday evening, "simplicity" is about the last word they would have employed in describing them. Nevertheless, to aim at the greatest possible degree of simplicity is something that does not divide the Minister and myself; on the contrary, it unites us.

The Minister said that he could not accept the amendment, and, by implication, did not agree that the amendment was necessary. For the purpose of arranging the debate we felt that it was wise to table the amendment.

If, instead of accepting our amendment, the Minister is asking us to accept his good faith, that he wants the same as we do but that it may have to be achieved in a different way from that outlined in the amendment, I have no objection.

On that basis it would be uncharitable if we were to continue to press the amendment any further. It would be churlish indeed if I were to suggest that we should press it any further.

Before officially asking leave to withdraw the amendment, I would like to point out that the Minister completed his remarks with a challenge to the pensions industry. Not for the first time has he shown a high degree of faith in one of the bastions of private enterprise. It has warmed the hearts of many of the strong supporters of private enterprise in Standing Committee A that he did so during the Committee's proceedings.

The Minister was absolutely right to say that he wanted to have the maximum number of people brought within occupational pension schemes. That is what we have said since the introduction of the Bill and that continues to be our purpose. We want to include in occupational pension schemes many of those in industries in which at present it is difficult to achieve such schemes. However, if we accept from the Government that there are difficulties in achieving that, it is partly up to the occupational pensions industry to find an acceptable formula. I do not believe that the pensions industry will be found wanting. It will continue to pursue the challenge given to it by the Minister this afternoon.

In all these circumstances the outcome of the amendment is distinctly favourable. We know that the Government, the Opposition and the private pensions industry are all on the same side and are pressing for the same thing. Therefore, Mr. Deputy Speaker, I do not wish to pursue Amendment No. 22.

Is the hon. Gentleman asking for leave to withdraw it?

Amendment by leave withdrawn.

Clause 34

Earner's Guaranteed Minimum

I beg to move Amendment No. 23, in page 23, line 32, leave out '1/8th' and insert '1/7th'.

With this amendment it may be convenient to take the following amendments:

No. 24, in page 23, line 32, leave out '1/8th' and insert '1/6th'.

No. 41, in Schedule 1, in page 52, line 6, leave out 'eight' and insert 'seven'.

No. 27, in page 52, line 18, leave out '1/8th' and insert '1/7th'.

No. 28, in page 52, line 18, leave out '1/8th' and insert '1/6th'

No. 42, in page 53, line 13, leave out 'half'.

No. 43, in page 53, line 26, leave out 'half'.

Amendment No. 23 bears a close resemblance to Amendment No. 15, which I moved in Committee. These two amendments seek to give a fairer deal to those like yourself, Mr. Deputy Speaker, who continue to work beyond retirement age.

I remind the Minister that in Committee I was supported by two of his hon. Friends, the hon. Member for Edmonton (Mr. Graham) and the hon. Member for Walsall, South (Mr. George), both of whom spoke in favour of the amendment.

The hon. Member for Edmonton said,
"If the amendment cannot be accepted, I hope that he "—
that is, the Minister—
"can come back at a later stage and say something helpful to a great many people who are already encouraged to continue working."
This is the latest stage at which the Minister can come back. Both the hon. Member for Edmonton and I look forward to his saying something helpful. In the same debate the hon. Member for Walsall, South also expressed the hope that
"…the Minister will be forthcoming on that score."—[Official Report, Standing Committee A, 24th April 1975; c. 290–1.]
It is a matter of concern that the Labour back benchers are not only empty of talent but are also, on an important matter such as this about the future of retirement pensions, empty.

The argument is essentially simple. At the age of 65 a man can either claim a retirement pension or he can carry on working. If he chooses the latter, he forgoes his pension until such time as he does retire. By so doing, he saves the Government a considerable amount of money and, in recognition of this, he receives a deferred increment. In the Bill, as it now stands, for every week he carries on working beyond retirement age, his pension is increased by one-eighth of 1 per cent. In the case of a single man, this works out at a rate of return of 6½ per cent. before tax on his investment in his pension. I believe that that rate is far too low, and I seek to raise it by these amendments to 7½ per cent. This is done by increasing the rate of accrual from one-eighth to one-seventh. One-seventh per cent. still represents a very good bargain for the Treasury, and the rate of accrual would have to rise to one fifth per cent. if it was to be actuarially fair.

These sums may sound very small, but if one takes an example and looks at the global sums of money involved, one finds that the sums are in fact quite large. A single man aged 65—this may be of interest to you, Mr. Deputy Speaker—has a life expectancy of 13·94 years and, if he has an earnings record of £40 per week, his pension entitlement is £18·70. If he decided to retire at the age of 65, he would therefore draw £18·70 for 13·94 years, and this comes to £13,555·26. Alternatively, he could work for a further five years and retire at the age of 70.

For each week that he works under the Bill as it stands, he would add one eight hundredth of his weekly pension entitlement of £18·70. At the end of his five years, he has earned himself an extra £6·08 per week by virtue of deferring his retirement. He is then entitled to £18·70 plus £6·08 per week for the remaining 8·9 years of his life, which comes to £11,519·73. This is £2,035·53 less than what he would have received had he retired at the age of 65.

The Government are, therefore, doing very well out of those who continue to work. While this may be a financial bargain from the Treasury's point of view, it is a shameful swindle on elderly people, many of whom are unable to calculate the real rate of return on their savings, and, I suspect, do not realise what a bad bargain they are getting.

The case for accepting my amendment is now even stronger than it was when I first moved it on 24th April. In the meantime, the Government have introduced an inflation-proofed savings scheme for those over retirement age. A man of 65 who retires and perhaps receives a lump sum on retirement can now invest that lump sum and receive a return equivalent to the going rate of inflation, currently over 20 per cent. But the man who continues to work, and whose savings before retirement remain locked up, gets much worse treatment, as his savings accrue only at 6½ per cent.

This distinctive treatment between those who live off unearned income and those who continue to earn seems wholly alien to the Government's general philosophy, and I do not see how they can reconcile this penal treatment of those who continue to work with their consciences.

This is not an expensive amendment. In the Minister's own words:
"The cost in global terms is small… It is estimated that it would reach £1 million a year after five years and £5 million after 30 years, so we are not talking about enormously increased expenditure."—[OFFICIAL REPORT, Standing Committee A; 24th April 1975, c. 292].
In fact, it is wholly wrong to look at this amendment in these terms. The reality of the present situation is that the Government are borrowing money from those over retirement age at 6 per cent. whereas the going rate at which the Government are borrowing from the rest of the community is nearly twice that amount.

The Government are therefore discriminating against those over retirement age who seek to carry on working, and there are no social reasons whatsoever for this discriminatory treatment. The Government have in fact succeeded in reversing the parable of the talents. The servant that hides his talent in the earth—or puts it into the Government's equivalent, the index-linked national savings scheme—does very well. The servant that goes and trades and makes five more talents—by carrying on working—does very badly.

Whereas in the parable the unprofitable servant has his talents confiscated and is cast into outer darkness, the Government have reserved this penalty for the profitable servant, whose retirement pension is, in real terms, confiscated. The bit of the parable which remains unchanged is the nature of the employer who was, if my memory serves me right, a very hard man.

This amendment, therefore, has all-party support. It involves a very small amount of public expenditure, and it gives the Government the opportunity of stopping what is in effect a shameful theft of the savings of elderly people. I very much hope that the Minister will announce that he accepts this amendment this evening, particularly in the light of comments made by the Minister of State on a similar amendment to the Social Security Benefits Bill on 16th January this year, when he promised that he would take a detailed view on this matter and consider fully the representations which have been made.

4.45 p.m.

Amendments Nos. 24 and 28 were to have been moved by the hon. Member for Cannock (Mr. Roberts), who I notice is not present in the Chamber. Those amendments would have outbid my very modest amendments by raising to one-sixth the rate of accrual. The hon. Member for Cannock clearly shares the strong feelings of Opposition Members on this matter. I hope that it is not pressure on him by the Government which has prevented his attendance at this debate. Perhaps the Government could compromise between the one-eighth in the Bill at present and the one-sixth proposed by the hon. Member for Cannock by accepting the amendments which I have moved, which suggest one-seventh.

Amendment No. 41 is a consequential amendment which would reduce from eight weeks to seven weeks the qualifying period for the deferred increment and would prevent any complicated questions being involved in the calculations.

Coupled with those three amendments are Amendments Nos. 42 and 43, in the names of myself and my hon. Friends. These amendments closely resemble the Amendment No. 89, which I moved in Committee—and I promise not to quote the Bible in support of my case this time. This section of the Bill makes provision for the surviving spouse who outlives his or her partner, and where the partner is in the process of building up a deferred increment to the pension. As the Bill stands, the surviving spouse gets only one half of the deferred increment.

This provision is wholly contrary to one of the major principles in the Bill, namely that a surviving spouse can inherit the full pension rights. On Second Reading the right hon. Lady the Secretary of State drew attention to this principle as follows:
"Moreover, when a widow retires or if she is widowed after pension age she will be able to draw any additional component which she has earned in her own right as well as the basic and additional components which she has inherited from her husband."—[Official Report, 18th March 1975; Vol. 888, c. 1493.]
So far as deferred increments are concerned, it simply is not the case that a widow inherits the total entitlement from her husband, and it does seem odd that this anomaly remains in the Bill.

Also, as it stands, Schedule 1 is inconsistent with Clause 7. Clause 7 provides that a widow's retirement pension shall be computed in exactly the same way as her husband's pension was computed, and this very welcome feature has not been carried through to the schedule. Further, the schedule is inconsistent with what is said in the foreword of "Better Pensions", which says
"the widow may inherit 100 per cent. of her husband's pension entitlement"
and further,
"the older widower and the widower who has had to be supported by his wife because of prolonged sickness can inherit her pension rights."
The reduction of one-half is not consistent with either of those two statements.

Again, this is not an expensive amendment. According to the Under-Secretary, some £5 million would be added to the cost of the scheme after 15 years. This is not a large sum, and it is worth paying to ensure consistency throughout the Bill. It will enable many widows to be taken off supplementary benefits, and I am sure that the Minister would welcome that particular consequence. In Committee, the Under-Secretary said, quite rightly, that this one-half provision was taken from the Conservative's Act. However, that Act did not embody some of the principles I have outlined, particularly that embodied in Clause 7 of this Bill, so the same inconsistency was not involved.

The Under-Secretary conceded that this provision was not completely logical with the rest of the Bill, and in fairness to him he did not seek to defend the Bill as it stood. I suspect this time that I may be pushing at an open door. He undertook to have further thoughts in the light of other amendments tabled by members of the Committee, and I hope that in the light of those thoughts—though his mind may have been on other matters more recently—he will now announce to the House that all the amendments I have proposed may be accepted.

When the hon. Member for Ealing, Acton (Sir G. Young) said that he was pushing at an open door I felt that there was some element of truth in that. However, the way in which he pushed was with such a force as almost to encourage me to slap it back rather than open it even wider.

As the hon. Gentleman knows, in Committee both my right hon. Friend and I were pressed heavily on certain issues, and certainly we both gave promises that we would examine various propositions which had been put to us by the Opposition. Two such propositions are the subject of the amendments which we are now discussing: Amendments Nos. 23 and 27 and the consequential Amendment No. 41 and the twin Amendments Nos. 24 and 28 dealing with the rate of increment for deferred retirement: and then the second batch of amendments which we are taking with them, Amendments Nos. 42 and 43 concerning the level of the increment to be inherited by the widow or, in appropriate cases, the widower. Certainly we have carried out faithfully the re-examination which we promised on that occasion.

We have arrived at the conclusion that we are prepared to accept one of the propositions but, at the moment, have to ask the House to reject the other. Perhaps I ought to deal with the bad news first and then sweeten it with the good news. We ask the House to reject those amendments which seek to increase the increment from the present one-eighth per cent. per week to either the one-seventh per cent. moved by the hon. Gentleman or the one-sixth per cent. in Amendments Nos. 24 and 28. Our reason for this is threefold.

First, the benefits which these amendments would bring about would go to those pensioners who were fit enough and had the opportunity, through either place of work or place of living, to remain at work after the age of 65. We do not believe that at the moment that has the greatest priority in the improvements we ought to carry out.

Secondly, we believe that the fact that the 6½ per cent. was introduced only in April of this year, two months ago, means that the period is too short to judge its general acceptability or whether it has any effect at all in persuading people to remain at work. The figure of 6½ per cent. was judged by the previous Government to be a reasonable one, and I am sure you will be delighted to know, Mr. Deputy Speaker, that your interests were looked after by the previous Government when they increased this to 6½ per cent.

Order. I know that the hon. Gentleman the Member for Ealing, Acton (Sir G. Young), is very young, but he is old enough to know that he should not refer to me. The hon. Gentleman the Under-Secretary is only just behind me in age.

I withdraw any accusation I might have inferred against you. Mr. Deputy Speaker.

We feel that since the 6½ per cent. was only introduced in April this year there has not been long enough to see its effect, and we think it reasonable to delay any action on this matter.

Thirdly, the hon. Gentleman said, quite rightly, that if the Government were to agree to Amendments No. 23 and 27 this would cost a matter of £1 million a year after five years, rising to some £5 million a year after 30 years. Amendments Nos. 24 and 28 would double that to £2 million after five years and £10 million after 30 years. We are not saying that these are massive sums of money, although sometimes we here talk carelessly about £10 million or £5 million and that causes me certain misgivings, but we do not believe that we can justify spending those sums at this particular time.

This is obviously not the last word on this sort of subject. This is the type of amendment which any Government can introduce at any time, and this is certainly an aspect of the scheme which the present Government will continue to keep under review.

Amendment No. 41 would only be of importance if Amendment No. 27 were carried. As I hope the House will reject Amendment No. 27. Amendment No. 41 will automatically not be useful.

Amendments Nos. 42 and 43, which resurrect the old Amendment No. 89 in Committee—and this is the good news for which the hon. Gentleman the Member for Ealing. Acton has been waiting—we are certainly prepared to accept. They would allow a widow and in some cases a widower to inherit the increments that a late spouse had earned, since the amendments apply to that part of Schedule 1. The Government recognise that the new scheme requires a widow or widower to inherit all rather than half the pension which a late husband or wife was receiving, subject to the maximum payable to one person. This was the point my right hon. Friend the Secretary of State mentioned when she talked about the philosophy of the scheme. So I am delighted to tell the h