I do not think that the House should part with the sums of money contained in these Estimates without some small protest. In these four Estimates, we are asked to vote £17,621 million. Of that, £15·8 billion is in respect of Votes on Account for next year, and that sum we can hardly grudge. But there are also Supplementary Estimates of £1,798 million, and a protest must be made about the way in which the House is presented with these enormous sums of money, expected to pass them, and then to proceed to debate the Bill which is before the House. It is quite wrong that the House does not have a far more effective way of controlling the expenditure of this Government.

I wonder about the timing of this Supply Day. Is it coincidence that it is the day before the statement on the IMF loan? Are the Government trying to sneak it through before tomorrow? Is that what it is all about? It seems to me that some explanation from the Treasury would not be amiss to tell us why these Estimates are being put through in this peculiar timing. I should have thought that the Chancellor might well be referring to cuts in public expenditure tomorrow. But, no, we are told that we have to pass these Estimates today, irrespective of what the Government's policy may be. It seems totally wrong.

I am horrified to see the motion on the Order Paper on the Supplementary Estimates on Defence in the names of 46 Government supporters suggesting that Votes 5, 7, 8, 9, 10, 11 and 12—

I am sorry to interrupt the hon. Gentleman. Is he confining himself to the first of the Estimates, or is he beginning to stray into the others? We are discussing the first Estimates on their own.

I did not know that it would be wrong to refer to the whole package. It would perhaps take more of the time of the House if I were to make four separate speeches, but, if that is your wish, Mr. Speaker, I shall do so.

So be it. It is not up to me how long hon. Members wish to take, but we must stay in order.

I shall try to save the time of the House by not referring at length to the Defence Estimates except to say that for Government supporters now to be seeking to remove supplies, miscellaneous services, administration, common services and all the defence procurement systems Estimates from the Forces is to make a nonsense. To have soldiers without weapons and billets is ridiculous.

The cuts should come in these first Estimates. That is where the Government's over-spending is at its worst. It is in the Civil Estimates and not in the Defence Estimates that Government supporters should seek to be making economies, because we all know in our heart of hearts that we cannot afford to go on spending these large sums of money which are not represented by earnings, production and income to the Government. They are sums of money spent for political reasons and in trying to win votes. They are not for purposes related to the productive capacity of the country.

I shall not delay the House further, except to say that, as long as the House treats the control of these vast sums of money in such a cavalier fashion, the House will not be able to reassert its control over public spending in the way that it should, in the way that it has in the past and in the way that it must in the future if we are to get on top of our economic situation.

Taking up the remarks of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), I must make the point that it is clear that the House and the country are extremely concerned about the total in the Defence Estimates under discussion—

On a point of order, Mr. Speaker. I understood that we were discussing the Civil Estimates. You found it necessary to call to order the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), and now the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) is talking about the Defence Estimates.

I am grateful to the hon. Member for Salford, East (Mr. Allaun) for being in the Chamber because my attention was distracted. The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) must confine himself to the first Estimate.

Shall I have an opportunity to speak on the Defence Supplementary Estimates?

I fear that that is so.

I hope to speak to the correct Estimate but that is only a hope. I support what the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said. The time has come when the House of Commons—whether it approves the Estimates or not—must find better ways of examining them. What we are doing today is the custom of the House. We are simply voting sums of money to which the Government are entitled by custom to carry out their responsibilities in the next year.

If this country were a commercial firm it would be bankrupt or insolvent. The time has come to find ways of examining these Estimates, which are always expected to go through on the nod. I support the hon. Member, not in wishing to hold up the proceedings but in urging on the Government that they should find a better way of debating expenditure.

The House and the country—

Order. Perhaps I might explain to the hon. and gallant Gentleman that this motion concerns the Vote On Account. I think that hon. Members who wish to participate in a debate will wish to do so on the Defence Supplementary Estimates.

I have selected the amendment in the name of the hon. Member for Bristol, North-West (Mr. Thomas).

This must be third time lucky. The House and the country are concerned about the Estimates which the House is now considering. The Secretary of State for Defence told an hon. Member at Question Time a few months ago that the Chiefs of Staff can speak for themselves. The Secretary of State is not in the Chamber but I see that a Minister of State for Defence is here and I hope that he will tell the House whether this is a new constitutional arrangement under which the new Chiefs of Staff are entitled to speak for themselves. They have been prohibited from doing so throughout history. If there is a change I hope that the Government will allow them to speak loud and clear. If they are not allowed to do so, what the Secretary of State said must be an abdication of his responsibility for defence in this country. I hope that the Minister of State will say which of those two hypotheses is correct.

I beg to move, That the sum be reduced by £272,859,000 in respect of Votes 5, 7, 8, 9, 10, 11 and 12.

A total of 46 hon. Members from this side of the House have put their names to the amendment. I must make it clear from the start that none of those who signed the amendment is making any objection to the increases in pay for members of Her Majesty's Forces in so far as that meets with the requirements of the pay policy. But I am not certain whether it involves the £6 pay policy or the second stage of the pay policy.

Many of us have already expressed our view about restrictions on pay increases, and I want to make clear that the amendment is not meant to deny the squaddy his rightful pay under the pay policy, but we are challenging the other items that appear in the Supplementary Estimates on page V. We make the challenge because of the cuts in education, health, social services, housing and so on. Given those cuts, it is unacceptable for the Government to come and ask for over another £300 million-plus for defence.

Reference is made within the details of the Estimates to price increases as a justification for asking for this sum. I remind the Front Bench of my party that local authorities are faced—as the Prime Minister said a few moments ago—with rigidly enforced strict cash limits. They are also faced with decisive cuts in the rate support grant. With both those factors at work, they must contain inflationary pressures if the costs to local authority departments are greater than what the Government think they are or should be. They must contain their spending within their own cash limits and cut back services to do so. But it appears that the Defence Department is not faced with the same kind of cash limit.

Elsewhere in the Supplementary Estimates reference is made to the increased costs due to the exchange rate, but no total is given. We are spending about £800 million annually on military commitments overseas, and about £500 million is being spent in Western Germany. About £2,000 million has been spent on military commitment overseas in the last three years.

We are in a situation where we are cutting the social wage to placate foreign bankers, the militant monetarists of the Opposition, the City, foreign speculators and the IMF. And yet the amount that we are now crawling to the IMF to borrow is about the same as the sum that we have spent on military commitments overseas in the last three to four years.

We are told that the Supplementary Estimates represent only 80 per cent. of the increase likely to come about in the current financial year. Does this mean that before long the Government will put before us further Supplementary Estimates of £200 million or £300 million, pushing our Defence Estimates way over the £6,000 million mark? These Supplementary Estimates must be seen against a background of expenditure of about £6,000 million on defence and a probable expenditure of £20,000 million over the next three years.

My hon. Friends have said time and again that as a proportion of the gross national product our defence expenditure is more than that of our industrial competitor countries. When that point is made, we are told that we should think of defence expenditure per head of population. I can only reply that, if defence expenditure were decided on that basis, heaven help us when we think of what China and India would be justified in spending on defence.

Will my hon. Friend tell us something about Soviet expenditure on defence and what proportion of overall public expenditure in the Soviet Union it represents?

I am prepared to stand up in Moscow, Washington, Tel Aviv or anywhere else and appeal to the Governments concerned to cut their defence expenditure before a near-madman presses a nuclear button and the whole of civilisation is destroyed. But we have a responsibility here. We are making the decisions here and now. If my hon. Friend would like to arrange for me to go to Red Square, Washington, Tel Aviv, Paris or anywhere else and shout as loud as I can, and appeal as well as I can for the Governments there to cut their defence spending, I shall be only too happy to do so.

What does the hon. Gentleman think would happen to him in Red Square, Moscow and Times Square, New York, if he were to speak against the defence policies of first the Soviet Union and secondly the United States?

I should be happy to go to Red Square or Washington. I have no idea what would happen to me in either place if I spoke in that way, but I should be prepared to do it. But it is nonsense to suggest that what is happening in the Soviet Union or the United States takes a responsibility off us. We are taking our decision this afternoon, and it should in my view be to oppose increases in defence expenditure.

I have said that our industrial competitor countries spend far less on defence as a proportion of their gross domestic product than we do. That is one of the major reasons why we now face serious import penetration throughout British industry. These vast sums on defence are not for the Japanese or, to a lesser extent, the Germans. They have channelled their resources into capital investment to build up their industries and we are feeling the effect, with almost 60 per cent. of our non-fuel imports now being of finished and semi-finished manufactured goods.

There are those who say that cutting defence spending would mean a loss of jobs and consequent unemployment. Such a statement has a hollow ring when we have almost 1½ million unemployed and when we are prepared to make vicious cuts in the public sector which we know will push up unemployment. People find that acceptable, but when it comes to defence the unemployment argument is used.

I am not one of those who say that we should be sacking people from defence industries, putting them into dole queues. I appeal to my right hon. Friends to remember our party's conference commitment to make a substantial cut in defence expenditure and to look at the work that has been done by shop stewards at Lucas, BAC and Rolls-Royce in producing first-rate proposals showing how we can utilise the innovative and creative skills of the workers in those firms in socially necessary and far more suitable alternative work.

The Tories want to cut public expenditure and cut and cut again—except defence expenditure, which they want to increase. If the cuts in public expenditure that the Tories want were allowed to happen, the unmployment consequences would make the inter-war years look like an economic miracle. But it is not just a question of guns before butter. The Tories want nuclear weapons and more nuclear weapons before food, housing, education, social services and all the other parts of the social wage.

Does the hon. Gentleman realise that 90,000 jobs have already been lost as a result of the defence cuts that his Government have made? What can he say to those who are on the dole as a result of his Government's actions which he is now supporting?

I made it quite clear that was not advocating defence cuts to put skilled workers into dole queues. I said that the trade union movement and groups of shop stewards had produced clear-cut proposals on how the innovative and creative skills of, for example, aircraft workers could be used to produce socially desirable and far more socially needed products. If the hon. Gentleman is saying that the only way in which we can keep the people concerned in work is by making weapons of destruction, that is a clear indictment of our society and the hon. Gentleman should be ashamed of saying it.

What about the rest of the world?

I accept that this applies to the rest of the world. I have made that absolutely clear.

The 46 of us who signed the amendment do not want today to agree to increase defence expenditure by more than £500 million and then have my right hon. Friend the Chancellor of the Exchequer deduct £100 million from that total tomorrow—[Interruption.]

Order. I hope that hon. Members will not conduct another debate across the Floor of the House. I cannot hear what is being said.

I was saying that we should find it unacceptable—

On a point of order, Mr. Deputy Speaker. I have a notion that the Secretary of State for Defence did not hear your admonition.

We should find it completely unacceptable to vote today for the expenditure of an additional £500 million-plus on defence and then be expected to take it as a sop tomorrow if £100 million is cut.

I appreciate that the House is looking forward to getting back to the devolution debate, though quite why that should be I do not know. In my constituency in Wiltshire there are one or two other interests which we hold to be of comparable importance, and one of them is defence.

This afternoon the House is asked to approve the spending of additional money on defence. It is abundantly clear to all of us on the Opposition Benches that Labour Governments are not to be trusted with the responsibility for defence.

I remember very well that in the early months of 1965 a certain aircraft was undergoing its trials in my constituency. It was more advanced than anything then in service in the world. It flew daily over my constituency. It flew up to the Pennines and out to the Scilly Isles. It far exceeded its designers' hopes. British engineers had clearly developed a world beater and there was nothing—not even on the drawing board—to compare with it. Then, in his first spring Budget, the right hon. Member for Birmingham, Stechford (Mr. Jenkins) who is shortly to leave us, and who was then Chancellor of the Exchequer, announced the cancellation of the TSR2 project. The aircraft was taken off the runway and sheeted up, and orders were given for the jigs to be destroyed so that the project could never be resurrected. We do not readily forget these things in the part of England that I represent.

Tomorrow we shall have yet another Budget. It will be the eighth Budget of the present Chancellor of the Exchequer in less than three years. In March 1974 he cut £50 million off defence. In April 1975 he again cut back on defence. In February of this year he cut £190 million off defence. It is small wonder that some of us are uneasy about tomorrow, and that the Chiefs of Staff called at Downing Street last week. It never ceases to astonish me that they do not carry their protests to the point of resignation. The last senior soldier to resign over a point of principle was General d'Avigdor-Goldsmid, who later joined us here, and whose brother's death we mourn this week.

There is a section in the Supplementary Estimates dealing with research and development establishments. A shadow now hangs over the most advanced centre of all—the Microbiological Research Establishment at Porton. If the Attlee Government were right to set up these unique facilities, and were right in appreciating the real dangers to our population from germ warfare, it follows that the Callaghan Government, at a time when the Soviet threat is greater, must be wrong to close them.

There is nothing in the United Kingdom that is remotely comparable to this research establishment. In the free world, only in Germany and Atlanta, Georgia are there comparable facilities. Yet no country in the world is more vulnerable than the United Kingdom to military attack using disease germs as the weapons. Moreover, no form of warfare is easier, simpler or cheaper to conduct. Contrary to popular belief, it is an astonishingly unsophisticated business.

It is probable that most hon. Members saw crop spraying this summer. An aircraft flying over a cornfield can rid it of aphids within minutes. The principle is the same. One aircraft, flying 10 miles up, making use of prevailing winds and carrying a few tons of a biological agent, could bring life in this country to a halt. Some days would pass before anyone became conscious that anything had happened. There would be no fall-out that could be detected, and nothing that could be seen or smelt. Then the epidemic would break out on an unprecedented scale.

There is a whole range of diseases that lend themselves to military use. The choice is wide. The likelihood is that an enemy would choose, the most lethal. Anthrax is an example, and it is almost always fatal unless the necessary serum is applied, and unless scientists are trained and ready to supply it at short notice. But the disease could equally well be cholera, plague, or viral encephalitis. All are cheap and easily prepared, and none of them is attractive.

Four hundred scientists are working at MRE Porton. They include physicists, chemists, bio-chemists, bacteriologists, virologists and geneticists. They work in more than 100 laboratories, and are men and women of advanced training and experience. They are dedicated to their work and understand its relevance to the well-being of the community. The whole House will be delighted at the recovery of Mr. Geoffrey Platt, and we hope that he will shortly be reunited with his family. He is the scientist who recently caught Marburg disease and who has caused us some anxious weeks.

It is not difficult to imagine the feelings of these scientists and their families. Their concern goes much deeper than the prospect of unemployment, of which we have already heard. It goes deeper than the realisation that openings for such highly specialised personnel are rare. What really cuts deep among men and woment who have worked for 10 or 20 years at these frontiers of knowledge is the ham-fisted attitude of those who consider that their work is dispensable.

The left wing of the Labour Party does not believe in defence. All its thoughts are concentrated on the social wage—of which we heard this afternoon—on housing subsidies, and so on. What is criminal—and we watch it monthly from the Opposition Benches—is the way that the Government constantly appease the left wing. The national interest takes second place. When votes are needed in the Lobby. Tomorrow we shall see yet a further instalment of this.

I have always considered the present Chancellor to be the worst since the war, but I am unable to make up my mind whether he did more harm at the Ministry of Defence than he is now doing at the Treasury. In the spring of 1969 he told the House something of profound significance, but every subseqeuent act on his part has run counter to it. He said:

"once we cut defence expenditure to the extent where our security is imperilled, we have no houses, we have no hospitals, we have no schools. We have a heap of cinders."—[Official Report,5th March 1969; Vol. 779, c. 551.)

The observations that I want to make about the motions before us will be almost entirely interrogative. They will consist largely of a series of questions designed to elucidate and get more information about some of the imprecise language set out in the Supplementary Estimate.

It is one of the heaviest responsibilities of this House to monitor and check the expenditure of public funds by the Government. It has been agreed by almost everyone, of whatever political view, who has thought about this subject in recent years that the extent to which, and the effectiveness with which, the House has carried out is function of invigilating Supply has declined over the last two or three decades.

There could be a number of reasons. Perhaps one is that we have a lot more to do today. There must be good causes and some bad causes for that. Whatever the reason, in the period since I first came here, rather more than 30 years ago—[Interruption.] That is a gentlemanly thing to say. Of course, the hon. Gentleman is a member of the gentlemanly party. Perhaps it is too long, but it was not for the hon. Gentleman to say so. Someone will say it to him one day.

In this rather more than 30 years, I have observed that the surveillance of expenditure by Parliament has become increasingly less effective. This is a rôle which we should take up more.

I recall once sitting all night on a Supply debate and it was one of the best debates I have ever attended. It started at 3.30 in the afternoon and finished after midday the following day. I do not recall a single word which was not practically directed at examining the Estimates. There was a great deal of discussion during the night about, among other things, the purchase of paper and stationery and the best forms of stock keeping.

I am sure that one one will object if I do a little invigilating work on this Estimate. Some points have been raised which it would be discourteous of me not to mention. Somehow, it has always been accepted that there is a substantial difference between defence expenditure and other expenditure—that defence is a sacred cow, and that anyone who starts to look down its gullet is being unpatriotic or treacherous, but that all other expenditure is wide open for examination and we have a right and, indeed, a solemn duty to examine it.

This is something which no one, whatever his political view, should accept. Anyone who has run a big organisation knows that it is possible to have waste if the system of operation is not checked. This is as true in hospitals and local authorities as it is in the Army or the Ministry of Defence.

There ought to be no sacred cows; we should look, with equal assiduity and determination to avoid waste, at all Government expenditure and not take the view that defence is a sacred cow.

Opposition Members shouted a lot of rubbish at my hon. Friend the Member for Bristol, North-West (Mr. Thomas) about Moscow, Washington, and so on, as though it is patriotic to challenge expenditure of the National Health Service but treacherous to challenge defence expenditure. What rubbish that is.

I take the hon. Gentleman's point that nothing can be issume from invigilation, but does he not agree that the pattern of the past 10 years, under all Governments, has been that defence expenditure has steadily reduced as a proportion of gross national product while public expenditure in most other areas, including education, health and local government, has increased? If there are any sacred cows, defence is not among them.

The two halves of the hon. Gentleman's question constitute a non sequitur. The answer to the first part is "Yes"; that has been the general pattern. But the second part of his question is not relevant to that, because we must consider all the changes of circumstances, and, above all, the changed rôles which have occurred. We were once a great imperial Power, occupying red spaces all over the globe. We had considerable obligations to defend very nearly all those red spaces. They have now gone from the ambit of our defence policy. The Australians and the Indians do not rely on us to protect them. Belize and Hong Kong are now almost the only colonial defence obligations left. The instrument has run down because the task for which it was fashioned has been changed and greatly reduced.

At the same time, taking up the other half of the hon. Gentleman's question, needs at home have increased because there has been an escalation of social expectation, and this has been an equal phenomenon all over the world. The hon. Gentleman could have put his question in the Parliaments at Bonn, Paris or The Hague and it would have been equally irrelevant.

What about Moscow?

I do not know what that has to do with it. I do not know whether the hon. Gentleman approves of Soviet defence policy. I do not, and have said so on many occasions.

The hon. Gentleman asked my hon. Friend the Member for Bristol, North-West what would happen if he queried defence policy in Times Square or in Moscow. I know that if I did that in Moscow, I would be photographed by the KGB and put on a computer. In Times Square, I would be photographed by the FBI and put on a computer, and in Trafalgar Square I would be photographed by MI5 and put on a computer. What the hell is the difference?

The essential point is whether the hon. Gentleman believes that in Moscow he would be allowed to complete his speech, be interviewed on the radio, and for the news to be carried on television and in the Press. He would have that privilege in both Times Square and in Trafalgar Square, as he knows. The hon. Gentleman is sympathetic to the régime in East Germany, where they murder people for trying to escape, let alone for questioning defence policy.

That is grossly offensive and, I should think, grossly out of order, but it is typical of the hon. Gentleman.

Of course I know that there is restriction of personal liberty in Moscow. I have been fighting it for 30 years.

And in East Germany?

Yes, in East Germany as well. I have been fighting that for 30 years, too.

The hon. Gentleman made money out of East Germany.

That is a lie.

Order. I must ask the hon. Member for Bethnal Green and Bow (Mr. Mikardo) to withdraw that remark.

No, Mr. Deputy Speaker, I will not. The right hon. Gentleman said that I made money out of East Germany. That is either a truthful statement or it is not. I am willing to submit to an independent examination which will show that I have never had a single penny out of that country, in any circumstances whatever. If saying that I have does not constitute a lie, will you please advise me, Mr. Deputy Speaker, whether it is truthful?

If the hon. Gentleman went to the length of saying that it was an offensive mistake, that might cover the situation.

I will use the words of my old late lamented friend, Damon Runyon, who said

"If it was not a lie, it will do until a real lie comes along."

Perhaps I may continue trying to make what was a serious contribution to this debate before the puerile nonsense from the hon. Member for Epping when he interrupted me.

It is not Epping.

Well, wherever it is.

Get it right.

Wherever it is, the hon. Gentleman's constituents suffer considerably. They should be better represented.

I said that I would make two general points. The second concerns the question of defence expenditure as a vehicle for providing employment. I wish that hon. Members who argue that we cannot cut defence expenditure because that would add to the already horrific level of unemployment would think through the consequences of what they are saying. They are saying that one should go on making weapons, whether one needs them or not and whether or not they are of any use, not in order not to have the weapons but to provide employment. No man in his right mind would ever argue that, but that is clearly the extension in logic of the argument that one must not cut defence expenditure because one will create unemployment. I leave aside for the moment the valuable point made by my hon. Friend the Member for Bristol, North-West, that it is always assumed—for some reason that I do not understand—that people engaged in making arms cannot make anything else, and that if they were not making arms they would be unemployed. I do not know why that should be true.

I recall that towards the end of the war, in almost every arms factory serious discussions were going on about what they would do after the war, because they knew that the defence industries would be hugely run down. I sat in on many of those discussions, which were very interesting and which showed a great deal of inventiveness, ingenuity and initiative. Many good things were worked out, as is happening now in the Lucas factories, BAC, Rolls-Royce and elsewhere. After the war, we ran down our defence industries very quickly, by millions of people, at the same time as we took more than 5 million men and women out of uniform and put them back into civilian occupations. There was a great buoyancy of demand, and people were starved of goods. That goes to show that if the overall economic climate is right, one may just as readily face a situation in which one stops making weapons because one does not need them, as one can face a situation in which a factory stops making hairpins because women have stopped using them. One gets changes in demand all the time, and industry is a very flexible instrument.

The hon. Member for Salisbury (Mr. Hamilton) mentioned the TSR2. I recall the debates on that aircraft. Everyone said that Preston would become a blighted town as a result of the cancellation of the TSR2. The Ministry of Labour, as it then was, sent special teams to Preston to deal with the frightful unemployment which it was thought would be caused by the cutting of the TSR2 programme. Within weeks, not one of the people who had been pushed off that programme was out of a job. The real problem that we face is that such changes as we are having to make, we have to make in a climate of economic non-buoyancy. That is what we should be looking at—not fiddling.

I recall the first General Election that I ever fought, in 1945. Perhaps hon. Members will bear with me while I make a point about what happened in that campaign. I was losing that election campaign—it was a safe Conservative seat—until all the candidates were invited to go to an aircraft factory just outside the constituency and talk to the workers about their future. We were all asked what we thought would be the future of the 6,500 people who were making aircraft which manifestly would not be wanted after the war. My Conservative opponent, who is unhappily no longer with us—a very fine man, for whom I had very great respect—said "I believe that we should keep everyone employed, even if it means that we build battleships, tow them out to sea, sink them and come back and build some more". He lost the election from that moment onwards because the Daily Mirror unkindly reported what he had said. That is what hon. Members are saying today.

Anyone who suggests that one should go on making arms because of the need to maintain employment is saying that one must make arms irrespective of whether one wants them or will use them. That is an absolutely untenable argument.

Surely the hon. Member has spent an inordinate amount of time destroying what is a stupid argument. No one in his right senses would argue that one should maintain defence merely to guarantee jobs. Surely the case for defence expenditure is based on prudence, and ensuring the security of the country. It comes down to that, and surely not a facetious argument.

I try never to be unkind to fellow Members, and I would hate to suggest that any one of them was not in his right mind. However, already today we have heard people saying that we must not cut arms expenditure, because that would create unemployment. Whether or not people are in their right minds is a matter on which the hon. and learned Gentleman may be a better judge. However, every country says the same thing. If one goes on maintaining that argument, one is in an arms race for all time.

I turn now to the Estimates. I should have been much quicker about it had I not been interrupted, and rudely interrupted, so much. Page 14 contains an item which has been increased substantially, mainly because of higher fares—which is understandable—and variations in exchange rates. Undoubtedly if one is to have men travelling abroad and one pays in sterling, one will have to pay more if there is a variation in exchange rates which is unfavourable to sterling. Other Departments have been told that they must maintain a cash stop. A cash figure is fixed, and they have to stick within that figure, no matter what variations occur in prices, salaries or exchange rates. What would happen if there were some civilian expenditure that involved imports? If a local authority bought an American computer—I hope that it would not, and that it would buy a British one—and if the authority had to continue to buy software, would it be exempted from the defined total cash limit and the cash stop, in order to give it a bit more money to cover the variations in the cost of the computer as a result of variations in the exchange rates? No, it jolly well would not. Why is this a factor which applies only to some Estimates?

I have another question. Over and over again, the explanation for increases is stated to be that they are "mainly" this, that or the other—"mainly" increased rates of pay, "mainly" higher charges, "mainly" other things. I ask the Minister to tell the House what is the other bit of it. If we are adequately to invigilate these accounts, we should know the whole story.

How big is "mainly"? Is it 60 per cent., or 51 per cent., or 70 per cent., or 80 per cent.? What does the other 20 per cent. or 30 per cent or 49 per cent. or 40 per cent. consist of? The facts are manifestly available or the Minstry would not have been able to say "mainly". Can we have the facts?

On page 15, there is shown a substantial increase in expenditure on "miscellaneous stores". What were they? A lot of money is involved. Were they weapons? I do not think that they can have been, because weapons are shown separately. What sort of stores were they? What attempts are made to do bulk purchase with other Departments of common stores? I have heard this aspect discussed in many debates on Civil and Defence Estimates. The potential for saving in this way is very great.

Why do Departments buy separately the identical things they need? They could obviously get economies of scale and the advantages of bulk purchase by buying them together. Every Department buys paper of different types. Why do Departments not all buy paper together? Why does the Ministry of Defence buy medical and dental stores separately from the National Health Service? Ought there not to be some attempt to get some economies to make up for increased prices by doing common purchasing?

Page 16 shows a very large increase, amounting to well over 20 per cent., in rents and other charges "other than married quarters". What are they? What are we paying rent for, other than in respect of married quarters, which goes up by over 20 per cent. in a year? May we be told?

Our expenditure on the North Atlantic Treaty Organisation has gone up by 17 per cent. What is it for? What do we get for this £18½ million extra? Who gets paid out of it? Is it the soldiers? Or is it spent on weapons of war? If we are serious about controlling Government expenditure, we ought to know these facts, because £18½ million is a lot of money. Many things have been cut out of Government expenditure which would have cost a great deal less. What is this money being spent on? Who is getting what out of it?

Turning to page 36 prompts me to ask about cash limits. Two items of hardware expenditure are shown there which have increased between them by no less than £70 million. It is part of a very large hardware expenditure. Other people buy hardware. Civilian Departments buy it. They have been told that they have to keep within a total fixed cash limit, and if the price of each unit of hardware has gone up 5 per cent., say, they have to manage with 5 per cent. fewer units. Why does that apply in these other cases but not in this one?

Again, there may be good reasons—I am only asking because it is my duty to do so—why the payments to Rolls-Royce (1971) Limited exceed the estimate by 50 per cent. Someone was not a very good estimator, was he? If an estimator in industry made an estimate that was that much out, he would quickly get it in the neck. The offsetting receipts were correctly estimated and the outturn is the same as the budget, but the payments have been underestimated, being 150 per cent. of what was estimated. Why? What were these payments? How did this substantial error in estimating come about?

I apologise for having taken so long. I shall quote only one other example, although I assure the House that I could quote many more. There is an item headed

"Contract Repair for Ships and Vessels".

Every other organisation has contract repair. Local authorities have contract repair of their electrical installations and their dustcarts. A river authority has contract repair of its locks and other systems. Every organisation of any size goes in for contract repair.

The estimate in this case was wildly wrong. The outturn was 24½ per cent. above the estimate. I would like to know what monitoring is done of these repairs and of the rates of charge for them. If the head of a maintenance department in a factory who had a budget for maintaining the machinery and equipment said, at the end of the year, "I put it out to contract a year ago but I need 24½ per cent. more money than I asked for then", he would not last five minutes.

I want to know more about all this. I hope that the Minister will be able to give the House some assistance on these matters.

I end as I began. I hope that no one will feel resentment that hon. Members are looking very closely at all these estimates, because it is not merely our right but our solemn duty, and one of the most important duties that we are here to carry out.

In what the hon. Member for Bethnal Green and Bow (Mr. Mikardo) himself described as a lengthy speech, he said that defence expenditure was a sacred cow. I do not know where he has been during the last three years. defence expenditure during that time has been cut or planned to be cut by more than £8,000 million, and there will be more cuts tomorrow.

The Chief of the Defence Staff pointed out about a year ago that

"We have been through a long, searching examination…not just by the Ministry of Defence but on an inter-departmental basis, and as a result of that we have already made…a very large contribution to the reduction of public expenditure. We've been through the examination and we should not be put through the examination again."

Since then there have been at least two more cuts. But what the Chief of the Defence Staff said was right—defence has been examined much more than any other Department. To say, therefore, that defence expenditure is a sacred cow can very nearly be described by a word that the hon. Gentleman used in his speech but which I would not dream of repeating. I will simply say that it is untrue.

The hon. and learned Member for Montgomery (Mr. Hooson) said that the hon. Member for Bethnal Green and Bow was spending a lot of time knocking down an argument—that weapons should be made for employment's sake—which is used by very few people other than by some Labour Members. We believe that weapons should be made for the defence of the country and of the West. But that is not the view of a number of hon. Members below the Gangway opposite. It is true that defence expenditure has considerable implications for employment, and it is a matter of some remark that, whereas Labour Members below the Gangway are quite rightly anxious about unemployment in every other sector, they seem to welcome it in the defence industries.

I have heard the right hon. Member, like so many of his hon. Friends, constantly repeating this. It is untrue that Labour Members below the Gangway are not concerned with the defence of this country and are not concerned with protecting our country's interests. Many of us served right through the last world war. Many of us have served in the Armed Forces, playing our part in the defence of our country. What the hon. Gentleman is saying is quite untrue and it is a deliberate smear. He and his hon. Friends continue to repeat the suggestion that because Labour Members are concerned about cutting defence expenditure they are not concerned about the defence of the country.

I have no criticism of the hon. Gentleman's war record. I can later substantiate the remarks I just made by one or two quotations from a source not a million miles away from the hon. Gentleman. I see that the hon. Member for Bristol, North-West (Mr. Thomas) has now gone. He and the hon. Member for Bethnal Green and Bow, and the hon. Member for Salford, East (Mr. Allaun)—whom I respect—are signatories to this motion. This sort of motion is tabled every year, and in most cases the signatories melt away. But the hon. Member for Salford, East is always there to defend his signature and to make his speech. I am sorry that on this occasion I am speaking before he does and not after. However, to say that defence workers could be redeployed in other industries when we have 1½ million unemployed is fatuous rubbish. Not only do we have 1½ million unemployed; all the forecasts are that that figure will grow. To suggest that by creating more unemployment in defence industries these people will be easily deployed and found jobs elsewhere is untrue.

I quote from the Tribune document, published in the summer:

"We recognise the need to provide alternative socially useful work for all those at present employed in the armed services or employed in military or defence establishments—indeed, we see the redeployment of technology and skills to civil production as a substantial potential strengthening of the economy."

As long as we have high unemployment, that is arrant hypocrisy. There is no possibility of its happening.

Labour Members below the Gangway are speaking on a motion to knock off £270 million from the defence budget. Labour Members will be aware that the former Defence Secretary said, in the holy writ of Labour Weekly of 11th June this year, that:

"Any reduction, even of much less than £1,000 million a year…would require savage cuts in the armed forces and many big equipment orders would have to be cancelled. Our Allies would no longer regard us as serious allies and partners. The disarray that would be caused in the NATO Alliance would place at risk the whole security of Europe, not least our own. Our enemies would be able to take advantage of our weaknesses. To achieve such a reduction would entail a major foreign policy change. Our relations with the United States and with the West Germans would deteriorate badly. We would risk unravelling the NATO Alliance and destroying the security which we gain through it. The effect on our financial credit and on economic and trade relations would be incalculable."

That is one view and that goes part of the way to answering the hon. Member for Liverpool, Walton (Mr. Helfer). When we consider, as we must, that defence has already been cut by £8,000 million and then we read what the Tribune Group—I think that all the signatories to this amendment are members of the Tribune Group—

They are not.

I am sorry to blackguard those who are not, but I am afraid I do not know which ones are not members. I think that nearly all of them are. It is interesting that so many of them represent constituencies in which there are defence industries. For instance, how can either the hon. Member for Preston, North (Mr. Atkins) or the hon. Member for Preston, South (Mr. Thorne) sign a motion like this, knowing full well that they will throw a large number of their constituents out of work? The same applies to the hon. Member for Salford, East.

A short time ago the right hon. Gentleman accused Labour Members of wanting to cut down on defence, regardless. I was a soldier, and was wounded in the last war. The right hon. Gentleman should take note that I come from Sheffield, where the organised working people are behind what I am trying to do—the right hon. Gentleman can check up on this. They know, as my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) pointed out at some length and quite correctly, that it is not beyond the wit of man to move workers away from producing these weapons of slaughter on to constructive work, when the whole world is panting out for consumer goods. That does not mean that we are refusing one iota to defend our country. Labour Members want to defend their country on all occasions.

I pay tribute to the hon. Gentleman's war record, but I repeat that we cannot redeploy people when we have 1½ million unemployed.

For the hon. Member to say that he is concerned about defence when he goes out of his way to cut defence spending is totally inconsistent. Some hon. Members—for instance the hon. Member for Bristol, North-West—could hardly fail to be affected by considerable cuts in defence expenditure. Apart from denuding this country's defence, Labour Members are seeking to put their constituents out of work.

I should have thought that the right hon. Gentleman would pay such Members a tribute for not being merely vote catchers, as too many people are.

I do not find it admirable. When I was a Minister some Labour Members came to me to ask for increases in defence orders to save employment. I said that it would mean an increase in the defence budget, whereupon they replied that they did not want that but preferred their constituents to be unemployed. I do not find that admirable.

I return to the Tribune document, which is the answer to the question of the hon. Member for Walton:

"In the long run, however, it is our view that British defence expenditure should be related to the pursuit of a socialist foreign policy, and there is a contradiction between many of the aims outlined in the document"

—that is Labour's programme for 1976, which is idiotic enough—

"and the fundamental commitment, accepted by all British Governments for the past quarter of a century, to NATO and other military alliances. These are designed to achieve security and stability for existing régimes which are situated within the western sphere of influence. This end is in many cases incompatible with support for movements seeking to achieve radical social change… We do not believe that Britain can any longer justify remaining a member either of SEATO or CENTO, and in the absence of positive steps towards mutual and concurrent phasing out of NATO we consider that Britain should progressively reduce her commitment to NATO. On economic grounds alone, Britain cannot indefinitely continue to shoulder the burden of maintaining BAOR, to which she is committed as a member of this alliance. The adoption of this policy would represent a decisive shift in the direction of nonalignment in international affairs."

That is the final answer to the hon. Member for Walton. Anyone who wants to take this country out of the Western alliance when Russia is increasing its defences every year is not interested in the defence of this country or of the West. As my hon. Friend the Member for Salisbury (Mr. Hamilton) said, these continual cuts are not in the national interest, or the interests of our defence or our economy. They are purely sops to Labour Members below the Gangway.

The Secretary of State said this afternoon—I am sorry that he is not here now; I beg his pardon, he is present. I was about to say that I will not be able to remain for the remainder of the debate—

I am sorry that I was not here at the beginning of the right hon. Gentleman's speech. I was attending a meeting with representatives of the defence industry which I broke off as soon as I saw the right hon. Gentleman's name on the television screen.

I am extremely grateful for the Secretary of State's courtesy. I was apologising that, for reasons of which he will be aware, I shall be unable to remain for all of the debate. I apologise to the Minister of State and to all other hon. Members who will be speaking. I was disturbed by what the Secretary of State said about the Chiefs of Staff. Surely, he should realise that it is not the job of the Chiefs of Staff to resign; it is the job of the Chiefs of Staff to put their views forward as forcibly as they can, which is what they have done, and then to accept the policy of the Government if they can stomach it. It is not their job to resign, it is the Secretary of State's job to resign. To try to pass the burden of the Government's misdeeds on to the Chiefs of Staff is quite unworthy of him and I hope that he will withdraw that part of his remarks before very long.

The right hon. Gentleman seemed to admit, not handsomely, but honestly, I think, that he had concealed the cuts that are to be made tomorrow from our NATO Allies when he saw them only a few days ago. That is bad for him and for the country. The allies do not like being treated like that. If he wishes to preserve open and honest dealing with the NATO Alliance he should have told the allies the worst.

We ought to get the record straight on this. The detailed package which my right hon. Friend is to present tomorrow was not concluded until after the meetings I had with my colleagues in NATO. I hope, therefore, that the right hon. Gentleman will withdraw that remark.

Did the right hon. Gentleman tell his colleagues that the cuts were to be made? Obviously he could not give the details if he did not know exactly what they were, but he could have warned them that the cuts were to be made. From his silence I take it that he did not warn them, and I think he would agree that my original point stands.

Since the Secretary of State for Defence saw fit to intervene during my right hon. Friend's speech, does my right hon. Friend not think that it would be appropriate to give the Secretary of State an opportunity to tell the House when he proposes to inform our NATO Allies of the further and grievous defence cuts to which he has shamefully agreed?

I hope that the Minister of State will deal with that pertinent point when he replies to the debate.

This is the fifth time that the Government have made defence cuts. The Russians are expanding far more than we ever thought possible. These cuts come at a time when we are being warned by General Haig and every competent observer that the Western Alliance is not in good shape. Our allies are spending more making themselves stronger to deal with this bigger threat yet what do we do? We get weaker and weaker. It is particularly disgraceful to make these cuts now. They arise largely because of pressure on the Government from the Labour left wing. As the hon. Member for Berwick and East Lothian (Mr. Mackintosh) said yesterday, that is what the Cabinet has been concerned with—not the national interest but what they can get past Labour Members below the Gangway. Those hon. Members, as the Secretary of State knows well, do not basically believe in the defence of this country.

The cuts are particularly wrong at this time, because the point of public expenditure cuts is to increase foreign confidence in the pound. The Secretary of State and all Labour Members know full well that these defence cuts will not do that, simply because they will show foreign observers that Labour Members below the Gangway still have an inordinate influence on the Government.

I wish that were true.

Therefore, not only are these cuts extremely damaging to the defence of this country; they do not even achieve their objective of ensuring financial solvency. I hope that the Secretary of State will reconsider his position, and I hope that he has done at least all that he can to mitigate the damage that the Chancellor seems to be doing. It is deplorable that the Government should be cutting defence expenditure again, and it is ironical that they should be resisting the cuts proposed by Labour Members below the Gangway. I see the point of what those Labour Members are doing, given their views. I hope that the Minister of State will be able to explain to the House why his hon. Friends are wrong today and how the Government will be right tomorrow. I do not see how that can be done.

The speech of the right hon. Member for Chesham and Amersham (Mr. Gilmour), and, indeed, all of the contributions from the Tory Benches, have demonstrated how barren is the attitude of the Conservative Party on these matters. Those speeches must have fortified the belief of the Labour movement that the British people are not likely to return a Conservative Administration. The reality, which has been evident in the speeches of Tory Members, is that they do not realise that they are living in 1976. They have entirely missed the bus. They do not understand the mood of the younger generation. They live in a bygone age.

Tory Members do not seem to realise that in the last war Britain and Russia fought on the same side. If that had not been so, it would have been bad for us. If, in a future war, we are not on the same side again, it will be equally bad for us. It is true that the Russians are building up a great defensive armoury, mainly concentrated on land forces. In the West, NATO and the American allies are building up a massive defensive nuclear strike capacity. That is what life is all about in the world today. The conclusions which have been drawn in the speeches of my hon. Friends below the Gangway are the long-held conclusions of the Labour movement, which is the progressive content in British society. It is absolutely nonsense for Britain to be engaged in defence on this scale.

I want to devote most of my remarks to the interrogatory attitude envinced by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). I decry the foolish interventions of the hon. Member for Chingford (Mr. Tebbit). They showed that he is greatly deficient in his understanding of this subject, as he is on many other matters. He made a crude intervention during my hon. Friend's speech. His attitude toward the Soviet Union is well known to any discerning mind, as is his passionate attachment to democratic liberty. My hon. Friend was too kind to deal adequately with the hon. Member. I am not so kind, and not so inclined.

These Estimates are worthy of far more serious consideration. I am surprised that Tory Members are not as diligent in their probing of these items of expenditure as we are. They are certainly diligent in all other respects. The primary rôle of the House is to inquire into such matters. This stems from the fact that the Prime Minister is the First Lord of the Treasury and the Chancellor the Second Lord of the Treasury. I often think that in this Government we have a Third Lord of the Treasury, in my right hon. Friend the Chancellor of the Duchy of Lancaster. The strength of the British Parliament has stemmed from its interrogatory powers and its ability to probe aspects of Government expenditure.

I hope that the Minister of State will give a full reply to all the points that have been raised. I look for some answers to the questions about movements in pay increases for the Armed Forces. I would not wish to probe such increases in depth if it can be shown that they are in line with the general movement of pay increases in industry. However, we know that when there is rigid State interference in the movement of pay—something with which I and my close Friends on the Labour side of the House disagree—we encounter all sorts of difficulties. Many devices are used to get round the resulting rigidity. I would like to hear more about this expenditure as it relates to promotions in the Army.

The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) said that he welcomed the fact that the door of No. 10 was open to brass hats—that is my expression, not his—who are concerned about the defence cuts which may result from the IMF negotiations. It is right that they should avail themselves of that democratic facility, but if they want to make public statements they should be prepared for public debate and not simply make noises and run away. That has been one attribute of brass hats in the past: when they have had something to say about Government policy, they have not wanted to engage in public debate.

The decision should not rest just with the brass hats. Many of us have proposed that soldiers should have the same democratic rights as any other citizen, including the right to join a union. So should the police. They should scrub their "house organisation", the Police Federation. Tomorrow, the Police Federation is to lobby this House—

Order. I am afraid that the hon. Gentleman is straying wide of the motion.

I agree that an allusion to the Police Federation is out of order. I was trying to show the similarity between these two groups.

The members of the Armed Forces should have the freedom of say-so as well. What Conservative Members have said today is a gross travesty of the truth. Those of us who reflect the attitudes of conferences of the Labour movement, which express the thoughts of the grass roots of the British people, are not against the defence of this country. We are seriously attached to our defence. We have proposed the concept of a people's army and of defending our country street by street if necessary. It is we who say that the semi-global defence rôle of Britain is totally unrealistic. This is all based on the concept of the Soviet threat, which is absolute balderdash.

The hon. Gentleman seems to be suggesting that the Tribune Group is frightened of the Army and of the police and that it wants to institute the Russian system of a people's army. Would he confirm that that is what he is saying?

What happened in the Soviet Union was the result of totally different historical circumstances. As things progress, it is ridiculous to believe that Eastern or Western European States will slavishly follow the pattern in any other country. That is a misreading of history. If the Soviet Union is to retreat from its present military posture, there has to be a quid pro quo. It has to be done by international agreements; it cannot be done by a return to the cold war psychosis. That is why the majority of our people reject the attitudes shown by Conservative Members and similar attitudes evinced in the Labour movement

The right hon. Member for Chesham and Amersham (Mr. Gilmour) talked about cuts to the tune of £8 million. That is chicken feed in the face of a defence programme of £6,000 million. A far greater sum is involved in these Estimates. When we are on the verge of cutting the social wage, the health services and the local authority services, threatening people's whole standard of living, it is absolute nonsense to pass these Estimates without the closest scrutiny. Without the amendment, there probably would have been no debate today.

How many people would be made unemployed if the cuts that my hon. Friend proposes were put into effect?

On that basis, one might as well argue—I do not know how many surface battleships and submarines we have—that we should double, triple or quadruple the number of submarines at Holy Loch in order to cut down the1½ million unemployed. No intelligent Socialist would make such a suggestion. We want to switch those resources into productive enterprise.

Our approach is fortified by a recent Press release by the British Institute of Management, which says:

"The forthcoming package of economic measures should comprise an integrated programme that relates the proposed cuts in public expenditure to prospects for export-led growth in the light of world trade developments and the UK's increasing competitive position; to a programme for returning to higher rewards for skill and responsibility and a reduction in personal income tax rates".

We believe in higher rewards as well, but they have to be related to proper endeavour by the wage-and salary-earning workers. We also want to see a reduction in personal income tax, but we shall not get it by increasing defence expenditure. That would mean an increase in taxation when we should be bringing our defence expenditure into line with that of our industrial competitors.

The Press release also refers to

"practical encouragement of productive investment."

We must carry out the policy of the Labour Party by means of the National Enterprise Board and planning agreements so that the Government can supervise the British economy and its productive enterprise.

The BIM emphasises this point in a letter to the Prime Minister, sent on behalf of its 52,000 members by its Chairman, Sir Derek Ezra. It states :

"Recent reports have centred on different views about the size of cuts in non-productive expenditure".

That is what this debate is all about. The debate on the totality of public expenditure cuts will range far wider, but those words should relate specifically to defence expenditure. Conservative Members show a totally unrealistic attitude towards this matter. The letter talks about the size of cuts

"said to be necessary to reduce the level of Government's public sector borrowing requirement".

Part of that requirement is related to the borrowing requirement that is needed to sustain our totally artificial level of defence spending. There has been no real defence cut when one considers the global size of the expenditure and the effects of inflation.

The BIM letter goes on to say:

"We support the aim of reducing wherever possible non-productive expenditure and the present level of public sector borrowing."

I agree with that entirely.

I do not suppose that the British Institute of Management believes that it is necessarily expert in defence matters. I do not believe that I am a defence expert, but I know a bit about the subject having listened to defence debates in the House. However, I know the Labour movement's policy and I welcome the fact that there are now signs and symptoms within the Government that we are moving towards it.

I welcome the opportunity to highlight two important matters in Northern Ireland, which is the one part of the United Kingdom that is now under attack. We have heard about various situations around the world but we must remember that there is a most serious situation within the United Kingdom.

The first matter to highlight is that the three defence establishments have been axed. Northern Ireland is a strategic part of the United Kingdom that cannot be sacrificed. It is not a part that can be left out of the overall defence strategy of the realm. Sometimes I think that the strategic value of Northern Ireland to the United Kingdom is almost forgotten. It should be remembered that during the Second World War tribute was paid to the Province when the U-boat campaign was at its height. It was because of the loyalty of Northern Ireland towards the rest of the United Kingdom that a base was able to be operated effectively to keep open the Atlantic Ocean during the war. The man who led this country, the grandfather of the Opposition defence spokesman now on the Front Bench, the hon. Member for Stretford (Mr. Churchill), paid high tribute at that time to the people of Northern Ireland.

If we look at a map of the United Kingdom, we see that there are defence establishments in every part of the country except the area that is under attack. Nevertheless, the decision is taken to axe the naval depot at Antrim, which borders on my constituency and the constituency of my hon. Friend the Member for Antrim, South (Mr. Molyneaux), the Leader of the United Ulster Unionists, the RAF station at Aldergrove and the establishment at Sydenham.

No provision was made in the axing of the three establishments to prepare the workers so that they would be able to take up suitable employment elsewhere. Although I do not go along with the arguments presented by some Labour Members, I feel that when establishments are closed down there should be a phasing-out period so that the workers have other jobs to take up. The present situation in Northern Ireland is that they are thrown on the scrap heap. There is little possibility of some of the people who were working in the defence establishments ever being employed again. I must emphasise that I believe that work in the establishments could continue to be done. At this time it is a tragedy that in the defence of the realm Northern Ireland is the only part of the kingdom that does not have back-up defence services. Surely at this stage there is a great need for such services.

The second matter to highlight is the Ulster Defence Regiment. Yesterday in Belfast and around the Province we had a very serious situation. It may surprise some hon. Members to know that from 11.20 a.m. to 9.21 p.m. there were 26 serious incidents in Belfast and the rest of Northern Ireland. At 11.20 a.m. shots were fired at the staff of the Lansdowne Court Hotel in the Antrim Road as gunmen fled after planting two bombs. The premises were destroyed and gutted by explosion and fire. At 12.30 p.m. there was a raid at Hall's brush factory and a 23-year-old polio victim who did not run fast enough was shot dead in his tracks. At the end of the day the IRA gloried in the fact that it was responsible for this disgraceful wave of terrorism.

A bomb exploded at Ormeau Bridge at 3 p.m. At 3.5 p.m. a man was shot in the legs as two gunmen planted a suspect bomb at Riteprice's store in Duncairn Gardens. Four bombs blitzed the town of Bellaghy, which is in the constituency of my hon. Friend the Member for Mid-Ulster (Mr. Dunlop).

I am sure that my hon. Friend will be aware that the little town of Bellaghy has about 800 inhabitants and that four savage bomb attacks have completely devastated the business area of the town. Those attacks have left the town with hardly any services over the Christmas season. As well as the great damage that has been done, there is the undermining of the morale of the people. Where is the defence of this realm when a small town can be attacked with such ferocity, when it does not seem that there is any way of protecting or defending it?

I am sure that we all feel for my hon. Friend when he visited the town last night and saw it blasted by the bombs that went off within 15 minutes of one another, completely wrecking the whole business sector.

The UDR has been coming under serious attack. One by one its members are being shot down. My colleagues and I had a meeting with one of the Army Ministers. We were seriously disturbed to hear the question of finance raised when we asked that steps would be taken so that UDR men might be personally protected. Members of the regiment do a day's work and then go on the roads of Northern Ireland to stand between people in all sections of the community and the enemy.

If it is a matter of finance, as I have said before we are prepared to have cuts in other sectors of the economy so that members of the UDR may be given proper protection in their homes as well as proper protection for their families. If there is a lack of finance, I feel that finance must be made available from other sources. How can the war be fought if the sinews of war are not available to the members of the Ulster Defence Regiment? These are matters that are in the minds and hearts of Ulster Members.

When Members from other areas return to their constituencies for the Christmas Recess, we in the Unionist coalition will probably return to follow the coffins of our constituents. We shall be standing over graves. We shall be watching the tears of widows and orphans. We shall do so having been told about financial priorities. I plead with the House to make the money available so that the men fighting the war in Northern Ireland will have the personal protection that they deserve. I make that plea on their behalf as an elected representative from Ulster.

I wish to deal with the arrant nonsense that is being talked about "further" cuts in defence spending. It is false and misleading, whether or not it is deliberate. The arms bill, in real terms, has gone up, not down, as I shall show.

I refer to the utterances this afternoon of the Shadow Secretary of State for Defence, and on other occasions of Lord Carrington, Lord Chalfont, the right hon. Member for Barnsley (Mr. Mason)—until recently the Secretary of State for Defence—the Chiefs of Staff, NATO officials, the Daily Telegraph, The Times and others.

The cuts thought to be coming tomorrow are said to follow cuts already made of £4 billion. The right hon. Member for Chesham and Amersham (Mr. Gilmour) actually said today that £8 billion had been cut in the past three years. The truth is that there have been no cuts in the total arms bill. In fact, there has been an increase in both cash and real terms.

I have today secured the following figures from the statisticians of the House of Commons Library Research Department. Those figures show that military expenditure increased from £3,092 million in 1971–72 to £6,144 million for the current year at current prices. At fixed prices—1975 survey prices—there has been an increase from £4,540 million in 1971–72 to £4,548 million last year. It is true that that is an increase of only £8 million in real terms. However, there has been a far bigger increase in real spending this year following the latest supplementary estimate, on which the statisticians comment that it is not possible to make a realistic estimate in real terms—presumably because of uncertainty about the exact degree of inflation.

I repeat, there has been an increase in that period in real terms of £8 million, and of £3 billion in cash terms, and a further and much larger real increase in spending this year. Let us hear no more nonsense about further cuts in arms spending when there has been none.

The reduction claimed by the gentlemen I have named are completely spurious, and they must know that, because they are not fools. The trick is this. The only reduction that has taken place is in what might have been spent, had the wild and grandiose increases proposed in 1973 for the next 10 years by the Conservative Government in a very different economic atmosphere been implemented.

It is contrary to common sense, humanity and Labour policy to accept this huge Supplementary Estimate of £517 million when savage cuts in housing, health, education and social services are being sought and pressed for by the Establishment.

Does the hon. Gentleman accept, by the same token, that the proposed cuts in other areas are also cuts in future programmes? Did not his hon. Friend the Member for Eton and Slough (Miss Lestor) resign because she believed that the cuts in education were actual cuts, whereas cuts in defence are apparently not cuts?

I understand the hon. Gentleman's point. My hon. Friend the Member for Eton and Slough (Miss Lestor) is perfectly capable of answering for herself.

The cuts that we are thought to be about to suffer tomorrow are not merely cuts in potential expenditure. Some of them are real cuts in housing and education. We already have the July announcement which requires council housing to be cut by one-third for the remainder of this year and by a further 25 per cent. next year, compared with this year.

rose—

I promised to keep within five minutes. I do not dodge questions, as I think hon. Members know.

rose—

Order. If the hon. Member for Salford, East (Mr. Allaun) does not wish to give way, he does not give way.

It is only fair to keep my speech short.

Reflected in these Supplementary Estimates are huge increases in military research and development, which employ two out of every three Government scientists, who are badly needed in other spheres; in the cost of BAOR, which now costs £600 million across the exchanges and 40 per cent. in real terms in the cost of each MRCA aircraft, as admitted by the Minister.

If, tomorrow, the arms cuts are, as rumoured, only £100 million or £200 million, they will be purely cosmetic and unacceptable to many of us who want real cuts. These spurious reductions can be achieved by phasing. Any accountant worth his pay can show hon. Members how to do it. It can be done by delaying the purchase of certain stores and munitions. These cuts will not mean a real cut in comparison with the £6 billion expenditure.

The armaments lobby daily attempts to scare us by talk of the red menace and by accounts of Soviet military might. I dislike that probably even more than do the British militarists. But is the lobby blind to the American military programme? According to the Pentagon, NATO exceeds the Warsaw Powers in total military spending, naval strength and total manpower. Hon. Members must ask themselves what is the good of being militarily powerful and economically bankrupt. How will it improve our financial position to increase our military spending?

Will my hon. Friend give way?

I am sorry; I cannot. It is not that I want to dodge questions. My hon. Friend knows me well enough to realise that.

It would be far better for the workers who might be affected—and for the country—if they were engaged on making the highly sophisticated machine tools which they are particularly suited to make and and which, at present, we are importing in large quantities from America, Germany, Switzerland, Italy and other countries.

Will my hon. Friend please give way?

Order. The hon. Member for Salford, East (Mr. Allaun) is in order.

I said I would speak only for five minutes, and I shall keep to that.

Conservative Members do not seem to be worried about causing unemployment for building workers, teachers, nurses, home helps and others. For the reasons that I have mentioned, I intend to vote for the motion.

The hon. Member for Ealing, Southall (Mr. Bidwell) spoke about reality. I want to give him and the House some reality from the Conservative Benches. The debate is not about the generalised question of how much we should spend on defence and what proportion of the GNP it should be; it is a debate on a motion to reduce the specific sums of money that are needed during the current financial year.

I would have found the arguments put forward by the proposers of the motion much more consistent—although still totally unacceptable—if they had suggested that the total sum sought by the Government should not be granted. Instead, they have gone carefully down the list and decided how they will reduce the figure by £272 million.

If we examine the list in the summary, we can calculate which items Labour Members below the Gangway have singled out. They have decided that it is important that the pay and allowances of Royal Air Force and Royal Navy personnel should go ahead. They also believe that Armed Forces retirement pay and pensions, and also the pay of civilians, should go ahead. They should look a little more closely at the items that they intend to cut. We are not talking about generalities, but specific instances.

If we examine Subhead 5, "Stores, Supplies and Miscellaneous Services", we find a sum of £58 million. That sum is bound up with various items, including travel allowances and expenses of Service personnel and civilians, increased rates of allowances, furniture and various other purchases. I wonder how Service men and their families will regard the proposals in the amendment, which will have the effect of virtually cutting out their travel allowances for the rest of this year. Furthermore, expenses of civilians will also be cut out.

The amendment will also affect medical and dental stores, and certain educational services. Therefore, those Labour Members in framing their amendment have not looked at the subject as carefully as they should have done. They are proposing that all these things should be cut out.

Canteens and hospitals for civilian staff will go, as will clothing allowances. If we look at Subhead 7 we see under "Headquarters Administration" a figure of 6,418 staff. Under the amendment not only will they be pruned but will receive no increases for some time.

The hon. Gentleman reinforces the point that I was making. Nobody is proposing that Service men who travel should not have their expenses, and the same applies to the civilian staff. What we are saying is that there should be fewer staff and that they should travel less. Nobody is proposing that there should be no canteens or hospitals. The National Health Service is having to keep its services in this respect to a fixed total. Why is such a facility being afforded only in the defence sphere? Why is defence being excluded from the upper limit?

The hon. Gentleman should have thought more about these matters before he appended his name to the amendment. The amendment covers the items which I have mentioned and says, not that they should be queried, but that they should be cut out. I want to ensure that those who read these debates are clear what is intended by hon. Members below the Gangway and what they would support.

That is not true.>

Furthermore, in regard to married quarters, dealt with in Subhead 11, those same hon. Gentlemen do not want to see any expenditure there. I wonder how this will go down in the dockyards at Chatham, Plymouth and Portsmouth? Some Labour Members are inviting us to vote against salaries and wages in respect of increases as well as travel allowances and all the rest of it.

No.

The hon. Member for Bethnal Green and Bow (Mr. Mikardo) and his colleagues are asking the House to vote for their proposals, which will mean that all these items relating to the dockyards will be cut out.

That is not true.

Let me put this to the hon. Gentleman—

If the hon. Member for Chertsey and Walton (Mr. Pattie) addresses the Chair, he will be given a more peaceful reception.

I was intending to address the Chair, but I was being chivvied by Labour Members, who were seeking to disclaim the consequences of their own amendment.

No.

It does not matter how often the hon. Gentleman says "No"; what I have said is quite clearly the case, and we shall await with interest to hear the Minister of State, because if Labour Members below the Gangway do not understand the consequences of their amendment I am sorry for them.

In view of the presence of the Deputy Chief Whip, it is important for hon. Members all to be brief.

I oppose the amendment for three reasons. First, I believe that our Armed Forces have already been dangerously run down. Secondly, I believe that the threat to our country is great and growing. Thirdly, I believe that if there are any further cuts we shall put at risk the Alliance, including our relationships with the United States and the Federal Republic of Germany. The whole House knows that our forces—whether it be the Royal Air Force, the Royal Navy or the Army—are now at a perilously low level. [Interruption.]

Order. It is most irritating to the Chair to have to listen to several conversations taking place in the Chamber during the course of an hon. Member's speech.

I am obliged to you, Mr. Deputy Speaker. The level of our Armed Forces is becoming critical. The credibility of any nation's armed forces needs to be measured in three ways. First, they should be credible to the men and women who serve in them. There are many loyal members of our Armed Forces, but today they have doubts about whether the equipment and the scale of their formations are adequate for the job which they are asked to do. Secondly, the forces need to be credible to our allies. I was ashamed the other day when the United States Supreme Commander NATO had to move an armoured brigade from South Germany because the British Army of the Rhine no longer could be guaranteed to fulfil its rôle in the Alliance. If there were to be further cuts, it would throw doubts on the credibility of the British forces in the eyes of our allies.

Above all, our forces must be credible to the enemy. Yet at this point in time, the Soviet Union—while impoverishing its people in terms of consumer goods, houses and in other respects, continues massively to increase its second-strike nuclear weapons and conventional armaments of all kinds, in particular its navy. In these circumstances, further reductions in the British Armed Forces will leave them incredible in the eyes of our major antagonists.

I have suggested that further reductions in our Armed Forces will have an unacceptable impact on our allies. I have spent many years in the United States, and I wish to make one point clear. At present in the United States there is a clear commitment by both political parties to the NATO Alliance. But this commitment could be put at risk if American public opinion were to come to believe that its British allies were not willing to carry their share of the common defence burden.

If Her Majesty's Government continue to reduce the level of the British Armed Forces, it will become less possible for the political parties in the United States to carry American public opinion with them in retaining the United States commitment to the defence of NATO and Europe. Any Government should think carefully before they put at risk the American commitment.

One fear among the Tribune Group rightly relates to its worries about a rearmed Germany, which may destabilise central Europe. The Russians fear that more than anything else. But if Britain continues to run down its contribution to the NATO Alliance there will be pressures on the German Government to fill the gap—and who can blame them?

The Germans are only two hours' tank drive away from the Soviet army. Therefore, if the Germans start to fill the gap by building up their armed forces to meet the deficiency left by the British, we could well find ourselves in a Europe which is dominated by a new, powerful and eventually nuclear-armed Bundeswehr. I cannot believe that any hon. Members on the left wing of the Labour Party really wish to bring that about.

To sum up, if further cuts are made they will reduce the level of the British armed forces to a point where they will cease to be credible; they will encourage the Soviet Union; and they will be the despair of our Allies. I beg the House to vote against this mischievous amendment.

I am at some slight disadvantage this afternoon because my right hon. Friend the Chancellor will make a statement tomorrow, about which there have been a great many rumours and a great deal of speculation in the Press. I am unable to reply in the terms suggested by my hon. Friend the Member for Salford, East (Mr. Allaun) as to the nature of the cuts to be announced by the Chancellor, and whether these will be real cuts. We will all have to wait until tomorrow to find out.

It may be helpful if right from the beginning I clear up a major misunderstanding which seems to have developed in the minds of some of my hon. Friends. It is not the case that the defence budget is immune from cash limits. Like any civil Department, we are subject to cash limits and even these Supplementary Estimates still leave us below our cash limits for this year. I hope that my hon. Friends will accept my assurance on that point.

The reason for the Supplementary Estimates is almost exclusively the impact of price increases in this country and the effect of the change in the sterling exchange rates. My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) asked whether the Ministry of Defence, alone of all Departments, was exempt from the effects of depreciation in the sterling exchange rates. So far we have not been exempt from such depreciation. In fact, my Department suffers from the reductions in the foreign exchange value of sterling almost exclusively as regards Government spending. No other Department of State has been affected to anything like the same degree as the Ministry of Defence by changes in the sterling exchange rate. Up to now we have succeeded in covering that under our cash limits, but I cannot forecast the eventual outcome for the remainder of the financial year. That will depend on future movements in exchange rates, and I am not so rash as to try to predict those.

I do not think that any of my right hon. and hon. Friends on the Front Bench have ever tried to defend defence expenditure in terms that it preserves employment. All of us—on both sides of the House—would greatly prefer to have much less defence expenditure. There is no hon. Member who could not find better things to spend public money on than defence, if we could only justify it to ourselves in terms of the defence of this realm. The hon. and learned Member for Montgomery (Mr. Hooson) made this point succinctly.

This point was referred to by my hon. Friend the Member for Salford, East (Mr. Allaun) who spoke of the use of resources and the deployment of manpower in appropriate ways. Tomorrow at noon a deputation of Liverpool and Merseyside Members will meet the Under-Secretary of State for Defence for the Royal Navy, and speak with shop stewards from Cammell Laird Shipbuilders Limited, whose order book expires around 1977. The firm has not a cat in hell's chance of getting any civilian orders, and is asking urgently for defence expenditure for a new frigate. I am told by some of my hon. Friends that defence cuts mean nothing and I am told by the Government that this is one of the difficulties of asking for more shipbuilding for Cammell Laird Shipbuilders Limited. I do not expect an answer today, but this will have a relationship to what we say tomorrow.

I am obliged to my hon. Friend for giving me notice of what he intends to say on his visit tomorrow. It is true that in the long run one can convert manufacturing of any type of goods into manufacturing of a different type of goods.

We all wish that we could spend less on defence, but it would be irresponsible of any Government to make any major reductions in our defence spending outside the context of the mutual and balanced force reductions. This is the environment in which we must take our decisions.

I was asked several factual points by my hon. Friend the Member for Bethnal Green and Bow. He asked about the NATO subscription. The costs which he reads in the requests for Supplementary Estimates relate to the costs of NATO headquarters, which have risen almost exclusively with the decline of the sterling exchange rate. Rent for service clubs and institutions in Germany is included under that Vote.

My hon. Friend also asked about Rolls-Royce and the enormous increase there. As I understand it, at the beginning of each year a nominal sum is put in for payments on the RB211. It is not possible, when the original payment is drawn up, to know the production rate of engines at the beginning of the year. The payments made to Rolls-Royce are refunded in due course, and the Government receive a share of the profits on the sale of the engines.

My hon. Friend asked about Votes 11 and 12. Vote 11 provides the entire defence works programme at home and abroad, and expenditure on things such as runway maintenance and domestic accommodation for the Services. A great deal of the expenditure is on the staff of the Property Services Agency, and the Supplementary Estimates cover the £6 a week pay rise for those staff. Vote 12, which is a new vote introduced this year to bring together expenditure on the Royal dockyards, covers both Service and civilian staff, and the Supplementary Estimate for these people includes the £6 a week pay rise.

My hon. Friend raised various other questions. I will write to him about them as soon as possible.

Before the Minister draws to a close, will he do me the courtesy of making a brief reference to Porton, to which I referred in my speech?

I had not concluded my speech. I was about to say that all our expenditure is subject to cash limits. There are two exclusions which I should mention—pensions, and I am sure that most of my hon. Friends would welcome that, and the salaries of the PSA staff which are subject to the cash limits of the Department of the Environment.

As for Porton, I listened to the scenario which the hon. Member for Salisbury (Mr. Hamilton) drew with increasing bewilderment. I cannot see that the sort of thing he has in mind is in any way a realistic threat about which we should be concerned at the moment—

rose—

I have given way to the hon. Gentleman once. I cannot do so again.

The defence staff at Porton has a most distinguished record and I would be the first to pay tribute to it. I join the hon. Gentleman in expressing our relief at the recovery of his constituent from the extremely dangerous disease that he was apparently stricken with. For some time now about two-thirds of the work of the Microbiological Research Establishment at Porton has been done on civilian account and has had nothing to do with the Ministry of Defence. It is our considered view that with the rundown of work there it would be appropriate to wind up that establishment as a separate element at the Ministry of Defence establishment at Porton. My saying that in no way implies any criticism of the extremely valuable work that has been done there over the past many years.

Before the Minister finishes will he deal with one question? He undertook to reply to my right hon. Friend's question about whether the Secretary of State for Defence told NATO in advance that there was to be this further cut. Did he do that? Did he tell General Haig?

The hon. Gentleman is experienced enough in the ways of Government to know that my right hon. Friend will have been following the normal precedents in these matters. My right hon. Friend knows precisely what they are in terms of communicating to other Governments when economic statements are made in this House. He is perfectly well aware of the precedents, and it is beneath the hon. Gentleman to make cheap political capital in this way. My right hon. Friend is much too sophisticated in these matters.

Is it not accepted practice that there is consultation with our allies before cuts of this sort are announced? Does not the hon. Gentleman recall a passage from the Labour Party manifesto of October 1974 which reads:

"we shall, in consultation with our Allies, press forward with our plans to reduce the proportion of the nation's resources devoted to defence"?

Where was that consultation? The Secretary of State was honest enough to admit at the Dispatch Box today that he concealed this from our NATO Allies at his meeting last week, even though he knew that the defence cuts were coming within a matter of days. He was not prepared to give any advance consultation at all. So what is the consultation which the Government propose?

Will the Minister of State clear up the suggestion by the Secretary of State that there is nothing unusual or unprecedented about the Chiefs of the Defence Staff coming together and seeking a meeting with the Prime Minister? It is unprecedented in peace time since 1921.

The hon. Gentleman has taught me something about giving way to interventions. I repeat what I said a moment ago, that my right hon. Friend

rose—

rose in his place and claimed to move, That the Question be now put.

On a point of order, Mr. Speaker. In view of the representations made to you and to the Lord President, may I ask whether there has been any request for the Lord President to make a statement on the misunderstanding which may have arisen from his statement on Thames Television last night about possible violence in Scotland?

I have had no such application.

My first task is to pay tribute on behalf of my colleagues to my hon. Friend the Member for North Angus and Mcarns (Mr. Buchanan-Smith) for the work he has done for Scotland and for the Conservative Party. I know the anxieties and problems involved. My hope is that when my hon. Friend returns to the Front Bench it will be in happier circumstances than my own transfer from trade to Scottish affairs.

I mention trade only briefly because I see from the tape that we have had the announcement on the worst-ever trade figures—a deficit of over £500 million. I hope that the full responsibility will not be placed on myself ! This is an issue that will probably unite most of us in the House. We certainly do not hope that the activities of the Department of Trade concerned with foreign trade will be extended to trade with Scotland or Wales.

There is no doubt that the Prime Minister's speech in opening this great debate yesterday was a disappointment. I have never before heard such a poor case put forward for a major Bill. There was no argument whatever that the Bill would achieve better government. There was no argument that it would produce cheaper government. In fact, all the evidence is the other way. There was no argument that it would produce less complex government or more prosperity for Scotland or Wales. In fact, the only issues mentioned by the Prime Minister were, first, that he hoped to make up his mind on a referendum before long and, secondly, that he was looking for some ideas from the House about new taxes to raise. Quite frankly, the present Government, with their long experience of raising new taxes, should not look to this side of the House for ideas in that connection. It was not a good case for a major Bill which is to take up about 30 days of the time of the House.

On the other hand, as the hon. Member for West Lothian (Mr. Dalyell) said a moment or two ago, last night we had a more compelling argument put forward for the Bill. What was said by the Leader of the House and what I hope the Secretary of State will refer to was a most unusual and, in my view, a very irresponsible argument for the Bill.

The Leader of the House said that Ulster-type violence could erupt in Scotland and in Wales if the devolution proposals were defeated. He said that he thought that that was quite likely. In my view, that was one of the most wholly irresponsible statements ever made by a Government Minister. It shows that the right hon. Gentleman is wildly out of touch with feelings in Scotland and in Wales. I am very sorry that he is not present at the moment, but I hope that at some time during this debate he will make it clear whether he meant those words and whether on reflection he would like to withdraw them. There is no doubt that, if there are potential terrorists in Scotland or in Wales, they will not be deterred by this Bill.

As the hon. Gentleman knows, I am not the most ardent supporter of my right hon. Friend in this matter, but I hope that the hon. Gentleman will be fair. Has he seen, as I have, the full text of what was said last night?

I am afraid that I have not. I have seen only what appeared in the Scotsman newspaper this morn-in. If it is wrong, I hope that it will be withdrawn, but I think that the hon. Gentleman will accept that, with one of the major Scottish newspapers carrying such a news item on its front page, the effect could be very substantial. If it was wrong, and the right hon. Gentleman was misreported, I hope that it will be made clear.

One of the factors to have caused divisions and doubts in all the parties over the issue of devolution is the knowledge that, if the wrong scheme is enacted, it could precipitate the break-up of Britain. The recent events in Canada and Quebec show, if nothing else, that the existence of substantial devolved powers to territories or nations within a union will not of themselves automatically undermine or frustrate the forces of separatism, even within a federal structure. This danger is one which we in Britain should be particularly aware of, observing that there are strong forces, happily still very much in the minority, both within and outwith Parliament, who have as their sole aim the break-up of Britain and who have openly admitted that they hope to use devolution and the establishment of Assemblies in Scotland and Wales as a vehicle to achieve their ends.

The hon. Gentleman quotes the position in Canada, but he ignores the position in Belgium, where, after the nationalists in both the Walloon and Flemish parts got devolution, the nationalist case disappeared completely.

I am sure that the hon. Gentleman knows more about Belgium than I do, but the experience of Canada and elsewhere is that the giving of federal powers or other provisions similar to those in this Bill have not necessarily undermined the forces of separatism.

I am fully aware that there are those who sincerely believe that without a Bill along these lines, it will be more difficult to preserve the Union, but I hope that, in this lengthy debate, they will listen to and think upon the views of those who believe that this Bill, if enacted, could stoke up the feelings of frustration, hostility and injustice upon which separatism and fragmentation grows and thrives.

In this connection, the most obvious point worth thinking about is why the representatives of the Scottish National Party and the Welsh nationalists are so enthusiastic about the Bill. Of course, they have made it clear that they would like the Bill to go much further, but if, as has been argued by some, the enactment of this Bill will frustrate and destroy parochial nationalism, we should ask ourselves why there are no looks of depression and resignation on the faces of the nationalist Members as this Bill is being debated. They smile, I believe, because they see all the seeds of frustration in the Bill staring us in the face.

Scotland is to have an Assembly with its own Executive or Government dependent entirely on a block grant from Westminster and on borrowings approved by Westminster. In normal times this would be a recipe for an annual battle between Edinburgh and Westminster, as the new Scottish Government, conscious of the problems crying out for attention, found that a block grant, however generous, could not match desired public expenditure. But in times of economic stringency like the present and like the foreseeable future, when cash allocations from Government to local councils assume a major cutback in existing services and massive staff redundancies, the arrangement set out in the Bill could provoke a continuing crisis.

If we add to this difficult and dangerous situation the possibility or probability of the political make-up of the Assembly and its Executive being different from that of the Westminster Government, the crisis could become a catastrophe.

As my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) pointed out in the White Paper debate, the Conservative Party has opposed consistently the establishing of a separate Executive or Government in Scotland, largely on account of the over-government and additional bureaucracy it would create; but to have a separate Government without any revenue raising powers, as the Bill proposes, would be to sow seeds of frustration and disillusionment throughout Scotland.

Even local councils, while largely dependent on the rate support grant, are restrained in the demands and plans they make by the knowledge that each fresh demand or plan involves extra calls on the ratepayers who are their electors. Just as this Government will, in the next election, reap a bitter harvest in consequence of the tax demands and economic misery they have inflicted on the British people because of their failure to contain their spending during their first year or so in office, so the responsibility of charging rates is a restraint on the power of local councils. But there are no such restraints on the proposed Scottish Government.

In their original White Paper the Government sought to deal with this problem with a preposterous plan to give the Asesmbly power to levy a surcharge on rates. This proposal provoked such a fierce reaction from Scottish ratepayers, whose burdens have been doubled under this Government, that the plan was dropped like a stone in the supplementary White Paper. Instead, it was merely stated that if, at some time in the future, new national or local taxes could be invented—and this, at least, is an annual possibility when Labour is in power—consideration would be given to handing over part of that money to the Assembly. In the Bill, we are back to square one: we have an Executive, a Government, but no revenue raising powers.

There are many other seeds of conflict in the Bill, some of which I will mention later, but, of course, there are more fundamental objections to the Bill.

As my right hon. Friend the Leader of the Opposition mentioned yesterday, we consider it ludicrous and insulting that the Government should have presented devolution proposals for Wales and for Scotland in one Bill. The problems, the needs and even the present constitutional arrangements in both nations are entirely different. Apart from the constitutional objections to having both Scotland and Wales covered by one Bill, it will make proper debate much more difficult. We will, in effect, have two debates going on at the same time.

In this time of economic crisis, when the Government are up to their ears in debt, and when the Cabinet, we are told, is meeting almost daily to discuss ways in which it can borrow more, it seems utter folly to indulge in any unnecessary travagant, even if we give the Govern-the scheme of devolution outlined in the Government's Bill is monstrously extravagant, even if we give the Government the benefit of the doubt and say that for once they have got their sums right. In the White Paper which we discussed some time ago it was stated that Scottish devolution would involve between £2 and £3 million capital expenditure and annual running costs of about £10 million. In Wales, capital costs were estimated to be between £1 million and £2 million, with initial running costs of about £5 million, rising, we were told, at a later stage to £12 million. In short, there would be about £4 million of capital outlay and about £15 million revenue expenditure at the first stage. That was to be the initial cost.

That was in November 1975. Now we have the Bill, which has its Explanatory and Financial Memorandum showing that at November 1976 prices, only one year later, the likely capital outlay on buildings, reconstruction and equipment comes to about £8½ million, with annual running costs of about £24½ million. The Bill also mentions the little extra of £3 million for publicity, election costs and removal expenses.

By now we are fairly clear about what it is the Opposition oppose. Will the hon. Gentleman state what they are in favour of, and in particular what would be the costings of the Conservative Party's proposals?

The Shadow Cabinet's position on devolution was made absolutely clear in a statement made after its meeting last Wednesday. What we are discussing is whether the Government's proposals will help Scotland and Wales, and whether they will be good for Britain as a whole. I am trying to prove that, whatever we do, the Bill will not be the answer for Scotland or Wales, or for the unity of Britain.

I have pointed out that at 1976 prices the expenditure comes to about £36 million. As the Assemblies get "into their stride", as the White Paper says, the running costs, at least in Wales, will increase sharply. Running costs alone will come to about £10 a year for the average Scottish family, and more for the average Welsh family.

If the Government are unable to produce a more economical plan they have at least an obligation, which they have not yet discharged, to say who will pay. Will it be a charge on the general taxation of the United Kingdom? Or will it be clawed back from the ratepayers and taxpayers of Scotland in a lower level of public services, by deducting Assembly costs from the block grant? Or will it be the friendly International Monetary Fund that will foot the bill and pass on the costs to our children and grandchildren?

Another major objection is the bureaucracy involved in the scheme. It is considerable. The new arrangements are calculated to involve the employment of an extra 2,300 civil servants, a considerable number. In the case of Wales the number is expected to rise. At a time when Government Departments and local authorities are being obliged to cut staff in almost every field of activity, the proposals seem ludicrous. There is not even a suggestion that the public in Scotland or Wales will benefit from better public services. In fact, it is pretty clear that, at least in the foreseeable future, the level and quality of public services will be reduced because of the Government's other policies.

The Secretary of State must be well aware of what is happening in, for example, Glasgow and the Strathclyde Region. Some of my hon. Friends and I had the pleasure of meeting the convener of and leader of the Labour Group on the Strathclyde Regional Council only a few minutes ago.

Does the Secretary of State believe that it would serve any useful purpose to employ an extra 1,000 civil servants in Scotland, so that there would be more people available to tell local authorities in Scotland that they must employ fewer home helps for the elderly, fewer school crossing patrol attendants and fewer public servants? But it seems inevitable that more civil servants will be employed by the Government to tell local authorities and other Government Departments to employ fewer.

The hon. Gentleman talks about increased bureaucracy and expense. Will he do the House the courtesy, which the Leader of the Opposition did not do, of answering the question put by the Leader of the Liberal Party? What is his party's view? What are its concrete proposals?

We would have no separate Executive, which is one of the main reasons for the extra 2,300 civil servants. We calculate that about 80 per cent. of the additional staff would stem from having a separate Executive. My party has always opposed having a separate Executive.

It is not just staff that will increase in number. The numbers of politicians will substantially increase as well. Whereas the legislative and executive needs of Scotland are at present attended to by 71 Westminster Members of Parliament, the Bill provides for an extra 150 Scottish Assemblymen to carry out part of the legislative and supervisory tasks now being done by Members of Parliament. On any reasonable basis of calculation, the total of 150 appears excessive.

The Conservative Party has been attacked on many occasions for the alleged element of over-government involved in the reform of local government in 1973—rather unfairly, I suggest, on the part of Labour, Liberal and nationalist Members who allowed the Bill to have its Second Reading in the Scottish Grand Committee without calling for a vote. However, even if these allegations are true—and with hindsight they may be seen to have some justification—it seems foolish to add to the extent of over-government with the Bill. In my own constituency, in the 1960s, the democratic interests of the community were looked after by one Member of Parliament and two town councillors. On present plans, in 1978 it will have a share of one Member of the European Parliament, a Westminster Member, two Scottish Assemblymen, three regional councillors and six district councillors. In some constituencies, under the Bill, there will be three Assemblymen.

It can be argued that Members of Parliament are overworked, and, because of pressure of work, unable to fulfil their task efficiently, but if that is so, surely the argument applies to Members of Parliament as a whole, not just those in Scotland and Wales. There are no plans for devolution in England.

Another feature of the Bill which causes real concern is that, with the proposal to have the entire legislative process of Bills carried out in the Scottish Assembly, subject only to a Westminster veto, initiated by the Secretary of State, a most unstable and divisive situation will be created in the Westminster Parliament. Scottish Members of Parliament in Westminster will, unless the Secretary of State invokes his veto powers and therefore must come to the House of Commons, have no say in the formulation of education, housing, police, planning or health legislation for Scotland; but their votes and voices could be decisive in determining what policies are adopted in England. It would be a strange situation if the Secretary of State and I, as Glasgow candidates in the next election, had to indicate to our electors what education and housing policies for England we would seek to support with our votes in the House of Commons, while having to make clear that we could not pledge anything for Scottish education and housing. No doubt Members of Parliament from England will feel a unique sense of grievance if the electoral choice of their voters is overturned by the votes of Scottish Members of Parliament.

There are some who argue that there is a simple answer, that we can resolve the matter tidily and happily, not, as suggested by the SNP, by a complete break, but, if we continue with this system, by having a convention that Scottish Members of Parliament do not vote on English legislation. That suggestion will probably be discussed in this debate, but the issue is not so simple as it appears. The Cabinet would represent the majority in the House of Commons as a whole, and it would be frustrating, to say the least, if, for example, a Socialist Cabinet were unable to implement Socialist housing and education policies in Scotland, because there was a Conservative and Liberal majority in the Assembly, or in England, because the majority of English Members of Parliament were Conservative. That could well happen. We can think of other permutations, such as not having a Conservative or Liberal majority in the Assembly. We could have in charge of the country a Cabinet unable to implement its policies in Scotland or England if the Bill went through in its present form. That would not make for stable government.

Before the hon. Gentleman passes from legislative responsibilities and how they are apportioned, will he spell out what the Conservative proposals for a directly-elected legislature would involve? Which responsibilities would go to the directly-elected Assembly and which to Westminster, and how would one deal with the clash?

The Shadow Cabinet's position was made quite clear on Wednesday. Our policy is to oppose the Bill, and that is what we are doing now. These constant interruptions show that the Government are not very anxious to talk about their Bill. If they feel that there are ready answers, they should give them to us. But the answers are not clear. We should spend our time talking about the Bill.

The fact that parliamentary and Assembly elections are unlikely to coincide makes it more than likely that a Government in Westminster would be unable to get through their manifesto policies in Scotland, England or Wales in a very wide field of policy. Apart from this, the existence of a non-voting convention in the House could have the effect of creating a new race of second-class MPs. Anything that would undermine the power and effectiveness of Westminster Scots would not be good for Scotland.

Apart from anything else, matters which are on the face of it English, involving expenditure or borrowing, are not matters which have no effect on Scotland. While Scotland's domestic policies will be restricted by the block grant, there is no proposal for a limiting block grant for activities in England.

One obvious flashpoint in the Bill before us is that, by arranging for the entire legislative process of Bills affecting Scotland to be considered by the Scottish Assembly, the Government have felt obliged to insert a whole series of restrictions in the Bill. The Prime Minister called them safeguards, but if the Bill became law would they be safeguards? As my right hon. Friend the Leader of the Opposition said, there is no exclusive right to legislate for the Scottish Assembly.

There is the power in Clause 45 to reject Assembly Bills subject to the approval of Parliament; the power in Clause 46 to prevent or require action on the part of the Executive; the power to revoke Statutory Instruments in Clause 47 on grounds of public interest; the power to fix council rent and rates levels in Clause 52; the power to fix rent and rate rebate schemes in Clauses 53 and 54; the power to fix public service wages and salaries, including those of teachers, in Clauses 56 and 57; the power to control borrowing limits in Clauses 65 and 66, and even restrictions on planning decisions in Schedule 3.

Recently, for example, we debated a Bill in the House to determine whether the Secretary of State should have power to make orders exempting oil rigs and offshore installations from rating. Rating law is a devolved power, but when I asked whether the Assembly or its Executive would take over these order-making powers I was advised that they would not have any such right. What rating law will the Assembly be able to approve? For example, would it have powers to revoke the 50 per cent. derating which Scottish industry enjoys? It would be helpful if the Secretary of State could indicate the position on this very vital issue for Scottish industry.

On legislation, there appears to be a logical case for permitting a devolved Assembly to participate in the lawmaking process, just as there appears to be a logical case for giving full powers in specified areas, subject, of course to ultra vires restrictions. But there is surely immense danger in provoking conflict by appearing to give full legislative powers but restricting the freedom by such a mass of clauses, subsections and schedules.

We therefore oppose the Bill because it is about as bad a way of producing devolution as is possible. It is costly, bureaucratic, and full of ingredients which could precipitate constitutional clashes and thereby lead to the break-up of Britain. But there are some who would accept all these things. They would say that we should accept the Bill even though it is costly, bureaucratic and a threat leading to the break-up of Britain, and that we should go ahead for a number of other reasons. It is, they would claim, the desire of the people of Scotland.

But why do they claim that? Of course, there are indications in opinion polls that a majority of Scots have expressed a desire for devolution, the percentage depending on the way the question has been asked. Such a result, however, is far from surprising when all the media in Scotland have been promoting devolution with enthusiasm and when there has not been, until recently, a specific Bill which could be used to work out how the Government's proposals would affect the average Scots family.

Perhaps the most interesting poll of all was the one which showed that a year ago 10 per cent. of Scots had never heard of the Government's proposals and that this month 28 per cent. had never heard of the Government's proposals. Perhaps some people are "switching off", but it would certainly not surprise me if the people of Scotland, when they realise what the Government's scheme will involve in extra taxes, over-government and, extra bureaucracy, show less enthusiasm than they have up to now for the Scotland and Wales Bill.

Is there not a fallacy in that argument? On the one hand the hon. Member for Glasgow, Cathcart (Mr. Taylor) has said that if the Bill goes through it will lead to separation, but on the other hand, just a minute or so later, he said there was no real demand for anything. If that is so, why is the Bill a danger?

There is no great demand for the Scotland and Wales Bill. I am absolutely convinced that if it were enacted the people of Scotland would find it a ghastly farce. What will happen if it is passed How will it affect the average family in South Ayrshire? They will have more taxes to pay and more civil servants to support, and we shall face the real danger of a break-up of the United Kingdom, which we both oppose.

One interesting feature is that a number of the organisations whose business it is to study White Papers and Bills in detail the moment they are drafted have expressed real concern about the Government's Bill. The CBI, for example, which represents most industry in Scotland, is opposed to the Bill. It sees it as a threat to prosperity and jobs. Likewise the chambers of commerce have come out against the Bill. Any Scottish Secretary of State who, like the present one, shares responsibility for creating a postwar record of unemployed Scots should pay careful attention to the views of those whose decisions will determine whether the frightening total of unemployed Scots can look forward with hope or hopelessness.

Another argument used is that, although the Bill has bad features, it is necessary to stop people supporting separatist parties like the SNP. Apart from the fact that the polls show that about half of nationalist voters do not support separation, the rest apparently being concerned with protesting against Socialist misgovernment, I would argue that, far from frustrating nationalism, the Bill could create more of the stresses, tensions and complaints of injustice on which nationalism thrives.

If, as I suspect, the Bill has been designed with a view to appeasing nationalist sentiment, it could well have the opposite effect. Sensible economic policies leading to stability, greater investment and more jobs are the real answer to the separatist disease. The proposed Assembly, starved of cash by an almost bankrupt Government with a background of crisis and instability, will simply feed nationalism and not destroy it.

It is jobs, prices, rates and taxes that most hon. Members find that their constituents want to talk to them about today. Those are the issues which our constituents worry about, and they expect us to find solutions. Very few voice opinions on the Bill. It is our task to do that, and that is what we will do today, to- morrow and on Thursday.

I understand the argument presented by my hon. Friend in opposing the Bill. Is he also arguing against devolution and a directly-elected Assembly? That was not the view of the Kilbrandon Report, which was unanimous about this. I shall be grateful if my hon. Friend will clear up this point.

I am sorry if I have not carried my hon. Friend the Member for Canterbury (Mr. Crouch) with me. I am arguing against the proposition before us, and that is the Bill. That is what we have to discuss, and we must determine whether it is a good or bad Bill for Scotand, for Britain and for all the people.

We should think of this not just in constitutional terms but from the point of view of the people. We make a great mistake in this House when we put forward legislative plans and discuss ideas and proposals without thinking them through in terms of people. If we think them through this week, are not scared off by Scottish nationalism, and consider the effect of the Bill on the unity of Great Britain and on the average family in Scotland and Wales, there is no doubt that we shall reject it.

The most interesting feature of the Prime Minister's speech was that he gave no indication or assurance that the Bill would improve the lot of the average Scottish, Welsh or English family. The right hon. Gentleman did not argue that it would bring better government. We know that it will not. Nor did he argue that it would make government less remote. We know that it will not. Or make government less complex. It will make government much more complex.

We have to consider the Bill carefully in relation to the situation of the country, the various priorities for spending, and the dangers inherent in this legislation. My party, the Shadow Cabinet and I believe that this is a bad Bill which has been presented for the wrong reasons. If enacted it will produce the wrong results, which this House will live to regret. In these circumstances the Bill should be rejected, and I hope that the House will do that on Thursday night.

I wish to take up a number of matters that were discussed yesterday and to answer some of the points raised then. I shall also answer a number of the points made by the hon. Member for Glasgow, Cathcart (Mr. Taylor).

We have had two lengthy speeches from the Opposition Front Bench, but the House has still not been informed of what is the Conservative Party's policy on devolution. Either it does not have a policy—which is what I suspect—or it has a policy but is frightened to tell the House what it is. It is monstrous, to use one of the favourite words of the hon. Member for Cathcart, that one of the parties in the House which aspires to becoming the Government is unable to tell the House and the country what its policy is on an issue of this significance which has been debated for years.

The Leader of the Opposition and the hon. Member for Cathcart have both made a number of criticisms of the Bill, and I am entitled to say one or two things about what we understood, until recently, to be the Conservatives' proposals. The last election manifesto of the Scottish Conservative Party said:

"Therefore we now propose an Assembly sitting in Scotland. Its powers will include the major stages of Scottish legislation. It will be a forum for Scottish opinion and act as Scotland's voice in issues of national debate. Initially, the Assembly's membership will be drawn from the elected members of the new local authorities, though direct election could evolve in the future."

Is that the policy of the Conservative Party? The Leader of the Opposition has disappeared. Obviously we shall not get an answer from her.

The document "The Right Approach". published only in October this year, said:

"We have argued for the establishment of a directly elected Scottish Assembly acting as another Chamber of the UK Parliament. Its functions would be to take an important part in legislation with Parliament and to subject Government in Scotland to full democratic scrutiny."

Is that Conservative policy? If not, what is? If we assume that Conservative policy—if it has not been abandoned altogether—is still that certain parts of Bills relating to Scotland which come before the House should be referred to a directly-elected Scottish Assembly to deal with certain bits of procedure—for example, Committee and Report stages—we can confidently say that, if ever there was a recipe for conflict, this is it.

How could the last Conservative Government have got their Rent Act through a hostile Assembly in Edinburgh? Their legislative process would have come to a halt. Who would be elected to a Scottish Assembly to sit in Edinburgh dealing with certain parts of the procedure relating to Scottish Bills and, at the end of the day, have their work eliminated by the vote of a hostile House of Commons?

That scheme is utter nonsense and a recipe for conflict. We do not know from the two Opposition Front Bench speeches so far whether this is the scheme that the Conservatives are putting to the people of Scotland. We are entitled, before the end of this four-day debate, to have an answer to this question, not just for the House or for hon. Members on this side, but for certain members of the Conservative Party in Scotland, including some who still hold Front Bench responsibilities for the Opposition in the House.

The right hon. Gentleman's criticisms of what he explains as Conservative policy may have some force, but surely they apply with even greater force to the larger legislature and Executive proposed by the Government.

They do not. The right hon. Gentleman no longer speaks officially for the Conservative Party. If an official spokesman would like to tell us the Conservative policy on these matters, I should be delighted to give way. We have not had it explained in the two Front Bench speeches so far.

The right hon. Gentleman has said, quite rightly, that in certain ways the Executive will be more accountable under the Government's proposals, but does not that really affect the Chief Executive? Is he certain that the Secretary of State for Scotland, when he exercises the very important powers of virtually vetoing certain Bills, will be any more responsible to the people of Scotland, if the Bill is passed, than he is now?

Many of the functions of the Secretary of State will be completely removed from him. I shall come to that later, if time permits. Regarding the functions for which he will remain responsible, he will be just as responsible to the House as he is now. As these functions will be a good deal narrower. this will increase democratic accountability at Westminster for Scottish functions—in the same way as the Scottish Assembly will increase democratic accountability in Edinburgh for the Assembly functions.

I was about to describe briefly the Scottish scheme of devolution. My right hon. and learned Friend the Secretary of State for Wales will no doubt refer to the Welsh scheme for devolution tomorrow.

The three main principles and themes which underlie the scheme for Scotland are, first, that the scheme in Scotland must be a legislative scheme, for obvious reasons. We already have separate Scottish legislation over a whole range of functions. Perhaps I may say to my hon. Friend the Member for West Lothian (Mr. Dalyell) that this was made clear before the 1974 General Election. It was specifically provided for in the White Paper of September 1974.

Secondly, we have aimed to devolve functions to the Scottish Assembly which are specifically Scottish and concern Scotland alone, but at the same time we have retained in the United Kingdom Parliament those matters affecting Scotland where there is a substantial United Kingdom interest.

Thirdly, we have drawn up our proposals so as to avoid constant interference by the Secretary of State for Scotland and the United Kingdom Government in the day-to-day work of the Assembly in discharging the devolved functions.

There was a considerable improvement in our proposals in that respect between the White Paper of November 1975 and the White Paper of August 1976. That was well recognised in Scotland. The Bill reflects the White Paper of 1976.

How does the right hon. Gentleman square that intention with the intention of retaining control of the universities in Scotland?

The universities in Scotland have a function which extends far beyond Scotland. They do not provide simply for Scotland's needs. They have in proportion to the population of Scotland a much greater student population than the universities in England. There are many faculties in which we produce far more graduates than are needed for Scottish purpose Medicine is one example. Scottish universities can be dealt with in detail later when we come to the appropriate clause.

Can the Secretary of State assure the House that the Law Officers have considered this Bill hand in hand with the Act of Union and have come to the conclusion that there is nothing in the Bill which goes against those provisions in the Act of Union with which the English Parliament agreed in perpetuity not to tamper?

All these matters have been considered in the preparation of this Bill.

A number of requirements come from the main considerations that I have already outlined to the House. First, there has to be precision in the wording of the Bill to determine the boundaries between the devolved functions and the reserved functions.

Without dealing in detail with examples of this, I point out that the Scottish Development Agency is basically devolved to the Assembly, but there is reference in Clauses 49 and 51 to the responsibility of the Secretary of State and the United Kingdom Parliament to lay down guidelines for the industrial functions of the Agency, because in those functions the work of the Agency has considerable impact in the United Kingdom as a whole and is not exclusive in Scottish terms. These provisions are designed to get the precision in wording that is required if we are to separate the devolved functions and the non-devolved functions.

I turn now to the question of vires. We have in the Bill dropped the political mechanism originally proposed in the White Paper of November 1975. We now provide for a mechanism which involves the Judicial Committee of the Privy Council. That provision is in Clause 20 and it is a considerable improvement on the original proposals. Again, it removes a potential source of conflict by taking it out of political considerations.

But it has been stated explicitly at all times by the Government that, even if one had a precise delineation of functions and a mechanism outside politics for dealing with the vires of Scottish Assembly legislation, circumstances might arise in which a piece of legislation from the Assembly, perfectly within order and within its competence, nevertheless impinged seriously on a non-devolved function, and in which the United Kingdom Government wanted to provide a mechanism for dealing with such a situation. That is what Clause 45 does. It is expressed in terms which made it clear that the mechanism will operate not when the Assembly is acting wholly within its competence and on a devolved subject with full responsibility to act, but when the legislation has an impact of a serious nature on a non-devolved function.

In all these matters, it was extremely difficult to draft the Bill in a way which made it clear that we have got it right, but I believe that we have got the provisions basically right. There will no doubt be an interesting Committee stage, and we can then consider any particular points put up from any quarter of the House. But to suggest that some doubt about Clause 20 or Clause 45 would be good enough reason for rejecting the Bill on Second Reading is absurd.

To every one of the detailed points raised by the Leader of the Opposition yesterday there are very good answers, and they will be given at the appropriate stages. The right hon. Lady's was a Committee stage speech, if anything. It was legalistic and destructive. It paid no attention to the underlying political considerations behind the Bill. She said that she had consulted some of her legal friends. It is a pity that she did not consult some of the ordinary people of Scotland, for otherwise she would not have made that rather silly speech.

As a point of fact relating to Clause 20, yesterday I asked whether the Government had had any representations from the judges on their view of being involved in politics in the form of the Judicial Committee of the Privy Council. My right hon. Friend the Leader of the House had a lot of very eloquent things to say at one time about Sir John Donaldson as a judge involved in political decision-making.

The judges discussed that matter in a memorandum which we took into account. I may point out that all these matters have been exhaustively considered, not only within the Government but with the appropriate bodies outside. On the legal issues, we have had memoranda from the Law Society of Scotland and the Faculty of Advocates as well as the Scottish Law Commission. Most of these documents were published by the submitting bodies themselves at the same time as they sent them to the Government.

The right hon. Gentleman refers to a memorandum put in by the Scottish judges. I am not aware that it has been published or that it has ever been placed in the Library of the House. Will he arrange to put it in the Library before we move any further?

That may be a matter for the judges themselves, but I will take account of what the hon. and learned Gentleman has said. There has been a mass of documentation and representation about the Government's White Papers, and most of that documentation is at least familiar to Scottish Members if not necessarily to English Members.

Surely the right hon. Gentleman must be aware that, whatever our view of devolution or of the Bill, there is a deep unease about the long-term constitutional implications lying behind the measure. Is not the House entitled to have a clear answer to the point asked by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees)? It is not sufficient to say that, if the judges prepared a memorandum which the Government took note of, perhaps the judges would publish it themselves. The right hon. Gentleman must take the House and the country into his confidence and tell us what were these considerations. We are entitled to know.

The proposal in the latest White Paper took this technical matter relating to the vires of the policy content of the Assembly's Bills out of the hands of the politicians—in the previous White Paper it had rested with the Secretary of State—and put it into the hands of the judiciary for decision. The judiciary will decide not on the policy content but on the question of whether it is technically competent. The change has been widely welcomed in Scotland. My hon. Friend the Member for West Lothian is making heavy weather of this. The original proposal left it in the hands of the Secretary of State, and it was almost universally criticised, the critics including the legal profession. We have met that criticism by Clause 20, and no doubt we can discuss it at some length in Committee.

I want to speak now about the financial arrangements, because there has been criticism of the concept of the block fund. I do not want at this point to explain in detail how the block fund will operate—that will come later when we discuss the clauses. But a lot of the discussion of the financial arrangements in the Bill has been rather unbalanced, because it has almost completely neglected the mechanism of how the block fund will be negotiated, calculated, and the rest. There has been an almost exclusive concentration on the question of independent revenue-raising powers, but it is how the block fund operates that will be immeasurably the most important part of the financial settlement between the Westminster Parliament and the Scottish and Welsh Assemblies.

The original criticism was that the Government had not thought about independent tax-raising powers at all, and therefore had not produced any conclusions because they had not given the matter any consideration. We had a variation of that criticism yesterday. We were told by a number of hon. Members that we had thought about it very firmly but had not reached any conclusion or produced any solution, so therefore the problem was insoluble. The second criticism is contradictory of the first, although a little more flattering to the Government. But neither criticism is justified. We have given great thought to this matter, and the fact that we have not so far produced a solution does not mean that a solution is impossible. We have made it clear on a number of occasions that if a possible solution to the problem emerges, we will be happy to consider it for incorporation in the Bill.

The Secretary of State has said that it will take some time to consider this. The Explanatory and Financial Memorandum says that it will cost about £36 million to set up and run the Assemblies for one year. Who will pay? Will it be the British taxpayer, the Scottish taxpayer or the Welsh taxpayer?

There is one category of taxpayer. This matter will come into the block fund negotiations. The expense for establishing the Assemblies will be a United Kingdom charge.

rose—

I should like to develop my argument a little further and then I shall be perfectly happy to give way to the hon. Member because I know that he is interested in these matters.

I was about to make a number of preliminary points about the question of block funds and independent revenue-raising powers. First, in terms of a devolution settlement I think that it is accepted by most that independent revenue-raising powers could be only marginal. The block fund is bound to provide the bulk of finance for the Assemblies. That is why we ought to be turning our minds to—and I hope we shall in Committee—the problems arising from the block fund, how it should be negotiated, how we estimate the needs of the Scottish and Welsh Assemblies and what are the needs of the Scottish and Welsh people in terms of devolved services and so on.

These are all extremely important matters and they are the more important because the block fund will provide—even if we find an independent tax-raising power—the bulk of the money. What we are talking about in terms of independent revenue-raising powers is only at the margin.

Second, there is a growing clamour in Scotland, as well as alsewhere, for independent revenue-raising powers for the Assemblies, Scottish and Welsh taxpayers ought to be asking: are we in favour of paying more taxes to keep the devolved functions of the Assembly going? That is the problem for the Scottish and Welsh taxpayers.

Will my right hon. Friend explain to the House what will happen if the devolved Assemblies overspend their block grants in any one year?

Before answering that question, I should like to say one or two other things about the tax system generally. I think that the House ought to take these general points into consideration before making up its mind about the question of independent tax-raising powers.

The overall settlement would be based on need, not on revenue. That is absolutely fundamental to the devolution scheme for both Scotland and Wales. In terms of expenditure per head of population, Scotland and Wales have done well, on a crude comparison with England. The figures were published in a recent answer to a Parliamentary Question. That does not of course mean that Scotland and Wales have necessarily done well in terms of their real needs. That brings in considerations other than just the crude expenditure per head measurement of public expenditure. Over the years, the way in which money for Scotland and Wales has been voted by the House and the way in which Ministers have come to conclusions about money for Scotland and Wales has taken account of the fact that there are special needs in those countries.

Therefore, it is not possible to provide a crude expenditure per head of population for individual parts of England as well. If we had regional figures for England, they would demonstrate that in some parts of England public expenditure per head is legitimately greater than in other parts. That is done within the Government at present. It does not present an absolutely new problem, but it will have to be dealt with in a different context after the Assemblies are established. It is a problem with which we are familiar at present.

I accept absolutely, however, that there are powerful arguments in favour of independent tax-raising powers for Scotland and Wales. The first is the argument of flexibility, because it would allow the Assemblies to have a certain amount of money at their disposal rather than remaining utterly dependent on the block grant. The second argument is about accountability. If one is to have financial discipline in any elected body which is spending large sums of public money, the fact that it has to raise some of the money itself is obviously an important factor. I accept that it is important, if we can achieve it, to get independent revenue-raising powers for the Scottish and Welsh Assemblies.