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Commons Chamber

Volume 928: debated on Monday 21 March 1977

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House Of Commons

Monday 21st March 1977

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions


Ussr (Credit)


asked the Secretary of State for Trade how much of the Anglo-Soviet line of credit of £950 million arranged in 1975 has been taken up at the lastest available date; and if he will make a statement.


asked the Secretary of State for Trade what major contracts have been secured by British companies for the supply of goods or equipment to the USSR under the £1,000 million line of credit negotiated in 1975; and what is the aggregate total value of these contracts.

Signed contracts concluded within the terms of the Anglo-Soviet Agreement in 1975 total £188 million. Other major contracts are under negotiation and I have every expectation that more contracts will be concluded. It is not customary to identify the contracts placed under this agreement.

Is the Secretary of State aware that the distinguished Soviet exile Andrei Amalrik has made the point that, by transferring resources to the Soviet Union by means of generous credits of this kind, the West is helping the Soviet Union to maintain its police State?

We are simply competing with credits given by other Western countries. It is necessary to do so if we are to get business with the Soviet Union, and it is our wish to build up trade with the Soviet Union. That seems to us to be the right objective.

Is my right hon Friend aware that these figures show how important trade is with the Soviet Union and how many jobs depend on the expansion and development of that trade?

It is certainly true that many jobs depend on this trade. I must say, however, that I am disappointed about the speed with which trade under this agreement is being negotiated and I shall certainly look for a considerable improvement over the next few months.

Can the Secretary of State confirm that not one penny of profit will accrue to Britain under any contract placed as a result of this line of credit? Furthermore, can he deny that approximately 50 per cent. of the total production costs of anything that the Soviets purchase under this agreement will be footed by the British taxpayer?

I cannot confirm either of the facts which the hon. Gentleman suggests. These contracts bring employment to this country, and I do not think that the firms concerned will enter into them if they do not think it worth while to do so.

Is my right hon. Friend's wish for an improvement in this position likely to materialise now that the most recent five-year programme in the Soviet Union has started? Is it not necessary for us to make it as easy for our industrialists to sell things to the Soviet Union as other countries in Europe are doing, in an effort to build up trade and friendship with the Soviet Union?

I am sure that it is necessary, if we are to get business with the Soviet Union, for us to grant competitive credit terms. I hope that my hon. Friend is right in suggesting that perhaps further business will be coming under the five-year plan. Certainly we shall look for further business. We were assured by Mr. Gromyko last year that it was the intention of the Soviet Government to put business up to the limit of this agreement, and we are disappointed that nothing like that has yet been achieved.

Export Promotion


asked the Secretary of State for Trade if he will expand the governmental export promotion sales organisation and staff.

The export promotion organisation of my Department is adjusted, when necessary, in consultation with the British Overseas Trade Board, which advises me on the resources needed to provide appropriate services and promotional aids for exporters.

Will my right hon. Friend and the Secretary of State for Defence switch the 390-strong Defence Sales Organisation to promoting non-military engineering and other exports? Will my right hon. Friend take into consideration the policy of President Carter that commercial matters should not be the only grounds for considering exports but that peace should also be taken into account, since war would cost us far more than the loss of a few arms orders?

As my hon. Friend knows, defence sales are under the control of the Defence Sales Organisation and my right hon. Friend the Secretary of State for Defence. Non-military exports, on the other hand, are sponsored by my Department, and I will consider the resources that are necessary for assisting these exports in accordance with our judgment of the requirements. As I say, we shall adjust the resources devoted when we think it necessary.

Is the Secretary of State aware of the grave dissatisfaction of exporters with the recent changes in the policy of the British Overseas Trade Board with regard to joint venture schemes in outward bound missions? Will he have another look at these changes? In any case, is it not time now, Wednesday aside, for publication and review of all our export services?

The hon. Gentleman knows that a review is going on of many matters in that area. As for the grave dissatisfaction of exporters, the British Overseas Trade Board was asked by me to make certain savings in connection with the public expenditure cuts last year, and it assured me that it could do so without affecting the main thrust of its activities. I do not think it should be asumed that all expenditure in promoting exports is cost-effective. We give far more assistance in joint ventures and overseas trade fairs than the great majority of our main industrial competitors. I am satisfied that we are giving the help that is required.

Import Controls


asked the Secretary of State for Trade which industries he is considering to subject to selective import controls.

The Government are ready to use temporary selective import controls to protect any normally viable industry which is suffering serious injury as a result of increased imports.

Assuming for a moment that the Government continue in office, will the right hon. Gentleman beware that in any protectionist war foreign competitors carry a much bigger clout than we do? In particular, is the right hon. Gentleman aware that in the paper industry there are three important lines of imports which British producers cannot produce in sufficient quantities? Will he remember the interests of the consumer in all this?

The interest of the consumer is one matter that has to be considered. The Government have made public their position on import controls. Our policy is well known, it has been discussed in the House repeatedly, and I have no change to announce today.

Does my right hon. Friend agree that the hardest hit of all industries, by foreign countries, and the fastest declining, is footwear, and that the industry has every right to expect greater protection against foreign countries than it has had so far?

We control imports of footwear from Eastern Europe, and we have duties on, for example, Brazilian footwear. I am aware of the problems of the footwear industry, and we have taken action to give it protection. On the other hand, in our relations with Eastern Europe there are other considerations that have to be taken into account, and one is our exports to those countries.

Is the right hon. Gentleman satisfied with the criteria by which dumping is established, and is he happy with the proposed transfer to Europe in the next month or two of responsibility for anti-dumping regulations?

The criteria for dumping are laid down both in our own legislation and in the GATT anti-dumping code. We have been using that legislation more rapidly and more effectively in recent months than ever before, and I think that there have been some expressions of satisfaction from industry on that account.

As for the transfer of responsibility on 1st July to the European Commission, the House knows that last year I discussed this matter with Sir Christopher Soames, and more recently I discussed it again with Vice-President Haferkamp to make sure that they are aware of the need to build up staff in Brussels to handle the case load that they will face when the transfer takes place. It is the intention to maintain a unit in my Department to assist in the investigation of anti-dumping cases.

Is my right hon. Friend aware that the Department of Applied Economics at Cambridge has again come out in favour of selective import controls as a safeguard in a necessary expansion of the economy, which is the only way to prevent unemployment rising to more than 2 million?

Although the department has kindly sent me a copy of its report, I have not yet had an opportunity of reading it in full. My impression is that, unlike my hon. Friend, it wants not selective import controls but general import controls. I think that would involve dangers, to which attention has been drawn on many occasions. If the forecasters, including those forecasters, are right in suggesting that this country will shortly be moving into a balance of payments surplus, it will make it even more difficult to use the sort of policy instrument recommended by Cambridge.

England And Scotland


asked the Secretary of State for Trade if, following the work being done by the Scottish Council Research Institute on the input-output model of the Scottish economy, he will re-examine the feasibility of his Department's conducting a survey into the value of cross-border trade, including food and drink, between England and Scotland.

No, Sir. The Department of Industry is already sponsoring a research project which is concerned with assessing the merits of alternative methods of estimating trade flows between different areas in the United Kingdom, including those between Scotland and England. The suggested survey would still entail substantial official costs on top of additional commercial costs which we do not think would be justified.

Does not the Minister's reluctance to initiate such a study show that he and his Department are frightened of the possible results, and that they do not wish the people of Scotland to know that Scotland's trade is basically in balance, unlike England's?

I take it that the evidence on which the hon. Gentleman purports to make his case that Scotland is in balance is drawn from an article by Michael Fry which appeared in the Scotsman on 14th February, which suggested that the preliminary results of the Scottish Council Research Institute's input-output project suggested that Scotland was in balance in 1973. The directors of the project said afterwards that the article was based on incomplete data, which was subsequently misinterpreted. There is, therefore, nothing in the hon. Gentleman's case to answer.

Is it not true that cross-border trade in drink has been greatly improved by the bevy of SNP Members in this House?

I am sure that members of the SNP have made their contribution to the £300 million or more earnings from Scotch whisky.

Is the hon. Gentleman aware that this is part of the SNP's campaign to create physical barriers between Scotland and 'England, including Customs posts and other impediments to the free movement of capital, goods and, indeed, people? Will the hon. Gentleman investigate whether, because of this alarming propaganda by the SNP, its prominent supporters, such as Sir Hugh Fraser, are selling out in Scotland and investing funds in London and elsewhere?

I do not think that anyone, other than members of the SNP, allows his political fantasies to run away with him and ingnore the hard-headed economic facts of interdependence between Scotland and England.



asked the Secretary of State for Trade what representations he has received in the light of the New York Port Authority's decision regarding landing rights for Concorde in New York.


asked the Secretary of State for Trade what efforts his Department is making to back up the efforts made by British Airways and Air France to obtain landing rights for Concorde at New York.


asked the Secretary of State for Trade if he will make a statement on the question of Concorde's landing rights at New York.

The Port of New York Authority decided to postpone its decision so that it could consider any new proposals on how the noise impact of Concorde on local communities could be reduced. Its next meeting is on 14th April. The court hearing has been postponed, but a new date will be set this week.

Will the right hon. Gentleman confirm that if by any unlikely chance the Government are still in office in June they will not sign a new Bermuda Agreement until the American Government have lived up to their obligations under the present one and have ensured New York landing rights for Concorde?

We shall sign a new agreement on 22nd June, or before, if we negotiate a new agreement that is satisfactory to us. Among the problems with the existing agreement, as the hon. Gentleman suggested, is that we have not been able to obtain our true rights in respect of landing Concorde in New York. There are many problems about the current agreement and many improvements that we could make. If we can get a satisfactory agreement, we shall sign it.

Will the right hon. Gentleman confirm today's report in an American newspaper that, whereas the French Government have spent more than $2½ billion on the promotion of Concorde in the United States, our contribution has been only $100,000? As we each have a stake in the commercial success of Concorde, is there not a danger of our spoiling this aircraft for a penn'orth of tar?

I do not think there is any doubt about the commercial success of Concorde at Washington. There is no doubt that it would be a commercial success if it was allowed to fly into New York. That is not the issue. The issue is obtaining our rights to secure admission for this aircraft to New York.

Is the right hon. Gentleman aware that in a Written Answer to me last Thursday the Foreign Office said that

"a party to a treaty may not invoke the provisions of its internal law as justification for its failure to perform a treaty."—[Official Report, 17th March 1977; Vol. 928, c. 305.]
Is not that precisely what President Carter is doing? In that case will the right hon. Gentleman consider, as part of his renegotiation of the Bermuda Agreement, taking action specifically against New York, not against other United States cities, and withdrawing traffic rights between New York and Britain, and New York and France, until this aeroplane is accorded the rights to which it is entitled under the treaty?

I do not think it would be right at this time to talk about the steps we might take in certain circumstances if we do not secure admission to New York. As the hon. Gentleman knows, and as I said in my answer, there is a further meeting on 14th April. We have a court case outstanding under which we can proceed. It is entirely premature to make the sort of threats that the hon. Gentleman invites me to make.

Has my right hon. Friend had any chance to speak to his right hon. Friend the Secretary of State for the Environment about the report in yesterday's newspapers concerning the Noise Advisory Council's report on Concorde being made available to the New York Port Authority? Would he care to comment on that?

I have had an opportunity of talking to my right hon. Friend about this. The question which is the basis of this matter in New York is whether Concorde can meet the noise requirements of Kennedy Airport. We believe that it can. We believe that that has been demonstrated to the New York Port Authority. We see no justification for its keeping Concorde out of New York.

Is the Secretary of State able to tell the House whether the load factor on the Concorde route between London and Washington has been above or below expectations and, at the same time, whether the level of complaints from those living around Dallas Airport has likewise been above or below expectations?

We have been favourably surprised by the low level of complaints from people living around Dallas Airport. The hon. Gentleman knows that Concorde has been operating to Washington at a satisfactory level of capacity. Whether that is below or above the expectations of British Airways I would not like to say.

Is not my right hon Friend aware that what angers the British people about this situation is that if the Americans had been first in the field with supersonic aircraft we would have been expected to receive this aircraft with open arms? Is this not a case of sour grapes on the part of the Americans?

I certainly think that my hon. Friend is right in suggesting that if the aircraft was American we would have been expected to receive it in London. I welcome the statements which have been made by various aircraft manufacturers in the United States recently and by others saying that Concorde should be allowed into New York.


asked the Secretary of State for Trade what progress he has made on obtaining new routes for Concorde.


asked the Secretary of State for Trade what supersonic routes for Concorde are at present under negotiation; and whether he will make a statement.

Apart from New York, we are concentrating our efforts on securing Concorde routes to Melbourne and Tokyo.

Can the Minister say what progress he is making in his negotiations with the Governments concerned response from the Australian Government. ment will take an initiative with the new Government of India on this important matter?

We have had a favourable response from the Australian Government. Negotiations are still continuing with the Indonesians about supersonic overflying rights. The Indian Government have objected in the past, and we shall have to await developments with interest as and when the new Indian Government are formed.

Is it not true that, whether or not the Indian Government continue to object, there is now no problem over a Far Eastern route? We could start it. Is not such a route vital for the future of Concorde, irrespective of whether we get permission to go to New York? Does not the Minister agree that it is extremely disappointing to see how slowly British Airways seem to be getting this route going? Air France has trained sufficient crews. Why is there a delay here? Will the Minister put pressure on British Airways?

I do not accept that British Airways have been slow in dealing with this matter. There has been an industrial dispute which has slowed up the opportunity to train crews. Matters are not as simple as the hon. Gentleman suggests, because far more crews are needed to deal with the London-Melbourne route than any other route. Nevertheless, I can assure the House that British Airways are proceeding with this issue as rapidly as possible. We must, of course, see what happens with regard to New York, because that situation impinges upon the operation of the London-Melbourne route.

Since the Minister has demonstrated that he is powerless to stop Air France flying up the English Channel supersonically and in so doing causing great disturbance, through sonic boom, over South-West England, will he ensure that he does not apply for routes which involve supersonic flying up the English Channel?

I have done my best to keep the hon. Gentleman informed of the progress which is being made over a specific complaint which has affected a substantial number of people. The hon. Member knows, as do other hon. Members, that this matter is being carefully investigated. The flights and the noise are being monitored. I hope that the hon. Gentleman, instead of making constituency points, will recognise that it is not a demonstration of powerlessness on the part of the Government but rather a recognition of the need to investigate this matter in depth before coming up with the sort of simplistic solutions which he has put to me.

Cotton Imports


asked the Secretary of State for Trade what percentage of the home market for cotton textiles is supplied by foreign imports; and how this compares with the previous percentages over the last 20 years given at five-year intervals.

It is estimated that the share of the home market for cotton yarn, in terms of weight, supplied by foreign imports in 1976 was 25 per cent., and for cotton cloth, in terms of area, it was 62 per cent. The comparable figures for 1959 were 4 per cent. and 31 per cent. respectively. With permission, I will include figures for intervening years in the Official Report.

Does not this show a serious decline in the Lancashire cotton industry? Is there any hope that the industry will eventually survive? If there is such hope, in which direction must it look for help?

We believe that through the Multifibre Arrangement we have already brought more help than ever before to the textile industry. We are taking a tough bargaining stance in the renegotiation of the arrangement in Geneva, particularly over cumulative disruption and the downward adjustment of growth rates, which are the two key problems for the textile industry. If we can succeed here—and we intend to try—the textile industry will be in a stronger position than ever before.

Has my hon. Friend's Department had the opportunity of examining the level of imports of cotton yarn from India recently? Could he have a look at that?

The import level of cotton yarn from India is about 20 per cent. I might add that it is exceeded by imports of cotton yarn from the EEC, which are 22 per cent. It is not, therefore, the largest supplier. I am glad to take this opportunity to announce that with regard to Indian hand-loom textiles, exports of which to the United Kingdom enormously increased in 1976, we have, in collaboration with the EEC, managed to secure a substantial cut-back in trade. In the case of woven shirts, which reached a level of 7·6 million pieces in 1976, we are today announcing a cut-back to 5·45 million for 1977. For women's shirts and blouses, which reached a level of 11 million in 1976, we are announcing today a cut-back to 7·4 million pieces. This is a substantial cut-back and I am sure that the House will be pleased to hear of it.

Following are the details:

The figures for the intervening years were as follows:

Cotton Yarn (in terms of weight)

per cent.


Cotton Cloth (in terms of area)

per cent.


Figures prior to 1959 are not comparable with those for later years.

Special Steel Imports (Price)


asked the Secretary of State for Trade if he has received evidence that certain imported special steel products are currently offered for sale in the United Kingdom at prices which are well below those applying in the producer countries.

Yes, Sir. In each case brought to its attention my Department is taking appropriate action.

Is my hon. Friend aware that when action is taken and is known about in South Yorkshire it will be widely welcomed? Will he confirm that in at least two cases imported special steels are available for sale in Britain at prices 50 per cent. below the price charged in the countries of origin? Will he show urgency in taking action on this issue?

I have listened carefully to what my hon. Friend has said about a figure of 50 per cent. Our investigations, which are nearly completed, in several areas dealing with imports from different countries show that the figure may be substantially lower. I recognise, however, that there is a significant problem. Dealing first with Japan, which is perhaps the price leader, we have had an understanding on high-speed tool and stainless steels from last September for the first half of this year. In a few days' time we hope that negotiations will begin again in Tokyo for the second half of this year. Similarly, in the cases of Sweden and Austria we are ensuring that there are no breaches in the ECSC rules. In the case of Spain, where we already have a provisional charge on stainless steel imports, we have a full investigation in progress which started last month. We hope to announce the results very soon.

Can the Minister tell the House what he thinks about the latest EEC discussions on general steel imports and whether he agrees that there may be a necessity for minimum prices on a number of steel products and import licences for all imported steels coming into the EEC? Is he taking part in the discussions?

Of course, we are participating in discussions over the evolution of the EEC's steel policy at this particularly difficult time. I do not think it would be appropriate for me at this point to say exactly what we have proposed or what conclusions we hope will be reached. The considerations that the hon. Gentleman has mentioned are relevant.

Aircraft Noise (Gatwick)


asked the Secretary of State for Trade what proposals he has for reducing the present maximum noise limits at Gatwick Airport.

Is it not vital that the noise levels should be progressively reduced in view of the fact that a considerable number of people live within the monitoring points and in fact are closer to the monitoring points and are, therefore, subjected to greater noise than the so-called official noise limits?

I am aware of the noise problem at Gatwick. The hon. Gentleman will know from the consultation document issued on the London airports that there is likely to be, because of the projected increased use of Gatwick, a short-term worsening of the situation. That is unavoidable. On the other hand, he will also know that I have taken steps to restrict very substantially the number of night jet movements during the summer, and there is now a consultative document out to deal with the question of night jet movements at Heathrow and at Gatwick.

Is my hon. Friend aware that the endeavours of himself and of his Department to reduce noise at Heathrow Airport are very much appreciated, but would he not accept that to suggest the simple transfer of some elements of traffic from one London airport to another is not really constructive? In view of his remarkable endeavours in the past three months, can he state whether any progress has been made in reducing night flights at Heathrow?

The redistribution of noise is always a problem, but it is separate from the need to utilise more effectively the facilities which will become increasingly available at Gatwick, and it is necessary that we should do that.

On the question of the reduction of night jet noise, only last week I issued the consultative document putting forward the options that are available for dealing with this matter. They comprehend essentially possible closures as far as night jet movements are concerned or gradual phasing out of noisier aircraft while permitting quieter aircraft to continue to operate. These matters should be carefully considered.

In view of the Minister's highly unsatisfactory answers, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.


asked the Secretary of State for Trade whether he is satisfied with the arrangements for monitoring aircraft noise at Gatwick.


asked the Secretary of State for Trade what are his current arrangements for monitoring the noise levels created at Gatwick Airport as experienced in the main adjacent centres of population.

The noise caused by each jet aircraft take-off is recorded by the automatic noise monitoring system using four fixed microphones. In addition, sample measurements of aircraft noise are taken at a variety of other places around the airport.

Is the hon. Gentleman aware that many of those who live near Gatwick Airport believe that airline pilots know exactly where these microphones are and do their best to avoid them? Will he either use his powers to get the airlines to fly on their proper flight routes or move the microphones to where the aircraft fly?

We believe that it is better to try to persuade those who have infringed the noise limits to adopt a better and more reliable course than they have in the past rather than engage in confrontation. The evidence is that the infringements constitute about one-half of 1 per cent. of all jet take-offs. At Heathrow the position has improved substantially. At Gatwick the position has not altered materially since last year.

Is the hon. Gentleman aware that, having taken fairly robust steps to limit night noise at Heathrow, he has not taken comparative steps to help at Gatwick, where the nuisance is increasing—and he knows that it is increasing?

The hon. Gentleman is quite wrong, and he knows that he is wrong. The permitted number of night jet flights has been reduced by 25 per cent. in the summer and by 30 per cent. in the winter. This is a direct result of action which my Department has taken over the course of the last few years.

Tanker "Globtik Venus"


asked the Secretary of State for Trade what investigations he has made into recent events concerning the tanker "Globtik Venus"; and if he will make a statement.

On 3rd March the Attorney-General was asked to consider whether any criminal offence had been committed in connection with this incident, and inquiries are being urgently pursued. The industrial dispute involving the original crew has been resolved and the vessel is expected to sail from Le Havre at the end of this week.

In view of today's reports about another planned raid similar to the "Globtik Venus' incident, will the Government take immediate and firm action against those responsible for setting such a dangerous precedent? Is it not sheer cant and hypocrisy for the Tories to make polite gestures towards the trade union movement when two members of their Shadow Cabinet are connected with Globtik Tankers Limited, which hired the gang of thugs to try to beat the trade union movement into submission?

I have no evidence to confirm what was said in the report in the Daily Mail this morning. As I have indicated, we are considering very carefully the action which should be taken in the circumstances arising out of the "Globtik Venus" matter.

What is far more important than the activities of the two hon. Gentlemen to whom my hon. Friend has referred is the reaction of the Opposition and the weasel words of the hon. Member for Hertfordshire, South (Mr. Parkinson). He said that he could not see any reason, nor did the Opposition, to hold a strong view about the recruitment of mercenaries to undertake this outrageous action. The House and country will now know where the Opposition really stand on matters affecting industrial disputes.

What I in fact said in the course of my remarks was that unreasonable actions often produced unreasonable reactions. In no way did I condone the action of Mr. Tikkoo, but I said that in the circumstances he had been provoked. Is the hon. Gentleman aware that he is repeating or setting for himself the low standard which he demonstrated in replying to the debate?

Lectures about low standards ill become the hon. Gentleman. What he said was:

"This was not the way in which I would reclaim a ship of mine, but I do not own any ships. I do not see any reason"—[Official Report, 7th March 1977; Vol. 927, c. 1120.1

Order. It is very unfair to others who have later Questions on the Order Paper to go over a debate which has already been held.

Is my hon. Friend aware that the leader of the gang of armed mercenaries recruited on Humberside, a Mr. Miller, has criminal convictions for rape, buggery, larceny and possession of firearms? He is not a defender or upholder of the law. It is extremely noticeable that the unions have praised the Minister's action in dealing with this matter but have noticed with astonishment that there has been little noise from the Opposition, who had a lot to say about the Shrewsbury Two and the Clay Cross rebels.

Not only the trade unions but the General Council of British Shipping and the employers condemned the action. The only people out of step were the Opposition.

Is the hon. Gentleman aware that, with the single exception of the hon. Member for Feltham and Heston (Mr. Kerr), although there is great gloom on his side of the House today, he will have to think of an issue other than the "Globtik Venus" on which to fight the election? His answer was very unsatisfactory indeed.

The relevance of the "Globtik Venus" issue is that it depicts in all its nakedness the real way in which the Conservative Party looks at trade unions. We are not gloomy; but I think that the Opposition should not be quite so self-satisfied. They resemble turkeys lust before Christmas.

Power Plant Industry


asked the Secretary of State for Trade when he expects to respond to the CPRS Report on the future of the electrical power plant industry.

The Government are carefully considering all aspects of the proposals in the CPRS report and will be responding as soon as possible.

Does the Minister agree that the only way in which we can maintain in this country a viable electrical power plant industry with an export capability is by having a flourishing nuclear industry? Will he have words with the Secretary of State for Energy and remind him that some crucial decisions must be taken on the future of the nuclear industry in this country if the electrical power plant industry is to survive?

That is a matter for my right hon. Friend. I shall bring the hon. Gentleman's remarks to his attention. All these matters are being taken into account in our examination of the CPRS Report on the electrical power plant industry.

In any consideration of the report, will my hon. Friend make it perfectly clear that the Government's attitude is that rationalisation of the industry will not be made an excuse for substantial factory closures in any part of the industry, with substantial numbers of people losing their work?

The proposal for rationalisation of the industry was one of the five main recommendations made by the CPRS. We are now examining its report. Before any conclusions are reached we shall have the fullest consultation with all those concerned, including particularly the trade unions.

Before the Minister makes the decision, will he put to the House the Government's genuine energy policy? Will he assure the House that there will be no nonsense about building the unnecessary Drax power station without the consent of hon. Members?

The proposal about the Drax B station was again one of the recommendations of the CPRS Report that we are examining. The right hon. Gentleman's question is more relevant to the Secretary of State for Industry. All I can tell him is that this has been fully considered along with all the other recommendations in the report.

Will my hon. Friend take into consideration the fact that we have heard nothing from him today that we did not hear during the last Question Time when his Department appeared? Will he now say that before Easter we shall at least get some progress in regard to export credits, because these are vital to the firms of Babcock and Wilcox and Clarke Chapman which are at the heart of our industrial strategy?

I appreciate the significance of those industries with regard to exports. I can only reiterate what I said before—that we exclude no option in examining how we can give assistance in respect of exports. My hon. Friend will not expect me to spell out the ideas that we have been examining, but I can assure him that there has been a great deal of discussion on this issue. I am also aware of the urgency of the matter. My right hon. Friend the Secretary of State for Industry has said that it would be some little time before he could make an announcement, but we are aware of the need to make an announcement as quickly as we can.

Does the Minister realise that many thousands of employees at Babcock and Wilcox will not be prepared to wait "some little time" for an announcement?

It is precisely because we are engaged in the fullest consultations on the proposals, which must be wide-ranging and comprehensive, that we cannot produce conclusions before the House quickly. I am sure that the hon. Gentleman would prefer us to reach the right conclusion rather than one which perhaps might appeal to him but which would certainly have a devastating effect on employment.

In view of certain developments overseas, which were a disappointment to us and to Babcock and Wilcox, will my hon. Friend press upon his right hon. Friend the imperative nature of getting the Drax B order through as quickly as possible? Will he also bear in mind that only a few short months ago the SNP, which is now speaking weasel words in favour of the workers in Babcock and Wilcox, was asking for a cut-back in the electricity generating programme, which would plunge my local factory into total redundancy?

My hon. Friend has again hit the nail on the head. I shall certainly draw his remarks to the attention of my right hon. Friend. We intend to produce a report to the House as soon as we possibly can, but I ask hon. Members to recognise that very extensive consultations have to be undertaken. There are many interests involved and we want to get it right.

Air Fares


asked the Secretary of State for Trade what control he exercises over the level of air fares in connection with International Civil Aviation Organisation obligations.

Membership of the International Civil Aviation Organisation places no obligations on the Government with respect to the level of air fares.

Is the Minister telling the House that he has absolutely no say in the setting of air fares? Will he tell us what particular steps he has taken to do something about the excessively high level of fares in Western Europe? Has he suggested to his colleagues in the Council of Ministers that European rates should be declared a cabotage route?

The Air Service Agreement with other countries gives the Governments concerned the right to control air fares on the services they cover. Fares are normally agreed between IATA and submitted for approval to both sides. If either Government is dissatisfied, the matter is settled by negotiation. The question of European fares is under review in Europe. As the hon. Gentleman well knows, the CAA has recently given close attention to this, and I am awaiting its report.

Civil Aviation (Bermuda Agreement)


asked the Secretary of State for Trade what further progress has been made on renegotiating the Bermuda Agreement.

The fourth round of negotiations for a new Air Services Agreement was held in London from 28th February to 11th March. Some progress was made towards agreement on the methods of regulating capacity on North Atlantic services and establishing tariffs. The negotiations will be resumed in Washington on 28th March.

Is it not the case that the Americans have still absolutely no intention of restricting the activities of their airlines to a policy of single designation? What is the Government's policy with regard to regulation as opposed to competition?

The Government are in favour of competition, but not by means of putting such grossly excessive capacity on the North Atlantic that it means a gross waste of fuel at a time when energy conservation is important and leads to excess fares paid by customers travelling over the North Atlantic. It is not true to say that the United States has entirely ruled out the idea of single designation. What we are concerned with is a system of capacity control. In the last negotiations the United States made certain proposals in this regard. We are now negotiating with the United States, and I am sure that the hon. Gentleman would not wish me to reveal the whole of our negotiating position.

Within the concept of capacity control, will the Minister consider introducing regulations for the control of air freight and passenger charter flights?

We have, of course, considered whether charter should come within the renegotiation. The present view of both parties is that it should not, althugh charters are closely connected with services across the North Atlantic. That is the basis upon which we are negotiating at the moment and it seems more convenient to both sides. We want a memorandum of understanding with the United States to govern the operation of charters, and I think that that is better done outside these negotiations.

As the United States Government have already stated that they do not have the authority to stop aircraft in certain circumstances landing within the United States, is the right hon. Gentleman satisfied that they are in a position of authority to sign such an agreement?

That is a very interesting question which we shall have to discuss during the negotiations. We have had many disagreements with the United States Government on the interpretation of the Bermuda Agreement. One of the reasons why we wish to renegotiate the agreement is so that we can have an agreement that both sides understand and which is actually operated. We believe that there are cases where the United States has not operated the Bermuda Agreement. The landing rights of Concorde at New York are one example.

Arab Boycott


asked the Secretary of State for Trade whether he will take measures to deny Government support and facilities for various kinds of trade transactions in order to combat the discriminatory effects of the Arab trade boycott.

My Department and the British Overseas Trade Board will continue to give advice and assistance to British exporters to the markets of the Middle East.

Is the Secretary of State aware that the Government's lack of action has contrasted very unfavourably with that of other Gov1ernments in taking positive action against the boycott, against which they have expressed positive disapproval?

Our position in practice is the same as that of other Governments. We have indicated that we oppose and deplore the boycott, which lacks international authority. We have also said that it must be left to the decision of individual companies how they react in particular situations, although we give advice. In practice, our position is the same as that of our partners in the European Community and other Governments.

Is my right hon. Friend aware that the authentications by the Government of boycott documents is regarded as a gross offence to Israel and those concerned with free trade? Will he reconsider this practice with the Foreign Secretary, who has openly condemned the Arab trade boycott?

As my hon. and learned Friend knows, this is a question for my right hon. Friend the Secretary of State for Foreign Affairs. It has been explained by Ministers in that Department, however, that what is authenticated is the signature of notaries.

Is the right hon. Gentleman aware that the United States Government and the Government of Canada and their Departments of Trade have come out forcibly against the concept of a boycott against the interests of international trade? Surely he should be seriously considering bringing legislation in this country into line with that proposed by the United States and Canada.

We, too, have expressed our opposition to the boycott. I am examining what the United States is doing. It has further proposals for legislation which may be brought before Congress. As far as I am able to say at the moment, the practical effect of the present United States position is that it leaves to individual companies their own decisions as to how they react in the situation they are faced with. The practical effect, therefore, seems to be the same as the practical effect of our policy. If there are changes, we shall observe them.

What advice is the right hon. Gentleman giving to industries for which his Department is the sponsoring Ministry? Is he telling them to make up their own minds, or is he telling them to take the advice which the Government are giving and not give in to boycotts?

We give private advice on this matter to companies which ask us for it so that they may be aware of the nature of the problems known to us. A fact which is relevant in this context is that in 1976 our exports to Israel, I am glad to say, went up very substantially at a time when imports by Israel were stable or declining. In that respect, we have a good record in our trade with Israel. That is perhaps one measure by which our policy can be considered.

Industrial Democracy


asked the Secretary of State for Trade what consultations he has so far held on the Bullock Report; and with what results.


asked the Secretary of State for Trade what consultations he has had with the CBI or other employers' associations on the recommendations of the Bullock Committee; and if he will make a statement.

I have had discussions with the CBI and the British Institute of Management. I have also received the views of a number of other organisations. It is too soon to talk about results.

In his discussions with the CBI, did not the right hon. Gentleman realise that the CBI was implacably opposed to the majority report? If his earnest to work with the private sector means anything at all, could he not make a gesture and say that the Government have now decided to drop the whole proposal?

No, I will not make that gesture. Advances in industrial democracy will be of value to industry. I am aware that the CBI is implacably opposed to the majority report. It has made that perfectly clear. Nevertheless, very useful discussions with the CBI are currently going on, and the Government are committed to introducing legislative proposals on this subject by the summer.

Since the Government apparently have abandoned the majority proposals of Bullock, will they now put in its place the whole of the Liberal Party's policy for participation, and are we to assume that the Prime Minister will announce on Wednesday that this is the new policy of the Government?

At any rate, the hon. Gentleman concedes to the Liberal Party that it has a policy on participation. That is more than he can claim for his own party.

Is my right hon. Friend aware that in no sense can there be any political democracy until there is some form of economic democracy, that at least the Bullock Report is moving in that direction, and that it should be looked upon benignly by the Government?

We are trying in this area to get a consensus about the way in which industrial democracy shall be advanced in this country. That is the process going on in Europe. We believe that this country cannot dissociate itself from that process. That is why in my discussions I am trying to seek a consensus about a basis on which to proceed.

Laker Airways Skytrain


asked the Secretary of State for Trade what progress he has made in bringing the United States of America to accept Skytrain services as part of the Bermuda Agreement.

On 18th February our Embassy in Washington formally asked the United States Government to issue an operating permit to Laker, in accordance with the Bermuda Agreement. However, as I informed the House on 14th February 1977, I envisage negotiating a special arrangement with the United States to cover the operation of Sky-train instead of including it in the new Air Services Agreement.

Does the right hon. Gentleman accept the view held in some quarters that the apparent lethargy by his Department springs in part from its recent defeat by Mr. Laker?

The hon. Gentleman's accusation is unjustified. I made an announcement in the House on 14th February. On 18th February we made representations to the American Government asking them to issue a permit so that the Laker Skytrain could operate. The CAB has now asked Mr. Laker for further information. It is our wish to get the Laker Skytrain into the United States, and we shall exert all necessary pressure to that end.

Has there yet been any indication that an application for a licence will be made by an American counterpart of the Laker Skytrain?

Not yet. But obviously, if the United States Government indicate to us a wish to discuss that matter, we shall ourselves be ready to discuss it with them.

Motor Vehicle Headlamp Bulbs


asked the Secretary of State for Trade how many light bulbs of the type used in motor car headlamps were imported into the United Kingdom during each of the past four years.

Imports of all vehicle bulbs not exceeding 28 volts were 22 million, 28 million, 34 million and 49 million respectively for the four years to 1976.

Does my hon. Friend realise that the importation of these bulbs is doing great harm to companies in this country? Is he aware that these companies are saying that the cost of materials is equal to, if not greater than, the cost of these imported bulbs? Is not that dumping? Will my hon. Friend do something about the quality of these bulbs by letting the public know that they are very much below the standard of bulbs manufactured in this country?

That last point is a matter for my right hon. Friend the Secretary of State for Transport. My hon. Friend asked me about dumped bulbs. The Lighting Industry Federation submitted an anti-dumping application to us last year, but it withdrew it a couple of months ago because it could not provide domestic prices for comparison for more than a few of the 200 different types of bulbs imported. We are therefore examining the possibilities either of operating through the Commission to seek price and quantitative action from the Eastern bloc suppliers or of across-the-board import restrictions for all suppliers. I hope that one or other of these routes will he successful.



asked the Secretary of State for Trade what are the latest figures for import and export of steel.

In the 12 months ending February this year, 4 million metric tons of ingots, semi-finished and finished steel were imported and 3·6 million metric tons exported.

Does my hon. Friend agree that the figure for imports is incomprehensible to many people, given that we are cutting back on production? If this is due to the cyclical production of steel, does not my hon. Friend agree that we should be making investment now? In that event, will he have a word with British Steel at Scunthorpe so that it might put forward plans for increasing blast furnace capacity there?

The question of imports is undoubtedly affected by the fact that customers were lost when the British Steel Corporation could not meet the demand in 1974 during the after-effects of the three-day week. [Interruption.] Hon. Gentlemen may laugh, but it is a fact which their business friends realise. Once customers are lost to cheap imports, it is very difficult to get them back. Opposition Members may try to conceal their embarrassment about the disaster of two years ago, but the effects of it are still being felt. We are encouraging the British Steel Corporation to increase investment as a result of the funds that we are making available both for investment and for stocking.

Coming back to something rather more recent than the three-day week, is the Minister satisfied that the Japanese are following the voluntary restraint on exports of steel agreed with Britain and other EEC countries in November? If he is not satisfied, what action does he intend to take?

In respect of special steels, we are having discussions with the Japanese in Tokyo on the 28th and 29th of this month. In regard to high speed steel the Japanese have generally kept to the forecast, but on tool steels and stainless steels there is some dispute. On bulk steels, I draw attention to the fact that we made an announcement on 14th March that we intend to investigate the Japanese light sections and flats.

Will the Minister take note of the deep concern that is felt in all steel areas, including Sheffield, about imports of steel? Will he accept that at the new Thrybergh Mill near Rotherham recently when proper investment took place—which did not happen under the Conservative Party—a world record for production of steel was achieved?

Business Of The House

The Lord President of the Council and Leader of the House of Commons
(Mr. Michael Foot)

With permission, I wish to make a statement about the rearrangement of business.

At the end on Tuesday, following the opening of the defence debate, the motion on financial assistance to the Meriden Motor Cycle Co-operative.

On Wednesday, debate on the Opposition censure motion.

On Thursday, Lords amendments to the Social Security (Miscellaneous Provisions) Bill, motion on the Family Income Supplements (Compuutation) Regulations and motions on the European Communities (Definition of Treaties) Orders. As already announced, the Chairman of Ways and Means has opposed Private Business for consideration at 7 o'clock.

On Monday 28th March, conclusion of the debate on the Defence Estimates.

Will the Leader of the House indicate upon what motion the debate on the defence White Paper will take place tomorrow?

The debate will open tomorrow and conclude next Monday. Before then we shall have put down a motion—[interruption.]—we shall have put down a motion in plenty of time for the Opposition to make up their minds by how much they wish to increase public expenditure in this field.

We have not yet tabled a motion but there will be plenty of time for the Opposition to decide by how much they wish to increase public expenditure.

Will the Leader of the House indicate whether the motion will be for the Adjournment of the House or will it be a substantive motion on the defence White Paper?

As I have already indicated, the right hon. Gentleman will have a full opportunity to tell the country by how much his party will increase public expenditure on defence.

Can my right hon. Friend suggest where the overwhelming majority of Liberal Members are? Is their absence of any significance. Are they in any particular place?

On Wednesday's business, can the Leader of the House reassure us, and put the nation out of its misery, by telling us that Labour Members will be voting on this matter?

Will my right hon. Friend accept that we appreciate the Opposition spokesman realising that we shall decide which motions we debate next week?

Let us proceed to the debate on Wednesday, and I am sure that it will then be satisfactory to proceed to the business next week.

Does the Leader of the House appreciate that the Tories' tears on censure are of the nature of crocodile tears? It was only because the Scottish National Party put up two Tellers last Thursday that—

Will the Leader of the House ensure that before we begin the debate tomorrow we know what motion we are speaking upon?

I am sure that the hon. Member will be capable of making a speech whether there is a motion down or not.

Will the Lord President answer the question put by my right hon. Friend the Member for Cambridgeshire (Mr. Pym)? Upon what motion will tomorrow's debate take place, and does the Lord President intend that the Government will put down a motion on defence?

I do not think that the House should be worried. There will be the first day's debate tomorrow— [HON. MEMBERS: "On what?"]—and in plenty of time for Monday, when the House will wish to reach a conclusion on the matter, there will be a motion on the Order Paper.

Will the Leader of the House explain why he is not putting a motion down tomorrow?

The right hon. Gentleman can appreciate the situation perfectly well. There is a normal practice in this House whereby when there is a two-day debate on these matters, the Division takes place on the second day. The motion will be put down in plenty of time for hon. Members to put down amendments to it if they wish to do so.

I must press the Leader of the House. It is intolerable to start a two-day debate without a motion in front of us. Surely it is not unreasonable, 24 hours beforehand, to know the motion on which we shall be voting next Monday. In a multi-party Parliament I am sure that the minor parties at least will require that much of the Government.

It is perfectly simple to debate the matter in the way in which I have indicated. The House will reach a conclusion on Monday in the way I have described.

On a point of order, Mr. Speaker. The Lord President has come here to make a statement on tomorrow's business. Should he not tell us on what motion tomorrow's debate will take place?

That is not a point of order for me. The Leader of the House decides such matters.

On a point of order, Mr. Speaker. How is it that if there is no motion, the subject of the debate can be confined to defence? If there is no motion surely it is open to the House to talk on all matters of importance?

Statutory Instruments

We shall now take the motion on Statutory Instruments in the name of the right hon. Gentleman the Leader of the House. The Question is—

It is customary to wait until I have finished before hon. Gentlemen raise points of order.


That the Health Services Board (Deputies) Regulations 1977 (S.I., 1977, No. 323) be referred to a Standing Committee on Statutory Instruments, &c. — [Mr. Foot.]

Business Of The House

On a point of order, Mr. Speaker. If I may refer to your previous remarks, may I take it that you have some cognisance, which is denied to the rest of us, of what is in the motion? You said that when you saw the motion you would give your ruling whether it would be possible to raise matters other than defence. May we take it that you know more about the subject than we do?

What I said was quite clear. I said "when" I saw it. I do not know any more than the rest of the House on this matter.

I hope you will agree that it is a genuine point of order, Mr. Speaker. The right hon. Gentleman the Leader of the House has given the impression that there will not be a motion before the House tomorrow. All we are trying to find out is whether, if there is not to be a motion before the House, you can or cannot guide us today or tomorrow.

If the Liberal Party does not mind, I shall fall back on a Liberal saying. We must wait and see.

Orders Of The Day

Redundancy Rebates Bill

Order for Second Reading read.

3.42 p.m.

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

Let me say frankly at the outset that this Bill is a consequence of the defeat on Second Reading on 7th February of the Reduction of Redundancy Rebates Bill. In doing so, I am telling the House nothing of which it is not already fully aware, but I want to make it quite clear that I am not going to try to be coy with the House or be other than candid and open about our purpose.

Having said that, let me also make it clear that this is not a rehash of the earlier Bill. That Bill had the simple purpose, as I explained on 7th February, of reducing employers' rebates from the Redundancy Fund from 50 per cent. to 40 per cent.

This Bill, of itself, does not reduce the rebate at all. It is quite different in concept since it enables the rebate to be varied—varied up or down. I shall not mislead the House, let me hasten to add, about our early intention—and I shall come to that in a few minutes. I repeat that I want to be candid and open about our intention. But I believe that the formula on which this Bill is based is not only different but is a better approach than the earlier one. Let me say why that is the case and why it may be more attractive, or perhaps less repugnant, to hon. Gentlemen opposite.

This is not the first time that a Government have sought to vary the rebate from that provided for in the 1966 Act— and I am sure it will not be the last, if not least because hon. Gentlemen opposite, it I understand their attitude, would like to see it varied upwards, if not now, perhaps at some future time. Whether the best way to do so is through primary legislation— with all that accompanies it, not least the demand on Parilament—is open to question. But notwithstanding the cautious approach that all of us should have when confronted with enabling legislation, I think we should now recognise the need for flexibility in this matter—and equally recognise that it is a flexibility better exercised by order rather than by the sometimes long and cumbrous procedures entailed by a Bill.

Furthermore, I am sure the whole House will hope that the circumstances which have made necessary a reduction in the rebate will prove to be of short duration. No one will be more pleased than I to see a return to a more generous level of rebate. When those changed circumstances arise, I am sure that hon. Gentlemen opposite will join me and my right hon. Friend in wishing to be able to restore higher levels of rebate more speedily than by passing a Bill through Parliament. I regret that we did not go for an enabling Bill in the first place— not just because we lost the vote of 7th February, but because it seems to make better sense.

I should now like to say something about the Bill itself. It is intended to enable rebate to be varied between one of 10 different rates over the range of 35 per cent. at the bottom level to 80 per cent. at the upper level. At no time would it be possible under the proposed measure to introduce rebate at the rate of 40 per cent. The House has made its views clear and we must respect them. Nevertheless, we have thought it right to make provision for a near alternative.

The Minister said that the precise rates laid down in the earlier Bill are not included in this legislation and added that there was an alternative. What are the Government's intentions? Obviously they are introducing this measure with the intention of using it.

I shall come to that point a little later in my speech. I have already said that I want to be frank and candid about our intentions. I am hesitant to inflict tedious explanations on the House. If I thought that we all understood the way in which the Bill will operate, I should be quite happy to say no more on the subject. But at first sight the Bill is not particularly easy to understand, and some explanation might be helpful.

A redundancy payment is calculated at three different rates according to age and length of service. The highest rate is one-and-a-half week's pay for each complete year of service over the age of 41. The second, or middle, rate is one week's pay for each year of service below that age, but after age 22. The third and lowest rate applies to service from age 18 to 21.

The method chosen for calculating rebate for the 1965 Act was to set down three different fractions of a week's pay, each of which corresponded to one of the rates at which entitlement to a redundancy payment accrued. All this may seem complicated, but in practice it is relatively easy. For example, the rebate payable in respect of service which counts at the rate of one-and-a-half week's pay is three-quarters of a week's pay. Similarly, the rebate payable against the two lower entitlements of one week's pay and half a week's pay are one-half and one-quarter of a week's pay respectively.

The same principles apply to the sets of fractions set out in the schedule to the Bill. Accordingly, the first set of fractions of 21/40ths, 7/20ths and 7/40ths equate to a flat rebate rate of 35 per cent. The second set of fractions produce a rebate of 41 per cent. and the third set of 45 per cent. Thereafter, each set of fractions increases the rebate rate by 5 per cent. until it reaches a maximum of 80 per cent. at the top.

The two limits have been carefully chosen. A figure of 35 per cent. represents the lowest point to which rebate can be reduced without further legislation. The 80 per cent. maximum is broadly equivalent to the rebate of one and one-sixth week's pay, or very roughly 78 per cent., which was payable under the original 1965 provisions in respect of the one-and-a-half week's pay entitlement.

What emerges from all the seeming complexity is really a simple system of varying rebate. It will be unnecessary to bother employers with the detailed processes leading up to the overall rebate. In practice, all they will need to know in order to claim their full entitlement is the percentage rate to be applied.

As I said at the outset, this is an enabling Bill. One point to which we gave the most careful consideration was whether the powers should be exercised subject to the affirmative procedure, or whether it was sufficient to seek to adopt the negative resolution procedure. We came to the conclusion that adequate parliamentary control can be exercised by making the order subject to annulment by resolution of either House.

There is nothing devious about this. In no sense should it be taken to imply a hope on the part of the Government that it may be possible to slip through an order without anybody noticing. Advance publicity has to be given to changes in rebate. Employers need to know their entitlement. Even therefore if an order is overlooked on being laid, its existence cannot escape notice for more than a few days at the most, thus giving ample opportunity for objections to be raised as necessary.

The Bill will also amend the Northern Ireland legislation. As I explained to the House on the 7th February, Northern Ireland is not covered directly by the Redundancy Payments Act 1965, but by parity legislation contained in the Contract of Employment and Redundancy Payments Act (Northern Ireland) 1965. Given that in practice the two schemes are operated as a single system, Clause 2 seeks to short circuit the lengthy Order in Council procedures by providing a similar enabling power for exercise in Northern Ireland.

In respect of Northern Ireland an order will never come before the House.

That is true, but I can give the House the assurance that we shall proceed on strict parity lines. Therefore, when an order that applies to Great Britain is laid before the House, hon. Members representing constituencies in Northern Ireland will have the opportunity to express any objections and views.

There are two points that follow from the right hon. Gentleman's intervention. The first is that the enabling power will be vested in the Department itself rather than in the Minister. I understand that that follows convention for which there is well-established precedent. The second point has already been dealt with in my reply to the intervention. I assure the House that use of the powers in the way that I have described—on the basis of maintaining strict parity—should avoid any absurdities that could arise if different rates of rebate were applied over any length of time.

Having dealt with the mechanical details of the Bill, now turn to the question that was raised by the hon. Member for Basingstoke (Mr. Mitchell) about the way in which the Bill will be used.

Initially, we propose to make an order reducing rebate to 41 per cent. This will have the direct effect of reducing the public sector borrowing requirement. Put very simply, rebates are paid from the Redundancy Fund. By definition these payments are public expenditure. If the Fund is in deficit it has to be financed by borrowing from the National Loans Fund which involves a direct charge on public funds by any definition. On the other hand, if it is in surplus, that has the effect of reducing the public sector borrowing requirement through being invested in Treasury Bills or stock. There can be no argument about this. It is a matter of fact.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) was interviewed on Radio 4 on the morning after the debate on the earlier Bill. I hope that the transcript does not misquote him. He said—when challenged about the Opposition's attitude on public expenditure and when reminded that his party has repeatedly said that the Government should cut public expenditure—that the Bill would not cut public expenditure. He said that the money involved was in the Redundancy Fund and that all the money in the Fund comes from industry — and I do not challenge that. He also said that the money in the Fund was all used for making redundancy payments and could not be used for anything else.

In fact, as I have just described, when the Fund is in surplus, it is committed by the provisions of the Redundancy Payments Act 1965, Section 26(3), to use that money as directed by the National Loan Commissioners and to invest it in Government stock. To that extent, it does offset the public sector borrowing requirement. Equally, when the Fund is in deficit, that deficit is incurred against the public sector borrowing requirement.

The hon. Member for Brentford and Isleworth also said that Ministers had made no attempt during the debate, to justify the Bill on the ground of public expenditure. I am sure that the hon. Gentleman did not intend to do us an injustice, but that was the main burden of my speech. In a brief speech, I emphasised that point at least four or five times.

When I said that the money could not be used for any other purpose, I was paraphrasing what was said by the Minister in introducing the Bill on 26th April 1965.

No doubt the hon. Gentleman has had an opportunity since then to look at the 1965 Act which says that any moneys forming part of the Fund may from time to time be paid over to the National Debt Commissioners and invested by them, in accordance with such directions as may be given by the Treasury, in such securities as are authorised by Parliament, as investments for savings banks funds. It has been modified since by the Social Security Act 1973.

Is that not a direct contradiction of the economic policy of the Chancellor who has said that his purpose is to try to attract more investment and funds into industry? The Minister is now telling the House that the Government will take money out of industry and put it back into the hands of the Treasury. That is in direct opposition to the Chancellor's policy.

I understood that the Opposition want reductions in public expenditure and that they are critical of the Government for not reducing it adequately. This is a reduction in public expenditure. I was replying to the point that was made by the hon. Member for Brentford and Isleworth in a radio interview when he said that we had not made out a case for the Bill on the ground of public expenditure.

Is the Minister not aware that last week there was a sizeable majority against the Government's public expenditure White Paper? Can the Minister tell us what the economic effect of the Bill will be? This question was raised when the subject was debated previously and the hon. Gentleman suggested that it would be £80 million per annum. Can he say whether that figure will be changed as a result of what he intends to do today?

I shall answer at least a part of that point in a moment. This is an enabling Bill and its effect will depend on the terms of the order that will be laid before the House and on what the House decides to do in respect of that order.

I am sorry to press the point, but the hon. Gentleman has been kind enough to explain the effect of these different permutations in the table. Surely it is possible to give permutations for the economic effect of each level set by the table.

If the hon. Gentleman will let me continue, I may be able to satisfy him on at least part of his question.

It has been stated in the House on a number of occasions that the Redundancy Fund is intended to be self-supporting. There is nothing in a proposed reduction of rebate which detracts from this principle in any way. At the moment, the Fund is in surplus to the extent of approximately £7 million. If rebate is reduced naturally we expect that the surplus will increase. This increase will have a direct beneficial effect on the public sector borrowing requirement. Admittedly if that surplus is allowed to grow unreasonably, it could give rise to problems in the future.

But machinery exists for adjustment and it can be used as and when necessary. Either the Fund's income can be reduced by cutting the allocation which is made front the employer's share of class 1 earnings-related contributions — at present 0·2 per cent. — or alternatively, the rate of rebate can be increased. Of these two possibilities, it is the second that could be done most easily and quickly under the provisions of the Bill. I have already put the case for being able to make future changes with the minimum of delay according to the requirements of the economy and the state of the Redundancy Fund.

There is also the question whether the Government are justified in looking to employers for a further contribution intended to play a relatively modest part in a vitally important overall package. Looked at in isolation the savings may appear small. For example, on the basis of the best estimates we have been able to make for 1977–78, each 1 per cent. of rebate is the equivalent of approximately £1·8 million on the Fund for a full year.

It may help the hon. Member opposite who put a point to me if I quote a full year saving for 41 per cent. rebate. The answer is £16·2 million. To put it another way, expenditure from the Fund will be reduced by approximately £1·35 million a month—and I hope hon. Members opposite will find that helpful. The actual amount saved during the coming financial year must depend of course on how soon it is possible to reduce the rebate and on how quickly we can introduce the order, have it approved by the House and made effective.

These figures may seem small when compared to the £1,000 million July package. Taken by themselves they may not seem worth bothering about, but that would be missing the whole point of the exercise. The package announced by the Chancellor last July is fundamental to the healthy economy of the country. It went much wider than simply cutting expenditure and reducing the public sector borrowing requirement. Its declared aim was the deliberate encouragement of an upturn in the economy. It was also spread to do the least damage bearing in mind the need to preserve rightly important social and economic priorities. Directly or indirectly, there can be very few people in this country who have not been required to make a contribution in some form or other, however small, to the stringent measures dictated by our economic circumstances.

We believe it not unreasonable to ask employers to make an additional contribution within the context of the package as a whole. I appreciate that some employers may feel the impact more harshly than others. Even so a sense of proportion must be retained. For example, the maximum additional cost to an employer of a reduction in rebate to 41 per cent. will be something less than three weeks' pay for each employee made redundant. On average, the amount will be much smaller, in most cases a week's pay or less. Additional costs of this order should not be difficult to assimilate.

As I made clear at the outset, this is an enabling Bill. It will not reduce rebate, but, given all the circumstances which surround its introduction, it would have been wrong for me to attempt to conceal in any way the immediate use to which we propose it should be put on enactment. On this occasion, and I freely acknowledge the stimulus to clearer thinking which was given by the House through its rejection of an earlier Bill, we have produced a more useful and flexible instrument for the administration of the statutory scheme. I think that the Bill achieves this object. I have no hesitation in asking for the support of the House for this measure.

4.2 p.m.

Six weeks ago the House rejected the Second Reading of the Reduction of Redundancy Rebates Bill by 130 votes to 129. I am not sure whether it was entirely the eloquence and arguments that we deployed from the Opposition side of the House, or the fact that the Prime Minister and the Chancellor of the Exchequer were absent unpaired, that led to the defeat, but for the first time since 1888 a Government were defeated on a Second Reading.

Now the Government have brought in another Bill and, although less obnoxious in form in certain respects, it is perhaps just as poisonous in effect. The question that we posed last time was "Why have it at all? "That question remains unanswered.

The Bill has not been asked for by Jack Jones, nor by Tom Jackson, nor any of the other puff merchants for the Labour Party—I am thinking of their comments on radio recently. Certainly the CBI does not want it. Who does want it?

Evidently the Labour Party does not want it. Has my hon. Friend not noticed the serried ranks on the Benches opposite?

I imagine that Labour Members have other things to contemplate. We are not discussing unemployment, but perhaps many of them are contemplating the unemployment that will face them as a result of events later this week and next month.

The public expenditure arguments are the only arguments that the Minister tried to deploy, but what he said was fatuous. The words that I used in the radio broadcast were taken straight from what the then Minister of Labour, Mr. Gunter, said on Second Reading of the original Act:
"The Redundancy Fund itself will be quite separate from the National Insurance Fund and will be used solely to finance redundancy payments, not for any other purpose."— [Official Report, 26th April 1965; Vol. 711, c. 44.]
That is clear, and it is also clear that it was not intended that the legislation should be used as a back-door way of collecting revenue from industry.

The Minister of State said that employers had to make a contribution as a result of the package, and presumably the contribution that he had in mind was that they should get less rebate while continuing to pay the levy to the Redundancy Fund at the previous level. I understand that the difference is the equivalent of 0·03 per cent. If the object of the Bill is to levy this charge, equivalent to 0·03 per cent. more on the general levy than the level of rebate justifies, it is a nonsense in the context of a package which also imposed a payroll tax of 2 per cent.

The Minister seems to have forgotten that the package included a proposal for making a surcharge of 2 per cent. on national insurance contributions. That was asking employers to make a contribution with a vengeance. It was sucking out £1 billion from the resources available to industry. His suggestion that 0·03 per cent. is significant in that context is fatuous and absurd.

There is no public expenditure case for the Bill except on what I described on Second Reading of the former Bill as a:
"wholly pernickety, bureaucratic, legalistic interpretation".—[Official Report, 7th February 1977; Vol. 925, c. 1132.]
If that is the cap that the Minister of State wishes to wear, I shall not deny him its use.

Perhaps I have not understood the hon. Gentleman's argument, but is he saying that the amount is insignificant, while accepting that it still counts against public expenditure, or is he persisting with the line that the money cannot and should not be counted against public expenditure? He should remember that during the 1970– 74 Conservative Government the Department of Employment and the Treasury considered the income and outgoings of the Redundancy Fund to be debits or credits against public expenditure.

I made my point clearly in my speech on the last Bill and in the extract from it that I have just quoted. Perhaps the Minister was so busy thinking up his intervention that he did not listen to what I was saying.

I accept that public expenditure Is involved if one takes the most narrow, pernickety, legalistic and bureaucratic interpretation, but if we look at this matter in the context of the effect on industry of the measures announced recently, together with the 2 per cent. surcharge, the Bill makes no sense.

The Government are facing a great political crisis. They are a divided, demoralised and discredited Administration who have run out of steam. The dry rot of Socialism is going through the fabric of their whole being. Yet they come to the House, presumably to rally the Labour faithful—just look at the empty spaces behind the Minister—with this insignificant irrelevance of a Bill.

The Leader of the House also gives priority to this Bill. We could be debating the confidence motion today. The Leader of the House, presumably after consulting the Prime Minister, has decided that we should not debate that issue but that we should deal with this earth-shattering Redundancy Rebates Bill. Perhaps the reason is not the relative priorities, but that the Leader of the House and the Prime Minister want more time to try to cobble together some grubby and shady deal that will enable them to survive on Wednesday night.

We could have had a debate on unemployment or on the difficulties confronting teenagers who have not got jobs. If today had been allocated as a Supply Day, issues of that kind could have been debated.

We could have debated the way in which the Government are imposing by diktat a substantial increase in the price of gas. Is it not interesting that the Government cannot make a Supply Day available to the Opposition but can find time for this insignificant and irrelevant little piece of legislation?

I do not think that people outside wholly understand how the agenda for this place works. On most days the agenda is determined by the Government. The Opposition have the opportunity of determining what will be discussed only khen a Supply Day is made available to them, or in the very exceptional circumstances of putting down a censure motion, or something of that kind.

Therefore, the Government prefer to use the time of Parliament to debate this kind of issue rather than some of the more substantial issues which worry many people. If they have not the guts to put important matters before the House, they should at least allow the Opposition a Supply Day so that they can do so.

The Leader of the House is strangulating Parliamentary debate on issues by bringing forward such Bills and clogging up the Order Paper with this kind of measure. We see both the Government and the Department of Employment giving this Bill priority. That fact, I suggest, demonstrates their manifest unfitness to remain in charge of the nation's affairs.

The Bill underlines and lends emphasis to the Government's shortcomings. I shall explain why. The defeated Bill was explicit. It followed precedent as well, because changes had been made in rebates. Therefore, the previous Bill, which the House defeated, at least had those virtues. However, this Bill is nonspecific and is an enabling measure. I suppose that all Governments have sought such legislation. They ask the House for broad general powers. I wholly accept that Conservative Governments have done that in the past. But we should recognise the dangers of enabling legislation.

The Minister of State said that it was flexible, that it did not need to go through the cumbersome procedure of a debate in this House. What does it do? It enhances the power of the Executive and diminishes the rôle and power of Parliament.

The changes proposed by the Government in the Reduction of Redundancy Payments Bill were subject to debate and amendment in Committee. If Members wanted to argue against the 40 per cent. or 41 per cent. which is now proposed, they had the opportunity to do so at the time and in the circumstances in which a change was proposed. But hon. Members will now be given no chance other than accepting or rejecting what the Government put before them. The use of the order procedure means that no amendments can be taken. Therefore, that gives an advantage to the Executive. It is certainly flexible from the Executive's point of view. It is not cumbersome, because the Government do not have to argue their case in detail before Parliament and have it undergo the scrutiny which takes place in Committee.

In my judgment that typifies the Socialist Government's approach to legislation. They prefer enabling legislation. It is much easier to roll it through. Indeed, leading Socialist thinkers have often argued that the right course for an incoming Socialist Government is to have one simple debating Bill and then do practically what they like by order subsequently.

This Bill covers three financial elements. First, there is the maximum level of pay for calculating entitlement. That was covered by Schedule 1 of the original Act and was amended in the Employment Protection Act. That enabled the Government to change the maximum level of pay to be taken into account in determining the amount of redundancy payments to which an individual was entitled. There was the power for changes to be made by order, but by affirmative order. It was necessary for the Government to get a resolution of both Houses of Parliament to do that.

The second financial part of the original legislation was the amount of charge to be levied across industry. That was Section 27 of the 1965 Act. Again, that was amended and new provisions were written into the Social Security Act 1973— Section 122. But again that carried forward the idea that changes would be made by order and that the affirmation of both Houses would be required.

Now I turn to the percentage of rebate which would go to the firms concerned. The figure was written into the 1965 legislation, which was debated and amended in Committee. In 1969 the then Government asked for a change. Six weeks ago the Government asked for a change. They sought by legislation to modify the amount of rebate. Now we have the Government seeking this enabling legislation, which will not follow the affirmative procedure which was followed for the previous legislation where changes were envisaged from the start—obviously less important changes than the change in the percentage of the rebate which in 1969 was held to be changed only as a result of legislation. Now the Government are trying to achieve that change by way of the negative procedure. That is entirely wrong.

In addition, there is the point made by my right hon. Friend the Member for Crosby (Mr. Page) that, while we, at any rate, can debate a Statutory Instrument which would apply a change in rebate for the United Kingdom, there would be no necessity for a similar debate in this House regarding Northern Ireland. That is a considerable change from the provisions of the original legislation and of the proposal which was before us six weeks ago.

It is typical of the Government that they should be so contemptuous of the rights of the House and of the rights and powers of Back Benchers that, having been defeated, they should come forward with a measure which takes power away from the House, which seeks to avoid the detailed discussions which would follow changes in the amount of the rebate, and which gives greater power to the Executive.

Of course the Bill itself is small and relatively unimportant, insignificant and irrelevant to our economic problems by itself, but I submit that it is highly significant and relevant if we look at how the issue has been handled by the Government. The truth is that the facts of parliamentary life at the moment prevent the Government from steam-rollering through Parliament their damaging devolution Bill and prevent them from even bringing before Parliament their doctrinaire direct labour proposals.

But we see the arrogance of the Socialists and of Socialist Ministers in the way in which they are putting this Bill before the House. Since Parliament has rejected the Bill when it was specific, they come forward with a broad enabling measure seeking to do by the negative procedure what has normally been done by amending legislation. It is in utter and total opposition to that arrogance, as well as in opposition to the Bill itself, that we shall vote tonight.

4.21 p.m.

Unlike my hon. Friend the Member for Brent-ford and Isleworth (Mr. Hayhoe), I do not object to this small Bill being discussed in the House now, because it raises a very important constitutional issue. The Minister of State, in his usual charming, courteous and persuasive way, put over what sounded like a modest and reasonable case. Who would have dreamt that in fact he was telling us that the House has already chucked out the Bill once and that, therefore, the Government will in future achieve its aim "under the counter".

The Minister of State is saying that the Government will not ask the House to approve the details of the scheme, but they will do it by order, and by a form of order that he attempted to justify, as so many Governments have in the past, by saying, "We must have flexibility in this matter," that is to say, the Executive must have flexibility. That merely means that the Executive want to go behind the House of Commons and cheat Parliament and the Back-Bench Members. I say that because it is well known that if subordinate legislation is subject to negative resolution only, it has little or no chance of being debated in the House. If subordinate legislation is merely subject to annulment, it comes to the House for debate only by the grace and favour of the "usual channels".

The Back Bencher has little or no chance of bringing a Prayer before the House these days. If he wishes to do so he has to go to the merits Committee—the Statutory Instrument Committee—which sits in the mornings and is very badly attended. There are no votes in such Committees. The Committee merely takes note of an order.

Let us suppose that a negative order is brought forward under Clause 1 of the Bill and an hon. Member puts down a Prayer for its annulment, so it is sent upstairs. An order under the Bill might increase the levy imposed on certain citizens, but when it goes upstairs the Committee may say only, that it has taken note of the order. This is not the right way to treat the House when discussing increases in levies that may be imposed on certain citizens.

Even if it is by affirmative order, it is difficult enough to cover all the issues in the one and half hours allowed for debating affirmative orders. But at least in that case we have a fixed one and a half hours, whereas with an order that is subject to annulment we cannot debate it after 11.30 p.m., and, if there have been two or three votes after ten o'clock, the debate will be cut down to perhaps three-quarters of an hour.

This endeavour to come before the House and say that the rate of rebate in redundancy payments shall be decided in this way in England, Wales and Scotland is cheating the House. It is impossible, even by an order that is subject to affirmative resolution, to amend the order or debate any amendment to it, and it is certainly impossible with an order that is subject to negative resolution.

The Minister of State said, perhaps by a slip of the tongue, that the order would require the approval of the House. But it will not do so if it is by negative resolution. An hon. Member might see the order on the Order Paper as having been laid before the House and might be quick enough to put down a Prayer to annul it. The Minister said that someone would see it on the Order Paper within a matter of days and put down a Prayer to annul it.

There is a convention that Departments should not make an order operate in less than 21 days from its being laid before the House, but how many orders disregard that convention at present? The 21-day convention is not fully observed, particularly in money orders that come before the House. If it were observed there might be some chance of annulling orders before they come into operation, but in practice that is not possible.

I come now to Clause 2, which deals with Northern Ireland. On the face of it, any order affecting Northern Ireland could be annulled by resolution of Parliament, but in fact under the Northern Ireland Act 1974, no subordinate legislation which is subject to the negative resolution procedure comes before this House at all.

Any subordinate legislation which needs the approval of Parliament is laid before us with the possibility of a Prayer to annul it. On the face of it, Clause 2 states that the order will require a negative resolution to annul it, but under the Northern Ireland Act 1974 that does not happen. This order for Northern Ireland is not even made by the Secretary of State. It is made by the Department of Manpower Services for Northern Ireland. It is possible, and has been done in the past, for such an order to be required to be made by the Secretary of State, in which case it comes before the House if an hon. Member puts down a Prayer against it. Why did not the Minister adopt that procedure? It is possible to do this under existing legislation, and has been done in recent legislation. He should have adopted that course in this case.

It is preposterous that, having lost the Bill on the first occasion, the Government should bring in another Bill before the House and say that, as they cannot get it through a full House, they will do it by negative resolution procedure, which it is almost impossible to debate on the Floor of the House. I hope that we shall divide against this Bill.

4.29 p.m.

I agree with the remarks of the right hon. Member for Crosby (Mr. Page) who has brought out some of the most important defects in the Bill. I find it quite astounding that the Government have not learned and have not listened to what was said in the debate on 7th February.

The Government do not command an obedient majority from their followers but have to seek the support of a majority of other hon. Members to sustain their legislation. Against that background they are going completely against that support in reintroducing the Bill in a sneaky and back-door way, as the Minister has done. I was amazed to hear the Minister of State, for whom I have a great regard, say that the rate is not exactly 40 per cent. as it was when the House turned down the Bill last time, but that it will be 41 per cent. That is unworthy of the Minister of State and of any Government who hope to command respect and, on occasions, support from anyone other than their own devoted and obedient followers. They cannot continue in that spirit and in that light, and that must add a certain piquancy to our discussions later this week. Clearly, unless the Government can show that they can learn the lesson of the views of the House, they have no right to remain in Government, and the sooner they are replaced the better.

At the beginning of the debate the question was posed of who wants the Bill. It seems slightly incongruous, in view of the figures which we have discussed on many occasions, that the Government should be straining so hard to get what the Minister of State now tells me will be about £ 16·2 million from the 41 per cent. of rebate. In a sense, the Government are going for the widow's mite. We have heard that it is not the Government who want the Bill. The Government have said that they regret having to bring the Bill before us. The Bill is certainly not wanted by the other parties in the House. They voted against the Government on the last occasion. One can assume only that the Bill is wanted by the IMF alone.

Following the Chancellor's package of measures last July, we are hearing a different tune from the Government. We are hearing how the Chancellor has £1 billion, £2 billion, or £3 billion— who knows exactly how much? We hear that he will lay this before us in eight days' time. That is the largesse which will be offered to the electorate in the forthcoming election campaign. But here we are arguing over a Bill which, although having been defeated, is reintroduced in substantally the same form and will produce £16·2 million. Once more, that does not seem to me to be the act of a Government who are taking account of the views of the House and of political realities.

The Minister said that the maximum cost to any employer would be three weeks' pay for each employee made redundant. I calculate that with some companies that could be between £200 and £250. That could mean a sizeable pay-out for a small company. Suppose that 10 or 20 people were made redundant in a small company. They would have to be paid out at a time when the company was least able to bear the expense. The Minister says that the expense would not be great, but the incidence of this tax— for that is what it is— comes when the company is already in difficulties.

There is an air of unreality about all this. The Minister cannot expect us to believe that this Bill will not adversely affect companies, particularly small companies. That arrangement demonstrates the saddest aspect of the lack of logic in the Minister's argument.

On Second Reading of the original Bill, the Minister was unable to give any extrapolation of the figures with a rising trend of unemployment. But unemployment in Scotland has increased by about 2,000 a week over the last three months, and figures from the Department of notifications under the Employment Protection Act seem to show that we are talking in terms of at least 1,000 a week for the next three months.

The House must be cautious of seeking to establish a correlation between the level of and number of redundancy payments and the level of unemployment. There is no clear correlation. For example, between 1975 and 1976 there was a significant rise in unemployment, and yet the rate of redundancy payments made in 1976 was significantly below that of 1975. I can make a forecast. The Government expect that in 1977 the number of redundancy rebate payments will be between 250,000 and 270,000, but it would be misleading to draw from that conclusions about the level of unemployment. There are so many factors involved that one cannot establish a clear correlation between the two.

I am sure that the Minister would not argue that there is no relationship at all between unemployment and redundancy. It would be interesting to know whether the Department has figures which show whether as a result of the Employment Protection Act, which defines the rights of work-people made redundant, there is a much clearer link between redundancy and unemployment than was hitherto thought to be the case. Perhaps the figures might reveal a pattern which will develop in the future.

No doubt the Minister, like other hon. Members, has been notified about potential redundancies in the construction and engineering industries. We are told that in Scotland Babcock and Wilcox may have up to 1,500 redundancies, with possibly another 550 in Standard Telephones and perhaps 2,000 to 3,000 in shipbuilding over the next six months. Redundancies are also expected in jute, steel and textiles.

The Scottish economy is facing a very serious situation. I hope that the Minister will not try to underestimate that situation and will not say that it is impossible to calculate what the effect of it on jobs will be. Of course, if the Government plan to contribute less, people in Scotland will have to pay more as the rate of redundancy there goes up. That will take more money out of the Scottish economy, money which will run down the bottomless sink in Whitehall to be squandered as so much money is squandered by Whitehall.

The Minister of State has not convinced me that the Bill is in any way suitable or appropriate. He has not convinced me that the Government have listened to the voice of the House on 7th February. I must therefore recommend my hon. Friends to oppose the Bill tonight.

4.38 p.m.

Until I listened to the Minister of State I was doubtful of the wisdom of my party in deciding to vote against the Bill. But the Minister of State's speech reminded me of a highly respectable figure in a Whitehall farce who is discovered with his trousers down as the curtain goes up on Act II, having been seen at the end of Act I with his hand in the till. My doubts about voting against the Bill are therefore evaporating very rapidly.

I am against the Bill not so much because it is the wrong way to cut Government expenditure. If I were pushed, I am sure that I could think of much worse days of doing that. Certainly the Government have managed to find some. I am against the Bill not solely because it is directly contrary to the Government's much-proclaimed industrial strategy. That strategy never was credible. The only credible form of industrial strategy for this country is to change Governments as quickly as possible.

The additional cost to the employer directly as a result of the Bill may very well prove critical. It may very well prove critical particularly in those industries and in those parts of the country where the Bill' will be most used. The hon. Member for Aberdeenshire, East (Mr. Henderson) put his finger on this very well, and I echo what he said also with regard to Wales. The effect of the Bill can only be to penalise those parts of the country which are already the worst hit by the problems arising from redundancy. This is a further load imposed on employers, who are already staggering under the impact of the surcharge on employers' contributions, who are already affected by the operations of measures such as the Employment Protection Act, by various other measures which the Government have enacted concerning trade unions, and also by., some of the consequences of legislation concerning equal opportunities.

As to the whole concept of shielding employees from the consequences of redundancy and of trying to ensure security of employment by legislation, the evidence seems to be accumulating that this complex of legislation is now not merely ineffective but beginning to become counter-productive. The concept of redundancy payments, like that of wage-related unemployment benefits and of employment protection, is all right at a time of industrial expansion. In a country such as the United Kingdom, where old industrial habits die hard, it is most important to induce employees to move out of declining firms and industries into growing firms and industries. It could very well be that measures such as these may be helpful in the context of getting people into the frame of mind in which they readily accept the idea of moving from one firm or industry to another.

At a time of declining opportunities and a contracting economy such measures reinforce' the downward spiral and make it more' difficult to move people from unproductive to productive employment. Many firms might be able to stage some kind of recovery if they could shed two or three employees and streamline their operations— those employees would go off elsewhere, and so on— but the impact of having to contribute to the Redundancy Fund and having to make an increased contribution to it under the Bill may have precisely the effect to which the hon. Member for Aberdeenshire, East has just referred. It may be critical in driving a small firm into bankruptcy.

Yesterday I was speaking to a meeting of the National Federation of Self-Employed. The self-employed are very much concerned by the effect that all these measures are having on them and on small businesses in inhibiting their growth and discouraging them from expanding and taking people into new jobs. As the representative of an area body badly affected by a sudden spurt in unemployment— caused very largely by the simultaneous failure or contraction of huge employers, such as the British Steel Corporation, Hawker Siddeley Aviation and Courtaulds— I am more conscious than any other hon. Member of the vital importance of enabling small firms to expand and of encouraging people to become self-employed.

The best way of securing a very rapid diminution in the unemployment figures is by concentrating on what can be done at the very bottom end with the very smallest businesses— the self-employed. The time has come, therefore, not just for tinkering with the existing measures for employment protection and redundancy but for taking a radically new look at the whole complex of legislation that is supposed to govern the creation or the preservation of employment.

It is no good looking to the present government for any such radical new look. The Government in these matters, if not in all others, are completely under the thumb of the unions. The unions themselves, alas, seem to be completely under the thumb of those whose thinking on these matters is totally arthritic.

I am sure that a number of hon. Members who have been in contact with trade union leaders recently have found welcome evidence of some individual trade union leaders thinking in bolder terms than others, but the plain fact is that such views are not effectively represented on the General Council of the Trades Union Congress, and show very little sign at present of making headway in the trade union movement.

I am very pleased with the observations just made on trade union leadership. Does the hon. Gentleman subscribe to the view, put from the Opposition Front Bench, that these leaders are puff merchants?

I am not quite sure what the Under-Secretary of State means. I was listening very carefully to my hon. Friend the Member for Brentford and Isle-worth (Mr. Hayhoe) and I did not hear him use that particular phrase.

I am making a very serious point. Despite the fact that certain trade union leaders are now well aware of the need for a very radical re-think of our employment policies, and of the fact that intelligent employment policies will produce a permanent increase in the level of employment in this country and a permanent reduction in the level of unemployment, such policies would now necessarily entail an increase in unemployment over the next couple of years. It is simply not possible to run away from this fact.

Whatever party is in power, it will have to accept increased unemployment figures for the next two years or more. The real question is whether at the end of those two years we shall have a permanent reduction in the level of unemployment, or whether, on the contrary, the temporary increase will turn out to be part of a permanent increase in unemployment.

By that acid test the Government have totally failed, because they are incapable of any fresh or original thought on the subject. The present Bill is merely an acceptance of the fact that we have a set of measures which is the most to which the trade union movement would allow the Government to assent. These measures are manifestly failing and have to be tinkered with and in some respects made worse.

Since the Minister of State has said nothing whatever to disabuse me of the belief that this minor measure will now make the Redundancy Payments Act itself a questionable piece of legislation, and make it slightly but significantly worse, I shall have little hesitation in voting against it.

4.49 p.m.

Last week we had government by abdication. This week we have government by subterfuge and deviousness.

On 7th February the Government sought to increase the employer's proportion of the cost of redundancy. The House of Commons said "No". Today we have a Bill to enable the Government to do exactly the same thing. Of course, there are two changes. First, the Bill permits the Government to do it by an order which will come up for approval in the House in the dead of night. The Government might expect to get it through when perhaps the House is thinly attended— not that it would be possible for the Labour Benches to be much more thinly attended than they are at the moment. The Government are taking this course in order to get through what they could not get through by their Bill lost in February.

I was interested to hear the Minister's comment that hon. Members might find this Bill more attractive than its predecessor. He said that he himself did. He said that this procedure would be better than the long and cumbersome procedures and pressures of the House. It means that the Government will be able to introduce legislation by order, approved, if time is found for discussion at all, in the dead of night. The hon. Gentleman is one of the nicest and kindest men in the Government, but I wonder whether he realises the implication of his statement. If the procedures and pressures of the House are a nuisance to a Government, is not that what democracy is about? Is not that what the House of Commons is here for? Is not the view he has expressed getting dangerously near to contempt of Parliament?

It will not be lost on hon. Members that if the procedure outlined by the Government in the Bill, which would enable them to do by order what they were unable to do by debate on the Floor of the House, is followed, such an order could not be amended. It could only be either overturned or not. Contrary to the terms of the Bill which the Government lost on 7th February, there would be no Committee stage for an order, and no opportunity to probe line by line and clause by clause with amendments seeking to change what the Government were proposing. There would be none of that. The House would be left with the straightforward choice of accepting an order or not, and that choice would be given mostly in the dead of night. In effect, therefore, this Bill, unlike its predecessor, would allow the Government to do by subterfuge what they could not do on 7th February.

Secondly, the Bill reduces the extra contribution to be made by employers. It does so only slightly, but we must be grateful. The Government will take only £16½ million out of industry under this Bill instead of the £18 million they proposed to take under the lost Bill. But I believe that we must look at this Bill against the background of the unemployment situation. Although there may be a statistical aberration, to which the Minister referred, one cannot separate unemployment and redundancy, and I shall discuss a key point where the two impinge upon one another. We are considering the Bill against the background of an unemployment figure of over 1⅓ million, which is expected to go to 1¾ million. We have a Government who want employment but do not care for or understand or even want employers.

The Bill piles yet another burden on industry on top of all the other burdens that it already has to suffer. It is difficult to know what is the last straw which breaks the camel's back in this case—whether it is the burden of inflation, which means that industry needs more money in order to achieve the same turnover; whether it is increased corporation tax, which takes money out of the business community at the very time when inflation means that it needs more; whether it is increased income tax; whether it is increased national insurance contributions, or whether it is the new surcharge which is to come in next month—the jobs tax, the surcharge of 2 per cent. on national insurance for everyone in employment.

I do not know which of those burdens is the worst, but the total, with this £16½ million piled on top, will clearly lead to an increase in unemployment. It seems that the Government's slogan could well be "unemployment". Perhaps, if we are to have a General Election soon, they will go to the country on the slogan "We are the party that has managed to double unemployment in only two years. Put us back to continue the good work." I do not know whether that will be the case, but this Bill will certainly add to the unemployment.

Before the Minister sat down, to thunderous applause from both of his supporters in the Chamber, he said that the Bill would have the effect of reducing the public sector borrowing requirement, because if there were a surplus on the redundancy fund it would go to the Treasury. But we know the policy of the Government as outlined by the Chancellor of the Exchequer in his Budget Statement 12 months ago and reaffirmed by him in the economic debate last summer. He told us that he wanted to see a transfer of resources from the consumer and the Government into industry. Yet we are now being asked to approve a Bill to take another £16½ million out of industry and put it into the hands of the Government. The contradictions are all too clear.

The Minister said that he did not feel it wrong to ask employers to make this additional contribution in the national interest. But is it in the national interest to denude industry of the funds that it needs for investment? Is it in the national interest to denude it of another £161 million which might otherwise go into modernisation or re-equipping? The Bill will lead directly to an increase in unemployment, and I do not see that that is in the national interest.

The truth is that in 1976 and 1977 the burden of carrying the Government has broken the back of industry. As the process has gone on, the number of unemployed and the number of bankruptcies have risen. There is now the additional burden of £16½ million, but it will not be spread thinly across industry. The Minister cannot say "But it will cost each employer only so much". It is being placed specifically on firms which are in the greatest financial difficulty.

No company pays people off unless it has to. No company makes people redundant unnecessarily. On the contrary, machines and empty factories do not make profits; they do not help to earn for shareholder, investor, manufacturer or management. They mean a dead loss. When a company reluctantly decides, because of its financial situation, that it has no option but to pay off some of its employees, at that time of acute financial pressure the Government say "You will pay more towards the redundancy payments than you would have done previously". In effect, when a company has had a bad year and is in its weakest financial position, this scheme will translate that bad year into bankruptcy. I know a number of firms which have had to face the fact that if they paid off the number of employees they needed to pay off in order to remain in a viable position they would bankrupt themselves because of the Bill.

Another important point has been made to the Government, but with no response—that there is no right under the companies legislation for any company to accumulate reserves against this liability. Therefore, the liability comes along and the company is unable to accumulate free of tax, a fund with which to meet it. What is more, family companies, close companies and companies which under the tax legislation are forced to pay out their profits in dividend are not allowed to retain the profits within their finances unless they are for immediate investment. They are in the position that they cannot retain the funds necessary to meet redundancy payments because they have had to pay out the money to the shareholders.

I have a third reason for opposing the Bill, and that is the lost opportunity, to which my hon. Friend the Member for Flint, West (Sir A. Meyer) referred, to rationalise the whole area of what happens when a man becomes either redundant or unemployed in other ways. The redundancy payments legislation helps most those who may need help least. I go further: it may give no help to those who are most in need.

I shall give two examples to the House. There is the case of a married man with three children living in Scotland who, as the representatives of the Scottish National Party will bear out, is suffering from rising unemployment under the present Government. He finds it difficult to get work in Scotland. He is being driven—as were so many, including my grandfather—to England to seek work. He had the misfortune of changing his job in Scotland a couple of years ago, and now he has lost his job because of rising unemployment. He searches England for a job, finding one, perhaps, in Basingstoke. He has to meet the cost of moving which is much higher, and he has the cost for a while of keeping two homes, yet he has no redundancy payment. He is in great need, but he receives no help.

I am glad that the Minister has returned to the Chamber. I was making the point to him about the lost oppor- tunity to rationalise all that happens when a man loses his job whether through redundancy or in other ways. I was indicating that there are men who are in great need but who get not one penny from the Redundancy Fund, but other men may receive help.

There is another example from my constituency, where a builder made three men redundant. He did not want to do so, but a contract had ended and demand for construction work was shrinking. He had no option but to pay off the men. There was another building contractor, literally across the road, who took on those three men. They simply crossed the road. I do not know whether they were paid slightly more or less or the same, but I imagine that there was no distinctive difference. They suffered no cost, and they received a substantial sum in redundancy payment. The original builder nearly had a strike on his hands. The other men whom he had not dismissed said "Please, why do you not make us redundant? We could have worked across the road next week for somebody else and we could have had that nice sum of redundancy money in our pockets, yet we got nothing."

Irrationally, the system often pays out according to how lucky one has been. The luckier one has been, the longer one has had a job and has not been out of work, the more good fortune one has and the more one gets in the payout. The greater the misfortune one has, when one has perhaps changed jobs a number of times and one's employer has gone bankrupt under this Government, the more one suffers.

Would the hon. Gentleman add to his examples the kind of situation which obtains in Moray and Nairn, where a Government-subsidised bus company is able so to undercut all local contractors in the Grampian Region between Inverness, Peterhead and Aberdeen that they are driven out of business? The undercutting means that the Alexander buses are taking on contracts at a loss. Local contractors are having to allow men to become redundant, but they immediately get jobs with Alexander. Money from the ratepayer's pocket is making that undercutting possible. The result is that small businesses engaged in transport in the area are being driven out of existence.

I am happy to accept the hon. Member's additional example. I could expound to the House for a long time on other examples of the sort of unfair competition subsidised by the Government and ratepayers which is leading to people being made redundant and, therefore, to claims upon the Redundancy Fund, but I am sure that I would not be allowed to do so because there are others who wish to take part in the debate.

One can think of, for example, the electricity industry. It has fine show- rooms in the High Street, paid for out of electricity charges on the individual consumer, where it sells electrical equipment, heaters, cookers and so on. The Government subsidise that activity, but by their action they bankrupt the small private enterprise electrical contractor and sales company that is operating alongside the showroom.

The Minister looks annoyed. I assure him that if he looks at what is happening he will discover that what I have been describing is the case. He will see that the return on assets, where separate accounting has taken place in some of the electrical industries, is such as would have driven bankrupt any private enterprise company.

If the House wants to look further, there is the direct labour organisations of local authorities. They frequently drive local builders out of business because they act without private accounting, and by using ratepayers' money they are able to make losses and conceal them in a way that no private enterprise firm would be able to use. These examples add to the point made by the hon. Member for Moray and Nairn (Mrs. Ewing). I give one example. In Glasgow it costs more than £4,000 more to build a house through a direct labour department than through private enterprise. These are examples of areas where people are being made redundant as a result of Government activities and therefore calling for additional money from the Redundancy Fund.

I repeat that an opportunity has been lost. I hope that the Minister will take back the Bill—although it may, happily, be defeated again as was its predecessor— and, in the short time still available to him as a Minister in this Government, consider how he can roll together and rationalise redundancy payments and wage-related unemployment benefits. They are related to the difficulties and the suffering of unemployment, unlike the redundancy payments. I hope that he will look at the whole area of retraining.

If we roll these two things together into a rationalised programme for giving financial and other help to people when they become unemployed, we shall be helping the economy and we shall bring fairness into an area which is so unsatisfactory at present. Above all, we shall be doing something to prevent the growing level of unemployment occasioned by firms having to make payments at their weakest possible moment—when they have to pay people off.

5.9 p.m.

I shall not detain the House for more than a couple of minutes, but I think it is right to draw attention to the distinctive difference between this debate and the one in February. This debate does the House no credit. In February, the Bill presented an opportunity for the House to discuss the redundancy payments scheme. It did so, in a debate which, for all its faults, and even though it lasted for only three hours, got together a number of comments that were worthy of the House. Hon. Members made a number of useful points about the scheme and a number of suggestions.

My hon. Friend the Member for Basingstoke (Mr. Mitchell) and others are trying to inject that same view into this debate. That debate even occurred with two Labour Back Benchers taking part. The debate took place, and, having discussed the redundancy payments scheme and having taken account of the Government's overall economic problems and the fact that they wanted to cut down on our borrowing requirements, the House decided this was not the way to do it. It was a simple matter for the House to take that decision in a useful and valuable debate. We now have that thrown back in our faces, with the result that today we have a debate that is empty, not so much of argument, because we have been trying to keep that up, but of purpose.

One has only to look at the schedule to the Bill to realise what a tawdry measure this is. Even the fractions show what we are talking about. One chunters down the first column dealing with fortieths until one looks at Item 2 where the fraction suddenly splits into 123/200. The purpose of that is to enable the Minister to put a loin cloth on this dreadful Bill. The Minister is an honourable man and it is unfortunate that he has been put in the position of having to introduce the Bill.

Let me recap on three small points about the Bill, and what we said before and what we say now. It is right for the Government to decide to cut their borrowing if they desire to do so, but it must be right for the House to decide that there are certain areas which they should not touch. If we do not have any latitude in the matter, the House might as well pack up and go home if at all times what the Government say must take precedence.

If the House decides, as it clearly did, not by accident but of its own will, that something should not be done, and if the Government come back in the same Session with identical proposals, disguised though they may be, and spit in the face of the House of Commons, they ought to be thoroughly