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Her Majesty's Government (Opposition Motion)

Volume 928: debated on Wednesday 23 March 1977

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3.35 p.m.

I beg to move,

That this House has no confidence in Her Majesty's Government.
The Prime Minister made it inevitable that this motion would be moved, first, when he dodged the vote on his own party's proposals last Thursday and secondly, when, unlike his predecessor, he refused to put down a motion in his own name to confirm confidence in his own Government. We have not necessarily thought of his predecessor as having high standards before but we think more highly of them now.

Then, on Friday we watched with great interest the performance of the right hon. Gentleman on television. He came out with a very good polished veneer. He came out with some very interesting phrases. He said that legislating is not necessarily governing and he went on to say:
"We govern as of right".
By what right? The right of a minority Government; the right of a supposed mandate based on 38 per cent. of the votes cast or 29 per cent. of the electorate? They govern by no right except the arrogant right of Socialism. The fact is that the Government have no credibility left. We know why the Prime Minister would not let his party vote last Thursday. He was afraid that he might be seen to lose, so he feared even to fight. Better to have voted and to have lost than never to have voted at all. But of course there was another reason—not only would he have lost, he could not have got all his party in the Lobby with him. It is true that the right hon. Gentleman has the support of the IMF. But having got the support of the IMF, he has lost the support of a large wing of his own party. He cannot have both simultaneously.

I ask hon. Members what the Prime Minister meant last night when he said,
"It is no use being a general of an army which does not follow you, is it?"
Sheep do not usually need generals.

Unless there is a General Election following, we shall go into a period of very great uncertainty. Whatever negotiations the right hon. Gentleman has, he can never be sure that he will get through either his legislation or his economic proposals. He can never be sure that any package would stick, because some of the people below the Gangway would unpack the package. Then it loses its balance, exactly as happened on the IMF bargain and exactly as happened when they tried to get more cuts on the capital side than on the revenue side because that is what suited them better.

The right hon. Gentleman could not even be certain of getting a Budget through because he would have to wheel and deal through the party and some things would be acceptable and others would not. Indeed, be admitted last night that if he carried on it would be a very uncertain Government, and he said,
"I think every vote is a cliff-hanger and bound to be as long as you have got this parliamentary situation."
Some way of governing—and very damaging to the interests of Britain as a whole.

The Prime Minister would go off to international conferences, perhaps held in London, in the morning. We are to have three Summit conferences soon—the economic conference in May, the Commonwealth Conference and the economic European Council. There might be negotiations on Rhodesia. He would speak for Britain in the morning and then come back in the afternoon to haggle for a few more votes to see whether he could get any of his policies through.

The fact is that this is a broken-backed Government, and that is highly damaging to our foreign relations policy.

Of course, the wheeling and dealing is not unusual for the right hon. Gentleman. That seems to be the way in which the ordinary business of the present Government has been conducted. We remember the resignation speech of the right hon. Member for Newham, North-East (Mr. Prentice), when he said,
"too often we have made key decisions as a reaction to pressure rather than on the merits of the decisions."—[Official Report, 21st December 1976; Vol. 923, c. 517]
What an epitaph for the Prime Minister. He never made decisions on merits but only in response to pressure and wheeling and dealing.

Now we find the Prime Minister creeping cravenly around putting both wings of his party up for auction at any price. We ask whether he still believes in the Labour Party manifesto. Let us see what the Labour Party manifesto actually said about negotiations with other parties. It said:
"Why can't we accept the idea of a coalition to meet the nation's crisis? Because what our country needs in this crisis is a government with a clear-cut understanding of the nation's problems and the ability to decide quickly and effectively how to deal with them."
The Labour Party manifesto went on to say,
"A coalition government, by its very nature, tends to trim its policies and fudge its decisions; and in present circumstances that just won't do. If we believe, as we must, in our own independent political philosophies, there is no meeting point between us and those with quite different philosophies."
The manifesto went on to say,
"it would be a cruel farce to suggest that the future of the country would be helped by shuffling, compromising administration".

In early March 1974 when the right hon. Member for Sidcup (Mr. Heath) was thinking of forming a coalition Administration, would the right hon. Lady have joined the Cabinet or would she have stayed out of it?

Perhaps the hon. Gentleman would like me to read a little bit of our manifesto on the same subject. [HON. MEMBERS: "Answer."] My right hon. Friend the Member for Sidcup (Mr. Heath), unlike the right hon. Gentleman the Prime Minister, who goes against his manifesto, acted exactly in accordance with our manifesto when he said,

"After the election we will consult and confer with the leaders of other parties and with the leaders of the great interests in the nation, in order to secure for the government's policies the consent and support of all men and women of good will."
The difference is that my right hon. Friend was acting in accordance with his manifesto. The right hon. Gentleman has been acting flatly in the face of everything that he said. He has been going around all parties, a sort of Jim of all parties and master of none.

The truth about the present Government is that no make do and mend, no patchwork quilt of bargains, can cover their shabby, devious manipulations.

Not only are the Government in a minority. I am glad that the Prime Minister admits that they are in a minority and that he no longer has a majority to govern. We all know that the Labour Party itself is a meaningless coalition in which the deeply divided and mutually distrustful factions prevent each other from governing. We read in the newspapers great big dissertations from the two wings of the Labour Party, one in favour of Marxism as the basis for Socialism and one rejecting it completely. Therefore, we ask the Prime Minister where he stands. As usual, he does not stand anywhere.

The fact is that one of the wings, as the right hon. Gentleman and the whole House know, believes in the mixed economy and tries to make it work, albeit there might be some arguments about the mix. The other of the wings wants to destroy the capitalist system completely. Therefore, we do not know, and nor does anyone else, whether the basis of the Government's strategy is to restore capitalism to health or whether the basis of their economic and industrial strategy is an irreversible shift to the Marxist society by way of Clause 4. The two wings do not agree.

If one really cannot agree about one's economic objective, it is not surprising that one has a completely inconsistent and incompatible economic policy. If the objective is to restore capitalism to health, the right hon. Gentleman must have a policy to restore profits and profitability, because one cannot plough back into investment if one has not got the profits. Not only must the right hon. Gentleman have profits in order to plough back—he wants investment without the investors being able to get the benefit—he must also have profits able to be distributed. However, he put that policy to his party conference and it did not meet with overwhelming excitement or success.

If the policy is to restore capitalism, then the right hon. Gentleman must have a policy that restores incentives. But every time he tries to reduce taxation, someone will get up from his own Back Benches and say "Would it not be better if instead of cutting public expenditure and cutting taxes, the Government kept taxes up and increased or kept up the level of public expenditure?"

If the right hon. Gentleman is to have a policy of restoring capitalism to health, he must cut away many regulations and restrictions beloved of Socialism. But none of these things will suit the Left wing of his party. The Prime Minister knows it and everyone else knows it.

The Tribune Group may be quiet today. It may have gone on its annual holiday because the Government have gone for a survival strategy for the time being. But the problems are still there and they are unlikely to go away. The Tribune Group wants the Labour Party programme for 1976 and the Manifesto Group wants something as totally different from that as a free society is from a Marxist society. It is not surprising, when the Government cannot agree on their objectives, that their economic strategy makes very little sense and that their industrial strategy is full of contradictions and has never worked from the day that it was enunciated.

We cannot get a policy to back success—of course, success mostly backs itself and does rather better without Government than it ever does with it—by just switching from grandiose plans, by just switching off differentials and by disconnecting reward from effort. The right hon. Gentleman knows the trouble that one gets when one does, because he is having it now. One cannot ignore the morale of management if one is to get a successful industrial strategy and one cannot ignore the market.

But the right hon. Gentleman's strategy is a strategy in name only and it is failing in every particular. The economic indictment against the Government goes very far indeed. After three years—[Interruption.] The Government have hardly speeded up production, which is exactly what I was coming to. After three years of Labour we are nearly back to where we started. After three years the level of production is nearly back to where it was in February 1974, and that in spite of having nearly doubled public expenditure and in spite of having increased direct taxation to try to finance the level of public expenditure.

Perhaps the right hon. Gentleman would like me to go on with the catalogue? Perhaps he would like me to remind him—[Interruption.] I do not think hon. Members would. Perhaps they would like me to remind them that prices are up 70 per cent. although they claimed at the time that the social contract would beat inflation. Unemployment has rather more than doubled. One economic factor after another has testified to the total failure of Socialist economic policy in practice.

I know that the Prime Minister will read out a whole series of statistics, but I shall not do SO. [HON. MEMBERS: "Why not?"] I would have plenty to read out. Any hack lawyer or statistician on either side can cook up a whole lot just depending on the premises on which he started. I would make it quite clear that every improvement is welcome but that every setback is a cause for concern. Whatever statistics we read out, they will not mean very much to the ordinary people because they have already felt the effect in their pocket and in their daily lives.

We know that the Prime Minister will be full of easy and comforting phrases rather like "Steady as she goes". But the soothing syrup will inevitably come out rather like the family doctor whose reputation miraculously survives the death of whichever patient he is in charge of. But apart from the economic indictment of the Government, we have not been all that impressed with the Prime Minister's respect for the small print of democracy. We remember the way in which he deferred the Boundary Commission's proposals in 1969 for party advantage. We remember the devices on the Aircraft and Shipbuilding Industries Bill. We remember the refusal on the Scotland and Wales Bill to consider an agenda for the Speaker's conference to include under-representation of Members of Parliament in England and grievous under-representation in Ulster. [HON. MEMBERS: "Ah!"] We anticipate with no sympathy the manipulations to get some Socialists elected to the European Parliament. What will the excuse be? Too late for the Boundary Commission to start to work?

Nor would we fall into the trap of judging the Prime Minister's policy by what he says about them. We remember vividly his speech in the education debate, but equally I remember, having been at the Department of Education for quite some time—that there was very little concern on the opposite side of the House for keeping up standards then. Even while the right hon. Gentleman talks of the debate to raise educational standards, we remember that he never provided parliamentary time to debate the report on "A Language for Life", the first Bullock Report, which was directly connected with educational standards.

Even while he said that, he was busy trying to demolish grammar schools based on selection by ability—wholly free schools open to all regardless of background. Perhaps one of the reasons why so many of our constituents have left support of the Socialist Government was put very well in an article called "Maligning Merit" in The Sunday Telegraph Magazine a few weeks ago by Mrs. J. B. Priestley, the author Jacquitta Hawkes, when she said:
"for me Labour showed that it had gone astray when it used meritocracy as a dirty word. My utter conviction that egalitarianism is wrong in theory and positively evil in practice has grown mainly from observing what is being done in its name today."
Her views are shared by many people.

But whether we regard Socialism by its economic record or by its other record, we find that in practice it has totally failed. It has been brought to a satisfactory conclusion. The only thing is that the Prime Minister now refuses to put it openly to the verdict of the people. If the right hon. Gentleman is now to say openly and publicly that he has abandoned his Socialism and his manifesto, what possible point can there be in a Socialist Government? If he does not say that, Socialism is in a minority and has no authority whatever to govern. But then the Prime Minister's next ploy is to start to attack the next Conservative Government. He represents it as somehing to be feared and with a notion almost akin to fear. How we would get in if we were feared is something of a mystery. We would get in only if we were wanted.

If the hon. Gentleman thinks that we would not get in, why does his Prime Minister not put it to the test? The reason he will not put it to the test is that he thinks that we would get in, and with a big majority. He knows from the opinion poll published in the Daily Mirror this morning that the majority of people want an election. It is because they want it and because he might lose it that he is unwilling to put it to the test.

It is not surprising that the Prime Minister takes months to screw up courage to have a by-election. We cannot have a Budget two days after every by-election—even on the Socialist record. Or perhaps it is very nearly possible.

The choice next time will be on the published documents between the Labour Party's programme published in 1976 and "The Right Approach" to which the Prime Minister seems to be thoroughly addicted. Both documents have been to party conferences.

Perhaps I might spell out a few points from "The Right Approach" as approved by the people of Workington and Walsall. [Interruption.] We shall wait for one or two other examples, and we shall be delighted when the Prime Minister moves the issue of the writs for some of the other outstanding by-elections, unless he is to move the writs for the whole of the 635. That would be the greatest test of all.

"The Right Approach", approved by the people of Workington and Walsall, spelt out our basic philosophy. If we are allowed to have a manifesto in time for an election, hon. Members could read it in even greater detail. In the meantime—we Conservatives believe in capitalism and democracy. There cannot be democracy, and there will not be democracy, unless there is a capitalist system. Hon. Members below the Gangway do not approve of it. They disagree with it. They would like to do away with capitalism.

However, we are very pleased that we have in fact got some support from hon. Members opposite who are not below the Gangway and who believe that, if individual freedom is to be safeguarded, economic as well as political power must be dispersed. They say:
"The only practicable alternative to a mixed economy of the Western kind"—
the capitalist system; that is my inter-polation—
"is a command economy on the Soviet or Eastern European model."
[HON. MEMBERS: "Read on."] I am quite happy to quote the lot; it is nearly all on my side.

We would also, unlike right hon. Members opposite, believe in maximum choice because with no choice there will never be a responsible society, and choice is being progressively diminished.

We would of course reduce the burden of direct tax. It would be too much to expect this Government to reduce it to where we left it. That would mean reducing direct taxation by some £4,000 million if people were to be left in the same position as they were when my right hon. Friend Lord Barber was Chancellor of the Exchequer.

We would of course expect hard work to be rewarded. This is what the people want. We would of course give more people a chance to own their own homes. This is what the people want. We would of course uphold standards and values, and the rule of law. That is what the people want. We would of course not carry out further schemes of nationalisation. People do not want those either. We of course would want the reduction of inflation to be our first economic priority, unlike in particular the first year of this Government which did so much damage to the economy as a whole.

We would reject utterly the divisive nonsense of class division upon which Marxism thrives. We have no class enemies. We do not think in those vindictive or outmoded terms. One of the commentaries when "The Right Approach" was published was very interesting. We had not quite expected the comment at the time. It was just automatic that we did not put anything in "The Right Approach" which is against anyone. Our philosophy is not against anyone. Our philosophy thrives on success, on improving housing, on raising the standard of living and on having it more widely distributed. Our philosophy thrives on believing that Governments are the servants of the people and not their masters.

Whether it be in factories, on farms or in offices, there is a widespread desire to see this Government go. The Prime Minister intends to try to cling to office by political cunning. Of course, I know that he likes power. He would hardly have put his name to a political ballot of he had not wanted the job, if he had not got an ambition for the job. There would be something very strange about any political leader who did not want to be leader or Prime Minister.

The Prime Minister is an expert—[HON. MEMBERS: "Hear, hear.'"]—in political wheeling and dealing, I was about to say. It is no substitute for political courage. Perhaps he should face the people's verdict and like a statesman face it now.

4.7 p.m.

I listened to the right hon. Lady's essay with considerable interest. It was a series of generalisations which, while certainly interesting, were perhaps not altogether novel. As her complaint against me and the bill of indictment built up minute after minute, until I was almost overwhelmed, I felt like repeating the immortal words of Adlai Stevenson" If the right hon. Lady will stop telling untruths about me, I promise not to tell the truth about her."

However, in the series of generalisations to which the House was treated I did not find any particular thread that led me to discover how the Conservative Party would deal with the issues of the day. At the end of the right hon. Lady's speech I was still not clear whether it was the policy of the right hon. Member for Leeds, North-East (Sir K. Joseph) that would prevail on public expenditure. I was still not quite clear, on the matter of incomes policy, whether it was the good sense of the right hon. Member for Lowestoft (Mr. Prior) or the attitude of the right hon. Member for Leeds, North-East that would prevail.

I have no idea what they would do about industrial strategy or securing industrial regeneration. Nor was there any indication of how they would see Britain's social progress. There was none of that. I say to those who are not just blind followers of the right hon. Lady that before they vote tonight they should consider what they are voting for as well as what they are voting against.

The truth is that since the events of last autumn there has been a new stability in the financial and monetary affairs of this country. It is true—reserves have risen by $3·7 billion in the last two months. We have successfully negotiated a safety net that has given stability to sterling. This is together with the $1·5 billion medium-term credit negotiated from the commercial banks on favourable terms, which indicates confidence in this country's future and in the Labour Government's policies.

In the last four months there have been more than £6 billion worth of sales of gilts to help finance our borrowing requirements. Interest rates are now down, with the minimum lending rate at a full two points less than it was when the Opposition left office of 1974.

Our domestic credit expansion is well within the target of £9 billion in a full year. Within the last year, the sterling money supply has increased by a little over 6 per cent. compared with 28 per cent. and 24 per cent. in the last two years that the Opposition were in office. If this situation continues, the home buyer can look forward to a reduction in building society rates of interest.

The growth of industrial output of 2 per cent. and of gross domestic product of 1 per cent. in the fourth quarter shows that the economy is now turning upwards. In the most recent three months exports are up and imports are holding level, with the current deficit reduced to £288 million compared with £518 million in the preceding three months.

Business confidence is on the upturn. The percentage of firms working below capacity is the lowest for two years and new orders for exports of engineering industries are up by 46 per cent. It was welcome news yesterday that unemployment has fallen again, as it has in each of the last two months. The fall last month, seasonally adjusted, was the biggest for four years.

The most welcome news is the fall in the number of unemployed school-leavers, from 208,000 in July to 42,000 in February and 34,000 in March. There are more vacancies for jobs—these are up by a third on a year ago. Our industrial relations record, due to the work of ACAS and the industrial relations legislation which was passed on the basis of conciliation and consent and not on confrontation, is the best for 10 years.

I will come to the matter of unemployment again in a moment. I cannot guarantee that this decline of the last two months will be continued in the next few months. [HON. MEMBERS: "Oh."] I see no reason for hon. Members to mock that statement, unless they are seeking only to make party points. The immensity of the task on unemployment is added to by the fact that at the present time the number of additional new entrants to the work force is about 150,000 a year. That makes the problem all the more formidable.

The world economy is still in a precarious state and the wrong decisions internationally could have serious effects on our economy and on those more vulnerable economies in the less developed countries. It is my hope that the Downing Street summit will achieve a unity of Western leaders in purpose and action. We must ensure a unity of action to prevent a trade war that will plunge the world back into an even deeper recession. We must ensure that there is unity of action to counteract unemployment, which is running at a rate of 15 million in the industrialised Western world. What kind of future are we offering to young people in the various industrialised countries if we tolerate these levels of unemployment as a permanent feature of Western industrialised society?

It will be vital in May to seek a new initiative for the Western world to help the less developed countries overcome their balance of payments problems caused by the increase in oil prices.

Does the Prime Minister think that it really helps less developed countries if we borrow $20 billion that would otherwise be available for development by them?

The two matters are not totally related. The future of the credit facilities for the less developed countries is something that is concerning the International Monetary Fund at the moment. Such calls as are being made upon it by Westeren industrialised countries will be offset by the creation of new facilities. We have a formidable agenda in front of us and this is something in which the whole future of society—whether it be capitalist, mixed, Socialist, or Marxist is at stake. Did hon. Members hear anything about this from the Leader of the Opposition today?

Britain is not isolated or insulated from the rest of the world economically. But, especially with North Sea oil coming in at a rate of 30 million tons a year—one-third of our requirements—our economy presents a picture of some encouragement for the future—I emphasise "some encouragement". That view is receiving endorsement by authoritative commentators throughout the world.

Last week, the OECD, in its annual review of the United Kingdom economy, said:
"Britain could achieve a rapid rate of economic growth compared with past levels and a steady rise in living standards over the next few years."
About this Administration it went on to say:
"As a result of the relatively novel approach"—
adopted by this Government—
"less heavily orientated than previously towards the short term, the economy could—for the first time since the 1967 devaluation—be able to break away from the vicious circle of the past."
That is the judgment of those who consider where the country has got to today, and it is a picture of some encouragement to the British people.

There are many problems ahead. Our position is baseed, as the right hon. Lady said, on the industrial strategy. That strategy is not just the strategy of the Government, as she always seems to think. It is a strategy that has the full backing of the TUC and of the CBI. So when the right hon. Lady attacks the industrial strategy she is not just attacking the Government, as she seems to think; she is attacking a policy agreed among these three major elements. It is recognised
"that sustained recovery is needed. For the troubles of our economy are by now long-standing and deep-seated. To make the structural changes that are necessary to restore the dynamic of a mixed economy will need a settled approach over a long, hard haul. The foundations of economic health will not be relaid in less than a decade."
Yes, that is from "The Right Approach". I have been quoting from it for some time, and right hon. and hon. Members opposite did not even notice.

Our policy is based not just on words but on a co-operative effort by Government, trade unions and management. So what can be done to regenerate our industry, since it is industry that will provide the basis for our future prosperity? I have described before what industrial sectors and firms are doing, and it is upon our industrial performance that the future of our standard of life and, indeed, the nature of our society will depend.

But that is not all. We recognise that our greatest national asset is the skill of our own people. That is why we have devoted over £180 million for training and retraining, created over 86,000 extra training places, and applied special measures to keep people in work. The £202 million spent in the last 20 months on the temporary employment subsidy has helped to preserve against the world blizzard 214,000 jobs, and we have also provided £130 million for the job creation programme, and introduced many other measures besides.

All round, the industrial strategy is blessed by representatives of both labour and management in industry. What would the Opposition do, for example, about the 40 sector working parties now going through their own industries, firm by firm to see how industrial efficiency can be increased? What would the Opposition do about the selective aids which are now going to vital industries such as machine tools, machinery, foundries and electronic components, where thousands of jobs are involved? We know what the right hon. Member for Leeds, North-East would do: he would have them out on the stones next week.

Will the Prime Minister tell us where the money that the Government are spending to sustain some industries is coming from except by destroying other jobs by over-taxing, over-borrowing and printing money?

Did I hear the right hon. Gentleman say "printing money"? I have always known him to be an honest man, even if it costs him a great deal, but, really, he knows better than that. What has he to say for himself? "Printing money"? I shall answer him. I would sooner that taxation was a little higher and 200,000 people were kept in work than pursue the policy of abolishing all the subsidies and putting those people on the dole.

I hoped that the Leader of the Opposittion would spell out, as her leading spokesman is opposed to this policy, what she would do. What would she put in place of our policy? What would she do to regenerate industry? How would she create the jobs? Would she get rid of the temporary employment subsidy? These are questions that people will be asking the Conservative Party, and we have no idea of what the Conservative policy is in any of these areas.

I turn now to the question of prices because prices are one of the key issues. Last year, with the co-operation of the trade unions, we had good success, and inflation came down to under 13 per cent. There have been set-backs since then, and it is right that the country should know the reasons and what the Government are doing to try to ensure that these set-backs do not recur.

Last summer, when the pound came under heavy pressure in the currency markets of the world, the sterling prices of our imports rose, and we are still seeing the effects, although, as I have said, the value of the pound is now stabilised. It will still be a few months before the benefits of the more stable pound are seen in the shops, but already the benefits are coming through for our wholesale prices.

In the last three months input prices rose by only 2¼ per cent.—a very low figure. In a few months' time we shall be seeing the effect on the prices of goods in the shops, and the latest forecasts indicate a good prospect that by the end of this year inflation will be below the 15 per cent. estimated last December. Indeed, the latest forecast by the OECD, published last week, predicted a rise below 12 per cent. at an annual rate in the second half of the year.

But no Government could guarantee that, because the prices of many of the goods in our shops are dependent on factors right outside any Government's control. Last summer's drought put up food prices by 6 per cent. or more, and, as the House knows, world commodity prices are outside the Government's control. Indeed, world prices in dollar terms are currently more than 50 per cent. up on 12 months ago, and there have been particularly steep increases in the price of coffee, which has trebled, and that of tea, which has increased by two and a half times on the commodity markets.

We have seen some glimpses of what the Opposition's policy is on these matters. I shall take the House into my confidence in case they have not caught everyone's attention. The hon. Member for Derbyshire, West (Mr. Scott-Hopkins) told my right hon. Friend the Minister of Agriculture on 16th March that he failed to understand why my right hon. Friend was unwilling to accept the package of the Commission in Brussels and devalue the green pound by 5·9 per cent. The effect of that would be to increase food prices in this country by 1¼ per cent. at a stroke—immediately—if my right hon. Friend accepted that misguided advice.

What about the hon. Member for Cleveland and Whitby (Mr. Brittan), who I am glad to see has now been promoted to the Front Bench? His view is that there is a powerful case to be made against price controls altogether. Is that the policy of the Opposition? Is it?

The Opposition seem to be a little confused. They are not quite sure whether their policy is to get rid of price control or to maintain price control. We shall give them the opportunity of making up their minds. They can vote for our new prices Bill when it is brought to the House in a week or two's time. Let us see where they stand. Let them give us a clear indication.

We cannot achieve success—[HON. MEMBERS: "Hear, hear."]—Conservative Members are very sharp today—we cannot achieve success without ensuring other policy considerations and unless we take into account four elements. The Opposition should have told us where they stand on these elements.

First, we need a stable currency. Secondly, we need a new incomes agreement. Thirdly, we need increased competitiveness and efficiency in British industry. Fourthly, we need Government intervention against unjustifiable price increases and profit margins.

The Opposition will soon have the chance to stand up and be counted. The Government will be introducing a new prices Bill. The new policy will be based on profit margin control, subject to safeguards, for firms in manufacturing, services, and distribution. This will replace the detailed, over-restrictive and outdated cost controls written into the Price Code that we inherited from the last Conservative Government.

The Price Commission will be given new powers to investigate and, if necessary, to disallow specific price increases anywhere in the economy. These changes will greatly increase the flexibility and efficiency of our system of price control. Are the Opposition in favour of this or are they against?

I pass now to the future of this Parliament.

Before the Prime Minister leaves the subject of prices, is it not really time that the Chancellor of the Exchequer had the courage and the decency to admit to the British people that his claim that inflation was running at 8·4 per cent. at the October 1974 election was utterly and totally fraudulent? If the Chancellor will not do that, what can his credibility be for the future?

The right hon. Gentleman will have the pleasure of hearing my right hon. Friend the Chancellor of the Exchequer introduce his Budget next week.

I turn for a moment to the future for us sitting in this House. First and foremost, the Government intend to use the time ahead to carry through our economic and industrial strategy. The various indicators to which I referred earlier all point perhaps for the first time for a generation, to the possibility of at last securing steady and sustainable economic growth in this country, with a stable currency, a surplus on the balance of payments, strict control of monetary policy, falling rates of interest, declining price inflation, a rising rate of investment in manufacturing industry, continuing industrial peace, tax reforms and a lower burden of personal taxation. On these foundations we shall build the growing prosperity of our people.

We shall use the time of this Parliament to plan how best to distribute the fruits of success of our economic policy and to maintain a proper balance between the needs of the public services and the wish of the private individual to have more real income in his pocket to spend. It will require planning. I tell the right hon. Lady the Leader of the Opposition that this cannot be left to the brutal dictates of the laissez-faire market; nor can it be frittered away in current consumption. The future strength of our industry must be secured through investment in our industrial strategy. We shall plan not only the regeneration of our industry but that of our great cities, to eliminate ghettos of poverty and racial tension. We shall see these policies through.

It will need the co-operation of all our people. The social cohesion that we have maintained through these last few difficult years was possible only because we were able to win and hold the trust of the working people of this country.

We do not know where the Opposition stand on any of these major issues. We do not even know where they stand or whether they would try to get another voluntary incomes policy. But we know that without the voluntary co-operation of the British working people the whole of our recovery and the fight against inflation would be entirely jeopardised. There is only one way, that of conciliation and consultation, preserving the cohesion and consensus in our society, of which the Opposition were once rightly proud but which in recent years they seem to have deserted.

This Government follow these objectives and have pursued them successfully during the past three years and will continue to do so in the remaining years of this Parliament.

Order. If the Prime Minister is not giving way, the hon. Member for Bury St. Edmunds (Mr. Griffiths) must sit down.

Much else remains to be done. I have already referred to the need to co-ordinate the responsibilities of industrialised countries to our global economic problems, and I gladly welcome contributions here.

I shall say one other thing about the vote tonight and the attitude of the Opposition. There are hon. Members on both sides of the House who have a deep and genuine concern about the problems of East-West relations. Perhaps the biggest fear that we have is over whether we shall maintain peace or drift into war. The problems are those of nuclear proliferation, of who holds nuclear weapons, and of whether we endeavour to live in relative amity with those who hold an entirely different philosophic view about the organisation of society.

If we cannot learn to live with them, we shall certainly die with them.

Against that background I ask the House to consider whether the right hon. Lady, the Leader of the Opposition, contributes to detente and relations with the Soviet Union. The Opposition's domestic policies are mirrored in their international policy which, where it is specific, is dangerous, and on many major issues and crucial areas of international economic co-operation it is totally non-existent. It is against this background that we have been conducting conversations to see on what basis these general policies should be continued.

The conversations have taken place with many people. We have been anxious to discover whether there is sufficient identity of interest to enable the general policies that I have outlined to be continued. There is no doubt that the Government, half way through the life of this Parliament, wish to see that the policies which are being followed—they are not pleasant policies, and they are not intended to be pleasant—shall be followed through resolutely.

We have had discussions with the leaders of the Ulster Unionist Party. It is not my intention to go into any detail on this except to say that I am impressed by the case that has been made by the hon. Member for Antrim, South (Mr. Molyneaux) and by the right hon. Member for Down, South (Mr. Powell) who accompanied him on the matter of the number of seats and the under-representation of Northern Ireland in this House. I indicated to the hon. Gentleman—and I hope that he will not mind my saying this—that, irrespective of the way in which he and his colleagues vote tonight, it is my intention, with the consent of my colleagues, to refer to a Speaker's Conference, if you will care to preside, Mr. Speaker, the question of the representation of Northern Ireland.

The hon. Member for Antrim, South has made no bargain with me about that. I have no idea how he intends to vote, but I told him and I repeat here publicly what I intend to do.

If the right hon. Gentleman feels that these are changes that should be granted to the Ulster people now why did he not grant them years ago when we were pressing for them in this House?

There has been considerable debate about that—[HON. MEMBERS: "Bribery."]—but the latest reason is that the House was genuinely waiting for the result of the devolution discussions and for what would happen—[Interruption.] The Conservatives may not like it, but it happens to be the simple truth.

The Lord President and I have also had talks with the Leader of the Liberal Party.

I am grateful to the Prime Minister. His talk of bargaining over seats in Ulster is a part, albeit an unattractive part, of the political deals that go on. Will the right hon. Gentleman take this opportunity categorically to deny that any deal was offered or mentioned concerning the movement of two battalions of troops to Ulster as part of a political settlement? Will he confirm that this was no part of his discussions, because to use British troops as a political pawn in this chess game would be utterly disgusting?

It only goes to show that second or third thoughts are best, and I am glad that I gave way to the hon. Gentleman. I am sure that the hon. Member for Antrim, South will not mind my saying that at no time in our discussions did any questions of this sort come up and that the hon. Gentleman and myself would have regarded it as insulting if we had endeavoured to bargain on that basis.

I am grateful to the Prime Minister for giving me this opportunity for denying that any such point was raised at any time. I think that we would both view any such report with contempt. May I also say in fairness to the Prime Minister that all our discussions were conducted on the basis that there could be no concession or sacrifice of principle on the part of either of us?

I was saying that my right hon. Friend the Lord President and I had discussions with the Leader of the Liberal Party and with the hon. Member for Cornwall, North (Mr. Pardoe). It is our view that there is a sufficient identity of interest between us at present to establish some machinery that will enable us to consult each other about future developments in this Parliament—[HON. MEMBERS: "Oh."] We therefore—[An HON. MEMBER: "Sing it again."]

Order. The House knows that I cannot see behind me, but I can hear. I hope that whoever has been shouting at my left ear will stop doing it and go away.

You have no idea how much you have relieved my mind, Mr. Speaker. I thought that it was you shouting at me.

We have therefore agreed to establish some machinery to keep our positions under review and we intend to try an experiment that will last until the end of the present parliamentary Session, when both the Liberal Party and ourselves can consider whether it has been of sufficient benefit to the country to be continued—[Interruption.] I am very happy to see the Opposition applaud this new-found stability in Parliament. It will give this Administration the stability it needs to carry on with the task of regenerating British industry and of securing our programme.

We therefore intend to set up a joint consultative committee under the chairmanship of my right hon. Friend the Leader of the House. This committee will examine policy and other issues that arise before they come to the House, and of course, we shall examine the Liberal Party's proposals. [Interruption.] I think that Conservative Members should listen to this, because their fate may depend upon it.

The existence of this committee will not commit the Government to accepting the views of the Liberal Party, nor the Liberal Party to supporting the Government on any issue. There will, however, be regular meetings between Ministers and spokesmen of the Liberal Party including meetings, for example—which have already begun—between the Chancellor of the Exchequer and the Liberal Party's economic spokesman.

On a point of order, Mr. Speaker. Is it not a well-established practice that Budget proposals are not divulged to anybody in advance? May we be assured that that practice will not be set aside in this relationship between the Government and the Liberal Party?

That is not a point of order. I suggest to the House that we shall not know more unless we listen.

On a point of order, Mr. Speaker. In view of what the Prime Minister has lust said, may we take it that the next Liberal Party spokesman will be speaking from the other side of the House?

Order. I warn the hon. Gentleman that he has been extremely discourteous to me. I warn hon. Members that unless they resume their seats when I stand up and call for order, I shall order them out of the Chamber. I know the importance of the vote tonight to both sides, but the House must treat its Speaker with courtesy.

No. I know that there were complaints about the reception that the right hon. Lady received, but it has been repaid a thousand fold by the Opposition during the last half hour.

In addition, the Prime Minister and the Leader of the Liberal Party will meet whenever necessary to discuss these matters. [An HON. MEMBER: "What does that mean?"] It means exactly what it says—that we shall meet for discussions.

The issue of direct elections is a difficult one. I have already indicated that the Government will be presenting legislation on direct elections to Parliament in this Session, for direct elections next year. The Liberal Party has reaffirmed to me its strong conviction that a proportional system should be used as the method of election.

Next week the Government propose to publish their White Paper on direct elections. As hon. Members will find, that will set out a choice among different electoral systems, but it will make no recommendation. The purpose of doing that is to enable the Government to hear the views of the House on these matters, but, in view of the arrangement that I now propose to enter into with the Leader of the Liberal Party, there will be consultation between us on the method to be adopted, and the Government's final recommendation will take full account of the Liberal Party's commitment. [Interruption.] I do not know whether Conservative Members think they are disturbing me, but I promise them that they are not. I could go on for a long time.

To come back to the White Paper, whatever the final recommendation on these matters, it will be subject to a free vote of both Houses of Parliament. As far as the Government are concerned, all hon. Members will be entitled to vote in any way that they think fit.

The Leader of the Liberal Party put to us very strongly, though it was hardly necessary to do so because we are agreed about this, that progress should be made on legislation for devolution, and to this end the Liberal Party has today submitted a detailed memorandum to us. Consideration will be given to that document and consultations will begin on it, and in any future debate on the devolved Assemblies and the method of representation—for example, proportional representation—there will be a free vote.

The House has no doubt forgotten, but there was the Housing (Homeless Persons) Bill which I recommended to the House during the Queen's Speech, but for which time was not able to be found, so the hon. Member for the Isle of Wight (Mr. Ross) took over the Bill and with some Government assistance has been endeavouring to put it through. We shall provide extra time to secure the passage of that Bill.

The Local Authorities (Works) Bill will be confined to the provisions that are required to protect the existing activities of direct labour organisations, in the light of local government reorganisation.

That, together with the fact that we agree that this should be made public, represents the contents of the discussions that have gone on between us. They will give the Government the opportunity of maintaining a stable position while they carry through their economic and social policies. It will enable us to take away what the right hon. Lady thought was a weakness, and that is the instability of the Government not knowing from day to day what will be the position of the Opposition. We shall now be able to overcome that, and for that reason I am certain that this is in the national interest.

It seems that my right hon. Friend and other members of the Cabinet will spend a great deal of their time and energy in future consulting the 13 Members of the Liberal Party. Will my right hon. Friend give a categoric assurance that there will be equal and if necessary better consultation with Back Bench Members of his own Parliamentary Labour Party, because we carry more weight in this Parliament than do the Liberals?

My hon. Friend is quite correct. As he will know and as the Opposition do not know, in recent weeks there has been correspondence between the Liaison Committee and the Chairman of the Parliamentary Labour Party and myself and my right hon. Friend the Leader of the House in which we have overhauled the whole process of consultation with the Parliamentary Labour Party. As my hon. Friend knows, this was not to be published, but the new machinery was reported to the Parliamentary Labour Party meeting two or three weeks ago when I was present, I believe that my hon. Friend was there, too. It was unanimously accepted as being appropriate and suitable to enable the views and opinions of the Parliamentary Labour Party to be borne in upon the Government before legislation was introduced. I thank my hon. Friend for enabling me to make that clear.

I am grateful to the Prime Minister for giving way; he has given way a great deal this afternoon. I come back to the Liberal Party memorandum on devolution. Would not my right hon. Friend agree that the main problem about devolution has been and always will be the timetable motion? If the Liberal Party suggests that that should be a vote of confidence issue, we all know that the problem about the future of a timetable motion, as with the one on 22nd February, is the Labour Party's own Members of Parilament.

I regret to say that I have not yet studied the Liberal Party's memorandum. It has only just reached us.

I see that the Opposition are in a giggly mood, and I suppose that it is a measure of their discomfiture.

As far as the future of the Bill is concerned, I would have no hesitation in discussing by what method we can ensure that there is progress on the Bill to bring it to a conclusion on as agreed a basis as possible. I can go no further than that. My view on this matter has always been clear. It has always seemed to me that it is vital in the interests of Scotland that there should be a Bill on devolution, and the more we can get it agreed, the better it will be. I can go no further than that.

Order. It is quite clear that the Prime Minister has said that he will not give way.

I have given way much more to the Opposition, but that, Mr. Speaker, concludes my report to the House.

My report was set against a barrage of interruption. But I must say that I have a feeling that at the end of the day I shall not feel as worried as will hon. Gentlemen opposite.

5.3 p.m.

On a point of order, Mr. Speaker. With respect, is it not normal practice to call an Opposition speaker?

Order. If I were awarding marks, I would award the hon. Gentleman high marks.

Further to that point of order, Mr. Speaker. Again, with the utmost respect, may I put it to you that there are important matters affecting the House of Commons involved in my hon. Friend's remark concerning the Opposition representation on Standing Committee's and the majority in this House. I wonder whether it would be possible for you to give us guidance as to the propriety of the Liberal Party sitting on this side of the House.

Order. May I say that the House has vested complete discretion in the Speaker about who catches his eye and when he calls hon. Members to speak. Despite the high feeling that there is, I hope that the House will give an opportunity to those addressing it to be heard in reasonable silence.

My hon. Friends and I will support the Government in the Lobby tonight. [Interruption.] if there were any lingering doubts, which there were not, they would have been dispelled by the lack of any constructive alternative to such a course of action tonight in the speech of the Leader of the Opposition. [Interruption.] For some time my hon. Friends and I have been arguing, both in the House and outside, that the lack of stable continuity in the planning of our economy is one of the deeply destructive factors in our economy—I do not say that it is the most important or the sole factor—and is contrary to the national interest. One has only to look back over the past few years at the record under this Government and the previous Government on matters such as the encouragement of industrial development and prices and incomes policy.

It was the Labour Government in 1966 who set up the Industrial Reorganisation Corporation, which was dissolved by the Conservative Government in 1971. The National Enterprise Board was established in 1975, and the ink was hardly dry on the paper when the Conservatives gave a pledge that if they came to office they would abolish that, too. On prices and incomes, one can look back to find that in 1965 the National Board for Prices and Incomes was established by the Labour Government and abolished in 1971 by the Conservative Government. [Interruption.]

Then we had the creation, in 1973, of the Price Commission and the Pay Board under the Conservative Government. The incoming Labour Government abolished that, and with that we lost the opportunity that we might have had in recent weeks to refer the question of differentials to the Relativities Board.

I look back even further than that to, for example, the record of the British steel industry and the changes that it has had to suffer under nationalisation, denationalisation and renationalisation. When one looks at the Land Commission, set up one year and abolished the next by another Government, the remnants of which commission are still to be found lurking somewhere in Whitehall, one can make a reasonably convincing argument that we have not been conspicuously successful in the continuous planning of our economy.

It was not just the Liberal Party that has been saying this in recent months; more and more authorities are making the same argument. Some months ago Sir Ronald McIntosh, the Director-General of NEDC, when he talked about the future of British industrial strategy and speaking of the reasons for Britain's economic failure, said:
"it may also stem from our party political structure with its obsessive concern with short-term pressures and its destructive concepts of adversary politics."
I believe that he is right, and that industry requires a much longer period of stability and not a series of alternating policies wielded like virility symbols by different political parties.

It is against that background—and that view is not a new one because we have expressed it in the House many times—that we had to consider this motion of no confidence.

The first point that we had to consider was whether anybody seriously argues for a third General Election in three years and whether that could be described as being in the national interest. I do not believe that any objective commentator overseas would argue that three elections in three years is a sign of a mature, stable political democracy that is able to make its way in the world.

I ask those who say "Yes" to stop to consider the situation. There are only three realistic possible outcomes of a General Election, if one were held. The first is that a Labour Government—I agree that it is not likely—might be returned with an increased majority. Is it seriously argued on the Opposition Benches that the flow of material and policy reports from various Labour Party committees would increase international confidence? Is that the argument that is being advanced? I do not think it is.

The second possibility is that neither major party would secure a majority in the Commons following an election. That is more likely because of the growing balance of hon. Members in the House who do not belong to either of the major parties—the Liberals, the nationalists from Scotland and Wales, the Ulster Members and others. If that were the outcome of a General Election, some kind of arrangement between the parties would be necessary in any case. In those circumstances we could have saved ourselves the bother of an election if we were to go in for haggling after it any way.

The third possibility is that there would be a Conservative Government with a working majority. Is it seriously argued that that would restore international confidence? If the stock market and the pound trembled at the merest prospect of the right hon. Lady the Leader of the Opposition entering No. 10, God knows what It would do if she ever got there.

We are coming up to a period—the Prime Minister stressed this in his speech—when, in the national interest, we must secure agreement on pay and price restraints. Would that agreement be more competently secured under the right hon. Lady? [Interruption.] Is that the argument on this side of the House? [Interruption.] Is that what is being suggested when half the Conservative Party does not believe in such a policy in the first place?

I heard Lord Thorneycroft in a broadcast the other day suggesting that the Conservative Party was ready for an election and about to publish a manifesto. Will that manifesto be published in any case? It would certainly enlighten us on Tory policies.

Leaving aside the question of a manifesto, what about the Conservative commitment on devolution? [HON. MEMBERS: "Wait and see."] No doubt "Wait and see" is an appropriate answer to that question. Others may say that there are more Conservatives interested in proportional representation than there are Socialists. That is quite true. But are we, as a party, to trust the Tory Party which, in its manifesto, made a stirring commitment to refer the matter to a Speaker's Conference but felt unable to press the matter when the opportunity arose?

Has the right hon. Gentleman an assurance on that matter?

No. I did not seek one. I argue that an election in itself cannot be described as being in the national interest. Furthermore, it is not in the national interest when a Government are forced to stagger from vote to vote, by-election to by-election or influenza to pneumonia. Indeed, it is the view of my colleagues that it would be better to have a General Election than to carry on with a Government of that kind. That is why, when I first went to see the Prime Minister to see whether there was any basis for agreement, there was never any question of reaching any kind of bargain, any deal, any price simply to secure Liberal votes in the Government Lobby tonight. [Interruption.] That was never discussed. Indeed we never even discussed the possibility. My colleagues and I would rather have had a General Election than see the country carry on with a Government who might survive tonight but face the same problems in a week or so.

Who is the right hon. Gentleman kidding?

The basis on which I approached the Prime Minister related to whether there could be agreement between us for a period of stability. If there were to be that stability, we were interested in continuing discussions to find the basis of an agreement.

The idea that the Liberal Party will support a Government on an agreed programme in the national interest is not a new one. The same proposal was put put the right hon. Member for Sidcup (Mr. Heath) when he was Prime Minister in February 1974. It is important to put this on the record, because I have no doubt that the Conservative Party Central Office propaganda machine will be churning out leaflets lining up the Liberal Party with Socialism and all its policies.

I wish to remind the House that ever since the first election in 1974 my predecessor and I, as leaders of the Liberal Party, have argued that we were prepared to support any Government in the national interest so long as we believe that that was the general desire, and so long as we could sufficiently identify the areas of policy on which we were agreed. The former Conservative Prime Minister replied in a letter, which has been published, as follows:
"We do not think that, on its own, an arrangement for Liberal support would be sufficient to provide the stability and command the confidence necessary in present circumstances."
The right hon. Gentleman wanted us to enter a coalition. I do not criticise the right hon. Gentleman for that statement because, if one added the then Conservative members to the number of Liberal Members, one still reached a total of only 309. There was not a majority for such an arrangements. The right hon. Gentleman might well have been justified in rejecting that proposition—but reject it the Conservative Party did.

No, we did not. The Conservative Party rejected the arrangement that we are now reaching with the present Government. Coalition was never on then, and it is not on now. That word was never mentioned between the Prime Minister and myself. This is not a coalition arrangement. We all know that a biography of Ramsay Macdonald has recently been published, and we know what happened then and the strong feelings in the Labour Party. The Liberal Party would find it difficult to enter a coalition so long as our numbers do not adequately reflect our vote in the country. With the small group that we now have, that would not be a balanced coalition. Therefore, we were not interested in a coalition; and we were not interested in any kind of deal for this evening. We are interested in an open, agreed and above board agreement for a definite period. That is what we have secured [An HON. MEMBER: "For how long?"] If Opposition Members had listened to the Prime Minister's speech, they would have heard him say that this will last until the end of the present parliamentary Session.

The Prime Minister said on television last night-and he said this to me during our discussions—that it was important, in coming to an agreement, that each of us, as leaders of our parties, would be able to maintain our self-respect. That is what we have done. The terms have been agreed to work together, and we have both retained the total independence of our parties from each other in electoral terms and in terms of the House of Commons.

I pay tribute to my colleagues who have sustained this agreement with collective responsibility in a mature way, knowing the effect that it may have on our followers in the country. I also pay tribute to the Prime Minister, because there are many men who have occupied his position who might have been a little too vain or above these matters to discuss them with a relatively small group. It is a tribute to him that he was willing to work for an agreement and that he persuaded his Cabinet colleagues about its value.

Is the right hon. Gentleman aware that in my constituency at the last election many Liberal supporters objected to people who said that a vote for the Liberals was a vote for Labour? Does he think that they were right so to object, in the light of today's events?

Yes, they were right to object to that assertion. A vote for the Liberals is a vote to help the nation in its economic problems. It cannot be said to be a vote for Labour if we were willing to do exactly the same with a Conservative Government in a similar position. It was a vote for the national interest. That is the truth, and it is on the record.

The object of the exercise, as the first paragraph of our agreed statement says, is to secure the country's economic recovery. My hon. Friend the Member for Cornwall, North (Mr. Pardoe), as chairman of our party's distinguished economics panel, has a record over the years of rather greater accuracy, both in forecasting and in consistant diagnosis, than many of the so-called economic experts who are available to either the Conservative Party or to the Labour Party.

We intend to work with the Government to support the attempt to secure agreement on pay and prices and also to argue the case that there is a definite need to shift the burden of taxation from personal incomes to other areas that we have specified in a detailed document.

There is even some gain for the House of Commons and the country as a whole in the negative parts of the agreement. I do not expect the Prime Minister to stress these matters, but in a House where the Government are a minority the fact that the direct labour proposal outlined in the Queen's Speech is not to come before the House is, I think, in the national interest. The fact that the banks and insurance companies can look at a certain passage in the Labour manifesto but sleep easily at night is also in the national interest. The Prime Minister has said before in the House that no proposals of that sort were coming forward. Nor could they, because the Government are in a minority.

Is the right hon. Gentleman seriously suggesting that the Liberals would have supported either direct labour legislation or the nationalisation of the banks and insurance companies before today's arrangements?

That intervention was a bit of a waste of time. [HON. MEMBERS: "Answer."] No. I am arguing that the idea that a minority Government having to seek support from other parties is detrimental to the national interest is nonsense. [HON. MEMBERS: "Answer."] If Conservative Members had been making less noise the House would know that I said "No" as a direct answer to the hon. Gentleman.

The Prime Minister said that the committee that is being set up will consider Liberal Party policy proposals as well as policy proposals from the Government. The Press has made much play of the so-called shopping list. There was no attempt to include a shopping list in the agreed statement. However, we know that machinery is to be established so that we can bring forward our own views on industrial relations policy, housing policy, matters such as the attention required to be given to the self-employed and small businesses, our views on the future of British Leyland and even on esoteric topics that do not get much attention in the House, and no sympathy from the Opposition, such as the necessary review of the provisions of the Immigration Act 1971 and its deportation procedures. We shall be bringing these issues before the Consultative Committee. The trouble is not that we have too few policy proposals but too many. We shall have to be selective.

Before the agreement was ever made talks on devolution were taking place among all parties. I hope that the Government will not take offence if I repeat my view that the devolution Bill, as constituted, was a thoroughly bad Bill. It was widely held to be so by Members on both sides of the House. We are now arguing with the Government that there are either fundamental improvements to the Bill or we proceed afresh with new legislation.

I have suggested that there should be one Bill for Scotland, separately, closely followed by one for Wales. I do not blame the Prime Minister for not having read the detailed document, consisting of 30 pages, that he received only yesterday. The right hon. Gentleman had other things to do. However, he will see that it contains proposals that the Assembly shall have powers of taxation. It tries to sort out the unsatisfactory definitions in the Bill on the balance of powers between the Assembly, the House of Commons and the Secretaries of State.

I believe that to be a constructive approach. If the Government consider these matters seriously, we can get an improved devolution Bill on the way. I make an appeal to those sitting behind me from the Scottish and Welsh national parties to pause for a second to consider whether they will vote tonight so that the right hon. Member for Finchley (Mrs. Thatcher) may have her opportunity to "wait and see" on devolution as an alternative to these proposals.

The right hon. Gentleman has said that he would like to see separate Bills for Wales and Scotland. Will he tell the House whether the priority would be for Scotland and whether, on his proposals, it would be possible for a Welsh Bill to go through Parliament before the next election?

On the second part, "Yes", On the first part. I hope that the hon. Gentleman will forgive me if I do not start a devolution speech. I shall happily send the hon. Gentleman a copy of the document. I hope that that will keep him happy.

This afternoon we have had for the first time a specific commitment to introduce a direct elections Bill this Session. There was also the specific commitment that there will be a free vote as a whole on the proportional representation issue.

I do not think that the degree of anger that is felt by the 5 million to 6 million Liberals who voted in two successive elections, about the limited representation that would have ensued, is sufficiently appreciated in the House. It would have added insult to injury if we had adopted an election system for Europe that risked the result that the Liberal Party, had had no seats.

There are arguments for treating the European Assembly in a totally different way from the consideration of Westminster elections. No Government is to be formed, as it is an Assembly. It is a new experience. There are no seats to be redistributed or Members to be decamped from existing seats. The real danger of a fixed-term Assembly is to have elections occurring at times of Government unpopularity. All Governments in this country are unpopular—usually in their mid-term—whatever their party composition. Having European Assembly elections at such times would produce a totally distorted imbalance in the delegations that we send to Strasbourg.

Lastly, there is the argument that it is very much easier to introduce a proportional representation system within the deadline of 1978 than it is to construct 81 separate constituencies. These are arguments that have nothing to do with unfairness to the Liberal Party and that bring proportional representation to the fore. It is a matter that will automatically be brought to the fore in the White Paper.

Will the right hon. Gentleman now let the House know whether the Liberal Party will withdraw its candidates at Grimsby and Stechford?

I shall treat that intervention with the contempt that it deserves.

The agreement lapses at the end of the present Session. It will get the country through the difficult period ahead, especially the pay negotiations. It may well be that, come the autumn, either the Labour Party or ourselves, or both, will deem it right to bring the agreement to an end, to abandon it and urge the people to take their opportunity to elect a new House of Commons. If that is so, I shall not regret the period of the experiment. It is my belief that it is possible that people will get to like the taste of co-operation and want more. It may well be that they find the artificial party battle in this place a little irrelevant to many of the ordinary problems that they face.

I do not know whether the agreement will succeed, but I trust that it will. Trust between us on these matters is very important. It requires very much of the political parties. In a newspaper this morning—I forget which one—it was said that the Liberals might have to carry the can for the Labour Government. I accept that. There is a tendency always to blame others. Not enough of us carry the can. There is a tendency to say that everything is the fault of the Labour Government, of the previous Tory Government, of the unions, of bad management, or even, sadly, in some places, the fault of the immigrants. The latter introduces a particularly dangerous and unsavoury note.

All of us have to carry the can if we are to pull through, and we are not prepared to shirk our share of the burden.

In calling right hon. and hon. Members I intend to ensure as best I can that every minority opinion has a chance to express itself. That will mean that some may have to wait.

5.30 p.m.

I do not think that I am one of those who are benefiting from your ruling in favour of minorities, Mr. Speaker. However, I have always thought that although minorities ought to be heard, there should be some chance for those who express a view with which most people agree to get it in edgeways between the voices of the minorities.

Whatever Government we have in this country, there will be certain awkward problems. They have been with us for some time and will go on being with us for a good deal longer.

I want to refer briefly to a few of those problems and to consider what light they throw on the question before us tonight regarding who enjoys the confidence of the House and of the country. I have in mind how the wealth produced in this country should be shared among different groups and individuals, how the production of wealth can be made more efficient, for without it there is no realisation of any of our hopes, how we are to achieve a civilised relationship both in this country and on the world scene between those who have white skins and those who have not, and the problems of defence, and war and peace.

My right hon. Friend the Prime Minister gave us some solid evidence for the view that on these matters, although the problems remain immense, we are proceeding in the right direction. All the economic indicators suggest that we are getting nearer to the answers on the first two problems. On the world scene there is no doubt that the Government are in cordial relationship with our partners in the Community and with our transatlantic allies and are making a steady and realistic approach towards relations with Eastern Europe.

As the problems are there and as we are moving in the right direction towards their solution, we must ask what contribution could be made by the Opposition if they came into power. Although in heaven somewhere there may be better solutions to these problems than the Government have attempted, in this imperfect world we are obliged to ask what would happen if the right hon. Member for Finchley (Mrs. Thatcher) and her colleagues were tackling them.

As to the right hon. Lady's personal fitness to tackle them, we cannot be left in any doubt after the speech with which she opened the debate. When I say that it was a tragic speech, I use the word "tragic" in its classical sense, because Aristotle defined tragedy as that which arouses both pity and terror. The right hon. Lady's speech certainly managed to arouse pity on the Government side and manifest terror on the Opposition side. [AN HON. MEMBER: "Rubbish".] It is comforting to think that the Opposition had a few things later to cheer them up a bit. They certainly needed them. Indeed, it is generous to say that they deserved them.

Let us consider the Opposition's position on the four problems that I have outlined. My right hon. Friend the Prime Minister pointed out the extent to which the Opposition are uncertain on various matters. I want to add to the picture by pointing out certain attitudes on which they are quite definite.

I instance how the wealth produced in this country should be shared among the competing claims of different kinds of producer—worker, investor, worker by hand, worker by brain, more skilled worker, less skilled worker. What solution would be offered by the Opposition? It is no exaggeration to say that we do not know. If we reproach them with wishing to tear up the social contract, there are indignant denials, but they never refer to the social contract except in terms of contempt. They give encouragement to any goup of people who want to beak the arrangements between the Government and the trade unions.

It is not even clear whether the Opposition believe in an incomes policy. I say, from deep conviction and much experience, that for any Government to say that they do not believe in an incomes policy is to deceive themselves. If they start to act on that belief, they will end up by bashing people in the public service because, in the absence of an incomes policy, all the others will have got in first and those in the public service will be the only ones left to bash. That is what not having an incomes policy means. However, we do not even know whether the Opposition believe in an incomes policy.

On the distribution of wealth, the Opposition are clear about one thing! they have told us with real gusto that they will repeal the Community Land Act. The opportunity to get large chunks of income for doing nothing at all will be rapidly expanded under a Tory Government.

On the vital question of how those who help to produce the wealth should be rewarded, the Opposition are uncertain and vague. However, they are determined that it ought to be easier for a limited number of people to do very well by making no contribution to the wealth of the country at all.

As regards the production of wealth, I am convinced of one thing to which no Government have paid sufficient attention—namely, the need for much greater emphasis on industrial retraining. We must make it easier and more normal for a man during his working life to learn a new skill and to go into a new industry. We cannot raise our standard of life unless productivity goes up. By that I mean the amount of wealth that one man produces in an hour or a week.

If we improve productivity and do nothing else, many people see themselves being worked out of jobs. We can only justify to the trade union movement and get its help on measures to increase productivity if it becomes easier for men to learn new skills.

The records of successive Governments on industrial retraining are not encouraging. I made a particular study of this subject some years ago when I was at the Department of Economic Affairs. I discovered that that Labour Government and the present one had a decidedly better record on this matter than Tory Governments.

In order to get anywhere with industrial retraining we must have the good will of the trade union movement, whether we like trade unionists or not. It is apparent that many hon. Gentlemen opposite do not like trade unionists. Indeed, certain hon. Gentlemen have made contemptuous and hostile references to them. But a subject so delicate as getting men to learn new skills and of getting others to accept into their industries those who have recently been retrained requires the genuine good will of the trade union movement.

The one thing about which the Conservative Party is sure is its dislike of the trade union movement. No opportunity is lost in this House, either at Question Time or in debate, by Conservative Members to say or do whatever they can to try to weaken the power of organised labour and to encourage every kind of movement—breakaway unions—which will make the lives of leading trade unionists more difficult. Again, on things that matter the Opposition have nothing to say, but on anything that is wrong they are wholehearted and enthusiastic.

The third problem that I mentioned was race relations. We all know how important to the peace of the world is the civilised relationship between white and non-white. We know that part of Britain's job in contributing to the solution of that problem is to ensure an harmonious relationship in this country.

When the Tory Opposition are pressed on what they would do about immigration, they return, as always, a hesitating reply. But now, at a by-election, they have come out with a programme. Their candidate's approach is substantially the same as that of the National Front, and he is not disowned by the leaders of the Conservative Party.

Their policy would mean that a black man living in this country whose wife has not yet been able to join him will be told that she never will be able to join him. No decent person could defend that policy But that, for electoral reasons, is what the Conservative candidate is doing, and the Opposition Front Bench will not or dare not disown him.

I come from near that area. May I ask the right hon. Gentleman a question that the people of this country would like to put to him, to his party and to the Liberal Party? What constructive suggestions do the Government have for limiting immigration, which is continuing at the rate of 75,000 people a year?

The Government recently put forward suggestions, and there has been a report on this subject. There has been discussion about whether there should be a register and there are stricter controls against illegal immigration, but I am concentrating on the point that the one thing to which the Conservative Party is now apparently committed—according to what has been said during the Stechford by-election—is that there should be no further immigration, with the results that I have just described. The wife of a black man living in this country who has not yet been able to join him would never be able to do so.

Do Conservative Members ever consider what the results of some of their attitudes may be on opinion all over the world. These affairs are watched in Asia and Africa. Once again this point demonstrates Conservative uncertainty about any constructive policy but their certainty on the one policy that is certainly wrong.

There is also the matter of East-West relations and the related topic of national defence. If "trade unionist" is one term of contempt among the Conservatives, the word "Helsinki" is another.

I think I heard an echo. The hon. Member is mistaken and I shall ask him to consider that remarkable proposition for a moment. The decision to hold the Helsinki conference was not made by the British Government alone. Also participating were our partners in the EEC, our transatlantic allies and a large number of non-aligned countries, as well as the countries of the Communist world. It is difficult to believe that they were all wrong and that a smattering of Conservative Members—sometimes including the Leader of the Opposition herself—were right.

We ought to know whether the Conservative Party thinks that it was wrong to hold the Helsinki conference. Would any future Conservative Government explain that to our allies, or go further and say that they would not attend the forthcoming Belgrade conference?

The right hon. Gentleman may recall that part of the Helsinki Agreement was that the Russians should improve their treatment of human beings and afford them some human rights in their own country. Various organisations, such as Charter 77, have been set up in Russia and satellite countries to monitor this, but they in turn have been suppressed. Does the right hon. Gentleman still believe that the agreement was a good thing or that the right hon. Member for Huyton (Sir H. Wilson) did not have the wool pulled over his eyes?

I still think that the Helsinki Agreement is a good thing. It gives us some opportunity to focus the attention of the whole world on these matters. Although the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) may not have noticed it, such activity has made it possible to extract from the grim large prison of Eastern Europe a number of people who have been glad to leave.

The question at issue is whether a future Conservative Government would go to the Belgrade conference. I imagine that the hon. Member for Cirencester and Tewkesbury would not, although the question is not likely to arise in his case. We do not know what view the Leader of the Opposition would take. We know that she will make a crack at Helsinki and the Russians if she thinks that she can obtain electoral advantage in this country by doing so. That is an extremely dangerous and irresponsible thing to do, and it is linked with demands that this country should be more heavily armed.

Is the right hon. Gentleman aware that the bulk of our preparatory work for the Helsinki conference was carried out by Lord Home when he was Foreign Secretary, although the conclusion of the conference and the signing of the agreement took place during the period in office of the right hon. Member for Huyton (Sir H. Wilson)? The Conservative Party took its fair share in preparing for the conference and I have always thought that if the Soviet Union stuck to the agreement there would be much to be said for it. We Conservatives have tried to warn the House and the public that the Soviet Union's signature might not be as valid as it appears.

I hope that the hon. Member will talk that point over with his hon. Friend the Member for Cirencester and Tewkesbury who seems to think that the Helsinki conference should never have taken place. I pay tribute to what was done by that Conservative Government in helping to prepare for Helsinki, but we should remember that the first steps on the road to Helsinki were taken by the Labour Government of 1964–70.

This is by the way, because we are talking about matters that concern us whatever party is in power. It worries me that the Conservative Party has—as we have just heard—two voices on Helsinki. One finds some certainty in the Conservative Party because its members agree that this country should be more heavily armed. That is Conservative doctrine, but it is curious, because the Conservative Party's record in looking after our defences has never been particularly good. It is interesting that during the last war, with one exception, if he could, Sir Winston Churchill always avoided putting the Armed Forces or anything to do with national security under the charge of Conservative Ministers.

We now have the Conservative proposition that the country ought to spend more on armaments, but the Conservatives have also said that they must not be paid for through increased taxation. To put it bluntly, the cost will have to be paid by reducing social services. I should have thought that if the case could be made out that we should spend more on defence in the national interest, there should be a call to the nation as a whole and a demand that everyone should help bear the cost according to his means. The Conservatives are a little vague as to exactly how much more money would be needed, but they are sure that the more fortunate and well-off should not be put to any inconvenience.

On all these issues the Conservative Party remains opposed to trade unionism and good race relations and deeply committed to a class approach to all our problems. In every case the Conservatives are uncertain on matters that might be constructive and helpful. When they are certain, it is always on something that is wrong. The Conservatives have an unerring grasp of the wrong end of the stick, and that is why a change of Government in their favour would be a national disaster.

5.48 p.m.

The right hon. Member for Fulham (Mr. Stewart) has dealt with a range of the problems that may or may not arise after tonight. I ask his forgiveness, and the forgiveness of other hon. Members who wish to speak, if I do not follow his speech in detail.

I am not entirely happy with the social contract. The received wisdom is that Mr. Jack Jones is dictating to the Government. In fact, the boot is on the other foot. He delivered the trade union movement to the Government without sufficient guarantees that prices would be held.

The right hon. Lady the Leader of the Opposition referred, among other things, to the fact that this Government are a minority Government and that the House is made up of minority parties. I am with her on that point 100 per cent., but having diagnosed that sore on the body politic I waited for her to give a prescription. I am still waiting.

I have one good word to say for the Liberal Party. It is with my party in being in favour of some form of proportional representation—but if hon. Members find fault with the Government for being a minority Government they should have the honesty to do something about it.

The Prime Minister read out the usual list of jam tomorrow and better times ahead, but we have had that time and again from Governments of both parties since the war. He said that there would be more money to spend, but to quote the words of Aneurin Bevan, which the Prime Minister himself used yesterday,
"Why peer into the crystal ball when we can read the book?"
We know what has happened. The value of money has gone down and prices have gone up.

The Labour Party's manifesto in 1974 said:
"The first and over-riding priority facing Scotland in the next 5 years will be to create more and better jobs."
At that time, unemployment stood at 4 per cent. Yesterday's figures indicate that it has doubled to 8·3 per cent. The Government have also kicked the self-employed in the teeth by refusing to raise the VAT threshold from £5,000 to £15,000. In many areas the self-employed account for 25 per cent. of the working population, and if that threshold had been raised, many more jobs would have been created.

The manifesto also said:
"The next Labour Government will give a high priority to the fight against rising prices."
In a recent parliamentary answer to my hon. Friend the Member for Perth and East Perthshire (Mr. Crawford), the Government admitted that the pound, which was worth 100 pence in 1971, was worth 51 pence in 1976. We know that food prices have risen by 231 per cent. in the past 12 months.

The manifesto also said:
"Labour will seek to create greater economic justice."
Yet we hear of dental charges being raised to £5, opticians' charges to be increased and so on.

The manifesto said:
"Labour will give high priority to improving our system of education."
The Secretary of State for Scotland heard a good deal about that today in the debate in the Scottish Grand Committee where hon. Members in all parties, including his own, denounced the proposals in his consultative document.

Another part of the manifesto read:
"We shall carry through a radical programme of industrial change."
The Scottish Development Agency was set up with a paltry budget. It will never get anywhere near clearing up the appalling industrial mess in Scotland.

All these charges are on the indictment against the Labour Party. They are proved, and they are sufficient reason for us to have no confidence in the Government.

For my hon. Friends and myself, the most important promise in the manifesto was:
"We shall set up a Scottish Assembly and Labour does not make promises it won't keep."
The Leader of the Liberal Party said that the Scotland and Wales Bill was a bad Bill. My hon. Friends and I all said that it was a bad Bill, but at least it was a start along the road. When the Liberal Party did not vote for the guillotine we lost any chance of getting the Bill through in this Session. It is interesting to note that among the arrangements cobbled up between the Prime Minister and the Leader of the Liberal Party on devolution, no obligation is spelled out on a timetable, and without such a motion the Bill will not pass. The Leader of the Liberal Party tells us to wait and see, but we saw what he and his colleagues did when it came to the crunch.

That was the first time for a generation that we had the chance to start decision making in Scotland. I have never had any doubt about the good faith of the Prime Minister and the Leader of the House in putting through the Bill, even though their motives are different from mine. They wanted to put the Bill through, but were frustrated by members of their own party. If the "no confidence" vote succeeds, the hon. Members who voted against the Government on the guillotine will have dug the Government's grave.

I thank the right hon. Gentleman for giving way. He is right to castigate the Liberals for their mistake in voting against the devolution guillotine, but how on earth can he and his party justify going into the Lobby tonight with the arch-unionists, anti-devolutionists and anti-Socialists in the Conservative party? That is how the Scottish people will see it.

The unionists are not confined to this side of the House; they are on the Benches opposite as well. We saw that in the vote on the guillotine.

I am shocked to learn that Wales is to be taken out of the devolution Bill.

May I correct the right hon. Gentleman at once? There is no deal to remove Wales from the Bill. Nothing of the sort has been accepted, or even proposed from either side.

I gathered from what the Prime Minister said that the Bill was to be brought in as a Scottish Bill only. I am pleased to accept the right hon. Gentleman's assurance that this is not so. We served notice on the Government weeks ago that the Bill should go through.

What the Liberals do tonight is their business, and the Conservatives must get away from the idea that other parties in this House are their playthings, but, as a result of their action on the guillotine, the Liberals have ceased to have any credibility as a home rule party.

I would not give a vote of confidence to the Labour Party, the Tory Party or the Liberal Party. I want that vote to be available to the Scottish people, and we shall vote against the Government.

5.57 p.m.

What a bitter disappointment it must be for the Leader of the Scottish National Party that he will not have the opportunity that he thought he would have to bring down the Government! Much as I admire and like the right hon. Gentleman, I am not struck by the arrogant posturing which the SNP Members adopt in the House, as though they were the repositories of all that is good in Scotland and no one else knows anything. It must be put on record that the Scottish trade union movement has said categorically to the SNP Members that if they carry out their stated intention and vote against the Government, they will bring about the possibility of a return to the most reactionary Tory Government since the 1920s and will shut the door on the possibility of any form of devolution.

The public could be excused for being rather puzzled about the way in which we conduct the business of the House. It appears to them that hon. Members opposite, either en bloc or individually, are vociferous in denouncing Ministers every day and are constanly expressing a lack of confidence in the Government. The same could be said about some of my hon. Friends.

It is pertinent to ask
"Why is this evening different from all other evenings?"
The answer is probably that the Leader of the Opposition tabled the motion in a fit of pique, and now feels that she must go through the formalities.

Even the remote possibility of a Tory Government causes shudders of horror throughout the country—as the Leader of the Liberal Party clearly indicated in his admirable speech. There was the amazing picture only a couple of days ago in the Stock Exchange when there was a £1,000 million drop in the value of shares on the mere improbable possibility of a Tory Government.

The Opposition say that they have no confidence in this Government, but what alternatives do their policies portend? I suggest that there would be massive cuts in public expenditure, as my right hon. Friend the Member for Fulham (Mr. Stewart) spelled out. Those cuts would fall hardest on the National Health Service, with prescription charges being increased, and on education. Higher rents would be a certainty. The cuts would fall on the welfare services. There would be increased expenditure on defence. Even a 1 per cent. increase in defence expenditure would amount to about £1,000 million extra being spent. The Tories have not reconciled themselves to Britain's changed rôle in world affairs. Certainly we play a different part now from that which we played in the nineteenth century.

I now turn to détente and the Helsinki Agreement. A total of 35 countries in Europe, including two from outside—the United States and Canada—are involved. The Select Committee on Defence and External Affairs is dealing with the Helsinki Agreement at present—I am not in contempt because our deliberations today were in public. We went in considerable detail into many aspects of the Helsinki Agreement. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) cannot expect change to occur overnight. We are asking many pertinent questions about the Helsinki Agreement. Probing deeply.

Under a Tory Government unemployment is bound to rise, because there would be a savage increase in the rate of factory closures. The Tories do not want to temper the search for efficiency with a humane approach. Under a Tory Government there will be a shift from direct to indirect taxation, with the consequent injurious effect on those least able to bear the burden. There is bound to be conflict with the trade union movement. As has been pointed out by two speakers today, there will also be the problem of immigration policy.

I promised to make a brief intervention. In my experience it always seems that the Labour Party comes into office when the country is in great difficulty after a period of Tory administration. That is what happened in 1974. For two-and-a-half years the people of this country, led by a Labour Government, have made sacrifices that are showing unmistakable signs of paying off. The balance of payments situation has improved, the pound is more stable, exports have increased, resources have increased, unemployment is decreasing, and inflation is falling.

The Leader of the Opposition was obsessed with Marxism. She referred to it many times in her speech. She must face the truth that the capitalist system is creaking at the joints. The capitalist system has not solved the unemployment problem. For example, it is 52 per cent. in West Germany and would be higher if 650,000 guest workers had not been returned to Yugoslavia and Turkey. It stands at 4·7 per cent. in France and would be higher but for 300,000 people who are in the armed services as a result of conscription. Unemployment is 6·3 per cent. in Italy, 7·3 per cent. in the United States, and 5·1 per cent. in the United Kingdom.

Technological advance means that fewer operatives are necessary. That is a problem that we must face and solve. My right hon. Friend talked of the necessity of acquiring new skills, but I suggest that it might be a good idea if the work force regained some of the old skills that are dying out. We shall need a shorter working week.

The country simply cannot afford a Tory Government, because only a Labour Government is relevant to the needs of the United Kingdom. The Prime Minister is right to want to continue to do everything that he can to carry on with the good work of the past two or three years.

The Tories and the nationalists are enraged at the consultations with the Liberal Party, but the Prime Minister is facing the reality of the situation. He is acting in the national interest. I look forward to this Government continuing with their important legislation for a further two years or more and to their being returned with a large majority at the next General Election, in 1979.

6.5 p.m.

I am grateful for the opportunity to intervene and I undertake to be brief. My right hon. Friend moved a motion expressing no confidence in the Government. I see no reason at all why the House should have confidence in the Government, since the country clearly has not, according to recent polls and by-elections.

The familiarity to us here of the Government's arguments does not add any enchantment to their qualities in Government. The Government have made a hash of it. On prices, taxes, unemployment, the value of sterling—all the things that matter—the record of this Government has been lamentable. As for the conduct of the business of the House, I have never known anything to match it for incompetence. That, too, has been lamentable.

The Government say that they are changing their minds. They are talking of reducing Government expenditure and taxation, and about the importance of profits. The prospect of being hanged certainly concentrates the mind. If this is the path that we are to follow, if we are to have reduced Government expenditure, lower taxation and to show some respect for profits, is it not better to do it under a Government of a party that believes in those things? The last things that the Government believed in a few months ago were the things that they say that they believe in today. On their record we have no confidence in the Government and we have even less confidence in their ability to carry through policies in which they totally disbelieved a few months ago. I shall regret it very much if the motion is not carried. I fear, from what has been said today that it seems unlikely to be carried.

I listened with fascination to the Prime Minister and the Leader of the Liberal Party about the understanding between them—I must not say "deal". I have seldom heard anything so bogus in my life. I have an increasing conviction that someone has been sold a pup. I think that the Liberals have been sold a pup, but whether the Prime Minister sold it to them or they sold it to themselves is still to be discovered.

Let us examine what they have said. They are to have consultations. The Labour Party has given one or two details of concessions on particular measures, but the basis of the Liberal Party's argument is the need for stability. How long is that stability to last—for a Session or a Parliament? The Prime Minister said it was to be for the rest of this Parliament, although I am not sure of that.

What stability is there in a few months? The whole point of the Liberal Party's argument was that it should be for a few years. The Leader of the Liberal Party has destroyed his own argument. If there is to be stability, it must be for some time. If the Government are to have an assurance of continued support for their policies over an extended period, the Liberals cannot possibly vote against the Government in circumstances that would defeat them for a long period of time.

The right hon. Gentleman cannot say that we have been sold a pup, because at the end of the Session we shall review the agreement. If it works, we shall continue it and we shall get long-term policies.

Stability for a few months or stability until the end of the Session—that does not make any sense. What have the Government given in exchange? There is to be a machinery of consultation. How splendid! There is to be an examination of proposals and policies, including economic policies. Does that include the Budget? After all, the Budget is central to a Government's economic proposals and policies. If the Liberal Party is not to be told the contents of the Budget, what is the point of consulting? If it is to be told the contents, that is a disgrace. Which is the answer?

The right hon. Gentleman will acknowledge that he has been a Chancellor of the Exchequer and is, therefore, able to tell us that no Minister of any Administration is told the Budget details until probably the morning of Budget day or the day before when the Budget is to be agreed by the Cabinet. It therefore follows that it would be just as improper for the Chancellor to tell Liberal Members the details as it would be to tell his colleagues. What we have done is to make very detailed submissions. We did that some three weeks ago.

Liberal Members give everything away. Everyone has made submissions. We all do that. As I remember it, the rule is that details of the Budget are disclosed in advance only to the Prime Minister and certain members of the Cabinet. Therefore, the details of the Budget will not be disclosed to the Liberal Party, so the details of the Government's policy will not be disclosed. What is the point of all this talk?

The other thing is that the Government are to examine the ideas of the Liberal Party. There is no commitment to accept anything whatever, but only to examine. I should have thought that any rational Government, even the present Government, would examine any serious proposal put forward by any party in the House. What is the difference? Are we all equal, or are the Liberals more equal than others?

If in the future the Liberals are to be more equal than others, to what extent and in what way, and will the Government accept Liberal proposals because they come from the Liberal Party and not because they think that they are good proposals? If the Government are to accept only proposals that they think are good, that is what happens already, without the machinery of consultation.

This understanding is the most bogus nonsense that I have ever heard.

6.12 p.m.

For the benefit of those interested in the arithmetic rather than the argument, perhaps I should say that I shall be voting with the Government tonight. That is a decision that I reached at about 3 o'clock this afternoon, after a good deal of agonising doubt.

It seems to me that we are engaged in two debates that are interwoven with each other. One is a debate following the usual form on a motion of no confidence, which is, in fact, a mutual slanging match and is just as boring as these slanging matches always are. The other is a debate on the significance—or lack of significance, according to the right hon. Member for Chipping Barnet (Mr. Maudling)—of the understanding between the Government and the Liberal Party.

I do not share the cynicism of the right hon. Member for Chipping Barnet, although I think that we would all agree that at present we do not know what will become of this understanding and whether its results will be short term or long term. Certainly in the short term there is an agreement to have what the Leader of the Liberal Party described as a period of stability.

There is an agreement to establish machinery under the chairmanship of my right hon. Friend the Lord President. Those of us who have known him for a long time will look forward with fascination to his progress as a promoter of stability. There seem to be a number of understandings on the legislative programme on matters on which the views of the Government and the views of the Liberal Party may already have overlapped to some degree.

However, the question that I want to examine—I examine it optimistically; this is why I shall be voting with the Government tonight—is whether this can lead on to a new style of parliamentary politics and a new kind of relationship between parties in the House. Another phrase that was used by the Leader of the Liberal Party was that he hoped that there might be—I hope that I remember his words correctly—a taste for co-operation emerging from these new procedures. I hope that there will be, and I believe that there should be.

The background to the debate is that during the last three years—I refer particularly to the period since the General Election in October 1974—the Government have grossly exceeded their mandate and have been allowed to do so. They have been allowed to do so because of the disunity of the Opposition parties—partly because of their genuine differences of opinion with each other and partly because of their different views about parliamentary tactics. They have allowed the Government to get away with more than a Government should have been allowed to get away with.

I say that against the background that the present Government are a minority Government in the sense of their support in the country. The Labour Party is a minority party in the country. So is every other party that is represented in the House. However, it has often been said, and it is worth repeating, that we got less than 40 per cent. of the votes of those who voted at the last General Election and the votes of less than 30 per cent. of those who were entitled to vote.

Also, in this House the Labour membership has constituted only about 50 per cent. of the membership. It was marginally above 50 per cent. following the October 1974 General Election, and then that margin disappeared and it is now marginally less than 50 per cent.

Yet the Government have successfully pursued a very intensive programme of long, complex and controversial legislation, often badly drafted, often costing much more to taxpayers and ratepayers than was ever anticipated, and they have rushed it through at a rate that has never been seen previously. It is no secret that some members of the Cabinet—I was one of them—at times tried to warn their colleagues against both the volume and the pace of this legislation. But when we did so, we were answered with the arguments that these were manifesto commitments, that the Labour movement expected us to do these things and, in particular, that the TUC expected us to do these things as part of the price of the social contract. Those arguments were considered to be overriding arguments, whatever the merits of a particular case and despite the developing minority situation of the Government in the House.

A few days ago the Prime Minister referred to this debate, and particularly the vote at the end of it, as a moment of truth. So it is. It is a moment of truth for every hon. Member, particularly for the Prime Minister and his Cabinet colleagues, because the fact is that the Government can no longer go on governing in that way. The fact is that the parliamentary arithmetic no longer allows it. The Prime Minister was conceding that fact in his speech this afternoon. With his usual flair as a parliamentary speaker, it did not sound as though he was making concessions, but he was making concessions, and in my view they were overdue concessions.

The question is whether this new organisation—the agreement with the Liberal Party is only part of this, but it is the most obvious example—will be a more permanent feature of our politics. I would want it to be a feature of our politics whichever side is in office. In other words, so long as there is a Labour Government, is their first loyalty to what is usually called the Labour movement—which is, in fact, a very few thousand activists throughout the country—or, instead of that, is it their duty, as I believe it to be, to seek out the national interest and to seek the greatest degree of consensus and to get as much support as possible in the middle ground of politics?

My right hon. Friend knows, as I know, that in Newham, part of which he represents, we have had a grave problem with regard to housing and education during the period when we have had several Secretaries of State for Education and Science and when we had a majority. Manifesto or no manifesto, can my right hon. Friend tell me, during any of that period, when those Ministers—I emphasise the plural—did anything to overcome the awful problems of the nation? Does he think that this shabby deal with the Liberals will help, when he knows that only this week the Government have announced further cuts in the building of schools in Newham?

I shall not answer on behalf of Secretaries of State for Education and Science, in the plural.

I can help by answering on behalf of one Secretary of State for Education and Science, and that was myself. [Interruption.] I shall tell my hon. Friend what he ought to know—and as he does not know, he would do much better to shut up and listen. I shall tell my hon. Friend what he ought to know. It is that I discriminated in favour of the deprived urban areas in this country in respect of school building. I discriminated in favour of boroughs such as Newham in terms of the London allowance. During that period of great economic stringency, I did everything within my power to improve the opportunities for children in Newham and areas like Newham. My hon. Friend might do better to study these matters rather than making the sort of foolish intervention that he has just made.

My hon. Friend diverted me from my main theme. The point I was on was that it has become a condition of this Government continuing in office for the Government themselves, at least for the time being, and I hope for longer, to take this new stance and direction towards the centre of politics at the risk of offending their own Left wing. That is something which many of us have wanted to see happen for a long time.

I believe that the benefits that can flow from that are much greater than simply the survival of the Government. I mention just two. It seems to me that it is good for Parliament. It re-establishes the basic point that no Government of this country can govern except with the consent of Parliament and that every Government must accept the limitations which that imposes on their freedom of action. It would be a timely reminder to activists in all political parties, and to party conferences of all political parties, that Parliament does not exist just to rubber stamp their decisions. It would underline the fact that MPs have a duty to the country, and to their constituents that transcends their duty to their parties. It is a duty that was defined by Edmund Burke about 200 years ago and I believe it is as true today as it was when he sent his letter to the electors of Bristol.

The other reason is that at the moment I believe the needs of our country, particularly the needs imposed by our economic situation, make it imperative for us for some years ahead to have a Government who aim at the widest possible measure of agreement. Ideally, I should like to see the kind of arrangement and understanding arrived at between the Government and the Liberal Party extended to the Conservative Party, or, if not to the whole Conservative Party, at least to the more progressive Members of the Conservative Party.

I have believed for some years that within this Parliament and without a General Election it would be possible to have an agreed policy and an agreed programme of measures that would command the consent of about 400 or 450 hon. Members, although they would be strongly opposed by extremists both of the Left and of the Right. There have been periods in the history of this country when the forcing through of a drastic and controversial programme has been in the national interest. I think of the programme carried out by the Liberal Government from 1906 onwards and the programme carried out by the Labour Government from 1945 onwards. These were periods when drastic and controversial change was badly needed in the national interest.

But we are not in such a situation now. We are in a situation where we need the maximum unity in politics and the maximum common endeavour in industry in order to overcome our chronic economic weaknesses. Hon. Members on both sides of the House should bear in mind that in the 32 years since the end of the Second World War the Labour and Conservative Parties have been in office for periods which are approximately equal. For most of that time one party or the other has had a majority in this House. It has been a one-party Government throughout this period, and always with an Opposition waiting to pounce.

The same 32 years have seen Britain's economic performance and her performance in terms of social progress falling behind the performances of other Western industrialised nations. There must be some relationship between that failure and the way in which we run our political affairs.

Does the right hon. Gentleman agree that during the 100 years between 1800 and 1900 there was the same opposition between the two great parties—the Whigs and the Tories—and yet that was a time of immense economic, political and scientific advance?

It would be historically true to say that those advances were in spite of the Government of the day rather than because of it.

I have no sympathy with those of my hon. Friends who talk about the prospect of a Conservative Government with such horror. I wish they would not exaggerate such matters. Our need now, whichever party occupies the Treasury Bench, is a Government who seek to be a Government of national unity. We need an Opposition, or Opposition parties, which pursue a course conducive to national unity. We need a wider consensus in the conduct of our affairs than any one party has seemed able to provide in recent years. We need a Government who are touch enough to face up to the vested interest of both big business and the TUC. We need a period in which we are not tearing ourselves apart with doctrinaire arguments and not competing with each other to promise social benefits for the British people based on resources that the country has not yet earned.

If we are to enter such a period, it need not be a negative period. There is a great deal to be done. There were examples of this among the measures discussed this afternoon. There is the form of legislation for elections to the European Parliament, the terms of the Budget, the terms of industrial democracy and many other matters. But these must be matters that command consensus across party lines rather than proposals imposed by the domination of one single party.

I welcome the agreement reached between the Government and the Liberals because I believe that it could lead to a new and better style of politics in our country that would be more relevant to the needs of the country in the 1970s and 1980s.

6.28 p.m.

I shall not follow the right hon. Member for Newham, North-East (Mr. Prentice) in detail, but it must be pleasing for the right hon. Gentleman to see the Labour Government moving in the direction of a Social Democratic Government. That is not an attitude which may be shared by everyone. What surprises me more is the equanimity of some Labour Members during this transition. I wonder whether their confidence in the Government is now dented by such a movement.

We are asked whether we have confidence in the present Government, not whether we have confidence in the Conservatives as a Conservative Government. If the motion is successful that will be a matter for the people to decide in a General Election. But if the Queen sent for the Leader of the Opposition and invited her to form a Government without an election, my colleagues and I would certainly show the same lack of confidence in the possibility of a Conservative form of Government, and their present policies, as we have in the present policies of the existing Government.

Indeed, the speeches from both Front Benches lead us to feel a lack of confidence in the future of Parliament. I suspect that the Prime Minister showed a total lack of strategy. Indeed, when referring to his industrial strategy, he missed out one vital element, and that was the parameter of unemployment. It it true that he referred to unemployment several times, but not within the parameters of trying to get stability. I suspect that stability could be reached with 1,500,000 unemployed, but that is not the sort of stability that I like.

The Leader of the Opposition did not put forward any positive alternatives which would give us any hope of this problem being overcome. If there were doubts about confidence before this debate started, our doubts are now even greater, particularly now that we are dealing with a Lib-Lab alliance rather than a Labour Government per se.

There was one matter to which the Prime Minister referred in relation to devolution. The Leader of the Liberal Party also referred to this. The Prime Minister said that devolution was vital to Scotland. We are very worried about the direction in which the Government are moving and the possible exclusion of Wales. We are also worried about the comments of the Leader of the Liberal Party, who pressed for two separate Bills. We know, as Members of the Liberal Party have said, that this could mean that the Bill dealing with devolution for Scotland could get through whereas the Bill dealing with devolution for Wales could be left out.

The motion asks whether we have confidence in the Government. On the Government's record over the past two and a half years, how can we, in all seriousness, say that we have confidence? We have seen the Government living with massive unemployment. I would go so far as to say that the Government have used unemployment as an economic regulator. Unemployment in Wales rose from 3·2 per cent. in the summer of 1974 to 8·1 per cent. last summer. That does not inspire confidence.

We have a chronic housing situation. Sixty thousand families in Wales are on the council house waiting list. The list is lengthening. When the Government came into office the Minister of State, Welsh Office said that Welsh local councils should bust the bank to solve the housing problems. Yet within a matter of months that policy was reversed. The number of unfit houses has risen from 90,000 to 150,000. The amount of spending on housing in Wales has decreased from £146 million in 1973–74 to £63 million in 1978–79. How can that give us any cause for confidence?

We have seen the lip service that the Government have paid to economic planning. We have seen the introduction of the National Enterprise Board, but it has failed dismally to make any mark on the scene. We have seen a policy of switching resources from the old development areas to inner city areas. That policy causes us concern.

We have seen the abandonment of regional employment premium, which has lost Wales £32 million a year and is now threatening many companies, including one specific company in my constituency. How can I have confidence in a Government that pursue such measures?

Whereas expenditure on social services, education and housing has been cut, we have seen expenditure on defence for the United Kingdom stay at 5·1 per cent. of the gross national product compared with 3·6 per cent. of the gross national product in the European NATO countries. How can we have confidence in a Government who pursue such priorities?

Our teachers have been left unemployed in great numbers, while classes of 40 to 50 pupils continue. The Child Benefit Bill suffered the fate we all know about. Quarrymen in my constituency have suffered severely from pneumoconiosis and silicosis but have looked in vain for help to this Government. We have seen the abandonment of the promise of a fourth television channel for the Welsh language. How can we have confidence in a Government who behave consistently in this manner?

The 1974 Labour manifesto contained a clear-cut commitment to grant devolution to Wales. There were delays from 1974 to 1976—White Papers, discussion papers, and so on. This is happening again—more discussion documents are being issued and no doubt we shall be presented with more dummy Bills. There was also a commitment in the Labour manifesto that the Welsh Assembly would have economic planning powers. That was dropped when the Labour Party actually became the Government. How can we have confidence in such a record?

The Scotland and Wales Bill was lost because English Labour MPs were not able to support it, although a majority of Welsh Members were in favour of it. The Government were unwilling to make the Bill an issue of confidence. How, in turn, can we have confidence in such a Government? We are not even to get a referendum on this issue, although the Government had become persuaded, after a long argument, that a referendum was necessary. We pressed for one, as did hon. Members of other parties. How ever, we are not to have one; so the people of Wales and Scotland will not be able to vote on the issue of devolution. How is it possible for us to have any confidence at all in a Government who behave in such a fashion?

Is the hon. Gentleman arguing that if there were a Conservative Government in power any of these things that he says are wrong would be set right? Does not the hon. Gentleman realise that the problems of the Welsh people would be massively intensified under a Conservative Government?

What I know is this: for the past two and a half years we have had a Labour Government who have followed the policies of pink Tories, and as a result we believe that there is very little to choose in practice between the effects of the policies of a Labour Government and those of a Conservative Government. The Conservatives are against devolution for Wales. The Labour Party, although it promised things to Wales, could not deliver the goods because of its own shortcomings. So we have the choice between getting nothing from the Conservative Government and the probability of getting nothing from the Labour Government too.

The only thing that will deliver the goods for Wales and Scotland is an upsurge in the two nationalist parties and an increase in the number of their representatives in the House of Commons and that needs a General Election. That is the historic lesson to be learned from the betrayal of the people of Wales and Scotland by the dropping of the Scotland and Wales Bill. It is exactly what happened at the end of the last century when the Liberal Party gave much the same sort of pledges. What happened over the Scotland and Wales Bill was an action replay. If the people of Wales did not understand the position before, they do now. The only thing that will get them their rights is for them to support independent political action and vote for Plaid Cymru.

Confidence should be a matter for the future. Can we have any hope for some improvement in the future? Is there any confidence that under this Government production will move to a greater level than it was at the time of the three-day week? Have this Government a policy forthcoming which will tackle inflation and the problem of the sinking pound? We have seen the mess that they made of handling the Aircraft and Shipbuilding Industries Bill. Then there have been the delays to which the steel industry has been subjected and the farce over the Water Charges Equalisation Bill. Is there any indication that such incompetence will be reversed?

There has been a failure to introduce any control of imports, which would have had a direct beneficial effect on the economy. There is no indication that there is to be a change from the policy of the use of high interest rates. It must be acknowledged that interest rates have dropped somewhat in recent weeks, but they are still desperately high and are causing a fundamental problem with the economy.

There is no indication that the Government intend to give a fair deal to agriculture that will really bring "Food from Our Own Resources".

Because of the Government's policy on all these matters we have no cause to have confidence in the future. There is bound to be uncertainty over the next two years about how inflation will go and whether investment will be encouraged. There is uncertainty about phase 3 and the effect that it will have on the economy. There is uncertainty about the Government attitude towards direct elections for the European Parliament. There is uncertainty about their commitment to radical employee control in industry, which we have looked for. I suspect that the deal with the Liberals that we heard about this afternoon will dilute the move that has been made in this direction. All this gives us no basis for confidence.

We have seen no new vision for getting the 80,000 people in Wales and the 1. ½ million people in the United Kingdom as a whole back to work. We see no cutting of bureaucracy and red tape. None of these things gives us inspiration.

If there were to be an election now, it would provide opportunities. It would provide the Labour Party internally with the opportunity to discuss the policies it should be following and that it should be putting forward instead of the two years of vacuum that we are likely to have as a result of the failure of the vote tonight.

An election now would provide an opportunity for the electors to decide the course they want to follow, particularly in Wales and Scotland where there is an alternative. It would provide an opportunity for whichever party were returned to power to face up to a greater number—perhaps 30 or 40—of nationalist Members. We should have a new House of Commons, a new balance, new faces, a new Cabinet, and a new start.

None of this is to happen, however. We have instead a shabby deal which will keep the same moribund Government in office for two years with no new policy. The same old faces will continue to govern us in a wishy washy way. Our people will suffer as a result. We have seen on the constitutional issue that this Government are not to be relied upon. Nor are they to be relied upon to deal with economic matters.

I say nothing other than that we have no confidence in this Government. For us to vote for them tonight would be a lie. Unlike others, we are not prepared to indulge in that lie. We shall vote for the motion.

6.39 p.m.

I cannot follow the hon. Member for Caernarvon (Mr. Wigley) in detail. He seems to disregard the whole history of the Labour Government and previous Governments in relation to Welsh affairs. Up to, and including the advent of the 1945 Labour Government, investment in Wales by previous Governments was almost nil. But Labour has, through various avenues of legislation and special grants, set up factory after factory in South Wales.

Recently we voted an enormous amount of money to two steelworks in Wales. Against all industrial logic—because the iron ore was not available on the site—the late Aneurin Bevan agreed to put a steel mill at Ebbw Vale in order to generate industry. Therefore the charge the hon. Member is making is quite fatuous.

As my hon. Friend has said, the Government recently made a statement to the effect that over £800 million investment will be put into Shotton to keep it going and into Port Talbot. By voting against the Government tonight the hon. Gentleman and his colleagues are putting that at peril. I think that they would find that at the next election not one member of Plaid Cymru would come back to this House.

I agree. Along with the non-investment from 1900 to 1945 there was a change in demand and technology which left a wasteland behind in South Wales. This is what we had to deal with in 1945.

I come to the motion tabled by the right hon. Lady the Leader of the Opposition. It is the wrong motion at the wrong time for the wrong purpose. She has jumped on the bandwagon that resulted from last Thursday's events when the Scottish nationalists put in the Tellers. Her decision is against the judgment of any political historian who knows the House of Commons. Confidence motions are usually tabled by the Government of the day, and only very rarely are they sponsored by the Opposition. The right hon. Lady has jumped on the bandwagon because she thought it would be profitable, but it has bounded back in her face. She made a miserable, tragic speech today which contained no philosophy and no political direction. If that is all she has to offer we might as well all go home and ask her to withdraw the motion because there was nothing in what she said.

In terms of our economic situation this country has to deal with the same problems time and time again. One of the main problems is, of course, lack of investment. One gets befuddled trying to remember the investment policies that were in operation under Harold Macmillan and before that. At that time there was a flow of money from the banks, export markets were available, there was no contraction of confidence, and everyone was buying goods. Profits were being made, but they were not reinvested.

With the advent of the Heath Government, the then Prime Minister made a plea to the City to invest, but that investment was never forthcoming. It was not even forthcoming in capital industries which needed investment so badly. One remembers the case of Rolls-Royce where the Conservative Government had to step in at the eleventh hour, mainly because the technical expertise of British craftsmen would have been lost. When we talk about investment we should do all we can to alleviate the general distress felt in small industries and we should gear them to a higher rate of production.

Our problems were not helped when out of the blue the Arabian oil kings put up the price of oil to astronomical heights. A shudder was felt throughout the whole industrialised world and also in the under-developed world. This problem is still with us. As a result of it we have had a contraction of markets and a contraction of credit. There has been a low return on capital as a consequence and we are now in a virtually static position.

We have had in this country more investment and more people employed in non-productive industries. That is something that must be changed quickly. We cannot maintain a nation of 53 million people on non-productive industry no matter how attractive our social legislation. We need money to operate that legislation. This is the situation in which we found ourselves when this Prime Minister came to office. I do not think that anyone in this House could complain that the Prime Minister has not tried to do a proper job within the confines of what this very volatile party has allowed him to do. He has had to control the various factions of our party and he has done so, and at the same time he has restored to the office of Prime Minister the dignity it should have. This is why this vote of confidence is absolutely idiotic and should never have been tabled.

Economically this country seems to move from crisis to crisis and its difficulties get greater and greater. I served for three months in the European Parliament, and over the years I have attended many international trade union conferences. I have also listened to many seminars. I have come to the conclusion that an army of occupation in any country concentrates the mind wonderfully, and that is just what has happened in Germany. That country had to pull itself up by the bootlaces and start from scratch. As a result the Germans have the best industrial economic base in the world, including the United States.

Also the operation of the German democracy is on a proportional representation basis. After watching the way our system works one is driven to the conclusion that there must be a better way out of the nation's difficulties.

We cannot continue in the way we have been going. When money is made available by Government to industry it does not always get there. We had pleas from the Conservatives for money for investment, and, as I have already pointed out, this was not forthcoming. Where did it go? It went into property. In 1954 Lord Duncan-Sandys took off the building controls and look what happened then. The price of land rocketed. After that we had the activities of the secondary banks because no one bothered to check them throughly, not even the staid, solid Bank of England. When they went broke the Government and the taxpayer had to pick up the bill.

We have now arrived at a situation in British industry where long-term decisions must be taken. I hope that the social contract will be renewed and extended. It is asking a frightful lot but it is necessary. This nation has an industrial history which has developed slowly over 150 years, and which has been based on an ideological struggle between man and master. The working classes' claim for recognition goes back as far as 1902 when they saw political representation as a means of remedying ills and achieving their just demands. This has built into people's philosophy the idea that one achieves through organisation. When there is a run of full employment and the generation of a consumer society, people come to accept that. It is part of their life. It is one of the dilemmas with which we are confronted, and if it is to continue we have to make provision for its just demands and desires.

In the 25 years that I have served in this House, I have always believed that delegates rather than Members of Parliament should speak at the Labour Party Conference, but last year, because of the situation in my constituency, I had to speak at the conference. One can only take the British public with one so far, as I pointed out then. Higher prices, increasing rents and the rest have up to now being absorbed by the people with a willingness and stoicism which have staggered me. They know instinctively when the country is in difficulties, however, and they prefer to dig it out of them, but, as is shown by the lowering percentages of votes cast in elections, many of them are demoralised and dispirited by our electoral system. They do not know precisely where they stand or where they are going.

It is the job of Parliament to tell the people where they are going and to assist them to get there. If the action of the Liberal Party today helps us in that direction, it will have served its purpose. Whatever the future may hold for political life in this country, it will not remain in the same pattern after today. This is indeed an historic day. We now have for the first time an inkling of political will for a common public purpose which we have never had before, and we must not lose it.

I shall not speak for long, Mr. Speaker, as I know that many others wish to speak, but I thought that on this occasion I had to speak. The nationalisation of banks and insurance is in our programme, and I beg my right hon. and hon. Friends to be careful. A man in Great Britain, who has been brought up with a history of industrial struggle, will not put his weekly wage at risk for anyone, not even the Government. We must be careful about the nationalisation of banks. In such institutions as the banks, the Stock Exchange and Lloyds, this country has the greatest invisible earners in the world. Other nations, chiefly Germany, are anxious to take over that business. German, Japanese and American bankers are powerful people. Up to now, they have come to our rescue through the International Monetary Fund, and we should not disappoint them by slapping their philosophy in their faces.

A policy of nationalisation of banks and insurance will be awfully dangerous, and I ask the Labour Party to consider that point. For making this kind of speech, one pays a penalty, and I have paid. I repeat that confrontation by an army of invasion wonderfully concentrates the mind. Germany's stability continues. The Italian miracle has run itself out. Something may have run itself out on this side of the House.

I am a tolerant person, although some people, especially some of my Left-wing friends, think that I am not. It is one thing to put down a motion criticising the Government and then to say, as one hon. Member once said to me, "Of course, although I have signed the motion I shall support the Government in the Lobby", thereby buying a pleasant time in one's constituency, keeping Left-wing delegates at bay, and quite another to have a consistent philosophy. There has to be a philosophy. There has to be a progression.

This is the job we have to do. It has been and is a slow job, and my right hon. Friend the Prime Minister has done wonderfully well. We must get that message across, not only here but in the world at large. In Germany, industry and workers alike are fearful of unemployment and they wish that they had an agreed incomes policy. The Americans have had a kind of incomes policy because there they renew contracts between industry and labour every three or four years. We do not. We have a day in, day out procedure. But we have to operate this new pattern if we are to get anywhere.

Now we are coming to elections for the European Parliament. One of the reasons why I have been sacked by my constituency party is that I went into the Lobby for something I believed in—the Common Market—against the wishes of that party. Why do I believe in the Common Market? For one thing, I believe that food prices would have risen even more had we not been in the Common Market. The present situation has been generated to a large extent by the oil situation. In addition, Britain had previously relied on colonial preferences which no longer exist. But we found ourselves having to maintain a large population in benefits which it had come to expect as of right. We still have to earn those benefits, however, and we can do it only if we are part of the bigger industrial scene in Europe. That is one of the reasons I went in, and one of the reasons that I am out.

Now we come to the Liberals and the question of direct elections to the European Parliament. I am in favour of these elections taking place as quickly as possible. I hope that they will not be delayed beyond 1978. There is a job to be done, not only for Europe but for the Lome Convention countries, which now have certain privileges. It will be a long-term job. There is the question of what is to happen to India—and that nation defies organisation. There is danger of nuclear war. We should be fostering Japanese-Chinese co-operation as fast as possible. I know where the real challenge is coming from—from Africa—and the purpose is to continue British industry's crisis, denying raw materials to us except on terms that we cannot meet. This is the ultimate industrial, political and military challenge, so we had better get organised before it is too late.

Order. May I make an appeal to right hon. and hon. Members before I leave the Chair for a short while? There are 15 right hon. and hon. Members still seeking to catch my eye, and there are two hours left before the winding-up of the debate.

7.0 p.m.

I congratulate the hon. Member for Hammersmith, North (Mr. Tomney), as always, on his speech. But I want to turn to the more optimistic speech of the right hon. Member for Newham, North-East (Mr. Prentice). He takes the optimistic view that there is a changed situation in the House of Commons.

This is a perfectly proper vote of censure, and I shall not rehearse the arguments for it except to say that politically, and regionally—as the hon. Member for Caernarvon (Mr. Wigley) said—and industrially and economically there is an overwhelming argument for defeating the Government tonight.

But people are more interested in the deals or non-deals that have been done. This is where optimists like the hon. Member for Hammersmith, North say that a new page is being turned in political history in the House. I believe that to be an entirely wrong and over-simplistic view. Northern Ireland Members are to be congratulated on the concessions that the Government have offered them—which I know would have been given by the Conservative Party—and on thereby reinforcing their position.

The situation of the Liberals is one of great interest. I congratulate the Prime Minister on what he has done for the Liberal Party. The crude fact is that this is not a great advance in the unification of political thought and the achievement of a consensus.

My father happened to know Lloyd George, and I am the great-nephew of Prime Minister Asquith, so I say, with almost filial respect to the Liberal Party, that the Liberal Party was desperately looking for a way in which to avoid voting tonight. The Prime Minister, being a good negotiator, was good enough to offer them a way of escaping that obligation. It is no more than that. The realities of this so-called pact are totally negligible.

The Leader of the Liberal Party spoke about stability, but when one looks at the Left wing of the Labour Party, one wonders whether this pact will bring much stability into the coalition of the Labour Party. That is something that they must work out themselves. It is not for us to do so.

Devoted as I am to various political causes, first of all the cause of the Conservative Party, and with the respect that I have for other parties in the House of Commons and all parties, I say that this has done nothing to change the face of British politics. All it has meant is that an excuse has been found by an extremely capable Prime Minister for the Liberals to avoid a vote which would have been disastrous for them.

I promised to speak for only five minutes, so I have one and a quarter minutes left. I say to the Liberal Party that, although this deal has been done by the Liberal Party in the House of Commons, there will be many Liberal supporters outside the House who will feel that their interests have been betrayed.

Many people will feel that the claim made by Conservative candidates throughout the country that a vote for the Liberals is a vote for Socialism is true. I see that the hon. Member for Isle of Ely (Mr. Freud) has returned, so I say to him, with his canine experience, that the Liberals are proving the running dogs of Labour.

7.4 p.m.

I think that most hon. Members who are honest with themselves, including Conservative Members, will agree that there has been a great sigh of relief that there does not now seem to be an immediate prospect of a General Election.

The number of hon. Members from various political parties who have said to me "I hope that it does not come to an election" is legion. A Welsh nationalist Member, who was on the same television programme as myself, said "My party will vote wholeheartedly and decisively against the Government, and we hope that the Government go down", or words to that effect. A little later the same hon. Member was asked by the television interviewer "Do you want to see the defeat of the Government on Wednesday night?" and he replied "No". The television interviewer then asked, perfectly justifiably, "Why are you voting against the Government?"

Many people have expressed this view, saying that a General Election at the moment would not be good for the country, quite apart from the likelihood that it would have returned the most reactionary Conservative Government that we have had this century. Everyone knows that it is not good for the political and economic stability of the country to have an election every two years. We were attempting to get a good majority in order to get political and economic stability. It has not been good for the country to have a minority Government and it is not good for the country even now to have a minority Government.

I wish to talk about the agreement that has been reached. Since I have been in the House, there have been many agreements, understandings and discussions, particularly since February 1974. They have gone on the whole time, and I have no objection to understandings between various political groups on different subjects at any given moment. But I am not happy that we have to enter into a concrete agreement of this kind. I should be untrue to myself and untrue to my Socialist convictions if I said that I was happy with the situation. I shall look at this agreement with the greatest suspicion and put it under the microscope.

Opposition Members may laugh if they like, but if there had been a General Election they might not have laughed. I know that the right hon. Lady the Leader of the Opposition believes that she would have walked it, but I tell her that that is a myth. She could easily have found herself in a position similar to that of the Government. Would not the Opposition have reached an agreement with other parties with a nod and a wink? Of course they would. If they would not, the face of the Conservative Party has radically changed, and I do not think that it has changed.

I am not against political agreements and understandings. As I have said, I am a Socialist. The people in my constituency had the opportunity to vote for a Liberal, and a small minority of them did so, but well over half of those who voted in fact voted for me, for my party. We are talking about General Elections—

The Liberals won a number of seats on the local council that normally go to the Tories when we have our backs to the wall, but that will not last for ever.

If there is any question of the Labour Party entering into a long-term arrangement which will manoeuvre it into accepting Liberal concepts, that will not be agreeable to us. This arrangement can operate only for a very short term. Conservative Members should not feel that I fear a General Election. I still think that any Labour Government, even a minority one, will protect working people and their families much better than could any Conservative Government, and history proves that to be so.

The Conservative Front Bench has shown its hypocrisy on this issue. It attacks the Government and seeks to take advantage of the discontent which has arisen because of the wages policy and the public expenditure cuts. The Conservatives know that this is the best possible time to take advantage of that discontent, but if they were in power they, too, would cut public expenditure. The cuts that they would impose would clearly put at risk the benefits paid to the unemployed, the disabled, the sick and pensioners. Would the Conservatives have saved the jobs of workers who were thrown out of work because of the collapse of private industry? They have made clear that their total market philosophy would not provide assistance to industry for saving jobs. I am not prepared to see working people suffer like that.

I heard the right hon. Member for Lowestoft (Mr. Prior) saying on the radio the other morning what the Conservatives would do for Stage 3 of the pay policy. He said "We would sit down and discuss the matter with the trade unions." That is just what my hon. and right hon. Friends have been doing. He said "There would have to be greater flexibility". Every one of my hon. Friends who speaks on this question has referred to the need for greater flexibility. What hypocrisy there is on the Conservative Benches about this matter.

The Conservatives know that the oil will flow more freely, that the balance of payments position will improve, and that unemployment will gradually fall, and they want to bring the Government down so that they can profit from the situation largely created by the Labour Government. It is true that I have criticised my Government for the public expenditure cuts, but they have handled the cuts much better than any Tory Government could have done.

That was obvious from what I said at the time. If the hon. Gentleman did not hear that, he must need a hearing aid.

I wish to direct a few remarks to my right hon. Friend the Member for Newham, North-East (Mr. Prentice). He made a remarkable speech. He argued that we ought to work slowly and steadily towards a Government of national unity. The logic of his argument was that we ought not to discuss politics at all, that there should be no political debate or discussion. My right hon. Friend was with me in Chile. He knows that the Chilean Government has just banned politics. People there are not allowed to talk politics. Logic demands that democracy means discussion, argument, vote and clash of opinion, and politicians putting their ideas before the people. That is the point about democracy.

It is a good thing that my right hon. Friend has now discovered the right to take independent action. However, some of us over the years have taken independent action on many issues, and we have been accused by my right hon. Friend and his colleagues of rocking the boat. He cannot have it both ways. He cannot suddenly find this new freedom and forget that for years he has been telling us that we should not do these things.

I dismiss my right hon. Friend because there is little logic in his argument. Undoubtedly at some stage he will find himself in some other political party. We shall not have put him there. He will probably have put himself there, but that is his problem, not ours.

I wish now to consider the significance of what has happened today. As I said earlier. I am worried. We are in a minority, however, and we have to recognise that. But I warn my Front Bench colleagues not to allow the immediate situation to jockey them into the position in which the dog is being wagged by the Liberal tail.

If we are to have consultative machinery of the type outlined for the discussion of legislation, the other committees referred to by my right hon. Friend the Prime Minister must also be consulted. So must the National Executive Committee of the Labour Party, acting on behalf of the party in the country. If it is not consulted, we could be heading into dangerous waters. I do not want that to happen, for the reasons that I have put forward. I want to see the Government succeed.

I am sure that my hon. Friend is well aware of what my right hon. Friend the Prime Minister said earlier. He said that we had had discussions over the last month or two in the parliamentary party to try greatly to improve the machinery which exists within the party for discussing these matters. One of the undertakings we have quite properly given is that we should set up on a much more formal basis—this was decided long before any discussion arose with the Liberal Party—procedures whereby we could have discussion about legislation within our party committees.

I do not for one moment deny that that happened, because I was at the party meeting when it was agreed. I am merely saying that the arrangement had better work, and it had better work effectively. The Labour Party membership in the country had also better know what is happening. We are a different and separate party from the Liberal Party.

In view of the improved communications which we now understand exist within the Labour Party, does the hon. Gentleman know whether the National Executive Committee was happy about this deal with the Liberals?

The hon. Gentleman will discover that when he reads the newspapers. There was a National Executive meeting this morning. No facts were revealed from the meeting, and therefore I can imagine that there will be a full report about it in tomorrow's newspapers.

Since the House is so interested in these matters, I am sure that my hon. Friend would like to confirm that there was also a discussion in the Labour Party's Liaison Committee on Monday, and the unity expressed there about what should be done was so strong that the matter was not reported in the newspapers.

I confess that I have often had the experience of making a speech defending my Government and not finding a word about it in the Press. But there have been other occasions when I have said a few uncomplimentary things about my Government that have made headlines. I do not know why that is. I can only assume that the newspapers take a peculiar view of what is and what is not worth reporting.

I and most of my hon. Friends will give this agreement the benefit of the doubt. We shall look at it very carefully. We shall see how it operates. But that is all that we shall do, and I think that the Government cannot expect any more than that from their Back Benchers. It is qualified support that we are giving this agreement because we want to see a Labour Government succeed and to keep out the Tories so that the British people do not again have to suffer the injustices and difficulties that they have suffered in the past by having Tory Governments.

7.21 p.m.

I shall follow some of the remarks of the hon. Member for Liverpool, Walton (Mr. Heffer) in what I have to say later. Let me first remind the House that the reason for this political crisis, for this debate, and for this strange compact about which we have been told is that the Labour Party was elected with a very small majority, by a very small proportion of the electorate, and that it has since suffered considerable defections.

The Labour Party is, as it were, breaking up at the edges. Not only has it lost by-elections, but it has lost the right hon. Member for Newham, North-East (Mr. Prentice), to whose extremely green speech we listened, and on the other side it has lost the hon. Members for South Ayrshire (Mr. Sillars) and Paisley (Mr. Robertson). It has also lost Mr. Roy Jenkins, who was green at the gills about the direction in which the Labour Party was going, and the hon. Member for Ashfield (Mr. Marquand).

The Labour Party is running scared, and it is breaking up at the edges. Indeed, it is a white party with green edges, if I may coin a phrase, and it is this party that the Liberal Bench has chosen to support. I have heard of rats leaving a sinking ship, but I have never heard of mice joining one.

I am concerned to ask myself what it is that the Liberals have gained or lost by this afternoon's work. They have lost a benefactor, we are told, but clearly it would be wrong to put that in the forefront of their considerations, although I dare say it might tell when it comes to financing elections. The Liberal Party has gained very little. I note what was said by the Prime Minister. Liberal Members have gained a promise of discussions with the Government about direct elections to the European Parliament, with the possibility of a Bill, and the possibility that proportional representation will be the method of election, on a free vote. It is not an earth-shaking concession that the Prime Minister has made, especially as it was part of his manifesto.

Secondly, Liberal Members have gained further talks on the devolution Bill. I thought that such talks were taking place already. I thought that we were in touch about the devolution Bill.

We have been told about this 30-page memorandum. Incidentally, I thought that it was normal for papers of this sort to be laid before the House before we discussed such matters, but I shall let that pass. There is no great concession there, and tacked on the end is a special sop to the hon. Member for the Isle of Wight (Mr. Ross). He is to get help with his little Bill about homelessness, which is by no means a very helpful measure for many of the homeless.

For those small concessions the Liberal Party has delivered its soul and vote to Labour.

I admire much more the hon. Member for Antrim, South (Mr. Molyneaux), the Leader of the Ulster Unionists. He has gained much more. He has gained proper representation for Ulster, yet he will not vote with the Government and has no compact with them. That is the way in which to do business. The right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) should take a lesson from the hon. Member for Antrim, South on how to do a deal.

The reason for the agreement is not that these are major concessions that the Liberals can chalk up. Nor is the reason that given by the right hon. Member for Roxburgh, Selkirk and Peebles, namely political stability. My right hon. Friend the Member for Chipping Barnet (Mr. Maudling) destroyed that argument by asking why it is that the compact is to last only until the end of the Session. There is not much stability involved there

I ask a further question of the Leader of the Liberal Party. Is it always right that there should be granted a period of stability to a Government who have consistently done the wrong thing, who are stinkingly unpopular in the country, and who are severely damaging the economy?

Is the hon. Gentleman aware that his party and his leader, whom he loyally followed at the time, tried desperately to secure the support of the Liberal Party in 1974 to keep the Conservatives going in a far worse situation than that in which the Labour Government now find themselves? Would the hon. Gentleman have used similar strictures about any such deal?

I confess that I informed my right hon. Friend the Member for Sidcup (Mr. Heath) that if the hon. Gentleman came in, I went out.

The Liberal Party must think about its new-found friends. The Prime Minister talked about what is to happen during the future life of this Parliament, and then by a slip perhaps because he got the page wrong, he talked about East-West relations. I thought that he was talking about the two halves of the Labour Party. The Liberal Party now has some new friends in this "East-West" relationship, and Liberal Members will find some strange bedfellows at the eastern end.

When a Liberal fights my seat, which one did on the last occasion, he will have to explain how it is that Liberal Members have though it right to keep this Government in office, because many people voted Liberal at the last General Election not because of the importance of the homelessness Bill, or the devolution Bill, or PR in direct elections, but because they thought the Liberals might do better than the Tories in some circumstances, and because they were not happy with what the Tory Government had done. They did not cast their votes in the way that they did because they wanted Left-wing Labour policies.

I can tell the hon. Member for Walton that in my constituency the Labour Party chalked up 21 per cent. of the vote. If the people there had wanted to vote for Socialist policies such as those advocated by Labour Members, I do not think that 80 per cent. of them would have voted for a non-Socialist candidate. The Leader of the Liberal Party has now betrayed his supporters. Those famous 6 million who did not think that they were voting for a Left-wing party are now being told that it is in the interests of political stability for this Left-wing Government to be kept in office. What a shabby thing to do.

Does the hon. Gentleman really believe that it would have been a lot less shabby to have committed the 6 million Liberals to support a Conservative Government?

I think that those 6 million people were voting for a miscellany of reasons. [HON. MEMBERS: "Answer the question."] I shall answer it in my own time.

The twin pillars of the Government's policies are the industrial strategy and the social compact. We are constantly told this by the Leader of the Liberal Party. But the right hon. Gentleman has it wrong; it is the social strategy and the industrial compact. These two are what we are suffering from.

The social strategy is to take from the workers and to give to the unemployed, to take from the investors and to give to the consumers, and to take from the triers to give to the non-triers and to level out. The result is that it is becoming abundantly clear that the incentive for people to invest, to earn, to try and to work has been destroyed. The effect of the social strategy has been disastrous towards the creation of wealth and therefore has made the less fortunate groups in this country much poorer than they would otherwise be.

Obviously the hon. Gentleman is talking about differentials. While I was walking from the Norman Shaw building, I saw a Conservative Member of Parliament getting into his chauffeur-driven Rolls-Royce. At the same time I saw a woman of about 40 from the cardboard city walking around the Rolls-Royce. What sort of differentials does the hon. Gentleman want?

I have some sympathy with the hon. Gentleman on that point, but how is it that we have a tax system that makes it more likely to be a good investment to buy a Rolls-Royce than to invest in a commercial or industrial company? Those who believe that by clobbering the investors we shall get jobs are wrong. All we shall get is a Rolls-Royce situation.

As I have said, it is the industrial compact and it is the social strategy. The industrial compact is between the Government and the trade union leaders. The people who are disadvantaged by the industrial compact are the members of trade unions and those who do not belong to either. We are seeing the revolt of members of trade unions against their unions enforcing the pay policy and against the total lack of differentials throughout the rigid pay code. This is illustrated by the recent strike at The Times, the British Leyland toolroom strike, and the pressures found by management everywhere.

The explosive nature of the feeling in the factories is everywhere evident and it manifests itself as it did in Walsall and Workington. It might be of interest to the House to note that the one constituency in the country where there are not so many manual workers, whether in farms or factories, is the City of London and Westminster, South, where the swing was not so big. That is interesting.

We are seeing the destruction of the social compact and the industrial strategy. What the right hon. Member for Newham, North-East, the Liberals and the centre of the Labour Party are trying to do is to stitch together one last ditch coalition to defend social democracy and all its works long after it has failed and long after it has been rejected by the people. This is what we have been told.

It is no good arguing, as has been argued so often today, that if only certain things would happen, if only we could get stage 3, if only all good men and true could be put together in the Government to run the country, we could have our economical miracle, which has so frequently been paraded by the Chancellor and the Prime Minister. To coin a phrase, the management of the economy under the Chancellor can best be described as Titanic. There is no future this way.

That is why we should have a General Election and let the hon. Member for Walton and those who think like him fight it out with those who believe that the only way we can help the poor and bring prosperity, get industrial investment, get people humming, working, trying, caring and fighting again is by the system of incentive and reward which is at the heart of free enterprise.

7.36 p.m.

The only thing on which I find myself in agreement with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is that those who stand in the centre of the road may get knocked over. He was arguing for fundamental changes from a Right-wing position. I would argue them from a Left-wing position. It gives me no pleasure to speak this afternoon. I should like to be in a position, as would my hon. Friend the Member for Paisley (Mr. Robertson), to vote with the Labour Government tonight.

The Labour Government are part of the Labour movement. The significance of the Labour movement was implanted in my mind when I was a young boy, as I watched my father, in an uncharacteristic manner, jigging and dancing with delight when the Labour Government of 1945 were elected. We would obviously wish to be able to vote for the Government, and that probably goes more for my hon. Friend the Member for Paisley than for me, because man and boy he has been in the Labour movement, a trade unionist, a member of the Labour Party, a member of the ILP, and later a Labour Member of Parliament. The simple fact is that unless the Government can bring themselves to meet our reasonable requests on devolution, we shall have no alternative but to vote against them.

If this were a Socialist Government with the full significance of that term, despite our objections vis-à-vis the Government's stand on devolution, we would not hesitate to vote with them tonight. But the debate on public expenditure showed that this was the first Tory-Labour Government in our history, and I stick by that assertion. I was interested to hear the hon. Member for East Kilbride (Dr. Miller) boasting of the fact that the possible change of Government from Labour to Conservative sent the Stock Exchange into a fit of the jitters. I always thought the situation was that if there were to be a possible change of Government from Labour to Tory, the people in the Stock Exchange danced with delight because things were looking well for them. We have had a reversal of this process simply because the people in the Stock Exchange, and in the Establishment, know full well that the Labour Government are doing things to the working class that no Conservative Administration could ever get away with.

I can remember that in Labour Weekly in July 1974, in a special edition leading up to the election, the back page was all about unemployment under the Tories. It appeared under the heading "One million unemployed. Never let it happen again", and added that we should support the Labour Party. We have gone well beyond that figure. We have made the trade union movement accept the unacceptable and tolerate the intolerable. We have engaged in cuts in working-class housing accommodation. In the part of Scotland that I come from, 19 out of the 21 deprived areas in the United Kingdom are to be found there, on Clydeside.

The last by-election in Scotland was in Govan in 1973. I went canvassing in Govan for the Labour Party and found myself more and more acutely embarrassed, as I went from one housing area to another, because of the poverty and deprivation to be found there. Basically, nothing has changed in many of those areas in Clydeside since 1973, yet we are cutting housing and education.

On the subject of housing, we have become a Government of money lenders. In my constituency in the next two years district council rents and grants will take £6 million of the housing revenue account, and £4 million of the total will be paid in interest to the money lender. Furthermore, we have a wages policy that has been deliberately constructed and designed to cut the standard of living of the working people.

I sympathise with a great deal of my hon. Friend's speech, and I understand his point of view, but since he presumes to speak on behalf of the Labour movement in Scotland, and particularly that in his area, how does he reconcile his view with the recommendation of the STUC yesterday urging people to support the Labour Government because of the harsh alternative to the present Labour Government—namely, a Tory Government under the right hon. Member for Finchley (Mrs. Thatcher)?

I shall answer my hon. Friend in a more substantive fashion in a moment. I certainly do not presume to speak for the whole of the Scottish Labour movement. However, I am a member of the trade union movement, I am a member of the Transport and General Workers Union, I am an individual affiliate of the Scottish TUC, and I am as entitled to my point of view as is the General Secretary of the STUC, who happens to be a personal friend of mine, although we differ on this matter.

I may be wrong, but the hon. Gentleman may also be wrong. The net effect of the Government's social contract, public expenditure cuts and relationships with the trade union movement has put the trade unions in a cage whose bars consist of the social contract. That prevents the trade unions from doing what they are supposed to do for the industrial worker.

Everybody anticipated the crisis which we faced earlier this afternoon. That was an inevitable consequence of the fact that 22 Labour Members voted with the Tories to kill the devolution Bill. Everybody knew that from that moment the Government were in extreme peril. We have explained to the Leader of the House in a letter delivered by hand, and we also made clear in conversation afterwards, that all that we sought was the reintroduction of devolution this session. We require a firm guarantee from the Government that the timetable motion will be treated as a vote of confidence by the Parliamentary Labour Party.

Is the hon. Gentleman saying that there should be a free vote?

I shall come to that when I am dealing with the scenario involving the Leader of the Opposition and the rôle of Scotland in the present situation. We have been prepared to bend over backwards, but not to turn somersaults, in our commitment to a Scottish Assembly. The Government would much prefer to do a deal with the Ulster Unionists, who happen to include the right hon. Member for Down, South (Mr. Powell), whose views on racial matters and economic policy every Labour Party member outside abhors. But Labour is prepared to consider doing a deal with him and his colleagues. Labour is also prepared to consider a deal with the Liberal Party before it honours the election pledge to Scotland.

The hon. Member for Liverpool, Walton (Mr. Heffer) is right to be concerned about this deal and its effects on Labour Party policy and the Government's performance.

I thought that earlier in the debate the Prime Minister and I made it abundantly clear that there had been no deal.

I never said that there was a deal. I said that Labour would have been prepared to do a deal if it could have been negotiated. My hon. Friend would do well to become a regular reader of the Glasgow Herald on a Friday, because the Leader of the Liberal Party writes a regular column for that journal once every three weeks. Last Friday in that column the right hon. Gentleman said:

'The Labour Left will not wish to commit suicide by being seen to force an election. So we may be able to take the first step towards blocking the domination of Government by the lunatic Left and Right."
I do not need to give my hon. Friend the Member for Liverpool, Walton any guesses in realising in which direction the Liberal Party is looking when it talks about the "lunatic left". I imagine that the right hon. Gentleman was referring to the Tribune Group. One of the significant developments in the last 24 hours is that the Liberal Party has been able to extract from the Government more than the Tribune Group has managed to extract from them since October 1974.

Let me now answer the point put to me by the hon. Member for West Lothian (Mr. Dalyell) about the scenario to which I referred which has taken place in the Tea Room and elsewhere. Would we permit a situation in which the Conservatives, having been returned to power with a majority, once the oil began to flow would remain in power for 15 to 20 years? That has been the scenario presented by various people. However, if that is such a devastating position for Members of the Parliamentary Labour Party to contemplate, why are they prepared to consider that possibility instead of honouring their devolution pledge to the Scottish people? It is they who are putting the Government in jeopardy.

The Prime Minister should have adopted the same procedure on the timetable motion on devolution as that followed by the right hon. Member for Sidcup (Mr. Heath) on the European Communities Bill. Two or three minutes before the close of that debate on Second Reading, he told the Tory rebels that Parliament could not sensibly continue unless the Bill passed. That gave a clear choice.

The Government cannot make a commitment which is not a vote of confidence into a vote of confidence by saying so. If a Bill does not pass, a Prime Minister can resign. One cannot convert a vote on an issue on a substantive matter such as devolution into a vote of confidence simply on the say-so of the Front Bench.

We know that the Prime Minister is an honourable man. In those circumstances we can assume that he would call a General Election.

If the hon. Gentleman persists in this argument. I shudder to think what would happen if he and his colleagues got a majority in Parliament anywhere in the world. Surely that would be a Stalinist or Fascist State?

It has everything to do with the Scottish situation. The fact is that without a pledge on a Scottish Assembly with powers there would not be a Labour Government today, and everybody knows that. If the hon. Member for Liverpool, Walton does not know that, certainly the rest of the Members of the Scottish Labour Party know it. We are talking about a pledge that was given by the Government to a nation. I stress that it was given to a nation and not to a region. If that is not a matter that merits a vote of confidence, I should not like to hazard a guess about the fate of Labour candidates in Scottish constituencies at the next election. The Scottish people have been treated like electoral donkeys, with a carrot having been dangled before them in October 1974 labelled "devolution". They were told "Vote for us, and you will get a bite of a carrot". Only a year later the Government did not regard that pledge as being worth a political shilling. If I may speak on behalf of my hon. Friend the Member for Paisley, I must say that that is not acceptable.

In October 1974 Labour asked Scottish Labour voters to align themselves with a Labour Government and they did so. We are asking the Labour Government to line up on the side of the Scottish people. If they cannot do so, we shall not support them.

7.50 p.m.

The speeches of the hon. Members for South Ayrshire (Mr. Sillars) and Liverpool, Walton (Mr. Heffer) show the future of the arrangement that we have been discussing. Indeed, the Prime Minister skated lightly over the problems of his party. This is a motion of no confidence in Her Majesty's Government but the speech of the hon. Member for Scuth Ayrshire was not radiant with confidence in Her Majesty's Government. The speech of the hon. Member for Walton was to the effect that he would give them the benefit of the doubt tonight, but not necessarily thereafter. The hon. Gentleman intends to examine the working of the arrangement under a microscope.

The background is that the Labour Party was returned at the last election with a minority of votes and a balanced position in the House of Commons. That is not an unprecedented situation, except that in the Labour Party manifesto and in its profession to carry it through there was the intention to effect a fundamental and irreversible change in our society. In that context that intention was a fraud on the parliamentary democratic system that we operate.

There is no safeguard in our constitution against a bare majority being used in such a way. Our parliamentary life depends upon conventions that are not written but are felt by those who live inside it. The Labour Party's intention represented a breach of the conventions.

Last Thursday the Government decided not to vote. They came to that decision because they knew from their calculations that they would be defeated by four or five votes. They knew that they would be defeated by those votes because their attempt to change society fundamentally and irreversibly had led them to a situation in which they were having to go into reverse.

The potential rebels were not prepared to accept such a reversal. They were not prepared to accept the cuts in public expenditure which, inadequate though they may be, underly the whole of the strategy described today by the Prime Minister. The right hon. Gentleman said that they would bring their fruit in the Budget that we shall hear on 29th March. The right hon. Gentleman was referring to the cut in the Government's borrowing requirement and the cuts in taxation that will be so attractive to the electorate. All that is based upon the policy that his party was not prepared to support in the Government Lobby last Thursday.

The Conservative Party has no confidence in Her Majesty's Government. The national parties have no confidence in Her Majesty's Government. I do not know about the Liberal group. We shall never know what it thinks about Her Majesty's Government. However, the Tribune Group has no confidence in Her Majesty's Government. If we all voted tonight according to our opinions, the motion would be carried whatever the Liberals did. However, as the Prime Minister rightly said, there is a community of interest that holds them together and binds them to those who sit behind me—namely, the Liberal group.

The right hon. Gentleman's version is correct. He is right to say that there is a community of interest. When the right hon. Gentleman made his speech to those tremendous cheers, he was hearing the cheers, primarily, of those Labour and Liberal Members who have majorities of less than 5,000. That is the community of interest that binds them together. They were grateful to the Prime Minister for spaying the Liberals. That is what I think he has done, although I suspect that he has spayed the Labour Party in the process: that we shall see when the autumn comes.

Let it be borne in mind that it is not only the arrangement or the accommodation that has been reached with the Liberals that lapses at the end of the Session. I strongly suspect that the Parliament will lapse as well, and, perhaps most of all, the Liberal Party.

I bet that this is not the first time that the hon. and learned Gentleman has made this speech.

The hon. Gentleman is wrong, but in any event it is probably the last time that I shall need to make it.

The hon. and learned Gentleman will reach the stage when everyone knows that it is not true.

We have heard a great deal from both sides of the House about this open and above-board bargain. Unless there are some secret clauses, it will all be spelled out in Hansard. Presumably it is virtually as it is written down. It amounts to a letter of intent from the Government to the Liberal Group. We now have three letters of intent. There is the letter of intent to the Liberals, to the IMF and, most pervasive of all, what is called the social contract with the trade unions.

The Government are held against the quay wall by three ropes to which no Government should ever agree. The Prime Minister has promised the Liberals not to go to sea again. He said that he has been a good sea rover in the past. He has collected four-fifths of the booty that he wanted and he is now content to stay in harbour. As a fellow ex-naval person—to use that expression—he should be warned by the old naval saying that in harbour ships rot and men go to the devil.

Reference to that dignitary leads me straight to the Prime Minister's new friends, whose unswerving devotion to condescending sanctimony always earns them a place in our political history. They have been very conscious of a special bilateral relationship with the Almighty whom they have been serving in an advisory capacity. Their long experience of trimming should serve them well in their new situation.

I foresee certain practical difficulties after listening to the Prime Minister. There will be what might be called drafting difficulties when it comes to policy. When dealing with a consensus stretching from the Orkneys to Bolsover one is obviously engaging in a complicated and protracted process.

The Liberals are not the only trimmers that we have seen in politics. However, when it is all put down on paper, we virtually institutionalise trimming. And they may so discredit themselves by the evidence that they have offered to history that they may find themselves—possibly sooner than the autumn—in the position of trimmers in Dante's "Divina Corn-media" who, as they will remember because they are learned people, were spewed out by heaven and hell and tossed round in a circle for ever by stormy winds.

The public may well take that view of this strange bargain between these two equally objectionable but somewhat disparate partners. This is the most remarkable example of twinning since Sodom and Gomorrah.

We have heard of the benefits that will be conferred upon us by the bargain. We heard them from the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). For instance, there is proportional representation. That is a cause that the Liberal Party feels strongly about, although it never had the slightest interest in it when it was one of the major parties. It is most remarkable.

In the last few days, the Liberals have been engaged with the Prime Minister in this wheeling and dealing, which has not been very creditable to our politics because such bargaining induces cynicism on the part of the public. But this proportional representation that the Liberals are so anxious to have will make this kind of wheeling and dealing a permanent feature of our political life. It will turn politics in this country into what we see in Italy, or what we saw par excellence in the Fourth Republic in France. That gratifies the thoughts of those who are unable to secure the support of enough of the electorate to give them a substantial representation in this House.

The hon. and learned Gentleman has pointed to certain alleged Continental analogies. Does he agree that West Germany is a conspicuous example of a country that enjoys the benefits of proportional representation and has achieved, from a rock bottom start, a prosperity that now far exceeds our own?

Yes indeed, but the hon. Gentleman's perspective of history is surprisingly short. I remember several editions of German democracy. Though they have understandably taken a different course from Gallic democracies, they have, in the past at any rate, had almost equally short histories and led to much worse results. However, we shall see.

I am not suggesting that the experiment with the Liberals will ever be of such gravity in our political development that we need take it seriously. However, I thought it right to make these animadversions.

The right hon. Member for Roxburgh. Selkirk and Peebles said that his first point in the bargaining was no more Socialism. That was publicly stated in the broadcast. I should like to ask the Government whether he got that agreement. If so, has that fact been communicated to the National Executive Committee or Labour Members below the Gangway? If not, it would seem that the first and principal request has not been obtained.

The Prime Minister said that he did not mind that request, because he had already got four-fifths of his programme through. So he has. Britain is now the most Socialist country in the free world.

Is the Liberal Party now proposing to give this Government, who have done that—with that degree of popular support which I described in the parliamentary situation which we know has existed for the last two and a half years the opportunity of digesting and absorbing what, in two and a half predatory years, it has swallowed? Is that the intention? If so it is rather like the Liberal Party saying "You have eaten my mother and my father, my brothers and my sisters, but I shall support you if you do not eat my aunt".

For that, the Liberal Party is proposing to give the Government a period of stability. Therefore, we find the Liberal Party, like Harcourt, saying "We are all Socialists now" and the Prime Minister saying "We are all Liberals now".

I suggest that it will be a very interesting joint committee that will be chaired by the Leader of the House. My memory goes back to the days when we were at Oxford together. The right hon. Gentleman was chairman of the Liberal Club. What he used to say about Socialism was really quite remarkable. The right hon. Gentleman would quote Lloyd George about sand in the wheels and all the rest of it. Socialism was a terrible thing. But the right hon. Member for Ebbw Vale (Mr. Foot) is now a Socialist. Indeed, he is not just a Member of the Labour Party. At one time he was the shining light of the Left wing of the Labour Party—the Tribune Group. I warn Liberal Members that they are treading on a dangerous slope when they go in company with the right hon. Member for Ebbw Vale.

I must be short, Mr. Deputy Speaker, in the interests of other Members who wish to address the House. I wonder whether Liberal Members will give the stability that they think they are going to give to the Government. I suggest that the Government that they are proposing to support at 10 o'clock tonight are a very strange Government. They are a ruinous Government, dilapidated beyond repair. They remind me of the hut in Grimm's Fairy Tales which remained standing because it was so ruinous that it could not decide which way to fall. The Liberal Party is telling the hut which way to fall—and doing it with a fine irony in the name of accommodation.

My closing words of warning to Liberal Members must be that at the end of the day, which is not many months distant, they will find themselves without accommodation, without friends, without reputation, and without a future.

8.7 p.m.

I assure the hon. and learned Member for Beaconsfield (Mr. Bell) that the House enjoyed his performance almost as much as he enjoyed himself. The hon. and learned Gentleman took us along many byways. I know that he will forgive me if I do not follow him too seriously on his recent and Biblical analogies.

This confidence debate concentrates our minds, in the same way as they were concentrated last Thursday, on one of the most repugnant and obscene affairs of our Parliamentary deliberations. As my right hon. Friend the Prime Minister said, we have a minority Government. The result of a vote of confidence in such circumstances can rest entirely upon which side has the most Members sick at one moment and how many are in hospital beds rather than on the Floor of the Chamber.

My hon. Friend the Member for East Kilbride (Dr. Miller), who is the doctor in the House, has spent his time during the course of the debate looking at the sick downstairs. It must be incomprehensible to the public outside that the Mother of Parliaments, on a matter of supreme importance—a vote of confidence in the Government and whether to have a General Election—should have ambulances coming into New Palace Yard bringing in among others, a Member with a coronary thrombosis, and that decision has to be made in order to ascertain whether he can be brought in to vote. I hope that, having reached that situation, yet again the usual channels will now consider it for future occasions, because inevitably with a minority Government there will be a repetition.

The statement at the weekend by a Conservative Whip urging his colleagues not to go hunting in case they broke their necks, because he could not afford to lose their votes, bordered on the ludicrous. I do not know whether he felt that they should not go shooting or fishing in case they fell in the water and caught colds.

Much of the debate has hinged on the arrangements made and being made between my right hon. Friend the Prime Minister and the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). I think that most people in politics would like to be pure white and not have to enter into compromises about anything, but rarely do we get 100 per cent. of what we want.

There were obvious political motivations at work for my right hon. Friends in the Cabinet and the Liberal Party. I congratulate the Leader of the Liberal Party on his political considerations. I believe that he made the arrangement in the interests not only of his party but of the country. I hope that he will not consider me patronising when I say that in my experience in this House over many years colleagues who reach the leadership of the party or become Ministers have two options. Some grow and some swell. The Leader of the Liberal Party has grown considerably since he has held that office in his party. Of course, we shall argue and fight with him when our politics diverge and there will be differences of opinion. Nevertheless, as a result of his taking a commonsense approach, what has happened in the House today and what will happen in the Division tonight will mean that for a few months arrangements will be discussed with which he will be able to agree or disagree.

Most of the argument in today's debate has concentrated on the Government's problems, its economic and industrial strategy, its social strategy and the handling of public expenditure. Together with many of my hon. Friends, I have had differences with the Government over some aspects of the public expenditure cuts, but I hope to put this into perspective.

Let us look at the balance between the nation's spending in the public and private sectors. I often recall walking down Oxford Street at Christmas and looking for the poverty of the workers as they went in and out of the shops on a huge spending spree. We have just received figures which show that—and I make no complaint about this because workers are entitled to spend their money as they choose—we spent £2,237 million on cigarettes and tobacco, £3,927 million on alcoholic drink and £2,600 million on bingo and gambling in 1974. That is twice as much as we spend on the whole of the hospital service. There is no reason why we should not choose to spend our money in that way, but I cannot believe that my Government are causing intense poverty to ordinary people when so much money can be spent in the private sector.

The Opposition speak—as they used to say in the boys' comics of years ago—with forked tongues. In every area of need, they are prepared to attack the Government and to call on them to give or do more. This applies to spending on the elderly, the sick, the disabled and cars instead of tricycles. Yet the Opposition also call at the same time for cuts in public expenditure. I must defend the Government's record since we came into office in 1974.

I support my Government for the way in which, when the going has been tough, the financial climate has been difficult and there has been no easy option, they have invariably chosen to give the best possible deal to the poor, the sick and the disabled. That is the basis of my support for the Government and my condemnation of the Opposition motion.

In the few minutes that are left to me, I wish to speak about my confidence in the Government and lack of confidence in the Opposition. The area of public concern with which I have most contact is that of the National Health Service. The House will not be surprised that I look to that Department in seeking an example of my Government's record.

Following customary practice, I dropped a line to the right hon. Member for Leeds, North-East (Sir K. Joseph) to inform him that I intended to talk tonight about his track record on National Health Service expenditure. The right hon. Gentleman, who has considerable influence on Opposition benches on economic policy, recommended that an American consultant company, McKinsey, should compile a report to restructure the administration of the National Health Service. That report cost the taxpayers £22,000. It was intended to reorganise the National Health Service on more efficient lines, but it led to one of the greatest bureaucratic administrative monstrosities of all time. Having delivered the report and received the money, that same company said only a few weeks ago that it was sorry but it had got things wrong. But it was up to the Conservative Government to reject the advice—the decision was theirs—but they did not do so.

Every hon. Member will be able to recognise the example that I shall give relating to my own constituency, and no doubt every hon. Member has similar figures. My local area health authority employs 196 administrators at a total cost of £829,443 a year. The Royal College of Nursing made the point admirably today when it said that it was time that we took a scalpel to the administration and put more effort into the treatment, care and prevention of disease instead of building up larger amounts of paper, committees, consultations and the liaisons that go on as a result of the way in which the reorganisation Act of 1973 has decided to run the Health Service.

Since my Government took office, the amount spent on hospital administration has risen from £51 million in 1973 –74 to £121 million in 1974 –75. This is the direct result of the 1973 Act. If the Opposition win the vote tonight, there could be an election and, Lord forbid, there could be a Conservative Government, so I intend to compare Opposition policies with what my Government have been able to do in difficult circumstances.

When this Government came into office, the amount that was being spent on the National Health Service was about 4·9 per cent. of the gross national product. As a result of the Labour Government's administration, in which I have the greatest confidence, we are now spending 6·7 per cent. of our gross national product on the National Health Service for the first time. We are spending £6,800 million every year on looking after the sick.

Nurses who for generations have been underpaid and overworked, for the first time, received a fair deal in April 1974. The Government have also given a fair deal to junior doctors that they were not getting before.

When I hear the way in which my Scottish colleagues argue about devolution, I feel that I must remind them that although we spend £4 per head of population on health in England, we spend £5 per head in Scotland. The Scots should appreciate this benefit of the United Kingdom when they go into the devolution talks. I could give the House details of the situation in the United States where £12 is spent per head of population on health services compared with £4 per head in this country. I could go on, but I shall not do so.

The Government have done a good job of work here—even though they are not perfect. When you, Mr. Deputy Speaker, and I are perfect, I shall expect my Government to be perfect. Perfection cannot exist this side of paradise. My Government do and will make mistakes, but they have achieved an enormous amount in spite of the difficulties.

The Opposition should remember that when there are quarrels inside a family—and every family has quarrels—if the neighbours try to interfere the family will immediately unite. The Treasury Bench need have no fear. If we are attacked by the Opposition, our family will stand together, will have every confidence in the Government, and support them, especially when under attack from their opponents.

8.18 p.m.

The hon. Member for Hammersmith, North (Mr. Tomney) said that in putting down this motion the Tory Party was out of touch with the electorate. Since I and two or three of my hon. Friends have recently been in the closest possible touch with the electorate in the way that counts—by looking for their support—I am particularly pleased to be able to say a few things in this debate.

Any Government obtains their authority from three separate but overlapping sources. They receive authority from the constituency—the people and the popularity of their policies—from parliamentary solidarity and strength, and from a moral sense, which is a feeling that the country at large—not necessarily just politicians—believes that the Government are not abusing their supreme authority, but are using it in the long-term best interests of the nation, that they are not putting it at the disposal of some special specific faction. I shall look briefly at each of these three.

First, at constituency level: there are 72,000 electors in Walsall, North. Prior to the by-election in November, the Labour Party held the seat with a majority of almost 16,000. It is now a Conservative seat with a majority of more than 4,000—there has been a swing of about 20,000. The hon. Member for Liverpool, Walton (Mr. Heffer) may claim that this massive turn-round was caused by the effects of the incomes policy. That policy was an important factor, but the hon. Gentleman is mistaken if he thinks that it was the only one. There were other equally important factors at play in the campaign and in the country.

These factors included the importance to the average working man of seeing his hard-earned money being taken away in taxes and wasted by the Government in poor administration and in schemes, such as nationalisation, that are irrelevant to the nation's needs. The people of Walsall, North also changed their voting habits because they were frightened by increases in crime and by the actions of a Government who condoned law-breaking and thereby undermined respect for authority.

Voting habits were changed because of restrictions on the freedom of choice. If there is one thing that the English people dislike above all others it is a busybody. Interfering petty officials have had a field day under this Government.

Those were the reasons for the choice made by the people of Walsall, and a similar choice was being made at the same time in other parts of the country, including Workington. It is clear, therefore, that the part of the Government's authority that comes from the electoral popularity of its policies has withered away.

The Government's parliamentary authority is no more satisfactory, and not just in the immediate issue that we are facing, although spending is at least as important as revenue raising and if there is a similar result following the Budget proposals, there will be even more of a storm than we have witnessed in the past few days.

It is not just a question of the approval of specific policies. There is also the Government's failure to carry crucial and important legislation—the devolution Bill is the centrepiece of their legislative programme for this Session. In fact, it is not even only their failure to carry that legislation. They have failed to bring forward legislation because they know that it will be lost. They have not brought in the Bill to provide for direct elections to the European Parliament, and that takes us into an even more serious default.

Direct elections to the European Parliament concern not only this country but our allies and friends abroad. The Government have jeopardised not only the position of this country, but our prestige and reputation around the world. For these reasons it can be said that the Government's parliamentary authority has been chipped away.

Finally, I turn to moral authority, which is possibly the most important, if least tangible, source of the Government's strength. The Government must face the fact that it is widely considered that they have given sectional claims priority over the needs of the nation as a whole. As a result, many policies have been adopted that are, at best, irrelevant to the nation's needs, and, at worst, downright harmful to our long-term prospects.

Hon. Members opposite will claim that nothing has been done that was not in the Labour Party's manifesto at the last General Election, but, as was pointed out earlier, there was no mention in that manifesto of deals with the Liberal Party.

The Government have lost and forfeited their authority and right to govern. No doubt hon. Members opposite will disagree. They may be right; they certainly have more parliamentary experience than I, but they must admit that there is at least a possibility that they are wrong. The one thing on which we can all agree is the value of the democratic franchise. If hon. Members opposite are right, why should they be frightened to put it to the test? Let us put it to the test by putting it to the people. Anyone who is a democrat will be supporting the motion in the Division.

8.25 p.m.

In reply to the hon. Member for Walsall, North (Mr. Hodgson), the plain unvarnished truth is that we believe that if we put it to the people now, we would lose. It is also the plain unvarnished truth that the Leader of the Opposition wants to put it to the electorate because she thinks that she will win. However, it is interesting to note that in the past week, the Press, which is not altogether friendly to my party, has been almost unanimous in agreeing that this is not the time, in the national interest, to have a General Election. Apart from the Tory hack papers such as the Daily Mail and the Daily Telegraph, most of the papers have resisted the claim of the Leader of the Opposition that the country and the Tory Party are thirsting for a General Election.

One of my hon. Friends mentioned earlier the surprising difference between the statements made by Conservative Members in the House, when they know they will be widely reported, and what they say privately. There are 600 vested interests in this House who do not want a General Election. The Observer summed it up well on Sunday when it said:
"The case against a Thatcher Government coming to power … is that too little is known of Conservative anti-inflation policies."
We have heard some witty speeches from hon. Members opposite, but they have been entirely barren of the policies that the public have a right to know about before putting their crosses on the ballot paper. The Leader of the Opposition spent a good deal of time saying precisely nothing about these policies.

I have whacked the hon. Gentleman so many times that it would be a waste of time for me to give way to him again.

I apologise for taking up the time of the House by quoting from respectable newspapers. I would not do so but for the fact that they support my case. The Times said last week about the Government:
"for the moment it does not appear to be prevented by the weakness of its parliamentary position from doing anything that is essential in the national interest."
The same editorial said that there was not
"sufficient cause to precipitate an election next week"
One may therefore ask who honestly and passionately wants an election before another glorious summer is upon us. Whatever hon. Members opposite may say publicly, the vast majority admit in private that they do not want an election. No more and no less than my party, the Conservatives are a series of minority parties. We have seen the petty type of tactic being operated this evening with Conservative hon. Members occupying the Liberal Benches. When I look at the Liberal Bench I do not suppose that that bunch of Tories could muster an 1Q of 103 between them.

The person who passionately wants to take the plunge in a General Election is the Leader of the Opposition.

I shall examine the right hon. Lady's motivation. It is completely honourable. With the demise of one lady Prime Minister in the world she desperately wants to go down in history as the first female Prime Minister in the British calendar. That all-consuming passion has warped her judgment and whetted her fancy as surely as if she had become a drug addict. She may have no policies

On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to suggest that my right hon. Friend the Leader of the Opposition is comparable with a drug addict? I suspect that you would not agree to that.

I do not understand what the hon. Member's point of order is. What is it?

It is not in order and it is uparliamentary for the hon. Member to suggest that the Leader of the Opposition is comparable with a drug addict.

I do not know whether the hon. Member For Fife, Central (Mr. Hamilton) will save me the trouble of ruling by withdrawing the words. As I understand it, he is only making a comparison. He is not suggesting that the right hon. Lady is a drug addict.

Hon. Members misheard what I said. I shall repeat my words and then you, Mr. Deputy Speaker, can rule upon them. I said that the all-consuming passion that the right hon. Lady has—I wanted to be in order because I am very much a parliamentarian—

On a point of order, Mr. Deputy Speaker. The hon. Member for Fife, Central (Mr. Hamilton) is clearly reading his speech. He has said that he is. Can you stop that nonsense? It is not in order to read a speech.

I did not expect that we should get into this mood this evening on such serious business. The debate has been well conducted so far. I suggest that we get on with it so that we can hear the final speeches from the Front Benches and reach the all-important vote.

Order. It would help the hon. Member if he addressed himself to the Chair. He would then get a smoother ride.

I was making a comparison. The warping of the right hon. Lady's judgment, in her anxiety to become the first female Prime Minister, makes her like a drug addict. That is a perfectly proper comparison to make.

On a point of order, Mr. Deputy Speaker. Is it parliamentary language and is it in order for the hon. Member to say that my right hon. Friend the Leader of the Opposition is behaving like a drug addict? I do not think that it is.

So far as I can judge, the hon. Member for Fife, Central is trying to compare the right hon. Lady's actions with those of a drug addict. He is not suggesting that the Leader of the Opposition is a drug addict.

Hon. Members are consuming the time of the House. The next speaker is a Tory hon. Member and I do not wish to prevent any hon. Member from speaking. However, as a result of these interventions my speech will be that much longer.

I was remarking that the right hon. Lady and all those who purport to support her in the debate may have no policies. Her team on the Front Bench makes Dad's Army look like a crack regiment. That which is lacking in policies and personalities the right hon. Lady seeks to make up by using her polished phrases and her blue rinsed coiffure.

The right hon. Lady knows that the time factor is now not on her side. The trends in the economy, which were spelt out by the Prime Minister this afternoon, are all in the right direction. The pound is stable, the rate of increase in inflation has been slowed down and unemployment may have passed its highest peak. Next week we shall get a very favourable Budget, and next year will see North Sea oil getting rid of our overseas borrowings and we shall see a healthy balance of payments surplus within a period of 12 to 18 months.

What the national interest requires now, it seems to me—and, apparently, to most of the newspapers—is a period of steady, unspectacular government, working in co-operation with organised labour in the form of the TUC and with capital in the form of the CBI—

and with our people as a whole, in terms of the social contract, towards the goals of prosperity and peace both at home and abroad. That seems to be the broad policy at which we must aim.

I come now to the deal, the agreement or the understanding—call it what one will—that has been arrived at by the Government and the Liberal Party. I believe that at present the country prefers government by affable Uncle Jim to government by the excitable, unpredictable, aggressive Iron Lady.

We shall put it to the test, but not at a time of the Conservative Party's choosing.

The realities of the present Parliament demand accommodations

The Labour Party will be out lock, stock and barrel.

with such minority interests as are reasonable in their demands. The Liberals in this House are a nice bunch of lads requiring special treatment, and we shall give it to them. Their demands were not unreasonable. I can happily go along with most of them. My colleagues in the Tribune Group may be nice as well—though not quite as nice, perhaps. They are more numerous, for sure, and a large number of them represent marginal seats, so they need just that little bit of coaxing to vote for the continued survival of old uncle at No. 10. The more troublesome of them can always be accommodated within the Government.

Scottish National Party Members can be written off as Tories, anyway. They will be going into the Lobby with the Opposition tonight. Many of them would bridle at any concessions made to them. I have often talked about the Scottish economy. In the context of this debate and in this connection, my hon. Friends should know that there is now a project in hand worth £200 million in oil investment by Shell-Esso in Fife. My SNP opponent condemned that outright as soon as it was announced. That was a £200 million investment in the county of Fife. We can write off the SNP in that context.

I say to my right hon. Friends, however, that there are other minority groups in the Labour Party who need to be considered. I was a bit concerned when my right hon. Friend the Prime Minister referred this afternoon to a document that none of us has yet seen. That is the long document presented by the Liberal Party on the devolution Bill. Some of us would like to see that document. I hope that we shall see it in full in good time, and before my right hon. Friends take action on it I hope that they will consider the views of minorities such as myself in these matters. We are just as important as the Liberal Party. We shall have something to say about the Bill and about its process through the House. I do not believe that the proposition presented by the hon. Member for South Ayrshire (Mr. Sillars) is practical because the Government cannot link a motion on the guillotine to a motion of confidence. The two are completely unrelated.

On a point of order, Mr. Deputy Speaker. The recent Conservative converts to the Liberal Party, who are sitting on the opposite side of the House in the Liberal seats are making an awful racket. Could you do somethting to keep the children quiet?

Mr. Deputy Speaker