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Commons Chamber

Volume 929: debated on Monday 28 March 1977

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House Of Commons

Monday 28th March 1977

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions




asked the Secretary of State for Energy if he is satisfied with arrangements to safeguard pensioners and others from disconnections.

Safeguards are contained in the Code of Practice on Payment of Domestic Electricity and Gas Bills adopted and published by the gas and electricity industries after consultation with the Government last December. I am hopeful that they will prove effective in helping genuine cases of hardship to avoid disconnection.

I thank my hon. Friend for what he has said and applaud the endeavours of his Department, but will he, nevertheless, attempt to increase information to the deserving cases who can be helped in the light of what he has said? I feel that this is of paramount importance. Will my hon. Friend give the matter his earliest attention so that the information can be disseminated as widely as possible?

I am grateful to my hon. Friend. The code sets out to draw attention to the easy payment and other methods by which people can be helped to overcome the difficulty of large quarterly bills. It is clearly advantageous to the fuel industry to know in advance whether people are likely to want help. People should not, therefore, wait until the last moment with a bill that is difficult to pay but should seek help and advice as quickly as possible. The Department will do all it can to ensure that the information is passed on to them.

Does my hon. Friend agree that while a code of practice is helpful it is sometimes difficult to apply? For instance, it is difficult to secure supplies of slot meters, although the code recommends that these should be made available in certain circumstances.

The code says that prepayment meters will be made available, where safe and practicable. If my hon. Friend has a particular case in mind, I ask him to refer it to me and I shall look at it. Decisions on the installation of prepayment meters must be for the industries themselves, since only they are in a position to assess whether they can be installed safely and practicably.

Can the Minister do a little more to help people in difficulties with insulation, particularly those in electrically-heated homes who are forced to pay bills which they cannot afford?

As the hon. Gentleman knows, the Government have set aside £25 million to help those who are in receipt of supplementary benefit and family income supplement with their electricity bills this winter. On the question of insulation, the Government have made it clear that local authorities in particular are encouraged to go ahead with the insulation of houses. We know that there is a large area in which progress can be made, and funds have been made available through the job creation programme to do that. We want to see local authorities getting on with the insulation of housing.

Gas Prices


asked the Secretary of State for Energy if he will meet the Chairman of the British Gas Corporation to discuss increased charges.

Since the Government's request to British Gas was announced by my right hon. Friend the Chancellor of the Exchequer on 15th December, I have been in touch with the chairman about its consequences on several occasions. The proposed increases will come into effect from 1st April.

In view of the collaboration that was asked for and given by the trade union movement to the Government's economic policies over the last few years, does not my right hon. Friend think that this decision is a slap in the face to the movement for the sacrifices that have been made? Will he confirm that it suggests that prices in the public sector are likely to increase for some time ahead? Has he tried to justify this decision to a trade union audience?

I think that any increase in prices is regrettable, but my hon. Friend will know that this increase derived from the necessity to reduce the public sector borrowing requirement in connection with the IMF loan.

As the increase is due to debt repayment, why is it that the gas industry is the only corporation that is asked to repay any debt? The Post Office, after all, has also made quite a substantial profit.

I appreciate that. The reason for the increase I have just announced—and the House knows it anyway in the context of the energy industries—is that if the choice was between a reduction of investment in coal, gas, electricity or nuclear power and increases in the prices, the comparable figures show that electricity has increased in price by 119 per cent. in the last three years, coal and coke by 92 per cent. and gas by 57 per cent.


asked the Secretary of State for Energy what representations he has received to date from consumer associations or others following the announcement of a rise in gas prices.


asked the Secretary of State for Energy what representations he has received about his decision to authorise a 10 per cent. increase in gas prices.

My right hon. Friend has received about 500 representations from consumers and their representatives up to 25th March.

The arbitrary manner in which the Government have increased gas prices without proper consultation has rightly angered the consumer. Does the Minister agree that it must be in the longer-term interests of the consumer that gas prices should not be artificially lower than other energy prices, in view of the need for huge investment in the longer term to provide alternative energy sources?

I agree at least with the latter part of the hon. Gentleman's question, but he will recall that the Government had to make a decision quickly to get the fuel industries out of the deficit into which they had been forced by the previous Administration. [Interruption.] The hon. Member for Bedford (Mr. Skeet) laughs, but it is true. The Government also decided, because of conservation measures, to move towards the economic pricing of fuels.

Having said that, I go on to say that I agree with what the hon. Gentleman said about the long term. It is a fact that, even taking the 10 per cent. increase into account, the cost of gas is lower in real terms than it was five years ago.

As has already been said by our right hon. Friend, does my hon. Friend accept that, as this price increase was agreed as part of the IMF loan package last year, and as we now know that that package was based partly on inaccurate public sector borrowing requirement forecasting, the Secretary of State should take back to the Cabinet at least proposals for a proportionate decrease in this price increase which has caused outrage among many of our own working supporters?

I can only emphasise that the cost of gas in real terms is still lower than it was five years ago. But, of course, I recognise what my hon. Friend says, namely, that any increase in price at this time is bound to cause concern among people on low incomes. However, my answer to the point put to me about a reconsideration of the matter is that, as this comes under the decisions associated with the IMF loan, my hon. Friend should put his question to the Chancellor of the Exchequer and not to me.

Surely the Minister is not being frank with the House. This has nothing to do with the IMF. Is it not because of fears about the price of gas versus electricity—15p per therm for the former and the equivalent of 60p per therm for electricity—that the Government had to raise the price of gas in order to bring about some parity with electricity, otherwise the latter industry would have been destroyed?

Absolutely not. The hon. Gentleman says that I am not being frank with the House. He knows as well as I do that the decision was announced as part of the measures in December of last year. No one can gainsay that as a fact. As for the situation vis-à-vis the electricity industry—and, for that matter, other industries—my right hon. Friend has already given the comparable figures in an earlier answer. I have nothing to add to what he said then.

If this increase was a requirement of our obtaining the IMF loan, was this requirement imposed by the IMF or was it offered by the Chancellor of the Exchequer?

The decision was part of a package of measures that were considered by the Government, agreed by the Cabinet and subsequently agreed between the Government and the International Monetary Fund.

On a point of order, Mr. Speaker. As these Questions were really aimed at a Cabinet Minister and as a Cabinet Minister obviously has responsibility for replying, should not all the Questions on this matter have been put together so that the Secretary of State could answer them?


asked the Secretary of State for Energy what discussions or correspondence he has had with the Gas Corporation about the prospective increase in the price of gas.


asked the Secretary of State for Energy what recent discussions he has had with the Chairman of the British Gas Corporation about price and the effects of a price increase and their effect on domestic consumers.

I would refer the hon. Members to the answer I have just given to my hon. Friend the Member for Basildon (Mr. Moonman).

Is it not most misleading for the Secretary of State to blame the increase in gas prices on the IMF? Is he not aware that there was no commitment in the infamous letter of 15th December to Dr. Witteveen to increase gas prices? Ought not the Secretary of State admit that he has issued a directive to the British Gas Corporation to put up the price of gas, which the British Gas Corporation itself did not want?

If the hon. Gentleman had heard my earlier answer, he would have heard exactly the words I used. This derived from the necessity to reduce the public sector borrowing requirement. There was no suggestion of blame directly; it was a part of the package which involved a reduction of the PSBR. What flowed from that was the necessity to raise the price.

Is the Secretary of State aware that this will hit consumers very hard indeed, particularly consumers with below-average incomes, above-average-size families, and the elderly and old-age pensioners? Will the Secretary of State undertake at least, in order to mitigate the effects of the increase from 1st April, to authorise one of his senior officials to keep permanently in touch with DHSS Ministers lest there be any problems arising for consumers on below-average incomes who do not qualify for supplementary benefit?

I appreciate that, but, as the hon. Gentleman knows, the arrangements already exist for that and are not affected by the increase. I would say to Opposition Members who demanded very much larger cuts in public expenditure that, had they been implemented, the impact on poorer people would have been much greater.

In view of the fact that I requested my right hon. Friend the Secretary of State for Prices and Consumer Protection to ask the Cabinet to reconsider this matter, will my right hon. Friend indicate whether he has been back to the Cabinet and what decision it took on the matter, because there is a strong feeling that even now that decision should be reconsidered so that there is not an increase that can put additional burdens on those who cannot afford them?

Perhaps I may remind my hon. Friend that I answered Question No. 2 myself. He knows that these are Cabinet decisions.

What is the point of having meetings with the Chairman of the British Gas Corporation if the Secretary of State takes decisions, such as increasing the price of gas, without consulting the Corporation in the first place, and then volunteers it himself, independent of the Cabinet, as a potential saving? What is the point of a Price Code if it can be avoided unilaterally by one nationalised industry?

Perhaps I may take the two points separately. It was not an energy policy decision, because the House knows that there has been a demand for a tax on gas from the other industries for a long time.

I said there had been a demand and that it was not an energy policy decision. I think the hon. Gentleman will know that on budgetary matters—and the IMF package was thus regarded—preconsultation is not possible.

On a point of order, Mr. Speaker. You said in answer to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) that it was not for you to decide how Questions were dealt with. However, we have had an extra-ordinary procedure this afternoon of a sort that I have not seen before in that the grouping of Questions has been taken in three goes. If you, Mr. Speaker, are unable to give a judgment on this—I respect your position—is this a matter that we must take up in another place? What has happened this afternoon is extremely odd.

The hon. Gentleman knows the sort of places where he should pursue that matter, but it is not with me.

On a point of order, Mr Speaker. I wish to give notice that, in view of the totally unsatisfactory nature of the replies, I should like to raise the matter on the Adjournment.

Wave Power


asked the Secretary of State for Energy what estimate he makes of the proportion of United Kingdom electricity requirements which could be met from the conversion of energy from sea waves.

The eventual estimate of exploitation will depend on the success of the national research and development programme and the relative economics of wave energy.

Is not the potential from wave energy very much larger than the potential from other sources of renewable energy, such as tide energy? As this could reduce our dependence nationally upon oil, coal and nuclear energy, how soon can energy from waves be produced, and can the Minister say what the cost would be?

On the last two parts of the question, I am afraid that I cannot tell the hon. Gentleman how soon, because this is experimental. With regard to cost, so far as we know it will certainly be expensive, but as we are still in the experimental period that may not in itself be the decisive factor. With regard to the first part of the question, wave energy certainly looks like a good bet compared with alternative sources of energy, although they are all important. We are still carrying on our studies, and we hope to report to the House as progress is made.

As regards tidal energy, is it not time that we had a reappraisal of the Severn Barrage scheme, particularly its viability in the 1990s, when oil resources will be reduced?

I could not agree more with my hon. Friend that we should look at aspects of tidal energy. My right hon. Friend is considering the matter urgently and will make a statement to the House about it.

Energy Sources


asked the Secretary of State for Energy if he is satisfied with his Department's approach toward the encouragement of benign and renewable sources of energy, especially solar energy.

Yes, Sir. The research and development programmes announced and planned by my Department are commensurate with the present early stage in the development of these technologies.

How can the hon. Gentleman be satisfied about his Department's efforts when, in the Press release on the new policy which was put out recently, no mention was made of the export potential of solar energy? Surely this is one of the matters that the Department of Energy should be considering as a good export earner for Britain.

This is a comparatively new technology. I agree with the hon. Gentleman that there certainly could be export potential here. If he looks at the Press release to which he referred, he will see that we have increased the sums to be spent on research into solar energy. I do not dismiss what the hon. Gentleman has said.

Does the Minister accept that the best guess—it is nothing more—is that by the end of the century benign sources could account for as much as 10 per cent. of our energy needs? Does he accept that the amount currently spent on research on these sources is so small as to be insignificant compared with that spent on nuclear energy?

The answer to the first part of the hon. Gentleman's question is that his figures are about right. Figures varying from 6 per cent. to 8 per cent. and 10 per cent. have been mentioned by about the year 2000. As for the allocation of finance to alternative sources of energy, as much is being spent as needs to be spent at the present time, because the whole technology is to some extent in its infancy. Of course, as the technology improves the Department will consider allocating more finance to alternative sources of energy.

Coal Production Targets


asked the Secretary of State for Energy when he expects the targets for productivity set out in "Plan for Coal" to be achieved.


asked the Secretary of State for Energy when he expects the targets for productivity set out in "Plan for Coal" to be achieved.

We can expect productivity to improve as the investment programme comes to fruition.

Does the Minister appreciate that the energy policy review indicates that by 1985 the target might fall short of requirements by 10 million tons? Is he also aware that the Tom Boardman settlement remains to be implemented by the miners' union and that if it were implemented he might be able to reach his target? Will he look into these matters?

We are debating these issues in the Standing Committee considering the Coal Industry Bill, and the hon. Gentleman has posed these questions there. As for the agreement on productivity with the miners' union, the hon. Gentleman knows—indeed, I have answered Questions about this—that a working party comprising the National Coal Board and the unions is looking at the question of productivity and incentives.

As for progress with new investment, the hon. Gentleman is aware, of course, that Royston has come into production. The outlook is good—three times as much as the national average—so the new investment is beginning to pay off.

At the inauguration of the Selby coal complex, the President of the National Union of Mineworkers expressed concern about the performance of machinery underground. Can the Under-Secretary tell us whether he is satisfied that this lack of performance is sufficient to hold back the output per man-shift in the industry?

One can never be satisfied with the performance of machinery. Certainly there have been instances where one could expect a better performance from machinery. As the hon. Gentleman realises, however, sometimes this is in itself related to the techniques of mining, and if one could indulge in more retreat mining one could probably have better progress from mining machinery. No one is complacent about this, of course, and it is something to which we shall be addressing ourselves. Certainly the performance of machinery compared with other parts of the world is satisfactory, but we are not complacent about it.

Will my hon. Friend confirm that in the European coalfields, including West Germany, productivity has fallen during the past several years? Will he also agree that productivity is closely allied to mechanisation and geological conditions? Will he also confirm that after 1966, when the productivity system in the pits was abolished, there was one of the greatest spurts in productivity in British coalfields, from one end to the other?

My hon. Friend has put three questions. Yes, there have been disappointing performances in relation to productivity. Yes, the whole of the world is looking at the possibility of trying to increase productivity. On the third question, about the boost that we received in relation to productivity, I believe my hon. Friend will agree that that was as a result of the power supports coming more and more into being. Indeed, what we really had at that particular time was a new technological breakthrough.

There is much discussion going on in the industry about whether we are on the verge of another technological breakthrough, but I do not think we can expect the same increases as those we expected in the 1960s, because that really was a massive technological breakthrough in productivity and mechanisation.

Does not the Minister understand that there is wide public concern that, leaving aside the question of improved productivity from miners, after what is already a very substantial investment programme, so far from there being an increase in output, output this year will fall against last year and his Department's own forecast is that output next year will be even lower than this year? One must ask exactly what is happening to the capital investment and the benefits that should flow from it.

The hon. Gentleman may say that there is a great deal of public concern. But there is no complacency in the Department of Energy, nor is there complacency amongst the miners. I explained earlier that the question of incentive and productivity had been occupying jointly the minds of the National Coal Board and the National Union of Mineworkers.

Yes, there is more to it. For example, the stockpiling of coal may have had some effect on the morale of miners. The question of certain types of manpower in relation to development work in the mines may have had an effect on the morale of miners.

I can back up with facts what I am trying to say to the hon. Gentleman. Where new investment has come into-being, such as at Royston, there have been substantial increases in productivity. As more and more of this new investment comes into being, we will get successes. The Government are trying to do in 10 years what should have been done in 25 years in the mining industry, and I wish that the Opposition would bear this in mind. The industry was starved of investment, and this Government are now putting investment into it.

National Coal Board


asked the Secretary of State for Energy when he last met the Chairman of the National Coal Board.


asked the Secretary of State for Energy when he last had discussions with the Chairman of the National Coal Board on the future of the coal mining industry.


asked the Secretary of State for Energy when next he intends to meet the Chairman of the National Coal Board.

I have regular meetings with the Chairman of the National Coal Board and last met him on 22nd February.

Is the Secretary of State aware that we are encouraged that he has seen the Chairman of the National Coal Board within the past four or five weeks? Will he now seek another meeting with Sir Derek Ezra and convey to him some of the deep anxiety felt on both sides of the House of Commons about the continuing decline in productivity and the number of miners leaving the industry? Does not the Secretary of State genuinely consider that this continuing decline in coal productivity for the third year running could produce a whole series of long-range energy problems for the United Kingdom?

I think that the whole House understands the importance of productivity, but I take the view strongly that exhortations to the miners on productivity from Ministers, the Opposition Front Bench or Back Benchers are not effective. I have, therefore, never made a speech urging higher productivity, because the work in the pits has to be undertaken by those who work in them and know them best.

When next he meets the Chairman of the National Coal Board, will my right hon. Friend discuss with him the granting of a few more million pounds for claims for damages under the pneumoconiosis scheme? Is not my right hon. Friend aware that many widows and others, because of certain anomalies, have been harshly and unfairly dealt with because of lack of money?

Will my right hon. Friend also discuss Drax B power station with the Chairman of the National Coal Board? Why are we holding back on the building of Drax B? Are we waiting until the Selby coalfield comes on stream? I ask my right hon. Friend not to forget that we have a stockpile of coal that could be used for power stations.

My hon. Friend knows as well as I do the contribution that the Government have made both on miners' pensions and on the pneumoconiosis scheme. My hon. Friend also knows the position on Drax B, which has not changed since I last made a statement on that subject in the House. But we have tripartite meetings at which Ministers, including Treasury Ministers, the management and unions in the coal industry discuss all the matters that he raises. I hope that my hon. Friend will not overlook the substantial arrangement on earlier retirement, which the NUM itself puts as its top priority.

Will my right hon. Friend also tell the chairman that after 30 years of nationalisation retired miners and widows of retired miners still do not have enough fuel to keep them going through the whole year, especially in wintertime? Is he aware that the coal that is provided is provided out of the concessionary coal of those working, and that it is high time that the National Coal Board made a substantial contribution to the coal pool scheme in order that retired miners and their widows can have sufficient coal throughout the year, to ensure that they receive not less than five tons per annum and so that the NUM's current haggling over this scheme can be ended very quickly?

Matters of this kind are raised by the NUM first with the NCB and then at the tripartite meeting. I think it better that I should continue to preside where these matters arise and leave it to that machinery for consultation.

The Secretary of State says that he has made no appeal for higher productivity to the miners. Will he say who he thinks should do that, since the mines are now publicly owned and there are no shareholders? Is he aware of the very serious consequence of low productivity and all kinds of absenteeism in the mines? Finally, will he bear in mind that we were told that when the mines were nationalised there would be a complete change of attitude on the part of the miners? What has happened?

The hon. and learned Gentleman will recall that I began my answer by saying that everybody in the House recognised the importance of productivity, but, to be effective, it must be sponsored and stimulated from within the industry. I hope he will not think me offensive if I say that advice on how to handle the mining industry from his side of the House has not been altogether successful over the last few years.

Will my right hon. Friend please explain to Opposition Members that productivity in the pits is not something which can be obtained by simply making flowery speeches or turning taps on and off? A thousand and one things govern productivity in the mines. Will my right hon. Friend also point out that over the last few weeks productivity and global output in the Barnsley area have gone up tremendously?

My hon. Friend knows much better than I what the factors are, but any Member of this House who is not acquainted as closely as he is with the mining industry will know from visiting a pit that, among other things, the geological factors may make an absolutely dramatic difference to productivity. One cannot work one's way on overtime through a major geological fault.

Will the Secretary of State address himself to the question that his hon. Friend failed to answer? Accepting that exhortations from either side may not be particularly effective, there is still an area for which the right hon. Gentleman has direct responsibility, which is the effectiveness of the capital investment going into the industry. Is he satisfied that, in the light of the very substantial public investment going in, the output which is being generated as a result is satisfactory?

I absolutely agree with what the hon. Member says: that with a very heavy capital programme the House is entitled to be satisfied that the capital investment is producing the returns which it was intended to produce. Of course, the equipment is utilised by the people who work in the industry, and I would take very seriously indeed criticism of the capital equipment from those who are required to use it. But, apart from the one reference that the hon. Gentleman quoted, made by Joe Gormley at the Selby opening, it has not been represented to me that the capital investment is failing to achieve, in general, what it was intended to achieve.

Electricity Generation (Coal Supply)


asked the Secretary of State for Energy when he next expects to meet the Chairman of the National Coal Board to discuss coal-burn agreements for the generation of electricity.

My right hon. Friend and I meet the Chairman of the Coal Board regularly. When we next meet him we shall wish to discuss the arrangements to implement the Government's decision to make £7 million a year available to enable the National Coal Board and the South of Scotland Electricity Board to conclude a five-year coal supply agreement.

Is my hon. Friend aware that the Scottish miners are very grateful to him for his part in negotiating the Government assistance of £35 million over five years to enable the South of Scotland Electricity Board to burn coal in its power stations? Will he ask the NCB to ensure that some of this money is used to benefit collieries such as those in the Longannet project and also Polmaise, in my constituency?

I am grateful to my hon. Friend for his kind comments. I think he will agree that the fact that the National Coal Board is about to conclude the agreement will be of advantage not only to people in the Longannet and the Polmaise area but to the whole of the mining industry in Scotland. With the market and the long-term five-year contract, it will mean that the National Coal Board will be able to carry out the new investment and the new sinkings which Scotland requires.

Will the Minister accept my thanks about that investment? Will he also say what kind of consultations his Department and the National Coal Board have with his right hon. Friend the Secretary of State for Scotland, as the Secretary of State for Scotland is responsible for the electricity industry in Scotland?

I am obliged to the hon. Gentleman for his kind comments, but I ask him to recall that the £35 million, for example, was the result of a joint working party chaired by my right hon. Friend the Secretary of State for Scotland. Maximum consultation took place between the office of the Secretary of State for Scotland and the Department of Energy. Consultation is taking place all the time, largely because, as the hon. Gentleman pointed out, my right hon. Friend the Secretary of State for Scotland has responsibility for the South of Scotland Electricity Board.

Does not my hon. Friend agree that with questions of this importance it is necessary to have discussions not only with the Chairman of the National Coal Board but with the chairmen of the generating boards and with the unions in mining and electricity supply?

I could not agree more with my hon. Friend, but when I answered the previous question I pointed out that the decision arose largely from the recommendations of a working party. All the generating unions were involved in that working party and they all said that there must be a commitment to coal in Scotland.

Will the Minister tell us under what statutory powers he is sanctioning the £35 million?

The hon. Gentleman is a member of the Standing Committee on the Coal Industry Bill. If he studies the legislation about to be passed through the House, he will find that under Clause 2 the statutory authority will be given to my right hon. Friend to earmark this capital sum.

Gas And Electricity Industries


asked the Secretary of State for Energy if he has any plans to meet the Chairmen of the British Gas Corporation and the Electricity Council, respectively.

I meet the chairmen as and when the occasion requires but have no immediate plans to do so.

Last time the Secretary of State met the Chairman of the Gas Corporation, did he not find that gentleman rather resentful of the fact that the prices of the product of his industry were to be increased as a result of Government policy while the prices of other fuels produced by nationalised industries were to remain static? Will the Secretary of State tell us, even now, why that distinction should have been made when the Government were forced to cut back on their expenditure?

I have answered that question several times today, but I will deal with it again. Given the requirement to reduce the public sector borrowing requirement, given the necessity to require a contribution from the nationalised industries to that end, and, in the energy field, given the choice between cutting investment, which would mean cutting back on the future or increasing prices, and making a change in the differential in prices for electricity, coal and coke, the Government decided that it would be right to require a contribution from the gas industry. The Chairman of the Gas Corporation did not particularly like it—that is obvious—but at the same time the capacity to finance more of the investment himself by increasing prices provided him with some security.

As my right hon. Friend has said, the public sector borrowing requirement is really a Treasury decision. We are expecting a statement from the Chancellor tomorrow. As the public sector borrowing requirement has improved greatly in recent months, could my right hon. Friend ask the Chancellor to look at the matter again and make a statement tomorrow on gas price increases?

I never thought that I should have to say that I cannot anticipate my right hon. Friend's Budget Statement, but I am dealing with a Question about gas prices falling directly within my responsibility.

As a Cabinet Minister, will the Secretary of State say why, if the public sector borrowing requirement is the object of the exercise, it was not applied to public corporations outside the energy industries? Secondly, in view of the great importance of these Questions and of some of the things said by Ministers today, may we be assured that all these views have been cleared with the Liberal Party? Does that explain the total absence of the Liberals from the Chamber during this important Question Time?

I am not responsible for the absence of the Liberal Party from the Chamber—at least, I assume that I am not responsible. But the hon. Gentleman must recognise—his memory will not be that short—that his colleagues have been demanding much more savage cuts in public expenditure, which would have hit people much more harshly. Cabinets have to make a judgment between alternative ways of reducing the public sector borrowing requirement.

Does not my right hon. Friend agree that different aspects of Government economic strategy contradict each other? Does he not accept that the increase in gas prices will stimulate inflation? How does he reconcile those two considerations?

I think it was right, and I hope that my hon. Friend thinks it was right, to safeguard investment and jobs. After all, one possible reduction in the PSBR might have come from cuts in, say, coal investment or might have affected the possibility of building Drax B power station. My hon. Friend will also recognise that the Gas Corporation, which has an indebtedness of £2·2 billion in this sense, hopes to finance more of it directly.

Can the right hon. Gentleman confirm the widely-circulated report that it was he himself who in Cabinet volunteered the idea of the increase?

Industrial Democracy (Coal Industry)


asked the Secretary of State for Energy what progress has been made in the discussions, referred to in his answer to the hon. Member for Consett on 2nd February, between the mining unions and the National Coal Board on industrial democracy.

I understand that the Board has put proposals to the mining unions for colliery policy committees at each pit. The unions and the Board have had detailed and fruitful discussions on the constitution and responsibilities of these committees, which are continuing.

I am grateful to my right hon. Friend. Does he agree that the best way forward might be through the application of common ownership principles of management in the coal industry? Irrespective of whether he agrees with that view, will he draw it to the attention of the Board and of the unions?

I know what my hon. Friend is saying, but common ownership of the mining industry in a sense was achieved in 1946. What is now being considered is the possibility of committees at each pit, presided over by the manager, at which the unions—the colliery managers, NACODS and the NUM—would be represented. I strongly believe—and I think my hon. Friend accepts—that industrial democracy has to grow out of the experience and desires of those concerned.

Will the arrangement be on the lines of the majority Bullock Report? If so, will it be discussed with the Shadow Liberal Minister?

As the hon. Gentleman knows, the Government have not reached their final conclusion about the handling of the Bullock recommendations. In any case, industrial democracy in the public sector was being looked at in parallel with that. Since I have been Secretary of State, I have been engaged in the development of greater mechanisms of industrial democracy that do not require legislation.

Does my right hon. Friend agree that there are varying opinions about what should happen in industrial democracy? No matter what we believe, it is vital to have the good will of the trade union movement and of management to ensure that industrial democracy works. If the trade union movement does not agree wholeheartedly, proposals for industrial democracy cannot succeed.

If, as the Minister has said, common ownership of the coal industry was established in 1946, how is it that in the past 30 years no member of the public has had the slightest effect on the price of the product they are forced to buy?

There is an old phrase that the hon. and learned Gentleman may remember—there is not blood on the coal as there was in the years of private ownership.

Industrial Relations (Nuclear Power Industry)


asked the Secretary of State for Energy if he is satisfied that the recommendations of the Bullock Report on Industrial Democracy will provide the best available method of improving industrial relations in the nuclear power industry; and if he will make a statement.

I have no doubt that the extension of industrial democracy will make a major contributon to improved industrial relations in all industries, including the nuclear industry. The Government are at present considering how to effect this extension in the various industrial and other sectors following publication of the Bullock Report.

Will the Secretary of State consider in the meantime having an urgent meeting with the Chairman of British Nuclear Fuels Limited to consider the lengthy dispute which took place recently at Windscale, bearing in mind the excellent joint council arrangements existing there and, in particular, special arrangements in connection with safety? An embarrassing situation has developed which I should have thought required urgent action.

I am glad that the hon. Gentleman has raised the matter. I took the opportunity of having discussions with the chairman, the managing director and others, and there is no doubt whatever that here are some deep-seated problems which are on the agenda to correct. More generally, I am anxious to encourage discussions leading to greater industrial democracy, and I have told all the fuel industries of that intention.

Will my right hon. Friend tell his right hon. Friends in the Cabinet, when the Bullock Report and industrial democracy are discussed, that it is much better to discuss bullocks with "Heffers" than to discuss them with the Liberal Party?

Overseas Development

European Community Development Ministers


asked the Minister for Overseas Development what recent consultations she has had with the Development Ministers of other member States of the European Economic Community.

Mr. Jan Pronk, Netherlands Minister for Development Co-operation, and I have had discussions in London. Last week I met Ministers from the other Community member States at the Council of Development Ministers in Brussels. I shall have discussions with my Italian colleague this week in Rome. I hope soon to accept an invitation to meet my French colleague in Paris.

I thank my right hon. Friend for that reply. Can she tell the House anything of the discussion in the Development Council about the pros and cons of various means of assistance by the EEC to the Third World, particularly the pros and cons of the STABEX scheme and other alternatives such as the Common Fund, which, I believe, was discussed at the Council of Ministers yesterday?

On the two latter points, the House will await with interest the statement of my right hon. Friend the Prime Minister in a few minutes. I can tell my hon. Friend that we made a certain amount of progress. For example, we agreed the criteria for the distribution of food aid, although there are more matters to be resolved there. On disaster relief, we took a further step forward on co-ordination and agreed that on a case-by-case basis we could cover both man-made and natural disasters. We made what I regarded as a significant degree of progress on aid to non-associated countries, but we have to return to that matter at the next Development Council.

Has the Minister—or her predecessor, bearing in mind that she has only fairly recently resumed office—taken any initiative regarding the proposals for the development of a fund for commodity stabilisation? Or has her Department, as I fear, merely hidden behind West Germany and the United States, following whichever way they led?

The hon. Gentleman would be wrong to suppose that. My Ministry is deeply concerned and involved in the interdepartmental discussions on these and other matters which affect the North-South dialogue and the current discussions in Geneva. I think that the hon. Gentleman will have observed that there has been an agreed Community position, particularly on the Common Fund, which took us a good way forward from Nairobi last April. But there may be something of interest in the statement of my right hon. Friend the Prime Minister.

Crown Agents


asked the Minister of Overseas Development when she now expects the Fay Committee dealing with the Crown Agents to make its report.

The committee is concerned to complete its investigation as soon as possible and hopes to report by the autumn, if not earlier.

Does my right hon. Friend agree that the Crown Agents, creditors in the ill-fated Stern empire as they had investments there, ought to be receiving the greatest possible return on the investments in the Stern empire that are currently being sold off? To that end, will she instruct the receivers, W. H. Cork Gully & Co., to ensure that there are no more private deals in the sell-off of the Stern properties, as was the recent case with the South Lodge block at St. John's Wood? Will she also ensure that residents in such blocks have proper representation when those blocks come up for sale?

I shall certainly look very carefully into the last point that my hon. Friend has made. I do not have the detail on that, I must confess. The Crown Agents, as I think my hon. Friend knows, have loans of £40 million outstanding to the Stern Group. What has happened so far is that, along with other creditors, the Crown Agents have agreed that the company should be run down under an arranged scheme.

As my hon. Friend would expect, as soon as I returned to the Ministry I made it my business to look very closely into exactly what was happening in this matter. There is not a fiddle. I can assure him of that. Indeed, the agreement that has been reached would not preclude the Crown Agents from taking bankruptcy proceedings, should it be necessary, if that were thought to serve the best interests of the Crown Agents and the country. That is not precluded.

Does the right hon. Lady agree that the Crown Agents are a unique organisation which is the envy of the world? Will she ensure that the value of the Crown Agents is recognised and that the baby is not thrown out with the bath water in which her hon. Friend the Member for Bolsover (Mr. Skinner) is stirring up mud?

My hon. Friend has a good deal of grounds for the questions he is putting. But I can only repeat what I have said on past occasions a number of times from this Dispatch Box: that the Crown Agents have a great record of service in the developing countries and perform an extremely useful service here and overseas. In the past there have been all the matters which are now the subject of the Fay inquiry. To the extent that the Fay Committee has not already reported and may take until the autumn, I am absolutely convinced that that is because the investigation is thorough and that the whole of the truth will come out when the inquiry is published.

Overseas Students


asked the Minister of Overseas Development what plans she has to assist the education of overseas students from underdeveloped countries.


asked the Minister of Overseas Development what steps she is taking to ensure that the number of students from developing countries is not greatly reduced by the increase in tuition fees announced for the academic year 1977–78.

The Parliamentary Secretary to the Ministry of Overseas Development
(Mr. John Tomlinson)

My right hon. Friend will continue to pay the tuition fees of students who come to this country under our technical co-operation programmes. On 29th November her predecessor announced that we would make a substantial contribution towards the increase in fees for some 600 other students from developing countries who, having already enrolled for courses starting in the academic year 1977–78, would otherwise suffer hardship.

As education is one of the most valuable aids that we can give to underdeveloped countries, will my hon. Friend take into account the unfairness of the fact that overseas students have to pay additional tuition fees in order to study here? Will he also consider the possibility of using some of his Department's budget in order to encourage some overseas students to come here and to take up some of the vacant places which exist in colleges of education in Scotland and elsewhere?

We certainly bear all those points in mind, but we should also remember that our primary objective continues to be to assist the poorer countries to build up and use their own institutions for education and training. While advance training in the United Kingdom in disciplines of developmental relevance is important, we must not in any way lose sight of the main objective of trying to achieve greater self-sufficiency in education provision in the developing countries themselves.

Will my hon. Friend acknowledge that the schemes which he has indicated, although welcome, affect predominantly only students already on courses? What about the deterrent effects of such high fees upon Third World countries and their Governments in sending students here? What will be done about that problem?

We obviously bear in mind all the serious repercussions of the decisions which have been made. I remind the House, however, that in the year 1975–76 some 8,000 overseas students were brought to the United Kingdom at a cost of some £12 million to the aid budget. No one would suggest that that is an insignificant contribution in terms of education and serving the educational needs of developing countries.

Is the Minister aware that concern on this matter is not confined to one side of the House? Will he undertake to be in touch with his right hon. Friend the Secretary of State for Education and Science to emphasise the fact that many Members are profoundly concerned about the future of the overseas student programme and wish to see it maintained?

I readily recognise that concern on this matter extends to all parts of the House. I am sure the hon. Gentleman will be pleased to know that my right hon. Friend the Minister of State for Overseas Development is having discussions with my right hon. Friend the Secretary of State for Education and Science on the matters which he raised.

Is the Minister aware that many people in universities and elsewhere are gravely concerned about the present position? Has he made any estimate of the likely decline in the number of overseas students which may result from the Government's present policy?

I am aware of the grave concern which is felt. The question of an estimate of the decline is not a matter primarily for the Ministry of Overseas Development. Rather it is one for my right hon. Friend the Secretary of State for Education and Science. But I must remind the House that all kinds of unpalatable consequences stem from the restraints on public expenditure which the House has had to recognise over the past two or three years.

Would my hon. Friend agree that one of the most important ways in which we can help education vis-à-vis the underdeveloped countries is in the teaching of the English language, which for many people in those countries will be the main route to modern science and technology? Has his Ministry taken steps in the past year or so, since unsatisfactory answers were given to me, to speed up and to step up the programme of English language teaching in under-developed countries?

This is obviously a very important area of education policy in relation to developing countries. It does not stem directly from this Question, because the matter of English language teaching is related to the question of teaching people in the overseas countries themselves rather than to the problem of bringing students here. As I said earlier, our primary objective continues to be to assist the poorer countries to build up and use their own resources. In pursuit of that objective, the teaching of the English language in the developing countries is an important part of their programmes.

Developing Countries (Aid)


asked the Minister of Overseas Development what plans she has for increasing public understanding in the United Kingdom of the need to provide more aid more effectively for the benefit of developing countries.

We shall continue our programme of publications, films and assistance to development education projects and programmes carried out by voluntary organisations. I hope to persuade the public that an enlightened self-interest lies in assisting the Third World.

In seeking to do that, is the Minister aware that many of the Opposition would find it far easier to support the strong moral, trading and strategic arguments for continuing and increasing the aid budget if the Government for their part set their face against giving aid to so-called liberation movements—aid which often goes into the procurement of arms?

If the hon. Member has particular problems in relation to any aspect of the aid budget, I shall be happy to look at them, as will my right hon. Friend, if he writes to us. I am sure that the vast majority of hon. Members would agree that, in terms of cost effectiveness, the limited aid budget of this country is very well spent.

Will my hon. Friend disregard that sort of criticism from the Opposition side of the House but worry rather more that the principal difficulty about aid in the past has been that too much of it has not benefited the developing countries but has simply poured money back into the system of the countries which purport to give the aid? Will he include an understanding of the need genuinely to benefit the poor in the developing countries as one of the points in his education programme?

I am sure that the whole House will support the general direction of the new aid White Paper, which is to make sure that British aid is directed to helping the poorest people in the poorest countries. Of course, I shall not ignore any comment that is made in the House, but, as I said in reply to an earlier question, if hon. Members are concerned about any particular aspect of any sector of expenditure they should take it up with us and we shall certainly look at it. The general principle is that the whole aid programme is directed towards the poorest people in the poorest countries.



asked the Minister of Overseas Development whether she has received a request to meet Paraguayan Government officials now in London.

Should my right hon. Friend be asked to meet the Paraguayan Minister of Agriculture, who is presently in this country, will she make it clear to him that British aid to Paraguay cannot be extended except on an equal basis not merely for the Government but also for local co-operatives in that country? Will she also convey to him the detestation we have here of the present level of political repression under the Stroessner dictatorship?

Having made some inquiries following my hon. Friend's Question, I understand that Senor Bertoni is leaving today. The small technical co-operation programme which we have in Paraguay amounts to about £140,000 and is concentrated almost exclusively on help to small cultivators and livestock farmers. I certainly take my hon. Friend's point and shall bear it very much in mind.

European Council (Rome Meeting)

I will, with permission, make a statement on the European Council meeting which took place in Rome on 25th and 26th March under my chairmanship. Rome was chosen for this meeting to mark the twentieth anniversary of the signature of the EEC Treaty.

The dominant theme of our talks was the need to find more effective ways to tackle the serious economic problems which confront the world, to prepare for the Downing Street summit in May, and to ensure that the Community itself responds positively to the challenge of unemployment and inflation.

As is the custom for the President of the Council, I met first with leaders of the European Trade Union Confederation. They expressed to me their concern about the problems of inflation and unemployment, which I reported to the Council. The Council agreed to hold a further tripartite conference in the first half of this year to bring together European Governments, employers and trade unions, and in the meantime agreed and published a statement on growth, inflation and unemployment. The Council will review progress over this whole area at its meeting in London in June.

The Council reviewed international financing problems and welcomed the efforts of Finance Ministers to develop a Community position for the IMF Interim Committee at the end of April. We asked the Commission and the European Investment Bank to focus particular attention on measures in three areas: first, to deal with specific employment problems, especially among youth and women; second, to encourage higher levels of investment; and third, to pull the economic performance of member States closer together. The Commission made clear in Rome that it would be ready to respond with positive ideas.

An area in which all the Community countries face particularly acute difficulties is the steel industry. We need short-term measures to stabilise the market, and there is a clear requirement for structural reorganisation of the industry throughout the Community. The Commission made a number of proposals, which the European Council agreed should be given urgent attention, with a view to getting agreement on common action.

Turning to international affairs, we agreed on the need for a successful conclusion to the North-South dialogue, and moved forward an important step beyond the opening position on this subject previously agreed by Foreign Ministers on 8th March. We agreed that there should be commodity price stabilisation agreements, where appropriate, and a common fund. There will also be a study of export earnings stabilisation measures for developing countries and special action for the CIEC on aid.

We reviewed developments in our trade relations with Japan, and saw a need for further efforts to achieve the growth of trade on a balanced basis, which is the Community's aim. Trade with Japan raises questions of competition and of market access which are important factors in the Community's international trade relations as a whole.

We discussed our internal Community affairs, including the question of Community representation at the Downing Street summit. We agreed that the President of the Council and the President of the Commission should represent the Community at sessions which discuss questions which fall within the competence of the Community. I shall circulate texts of the formal statements in the Official Report.

Finally, I come to one point which has attracted considerable interest in this House. The Commission confirmed that it would make a full study and report on the idea of a European Foundation. There was general agreement with the suggestion of the Belgian and Italian Prime Ministers that it would be appropriate to link this proposal with the twentieth anniversary of the Treaty which we had celebrated in Rome.

May I put three questions to the Prime Minister arising out of his statement? First, will the right hon. Gentleman take it that we very much welcome the result that the President of the Commission should represent the Community at the economic summit which is shortly to take place at Downing Street? Had this result not been achieved, it would undoubtedly have given rise to great concern among some of our European partners.

Second—this is a composite point—is the right hon. Gentleman aware that it is rather difficult to deduce from the statement precisely what is its practical effect? For example, in the section on economic measures he referred to measures
"to pull the economic performance of member States closer together"
"to deal with specific employment problems".
Does the right hon. Gentleman have any practical measures in mind, or are these merely objectives, and further conferences are to be called upon them? It looks to me as though this is a statement of objectives but no practical measures emerge. Similarly with the commodity price stabilisation agreements, it is easier to talk about objectives than it is to put practical schemes into effect. Precisely which key commodities will they start on?

Third, although the Prime Minister may say that this is not precisely within the terms of the EEC, were there any discussions on the steps proposed by Mr. Vance in Moscow about the revision of the SALT agreements? What he is proposing will, clearly, have an effect on our security. I am aware that it is outside the terms of the European Economic Community, but the European Council itself is not within the terms of the Treaty.

On the question of the attendance of the President of the Commission, there was a feeling among the smaller members of the Community that the President of the Commission should be there when issues which directly concerned the Commission were discussed, and that was generally acceptable to all. There will obviously be items and matters that will be discussed at the Downing Street summit for which the Commission will not be present because there is no Community competence for them.

As regards the right hon. Lady's general point, these meetings, which last for 24 hours or thereabouts, are not designed to achieve detailed negotiations, They are designed more to give political impetus, and they did so in one or two areas on this last occasion. For example, the idea of a common fund is something that had not been agreed, but we were able to give it a political thrust, and the Foreign Ministers will now carry that on.

I think that applies also to the right hon. Lady's questions about such matters as price stabilisation in relation to key commodities. Heads of Government and Heads of State do not go into that kind of detail. It is for the Foreign Ministers at the Council of Foreign Ministers to work out, commodity by commodity, the appropriate items on which there should be price stabilisation agreements or export stabilisation agreements.

In that connection, the Foreign Ministers will have to go into a lot of detail—for example, in relation to the fact that it is not intended that fully developed countries which possess raw materials should join in this particular project, which is basically for the benefit of developing countries. They will also have to look at the question of what substitutes for existing raw materials might come into play if stabilisation agreements take effect. These questions are much more technical, I think, than the Heads of Government would be expected to get down to.

Finally, on the question of the SALT agreements, as the right hon. Lady says, these matters are not within the competence of the Community. Ireland is not a member of NATO, so we do not discuss these matters in the sessions when we meet.

The Prime Minister will be aware that many of us regard this as progress having been made on many fronts. We particularly welcome the resolution of the question of the representation of the Community by the President of the Commission. It appears that credit for this should be shared between the President of France, who was prepared to move closer to the views of his eight partners, and the right hon. Gentleman himself as Chairman. He will be aware also that we welcome the agreement to study the idea of a European Foundation, which I think the right hon. and learned Member for Hexham (Mr. Rippon) pioneered on the Order Paper.

I wish to ask the right hon. Gentleman three questions. First, is it the hope that there will be a common front by the Nine—[Interruption.] Some of us actually believe in Europe, and always have done.

Remembering how Liberal votes saved the Tory legislation on the Common Market, may I ask whether it is the hope of the Nine that there will be a common front on stabilisation by the time of the North-South dialogue? Can we try to associate our American allies with any particular agreement in that regard?

Secondly, what is the time scale of the tripartite discussions? Will they take place by the summer? For how long will they be likely to go on? Will there be rapid decisions?

Finally, was there any discussion on the common agricultural policy?

I promise the right hon. Gentleman that the Conservatives will get over it, in time; they will learn to live with it. As regards the representation of the Community, I note what the right hon. Gentleman says, and I agree with him that this was a conference in which there was a desire to reach accommodation on a number of issues. That is why we were able to make progress.

As regards the European Foundation, I drew the attention of my colleagues to the fact that the motion on the Order Paper had been signed by more than half the total of right hon. and hon. Members of the House. I think that it was this, in part, which led the Commission to indicate that it would make a study of it and bring forward its proposals in due course.

As regards the CIEC, I think that it is now fair to say that there ought to be—I must choose my words carefully—a common front by the Nine on these matters affecting a common fund.

On the question of stabilisation, what we undertook there was to study the prospect. There has been no agreement on this, although I think that people will look at it with a view to reaching agreement.

As regards the United States, from my talks with President Carter I assume that now that the Community has, as a whole, taken up a rather more forward position, it will be possible for us to get agreement with the United States, and that will help when the Eight meet the 19 countries later on.

As regards the CAP, there was no discussion on that because the Agriculture Ministers were meeting in Brussels, I believe, at that time.

The tripartite meeting between Governments, trade unions and employers will take place during the first half of this year.

Did my right hon. Friend give his colleagues the impression that there would be direct elections in May 1978, or did he ask them to consider any contingency plan for such elections being delayed?

In view of the failure of the Community to live up to the promises made at the time of accession, will the Prime Minister give an undertaking that, where the statement refers to a structural reorganisation of the steel industry, any such reorganisation will not adversely affect the steel industry in Scotland with redundancies as it has done in the past?

My interests, although they include Scotland, are wider than Scotland, and I should like to extend what the right hon. Gentleman says to the United Kingdom. We have, of course, embarked on our structural reorganisation, and, because we have one nationalised industry here, it has been possible for us to look at it in a coherent way. Other industries in other countries where market forces more directly apply are perhaps not as far advanced in their restructuring as we are. It is in that direction that I think the Commission will be looking in order to see how far we can get one common pattern for Europe as a whole. Certainly, there is nothing in the Commission's proposals which would endanger the British steel industry. Indeed, they may make it stronger.

The Prime Minister mentioned a statement of intent about the common fund. He also mentioned specific funds for specific commodities. Does he not agree that those two ideas are distinct from the stabilisation of export revenues, which he also mentioned? Can he, therefore, confirm that the intent of the EEC is in the first two concepts rather than only in the latter?

Yes, Sir. I confirm that it is intended to cover all the three points that my hon. Friend mentions. I did not say—I want to draw this to the notice of my hon. Friend and the House—"the" common fund. I said "a" common fund. In other words, the agreement is not to any particular proposals which have been put forward and which have been widely espoused but to the concept of a common fund, and proposals will be put forward by the Nine on the basis of a fund as we see it.

The question of stabilisation is separate, as my hon. Friend correctly says, and we have undertaken to examine that, but not to the exclusion of a common fund or the other matters.

Is it not clear—not least from some of the subjects discussed at this meeting—that the Common Market is becoming less and less concerned with the promotion and widening of free trade and more and more with the creation and imposition of arbitrary and artificial price systems?

Yes, Sir, that is not an unfair comment, given the growth of world recession and unemployment. Therefore, when Heads of Government meet, they are concerned to talk about the impact of market forces upon the social health of their own countries. I have noticed a change in the nature of the discussions during the three years that I have been associated with the Community directly negotiating with others.

May I express appreciation of the progress made in Rome towards the establishment of a European Foundation, to be linked with the celebration of the twentieth anniversary of the signing of the Treaty of Rome, and express the hope that it will be a notable contribution towards fulfilling the objectives set out in Mr. Tindemans' report and the creation of a citizens' Europe?

The right hon. and learned Gentleman was, I believe, the original sponsor of the motion which I drew to the attention of my colleagues as Heads of Government. Certainly, Mr. Tindemans is owed a debt of gratitude for his part in putting it forward. I hope that we can get proposals from the Commission by the end of the year, and I shall certainly see that the right hon. and learned Gentleman, in common with the rest of the House, is kept fully informed of progress.

Notwithstanding the defence element in the right hon. Lady's question, does not the Prime Minister agree that, if there is not early response to his plea for sensible co-operation among all the Western nations to prevent a recurrence of the blight imposed on ordinary people by inflation and unemployment, that could pose as great a threat as anything to the stability of Western civilisation?

I certainly believe that the continuance of long periods of unemployment on a wide scale could cause considerable social tensions in a number of Community countries, and, indeed, in countries outside the Community. That is why we have asked that special attention should be paid not only to the problems of growth as a whole, so that we can have greater growth in our economies, but also to particular problems, such as unemployment among young people and women, and the fact that in a number of countries, including our own, a large number of people will be coming on to the labour market during the next three or four years. About 500,000 extra people will be coming on to the labour market in this country alone.

Is the Prime Minister aware that I welcome his statement as President that the Community will call on other countries—for example, Eastern Europe and the oil-producing countries—to make a greater contribution to development? Bearing in mind that at present the contribution to overseas aid of the Soviet Union represents only 0·03 per cent. of its GNP, this is long overdue, at least in its case.

Has the Prime Minister or the Community any suggestion as to how this greater contribution might be made by those countries? Does the Community envisage, for example, that those countries might take part in the common fund?

I am obliged to the hon. Member. When he asks what the countries of Eastern Europe can do to increase the volume of their aid, I give the simple answer that they could help if they were not to supply so many guns but were to supply a little more of the fiscal needs of these countries. Indeed, a great deal of their aid at present is made up of armaments. It was this that was in the minds of the Heads of Government when they drew up their view of this matter.

In considering how such countries might be associated with these matters, we were not assuming that they would want to join in a common fund. We want to get this moving and not just use it as a propaganda exercise, but we do want Eastern Europe to understand that we expect it to contribute to the North-South dialogue directly.

Can my right hon. Friend say what further course of action is proposed to deal with the high rate of unemployment in the Common Market and to get the EEC out of the present economic recession?

I cannot do so in a sentence, for it is too complicated a matter. We would like to see faster growth in the economies of those countries which are in balance of payments surplus, and specific measures taken in relation to special groups. For example, if we could, as a European Community, agree that all young people should have either further training or further education to avoid their going into the dole queues, that in itself would be a considerable advantage.

Order. I hope to call the six hon. Members who have risen, but I can do so only if their questions are brief.

My right hon. Friend mentioned steel. Is he aware that certain negotiations that are outstanding—for example, the coking coal agreement—will result in an imbalance or a detriment for this country? Will this be the subject of the discussions my right hon. Friend will be having about steel? If not, can he identify the areas with which those discussions will deal?

Yes, Sir. There will be discussions of this sort, and my right hon. Friend the Secretary of State for Energy will shortly be leaving for Brussels to begin them, especially on the question of coking coal aids.

Will the Prime Minister say whether the Heads of Government, in their consideration of the problems of Japanese penetration of the Common Market, discussed the need to balance the necessity for more employment for young people and the opportunity for accepting Japanese investment?

We did not actually put those considerations in juxtaposition. We had in mind that there had been certain easements on the part of the Japanese—for example, in relation to car testing, tobacco distribution and pharmaceutical testing, and in the fact that they have increased the export price of their ships by 5 per cent. These are all moves in the right direction, but probably much more needs to be done if we are to get a balanced trade between the Community and Japan.

Is my right hon. Friend aware that hon. Members on both sides are pleased that he and his counterparts in Europe have discussed the employment of young people? But will he give the House an undertaking that he will not forget the age group 45 to 55, hundreds of thousands of whom are an asset to this country if used correctly? When discussions take place on the next occasion, will my right hon. Friend please discuss the employment of men and women in the 45 to 55 age group?

My hon. Friend is well known for his persistence in this matter, and I certainly shall not lose sight of it. All the proposals we made in this area, such as on youth unemployment, are subsidiary to the need for a greater measure of growth in our economies as a whole, and that is the best thing that can help all the groups concerned.

Is the Prime Minister aware that this is the third or fourth European Council meeting which has shown great distress at all the unemployment, but simply nothing appears to have been done? Is there any chance of anything concrete being done after this meeting? For example, did the German Chancellor agree to some reflation to help the unemployment situation?

We expressed it in the form of a general formula. We did not put specific pressure on individual member States to reflate beyond the point at which inflation would take over. It is for them to judge this.

There is a difference of view as to how far certain countries can go, and that difference is unresolved. My own view is that we need a much faster rate of growth in the world. I think that the United States economy will grow faster this year, according to the latest forecast, than was expected a few months ago. That will be of help. I should like to see some other countries doing the same.

Will the Prime Minister be wary of proposals to enhance the status of the President of the Commission, who is, after all, only the principal bureaucrat of the Community—its servant, and by no means its president? Is it not important to distinguish carefully and publicly between democratically elected leaders of the member countries and a mere official?

The Commission, under the treaties, has a special and legal place in the affairs of the Community, which goes beyond that of a civil service that advises political leaders. That place should be met and fulfilled. The President of the Community and the President of the Commission have their respective roles. I shall attend as President of the Community as well as British Prime Minister, assuming that I am still here on 7th and 8th May.

Does the Prime Minister agree that the West German economy is by far the most successful in the Community at the moment? During the summit meetings, has any of Chancellor Schmidt's robust support for a free enterprise system brushed off on the Prime Minister?

I find that we influence each other considerably. Both the free market system and the mixed economy, of which the hon. Gentleman is a fervent supporter—at least, I take it that he is a fervent supporter, as that is his party's doctrine—have their place. As the right hon. Member for Down, South (Mr. Powell), said, in the present recession the working of the free market economy is beginning to take second place to the needs that arise when there is large-scale unemployment which does not appear to respond to it.

Following is the information


The European Council considered the prospects for economic development within the Community and agreed that, in order to promote sustained economic recovery and mitigate the severe unemployment being experienced in Member countries, without risking the renewal of inflation, there is a need for intensified co-operation at the Community as well as the international level.

The European Council recognised that such action must in large part be undertaken on a world scale in which the Community has an important role to play. In this connection they noted first that Community Finance Ministers have reached a large measure of agreement on the views they will put forward on international financing problems at the meeting of the IMF Interim Committee in Washington at the end of April, and secondly that ways of encouraging a stronger, but still balanced, growth of world economic activity will be a major theme of the London Summit in early May.

The European Council further agreed in particular to seek action at the Community level in three directions: firstly to promote measures to help resolve specific labour market problems, especially in improving training and employment opportunities for young people and women: secondly to encourage higher levels of investment in the Member States: and thirdly to halt divergence and promote convergence in their economic performance. To this end, the European Council invited on the one hand the Commission, in particular by the better use of Community instruments, and on the other hand the Board of Governors of the European Investment Bank to seek ways of improving the effectiveness of their activities.

The European Council emphasised the importance of co-operation between the social partners in these matters and have agreed to the holding of a further tripartite conference in the first half of this year, at a date to be agreed, at which progress and possibilities could be reviewed. The European Council agreed to reconsider progress on this range of problems at its own projected meeting in June.

The European Council agreed to conduct at its meeting at the end of the year an examination of the results obtained in the fields of growth, employment and the fight against inflation and to assess the Community's prospects of making progress towards Economic and Monetary Union.



We have agreed the basis of a common position.

We agreed that there should be commodity price stabilisation agreements where appropriate and that there should be a Common Fund. There will also be a study of export earnings stabilisation measures for developing countries and of special action for the CIEC on aid.

This will now be worked up in detail at the Council on 5th April and will be brought forward in the preparations for the CIEC Ministerial Meeting in Paris, in which the Community will co-ordinate its position with the other industrialised countries in the Group of Eight. This will be followed by detailed negotiations at the UNCTAD Conference.

The Community will call on other countries, for instance in Eastern Europe and oil producing countries, to make an adequate contribution in the development field.


The President of the Council and the President of the Commission will be invited to take part in those Sessions of the Downing Street Summit at which items which are within the competence of the Community are discussed. Examples of such items are negotiations about international trade and the North/South Dialogue.


The European Council, recalling its statement of 30th November 1976:

reaffirms the importance it attaches to maintaining good relations between the Community and Japan;
notes that some progress has been made over the past four months towards resolving certain specific trade problems;
observes however that not all the problems have yet been solved and considers that efforts have to be continued particularly with a view to the sustained expansion of Community exports to Japan;
invites accordingly the responsible Community Institutions to continue the intensive discussions with the Japanese authorities with the aim of resolving outstanding difficulties as rapidly as possible.


The European Council has considered the situation in the steel sector, on the basis of a communication from the Commission. This sector is experiencing a depression more serious than at any time in the history of the Coal and Steel Community, The Heads of State and Heads of Government have taken this opportunity to reaffirm their resolve to restore to the steel industry through the appropriate measures, the viability and competitiveness essential to the maintenance of a truly European industrial potential.

The European Council expresses its appreciation of the efforts being undertaken by the Commission to put forward at an early date practical proposals and initiatives for short-term remedial measures to stabilise the market, for a longer-term structural reorganisation of the European steel industry and for measures in the social field to assist workers adversely affected by such reorganisation.

The European Council expresses the wish that the Council of Ministers gives its urgent attention to the Commission's proposals and initiatives on these issues.

Business Of The House

On a point of order, Mr. Speaker. I see that included in the business for tonight is the matter of fishery resources and a Community document. From listening to the news, I understand that the document has been virtually vetoed and thrown out of the window. Will the Government proceed with the matter tonight, or have they now withdrawn that document?

I have received no information to lead me to conclude that the matter must not be discussed. I can, however, tell the House that a wide debate on fishery resources will be possible under the motion on the Order Paper, if we reach it.

Orders Of The Day


Order read for resuming adjourned debate on Question [ 22nd March]:

That this House takes note of the Statement on the Defence Estimates 1977 (Command Paper No. 6735); and endorses Her Majesty's Government's policy of basing British security on collective effort to deter aggression, while seeking every opportunity to reduce tension through international agreements on arms control and disarmament—[Mr. Mulley.]

Question again proposed.

3.58 p.m.

I listened with great interest to the contributions of hon. Members on both sides of the House to the first day's debate. I should like to begin by touching sparingly on as many of those contributions as possible before picking up the motion before the House and then observing briefly on the Official Opposition amendment thereto.

A number of hon. Members referred to the threat to NATO maritime operations posed by the Russian Backfire bomber. These aircraft are indeed a formidable and growing threat, complementing that already posed by the Russian submarine force. However, it would, I believe, be wrong to suppose that, just because it is such a formidable aircraft, it would have it all its own way. Defence at sea is based on defence in depth. In the first place, land-based aircraft of the RAF and our Allies will be available to attack or disrupt the operations of enemy aircraft. Then there would be the defence provided by the United States carrier-borne aircraft assigned to SACLANT. Thereafter, in our own case, apart from the contribution made by the Sea Harrier in dealing with Soviet reconnaissance and target-indicating aircraft, thereby complicating the attacker's task, we should have the very effective organic defence provided in particular by Sea Dart and Sea Wolf.

The hon. Member for Stretford (Mr. Churchill) questioned me last week about contracts for the sale of equipment to Russia by Lucas Aerospace and Plessey. I assure the hon. Member that the Lucas case is still being studied by Departments. Obviously no agreement can be given unless we are satisfied that our national interests and international obligations will be met. As for the Plessey case, full details of the level of technology involved have not yet been received from the firm. Thus, no major decisions on the project have yet been made by Government Departments.

The hon. and gallant Member for Eye (Sir H. Harrison) raised a number of questions about Exocet. The number of ship systems and missiles originally agreed in 1971 has not changed, although, as part of the general review of the project in 1975, it was decided that it was reasonable to reduce the allowance for in-service practice firing. As the hon. and gallant Gentleman noted, it is a powerful new weapon with which the Navy is well pleased.

Reference has been made to the cumulative effect of the cuts in fuel, spares and ammunition. These are not expected significantly to affect operational effectiveness or war reserves. We have heard a lot in particular about fuel reductions. I have had to endure taunts about a "half-speed Navy". The Fleet has been under standing instructions to seek to conserve fuel as a good housekeeping measure since as long ago as 1973–74. But significant savings have been achieved without detriment to training or the effectiveness of the Fleet—or to our surveillance effort, despite recent Press allegations—and we hope that the future 5 per cent. cut, in 1978–79, taken as part of the PESC 1975 cuts for 1977–78 to 1979–80, will be achieved by the continued application of good housekeeping measures, again without adverse effects on training or Fleet effectiveness. In the case of the recent reduction in the defence budget for 1977–78, we have made no cuts in naval fuel or ammunition.

The hon. Member for Portsmouth, South (Mr. Pink) raised the incident between HMS "Brinton" and the French trawler, the "Daniel Roger", on 16th March. It is not my intention to discuss today the contributions of the Royal Navy and Royal Air Force to the offshore task, but I should like to put the hon. Gentleman straight on a few facts. There was no question of HMS "Brinton" being unable to keep up with the French trawler. The reason why she could not head off the "Daniel Roger" was that she was hampered by the close manoeuvring of other French trawlers.

The hon. Gentleman further commented that the
"new patrol boats are little, if any, faster."—[Official Report, 22nd March 1977; Vol. 928, c. 1189.]
I take the implication of his remark and that of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) to be that the Islands class will be no match for trawlers. Perhaps the hon. Gentleman would like to look at some trawlers. In a recent study of all trawlers built in 1976 and likely to be encountered in our fishery protection areas—Soviet trawlers were excluded for lack of information—it was discovered that only some 5 per cent. had a maximum speed in excess of 15 knots, whereas some 40 per cent. had a maximum speed in the range of 11–12 knots. As far as the "Brinton" incident is concerned, action is being taken by the French authorities, with whom we have enjoyed close co-operation from the outset.

My hon. Friend the Member for Heeley also raised the question of defence expenditure overseas. I would remind him that, important though this is, it is not the whole of the balance of payments picture. Defence sales continue to make a valuable contribution to the balance of payments and are expected to reach some £850 million in 1977–78.

The hon. Member for Beckenham (Mr. Goodhart) accused the Government of hiding substantial defence cuts from the House. That is not true. His "evidence" for such a wild accusation was that the defence cash limit was only about 11 per cent. above the Estimates provision, whereas inflation, at an annual rate, has been higher than that. I assume that he was referring to 1976–77, since the cash limit for 1977–78 has not yet been published. I assure the hon. Gentleman that there have been no significant deferments or cancellations as a result of the application of cash limits.

Last Tuesday evening the hon. Member for Haltemprice (Mr. Wall), in quite the most impressive speech that we have yet heard in this Parliament from an Opposition Front Bench speaker on defence, vividly reminded the House of the importance of sea lines of communication with his quotation from Admiral Gorshkov. If I may take issue with him on one point, it is with his use of the phrase "sea flanks".

In one sense, the North Atlantic is the heart of the Alliance. It is vital for economic purposes for the deployment of a major part of NATO's strategic deterrent force, and for mutual support and reinforcement in time of war. It is as much NATO's front line as is the central region in Europe. At sea, no less than on land, NATO needs to provide constant deterrence.

I would remind the House that in the Eastern Atlantic and Channel areas the Royal Navy and the Royal Air Force provide the main weight of maritime forces readily available to NATO. We are alive to Gorshkov's thinking, and by our contribution to collective maritime defence we show our clear determination to ensure that the admiral's ideas are never translated into fact.

My hon. Friend the Member for Farnworth (Mr. Roper), in a powerful and authoritative speech that was acknowledged as such on both sides of the House, also raised the question of NATO's flanks. Although it was decided during the defence review to concentrate the United Kingdom's defence effort in the central region, the Eastern Atlantic and the Channel, we have agreed to carry out specific compensatory measures of special value to the southern flanks.

The hon. and learned Member for Colchester (Mr. Buck), in a speech of compelling authority, which befits a former Navy Minister, pointed to the importance of NATO's northern flank. In recognition of the importance that the United Kingdom attaches to this area the number of troops specially trained for Arctic warfare is being increased. In addition to the existing 45 Commando Group and naval air squadron, a further commando group, naval air squadron and a tactical brigade headquarters are being equipped and trained for winter operations in Norway.

The allocation of these forces and their regular annual exercises in Norway are a clear indication of our determination to defend the northern flank. Moreover, we are continually reviewing the arrangements for logistic support and field training in order to ensure that the maximum effort and impact can be obtained from these reinforcement forces.

My hon. Friend the Secretary of State for Defence and I visited Norway three weeks ago. We saw 45 Commando Group training alongside the forces of our Norwegian and Dutch Allies. We were most impressed by all we saw. Our Royal Marines, as always, filled us with deep pride. These lads, many of them only late teenagers, were wet because of the conditions at the first onset of thaw after temperatures well below zero, but they were in no way dejected, and in many instances they were looking forward to their return to Norway this time next year.

The Norwegians were most complimentary about the Royal Marines and about the contribution that we make to the security of North Norway.

Finally, I would remind the House that the United Kingdom contributes land and air forces to the multinational ACE mobile force, which can be deployed anywhere in Europe, and the United Kingdom mobile force, consisting of land and air forces for use in the central or northern region.

I turn now to the problem of NATO airborne early warning. My right hon. Friend attended a special meeting of the Defence Planning Committee of NATO in ministerial session last Friday. Hon. Members will have seen the communiqué issued at the end of the meeting, and a copy has been placed in the Library. The Ministers reaffirmed their support for a co-operative programme to achieve a NATO airborne early warning capability and decided that, subject to approval by their own competent national authorities, an AWACS system would be established, that details of cost sharing and some other outstanding questions would be worked out rapidly, and that Governments would take all possible steps to establish an agreed programme by 1st July this year. My right hon. Friend, however, while endorsing fully the importance of the provision of an airborne early warning system for the Alliance as a whole on the basis of collective decision and common funding, reserved the position of Her Majesty's Government as to the best way in which Britain could make its contribution.

As the House knows, we have been pressing the Alliance to take a decision on this project. Unfortunately, it was not able to do so at the meeting last week. We shall, therefore, be considering most carefully our attitude to the project and the Nimrod alternative, in the light of the discussion at the Defence Planning Committee. I should not wish today to anticipate the outcome of the urgent reconsideration which we are giving to this matter, but, as my right hon. Friend made clear in his speech last Tuesday, if we go ahead with Nimrod, it would be on the basis that it would contribute to NATO's AEW capability and with the aim of making it compatible and inter-operable with whatever additional AEW capability our Allies decided to procure.

I am grateful to the Minister for carrying out his right hon. Friend's undertaking to report to the House on the NATO meeting on Friday. May I press him a little further on this? Will he tell the House what factors he will take into account when be makes this decision? Will they be exclusively NATO factors, or will factors affecting demand on the aerospace industry play a significant part? The Minister says that it is an urgent decision. May we please be told the time scale?

The answer to the first part of the hon. Gentleman's question is "Both". I have already indicated in the statement that I have incorporated in my address that we are giving the matter the most urgent reconsideration, and I have named a date.

The Minister says that he has named a date. Does he mean that he has named a date, or that he has a date in his mind, even if he is not willing to give it to the House, on which, if NATO has not decided that it will go ahead with the Boeing AWACS proposal, we shall go ahead with Nimrod?

Again, the answer to the first part of the hon. Member's question is "Very soon", and I named the date by way of indicating the urgency that we attach to the consideration of this question.

I am afraid that the hon. Gentleman is causing confusion. The only date that the Minister has named, as far as I can recollect, is 1st July, the date by which NATO intends to make up its mind. If he is talking about urgency in terms of a decision by 1st July, clearly there is a considerable confusion.

I have said that we are giving the matter urgent consideration, and that will be on the basis of days, not weeks.

I have been very fair with hon. Members. They understand the position as well as I do, and they also understand the limiting factors of my position. I hope that they will appreciate that.

I strive, perhaps unwisely, to be helpful to the House, and I hope that the hon. Gentleman will appreciate that and allow me to proceed.

Having dealt, though briefly, with as many as possible of the contributions made by both sides of the House during the first day of our defence debate, perhaps I may now turn to the motion before the House.

Once again the Opposition have chosen to attack it without offering any alternative policy of their own. When challenged last Tuesday by my right hon. Friend the Secretary of State for Defence, the right hon. Member for Chesham and Amersham (Sir I. Gilmour) once again refused to commit himself. Moreover, as my right hon. Friend the Secretary of State for Defence said last week, the House and the country are entitled to know the cost of the Opposition's policies. Had last Wednesday's vote turned out differently, the country would have been faced with a blank cheque instead of a Conservative defence policy.

The right hon. Gentleman claims that the Defence and External Affairs Sub-Committee report shows that we have concealed the facts from the public. How, then, does he explain that the information on equipment reductions published by the Sub-Committee in its recent report had been published in the 1975 and subsequent defence White Papers as well as in the earlier reports of the Expenditure Committee itself and in answer to many and varied Questions from hon. Members on both sides of the House? Indeed, in its report on the defence review the Expenditure Committee complimented the Minister of Defence on how the review had been conducted. It would hardly have done so had it considered the information provided to be inadequate.

As my hon. Friend the Under-Secretary of State for Defence for the Army pointed out just before the House adjourned last Tuesday, the efficient management of resources is as important as the level of resources themselves. By their defence review the Government ensured that the scarce resources available for defence, both physical and financial, were so concentrated as to provide the most effective contribution to NATO. The policy we inherited from the Tories was seriously overstretching our forces, and I believe that even they were beginning to realise that our commitments would become increasingly difficult to support.

I noted with interest that the right hon. Member for Chesham and Amersham admitted that the Conservatives would
"not return to places from which the Labour Government have withdrawn".—[Official Report, 22nd March 1977; Vol. 928, c. 117.]
The more general recent cuts have been prompted by the general needs of the national economy.

But when a budget is reduced, what matters is the way in which the reduced budget is managed. As my right hon. Friend the Secretary of State for Defence said last Tuesday, our aim is to keep to the minimum the effect of any reductions on our front-line contribution to NATO. We have been able to achieve the reductions in 1977–78 without having any far-reaching reduction to our frontline contribution to NATO.

The motion before us today seeks endorsement of the Government's
"policy of basing British security on collective effort to deter aggression, while seeking every opportunity to reduce tension through international agreements on arms control and disarmament."
It is not about a particular level of defence spending. The Government's policy, therefore, should be judged not on the basis of short-term economic measures but on the scale of its contribution to deterrence and détente.

We regard mutual and balanced force reductions as one of the testing grounds for Soviet commitment to détente. Like other participants in the talks at Vienna, we attach great importance to a successful outcome to the negotiations, and we are determined to do all we can, jointly with our Allies, to reach a satisfactory agreement with the East. Détente will be of little value unless there is progress towards the objective of undiminished security for each side at lower levels of forces.

But, as the White Paper makes clear, progress has been disappointingly slow. The East has so far failed to respond positively to the initiatives made by the West in December 1975. Nor has it shown a willingness to negotiate on the basis of our proposals for a common ceiling on manpower for the two sides. The onus is on the Soviet Union to demonstrate a serious commitment to détente in this important area of negotiations, but the Government, though fully committed to seeking every opportunity to reduce tension, are not blind to the potential threat that is posed by the massive military power of the Soviet Union and her allies. What critics of our defence policy often lose sight of, however, is that we do not face this potential threat alone.

Naturally, our Allies express concern at the economies that we are forced to make, but they realise that any effect on our front line will be kept to a minimum, and they are fully aware of the economic difficulties with which Britain is faced.

As a result of the defence review, we expect a slow and limited growth in equipment spending, and we expect the equipment programme to take a somewhat higher proportion of the defence budget in the future. The proportion of the budget devoted to equipment has been rising steadily since 1974–75, yet the Opposition amendment asks the House to accept that our forces are
"being seriously deprived of modern equipment".
I find that a surprising and ill-informed judgment in the light of the maior re-equipment programme that just one of the Services—the Royal Navy—is undertaking and the continuing progress with which new equipment is being introduced into that Service.

On the part of the Royal Navy we recognise that the chief threat in the Eastern Atlantic area comes from the Soviet submarine fleet. Our naval forces are largely devoted to anti-submarine warfare, although they also possess significant air defence and anti-surface ship capabilities.

We are continuing to improve our capability in all these areas, and in particular that of ASW. The ninth nuclear-powered submarine has now entered service and three more of the class are under construction. The first of the new class of ASW cruisers will be launched at Barrow in May, and a second is under construction. We are building a new class of ASW frigates, the Type 22, the first of which has already been launched. These are planned to carry the Lynx helicopter, which will be operational by early next year.

On a recent visit to Yeovilton I was able to fly in the Lynx and hear at first hand the opinions of those who will fly and operate the helicopter. Their enthusiasm for its capabilities was most reassuring. I could not have been more impressed. I could not possibly bring to bear on it either their professional judgment or that of some hon. Members on both sides of the House. Nevertheless, I only wish that any sceptics now present could have been with me.

The Lynx will also be fitted to the general purpose Type 21 frigate, the fourth of which, HMS "Arrow", entered service last year; three more are expected to enter service this year. The building programme for the Type 42 guided missile destroyers is continuing, and two of this class, which is primarily intended for area air defence, have been accepted for service. A third will be accepted this year, and six more are under construction, including the order for the ninth ship of the class recently announced by my right hon. Friend the Minister of State.

I know from the interest demonstrated by so many of my hon. Friends—indeed, the acute anxiety displayed by some of them as they sought to secure building contracts for their own particular localities—that this warship-building programme is appreciated, at least on this side of the House. There have been no deletions of orders in our forward warship programme other than those arising out of the defence review which were announced nearly two years ago.

Aircraft and weapons are equally important. Apart from the Lynx, which I have already mentioned, work is under way on the Sea Harrier, which will enter service at the end of 1979. An improved version of the Sea Kings has already entered service, and the Sea Kings which are already operational are being modified to the improved standard.

New weapons now in RN ships include Seadart for area air defence, Exocet for surface-to-surface attack, Ikara for quick reaction against submarines at long range and the submarine-launched acoustic homing torpedo, Tigerfish. Weapons under development include Seawolf, to provide point defence at short range against fast low-flying missiles and aircraft, and the Sea Skua anti-ship missile which will be carried by the Lynx helicopters.

Our contribution to NATO is, and will remain, substantial. I do not believe that it is materially affected by short-term economies in our defence budget. I am confident both that NATO forces as a whole are sufficient to deter aggression of any sort and that the United Kingdom is pulling its full weight in the Alliance.

I hope that the Minister is about to give us an explanation of why there is a subtle difference between what he is now saying and what his right hon. Friend said earlier and to the Select Committee. The Secretary of State's words were "no difference to our front-line forces in NATO", but the Minister said "no material difference". What is the change in attitude? Does not the Minister realise what is happening as a result of these short-term cuts?

No. There is not intended to be any difference of substance, even of emphasis, between what my right hon. Friend said last week and what I am now saying.

What I was saying, and I should like to repeat it, is that the United Kingdom is pulling its full weight in the Alliance. The standard of training and the professionalism of our all-volunteer forces, as the hon. Gentleman knows, are both widely respected. In particular, in the naval sphere our European Allies look to us for training and guidance on tactical doctrine.

We hear a lot about GNP, GDP and per capita comparisons, but no one, to my knowledge, has come up with a convenient way of including equally important factors, such as value for money, quality of equipment, and professional competence of members of armed forces in any league table. I believe that in all these respects we score very high indeed, if we do not come out on top.

About a minute ago the hon. Gentleman-referred to training and guidance on tactical doctrine that we give to our European Allies. That sounds the most terrible jargon. What does it mean?

It means exactly what it says. I do not know how I could possibly simplify that statement, except to say, perhaps, by way of explanation and amplification—[Interruption.] On the contrary, I am grateful for the opportunity to say with pride that the Navy, for example, provides at Portland an operational sea-training school. Places are provided at this school for ships from overseas navies, from the navies of our friends and allies, and they pay for that provision. They receive benefit of the kind to which I referred and about which the hon. Member wanted an explanation. I shall gladly write further on the subject to the hon. Gentleman.

I have delayed the House long enough. I have attempted to demonstrate that, contrary to the opinions expressed in the amendment tabled by six hon. Members opposite, this Government have not and will not deprive the Armed Forces of modern equipment. The Government have not left them with insufficient conventional capability to deter aggression. We continue to play a major rôle within NATO and to provide substantial forces to the Alliance.

Finally, we support NATO as an instrument of détente as well as defence, and will continue to seek every opportunity to reduce tension through international agreements on arms control and disarmament. I invite the House to support the motion.

4.30 p.m.

I beg to move to leave out from "House" to the end of the Question and to add instead thereof:

"regrets that Her Majesty's Government's defence policy has resulted in our forces being seriously deprived of modern equipment necessary to maintain, with the other members of the North Atlantic Alliance, sufficient conventional capability to deter acts of aggression, to sustain an effective fighting force in the event of actual hostilities, and thereby to strengthen our influence in formulating the policies of the Alliance".
As my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) pointed out last week, it is unprecedented since 1950 for a Government to fail to table a motion to approve their own statement on Defence Estimates. It is a reflection of how badly rattled the Government have become that they dare not ask the House to approve either their public expenditure programme or their defence policy because they know that they no longer command the support of their own party on either subject. The Government are merely asking the House to take note of their Statement. Regrettably, there is little in the White Paper worth taking note of.

The Under-Secretary of State, in his excellent wind-up speech this afternoon six days after last week's debate, made little reference to the fact that Britain's defence expenditure is being cut in the coming financial year by no less than £953 million and by £1,217 million in 1978–79. The Secretary of State does not seek to justify that severe blow to Britain's defence capabilities by suggesting that the threat of the Soviet Union has diminished, nor indeed, to do him credit, did the Under Secretary of State. Nor has he suggested that the terrorist war in Northern Ireland has been won. In the absence of either an abatement of the Soviet threat or a winning of that war, he fails to justify to the House why he is seeking to cut Britain's defence expenditure by such a large amount.

It will assist the House if we may assume that the hon. Member for Stretford (Mr. Churchill) is speaking—as I am sure he realises—as an official spokesman of his party. Will a Conservative Administration immediately increase Defence Estimates by £950 million this year and by £1,200 million next year?

I am saying that the next Conservative Administration will substantially strengthen Britain's defences. The Secretary of State seeks to justify the cuts on the basis of Britain's economic failure under Socialism. He tells us that we cannot afford to spend more on defence at the present time and, indeed, that we must spend less. Can that be believed at a time when the Government are squandering thousands of millions of pounds of taxpayers' money to finance Socialism which the nation has made clear it does not want? The money can be found to nationalise the aircraft and shipbuilding industries, North Sea oil and development land. Taxpayers stand helpless as they see hundreds of millions more of their money being squandered by the National Enterprise Board, by Lord Ryder and British Leyland.

The money is there. It is merely a question of priorities. This Government prefer to cut expenditure on defence, to lower the nuclear threshold in Europe, to imperil peace itself and to undermine, by unilateral defence cuts, the prospect of securing a serious, viable arms-control agreement with the Soviets. In the order of Socialist priorities it is worth putting all these at risk to move forward to a Socialist-Marxist State.

The Secretary of State contends that defence must "bear its part" of the burden of public expenditure cuts that are being carried through by the Government. Perhaps he should get together more often with some of his colleagues and find out the contributions that they have made.

Last week I tabled several Questions to some of the Secretary of State's colleagues. I shall mention only a couple. I asked the Secretary of State for Education and Science how many hundreds of millions of pounds had been cut from the education budget. The Under-Secretary of State told me:
"In respect of the expenditure in Table 2.10 of Cmnd. 6721–55 'The Government's Expenditure Plans' for which my right hon. Friend and my right hon. and learned Friend the Secretary of State for Wales are responsible, the reduction on the expenditure forecast in Cmnd. 6393 is £88 million at 1976 Survey prices, or just over 1 per cent."
I asked the Secretary of State for Social Services what had been the total reduction in his Department's budget for 1977–78 in money and percentage terms. I was told:
"There has been no reduction. The anticipated expenditure for which my Department is responsible in 1977–78 is, at 1976 survey prices, £76 million, or about 0·4 per cent., higher than that forecast in the Public Expenditure White Paper Cmnd. 6393."—[Official Report, 25th March 1977, Vol. 928, c. 700, 713.]
The Library has done an excellent piece of research into the whole matter. It has produced a graph which can only be described by the word "jaws" since it shows social security spending going up through the roof and defence expenditure going down. It is clear that the shift of resources away from defence towards social services has been quite staggering.

In 1960 health and social security accounted for 29·2 per cent. of total public expenditure compared with 19·8 per cent. for defence. According to the public expenditure White Paper, by 1978–79 defence will account for only 11·3 per cent. of total public expenditure while social security will account for 36·8 per cent. Put another way, in 1960 health and social security expenditure was 50 per cent. greater than defence expenditure. By 1978–79 it will be more than three times greater.

Is the hon. Member now saying that if we get a Conservative Administration—and heaven knows when that will be—they will increase defence expenditure by cutting social services?

I am not saying that. Under a Conservative Government there will be less unemployment. We shall not tolerate the situation in which those who are drawing unemployment benefit get substantial inflation-proofed rises at a time when those who are working have their pay strictly limited. We shall not tolerate a situation in which it pays people more to be voluntarily unemployed than to be in a job.

That brings me to another of the more fallacious arguments advanced by the present Government, which is that our defence expenditure compares favourably with that of our allies. Indeed, the Secretary of State seems to derive great reassurance from frequent declarations that Britain is spending 5·1 per cent. of her gross domestic product on defence, compared with the United States' 5·9 per cent., France's 3·8 per cent. and the Federal Republic of Germany's 4·2 per cent. But this conceals the fact that because our economic performance has been so poor—especially in the past three years of Labour Government, when industrial production has gone down rather than up—France, in the current financial year, is spending 18 per cent. more than the United Kingdom, the Germans are spending 20 per cent. more and President Carter is increasing the United States defence budget in the coming year by $10 billion—an increase equal to the entire amount of the British defence budget.

The Minister of State admitted that several of our Allies are increasing their defence expenditure and that Britain, almost alone of the NATO Allies, is reducing hers. I quote the Minister of State's reply to me of 25th March:
"In real terms there will be an increase in the cases of"
—the United States, Norway and Denmark—
"and a decrease in the case of the United Kingdom. The position in the other countries named is less clear since we do not know what allowance they have made for inflation, but we would expect a decrease in real terms in the case of West Germany".—[Official Report, 25th March 1977; Vol. 928, c. 697.]
I have made inquiries this morning and I am advised that that is not the case and that the West Germans do not expect to reduce their defence expenditure in real terms.

But anyway, this argument of using the GDP of our Allies as the yardstick for our own defence expenditure is wholly bogus, because it is not from our Allies that the threat comes. It is a pity that the Secretary of State and his Ministers appear unable to appreciate that fact. The only valid yardstick is the perceived level of threat. Nor am I referring to the political threat from below the Gangway, which seems to be strangely absent today. Despite the ritual howls for unilateral defence cuts, to which the Government pay a dutiful obeisance, it is significant that no hon. Member, even from the Left wing of their party, is suggesting that the Soviet threat has diminished.

Since the present Government came to office in 1974, much has changed in the world. It cannot be questioned that principal among these changes has been the level of the Soviet threat. It has become apparent in these last three years—indeed, it is conceded in the White Paper—that the Soviet Government's expenditure on their military forces, at 12 per cent. or more of GNP, is double what had previously been estimated by the West, and it is close to three times the NATO average of 4·8 per cent.

If, as I accept, the difficulty of exchange rates makes comparison of GNP between allies difficult, it is equally valid in taking the percentage of the Soviet Union.

It is also the case that the growth of the Soviet expenditure is due to the rise in economic growth, and that the percentage of their GNP has not significantly changed in the past few years.

The right hon. Gentleman has himself, however, made clear in repeated statements that the Soviets are currently, and have been for the past two or three years, accelerating their defence expenditure at the rate of 5 per cent. per annum in real terms, and that is a very substantial increase. Yet he can name not one of our Allies which is reducing its expenditure in real terms, apart from our own country. How is it possible that he can justify this in the face of our Allies believing that there is an increased threat? Indeed, he himself admits that there is an increased threat.

In terms of Soviet conventional forces, a direct consequence of this increased Soviet expenditure on armament has been the deployment against Western Europe of a greatly increased strength in offensive weaponry, especially in modem tanks and supersonic aircraft with a radius of action far greater than that of the aircraft that they have replaced. The fact of this massive deployment, the core of which is represented by no fewer than 59 Category I Soviet divisions permanently at the highest state of readiness and backed by a force of 15,000 tanks, has forced senior NATO officers to abandon the assumption of a 30-day warning or tension period, on which hitherto has depended the whole plan for reinforcing the peace-time strength of our front-line forces from Britain and the United States.

The power of the Soviet Union's standing forces in Eastern Europe, which are kept permanently in an attack deployment—they would be totally differently deployed if there were any question, as the Secretary of State in an earlier debate sought to imply, that they were there as a deterrent to the forces deployed by NATO—is today so great on the Warsaw Pact side that the Supreme Allied Commander, Europe, believes that the West can now be sure of no more than 72 hours' warning in the event of a surprise attack by the Soviet Union.

The October 1973 Middle East war vividly demonstrated how it is possible for countries—in this case, Egypt and Syria—that are able to maintain large forces in forward deployment at full battle strength to take by surprise a nation or group of nations that depend heavily on large-scale reinforcement and mobilisation of reserves to meet any threat—as do all the NATO countries.

These are new facts of deep significance of which a majority of our Allies, by their decision, to increase their defence expenditure in real terms this year, have evidently taken note. When will the Secretary of State and, indeed, the Government as a whole wake up to these new and alarming facts and act accordingly, rather than utter unctuous bromides, as the Prime Minister and Herr Schmidt did recently in their television duet?

The fact that for 30 years the NATO Alliance has maintained the peace of Europe by successfully deterring all Soviet designs should not be allowed to obscure the reality that it is only very recently that the Soviet Union has acquired a serious offensive capability—something that never existed even in the time of the Tsars. For though Russian soldiers fought with great courage and determination at Austerlitz and Stalingrad, there was in the end only one thing that saved them from defeat by Napoleon and Hitler—snow.

Those days have long since gone. Now for the first time, the Soviet Union, having achieved both strategic and tactical nuclear parity with the West has built up a clear preponderance of conventional power in Europe. No action could be more calculated to disturb the stability of Europe or the peace of the world than this development. Yet the British Government, by their policy of unilateral defence cuts, persist in ignoring reality, and by so doing they are placing peace in jeopardy.

On this point, the unanimous report of the all-party Defence and External Affairs Sub-Committee, to whose diligence and judgment this House owes a very great debt of gratitude, was unequivocal and damning. I quote its words:
"our forces are being seriously deprived of modern equipment necessary to maintain, with the other members of the Alliance, sufficient conventional capability to deter the Warsaw Pact from acts of aggression, to sustain an effective fighting force in the event of actual hostilities, and thereby to avoid early recourse to nuclear weapons."
The message is clear—in the opinion of the Committee the Government are guilty of lowering the nuclear threshold in Europe. In opening the debate, the Minister termed this part of the report, which features prominently in the Opposition's amendment, as "surprising". Perhaps it would help if he got about a little more. I appreciate his difficulties. With his desk piled high with paperwork he does not have the advantage of being able to get out into the field as much as, no doubt, he would like. None the less, he is not facing the reality of the situation squarely.

As the Labour Government embarked on their defence review, they sought to give the impression that the cuts which were to be made in Britain's defences related principally to doing away with the relics of our Imperial past to enable us to concentrate on NATO which Ministers claimed, with the now well-worn cliché, to be the "linchpin" of our defences. The Minister intoned those very words only last week. The present, Secretary of State still seeks to preserve this fiction by frequent references to the effect that there have been
"No cuts in our forces committed to NATO."
And only last Tuesday he said:
"We have not cut back in the size of the forces as a result of any recent measures."
Only in the narrowest semantic definition is that statement true. The general sense that he seeks to convey to the House and to the nation by such a statement is the reverse of the truth, as has been made emphatically clear by the Expenditure Sub-Committee's findings, which strip away the fig leaf with which the Secretary of State seeks to conceal the nakedness of his policies. Just one sentence beyond the Secretary of State's assurance that we were not cutting back in the size of our forces, he continues:
"I return