Skip to main content

Commons Chamber

Volume 929: debated on Monday 4 April 1977

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Commons

Monday 4th April 1977

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

New Writ

For Grimsby, in the room of the right hon. Charles Anthony Raven Crosland, deceased—[ Mr. Michael Cocks.]

Oral Answers To Questions




asked the Secretary of State for Wales if he has any plans to visit Ceredigion during the next month.

Is the Secretary of State aware that many people in Ceredigion and other parts of Wales are wondering what has happened to the Scotland and Wales Bill? Is he able to comment on that today?

I am sure the hon. Gentleman is aware that discussions with other parties and with my hon. Friends are taking place with the object of establishing whether a broad measure of agreement can be reached. The Government remain fully committed to devolution in Scotland and Wales.

Will the right hon. and learned Gentleman make a joint visit to Ceredigion with his new Liberal partner so that together they can explain why, on top of all the existing burdens of unemployment, the abolition of regional employment premium and increased social security tax, the Government are now imposing a vicious petrol tax?

I noticed the other day that the hon. Gentleman paid a visit to, of all places, Hereford to warn the populace there of the dangers of the Liberal agreement. All I can say to the hon. Gentleman is that I feel he may be afraid of losing his seat in the next General Election.

Derelict Land Clearance


asked the Secretary of State for Wales what representations he has received from local authorities in North Wales regarding the latest allocation of funds for derelict land clearance.

Is the right hon. and learned Gentleman aware that there is at least one protest on his Department's decision, according to the Flintshire Leader, which records the hon. Member for Flint, East (Mr. Jones) as having protested against this decision on the part of the Welsh Office? Is the Secretary of State further aware that his allocation of funds is widely regarded in North Wales as being greatly discriminatory against the interests of North Wales? Is he not aware that if the unwanted, directly-elected Assembly which he and his frightened Liberal mercenaries are proposing to impose upon the protesting people of Wales comes into being, this kind of thing will get worse?

The hon. Gentleman is completely mistaken in his utterances. My hon. Friend constantly makes representations to me on behalf of Clwyd on a whole range of issues, and, if I may say so, with a broad measure of success.

I am aware that there has been concern in a certain part of Clwyd in respect of some schemes which so far have not found favour. But I have told the Welsh Development Agency that I agree to the overwhelming bulk of the proposals—a little under 90 per cent. Because the other proposals had a lower priority and were substantially environmental, they had to be looked at again together with any other schemes which might have a higher priority. I am sure that the hon. Gentleman, who is so concerned about limiting public expenditure, would wish to ensure that public money is spent on proposals with the highest priority. I assure him that there is no bias against any part of Wales.

Would my right hon. and learned Friend agree that the greatest amount of derelict land is in the mining valleys of South Wales and that the Mid-Glamorgan county area has a larger proportion of derelict land than any other county in Wales? As well as ensuring that the momentum is maintained in clearing the dereliction, will my right hon. and learned Friend ensure that he will take measures to attract industry into the cleared derelict areas instead of placing it on agricultural land?

I am sure that my hon. Friend is broadly right in that there are large areas in need of assistance to wipe out the ravages of the past, for which this generation has to pay the price. A large proportion of such land is in South Wales, but some can be found in North Wales. I assure the House that there is not a regional or geographical bias in the determination of this matter, either by the Agency or by myself. What we seek to do is to ensure that the money goes to the areas with the highest priority, and that priority still is for industry and for housing. I am sure that my hon. Friend would agree with me on that score.

Is my right hon. and learned Friend aware that people in Wales as a whole, from North and South, appreciate the remarkable work carried out by the Derelict Land Unit over the past 10 years? The people of North Wales do not believe that there is any discrimination in favour of one region against another. Will my right hon. and learned Friend be good enough, however, to look in particular at certain areas in Gwynedd—Clwyd has already been mentioned—which are affected by state waste and, for example, Paris Mountain in Anglesey, which is still in a state of serious dereliction as a result of the old copper workings?

It was, of course, my right hon. Friend who started all of this. He has created an enormous appetite in Wales. I do not complain. I boast about his achievements. The result has been £45 million worth of bids for the next programme in Wales. The resources which we could allocate were of the order of £15 million, the totality of which I have agreed, although there has been a discrepancy—10 per cent. or there- abouts—as regards some of the schemes. I will look at any area to ensure that we make the fastest possible progress in removing dereliction throughout Wales.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.



asked the Secretary of State for Wales what steps he has taken to encourage public debate on that sector of education in Wales within his sphere of responsibility.

I recently chaired a conference in Cardiff attended by about 200 people from all parts of Wales and representing many educational interests, as well as both sides of industry, parents and pupils.

Is the Minister completely satisfied that he is getting a full expression of parental views on all the educational issues involved in Wales? Secondly, will he urge his right hon. and learned Friend to take the utmost care before agreeing to the Welsh Joint Education Committee's recommendation that Wales should have a single examination system for 16-year-olds instead of the CSE and GCE O-level? Will he bear in mind that the Department of Education and Science has not accepted a similar recommendation for England, and that if Wales goes it alone on this it seems that we shall have no means of comparing standards of educational achievement in Wales with those of the rest of the United Kingdom?

To take the latter point first, I am aware of the Welsh Joint Education Committee's views about examinations. I must, however, give them careful consideration and come to no hasty decisions. The decisions must be arrived at between Ministers. As to the hon. Gentleman's first point, there were 70 organisations represented at our conference. Of the 52 people who spoke from the floor, many were teachers and representatives of parents in Wales.

Will the Under-Secretary accept that the great debate on education initiated by the Government is basically a "con" trick in that this great debate is taking place at a time of serious reduction in the allocation of resources to education generally and when we have a high percentage of unemployed young teachers in Wales?

It is not a confidence trick. It is a success as a conference. Two hundred people from all over Wales met to debate an important issue—the future of our children in Wales. The hon. Gentleman should remember that without any doubt many improvements can be made, even during a shortage of resources.

Will the Minister consider organising the showing of the film recently made by the BBC about a comprehensive school in Acton so that Welsh parents and governors of Welsh comprehensive schools may compare our schools with what goes on in the rest of the country?

The hon. Member was a distinguished educationist. I think he is really saying that we are doing quite well in Wales with regard to our schooling. There is no complacency, but there is much to be proud of.

Is my hon. Friend aware that we in Anglesey would welcome television cameras into all our comprehensive schools so that the country may appreciate how successful the system is?

Hospital Services (Cynon Valley)


asked the Secretary of State for Wales what proposals have been submitted to him regarding the future of hospital services in the Cynon Valley and particularly the casualty unit at Aberdare Hospital.

Those contained in the Consultative Paper on the Reorganisation of Hospital Services in the Merthyr and Cynon Valley and Rhymney Valley Health Districts published by Mid Glamorgan Health Authority in 1975. The authority proposed that minor casualty services should continue to be provided at both Aberdare General Hospital and Mountain Ash General Hospital.

I thank my hon. Friend for that reply. The deputation that came to see him expressed anxieties about the future of the hospital services in the Cynon Valley. There is particular concern about the casualty unit, and there are rumours that it will be taken from the area. Can my hon. Friend categorically confirm that the casualty unit is to be kept open?

I recollect the deputation that came to see me and the strong case that it put. I recollect, too, the many representations made to me by my hon. Friend about health services in his valley. The area health authority, in its submission, has not proposed to discontinue the casualty unit. If it did do so, it would first have to go through the normal processes of consultation.

Rural Wales


asked the Secretary of State for Wales if he is satisfied that the Welsh Development Agency is making adequate arrangements to deal with the economic problems of those parts of rural Wales that fall outside the responsibility of the Development Board for Rural Wales.

Is the Secretary of State aware that the highest levels of unemployment in Wales are outside the Mid-Wales area—indeed, are outside the special development areas? I welcome the emphasis placed by the WDA on the importance of small businesses, but does the Secretary of State think it sensible that the new Budget scheme to help small businesses should be confined to the special development areas? Does he not think that we should reconsider the boundaries of all these regional schemes in order to concentrate help where it is most needed? Are not some of the divisions that now exist becoming most unsatisfactory?

It is always difficult to draw a line whatever one does, but the special development areas have had traditionally a high degree of priority, and this is where we shall start with any problem.

Has the Secretary of State received the appallingly clichéridden document produced last week by the Welsh Development Agency, which apologises throughout for not being a proper strategic plan for the development of the Welsh economy? Will he now accept that it is time to give orders to the Agency to take its finger out, to stop scratching about on the environmental surface of Wales and to invest in public enterprise development in the empty advance factories from which so many of us suffer?

I do not accept any of that tirade. In the short period of its existence, the Welsh Development Agency has taken on major responsibilities for derelict land and the building of advance factories. It has also played a major part in ensuring the development in Merthyr Tydvil and has started, as the hon. Gentleman may have seen in the Press, on its joint investment programmes. For example, an important firm was announced recently for Newport, and there are others.

Is the right hon. and learned Gentleman aware that the Welsh Development Agency is doing exactly what we said it would do, unfortunately, in raising very high expectations and being totally unable to fulfil them, particularly in North-East Wales?

I can assure the hon. Gentleman that the plans so far announced by the Welsh Development Agency in the environmental sector have been largely welcomed. Obviously there have been criticisms about some of the points raised in earlier Questions. Generally, however, the Agency has set out to tackle the task it was supposed to do. It has recruited its staff. It is getting more and more involved in industrial development, and we are already beginning to see the fruits of the seeds.

Transport Fuel Costs


asked the Secretary of State for Wales what examination the Welsh Office has made of the impact of transport fuel costs on the economy of Wales.

The impact on the economy of transport expenditure as a whole forms part of the background to the Government's review of transport policy.

Does not the Secretary of State recognise that, particularly coming on top of the abrupt withdrawal of REP, the proposed increase in fuel costs will have a devastating effect on many firms and will contribute to increased unemployment?

I do not accept that. The Budget will have a minimal effect on Welsh industry, and a rough calculation has been made of about 0·056 per cent. of industrial turnover.

Is the Minister aware that it is difficult to imagine a tax more damaging to the rural areas of the Principality? Will he take account of the fact that in large parts of Wales people are peculiarly dependent on private transport? Whatever he may say, this will run counter to the Government's policy of making Wales a development area and, indeed, of setting up the Welsh Development Agency. Is not this an idiotic tax in the context of the problems of Wales?

Coming as I do from rural Wales, I am fully aware of the problems of living there. But I am sure that some of these points will be fully adumbrated in today's debate.

Would not my right hon. and learned Friend agree that one lesson to be learned from the outcry over the recent relatively modest increase in petrol prices is that there is now no chance whatsoever of replacing the vehicle excise duty by an increase on petrol and that, therefore, one effect of that will be that employment at the Driver and Vehicle Licensing Centre is secure?

First, may I welcome my hon. Friend back to the House after his recent illness. I am sure that the welcome he has given to this proposal will be widely echoed in his area, which is an important source of employment for the Swansea Valley. I take great pride in having been one of those who sited the centre there.

If the Secretary of State is aware of the effect that this increase will have on rural areas, will he press the Chancellor very hard indeed, if the measure passes tonight, between now and the Finance Bill debates to ensure that an amendment comes forward to reduce the catastrophic effect that this increase in the price of petrol will have in rural areas, not only on personal transport costs, when people perhaps have to travel 40 miles each way to work, but also on the prospect of bringing new factories to areas such as the Caernarvon area, where transport costs are a disproportionate part of the total revenue?

I am sure that the hon. Gentleman will be putting such viewpoints forcibly if he catches your eye, Mr. Speaker, either today or in the course of the debates on the Finance Bill.

We are always interested in the right hon. and learned Gentleman's views. How does he justify the doubling of the petrol tax since 1974 in view of its effect on the economy of rural Wales?

I am sure that the hon. Gentleman or some of his hon. Friends on the Opposition Front Bench will want to put those points in the course of the debate this afternoon. But what is important is that we are doing, and have done, much more for Mid-Wales and for rural Wales than the Tory Government ever did. How will the hon. Gentleman explain after being a member of a party that killed off the proposals of my right hon. Friend the Member for Anglesey (Mr. Hughes) for Mid-Wales and did nothing at all in the four wasted years afterwards?

Glan Taf School


asked the Secretary of State for Wales what representations he has received about the proposed closure of Glan Taf school.

My right hon. and learned Friend has received 47 letters and a petition signed by 3,100 persons objecting to the South Glamorgan Authority's proposals to cease to maintain the Glan Taf High School and to establish a bilingual school in the premises.

Does the Under-Secretary agree that closing a community comprehensive school without a public meeting is an act of folly on the part of the local authority? Would he agree also that, the local authority having refused the request for a public meeting, the least he can now do is to have a public inquiry as part of the great debate, because the parents will not be satisfied with anything less?

Individual parents met the local authority. We shall be giving very careful consideration to the case, and every expression of view will be taken into account. With regard to the hon. Gentleman's last point, the normal practice is to consider a Section 13 proposal on the basis of written submissions.

Health And Personal Social Services


asked the Secretary of State for Wales how many projects have been started during the 1976–77 financial year which have been jointly financed by area health authorities and local authority personal social services departments; and how much he plans to make available for joint financing in 1977–78.

Area health authorities and local authorities have already on occasion shared the funding of services on the borderline of their respective statutory responsibilities. I have no central record of these cases. During 1976 I discussed with local authority associations and area health authorities possible arrangements to enable NHS resources to be used to help in financing developments primarily the responsibility of local authorities. My right hon. and learned Friend will soon be consulting on his final proposals.

Does the Under-Secretary accept that that answer is totally unsatisfactory in view of the fact that his right hon. Friend the Secretary of State for Social Services made available in the last financial year £6 million for joint funding in England and that £21 million is to be made available in the current financial year? Will he accept that it is time he insisted that local authorities and social services departments in Wales took note of circulars that have been produced by his Department and that the forthcoming circular on joint funding should be a joint responsibility of his Department and the Department of Health and Social Security?

I must reject the inference at the beginning of the hon. Member's supplementary question. He has not told us that the £8 million and the £21 million totals were to come from area health authority budgets in England. Is he really saying that we should do the same in Wales when already area health authority budgets are under great stress?




asked the Secretary of State for Industry when he next expects to meet the CBI.

My right hon. Friend expects to meet CBI representatives at the NEDC meeting this week.

Will my hon. Friend ask the Secretary of State, before he meets the CBI, to read the new book about the CBI which was published two weeks ago and ask the CBI whether it can explain the apparent contradiction between its total opposition to public expenditure and the disclosure in that book that it uses for its own membership campaigns the fact that it can fiddle company structures so as to screw more grants out of the Government for individual companies?

Not only have I read something about that book, but I have read my hon. Friend's review of it in Tribune and I recognise that he has very strong opinions about the subject. I will bear in mind the rough tenor of what he has said, but I am sure he will agree that it is in the interests of both Her Majesty's Government and the CBI to see more investment in this country for everybody.

When the Secretary of State meets the CBI, should he not discuss with it objectively a problem of industries in our public sector which has arisen in South Africa? For instance, Alfred Herbert—whose improved results I welcome—has been urging its South African associates to persuade the South African Government to put on a tariff against the import of British machine tools because of Alfred Herbert's great interest in its South African associates. Would not the hon. Gentleman agree that such a policy of urging the use of tariffs against other machine tool manufacturers could cause unnecessary hostility to an industry in the publicly-owned sector?

That is a specialised matter which does not arise from the Question on the Order Paper. However, if the right hon. Gentleman writes to me and gives me more information I shall have the matter looked into.

Does not the Minister agree that the logic in the question asked by the hon. Member for Birmingham, Perry Barr (Mr. Rooker) should lead him to the proposition that neither the TUC nor the CBI should have any sort of privileged position?

That is an interesting observation but I do not think that that is what my hon. Friend meant.

Leisure, Brewing And Manufacturing


asked the Secretary of State for Industry what was the return. before tax, on capital employed in the leisure industry, in the brewing industry and in the manufacturing industries as a whole in each of the years from 1973 to the last year for which figures are available.

For large listed companies operating mainly in the United Kingdom in manufacturing industries, the rate of return on net trading assets, measured at replacement costs, was 7 per cent. in 1973, 3½ per cent. in 1974 and—provisionally—3 per cent. in 1975. Corresponding figures are not available for companies in the leisure and brewing industries.

Does not the Minister agree that it is rather curious that no figures are available for the brewing industry? If they were available—I declare an interest here—they would show that over recent years the brewing industry has been earning less as a return on capital than the cost of new money. Does not that factor make it rather odd that it should be the one industry singled out for examination by the Price Commission?

The singling out of the brewing industry is a matter for my right hon. Friend the Secretary of State for Prices and Consumer Protection, but I am sure that his decision to have that industry examined carefully was widely welcomed by many people who have a direct interest in the drinking of beer. We shall have to wait to see what the investigation finds.

Is the Minister aware that the latest pronouncement on the brewing industry by the Secretary of State for Prices and Consumer Protection will, it is estimated by the brewing industry, delay £250 million of new investment, with all that that means for jobs? Will the Minister have a word with his right hon. Friend so that in future, before he makes these grandiose announcements on prices, he takes jobs into account as well?

I understand that in this not-so-crowded hour the hon. Member is seeking to raise all sorts of issues. However, if he wants to tackle the Secretary of State for Prices and Consumer Protection he should have the decency and courtesy to put down a Question to him.

Does my hon. Friend agree that, in view of the social and revenue implications of the brewing industry, there might be a case for requiring it to hive off brewing interests from the other interests into which it is spreading with a view to securing special taxation arrangements?

The problem of investment in the brewing industry is specifically under examination. The Government are giving every inducement to encourage investment across the whole of industry, and we expect an increase in the level of investment this year of between 10 and 15 per cent., which will contribute towards the economic recovery now on the horizon under the present Government.


Polish Footwear


asked the Secretary of State for Trade when he expects to be in a position to make a statement on the investigation started on 8th April 1976 into allegations of the dumping of men's footwear by Poland.

I announced on 3rd March that we had obtained a satisfactory undertaking on the future price levels of men's leather sandals from Poland. No other formal investigations into Polish footwear are in progress. The application in connection with men's pigskin suede shoes is still under consideration.

Is the Minister aware—if he is not, he should be—that there are still considerable problems facing the British footwear industry, which will regard the further delay into the investigation, which is still going on, with some concern? Is he also aware that there is a shortage of orders in the home industry? When will he do more to encourage home production to keep jobs in this country rather than Eastern Europe?

I am well aware of the concern that has been expressed by the footwear industry, especially on imports. That is why we have taken extensive action to cut back imports from Poland, Romania and Czechoslovakia. We are also, for the third year running, holding down the level of imports of men's, women's and children's leather shoes from those three countries to between 5 and 10 per cent. below the 1974 level.

With regard to the continued investigation into imported pigskin suede shoes, a few days ago the EEC negotiated a voluntary restraint level on all leather footwear imported into the United Kingdom from Poland. For that reason I do not think that we could initiate a full antidumping investigation in respect of one part of the overall range. However, we will be having informal discussions with the Poles in the next few days on that issue.

Do the Government contemplate with satisfaction the prospect that in three months' time all these difficult and tedious matters will be dealt with by the bureaucracy of the EEC and not by Her Majesty's Government?

It is the fact that on 1st July anti-dumping powers pass to Brussels. We are, as I have said on a number of occasions, retaining an antidumping unit in order to assist British industry with anti-dumping applications. A member of our Anti-Dumping Unit has recently been taken on by the Commission, in order to ensure that the vigour we show will be taken on by that body.


Joint European Torus Project


asked the Secretary of State for Energy if he will make a statement about the Council of Ministers' meeting, in view of the consequences of the failure to agree a site for the JET project.

JET was discussed by the Research Council on 29th March. I regret that the Council was again unable to agree on a site. It was agreed that the choice now lay between Culham and Garching, but the view was held that the choice of site could not be made until the basis of the organisational structure had been decided. The organisational proposals put forward by the Commission and Council Secretariat, which we supported, proved to be unacceptable to some member States.

The Council agreed that this matter would have to be further prepared by officials and that the Council should then meet again as soon as possible to try to reach agreement on both site and organisation. In order to give time for this, the Commission will extend the contracts of the JET design team at Culham, which would otherwise expire on 30th June.

Will the Minister explain why the Government were not prepared to make a statement on a research project which is crucially important to the whole of Europe and why it needed a Question to be tabled to receive an answer at all from the Government? Does he understand that the Opposition are concerned about the failure to reach agreement and the bitterness that arose out of the chairmanship of the meeting by the hon. Member for Manchester, Ardwick (Mr. Kaufman)? Will he say what reassurance has been given to the members of the research team at Culham, as there is evidence that it is breaking up? Will he also say whether a date has been agreed for the next meeting, as it is vital that the matter should be resolved at the earliest possible date?

The hon. Gentleman asked why the Government did not make a statement. One of the reasons is that we do not take the cynical view shown by the implication of the hon. Gentleman's supplementary question. As I said in answer to the hon. Gentleman's Question, the Government regard the question of fusion as an issue that Europe will require to decide.

I want to refute the hon. Gentleman's allegation about the chairmanship of my hon. Friend the Minister of State, Department of Industry. The Government cannot accept responsibility for reports that appeared in the Press. The hon. Gentleman may take some comfort from the fact that at that meeting members of the Council complimented my hon. Friend on the manner and the method with which he chaired the meeting, which they admitted was a very difficult one. It is from the Council that the compliments come. The Government cannot accept any responsibility for the Press.

The research work at Culham is complementary to the JET programme and is not dependent on JET being sited there. Culham's work would continue with some modifications even if JET were abandoned.

Is it not regrettable that the decision which was about to be taken to site the JET project at Culham was nullified because of the pique of some of the smaller members of the Community because the British Government refused to accept the agricultural price review proposals? Does not my hon. Friend think that it is highly regrettable that that kind of situation should occur?

I agree with my hon. Friend. It is regrettable that no decision was taken. As I said in answer to the original Question, an issue that everyone thought had been decided was the question of the structure. On the second issue, the Government were assured that the agricultural policy had no bearing on the difficulty arising in reaching a decision.

Notwithstanding the last part of the hon. Gentleman's answer, is this not a lamentable example once again of the Government's failure to be positive in their European policy? No doubt this link exists between the agricultural meeting and the energy meeting. Will the Minister confirm that when he next goes back to Brussels on this matter he will try to secure a positive outcome before it is too late?

I am surprised at the way the hon. Gentleman has posed his question—talking about a lamentable failure by the Government. It was a surprise to everyone that the question of the structure and the organisation should be mentioned. One member State, much to the surprise of everybody, said "We have to get this organisation and structure correct. If we do not, the question of legality will be involved and the whole of the JET fusion programme will be in danger." The hon. Gentleman may reflect that we have had a number of debates in the House, and the Government have given a very firm commitment to fusion. If the position went awry on 29th March, of course the Council would require to meet again and come to some decision on it.

We did not manage to speak with one voice at the meeting, although I think that there was a general appreciation at the meeting that the EEC has to deal with the question of fusion and has to have a fusion technology.

As the dispute has been dragging on for around two years, will the Minister answer the important question put by my hon. Friend the Member for Bridgwater (Mr. King) as to whether a date has now been fixed for the next meeting and whether the dispute is likely to be settled at that meeting? Will he further comment on the Press report that one reason why the talks broke down was that the chair was taken by the Minister of State, Department of Industry, the hon. Member for Manchester, Ardwick (Mr. Kaufman), so that the Secretary of State for Energy could present his case?

I thought that I had answered the last question first, and I believed that the hon. Gentleman would accept what I said—that members of the Council complimented my hon. Friend the Minister of State, Department of Industry on the way in which he chaired the meeting, with the usual expertise that one would associate with him. [Interruption.] It is on the record that the members of the Council complimented my hon. Friend. I am concerned about the manner in which this information is being received. I am giving the House facts about what other member States did and said.

The beginning of May was a suggested date. As for the dispute going on for two years, the hon. Gentleman should check back. A dispute like this has not gone on for two years. The question of where the site should be had been an issue, but I think that most member States thought that the question of organisation and structure had already been decided.

Civil Service



asked the Minister for the Civil Service how many representations he has received to date opposing the dispersal of the Civil Service; and what is the estimated up-to-date cost of this dispersal.

Since the Government's announcement of the dispersal programme on 30th July 1974, I have received a total of 51 representations opposing the programme. These have come mainly from Members representing constituencies in or near London. By contrast, dispersal is keenly welcomed in the receiving areas. The costs are being reassessed in the light of the current review of the dispersal timetable.

Does the right hand of this ambidextrous Government know what the left hand is doing? In the light of changing economic circumstances, does it make any sense to shuffle 15,000 people and 30,000 jobs out of London when the Department of the Environment is trying to get offices and factories to reopen in London? Is it not likely that the Civil Service Department will spend £300 million on this dispersal of the Civil Service, which the Department of the Environment will then re-spend on getting people and jobs back here again?

There is no contradiction in the Government's policies in this regard. The London situation ought to be kept in perspective. London still has a much greater share of office employment than any other part of the country. The Government's dispersal policy is designed to help ease the structural unemployment which exists in the Scottish, Welsh and English regions.

Is not dispersal of civil servants from London long overdue? It was first suggested by a Conservative Government, and this Government have carried out the policy. Does not my hon. Friend realise that, unless there is dispersal of civil servants, those in other parts of the country who want promotion within the Civil Service will always have to uproot their homes and come to London? That is wrong.

I accept my right hon. Friend's point about the career development prospects for civil servants in the regions.

Does the Minister realise that his words do not match his deeds? Does he recall that in a recent parliamentary answer to a Question of mine he revealed that the total number of civil servants moved to the assisted areas in the last year was 0·02 per cent. of the total? If he really believes that the dispersal of civil servants has a contribution to make to regional policy, why does he not get on with it? If he does not believe it, why does he not scrap the whole thing?

There is no contradiction in the answer I gave to the Question tabled by the hon. Gentleman on a previous occasion. The Government's dispersal programme is phased over a period of 10 years. The programme is to disperse 31,000 Civil Service posts from London and the South-East during the period 1974 to 1984. The timing is under reconsideration, but the Government remain firmly committed to that programme.

Does my hon. Friend accept that as long as he adheres to the policy of Civil Service dispersal he will have overwhelming support from this side of the House? Will he consider, in relation to the projects for the Glasgow area, not necessarily waiting for the full buildings to be constructed but starting on the movement now, particularly of civil servants in the Ministry of Overseas Development?

I assure my hon. Friend that the Government remain firmly committed. However, as he will appreciate, and as has generally been acknowledged, the Government have imposed a moratorium on capital building during the next 12 months. This might conceivably affect the time phasing of the dispersal programme.

Do the Govern-men really mean business? When will the Minister give us a new date for starting work on the building of the Ministry of Defence in Glasgow and of the Directorate of Overseas Surveys office in East Kilbride? Is he aware that he told us at the end of last year that the programme had been delayed and that he hoped to announce new dates very soon? In fact, no new dates have since been given. Is he aware that people in Glasgow are becoming increasingly worried about the strength of the Government's commitment?

I can understand the interest which all Scottish Members have shown in the dispersal of Ministry of Defence and Ministry of Overseas Development jobs to Glasgow. I assure the hon. Gentleman that I shall announce the new timetable as soon as is practicable and possible.



asked the Minister for the Civil Service by what percentage the pensions of civil servants whose pensions are index-linked have risen since March 1974.

Since March 1974 three annual increases, payable from 1st December each year, have been awarded to public service pensioners under the provisions of the Pensions (Increase) Act 1971. These give a cumulative increase of 67·2 per cent.

If, as is rumoured, the scheme is amended or scrapped, will not the sufferers be carrying the can for the social contract, which has been responsible for unemployment and inflation? Does not the Minister agree that the main task is somehow further to increase incentives for skilled workpeople and entrepreneurs, without whom the country will not recover its prosperity and recover from three disastrous years of Socialism, to which has now been added the Liberal seal of good housekeeping?

The indexing of Civil Service pensions arises from the Pensions (Increase) Act 1971, which was placed on the statute book by the Conservative Party, to which the hon. Gentleman belongs.

Will my hon. Friend refute the suggestion in today's Daily Telegraph that the scheme is to be scrapped? Will he also remind the House that if any action were to be taken to amend the scheme legislation would be necessary, since public service pensioners have a statutory right to their pensions? Is he aware that many of us on the Labour side of the House would be vociferously opposed to any such move? Will he also remind the House that policemen, teachers, firemen and other public servants—as well as civil servants—are affected by the legislation?

I can assure my hon. Friend that he is absolutely right in his interpretation of the provisions of the 1971 Act. Civil servants have a statutory right to the indexing of their pensions. I accept that there has been appreciable public expenditure involved in the indexing of pensions for civil servants and public servants generally. As regards civil servants, during the three increases referred in the answer, in 1976 the increase amounted to £31 million, in 1975 to £41 million and in December 1974 to £21 million.

Does the Minister agree that when the scheme was introduced no one contemplated the present high rate of inflation? The nation as a whole has to bear the cost of index-linked pensions. Would it not think it much fairer if the pensions were linked to the rise in average earnings or the cost of living, whichever was lower?

Let me reiterate the point made earlier in an intervention with regard to a review of Civil Service pensions. The review of Civil Service pensions increases is under constant scrutiny by the Government. We invariably announce the outcome of that review each July. The hon. Gentleman is, however, absolutely right when he refers to the alternatives facing the Government by way of the retail price index or earnings. He might be interested to know that, as far as earnings are concerned, the figure I have given represents the rise in the cost of living from June 1973 to 1976. Over the same period the earnings index rose by 70·2 per cent. and the wages index by 86·4 per cent.

Scotland And Wales Bill


asked the Lord President of the Council whether he has yet completed his talks with Opposition parties about the future of the Scotland and Wales Bill; and if he will make a statement.


asked the Lord President of the Council what progress he is making in his discussions about the Scotland and Wales Bill.


asked the Lord President of the Council whether, in view of the talks currently being held, he will make a statement about the progress of the Scotland and Wales Bill.

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

The discussions are still in progress. I shall report to the House when the outcome is known.

In order to recommence progress on implementing the devolution commitment, will my right hon. Friend make an early announcement about the possibility of separate Bills for Scotland and Wales and also about the holding of an early referendum according to the policy of the Scottish Council of the Labour Party, whose view ought to receive more recognition from this Government than any Opposition party?

I fully accept what my hon. Friend says about the necessity for an early statement, and we shall do our best to make one. We are, of course, having consultations with other parties, as we said, but we are also having close consultation with members of the Labour Party and the Parliamentary Labour Party, and, indeed, with others who wish to make representations. On the two points mentioned by my hon. Friend, representations have been made about proposals for two Bills rather than one. As he will recall, that was debated in the House, but we will consider representations on that subject. On the second matter, a pre-Bill referendum was recommended by the Scottish Conference of the Labour Party, as my hon. Friend rightly recalls. None the less, we still think that there are very considerable objections to such a proposal.

Does the Lord President recall that in last Wednesday's debate he said that he still expected to get a satisfactory Bill on devolution on the statute book within this Parliament? Will he define what he meant by those words? Does he mean in this Session? If so, does he mean by October or so? If that is the case, is he not running very short of time?

It is undoubtedly the case that the failure to secure a majority for a timetable motion has caused some delay in progress. That is well understood by all observant Members of this House and possibly by others outside, but it does not alter the fact that we are determined to carry through a measure of this great constitutional character within the period of this Parliament. As it becomes more and more apparent that only a Labour Government would carry through such a measure, that is one reason among many why this Parliament should go its full time.

Since the Lord President will have noticed the predictable absence of representatives of the Liberal Party, does he not think that there is a strong caes for strengthening membership of the joint consultative committee by adding the hon. Member for West Stirlingshire (Mr. Canavan) and possibly the hon. Member for Eastbourne (Mr. Gow) to the Committee?

There is a great distinction between those two propositions. I am always very eager to consult my hon. Friend the Member for West Stirlingshire (Mr. Canavan), but the hon. Member for Eastbourne (Mr. Gow) stands high on the the list of hon. Members of whom I cannot say the same.

In view of the fact that a number of us argued very strongly during the course of the devolution Bill that there should be a pre-Bill referendum, and in view of the fact that the Scottish Council of the Labour Party has now adopted that policy, will my right hon. Friend reconsider the reply that he gave to my hon. Friend and bring it forward as a mater of urgency, because many of us feel that if the people of Scotland or Wales genuinely wanted devolution there could be no more argument against it in this House?

I understand the representations made by my hon. Friend and by those at the Scottish conference. I was present at the conference when the debate on this matter took place. I think that my hon. Friend and others in the House must take into account the extremely powerful arguments against a pre-Bill referendum. It could give rise to considerable confusion. The matters on which such a referendum would take place are nothing like as clear as they would be on a Bill which had actually passed through this House, and I believe that there are serious constitutional objections to such a proposal. However, as I said before, that does not mean that the Government have absolutely excluded the possibility. I have merely said that that is the general approach we have to the matter at the moment.

Can the Lord President give an indication of when he envisages the first elections to a Scottish Assembly taking place? We take a great interest in this matter. Beyond that, can he give an assurance that the passing of such a Bill will be made an issue of confidence with his own Back Benchers, in view of the failure of 44 Members to support the commitment?

We had always hoped that the first elections to the Scottish and Welsh Assemblies would take place in the spring of 1978. We still believe that that would have been a good date. It is certainly not the fault of the Government that that date is to be delayed, if it has to be delayed. But we certainly look forward to the hon. Lady's support and that of her hon. Friends when we proceed further with the devolution measure. I repeat that only a Labour Government can carry through this great constitutional measure. That is why we propose to stay here to carry that measure through, along with many others.

Is the right hon. Gentleman aware that we on these Benches were glad to see that the White Paper published on another series of elections as recently as last Friday acknowledges the undesirability of making major constitutional changes without a wide measure of support? Does he recall that over six weeks ago I put to him a proposition that an all-party convention should be convened precisely so that that wide measure of support could be achieved? The right hon. Gentleman rejected the proposition at first and then had second thoughts about it to some extent. Does he realise that the House of Commons would like to hear at an early date what progress has been made with all the parties and whether he will set up such a convention in order to get the widespread support necessary for a constitutional change of this magnitude?

As I said in my original reply, I shall make a statement as soon as we have had time to see what progress is made in the talks. As I indicated before, I am extremely doubtful whether an all-party convention of the type described by the right hon. Gentleman is the best way to proceed—not through any prejudice against him, but because I believe that it would be likely that such an all-party convention would end in complete deadlock. It may be better for us to have some of these further conversations and then to bring forward further proposals which have a good chance of getting a majority in the House.

House Of Commons



asked the Lord President of the Council when sound broadcasting of the proceedings of the House will commence.

The Joint Committee which has been considering permanent broadcasting of parliamentary proceedings has completed its work and will shortly publish its report. If the Joint Committee's proposals are approved, broadcasting will begin as soon as the necessary arrangements can be made.

Is my hon. Friend aware that those boxes over there have been there for months and that many of us who voted against televising the proceedings of this House were equally keen on continuing to broadcast the proceedings as quickly as possible? Has my hon. Friend a date for this beginning yet?

I am conscious of the time that it has taken, but I have to deal with the Services Committee, the Treasury, the Joint Committee, Members of this House and the other place. It has not been easy, but we hope to begin broadcasting by the autumn.

Does the Minister feel that there is a grave dilemma on the question of financing the arrangement? Does he feel that, as a quid pro quo for getting the facilities here physically, it is the broadcasting authorities which should bear the whole cost?

We have never asked the Press or the broadcasting authorities to pay for their accommodation, heating and lighting, and I see no cause for doing so on this occasion. We are hoping to find an arrangement acceptable to the BBC and IBA, in which we shall provide at least the basic accommodation. The rest will be borne by them, and their annual costs will be much greater than our capital costs on a one-off basis.

Does my hon. Friend agree that the date for the start of sound broadcasting is being put back again and again? If it is not possible to have a definite arrangement for permanent accommodation, could not some temporary accommodation be given to both the BBC and the IBA, with permanent accommodation added at a later date?

We looked at that and, as I understand it, the Services Committee has said that Cromwell Green is not possible. We have now had to look at a permanent arrangement and we believe that we have found a solution which will be acceptable to the House and to the broadcasters. But I give the assurance that no further public expenditure and no arrangements will be authorised until the matter has come back to the House.

Did the Minister say that no public expenditure will be authorised until the matter has come back to the House? Surely some expenditure has already been incurred. How much has been incurred, and on what Vote? On which Votes, in future, will other expenditure be carried?

The decision to authorise the boxes was taken in the middle of the night on an occasion when the hon. Gentleman was obviously not able to be present. I said that no further public expenditure would be used on broadcasting as a permanent arrangement. If the hon. Gentleman would care to see me, I will give him chapter and verse about how those boxes were built by this House when he was absent.

Mentmore Towers

(by Private Notice) asked the Secretary of State for the Environment whether he will make a statement on the Government's position with regard to the acquisition of Mentmore Towers, as Lord Rosebery's offer of the house and its contents to the nation expires on 5th April.

I have made it clear that the Government are prepared to spend up to £1 million on Mentmore Towers and its collection.

I agreed to consider Lord Rosebery's renewed offer if a contribution towards the cost of acquisition and running costs of at least £2 million were made available from private sources. Considerable interest has been shown, but all the schemes so far proposed would have involved public expenditure in excess of £2 million.

Is the Secretary of State aware that substantial funds have been promised since last week from private sources? Is he also aware that Lord Rosebery is prepared to receive a major part of the sum due to him over a number of years and also that Lord Rosebery's solicitors have just informed me that Lord Rosebery is willing to extend tomorrow's deadline until later this week?

In the light of these facts, will the right hon. Gentleman agree to see Lord Goodman and myself later this afternoon with a view to considering afresh the acquisition for the nation of this outstanding house and its contents?

I am aware, as is the hon. Gentleman, who has maintained a strong interest in this matter, that some funds have been tentatively put forward from private sources. I am pleased about that, but there is still a considerable way to go. In view of what the hon. Gentleman has said about the message from Lord Rosebery's solicitors to the effect that Lord Rosebery is prepared to extend the deadline, I am willing to have talks with the hon. Gentleman and with others to see what can be done.

Will my right hon. Friend assure the House that no public money will be spent on this building, as distinct from its contents? Is he aware that it is a nineteenth century copy of the sixteenth century hall which is in the middle of my constituency? Is he also aware that the city of Nottingham, which owns the original building—not the copy—urgently needs some money to spend on that building? If there is any public money to be spent on a building of architectural merit it should be spent on the original and not on the copy.

I note what my hon. Friend says. It is true that the building has not met with universal approbation. Nevertheless, it has recently been upgraded to a Grade 1 building and will therefore be subject to the protection that goes with that listing.

Whilst accepting that Mentmore, as indeed this building in which we meet, is not always regarded as the finest piece of architecture ever produced, none the less it is of historic interest, as are the contents. [Interruption.] Is the right hon. Gentleman aware that the reference to my Tory ancestors who sat in this House is very flattering, and I accept it with thanks to the Tory Party? I thought that they had not forgiven me for deserting their ranks.

Does the right hon. Gentleman agree that we are, in fact, talking about a national collection, and, whatever the Philistines below the Gangway may think, it is worth between £8 million and £9 million? Is there not a real possibility of a £3 million bonus to the nation?

Since the Treasury last turned down the suggestion, a further £1 million has come into the kitty, with the possibility of still further funds, and a longer date for agreement on this matter. The Treasury must be more open-minded and more flexible.

I hope that I heard all that the right hon. Gentleman said. I do not entirely accept the arithmetic of the valuations that he has put to me. Nevertheless, I agree that there is here a valuable and, in many ways, a unique collection, and it would be desirable, if we could, to find satisfactory terms on which it could be brought into the public domain.

May I thank the Secretary of State for the Environment for his encouraging words and ask him to make a determined effort, even at this eleventh hour, to save this historic house? Does he not agree that if the house and its contents are dispersed, not only will these be a grave loss to the national heritage but the Government will be losing the bargain of the century on behalf of the nation?

We must be careful about the language we use, because, inevitably, widely varying judgments are always imported into considerations of any collection or building. Of course we are anxious as a country—and on both sides of the House—to protect the national heritage. But the truth is that we have an enormous national heritage to protect, and it is the job of successive Secretaries of State to come to a view of what really are the most important items to preserve. Against a background of severe public expenditure restraint, I believe that we have done the right thing in showing considerable willingness—we are prepared to find £1 million—but private sources must come forward with the additional resources required.

Is it past the wit of anyone in the Government responsible for these matters to comprehend that the Government are passing up the opportunity of acquiring for the nation's collection and for the benefit of our tourist trade a unique property? [HON. MEMBERS: "A copy."] This is a serious matter if some of the lower ground twits would understand it. The Government are passing up a unique opportunity at a price about one-third of the £9 million that this collection alone, without the house, will get at auction, to the delight of Sothebys, ad a Grade 1 empty building will lie like a white elephant around the Government's neck. Cannot they understand this matter?

I acknowledge, and the House will recognise, the great enthusiasm of my hon. Friend for this particular building and its contents. Of course it has a potential in the context of the tourist trade. But I have no reason to change the general evaluation that I have made—that it must be judged against other priorities and other claims within the sphere of the national heritage, and I must look very carefully at any proposals put before me.

Will the Secretary of State accept that it really is all or nothing, because if the house goes the collection must go to auction, and most of it will go abroad? In view of the enormous progress that has been made by my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) in his negotiations, I hope that the Secretary of State will have another think about this matter before it is too late.

As I have already said, thanks to the information that has been imparted in the House, it appears that I shall have an opportunity for a further exchange with those acting on behalf of Lord Rosebery and, of course, I shall look at the matter seriously. I assure the hon. Gentleman that the export of particular works of art of outstanding national importance is an entirely different issue. The ordinary rules would apply to such items in any event.

Does my right hon. Friend recognise that the opportunity to take this splendid house and its contents into public ownership will be lost for ever if it is not taken now?

Would it not be a great pity if we allowed the present temporary situation—I am as concerned as other hon. Members about public expenditure cuts and so on—to condemn us to losing this national asset permanently?

I am not sure whether one should view this matter entirely in terms of the present situation. As I said, the wider and more difficult question is to assess the place of Mentmore in the whole context of the enormous and costly national heritage that we have and intend to preserve.

Is the Secretary of State aware that the real point of Mentmore lies in the combination of the house and the collection and that to separate the two would be to destroy a unique part of our national heritage? May I assure him that we are grateful to him for his response to us?

New Member

The following Member took and subscribed the Oath:

Andrew James Mackay Esq., for Birmingham, Stechford.

Orders Of The Day

Ways And Means

Order read for resuming adjourned debate on Question [ 29th March],


That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but

  • (a) this Resolution does not extend to the making of amendments with respect to the surcharge imposed by the National Insurance Surcharge Act 1976 other than amendments for affording relief to charities; and
  • (b) without prejudice to any authorisation by virtue of any Resolution relating to value added tax, this Resolution does not extend to the making of amendments with respect to that tax so as to provide—
  • (i) for zero-rating or exempting any supply;
  • (ii) for refunding any amount of tax.
  • (iii) for reducing the rate at which tax is for the time being chargeable on any supply or importation otherwise than by reducing that rate in relation to all supplies and importations on which tax is for the time being chargeable at that rate; or
  • (iv) for any relief other than relief applicable to goods of whatever description or services of whatever description.—[Mr. Healey.]
  • [ Relevant Commission Documents: Nos. R/566/77, R/567/77, R/2361/76 and R/2520/76.]

    Question again proposed.

    Budget Resolutions And Economic Situation

    3.43 p.m.

    The party excitements which we have just witnessed remind me of the time when I left the Treasury after a political discomfiture some eight years ago. I took with me the crystal ball which used to be the most prominent object on my desk and which I kept as a warning about the insecurity of prediction and the inadequacy of the instruments we have with which to make predictions. I also took a very distinct memory of the arguments we had had about the details of Budget management.

    I had come to the conclusion—I shall not say that I still adhere to it, because it might be against Government policy: who knows?—that we should be better off if we affirmed once and for all the broad structures of the Budget and then, at every Budget time, by some regulator method, lifted or lowered by a percentage the rate of tax that we wished to apply, having regard to the Budget judgment of that year. We should then have been able to focus the talents of the House upon the great economic problems and strategies upon which we have to decide.

    On the other hand, I have to recognise that it is the traditional rêle of the House to argue the relative priorities of the burden of tax on toothbrushes, bird food, and things of that kind. I hope, however, that we shall find an opportunity to focus the talents of erudition, learning, passion for the public weal, and all those other high qualities which, on our own admission, we possess in such abundance more usefully on the greater issues.

    I mention this because it is not unknown to hon. Members that tonight we have to deal with the Budget Resolutions, some of which have caused difficulty in all parts of the House. In particular, there is genuine concern in all parts of the House about the impact of the increase in petrol tax. I have the greatest sympathy for people in rural areas who are obliged to travel considerable distances, using a car that they can barely afford, or inadequate public transport. But the problems of transport in general, and those of rural transport in particular, are much larger than the question of the price of petrol and the level of vehicle excise duty that we shall be deciding tonight.

    Solutions to these problems are more complicated than anything appropriate to a Budget and a Finance Bill. However, these problems have been very much in the mind of my right hon. Friend the Secretary of State for Transport in preparing his White Paper which is due in about two months' time. My right hon. Friend is fully aware of the widespread and justified sense of grievance about aspects of our transport affairs. The question is how we should deal with those problems.

    As I said, I do not think that the Budget Resolutions necessarily give the best opportunity for dealing with these problems, but the House must be the judge of that. The Chancellor's proposals, however, are contained in a resolution which is central to the Budget strategy. That it includes petrol tax and VED increases seems to me justified by the fact that in the case of petrol the increase is no more than is required to maintain, as it were, the real value of the petrol tax, and, in the case of VED, to achieve something less than that.

    Although I am troubled, as I am sure many hon. Members are, about the problems that arise from the increases, we should bear in mind that in our energy situation we cannot afford deliberately to make fuel for vehicles cheaper in real terms. In addition, in considering tonight the problems arising from the resolution to which I draw particular attention we must bear in mind what is perhaps a weakness in our system of dealing with these matters. Inevitably the House passes the main Budget Resolutions early on, and the collection of the tax proceeds. I do not want to weary hon. Members, but the House will be aware of the immense administrative difficulties that would follow if, for any reason, the Government failed to carry their Budget Resolution on petrol. It would require the repayment of the duty to everyone who had paid it.

    The right hon. Gentleman mentioned energy-saving. So that the House may make up its mind on the basis of fact, can he tell the House what is the quantum of energy-saving—that is, of fuel saved—expected to occur as a result of the increase in duty in the Budget?

    Of all people the hon. Member should know that that is not a useful question. I am sure that he does not wish to engage me in the kind of charlatanry in which he himself indulges and predict mathematically the consequences of the imposition of the petrol tax. The hon. Gentleman must know that the imposition of this tax makes it rather dearer than it would otherwise be, and presumably rather less of the fuel will be consumed than would otherwise be the case.

    I have not come to devote the whole of my remarks to the petrol tax. I should press on, but I shall give way once.

    The Minister spoke of the administrative difficulty resulting from not passing the resolution on petrol tax. Is it not political arrogance for a Government in a minority position to impose a tax coming into operation at 6 o'clock last Tuesday when it could quite easily have come into operation at 6 o'clock tomorrow evening? We should then not have had all this kerfuffle with the Liberal Party. Does not the right hon. Gentleman agree that the administrative difficulty has been caused by the Chancellor the Exchequer's ineptitude?

    The hon. Gentleman also realises that the point he raises is a spurious one. He knows that in order for the tax to be collected the assent of the House is required and was given. He knows that one cannot announce increases in duties of this kind in advance. In those circumstances, the point that he seeks to raise is a bad one.

    I will not give away again on this point. No doubt the hon. Gentleman will catch your eye at some point, Mr. Speaker. He will then be able to devote the whole or such part of his speech as he requires to this issue.

    I will not give way on this issue. Energy-saving must occur here, too, to save the energy of Members. I have given way several times. I must make some progress. I want to go on with the real point that I have to make.

    In a few weeks' time we shall come to the Committee stage of the Finance Bill. The House will then have ample opportunity to consider the problem of petrol tax in detail.

    It is no good the hon. Gentleman jumping up and down. I have given way to him. He has had the opportunity to express himself. I cannot turn my speech into a dialogue with him on one minor issue.

    I have warned hon. Members that they are wasting their energy and the time of the House if they keep jumping up on this point, beause they will not be heard. Hon. Members have had ample opportunity to intervene and I have given way amply. I shall not allow a continuous barrage of intervention on this one point, which can be dealt with by Opposition spokesmen at leisure.

    On a point of order, Mr. Speaker. I raise this point of order reluctantly, but the right hon. Gentleman has said that the Chancellor cannot give advance notice of an increase in tax. That is surely factually incorrect, because any Chancellor can say that on a certain date a tax will be increased.

    If I were to intervene whenever I thought that anything was factually incorrect, I should be a busy man. I say that without any reflection at all on the right hon. Gentleman.

    It has always been the habit of those with weak cases to raise bogus points of order, without advantage to the proceedings of the House.

    In a few weeks' time we shall be able to discuss the petrol tax. We shall be able to discuss it with sharper focus because it will not be linked with other aspects. We shall be able to discuss all the details and to express opinions in our customary way. In the meantime, I must say this: recognising the genuine feeling in the House on this issue—among my own colleagues as well as hon. Members opposite and Liberal Members—my right hon. Friend the Chief Secretary to the Treasury will give his usual careful, benign and courteous reception to all those who wish to discuss the problem with him, as he will be very anxious to hear their views upon it. I have no doubt that my right hon. Friend the Secretary of State for Transport will also be equally obliged for any suggestions. [Interruption.] I gather from the noises from the Benches opposite that the Conservative Party is disquieted that what I have said might not be acceptable to the Liberal Party. Of course, we all know that at present the Conservative Party has an almost unlimited capacity for working itself into a frenzy of indignation over any obstacle that stands between it and the assuagement of the office-hunger which it is clearly now so feverishly projecting. But I do not doubt that Liberal Members will recall that they were not elected to office with the specific passion and purpose of assisting the Conservatives in this way. We were all elected to serve certain purposes and motivations. I am offering all right hon. and hon. Members—including Conservatives who feel sincerely about this question and who are not merely seeking to use it as a means for driving a hole through the Chancellor's Budget—the fullest discussions with my right hon. Friend the Chief Secretary and the Secretary of State for Transport of the troubles and grievances with which we are all closely concerned.

    I am not being discourteous, but if any of those hon. Members to whom I cannot give way on this point would care to wait outside afterwards. I shall be glad to see them.

    I now turn to the central purpose and strategy of the Budget.

    The hon. Gentleman does not seem to think that I am a man of my word. I told the House that I had no intention of giving way on this point. No doubt the hon. Gentleman will regale the House with his wisdom upon it in due time.

    Order. It is clear that the Minister does not intend to give way. He has said so to the House and I hope that his position will be respected.

    I am afraid that the hon. Gentleman will not necessarily carry everyone in the House with him by suggesting that any Minister who does not give way to him is a bully. It is conceivable that it would be more courteous if he retained his seat, observed the rules of order, and allowed me to get on with the business with which I have to deal.

    The right hon. Gentleman is generally extremely courteous to the House and is generally the master of his brief. He seems to be refusing to give way not because his speech is being unduly delayed, but because he cannot defend his own proposals. My hon. Friends are surely, therefore, entitled to probe a little further before a Minister is entitled to plead that his speech is being so delayed that he should not be interrupted any more.

    The right hon. Gentleman is attempting to score unworthy points. I hope that I am never discourteous to the House. I have given way copiously on this point, but it is not the major burden of my speech. The main theme is on the Budget itself and the question of the Budget Resolution will be best dealt with in Committee.

    On a point of order, Mr. Speaker. The Minister said that my hon. Friend the Member for Honiton (Mr. Emery) suggested that he was not a man of his word. The right hon. Gentleman had given his word that he would not give way, yet he has now given way to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) and to the hon. Member for Penistone (Mr. Mendelson). Is it the fact that he will not give way to Back Bench Opposition Members? Is that what he should have said? He has broken his word if that is not what he meant.

    Will my right hon. Friend bear in mind that although any Excise duty is a serious matter for all hon. Members, there is much more anxiety and criticism on the part of a number of hon. Members about the lack of growth proposed in the Budget? Will he now get on to the major economic strategy and not allow his time to be wasted on one point only?

    My hon. Friend has validated my assertion that I would not give way on this issue any further, and I have not and will not—not out of discourtesy to the House, but because there are others who wish to speak. I have no time limit and could go on and make the rest of my speech indefinitely. I have made the points I wish to make. If any members of the Conservative Front Bench feel that those points are not cogent and convincing, they may wish to give in more articulate form the advice that they have been giving to the Liberals on how they should or should not behave on this issue, and no doubt they will receive the reception appropriate to their wisdom and impartiality.

    I turn to the central policy—

    The hon. Gentleman can go on bobbing up and down like a jack-in-the-box from now until the rising of the House, but I do not intend to give way.

    I wish to turn away from the series of somewhat frivolous interventions—

    The right hon. Gentleman says that the interventions were not frivolous. Questions asking me to assess the amount of petrol that will be consumed after the tax compared with what would have been consumed before the tax, I regard as frivolous.

    It is perfectly plain that hon. Members opposite do not want to hear the rest of my speech. I do not blame them, but I am afraid that they will have to hear it, because I have a duty to make it.

    In his Budget the Chancellor's central problem, and one that is afflicting the whole of the world was the problem of inflation and recession, or lack of growth. It is quite plain, though one would not have gathered it from the somewhat sterile and negative criticisms of the Budget that have been made by the Conservative Front Bench, that the problem from which we have been suffering these past three years is a grave one troubling all advanced countries. Not only the Labour Government here, but every Government in every advanced country has had to grapple with problems, which they have so far not solved, of world inflation and world recession.

    The question is how such a situation arose. Why were we not afflicted with these problems before the war? Those hon. Members who are quite satisfied that the afflictions under which we struggle in this country are uniquely to be attributed to the Labour Government presumably suppose that the problems did not exist under the Conservative Government, or do not exist under any other Government at the same time as we have been grappling with them.

    While the world, perhaps prematurely, was congratulating itself on having solved the pre-war problems of lack of demand, it was in fact gestating a new problem—the problem of distributing in an advantageous way the level of demand that it had. In other words, in recent years, broadly reaching a climix in 1973, the world had, as it were, changed its problem from the problem of aggregate demand to the problem of managing the demand that it had in ways that would avoid inflation and permit the onward growth of production.

    In this country inflation reached acute proportions and the Government decided that, whatever the difficulties, it had to be dealt with. The important question was what remedies were available. We had all learned that the paper chase for unreal increases in money incomes would not be of advantage to us. However, that was a very generalised recognition. The problem was not to recognise the general aggregate of resources available and the demand that could be allowed to match it; the problem was how to structure that demand so that it would lead not to a paper chase, but to stable or more stable prices and a resumption of the growth of real wealth creation.

    Three remedies have been suggested for our problems. The first was monetarism, the second free collective bargaining and the third incomes policy. I shall speak briefly about monetarism. It has its addicts in all parts of the House in some form or another. If it were really true that monetarism could claim the possibility of solving our problems of inflation simply by the proper manipulation of the money supply, or the various monetary aggregates, we could pause to wonder why it was that in not one country has the problem of inflation been eliminated by this simple and advantageous method.

    Although to me monetarism as a doctrine has not been intellectually convincing, it has had a value in drawing greater attention to monetary aggregates, which in the past have had insufficient attention, especially under the Conservative Government—as the right hon. Member for Leeds, North-East (Sir K. Joseph) has pointed out to his ex-colleagues who occupied the Treasury Bench.

    However, as a total solution it represents a retreat into financial statistics which ignores the reality that is behind those statistics. A monetary solution, if attempted with the kind of rigidity that alone could offer us the hope of a cure for inflation by this means, would result in protracted and perhaps indefinite high unemployment. There is no guarantee, even within monetarism's own rather inadequate logic, that a structure of iron monetary restraint, would enable us to protect the weaker members of our society from the stronger. There is no justification for believing that this simple solution would resolve our difficulties in the happy way that its more naïve advocates press upon us.

    The package may have alluring flowers on the outside, but I suspect that if we sowed the seeds of monetarism with the ruthlessness to which we are urged, we should get not the flowers of inflationless growth but unemployment and hardship for an indefinite period. Certainly there would be no prospect of growth.

    The Chancellor of the Duchy has been arguing that if we were to follow an iron monetary policy it would be certain to lead to inflation. Since nobody believes that we have been following anything approaching an iron monetary policy over the past four years and since we have the highest rate of inflation that we have had since the 1930s, does not the right hon. Gentleman think that there is a monetary lesson to be learnt from that?

    As we have a rate of inflation which is not much more than half that of two years ago, it cannot be said—

    I shall have to re-phrase the question to read "unemployment". Certainly this is a grave and threatening problem. However, the fact that we have not been able yet to achieve its solution does not mean that we must immediately espouse some alternative solution without any conviction as to its consequences. A monetarist is entitled to believe that there would ultimately be less unemployment if we applied—

    The right hon. Gentleman says that we are applying monetarism. We are paying attention to monetary aggregates, which is not quite the same thing. If the right hon. Gentleman is satisfied that we are applying monetarism, he should be very happy because he has preached it and its fruits should be rich and rewarding. We are not applying monetarism. We are rightly taking into account monetary aggregates as part of the economic package by which we deal with our problems.

    Would not the Chancellor agree that M3 is expanding at about 5 per cent. per annum? Is not that iron control of the money supply?

    We have a firm control of the money supply. That is different from relying on the money supply to accomplish tasks greater than it is feasible to rely upon it to accomplish.

    The former right hon. Member for Wolverhampton, South-West, now the right hon. Member for Down, South (Mr. Powell), is always preaching that once one has the monetary disciplines one does not need to care any more what the trade unions or the working people do in organising wage claims and the like. But it has nothing to do with inflation. It is the total supply of money that has to do with inflation.

    There is a distinction between total indifference to the money supply—such as the Tories normally display when in office and total adherence to monetarism which relies upon monetarism, and monetarism alone, to cure inflation. I dismiss the notion that monetarism is itself a complete solution.

    I turn to the alternative suggestion, that we should go back to free collective bargaining. The trouble with free collective bargaining is that if, in the present context, we were to resume, without change, the system known as free collective bargaining we would undoubtedly produce a situation in which the stronger groups in our society would be able to achieve considerable benefits in relation to the weaker groups. But they would have two major disappointments. First, the gains that they made would be less than they thought they had made because of the twist to price inflation which was taking place. Secondly, the inflationary situation which would be resumed would bring about the dangers of slump and unemployment.

    In all, even the stronger groups exercising their powers, without reference to the aggregate achievement of our society at the present time, would produce a situation in which their gains were temporary and soon would be non-existent. Even they would be worse off than if we could all find the means of co-ordinating our achievements so as to allow greater accretion to our wealth creation than is possible in the inflationary situation which would follow the reversion to what is called free collective bargaining.

    The third choice is incomes policy, which is the policy the Government have been pursuing and intend to pursue. This is a policy of free collective bargaining co-ordinated so that each group takes into account, to its own advantage in the long run, the consequences in aggregate of the decisions they are making. I think this is a reasonable interpretation of the voluntary policies that we have been pursuing.

    The alternatives to that policy are clear. Without further success in the Government's policy of incomes co-ordination we shall return to the positively horrific level of inflation of two years ago, which will be followed in turn by the prospect of slump, devaluation and deficit.

    As a matter of fact, the policy so far, contrary to the pessimistic predictions of Conservative Members, of seeking the co-ordinated efforts of our working people in an incomes policy has had great success in removing at least partially the terrifying dangers that were arising two or three years ago. In fact, were it not for the fact that after the successful achievements of phases 1 and 2 a devaluation had occurred which became itself one of the great engines of inflation the Government would have made even greater progress in the success of these policies.

    The devaluation which occurred was to some extent at any rate, quite inevitable in the light of the inflationary free-for-all consequences of the previous period. What is worse, it was aggravated by the imperfect state of our international financial mechanisms at that time.

    Fortunately, the Government have been able to strengthen our international position—I refer now to the safety not and to the general strengthening of our international financial defences—which enables the Chancellor to offer the House a period of confidence in which we can look forward to the blessings of a stable currency and seek to organise our affairs within that stable currency so that we may become steadily more competitive.

    Let me say a word about the parity question in relation to incomes policy and in relation to competitiveness. I often hear the seductive expression "the blessings of an undervalued currency", and we are often told by those who orate most freely about the German achievement in the export markets that it was the blessings of an undervalued currency which made possible that achievement.

    I am afraid that that is a shallow view. The truth of the matter is that any economy which is gaining productivity against its rivals in world trade gradually acquires an undervalued currency and that the more it gains in productivity the more undervalued its currency becomes. So if I were to overstate the matter and turn it the other way round, I would say that Germany's currency became undervalued because Germany grew in its productivity in competition with its rivals.

    That view is corroborated by simply looking at one or two other experiences. Nobody can deny that, whatever the blessings of an undervalued currency, we got them after the Stafford Cripps devaluation when, in the face of a fairly marginal current account deficit, we devalued by 40 per cent.

    We devalued against the deutschemark and against the dollar, which was not devalued. One would have expected that with the blessing of this devalued currency, if it is a blessing, we would have leaped ahead and resolved all our problems. I do not need to dwell upon the number of times we have conferred the blessings of an undervalued currency upon ourselves or had it conferred upon us by agitated markets.

    The truth is that an undervalued currency is a prize to be won, not a blessing which we are free to confer upon ourselves by parity manipulation. An undervalued currency is the prize which is won by a competitive country gaining in productivity on its trading rivals. That again is shown in the case of Germany by the fact that, although its currency has steadily appreciated in recent years, as its productivity improvements have matched that appreciation the German currency remains undervalued compared with those of its rivals. It will remain undervalued as long as productivity is maintained in this way.

    The remedy for the evils of inflation is not to be sought in parity manupulation; nor are prizes of competitiveness. The prizes of competitiveness are to be sought in self-discipline and the organisation of a policy in which, instead of pursuing paper gains which cannot become real because the resources are not there, we seek to achieve in an orderly fashion the possibility of resuming the real economic gains which success in the battle against inflation will bring within our reach.

    I read the speech of the hon. Member for Cornwall, North (Mr. Pardoe) with great interest. He made many good points, but I thought there was one weakness in his speech, on the question of inflation.

    The hon. Gentleman seemed to ignore the fact that inflation is not a static condition in our society, but a dynamic process. When he advocated that ideally we should have zero growth, he ignored the fact that at any given time there is a huge weight of inflation already in the pipeline. The effect of a zero growth in wages would be not merely that one would ask for an immediate and probably intolerable sacrifice in real living standards by our working people, but that if one won that, they would not only accept an injury to their living standards but would injure the demand upon which their employment depends. And this at a time when nobody could say that our society was suffering from a plethora of demand.

    For that reason there has to be some means of bridging the period in which the inflationary price rises in the pipeline are worked out. That is why the Chancellor's strategy is absolutely right in seeking to make the tax reductions march side by side with the self-disciplines which reduce the paper claims which work people make at any given time. This will enable them to bridge a good deal of the gap caused by the inflation already in the pipeline.

    Would the right hon. Gentleman bear in mind that what he is arguing now does not tie up with what the Chancellor said in his statement or in the Red Book? In both those statements we were promised an increase of 1½ per cent. in economic growth for 1977 and that, if we were lucky, inflation would be down to 13 per cent. by the last quarter of 1977. However one plays with those figures, they can only mean reduction in living standards for the average Briton. There is no other way in which those figures can be interpreted. So is what the right hon. Gentleman is talking about going to happen?

    I see no contradiction in my right hon. Friend's figures. My right hon. Friend says that we are coming to the end of the period of reduction in real living standards. He says that we shall have an increasing growth. Although I am liable to be irreverently critical of Treasury forecasts, I think that this forecast will, on balance, prove to be pessimistic rather than to overstate the prospects.

    It is very difficult to predict these things with detailed confidence. I see nothing incompatible with the Chancellor's proposals and predictions in what I have said. The Chancellor is struggling to create the conditions for sustainable growth. The first condition is the control of inflation. That control is feasible only if we win the support of our working people for an incomes policy which will bring that about.

    I am sorry that, owing to frequent interruptions, I have gone on for rather longer than I wished. One or two points, however, still remain. I have read the speech of the right hon. Member for Leeds, North-East. As so often, he makes good points that are true only in part.

    He has a point when he says that it is not easy for private enterprise, if it faces a barrage of criticism of its efforts of its motivations, always to deliver its most exciting and satisfying work. The right hon. Gentleman is certainly in respectable company in pointing out that confidence in the system by which the country operates is a crucial factor in its success.

    Like so many of his good points, however, that leads to no useful conclusion. What does the right hon. Gentleman wish to happen? Does he want, for example, members of the Tribune Group, persuaded by the force of his argument, to affiliate forthwith to Aims of Industry, and from then on to give unqualified paeans of praise to the private enterprise system? Surely that is not a very practicable proposal.

    The right hon. Gentleman should bear in mind that it is about 130 years since the Communist manifesto was published, and since then private enterprise has changed dramatically. One of the most dramatic aspects of its change has been in its productivity. The achievements of private enterprise are greater under a barrage of criticism than they ever were when its tenets were regarded with almost religious fervour.

    I think that the right hon. Gentleman—as, for that matter, is the Conservative Party—is giving his attention a wrong focus. I am a great believer in the political and economic advantages of, and necessity for, private enterprise. I see it, as well as the public sector, playing a successful part in the years ahead. I should rather see the danger to its survival, value and sucess in terms of its failure to tackle the defects in the system of which my hon. Friends on the Left wing in politics are the most vociferous and perisistent critics.

    The danger to the private enterprise system does not lie in the fervent declarations of my hon. Friends the Members for Penistone (Mr. Mendelson), and Liverpool, Walton (Mr. Heffer), but in its own failure to remedy the horrific world level of unemployment and inflation from which we are suffering. It is the failure of private enterprise adequately to use the resources at the disposal of mankind for the creation of wealth and for the ordering of its affairs that endangers it. Nothing that is done by my right hon. or hon. Friends represents a danger a fraction as grave as that which threatens from the world evils of inflation and slump with which we are now beset.

    That is the reason why I find no difficulty in endorsing the strategy of my right hon. Friend. The fact that there is a world problem within which our own problems must be faced does not by any means permit us to ignore our responsibility to grapple with the still frightening level of inflation.

    The Chancellor's strategy is one for grappling with that inflation, not because of some theological objection to it, but because inflation is the biggest single obstacle to full employment. That obstacle must be removed, and because the Chancellor's is the only strategy that has been offered to the House and to the country in support of a policy of growth and full employment, I heartily endorse it.

    The Chancellor and the Prime Minister have already shown in their activities in the world that they recognise that whatever is done here can succeed only as a part of a wider world success. We have made and will continue to make our contribution as good citizens of the world. The Budget, however, is a central contribution to the strategy of ending inflation at home and opening the path to sustainable growth and fuller employment policies.

    4.31 p.m.

    Usually the Chancellor of the Duchy of Lancaster is second to none in his capacity to reassure us that things are growing a little lovelier each day and that the economy is coming up nicely. I hope he will not mind my saying that he appeared today to have filled up with a low-grade fuel with a heavy lead content. We note his reassurances but we do not believe them. I shall explain why later, but first I should like to look back on the debate on the 1977 Budget, of which this is the third day.

    For me the high spot of the debate was when the hon. Member for Cornwall, North (Mr. Pardoe) rose, heavy with the terrible burden of his new rôle bearing down on his shoulders, and told a hushed House:
    "In the present state of the economy hope is about the only commodity for which we can hope."—[Official Report, 30th March 1977; Vol. 929, c. 458.]
    I appreciate the burden upon the hon. Member, but there is another commodity—if that is the right word—for which we, certainly all of us on this side of the House, and perhaps the whole House, are entitled to hope. That is a little more candour and less cant in Liberal Party pronouncements. Anybody who was not born yesterday can understand the Liberal situation and see the dfficulties. Liberal Members must support the Government to survive, and I do not hold that against them. That is the political reality and the way in which the system works. But we are entitled to ask to be spared all the high-minded lectures about the new alignment and about giving the country a new era of stability.

    Where on earth is that stability? In the 12 days since the Lib-Lab pact there has been almost continuous instability and uncertainty. Over the weekend the Government were supposedly teetering on the edge of extinction while the Liberal Party danced a flamenco around the petrol tax issue, threatening archly to withhold favours from the Government but obviously determined to surrender in the end. The Chancellor had to rush on to the "Jimmy Young Show" to threaten the ultimate deterrent—3p on a pint of beer. That would, of course, have smashed the social contract and brought down the twin pillars of the Government's strategy.

    So everything is in doubt, and we need no lectures on the need for stability. Of course, the Liberals must cling to life—and to their shadow portfolios—even more so as their support in the country grows more shadowy still. To call that "stability" insults the intelligence of the electorate. The country can reasonably ask to be excused these "Perils of Pauline" episodes as the Liberal Party rediscovers each weekend that it would rather be red than dead.

    I turn to the more serious issues and I follow the Chancellor of the Duchy of Lancaster in looking at the contents of the Budget. I agree with him and the Chancellor of the Exchequer that this is not a political Budget. It may be paying the way for a political Budget, but it is not one itself. Indeed, one feature of the Stechford by-election—I shall try not to mention too often that painful episode for the Government—is that by Thursday nobody could remember much about what had happened in Tuesday's Budget, except the price of three, four, and five-star petrol. People saw that it was going up in price. We shall oppose the relevant resolutions tonight because we believe that it would be better for VAT to be consolidated at 10 per cent. instead. That is also what the Liberals believed last Wednesday and Thursday, although today they believe differently.

    We should not be surprised that nobody could remember much about the details of the Budget. After all, why should people remember them? If one considers the matter from their point of view, prices are still rising impossibly fast and food and household goods are becoming incredibly expensive. The poor at work will be poorer in the coming year and the poverty gap will grow wider. Everybody will be worse off in the year ahead. Tax will go on rising, despite the temporary hiccough, and everyone will be paying more tax next year than this. As the Chancellor knows, jobs will be scarcer and life will become tougher—for example, the disabled who rely on motor transport will be in great difficulties. The queues at hon. Members' surgeries will be longer with the sad people who cannot make ends meet, such as the heads of one-parent families. Every rate, gas, food and garage bill will go up. This is certainly not a Budget for a family with children or those at the bottom of the heap. If anyone present doubts my word, he should go to Hansard and read the devastating speech of the right hon. Lady the Member for Blackburn (Mrs. Castle), who made that point. This is not a Budget for the weakest, whatever the propaganda may say.

    Was this, then, a Budget for industry, the entrepreneurs and investment? We have welcomed the slight check in the deteriorating position of management that is implied in the tax concessions. It is slight, however, because by the time one has added the extra tax on company cars this year, extra petrol costs, and increased rates, the net effect will probably be nil. One should, however, be grateful even for small hiccoughs, and these we welcome.

    What about a major tax boost for business and major incentives for the renewal of enterprise that we must have in this country? What did the Budget do about that? What help was there in the Budget for partnerships and the self-employed? What about easing the rules on the 714 certificate issue—in which the Financial Secretary has played such a distinguished part—that will, in practice, bring total chaos to the construction industry? What about the job-destroying capital transfer tax? There has been no change there. What about the VAT reforms, for which many of my hon. Friends have been pressing? Again there have been no changes. What about savings? They were hardly mentioned by the Chancellor. What about personal capital building or profit-sharing, on which the Liberals are so keen? They were not mentioned.

    There is one industrial statesman who, I am told, is happy with the Budget. My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) reminded us on Wednesday that Lord Ryder will receive a fat increase in his take-home pay out of the arrangements—and good luck to him. He has authorised the National Expenditure Board, so my hon. Friend the Member for Rushcliffe (Mr. Clarke) tells me, to buy an ailing clock company to mark the occasion. I am told that it was a desperate bid to buy time.

    The British National Oil Corporation should also be cheerful. The petrol duty increase, if passed, will give BNOC money to spend on its capital programme for drilling this year in the North Sea—a matter that private enterprise could have handled just as well. It might be useful for motorists to know that their money is going into nationalisation programmes.

    Is the hon. Gentleman really trying to prove to a serious audience that money is being collected in petrol tax because we could not otherwise provide the finance required for work in the North Sea?

    I am not saying that. I was simply pointing out the squandering of money through the BNOC, whose functions in regulations and safeguarding the national interest could be done in much better ways at much less cost.

    There is nothing in the Budget for the rest of industry. Although the Chancellor refrained from talking about miracles, the real miracle in this country is that the business community survives despite the unremitting hostility of the Labour Party towards it.

    Is the Budget designed to please trade unionists? There has been no great clamour of enthusiasm from that quarter. As far as the conditional cuts are concerned, most of my hon. Friends would agree, for once, with Mr. Hugh Scanlon, who said that it is the Government's responsibility to govern and who implied, as we do, that it is not the Government's responsibility to send out little conditional promises and enter into negotiations of that sort with one exclusive body. If we are asked what we would do, our reply is that we would seek an open understanding and not a hole-in-the-corner deal.

    Whichever party is in power during the coming wage explosion, the situation will be fiendishly difficult in the face of the consequences of that explosion and the resulting threat to employment. That is the disastrous legacy of two years of the social contract. I am referring not just to the flattening of differentials which is causing such great difficulties and immense tensions. The workpeople were asked to "give a year for Britain" in three successive years. Did they get less unemployment in any of those years? No. It is higher now and as high as it has ever been. Did they get lower inflation? The Chancellor of the Exchequer assured workers that low pay agreements would bring down prices, but have we got lower inflation? No. Inflation is at 16 per cent. and is doing fearful damage to every household budget. Far from being near the level of our competitors, we are running at four times the level of inflation in West Germany.

    Surely these figures ought to tell the Chancellor of the Exchequer and his hon. Friends something about the social contract, the third part of which he is trying to set up. They certainly tell the workpeople something. They tell them that while pay restraint may be vital to the holding of jobs—this is more widely appreciated—it is all in vain unless the Government go all out to cut public expenditure, taxation and bureaucracy and to lower interest rates and so restore business confidence.

    That is the understanding that will really help the workpeople and the trade unions. The Chancellor of the Exchequer may have got a pay agreement last year, but the workers were betrayed not by their failure to deliver pay restraint—they delivered, even though wage drift pushed the level well past the original 4–5 per cent.—but by the Government's obsession with policies, ironically often in the name of the social contract, which froze incentives, destroyed profits and undermined foreign confidence through risks with the public sector borrowing requirement that should never have been taken. That made workers' restraint pointless and wasted and produced the appalling bitterness with which any Government will now have to deal.

    If we are asked what would the Tories do, we say that our rôle is not to deliver a sawdust package of Socialist promises in exchange for a scrap of paper that will probably be invalidated by events but to stick to the policies that will bring workers what they want in terms of jobs and living standards. That may need spelling out more clearly and openly, and the monetary limitations under which we have to operate should be set out more clearly. All politicians should be thinking of ways of doing that.

    I was interested in the views of the Director-General of NEDC on the links between the NEDO and Parliament. It may be that in NEDC we could create a forum in which these things could be thrashed out. Perhaps the monetary authority should also be given a more prominent rôle in this forum, as has often been done in other countries, as well as other interest groups.

    That should be the aim of a constructive pay policy—to bring home more effectively what many responsible trade unionists know already, namely, that there is a monetary total for the year which cannot be exceeded, that public expenditure must be held within cash limits underpinned by the political will to hold it and that within such a policy excess for some means less for others or fewer jobs for all or more pressure on the sick, the weak, the old and the dependent.

    That is the concerted way forward, rather than through job-destroying price freezes or a hole-in-the-corner social contract in which everything does indeed contract.

    The hon. Gentleman talks about giving more independence to the monetary authority. Can he give us any more specific details?

    I was making the point that in many countries, and maybe in ours, there is a case for the monetary authority, as distinct from the Government of the day, putting forward in its own terms limitations which must be held to and the total resources available for increases in pay and salaries, together with the consequences in terms of unemployment and difficulties for workpeople if those limits are exceeded. That is the concerted way forward, and the work-people are beginning to realise it even if the Government do not. So let us have no more of the chorus of "What would you do?" That question is being overtaken by events. If we are serious people on both sides of the House, we should be putting our minds to the approach that I have described.

    Let us, please, also have no more people saying that all is well and that we need not worry because the Budget marks the end of Socialism. That appears to be the Liberal view, and I heard the Leader of the Liberal Party say last week that we would get no more Socialism. I have news for him. Socialist measures and policies of the past have a habit of living on. Nationalisation, the war on the self-employed, the insatiable partiality for State employment and the obsession with price and profit restraint cannot be switched off like a bad television film or a party political broadcast. That is not the way these things work. There will be no end of Socialism until there is an end of this Socialist Government.

    The hon. Gentleman is right to say that Socialism tends to live on in its effects of increased bureaucracy, wasteful expenditure and lack of public participation. However, the most Socialist acts of the last 20 years have been the Industry Act 1972 and the reorganisation of local government and the National Health Service. These have all created far more Socialism than has any nationalisation, and they were carried out by the hon. Gentleman's party.

    The hon. Member may comfort himself with any arguments he likes, but we recognise the realities. He is supplying the oxygen to the Government. As politicians we understand his position, but he should not try to cover it with ambiguous persiflage and arguments about the high-minded principles of the Liberal Party.

    We are reaching the end of a chapter in our country's affairs. It is recognised outside as having been a disastrous chapter even if Labour Members do not recognise it as such. The Conservative Party and the work people of Britain have a massive job to undertake. We tell this Labour Administration to face realities, even if the Liberals will not, that they are done for. We tell them to stand aside with what grace they can summon and we tell them to make way for a new Government who will bring stability to our uncertain nation in the storms through which we still have to pass.

    Mr. Speaker desires me to make the following statement to the House. Six Privy Councillors and many hon. Members who have sat patiently through the previous three days of debate on the Budget have communicated to Mr. Speaker that they are anxious to catch his eye during today's debate. Although it is clear that some hon. Members are bound to be disappointed by failing to be called, it will enable the Chair to call more hon. Members if those who are fortunate enough to catch the eye of the occupant of the Chair will try to exercise self-discipline in the length of time they take.

    4.51 p.m.

    The hon. Member for Guildford (Mr. Howell) has told us, if I understand him aright, that the Conservative Party is in favour of some sort of pay policy. It is interesting to know that, and I hope that that statement goes for his hon. Friends.

    He also appeared to tell us that it is Conservative policy to take monetary policy to some extent out of the control of Government and Parliament. That is even more interesting, and we shall await further elaboration of his views from his hon. Friends.

    Like my right hon. Friend the Chancellor of the Duchy of Lancaster, I am anxious to examine the real underlying problems facing the country rather than to spend time on the price of petrol or the vacillations of the Liberal Party. I only wish in passing to congratulate the Liberal Party on having discovered that even a little power implies a little responsibility. Perhaps the Liberals will go on to learn that it is wiser to make up their minds first and to talk afterwards, in politics as in many other fields.

    I believe that the Chancellor of the Exchequer was perfectly justified in selecting oil and petrol, amongst other taxes, for some of the rises in revenue required to give the income tax reliefs in his Budget. It is not necessary to have worked in the Treasury to discover that the nature and object of taxation is not to please, but to displease as little as possible.

    I agree with my right hon. Friend the Chancellor of the Duchy of Lancaster that the real question facing the House and the country, and it goes very much deeper, is how we can get an effective enough voluntary incomes policy to make full employment and growth again possible in this country. My first priority in all this is full employment, which means, of course, full production and higher living standards. I believe that that is perfectly possible.

    It is only unrestrained collective bargaining in recent years and the resulting pay explosion of 1974–75 that have made full employment temporarily impracticable. This is true, as my right hon. Friend says, not only in this country but in the main industrial Western countries to a greater or lesser degree in the 1970s. That is why I believe that in the United Kingdom a new incomes policy is even more important than Budget policy and monetary policy.

    Indeed, one cannot have a Budget policy at all unless one has an incomes policy. At the moment I understand—my right hon. Friend will correct me if I am wrong—that £25 billion of Government expenditure is made up of payments of wages and salaries by the Government. To those who think that one can have a Budget policy without an incomes policy—and until today we thought that was the attitude of the Opposition Benches—I shall put this question: what do we do if there is a 20 per cent. increase in a few months in all wages and salaries, which would increase by 20 per cent. the £25 billion being paid out in Government expenditure? What becomes of Budget policy then?

    I apologise for baldly stating one or two blunt economic facts that seem to me to lie at the heart of our problems and the problems of some other countries and that some people are wishfully ignoring. The first is that if pay rates in money terms rise faster on average than the supply of goods and services available overall, prices must rise. That is an arithmetical truism that price control cannot alter, because the value of all goods and services sold must be equal to the total value of money spent on them. What price control can do usefully is to make the prices of some goods lower at the cost of making other prices higher, and there are times when that may be well worth doing.

    Secondly, if after prices have been forced up by a pay explosion the Government simply increase the quantity of money sufficiently to employ everyone at the higher rate of pay, prices must increase still further. That was beginning to happen in this country in 1975.

    From those two arithmetical truths it follows that a sharp practical dilemma is bound to confront any Government of any party in those circumstances. After a pay explosion and the resulting price explosion the Government can only do one of two things. They can expand the quantity of money in which case prices rise faster and we move towards the South American solution. This is perfectly possible, and it means that prices and incomes rise by a greater percentage year after year. Or, and this is the only alternative, having got into this situation, the Government can halt monetary expansion, and then for a time unemployment must rise.

    The other arithmetical truth, which I beg the House to grasp, is that, given a stable quantity of money, a rise in pay rates must mean a rise in unemployment. That is a point that people who are demanding rises in pay rates have not grasped. The practical implication is that in these circumstances only by pay restraint of some kind can we get the full employment that we all want. That is where we have got to in 1977.

    The level of unemployment in this country in the next few months is thus dependent almost entitrely on the rise in pay rates that occurs. The steeper the rise in pay rates, the higher will be unemployment. This emphatically does not mean that Keynes was all wrong in believing that there was a time when one could maintain full employment by managing demand. This is what extreme monetarists ignore.

    One can achieve full employment by managing demand on two conditions. The first condition is that pay rates do not rise faster than the supply of goods and services available. The second condition is that surplus capacity exists. In those two circumstances the Keynesian argument is valid. Far from Keynes having ignored this, he actually predicted the present dilemma in a particularly farsighted section of the employment policy White Paper of 1944, which he inspired and of which I shall quote just one sentence. It says:
    "Action taken by the Government to maintain expenditure will be fruitless unless wages and prices are kept reasonably stable."
    That is the point we have reached after 33 years, and our present situation endorses rather than contradicts what Lord Keynes then said. This means not that demand management has failed, but that demand management is impossible without cost management. That is not particularly surprising, because the level of employment, after all, depends on the ratio of demand to costs.

    If we prevent money demand falling too low—as in the 1930s and at other times—or prevent money costs rising too high—as in 1974–75—we can, given time, achieve any level of employment we wish. The idea now becoming fashionable, that for some mystical historical reason full employment is impossible, is sheer nonsense. We heard all that in the mid-1930s. What rubbish it looked 10 years later!

    Again, I agree with my right hon. Friend the Chancellor of the Duchy of Lancaster. In practice three courses of action are open to a modern Government who are faced with the pressure of collective bargaining. First, they can restrict money supply and balance the Budget, and have no incomes policy. Until today I thought that that was the policy of the Conservatives. The result of such an approach in the United Kingdom today would be seven or 10 years not merely of high unemployment, but of stagnating production and lower investment. That must mean the decline of this country into a third-rate Power—which is the fact that the pure monetarists do not adequately or honestly face.

    Secondly, the Government could gaily reflate without any incomes policy. That is all too easy for a Government if they wish to do so, and that is what some of my hon. Friends, understandably but, I think, unwisely, recommend at present. I beg those who recommend that course of action to realise that in present conditions that would mean prices rising rapidly and accelerating towards the South American spiral, and we all know how that has often ended.

    Unless one is prepared seriously and candidly to accept that spiral as the normal state of the economy here, with perhaps a 30 or 40 per cent. rise in prices every year, one cannot honestly advocate unrestrained reflation and no pay policy. I believe that in that way would lie catastrophe for this country and suicide for any political party that led the country into it.

    The only practical way is the third way, which is to reflate gradually, with a firm control of the money supply and the Budget, in step with a long-term, flexible incomes policy, which must cover dividends and prices as well as wages and salaries. I believe, indeed, that it is just because stage 2 has been reasonably successful that unemployment is now falling.

    At the request of Mr. Speaker we have to keep our contributions brief, and therefore I cannot go into the details and intricacies of incomes policy. However, it should not have needed the British Leyland toolmakers to demonstrate what has always been the central long-term difficulty of an incomes policy.

    I greatly regret that my right hon. Friend is under such pressure of time, because he is coming to the point of predicting that unemployment will fall, and no doubt he wants to say that it will fall without providing any evidence of why that will happen.

    It is a statistical fact that over the past three months, seasonally adjusted, unemployment has been falling. I could be wrong, but I believe that it has fallen because stage 2 has held, and, given that degree of restraint, I believe that unemployment will continue to fall.

    The fundamental and serious difficulty of an incomes policy is to combine the essential movement of relativities inside the pay structure with the restraint of the average increase. That is the essential problem before the country. I do not see myself how it can be solved in the long run without some sort of independent referee authority which would give final rulings on pay claims. If that could be organised, and if it were successful, we should be on the way to solving the really basic problem. Only practical experiment could show whether it would be successful. It is emphatically not a matter of theory. So I say for heaven's sake let us try it.

    But what an ironic tragedy it is that in this crisis in our national fortunes we have loaded upon ourselves the extraordinary handicap of the common agricultural policy. Just when we are forced to invite the public to exercise sever pay restraint, the Government are compelled by the 1972 Treaty of Accession gratuitously to raise the price of food, in some instances by as much as 50 or 100 per cent.

    It is interesting that no one in this debate has mentioned the EEC and the "great home market" that was to solve all our problems. In our last EEC debate on 16th March I estimated the cost of the CAP to our balance of payments at £500 million net for 1976. A few days after that, Mr. Wynne Godley and his fellow Cambridge statisticians provided a much more expert estimate of £650 million for 1977. Once more, therefore, I must apologise to the House for having under-estimated the damage which the Common Market would do to this country.

    Mr. Wynne Godley added that if the EEC Commission's present proposals were accepted, the burden on the United Kingdom balance of payments would rise to £900 million a year or more. To that we must add the £1,200 million increase in our trade deficit in manufacturing goods which we have incurred with this "great home market" since we joined.

    The stark truth is that the total balance of payments burden resulting from membership is therefore now approaching £2,000 million a year. That was one major cause for the fall in the pound last autumn, a factor which then caused food prices to rise still further. This gratuitous burden has been loaded upon us at a time when price and pay restraint are so crucial. This is the responsibility of all those who voted for the European Communities Act, and this is the burden which must be removed if our national fortunes are to be fully restored.

    5.8 p.m.

    My hon. Friend the Member for Cornwall, North (Mr. Pardoe) and my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) have already outlined my party's general view of the Budget strategy. I do not, therefore, wish to trespass on the time of the House for too long. That general strategy is, however, one which we support. We think that it is necessary that the Government should be given the breathing time that is required to secure a sensible pay agreement and further control over the rise in prices in the coming few weeks. That is the stability to which I have constantly referred in previous speeches and which the hon. Member for Guildford (Mr. Howell) was so ready to deride.

    I believe that it is right to make a start on shifting the burden of taxation from direct to indirect taxes. The Chancellor said that this is not the year to make a major shift of this nature, but nevertheless he has shifted the burden of income taxes from 51½ per cent. of the whole tax revenue to 48 per cent., and we regard this as a move in the right direction. Obviously, it does not go far enough. We want much more to be done, but this is a significant turning point.

    I think that it is unfortunate that the Chancellor did not take the opportunity to raise some of the revenue from indirect taxes by going for a single rate of VAT at 10 per cent. That would have brought in more than the vehicle excise duty and the petrol duties combined. It would have also given him an opportunity to raise the VAT threshold from the present £5,000 level. That level should be raised soon, as it has never been changed in the light of inflation. Raising the threshold of VAT and having a single rate would make that tax simpler to administer.

    I admit that a 10 per cent. rate would raise the retail price index, but I have never believed that one can disguise the real effect of inflation by tinkering with mechanisms of this kind. That is not a sufficiently weighty reason for rejecting our course of action. This is an issue that we shall raise again with the Chancellor.

    Is the right hon. Member aware that many of us have sympathy with the view that he has outlined? However, with phase 3 negotiations about to start this is the worst possible time to put such an imposition on prices across the board. Although I sympathise with his plan, I think that this is the least appropriate time to make such an introduction.

    If the hon. Member asks around among trade union leaders he will find that they have sympathy with this point of view as well. While we all regard any increase in prices as undesirable, VAT would spread that increase across the community as a whole. Some of the proposals in the Budget mean that the effects have been particularly severe on certain individuals in our society.

    The hon. Member for Guildford in his best Cambridge Union—or was it Oxford?—form this afternoon referred to the Liberal Party. I make no complaints about that. If the Liberal Party adds a little to the joy of politics, there is no harm done, and we shall not take his sallies too seriously. I shall take him up on three points. He said that the business community was very worried about the Budget. That may apply to the Tory moguls whom the hon. Member wines and dines. They may well be unhappy. But in reality the stock market rallied after the Lib-Lab agreement and it steadied even further after the Budget. So there is no factual evidence to support the hon. Member's remarks.

    I shall give way to the hon. Member in a minute. His second point was that we should stop asking "What would you do?" That was a very moving plea, and I shall not ask him what he would do. As he said, this needs more discussion.

    Thirdly, he accused my party of supplying oxygen for the present Government. What is the difference between the present Government's position and his party's position in March 1974? The only difference I can see is that we should have been supplying the Conservative Party with not only oxygen but splints and blood tranfusions. It had no parliamentary majority for what it sought, so it must not be too jealous of this agreement.