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Commons Chamber

Volume 931: debated on Monday 9 May 1977

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House Of Commons

Monday 9th May 1977

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions


Oil Slicks


asked the Secretary of State for Trade whether he is satisfied with the contingency plans of his Department for dealing with oil slicks.

Contingency plans to protect the coasts from pollution have been tested by exercises and live incidents and shown to be generally satisfactory. Nevertheless my Department constantly endeavours to improve its capability in order to meet changing circumstances, such as the additional pollution hazards of offshore oil exploitation.

In the case of the recent Ekofisk blow-out, the blow-out preventer was wrongly fitted upside down. Does that not indicate a need for close: inspection? Since such incidents as the Ekofisk blow-out and the tanker which is today reported to be grounded off the coast of Germany could have disastrous consequences, what additional steps are the Government taking to ensure that the oil companies face up to their responsibilities to provide vessels to fight fires, to deal with pollution and to prevent damage to fishing grounds and coastlines?

The first part of my hon. Friend's question is a matter not for me but for the Secretary of State for Energy. As for the responsibilities of oil companies, the specific point that my hon. Friend has mentioned is being closely investigated with the oil companies. There is a Standing Committee on Pollution Clearance at Sea, and a whole variety of other methods have been established to ensure that there is the closest coordination between all organisations and parties which have some responsibility in this area.

Is the hon. Gentleman aware that I am grateful to him and to a galaxy of Ministers who have been explaining to me the precautions against pollution? The public will be grateful to the Government for the plans they have drawn up. Is he also aware, however, that there is still some anxiety about the chain of command and whether each local authority has sufficient resources to discharge its wide responsibilities?

This morning the right hon. Gentleman came to see the Secretary of State for Energy and, as he put it. a whole galaxy of Ministers. We had a long and fruitful discussion about a whole variety of matters that concern us all.

On the point about the chain of command, we do not wish to be complacent but we have no reason at present to consider that it has led to any difficulties. However, we are keeping the matter under review, as the right hon. Gentleman knows. The point about local authorities is a matter for the Secretary of State for the Environment, but I do not believe that there is cause for anxiety on this score, although the level of resources must be increased, and this matter is receiving careful attention.

Is the hon. Gentleman's Department responsible for evaluating the effect of pollution on fishing grounds? If not, who is carrying out such an inquiry and when are we likely to hear the results?

That is a matter for the Ministry of Agriculture, Fisheries and Food, but there is co-ordination with a number of Ministries involved in the matter and a joint effort is being made.

Is the hon. Gentleman aware that compensation has not yet been paid in respect of boats in Folkestone Harbour although the oil damage there took place more than 18 months ago? Will he give an assurance that he will speed this up?

I shall look at the matter, but I do not recall the hon. Gentleman previously having written to me about it. However, as he has now drawn the matter to my attention I shall certainly look into it.



asked the Secretary of State for Trade if he will make a statement on the Noise Advisory Council's report concerning Concorde engine noise during the first eight months of scheduled service between London and Bahrain and Washington.


asked the Secretary of State for Trade what action he is taking to implement the recommendation of his Noise Advisory Council on Concorde noise levels.

The report is being studied and I shall respond formally to the Council's recommendations as soon as possible.

Can the hon. Gentleman confirm that the report indicates that at both 5 km. from the start of the takeoff roll and 30 km. from the start it was demonstrated that Concorde was noisier than the Boeing 707? Does he intend to have discussions with the manufacturers about this report, also taking into account the findings of the report which was recently submitted by the Civil Aviation Authority? Will he seek an assurance from the manufacturers that they will do something to make the aircraft less noisy?

My right hon. Friend the Secretary of State has tried to keep the House well informed about the situation. Two reports have been published recently, one by the Civil Aviation Authority and one by the Noise Advisory Council. The first of those reports is based on 12 months of operation of Concorde, and the hon. Gentleman has selected only one facet of that report. The overall conclusion reached by the CAA technical report was that on arrival Concorde is on a par with the Boeing 707 and that on departure it is within the range of noise levels recorded at permanent monitoring sites by subsonic aircraft using the same runways. Those are two pertinent points that should be borne in mind.

It is clear that the first two Questions on the Order Paper are of wider interest. I hope that hon. Members whom I call will direct short questions and that we shall have short answers.

Is my hon. Friend aware that our right hon. Friend the Secretary of State for the Environment is Chairman of the Noise Advisory Council and in that capacity is party to the report which says that Concorde is significantly noisier than any subsonic aircraft? In responding to that report, will my hon. Friend recognise that he is responding to our right hon. Friend who is a party to the view which I hold—namely, that Concorde is a very noisy aircraft indeed and should not be excluded from the limitations placed upon subsonic aircraft which have resulted in my hon. Friend giving answers to the House that have been misunderstood?

I am not answering my right hon. Friend; I am answering my hon. Friend who has a peculiar view about Concorde. My right hon. Friend was not responsible for the report or the views contained in it and has expressly said so. I regret to say that once again my hon. Friend is being carefully selective.

Does the hon. Gentleman agree that in eight of the 12 months the Boeing 707 was found to be the noisiest airplane at the statutory monitoring point at Heathrow and that the average weekly traffic movements over the past 12 months show seven Concordes and 463 Boeing 707s? Can he tell us when the Noise Advisory Council and other people will turn their attention to the real target if we are serious about cutting down aircraft noise?

The answer to the hon. Gentleman's first two questions is "Yes". On the third, I do not know.

What progress is the hon. Gentleman making in dealing with the problem of secondary or reflected noise from Concordes over the English Channel which has affected a number of constituencies all the way from the South-West to my own?

I have tried to keep hon. Members who are particularly interested in this matter closely informed about the steps that the Government have taken and I have written to them a number of times. We are carrying out intensive investigations and are discussing with the French possible changes to the flight paths.

Will the hon. Gentleman confirm that the Noise Advisory Council's report was based on a CAA report which was published earlier than the one he has mentioned and that it covered only about 1½ per cent. of the Boeing 707 flights out of Heathrow, although they have proved to be generally the noisiest planes?

Does one not have to be careful in talking about the Boeing 707, because the 320-C series of that aircraft is noisier than Concorde?

Has the Minister read reports that British opponents of Concorde have addressed public meetings in New York and alarmed people by claiming that there has been a huge fall in property values around London Airport because of the operations of Concorde? Will he take this opportunity to deny that outrageous allegation?

I am tempted to say only "Yes", but I should add that it is reprehensible that there has been an orchestrated campaign to damage this aircraft and the employment of many thousands of people who are dependent upon its successful operation. The situation is being considered by the district court in Manhattan and we ought to await the conclusions of the learned judge in the case.

British Airways (Disputes)


asked the Secretary of State for Trade if he will list the disputes that have occurred at British Airways, or at BEA and BOAC before the formation of British Airways, over the last five years that have resulted in a loss of more than £1 million to the airline

Six disputes fall into this category. Industrial action was taken by cabin crew and engineering supervisors in 1974 and by TriStar maintenanace staff in 1975, when there were also problems with the integration of the cargo centre. This year there was industrial action by aircraft and catering loaders, and most recently of course by engineering maintenance staff.

Is the hon. Gentleman aware that these disputes usually take place during peak holiday times? Will he condemn the infliction of hardship on travellers as a means of industrial bargaining?

That is not a particularly constructive or helpful approach. It is not likely that industrial disputes would take place in the middle of the night when there are scarcely any aircraft movements. Of course the travelling public are inconvenienced, and one regrets that. British Airways management and the unions concerned are anxious to produce a better industrial relations scenario at Heathrow, and I believe that they are thinking positively about that.

Is my hon. Friend aware that, despite the many negotiations that have been going on at Heathrow between British Airways and the unions, there are still some sensitive points over which trouble could brew again because of misunderstandings? Will he consult the Secretary of State for Employment and ask him to offer his services to the unions and the management to prevent a recurrence of what happened some weeks ago?

My hon. Friend is right in saying that there are still sensitive areas at Heathrow. I can assure him that Ministers in the Departments of Trade and Employment are watching the situation carefully, as is ACAS. Although there may be difficulties—and one cannot be complacent about that—British Airways are taking a new initiative in employee participation with the unions, and this is to be encouraged.



asked the Secretary of State for Trade if he is satisfied with the volumes of exports recorded for the last two months; and if he will make a statement on the efforts made by his Department to improve on this performance.

No, Sir. I am looking for a greater contribution from exports towards the elimination of the deficit on the current account of the United Kingdom's balance of payments.

Is the hon. Gentleman aware that the current trend in exports is rather worrying and that there has been a slight fall? Is he also aware that the trouble lies in the incentives to export, an example of which was the recent confusion over the taxation of people going abroad to market British exports? Could he do something to encourage exporting, because the Government are not doing it at the moment?

I am certainly aware that the recent trend in exports has not been as satisfactory as we should have liked, although in February and March our exports were up by 7 per cent. on the same period last year. America's exports fell in the first quarter this year, so it is not only our exports that are encountering difficulties. In regard to incentives, I am sure that the hon. Gentleman appreciates the importance of the new regime for exporters introduced recently by the Chancellor of the Exchequer. Our latest estimate is that exports will increase by about 5½ per cent. in the next year.

Has my hon. Friend seen the report prepared by economists working for the NEDC, which pointed out that the difficulties with exports were arising from non-price factors, particularly design, quality and delivery dates? Does he agree with the report's conclusions which highlighted these reasons for our not maximising export effort?

I am sure that non-price factors are important, although it is impossible to quantify them precisely. British exports have generally always had a high reputation for quality, but not always for delivery. I think that the emphasis that the Government have given to securing export-led growth for our economy by a tight monetary policy on the home market should ensure that once the export drive gets under way it will be sustained and will not be broken off short.



asked the Secretary of State for Trade what is his policy towards trade with Japan following his recent visit.


asked the Secretary of State for Trade what further measures he proposes to take to encourage Anglo-Japanese trade following his recent visit to Japan.


asked the Secretary of State for Trade what proposals he has for reversing the current trend in the balance of United Kingdom trade with Japan.


asked the Secretary of State for Trade, following his recent visit to Japan, what action is proposed regarding the United Kingdom's trade relations.

During my discussions with Japanese Ministers and business leaders, I stressed that a satisfactory trading relationship could not be achieved without a substantial increase in British exports to Japan. I look forward to Japanese co-operation in improving opportunites for imports from the United Kingdom and in continuing to restrain sensitive exports. The Government will continue to give strong support to British business men wishing to sell in Japan.

because, unlike the Leader of the Opposition, the ordinary person in the street is fed up with the fact that Japan is seeking to destroy vital industries in this country while refusing to accept British imports on the same terms as we accord to Japanese imports?

When in Tokyo I made perfectly clear to the Ministers concerned that we looked to an improvement in our exports to Japan and that the Japanese Government and industry could assist in that respect.

Does the Minister think that the tone of his remarks in Tokyo helped our relationships with Japan, particularly on a trading basis? Will he confirm that many of the so-called non-tariff barriers affect domestic products as they affect imported products? Is it not true that British manufacturers who set out to be as efficient as their Japanese counterparts enjoy a considerable measure of success when exporting to Japan?

The hon. Gentleman asked whether I thought my remarks in Tokyo helped our relations with Japan. When one discusses matters with another Government, it is best to make clear the anxieties that are felt at home. I made that perfectly clear, and I do not think it was misunderstood or that it in any way harmed our relations with Japan. Of course British manufacturers must produce the right product, but they find by experience that it is peculiarly difficult to sell in Japan even when products are competitive. This relates to reasons the removal of which could be assisted by the Japanese authorities.

Does the right hon. Gentleman share the scepticism of his hon. Friend the Member for Bolsover (Mr. Skinner) in recognising the futility of trying to improve the balance of payments by ministerial edict? When invisible earnings are taken into account, is it not arguable that our total trade with Japan is in surplus?

I do not expect to improve the balance of payments by ministerial edict. I believe that the Japanese Government could bring a certain influence to bear in terms of the level of Japanese imports. As for the level of invisible earnings, that matter has been discussed on many occasions. It is clear that invisible earnings are an advantage to this country, but they do not come anywhere near balancing our deficit with Japan.

May I congratulate my right hon. Friend on the frank and novel way in which he spoke to the Japanese Government and industry, which undid some of the harm caused by the visits made to Japan by the right hon. Lady the Leader of the Opposition? Will he consult the Department of Industry and tell its officials to keep an eye on the industries set up by Japan in this country, since those industries are not becoming manufacturing industries but instead are assembling plant and components imported from the Far East?

The matter to which my hon. Friend refers is one for my right hon. Friend the Secretary of State for Industry. My hon. Friend will no doubt know that the Department of Industry has brought pressure to bear on Japanese investors in this country to use locally-made components.

Since the communiqué issued after the recent summit meeting laid great stress on giving the Tokyo Round negotiations another boost, may I ask whether the Prime Minister of Japan and the President of the United States gave any indication of their wish to give the multilateral trade negotiations further help by reducing tariff barriers to our exports, since these are considerable in both countries?

I discussed this matter on a recent visit to Washington, and when in Tokyo I met the Japanese Prime Minister. Both countries felt it necessary to give an impetus to multilateral trade negotiations. This means removing non-tariff barriers which currently impede our exports to those countries. The problem in Japan, however, is not primarily a matter of formal obstacle. The trading system there does not allow freedom of imports in the same way as does the trading system in European countries.

In talking to firms in this country which wish to increase their exports, will the right hon. Gentleman encourage them to emulate British Leyland, which has taken the step of setting up its own offices in Tokyo with a view to pushing ahead with its exports?

Yes, Sir. Many British firms have devoted considerable efforts to increasing exports to Japan, and in the last five months for which we have figures in sterling terms the value of our exports shows a 42 per cent. increase over the equivalent period in the previous year. There is no doubt that currently British industry is making substantial efforts to export to Japan, but we could do even better if there were a change of attitude on the part of the Japanese.

A M Devereux Ltd


asked the Secretary of State for Trade if he will seek an early meeting with the Official Receiver in companies liquidation with regard to the case of Messrs. A. M. Devereux Limited, in view of the continuing delay in resolving the liabilities of the company and making payment to the outstanding creditors.

A receiver for the debenture holder of A. M. Devereux Limited is in possession of the assets, and he is required to pay the preferential and debenture holder's claims. I am not in a position to intervene.

The Official Receiver, as liquidator of the company, cannot make any payments to the ordinary unsecured creditors until the receivership is completed and any surplus funds then remaining are paid over to him.

Is it not intolerable that one of my constituents, a former employee of this company, has already had to wait more than four years for the arrears of wages and holiday pay which are due to him? Is the Minister aware that as long ago as August 1974 the Official Receiver said that this case was almost completed, and yet we now have more difficulties emerging in correspondence and we are told that the Inland Revenue has created more difficulties? How much longer will this saga continue? Will the Minister bang a few heads together and get things moving?

I have already told the hon. Gentleman that I cannot intervene. If his constituent has any problems about the conduct of the Official Receiver, he has available to him recourse to the courts under Section 80 of the Bankruptcy Act. The receiver inherited a number of difficult accounting problems and he had to wait for the new accounts to be published. He hopes that those accounts will be finalised in three months' time.

European Community


asked the Secretary of State for Trade whether he is satisfied with the United Kingdom's trade with the EEC.

No, Sir. I am looking for a further improvement in our visible trade position with the Community, following the reduction of some £270 million in our deficit with it in 1976.

Is the Minister aware that since we joined the Community in January 1973 we have accumulated a total trading deficit of over £8,300 million and that this figure is now running at an annual rate of £2,500 million? Is he further aware that our trade with the Common Market represents 38 per cent. of our world trade yet 57 per cent. of our total trade deficit? Since we cannot allocate invisibles to trade areas, does he not agree that this terrible deficit must in some part be the cause of the decline in the value of sterling last year?

The hon. Gentleman has spelt out the size of the total trade deficit since 1973, and I agree that it is far too large. But it is also true to say that since 1973 our trade has deteriorated in respect of our other main industrialised partners, namely, the United States and Japan—marginally in one case but significantly in the other.

The hon. Gentleman should be fair in taking account of some offsets that exist, partly in terms of monetary compensation amounts, which at the lowest point of devaluation were worth £400 million a year. In terms of invisibles we have had a surplus in the EEC of £350 million in one year and of £150 million in the next. Those figures are very much lower than the deficit on invisible trade, but they are not insignificant.

Is my hon. Friend aware that our trade deficit with the EEC is now four or five times greater than our trade deficit with Japan?

In view of what has been said in other replies about our trade with Japan, will the Minister confirm that the EEC offers a vast assured home market if only this Government would make it possible for the goods to be produced?

The question of whether it is an advantage that there is a mutual reduction of tariffs must be seen in the context of the changing pattern of trade and the size of the deficit or surplus. I do not think that the existence of that assured market has yet quite produced the results which some hoped to see from it.

Does my hon. Friend recall that, as an anti-Marketeer, he argued on platforms against British entry into the Common Market on the basis that we should not be able to supply this 250 million population-type market with our consumer durables even though we should be buying its food? Second, does my hon. Friend know that at the county council elections in my constituency of Bolsover the other day several anti-Marketeers stood on the platform of still being against the Common Market, that every one of them was returned and that we made a Labour gain as well?

Many conclusions have been drawn from the anti-Common Market stance taken by candidates at the recent elections. Whatever be the truth about that, however, there is no alternative in the short term but to improve our competitiveness and our productivity and to reduce the margin which separates us and the EEC, since there is no reason why, in terms of manufactures, we cannot further reduce the deficit considerably.

Is there any evidence whatever to show that, if we had not entered the Community and we still had a substantial tariff barrier against our goods into the EEC, and vice versa, our deficit would not be even greater than it now is?

The evidence on that point is conjectural, but I shall allow it to the hon. Gentleman that interest rate differentials and differentials in domestic inflation rates are considerably more important in modern trading conditions than are relatively small changes in tariffs.

Investment (Heads Of State)


asked the Secretary of State for Trade if he will introduce amending legislation to the Companies Act 1976 to ensure that the investments of the Royal Family and Heads of other States will be subject to the same disclosure as those of commoners.

As the Government have declared that they favour wider disclosure, is not this special secrecy positively feudal? Second, what is to prevent relatives of foreign potentates each taking up to 5 per cent. of shares in a British company, thus acquiring control unknown to the British public, to the company concerned and to its employees?

The object of the section in the Act was to deal with the problem of warehousing. That is what it effectively does, and the section is drafted for that purpose. Under the section, if anyone holds 5 per cent. this has to be revealed, and the exemption does not cover that. My hon. Friend asks whether it is possible for a large number of people associated in a family to acquire control of a company by each acquiring less than 5 per cent. Under this system it is one of the functions of the Bank of England to police exactly that sort of undesirable happening.

Trade Balance


asked the Secretary of State for Trade if he will make a statement on the latest balance of trade position.

There has been an underlying improvement in the United Kingdom's balance of payments position in recent months, which is expected to continue through 1977.

I thank my right hon. Friend for that reply, but is it not true that, although free trade might be a fine principle, imports come too easily into this country, with substantial effect on the textile and footwear industries and now also on special steels? Is he aware that the Japanese are now talking about taking 20 per cent. of our gardening tools market? Further, on the question of exports, will my right hon. Friend have a word with his right hon. Friend the Secretary of State for Energy about the surplus coal in this country? Why cannot we export it to the EEC in place of the imports which are coming from countries outside the EEC?

It is one of the objects of the multilateral trade negotiations, which the leaders at the summit asked should be given impetus, that trade should be free of impediments to exports and imports. In the specific areas to which my hon. Friend referred, the Government have taken action. For example, they have taken action in respect of footwear, although I know that further representations are to be made to me, and they have taken action in respect of steel and special steels. As regards textiles, my hon. Friend knows that the situation is currently the subject of the renegotiation of the multi-fibre arrangement. I shall certainly discuss the point about coal with my right hon. Friend.

Does the Secretary of State appraise our present trade position as Mr. Sam Brittan has suggested, from the point of view of a model of modern mercantilism? Second, in connection with the multilateral trade negotiations, does the right hon. Gentleman accept that the principles of the common agricultural policy are entirely open to be renegotiated in the course of those negotiations?

As regards the standpoint from which I appraise the multilateral trade negotiations, I suggest that the hon. Gentleman reads the 54-page lecture which I gave but which I hesitate to summarise at the moment. As for the part to be played by the common agricultural policy in the multilateral trade negotiations, it is quite understood that the multilateral trade negotiations cannot affect the general principles of the common agricultural policy.

That has been accepted as part of the European position in these negotiations, and I think that the United States also accepts it. That does not mean that other forms of action may not be possible in regard to agriculture.

I have not had the advantage of reading my right hon. Friend's 54-page lecture, so will he tell the House, in view of all the various statements made today which underline our point that we have effectively gained nothing out of being in the Common Market, whether in any part of that lecture he spells out what tiny advantages we have got from being in this monstrosity?

In the course of the lecture I briefly referred to our membership of the European Economic Community and I indicated some of the advantages in trade negotiations which have accrued to us therefrom. For example, in the specific area of textiles and the negotiation of the multi-fibre arrangement, I assure my hon. Friend that the views of this country would weigh a great deal less were they not associated with the views of eight other important trading nations.

I have not had the benefit of reading the right hon. Gentleman's lecture, but does he not agree that, unless some details of the common agricultural policy can be renegotiated at Geneva, there is a danger of the Geneva negotiations being fouled up altogether? Further, will he seek at Geneva to obtain some redefinition of anti-dumping?

As for whether the negotiations are likely to be fouled up, I believe that there is now a better understanding in Washington of the position of the European Community in respect of agricultural policy. I discussed this matter when I was in Washington, and I do not believe—although, of course, no one can at this stage guarantee it—that the problems of agriculture will prevent the successful outcome of the multilateral trade negotiations. As for anti-dumping, one of the issues which, I know, a number of countries involved in the multilateral trade negotiations wish to discuss is the problem of subsidies, and we should certainly like to see the United States Government bring their domestic legislation on countervailing into line with what was agreed by the constituent Powers many years ago.

Car Imports


asked the Secretary of State for Trade what was the total import penetration of the British car market by foreign producers for the first three months of this year compared with the same period of 1976.

According to figures from the Society of Motor Manufacturers and Traders, import penetration of the United Kingdom car market in the first three months of 1977 was 42·8 per cent., compared with 34·7 per cent. in the same period last year.

Does the hon. Gentleman realise that the situation is still giving rise to considerable concern and that in January this year, for example, we exported only 103 British cars to Japan, compared with 162 in the same month last year? What improvement does the hon. Gentleman expect in the export of parts and components to Japan as a result of the buying mission which came to Britain in March?

Certainly I agree with the hon. Gentleman that there is considerable concern about the trading position in respect of our motor car industry. The basic problem remains that we have to produce sufficient cars to meet domestic demand and also the demands of overseas markets. With regard to the export of commercial vehicles and components, we have a very substantial surplus, although certainly in the case of trade with the EEC it does not match the deficit on trade in cars. I cannot give a direct answer to the hon. Gentleman's last point but will certainly let him know.

What estimate has been made of the possible total import penetration if the policy of the Conservative Party had been pursued and British Leyland had been allowed to collapse and Chrysler had withdrawn from this country? Will my hon. Friend in a positive way support the "Buy British" campaign to help the British car industry in this country?

The consequences had British Leyland and Chrysler been allowed to collapse are virtually unimaginable. There can be absolutely no question of this, whatever Opposition Members may say while they remain in Opposition. With regard to the point about the "Buy British" campaign, there is a major difference between us and some of our competitors inasmuch as there is a natural nationalistic desire on the part particularly of the Germans and the Japanese to buy their own products. That desire does not, for various reasons which can be conjectured, appear to be developed here to the same extent. I assure my hon. Friend, however, that we are very well aware of this and that, in ways which I cannot publicise, we are seeking to take measures in this direction.

Is the Under-Secretary able to relate the import penetration to production figures in this country for the first three months of this year? Can he also tell the House whether his Department will be making representations to the Government about the new Mini development and its place in international trade?

I cannot closely relate import penetration levels and production in the first three months, particularly because, following disputes such as those we have seen, although certainly some sales are less and increased imports result, there may be a delay rather than a loss in other cases. The new Mini is a matter for my right hon. Friend the Secretary of State for Industry, and certainly close consultations about this are going on at the present time.

Will my hon. Friend liaise with his right hon. Friend the Chancellor of the Exchequer about the unfair competition which exists between those who sell British cars and those who sell foreign cars? Will he accept that there is a great economic and financial advantage to the car purchaser to take up an offer from Fiat, Datsun, Toyota and Volkswagen because of their low interest charges? Does he further accept that in this respect the position when buying from British Leyland militates very unfairly against the British car industry, and that this is one of the major factors in persuading the British buyer to buy foreign cars? Will he accept that it is simply a matter of economics and that there is unfair boosting from foreign Governments? Finally, will he deal with this situation?

The differential in interest rates makes a considerable difference, as my hon. Friend spelt out It is the Government's firm intention, as one of our central aims in our economic policies, to reduce the level of interest rates in this country. I do not think there can be any question of subsidising the interest rate in the way that my hon. Friend seemed to suggest, but interest rates have come down very considerably in the last four months and I hope that they will continue to do so.

Latin America


asked the Secretary of State for Trade what discussions he has had with the Chairman of the British Overseas Trade Board about export promotion in Latin America.

I am in regular contact with the Chairman of the British Overseas Trade Board about the board's export promotion activities, including those in Latin America.

The Minister must be extremely worried about our lack of success in Latin America. Is he aware that only 2·9 per cent. by value of our exports went into that market in 1976, and that that was a lower figure than in 1974 or 1975? Will he say what fresh impetus the Government intend to give to marketing in that area?

Although the hon. Gentleman is quite right to quote the figure of 2·9 per cent., it compares favourably with the 2·5 per cent. for our visible exports to the Eastern bloc, Russia and Eastern Europe, and is by no means insignificant.

With regard to fresh initiatives, in the last couple of years we have organised two major British industrial exhibitions in Sao Paulo and Caracas. In Brazil, too, our largest market, we have substantially increased both our trade and investment. We recently signed a memorandum of understanding that identified particular areas for co-operation when we are trying to get increased industrial development.

What are the prospects of exports of British engineering products such as the high-speed train and the advanced passenger train, in view of the extension of railways in Latin America?

I am sure that they are considerable. At the time of the visit of the President of Brazil we signed economic agreements with that country about steel and rail development plans, in each case worth probably well over £100 million. I hope that the rolling stock that goes with the rail manufacture will follow this.

Is the Minister aware of the considerable advances being made in selling to Chile by countries such as France and Germany? Notwithstanding the Government's well-known attitude to the political régime in that country, will the Minister make clear that he has no objection to the expansion of trade with it?

As has been made clear by my right hon. Friend's predecessor, although we have embargoed military supplies, normal facilities are made available for trade with Chile and ECGD cover is available subject to normal review and normal underwriting criteria.

Civil Aviation (Bermuda Agreement)


asked the Secretary of State for Trade what progress he has made towards the renegotiation of the Bermuda Agreement.


asked the Secretary of State for Trade if he will report on the progress being made by his officials in the renegotiation of the Bermuda Agreement.

The fifth round of negotiations for a new Air Services Agreement was held in Washington from 28th March to 22nd April. During my visit there on 26th and 27th April I reviewed the position reached with the United States Ministers concerned. Although some progress has been made, there are important issues still to be resolved. Negotiations resume in London on 16th May and I hope that we can reach agreement before the old agreement terminates on 22nd June.

Does the Secretary of State expect—as opposed to hope—to get a new agreement before the old one expires on 26th June? Does he still think that it was a very clever idea to start the renegotiations six months before the change of Administration in the United States? Will he say whether he thinks that the matter of New York landing rights for Concorde being negotiated at the same time has made it more difficult or less difficult to arrive at an advantageous Bermuda Agreement for the British carriers?

I hope that there will be an agreement by 22nd June. I think there are grounds in the negotiations to make that hope justifiable—that there will be an agreement by 22nd June. But, of course, I cannot give any guarantee. There are still some substantial matters outstanding between the two Governments.

The hon. Member asked whether it was sensible to start renegotiations six months before the change of Administration. It seems to me to have been right to do it then. I know of nothing that persuades me that it was not right to do it then. It has proved possible in the last few months—notably in the round of negotions just ended—to discuss the matter substantially and, as I said in my original answer, to make some progress. I do not think the fact that we had a six months' ground-clearing period before that has hindered the situation. It has obviously helped.

With regard to whether the negotiations concerning landing rights for Concorde in New York have harmed or hindered the situation, we now await the decision of the judge in the New York court on that question, and I have no comment to make. I have certainly indicated to the United States authorities that the subject of Concorde was a serious element in the negotiations at Washington. It will now unfortunately be the courts—I should have preferred it to be the Port of New York Authority—that will resolve this matter.

Will the Secretary of State tell the House whether the prospects of getting the Skytrain service accepted in America have been improved by the present difficulties in renegotiating the Bermuda Agreement?

I do not think that the renegotiations have affected the prospects for Skytrain one way or another. The hon. Gentleman will know that, as I announced in the House, we are trying to get Skytrain into the United States by means of a separate memorandum of understanding. I discussed this matter with United States Ministers when I was in Washington. The hon. Gentleman may know that the Department of Transportation has announced that it is in favour of Skytrain being allowed into the United States. That is a most helpful decision by that Department. We now await the recommendation of the CAB and eventually the decision of the President. As I have made perfectly clear, the willinginess of the British Government to support Skytrain is an indication that we, too, believe in competition.

Will the Secretary of State oppose attempts by American airlines to abolish their favourable rate for air freight under an agreement made with the shipping agents of British airlines in view of the great assistance that it has been to the textile and other industries?

I should prefer to look into that question and then to write to the right hon. Gentleman.

Scotch Whisky Exports


asked the Secretary of State for Trade what is the current level of exports of Scotch whisky; and how this compares with the level 10 years ago.

In the 12 months ending March 1977, 93 million proof gallons of Scotch and Northern Irish whisky was exported compared with 42 million gallons in the same period ending March 1967.

Will the Under-Secretary bear in mind the unique qualities of this particular asset as a major dollar earner and source of employment in Scotland? Does he agree that it is time that these unique qualities were protected by the Government? Will he look in particular at the question of single malt whiskies and do everything possible to prevent the export of bulk shipments of this particular brand of whisky, as importers in many countries are now watering it down with inferior local rye whiskies, to the detriment of the good name of Scotch whisky?

I shall certainly look into the matter raised by the hon. Lady. I should point out that in the last five years there has been only a very slight increase in the share of total Scotch whisky exports taken by bulk exports—about ½ per cent. up to 29½ per cent. There is no guarantee that restrictions would promote equal exports of bottled Scotch. In fact, restrictions on bulk ex, ports would probably invite retaliation against bulk imports of other drinks, such as rum and table and fortified wines for bottling here.

Is my hon. Friend aware that for once I agree with everything said by the hon. Member for Dunbartonshire, East (Mrs. Bain)? Is he further aware that there is great concern among trade unionists in the Scotch whisky trade about the increasing trend towards bulk rather than bottled exports? Will he tell the distillers that that is harming not only employment prospects for workers in the bottling industry in Scotland and elsewhere but the international reputation of Scotch whisky, because many unscrupulous importers are bringing in good-quality Scotch whisky in bulk, mixing it with foreign rubbish, then bottling it and selling it under a Scotch label?

I shall certainly look at the balance of interest here in preserving both the unique reputation of Scotch whisky and employment in bottling it without losing the employment which we get from bottling imported wine and rum.

Company Directors (Statutory Obligations)


asked the Secretary of State for Trade how many reminder letters have been sent to directors of a company in default of their statutory obligation during the last 12 months; and how many of those involved were deceased theatrical managers.

In the 12 months to 31st March, the Registrar of Companies for England and Wales sent some 45,000 reminder letters to persons notified to him as directors. It is not possible to say how many of these letters may have been addressed to theatrical managers, deceased or otherwise. My Department's objective is to secure increased compliance with the law by the living rather than to engage in spiritual communication with the dead.

I thank the Under-Secretary for that assurance. Does he recognise that this Question follows an earlier Question which I put down to his Department asking why it was making frenzied attempts to contact the late Mr. Arthur Bouchier, the ghost of the Garrick Theatre? Would it not be helpful if the Department saved the taxpayers' money by ending the reminder system, or at least if its officials read history—preferably theatrical history?

The hon. Gentleman is probably making his last positive appearance on this matter. Mr. Bouchier was a famous actor-manager, I gather, at the Garrick Theatre. It may be noteworthy that two of his longest-running productions were "The Golden Silence" and "The Arm of the Law". We have not been in a state of frenzy about this matter. It would be helpful if directors of companies—I am talking of the living rather than of spirits—advised the Companies Registry when one of their number departed this soil.

More generally and seriously, is the hon. Gentleman aware that the irresponsibility of a relatively small number of companies in not complying with their obligations under the Companies Act is not only a serious clog on commercial practice but very damaging to the overburdened majority, particularly of small firms, which try to wrestle with the matter? Is he aware that he would have the support of the House if he clamped down rigorously on the minority?

The hon. Gentleman is quite right. We stepped up the number of prosecutions quite dramatically in 1976, more or less doubling the figure for the previous year. I hope that the hon. Gentleman's observations will be taken to heart where it really matters.

British Airways (Chairman)


asked the Secretary of State for Trade when he last met the Chairman of British Airways.

My right hon. Friend met Sir Frank McFadzean and his board members on 31st March.

Has the Minister had any discussions with the Chairman of British Airways about an approach to IATA in order to seek a reduction in the excessively high surcharge on Concorde fares which is likely to price Concorde out of the market, even if it is allowed to land in the United States?

Does my hon. Friend agree that it would have been better to appoint as Chairman of British Airways someone who believed in public ownership rather than someone who spent his time writing pamphlets for a centre run by the right hon. Member for Leeds, North-East (Sir K. Joseph)?

My right hon. Friend and I are concerned to have as Chairman of British Airways somebody who cares about the corporation and has proved and is proving his ability to carry out that job well. I believe that that is true of Sir Frank McFadzean. My right hon. Friend the Prime Minister has already made comments on Sir Frank's extraordinary political and economic views in other regards.

When the Minister next meets the Chairman of British Airways, will he suggest to him that he takes a holiday abroad on a package tour, travels with the Chairman of the British Airports Authority and, when landing at Heathrow or Gatwick, experiences all the frustrations which ordinary people face instead of the red carpet treatment which he normally finds?

I think that the Chairmen of British Airways and of the British Airports Authority are fully aware of the present difficulties at Heathrow and Gatwick. The hon. Gentleman knows that extensive changes are taking place at both those airports, and one unfortunate consequence is inconvenience to passengers. I hope that when the developments have taken place considerable advantage will be gained by passengers.

Companies (Audit Committees)


asked the Secretary of State for Trade if he will make a statement of his views as to the value to companies of appointing audit committees in accordance with North American practice; and if it is his intention to propose that the appointment of audit committees should now be made statutory in certain classes of company.

Proposals for the establishment of audit committees deserve attention and, as the hon. Member will recall from an answer I gave him on 14th February, they are being examined alongside the more fundamental reappaisal of the structure of companies following publication of the Bullock Report.

Will the Minister bear in mind the good sense of the New York Stock Exchange authorities, which have not only made absolutely clear their intention that all companies quoted in New York must have audit committees by the end of 1978 but left plenty of time for the companies to make the necessary preparations and for people suitably qualified for this work to prepare themselves for their responsibilities?

I am aware of the advantages which are claimed for this practice, not only in the United States but in Canada, and the hon. Gentleman does not allow me to forget that. This matter must fall within the general review of company law which relates to the publication of the Bullock proposals.

Official Report (Correction)

I have a short statement to make to the House. I undertook last Thursday to inquire into the complaints made by the right hon. Member for Knutsford (Mr. Davies) about the alteration of Hansard. I have since consulted the Editor of Hansard and have personally examined the original transcripts. As a result of this examination, I am satisfied on two points.

First, the word "always" was indeed used by the Prime Minister in the context to which the right hon. Member for Knutsford referred. Secondly, the omission of the word from the record was due to a simple administrative slip on the part of the staff of the Official Report. There is absolutely no evidence to suggest that it was done deliberately or following any intervention.

The two shorthand records of the Prime Minister's words contained two different versions—one including the word "always" and one without it. These two versions should have been checked and reconciled before being printed, but because of an oversight this was not done. I have since taken steps to have the record corrected.

We should all remember the devoted service given to the House by the Hansard staff, often under conditions of great difficulty, and we should be very grateful for the care that they take to record our words in this Chamber.

I thank you for going into this matter, Mr. Speaker. I endorse your words on the subject of the Hansard staff, who have always given me the greatest help and consideration.

Naturally, I withdraw any kind of suggestion that the Prime Minister or anyone acting on his behalf sought to intervene on this matter.

The correction to which you have referred leaves the matter of substance enduring, and of course we shall want to pursue that with the Prime Minister in the normal way.

Heads Of Government (Downing Street Meeting)

With permission, Mr. Speaker, I should like to make a statement on the Downing Street Summit, which was attended by the Presidents of France and of the United States, and the Prime Ministers of Canada, France, Italy and Japan and the Chancellor of the Federal Republic, as well as the Finance and Foreign Ministers of the countries represented, and yesterday by the President of the European Commission.

Nearly a year has elapsed since our meeting in Puerto Rico, and there was a general wish among the leaders of the major industrial democracies to consult, to exchange experiences and ideas and to harmonise as far as possible our responses to our shared problems, recognising that our well-being is bound up together. Our discussion had the purpose of agreeing a common analysis, and so a common approach.

We have been able to share our views with the new American Administration and to review the state of the world's economy and examine our present policies as a whole. We have reviewed our policies to combat inflation and unemployment and discussed the policies that will be needed to reach a successful conclusion of the Conference on International Economic Co-operation. We also readily responded to President Carter's call for a close examination both of the need to conserve energy and of the dangers of nuclear proliferation.

Let me briefly restate seven target areas where we pledged ourselves to action. First, we agree that our most urgent task is to create more jobs, including special measures for young people, and that hand in hand with the fight against unemployment is the fight against inflation. Inflation destroys jobs, corrodes democracy and undermines economies strong and weak.

Secondly, Heads of Government committed themselves to maintain their tar- gets for economic growth or for stabilisation policies. We recognised that growth rates must be maintained in the stronger economies, increase in the weaker economies, and inflation tackled successfully in both, if we are to cut unemployment and provide a basis for sustained non-inflationary growth.

If countries concerned seem likely to fall short, they will adopt further policies to achieve their targets. This should give added stability and confidence.

Thirdly, we committed ourselves to seek more resources for the International Monetary Fund and to support the link between its loans and the adoption of appropriate stabilisation policies. Such facilities are essential if countries now in balance of payments deficit are to maintain reasonable levels of internal activity and foreign trade so that the world can avoid the danger of new trade and payment restrictions.

The danger of new trade restrictions also prompted our fourth pledge: that we would work to expand opportunities for world trade by giving a new impetus to the multilateral trade negotiations originally launched at Tokyo in 1973, whilst not removing the right of individual countries to avoid significant market disruption.

In view of the increase in demand for energy and oil imports, which is placing increasing pressure on finite sources of fuel, we pledged ourselves to greater energy conservation and agreed on the need for greater exchanges of technology, joint research and development for the efficient use of energy sources, including the improved production and use of coal.

This brought us face to face with the nuclear dilemma. The present generation has an awesome responsibility for the future of mankind. We agreed to launch an urgent study, the first stage of which we intend will be completed within two months, of how to reconcile the world's demand for nuclear weapons. Our initial studies will be concerned with the terms of reference for evaluating the nuclear fuel cycle internationally.

Our seventh pledge was to the world's poor, for whom the impact of the oil crisis and the world recession has been devastating. The countries attending the Summit agreed to do all in their power by means of trade, aid and finance to help the developing countries towards a just share in the sustained growth of the world economy. We should work for a successful conclusion of the CIEC in Paris at the end of the month. We also invite the COMECON countries to join us in this, the only war worth fighting—the war on want.

We placed on record a welcome for the work being done to achieve international agreement to eliminate irregular practices in international trade, banking and commerce.

The text of the Downing Street Declaration, together with the fuller Appendix issued with it, will be published in the Official Report.

Mr. Speaker, all of us recognised the difficulties of raising standards, or in certain countries even of maintaining them, and the problem of overcoming unemployment. But we shared a common determination to succeed, and we ended our discussions with the confidence that our democratic systems have the resilience and the inner strength to surmount our present difficulties.

It is our perception that the world economy is one and must be managed increasingly as one. This weekend the seven leading industrial democracies pledged themselves to a programme aimed not simply at their own future prosperity but in working for that prosperity to be more fairly shared in a safe and peaceful world.

Mr. Speaker, all of us recognised the difficulties of raising standards, or in certain countries even of maintaining them, and the problem of overcoming unemployment. But we shared a common determination to succeed, and we ended our discussions with the confidence that our democratic systems have the resilience and the inner strength to surmount our present difficulties.

It is our perception that the world economy is one and must be managed increasingly as one. This weekend the seven leading industrial democracies pledged themselves to a programme aimed not simply at their own future prosperity but in working for that prosperity to be more fairly shared in a safe and peaceful world.

I thank the Prime Minister for making that statement, and also congratulate him on having the Summit at Downing Street and on his part in presiding over it.

I have three points to put to him. Because I received his statement only shortly before he rose, I took the opportunity to look at other communications from other similar conferences in Rambouillet and Puerto Rico. I found that they are all very similar in what they say about inflation, unemployment, the need for recovery without inflation, the need not to have protectionism, to conserve energy and to renew confidence. Will the Prime Minister agree that one should not expect too much to emerge in practical terms from the Summit? This is a serious point: will he agree that the greatest value of such conferences is the meeting and understanding between the leaders of the great industrial nations which, in itself, is worth achieving?

Will he be bringing forward any practical proposals as a result of this Summit? Will he agree that the most practical item to emerge—and we welcome it—is the help to the Third World and the decision to establish a fund to stabilise commodities?

Finally, as this was a very important conference, what steps did he or any other Heads of State or Ministers from other countries take to see that women are represented at these conferences?

I thank the right hon. Lady for her courteous comments at the beginning of her questions. It is true that the communiqués are similar when we meet, but I think that that is the measure of the depth and complexity of the problems that the world now faces. It was interesting that the Prime Minister of Japan had been present in London during the 1930s. He made an interesting contribution, in which it was made clear that the problem of unemployment now is totally dissimilar from the problem as it existed in the 1930s, and indeed from the problems of the period before 1973. It is for these reasons that the Heads of Government and Heads of State need to meet at regular intervals. I agree with the right hon. Lady about that.

I do not think that enough credit has been given to the world for the successes which have been achieved, bearing in mind the pressures under which Heads of Government have been from their electorates and their own people to introduce restrictive and protectionist measures. There has been a common perception that this would lead the world into something much more like the 1930s. The fact that we have been meeting has enabled us to resist those pressures, which, however tempting they might seem in the short term, would be very damaging to world trade in the long run.

As for practical proposals, one of the more important matters to emerge has been the agreement to monitor the rates of growth of world trade in our countries, especially in those which are growing faster, so that if they fall short they have committed themselves to take new measures to ensure that they attain those targets. That is very important as a means of enhancing confidence and stability in the business community and elsewhere that investment decisions have to be taken.

As for the Third World, there were a number of proposals there on which we are working in order to bring the CIEC to a successful conclusion—such matters as stabilisation of certain export prices, if that can be achieved; funds to assist where stocks sometimes get too high, or, indeed, too low; funds perhaps to assist those countries which are deeply in debt at the moment and which suffer more than any of us. All these proposals are under consideration.

I would say to those who doubt the value of these meetings that it is not our job at these conferences—I have always taken this view—to produce a blueprint for the future. What we must try to do there is get political impetus for the direction in which we should go. Then that should be fitted into the various international bodies—the IMF, the OECD, UNCTAD and the others, of which we are part only of the membership—in order to ensure that they get results.

On the right hon. Lady's last question, I regret that no ladies were present. I shall certainly take note of her application for the post, but I cannot say that she will necessarily find that she will be successful.

May I join the Leader of the Opposition in congratulating the Prime Minister on his personal success at this summit?

I should like to ask two particular questions. What contribution will our own Government make to the study of the danger of nuclear proliferation? Second, after this meeting, has the position of the President of the European Commission at future Summits of this kind been regularised?

On the first question, we are in a favourable position to make a contribution on this matter because we are in the forefront of nuclear technology. Therefore, we shall be playing a large part in the small group which is to be set up on this matter. I hope that when we get the report, inside two months, we shall then be able to see whether we can proceed to the next stage that President Carter is very keen about—the international fuel cycle evaluation—and to see which fuel cycle would be most appropriate to the world and whether we can get some agreement on that to safeguard the world against the risks.

The future position of the President of the Commission is a matter for the Community itself to deal with and not for that conference as it stood.

Whilst warmly congratulating my right hon. Friend on the success of this seven leaders' conference and his personal contribution to it, may I ask whether he seriously believes that not only the COMECON countries but also Japan will respond more readily and liberally to the needs of the Third World?

These matters were discussed with the Japanese Prime Minister present and I had a bilateral discussion with him about this and about Japan's trading policies at Downing Street after the Summit Conference had concluded. It is not for me to speak for Mr. Fukuda, or perhaps to go into detail about what was said, but certainly he was the one who pointed out the problems of the existing situation in the world from his previous experience, going back about 40 years. I hope therefore that he will follow up his analysis with the appropriate conclusions.

As the priority seems now to be to conquer unemployment, did the Prime Minister in his discussions with President Carter get the impression that it is absolutely no part of United States policy to use protectionism, either general or narrow, to conquer their own unemployment problems in any particular field?

Everyone is under pressure in this area, including the President of the United States. He is resisting these pressures in the case of some elements of trade but not in the case of others. In all cases, certain political decisions will be taken by Governments. However, what is important is that by our standing together the general onrush for protectionism has been resisted. The resistance has become a little frayed at the edges in a number of cases, but we have achieved more success than I would have expected in this area. The President of the United States, like the remainder of us, is satisfied that to depart from that general principle would mean more unemployed in the world and not fewer.

Would my right hon. Friend please convey to President Carter the warm thanks of the people of the North-East for the pleasure and joy that he brought to their region on Friday during an all-too-brief visit?

The President thoroughly enjoyed himself on Friday. I always thought that the people of the North-East would give him a warm welcome, and they did. I am sure that not only will he never forget it but that it has strengthened the bonds of affection between him and this country.

Since it is envisaged that the evaluation of the nuclear fuel cycle which the experts will conduct may take as long as a year, was it agreed that in the meantime Britain and other countries which are engaged in the nuclear fuel cycle business should not go ahead with overseas reprocessing contracts?

The work in the nuclear suppliers' club will continue, of course, on the matter of safeguards. As regards our own possible contracts for reprocessing, until we can conclude such an agreement on these matters as the hon. Gentleman has mentioned, we shall have to reach our own conclusions, as will the United States, on the export of uranium. We are all still free to do that, but I hope that all of us in reaching our conclusions will take into account the general principles on which we based ourselves yesterday.

Will my right hon. Friend accept that the House will be thrilled to learn from him that the British Government now have much more confidence in British nuclear engineers than they have had in the past and that he is now confident that we can take world leadership in these matters? In regard to the report that my right hon. Friend will now submit to the meeting of the rich and the poor countries on 31st May, before that report on nuclear affairs goes forward will he give some consideration to the political problems which exist, in the sense that, in the United States, Germany and elsewhere, nuclear reactors and the nuclear indutry are mainly in the control of the private sector? This means that the Government control is somewhat limited over the contracts which those industries are likely to place with the poorer countries. In this country, we are fortunate in having public ownership of the nuclear industry. Therefore, will my right hon. Friend have further consultations with the committee of experts which has now been set up to see whether a common solution can be found to overcome this difficulty of the nuclear industry elsewhere remaining in private hands?

The manufacture of reactors in this country is in private hands, too, as it is in the United States or, indeed, in France. But Governments have the responsibility to impose safeguards upon the circumstances in which these reactors should be exported, the nature of the reactor and what safeguards should be evolved for the use of the spent fuel. All of these things must be overseen by Governments irrespective of whether the manufacture of the particular reactor is in private or in public hands.

Is the Prime Minister aware that we generally welcome the view that means must be found to deal with unembployment? Does that mean that there is to be a shift in Government policy to laying stress on reducing unemployment rather than reducing inflation?

No, it does not. Inflation and unemployment go hand in hand. One depends on the other. One can, of course, have a low level of inflation and a high level of unemployment as, indeed, the Federal Republic has at present. This is one of the difficulties that has led experts and authorities to conclude that the present recession is different in form from that before 1973 and certainly from that before the war.

Our position is really quite straightforward. The smaller the increase we have in earnings this year, the lower will be our rate of inflation next year. There is a direct correlation between the two. That is our task. If we have too high a settlement, our rate of inflation will be much too high in itself. Our task is to get down the rate of inflation but at the same time to take special measures, which we can take, including those for young people, in order to lessen the impact of unemployment.

Does the Summit Declaration against protectionism apply to agricultural as well as to industrial goods?

That was one of the most difficult topics we had to discuss because the United States and Canada clearly have a particular interest in this and some member countries of the Community have a different interest. But we cannot solve the trading problems of the one without regard to the social problems of the other. Certainly, there is a desire to ensure that protection should be lessened in agricultural goods as well as in industrial goods, but I have a feeling that we are likely to make faster progress on the second than on the first.

Will the Prime Minister accept that many hon. Members on both sides of the House welcome the fact that the Summit turned its face against "beggar my neighbour" protectionism? Will the right hon. Gentleman agree to give the House an indication of any changes in Government policy which will follow the Summit? Does the British Government intend to go for more growth than that envisaged by the Chancellor in his Budget Statement? If the Government intend to do that, how can that be reconciled with their statement to control the rate of inflation?

The hon. Gentleman puts his finger on the crux of the problem. At the moment our task is to pursue our stabilisation policies as they have so far turned out. With the improvement in our balance of payments, which is undoubtedly now taking place, I believe that we shall see a further improvement as the months go by. Perhaps our situation will alter. But for the moment and for the time being our task is to pursue existing policies. The fast-growth countries who might appear to be falling behind in their growth rates—if they do so that would have an adverse influence on us—have pledged themselves to maintaining their fast growth rates or to review policies and take further steps to ensure that they are maintained later.

Will my right hon. Friend confirm whether he had any discussions with President Carter regarding the standardisation of weapons within NATO?

Yes. There were talks outside the formal sessions. This is a matter in which President Carter is very interested and in which he would like to secure greater standardisation without necessarily giving all the advantages to the United States by so doing. It is something that he is quite sincere about, and he has also gone on public record with regard to his policies on the export of arms. I know that it is his desire that the export of arms in itself should be smaller.

Will the Prime Minister say whether the further studies on nuclear proliferation will include the question of the dumping of nuclear waste? If so, will he instruct all concerned in this country to suspend any applications for planning permission to look for sites for the dumping of nuclear waste until these studies are completed?

These studies will include this question, which is one of the most important questions. But it would be quite wrong to postpone planning decisions or to invite people not to go ahead with them until we have concluded our studies. We want to be ready to proceed in this field if we can be certain that there will be safety and that we are not endangering future generations. I see no reason why we should halt the preliminaries on this while these studies go on.

Is my right hon. Friend aware that his arranging and chairing of this meeting is deeply appreciated not only by the people of our own country but indeed throughout the western countries and the developing lands in particular? Does he not also agree that what has been revealed at this Summit, which should have been called many years ago, is that the principle of laissez-faire competitive fighting has to be dropped and that there is now an urgent need for a form of universal co-operation? This ought to be monitored. Will he see to it that if possible the monitoring of these broad principles for a return to sensible world co-operation will be reported to this House from time to time?

I think the principal reason that we have held three conferences of this sort within a relatively short period of time is the perception that the world economy is interdependent and that it must be increasingly managed as one. It cannot be left to free market forces in its entirety. There is a place, but not an excessive place, for market forces when we have 15 million people unemployed in the OECD countries. It is for this reason that the two must be combined. That is why I am a democratic Socialist and that is why Conservatives are just primeval monsters.

May I press my right hon. Friend on the question of Japan? In view of the widspread reports preceding the arrival of the Japanese Prime Minister can he say whether in bilateral or multilateral talks at the Summit the Japanese Prime Minister confirmed that he would be committing his Government rapidly and drastically to increase its aid giving in the near future or, if not, whether he at least indicated that his Government would be making a public announcement on this matter in the near future?

I cannot give an affirmative answer to either of those questions. The Japanese Prime Minister committed himself and his Government to the communiqué. That is as far I can go.

Will the Prime Minisster now answer the question that he has been asked twice already? In what respects is British Government policy going to be changed as a result of this meeting or is it just another case of pious hopes and meaningless platitudes?

I have already answered that question very fully and satisfactorily, namely, that we continue with our existing policies. But what was more important in the case of this conference is that those countries which have set out to grow faster, because they have strong economies, have undertaken and committed themselves so to do and to take further steps if they look like falling short. We have all agreed that there should be monitoring of this process.

The hon. Gentleman should not assume that we are the only country attending to this. It is a common effort. Each country has to put into the deal what it can in order to achieve the world balance that is required. [Interruption.] The hon. Gentleman may snigger about this, but that is the truth of the situation. Each of us has a different task to fulfil and we have a different rôle in the economic cycle. Each of us has to do different things.

Apart from that aspect on the economic side, what we discussed, for example, in relation to the developing countries and our relationship with them will be of assistance not only to them but to world recovery as a whole. The impact of the increased oil prices on them has been devastating. That is bound to affect our exports. It is bound to affect world trade. It is these things, which are indirect in our policies, which, if we can ensure that the IMF increases its resources, will, in the end, if we take advantage of the situation, enable our exports to grow. I ask the hon. Gentleman not to dismiss these things but to see them in the round. Let him try to see that the world is interdependent and that what others do may be as important to our economy as what we do ourselves.

Will the Prime Minister tell the House how progress towards the objectives agreed last weekend will be reviewed—whether any machinery for monitoring progress has been established, or whether another meeting will be held in due course?

The progress will be reviewed and monitored, and I hope that the political impetus will be put into the OECD meeting next month and the meeting of the IMF in September. We are all ready, if necessary, to meet again if it seems appropriate to maintain the momentum of the recovery which has begun. We are remaining in touch through our own officials at all times, and it is fairly easy to get people together whenever we think it necessary.

Several Hon. Members rose—

The House has had a very good run on this, but I shall call three more questions from each side.

On the question which the Prime Minister answered from the right hon. Member for Battersea, North (Mr. Jay) about agriculture, does this mean that Her Majesty's Government will implement their policy of importing more food from outside the Common Market, which policy is supported by the Conservative Opposition, and is not this, therefore, against that primeval monster, the common agricultural policy?

The common agricultural policy needs revision—I have said this constantly—and it is the British Government's policy that it should be revised in our interests. At the same time, as I said in reply to an earlier question, there are big social consequences of such a revision for some of the other members of the Community. Therefore, it will take time to do it. The seven nations agreed yesterday that there should be a mutually acceptable approach to agriculture which will achieve increased expansion and stabilisation of trade and greater assurance of world food supplies. The hon. Gentleman can assume that Canada certainly and the United States probably will be pressing the European Community for more outlets for some of their agricultural produce. I am sure that a bargain will be struck in the end.

Does my right hon. Friend recall that when the leaders met at Rambouillet there were about 1 million people on the dole in this country, that when they met at Puerto Rico another 200,000 had been added to the list, and that the total is now nearly 1·5 million? Do not those figures go to prove that these pious platitudes are not getting people back to work, any more than would the policy put forward by the Leader of the Opposition? In other words, capitalism has not got the answer. The answer is to be found, if my right hon. Friend wants to get down inflation, in freezing prices, if he wants to get people off the dole queue, in restoring the cuts in public expenditure, and, if he wants to do something for Britain, in getting us out of the Common Market?

That is a series of slogans which do not bear much relationship to reality.

That may be so. But the hon. Gentleman has a responsibility to give leadership as well as to listen to what people on the streets say.

Freezing prices is not a Socialist remedy. It has been applied in countries in Europe which are by no means Socialist and with the results that we have always known. These problems are more intricate and difficult than the hon. Gentleman seems to think. He has a dual responsibility, as I have. One is to ensure that our people are at work. The second is to preserve freedom in this country. He is a democratic Socialist, and the combination of the two is as important to him as it is to me. I know countries, as he does, where there is no unemployment. There is no freedom, either.

Was not the Prime Minister even a little embarrassed or ashamed to be acting as host and to be leading a Government who have dragged this country to the bottom of the league with shameful and disgraceful policies for stagnation, unemployment and inflation? Did he not pick up any tips at all?

The only factor which embarrasses me is when the Leaders of other nations have to read in Hansard that sort of comment.

In view of the fact that the nuclear energy programme took so long to discuss at the conference, and seeing that it will take 12 months to produce a preliminary report, will not the country's energy needs be in grave danger by the end of the century? Turning to a domestic matter arising from the conference, will the Prime Minister now tell the Secretary of State for Energy to instruct the Central Electricity Generating Board to go ahead with Drax B based on coal-firing?

My hon. Friend may have noted that, in my statement, I referred to the agreement that there should be an improved production and use of coal. As regards any specific power station, including Drax, my hon. Friend will know that it is not a shortage of power at present which is causing the hold up in this matter. It is other considerations concerning the future of the power plant industry. But that the power station, when it comes, will be coal-fired, I have no doubt.

What advice did the Prime Minister receive from his colleagues about the inflationary dangers of premature reflation? Did he take the opportunity last weekend to repeat the undertaking which the Chancellor of the Exchequer gave to the Managing Director of the IMF on 15th December last that a continuing and essential element of Her Majesty's Government's economic strategy was a substantial reduction in the share of resources taken by the public sector?

The share of the resources taken by the public sector has, to my regret, been educed—[Interruption.] Yes, to my regret. It means that a number of essential public needs are not being met. That is why we say that our first task is to overcome inflation so that we may resume non-inflationary growth. That is the order of priorities and the way in which we intend to tackle this task.

What was said about stopping the nuclear and non-nuclear arms race? Is my right hon. Friend aware that many of us who held very high hopes of the President's earlier proposals have been greatly disappointed by his recent actions on this subject? Therefore, what did Britain do at this conference, and what initiative will it take on this issue?

The biggest problem that we have is the future of our nuclear fuel and what should be done about that. We all agreed—and my hon. Friend must have heard what I have said about three times already—about the need for a very urgent study of the way to control these matters. As for conventional arms, of course, this was not a negotiating conference for conventional arms, although my hon. Friend will know the position that we have taken on mutual and balanced force reductions. Although I do not wish to commit the President in any way, my hon. Friend is a little premature in his disappointment. The President is undoubtedly quite sincere and convinced about the need for reductions in these areas.

Following is the information:

Downing Street Summit Conference: Declaration

In two days of intensive discussion at Downing Street we have agreed on how we can best help to promote the well-being both of our own countries and of others.

The world economy has to be seen as a whole; it involves not only co-operation among national Governments but also strengthening appropriate international organisations. We were reinforced in our awareness of the inter-relationship of all the issues before us, as well as our own interdependence. We are determined to respond collectively to the challenges of the future.

—Our most urgent task is to create more jobs while continuing to reduce inflation. Inflation does not reduce unemployment. On the contrary it is one of its major causes. We are particularly concerned about the problem of unemployment among young people. We have agreed that there will be an exchange of experience and ideas on providing the young with job opportunities.

—We commit our governments to stated economic growth targets or to stabilisation policies which, taken as a whole, should provide a basis for sustained non-inflationary growth, in our own countries and world-wide, and for reduction of imbalances in international payments.

—Improved financing facilities are needed. The International Monetary Fund must play a prominent role. We commit ourselves to seek additional resources for the IMF and support the linkage of its lending practices to the adoption of appropriate stabilisation policies.

—We will provide strong political leadership to expand opportunities for trade to strengthen the open international trading system, which will increase job opportunities. We reject protectionism it would foster unemployment, increase inflation and undermine the welfare of our peoples. We will give a new impetus to the Tokyo Round of Multilateral Trade Negotiations. Our objective is to make substantive progress in key areas in 1977. In this field structural changes in the world economy must be taken into consideration.

—We will further conserve energy and increase and diversify energy production, so that we reduce our dependence on oil. We agree on the need to increase nuclear energy to help meet the world's energy requirements. We commit ourselves to do this while reducing the risks of nuclear proliferation. We are launching an urgent study to determine how best to fulfil these purposes.

—The world economy can only grow on a sustained and equitable basis if developing countries share in that growth. We are agreed to do all in our power to achieve a successful conclusion of the CIEC and we commit ourselves to a continued constructive dialogue with developing countries. We aim to increase the flow of aid and other real resources to those countries. We invite the COMECON countries to do the same. We support multilateral institutions such as the World Bank, whose general resources should be increased sufficiently to permit its lending to rise in real terms. We stress the importance of secure private investments to foster world economic progress.

To carry out these tasks we need the assistance and co-operation of others. We will seek that co-operation in appropriate international institutions, such as the United Nations, the World Bank, the IMF, the GATT and OECD. Those among us whose countries are members of the European Economic Community intend to make their efforts within its framework.

In our discussions we have reached substantial agreement. Our firm purpose is now to put that agreement into action. We shall review progress on all the measures we have discussed here at Downing Street in order to maintain the momentum of recovery.

The message of the Downing Street Summit is thus one of confidence:

—In the continuing strength of our societies and the proven democratic principles that give them vitality;

—that we are undertaking the measures needed to overcome problems and achieve a more prosperous future.

8th May 1977.

Appendix To Downing Street Summit Declaration

World Economic Prospects

Since 1975 the world economic situation has been improving gradually. Serious problems, however, still persist in all our countries. Our most urgent task is to create jobs while continuing to reduce inflation. Inflation is not a remedy to unemployment but one of its major causes. Progress in the fight against inflation has been uneven. The needs for adjustment between surplus and deficit countries remain large. The world has not yet fully adjusted to the depressive effects of the 1974 oil price rise

We commit our Governments to targets for growth and stabilisation which vary from country to country but which, taken as a whole, should provide a basis for sustained non-inflationary growth world-wide.

Some of our countries have adopted reasonably expansionist growth targets for 1977. The Governments of these countries will keep their policies under review, and commit themselves to adopt further policies, if needed to achieve their stated target rates and to contribute to the adjustment of payments imbalances. Others are pursuing stabilisation policies designed to provide a basis for sustained growth without increasing inflationary expectations. The governments of these countries will continue to pursue those goals.

These two sets of policies are interrelated. Those of the first group of countries should help to create an environment conducive to expansion in the others without adding to inflation. Only if growth rates can be maintained in the first group and increased in the second, and inflation tackled successfully in both, can unemployment be reduced.

We are particularly concerned about the problem of unemployment among young people. Therefore we shall promote the training of young people in order to build a skilled and flexible labour force so that they can be ready to take advantage of the upturn in economic activity as it develops. All of our Governments, individually or collectively, are taking appropriate measures to this end. We must learn as much as possible from each other and agree to exchange experiences and ideas.

Success in managing our domestic economies will not only strengthen world economic growth but also contribute to success in four other main economic fields to which we now turn—balance of payments financing, trade, energy and North/South relations. Progress in these fields will in turn contribute to world economic recovery.

Balance of Payments Financing

For some years to come oil-importing nations, as a group, will be facing substantial payments deficits and importing capital from OPEC nations to finance them. The deficit for the current year could run as high as $45 billion. Only through a reduction in our dependence on imported oil and a rise in the capacity of oil-producing nations to import can that deficit be reduced.

This deficit needs to be distributed among the oil-consuming nations in a pattern compatible with their ability to attract capital on a continuing basis. The need for adjustment to this pattern remains large, and it will take much international co-operation, and determined action by surplus as well as deficit countries, if continuing progress is to be made. Strategies of adjustment in the deficit countries must include emphasis on elimination of domestic sources of inflation and improvement in international cost-price relationships. It is important that industrial countries in relatively strong payments positions should ensure continued adequate expansion of domestic demand, within prudent limits. Moreover these countries, as well as other countries in strong payments positions, should promote increased flows of long-term capital exports.

The International Monetary Fund must play a prominent rôle in balance of payments financing and adjustment. We therefore strongly endorse the recent agreement of the Interim Committee of the IMF to seek additional resources for that organisation and to link IMF lending to the adoption of appropriate stabilisation policies. These added resources will strengthen the ability of the IMF to encourage and assist member countries in adopting policies which will limit payments deficits and warrant their financing through the private markets. These resources should be used with the conditionality and flexibility required to encourage an appropriate pace of adjustment.

This IMF proposal should facilitate the maintenance of reasonable levels of economic activity and reduce the danger of resort to trade and payments restrictions. It demonstrates co-operation between oil-exporting nations, industrial nations in stronger financial positions, and the IMF. It will contribute materially to the health and progress of the world economy. In pursuit of this objective, we also reaffirm our intention to strive to increase monetary stability.

We agreed that the international monetary and financial system, in its new and agreed legal framework, should be strengthened by the early implementation of the increase in quotas. We will work towards an early agreement within the IMF on another increase in the quotas of that organisation.


We are committed to providing strong political leadership for the global effort to expand opportunities for trade and to strengthen the open international trading system. Achievement of these goals is central to world economic prosperity and the effective resolution of economic problems faced by both developed and developing countries throughout the world.

Policies on protectionism foster unemployment, increase inflation and undermine the welfare of our peoples. We are therefore agreed on the need to maintain our political commitment to an open and non-discriminatory world trading system. We will seek both nationally and through the appropriate international institutions to promote solutions that create new jobs and consumer benefits through expanded trade and to avoid approaches which restrict trade.

The Tokyo Round of multilateral trade negotiations must be pursued vigorously. The continuing economic difficulties make it even more essential to achieve the objectives of the Tokyo Declaration and to negotiate a comprehensive set of agreements to the maximum benefit of all. Toward this end, we will seek this year to achieve substantive progress in such key areas as:

  • (i) a tariff reduction plan of broadest possible application designed to achieve a substantial cut and harmonisation and in certain cases the elimination of tariffs;
  • (ii) codes, agreements and other measures that will facilitate a significant reduction of non-tariff barriers to trade and the avoidance of new barriers in the future and that will take into account the structural changes which have taken place in the world economy;
  • (iii) a mutually acceptable approach to agriculture that will achieve increased expansion and stabilisation of trade, and greater assurance of world food supplies.
  • Such progress should not remove the right of individual countries under existing international agreements to avoid significant market disruption.

    While seeking to conclude comprehensive and balanced agreements on the basis of reciprocity among all industrial countries we are determined, in accordance with the aims of the Tokyo Declaration, to ensure that the agreements provide special benefits to developing countries.

    We welcome the action taken by Governments to reduce counter-productive competition in officially supported export credits and propose that substantial further efforts be made this year to improve and extend the present consensus in this area.

    We consider that irregular practices and improper conduct should be eliminated from international trade, banking and commerce, and we welcome the work being done toward international agreements prohibiting illicit payments.


    We welcome the measures taken by a number of Governments to increase energy conservation. The increase in demand for energy and oil imports continues at a rate which places excessive pressure on the world's depleting hydrocarbon resources. We agree therefore on the need to do everything possible to strengthen our efforts still further.

    We are committed to national and joint efforts to limit energy demand and to increase and diversify supplies. There will need to be greater exchanges of technology and joint research and development aimed at more efficient energy use, improved recovery and use of coal and other conventional resources, and the development of new energy sources.

    Increasing reliance will have to be placed on nuclear energy to satisfy growing energy requirements and to help diversify sources of energy. This should be done with the utmost precaution with respect to the generation and dissemination of material that can be used for nuclear weapons. Our objective is to meet the world's energy needs and to make peaceful use of nuclear energy widely available, while avoiding the danger of the spread of nuclear weapons. We are also agreed that, in order to be effective, non-proliferation policies should as far as possible be acceptable to both industrialised and developing countries alike. To this end, we are undertaking a preliminary analysis to be completed within two months of the best means of advancing these objectives, including the study of terms of reference for international fuel cycle evaluation.

    The oil-importing developing countries have special problems both in securing and in paying for the energy supplies needed to sustain their economic development programmes. They require additional help in expanding their domestic energy production and to this end we hope the World Bank, as its resources grow, will give special emphasis to projects that serve this purpose.

    We intend to do our utmost to ensure, during this transitional period, that the energy market functions harmoniously, in particular through strict conservation measures and the development of all our energy resources. We hope very much that the oil-producing countries will take these efforts into account and will make their contribution as well.

    We believe that these activities are essential to enable all countries to have continuing energy supplies now and for the future at reasonable prices consistent with sustained non-inflationary economic growth: and we intend through all useful channels to concert our policies in continued consultation and cooperation with each other and with other countries.

    North/South Relations

    The world economy can only grow on a sustained and equitable basis if developing countries share in that growth. Progress has been made. The industrial countries have maintained an open market system despite a deep recession. They have increased aid flows, especially to poorer nations. Some $8 billion will be available from the DA for these nations over the next three years, as we join others in fulfilling pledges to its Fifth Replenishment. The IMF has made available to developing countries, under its compensatory financing facility nearly an additional $2 billion last year. An International Fund for Agricultural Development has been created, based on common efforts by the developed OPEC, and other developing nations.

    The progress and the spirit of co-operation that have emerged can serve as an excellent base for further steps. The next step will be the successful conclusion of the Conference on International Economic Co-operation and we agreed to do all in our power to achieve this.

    We shall work:

  • (i) to increase the flow of aid and other real resources from the industrial to developing countries, particularly to the 800 million people who now live in absolute poverty; and to improve the effectiveness of aid;
  • (ii) to facilitate developing countries' access to sources of international finance;
  • (iii) to support such multilateral lending institutions as the World Bank, whose lending capacity we believe will have to be increased in the years ahead to permit its lending to increase in real terms and widen in scope;
  • (iv) to promote the secure investment needed to foster world economic development;
  • (v) to secure productive results from negotiations about the stabilisation of commodity prices and the creation of a Common Fund for individual buffer stock agreements and to consider problems of the stabilisation of export earnings of developing countries; and
  • (vi) to continue to improve access in a non-disruptive way to the markets of industrial countries for the products of developing nations.
  • It is desirable that these actions by developed and developing countries be assessed and concerted in relation to each other and to the larger goals that our countries share. We hope that the World Bank, together with the IMF, will consult with other developed and developing countries in exploring how this could best be done.

    The well-being of the developed and developing nations are bound up together. The developing countries growing prosperity benefits industrial countries, as the latter's growth benefits developing nations. Both developed and developing nations have a mutual interest in maintaining a climate conducive to stable growth worldwide.

    Question Of Privilege

    I should like to draw to your attention, Mr. Speaker, certain comments made recently by the hon. Member for Antrim, North (Rev. Ian Paisley). Today, I received the transcript of a BBC radio programme broadcast last Wednesday in which the hon. Member for Antrim, North, in an interview with a Mr. Claypole, referred to

    "the lewd and immoral, foul-mouthed, drunken Members of Parliament who are mouthing about Ulster at this time."
    It would seem that this was an individual and collective smear on Members of this House. I should like to ask whether you would consider this as a matter of privilege. I apologise for raising this issue today. This is due only to the difficulty of obtaining transcripts from the BBC. Although I made requests on Thursday and Friday of the BBC, it was unable to supply me with a transcript of this programme until today.

    I am grateful to the hon. Member for Sowerby (Mr. Madden) for giving me notice of his intention to raise a question of privilege. I shall, of course, look into the matters to which he referred. But I must give him a little warning. I am afraid, at first glance, that I may find that it is barred by time. However, I shall look into it very carefully.

    Bill Presented

    Control Of Office Development

    Mr. Secretary Shore, supported by Mr. Secretary Rees, Mr. Secretary Varley, Mr. Secretary John Morris, Mr. Secretary Dell, Mr. Robert Sheldon and Mr. Guy Barnett, presented a Bill to extend the duration of and otherwise amend certain enactments relating to the control of office development in England and Wales: And the same was read the First time; and ordered to be read a Second time to-morrow and to be printed. [Bill 117].

    Merchant Shipping (Safety Convention) Bill Lords


    That the Merchant Shipping (Safety Convention) Bill [Lords] be referred to a Second Reading Committee.—[Mr. Stoddart.]

    Orders Of The Day

    Finance Bill

    (Clauses 14, 15 and 21; new clauses relating to value added tax, subcontractors in the construction industry, benefits from employment (motor cars), and capital gains tax)

    Considered in Committee.

    [Mr. OSCAR MURTON in the Chair]

    4.11 p.m.

    Before I call the first amendment, I have two announcements to make. The first is that I regret that an amendment to Clause 15 in the name of the Leader of the Liberal Party, the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), and his right hon. and hon. Friends was left off today's marshalled list of amendments. The amendment, No. 24A, has now been made available in typescript form in the Vote Office, and I have decided that it should be grouped for debate with Amendment No. 15.

    Secondly, I have received two manuscript amendments, one to Government Amendment No. 1 and one to Government Amendment No. 10, in the names of the right hon. and learned Member for Surrey, East (Sir G. Howe) and some of his hon. Friends. I have decided to select these two amendments, and a typescript of them is also being made available. The first group of amendments will accordingly consist of Government Amendment No. 1, with the manuscript amendment; Amendments Nos. 2, 3 and 4; Government Amendment No. 10, with the manuscript amendment; and Amendment No. 11.

    On a point of order, Mr. Murton. My right hon. and hon. Friends and I tabled an amendment on 2nd May, which is on page 2289 of the Notice Paper, in identical terms to Amendment No. 3 in the name of the right hon. and learned Member for Surrey, East (Sir G. Howe).

    That is correct. The names of the hon. Member for Perth and East Perthshire (Mr. Crawford) and his right hon. and hon. Friends were added to that amendment.

    On a point of order, Mr. Murton. It will be within your knowledge that Hansard for last Friday is not available. Since we are to debate the Finance Bill on Tuesday and Thursday, can you tell us whether the Official Report for today will be available? It is essential that we should have it on Tuesday and Thursday if we are to continue a meaningful debate on the Bill.

    I regret to inform the hon. Gentleman that that is not a matter for the Chair.

    Further to that point of order, Mr. Murton. I wish to stress the importance of the point made by my hon. Friend the Member for Eastbourne (Mr. Gow). I am glad to see that the Leader of the House is present. He will appreciate that in a Committee stage of this kind it is most important, particularly with debates that go into the following day, that we should have access to properly printed Hansard reports of proceedings. If Hansard is not available, will the Leader of the House give any assurance about the availability of typed versions? Is there any possibility of using the emergency printing presses that languish in the Basement and might be put to good use for this purpose? It is of great importance that we should have access to reports of this kind.

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

    I fully appreciate the great inconvenience caused to the House by hold-ups in the provision of documents. We shall do everything possible to overcome it, but I cannot give any exact undertaking about what will happen. We shall do our best to meet the problem. I fully appreciate the importance of the matter.

    Clause 4

    Hydrocarbon Oil Etc

    I beg to move Amendment No. 1, in page 5, line 1, leave out subsection (1) and insert—

    '(1) The rate of the duty of excise charged by section 11 of the Finance (No. 2) Act 1975 (hydrocarbon oil etc.) shall differ according to whether the oil is light oil or heavy oil; and accordingly—
  • (a) in that section after the words "£0·3000 a gallon" there shall be inserted the words "in the case of light oil and £0·3500 a gallon in the case of heavy oil";
  • (b) in the following provisions (under which duty is charged by reference to the duty on hydrocarbon oil), that is to say—
  • (i) section 6 of the Hydrocarbon Oil (Customs & Excise) Act 1971 (petrol substitutes and power methylated spirits);
  • (ii) section 3(3) and (4)(c) of the Finance Act 1971 and Article 3 of the Excise Duties (Gas as Road Fuel) Order 1972.
  • for the words "hydrocarbon oil" there shall be substituted the words "light oil"; and
  • (c) in section 92(2) of the Finance Act 1965 (grants towards duty on bus fuel) for the words "hydrocarbon oil" there shall be substituted the words "heavy oil".'.
  • With this we are taking the following:

    The manuscript amendment to Government Amendment No. 1, leave out from first 'shall' to the end and insert:
    'be at the rate of £0·3000 a gallon'.
    Amendment No. 2s, in page 5, line 1, leave out subsection (1) and insert:
    '(1) At the end of section 9(1) of the Finance Act 1976 (Increase of duty on hydrycarbon oil, etc.), there shall be added the words "except for the period from 29th March 1977 to 31st May 1977, when the duty charged shall be £0·3500 a gallon.".'
    Amendment No. 3, in page 5, line 1, leave out subsection (1).

    Amendment No. 4, in page 5, line 3, after shall ', insert:
    'as respects the period beginning at 6 o'clock in the evening of 29th March 1977 and ending at 6 o'clock in the evening of 5th August 1977'.
    Government Amendment No. 10, in page 5, line 31, at end add:
    'but as respects the period beginning at that time and ending at 6 o'clock in the evening of 5th August 1977 the rate of the duty of excise charged by section 11 of the said Act of 1975 shall, notwithstanding subsection (1) above, be £0·3500 a gallon in the case of light oil as well as heavy oil and the provisions mentioned in paragraph (b) of that subsection shall have effect accordingly'.
    Manuscript amendment to Government Amendment No. 10, leave out '5th August' and insert '31st May'.

    Amendment No. 11, in page 5, line 31, at end add:
    'and shall cease to have effect at midnight on the last day of May 1977'.

    May I thank you, Mr. Murton, for your consideration in accepting the manuscript amendments, the first of which is intended to extend the range of Government Amendment No. 1 to cover derv as well as petrol. The Government tabled that amendment on Thursday, by which time the Notice Paper was not being printed in the ordinary way. On Friday the House rose at 1.30 p.m., and most hon. Members on both sides of the House—but Conservative Members with more effect—were enagaged in the local elections of Thursday and Friday. This is literally the first opportunity we have had of tabling our amendment. It indicates the undesirability of the Government's proceeding to these rather belated changes of mind as a result of whatever transactions may or may not have taken place with their colleagues in the Liberal Party. international agreements prohibiting illicit payment

    The cost of Amendment No. 1 is £140 million in public sector borrowing requirement terms for 1977–78. It needs to be compared with the loss of revenue for 1977–78 if the Ways and Means Resolution had been lost, which would have been £365 million. The reason for the much lower cost is twofold. In the first instance, it reduces the 5p tax on petrol only and not on derv. Secondly, it deals with the timing. It inserts in Amendment No. 10 the date of 5th August from which this reduction will take place.

    The timing of 5th August has two advantages. First, it avoids very serious administrative problems that would otherwise apply. The manuscript amendment to Amendment No. 10, in the name of the right hon. and learned Member for Surrey, East (Sir G. Howe), seeks to insert the date of 31st May. The problem here is that on the best advice I am told that the Ways and Means Resolution that has been carried by the House would be paramount even if the date of 31st May were inserted. The amendment of the right hon. and learned Gentleman would not take effect until the date of the Royal Assent, whenever that might be. Until Royal Assent, we would be legally obliged to go on collecting the tax under the Ways and Means Resolution. There would then be the consequent chaos to which we referred in the debates on the Budget.

    There would be great difficulty, to put it no higher, in repaying to the motorist—as opposed to the supplier—the actual reduction in the tax. That is one reason why we have not inserted a date earlier than the Royal Assent. We do not know the precise date of the Royal Assent. In view of the uncertainty that would follow if the date was unknown, we felt it would be much better to name a specific date, the last day on which Royal Assent is possible, namely, 5th August. That avoids the administrative problems and uncertainties. I believe that the Committee will prefer this approach to the difficulties that would occur if we accepted the right hon. and learned Gentleman's amendment.

    The second advantage is the cost. The cost of the manuscript amendment, which would alter the date to 31st May, would be to add another £30 million to the public sector borrowing requirement for 1977–78, whereas the Government amendment, together with Amendment No. 10, would minimise the effect on revenue. Therefore, I hope that it will be more acceptable to the Committee.

    I am aware of some of the problems that have been referred to in the Press in the past few days, including the administrative difficulties of 5th August. We could not put "Royal Assent" rather than a specific date, for the reasons I have given, but if the Committee agrees to the amendment I propose to consult trade organisations. If a more appropriate date within a few days of 5th August could be found which was more convenient to all concerned and would create fewer difficulties, I think that on Report it might be possible to insert that date.

    I wish to make clear that I, my right hon. Friend the Chancellor of the Exchequer and the Government as a whole would prefer to keep the whole clause. I make no bones about that. But it is, I suppose, a strange situation. One has to recognise, with the democratic situation that now exists in this place, that there is not a majority in the Committee, as I understand it, for the clause as it stands.

    We may have to get used to this situation in future. Even when, after the next General Election, the Government are returned with a majority, we may well find that Back Benchers are not quite so amenable as they have been in the past to accepting everything that the Government suggest. It is perhaps worth noting the difficulties which Governments may get into from time to time in not being able to carry the whole Committee on a particular clause of a Finance Bill. That is just possible. So I make it clear that, whilst I am unhappy to have to ask the Committee to accept the amendment, I recognise the inevitability of there being no majority for the clause as it stands. This amendment, however, will limit the cost in the best way that we can conceive.

    Does not my right hon. Friend agree that Labour Back Benchers made considerable objection to the proposed increase on petrol, and that some indicated their intention to vote against this clause?

    I had it in mind to come to that point. I am aware of my hon. Friend's views, which are shared by many others of my hon. Friends. But, speaking for myself, quite apart from the other arguments, to which I shall come. If I had £140 million to spend this would not be my priority about the way to spend it. Nevertheless, as I say, I accept that that is not the view of the majority of the Committee. We have, as my hon. Friend has said, received very strong representations from some of my hon. Friends, from people outside the Committee, from right hon. and hon. Members in the Liberal Party, from trade union leaders and many others on this point. We were bound to take note of them—hence this amendment.

    I recognise the understandable concern, expressed in the Budget debate and on Second Reading, about those in rural areas and in heavily built-up urban areas who are running motor cars that they can barely afford to run. There are very serious problems, particularly in rural areas, where there is no other way of getting to work because there is no public transport service.

    But again I do not think that dealing with those problems by reducing the petrol tax is the best way to help. Surely the way to help lower income groups, whether in rural or urban areas, is to have a decent public transport service, or to do it through social security benefits, or to see a real increase in net take-home pay.

    In considering the major problems of transport in the rural areas, one should look at what has happened in what are called the shire counties. My right hon. Friend the Secretary of State for Transport told the House last week that he increased the allocation of transport supplementary grant to shire counties in order to enable them to spend more on public service transport, but then found that the Tory-controlled shire councils did not spend the money on it. So when I hear the Conservatives complaining to us about rural transport problems, I find it a little difficult to take.

    Is not the right hon. Gentleman forgetting that the remainder of the money for such support would have to come from the budgets of the councils themselves, which are being pressed by the Government not to spend more—indeed, to cut their budgets? Is he not being ambivalent?

    I am not. The hon. Gentleman should read last week's debate. My right hon. Friend the Secretary of State for Transport told the House then that he made an allocation of the transport supplementary grant on the basis of proposals put by the shire counties. There are not now many Labour-controlled shire counties, and there were not even before last Thursday. These shire councils, having received grant on the basis of their own proposals, have in some cases changed them. So, as I have said, when I hear the Conservatives talking to us about the problems of rural transport, and that sort of thing happens in the shire counties, I find their complaints a little difficult to take.

    I still believe that the arguments for an increase in the petrol tax are sound. I shall not go into detail of the main reasons, because we have been through them before. But there is, first, the conservation argument. It is true that the actual impact would be marginal, but, on the other hand, to go the opposite way is to reverse the situation. A decline in petrol tax must surely be the wrong way of dealing with the problem of petrol conservation.

    Secondly, there is the question of the switch to indirect taxes in order to enable us to reduce direct tax. The proposed increase in petrol tax was not even a real increase in indirect taxation. Thirdly, there are the alternatives. The right hon. and learned Member for Surrey, East and his hon. Friends are constantly telling us about the alternative of value added tax. But the VAT alternative, and, indeed, any other, has a worse effect on the retail price index and a worse effect on employment.

    Fourthly, the tax increase would mean a "relatively small increase" in petrol prices. That is not my choice of words. I am not sure that I would have chosen them precisely. They were used by the hon. Member for Guildford (Mr. Howell) on Second Reading. But it is a small effect.

    In my view, no real case has been made against the Government's proposal to increase the petrol tax. Nevertheless, as I have said, we recognise that, while we have the best of the argument and the best case, there is a majority against us in the Committee. But the problem will not go away. We shall have to come back to the problem of the petrol tax, as otherwise it would be the one indirect tax to decline, and I cannot believe that that is what the Opposition really want.

    The idea of indexing taxation is extraordinary coming from a Government who cause inflation. Why, therefore, does not the right hon. Gentleman propose indexed allowances also for the benefit of the taxpayer?

    I am not sure whether the hon. Gentleman is arguing in favour of keeping the 5p petrol tax in line with inflation from last year.

    He is not? I am still not sure of his argument. We are increasing personal tax allowances, although not as much as we would have liked. The right hon. and learned Member for Surrey, East has never argued in favour of indexation. Nor have I. But he is in favour of a switch to indirect taxation. Surely it is consistent with that thinking to maintain the petrol tax in line with inflation as from April 1976. If we do not, it will go into decline as a proportion of total taxation.

    The hon. Member for Blaby (Mr. Lawson) is remarkable. He suggests that a change from one year to another in line with inflation is indexing. I know that he has tried very hard to persuade his Front Bench of the virtues of indexing. He has tried since he joined the Opposition Front Bench, just as he tried before he joined it. I know that the fact that he is sitting behind the right hon. and learned Member for Surrey, East means that he has only to whisper in his ear. The right hon. and learned Gentleman is not as well up on this matter as the hon. Gentleman is, so the hon. Gentleman has to do so. An increase in indirect taxation from one year to another because of inflation is not indexation.

    I know that the hon. Gentleman wants to commit his Front Bench to the indexation of personal tax allowances and indirect taxes, presumably on a proper and full basis. He has not been able to convince his own Front Bench, and I am bound to tell him that he has not been able to convince me. Indeed, he has not been able to convince the House, and he will not be surprised to learn that I do not propose to suggest at this stage that we should move towards a form of indexation.

    4.30 p.m.

    The right hon. Gentleman is a little confused. I have always made it clear that, as in every other country that uses some form of indexation, it does not preclude discretionary changes in taxation, open and above board, by the Government of the day whenever those are necessary for economic or other reasons. Therefore, there is no difference between indexation and what the right hon. Gentleman is saying is required with the petrol tax. Nor, per contra, is there any contradiction in our saying that there should be a discretionary change, in as much as petrol duty should come down.

    The hon. Gentleman should be careful when he uses the phrase "our saying". I know that he is a member of the Opposition Front Bench, but he is not on the Front Bench at the moment. He knows that his Front Bench is not in favour of indexation. I do not know whether the hon. Gentleman has already resigned from his Front Bench, but his right hon. and hon. Friends are not in favour of indexation.

    On Second Reading, the hon. Member for Guildford used a strange argument for the alternative that is being proposed by the Opposition. In fact, it was not an argument but was, rather, more of an assertion. He did not appreciate the case. He was arguing that the standardisation of VAT at 10 per cent. was better than selective taxes. Why is it better? On reading his speech again, the only argument that I can find that he advanced in favour of that assertion was that it was proposed decisively by the Shadow Chancellor of the Exchequer. Clearly, anything proposed by the right hon. and learned Member for Surrey, East is important, but to say that it is an argument for the alternative is, to put it mildly, overstating the case a little.

    I do not know whether what the hon. Member for Guildford was putting forward was a new Conservative philosophy. I hope that Plato and Pythagoras will forgive me for using the words "Conservative" and "philosophy" together. I do not know whether the Opposition are saying that they would never increase selective indirect taxes. Is that what the hon. Member for Guildford is really saying? Is he saying that when some Government have standardised the rate of VAT at 10 per cent. he will never increase selective indirect taxes?

    It appears that the hon. Member for Guildford does not intend to answer my question. It was a strange argument to advance that selective indirect taxes must decline whilst VAT must go up as a proportion. It is an odd argument that we are hearing from the Conservative Front Bench, and perhaps at some time someone will explain it. If the argument is not explained, we are bound to come to a certain conclusion.

    If the Conservatives are in favour of increasing indirect taxes generally, including selective ones, but are not in favour of increasing them this year, perhaps they will tell us the year in which they would be in favour of increasing them. Is it not a fact that they are not in favour of increasing those taxes this year because this year they can be their thoroughly typical irresponsible selves? Is not that what it is about?