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Orders Of The Day

Volume 933: debated on Thursday 16 June 1977

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Supply

[22nd ALLOTTED DAY],— considered

Armed Forces (Conditions Of Service)

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Graham.]

4.26 p.m.

The Opposition have chosen for debate today the subject of the pay and conditions of the Armed Forces because it is a subject of obvious importance to the whole country and because it is obviously of particularly pressing importance to the Armed Forces themselves.

We do not propose at this stage to divide the House on the matter, because we believe that ideally it should be above party politics. I therefore do not want to look at it in too partisan a manner, but I must say at the outset—and I am sure that the Secretary of State for Defence would be the first to agree— that it would be a distortion if we considered the situation solely in the light of what has happened to the Forces' pay and ignored the defence policy which his Government have adopted since 1974. That policy has been to cut defence and cut, cut and cut again, and the Government have made it plain that defence has a low priority for them.

As I understand it, defence is not included in the social contract. Therefore, because of the attitude of the Government, Service morale would in any case have been damaged. But Service men have seen that the Government have been prepared to cut their numbers, their equipment and their general support and at the same time relatively to cut their pay as well.

In short, the very disturbing situation that we face over the low pay that the Forces now receive has been made much graver by the Government's savage cuts in defence. I am sure that nothing will be gained by trying to lessen the seriousness of the present position. I am now speaking not about equipment or stores but solely about the pay and conditions of the Armed Forces.

I trust that the Secretary of State will not try to minimise the seriousness of the present problem. It is very grave. The fact is that there is deep resentment, on every level in the Services, at the way in which they have been treated. There is a deep-seated sense of grievance and a widespread feeling that their interests have been neglected. In my experience and to my knowledge, the pay rises and the accompanying increases in charges for accommodation and food have been greeted everywhere with anger and derision. That is in no way surprising.

I cannot cover the whole front, but a number of examples may be helpful to the House. These examples show that the Services have not only had what is now called an Irishman's rise two years running but that they have lost all comparability with men working in industry. A substantial number of Service men are now working for little more than they would get if they were unemployed. I know one infantry battalion where 60 families are getting rent rebates, and I know that it is not much out of line with other battalions. In another battalion, 37 per cent. of married guardsmen and 16 per cent. of married corporals are drawing rent rebate. A married guardsman on Scale C, Band 1, Class 3, before the latest award, had £27·33 a week take-home pay. He now gets £27·84—an increase of 51 p.

In one battalion, the number of soldiers extending their service in April and May was lower than in any of the previous six months. The number of men seeking premature voluntary release in April and May together was higher than the total of the previous six months put together. None of this, unfortunately, is surprising. The Secretary of State cannot wonder that soldiers are cynical and resentful.

We on the Opposition Benches were very pleased by the increases in pay for some of our soldiers in Northern Ireland which the Secretary of State announced on the last day before the recess. We were glad that he responded, rather belatedly, to pressure from the Press and the Conservative Party to improve conditions in Ulster.

The Under-Secretary of State for Defence for the Army told us in the Estimates debate that he had called for an urgent report on this matter. But why on earth did he need a report? Why did he not know all about it without a report and why did he have to be alerted by the Press and by us on the Opposition Benches? Why was he so ignorant?

The reason given for the increase by the Secretary of State was
"the developing rôle of the permanent garrison in security duties".—[Official Report, 27th May 1977; Vol. 932, c. 625.]
That is pretty bogus. For at least the last seven years the permanent garrison has had an important rô1e in security duties. On every one of my visits to Northern Ireland they have exercised a very active security role. Still, if that bogus reason provides a useful fig leaf for the right hon. Gentleman against the hostile stares of his anti-defence colleagues in the Cabinet, who are we to complain?

I think that the circumstances in Northern Ireland had changed significantly to justify the decision. It was not bogus. However, if the right hon. Gentleman says that circumstances have not changed for seven years, then as Secretary of State, he had full opportunity and responsibility to put them on full operations conditions then.

Yes, but the Secretary of State knows that the appalling conditions revealed by the report of the Undersecretary of State for the Army, which were well known to us, did not exist when we were in power. Indeed, to give the Government their due, they did not even exist during their first year of power. They have got much worse over the last 18 months, as the right hon. Gentleman well knows.

Still, unfortunately, the Government have done nothing at all for the majority of our troops in Northern Ireland, and that we believe to be wrong. My hon. Friend the Member for Beckenham (Mr. Goodhart) has always been closely and expertly involved in these matters, and if he catches your eye, Mr. Deputy Speaker, he will put some extremely well-thought-out proposals before the House.

The feeling of resentment is the same in the Royal Air Force. Indeed, the situation, if anything, is even more serious than in the Army, because the RAF has suffered even more from the Government's cuts. Certainly, the bitterness in the RAF is no less great than it is in the Army.

On this point, I should like the right hon. Gentleman to clear up what appars to be a discrepancy between the Undersecretary of State for Defence for the Royal Air Force and the Review Body on Armed Forces Pay. On 4th May, the Under-Secretary told the House:
"But if full pay and charges are taken into account along with the Chancellor's Budget changes, which are, of course, an essential part of the Government's counter-inflation strategy, the position is that all Service men covered by the pay award will get a net increase." —[Official Report, 4th May 1977; Vol. 931, c. 497.]
The Pay Review Body, in paragraph 20 of its report, referred to "after-tax" amounts, which, according to a footnote,
"Assumes taxation rates and allowances at the levels announced for the year 1977–78 and no income other than military salary and pay supplements under the current restraint measures."
That suggests to me that that footnote takes into account what the Chancellor had announced in his Budget.

The part of the report to which the footnote relates—I am starting in the middle of a sentence but am not distorting the sense—says:
"but in general the after-tax amounts that arise from the supplements exceed the sum of the increases in food and accommodation charges for all unmarried adult servicemen and servicewomen and, apart from Second Lieutenants, for unmarried officers up to Lieutenant Colonel. The increases in charges for unmarried Second Lieutenants and for more senior officers exceed the after-tax increases in pay, but in the main by small amounts. The position of servicemen and officers who occupy married quarters is more complex. Married servicemen are allotted quarters according to family size but, generally, for them and for officers up to and including Lieutenant Colonel, the after-tax pay increase will exceed the increase in the accommodation charge. The single exception appears to be the rare case of the lower paid Corporal or Lance Corporal or Private who has four or more children and who happens to occupy one of the relatively few Type D/WO quarters."
At this point, a footnote says:
"His position would, however, be affected by the operation of the rent and rates rebate system."
The main paragraph continues:
"Some Colonels and Brigadiers will receive a smaller increase in pay than the increase in charges: but this directly reflects the impact of the restraint measures on those in the community generally at comparable pay levels."
All I want to know is, who is right? Is it the Under-Secretary in what he told the House or is it the Review Body? I mean no more than usual disrespect to the hon. Gentleman if I say that I prefer the word up to now of the Review Body.

The Navy has of course fared no better than the other two Services and the sense of grievance of sailors is just as strongly founded as that of airmen and soldiers. My hon. Friend the Member for Stretford (Mr. Churchill) will be dealing with the Navy in more detail. I should like only to quote from a letter from a constituent of mine who is in the Royal Navy. He draws my attention
"to the incredible situation where employees are actually asked to pay for the privilege of working for the Government. I cannot conceive of any industry which pays its men on one day and then immediately requires that person to pay back more than he receives."
Only very few people are involved, but a supreme example of this Government's ineptitude over pay and of how comparability has been lost is their treatment of Ministry of Defence Chiefs of Police. Their plight was raised in an Adjournment debate by my hon. Friend the Member for Devizes (Mr. Morrison) on 19th April this year. In May 1974, they were given an undertaking that their pay would be linked with federated ranks with the object of maintaining relativities
"created by the announced settlement of the pay of both federated ranks and chief officers." —[Official Report, 19th April 1977; Vol. 930, c. 162.]
Thirteen months later, the Government reneged on that undertaking.

Following the announcement of the 1975 police pay settlement in June 1975, the Chief Police Officers Association wrote on the 16th of that month to request formally the application of the new pay scales. They wrote again on 10th July, the day before the White Paper "The Attack on Inflation" was published and again on 30th July, but no reply was received until 14th August. That reply informed the Chief Police officers that they were eligible only for the £6 maximum despite the Government's letter of May 1974.

Perhaps more important, the police pay settlement of June 1975 was announced, and the first letter from the chiefs of police of 16th June was sent three weeks before the Government's pay policy was introduced. Although the federated ranks of Ministry of Defence police received the full 1975 pay settlement the chiefs of police did not. Almost incredibly, this means that the chiefs of police are now receiving salaries which are less than officers two ranks below them receive, and still the dispute has not been settled.

Plainly, this should have been dealt with as long ago as 16th June 1975, and no doubt it would have been but for the fact that only 10 men were involved. Nevertheless, surely in the interests of fairness to this small group the right hon. Gentleman should say today that a settlement will be made in accordance with the 1975 police pay settlement. Anyway, I look forward to hearing what he proposes to do about this indefensible anomaly.

There are, of course, many other anomalies. For instance, a colonel who retired two years ago will get a higher pension than a major general who retires this year. That is also surely absurd.

But to turn from particular cases, the general situation is very disturbing. To put it brutally but truthfully, the Forces have lost confidence in the Government. There is nothing surprising about that. Virtually everyone has lost confidence in the Government. What is much more significant and much more worrying is that the forces at all levels have lost confidence in the Armed Forces Pay Review Body. That is a fact, but it is the fault of the Government and not of the Review Body.

I sometimes wonder whether the Review Body could not have been a trifle more ingenious. After all, civilians who live in council houses usually do so because they want to live in a particular town or area. But Service men who occupy Service accommodation do so because they have been stationed there. They have no choice. I should have thought that that circumstance would, without any undue sleight of hand, have justified the Review Body abating the charges for accommodation this year.

Again, as is well known, because the Review Body reports in May, the Armed Forces come very much at the end of the queue. As a result, by the time that the Services get their pay award, prices have risen much higher than they were when other people got an increase last autumn. Again I should have thought that that circumstance justified the Review Body in giving an immediate pay award and in postponing for, say, six months, increases in accommodation charges.

I think that that should be done, anyway. It is wrong that the pay award should coincide with the increases in charges. They should be separated. It is quite impossible to explain to Service men that this is the right way to do it, and I hope that it will be altered.

The present situation over accommodation charges is utterly crazy. We learned yesterday from the Answer to a Question asked by my hon. Friend the Member for Stretford that there are now 14,000 married quarters unoccupied. What could be more ridiculous than that? Married quarters are being priced out of the market by these accommodation charges. Service men cannot afford to live in the quarters which are specially provided for them. Meanwhile, the Government lose the rent which they would otherwise get.

Bloody nonsense.

The Under-Secretary of State, who apparently is a great authority on these matters, says "bloody nonsense". I do not know whether he is disputing the figures. They were supplied by his own Department, so I am inclined to rely on them. The fact is that the number has increased greatly, and the reason is that the charges are so very high.

The consequences of this absurd situation go far beyond the financial. There is, necessarily, increased separation, which obviously is not good for morale. In the RAF especially, though the other Services are also affected, this is not good for what might be called, for want of a better word, "togetherness", which exists where everyone is living on a station. That is far from the situation when people are living miles away all over the country. There is also, of course, a loss of operational efficiency. Plainly, something must be done quickly about them.

All of us in this House are concerned primarily with the future. There are now two very important tasks that the Secretary of State has to perform, and we want to know today how he intends to discharge them.

The right hon. Gentleman's first task is to restore the confidence of the forces in the Review Body. That confidence has undoubtedly been impaired at every level in the Services. That is unfair. I have no doubt that the Review Body is able, hard-working, thoroughly well-intentioned and anxious to do its best for the Services. I am glad that its chairman, Mr. Atcherley, was knighted in the Jubilee Honours.

Nevertheless, because of the very meagre awards that the Review Body has been compelled to make during the last two years, it is now unfortunately widely regarded in the Services not as independent but as an arm of the Government. Both because this is an unfair reflection on the Review Body and because I am sure that it is in the best interests of the Services and of the State that the pay of the Armed Forces should be decided by an independent review, it is vital that the Secretary of State should confirm fully the independence of the Review Body. The right hon. Gentleman can do that quite easily. He can do it simply by telling the truth.

The Secretary of State, whom I respect, as he knows, is not one of the members of this Government who have a deep prejudice against telling the truth. His bias will, therefore, be in favour of doing what I ask, and it is important that he should do it.

Will the right hon. Gentleman, therefore, tell the House openly and fully what representations or requests were made either to him or to the Prime Minister, or both, by the members of the Review Body, either individually or as a body, that they should be released from the strict letter of the Government's incomes policy so that they can make a fair and reasonable award? Secondly, will the right hon. Gentleman tell us quite openly how many of the Review Body have at any stage wanted to resign but have been dissuaded from doing so?

It is quite clear from the latest report of the Review Body that its members were deeply unhappy about what they were being forced to do. They know better than anyone the inequity of increasing pay by 5 per cent. and then increasing food charges by 20 per cent. and accommodation charges by amounts up to 25 per cent. Throughout their report there is an obvious distaste for what they have been compelled to recommend. I have no doubt, therefore, that representations were made.

I trust that the Secretary of State will agree that it would be quite wrong for the Review Body to be blamed for the sins of the Government. Therefore, the answers to my questions are important. I know that the right hon. Gentleman realises that not only his own reputation for veracity is at stake but also the reputation and independence of the Review Body.

The second and even more important task facing the Secretary of State is to deal with the present disastrous situation. What does he intend to do about it? Of course, he may well reply that he and his Government are unlikely to be in office next week or next month, let alone next year. In that case, he is probably right. I can tell him that the next Conservative Government will see that there is proper comparability between Service and civilian life. But for the moment a Labour Government are in office, though evidently they are not in power.

We insist on hearing from the right hon. Gentleman what measures he proposes to take to remedy the damage that the Services have suffered during the last two years.

In the message that the Secretary of State sent to all members of the Armed Forces when the report of the Pay Review Body was published, he said:
"The rigid nature of the first two rounds of the present incomes policy has produced distortions in some pay structures in the professions, industry and other occupations. The Government hope that it will be possible to put these right under future stages of the policy, and I will ensure that the needs of the Armed Forces are fully taken into account."
There is not much of a whiff of the picket lines about that. The other day the Secretary of State made an exhibition of himself by standing in the picket lines at Grunwick's. We were all very pleased and relieved that he was not arrested by the police. We want to know now when the right hon. Gentleman will stand in the picket lines for the Armed Forces? When will he see that they get a fair deal?

It will be no good the right hon. Gentleman telling us that he will use his "best endeavours" to see that conditions are improved. We know that a sizeable proportion of the Cabinet think nothing of breaking their word to our allies and that a substantial proportion of the Cabinet and of the Labour Party, who are present in such large numbers today, are hostile to the Armed Forces and to the defence of the country. Those are the people whom the Secretary of State has to overcome.

Some members of the Labour Party no doubt welcome the present plight of the Forces either because they want to introduce into the Forces the efficiency and benevolence that we all associate with the names and activities of Mr. Clive Jenkins, Mr. Arthur Scargill, Mr. Alan Law and the shop stewards at London Airport, or because in other ways they want to reduce our defence capability. We want the Secretary of State to tell us this evening how he is going to defeat the anti-defence wing in his Party. That is something which he has singularly failed to do up to now. We want him to tell us now how he proposes to restore the morale of the Forces, how he proposes to end the present injustices and how and when the Forces' grievances will be met. The present situation is intolerable and we therefore require categorical assurances from the Secretary of State that he will remedy it.

Incidentally, as well as the other assurances that we seek, I hope that the right hon. Gentleman will be able to reassure us once and for all that leave warrants will not be taxed. That is one of the Treasury's worst little ideas which has created a great deal of worry. I should like it scotched by the right hon. Gentleman this afternoon.

I have no doubt at all that the Secretary of State wishes to see the Forces treated properly, but I greatly doubt whether he can persuade his Left-wing colleagues to agree. We do not intend to vote tonight but I must warn the right hon. Gentleman that if he does not give us satisfaction, we shall not be so for-bearing next time.

The welfare and morale of our Armed Forces are of the greatest possible importance to this country. It is the irrevocable commitment of the Conservative Opposition to see that their welfare is properly looked after and their morale fully restored. If the Government will not act, the Conservative Party certainly will.

4.52 p.m.

I and the House are grateful to the Opposition and to the right hon. Member for Chesham and Amersham (Sir I. Gilmour) for giving us the opportunity to discuss conditions and pay in the Armed Services. I should also like to say how much I appreciated the reasonable approach of the right hon. Gentleman until he got to his well-expected peroration. He rightly said that we are concerned not only with the past and the present but with the future. I think it unlikely that it would be a question of Government. I think that the Services and the community are entitled to have some indication as to what the Opposition would do if they had responsibility. We hear a lot about the size of the Defence Vote but we have had no indications that they would restore the cuts which I think were right in all the circumstances. We have had no indication at all about what they would do, except vague words about comparability. We have had no indication whatever over the whole range of Opposition policy. We do not know whether they would have a pay policy. The only clear indication we have of Opposition policy is in regard to housing which on the analogues which govern the cost of accommodation would make the accommodation charges very much higher.

But, in fact, the basic condition of everyone's service is his pay and there is widespread misunderstanding, not least by the right hon. Gentleman who was an architect of it, about the machinery for determining the pay and allowances of the forces and the criteria which are used in calculating what this should be. It is absolutely wrong to suggest, as the right hon. Gentleman did, that the Government's pay policy was confined to the Armed Services. While he did not specifically suggest this, the whole tenor of his remarks was that the Armed Services should be taken out of that pay policy. I quite genuinely believe that that is not the wish of the Armed Services themselves because they realise how vital economic recovery is—which pay policy alone has made possible—not only for the nation but, indeed for defence expenditure.

There should not be any great political argument about the basic principles on which pay and charges are based. They were devised by a Labour Government and worked out in detail and implemented under the succeeding Conservative administration. I have no doubt that the right hon. Member for Chesham and Amersham, as a defence Minister at the time, would have been closely associated with that process.

In June 1969, to put the matter on the record, the Labour Government published a report by the National Board for Prices and Incomes on the pay of the Armed Services. The report recommended that a new military salary should replace the existing system under which the Services received a relatively low rate of basic pay, which was supplemented by a variety of allowances and benefits in kind. The report argued that such a system was inappropriate for modern all-volunteer armed forces in which there had been a continuing trend away from combat-type jobs to technical and support functions similar to those found in civilian life and that there was a growing requirement for technical expertise, of a kind for which there was a ready market outside the Services.

Understandably, prospective and serving members of the Armed Forces wished to be able to compare the financial rewards of pursuing their specialist trade in the Armed Forces with the rewards of doing so in civilian life. This was not possible under the old pay system, with its complex amalgam of basic wage, allowances and payments in kind. Of course, another feature of the old system was that married men received more money than single men. This was not, and is not, the case in civilian life and it was clear that the majority of Service men regarded the practice as outdated. Almost certainly potential recruits to the Armed Forces, the majority of whom would be single, felt similarly. Thus the old system offered the least money to single men whom the Services were particularly anxious to attract. It was therefore proposed that the military salary would not differentiate between the pay of single and married Service men and that it would convey, both to potential recruits and to serving men and women, the true value of earnings in the Services.

It was hoped that this change would effectively demonstrate that the Services offered a career comparable to civilian occupations and that it would therefore encourage both new recruits and re-engagements. The main features of the proposed military salary were that single and married men received the same pay for similar work; that there was one comprehensive basic rate of pay for each rank and trade; that the total value of Service men's remuneration could be expressed in money terms; and that remuneration could be adjusted when necessary by a system that could be seen to be fair. The method chosen to achieve these objectives was to put all Service men on a comprehensive salary which would be subject to tax in the normal way, and out of which they would be required to pay for food, lodging and clothing, excluding uniform, in the same way as civilians.

The Labour Government of the day accepted the recommendations of the National Board for Prices and Incomes and introduced the military salary. The new pay arrangements were welcomed by the Conservative Opposition spokesmen, who agreed that the new scheme would help Service men to put into perspective the value of their work against that of the civilian.

To operate the military salary it was necessary to establish both an appropriate salary competitive with comparable civilian occupations and appropriate charges for accommodation and food which would reflect the cost of those things in civilian life. The salary was to have an additional element, called the "X" factor, in recognition of the special features of Service life—separation, frequent moves, long hours, discipline and so on. This "X" factor is currently 10 per cent. for men and 5 per cent. for women.

The Armed Forces Pay Review Body is responsible to the Prime Minister for recommending appropriate scales of both pay and charges. The body was set up by the last Conservative Government in November 1970. It is composed of eight distinguished men and women from public life and industry, and it includes among its members former trade unionists of long experience in pay negotiations and a retired senior Service officer who was formerly Chief of Personnel and Logistics in the Ministry of Defence.

The Review Body, like the similar Review Bodies which deal with the pay of doctors and dentists and top salary groups, is independent of the Government and is serviced by the independent Office of Manpower Economics. There is no representation of the Ministry of Defence or any other Government Department on it. This is a powerful safeguard for the interests of its customers.

The members of the body serve voluntarily, and I take this opportunity to pay tribute to their devoted and painstaking work and to join the right hon. Member for Chesham and Amersham in congratulating the chairman on his recent elevation to a knighthood. I very much regret the criticism made in some quarters that the body has in some way let down the Services by not making recommendations which would breach pay policy. The right hon. Gentleman is correct in saying that it is deeply unhappy. I know only by remote bush wireless that some of its members were perhaps thinking of resigning, not because they were against Government pay policy but because of the unfair criticism to which they have been subjected in the House and in the Press.

The Secretary of State has answered one question. Will he answer the other? What representations were made by the Armed Forces Pay Review Body to be released from the Government's present incomes policy, which discriminates against the forces?

The Government's pay policy does not discriminate against the forces, and as far as I am aware the body made no representations to me. It did not ask for such a release because it well understood the pay policy and it understood that part of the pay policy was that the Government would honour the agreement which has been worked out with the trade union movement. We have no means of enforcing the agreement in every respect in other areas.

I think that industry and the trade union movement have a very proud record in that they have honoured two rounds of pay policy which have made possible the good trade figures announced today and the even better ones of a month ago, and the fact that the economy is now on the way to recovery.

The AFPRB based its recommendations on a mass of data which are collected under its supervision and it is informed by facts and impressions which it collects there, as well as by evidence that it receives directly from the principal personnel officers of the Services and by many visits to Service units. I emphasise that the Body does not negotiate with or on behalf of the Armed Forces but makes its recommendations, and the Government are bound to accept those unless there are clear and compelling reasons for not doing so. This was made extremely clear in a letter in the Daily Telegraph last week from Admiral Sir Desmond Dreyer, now retired, a member of the AFPRB and a former senior officer responsible for personnel policy within the Ministry.

For the purpose of calculating pay, the AFPRB has accepted that direct comparison with civilian occupations is not practicable. There is clearly no direct parallel in civilian life for all military skills. Therefore a method of job evaluation similar to that employed by private industry for establishing internal relativities has to be adopted.

This work of job evaluation is undertaken by suitably trained Service officers and the results are judged by a group of senior officers under the chairmanship of a civilian management consultant. The information they collect is submitted to the AFPRB on a continuing basis. This process of job evaluation is complicated, but it ensures that there is a suitable basis for comparing Service with civilian jobs and for deriving in normal times rates of pay for the Services which are comparable with rates of pay in civilian life. Charges for food and accommodation are similarly established by analogy to civilian life.

While I do not wish to make a party point about this, I must explain that it was the Conservative Party which established these analogues. It is an essential part of the military salary concept that charges should compare realistically with those outside the Services—

If the hon. Gentleman had been listening he would have heard me deal with the difficulties of comparability of pay. He cannot expect me to repeat these things two or three times just so that he can grasp what I am saying. If he is still in difficulty I shall send him the text afterwards.

For food the calculation is relatively straightforward. Food charges are related to the food element in the retail price index, with a small addition to take account of essential overheads. The calculation of accommodation charges is more complicated. If, as an essential part of the whole concept of a military salary, there are to be charges for accommodation, some basis for assessing them must be made.

I do not quarrel with the way in which the right hon. Gentleman and his colleagues put down the analogue on which that should be based. They included four elements. These are rent, which is derived from an average of local authority rents for houses of a similar standard, age and location; rates, which reflect the average contribution paid by the Ministry for each type of Service house with average water rates; a small charge for the use of furniture and household equipment; and a small charge for the maintenance of the property, additional to that which would be typically undertaken by a local authority.

Is not the whole point that the charges that the right hon. Gentleman is discussing are not modified by Government policy but the pay is? This is where the unfairness comes in and where there is no comparison.

The hon. and gallant Member has indicated a difficulty. One well understands—and no one better than I—the reaction of the Services when their increase appears to be almost whittled away by increased accommodation and food charges. But this has happened over the whole range of civilian employment, including that of Members of this House. It is not dealt with by the Fees Office deducting our rates or rent or mortgage interest charge before we get our pay. It is done when we meet our food costs; that money is taken away when we go into the Dining Room or when our wives go shopping. This is the heart of the problem, and that is why I am trying to explain how it works and how the Services have been treated on all fours with the rest of the community.

In fairness, the Review Body should come up with what it thinks is genuine comparability with industry regardless of Government constraints. The Service man would then know to what level he is being cut down. I am sure that the right hon. Gentleman is right when he says that Service men understand his point about bearing some burden, but the report put forward by the Review Body is artificial as it is within the straitjacket of Government policy. The Service man does not know and, therefore, suspects the worst.

I understand that there is concern and misunderstanding about these matters. Equally, those in civilian occupations do not understand what they might otherwise have had. Whenever an incomes policy is introduced—for example, when the Conservative Government introduced their statutory incomes policy or when the Labour Government introduced their voluntary incomes policy —it must operate from a certain date. Clearly it is a greater disadvantage to those who are on the point of receiving a large increase as against those who, by chance, received an increase a month before that. As between one occupation and another or one industry and another, it is quite impossible to arrive at a figure, as the hon. and gallant Gentleman asks, and to state that that is what those in certain occupations or industries would have received if there had not been a pay policy.

The right hon. Gentleman has given figures that demonstrate that the Armed Forces have fallen behind those in civilian occupations. The pay of Service men has fallen behind the pay of industrial earners. It is imperative that the charges imposed on the Armed Forces are analogous to the rise in prices elsewhere. Why does not the same criterion apply to the earnings of the Armed Forces personnel?

Given his experience, I am sure that the right hon. Gentleman appreciates the difficulty of trying to depend too much on raw statistics.

I have not yet referred to any statistics. The pay of the Armed Forces is determined at the beginning of the financial year, whereas in other industries it is determined at a later stage. I can well understand the right hon. Gentleman not wishing me to spell out in too much detail the basis of the accommodation charges. After all, the right hon. Gentleman was very much involved in their construction. It is only right to ask whether the Conservative Party would abandon this analogue. If that is not its intention, I am bound to point out to anyone who is interested that the only element so far on which the Conservative Party has expressed itself in terms of figures in the whole range of policy is housing. It has said that council rents should increase. It has been said in the House that they should be increased by £3 a week on average in the country and by £6 a week in London. On that basis it would seem that it would be Conservative Party policy immediately to increase the charges that it introduced. Is the right hon. Gentleman prepared to say here and now that he will abandon the housing policy of his party?

This is a serious subject and it is absurd for the right hon. Gentleman to behave in this pathetic manner. I have told him during defence Questions that the Conservative Party is firmly commited to ensuring that the Armed Forces will not suffer as a result of Conservative Government. The right hon. Gentleman knows that the morale of the Armed Forces has been reduced to a level quite unknown in any time of our history by the action of himself and his Government. We are facing a serious situation and we want to know what action he intends to take. I have said before and I say again that it is definite Conservative policy that the Armed Forces will not suffer in comparison with civilian manpower but it is the policy of this Government to make them suffer. How will the right hon. Gentleman remedy that fact?

If there were a scintilla of substance in what the right hon. Gentleman has just said, I should agree with him. It is not the policy of the Labour Party that the Armed Forces should suffer. Equally, it is not my party's policy that the Armed Forces, any more than anyone else in the community, should be exempt from the sacrifices that have been made by the trade union movement to put the economy on a footing that will enable our public expenditure objectives and other objectives to be attained.

The process of job evaluation made it possible in normal times to derive rates of pay for the Services which were comparable with rates of pay in civilian life. However, in these abnormal times—surely no one will quarrel with that statement —the operation of the voluntary incomes policy has meant that we have had to suspend the use of comparability as a criterion for Service pay. That fact has been acknowledged by the Armed Forces Pay Review Body. It was acknowledged in its last report and in the report that appeared previous to that a year before. That is recognised by the Government.

In April 1975, on the recommendation of the Board, the Armed Forces received a substantial pay increase that brought them into a position of relative pay comparability. The result was that at that stage Service pay was comparable with the pay of civilian counterparts. The further review that was due in April 1976 was not possible because 1975, a year of high wage settlements, resulted in round 1 of the present voluntary pay policy, which was implemented in August of that year.

In common with many other members of the community, the Services had their pay review and increase early in 1975. The high rate of settlements continued through the summer of that year, albeit at a lower rate, and those increases were not reflected in the analogue on which the Services' early settlement was based. That applied to many others in the civilian sector who had earlier pay settlements.

When the pay of the Armed Forces was reviewed in 1976 it was, like all other wage settlements under round 1 of the pay policy, strictly subject to the round 1 guidelines. It was inevitable that the pay award of April 1976 could not retain the pay comparability that had been achieved in April of the previous year. The Armed Forces were not alone in that respect because the effect of the voluntary incomes policy has been to disturb relativities right across the board.

Apart from the timing of the introduction of the voluntary pay policy, which affected many groups, there are other factors that have had a bearing on the pay comparability of the Services. Outside the Armed Forces, employees may be able to increase their take-home pay by increasing their overtime or by changing their jobs so as to obtain a higher rate of pay. The personnel of the Armed Forces, like many other public servants, cannot take advantage of either possibility. Against that, we should remember that the Armed Forces are not subject to short-time work and layoffs as are civilian industrial workers.

It has been suggested that the Review Body should not have insisted on comparability of charges while pay comparability has been suspended. It is said that it has undermined the whole concept of the military salary. I understand that that is the essence of the Opposition's argument.

Is it not true to say that in civilian life many agreements have an annual increment basis? If that were applicable to the Armed Forces, that would have a tremendous effect in getting people to sign on again. Is not that a deficiency in the comparison that the right hon. Gentleman has made?

In many ranks in the Armed Forces there are incremental scales. A major with eight years' service gets substantially more than a first-year major. In fact, a major with eight years' service gets about £500 more than a Member of Parliament. Whether that is right or not I would not like to say. I just want to point out the difficulties in getting comparable figures.

What about comparable figures for Members of Parliament?

I am happy to say that that is outside the scope of my responsibilities.

It is wholly misconceived to suggest that the Board can disregard the analogues and the actual increases that have taken place. It is working a year behind, so in a sense it has not taken into account the full impact of rate and rent increases. No one in this House, least of all Opposition Members, will argue that rates have not gone up very substantially. We hear a lot about that. Equally, we all know the unhappy fact that food prices have gone up very substantially and it is quite impossible for these factors to be ignored in the concept of the military salary without creating a non-wage benefit. That could be done under the pay policy only if the amount of the pay increase were reduced by an amount equal to the non-wage benefit being given. That would be quite unfair because, for their own reasons and in special circumstances, some members of the forces do not occupy married quarters. Others do not live in barracks or take their food there, and it would be quite wrong for their pay to be reduced as a contribution to lower levels of accommodation and food charges.

I shall quote the words of Admiral Sir Desmond Dreyer in the letter to which I have already referred. He said:
"The assumption that charges for food and accommodation could have been maintained at the existing (1976, based on the 1975 data) level and, at the same time that Service men and women could still have received the full pay increases recommended 'without breaking the pay code' is ill-founded. As your informed readers will know, and as our sixth report records, the provisions of the restraint measures require that a non-wage benefit would have to be offset against the pay limit, and any departure from comparability of charges would create such a non-wage benefit".
That is the view of a senior and greatly respected naval officer who is a member of the Review Body and has great experience in this field.

Can the Secretary of State explain how it is that if the Review Body increased the accommodation charges by no more than an amount that is comparable in civilian life, the number of vacant married quarters has almost doubled since this Government took office? More than 6,000 Armed Services personnel and their families have voted with their feet and moved into civilian quarters.

I do not dispute that there are 14,000 empty quarters, but to a large extent the problem of married quarters stems from the reorganisation of the Services which followed the defence review and which has been spread over a timescale in order to maintain operational efficiency. Many of the quarters have been earmarked for future use, and if they are empty for a considerable time they are made available to local authorities.

In the Services, as in civilian life, I readily acknowledge that there is a desire by many people to own their own homes and to pay off the money by mortgage repayments instead of paying rents. The Services are part of the community, and many Service men, particularly when they approach the end of their Service careers, make arrangements for their return to civilian life. I think that is an explanation for the 14,000 empty quarters. It sounds a large figure, and indeed it is, but it represents only 14 per cent. of the total number of quarters. I would point out that local authorities that have great pressures upon them for accommodation may have houses standing empty simply because people are moving and the new tenants have not come in. The demands of service in the Armed Forces have been particularly acute in recent years.

I make it absolutely clear that by sticking to the guidelines the AFPRB, like the trade unions and employers, has given priority to the wider national interest. Before the introduction of the voluntary incomes policy the country was faced with raging inflation that threatened not only our competitiveness in world markets but social stability at home. We had been paying ourselves more than we had earned. This caused a catastrophic rise in prices that had to be curbed.

The voluntary incomes policy was designed to bring a dramatic fall in inflation and to keep the economy on the right line. That pay policy must apply to all sections of the community. As a deliberate act of policy to protect the lowest paid we ensured that the smallest percentage of increases should go to the higher paid. One of the successes of the incomes policy has been its universal application.

Before the Opposition threaten the achievements of the pay policy in order to seek some immediate political advantage, as they see it, without any suggestion or even a rumour of what they might do if they were in office, I ask them to consider the national interest. I urge them not just to talk about it but to make some positive contribution in that direction.

The Board did recommend the maximum increase allowable under the incomes policy. In round 2 of the policy there had been a general reduction in living standards. I do not think that anyone would dispute that. This has come about as a result of price rises coinciding with very modest increases in pay. The Armed Forces could be no more protected from this than could the rest of the community.

They are not less protected. They are on an analogue devised by the Opposition which puts them exactly on all fours with what civilians would have to pay for their accommodation. Perhaps the Opposition should have made a parallel with mortgage rates. That might be more disadvantageous.

Round 2 of the pay policy was linked with what the Chancellor indicated in the 1976 Budget—that a tightly structured pay agreement operating from August 1976 would make it possible for the introduction of substantial tax reliefs. One must look at the combination of the pay increase and the tax reliefs—the agreement of the current limit of 5 per cent. of earnings, with a minimum of £2·50 and a maximum of £4, coupled with tax reliefs applied retrospectively to April 1976.

This year the Chancellor of the Ex-chequer announced in his Budget measures that will result in all members of the community, including Service men, obtaining an increase in disposable income. Although these further measures do not form part of the 1977 pay award, the Armed Forces will benefit from them, and considering the financial position of Service men today it is right that that matter should be taken into account.

While the right hon. Gentleman is dealing with taxes, will he give the assurance for which I asked about travel warrants?

As I understand is, this is primarily a matter for my right hon. Friend the Chancellor of the Exchequer and financial legislation. There should be no reason why individual Service men should have to pay tax on leave warrants. This is a somewhat complicated issue which has still not been fully sorted out with the Inland Revenue. However, if the right hon. Gentleman requires a fuller answer, my hon. Friend will seek to provide it when he replies to the debate. We certainly do not have it in mind that individual Service men should pay tax on their leave warrants.

The right hon. Gentleman sought to embroil my hon. Friend the Under Secretary of State for Defence for the Royal Air Force in a particular argument involving the Review Body but it so happens that both interpretations are correct. The Body was expressing its view on pay increments derived from the pay policy, whereas my hon. Friend was looking at salaries in total. Again my hon. Friend perhaps can elaborate on that point later.

The right hon. Gentleman was kind enough to refer to the circumstances of the special dispensation we were able to make for certain Service men in Northern Ireland. In view of the measures recently announced by my right hon. Friend the Secretary of State for Northern Ireland, it was felt wrong to sustain the discrepancy which had lasted for seven years under which forces in Northern Ireland on emergency tours were treated as being in field service conditions and therefore did not have to pay charges for accommodation or food, whereas the permanent battalions who were there for 18 months or more were subject to these charges. I thought it wrong in those circumstances to sustain that situation. For that reason I decided that the charges should no longer be sustained and that certain charges for married quarters and single quarters should be abated.

The benefits to members of the forces from the reduction in accommodation charges are £7·50 a week for a captain, £5·30 for a warrant officer or sergeant, and £2·80 for a corporal or private. In addition, single men in permanent garrisons will be relieved of food charges of 93p per day. Married accompanied men will receive the same daily food allowance of 50p which is paid to members of the Ulster Defence Regiment who are called out for duty on days when they are not provided with food in the unit. If necessary, my hon. Friend will go into more detail when he replies to the debate, but this indicates our concern for the special hardship and difficulties of Service life in Northern Ireland. We agree that the circumstances have borne particularly hard on married accompanied men. The Government are determined to give the Services a fair deal.

Before the Minister leaves the subject of Northern Ireland, will he comment on the allowance paid for single men serving there? That allowance has remained at 50p per day for the last three years and, in view of the extra expense which those men face, it is an unrealistic figure. On a visit which I had paid to Dublin in an all-party delegation a week or two ago, we discovered that the soldiers serving on the southern side of the border were receiving special pay of £1·50 per day when undertaking the same job as the troops on emergency call were carrying out on the northern side of the border. Is this not a cause for concern and shame?

The decision I took will produce the greatest benefit for those in the hardest circumstances, but I must point out that it was a Labour Government who introduced this allowance in the first place. The Conservative Party was consistent in its view, and it may not have escaped the attention of Service men that the special allowance in Northern Ireland when the Conservatives took office was zero, and when they left office it still stood at zero.

I accept that there is a case for a pay review, but the allowance is caught by pay policy. It is a taxable emolument, and if that were to be increased it would have to be taken out of the total pay available. For that reason it is not possible at present to give cnsideration to that aspect which the hon. Member for Petersfield (Mr. Mates) sincerely wishes to see given to the subject. I must point out that men in Northern Ireland on emergency tours are not paying accommodation and food charges. As a result of my recent decision single men who are in Northern Ireland in permanent garrisons also will not pay these charges.

I am sorry to press the Minister on this matter, but I must point out that this is an element not of pay but of compensation. How can he say that this sum is subject to pay policy when troops in Germany are compensated when the pound is devalued? Should not a similar policy operate when men are forced to serve in another part of the United Kingdom?

The hon. Gentleman is entitled to his view, although I do not agree with it. I would remind him that this is a taxable emolument. If the sum were not subject to tax, it might be covered by the point he makes. Although he complains that the sum is taxable, I would remind him that since previously the figure was zero, it did not attract tax. I give the hon. Gentleman an undertaking—and this is a matter for the Body—that when the pay policy situation allows, this and all these other matters will be reviewed, because we all know that under the present rigid rules they cannot now be considered.

We are determined to give the Services a fair deal. The fact that only small net increases can be awarded in pay terms this year is in no way related to any reductions in the defence budget. We have budgeted in constant price terms. The difficulties regarding pay have not arisen as the result of any defence cuts. They are solely the result of applying to the forces the policy of pay restraint which applies to the population as a whole. We must get the situation out of perspective.

I believe that the Services offer a worthwhile career and one of great national importance. The satisfactory level of recruiting and re-engagement shows that many people share that view.

I understand the concern that exists within and without the Services about some of the consequences of the unavoidable and necessary rigidity of rounds 1 and 2 of the pay policy and, indeed, for that matter, of the preceding statutory incomes policy of the last Tory Administration. I understand the desire for more flexibility. The Opposition spokesman tried to pour scorn on what I have said to the forces but I shall repeat it because it is our intention that the rigid nature of the first two pay rounds, which have produced distortion in some pay structures in the professions, industry and other fields, including the Armed Forces, will—although we do not know yet the shape of round 3—be put right in future rounds of the policy. I shall ensure that the needs of the Armed Forces are taken into account. I also give that assurance to the House.

5.41 p.m.

The Secretary of State's speech this afternoon was more in the nature of a lecture—deliberately low key—about the philosophy and origins of the Review Body on the pay of the Armed Forces and on the general economic situation. I looked in vain for any inkling that the Secretary of State realised the deep resentment and bitterness that is felt by individual members of the Armed Forces. One certainly looked in vain for any real sympathy. The Secretary of State cannot have paid many visits to the forces recently.

I have been privileged to go to quite a number of establishments lately, including RAF St. Mawgan, the 40th Commando unit, Dartmouth, a nuclear submarine and the 59th Independent Commando Squadron of the Royal Engineers. The units were all different, but they had in common a fury about what they regarded as "an Irishman's pay rise". Indeed, on Dartmoor, where they were preparing for an exercise, Service men readily rose from their stomachs and the Dartmoor grass to tell me what they thought about the pay rise. I imagine that they modified their language for my benefit and that in private it was more highly coloured.

In case the hon. Lady has it wrong, I must point out that I have visited forces recently and that I visited our forces in Suffield, Canada, only last week. I was recently at St. Mawgan and I have also recently visited a nuclear submarine. Perhaps because of the difference in our sexes the men did not modify their language for me as they did for the hon. Lady. I must point out to her that the shop stewards who come to see me about their sense of grievance over pay and prices do not modify their language either.

In that case I can feel only that the Secretary of State is slow to learn.

There is a sense of frustration also because many of the avenues that are open to the ordinary citizen are not open to Service men. They cannot undertake industrial action or strike—although I doubt that they would wish to do so—and they therefore feel a sense of frustration in not being able to consider such action. Some Service men even feel that their representations to Members of Parliament are somewhat limited. One Service man said to me openly that it was all right for him to speak to me in the middle of Bodmin Moor but that he would not feel able to write to a Member of Parliament putting his grievances firmly on paper. I do not know whether Service men are so prohibited, but I would be interested to find out. Service men feel a strong sense of having no-one to whom they can turn, not even the Armed Services Pay Review Body.

Salt is rubbed in the wound because Service men see the maintenance of barracks and such services being cut back. There is no doubt that the money voted under these heads is to be cut, so Service men will see increases in the charges made for their accommodation while their accommodation will gradually go down in standard. That cannot help.

Furthermore, Service men do not have some of the opportunities that are open to those in civilian life. The Secretary of State referred to short-time working, but opportunities for overtime do still come up even now. Such opportunities are not open to the Armed Forces. Nor can they indulge in moonlighting without paying tax on those earnings—which makes the money worth a great deal more. They do not enjoy fringe benefits such as the use of cars or luncheon vouchers. In all these ways people in civilian life try to make up for any technical shortfall under an incomes policy.

There have apparently been disputes about the figures on the pay rise so perhaps I can quote some that I received from the horse's mouth. One was of a single marine living in barracks who received a gross weekly pay rise of £2·50. That amounted to £1·47 after the increased cost of food and accommodation. Tax on the pay rise was 87 pence and the cost of increased national insurance was 14 pence. The total deductions amounted to £2·48, leaving the princely sum of tuppence. The remarks column on my sheet added that his rank is paid fortnightly to the nearest pound and therefore this marine will see no difference in his pay. It is small wonder that there is deep resentment.

This is but one example from a whole host of examples. Another is that of a single sergeant living in the sergeants' mess who is entitled to a £4 increase. His food and accommodation increase amounted to £1·75 and the tax on his rise was £1·40. That did not include the increase in national insurance contributions, but without taking that into consideration his net rise was 85 pence.

I reinforce the plea that has already been made by the Opposition spokesman, my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), that it is singularly tactless to increase pay and charges for accommodation and food at one fell swoop. It comes hard, and I doubt that any Service man will understand that—however many lectures he may be treated to by the Secretary of State or other Ministers.

It is not simply the lower ranks who are penalised. The upper ranks are losing money, and several high-ranking officers have given me examples. Indeed, the answer to a recent parliamentary Question highlights this. I quote:
"Taking into account only the supplements which are paid and the increase in charges some colonels and brigadiers will receive an after-tax increase which is less than the increase to charges."—[Official Report, 19th May 1977; Vol. 932, c. 290.]
That puts it tactfully. It means that there will be less money in the bank account or the pocket than there was before.

I noticed that the Secretary of State brushed aside references that had been made to industrial earnings as though they were general figures of which one could not take too much notice. I shall remind him of figures which were given in reply to a parliamentary Question that was put by the Opposition spokesman, my hon. Friend the Member for Stretford (Mr. Churchill). From July 1975 to July 1976 the forces had a 9·6 per cent. rise while in industry that figure was 13·9 per cent. From July 1976 to 1977 the Forces received a 4·8 per cent. rise while industrial earnings increased by 6 per cent. There does not seem to be much comparability.

The Service men also suffer a whole host of other niggles that, taken together, add up to a considerable amount. I refer to heating. Some soldiers have been unblocking fireplaces because they can no longer afford central heating while others, who do not have fireplaces, have resorted to paraffin stoves. I notice that the Spencer Report, which dealt with the welfare of the Army—but it is equally applicable to the rest of the Armed Services—referred to the difficulties of fuel prices. These difficulties must go back as far as 1975 since that report was published early in 1976. The report said:
"Many witnesses expressed concern at the high and increasing level of fuel bills and pointed out that the older married quarters are being modernised and central heating is being installed; in some there are oil-fired systems, whilst in others there are electric night storage heaters. Price increases are now making these systems too expensive, particularly for the junior ranks who often attempt to economise by burning paraffin heaters … We were reminded that the Army tenant, like the council house tenant, has no choice of what type of heating system is installed in his house."
We must remember that there have been escalating fuel costs since then and the situation must be much worse now.

There is also a grievance about boarding allowances, and I am sure that this will be of interest to the Secretary of State because he used to be Secretary of State for Education. The Spencer Report underlined the heavy disadvantage suffered by the children of Service men because of the numerous changes of school. This may be regarded as a hazard of Service life, but that does not make it any easier for the children concerned. A survey of officers' families found that half had a teenager who had attended at least six schools. A significant proportion, because of the exigencies of Service life were compelled to change schools in the middle of a term and this makes it even worse. When the Wiltshire Education Authority tested basic skills in 30 primary schools, the children of Service families fared worse in all the tests at all ages than their counterparts from non-Service families. Is it surprising that many families opt to send their children to boarding school in order to overcome these difficulties and to give some stability in academic terms and from the emotional problems that might arise from constantly changing schools?

Whose fault is it that there are not sufficient State boarding schools to cater for these children? There are insufficient places in the State sector and the children have to go to the independent sector. Boarding allowances are paid, but, since these arise solely because of the difficulties of Service life, there is an understandable resentment that they are taxable. In many cases they are taxable at higher rates because they are added on top of a Service man's income.

Such anomalies could easily be ironed out and would do much to give a sense of fairness. The same applies to the Service man who, because of the necessities of Service life, has to let his house. He receives so-called unearned income, but he is not able to use the house because he is required to live in married quarters or to move away. Why should that money be subject to these deductions? May I quote one example of an Army officer from my part of the world. He was receiving £100 a month gross rent. By the time expenses and tax had eaten their way into that, he was left with a net £40 and he was being asked to pay £72·37 in married quarters. I am sure that my hon. Friends could give thousands of similar examples. Is it any wonder that there is widespread resentment among the Services

There is yet another difficulty. The move away from married quarters where-ever possible—because of the cost—and the need for a Service man to live in his own house rather than rent a property is leading to a break-up of regimental life and is causing considerable concern to high-ranking officers who believe that this will affect the work. It is not simply a question of keeping the troops happy but of keeping up the spirit and morale of regiments, and this is a point to which the Secretary of State should address himself.

I expect that it is a hopeless task to try to persuade the Secretary of State of the deep feelings of the Armed Forces. I have tried to put them as strongly as I can and I hope that my hon. Friends will do likewise because I should like the forces to feel that they have some friends, at least on this side of the House.

5.56 p.m.

The hon. Member for Plymouth, Drake (Miss Fookes) has articulated in a most informed and detailed manner some of the grievances about the structure of pay for the Armed Forces. I shall be touching on some of these points later.

I should like to start with a word of encouragement to my right hon. Friend the Secretary of State who gave a most reassuring account of the difficulties of comparability, which is the real issue here, and of the difficulties that he and any Secretary of State for Defence will face under any Government in finding a strict comparable pay structure for certain categories of Service men. This remains an exceedingly difficult problem to overcome. The indications from pay review studies so far are that there is a way of overcoming some of the intrinsic difficulties involved. When the economic climate improves—and it can improve only if we have a successful incomes policy—it will be possible to do something about comparability. I am sure that this will be rectified as soon as possible.

I was pleased to hear what my right hon. Friend said about the taxation of travel warrants. Although he was not able to be explicit, my interpretation of his remarks was that he was moving in the right direction, and that will be warmly welcomed on both sides of the House.

The hon. Member for Plymouth, Drake said that she wanted the Armed Forces to appreciate that she and her party were firm supporters of the Services. Let me make clear that hon. Members on this side of the House have no doubt that soldiers, sailors and airmen should be paid proper rates, comparable to those prevailing in industry. That proposition has strong support on this side of the House.

My hon. Friend the Member for Battersea, South (Mr. Perry) comes from a long line of colour sergeants. He was a warrant officer in the last war, and knows that the question of awards for Service men, particularly before the war and immediately after, has always led to inequities under successive Governments, and that Service men have generally come off rather badly. However, when one looks at the record, it is clear that Labour Governments have done more than Conservative Administrations in recent years to improve the lot of Service men. That cannot be disputed.

The ravages of inflation have made it extremely difficult for the incomes policy, and we are now in a fairly critical stage. Everyone knows that the next few months will be crucial for the next phase of the incomes policy. It is implicit from this policy that sacrifices should have to be made. Indeed, sacrifices have been made and have been accepted. Although it is not surprising that there is cynicism among Service men to a certain degree concerning politicians, most Service men accept overall that there has to be some sacrifice in the present circumstances.

The right hon. Member for Chesham and Amersham (Sir I. Gilmour), who opened the debate, said that there was no confidence among Service men in the Labour Government. Let him be without any doubt that there is no confidence among Service men in respect of the Conservative Party. The cynicism is pretty evenly shared.

The right hon. Gentleman should have shown a proper understanding of the dilemmas that the Government face. I think he missed a great opportunity here, because he will know that the greatest difficulty, facing not only the British Armed Forces but the armed services of the NATO countries as a whole, is that the wage and salary elements are a very considerable part of the defence budgets of the West. This is a factor with which the Soviet Union does not have to contend. There is a real dilemma here which has to be settled in a satisfactory way.

I hope that the right hon. Gentleman's arguments—this is the real danger of them —will not encourage the idea that perhaps the various senior officers serving on the Pay Review Body cannot be trusted. The right hon. Gentleman made great play of the point that somehow or another it is felt that they have been got at by the Government, and may unwittingly—I am sure that they do not want to do this—encourage the idea that the only way Service men can get justice is to unionise. I am sure that the right hon. Gentleman would not want to encourage that, but in my view he is in danger of doing so. I must say in passing, that perhaps if they did unionise, and came fully into affiliation with the Trades Union Congress, we might get a better debate on defence matters inside the trade union movement. Even so, that is too risky a proposition for me seriously to recommend.

There is much to be said for our present method of making sure that conditions for our Service men are maintained. It would be a great pity if the right hon. Gentleman or any other Member of the House were to increase cynicism about the Armed Forces Pay Review Body.

Before my hon. Friend leaves that point, about trade union organisation in the forces, will he confirm that there are certain armed forces of our allies which provide a greater degree of permission for organisation than we have in this country? Does he think that it works out unreasonably in those cases?

No. I do not. I fully accept my hon. Friend's point as a perfectly reasonable one, but this must be considered in terms of the historical circumstances. In the case of Germany there is a very strong case, in historical terms, for an element of trade unionism to be introduced because of the way in which the German army got involved in politics in the 1920s and the 1930s.

The experience of the British Armed Services is quite contrary to that. We have never had a military tradition. That is one of the great benefits that we have in this country. There is no need, therefore, for trade unions to be introduced into the Armed Services. In fact, I would go on and say that it would be most dangerous for it to happen, because it would bring the political process closer to the Armed Services. To involve the Armed Services in political decisions, however remote they may appear to be, by being in a trade union, would be extremely dangerous and should be resisted.

Perhaps my hon. Friend the Minister of State, when winding up, will say something about service housing, in regard to which there is considerable maldistribution. I wonder whether he could use some of the redundant married quarters by offering them for sale to some of the Service men. I do not know whether this possibility has been investigated, but my hon. Friend might care to comment on it later this evening.

The temptation of the Opposition to try to spread disaffection about the Government's intentions concerning incomes policy has been mischievous, and I am pretty confident that most of the serving officers and soldiers whom I meet will not fall for that ploy. They fully understand the economic situation, and that they must be part of a pay policy, but, as soon as the economic climate improves, I hope that my right hon. Friend and all my hon. Friends who are Service Ministers will argue very strongly for comparability for our Armed Services, all of whom are doing a first-class job. My hon. Friends must be congratulated on what they have already done for the troops in Northern Ireland. The increases are greatly welcomed and are an indication of what can and must be done in the future.

6.6 p.m.

I was disappointed at the Secretary of State's comment this afternoon, because I felt that he did not really get to the point of the debate, which is about conditions of service. His comments appeared to me to be an over-long apology for a miserable policy on pay.

The hon. Member for Hornchurch (Mr. Williams) is always interesting, and I could not agree with him more on unionisation. We do not want it in the forces. However, there must be many of us who believe that there are members of his party who are pressing the forces very hard and causing just those conditions which could bring about unionisation.

I believe that the basic problem of conditions in the Services is one of overstretch. This is caused by successive cuts in manpower without any dropping in commitment. We have fewer men and women to do the same, if not more, work. At the same time, they have to keep up the same standards, and in many cases even higher standards. We have a position, therefore, of harder work and longer hours done by a fewer number of people.

The first effect of this is longer family separations, although the seriousness of this has not been underrated in either of the recent reports, Lord Seebohm's report on the Navy or Professor Spencer's report on the Army: they both place great emphasis on the dangers of long family separations.

Although this problem is fully recognised by the Government, they are seriously worsening the position by the present cuts. Northern Ireland, for example, is not considered an extra responsibility. It has to be covered by home forces and by forces from Germany. It is universally known that we need more infantry in Northern Ireland. It has been much quoted but it is none the less true now than ever that the effort to save the teeth is being done at the expense of the tail. Defence cuts have led to the reconstructing of the corps in Germany, and the money available in the works Vote is now so reduced that men are living in bad accommodation. They are living in buildings with bunks one on top of another, and in some cases there are no baths. It was necessary to withdraw labour from families, but they were promised better household aids, and these have not been forthcoming.

The Chairman of the Armed Forces Pay Review Body has been congratulated on his knighthood, and I join with this, but it is hardly surprising that people in the forces to whom one has spoken have been making derisory comments about this. It is no use the Under-Secretary shaking his head. I have spoken to people, and they have told me that they consider this body to be composed of stooges of his Government. I can only repeat what I have heard from members of the forces. It is no use denying it. The Secretary of State made it clear this afternoon that he had been approached by the members of the Armed Services Pay Review Body who wished to do a job that he would not allow them to do.

The figures mentioned by my hon. Friend the Member for Plymouth, Drake (Miss Fookes) were only to February 1977. I believe that the up-to-date figures will show an even greater deficiency towards the forces compared with industry. The forces feel bitter when they compare their lot with that of civilians working alongside them. A good example is the tax disadvantage of Royal Navy personnel, compared with those manning the fleet auxiliary craft. The Services see the great advantages obtained by those working alongside them where defence money is not involved. Those points where the Services fail to make money have clearly been made by my hon. Friend the Member for Plymouth, Drake. In Germany the forces see the continuation of the Army Forwarding Service as an extravagance for the benefit for about 20 dockers at Deptford when bulk containers would be more economical for house moving.

I wish to make two particular points. The first concerns education. I am fully aware of the valuable work that is done by all the Service education authorities, and, indeed, by local education authorities, but with local authorities now adopting different criteria for grants, I think that it would be worth looking into the possibility of treating the forces as an authority in their own right. The Education Act 1944 could then have some effect. We should be able to give equal opportunities for grants to all Service families. It is not necessary to emphasise the great importance which Service families place upon education. Indeed, the Seebohm Report recognises the difficulty of children who in some cases have to move many times during their educational life.

The other point to which I wish to draw attention, as did the hon. Member for Hornchurch, concerns housing, particularly for ex-Service men. When the Minister of State replies this evening I hope that he will consider some of the empty married quarters being made available for ex-Service men. The present rate of inflation and the wages which Service men receive give them no opportunity of saving enough money to buy their own houses. We must seriously consider that matter for the future.

Does the hon. Gentleman agree that part of the difficulty is that, whereas in the past the gratuity that was given to a Service man on being demobilised was sufficient to put down as a deposit on a house, that is no longer the case? Therefore, this is a real difficulty for Service men.

I entirely agree with the hon. Gentleman. It is no new problem. It happened during Caesar's time. When he got back from one of his—

I was not there. You were. I am sorry, Mr. Deputy Speaker. You certainly were not there. The hon. Gentleman might have been.

When Caesar went back to Rome in 47—I think it was with the Tenth Legion —he asked the Senate for one acre of land and a cottage for each legionnaire. He got it, but only after he had threatened the Senate that he would loose the legionnaires on Rome. I believe that today this Government ignore the justifiable claims of the police and the Armed Forces, but submit willingly to the Seamen's Union.

I could not agree more with those of my right hon. Friends who have said that never before has morale in the forces been lower than it is now. How much longer do this miserable Government think that they can go on taking advantage of men and women in the forces? Surely the Government do not think that the Services are so ignorant, inarticulate and stupid as not to realise that they are being exploited. Do not the Secretary of State for Defence and other Ministers realise that they are showing no muscle on behalf of those whom they are here to lead, and to represent in this place? The forces know that many Labour Members are opposed to defence expenditure. They know that, when money has to be saved, it will be saved at their expense and at that of the police.

I suggest that the Secretary of State and other Ministers of the Crown can do something about this matter. I suggest that the right hon. Gentleman should see the Prime Minister, as did the Service leaders, and should tell the Cabinet, if it still sits, that the Ministers responsible for the defence of this realm will not put up with the conditions in the Armed Services at the moment. Surely what is good enough for the right hon. Members for Bristol, South-East (Mr. Benn) and Ebbw Vale (Mr. Foot) is also good enough for Ministers of Defence. There is no need to fear resignation or sacking. There is no need to fear for collective Cabinet responsibility. We heard from the Prime Minister today that, on his say-so alone, that is disbanded. Therefore, we can have a free vote, and an eager Chancellor of the Exchequer can, if necessary, provide money to improve the lot of the Services. The people of this country would welcome that.

Just as the defence of this realm should be the overriding duty of any Government, so should the same priority be given to the conditions of service of those upon whom we depend to carry out this duty.

6.17 p.m.

I listened with great interest to the hon. Member for High Peak (Mr. Le Marchant). Frankly, I agree with much of what he said, particularly about housing. I thought that he put forward a good suggestion regarding housing and the Armed Forces.

The second occasion on which I spoke in this House, which was in February 1965, was on a Bill to provide £40 million for housing for the Armed Forces. Every time I take a party round this House it is handy to pick out of the Lobby the Hansard copy that contains that speech on this matter.

I was glad to hear the hon. Member for Stretford (Mr. Churchill) say that there are 14,000 empty Service properties and that 6,000 members of the Armed Forces have left properties and sought civilian occupation. That is a very good thing. When a serving soldier, airman or sailor takes it upon himself to provide himself with accommodation for when he leaves the Forces, by the purchase of a property, it is an exceedingly good thing. I should like to see Service men buying their own houses so that, when they leave the Services they have somewhere to go. The 6,000 who have already left are to be commended. It is an indication that Service men today are to some extent enjoying better pay and conditions than they had before.

Surely the hon. Gentleman realises that a lot of these married quarters are empty not because Service men are buying their own houses but because they are living with in-laws and cannot afford anywhere else to live?

I suggest that that is supposition on the part of the right hon. Gentleman. I am hoping that these Service men have bought their own houses and are living in them.

The hon. Member for High Peak suggested that some of the 14,000 empty properties might be sold to Service men who on retirement want to live in the area where they served. I think that special conditions and charges for the houses should be commensurate with what Service men can offord to pay. I throw out that suggestion to the Minister for consideration with a view to occupation of these 14,000 empty houses.

One would have thought from today's debate that the Labour Government were the fathers of the Review Body. They were not. It was formed in 1971 under the last Conservative Government, after a long series of negotiations that took place when the previous Labour Government were in power. When the Body was set up the Government invited a number of business and professional men, including a retired Service officer, to form a completely independent panel to make recommendations to the Prime Minister on Service pay. Now the Opposition are trying to blame this Government for all the things that are wrong with this organisation. They are wrong to do that. One cannot set up an organisation and then blame someone else because it does not function as it should.

The rankers in the Services feel that they are not represented. The rankers and the ordinary senior NCOs feel divorced from this type of body. I do not suggest that members of the Armed Forces should join a trade union, but there should be some organisation to which they can turn so that their point of view reaches the Review Body.

My next point might be controversial. I wish to speak about the conditions of Service men. In 1973 I spent five weeks in Gibraltar as a guest of a senior NCO in REME. I went through the tunnel there and visited other places. I conversed with rankers, NCOs and warrant officers. One of the troubles in Gibraltar is that Service personnel have to work under extremely rigid conditions. They are confined in a small space. There is nowhere for them or their families to go. There is a swimming pool, but in the main the life of Service personnel is regimented from the time that they reach Gibraltar to the time that they leave.

I believe that the period of service in Gibraltar is two years. I am not saying that that is too long. However, the Minister should consult the Prime Minister and the Foreign Secretary, because today there is a new Government in Spain. Surely we can come to an agreement with the new Government so that British Service men are allowed to enter Spain. Our Service men should have the opportunity to go to Spain to see something of that country and stretch their legs. For many years British Service men in Gibraltar have been confined to that area. I should like to see negotiations started with the Spanish Government so that our Service men are able to enjoy the Spanish countryside.

Things are different in the Services today. Let us not make any mistake about that. But let us not parade the idea that things are so bad in the Services and perfect in civilian life. That is not so. I have met hundreds of Service personnel who are happy to be in the Armed Services. People in civilian life make the same type of complaints as do Service men.

The cost of heating has been mentioned. Hon. Members must have had correspondence from their constituents about heating. I received a phone call this morning from a lady whose quarterly electricity bill wag £373. She is sure that there must be a mistake. These problems trouble both civilians and Service men.

By concentrating on the problems of the forces the Opposition could create disaffection. I am not in favour of that. This constant pinpricking makes Service personnel believe that they are apart from civilians when they are really part of the civilian community.

When I hear the Opposition talk about the way in which the Government are reducing the standard of living of Service personnel my mind goes back to the 1920s, the 1930s and even the 1950s, when conditions were nothing to brag about. Conditions have been improved considerably by Labour Governments. I concede that Conservative Governments have also contributed. Let us not try to pit one party against another on this matter.

One of the most laughable incidents that I experienced in the last war was when I was being drafted to the Far East. We picked up our equipment and we were issued with Bombay bowlers used in the Boer War. Our khaki drill was also first issued at the time of the Boer War. It was not until a couple of years later that we received first-class equipment. That was in the run-up to the war under a Tory Government.

Hon. Members may talk about efficiency. As a sergeant I remember having to teach gunners with made-up, mock Bofors. Let us not forget that time. In 1939-40 we had no equipment to give our troops. For instance, when we were issued with uniforms we had to wait a fortnight before we got our boots and we had to drill in civilian shoes. Let us not dwell on past efficiency.

I want the Armed Forces to feel that they are part of the nation. I have been to Ulster and seen the conditions in which our troops operate. I have seen the conditions under which men defending outposts work. They have to contend with mud and dirt as well as danger. We should be thankful to them for doing the job that we have asked of them.

The Secretary of State should review speedily the question of the 50p. The men who do the dirty work in Northern Ireland—the infantry, the artillery batteries and the SAS, for whom I have a great respect—deserve our praise. Their activities have been put down by some people. I only wish that we had had a couple of SAS battalions to help us in the Far East. I pay tribute to the work that they have done in Northern Ireland.

I hope that the Secretary of State and the Minister will take note of what hon. Members have said—that they think that the soldiers who are doing the dirty work in Northern Ireland should get some extra recompense for it.

The lot of the Service man today is a lot better than it has ever been, but a certain number of things require attention, particularly housing, and especially housing just before the Service man leaves the Service. This applies to all people such as policemen and prison officers, and it should apply to serving soldiers. The police have a very good scheme whereby a policemen can buy a house while he is a serving policeman for when he retires, so that he then has a place in which to live. Prison officers have this opportunity. I believe that it should be extended to Service men. The Government should devise a scheme for people who have remained in the Armed Forces for 12, 15 or 22 years to provide some fund, some incentive or co-operation with the building societies, so that when they leave the Services they have a place in which to live.

One of the troubles with the Armed Forces is that very often those who leave after seven, nine or 12 years have no home of their own to which to go. They usually, by force of circumstances, have to look for a job that offers them accommodation. That is why so many people from the Armed Forces go into the Prison Service. Therefore, I ask for consideration of the question of housing people not only while they are in the forces but also when they leave them.

I want to return to the subject of Gibraltar. Some of the accommodation that I have seen there is really second-rate. There is some first-class accommodation as well. Some beautiful houses have been built. I shall not, of course, say that they are mostly for DoE employees or for the senior naval personnel there, but we want accommodation like that for our serving soldiers and airmen in Gibraltar, some of whom have to put up with rotten housing conditions.

I make this appeal to the Minister of State. If Gibraltar is to be continued as a station and if regiments of British soldiers are to be stationed there together with a number of RAF personnel, I suggest that they should be provided at least with decent accommodation. I am sure that the Minister will take this matter on board and see that the Armed Forces in places such as Gibraltar get some decent accommodation.

I conclude by saying that I am interested in this problem because I believe that in the past we have neglected our Armed Forces personnel and I want to see them treated in exactly the same way as civilians, having the same rights and privileges and the same opportunities when they finish their service opportunities that will enable them to return to civilian life with a place in which to live.

6.34 p.m.

I am very happy to speak following the hon. Member for Battersea, South (Mr. Perry), who, except in the party-political sense, is my honourable friend. I certainly agree with many of the points that he made, specifically about the greater rewards for soldiers serving in Northern Ireland. I also agree with what he said about Britain having neglected her Armed Forces in the past. However, the fact that Britain has done so is not an excuse for her continuing to do so now.

That brings me to the theme that has run through this debate, namely, that the Government are not playing fair with Service men about pay. That is a fact that we must face. I want to do that, but not in a controversial way. I want to do it by examining the whole matter.

I do not criticise the individual Service boards or the Service administration in Whitehall. I do not criticise the Review Body. Its members are very distinguished and conscientious people. No doubt they have done their homework very carefully indeed. I shall come to that matter shortly. I do not think that the trouble lies there. Frankly. I believe that it lies at the political level.

I am not sure that the House knows the detailed terms of reference of the Review Body. They are summarised at the beginning of the report, in one sentence. I believe that the trouble lies in the fact that the terms of reference are being applied or interpreted wrongly by the Government and possibly by the Body itself.

I think that it is common ground that the intention is that Service pay should keep pace in general terms with what has been happening in industry. That is the situation which, to be fair, both sides of the House have been trying to achieve, so there is no difference between us concerning that. I am also very well aware that the Review Body was set up in 1971 by the then Conservative Government. There is no argument about that. But surely the whole purpose of having a Review Body is to make a real and genuine comparison between Service pay and comparable civilian pay and then for it to advise the Government what that comparison is. Then, after receiving that advice, the Government should say whether or not it falls within the limits allowed by current Government incomes policy, and they should modify it if necessary. But that is not what has been happening.

Both the fifth report and the sixth report—the current report—start with the assumption that the recommendations of this independent Body—the case has been made that it is independent—must lie within the limits of the Government's incomes policy. That is what I think is wrong. It is unsatisfactory for a number of reasons.

First, it is unsatisfactory because the reports do not quantify what Service pay levels should be to keep pace with what the reports call "outside "—that is, in civilian life. Consequently, the people, and particularly Service men themselves, at all levels, cannot see whether or not they are getting a fair deal. Certainly many people in the Services today do not feel that they are getting a square deal The most important thing of all is that they should know what sort of a deal they are getting. If the Review Body starts from the assumption that it must be confined by the Government's incomes policy, the Service man has no idea what figure the Body has come up with or what sums it has done to find out the comparison with industry. That is the first thing that is wrong.

The second thing that is wrong with the Review Body procedure is that it is being repeated year after year and it produces a cumulative effect. If the forces are behind in one year, they are cumulatively behind in successive years, becoming further and further astern of station and further and further behind. They are, anyway, six months behind comparable industrial rates because of the procedure, but the point that I do not think that Ministers have hoisted in is that this is cumulative, year by year. If one starts by being behind and is then squeezed by the Government's incomes policy, one ends up further and further behind, progressively.

The third point is that the Review Body itself recognises that the procedure that it adopts is unsatisfactory. In page two of the 1976 report it says,
"In consequence, a substantial backlog of structural problems will arise in the Armed Forces"—
that is, arising from the procedure—
"and will have to be resolved in the future."
Therefore, the Review Body is not really happy about it.

Further, the report says that the Ministry has a dual responsibility,
"since it is bound both by the incomes policies of Governments and responsible for management and morale of the Armed Forces as a whole,… We have already drawn attention to problems of compression which will arise at the higher level of the pay structure and they will have to be resolved at a future review."
All those references refer to action in the future. The report is now a year or more out of date, and this has not happened. This Body, which has gone into these matters so carefully, says that the position is not entirely satisfactory.

What it comes to is that the Forces are being squeezed into the straitjacket of Government incomes policy, whereas just about everybody else in the country is somehow managing to avoid it. [HON. MEMBERS: "No."] Yes. The Economic Progress Report, the blue document that comes to us every week from the Treasury, has a graph of wages and earnings which shows separately industrial earnings. These bear no relation to the figures adopted by the Review Body. There should be a dotted line showing the Government norm. These graphs bear no relation to it, for reasons that we all know. I suppose that moonlighting does not come into the official figures, but there are the productivity payments, overtime, fringe benefits and the rest. Service men are not asking for exemption from sharing the burden borne by the rest of the country in times of economic stress, but they are asking that the norm adopted for them should be true comparability and not bogus comparability.

Even if the forces were keeping up with civilian earnings, I question whether that would be right. In modern conditions the Service man should receive more. I do not think that the X factor of 10 per cent. that the Secretary of State gave us is adequate in present conditions. Would a normal, fair-minded decent trade union man think that he was being adequately rewarded for the conditions in Northern Ireland that our infantry undergo on their emergency tours? What would a normal, decent, fair-minded trade unionist expect to have to pay for the accommodation and food he receives in a coastal minesweeper at sea? What would he expect by way of overtime for working the hours that Royal Air Force personnel work to keep operational aircraft in Germany serviceable?

The whole thing does not add up. Service men make the point that they have no overtime pay and cannot go in for moonlighting. My hon. and fair Friend the Member for Plymouth, Drake (Miss Fookes) spoke of the lack of productivity payments and fringe benefits. Ten per cent. is little enough for the extraordinary turbulence of Service life, which means being pushed from pillar to post and from job to job. From that point of view, too, the Service man is not getting a fair deal The point is that, whether or not we think the Service man is not getting a fair deal. Government must realise that the Service man himself does not think it. It is the Government's job to see that he is getting a fair deal and convince him that he is. This is where Ministers are falling down.

One aspect of the matter concerns the Rent Act, the fact that Service men who let their houses are then caught by the Act. It would be simple for the Government to introduce a short Bill to exclude serving men from the conditions of the Act affecting the tenure of their tenants. Everybody would understand this, and it would be an enormous improvement for the Service man. Why do not the Government act? Service Ministers know of the problem, and it would need the simplest legislative action to remedy it.

The Review Body ends its latest report with the words:
"We attach particular importance to the need for a measure of flexibility in the period after 1st August 1977 in a form which is strictly relevant to the Armed Forces pay system, having regard to the plain fact that measures which provide flexibility in an industrial environment may very well be impossible to reflect directly in an Armed Forces environment."
That is a clear-cut statement that the Review Body is not happy about the way in which the system is working now. If the Government are being advised by the Body, they should heed that cry from the heart from its distinguished members.

The Government should take the bull by the horns, obtain a true report of comparability and implement it. If they cannot implement it, if the country's economic condition will not allow it to be implemented, they should take the political odium of modifying it and not try to cast that odium on to the Review Body. Service men are accustomed to straight talk, to quick decisions and fair deals. I am afraid that in this matter they are not getting it from this Government.

6.46 p.m.

As right hon. and hon. Gentlemen who take part in defence debates are aware, I am not an advocate of increasing expenditure on defence. On the contrary, I am one of those who believe, on both economic and military grounds, that expenditure should be cut back far more drastically than either Front Brench would be prepared to countenance at this time.

At the same time, I make no apology for intervening in this debate. My hon. Friends and I who argue for real cuts in defence, which we do not think have yet been carried out, are in no wise arguing that these should be made by reducing the standards of life or the conditions of the ordinary members of the Armed Forces.

As long as we, as a nation, require Armed Forces—and I believe that we do —it is incumbent upon us to ensure that the pay and conditions of those who serve, and of their families, should be looked after. In a period of high unemployment this is particularly important. At a time of high employment the need to maintain the flow of recruits into the forces makes it necessary to introduce improvements to keep pace with changes in civilian life. Otherwise, recruitment is apt to drop off. At present, however, it is an undoubted fact that some young men and women are joining up because of the difficulties of obtaining employment outside and not through choice. In these circumstances, I believe that it is very important that we should consider the conditions under which these people have to serve.

It has been traditional, as my hon. Friend the Member for Hornchurch (Mr. Williams) pointed out, not to permit in the British Armed Forces any proper means of representation. That is considered to be a threat to discipline. But I believe that today there is a change of mood, which we can see reflected in the police and elsewhere. I believe also that eventually we shall have to come to terms with this change of mood, and that some form of representation will have to be worked out to enable people who serve in the Armed Forces to voice their grievances in a proper manner.

My fear is not that unionisation is a threat to discipline but that it is a threat to our political processes.

I take my hon. Friend's point, but I think that he would agree that there are those who would argue that, whether or not they believe that it is a threat to our political processes, it is a threat to discipline. I take the view that it is, on the right terms, neither. I would argue that if trade unionism continues to be rejected some form of representation will have to be substituted for it to enable members of the Armed Forces to express their just grievances.

As I pointed out in an intervention earlier, in Germany, which is our ally, there is the possibility of trade unionism in the Armed Forces, and I do not believe that anybody argues that that is a threat to discipline or to the political processes in Germany. In fact, as my hon. Friend believes, it is in some respects a safeguard.

I understand the hon. Gentleman's point, but does he not agree that a debate of this nature is a representation of Service men's grievances? If he would come on the visits that some of us make to the forces and hear the comments about the Government's present actions—some of which would blister the paint—he would agree that there is no lack of representation. We are now handing on those comments to the Minister.

As the hon. and gallant Gentleman says, it is important that these matters should be discussed in the House. I pay tribute to the way in which he continually tries to redress grievances, although I disagree with him profoundly on other issues. But that is no substitute for men voicing their own grievances. A suggestion that civilians should be denied union representation because Members could debate their grievances would be regarded as totally unsatisfactory. What is true for civilians should be recognised as equally true for the forces.

In this situation, Service men and women must rely on what the Government do and what hon. Members press them to do. Although I have criticised many aspects of this Government's defence policy, I pay tribute to the concern of Ministers over many problems that I have brought to their notice on behalf of Service constituents. I agree with my hon. Friend the Member for Hornchurch that there is more concern among Members interested in these matters on the Government Benches than on the other side of the House.

However, both sides agree than in one matter there is an overdue and crying need for improvement—the right of men and women who have been in the forces to housing upon demobilisation. Forces life requires people to move from one station to another, but local authorities base eligibility for housing on a residential qualification which, by the nature of his calling, a Service man cannot possibly acquire. I accept that some people in the forces can save or receive a gratuity which enables them to buy a home, but many cannot. They can get housing on the demobilisation only if they are offered a home to rent. Their present treatment, I think we all agree, is disgraceful.

I believe that the present situation is governed by Circular 54/75, which asks local authorities to co-operate in providing housing for people leaving the Services. But they are not required to do so, and increasing numbers of authorities do not. Thus, many Service men and their families have nowhere to go upon discharge if they cannot buy accommodation. They are treated, in effect, as substandard citizens. This is a disgrace, and it is high time that we did something about it.

People in this situation remain for as long as they can in Ministry of Defence accommodation. Then, the Department which they have loyally served seeks a court order for possession and throws them on to the street. I do not blame Ministers on this score—time and again in cases that I have taken up they have provided a stay of execution—but ultimately, the only way of obtaining possession for another Service man is through the courts. The man who has finished his Service life is then thrown on to the streets unless the local authority provides a house. It is time that we said that that was totally wrong.

What sort of reward is it for people who have served loyally in the forces to be evicted and perhaps lodged in temporary accommodation? We object to such treatment for farm workers, and most Service men deserve equal consideration. I recognise that if local authorities in garrison towns were to provide housing for all Service people who were demobilised every year, the numbers would pre-empt all rented accommodation and undermine the position of civilians in the area. Therefore, the Government must work out a new policy as a matter of priority. The Labour Party should demonstrate that it cares about these people.

There are problems, but these men and women should be allowed to put their names on the waiting lists in areas of their choice, with which they have some connection, long before they are demobilised —and they should be advised of that right. It is no good giving someone a booklet about it just before he is to leave the Service. That is too late.

Will my hon. Friend accept my assurance that one of the most miserable aspects of my job comes when I have to evict a Service man? Eviction is normally forced upon me by a housing authority which for one reason or another is not prepared to accommodate the unfortunate soldier or ex-soldier. We have no power to dictate to housing authorities. I agree entirely with my hon. Friend, but he must know —in fact he knows from his experience in his own area—that if a housing authority lays down a completely unreasonable condition, such as a two-or three-year residential qualification, it is physically impossible for any Service man to fulfil it.

I have a case being forced upon me at present in which a man who has given 12 years' service to his Queen and country and been disabled in the Service is now to be evicted because the local authority is not prepared to provide him with accommodation. In my view, it is quite monstrous that I should be forced to evict this man.

I take my hon. Friend's point, and I have already tried to say that I recognise the difficulty. I want to place on record that my hon. Friend himself has, in every case that I have been to him about, shown the greatest possible compassion that any man could be expected to show in any circumstances. But, as he rightly points out, so long as the law remains as it is, the Government have no power to compel local authorities to give ex-Service men this elementary right. Accordingly, I believe that it is time that the law was changed and that right hon. and hon. Members on both sides of the House should make it clear in their own local authority areas that it is disgraceful if local authorities are prepared for any reason not to provide accommodation for ex-Service people.

I recognise that there would be problems even if men and women were enabled to put their names on housing lists several years before demobilisation. Many settle, and have families which establish connections in a part of the country with which they may previously have been unfamiliar but in which they have been stationed for their final term of service. The children may be at local schools. Service men's wives may have local jobs or other connections. It is very difficult.

In these cases, we ought to work out some means whereby the residential qualification imposed by a local authority could be truncated. Perhaps there could be an agreement between the Government and local authorities in the areas where they know this problem will arise regularly whereby the local authority should reserve and perhaps have the means of providing certain houses which could be used to rehouse Service families.

In certain areas, the Ministry of Defence has sold houses surplus to its requirements to the local authority, and in this connection I want to bring out one matter which might be followed up by my hon. Friend. In such circumstances, before those houses are sold, an agreement should be made with the local authority that if Service men are demobilised in the area they should be housed at least on a certain reasonable basis. It is quite unsatisfactory that the Ministry of Defence should sell houses to local authorities which at the same time do not provide for treating ex-Service men in a proper way by rehousing them.

I am familiar with many cases that have occurred over many years in my own area. I am appalled by the resistance that I have met in seeking to persuade local authorities to take action on this matter in certain cases. In my area, there is a considerable contrast between the attitude of the Harlow district authority which, needless to say, is Labour-controlled, and the Epping Forest council, which is not. It is all very well making patriotic speeches lauding the role of our Army and revelling in military pomp and ceremony. If people wish to show real concern for the Armed Services, they must in addition to that, whatever their attitude may be towards it, provide proper housing for our Service men when they have completed their term of service.

In the long run, we must judge the community's attitude towards any section of it by the conditions that it provides for those people. We, as a community, should do more than we are doing at present to look after the rehousing of our ex-soldiers and their families, especially those from the lower ranks.

As one who is a continual critic of defence expenditure, for reasons that I have explained many times before, in no way do I retract any of the comments that I have made in the past. I believe firmly that far too much money is spent on defence. We would do very much better if there were real cuts in defence expenditure and if our forces were greatly reduced in number. But there is agreement on both sides of the House that those who served in the forces should be properly treated. In terms of housing them after they leave the Services, the time is long overdue for action to be taken to see that they are provided for properly.

7.7 p.m.

I rarely agree with the hon. Member for Harlow (Mr. Newens) on any defence matter. However, today he has made a most thoughtful contribution to our debate, and I agree with a lot of what he said, especially about housing. The last circular that went out to local authorities on this subject was one of the wettest documents that I have ever read.

I remind the hon. Gentleman, however, that his own Government have made matters in this respect just a little more difficult. As my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) reminded us, the Rent Act 1974 made it very much more difficult for Service men to let their accommodation when they were posted away. If the Government ever get round to reviewing the 1974 Rent Act, I am sure that they intend to put that matter right. Meanwhile, however, it is a major inhibiting factor on any Service man who owns his accommodation making it available to someone else when he is posted.

Again, as the Minister knows, the last Finance Act but three made it somewhat more difficult for Service men to get tax relief on their mortgages if they were obliged to move away from the houses in which they were living and go into married quarters. This, again, is a matter which could be put right.

I am sure that the hon. Member for Harlow was also right when he said that, if dissatisfaction within the Armed Forces continued at its present level, there would be increased pressure for some form of representation. I hope that the Armed Forces Pay Review Body, in its next report, can put in a little more about the consultations that it has had with members of the Armed Forces before writing its report.

However, if the hon. Member for Harlow were to get what he is really after, which is full trade unionism in the Armed Forces, I am not sure that things would work out in quite the way that he expects. The country which has gone furthest along this road is, of course, Holland. The Dutch armed forces have not one but 11 different trade unions. One of them, the one representing draftees, has taken a somewhat Left-wing view and has attracted a certain amount of publicity. The other 10 armed forces trade unions in Holland are extreme Right-wing organisations. When they demonstrate, as the Secretary of State was demonstrating the other day, they are demonstrating outside parliament and demanding increased spending on the whole armed forces structure in Holland. The hon. Member for Harlow would be a little unwise if he pressed too hard for full trade union representation in the Armed Forces of this country.

I am grateful to the hon. Gentleman for his remarks. I merely put it to him—I am sure that he will accept it—that I do not wish merely to have trade union representation in the Armed Forces because I imagine that it would be Left-wing. I think that on principle people have certain democratic rights, and I regret that, unfortunately, people frequently use those democratic rights in a way which I do not regard as in their best interests, but I believe that in any democracy we must accord the people that right, and that is what I am suggesting. I do not do so for Left-wing reasons.

I accept that there is a problem here which we shall no doubt be returning to year after year.

It would be churlish of me if I did not thank the Secretary of State for acting with some promptness on the question of charges levied on Service men in Northern Ireland, who are there for long terms of duty. The right hon. Gentleman announced the setting up of an inquiry on 19th April, and on 27th May action was taken. I am happy to say that the action taken was precisely that which I had recommended in the Army debate on 19th April. I am grateful that, with only a few weeks' delay, the Secretary of Slate acted with such promptness.

However, when reading the Secretary of State's Written Answer on 27th May, and listening to his speech this afternoon, I was not clear whether the inquiry into pay and conditions in Northern Ireland had now come to an end or, as it were, had merely issued an interim report. I certainly hope that it has not come to an end, because I am sure there is a great deal more that can and must be done to iron out the anomalies that exist in the security forces in Northern Ireland.

Some of those anomalies were brought to light during the recent abortive political industrial dispute in Northern Ireland. The RUC received many tributes for its work during the strike. The RUC got the praise and also the overtime. The UDR had to stand by on permanent duty. It did not get the praise or the overtime. Only the other day I was talking to the second in command of one UDR battalion, and he told me that in his battalion's area three RUC sergeants drew more overtime pay during the period of the Paisley strike than he received in his full salary for that particular period. Indeed, in his battalion there were men who were losing up to £30 a week because they were in full-time service and their pay was not made up by the firms that they were working for.

I hope that the inquiry is still in existence and I hope that it will look at the problems of the UDR, but this debate is primarily concerned with the pay of Regular soldiers. I well remember the words of the leader of my party when, during Question Time on 24th May, she said that she hoped that the Government accepted as a general guideline that no Service man should be worse off as a result of being posted to duties in Northern Ireland. I certainly echo that sentiment.

The concept of loss of local overseas allowance for troops coming from BAOR is a complex one. I have one suggestion to put to the Government. It might protect soldiers who go to Northern Ireland, without adding too much complexity to the situation.

There have been a number of complaints in the debate so far about the low level of the extra pay that is given to soldiers who serve in Northern Ireland. My hon. Friend the Member for Peters-field (Mr. Mates) and the hon. Member for Battersea, South (Mr. Perry) referred to this. I gladly give credit to the Labour Government for introducing the extra pay of 50p a day for Service men who serve in Northern Ireland. That extra 50p has, of course, now lost a great deal of its purchasing power since it was introduced. I would suggest that we have another look at this system.

My proposal is that when a soldier goes on his first emergency tour to Northern Ireland he should receive the present 50p a day in extra pay. When he goes on his second tour he should receive twice as much, when he goes on his third emergency tour he should receive three times as much, and so on. Every time a soldier goes on a fresh emergency four-month tour the amount of extra money he receives should be increased by 50p a time. Some units have now gone on seven emergency tours to Northern Ireland. If a man had been on all seven of those tours he would indeed have received quite a handsome sum. It is, after all, the men who keep going back to Northern Ireland who find the task most wearisome, boring and tedious. It is they who deserve the greatest reward.

If the committee of inquiry is still in existence I would ask it to look at my suggestion with some degree of urgency.

It would be quite wrong, however, to think that dissatisfaction over pay is in any way confined to Northern Ireland. It is all-embracing and it exists from the top to the bottom in all Services.

In part I think that this is a little misplaced because Service men tend to live in a partially closed community and there is widespread ignorance of the fact that the rest of the country is suffering so badly, too. They think that it is just confined to them, without realising that the average working man has lost £4·20 in purchasing power in his pay packet in the last three years. There is a misplaced feeling among Service men that being worse off is a situation that is unique to them.

They certainly have a very serious grievance on the question of wage drift and overtime, and here the Service man cannot hope to keep pace with his civilian counterpart. There is a widespread feeling of dissatisfaction at the fact that their pay limit is 5 per cent. whereas over the first two years wage drift has pushed up civilian earnings on average by 11 per cent. This is a real grievance felt by the Services.

There is then the question of the timing of the pay review. The Services know only too well that they have come at the end of the queue, and they know very well that virtually all that is left of the Government's hope for a phase 3 of the incomes policy is that there will be a 12-month gap between settlements. They are, therefore, desperately anxious that, if there is a period in which wages run away, and during which they are held back to 5 per cent., they will find themselves help back for 11 months after other people have abandoned the incomes policy altogether.

On a point of order, Mr. Deputy Speaker. Later this evening we shall be discussing the commercial vehicle taxation regulation arising from the Twenty-second Report of the Select Committee on European Legislation. That report says that certain written evidence was available to the Committee. In a note it adds that the written evidence has been deposited in the Library of the House and is available to Members on request. I have made inquiries with a view to studying this written evidence and I am informed that it is not in the Library. This puts us in an invidious position, and we have to consider whether the debate should go on, and whether there is time for Members to obtain this evidence. I considered it my duty to bring this matter to the attention of the House at the earliest opportunity so that inquiries may be made and so that people may take advice and try to locate the evidence. I apologise to the hon. Member for Beckenham (Mr. Goodhart) for having interrupted his speech.

I have no doubt that what the hon. Member has said has been taken careful note of and will be acted upon.

Whether or not that business can proceed later this evening I am at least glad that I can proceed to make the point that Service men feel that they are far behind in the queue and fear that their position will deteriorate sharply in the next 12 months. I hope that the Government will be able to take a more flexible line and listen to the protests made by the Armed Forces Pay Review Body. The Body closes its report by saying that the disturbance of differentials and anomalies created by the application of the particular form of restraint imposed by the Government is a matter of substantial concern to it. It goes on to say:

"We attach particular importance to the need for a measure of flexibility in the period after 1 August 1977 in a form that is directly relevant to the armed forces pay system, having regard to the plain fact that measures which provide flexibility in an industrial environment may very well be impossible to reflect directly in an armed forces environment".
Surely if that means anything at all it means that there should at least be an interim review before another 12 months have elapsed. I hope that Ministers after 1st August 1977 will sanction the work to begin on an interim pay review and to look at the anomalies that have arisen.

The Under-Secretary of State for Defence for the Army once said that he considered himself to be the shop steward of Service men. If he were an active shop steward he would be outside the Treasury picketing to get a new pay review as quickly as possible.

7.27 p.m.

It need hardly be said that the Services feel hard done by. Senior officers have suffered from Jack Jones; officers and men are suffering at the moment from the report of the Review Body. In addition, both officers and men share the distinct feeling that the Services have been discriminated against by the Government.

The language in Aldershot at the moment is more than usually vivid. Soldiers have no leverage or muscle, in the industrial sense. They belong to no great trade union. What is more, they serve in a profession that has seen four reductions in defence expenditure since the beginning of 1974.

As for their rewards—their pay and allowances—soldiers share the grievance of the police, but with the important difference that the police are able to claim overtime. The X factor, introduced into the military salary in the late 1960's in order to reflect the excessive hours of work and the disruption suffered by soldiers, has not started to keep pace with inflation. Perhaps it was wrong to have fixed the factor initially at the low figure of 5 per cent.

Soldiers work long hours and they have no overtime. In Northern Ireland it is not unknown for soldiers to work a 17-hour day for seven days a week. At home, late-night and weekend working is very common. In civilian life often one-third and sometimes a half of earnings are derived from overtime. By the very nature of their duties soldiers are unable to take a second job or to do or be paid for overtime. Add to these handicaps inflation at the rate to which we have all become accustomed and we have a situation in which the morale of soldiers is suffering most severely.

The police may wish to strike, though God forbid that they should, and the Army has no such wish. Nor, so far at least, is there a move to establish unionism within the Services. The Army itself would not wish to institute overtime. Such a system would be clearly quite unworkable. However, the Minister should re-examine the basis of the X factor. If the average payment of overtime in civilian occupations could be established, the X factor might be adjusted upwards to 18 per cent. or 20 per cent. of a military salary.

Soldiers are at a further disadvantage in that their wives find it hard to get work. That is because soldiers are often stationed in out-of-the-way places. Service families are frequently moved from one part of the United Kingdom to another, or abroad, and the soldier husband when at home is often on weekend or night working. The fact that soldier families are now applying for rent rebates proves that some of them are on the poverty line. In the most recent pay increase the Government have given on the one hand only to remove with the other.

Rent and charges have increased, yet many soldiers are obliged to live in Army accommodation and are not free to find anywhere less expensive. Rents for family housing are charged at roughly the same rate as obtains in civilian life, yet the families stay in their houses only for short periods, which are not long enough to effect any real improvements.

The whole issue of Service housing generally is a difficult one. In the late 1960s it was agreed that on retirement the soldier should receive a sum three times the value of his annual pension. In those days that was a payment that would go a long way towards a deposit on a house, or even the purchase of one. Inflation has made a mockery of that scheme. When will the Leach Report on Service housing be published?

Since July 1975 earnings in industry have increased by 19·9 per cent. despite stages 1 and 2. In the Armed Forces the comparative figure is 14 per cent. Why is there this discrimination? Why have the Government been prepared to take advantage of the loyalty and devotion of the men of the three Services? Surely they should be ashamed of themselves.

7.33 p.m.

I apologise to Ministers and to all hon. Members who have participated in the debate for not having been in the Chamber earlier. I have been in a Select Committee, followed by a Standing Committee, through no wish of mine.

I shall draw attention to two or three case histories to illustrate the way in which Service men have fallen behind and are now being driven into debt. The Government are driving our Service men, especially junior non-commissioned officers, into severe financial difficulties. I cite the instance of a married sergeant aged 28 years with one child. He writes:
"We have been married for almost four years and we have as yet not had a proper holiday. My wife is constantly worrying about money and whether or not we can pay the bills when they come in."
He then sets out the household expenses from his average weekly wage of £46. It is clear that his comments are entirely justified.

I have particulars of another sergeant aged 27 years, who is married and has two children. He writes:
"My life at the present consists simply of managing from one month to the next. As a sergeant I find it very disheartening not to be able to attend my sergeants' mess on a regular basis. I have attended twice this year, which I consider a little degrading for a man in my position. Besides this, my wife and I have only been out once together for a meal. I personally consider that I should earn a wage that enables me to take my family on trips occasionally. This I am unable to do on a regular basis. This ends up with one and all getting on one another's nevers from staying in week after week."
I have particulars of another noncommissioned officer, a lance corporal who is married with no children. He sets out his weekly income and states:
"Having been married now for just over four months not once have I been able to take my wife to any kind of social function. I find it degrading and embarrassing to have to say constantly to relatives and friends that I cannot afford it".
I have particulars of a private soldier with nine years' service who is worse off as a result of the so-called pay increase. Although his pay increased by £2·57, his quartering charges increased, his rent allowance was lost, his tax increased, his national insurance contribution increased and his contribution to travel under the residence to place of duty scheme increased. The result is that from 1st June he has been worse off, by 30p, than before the Government "increased" his pay.

The list of soldiers in the United Kingdom with serious financial difficulties is increasing. That is bad enough in itself, but there is in consequence increased administrative work for all units and a reduced number of soldiers who can be employed in responsible positions. I believe it to be the case that the number of disciplinary cases dealt with by commanding officers for dishonesty inside and outside barracks is increasing. I expect Ministers to be able to confirm that that has been the information reported to them.

It is a shameful thing that we should treat our Service men and women in such a fashion in 1977. I find it impossible to see how we can justify the fact that a second lieutenant should receive a net increase of 2p a day as a result of the recent pay increases. How can it be justified that a subaltern should receive less than the youngest soldier in his platoon? However, that is the position.

More and more good men are being lost. They are leaving the Army for financial reasons. Whatever the position may be about recruiting week by week, more and more good ambitious men, including non-commissioned officers, are leaving the Army. This is happening because they know that they can make more money outside. They are not prepared to allow themselves and their families to suffer the severe privation that is illustrated by the case histories that I have set out. It is a shaming thing that we should treat our Service men in such a way. I hope that we shall be told by the Minister that there is an intention to mend the ways of the Government, in respect of Service men at least.

7.38 p.m.

I am sorry that I have not been present throughout the debate. Having listened to my hon. Friend the Member for Aldershot (Mr. Critchley) and my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew) speaking of soldiers and their pay and conditions, I thought I must add a word on behalf of the Service men in my constituency, who are nearly all airmen.

The difference is that the airmen live in isolated situations. I live close to RAF Marham. It is a unit that has been honoured by Her Majesty the Queen in her Jubilee Honours. It is a station to which I was attached at the beginning of the war. I was given the somewhat ridiculous job of defending it with a Lewis gun against possible air attack. I never thought that I could hit anything with my Lewis gun.

RAF Marham has been close to my home all my life. It is a large station. Perhaps it is an unglamorous unit as it undertakes tanker refuelling. It does not look after fighter planes, which is possibly a glamorous job. However, the same conditions apply to the airmen attached to it. Perhaps they are even more isolated than others. Their wives have even less of a chance of getting jobs. When they come to leave the Service their difficulty, like that of the soldiers, is that they have no points and are unable to put their names on a council list.

I know that Ministers of all Governments have urged councils to give priority to people who leave the Armed Forces. But we have priority for the homeless first, and for the farm workers who leave their jobs and have to get a house elsewhere. Where will the soldier or the airman come on that list when he wants to leave the Service and live in the area near his station—perhaps where he married? The council will give priority to the homeless first, and then to the farm workers who leave their jobs, particularly when the farmer wants the house for another key worker. Therefore, the airman and the soldier go to the bottom of the list.

This is a very urgent problem. Everyone is sympathetic, but that does not help the man who leaves the Services and wants a home in which to live. I know that all the Services are sympathetic and allow wives and families to stay on if this is possible, but these families know that they have to leave at some time and they get more and more desperate.

I give many lifts to airmen in the isolated part of Norfolk in which I live. I hear from them increasingly of their dissatisfaction. Although most of them are very proud to belong to the RAF, they are dissatisfied because they cannot give their families the sort of life that they know can be given by their brothers in civilian life. I urge the Government to institute a review and to bring Service pay, allowances and conditions as quickly as possible up to the standard at which in all honesty they should be.

7.42 p.m.

I think that the House does itself less than credit this evening with its strength of turnout for a debate on a matter of such importance to so many individuals and their families who are our constituents.

Something happened to the British nation last week amid all the magical pageantry and jubilation of the Jubilee People took themselves by surprise with their own spontaneous manifestation of loyalty, devotion and love for the Sovereign in the greatest demonstration since the War of national unity and— yes, I shall use the forbidden word— patriotism.

Second only to the Sovereign and the Royal Family, the Armed Forces of the Crown are an embodiment of national unity and patriotism. These men and women, drawn from the four corners of the United Kingdom, are the subject of our debate this evening.

No one could accuse me of being back ward in calling for modern equipment in proper quantities for our Armed Forces. But it is men and not machines who make the Armed Forces what they are. A nation may deploy hundreds of aircraft and thousands of tanks, but this is irrelevant if the calibre, training and spirit of those called upon to man the equipment is inadequate. This proposition has been amply demonstrated by successive Middle East wars over the years.

The whole basis of the military salary, introduced in 1972, was, as the Secretary of State emphasised this afternoon, that of comparability in pay and accommodation charges with the equivalent in civilian life for each grade of skill and responsibility. This comparability in earnings was in essence to be further supplemented by what was called the "X" factor, which was designed to take account of the unique nature of Service life. This differs—adversely in many respects—from the conditions experienced by the community at large, and it is instructive that I should detail this point.

The Armed Forces are called upon to risk their lives, even in peace-time, far more than other members of the community. They work long and unsocial hours without bonuses or overtime. Officially they are on duty 24 hours a day, especially in Northern Ireland, where Service men frequently work a 100-hour week or even longer. It is illegal for them to strike and they have no negotiating machinery. They are subject to military discipline, and are unable to change their jobs at short notice. Frequently they are required to live in accommodation designated by their employer who is also their landlord. They are required by their postings to make frequent moves leading to a high incidence of family separation. At the end of the day they are faced with compulsory early retirement compared with most people in civilian life.

As the AFPRB explained in its third report in paragraph 39:
"The X factor is an element in the military salary which, on its introduction, was designed to compensate for the balance of advantage and disadvantage of Service life by comparison with civilian life. Because it was added to salary levels based on outside comparison, its effect was to ensure higher earnings for Servicemen than for those doing comparable jobs in civilian life. Erosion of this lead defeats the object of the X factor …".
That is precisely what this Government have now achieved. Far from being better off than their civilian counterparts, Service men are now substantially worse off.

The Secretary of State declared only today that the "X" factor is 10 per cent. One might have thought that he was talking about a 10 per cent. addition to the military salary. Not at all. What we have now is a minus "X" factor imposed on the Armed Forces. The Government have undermined the whole basis of the military salary and have utterly discredited the AFPRB in the eyes of the Services by dictating to that Body to charge the full comparability in accommodation and at the same time forbidding the maintenance of comparability on pay.

It is possibly of significance that the Secretary of State did not deny that members of the Board have made representations direct to the Prime Minister that they were unable to give comparability on pay to the Armed Forces, at least they should not be required to make the full increase in accommodation charges.

I made no such suggestion at all. The only representation made to the Prime Minister by the Board was that it furnished its report to him. I made no suggestion of its members making any such representations.

The House and the Armed Forces will be glad of that assurance. Perhaps the Secretary of State, in the event that he finds that that is not the position, will come to the House and make a statement.

In February 1970 the Chiefs of Staffs jointly went to see the then Prime Minister in what was to be the outgoing Labour Government to make representations specifically about the pay and conditions of the Armed Forces. What this Labour Government is inflicting on the Armed Forces is nothing new. They have a tradition of it.

The Chiefs of Staffs went to see the Prime Minister yet again last November on the whole broad front of our defences and our capability of fulfilling our NATO commitments. The House can be sure that they would have been there again on the doorstep of Downing Street had they not been there so recently. They are not able to set up a permanent camp site on the Prime Minister's doorstep.

As the report of the Review Body said somewhat acidly:
"Once again, therefore, effectively we are free only to recommend whether the pay of members of the Armed Forces should be increased by the maximum amount allowed by the pay limits, or by some lesser amount."
The Secretary of State this afternoon enunciated the well-worn Socialist doctrine of the equality of misery and insisted that the Armed Forces must be subject to pay policy. Nobody, least of all the Armed Forces, would dispute that. But the fact is that they are not being asked to make equality of sacrifice with the rest of the community. As my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) said, they are being given the short end of the stick.

What are the facts? Under phases 1 and 2 of the Government's pay policy, average industrial earnings have increased by no less than 22·6 per cent. in the 21-month period up to March this year. Meanwhile, to cover the 24 months to the same date the Armed Forces have been accorded two pay rise totalling 14·9 per cent. How do the Government explain how average industrial earnings have risen by no less than 50 per cent. more than those of the Armed Forces?

In the White Paper Command 6507, published in June last year, the Government said:
"The Government will ensure strict observance of the new policy throughout the public sector. The arrangements and sanctions in Command 6151 to secure compliance in both public and private sectors will continue to apply."
But where are these sanctions? The Secretary of State paid profuse tribute to the restraint of the trade union movement in honouring the pay code. But how is it that average industrial earnings have increased by 50 per cent. more than the pay of the Armed Forces? Where are these sanctions of which the Government speak in their White Paper and which were supposed to enforce the pay code in the private and public sectors? Why, when Ministers knew that the policy was leaking like a sieve and when the Government were prepared to do nothing about it, did they still refuse to allow the Review Body to depart from the wholly theoretical pay limits which they had laid down?

The resentment of the Armed Forces is focused not so much on the fact that their latest rise is less than 5 per cent. at a time when others in civilian life are manifestly doing a great deal better, nor even on the fact that their increases in the past two years of 14·9 per cent. cover barely a third of the increase in the cost of living as measured by the RPI index, which has increased in the two years to March 1977 by no less than 41·5 per cent. The nub of their resentment centres on the fact that the greater part of the recent increase—and in the case of some almost down to the last penny—has been clawed back by the Government in increased accommodation and food charges. This has given the tag of "the Irishman's rise" to the latest pay review and has provoked a degree of bitterness, resentment and disillusion unparalleled in Britain's Armed Forces in recent times.

The Government have placed the Review Body in an intolerable situation by making it the cat's-paw of the Government. It would be a great mistake if Service men and their families in their disappointment and frustration were to blame their plight on these responsible and dedicated men and women on the Review Body. The responsibility rests squarely and exclusively on the shoulders of this Socialist Government.

I recently had the opportunity to visit some of Her Majesty's ships at sea, and the point was brought home to me, particularly in the leading ratings' mess on board HMS "Andromeda" and HMS "Naiad", that the Review Body should make its recommendations on pay and accommodation charges on the basis of the facts—namely, on the basis of the remit of comparability—and that it should be left to the Government of the day to shoot down recommendations according to the pay policy, if necessary. At least in that way some confidence would be re-established in the Review Body. People would feel that at least if comparability were recommended, even if the Government of the day were not prepared to accept it at the present time, it would go far to restore some of the great damage which had been inflicted.

The inability of the Review Body to look after the interests of the Services has given rise to disturbing reports of militancy and, as the hon. Member for Hornchurch (Mr. Williams) has mentioned, demands for trade union representation in many units, squadrons and vessels. This has been put to me on several occasions in the last two or three weeks when I have visited various units. I agree with the hon. Member for Hornchurch that it would be a damaging, sad and regressive step if that were ever to come about. All the Armed Forces are asking for is a fair deal, and that is something which the House is under an obligation to give them.

There is no evidence that there is intense feeling among Service men to join trade unions. The real danger is that the arguments used by the Opposition Front Bench might lead to that situation.

I assure the hon. Gentleman that that is a situation which we would regard as wholly undesirable, but it is none the less a fact and it has been mentioned to me and to many of my colleagues in recent weeks. The suggestion has been put to me on more than one occasion. When I have suggested "All you are asking for is a square deal. You do not want to be unionised.", they have replied "The only way we shall get a square deal is by having a union." I am talking of a small minority, but it is a growing body of opinion. That body of opinion takes the view that the present Government will respond only to union pressure.

Ministers cannot fail to be aware of the reaction to this year's pay review, which can only be described as dramatic and unprecedented. As my hon. Friend the Member for Plymouth, Drake (Miss Fookes) has said, this attitude is to be found in every Army unit, every Royal Navy vessel and every Royal Air Force base. The pay review has been greeted with disbelief, derision and anger. These men and women, who give so much to their job without grumbling about their long hours, for which they expect and receive no overtime payment, and who frequently endure poor working and living conditions, feel that this Government are taking advantage of their loyalty and dedication and of the fact that they have no union to put the wind up the Cabinet.

Why does the hon. Gentleman think that it is undersirable for Armed Forces personnel to have some form of representation which is better than they possess at present? Why should they not have the right to join a trade union and to be able to express their point of view, because this would enable them to reflect feelings which at present they are unable to present in a reasonable manner—except, presumably, to Members of Parliament who will happen to visit them? It would surely be desirable that they should be given certain rights of representation.

It is regrettable that these personnel have nobody rooting for them. They feel strongly about these matters, and this undermines the Review Body. Unless the Review Body is allowed by the Government to act in a more independent way, the calls for a union will inevitably multiply. There can be nobody in the House who has served in the Armed Forces—and I am not privileged to be among them—who would wish to see trade unions extend into the military scene. That would be a retrogressive step and it would have a bad effect on the efficiency of the Armed Forces.

All the evidence points to the fact that the Armed Forces are being unfairly treated. Even the Government admits that much. During last month's debate on the Royal Navy, the Under-Secretary of State for Defence for the Royal Navy plainly admitted:
"There has been a loss of pay comparability between the Armed Forces and their civilian counterparts during the last two years."— [Official Report, 19th May 1977; Vol. 932, c. 747.]
Why, then, do the Government adamantly refuse to remedy the unfairness that they know they have imposed?

The situation with regard to accommodation and charges is particularly serious, and we must question whether the Review Body, in determining the level of those charges, has taken account of the much lesser security of tenure for Service men using this accommodation— 60 days' notice, which is less than that enjoyed by private or council tenants. One also wonders how far the Review Body has taken account of the Ministry of Defence's announced intention to reduce the maintenance of married quarters and other military accommodation and the fact that the insulation standards of such accommodation are appallingly inadequate. There is frequently no means of heating apart from expensive electricity.

The hon. Member for Harlow (Mr. Newens) has further drawn attention to the plight of Service men when they leave the Services. This anxiety is shared in all quarters of the House. The hon. Gentleman also drew attention to the extent to which local authorities are unco-operative and unsympathetic to the plight of the Service man who has served his country for many years in dangerous situations and has risked sacrificing his life for the sake of the community. No special arrangements are made by most local authorities for such people.

Many R.A.F. stations are forced to use remote sites in order to provide adquate married quarter accommodation, and junior airmen have no choice of accommodation yet that decision alone can make a greater difference to their pay than the increase just announced. A married airman, accommodated on a remote site, using R.A.F. transport between his home and his base—and on his pay it is unlikely that he would be able to afford a car—finds himself an additional £1·25 a week worse off than his colleague living on the base.

There is clearly a strong case for changing these arrangements and I hope that the Secretary of State will be willing to look at the matter. There can be no question but that it is detrimental to the efficiency of the Services to break up the community life that they have enjoyed by dispersing so many families. Some 6,000 more families have moved out of married quarters since this Government came to office. It also means that Service men are no longer readily on call when and where they are needed.

My hon. Friend the Member for High Peak (Mr. Le Marchant) pointed out that it is not merely military efficiency that suffers but, inevitably, the families themselves. There has already been evidence that some husbands are being forced to send their wives home to live with their parents in order to save the cost of the rents of married quarters and to qualify for extra separation allowances.

We all deplore this increasing incidence of family separation. It is important that when he replies the Minister should fulfil the Secretary of State's assurance that there will be a clear and unequivocal statement about the threatened taxation of travel warrants.

In many cases members of the Armed Forces are now facing substantial hardship—as my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew) said a moment ago. This is evidenced by the increase in the number of applications for rent rebates, mounting reports of private debts and greater family separation. The anxieties to which the situation gives rise can be only detrimental to morale and efficiency in the forces. More seriously, it cannot be ignored that this lowering of morale may affect technical servicing standards and thereby possibly endanger life.

The effect of Government dictation to the Review Body has been so to distort differentials that the military pay structure is now in total disorder. For instance, a naval sub-lieutenant earning £266 a month, who now pays £67 for his married quarters, is less well off than a leading seaman who is on about the same monthly rate but who pays only £35 for his married quarters. Comparisons with civilian pay are even less favourable. Unskilled civilian mess employees in Royal Navy messes have an average take-home pay with overtime of £80 to £110 per week—far in excess of skilled petty officers, who net around £50 a week.

I have great admiration for London's bus drivers and I do not grudge them the wages that they earn. However, it will surprise many hon. Members and people outside to learn that there are London bus drivers who are paid more for driving a £10,000 bus—for which only three weeks training is required— than an R.A.F. flying officer piloting a £3 million Phantom with £250,000 worth of training behind him. The flying officer, under the latest pay scales, receives £88·19 a week, whereas it is not uncommon for a bus driver—putting in fewer hours— to earn £90 or even £95 a week.

We know that the Secretary of State is a kind-hearted man who, in the past, has shown considerable sympathy for the plight of the lower paid in our society. Indeed, only last month he saw fit to join a picket line outside the Grunwick film processing laboratories and allowed himself to be photographed and filmed for television in front of placards wielded by members of his own union which read "Starvation Wages" and "Slave Labour". I wonder whether the Secretary of State took the trouble to inform himself about these starvation wages. I doubt it. It may interest him to know that the average wage for a 44-hour week at Grunwick—35 hours basic plus an average of nine hours overtime—is £5401. The Secretary of State might care to compare that with what he pays a private in Northern Ireland for standing target duty for the I.R.A. Even including the 50p a day danger money that the Secretary of State pays his private soldiers, they receive only £53·48 —53p less than the average paid by Grunwick, and that for a working week at least twice as long as that extorted from their workers by the supposedly hard-hearted Grunwick management.

I hope that the hon. Member for Stretford (Mr. Churchill) has checked his facts more carefully than usual. To the best of my information, when the dispute at Grunwick started the pay was £25 for a 35-hour week and £28 for a 40-hour week. There is a little difference somewhere.

I have indeed checked my facts extremely carefully, and for a 35-hour week plus nine hours overtime— which is the average for the factory today —the figure is £5401, which is 53p more than the Secretary of State pays a private in Northern Ireland. The army in Northern Ireland regularly works in excess of 80 hours a week, with more than 100 hours not being uncommon. It does so with unstinted loyalty and devotion to duty, without expecting or receiving a penny in overtime.

I agree wholeheartedly with the suggestion of my hon. Friend the Member for Beckenham (Mr. Goodhart) that more should be done for the men in this respect. What would the Secretary of State's own union say of an employer who made his men work twice as long for lower wages? How the Secretary of State had the nerve to stand in that picket line in front of those placards when he is paying men who wear the Queen's uniform less than half the hourly rate paid to the average Grunwick worker is something that thousands of Service men and their families will find difficult to understand or stomach.

Why was the Secretary of State not instead manning a picket line outside 10 Downing Street to inform the Prime Minister and his Cabinet colleagues that is it grossly unfair to impose on the forces in each of the past three years full comparability in respect of accommodation and food charges while according them substantially less than full comparability in the matter of pay? Before drawing attention to the beams in the eyes of others, the right hon. Gentleman would do well to consider the mote in his own. Why is he so ready to rush to the fore to defend what he so implausibly termed the "barricades of freedom" —supported, as we have seen this week by a thuggish mob of Communists, International Socialists and assorted yobboes —when he is manifestly not prepared to stand up and demand fair treatment for those who have no big union representation and no negotiating machinery through which they can put their case and who look to him to protect their interests—a task with which he is charged as Secretary of State?

I am glad to hear the hon. Gentleman's glowing account of Grunwick, but I wonder what he would have said if the pay award to the Services in stage 1 had been £2 a week instead of £6. That is what happened to Grunwick, and the wage increases to which the hon. Gentleman is referring have come about only since the workers joined the union.

The Secretary of State appears to know more about Grunwick than about defence. He has a direct personal responsibility for the pay and conditions of the Armed Forces which he does not have for the employees at Grunwick. He will have done his bit for the lower paid in our society when he looks after the interests of the men and women of the Armed Forces and their families with as much assiduity as he devotes to his union responsibilities.

We have had five unilateral cuts in defence expenditure in the past two years. They have eaten deeply into our defence capability. Training has been cut back, war stocks run down and vitally-needed modern equipment postponed or cancelled. Having attacked the forces' equipment programme, the Government are now assaulting the living standards of our Service men and women. With their Scrooge-like attitude on Armed Forces pay and conditions, the Government are sapping the morale and efficiency of the fighting Services and are undermining the entire voluntary principle on which our Armed Forces are founded.

Any Government who wish to maintain the strength and efficiency of the Armed Forces of the Crown must at the very least maintain comparability with civilian jobs, otherwise the Armed Forces will never be able to attract and retain on a voluntary basis the pilots, the skilled trades, the engineers and the electronic and computer technicians, all of whom could earn more in civilian life than in the Armed Forces. It is on the high calibre of men and officers such as these that the excellence of our Armed Forces is founded. It is this that makes them, man for man, second to none in the world. It is this foundation that the Government are undermining, and the nation should know the truth.

8.14 p.m.

The Armed Forces will know from this debate that there is genuine concern in all parts of the House about their pay and conditions. I propose to follow the tone of the right hon. Member for Chesham and Amersham (Sir I. Gilmour), who said that he intended to treat the debate in a non-partisan manner, as this was more fit and seemly than the tone of the hon. Member for Stretford (Mr. Churchill).

My right hon. Friend the Secretary of State dealt with questions of pay and I think that it would be appropriate and helpful if I concentrated on the other conditions of Service life. The hon. Member for Stretford asked me to confirm what my right hon. Friend said about leave warrants, and I have no difficulty in doing so. No Service man or woman, officer or other rank, married or single, going home or on holiday, will be assessed tax on a leave warrant. That is yet another Aunt Sally—like gratuities —that was set up in order to disturb the members of the Armed Forces quite unnecessarily.

Will the hon. Gentleman clarify as well as confirm what the Secretary of State said, because the right hon. Gentleman referred to no individual having to pay. Is there any danger of the travel warrants coming into the conditions part of the Review Body examination? Why did the Secretary of State use the word "individual"? Can the hon. Gentleman say simply that there is no question of any tax of any sort having to be paid?

It may be necessary to come to a compounded arrangement with the Inland Revenue, but I have made clear that no individuals will be assessed for tax on leave warrants. That is a totally unambiguous and clear statement, though if the right hon. Gentleman still feels that it is lacking in clarity I shall be happy to write to him on any points that he wishes to raise.

It has been suggested that Ministers are deficient in their duties because they have not been attempting to take care of the legitimate concerns of the Armed Forces. Without wishing to go into detail and to chase that preposterous hare, I should like to start my speech on a cheerful note by announcing improved arrangements for compassionate leave and travel at public expense for members of the Armed Forces stationed abroad.

This is a modest improvement, but one that I think will be generally welcomed. Until now, those serving in overseas stations could travel home to the United Kingdom at public expense on the death of a wife or child but could do so on the death of a parent only if the son's or daughter's presence at home was considered essential. This restriction has now been lifted, and compassionate travel to the United Kingdom at public expense will be granted in all cases to officers and Service men and women stationed abroad on the death of a parent. A similar concession has always been extended to accompanying wives, and the new arrangements will also be extended to a wife if the death of one of her parents should occur while she is accompanying her husband on an overseas posting.

It has always struck me as odd that the benefit is given to those who need it least. A Service man serving in Germany or the United Kingdom receives the entitlement and, on the fact of it, men based in those countries are more able to keep in touch with their parents and visit and telephone them than Service men further abroad. This anomaly has now been removed and I am pleased to say that the cost of this concession need not be offset against the pay limit.

The hon. Member for Plymouth, Drake (Miss Fookes), in a thoughtful speech, raised several points that I should like to study in Hansard. I take the hon. Lady's point about the provision of boarding schools in the public sector. This is a long-standing problem that affects not only members of the Armed Forces. It is one that we should like to do more about, but the hon. Lady will appreciate that at a time of constraints on public expenditure it is unlikely that anything drastic will be achieved in the near future.

The hon. Lady also spoke about the problem of taxation of allowances and rental income. I am seized of the deep feeling in the forces on these matters. There is nothing new in them, and I cannot make any promises that will meet the difficulties to which the hon. Lady referred.

The hon. Lady talked about thermal insulation in married quarters—a point also referred to in rather more extravagant language by the hon. Member for Stretford. We appreciate the concern of the House about the high cost of heating of certain married quarters, particularly those equipped with night storage heaters.

We are embarking, I am pleased to say on a further programme of insulation of roofs and draught-proofing in cases where these are inadequate. Cavity wall filling, as the House will know, is quite an expensive proposition, and while we cannot at present see our way to carrying out such programmes for all married quarters within the funds at present available, we and the Property Services Agency are considering whether there is an acceptable way of dealing with the cases where heating and condensation problems are greatest. I shall be happy to look into any cases that the hon. Lady may care to refer to me.

The hon. Lady was correct in saying that it has been necessary to make some reductions in maintenance as part of the reduction in defence works expenditure generally. This was a deliberate choice on our part, because it was thought to be preferable to reduce maintenance over a short period, at any rate, rather than further to reduce new construction. It is too soon to gauge the effect of this decision but we shall be watching the situation very carefully, and if there appears to be an unacceptable deterioration in standards we shall take appropriate measures to deal with it.

Bearing in mind that there are now 6,000 additional married quarter vacancies compared to the position when the Government took office, this means that the Government are losing almost £3 million of rental revenue each year. Would it not be preferable to make more reasonable charges for married quarters and then not have to cut down on the maintenance standards of others?

I intend to devote a fair part of my speech to the question of vacant married quarters. As to the charges, if they were not kept comparable a question of non-wage benefits would arise, and my right hon. Friend has dealt with that problem in the context of pay policy, as the hon. Gentleman knows, at great length.

My hon. Friend the Member for Hornchurch (Mr. Williams), who is still with us, mentioned, among other things—as did other hon. Members on both sides of the House—the question whether surplus married quarters could be sold to Service men as a way of meeting their own housing requirements. My hon. Friend the Member for Battersea, South (Mr. Perry) talked about that as a possibility for ex-Service men.

I shall be very happy to look into both suggestions in the constructive spirit in which they were made, but I ought to tell my hon. Friends, in all candour, that it would be easy to exaggerate the possibilities of what could be done in that way. It would be quite wrong to think that all the 14,000 vacant married quarters are surplus to our requirements; in fact, fewer than half of them could be, on even the most generous definition. Many of those that are released for disposal as being surplus to our long-term requirements would not be attractive, even to ex-Service men, because of their location. They are often in very remote parts of the country. That is not to say that we should not make the offer and see whether this would be a solution to some of our problems and to some of the problems of our ex-Service men and women.

My hon. Friend the Member for Batter-sea, South also spoke about the standard of accommodation in Gibraltar. I have a little personal acquaintance with the position there, because I visited Gibraltar in a previous capacity as a member of the Defence and External Affairs Sub-Committee during the period of the previous Administration. I certainly agree with my hon. Friend that much of the accommodation there is sub-standard, and has been for many years. On the other hand, as I am sure he would agree, there is a great deal of first-class accommodation in Gibraltar. It is a strange mixture.

It is true that there is a lot of first-class accommodation, but unfortunately I found out that it is for members of the Department of the Environment and not for Service members. I want to see the Service members have the same privileges and the same sort of accommodation as the others have.

I am much obliged to my hon. Friend for making that point. I certainly confirm to him that we are making progress with our programme for improving accommodation in Gibraltar. I believe that he will be much happier, as we shall, with the position when that programme has been completed.

My hon. Friend also referred to the need to modernise barrack accommodation in the United Kingdom and in Germany. I agree with him that this is a most important requirement, and we shall be giving to this also as high a priority as we can over the next few years.

Many hon. Members will know that various new scales of barrack accommodation were approved under the previous Administration, certainly in 1972, and all new barrack blocks are now built within these new scales. It is our intention and aspiration eventually to modernise all barrack accommodation up to these new and very much better standards. This has been a problem for a considerable time, and the Navy and the Army in particular have a great deal of very old accommodation which needs modernisation.

The cuts that we have had to impose on defence works planned expenditure in 1977–78 and 1978–79 have naturally made it impossible for us to make progress as fast as we should have wished, but I am sure that the House will appreciate that we have had to give priority to works projects that affect operational capabilities, such as higher priority training, and some barrack modernisation will necessarily suffer as a consequence. I can, however, tell the House that all three Services expect to be able to undertake some new barrack modernisation projects in both 1977–78 and 1978–79 in Germany and the United Kingdom.

I entirely agree with the proposition that modern and comfortable accommodation for the single Service man makes a very important contribution both to his morale and to his efficiency, and we intend to see that a high priority continues to be given to this modernisation programme.

The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) raised several interesting points, some of which were echoed by his hon. Friend the Member for Stretford, about the whole principle and way in which the AFPRB report is constructed, and suggested that a much better way of proceedings would be to have the Review Body ignore pay policy, presumably whichever Government are in office—that is, if a Conservative Government are to have a pay policy and if ever there is another Conservative Government—two highly doubtful propositions. The suggestion is that the Review Body should simply make a report as an independent body and invite the Government of the day to modify it. That is a tenable point of view, but, frankly, I do not think it would be a satisfactory way in which to proceed. What we have done, as our predecessors have done, is to set up a fully independent body and agree to accept its findings in full. I think that that is a thoroughly satisfactory way of proceeding.

I think that the hon. and gallant Gentleman, while he understandably and naturally is dissatisfied with the impact of pay policy on Services' pay and conditions, would be the first to start crying "Foul" if any Government were to interfere with the findings of an independently constituted body such as the AFPRB. However, we must merely beg to disagree one with another on that point.

If the Review Body is constrained by Government policy, it is not independent. It should be able to give an independent opinion, and it is then for the Government to apply whatever measures may be necessary. My point is that the Service man would then understand how he stood, which patently he does not do now.

As I said, I think that we can only agree to disagree about the fundamentals of this matter. The Government of the day take responsibility for the whole of their electorate and the pay policy. That is the right way for these matters to be regulated.

I take strenuous issue with the suggestion made by the hon. and gallant Member for Winchester that no one else is complying with the incomes policy and that only the forces are being screwed down in this way. If everyone were avoiding the rigours of the pay policy the Government would be a lot more popular than the evidence of certain by-elections leads me to believe. I am content to watch the result of the next one. The Conservative Party has apparently dropped 10 points in the opinion poll scale in one month. Therefore, I look forward to the next by-election— indeed, to the next General Election— if they maintain that rate of impact on public opinion.

The hon. and gallant Member for Winchester also suggested that we should exclude Service men from the operation of the Rent Acts. Other hon. Members also touched on this point. The hon. and gallant Gentleman said that it was a simple matter and that a one-clause Bill would do it. With respect, it is not a simple matter. I assure him that the difficulties of Service men with respect to the Rent Acts have been represented to my right hon. Friend who is responsible for the current review of the Rent Acts. I cannot say what the outcome will be, but we have tried to be proper shop stewards for the forces in this respect.

My hon. Friend the Member for Harlow (Mr. Newens) talked with his usual persuasiveness about the need for trade unions in the forces. We have not detected any serious demand from the forces for trade union membership of the kind that I think he has in mind. However, I assure him that it is open to any member of the forces in this country to join a trade union now. That is not necessarily recognised. In fact, we have encouraged members of the forces—particularly those who are shortly expecting to leave—to join trade unions in order to protect their position when they go into civilian life. There is nothing to prevent a man joining a trade union at the start of his career or coming into the Services as a paid-up member of a trade union and attending branch meetings, if he wishes, and paying his dues while he is in the forces, so long as his trade union activities do not bring him into conflict with the disciplinary requirements of the Services.

Several hon. Members have referred to the problems of local authorities' residential requirements for putting people on housing lists and how they have impinged unsatisfactorily on ex-Service men. This is a long-standing problem. It varies from one part of the country to another. The practice of local authorities is not uniform in this respect. Indeed, I honoured a commitment that I gave at this Dispatch Box a few months ago to write to my right hon. Friend the Secretary of State for the Environment asking him to draw the attention of local authorities to this matter yet again. I know that he will do that at an opportune moment.

Will my hon. Friend make it clear whether he thinks that it is now time that Circular 54/75 was replaced by a circular that imposes that duty on local authorities, rather than leaving it open to them to do as they wish?

I do not seek to shrug off our responsibility for the forces, but matters of that kind must in the last resort be for the determination of my right hon. Friend the Secretary of State for the Environment when he gives instructions to local authorities. I am not sure whether he has the power to do precisely what my hon. Friend the Member for Harlow suggested. However, I shall see that his suggestion is conveyed to my right hon. Friend.

Several hon. Members referred to the question of the number of vacant married quarters being maintained by the Ministry of Defence. The number is unusually high because of certain special factors which I should like to explain. It is certainly our intention to bring down the number of vacancies to normal proportions as soon as possible. The present 14 per cent. is about 6 per cent. higher than that which obtained in 1974 and it is certainly a worrying trend. Over that period we have released about 4,000 married quarters for sale to the civil community and nearly the same number have been transferred from one Service to another when there has been a need.

Over the last three and a half years the Services have released a number equivalent to over three-quarters of all the married quarters vacant in 1974. These are not matters that can be dealt with overnight.

When one takes into account that, for reasons that I shall explain, over half the 1974 vacancies must have arisen for "normal management reasons" and that many of the remainder were firmly ear- marked for a specific future use, it is fair to say that the situation is not as bad as a study of the figures might suggest.

It is clear from what the Minister has said—and we are grateful for his elucidation—that had it not been for the sales of these properties there would have been 10,000 additional married quarters vacant since the time that this Government came to office.

Last year's report of the AFPRB mentioned the concern expressed by the Minister of Defence about the impact on efficiency that a decline in the occupancy of married quarters would have. Can the Minister comment on that aspect of the situation?

Many factors lead people to leave married quarters. Not least, there is a general tendency for people to prefer to own their accommodation where possible. Other factors include the level of charges for married quarters and that has an impact that reinforces the preference of people to own their homes. It would be difficult to say which is the determining factor. I accept the calculations of the hon. Member for Stretford.

The attitude of the Services to these matters is not identical. Some prefer their officers and senior NCOs not to buy their own homes until a certain stage in their careers. On the other hand the Navy, for instance, is eager to encourage home ownership as early as possible.

The release of these premises for owner-occupation and transfer to other Services is a good thing and should be appreciated.

I am obliged to my hon. Friend.

I shall now deal with some of the reasons for this stock of vacant married quarters. Less than half today's vacancies arise for "normal management reasons". Many arise because personnel are overseas or because the accommodation is awaiting furnishing, decorating or structural repairs. An increasing number of vacancies arise because quarters are being converted from use by officers to use by other ranks. A substantial number of the remainder are vacant pending the arrival of a battalion in barracks or a ship in port. This turnover is unavoidable with a highly mobile defence force. Certain battalions—for reasons which I hesitate to guess—have a higher married strength than others. If a battalion with a relatively low proportion of its personnel married is in barracks, married quarters are not required for them but must be retained for other battalions which have a higher proportion of their strength married.

Finally, of course, we have quite a number of quarters that are located in the middle of Service establishments and are therefore incapable of being disposed of in a satisfactory way.

There are some special factors that explain the increase in vacancies that exercises Opposition Members. Since 1974 there has been an unusual number of deployment changes as the Services have been restructuring to their post-defence review rôles. About 100 establishments in all have been or are being closed or undergoing major changes in role. Quite a number of these have been passed from one Service to another— notably from the Royal Air Force to the Army. Some rebuilding is generally required in these cases, and in any case it takes a considerable period of time to prepare a unit for a major move of this sort. In the meantime, married quarters necessarily have to be held available at both places.

Vacant quarters are also held in some cases pending decisions on the future of particular locations, which often raise complex and difficult issues. Apart from the question of where the balance of defence advantage lies, hon. Members whose constituencies have been faced with closures will know how much care has to be given to the regional and employment implications of these matters. We intend to see that these outstanding decisions are taken as quickly as possible.

As has been pointed out, there has also been a market downturn in demand for quarters in recent years, particularly among officers and senior NCOs, as they have preferred to buy their own houses. The problem is that this downturn in demand is often throwing up married quarters in various areas. It is quite often very much easier to get rid of a whole block than it is to get rid of penny packets in the middle of areas of other types of accommodation.

Apart from anything else, before we release these types of quarter for disposal we have to be absolutely certain that the next people posted in, whose preference may well be for living in married quarters, will not in fact want them, because if we get this wrong we shall end up disposing of married quarters and then finding that we have to build married quarters next door to those that we have just disposed of. Naturally, hon. Members would regard that, as would the public, as a scandal. Therefore, the rate of disposals is always bound to be behind the game in this matter.

Where there is clear evidence that quarters, although within scaled entitlement, are unlikely to be occupied in the future, we shall see to it that they are released.

The hon. Member for Aldershot (Mr. Critchley)—I do not think that he is in the Chamber at present—said that the fact that some soldiers were applying for and getting rent and rate rebates proved that they at least were on the poverty line. I was going to read out the relevant passages of the 1974 report to repudiate that assertion. The hon. Member for Stretford looks pained about that matter. I am sure that he is pained, because he has had the passages read to him. It was not so long ago that he was peddling precisely the same canard. I shall spare him that. I think that he has been capable of assimilating a certain amount of instruction from this Dispatch Box.

I hope that the hon. Gentleman will be dealing with the question of the discrepancy between what the Under-Secretary of State for Defence for the Royal Air Force said and what the Pay Review Body said. I do not think that anyone in the House understood what the Secretary of State said on the subject—including, I think, the Secretary of State. It is difficult to see how both things could be right. We should therefore very much welcome clarification from the Minister.

I shall come to that in a moment.

We have now dealt with rent and rate rebates. I hope that it will never be suggested again in the House that entitlement to them is an indication that people are necessarily on some poverty line.

To come to the right hon. Gentleman's point, I must admit that the finer points of this debate have escaped me. My hon. Friend the Under-Secretary of State for Defence for the Royal Air Force has asked me to apologise on his behalf for the fact that he cannot be with us. However, before he left he did me the favour of underlining a couple of passages in the 1977 report which he said would explain everything.

I shall take his instructions on those matters and read the two passages to the right hon. Gentleman. If he still wishes to have further instruction, I am sure that plenty of opportunities will present themselves. We read on page 1:
"For the armed forces, as for many others, the tax reliefs, which are a very important element of the package, will have been in operation for a year before the associated pay increase falls due. The benefits from them will already have been felt at all levels, and will have been greatest for those who were not eligible for a pay increase in 1976."
At the end of paragraph 20, on page 8, we read:
"Where the increase in charges exceeds the amount available after tax from the pay supplement alone, it is important not to lose sight of the fact that the after-tax incomes of all members of the Services have already risen since the 1976 pay review as a result of the tax reliefs which are an integral part of the current restraint measures."
I am sure that that will make things absolutely clear, perhaps not to the hon. Member for Stretford but at least to his right hon. Friend.

Is not the Minister of State there referring to last year's Budget changes? What appears to be clear on page 7 of the Report, as my right hon. Friend pointed out, is that unmarried second lieutenants and more senior officers—married colonels and brigadiers —and certain categories of corporal, lance-corporal or private with large families, will be and are worse off as a result of the Irishman's pay increase, even taking account of the Chancellor's proposed Budget changes for this year.

I invite the hon. Gentleman to indicate the precise passage to which he has just referred.

About five lines from the bottom of page 7, the report says:

"in general, the after-tax amounts that arise from the supplements exceed the sum of the increases in food and accommodation charges for all unmarried adult servicemen and service- women and, apart from Second Lieutenants, for unmarried officers up to Lieutenant-Colonel. The increases in charges for unmarried Second Lieutenants and for more senior officers exceed the after-tax increase in pay, but in the main by small amounts."
It then goes on to deal with certain categories of married Service men. This is a complete contradiction of what the Under-Secretary of State for Defence for the Royal Air Force said a couple of weeks ago in a parliamentary reply, namely, that no member of the Armed Forces is worse off as a result of the pay review. There is a total discrepancy. The Secretary of State promised us a satisfactory reply in the winding-up speech. We should be glad to have it.

I am doing my best to assist the hon. Member. I am not clear whether he is suggesting that the passage that he has just read out is in conflict with the two passages that I have read out or that what my hon. Friend said is in conflict with the passage that he read out or with the passages that I read out. I understand that what my hon. Friend said was totally in harmony with the passages that I read out. I am glad that at any rate we have not had an intervention from Conservative Members to contradict that.

Are there members of the Armed Forces who are worse off as a result of this pay review? That is clearly what is suggested on page 7 of the report.

Clearly, what is said on page 7 of the report is not to be contradicted by me.

I wonder whether my hon. Friend will allow me to intervene. This is a very unusual situation, but it was I who caused the difficulty by making a statement which I believe still to be wholly correct. What I think I have to explain is that when my hon. Friend the Under-Secretary for the Royal Air Force made his statement, he was properly taking into account the pay review as a whole and the tax reliefs of the pay as a whole—

—the hon. Gentleman should listen, because a difficult passage is coming—whereas, of course, rightly, the right hon. Member for Chesham and Amersham (Sir I. Gilmour) drew attention to the footnote to paragraph 20, which makes it clear that

"in general, the after-tax amounts that arise from the supplements"—
the supplement is £4—
"exceed the sum of the increases in food and accommodation charges".
So the point is that it is a different position if one takes into account the tax reliefs over the whole of the salary than if one compares the tax relief which flows only from the £4.

I am obliged to my right hon. Friend. Who would care to dissent from his interpretation of my hon. Friend's wise remarks?

I have some sympathy with both the Minister of State and the Secretary of State, because this is a complex matter. Going back in my memory for three or four years, I am sure that there always was in the complexities of pay reviews a let-out clause that no one should actually finish up worse off. If anyone did, extra charges and restraints were waived. This is not something that I would expect the Minister to have at his fingertips, but I recall one time when, had it not been for the waiving of a charge, I should have been worse off because I had had a better rise the time before.

I am not making a party point, but the point is valid. Is any member of the Armed Forces worse off as a result of the pay review and the awards than he was before? If so, there has been a significant change, and this makes a difference.

I am obliged for the constructive way in which the hon. Member has made his point. I am not taking issue with his recollection: I am sure that it is better than mine. I am looking at the matter—[Interruption.] The hon. Gentleman is inviting me to compare what is happening in this review with what happened in a previous review. As he said, one cannot know that off the top of one's head—no more I than my right hon. Friend. But I will look into the matter and communicate with the hon. Gentleman.

The present arrangements for Armed Forces pay review have been developed over several years to suit the special circumstances and tasks of the forces and to provide for the views of individual Service men to be taken into account. I think that the methods used are well understood and that there is no serious demand for a change.

On pay, it is important that the House should not confuse the adequacy of the system for determining pay and the difficulties and distortions that any incomes policy is bound to create for a pay structure as complex as that of the Services. We do not dispute the proposition that we need greater flexibility in the next pay round, and it is to that end that we are working.

Every hon. Member wishes men and women to feel able to take a pride in their career in the Services, to wish to remain in the Services for as long a period of their working lives as possible, and to feel that their legitimate aspirations and grievances are being met. Of course Ministers are aware of the concern felt in the House and, if I may say so, more importantly, in the many parts of the Services, at the present state of affairs. Ministers, senior officers and senior officials strenuously and untiringly represent the Service case in the context of pay policy. My right hon. Friend is pledged to do all that he can to restore flexibility in the next round of pay policy.

When all is said and done, and despite the terrible picture that has been painted, the fact remains that recruitment to the Services is buoyant and that retentions are less of a problem than they were even a year ago. If the forces did not accept the good will of my right hon. Friend in these matters, I can assure the House that the figures would tell a very different story.

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

European Community (Taxation Of Commercial Vehicles)

8.55 p.m.

On a point of order, Mr. Deputy Speaker. The next motion relates to EEC draft Directive R/1435/68 on Adjustment of National Taxation Systems for commercial road vehicles. Earlier in the evening, I raised a point of order about the availability of documents, and, in respect of this matter, I wish to draw your attention to the 22nd Report of the Select Committee on European Legislation, ordered by the House to be printed on 25th May 1977 and available to hon. Members only today.

One of the reasons why the Select Committee referred this legislation to the House was that it felt it necessary for right hon. and hon. Members to consider certain documents. The Select Committee said in its report:
"This written evidence has been deposited in the Library of the House and is available to Members on request"
Earlier in the day, I duly requested it. I hasten to say that I intend no criticism of the Government or of the Ministers involved. But, trying to be as kind as possible, I have to inform the House that that information became available only about 10 minutes ago.

There are three documents involved, and I have attempted in that brief interval to peruse them. Your predecessor in the Chair, Mr. Deputy Speaker, undertook to look into the situation.

I believe that this House, whatever the business that it is doing, should go about its business in a workmanlike way. We have this procedure late at night, and we have had these disputes before about the availability of documents. I am aware that it is a new procedure for documents to be deposited in the Library. Nevertheless, it is unsatisfactory that we should land ourselves in this position where right hon. and hon. Members cannot have made a full study of the depositions which were supposed to be available in the Library.

I hope, therefore, that you can report to the House on the result of your earlier investigations and assure us that this difficulty will not occur again. I say that without castigating or blaming any of the officials of the House who, I know, do their best to serve us and who have put in considerable efforts to get these documents to us.

Further to that point of order, Mr. Deputy Speaker. The House is put at considerable inconvenience when evidence of this kind is not made available to right hon. and hon. Members. In fact, the three documents to which the hon. Member for Brigg and Scunthorpe (Mr. Ellis) rightly referred were handed to me, as the Clerk of the House knows, at 8.52 p.m., precisely six minutes ago.

The three documents are not technical or side issues. They are the observations of three bodies—the Society of Motor Manufacturers and Traders, the Road Haulage Association and the Freight Transport Association—upon the exact nature of the business which is before the House.

You will recall, Mr. Deputy Speaker, that on the last occasion that we attempted to debate this draft directive, the Government did not provide the documents. On this occasion, the documents which are necessary for us to be able to assess the strength of the three expert professional bodies to which any hon. Member would turn have not been available. The matter goes a little further than the hon. Member for Brigg and Scunthorpe said. We might also consider what action can be taken now because, quite clearly, five or six minutes is no time for a proper consideration of the points made in these fairly extensive and detailed observations.

Further to that point of order, Mr. Deputy Speaker. As one who is perhaps known to you as having an interest in the motor industry, I tried to obtain these documents. It was at 8.51 p.m. precisely that I was able to obtain them from the Library, having earlier been refused them. I find myself at some disadvantage. I have had a previous acquaintance with the evidence of the Freight Transport Association but I have been unable to obtain the evidence of the other two bodies to which my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) referred. I find myself at a considerable disadvantage in trying to take part in these deliberations, which have a considerable constituency interest, without having had the time to study the documents.

I should be grateful if you would give me your guidance as to how the House can best proceed. I find myself at a considerable disadvantage with regard to a very important matter for the industries and constituents that I try to represent in this House.

I am much obliged to the hon. Member for Brigg and Scunthorpe (Mr. Ellis) for raising his point of order. As the hon. Member knows, I was not in the Chair when he first raised the question of the absence of essential documents. I first heard about it when I took over the Chair. Hon Members have been talking in terms of minutes. I have been in the Chair longer than that, and I believe that the documents have since become available.

As far as I can judge, there has been some mishap in the provision of the documents, but they are now available. If we allow the Minister to proceed to move the motion he will no doubt do it in a quiet fashion so that hon. Members can at the same time study the documents that have been made available to them. I am sure that they will then feel able to take part in the debate. I agree that the situation is unfortunate, but it is not a matter which concerns the Chair except, naturally, that we shall try to find out exactly where the lack of communication occurred and as far as possible try to avoid it in future.

Further to that point of order, Mr. Deputy Speaker. One, of course, fully appreciates the position in which you yourself are placed. I think that you would concede that what you have said is not satisfactory to anyone wishing to take a serious interest both in what the Under-Secretary will doubtless try to say and what is contained in these three documents. In all conscience, it is impossible to read through the detailed recommendations in three documents from three separate organisations while at the same time listening to what the Under-Secretary is saying, and, as it were, putting a fourth point of view. Even given the multifarious skills represented in this House, that is putting it a little too high.

We are not blaming the Government on this occasion because it is not their responsibility that these documents have not been provided. I suggest through you that the Minister should agree to do what he did on the last occasion and not move the motion, therefore allowing a debate to take place at a later stage.

Further to the points of order, Mr. Deputy Speaker. I think the House understands the problem that has arisen here. As my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) kindly said, considering the enormously difficult job which the Library does one can understand that an odd mistake does occur. Undoubtedly these documents were deposited by the Select Committee to which they were presented by the three organisations concerned, but in the welter of documents it is occasionally the case that some do not come to light as quickly they they might have done.

That has happened here. I well understand the difficulty in which hon. Members have been placed. On the other hand, I would point out that these three documents came to the Committee of the House in 1975 in answer to requests made by the Select Committee. But for this slight mishap they would have been deposited—indeed, they were deposited—to enable hon. Members to have a closer look at them.

Given that they were deposited in 1975, it is my understanding that the general negotiations that have gone on there have largely taken account of the problems which were raised by the three organisations. If I were to be allowed to move the motion, I could perhaps explain the present state of the negotiations and say how they have been able to take account of the reports that were made by the three organisations. In the meantime, perhaps if I made a reasonably lengthy contribution hon. Member would be able to read what are basically two or three-page documents.

On a point of order, Mr. Deputy Speaker. I understand that we are considering the draft directive on the recommendation of the Select Committee on European Secondary Legislation. It has recommended that the directive is worth considering and it has come to that conclusion for a number of reasons which may have been advanced in the evidence submitted to it by the three organisations about which we have heard. Without having that evidence before us and without having the opportunity to study it, we can hardly judge why the Select Committee considered the matter worthy of full detail before the House. We can hardly be carrying out the intentions of the Select Committee if we do not have before us the evidence that it had to consider.

While certain of my hon. Friends have managed to secure these documents through their own efforts. I have not yet managed to see them and I therefore feel at something of a loss. I have had a moment to scrutinise those belonging to another hon. Member but that is hardly a satisfactory basis for discussion of a fairly involved and technical document. It is all very well for the Minister to say that he will give a helpful and full statement, but that is not the same as hon. Members having the opportunity to assimilate the information for themselves and to evaluate what the Minister says against the information given before.

This is not fundamentally a straightforward matter but one which requires careful consideration. The Minister would be doing a service to the House if he agreed to defer the debate until hon. Members have had the opportunity to study the information. This matter has been hanging around since 1968 and I do not think that there is any degree of urgency. In the interests of informed and sensible debate, it would be helpful for this matter to be put back, and I hope, therefore, Mr. Deputy Speaker, that you will accept such a motion from the Minister.

Further to that point of order, Mr. Deputy Speaker. I raised this matter in the first instance and my hon. Friend the Under-Secretary has given an explanation and so have you, Mr. Deputy Speaker. It has been established that an error has been made, but not by the Government, and that these matters will be corrected in future. It is fortunate that we have reached this debate at an early stage in the evening. Presumably, we could get over this difficulty if the Minister read out the three documents in full, but I am sure that that is not necessary. I have been able to get hold of the documents. Since it was I who first raised the matter—and perhaps if I had not mentioned it no one else would have noticed—may I say that I am satisfied with the explanations that have been given.

Further to that point of order, Mr. Deputy Speaker. While hon. Members have been making quiet interjections I have been trying to study one of the documents. So far I have reached page three and I have already come across the starting date, the question whether these duties are the only duties to be charged, the question of exemptions, the question of the cut-off point, the question of the tax basis, the question whether four-axle vehicles are to be included, and whether trailers or semi-trailers are to be included, the weight bands which are to apply to the excise procedure—

Order. Before the hon. Gentleman has finished he will have read the three documents to the Chair. I can appreciate the import of the documents. In fact, we are not taking note of the Select Committee's Report. The House is being asked to take note of the EEC draft directive. The hon. Member for Brigg and Scunthorpe (Mr. Ellis), who first raised the matter, has said that he is quite satisfied with the explanation that has been provided. The hon. Gentleman is willing to proceed. Let us see how the matter progresses. A dilatory motion cannot be moved until the Minister has moved his motion and the occupant of the Chair has proposed the Question. Until that stage has been reached, nothing can happen.

On a further point of order, Mr. Deputy Speaker. I have not been addressing my remarks to the report of the Select Committee. I have been addressing my mind to the evidence submitted by one of the associations to the EEC document, which is what we are to consider this evening. I appreciate that we shall not be discussing the Select Committee's Report. These subjects relate to the substantive draft directive of the EEC Council of Ministers. You rightly interrupted me, Mr. Deputy Speaker, before I had completed the list of headings, but I think you will agree that the documents are of sufficient weight, importance and difficulty to enable me to say that in the 20 minutes that I have been trying to study them it is not unreasonable that I have not been able to arrive at a conclusion. I had not been able to obtain them earlier.

Several Hon. Members rose—

The evidence to which the hon. Gentleman refers was submitted to the Select Committee. I do not see how I can help matters until the Minister has moved his motion and I have proposed the Question. When that has been done we can then discuss how we shall proceed.

Further to that point of order, Mr. Deputy Speaker. First, I made it clear that my remarks are in no sense meant to be a criticism of the Library. I think that hon. Members on both sides of the House would pay tribute to the service that we get from the Library. The basic point that is being made is that in coming to a decision whether we should take note of the draft directive that the Under-Secretary of State is about to move, we should like to have time to study the views of the three organisations most closely involved. That is why it is so crucial—

Order. The question whether the Minister is prepared to withdraw his motion is a matter for him alone. If he sees fit to move his motion, it would be open to an hon. Member to move a dilatory motion.

That would be a matter for the Chair. That cannot take place until the Minister has moved his motion.

9.14 p.m.

I beg to move;

That this House takes note of the draft Directive R/1435/68 on Adjustment of National Taxation Systems for commercial road vehicles, and of the revised explanatory memorandum submitted by the Secretary of State for Transport on 19th May 1977, which includes a text of the draft Directive currently under discussion.
This draft directive was part of our inheritance when we joined the European Community. It first saw the light of day as a proposal from the Commission in 1968. After more than eight years of negotiations, we now seem to be reasonably near agreement, and approval by the Council of Ministers later this year is quite likely. But as I shall explain in a minute, the draft embodies policies on vehicle taxation that are very much in line with the Government's views of the course that we should pursue.

It will therefore make comparatively little difference to operators in this country whether or not the directive is finally approved. On the other hand, approval should in due course lead to a better coordinated approach to taxation of lorries throughout the Community. This in turn should help manufacturers who are faced at present with different tax regimes in neighbouring markets.

Not surprisingly, many changes have been made during the past eight years. The Commission has published only the original version of the draft directive and there is therefore no up-to-date Commission document to lay before the House. So that this debate may take place sensibly, my right hon. Friend has provided for the House an extended memorandum explaining the proposals as they now stand. In accordance with the undertaking given by the Leader of the House on 30th March, a text of the draft directive showing the form in which it is currently under consideration in the Transport Questions Working Group of the Council is annexed to the explanatory memorandum.

Accordingly, I shall base my remarks on the revised memorandum and the text of the draft directive attached to it. This is the important thing to look at. The three documents that we have been discussing during points of order were documents requested by the Select Committee on European Secondary Legislation in order to decide whether this particular directive should be debated. The Government did not receive them at all, but we requested them as a matter of interest to see what the three organisations said to the Select Committee. Naturally, there was a direct request from the Select Committee to the organisations concerned to enable the Committee to make up its mind whether there should be a debate. It was of no direct interest to the Government, and we were in no way a party to the decision. The wishes of the Select Committee were finally made known, and in the course of that we learned a few lessons about the sort of documents that should be available to the House. That has been valuable to all concerned.

I wish to base my remarks on the revised memorandum that the Government have provided and the new procedure that we have adopted. The central idea in the Commission's proposals in that taxation should reflect the costs that are caused by commercial vehicles using the road network. The expectation is that this will encourage the use of vehicles that incur lower costs, ensure fair competition with other transport modes, especially the railways, and will help align conditions of competition between road hauliers within the community.

When the directive is in force, all member States will tax their vehicles on a similar basis. Each category of vehicle will have to meet, through fuel taxation and vehicle excise duty, the marginal road costs which that category causes. However, individual Governments will remain free to decide how much extra tax they require over and above the marginal costs as a contribution to the general revenue.

Any extra tax of this kind will, however, have to be distributed fairly among different categories of vehicles. A supplement will be added to the tax required from each category. This will be related to the average mileage travelled by vehicles in the category. Vehicle operators may be alarmed that this is a complex matter to calculate, but I assure the vehicle operator that he will not need to go into all these details. As at present, he will be able to look up the tax liability of each of his vehicles in a published table.

At present we tax vehicles according to their unladen weight, and this can produce striking differences in tax between vehicles which have the same gross weight but different unladen weights. We intend to switch as soon as possible to taxation based on gross vehicle weight. I understand that this move will be welcomed by both manufacturers and operators.

This reflects the fact that since the document to which my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) referred was issued, there have been continuing negotiations, and while there were once reservations about the new system, operators are now basically content with it provided that we can have a reasonable transition period before the switch.

At the same time, the new system will take account of the number of axles a vehicle has and of the axle loading. The main effect of restructuring vehicle excise duty in this way will be to redistribute taxation so that rates of tax will be in proportion to the costs occasioned by each group of vehicles. The directive will not itself be responsible for anything more than the redistribution of the total existing goods vehicle excise duty.

For some vehicles—the heaviest lorries with few axles—this will lead to an increase in taxation. The recent Budget increases in excise duties on goods vehicles and on derv have gone some way to meet the increases expected to result from the directive even for these classes of vehicle. Where any considerable change from existing tax rates is required the directive provides that the changes can be staged over a maximum of five years. This is a point that we have discussed with the various organisations that gave evidence to the Select Committee on European Secondary Legislation, and is a point about which they were concerned.

The directive now applies only to vehicles weighing more than 12 tonnes. For vehicles below this weight, application of its principles will be optional. However, when the vehicle excise system is restructured, we expect to apply the principles of the directive, with some modification, to all goods vehicles. That remains the expectation and, as I have said, it remains optional. For the time being articulated vehicles will continue to be taxed as entities but we expect to tax drawbar trailers separately.

Originally, the Commission proposed that the directive should cover commercial passenger vehicles such as buses and coaches, as well as lorries. These are now excluded. As hon. Members will know, buses in this country enjoy a rebate of fuel tax and their exclusion from the directive will enable this concession to be continued. This is an extremely important point in the operation and conduct of a sensible transport policy.

It would appear that the allowance of a special rebate of fuel tax for passenger vehicles is a matter of principle rather than of quantum. Will the Minister assure the House that we shall be allowed to continue to apply that principle if the contents of this directive become unenforceable?

Yes, that will be the case. Since the directive does not cover buses or coaches, that principle will be maintained in our taxation system.

Under the current vehicle excise law certain vehicles—for example, ambulances and fire engines—are exempt from tax and these exemptions are likely to remain. Certain other categories of vehicle—for example, farmers' and showmen's goods vehicles—are now taxed at a lower rate than are general goods vehicles. These concessions will not be automatically carried over into the new system. Therefore, there may be a change in that direction, although not in respect of buses and coaches and of the other exempt items, such as ambulances and fire engines.

If I understood the Minister correctly, he included drawbar vehicles among those attracting heavier tax. That, together with the statement he has just made, would indicate that farmers will have to bear a considerably heavier tax if this directive is carried through. Will he clarify that point?

I have said specifically— perhaps the hon. Gentleman misheard me —that farmers' goods vehicles will remain exempt under the new directive and that the taxation will be no greater than it is today. Each concession in future will have to satisfy strict criteria and also secure the agreement of the Commission. Discussions have already taken place with the National Farmers Union and the Showmen's Guild. I am talking in that respect about goods vehicles and showmen's vehicles.

I cannot say with absolute certainty when the changeover in systems will be but it is likely to be within the next two or three years. The goods vehicle records at the Driver and Vehicle Licensing Centre at Swansea are based on the unladen weight of vehicles, so that it will be necessary first to obtain information on gross vehicle weight and number of axles for each goods vehicle. Powers to do this were given in the Finance Act 1976. Because the centralisation of the vehicle records at Swansea will not be completed until March 1978 it will be possible to begin the assembly of information and the transformation of records only some time later. This does not, of course, mean that there can be no changes in vehicle excise duty for goods vehicles during the interim period—the last Budget proved that—but only that any such changes will continue to be based on the present system of the unladen weight of vehicles.

These proposals, if approved, will direct us along a path that we should intend to tread in any case. The switch to taxing on laden rather than on unladen weight will produce a fairer taxation system and level of taxes will reflect much more the costs in terms of the wear and tear on the road that the vehicles actually incur. As I have explained, the Government are in no doubt that this is the right policy for the future and we shall in any case implement it as soon as we can acquire the necessary information about individual vehicles.

With regard to the timing as well as the amount of tax, will the Minister confirm that the timing of the implementation is solely a matter for this country and that the total amount of tax, at this stage, is also a matter for this country?

This directive is concerned fundamentally with the structure of the taxation and not with the amount of tax. We intend to proceed with this anyway and therefore the directive is not necessarily of great consequence in this country alone.

Before I wind up, let me say I am afraid that I may have misled the hon. Member for Lewes (Mr. Rathbone) in reply to his earlier intervention. I should like to take up his point more clearly, because my information is that the concessions for farmers' goods vehicles and showmen's goods vehicles—although I believe the hon. Gentleman was thinking only of farmers' vehicles, by which I mean vehicles owned or leased by farmers—would not necessarily continue under the directive. I think that I was a little too categorical in reply to his intervention. I shall write to him if I cannot satisfy him on that point during the debate. There is now some element of doubt about that.

This is one of the difficulties of not having the papers. The question that I raised was whether farmers would have taxes on their vehicles, particularly their draw-bar vehicles, to which the Minister referred in his statement, and agricultural vehicles. I asked whether the two would be put together and whether that would lead to increased costs to farmers. The Minister led me to believe that there was no such threat. Is he now withdrawing that?

I was a little too categorical in what I said to the hon. Member. It appears to be the case that goods vehicles owner or leased by farmers would not necessarily retain the concessions that they now have. As for draw-bar trailers, on reflection I should not have been so categorical about the concessions. I should like to refer to the matter again and to take some advice. If the hon. Member for Lewes does not intervene in the debate again I shall write to him to clear up that point, precisely because I do not want him to be under any misapprehension.

I apologise to the rest of the House for these constant interventions, but I am afraid that we are faced with not only insufficient papers and insufficient time but with a Minister who has insufficient understanding of what he is talking about. I am most grateful for the Minister's promise to investigate this but it is incredibly difficult for hon. Members to debate the subject if the Minister cannot tell me what the effects of these regulations will be on agricultural drawbar vehicles.

Let me be as explicit as I can. If a drawbar vehicle is owned or leased by a farmer, the existing concessions may not continue. There may be an increase in taxation. I was telling the hon. Gentleman that negotiations have taken place with the NFU on farmers' vehicles and with the Showmen's Guild on goods vehicles used by travelling circuses and fairs.

I was too categorical in what I said in reply to the hon. Gentleman's first intervention. I am now retracting that and saying that there is a threat to farmers' vehicles in this respect. I should not like the hon. Gentleman to get the wrong impression of the negotiations and perhaps I may write to him to explain the matter more fully when I have had an opportunity to assemble the information.

Cannot the matter best be summed up by reference to Article 12 of the directive, a paper on which is available in the Vote Office? That article states that

"Member States may exempt the following commercial vehicles from payment of the road infrastructure tax:
  • (a) agricultural tractors, including motor vehicles fitted with tyres or tracks and having at least one axle, whose main function lies in their tractive power and which are specially designed to draw, push, carry or operate certain tools, machines or trailers designed for use in agriculture or forestry;
  • (b) agricultural self-propelled and trailed vehicles and trailed equipment; these include agricultural trailers, semi-trailers, machinery and implements."
  • That is so. I was anxious to make sure that the hon. Member for Lewes was not under a misapprehension. I hope that he is not now. If there are further details on which I can satisfy him, I shall attempt to do so.

    The Government have no doubt that this is the right course to pursue and we shall in any case implement the proposals domestically as soon as we can when we have the necessary information about individuals. I hope that the directive will be approved, because it will ensure similar taxation systems throughout the Community, and that should help our manufacturers in planning their production and export programmes. It is one of the essential purposes of the Common Market that this sort of uniformity of approach should be adopted, and this is a sensible way to do it. It also happens to fit in with our general approach to the taxation of heavy lorries and other such vehicles. In those terms, I recommend the draft directive to the House.

    9.33 p.m.

    I return immediately to the first point that we raised. The Minister has demonstrated in his exchanges with my hon. Friend the Member for Lewes (Mr. Rath-bone) exactly what we are complaining about. There is a section that I have not had time to go through—and it would be unreasonable to expect that any hon. Member would have had the time— on the taxation of trailers and the views of the Society of Motor Manufacturers and Traders on the subject. There are three documents referred to the Select Committee's Report for 1976–77 that contain written evidence from the Road Haulage Association, the SMMT and the Freight Transport Association.

    My hon. Friend is concentrating so much on his important arguments that he may not have noticed that Mr. Deputy Speaker is explaining to Mr. Speaker the difficulties that we have been facing. Would my hon. Friend care to make short conversation until their conversation is finished so that Mr. Speaker will be able to understand what my hon. Friend is saying?

    I think that making short conversation to myself is quite difficult at the Dispatch Box, but perhaps I may put the point simply. The written evidence was given to the Select Committee dealing with European legislation, and it is printed in the report to which I have referred. Evidence was given to the Select Committee from the Road Haulage Association, from the Society of Motor Manufacturers and Traders, and from the Freight Transport Association. On page 7 of the report it is said that this written evidence has been deposited in the Library of the House and is available to hon. Members on request.

    My point—for those who have just heard the intervention and the exchanges between the Under-Secretary and my hon. Friend—is that indeed one of the matters which came up related to a point in the SMMT document. The three organisations which gave their evidence—the Freight Transport Association, the Road Haulage Association and the Society of Motor Manufacturers and Traders—are clearly and indisputably the three leading organisations in this field.

    The point at issue is that it is impossible, without the three documents, which should have been in the Library—I am casting no blame, but the fact is that they were not in the Library and were made available only a minute or two before the debate—for hon. Members to come to a proper understanding of the case in the time available. The Undersecretary made no mention in his speech of the three documents, or at any rate no substantive mention of them. Indeed, he conceded that he also had not seen the three documents to which we are referring. It seems to me that in those circumstances this is no way in which proper consideration can be given to the three documents and the points which have been made. I beg to move, That the debate be now adjourned.

    I am afraid that I cannot accept a dilatory motion at this stage. The debate must proceed.

    The hon. Gentleman, intervening from a sedentary position, shows his total ignorance of the procedure of this House in shouting "Too late", because it should be within his knowledge that that was the only stage at which the motion could be moved. I doubt very much whether the hon. Gentleman will lend very much to the debate by his presence. He lends very little to any other debate which takes place in this House.

    Let me return, Mr. Speaker, to the brief and in many ways sorry history of this debate. The House is being asked to take note of this EEC draft directive. The Under-Secretary, on the last occasion on which he spoke on this matter in the House, moved one of my hon. Friends to say that he would be most grateful if he could be given some guidance on what the House was supposed to be discussing, and on what document the debate was taking place, as he was considerably puzzled. One of his hon. Friends said that, having listened to the statement which the Under-Secretary had made, his mind was still boggling over what exactly the House was supposed to be discussing. Another hon. Gentleman said that the only thing for the Minister to do was to withdraw the document with good grace and to return to the House with a proper one. That is the unhappy history that has accompanied this draft directive.

    Perhaps I may first offer some congratulations to the Under-Secretary on producing a far more relevant and up-to-date account than he was able to produce on the last occasion. On that occasion the House was placed in an impossible position. But better information has now been provided. We believe that better information is essential for these debates. I think that the Under-Secretary will at least concede that by not moving the motion on the first occasion, he was being of assistance to hon. Members of both sides of the House.

    As the hon. Gentleman said, there are a number of differences between the proposed European system and our own. The draft directive would require vehicle taxation to be based on the maximum permissible laden weight of the vehicle as opposed to the United Kingdom system of unladen weight. It would tax vehicles of the same maximum weight differently if they had a different number of axles. The cost of wear and tear would be calculated by a formula set out in the annex to the directive.

    In making a judgment on these proposals, the Under-Secretary has given some international background to the negotiations. I should like to set out some essentially national background which, strangely, the hon. Gentleman did not mention.

    I think that the most essential part of the national background is that the road haulage costs of British hauliers have vastly increased over the last two or three years. Operators—particularly small hauliers—are finding it difficult to provide money out of profits to buy new vehicles. The road haulage industry today undoubtedly faces an extremely difficult time which will affect the prospects not only of the proprietors of businesses but of drivers working within the industry.

    It should be emphasised that, although there are big companies in road haulage, there are also many small companies seeking to make a living out of a very competitive industry. There are about 130,000 operators who each have five or fewer vehicles and of whom 80,000 are one-man businesses. They are another example of small business men who have been hit so hard during the last three years. They were hit hard in the last Budget. Indeed, the Chancellor insists upon writing them off as an anti-social and undesirable industry. I do not believe that anything has done the Government more harm within the road haulage industry than the television broadcast made by the Chancellor after the Budget. I believe that such views as those expressed by the Chancellor are mistaken.

    The draft directive is of fundamental importance, because the taxation levels on commercial vehicles crucially affect not only the industry, but the public. The vast majority of goods in this country go by road. As the Government will soon confirm in their White Paper, 85 per cent. of the total tonnage of goods will continue to go by road. Therefore, taxation on transport is important, because it crucially affects every housewife and business man in this country.

    Against that background, and given that, through no fault of our own, nor through the fault of the Government, this is an intrinsically unsatisfactory debate, I should like to put three points to the Under-Secretary.

    The first concerns wear and tear costs. Clearly, commercial vehicles should pay for the wear and tear that they cause on our road system. I do not think that aynone would seriously dispute that view.

    When it comes to competition between road and rail, I think that the Government's function is not to direct traffic to use one mode or another but to work out the fair track costs of each different mode and then to allow free competition. The consultation document gave some figures of track costs. It showed that, whereas cars and vans were paying more than their full track cost, some of the heavier vehicles were not. However, these figures were based on the period 1965–75 when there was a heavy, if not record, road investment. Since then two things have happened. First, road investment and maintenance has been heavily reduced. Secondly, thanks to this Government, taxation has been substantially increased.

    What is the current position? The Freight Transport Association, in one of the documents which is available to hon. Members, says that there is ample evidence to show that before the Budget goods vehicles were covering their track costs at the rate of 1·5 to 1. Within this lorries were covering their track costs by the ratio of 1·2 to 1. The FTA dispute that there is any shortfall on the part of even the heaviest vehicles and that if there is, it is being made up by the light and medium vehicles in its fleets. The taxpayer is not subsidising road transport.

    After the 1977 Budget, the Association made further comments about road track costs which again show that light goods vans and other vehicles are now paying their track costs. It is important to know —when assessing this draft directive and the changes proposed in it—how the Government regard the question of track costs.

    My second point concerns the supplement mentioned in the draft directive. Each State must charge the costs of wear and tear on the road system. In addition, Governments can change the sum involved. Thus it appears that in the United Kingdom the Chancellor of the Exchequer retains total discretion and freedom over how he taxes commercial vehicles. Indeed, he raises in tax exactly what he wants to raise. To a large extent this draft directive seems to be somewhat redundant because many of its proposals are already operated here.

    Under the same heading of the supplement I must ask the Under-Secretary of State whether it means that the Government can charge any new costs? Can they charge the so-called social and environmental costs referred to in the document. If they can, will he explain the Government's latest thinking on the proposal, which is opposed by the industry and by the Transport and General Workers' Union. Is this proposal still a runner or have the Government put it on one side?

    My last point concerns a further document that I have received from the FTA In that document the Association says that the kind of legislation cannot be taken as a single package. The Association says,
    "Proposals to harmonise the basis of taxation have always been regarded as an interim step towards the establishment of a common basis for the treatment of infrastructure costs. This in turn is part of the overall plan to harmonise conditions of competition, leading, it is hoped, to a liberal transport policy."
    They are words used by the FTA.

    It is, therefore, relevant to ask how far the Government can assure the FTA that acceptance of the draft directive on taxation, with the consequential loss of United Kingdom control, will have any compensating benefits in the establishment of a more liberal policy in other areas of transport. The point being made is this: what is the quid pro quo in this kind of situation? Do the Government see any quid pro quo?

    One of the points that has been urgently raised with hon. Members on both sides of the House, but particularly on the Opposition side—

    Does not the hon. Member realise that to discriminate against one's own country with regard to the Common Market is illegal and that, therefore, concerning this matter, the Government cannot give a quid pro quo as long as they stick to the general line of the directive that is issued?

    I was about to mention precisely one area in which the negotiations between Common Market countries could allow for this. That is in the area of trade and the area of the permit situation inside Europe, which is not the subject of EEC legislation but which is essentially the subject of negotiations that arc taking place between Governments. However, perhaps I may ask the Undersecretary to deal with that point when he winds up the debate, rather than dealing with it now and preventing some of my hon. Friends from taking part.

    I do not wish to deal with the hon. Gentleman's point now, but I should like to be clear about it. He was asking what the quid pro quo was for this taxation system. I was not clear whether he was talking about an EEC quid pro quo or a national quid pro quo.

    I think that the point of concern that the FTA is making is that a great deal of harmonisation that is taking place seems to be coming one way. Therefore, what it is asking, from its own point of view, is what the Government have to offer it in terms of further and better negotiations to make its own trading position better on this crucial question of international permits, which, as the hon. Gentleman knows, is causing a great deal of concern, as I am sure the hon. Member for Brigg and Scunthorpe also knows.

    I want to be brief, because some of my hon. Friends want to speak in this debate. On the last occasion that we almost debated this draft directive, we were asked to welcome these proposals
    "as a step forward in liberalising the movement of goods by road within the Community."
    I think that that was overstating the case very considerably. Whatever else it did, it certainly did not achieve that kind of advance. We are now being asked to take note of the draft directive, which is a very different thing. I think that probably, in the end, it is something of which we shall take note.

    Perhaps I may say that hon. Members are aware that this debate will have to finish at 11.30 p.m. I hope that all hon. Members who want to participate will be able to do so.

    9.54 p.m.

    I shall try to do your bidding, Mr. Speaker, although this is a big subject.

    First, let me say that the hon. Member for Sutton Coldfield (Mr. Fowler) prefaced his remarks with some quite offensive remarks about my hon. Friend the Minister. It may be that when the hon. Gentleman reads his contribution in Hansard he will think again, as he may also think again about his remarks to my hon. Friend the Member for Sowerby (Mr. Madden). I am referring to the outburst about the document. I put it to the hon. Member kindly, because none of us is perfect.

    These matters concerning the Common Market are difficult and intricate. However, it is no good Opposition Members talking about a dilatory motion, and so forth. The hon. Member has particular responsibility, sitting as he does on the Front Bench, to make sure that he does his homework first. I hesitate to suggest, with due modesty, that the House may not have got on to that particular tack had I not done my homework tonight.

    I am grateful to the hon. Member, who at least does me the courtesy to indicate that that is so.

    As always in these debates, when we get on to the subject the hon. Gentleman waxes lyrical about the difficulties of the legislation, and so on. Some of us on both sides of the House have a right to say such things, but some have less right, because if matters are difficult and bureaucratic, and if documents are not available, some of us would say that those were among the difficulties about which we warned the House and our constituents when we continued to adhere to the Common Market. Therefore, the hon. Gentleman had better be careful, when he attacks my hon. Friend, not to waxe lyrical about the difficulties and complexities of any particular measure, or, as is happening now, he will be attacked by Back Benchers on both sides of the House—by those of us who always said that this was inevitable.

    I asked my hon. Friend during this debate whether the amount of the tax and the timing of its introduction were solely within this country's discretion. He said that they were, but the explanatory memorandum says, of Article 6:
    "The draft Directive allows the addition of a supplement to the wear and tear costs. This ensures that the total tax to be raised would remain in the discretion of Member States and the actual amount of tax on any vehicle would depend largely on the contribution to general revenue required. For United Kingdom the effect is to retain the Chancellor's present freedom in matters of vehicle taxation."
    That seems to bear it out, but there are other items in the explanatory memorandum which give the lie to that. For example, it says earlier:
    "The draft Directive is seen by the Commission as a first move towards a comprehensive scheme of charging the full cost of transport infrastructures to any respective users. The adoption of this Directive would, however, not prejudge the form of any future system of infrastructure charging."
    There is no doubt that this is to move taxation generally on to the principle of being based on the weight of the vehicles and the wear and tear on roads.

    Although the Minister has freedom at this stage, will there not be a cry for harmonisation once the tax becomes established? We shall then be in the position of making the taxes payable not as we think but according to the general directives that can be argued in Europe. This has important ramifications. For example, the Germans, who have lengths of autobahn, see people picking up goods elsewhere, perhaps across the Iron Curtain, and transferring them to France and other countries across their entire stretch of autobahn without paying a penny. The Germans also have railways which are suffering the same problems as ours. Therefore, it may well serve the Germans to change the whole system. But will that automatically help this country? We have freedom now, but I believe that we shall willy-nilly go down the road of harmonisation and again have our destiny decided elsewhere.

    The hon. Gentleman said that all that is as maybe. He is bound to say that, because he believes in the Common Market and is stuck with it. He asked what the Minister could do, outside this legislation, to claw back something to this country. The hon. Gentleman is right to mention permits. It is disgraceful that we cannot obtain the permits to operate in France and Germany, because it does not suit the internal policy of those countries, while the Germans and French can obtain permits to come here.

    This happens frequently. Those who believe in the Common Market presumably believe that all its members trust and love one another and that any country which can contribute to the common weal will do so. The attitude on permits belies that. When the hon. Member askes what leverage the Government can use to get fairer treatment, the nature of the beast becomes apparent. That may be how negotiations in the Common Market have to be carried on, but it is far from the dream that was described to the British people when they took that momentous decision on what I believe was the wrong information.

    We must be careful. If we impose a new tax at a low level and implement it late, because any citizen of a member country can operate in any other EEC country while paying tax in his own, our vehicles will have an advantage in France and Germany. French companies might even set up British holding companies to get that advantage. However, if we applied a higher tax earlier than the French and the Germans, our vehicles would be placed at a disadvantage. So this is not simple.

    The general proposition is to change the taxation of road vehicles without any of the details being fixed. One of the documents submitted to the Select Committee waxed lyrical about the proposal but another said, realistically, that we could not judge it until we saw the amounts. The Select Committee said:
    "The Committee understand that this is not a Commission document and that it is submitted by the Department on the authority of the Government alone."
    So what we are considering is not the definitive work. What we want to know is how the Government are working towards this end. Our approval depends on the details.

    I am grateful that we have seen the document so early, but when the Minister has finished his work in the Common Market and we know the form and content, he should come back to the House, perhaps with more information about the level of taxation which will be applied in France. That will have the greatest impact on us. We can then see where we are going. I hope that my hon. Friend will deal with that matter as well.

    This freedom of the Government to implement the amount and the timing is a transitional phase, and at a later stage we shall go over to the harmonised tax, where we shall not have this freedom.

    There is a draft Annex to the first Council Directive on the adjustment of national taxation systems which talks about the way in which the various formulae will be arrived at. This is typical of documents of this kind, as any Back Bencher who tries to do his homework knows only too well. The Annex goes on to deal with the way in which the economic and general aspects shall be calculated.

    I take only one aspect of it as an example. Under the heading,
    "Methods of determining marginal costs."
    we read that
    "One of three methods may be used to determine the marginal proportion of costs"
    when fixing this taxation. I chose the second method.
    "The second method relates traffic police costs or maintenance and renewal costs, to traffic levels for the whole network or, failing this, for a representative sample of such network. In the case of maintenance and renewal, this relationship is to be established for each cost category defined in point IV. 1 below. Generally, such a relationship takes the form d=a+bT derived from a statistical regression analysis where d=police or maintenance and renewal costs for the network or sample during a given period: a=constant cost element, independent of traffic volume"—
    I was with it so far—
    "b=marginal police or marginal maintenance and renewal costs, per traffic unit"—
    I was still doing pretty well—
    "T=traffic expressed in appropriate units (vehicle-km, vehicle-km equivalents, reference axle-km and axle-km equivalents) during the given period."
    It goes on:
    "The marginal cost rate is then bT over d. To determine the amount of marginal costs, this rate is applied to the amount D of police costs or of maintenance and renewal costs of the category concerned, for each year of the reference period."
    So it goes on in this kind of gobblede-gook. This is the kind of thing in which the Common Market excels.

    Here we are tonight changing the whole basis of our taxation of commercial vehicles. All that we can say is that we shall do it on the basis of weight transported over road. At this stage, we do not know what those figures will be. We do not know what the impact will be. We have to rest assured that we have been given some indicators of how the Common Market arrives at this. Its statisticians and its bureaucrats and their spewing out of words will go on and on, as these debates always point out.

    Allied to the remarks of the hon. Member for Sutton Coldfield about how we should try to get some of our own back by twisting the arm of the Common Market for an agreement, it must be said that it really will not work.

    My hon. Friend has my sympathy in all these matters. I forecast tonight that we shall see that the unlimited amount of freedom which my hon. Friend has at this stage to fix the rates will disappear at the next stage, and we shall have a bureaucratic formula. Right hon. and hon. Members of this House profess to be the custodians of the freedom of our people. Individual initiative is fast disappearing out of the door. It is not disappearing because Socialists and Red people like me wish it to do so. It goes hand in hand with the slavish affectation that all aspects of the Common Market are good. How anyone can come to that conclusion, having looked at the legislation, I fail to understand.

    I wish my hon. Friend good luck. I look to him—God help him—for the advance that I have asked for so that when he knows the detail he may come back to us and we can go through the formula together. I shall be very surprised if we can make sense of it.

    10.10 p.m.

    Unlike the hon. Member for Brigg and Scunthorpe (Mr. Ellis), I think it is a good thing that this country entered the Common Market. I hope that we shall stay in. I believe that the directive brings a bit of sense to our transport law which has been nonsensical for years.

    I started practising in transport law at the Bar as long ago as 1933. It always seemed to me to be quite ridiculous that we should base our vehicle taxation system, our safety arrangements and our categorisation of vehicles upon unladen weight instead of upon gross weights and axle weights. If the directive is ever implemented it will bring about a necessary improvement not only in our vehicles taxation law but in our general approach to the categorisation of goods vehicles.

    Having said that, I have a great deal of sympathy with what the hon. Gentleman said about the way in which these matters are presented to us. I have on other occasions gone to the Vote Office and asked for the documents relevant to the debate on an EEC regulation or directive that we are expected to discuss and have had a mass of documents handed to me They were generally not obtainable until fairly near the debate. But tonight they were not obtainable until the debate was just starting.

    Tonight I was handed four documents altogether totalling 25 sheets of foolscap. I am not blaming the man in the Vote Office. Someone has been too lazy to work out what we really need and to make sure that we get just that. Public money and paper have been wasted by people not giving enough thought to what is really needed to help us do our work properly. If we are to do the job expected of us as members of the Community—and we have got a job to do in scrutinising this European legislation— we need rather more careful assistance than we have had on this and other occasions. I am not necessarily blaming the Minister, although I think that he has a duty to ensure that the House does get the proper documents. I was surprised that the Minister does not have a Parliamentary Private Secretary sitting behind him tonight for immediate communication between him and his advisers in order to take up the points immediately raised in the debate like the point raised by my hon. Friend the Member for Lewes (Mr. Rathbone).

    I should explain to the right hon. and learned Gentleman that the Parliamentary Private Secretary is ill at the moment and is not available on that account.

    Plenty of sitters-in are always available. Indeed, when I used to call for a sitter-in I thought it was rather a privilege to invite a friend to come and sit behind me. I am sorry that the hon. Gentleman finds himself in such a deprived situation. I am very surprised to hear of it.

    I would in a constructive way criticise the way in which the documents have been presented to us in the hope that on future occasions a bit more sense can be brought to bear and that we can avoid waste. I hope that we can have more efficient help in our strenuous lives so that our task in reading and construing these rather complicated documents can be simplified. Speaking for myself, I have had to read these documents while the debate has been proceeding. I should like to tell the House the result of what I find.

    I am sorry to intervene again in the right hon. and learned Gentleman's speech, because I know the care that he takes over these things. But in all honesty, what he is saying is totally contradictory to what was said the last time we attempted to have this debate. The whole point of the negotiations since then, and the statement by the Leader of the House about how we should conduct these matters, was that the last time the Government presented a clear, short memorandum explaining in simple terms precisely what the directive meant we were accused of not presenting the full EEC text. That is what we have now done. The right hon. and learned Gentleman cannot have it both ways. Either we are short and simple and summarise or we present the thing in full.

    The Minister could have saved the time of the House had he waited and listened to what I have to say. I wish to show that there is endless repetition in these documents.

    Let me describe the documents. They are all in English. The first is entitled
    "first Council Directive on the adjustment of national taxation systems relating to commercial vehicles (Presented by the Commission to the Council on 17 July 1968)".
    That was nine years ago. There are five sheets of foolscap and they set out the terms of what was considered to be right as the draft directive.

    The next document has at the front of it a note saying that
    "The attached English version of a proposal for a Council Directive … has been prepared in Whitehall."
    It says that the original text was in Dutch, French, German and Italian and was first submitted to the Council on 17th July 1968. On the other side of that note is an explanatory memorandum dated 6th May 1974, which has been out of date for quite some time. It states that the Secretary of State for the Environment is responsible for the policy in the directive. Yet for some time we have had— I am glad that we have had them— the Secretary of State for Transport and the Under-Secretary. This memorandum has been superseded by the next document but the duplication does not consist merely of that. This translation, prepared in 1974, is a mirror repetition of the document dated 17th July 1968, which was itself in English.

    I have read furiously through the documents, and the only changes that I can detect between the two are the word "Considering", used five times in the 1968 document, has been replaced by the words "Having regard to". Apart from that unnecessary change of phraseology the two directives are the same. It was therefore quite unnecessary to burden us with those nine pages, on five sheets of foolscap. That is complete duplication and waste.

    I come to the next document, which seems to me to be the only relevant one. It is the one referred to on the Order Paper and it consists of seven sheets of foolscap. It has an explanatory memorandum described as a revised memorandum by the Department of Transport and is dated 19th May 1977. That shows that the earlier memorandum was superseded and unnecessary to be put before us.

    One welcomes the new memorandum, which is fuller and more informative than the previous one. We have what appears to be an up-to-date text of the proposed draft directive. It is shorter than the original text, but it is just as meaningful and it gives us the essentials. It seems to me that we could have done our work tonight simply with that one document of seven pages, but I cannot complain that we were given one other document, namely the draft annex to the directive, which is on six sheets and which goes into much greater detail. I must confess that it is somewhat above my head. In the time available I find it difficult to understand.

    With a view to savings in future I hope that I have pointed out constructively that it should be decided what documents are really necessary to prepare and put before us so as to eliminate those that are duplicated and unnecessary.

    As I have said, I believe that there is some advantage on the merits. There is the further advantage, which should appeal to the hon. Member for Brigg and Scunthorpe, that, although we are trying to harmonise this branch of tax law with our European partners in respect of principle, there is no question of their imposing amounts of taxation upon us. It will still be for our Chancellor of the Exchequer, acting within the principles, to decide what the taxes should be and the rebates that should apply.

    Having a large rural constituency and having been interested in transport matters for many years, I came to the debate, as did my hon. Friend the Member for Lewes, wondering how these changes in taxation would affect the farming community, which in turn affects the cost of food produced in this country. In that context it is hard to generalise about farm vehicles. Some goods vehicles are used by farmers merely for the carriage of goods. Within the transport licensing law there is special type of licence that farmers may obtain. There are farmers who have such vehicles for carrying only their own goods, and there is another type of licence for those who carry their neighbours' goods as well as their own. For many of us who have farming constituencies it was necessary to know from the Government what the effect of the directive would be in respect of such vehicles if it were ever brought into force.

    That is not all. Farmers have tractors, which are taxed, trailers, harvesters and a wide variety of fanning vehicles, which are taxed if they go on the roads, and many of them have to go on the roads. Some of them may be exempt from tax even if they go on the roads. That is why I must say in all candour that I was surprised that the Minister did not appear to be ready to enlighten us about these matters, which so deeply concern our farming constituencies. I hope that with or without a sitter-in he has managed to get advice. Perhaps he has obtained advice even while I have been talking, or in the course of the debate, so that when he replies, as he will have the right to do, he will be able to assure us that there will be no substantial increases in taxation as a result of what I find to be a sensible change in our tax law as borrowed from our European partners.

    I refer finally to the brief intervention that I made when the Minister was speaking. I wish to ensure that he understood my point. That is because it concerns rural passenger transport, which those of us who represent rural constituencies know is a great problem. As a result of increased costs the buses find it difficult to keep going. We rejoice in the fact that there has been a great increase in private car ownership. Many families now have cars who could not have afforded them before. However, that ownership has hit the bus services hard. It has meant that bus services have had to have a fuel tax rebate. If that had not been made available, they would have had to close down altogether. Some of them still lose despite the rebate.

    I was not convinced by the reply that I received from the Minister when I asked for an assurance that the tax rebates for fuel use of public service passenger vehicles would be continued. I was not sure that the Minister understood my question. I hope that when he replies he will reassure me that even if the directive is brought into force, such rebates will be allowed to continue.

    10.25 p.m.

    My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) made a proper complaint about the amount of paper with which we are presented when we consider many of these EEC matters. I suspect that the complaint should not be against our own proceedings in Westminster, but should be directed to the fundamental cause—the flood of paper emanating from Brussels.

    If there are any relevant documents— the original drafts or the redrafts of the directive—we must have them before us. This one tonight is only a modest example. On other occasions the documentation has run into hundreds of pages. This is a disease that afflicts Brussels—the churning out of vast quantities of paper.

    My hon. Friend must be fair. Nobody in Brussels said that we must be presented with two almost precisely similar copies of the same document.

    I think that we need to have the original draft and the latest draft. There would be legitimate complaints if those documents were missing. I desire that they should be shorter or non-existent. That gets to the heart of the matter.

    Nevertheless I agree with a great deal of what my right hon. and learned Friend said, and I find not unwelcome the principle of taxing the gross laden weight of vehicles. Having said that, I question, in certain respects, the value of the draft directive. It is not enough simply to consider the directive on its own. It does not make any sort of sense to do so.

    For the purpose of achieving fair competition there is little point in having a harmonised structure of taxation. If we are seeking equal conditions of competition between different transporters in different countries, ultimately we must be concerned with the harmonisation of tax rates. It does not make any sense unless the ultimate objective is to secure harmonised tax levels as well as a harmonised basis for tax.

    The explanatory memorandum tells us that the directive is seen as a first step towards harmonising tax levels, and that is the context in which we must consider this matter. The memorandum is somewhat misleading because it says:
    "For the United Kingdom the effect is to retain the Chancellor's present freedom in matters of vehicle taxation."
    I suggest that that is an untrue statement. Once this directive is adopted, the Chancellor will not have the same freedom on matters of vehicle tax as he has at present. Certainly he will retain the freedom to fix the level of tax, but he will not have the freedom to do anything about its structure or basis. That is what this is about. One must be more precise in the wording of documents of this kind.

    The document concerns the adjustment of national taxation systems, and the memorandum says:
    "This is usually abbreviated in the United Kingdom to ANTS."
    That is a most appropriate description. This is another example of the tax powers of this House being nibbled away by the termites emanating from Brussels.

    Of itself this is not a major inroad into our taxation powers, but it has to be added to the hundreds of other regulations which we are adopting progressively. It adds up to a powerful exercise by a lot of termites which ultimately will make a considerable impact on the taxation powers of this House.

    This document in itself can be seen only as paving the way towards a harmonised taxation structure. Those of us who believe in free and fair competition would not necessarily object to a fairly standard basis of taxation, but I object to the proposition that it should be imposed on us and that this House and the Chancellor of the Exchequer should have less power to decide what is and what is not the right way to tax the motor vehicle.

    In broad principle, I think that it makes sense to tax the gross laden weight of vehicles. I can also see the case for taking into account axle weights, because that is a relevant factor, but I wonder whether the change is worth all the trouble. That sentiment was expressed by the Freight Transport Association in views to the Select Committee—a document which most of us have only just seen. Complaint has been made about too much paper, but the irony is that a paper that is valuable, since it contains sensible, down-to-earth comments, was not available until the debate began and most of us have had no time to assimilate its contents.

    The FTA cast considerable doubts on the value of the whole exercise. That information is contained in a document of the FTA's views dated 15th January 1975. It is a very sceptical document. The explanatory memorandum gave the impression that the organisations representing manufacturers and haulage operators are now generally content with the changes which have been negotiated in the draft directive.

    That is contrary to the expression of views by the FTA given some two years ago. It would be helpful if the Minister could say whether it has changed its views, or whether we can assume that the 1975 document is a fair indication of what it now thinks. If the association thinks the same as it did then, it is misleading to say in the explanatory memorandum that everybody is content with the situation.

    By way of evidence, I wish to quote some extracts from the FTA's memorandum. The association says in the concluding paragraph:
    "In view of this and the lack of information regarding detailed effects of the directive, we have serious reservations regarding acceptance of the directive at the present time."
    Earlier, in paragraph 7, it said:
    "In other words, we consider that the draft directive should be left on the table until the detailed system which it would introduce has been designed."
    Even earlier, in paragraph 5, it said:
    "We consider that deep thought should be given to whether the objectives of this directive are realistically achievable and whether the very substantial input of resources necessary to devise a satisfactory system will be worth the effort."
    I share that scepticism, particularly when we are told by the Minister in this debate that a great deal more information will be required from every lorry operator to assess the new tax rates.

    At the moment I understand that we have no information about the gross laden weights of these vehicles or about the number of axles. I understand from the Minister that all that information is still to be secured and that we must re-rate all the vehicles on different bases. There is considerable work involved to get the new basis of value. Is it worth it— because at this stage in regard to this directive we are not talking necessarily about increasing levels of taxation? I wonder whether it is worth the effort.

    I want the Minister to explain precisely how the system will work, because it is not clear to me how the average mileage factor will be introduced into the taxation system. If there were two lorries, each of 32 tons, and one did 20,000 miles a year and the other 100,000 miles because they were engaged in different sorts of operations, would they be assessed on the same basis of average mileage? If one incorporates average mileage it becomes a nonsense factor because it would apply equally to all vehicles of the same weight. Perhaps the Minister could tell us how it will be done fairly between one vehicle and another.

    I am also greatly concerned because I have a suspicion that the directive will pave the way towards heavier lorries. That suspicion is founded on the emphasis in this document on axle loadings. I accept that axle loading is a fair way of assessing the damage inflicted upon roads to a certain extent, but the argument about axle loadings leads many people to favour heavier lorries. It is said that if there are enough axles the average gross weight of the vehicle does not matter. I hope that the Minister will give a categorical assurance that in no way does our taking note of this directive imply that the Government or the House accept that there should now be any increase from 32 tons to 40 tons or whatever may be put forward.

    If one has a tax system that emphasises axle weights, people will thereafter say that if there are five axles on a vehicle —and that will be encouraged by this system—there can be less argument against going up to 40-ton vehicles. The whole philosophy is an emphasis on axle loadings, and that will encourage manufacturers and others to argue for heavier lorries. Particularly now, it would be a fundamental mistake to accept any such commitment to heavier lorries. I emphasise now because the maintenance of our roads is now falling a long way behind because of the economic crisis of the last few years. Road conditions are worse, and the damage that is caused to roads in poor condition by heavy lorries is worse than the damage that such lorries cause to roads in good condition. This would be a foolish time to increase lorry weights.

    I question whether we are always right to attach such importance to axle loadings and not to gross weight. The Minister knows that there is great lack of knowledge about vibration damage. That damage can be directly related to the overall size of a vehicle and not simply to the axle loading. Before we go too far along the road of axle loadings alone, we should know much more about the extent of vibration damage caused by large lorries to road and building foundations. I hope that we shall go easy on this acceptance of the idea that axle loading is everything. It is not. I accept that the directive balances that by taking the gross laden weight factor as part of the basis for taxation. To that extent there might be a degree of balance that I should find acceptable.

    I conclude by saying that I am sceptical about the whole value of the operation. I doubt whether it will be of any particular benefit to the road haulage industry. I share the Freight Transport Association's scepticism about whether it is a significant factor with regard to competition between ourselves and our European competitors. We should probably be as well off without it. It is just yet another additional burden of unnecessary legislation upon the country.

    10.40 p.m.

    I begin by apologising if I addressed the Chair incorrectly in my submission earlier about the amount of time available for consideration of these documents.

    I am unable to follow my hon. Friend the Member for Faversham (Mr. Moate) —as he may have suspected—about the value of this legislation and about lorry weights. I also have to apologise to the House that my remarks may not be as considered as I should have liked, but I have had the documents only since 8.51 p.m. and, as I have been trying to follow the course of the debate, I have not been able to apply the polish or train of thought that I normally attempt to apply.

    I should like to direct the Minister's attention to some serious points that I hope he will answer if he replies to the debate. I am concerned that manufacturers of commercial vehicles need to have a clear indication, sufficiently in advance, of the course of taxation for them to plan and design the production of their vehicles. I understand that the draft directive applies only to vehicles whose tractive power is provided by diesel engines. Am I correct in supposing that petrol-engined vehicles are to be treated differently or are to be excluded from the scope of the harmonisation of taxation? This is a significant point for manufacturers and the time period envisaged is not lengthy when one considers the need to design a range of vehicles, conduct a marketing campaign and lay down the ensuing lines of production.

    I hope that the Minister will take this not as a niggling point but as a genuine inquiry, because there is, also on this subject, the significant point about how the proposed taxation system will affect fuel used by vehicles, not only through their design but through the computation for taxation. I understand that average annual distances are to be included in the calculations under the directive and the financial terms must be affected by the fuel used. I understand that account will also be taken of vehicle excise duty and perhaps other duties. We must remember that fuel is differentially taxed in this country. I should be grateful if the Minister could clarify some of the Government's intentions in these matters.

    Having drawn the Minister into it, I should be wrong not to pay tribute to him and his Secretary of State for presenting us with a copy of the actual EEC draft directive. This is a welcome departure, and I believe that it is the first time that we have had the draft directive as well as the Government memorandum which has had to serve in the past.

    I turn to consideration of fuel economy. There is a danger that moves towards limiting the weight of vehicles may take us in the opposite direction from the aims of fuel economy. This is where I part company with my hon. Friend the Member for Faversham.

    While I accept what was said about the need to pay very careful attention to the causes of vibration and the damage to buildings, I believe that we have not had sufficient evidence presented to us as to the cause of that vibration, in particular on the question of the ratio to the fourth power on the axle weight. I think the Minister would agree that this is still quite controversial. It is by no means established whether that ratio is to the fourth power or, beyond that, whether it is indeed the correct ratio.

    The Minister may have heard from designers who would tell him that it is rather more a question of the tyre size and the amount of rubber on the road, to put it colloquially, rather than necessarily the mere axle loading. I should be grateful if the Minister would tell us whether he has accepted this axle weight to the fourth power as a correct ratio, and whether, even accepting that, it is the correct ratio to apply to the degree of wear and tear.

    Whereas I am in agreement with the principle that commercial vehicles should be taxed on the basis of the wear and tear caused, if that can be established, I am by no means satisfied that it has been established that the ratio selected is correctly calculated or applicable to wear and tear. Those are two separate questions. I think that the Minister has followed me.

    I turn to the question of whether the tax proposals in this document will, in the Minister's estimation, result in an increase or a decrease in taxation. We have so far had, under the recent vehicle excise duties, a very substantial increase, which has gone largely unnoticed by the public, in the taxation of commercial vehicles. I should be grateful if the Minister would give us, on the present levels of taxation, his estimate of whether the adoption of this new basis would result in an increase or a decrease. The House has a right to know this. He would, I think, confirm my reaction to the question of his hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) that he would indeed have to come to the House, because the change would require new legislation. I think that is made plain in the draft memorandum. Perhaps he would like to confirm that in order to change the United Kingdom basis of taxation fresh legislation would be required.

    I wish now to go into another rather detailed point—the basis of taxation of tractors and trailers of articulated vehicles. The Minister will be aware that it is a quite common practice to drive a trailer down to a Channel port and then to ship the trailer over "dead", as it were, on the roll-on/roll-off ferry, and then for a new tractor to pick it up on the other side. This is for reasons of lorry drivers' hours—another subject on which my hon. Friend the Member for Faversham might have some objection. But there is a limit on drivers' hours, and many fleet haulage firms, therefore, find it convenient to drive a trailer down to a Channel port and for the tractor driver then to have his rest and pick up another incoming trailer off a ferry, while the outgoing trailer goes over "dead" and is taken off by a light vehicle and hitched up to a tractor on the other side.

    If there are different rates of taxation in the different countries, that is already one problem, but how is the trailer to be taxed together with the tractor if it is for most of its life attached to different tractors? I realise that this may sound amusing but it is a very real practical problem and we need to have an answer about it.

    I turn now to the question that there should be some trade-off. I would not have put it in those terms. Is the Minister able to give us any indication about the number of permits that our operators are to receive for operating on the Continent? This is a relevant matter to raise in the context of this approximation of vehicle taxation. It may also arise in the context of the approximation of drivers' hours. I should be grateful for any indication that can be given of the progress that has been made in negotiations on that matter, which was also raised by the hon. Member for Brigg and Scunthorpe.

    Finally, I regret the shortage of time to debate this matter in view of the highly technical nature of the questions that we have had to consider. If the Minister is unable to answer my questions tonight, I should be grateful if he would reply in correspondence. I realise that it is unfair to expect him to reply to all the questions without assistance, but these are serious matters which cause concern. Therefore, they deserve to be answered.

    10.52 p.m.

    This directive comes before the House for debate tonight because the Select Committee on European Community Secondary Legislation recommended that the House should consider it as it raised matters of political importance.

    The directive has quite a long history before the Select Committee. In January and February 1975 the Committee considered the draft directive as it stood at that time and took written evidence on it. Unfortunately, that written evidence is missing. However, I recollect that at that time the evidence showed objection by the bodies which were consulted and which gave that written evidence that the proposals might remove the present tax advantage of diesel-propelled vehicles, that it might switch taxation from unladen to gross laden weight and, therefore, that it might operate to the disadvantage of the larger and more efficient vehicles. It was for that reason that the Select Committee considered that the House should debate this directive. Of course, the directive was then in a quite different form from that which has come before us tonight.

    The Department submitted a revised explanatory memorandum in November 1976. That was considered by the Select Committee in December, and again it came to the conclusion that it had political importance and that it should be debated by the House.

    Finally, what I may call the revised revised memorandum of 19th May 1977, which we have before us tonight, was submitted to the Committee. That was submitted with a draft directive which was very different from the first directive. It showed that the directive would now only apply to diesel-propelled goods vehicles, that the tonnage threshold for its application would be raised from 3 tons, as it was originally, to 12 tons for rigid lorries and tractor vehicles, to 16 tons for articulated vehicles or a combination of lorry and trailer, and to 4 tons for trailers, and that the taxation would depend partly on the average annual distance travelled.

    The directive has progressed through several meetings of the Select Committee to the stage at which it now comes before the House. The hon. Member for Brigg and Scunthorpe (Mr. Ellis) complained that we were dealing only with a draft directive and that, before this became effective as a directive, there might be further alterations. Indeed, we have seen substantial alterations as it has progressed.

    I have not got the paper with me, but I think the Select Committee pointed out that we had not got a memorandum at all but had an explanation of what the working party was doing.

    I am certain that before this becomes a firm directive there will be further alterations.

    If there are substantial changes in a draft directive which has been before the Select Committee, and certainly if it has been before the House, there is an obligation on the Department to report those changes to the Committee. The Committee is charged with the duty of considering those changes and whether it should recommend that the directive should again be debated in the House.

    There is great value in debating these directives when they are in draft form. We can tell the Secretary of State that he shall or shall not agree to proposals. The House expresses its opinion by accepting or rejecting the draft, and by that opinion the Secretary of State knows whether he should try to amend the draft before it becomes a firm directive. I am sure that the Minister has had some good advice from the House about which proposals in the draft should be considered further.

    This is an important directive. It deals with the taxation of commercial vehicles. The tax will be reflected in the price of goods carried. It will affect the price of a whole range of goods, particularly food.

    We are told in the first paragraph of the memorandum of 19th May 1977 that the purpose of the introduction of a common taxation structure for commercial goods vehicles is that the tax should in future reflect the variations between vehicles in the damage they cause to road infrastructure. That is a good principle because it reflects the cost of vehicles to the public. But I wonder who will benefit. Local authority revenue has to pay for the damage to road infrastructure. I cannot imagine that tax raised from commercial vehicles will go straight to the local authorities. The proposal might be good in principle, but who will benefit from it? Will the revenue go to local authorities which suffer the damage to road infrastructure?

    Would my right hon. Friend go as far as to argue that all road revenue should go to a road fund dedicated to road construction and repair?

    I shall not be enticed along that avenue. I am saying that some of the revenue from this taxation should go to the authorities that suffer the damage.

    The draft directive has been reported to the House by the Committee on the basis that it is of political importance. The Committee is charged with reporting to the House if it considers that a directive is of either political or legal importance. Although this directive was reported as being of only political importance, it is also of legal importance. Some substantial alterations will have to be made to our vehicle taxation law and how it is calculated.

    I have said that the directive applies only to diesel-propelled vehicles and only to those of the certain rather substantial weights mentioned in the directive—at least, as the directive stands at present —and that it depends on the axle loading. I do not pretend to understand how one calculates the formulas on axle loading, but when it comes to average mileage I am a little puzzled. I may not have heard the Minister correctly, but I thought he said that when it came to the supplementary taxation—indeed, there is a paragraph in the memorandum on this very point, headed "The supplement"—this would depend on mileage.

    I do not read that as stated in the memorandum. I thought that this was just the supplement which any member State might put on in the rate of tax. Am I to understand that this is some special supplement, not in a change of rates but in the actual structure of the taxation itself? Is it really a supplement or is it merely a change in the rates?

    Also, if I heard the Minister correctly, he said that the operator need not bother about the average mileage and that it would all be worked out on some public scale. If that is so, we ought to be told a little more about that. That certainly does not come out in the memorandum.

    I think that my hon. Friends have raised all the other points that I wanted to call to the attention of the House, except perhaps the timetable. In the memorandum, we are told:
    "It is now unlikely that a decision on the Directive will be possible until late 1977 and the operational date will have to be deferred to 1st January 1980."
    By "the operational date", does that mean that we shall have to have the new tax structure in this country by 1st January 1980? It is true that the memorandum says
    "This would provide a transitional period until at the latest 31st December 1984."
    I am puzzled about what is to happen during the transitional period. Are we to have two rates of tax, optional forms of tax, or what is to happen in that transitional period? I should have thought that if one were introducing a new tax structure it would be introduced in one measure and not by a matter of transition over a period.

    Perhaps the Minister could give us a little clearer indication of the timetable and when we may expect to be obliged to consider in the House the details of this new tax structure for commercial goods vehicles. If we are to consider in the House some appendix, such as the one put before us tonight, in calculating the result of, as the Minister said, the heavier and fewer axles the higher the tax—which sounds to me a most extraordinary formula, but I suppose that the Minister is right—I shudder to think of the sort of amendments that will go down on the Order Paper and the time we shall spend in Committee working out that formula.

    However, I return to the first principle of this. I think that the principle of the tax being related to the damage caused to the road infrastructure is a good principle provided that the proceeds from it go to the right quarter.

    11.4 p.m.

    I am glad that the right hon. Member for Crosby (Mr. Page) approves of the principle, but I am sorry that he asked me so many detailed questions at such short notice, as I cannot give him adequate replies.

    I should like first to answer the right hon. Gentleman's question about the transitional period. If one is introducing such a measure, which is a fundamental change in the structure of a tax, one will do it all at once. I cannot imagine any Government trying to do it bit by bit. The right hon. Gentleman is right about that.

    As for the timing, I have already pointed out that the problems of obtaining information on the number of vehicles of different types in the country prevented any action earlier than late next year. In all probability 1979 is the earliest practicable date for legislation to move over to the new system.

    I cannot give the right hon. Gentleman any more details than I have already given about a publicly-available scale of charges, a ready reckoner, because it will depend on the level of the tax, and the amounts of the tax are not yet decided because its structure is not yet dicided. It is not sensible to go into further details when we know so little at this stage about what taxation will emerge for any particular vehicle.

    Does the Minister realise that this has serious implications for manufacturers and users of vehicles? Will he try to produce a system as early as possible? The longer the matter goes on, the shorter the period of transition will remain, with serious consequences for everybody involved, as I am sure the hon. Gentleman understands.

    There is the problem of exactness in producing the details for a ready reckoner. That is one reason why we cannot say what the exact figures will be until we know more. But that is a matter of small changes on the present levels of taxation. That need present no real problem, because they will not be large changes if this new formula is adopted.

    However, there may be large changes in the general level of taxation, and the hon. Gentleman cannot reasonably expect me to anticipate what any Chancellor may decide to do in that regard. That is a separate matter that we cannot go into now. There is no uncertainty, because we are talking about the sort of measures that were taken in this year's Budget and will be taken in next year's.

    The question of har-monisation must raise its head, because it is a fundamental concept of the Common Market that one country's commercial infrastructure and taxation cannot work to the exclusion of another country. Therefore, everything must fall into line, following the Common Market dream of everybody competing fairly.

    No. The supplement that we have talked about remains entirely a matter for individual Finance Ministers. There is no intention in the directive that that shall be harmonised. If I tried to reply to the question of the hon. Member for Bromsgrove and Redditch (Mr. Miller) in the way that I think he wants, I should be trying to anticipate what future Chancellors may do about vehicle taxation, and it would be foolish to do so.

    The right hon. Member for Crosby made the ingenious suggestion that some of the money should go to local authorities because, he said, they repaired the roads. It is not only local authorities that repair roads. The Department of Transport undertakes repairs and maintenance for trunk roads, roads which carry a high proportion of heavy vehicle traffic. That is one reason why local authorities will not necessarily receive some of the money. Secondly, even the money that local authorities spend on the maintenance of their own roads comes principally from Government sources. To hypothecate a part of that sum to local authorities would be to carry local authority expansionism to unwanted lengths.

    As for who will benefit from this system of taxation, the sensible answer is that it will be the consumer. After all, the point is that there should be a fair system which reflects in the taxation of particular vehicles the resources represented by the funds for road building maintenance, policing and so on. The result is a true allocation of costs among different types of road vehicles and between road vehicles and rail freight. This obviously results in the best use of resources and the lowest prices. That is why the real beneficiary will be the consumer.

    Is the Minister really saying that his Department has not run some calculations through on the formula for negotiation in the annex to see whether it works and what figure it produces? I find that hard to believe. If we are trying to estimate the taxation of commercial vehicles through the EEC, he must be able to give us some idea on the present basis of taxation, without committing the Chancellor. On the present basis, would the result be an increase or a decrease in taxation?

    The hon. Member for Sutton Coldfield (Mr. Fowler) raised the same question in a different way. He asked whether we thought that the current levels of taxation, taking account of the Budget, covered the costs of lorries as a whole—as the Freight Transport Association maintains they do. It is our view that, while lorries as a whole cover their costs, the heaviest lorries do not. The FTA does not agree, but the reason for the difference, as I explained in Committee on the Transport (Financial Provisions) Bill of long-lived memory, is that we believe that the FTA has made a simple and honest arithmetical error in not taking account of inflation. I could readily demonstrate that if I had more time.

    We believe that our calculations are correct and that heavy lorries do not cover their costs. Therefore, to answer the hon. Member for Bromsgrove and Redditch, this structure, if imposed at the present level of taxation in this country, would redistribute taxation towards heavy lorries and away from lighter lorries but would not substantially increase the total.

    The hon. Member for Sutton Coldfield said that what we are debating here are wear and tear costs, which are basically road building, maintenance, policing, traffic lights, other lighting and other direct costs. The directive does not deal with social and environmental costs, and it is not the intention of the directive that they should be included. It is simply wear and tear costs of a direct kind. The hon. Gentleman went on to ask me what was the Government's present position on charging for social and environmental costs. The Government's present position will be revealed in the White Paper.

    The hon. Gentleman also asked me what was the situation on permits, as did the hon. Member for Bromsgrove and Redditch. I take the point very seriously. I have a lot of correspondence on this matter, and I know how strongly our own road hauliers feel about the limitation of permits. I have myself argued in the ECMT as well as in the Common Market for an increase in permits. This is a matter about which we have not so far got the agreement of our European partners. None the less, we continue to push at every possible opportunity for an increase in the number of permits.

    The position is that whereas, for example, it is France which gives us most of our permits, most of the French permits which we use are not used for vehicles which necessarily are delivering to France. They will be simply crossing France. There is a slight difference of view about how permits should be used. It can look unfair to our people when it is not necessarily as unfair as all that. None the less, we feel that it is right for us to press as far as we can.

    I am sure the hon. Gentleman will agree that there is no regulation or directive which affects those negotiations and that our membership of the Common Market should be beneficial from the point of view of negotiations. I agree that it is not at the moment.

    I hope that in the long run we shall gain some benefit from being members of the Common Market, though at the moment progress is very slow. There has been no change in the quotas for some time now. There are some quotas which are decided directly by the Common Market. There are also international quotas which are decided by the ECMT. That is a separate matter.

    My hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) made a point about the freedom of Finance Ministers to set the levels of tax as they wish. The freedom still remains absolute with regard to this half of the tax—the amount which does not cover wear and tear costs. But it is necessary to qualify that freedom in respect of wear and tear costs, because it is the intention of the directive that, ultimately, the new system of taxation will operate, as it does, fairly between categories, and also that each category will cover its marginal wear and tear costs. To that extent, therefore, there is a minimum aim in absolute levels of taxation. It is only above that that Finance Ministers will retain total freedom, though it is a very large freedom.

    The hon. Gentleman has not dealt with the point about the fuel tax. This applies only to diesel-propelled vehicles. Will it not be discriminatory if we alter the rate on diesel oil?

    The United Kingdom intend to treat vehicles which use petrol on a par with vehicles which use diesel fuel. That is not in the directive, because the directive relates only to vehicles which use diesel fuel. But, as a matter of United Kingdom Government policy, we intend to treat petrol engines on a par with diesel-fuelled engines. That is a separate matter within our control, and that would be a reasonable and sensible way to approach that problem.

    On the other aspect of freedom, I make the point that this approach to the taxation of lorries is one that the Government want to adopt anyway. It is true, in a sense, that our freedom might be limited by an EEC directive in this way if we were against it. But we are in favour of it. We are moving down this path anyway. Therefore, there is no limitation of this freedom as a consequence of this directive.

    Do I understand the Under-Secretary to be saying that it is therefore the Government's intention and wish to increase the taxation of heavy agricultural vehicles?

    Perhaps I can deal with the point about agricultural vehicles. I ask the hon. Gentleman to differentiate between tractors and implements which they pull, which are not affected by this directive, which are used on or off the farm. But farmers' goods vehicles are subject to this directive. It is a matter of negotiation as to how far their present concessionary rates on vehicle excise duty are maintained in the future. As I have said, we have had negotiations, and shall continue to do so, with the National Farmers' Union. That was why I could not be more precise in my earlier reply. This is still a matter for survey by the NFU and also for continuing negotiation.

    The hon. Gentleman also made a point about drawbar trailers. These will be taxed separately. If there is a case for different levels of tax for farmers' drawbar trailers, this will emerge from our discussions with the NFU.

    The draft directive applies all the way through to rigid lorry, tractor, trailer or semi-trailer. It seems to me that it applies to the sort of vehicles that the hon. Gentleman is referring to. I cannot see how the Minister is excluding them from the effect of the directive.