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Commons Chamber

Volume 982: debated on Monday 31 March 1980

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House Of Commons

Monday 31 March 1980

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Trade

European Community (United Kingdom Exports)

1.

asked the Secretary of State for Trade what was the value of exports to the European Economic Community in the most recent 12-month period for which figures are available; and how this compares with the previous 12-month period.

In 1979, United Kingdom exports of goods to the rest of the European Community were valued at £17·0 billion on a balance of payments basis, an increase of 30 per cent. on 1978.

Will my right hon. Friend confirm that exports to EEC countries have increased sixfold since the year before Britain joined the Community? Does not that show how beneficial our membership of the Community is?

I am sure that my hon. Friend's figure must be right, but I should need to check it. Our exports to the EEC grew at four times the rate that our exports grew elsewhere in 1979, which was an excellent achievement.

Is it not true that our imports from the EEC have risen even faster, and that currently in manufactures we have a deficit of between £4 billion and £5 billion? Does the right hon. Gentleman agree that that is one of the major causes of putting the nation on the dole?

Imports from the Community into the United Kingdom grew at about 25 per cent. in 1979, which was a rather slower growth than our exports to the Community. I do not remember the latter part of the hon. Gentleman's question.

Our overall deficit was £2·7 billion. I shall give the hon. Gentleman a detailed breakdown of the figures if he wishes to have it.

Does not my right hon. Friend think that it is better to talk in terms of volume than in money terms, as inflation distorts the figures? Is it not a fact that the adverse element of the trading balance is increasing continually, showing how disadvantageous it has been to be a member of the European Community?

We operate our trade with the Community within a customs union. In my opinion we would wish to keep barriers down in our trade with the Community whether or not we were a member. I do not think that that is a particularly relevant point. I agree with my hon. and learned Friend that the volume figures would look differently from the value figures.

British Textile Federation

2.

asked the Secretary of State for Trade when next he expects to meet representatives of the British Textile Confederation.

11.

asked the Secretary of State for Trade when next he plans to meet representatives of the British Textile Confederation.

I met the chairman of the British Textile Confederation earlier this month, and my hon. Friend the Minister for Trade and I have recently met its representatives. I have no immediate plans for further meetings.

Will the right hon. Gentleman take this opportunity to give a categorical undertaking that it is the Government's desire to renegotiate the multi-fibre arrangement when it expires next year? Are the Government seeking a longer successor to the MFA than the present three-year arrangement?

We have said repeatedly that we envisage that when the present MFA expires in about 18 months' time it will be necessary to have a continuing arrangement. That is the position, and we have repeatedly said so. The length of MFA 3, if I may call it that, will have to be decided as part of the discussions leading up to it.

In those discussions will the right hon. Gentleman consider inserting a recession clause, so that if the home market is growing slowly, if at all, there will not be a massive penetration of imports further to harm the industry? Secondly, will he consider the problems caused by the imminent acces- sion of Portugal, which is clearly expecting to take a substantial part of the textile market in Europe, which if obtained will be to the detriment of our industry in Yorkshire and elsewhere?

I realise that managements and unions in the textile industry are anxious for some form of recession clause in MFA 3, if I may use that shorthand term. The previous Labour Government were asked for a recession clause when they negotiated MFA 2, and they were not successful in obtaining one. These matters are for discussion and negotiation at the appropriate time. As I explained to the TUC textile committee only last week, it would be most foolish for the Government to commit themselves to details before the negotiations begin. I agree that it will be necessary to arrange some sensible and useful transitional arrangements for the accession of Portugal to the Community.

Does my right hon. Friend accept that he or the Minister for Trade gave the trade unions in the textile industry a categorical assurance that the MFA would be renewed, as far as was in our power, as soon as possible? Is my right hon. Friend therefore taking the initiative in the matter, which I hope he is? He is only one among many, and if he cannot build in a recession clause will he at least see that there is no element of dynamism, which would mean that overseas countries have an increasing quota as time goes on instead of merely a static one?

Discussions have started at an official level about a possible successor to the MFA. I do not anticipate that Ministers will be involved much before the autumn. I am quite clear that all our Community partners know of our position, and there is not much more that I can say that will make it more clear.

I understand that the textile industry would like a lower global quota than at present. However, I repeat that it would be unwise to commit ourselves to the details of a negotiation that, after all, concerns a regime that will start 18 months from now. We should not get into too much detail at this stage.

What, if any, progress has been made in solving the vexed problem of labelling and countries of origin? Will the right hon. Gentleman accept that that problem is greatly troubling the Scottish knitwear industry and other elements in the textile industry?

My right hon. Friend the Minister for Consumer Affairs is considering the matter at present.

Does my right hon. Friend agree that a decision on the renewal of the MFA is urgent, as a view must be presented to the GATT textiles committee in October?

I know that my hon. Friend is anxious for me to commit myself to my negotiating position in advance of those negotiations. However, I have told him repeatedly that that would mean that the United Kingdom was less able to get a good deal than if we await the moment when the negotiations commence.

Does the Secretary of State agree that when asked if he would accept the renewal of the MFA he used the phrase "a continuing arrangement", and on previous occasions he has talked of "an orderly marketing system" as the successor to the MFA? As there is doubt about his policy, will he say clearly and unequivocally that the Government are totally committed to the renewal of the MFA, which will put everyone out of their misery?

The semantics of that question are astonishing. The right hon. Gentleman may call it what he wishes—an orderly arrangement, a continuing arrangement or a new MFA. I envisage that, following the expiry of the present MFA, a new arrangement will continue it. It is impossible to predict precisely what arrangement it will be until the negotiations begin.

Price Fixing

3.

asked the Secretary of State for Trade when he expects the Director General of Fair Trading to come to a decision on alleged resale price maintenance referred to in Questions to the Minister of State, Official Report, 28 January, column 526.

This is a matter for the Director General of Fair Trading, who will no doubt be reaching a view in due course.

Will the right hon. Lady accept that the matter is most urgent in view of the evidence that I provided her with, which showed that people were paying far too high a price for a wide range of consumer goods, as retailers were not allowed to offer discounts?

I share the hon. Gentleman's concern. However, he will be aware that I cannot comment on specific cases which may be sub judice. In the cases described to me in the hon. Gentleman's letters, it may be appropriate for the Director General to use the powers under the Resale Prices Act. The new powers under the Competition Bill will make it much easier for the Director General to investigate cases where a supplier may refuse to supply because a retailer sought to undercut the minimum prices that he is imposing. I hope that the hon. Gentleman will welcome the new powers in the Competition Bill, which will act in the interests of consumers and traders.

Does the right hon. Lady accept that there is clear evidence that major manufacturing and importing distributors, particularly of hi-fi and electronics equipment, are abusing their market position? Is the Minister aware that the other day Tesco allegedly made an application to the Office of Fair Trading for an investigation of certain companies, including Thorn Electrical Industries, on the basis that they were demanding excessively high prices for their products on the home market? Is the right hon. Lady further aware that Argos has also complained that four companies, including National Panasonic and Hitachi, have failed to deliver goods2, and have given spurious reasons for that failure? Can the right hon. Lady—

Order. The hon. Gentleman's question has become unreasonably long. Hon. Members must try to keep supplementary questions brief and hope for brief replies.

As I said previously, I cannot comment on specific cases that may be sub judice. The Director General has received a number of complaints alleging such practices. It is up to him to decide which legislation is the most appropriate to use if he decides to take action.

Trade Minister (Discussions)

4.

asked the Secretary of State for Trade when next he plans to hold discussions with his counterparts in the United States of America, Japan Canada and the European Economic Community on trade problems.

Since November 1979 my hon. Friend the Minister for Trade and I have between us met our counterparts in all the countries referred to by my hon. Friend the Member for Harrow, East (Mr. Dykes). We meet European Community trade ministers regularly at the Council of Ministers, and expect to continue to meet our other counterparts frequently, as opportunity offers.

I thank my right hon. Friend for that reply. This country still rightly believes in free and fair trade throughout the world, and is my right hon. Friend satisfied that there is free and fair trade in high technology products, in particular computers? Will my right hon. Friend confirm that it is impossible for us to sell computers freely on the United States market, whereas IBM can sell freely in Europe and the United Kingdom?

If there is not free and fair trade in high technology products, I ask British industry and hon. Members to bring specific cases to my attention so that we may pursue them. We cannot proceed by means of generalised statements or charges, although I am not suggesting that my hon. Friend is making a charge. We should look at specific cases of unfair trading and attempt to deal with them.

Following the enactment of the Protection of Trading Interests Bill, does the right hon. Gentleman plan to discuss the vexed question of extra-territorial jurisdiction with the United States, with or without his EEC colleagues? Has he any plans in particular to deal with shipping, where the sole beneficiary of continuing disagreement will undoubtedly be the Soviet Union?

I was in Washington the weekend before last when I discussed that matter with my counterpart in the United States Administration. In particular I discussed shipping with the Secretary of Commerce.

In such discussions will my right hon. Friend ensure that the world-wide expertise of our service industries is preserved? Does he accept that the danger is that many countries are realising the lead in many fields, such as banking and insurance, and taking steps to narrow our world-wide opportunities?

There is a problem. There are substantial non-tariff barriers and actual barriers against our service industries, such as banking and insurance. I am anxious that the Community harmonisation procedure should move forward here. I am conscious of what my hon. Friend says. Our invisible earnings generally pay for about half our imports. They are vitally important and growing in importance.

As the United States has a tariff barrier of 45 per cent. against United Kingdom woollen cloth imports and we have only 13 per cent. against United States imports, will the Secretary of State discuss equalising import tariffs in that area?

The question of wool tariffs between the Community and the United States was raised during the multilateral trade negotiations, and the previous Administration did their very best to get that very high American tariff down. Short of MTNs of a similar kind, I fear that it will not be possible to make any further progress in the immediate future. But I share the hon. and learned Gentleman's concern about the level of that tariff.

Footwear Industry

5.

asked the Secretary of State for Trade if he will raise at the European Economic Community Trade Council the imposition by the Republic of Ireland of imposed surveillance licensing on the import of footwear from the United Kingdom.

The Republic of Ireland was permitted to maintain surveillance measures during the transitional period of the Treaty of Accession but this authority has now lapsed. My Department is investigating the present position and will take appropriate action. We shall, of course, refer the matter to the EEC Commission if the evidence justifies it.

Will the Minister also give us his estimate of the consequences of this action on the part of the Republic of Ireland for the already battered shoe industry? Will he assure the House that his action will be urgent and swift?

It is very difficult to estimate the effect of the action. I can only say that we have had no complaint of any kind about it from the industry in the last 12 months, and the industry is pretty good at making its views known. However, we shall take speedy action if it is necessary.

Does my hon. Friend appreciate that, whereas the British Government are committed to fair trade, it is by no means certain that all our Common Market partners carry out the letter of the law? Will he pay particular attention to what appears to be happening in Italy? There appears to be a degree of unfair competition with our industry.

If my hon. Friend can come forward with any evidence or facts that would substantiate his remarks, we would be very happy to take them up, to examine them, and to work with the industry in preparing a case to prove that action needs to be taken.

Soviet-Manufactured Greeting Cards

6.

asked the Secretary of State for Trade what steps he has taken to stop the dumping of Soviet-manufactured greeting cards; and if he will make a statement.

Responsibility for taking action against dumped or subsidised imports which are causing injury to a Community industry rests with the European Commission. In this particular case" my Department is helping the industry in the preparation of a complaint to put to the Commission for appropriate action.

I thank my hon. Friend for that answer. Does he recognise that there has been a 40 per cent. increase in Christmas cards alone over the last year, that sales are one-third down on those of last year, and that at least one company, Waldorf Cards, has laid off 80 men and is pulling out of the market? How much longer will this industry be expected to subsidise the British military effort—the Russian military effort? [Laughter.]

I shall answer my hon. Friend's question as he meant it, and not as he originally phrased it.

It is a matter for the industry to put its case against dumping to the Commission. The Department of Trade maintains an anti-dumping unit to help the industry. We are working closely with the industry. We recognise the importance of this matter. We shall be taking action as soon as possible.

What would the Minister say to a potential Olympic athlete who inquired as to why we should accept dumped Christmas cards but that he could not go to Moscow?

I would advise him to use his discretion as a consumer not to buy Russian Christmas cards, for a start, but to make his own.

However, the hon. Gentleman knows that if there is unfair competition from these cards, we shall take action against it. The issue was debated very clearly in the House the other day. We do not see anything advantageous for Britain about our athletes taking part in a gigantic propaganda exercise advertising the virtues of Russia.

Is my hon. Friend satisfied with the speed and efficiency with which complaints about dumping are processed in the Community? Will he advise British industries concerned in this matter how best they-can expedite the whole process?

One of the very first things that my right hon. Friend and myself did when we were appointed Ministers was to go to Brussels to meet the anti-dumping unit there and to check on the way in which it works. We have issued a booklet showing how to use the anti-dumping machinery which exists. We have also retained an anti-dumping unit to help those industries which require help.

Hon. Members on both sides of the House will welcome the fact that an anti-dumping unit exists. However, if this unit is in operation, may I ask how many people it employs and what it actually does? Hon. Members on both sides of the House are very discontented about what it does and how fast it does it, because our industries—carpets, clothing and textiles—are being hammered and ruined while this unit does nothing.

I am sorry to have to tell the hon. Gentleman that that simply is not true. The anti-dumping unit processes a substantial number of actions, and the rate at which it acts shows up very well against the rate of performance of his own Government when they were last in power. It is quicker.

Import Restrictions

8.

asked the Secretary of State for Trade how many countries' exports to the United Kingdom are subject to restrictions, either formal or informal, in the case of (a) clothing,and (b) footwear, other than rubber and canvas.

Imports of clothing from 35 countries are restricted under the multi-fibre arrangement and measures associated with it. Imports of footwear other than rubber or canvas from five countries are subject to restrictions.

Does the hon. Gentleman agree that the British market is one of the most open in the world and that it is being penetrated by countries which bend international rules, all too often aided in doing so by retailers and wholesalers in Britain who put their own interests before the interests of Britain? In those circumstances, will he cease supinely to accept agreements which are dictated largely by countries which do not permit that kind of penetration in their markets?

The hon. Gentleman has asked a very general question. Perhaps I may tell him that 95 per cent, of all the imports from low-cost suppliers of textiles are controlled under agreements negotiated by his own Government. Of total footwear imports into Britain, 25 per cent, are controlled.

As regards footwear, is my hon. Friend aware that it is the unique combination of dumped imports from Third world countries and the restrictions on exports to industrialized countries such as Canada, the United States and Australia, that makes matters so difficult for that industry? May we expect some change in the Government's attitude on this matter?

The Government are very conscious of the problems of the footwear industry. By his regular interventions, my hon. Friend makes sure that we remain so. We are pressing in every way that is open to us, through the Commission, for the removal of tariff barriers against our own footwear, and we have controls over a very substantial part of the imports from low-cost countries, about which my hon Friend was complaining.

Manufactured Goods

9.

asked the Secretary of State for Trade what new plans he has for imposing further import controls on manufactured goods.

Does the Minister agree that probably the majority of this House would refuse to accept the view that permanent and general import controls would be a solution to our trading problems? Having said that, however, may I ask whether he agrees that there is an increasinly strong case for further selective import controls on a temporary basis, if only to prevent or, at least, to retard the increasing de-industrialisation of the United Kingdom economy?

The claim that the United Kingdom is being rapidly de-industrialised is sometimes exaggerated. I take the hon. Gentleman's point about temporary as opposed to permanent import controls. However, if one were to exclude motor vehicles alone, the export/import ratio declined by only 1 per cent. in 1978 and 1979. Therefore, there is no ground for the scare stories that one hears about the imminent and total de-industrialisation of this country. That simply is not true.

Does my right hon. Friend agree that temporary import controls all too soon become permanent and become the slippery slope into a form of protectionism from which it is impossible to escape and which would be disastrous for our economic affairs and do nothing to benefit the interests of the consumer or the efficiency of British industry?

I agree with my hon. Friend that those against whom we imposed import controls would, in many cases, probably retaliate against our exports, whether we called the controls temporary or permanent. There are agreed arrangements for temporary controls under the GATT, but I agree that temporary controls would too easily become permanent. We are an exporting nation, with nearly one-third of our gross domestic product in exports, and it is the export penetration of overseas markets on which we should be concentrating.

Has the right hon. Gentleman seen the effective British Leyland advertisement which gives a catalogue of the massive penetration of foreign manufacturers in this country? Will the Government start a "Buy British" campaign to encourage consumers to buy British goods? It appears that we are being flooded by foreign manufactured goods.

I have seen the British Leyland advertisement, but it does not say what proportion of overseas markets we have in the products mentioned in the advertisement. It concentrates almost entirely on the import penetration of those products, but does not say whether our industries are exporting. The car industry is still among our leading exporters and we still export more than £2,000 million worth of textiles every year.

Does my right hon. Friend agree that the exchange rate for the pound is artificially favourable to importers? Will the Government reconsider their policy and look at ways, perhaps by exporting capital or reducing the rate at which we exploit our North Sea assets, of bringing the exchange rate for the pound better into balance, for the benefit of our export trade in particular?

I agree with my hon. Friend that we should not discourage the export of capital, and that is why we abolished exchange controls. It is important that we build up some income-producing assets abroad. As for the Government managing the exchange rate or forcing it down, I do not believe that in current circumstances it would be possible for the Government to hold the pound down for long, even if we wished to do so, given that there are international pressures pushing it to its present level.

Is the Secretary of State aware that the Metropolitan Police have been obliged to buy their overcoats from West Germany as a result of the EEC supplies directive? Will he renegotiate that directive, so that public sector purchasing policy can at least ensure help for the British industries that need extra orders?

I do not know of any EEC directive that obliges anyone to buy anything anywhere. I understand that the supplies directive requires countries not to discriminate against others in their public purchasing policies. I will inquire into the purchase of the overcoats, but I am sure that we did not have to buy them from West Germany.

Textiles

10.

asked the Secretary of State for Trade if he plans to reduce the level of textiles imported into the United Kingdom.

Imports of textiles from low-cost sources are already strictly controlled, and on 18 February I announced further restrictions on certain synthetic textile products.

Is the right hon. Gentleman aware that his announcement earlier this year was another example of too little, too late? Is it not about time that he recognised that the British textile industry is dying rapidly and that thousands of workers are being thrown onto the dole? When will he go to Brussels and demand action from the EEC or take unilateral action to protect this once great British industry?

I have had more protests from the textile industry about my having applied the quotas than about the action being too little and too late. As I explained to the hon. Gentleman at the time, the low-cost fibres are a raw material of many British textile producers who export their goods.

Is it not better to expand trade by removing obstacles to exports, rather than to restrict trade by creating obstacles to imports, since with the expanded trade, our invisibles, which are our major earners, will automatically benefit?

I entirely agree with my hon. Friend. It would be foolish for the country that has the greatest single interest in the expansion of world trade —we have a greater proportion of our gross national product in world trade than almost every other nation—to be a party to restricting world trade, which is what import controls are all about.

Is the Secretary of State aware that he has received massive criticism from British man-made fibre manufacturers about the fact that a so-called quota to be introduced next year is at a level higher than the import penetration of the year that preceded it? In that circumstance, he is allowing the United States to use the unfair advantage of its low price for energy to decimate a good British market.

Everything about those comments was incorrect. The quotas are not higher than the import penetration of the preceding year.

As for decimating the British textile industry, I repeat what I said to the hon. Member for Newton (Mr. Evans), that I have had more protests from the British textile industry about having imposed the quotas than about having done too little.

Television Sets (Imports)

12.

asked the Secretary of State for Trade what steps he proposes to meet the threat to the United Kingdom television manufacturers from the proposed importation of approximately 200,000 monochrome sets from Thailand.

I have discussed this matter fully with representatives of management and trade unions in the industry. My Department is continuing to monitor closely the rate of importation and is exploring the possible courses of action if that rate should rise unacceptably.

May I thank my hon. Friend for his considerable personal interest and concern in this matter? Does he agree that the best course for all concerned, including the manufacturers in Thailand, would be to agree revised quotas for all importers of monochrome television sets into this country?

I am not sure whether what my hon. Friend wants is possible. One of the options that we are pursuing is a voluntary restraint arrangement agreed between our industry and that in Thailand.

May I reiterate that we feel that it is essential for the future of the British monochrome television industry that some form of voluntary restraint agreement is reached with the Thais?

I am sure that my hon. Friend is right. That is why we are pursuing that objective as a matter of great urgency.

Quite apart from the world markets with which Britain trades, we have a special interest in article 3(f) of the EEC Treaty of Rome. Will the hon. Gentleman pay particular attention to that article and ensure that it is put on the agenda for discussion when Ministers meet in Brussels or elsewhere in Europe?

I never like to mislead the House and I should not like to do so by pretending that I know what article 3(f) says. I know that the hon. Gentleman always makes serious points and I shall look at the matter and write to him.

Film Industry

14.

asked the Secretary of State for Trade when next he expects to meet representatives of the British film industry.

I meet representatives of the industry frequently, but I have at present no plans for a meeting.

When the Minister next meets representatives of the film industry will he give them a categorical assurance that the Government believe in the existence of a British film industry? Is he aware that the help that the Government have given recently is totally inadequate to maintain the industry? Is not the fact that the National Film Finance Corporation was able to contribute financially to only four films last year, compared with as many as 60 a few years ago, ample evidence of the neglect that has been shown?

The hon. Gentleman will no doubt recollect that my right hon. Friend the Secretary of State made a statement last year about the proposals that we would bring forward for additional finance for the film industry. That remains the position and I hope to be able to help with that matter before too long.

Will the hon. Gentleman at the same time look for a practical way of helping the Children's Film Foundation, which makes very good films and is much appreciated world-wide for the excellence of its products? Will the hon. Gentleman consider ways of supporting it in the future?

I share the hon. Lady's view that the foundation has done some very good work. I believe that she will know that I am due to see representatives of the foundation shortly.

Company Mergers

15.

asked the Secretary of State for Trade what annual increase in company mergers he estimates will result from his decision to lift the assets threshold from £5 million to £15 million as a criterion for referral to the Monopolies and Mergers Commission.

I would not expect any increase in the number of mergers which raise significant public interest issues as a result of raising the assets threshold. All mergers which create or enhance a one quarter share in any market will continue, regardless of their size, to fall within the scope of the legislation.

I thank my right hon. Friend for that reply. Now that my right hon. and learned Friend the Chancellor of the Exchequer has eased the tax obstacles, will my right hon. Friend give added emphasis in future to a policy of de-merging in an attempt to stimulate our sluggish and over-concentrated economy?

I am very keen to enable British industry to—if I can use the frightful word that I coined—de-merge as easily as it merges. That is one of the principles that underlie the intentions of my right hon. and learned Friend the Chancellor in the Finance Bill.

Will my right hon. Friend assure the House that he will make certain that industry understands that the economies of scale are often nothing like as great as the diseconomies of scale, and that, rather than increasing takeovers, he will do what he can to encourage small and medium-sized industries, which are usually good and beautiful?

I agree with my hon. Friend that the history of the mergers mania in the 1960s is not a happy one. I think that many of the very large corporations that were created then have proved to be a failure. I believe in a firm mergers policy within restrictive practices policy generally. We intend to keep it going.

In considering further reviews of competition policy, will the right hon. Gentleman make it easier for the commission to recommend the breakup of a monopoly when it examines it and finds it to be against the public interest?

Balance Of Trade

16.

asked the Secretary of State for Trade what plans he has to meet the Trades Union Congress regarding the United Kingdom balance of trade.

I meet representatives of the TUC frequently in my capacity as a member of the National Economic Development Council, and this topic is often discussed in that forum.

Does not the right hon. Gentleman agree that the TUC is right to be alarmed about the massive surge of imports, and that the Budget, by its appalling neglect over the years ahead of the topic of industrial investment, will make the matter worse? What urgent action will the Government take to protect our highly vulnerable motor car and textile industries?

The only way in which either of those industries can succeed is by becoming more competitive. There is no way in which controls will improve the position of the motor car industry or the textile industry, much of which is highly efficient. If the hon. Gentleman thinks that barriers would make those industries more efficient, rather than less, I cannot agree with him.

Do not more than half the questions on the Order Paper and my right hon. Friend's detailed answers, and his pronouncements on tufted carpets, man-made fibres, footwear and even Channel-hopping fares, and so on, admit the fundamental principle of the need for protectionism—it is effective—subconsciously or consciously? Therefore, may we assume that my right hon. Friend's only objection to applying it more generally is fear of retaliation?

By no means do I admit the need for protectionism. What I admit is the need for fair trade. Protectionism is very different from saying that firms must compete in an open market fairly with the products and the firms of other nations. They are two different things.

Does the right hon. Gentleman agree, if he accepts the concept of fair trade, that there are many nations—for example, Japan—that do not have strict import controls but hedge round the products coming into their countries in such a way that there are effective import controls? Could we not learn a lesson from some of our competitors and do something similar in the interests of our people?

The hon. Gentleman referred specifically to Japan. About one-third of everything that we import from Japan is already under some kind of restraint.

The hon. Gentleman's mathematics are brilliant.

The industry-to-industry understandings on motor cars have been very successful. The Japanese have held to them. It is not a one-way process.

When my right hon. Friend meets the leaders of the TUC again, will he point out the profitability to Britain of our trade with the developing world, with which we enjoy a substantial balance of payments surplus, and therefore point out to them that any action taken to control imports from that source will not be in our national interest?

A great volume of goods that we import from the developing world is already under some kind of import restraint. We do not wish to extend this process further than necessary. We have a substantial surplus on our trade with the developing countries, and it is profitable trade for us. Trade is a two-way process, not a one-way process. We cannot have it all our way.

The Secretary of State referred to our relationships with Japan. He will be aware of the considerable obstacles put in the way of British exporters seeking to exploit the Japanese market. Some obstacles to the whisky industry were erected recently. What is the right hon. Gentleman doing to create the same opportunities for British exporters in Japan as many Japanese importers have in this country?

I discussed this matter not more than two months ago in Tokyo with my opposite number there. I discussed with Japanese Ministers the raising of the whisky threshold. But that is not a non-tariff barrier erected by the Japanese. The position changed because the sterling-yen exchange rate changed. I shall continue to raise with the Japanese all those areas in which they are, by one means or another, keeping out British goods.

British Airports Authority

17.

asked the Secretary of State for Trade when next he will meet the chairman of the British Airports Authority.

My right hon. Friend and I met the chairman on 12 February. I have no immediate plans for a further meeting.

Is it not extraordinary that, having had so long to think about it, the BAA cannot yet say exactly what land it requires in respect of proposals for the development of Stansted? What measures can my hon. Friend announce to do something to ease the serious problems caused for many people by blight?

The BAA could not win on this. Had it come forward rapidly with plans showing precise details of the land that it wanted to take, it would have been accused of jumping the gun.

As my right hon. Friend explained in February, statutory blight provisions will apply when compulsory purchase orders are published for the 1,500 or so acres which are proposed to be taken for a new terminal building and associated facilities. That will not, however, apply to the wider area of 2,500 acres for which safeguarding from incompatible development is to be sought.

In response to my hon. Friend's representations on behalf of his constituents affected by planning blight but not covered by statutory blight provisions, the Government have decided to introduce a clause into the Civil Aviation Bill now before the House which will confer powers on the BAA to acquire by agreement land which may be required for airport development in future but which is not immediately required for that purpose. That clause will not extend or affect the BAA's existing compulsory purchase powers. [HON. MEMBERS: "Too long."] I am sorry to be so long, but the matter is very important to my hon. Friend.

Will my hon. Friend tell the chairman that he absolutely repudiates the suggestion by the Liberal spokesman on the environment, the hon. Member for Isle of Wight (Mr. Ross), that consideration should be given to constructing a fifth terminal at Heathrow airport?

The Government have made it absolutely plain that we do not intend to pursue any proposal to build a fifth terminal at Heathrow, even if the Liberal Party presses it on us.

Civil Aviation Authority

18.

asked the Secretary of State for Trade when he will meet the chairman of the Civil Aviation Authority.

21.

asked the Secretary of State for Trade when next he expects to meet the chairman of the Civil Aviation Authority.

I met the chairman of the Civil Aviation Authority on 25 February and have no immediate plans for a further meeting.

Will the Minister indicate what discussions he had with the chairman of the Civil Aviation Authority concerning the rejection of the Plessey-GEC-Marconi bid for long range primary radar in favour of United States equipment? What consideration, in particular, was given by the Civil Aviation Authority to the long-term disadvantages that will be sustained by the British industry as a result of having lost that home bid?

The hon. Gentleman says "having lost it". No company has yet received an order for that radar. I should, however, tell the hon. Gentleman that the Civil Aviation Authority did its best to steer this order towards an appropriate British contractor. It gave full, fair and open notice of what would be needed. Unhappily, it looks as though the British industry would have the gravest difficulty in meeting the requirement within the time-scale.

Is not the Civil Aviation Authority at least 11 months behind the times'? When my hon. Friend next meets the chairman, will he remind him that we now have a Conservative Government pledged to free competition and private enterprise? In the context of that new climate, should not people like Sir Freddie Laker, who have done so much for the air travelling public in this country, be given much more support and encouragement than hitherto.

I am sure that the Civil Aviation Authority will give further encouragement to the private sector of the industry as well as the public sector. However, I would not like to go too far in any comment about Sir Freddie Laker's applications. Many of them may come to my Department shortly on appeal.

Overseas Development

Overseas Governments (Assistance)

43.

asked the Lord Privy Seal what are the basic principles upon which assistance is given to overseas Governments by his Department.

The Under-Secretary of State for Foreign and Commonwealth Affairs
(Mr. Richard Luce)

I refer my hon. Friend to the statement made by my hon. Friend the Minister for Overseas Development on 20 February.

Does my hon. Friend agree that trade can bring a lasting benefit and can, therefore, be more helpful than individual acts of generosity and aid? Does he agree, on this basis, that protectionism, wherever practised, can be more damaging than heartlessness?

First, I should perhaps say that my hon. Friend the Minister for Overseas Development—the hon. Member for Banbury (Mr. Marten)—is on an overseas visit which was planned before the new arrangements for ODA questions were known. I am, therefore, answering questions on his behalf.

The point made by my hon. Friend the Member for Gosport (Mr. Viggers) was borne out in the Brandt report. When looking at the relationship between the industrialised world and developing countries, one should consider not simply matters of economic assistance but also the important role that can be played by trade and investment as vital engines for development. For those who are concerned about improving the standard of living of developing countries, the policy of protectionism would be totally inhibiting to prospects of developing their standard of living.

Does not the Minister agree that his answer is totally hypocritical in the light of further savage cuts of £114 million between now and 1982–83? Will not the hon. Gentleman be honest with the House and say that the countries that have received, or are receiving, increased aid, such as Turkey and Pakistan, are receiving that aid only because of a defence posture that is agreeable to the Government?

To describe our present economic assistance policy as undergoing "savage cuts" is an emotional overstatement of the situation. It is surely known that we as a country are able to provide effective assistance to the developing countries only if we have a strong economic base ourselves. We shall have a strong economic base only if we start by cutting public expenditure at the present time. Departments, such as those dealing with aid administration, cannot be exempted without making the situation exceedingly unfair for other Departments that have to take their share. We must create wealth before we can contribute in a major way to the Third World.

I agree that a weak Britain is a great hindrance to trade and the development of overseas countries. I believe that my hon. Friend said that the Minister for Overseas Development was reviewing the overseas development programme. Presumably, he is still reviewing the overseas development programme. Why therefore, have allocations within overseas development administration already been made, particularly a reduction in the amount of money invested by the Commonwealth Development Corporation over the next four years?

I said earlier that on 20 February the Minister for Overseas Development made a full statement about our policy with regard to aid over the next few years. Our total policy is contained in that statement. He stressed strongly that we would give greater weight in the allocation of our aid to political, industrial and commercial considerations.

When the Minister receives requests, as in the recent case of Turkey, for aid for what are basically strategic and defence purposes, will he in future, pass the buck to the Ministry of Defence which has an expanding budget and can well afford such tasks?

I hope very much that the hon. Gentleman is not under-estimating the serious threat posed by the Soviet Union in the pursuit of our policies. If we are to counteract that effect, it is the Western world that gives economic assistance to underveloped countries not the Soviet Union.

Less-Developed Countries

44.

asked the Lord Privy Seal, in the light of the Brandt commission report, what priority he attaches to projects and programmes to alleviate poverty and to expand food production, in the less-developed countries.

The Government welcome the Brandt report as a comprehensive analysis of the question of international development and of the very serious problems which undoubtedly face developing countries. As my hon. Friend the Minister for Overseas Development said in his statement to the House on 20 February we shall, within the limits of our resources, seek to relieve poverty in the developing world. This includes help with the expansion of food production.

How can my hon. Friend reconcile that reply with the Brandt commission recommendation in respect of official development assistance? Does he not agree that the Government have announced a disproportionate, if not savage, cut in official development assistance?

I respect fully the strength of view held by my hon. Friend, who, over the years, has taken a strong interest in the problems of developing countries. I suggest to him that if he looks carefully at the figures, he will find that in real terms the drop in expenditure next year over this year is only just over 1 per cent. and that, cumulatively, over a period of four years it is only 14 per cent. in real terms.

I reiterate that it is important for us to have a strong economic base before we can make a really productive contribution to other countries. My hon. Friend may like to know—he is probably already aware—that we contribute, as a proportion of our gross national product, a far higher proportion than many other countries and higher than the average for OECD countries.

Did the Government have any consultation with the right hon. Member for Sidcup (Mr. Heath) a member of the Brandt commission, before making their Budget proposal on overseas aid?

I have no doubt that the hon. Gentleman has read the Brandt report. It covers a wide range of issues, not only economic assistance. It is just as important to talk about preferential trade policies and the need to increase private investment overseas, which are essential engines of development, as it is to talk in terms solely of economic assistance.

Is my hon. Friend aware that at least eight separate United Nations organisations are concerned with giving help to developing countries in order to improve their food production? Does he not agree that the Government could put pressure on the United Nations to rationalise these aid-giving organisations so that less money is spent on bureaucracy and that what little money can be given goes on helping those countries with agriculture?

There is a great deal in what my hon. Friend says. It should be known that we have heavy commitments on the multilateral side which we do not propose to reduce. But we think that some of the organisations to which we are committed, in terms of economic assistance, need to take a sharp look at the manner in which they donate their funds.

Does not the hon. Gentleman feel that a 14 per cent. cut really is a savage cut? Does he not feel, in the light of the Brandt report and all that was said in the debate last Friday, that to reduce aid steadily to the level where it was, or worse than it was, in 1974–75, including the effect on Commonwealth countries, is a matter for some shame and disgrace?

I can only repeat to the right hon. Gentleman that the average contribution of Britain is 0·48 per cent. of GNP in economic assistance. The average for OECD countries is 0·35 per cent., so our contribution is substantial. Until we have a strong economic base, we shall not be in a good enough position to help our friends.

Order. We were one minute late starting overseas development questions, so I will call one more.

Zimbabwe

45.

asked the Lord Privy Seal whether he will make a statement about aid for Zimbabwe.

50.

asked the Lord Privy Seal what provision he has made in expenditure in the aid programme for 1980–81 for assistance to Zimbabwe.

As an initial commitment we have announced grants, subject to parliamentary approval, of £7 million for immediate reconstruction assistance, £500,000 for joint funding with voluntary agencies and £1 million for UNHCR's refugee repatriation programme These amounts are additional to the £9·2 million being sought in the 1980–81 estimates to continue the existing programme of training for Zimbabweans. We are considering the extent of the further assistance to be provided over the next few years, and will make an announcement as soon as possible.

May we have an assurance that, despite the cuts in overseas aid expenditure announced in the White Paper last week, the Government will be as generous as possible in agricultural, industrial and educational programmes, which will help the people of Zimbabwe? Will the Minister ignore the squeals of protest coming from some of the Smith supporters in this country, who for years were just lining their own pockets out of the exploitation of the people of Zimbabwe?

I confirm as strongly as I can to the hon. Gentleman that we will do our utmost, within our economic circumstances, to assist Zimbabwe, so that it can be helped to get off to a good course after independence. In addition to the reconstruction that we have announced initially—it is only £7 million—we shall shortly be announcing our programme for the next three or four years.

Can the Minister confirm that the sum of £8 million, I think he said, is part of the grants not yet allocated in the current Estimates? Since the overseas aid development fund has gone down by £148 million, is he not saying in effect that it has gone down by £148 million because somebody will have to take that extra cut?

The hon. Gentleman leaves me totally baffled. I think that the hon. Gentleman will get a clearer picture when he hears our full statement, which we hope to make shortly, about the programme for Zimbabwe in the next three or four years. When he sees that, he will get the matter into context.

What action has the Foreign Office taken to further the approval given by the Prime Minister to the suggestion of the hon. Member for Honiton that Britain should take a lead in setting up a world development fund to help Zimbabwe, contributed to by the EEC, the Americans and other nations?

I would say to my hon. Friend, who knows a great deal about Zimbabwe, that Britain has made contact with all the countries in the Commonwealth and the Western world with a view to urging them to make the best possible contribution towards that country's de- velopment. It is not for Britain to preempt whatever decisions Mr. Mugabe and his Government may make after independence. It is up to them to make their proposals known to us, but we are certainly expressing the hope that our friends in the EEC, the United States and elsewhere will respond as well as we shall.

In giving aid to Zimbabwe—cerainly much more than £7 million is required—will the Government also take into account the grave economic position of Zambia, where, because of the blowing up of bridges by Rhodesian forces, things are very grave?

I am grateful to the hon. Gentleman. I agree that, over the last few years, Zambia has suffered the consequences of the war, as have other countries bordering Zimbabwe. Our programme for this financial year amounts to £30 million, which I am sure the hon. Gentleman will agree is not insubstantial; we shall also have a substantial programme for the coming financial year.

European Community (Agriculture Ministers' Meeting)

With permission, Mr. Speaker, I wish to make a statement about the Council of Agriculture Ministers' meeting in Brussels on 26 and 27 March, at which I represented the United Kingdom with my hon. Friend the Minister of State.

After a brief discussion on some of the Commission's proposals on prices and economies the presidency engaged in a series of bilateral meetings with each Minister. I gave our view that there should be no price increases for the commodities in structural surplus—milk, sugar and wine. I recorded our demand for the continuance of the Consumer butter subsidy, the need to retain the beef premium scheme until a better system could be agreed and the need in the price fixing to provide the whisky industry with the export refunds to which it is entitled.

When the Council reassembled, the President reported that there was no prospect of progress being made at this week's meeting. He expressed the hope that it would be possible to move towards a solution at the next Agriculture Council, which is due to take place on 21 and 22 April.

Because of the delay in reaching a settlement on agricultural prices for 198081, the Council had to consider extensions to a number of regulations that would otherwise have expired.

The Commission also proposed the extension of one of the agrimonetary regulations, which deals, among other things, with the calculation of monetary compensatory amounts.

The regulations agreed to a year ago now gives an unreasonable advantage of up to at least 5 per cent. to foreign food exporters to Britain and puts Britain's food exporters at an unfair disadvantage. As some other member States were unwilling to amend the regulation so as to decrease our disadvantage, I refused to extend the regulation beyond 31 March.

At a previous meeting of the Council agreement had been reached to devalue the green franc on 31 March for those items whose marketing year ended on that date. When the Council was asked to confirm that this applied to the theoretical end of the marketing year rather than the extended marketing year I demanded and obtained from the Council a statement approved by all Ministers that
"any Member State may ask for a reduction in negative MCAs and that agreement to such a decision should be independent of agreements on matters of another nature".
This clear statement should therefore prevent the reduction of negative MCAs from becoming a matter for negotiating positions in the future.

Is the right hon. Gentleman aware that we welcome his stand on a price freeze for products in structural surplus and his request to maintain the butter subsidy? Has he noticed that butter in storage is expected to rise from 69,000 to 88,000 tonnes in the coming year, at an extra cost to the British taxpayer of £24 million? Has he therefore made any proposals during this latest negotiation round to cut the butter surpluses and hence the cost to the United Kingdom budget?

Secondly, why did the right hon. Gentleman propose to tax British imports of food from the Community? Although agricultural exports would have been helped, the British consumer would have been punished again. With four devaluations of the green pound in the last 12 months, farmers have benefited to the tune of £340 million, while there has been a 4 per cent. increase in the food price index solely due to those four devaluations.

Recognising that we import twice as much food from the Common Market as we export to it, would not our food bill rise again with the changes that the right hon. Gentleman requested? Finally, what will be the position on the regulation that he has blocked beyond today, 31 March?

On the point about the butter subsidy, obviously the proposals to freeze the price of milk products and to continue with a consumer subsidy on butter were two positive proposals to that end. On the regulation, I find the right hon. Gentleman's statement extraordinary and in total contradiction to the Opposition's position on economic matters. The right hon. Gentleman is suggesting that we should favour a system that positively operates against the advantage of British producers and that we should continue with the system as it operates at present, under which, for example, Irish producers have a 4·4 per cent. advantage and the Belgians a 3·9 per cent. advantage over British producers. The right hon. Gentleman is saying that he would welcome that, no matter what damage it did to British producers—

Yes, he is—because it might be to the immediate advantage of consumers.

For a long time under the previous Government, British agriculture and horticulture were at a disadvantage because of the MCA system. I now intend to see that it works to their advantage.

Is the Minister aware that while the industry will welcome the firm stand that he is taking on various matters, the proposals, or lack of them, that have emanated from the meetings are cold comfort to an industry suffering from high interest rates and high costs? Can the right hon. Gentleman tell the House what the next steps may be in an attempt to open up the French market to mutton and lamb? Will the Government take action on matters within their power to reassure the industry that it will receive the help that it so badly needs for production and investment?

Last week I announced the biggest increase for the fat sheep subsidy that has taken place. Prior to that, the right hon. Gentleman will know, we introduced the biggest increase in hill farm subsidies for sheep and cattle. The three devaluations of the green pound that were mentioned will help. In spite of these measures, I agree with the right hon. Gentleman that farm incomes in Britain are under considerable pressure from other factors. It is the duty of Governments to sustain those incomes. That is why I tried at this meeting to remove the unfair advantage to foreign importers.

Order. I propose to call those hon. Members who have been rising and then move on to an application under Standing Order No. 9.

Will my right hon. Friend bear in mind that Conservative Members congratulate him on the stand that he took in Brussels? Will he confirm that the agreement on MCAs will help our food exporters? Will he also confirm that the previous Administration did absolutely nothing to help our food exports? Will he remember that I shall not be satisfied until British lamb is as freely available in France and the rest of Europe as French wines and cheeses are here?

The potential of British exports to Europe, without the disadvantage of a penalty, is considerable. One of the reasons why we import far more from the Community than we export to it is four years of massive MCAs against British exporters and in favour of European exporters to Britain. I intend to try to reverse that trend, to the advantage of the British economy. I totally agree with my hon. Friend about the export of sheepmeat.

Will the Minister confirm that his request for an overvaluation of the green pound will have the effect of putting up levies on food from third countries to levels higher than the Com- munity would otherwise demand? Would that not increase food taxes on consumers in this country? Has the Minister received any communication from the Corn-mission about the import of liquid milk?

I made no proposals to overvalue the green pound. My proposals in no way affected negative MCAs. That proposal affected purely the now substantial band of nearly 5 per cent. that affects potential positive MCAs. Therefore, the question does not arise. I was not asking for an overvaluation of the green pound. I was asking for the green pound to be treated as a currency at its present levels in the way that it should be treated, so that there should not be a positive disadvantage against it. The subject of liquid milk did not come up and was not discussed at the meeting.

May I thank my right lion. Friend for pressing the need for price fixing to provide export refunds due to the Scotch whisky industry? In view of the failure to establish an alcohol regime, may I assume that consideration is being given to making restitution payment under the cereal regime? If that is the case, can I have my right hon. Friend's assurance that he will press this matter vigorously, in view of the substantial sums involved and the long period during which this matter has been outstanding?

My hon. Friend is right. Substantial benefits will accrue to the United Kingdom. There are, in my judgment, back payments of about £40 million due to us and payment could accrue to our advantage at the rate of more than £20 million a year. I therefore told the Commission that it was totally unsatisfactory that this should be dealt with under the alcohol regime and that I wanted this issue to be dealt with at this year's price fixing of cereals.

Is it correct that the Minister's proposals on the MCAs will increase Britain's contribution to the EEC budget?

It is impossible to say without knowing the effect on the pattern of trade.

In view of today's statement, what prospects are held out by my right hon. Friend for the dairy industry, and what advice can he give it?

One of the important features of the dairy industry is that we have a substantial potential for export. Part of what I was attempting to achieve at this Council meeting was an improvement of that potential. The best scope for our dairy industry is in manufactured and processed goods, particularly cheeses. It is in that context that we seek the best possible competitive position that we can obtain. As we are a country which is only 65 per cent. self-sufficient in dairy products, the future of our dairy industry must be good.

Will the Minister comment further on the structural oversupply of milk and how his resistance to price increases is likely to affect us in the short term? Will he say more about the reaction of the French Government to the resistance to the devaluation of the green franc?

There has been a temptation on the part of the French Government on previous occasions to use devaluation as a negotiating base. Although they wanted a technical change—it had been agreed that they would devalue on 31 March, though the change in the marketing year altered that—I thought that it was a good opportunity to obtain from the French Government, amongst others, a declaration that in future this would be given as of right. The declaration that I read out in my statement had to be approved by all members of the Council, including the French Minister. I think, therefore, that the situation will improve.

There is considerable disagreement in the Council about the future price of milk products. Every other member State wants an increase way above that proposed by the Commission. We continue to adhere to our view that while milk is in surplus we should maintain a freeze on milk prices.

In his reply to my right hon. Friend the Member for Barnsley (Mr. Mason) the Minister claimed that he was more concerned with the interests of producers than with those of consumers. Will the Minister have a word with his right hon. Friend the Secretary of State for Trade, because whenever Labour Members raise similar questions about industries with which we are involved—including the need for protection —we are told that the interests of the consumers and the need for jobs must come way before the interests of producers?

For many years there has been a mechanism that adjusts the finances of exports and imports of food products to take account of the movement of currencies. For a long time that has been to the immense trading advantage of Germany, Holland, Denmark and other European countries. At a time when it might now be moving towards our advantage it would be absurd to try to change the rules.

While expressing pleasure at the Minister's stand in refusing price increases for products that are in surplus, may I ask him for an assurance that at the forthcoming summit the Prime Minister will not agree to increases in food prices as part of a package on the budget in line with suggestions made recently by Chancellor Schmidt?

If it is the central objective of the Government in price fixing to secure a freeze on the price of all products in structural surplus in order to reduce the cost of the EEC budget what sense can there be, at this time of all times, in seeking a change in the rule in order to apply levies on food imports in order to force our food prices above the common price levels on the Continent?

I would have thought that the hon. Gentleman, in the light of his experiences in Brussels,, would 'understand that that was not what I was trying to do. When the hon. Gentleman was in charge he agreed to a system of levies that applied to the United Kingdom differently from all those countries in the EMS. That was greatly to the disadvantage of British agriculture and horticulture. I am trying to remove that disadvantage.

Klein Brothers, Salford

I beg to ask leave, Mr. Speaker, to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"a dispute at a Salford clothing factory where the overwhelming majority of women are on strike to secure trade union representation, and the refusal so far of the employers to accept the services of ACAS."
I shall be brief and stick strictly to the rules.

The firm involved is Klein Brothers, of Liverpool Road, East Salford. The matter is specific, because the workers are on strike. It is urgent, because unless ACAS is brought in tempers will rise and attitudes will harden on both sides. The matter is important, because a small factory employing 75 women workers is involved, and those workers have joined the National Union of Tailors and Garment Workers. They are now standing outside the gates of the House of Commons. The firm employs about 110 workers, including supervisors and clerical staff.

To refuse to meet the officials of the union when the majority of workers ask for that is surely feudal in 1980. My right hon. Friend the Member for Salford, West (Mr. Orme) asks to be associated with the application.

The matter is important, because most of the employees of the hundreds of small factories in the Greater Manchester area would like to have union representation. Their eyes are closely fixed on the dispute. There is strong support for the women, who have acted with courage and determination. The issue deserves debate in the House.

The hon. Member for Salford, East (Mr. Allaun) gave me notice before 12 o'clock today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,

"a dispute at a Salford clothing factory where the overwhelming majority of women are on strike to secure trade union representation, and the refusal so far of the employers to accept the services of ACAS."
The hon. Gentleman has raised a matter of considerable significance. As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the order but to give no reasons for my decision. I listened carefully to the hon. Gentleman's request for an emergency debate but I have to rule that his submission does not fall within the provisions of the Standing Order and therefore I cannot submit his application to the House.

Royal Assent

I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

  • 1. National Heritage Act 1980
  • 2. Betting, Gaming and Lotteries (Amendment) Act 1980
  • 3. Can Hill Cemetery Act 1980 STATUTORY INSTRUMENTS, &c.
  • Statutory Instruments, &C

    Ordered,

    That the draft Agricultural and Horticultural Co-operation Grants (Extension of Period) Order 1980 be referred to a Standing Committee on Statutory Instruments &c.—[Mr. St. John-Steyas.]

    Orders Of The Day

    Ways And Means

    Order read for resuming adjourned debate on Question [26 March].

    Amendment Of The Law

    That is is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

  • (a) any amendment with respect to value added tax so as to provide—
  • (i) for zero-rating or exempting any supply;
  • (ii) for refunding any amount of tax;
  • (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
  • (iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or
  • (b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable.—[Sir G. Howe.]
  • Question again proposed.

    Budget Resolutions And Economic Situation

    3.53 pm

    Today in the Budget debate we are to concentrate on the social services. It is impossible to look at social service policy other than in the broad economic context.

    The heart of my right hon. and learned Friend's Budget strategy is summarised in the figures set out in table 9 of the Red Book—the five-year projection of public spending, public borrowing and taxation. The last line of this table shows the public sector borrowing requirement falling from 5½ per cent. of GDP in 1978–79 to 1½ per cent. in 1983–84.

    In the Government's view, that is the only possible route to the rescue of our economy from the inexorable and depressing decline which we have witnessed over the last couple of decades. If Governments spend too much, the public sector absorbs too high a proportion of the national product and crowds out the private sector. If Governments borrow too much, high interest rates hit investment and home buyers. If Governments tax too much, incentives are eroded and enterprise is stifled.

    Table 9 of the Red Book, which in effect sets out my right hon. and learned Friend's medium-term financial strategy, is the background against which the House and the country have to look at the social service programme. If we do not cut public borrowing, if we do not bring down interest rates and if we do not reduce taxation, the people who will suffer most in the longer run will be the people least able to protect themselves.

    There is another table of figures to which I should like to draw the House's attention to reinforce this point. It is table 5·1 on page 170 of the public expenditure White Paper. This sets out for the years from 1974–75 to the end of the period 1983–84, at constant prices, total public sector debt interest payments. Though not all of this is funded direct from taxation, every penny of it has to be paid by the people of this country in one way or another—in their rates, in their water charges, in their fuel bills, on their public transport, indeed on virtually every public service we use. What does this table show? It shows that the total debt interest rose from just over £8,500 million in 1974–75 to over £10,000 million in the year that is just ending. It is projected to fall back to just over £8¾; billion by 1983–84.

    Throughout the Labour years, from 1974 to 1979, this country spent more on debt interest than it did on retirement pensions. By 1982–83, under this Government, we shall be spending more on pensions and less on debt interest.

    Did my right hon. Friend hear the Leader of the Opposition yesterday suggesting that the Chancellor of the Exchequer should be borrowing yet another £2 billion in the current year? Has he made a calculation of what further debt interest would be payable by the taxpayer if the Chancellor followed that advice?

    My hon. and learned Friend is absolutely right. The figures put into context the remarks by the Leader of the Opposition on television yesterday. He said that we should borrow another £2 billion. That was his soft option. The consequence would be that debt interest would continue to cost more than pensions year after year after year. Is that the Opposition's policy?

    How does the Secretary of State reconcile what he says with the facts in the table to which he has directed our attention? That table shows that in his first year debt interest rose by £300 million, which is more than the average increase in the past six years.

    The Leader of the Opposition knows that the debt interest that we are paying now is on the £40 billion of extra debt incurred when he was Chancellor of the Exchequer.

    I have sought to make these points because it is desperately important that in all the debates that we shall have in the net few weeks on health and social security we constantly bear in mind the crucial and inescapable economic background.

    The right hon. Member for Salford, West (Mr. Orme) is fond of referring to me, as he did in Committee, as the Treasury mole at the DHSS. If by that he means that I understand the economic imperatives as clearly as the Chancellor of the Exchequer and the Chief Secretary, I take that as a compliment. It is certain that neither I nor any succeeding Secretary of State for Social Services can care properly for the old, the sick and the disabled until the economy creates the resources to pay for that care.

    My right hon. and learned Friend's Budget strategy, despite, or indeed in the light of, all the sound and fury from the right hon. Member for Leeds, East (Mr. Healey) on Thursday, remains the only viable strategy on offer. There does not begin to be a glimmer of any conceivable alternative from the Opposition.

    The right hon. Member for Leeds, East, when in office, argued for policies to cut borrowing, cut spending and cut taxes. The only trouble was that he was incapable of cleaving to virtue for more than about five minutes at a time. My right hon. and learned Friend's Budget sets out the path of virtue for four years ahead in table 9 in the Red Book. It is a notable advance in the field of public finance, for which my right hon. and learned Friend deserves every credit.

    It is against that background that I turn to consider the two main programmes for which I am responsible, namely, health and personal social services and the social security programme.

    The central fact about the Health Service is that the growth in spending between 1978–79 and 1982–83—the last year covered by the Labour Government's last White Paper—projected an increase of 7·7 per cent. or about 1·9 per cent. per annum. During the election we gave a pledge to maintain that growth. The figures in the public expenditure White Paper demonstrate that that pledge has been kept 100 per cent. The White Paper shows that growth between the estimated outturn in 1979–80, the current year, and the end of the Public Expenditure Survey Committee period, is planned at 8·2 per cent., or almost exactly 2 per cent. per annum.

    The real growth next year will be about one half of 1 per cent., but that is exactly the level of growth planned by the right hon. Member for Norwich, North (Mr. Ennals).

    In line with other central Government expenditure, the cash limit for the National Health Service provides for a 14 per cent. increase in prices between 1979–80 and 1980–81 and in earnings from due settlement dates. It is not the Government's intention, so far as the NHS is concerned, that this cash limit should operate as a covert squeeze on volume.

    We are providing separately for pay increases arising from existing commitments, for the staging of past awards and specifically for the increases resulting from the Clegg report on nurses' pay. This includes a special provision in 1980–81 to cover the recent Whitley agreement on reducing nurses hours to 37½ a week. We are also making full provision for the final stage and full year effect of the Clegg awards for ancillary workers and ambulancemen. However, health authorities will be expected to press ahead resolutely with the elimination of the bogus incentive schemes and other unsatisfactory working practices identified by Clegg. If allowance is made for savings on this account and for various other factors, I am satisfied that, given responsible pay bargaining on both sides, the cash limits for health authorities on current expenditure for 1980–81 are realistic and fair and, subject to inflation remaining roughly as forecast, they should be enough to achieve the planned level of spending.

    Is the Minister saying that it is the Government's intention to implement the recommendation of the Clegg Commission about the ancillary workers in the National Health Service? The Minister of Health, during a lobby in the House last Thursday, said that he was absolutely amazed by the recommendation, which made no sense at all.

    The hon. Gentleman is referring to the professions supplementary to medicine rather than to the ancillary workers, such as boilermen and porters. The professions supplementary to medicine are currently engaging the attention of the appropriate Whitley council. I fully understand the sense of indignation that many of the members of those professions feel, especially about hours and their professional status, but it is primarily for the Whitley council to reach a solution to the problems. Ministers are carefully monitoring the position.

    I should not like my right hon. Friend to imagine that the criticism of what I regard as an asinine report of the Clegg Commission is confined to one side of the House only. There are many Members on both sides who feel that the report is nonsense.

    I understand my hon. Friend's point of view, which has been widely represented both inside and outside the House. However, in the first instance, it is for the relevant Whitley council to resolve the problems that have arisen as a result of the Clegg report.

    There is not much scope for redistribution of money between the regions this year. Nevertheless, I have decided that the best-off region as defined under the RAWP formula should receive an increase of 0·3 per cent. so that the worst-off regions can receive increases up to twice as large—up to 0·6 per cent. In addition, although the sums of money are by no means large, I have sought to recognise, in some small measure, the special population problems of East Anglia and Oxford to which I know a number of my hon. Friends attach importance.

    When the allocations were announced last year by the right hon. Member for Norwich, North, the worst-off region was pearly 9 per cent. below its target and the best-off region nearly 13 per cent. above. After this year's allocation the worst-off region is down to 7·5 per cent. below and the best-off down to 12·7 per cent. above target. It is not an epoch-making change, but I hope that the House will agree that it is a change in the right direction.

    On Thursday, the right hon. Member for Salford, West complained bitterly about the increase in charges. I understand this necessary ritual, because that is what it is. The leader in The Guardian on Friday described the Opposition's protests as "somewhat hypocritical". It stated:
    "Labour, which introduced health charges in 1951, has never repealed them. Moreover, it put up dental and ophthalmic charges in three out of its last four years."

    Is the Minister ignoring absolutely the fact that during five and a half years of Labour government prescription charges did not rise at all but that since he took office he has decided upon increases to multiply the charges by five? He must understand that on this side of the House our anger is not hypocritical but genuine.

    No doubt the right hon. Gentleman will make his view known to the writer of The Guardian leader. The truth is that Governments of both parties have not been able to avoid maintaining the charges or increasing them. We believe that it is sensible to let charges make their contribution towards increased spending. What really matters is that the facilities of the Health Service should be there when they are needed.

    As my right hon. and learned Friend the Chancellor announced, the prescription charge will rise to £1 on 1 December next. But the exemptions remain unchanged. Some 305 million prescriptions are dispensed each year. Of these, two-thirds are exempt from charges, and they cover about 60 per cent. of the population. The cost of prescriptions is rising, and by December 1980 the average cost will be about £2·90 each. So the charge will be about one-third of the cost, paid by about one-third of the patients, with none of the cost paid by two-thirds.

    Nor is it necessary for those who have frequent prescriptions to bear the full charge. Anyone not entitled to exemption can limit his outlay on medicines by buying a season ticket. The new prices from 1 April will be £12 for an annual certificate and £4·50 for a four-monthly certificate. Next December, the season ticket charges will be increased proportionately. People should realise that the season ticket entitles the holder to as many prescriptions as he needs.

    Does the Secretary of State accept that his figures showing the exemption from charges of two-thirds of those who will need prescriptions are quite irrelevant? The benefits of an insurance scheme must bear some relation to the contributions made. Contributions have been rising and the benefits have been going down.

    The right hon. Gentleman is labouring under the same delusion as a large number of members of the public who think that the Health Service is paid for out of their national insurance contributions. Apart from a very small part, it is not. It is paid for out of taxation. It is of the utmost importance to people who are exempt that they should be so. Given the rising cost of prescriptions, given the wide exemptions, given the very reasonable price of a season ticket, and given the need to finance the rising spending in the Health Service, I believe that an increase in the prescription charge is fully justified.

    Will the Secretary of State tell us by how much season tickets have risen since he came into office until the new rate of £12? Will he confirm that every taxpayer pays 78p a week for medicine and that only the sick pay twice?

    I am not sure from where the hon. Gentleman gets the figure of 78p. I shall write to him about the increase in the season ticket charge.

    I cannot give way; I must press on.

    Dental charges are going up from 1 April in order to keep pace with rising costs, as, of course, they did under the previous Government. However, from next year we are ending the exemption for young people aged between 16 and 21 who have left school and are not exempt on grounds of low income or for other reasons. We have also decided, as part of the contribution which charges can make to the cost of the Health Service, to introduce a charge of £2 for a sight test in the general ophthalmic service.

    Does the right hon. Gentleman seriously imagine that it is possible to keep for all time to an existing list of charges?

    With respect to the right hon. Gentleman, that is not what was said. At the time it was said—and it was perfectly true—that we had no plans to introduce any new charges—[HON. MEMBERS: "Oh".] This is a small additional charge in an area where charges are already made, and overwhelmingly people will see the charge as being reasonable. The changes will require legislation and the necessary amendments will be tabled to the Health Services Bill on Report.

    May I take the right hon. Gentleman back to the question of prescription charges? Is he aware that certain sections of workers who will be included in the one-third who have to pay the full amount—for example, construction workers—suffer a higher percentage of illness because of the nature of their employment? They will now be put at a great disadvantage by the extra charge that the right hon. Gentleman has introduced.

    I do not know the average earnings in the building industry, but I think that £12 for a year is not an excessive amount for someone who requires repeated prescriptions. I believe that that is a good bargain—

    If they do not, they will be exempt on the basis of low income. The hon. Gentleman cannot have it both ways.

    We are also looking at other sources of income for the Health Service, and they include the possibility of recovering a greater proportion of the cost to the NHS of road traffic accidents and tackling the abuse of the National Health Service by foreign visitors. The Health Services Bill gives a new power to health authorities to engage in fund-raising activities.

    Let me put all this in context. Ten years ago, at the end of six years of Labour government, the proportion of the cost of the National Health Service met by charges was 3·3 per cent. In 1980–81 it is expected to be 3·35 per cent. By the end of the PESC period, the proportion met by charges will rise by no more than a further percentage point or two. The Service will remain overwhelmingly financed by taxation. In the light of these figures, the well-orchestrated roar of disapproval from the Labour Benches that greeted the Chancellor's announcement in his Budget Statement turns out to have been just as misplaced as it sounded synthetic at the time.

    The right hon. Gentleman referred to the one-third of those requiring prescriptions who would have to pay the full amount. What is his view of the working poor, the people for whom many Conservative Members were wanting a higher child benefit? I am referring to people on low wages who will have to pay the £1 per item.

    The right hon. Gentleman knows that children are covered by the exemptions.

    But the right hon. Gentleman was talking about child benefit. Now he says that he was not talking about children. The right hon. Gentleman must get his interventions clear. He knows that, in addition to those who are exempt on the grounds of receiving supplementary benefit or family income supplement, exemption will be enjoyed by those who are at work but whose incomes are not much above the level of supplementary benefit. Children are exempt and they will remain so.

    At 1979 survey prices, the total cost of the Health Service next year will be nearly £8·2 billion. I have no doubt that there is plenty of scope for getting better value for this money. I have already referred to the restrictive practices and bogus incentive schemes. The initiative there lies primarily with the management of health authorities. But I am also taking steps to see that the most glaring examples are brought to the attention of management by my Department. We shall want to know, if action has not been taken, why it has not been taken.

    I am very encouraged by the positive efforts now being made throughout the country by people at all levels in the Health Service to seek savings and to root out waste. Many spending decisions are of course taken by clinicians, and doctors and nurses need to know the cost of the decisions they take. My Department is currently working with the Health Service to improve the cost information available to doctors and other health care professionals.

    I have one other important piece of news before I leave the subject of the Health Service. Over the six months to 30 September 1979, the latest date for which we have figures, it looks as though the number of people on the waiting lists may have fallen by about 50,000. However, at 700,000 there are still far too many people awaiting admission to hospitals, and I know that it will be the constant concern of all the staff involved, clinical and non-clinical, to get this figure down.

    The Minister has been talking about waste and about the one-third who will have to pay the full price for their prescriptions. Is he aware that doctors will face a dilemma in wishing to prescribe double the amount of medicine to avoid certain patients having to have two prescriptions and pay £2? Has he considered the position of a doctor who is not certain what type of drug to prescribe and who at present will put the patient on a small amount of medicine to see how that patient progresses? Will not the doctor be tempted to forgo that trial period and instead prescribe a full amount?

    The hon. Member for Penistone (Mr. McKay) is addressing himself to a perfectly sound argument which will clearly have to be taken into account. The amount of each prescription is a matter for the medical profession, which will do what it considers best in the interests of its patients. No doubt is being cast on the sums that will be raised from increasing the prescription charge. We have plenty of experience on that score from past years under Governments of both parties.

    I turn now to the personal social services. The White Paper shows that spending on the social services by local authorities is projected to rise from next year by about 2 per cent. a year. That should be sufficient to maintain standards, given the rising number of elderly people in the community and the steadily increasing numbers of children in care.

    I have never sought to conceal from the House or from anyone else that I recognise that local authorities this year and next have faced, and will face, difficult decisions. But as I go round the country I find marked differences in the ways that different authorities are approaching this task. In some, savings are being made by raising charges, by cutting down on administration and by trimming non-essential services. In others, elected members seem too ready to accept without question significant cuts in services for vulnerable groups. It really is the exceptional local authority officer who will voluntarily propose reductions in his own immediate headquarters staff.

    It is for elected councillors to insist that savings should be found wherever possible by cutting down administration rather than by attacking services. I am doing that in my Department. Since 1 May nearly 2,000 DHSS posts have been saved—almost 2 per cent. of the total. In my headquarters departments the cuts are proportionately three times as big—6·5 per cent. of the total. We have one fewer Minister than the previous Government. A further 2,400 posts will be saved in this coming year. It requires constant, unremitting pressure from elected Members to force officials to make administrative savings.

    The Association of Directors of Social Services has complained bitterly that the personal social services have been singled out for bigger cuts than other departments. In its memorandum, which many right hon. and hon. Members will have received, it does not make clear what level of spending was the starting point against which the cuts of which it com- plains have to be seen. It looks as if it may have taken the original Budget estimates for 1979–80 of the Labour Party for its base this year. Many hon. Members from all parties now recognise that those figures were totally unrealistic. I note that the right hon. Member for Heywood and Royton (Mr. Barnett) is present.

    Let me make one or two other points about the personal social services. Unlike education, and unlike the Health Service, the personal social services are only part of caring in the community. Lord Wolfenden's report estimated that there was a bigger input to the personal social services from the voluntary sector than from the statutory sector. When economies have to be made, we are right to look to the voluntary sector to take on a larger share of what has to be done. Family support, support from neighbours, self-help groups, local and national voluntary bodies, all have a part to play. Indeed, local authorities such as North Yorkshire county council—which I visited on Friday—which are deliberately setting out to use their resources to mobilise voluntary support in the Community, will extend the networks of care and support far more widely than the social service department could ever hope to do by itself. My right hon. and learned Friend's Budget, in the £30 million package of reliefs for charities, has given a great boost to the voluntary movement, which will help considerably with the raising of funds.

    Joint finance also has a major contribution to make to local authority services. The planned expansion of joint finance money has not been affected by the cuts, and next year, 1980–81, will see a 16 per cent. real terms increase in joint finance money. That increase, together with any unspent allocations from previous years, equals 1 per cent. of local authority budgets for the personal social services. Moreover, we have recently told authorities that though support should normally be phased out over not more than seven years, extensions or renewals for individual schemes would be considered.

    During his Budget Statement the Chancellor referred to the cost of the social security programme. Even leaving out that part of the cost of child benefit which replaces the child tax allowances, the social security programme has grown by 50 per cent. since 1971. In the same period, total public expenditure has grown by about 30 per cent. and national income by only 15 per cent.

    In 1970–71 social security accounted for 17 per cent. of public expenditure. Today it accounts for about 27 per cent. Part of the increase is, of course, due to the rising numbers of the elderly. Part is due to the rising numbers of the unemployed, but a substantial part has been due to real improvements in the level of benefits, and new benefits and increased family support.

    Like most right hon. and hon. Members, I do not regard that as undesirable. On the contrary, we all know of social needs in the community which we do not yet meet properly and where we cannot match the provision made by other countries.

    In the light of the economic imperatives with which I opened my speech, it is inescapable that the growth in the social security budget should be curbed. I say "growth should be curbed", for even after making the savings that I have announced the social security budget is still programmed to grow at about 2 per cent. a year. Let me repeat that: the social security budget is growing at 2 per cent. a year.

    Anxiety about the rising burden is nothing new. The House will remember that in 1976 the right hon. Member for Leeds, East, then Chancellor of the Exchequer, let it be known that he was considering ways of reducing the burden that the unemployed put on the taxpaying population. He asked, in a broadcast in Wales, whether it was right to put
    "the whole burden of national sacrifice"
    on those who are working while continuing to protect those who are not working. Commenting on that, Ian Aitken, political correspondent of The Guardian, said:
    "Ministers are acutely aware that continuing inflation, combined with a high level of unemployment, has substantially increased the burdens on the working population while those who rely on state benefit are protected from the impact of the crisis.'
    I am sure that the right hon. Gentleman remembers the incident well.

    The right hon. Member for Heywood and Royton said, in a speech a day or two earlier, that the burden of social security transfer payments was becoming increasingly heavy and that there might be some justification for seeking means of reducing it. Well, well, well. The Treasury wanted to do something about the burden of short-term benefits in 1976, but, as we all know, it did not get its way. The Cabinet would not let it. As a result, the burden continued to grow, and nothing was done to curb it. The previous Government went on borrowing in order to pay for a rising burden on the social security budget, with the result that in the year just ended debt interest amounted to £10·2 billion, whereas pensions amounted to £8·8 billion. There was an excess of £1·4 billion of debt interest over pensions. I am sure that the right hon. Member for Leeds, East realised that that could not continue.

    Will the Secretary of State confirm that the Government intend to apply cash limits to unemployment benefits, as the Financial Secretary to the Treasury was reported to have said last week? If that is so, how will it be done?

    My hon. Friend the Financial Secretary will reply to the debate. He tells me that he did not say that. However, the right hon. Gentleman will be able to put that question to him.

    We know, too, that Labour Ministers recognised the justice of taxing the short-term benefits. Last Thursday I quoted from a letter to me from the right hon. Member for Salford, West, in which he said that he agreed with that in principle. I also call in aid the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), then Financial Secretary to the Treasury. Speaking in Standing Committee D on 23 June 1977 he said:
    "Not only do I agree with the taxation of short-term benefits, but I think that everyone who has ever been concerned with these problems has agreed with it."—[Official Report, Standing Committee D,23 June 1977; c. 1182.]
    He is right. All Labour Members have agreed. It is against that background that the House should look at the proposals to increase the short-term—

    Accepting the fact that short-term benefits should be taxed, is the Secretary of State now saying—or if not, will he do so—that when he taxes them, he will put back the 5 per cent. that he is now taking off?