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Commons Chamber

Volume 982: debated on Tuesday 1 April 1980

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House Of Commons

Tuesday 1 April 1980

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Private Business

Clifton Suspension Bridge Bill

Read the Third time, and passed.

British Railways Bill (By Order)

Dartmoor Commons Bill Lords (By Order)

Orders for Second Reading read.

To be read a Second time upon Thursday 17 April.

Oral Answers To Questions

Education And Science

Educational Arrangements (Wandsworth)

1.

asked the Secretary of State for Education and Science what discussions he has had with Wandsworth council about possible changes to educational arrangements for Wandsworth.

I am surprised to hear that. Is the Minister aware that the continued uncertainty about the future of educational arrangements in London is damaging to the interests of pupils, teachers and parents? Wandsworth council has not even sought to consult the Minister on this proposal. Will the Minister put an end to the discussion by saying that he does not intend to change the future educational arrangements of London?

The hon. Gentleman said that my answer surprised him, but he will, of course, realise that he asked whether I had had discussions with the council, which I have not. It is right, as he knows, that I have received a representation from the council asking that it should become a borough with responsibility for education in its area. I have not yet made any decision on that. I am aware that it is a highly controversial issue, but the Government have not yet reached a decision on Wandsworth's application.

Order. Before I call the next Member, I must say that I am not sure which hon. Member has Wandsworth in his constituency.

I am sorry to disappoint you, Mr. Speaker. Is my right hon. and learned Friend aware that the reason why Wandsworth and Westminster and Kensington councils have asked to run their own educational services is that they are dissatisfied with the growing cost of ILEA, and are equally dissatisfied with the poor educational results obtained by ILEA schools?

I am, of course, aware of the many criticisms that have been made about ILEA, including the two specifically mentioned by my hon. Friend. I am grateful to him for the public debate that has arisen following the report written by him and some of my hon. Friends. However, the Government have still not reached a conclusion on the matter.

Is the Minister aware that as this is a question about Wandsworth and not Marylebone, the fewer discussions that he has about it with anyone, the better? Will he note that virtually every education authority in my constituency has almost unanimously condemned these wrecking proposals, and that no one seems to believe in them, except the leader of the Wandsworth council?

I assure the right hon. Gentleman that I have had a substantial number of representations with regard to the Wandsworth council proposal and with regard to the proposals of ILEA as a whole, the majority of which have been opposed to the proposals of Wandsworth city council, but a certain number have been in their support. I am still considering the matter.

Mathematics Teachers

3.

asked the Secretary of State for Education and Science what percentage of mathematics teachers in secondary schools have mathematics degrees; and how this compares with 10 years ago.

The 1977 survey of secondary school staffing in England and Wales, which is the latest date for which such information is available to my Department, showed that 26 per cent. of mathematics teachers had degrees or equivalent, with mathematics as the main subject. A further 45 per cent. had studied mathematics at university or in other higher education. Comparable figures for 10 years ago are not available, but results from a survey in 1965 suggest that the corresponding figures then were roughly 15 and 30 per cent.

Does my hon. Friend feel that the figure of 26 per cent. is low, bearing in mind the results of a report published this morning, which showed that a considerable proportion of mathematics teachers were unable to teach mathematics to A-level, and that an unacceptable proportion of them were incapable of teaching mathematics to O-level? Does he feel that the Department of Education and Science should take much greater action to ensure that that figure of 26 per cent. is increased?

I am certainly sympathetic to those matters. No one could fail to be disquieted by what has occurred during the past 10 or 15 years. However, perhaps I can reassure my hon. Friend. The figures that I quoted were from the 1977 survey. It is our intention to monitor this aspect annually, and that has begun. Over the past few months we have brought to the attention of the agencies involved the importance that should be attached to this subject.

Is it not the fact that the main problem has nothing to do with mathematics graduates but is due to the fact that many schools have gone over exclusively to so-called "modern mathematics" and eliminated the more traditional mathematicians? That may be all right for children who wish to become mathematicians, but it is no good for those who will leave school at 16 or 18.

The hon. Member may have a point. However, the question relates to the supply of teachers of this subject. I do not want to be drawn down the path of standards and differentials of teaching.

Overseas Students

4.

asked the Secretary of State for Education and Science what is the total number of overseas students attending universities and colleges on advanced further education courses in the present academic year; and what estimate is now made of the total number of such students in the next academic year.

The total number of such students in the present academic year is not yet known, but in 1978–79 there were 59,000 at universities and on advanced courses at maintained, grant-aided and assisted establishments of further education in Great Britain. I cannot predict at this stage what the total number will be in 1980–81.

Does the Secretary of State agree with the president of the Association of University Teachers that numbers of overseas students in universities will decline by about half by 1983? Will he confirm the report that appeared on Monday in The Times that the Government will allow students from the EEC to be charged at the home rate, at a saving of up to £4,000? If that is so, does he accept that the new non-discrimination protocol, signed under the Lomé convention, must require that the Government extend a similar facility to students from the New Commonwealth and from the ACP countries? Does he further accept that if the Government fail to do so they will be guilty of the grossest discrimination against the poorest students?

I think that the hon. Gentleman has asked four questions in that one supplementary question. I shall try to deal with them in order or at least attempt three out of four. I do not accept his view about the likely drop in the number of students, and I remind him that, according to UCCA returns, applications are 10 per cent. down on last year and only 3 per cent. down on the year before. As regards his second question, I have today answered a written question from the hon. Member for Lewisham, West (Mr. Price) that concerns students from the EEC countries. As regards the third and fourth questions, I do not accept that the effect will be as stated by the hon. Gentleman.

Does my right hon. and learned Friend agree that the Labour Government attempted to reduce the numbers of overseas students by means of a quota system because there had been a large increase over the past 10 years, and that this attempt was to no avail?

I totally agree with my hon. Friend. The situation today is that despite the intention of the previous Labour Government to impose a declining quota, the numbers have increased. Against a figure slightly in excess of 35,000 overseas students in the universities at present, only a figure in excess of 29,000 is covered by recurrent grants.

A home student is defined as someone who has been ordinarily resident in this country for the previous three years.

In England, Scotland, Wales and Northern Ireland so far as I know, but I shall confirm to the right hon. Gentleman whether I am right. An overseas student is someone who has not normally been resident in this country for the previous three years.

How can the Secretary of State justify the Exchequer spending £5 million on subsidising students from the EEC while at the same time people from Third world countries are denied places in our universities as a result of the extortionate increase in students' fees?

What The Times said yesterday was that if the Government were to agree that those from the EEC countries should be treated as home students, the cost in the final third year would be £5 million. The answer to the hon. Gentleman, who I thought was a supporter of the EEC, is that there is a draft directive before the EEC that recommends that all students from each EEC country should be considered as home students throughout the EEC.

I accept that our primary duty is to our own students, but, bearing in mind the importance of overseas students to our economy and to good international relations, if the figures prove to be substantially lower will my right hon. and learned Friend reconsider the issue?

If the situation turned out to be totally different from that which the Government believe it will be, we would, as with any other matter of policy, look at the issue again. There is no question of our not wishing overseas students to come to this country. The fact is that their numbers have increased by more than 300 per cent. in the past 10 years, and we do not believe that the British taxpayer should be expected to sudsidise them to the tune of £100 million a year, irrespective of either the income or the country of origin of the individual student.

School Leaving Dates

5.

asked the Secretary of State for Education and Science what is his policy on school leaving dates.

After full debate Parliament passed the Education (School Leaving Dates) Act 1976, which determined the present arrangements. My right hon. and learned Friend is keeping the operation of these arrangements under review, but has no present plans to amend the law.

What discussions has the Minister had with the DHSS about the changes in the Bill that will take away the rights of school leavers to supplementary benefit, particularly as this may encourage many school leavers to leave at Easter rather than in the summer? Does he agree that if they will be £140 worse off by staying on at school for a further six weeks, that will cause educational problems?

These matters are constantly under review between the Department of Education and Science and the DHSS. I have nothing to add at the moment. The hon. Gentleman has raised several points that have frequently been raised on both sides of the House and in Committee. However, at present I have no further observations to make.

Will my hon. Friend consider a more flexible approach to school leaving dates, so that school leavers can leave in the term in which they become 16 if they have a permanent job or apprenticeship to go to?

That matter is constantly under review. My right hon. and learned Friend has made that clear on more than one occasion. The Department has received a number of letters over the years and requests for greater flexibility in the system. Any amendment to the 1976 Act would require legislation. I am at present chairing the 16–19 review—we hope to report in the autumn—and it is actively considering that aspect.

While the matter is under constant review, will the Minister, believing as he does, and as I think we all do, in the devolution of power from central Government, allow for an element of discretion to be used in the rigidity of implementation of the raising of the school leaving age?

Headmasters can now apply a certain amount of flexibility. I understand what the hon. Gentleman is getting at, and many people feel that while pupils are still working towards examination results at 16, an alternative permutation might be more attractive and for the benefit of the country. However, it should be made clear that the Government have no plans to reduce the school leaving age.

Does my hon. Friend recall the various statements made by my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas), when he was the Opposition spokesman on education, suggesting that it would be advantageous to open various doors, through the 16-year-old leaving age, provided that pupils remained in some form of continuing education?

This is a matter that was frequently discussed when we were in Opposition, and it has been discussed during the past few months. The issue is under review, and I cannot tell the House any more than that at the moment.

The Minister has said on several occasions that the matter is under review. Will he clarify for the benefit of the House exactly what is under review? Is it simply the technical arrangements such as those referred to by Conservative Back Benchers, or is he considering the proposal of his hon. Friend to reduce the school leaving age to below 16? Will the Minister say when his review will be complete?

The hon. Lady perhaps was not listening, because I thought that I had made it clear a few moments ago that the Government have no plans to reduce the school leaving age. As the hon. Lady knows, the review is part and parcel of the 16-to-19 review which we began last year. I should not wish to be held to this in fine detail, but I hope that we shall have a report out by the autumn of this year. The options of allowing early leaving to enable pupils to take up apprenticeships or offers of employment, or to embark upon courses of further education, have been considered, and my right hon. and learned Friend intends to keep an open mind in these matters.

Clegg Commission Awards

6.

asked the Secretary of State for Education and Science what is the expected cost in the financial year 1980–81 of the awards made by the Clegg Commission in the area of education since its inception.

The only recommendations made so far which affect the area of education cover local government manual workers and university manual workers and technicians. These are expected to add £90 million or just over 1 per cent. to the cost of the education service in 1980–81. Full account has been taken of these costs in the 1980–81 Estimates and the rate support grant settlement.

I thank my hon. Friend for that reply, but is he aware that despite the fact that wage rates in the private sector for cleaning and catering staff are lower than in the public sector, these staff have still received an award from the Clegg Commission? Does my hon. Friend agree that that makes nonsense of so called comparability? Does he accept that the Commission was set up only to enable the previous Government to give by stealth wage increases which if given openly would have breached their incomes policy? Is it not time that the Clegg Commission was wound up?

I appreciate my hon. Friend's strong feelings, but the Clegg Commission is not the responsibility of the Department of Education and Science, nor are the negotiations that followed its award. There are separate bodies that carry out the negotiations.

Will the Minister accept that even after the Clegg Commission has reported an dits findings have been implemented, many hundreds of thousands of workers in education are still very low paid? Will the hon. Gentleman comment on the disgraceful failure of many Oxford colleges to implement the findings of the Clegg Commission because they say that they cannot afford it?

My answer to the hon. Gentleman is the same as that given to my hon. Friend the Member for Bridlington (Mr. Townend). Bodies are set up to negotiate wage rates and they go through normal procedures. They are not determined directly by this House.

Will my hon. Friend urge our right hon. and learned Friend to publish at the same time as the findings of the Clegg Commission are published an estimate of the consequential redundancies that will flow from their implementation? Will he urge his right hon. and learned Friend to follow that up by urging his colleagues in the Cabinet to make the learned professor redundant as soon as possible?

Despite press reports, I was informed at 12 noon today that the report of the Clegg Commission regarding teachers had not reached Whitehall. I am also informed that it will be confidential until it is printed by Her Majesty's Stationery Office and published as a Command Paper. Publication is expected between 14 and 16 April. On its publication the responsibility returns to the Burnham committee for primary, scondary and further education and local authori- ties and employers will have to take note, in their negotiations, of the effect of that settlement on their expenditure and the rate support grant.

Professional Association Of Teachers (Burnham Committee)

7.

asked the Secretary of State for Education and Science whether he will arrange to have the Professional Association of Teachers officially represented on the Burnham committee.

I have instituted a review of the composition of the Burnham committee with the aim of making any necessary changes by the start of the next school year.

Does my right hon. and learned Friend accept that the PAT is the fastest growing teachers' body, showing an increase of over 100 per cent. in the past 12 months? It now numbers nearly 20,000 members. Does my right hon. and learned Friend agree that the Burnham committee would be far more representative if the PAT was included on it?

My hon. Friend would not expect me to prejudge the outcome of the review that I have instituted. Part of that review is to try to get a correct account of the membership of the various unions involved in the teaching profession.

Will the Secretary of State bear in mind that that association represents less than 5 per cent. of teachers eligible to be members of it? Will he accept that, with the threat to education from the Government's policies, there has never been a greater need for the teaching profession to speak with one voice, and that any fragmentation or distortion of teacher representation will be a great disservice to education generally?

The right hon. Gentleman, of all people, will know that the one thing that the teaching profession has never done is to speak with one voice. I repeat what I said to my hon. Friend the Member for Harborough (Mr. Farr). As the basis of my review of the composition of Burnham, a proper count will be carried out of the number of primary and secondary teachers who belong to the unions involved.

When my right hon. and learned Friend comes to the conclusion of his review, will he set a percentage that a union will need to meet to get representation, so that unions such as the Professional Association of Teachers do not have to chase a moving target?

I shall consider what my hon. Friend has said, but I must point out that the last review of Burnham was implemented only at the beginning of 1979. I thought it right to review its composition again at the beginning of the new school year, as I promised the Professional Association of Teachers I would.

Handicapped Children (School Admissions)

8.

asked the Secretary of State for Education and Science if it is proposed to give the parents of handicapped children the same rights and duties over school admissions and an appeals procedure as are contained for ordinary children in the present Education (No. 2) Bill.

The Government are concerned to ensure that parents of handicapped children should be fully involved in decisions affecting the education of their children. In his statement to the House on 3 March, my right hon. and learned Friend referred to the Government's intention to deal with these matters in future legislation. I am also pleased to inform the House that since then the Government have in another place introduced an amendment to the Education (No. 2) Bill extending to handicapped children the provisions of clause 8(5) relating to the publication of information.

I thank my hon. Friend for his reply, but is he aware that parents of handicapped children have become a little cynical about the promises of successive Governments? They have had promises for a change in legislation for a long time. What is needed is positive action. What happened in the House of Lords is a step in the right direction, but can my hon. Friend assure us that the Government will proceed with measures to put that into effect as soon as possible?

I can certainly give my hon. Friend that assurance. The Gov- ernment propose to publish a White Paper in the early summer outlining proposals for legislation, which will come about as soon as possible. It is intended in that legislation to give parents of handicapped children the same rights regarding information, consultation and appeal as exist for other children under the Education (No. 2) Bill. We hope that such legislation will be on the statute book at the same time as the Education (No. 2) Bill.

Does the Minister accept that the main worry of parents of handicapped children concerns facilities? Will he make clear to education authorities that, whatever other cutbacks there may be in public expenditure, there should not be any in regard to facilities for handicapped children?

I have no doubt that the hon. Gentleman's opinions will be echoed on both sides of the Chamber, namely, that whatever measures we have to take at a time of economic stringency, the needs of handicapped children should he given the highest priority.

Is my hon. Friend aware that some of my hon. Friends warmly welcome the amendment that has been tabled following the late-night debate in the other place, and particularly the impassioned pleas by Lord Vaizey and others that handicapped children should have the same educational facilities as other children? Will my hon. Friend give the House a firm assurance not only that the Government will seek to build on that development but that, following the point made by the hon. Member for Caernarvon (Mr. Wigley), facilities for the handicapped will be improved year by year?

I am sure that everyone agrees with my hon. Friend. We hope to propose in the White Paper to give the same rights of consultation, appeal and involvement to parents of handicapped children, which is desired strongly by both sides of the House. We hope that legislation for handicapped and other children will come on to the statute book at about the same time.

Does the Minister agree that there is genuine concern on both sides of the House that the provisions in clauses 6 to 9 of the Education (No. 2) Bill do not apply to handicapped pupils? Given that on Report the Minister gave many assurances, will he explain why, in another place, the amendment accepted by the Government was limited, and why he could not accept an amendment about appeals? Why does he say now that we need further legislation on this matter? Why cannot he accept this in the Education (No. 2) Bill?

I well remember the impassioned feeling in the House on Report. It was felt throughout the Chamber that something should be done to help the parents of handicapped children. My right hon. and learned Friend said on 3 March—and it was said also in another place—that such proposals could not be tagged on to the Bill. There are special requirements on distance and in many other ways, and the intention is to give the same rights wherever possible on appeal, on consultation and on the information that we have already put into the present Bill, which returns to the House tomorrow. It is not an attempt to reduce the rights. We wish to ensure that the rights are such that they can be carried out to give full opportunities to the parents of handicapped children.

"A Framework For The School Curriculum"

9.

asked the Secretary of State for Education and Science what representations or comment he has received so far on his paper "A Framework for the School Curriculum", and if he will make a statement on the progress of discussions.

My noble Friend the Minister of State met the local authority associations in mid-March in the first of a series of consultative meetings with national bodies in the education service and outside. Written comments on the curriculum framework proposals have been received from a wide range of bodies and individuals, and more are expected.

Will my right hon. and learned Friend say whether his proposals are being welcomed generally? Will he state how he proposes to implement the outcome of the discussions in practice in schools?

I am glad to say that our proposals have been generally welcomed. As to their implementation, I hope that as a result of the consultations that have begun agreement will be reached between the various bodies on what should form the basic curriculum in any school. On the strength of that, we propose to issue another document later in the year setting out guidance.

In view of the great damage being done to the school curriculum by the cuts in education funds, will the Secretary of State say whether he is prepared to drop the £30 million assisted places scheme for public schools and use that money for State sector education?

First, I do not accept the promise of the hon. Gentleman, who speaks for the Liberal Party. Secondly, £30 million is a figure that he has plucked out of the air. Thirdly, I believe that the fact that we are seeking a 6½ per cent. reduction in expenditure over the next five years on secondary and primary education at a time when the school population is dropping by 13 per cent. is totally compatible with maintaining standards.

Truancy

10.

asked the Secretary of State for Education and Science what is the latest estimate of the level of truancy in maintained schools in England and Wales, and if he will introduce measures to reduce this figure.

The most recent survey of attendance in all maintained middle and secondary schools in England and Wales, carried out in 1974, showed that just over 2 per cent. of pupils were absent without a known legitimate reason on the day of the survey. A selective survey in 1977 confirmed this figure. Responsibility for action to combat truancy rests primarily with local education authorities. Last year, however, my Department published the results of a survey by Her Majesty's Inspectorate about helpful practice in dealing with truancy and behavioural problems, which we hope will be of assistance to LEAs and teachers.

Will my hon. Friend give more details about the good practice dealing with truancy? Will he say whether that includes the establishment of special units to deal with persistent truants?

On the latter aspect, it is for the local authorities to decide on how many units are required. Her Majesty's Inspectorate produced two reports in 1978 which reviewed closely the effect of truants and their behaviour in special units. It is not a role of the Department of Education and Science to develop the units directly.

On the good practice aspect, it is the intention of my Department to coordinate a conference towards the end of the year, which will involve the Department, the inspectorate and the local education authorities. Its aim will be to iron out some of the remaining problems.

Is it not a fact that truancy in schools compares very favourably with truancy in the House? Would it not be helpful to consider the problem in a sensible manner and realise that when we achieve a better teacher-pupil relationship—the opportunity to do so now presents itself because of falling school rolls—teachers will be able to teach that much better? We shall be able to handle the matter in a civilised manner, instead of in the backward manner of the hon. Member for Altrincham and Sale (Mr. Montgomery).

It is a pity that the hon. Gentleman indulged in that unnecessarily harsh assessment of an important question. The hon. Gentleman has had experience of truancy both in school and in the House. We shall leave it to him to assess it on his own judgment. Let us hope that his assessment is better balanced than his question.

The matter is closely under review by my Department. It takes the matter seriously, and the local education authorities are responding. I hope that the seminar in which the Schools Council hopes to be involved later this year will be an integral part of the review of our conference.

Is my hon Friend aware of the activities of the National Union of School Students, which, with local Labour Party support in my constituency, is encouraging pupils to play truant as well as distributing obscene literature and disrupting classes? Will he consider recommending to local education authorities that that obnoxious organisation is banned from schools?

I think that the House will deplore that sort of action if it is happening in my hon. Friend's constituency. Such behaviour is to be totally deplored. It is a matter for initiative not by my Department but by the local education authority.

Will the Minister tell the Home Secretary and other members of the Cabinet that it is no use increasing expenditure on police if the Government, through the local authorities, intend to cut expenditure in education welfare services which tackle truancy at its roots? Truancy is the initial cause of a great deal of crime.

That question should be tabled to my right hon. Friend the Home Secretary. On the question of expenditure on this important aspect, I hope that local authorities will be able to judge precisely what is required in their communities and deal with the position accordingly.

Handicapped Children (Special Education)

11.

asked the Secretary of State for Education and Science whether he proposes to seek to repeal section 10 of the Education Act 1976.

I announced to the House on 3 March that the Government intend to issue a White Paper outlining proposals for early legislation for a new framework for special education substantially on lines recommended by the Warnock report. Section 10 of the Education Act 1976 will be examined in this context.

Is my right hon. and learned Friend aware that his reply will meet with a widespread welcome among those who believe that throughout the educational system handicapped children should be treated in exactly the same way as physically healthy children. Will he assure us that he will speed up the legislation once the White Paper has been issued and discussed?

I am grateful to my hon. Friend for his remarks. I believe that our proposals on Warnock have been widely welcomed. As I said in my statement on 3 March, we hope to produce the White Paper early this summer and to legislate at the earliest possible moment. My hon. Friend will appreciate that I cannot anticipate the contents of the next Queen's Speech.

Does the right hon. and learned Gentleman realise that for years we have neglected children who require special attention and special teaching facilities? When will the Government ensure that children who suffer from all sorts of handicaps, such as speech difficulties, will be supplied with teachers in sufficient numbers to help them to become normal citizens?

I can only repeat what I have said. The Government have announced their acceptance of the general principle of the report of the Warnock committee, which was established by my right hon. Friend the Prime Minister in 1973.

Village Schools

12.

asked the Secretary of State for Education and Science how many proposals for the closure of village schools he has approved since taking office.

Since taking office my right hon. and learned Friend has approved proposals to cease to maintain 23 rural primary schools.

Is my hon. Friend aware that proposals have been made for the closure of further village schools in Staffordshire, and that many of these proposals are extremely unpopular? If the proposals are eventually submitted to my right hon. and learned Friend, will full weight be given to the genuine public disapproval of the proposed closure of these schools before any final decision is taken?

I am aware of my hon. Friend's strong feelings. The only proposal to close a primary school in Staffordshire that is with us is a long-standing one from the Elms County primary school at Elmhurst, near Lichfield. None of the other proposals has come to us. If they come to us, they will follow section 13 notices. Obviously my right hon. and learned Friend will consider the proposals carefully, bearing in mind the effect on the rural communities from which they come, their popularity, the travel that is involved and standards within schools. He will have also to bear in mind the economic aspect of the schools' continuance.

How many proposals to cease to maintain village schools has the Secretary of State turned down since the Government took office?

In 1979, 61 proposals for primary school closures were approved, of which 26 were rural schools and 35 were urban. At the same time, one proposal for the closure of an urban primary school was turned down.

Is my hon. Friend aware that there are many villages with growing populations in the South-East where there is a demand for the opening of secondary schools? In my constituency there is a large village with more than 500 children who have to travel about eight miles to schools in different directions. Will my hon. Friend give serious consideration to helping the county council to open a secondary school?

When decisions are made on the closure of rural primary schools, the forecasts of the number of children in the area will be taken into account. Similarly, if a county council proposes the opening of a new secondary school to take account of the increased population in the area, it will be seriously considered by my right hon. and learned Friend.

Higher Education (18 To 19-Year-Olds)

13.

asked the Secretary of State for Education and Science what estimate has been made of the demand for places in higher education by the 18 and 19-year-old age groups in 1984 and 1985.

No precise estimate of demand exists, but if provision is made in 1984 and 1985 at the current level the number of young new home entrants to higher education should represent about the same percentage of the 18-year-old age group as now—around 12 per cent.

Is the Minister aware that his answer is astounding that no estimate exists only three or four years before these students are to go into higher education? Is he also aware that the excuse about falling numbers that he is now making for primary and secondary schools will not apply in the years to which he has referred because rolls in those years will be reaching a peak? Is he aware that he should be financing staff, equipment and buildings now to provide for the future?

No estimates exist because estimates have been constantly wrong when they have been made. There has been a tendency always to overestimate. The number of 18-year-olds going on to higher education has fallen year by year as a percentage of that age group. The percentage of 18-year-olds going on to higher education fell every year during the administration of the previous Labour Government. The number obtaining A-levels was not what had been expected. The number obtaining A-levels and wishing to go on to higher education fell. The percentage of 18-year-olds going on to higher education during 1974–75 was 13·6. By 1978–79 it had fallen to 12·4 per cent.

Is the Minister telling the House that he is making no calculation, and has made no public expenditure forecast, of the numbers going on to higher education during these years? As the Secretary of State said recently that universities could recruit as many Saudi Arabians as they could get hold of, is he including overseas students in any forecasts, or has he ceased to do that?

The estimates exist in the projections that were announced last week, when we said that we were engaging in level funding for the maintained and university sectors. That means that it is likely that similar numbers will go to universities and polytechnics in 1984 and 1985 as are entering those institutions now. By the autumn we shall know what the foreign student intake is to be. Even if the fall in intake was 5,000, not one penny less of Government grant would go to universities this year.

"Frederick Russell" (Refit)

14.

asked the Secretary of State for Education and Science if he will make a statement on progress in the refitting of the Natural Environmental Research Council's vessel, "Frederick Russell ".

The work is on schedule and is expected to be completed during the first quarter of next year.

Does the Minister realise that many people regard as indefensible the decision to have this British Government-owned vessel refitted in a Belgium yard, where there is a subsidy of 80 per cent. on the money borrowed at a 1 per cent. rate of interest and a two-year moratorium on payment? Is he aware that it is felt that the work should have been undertaken in a British yard?

I can understand the hon. Gentleman's anxiety, and perhaps that in his own constituency, that the work was lost. The refit of this 339-ton vessel will take place under a contract placed by the National Environmental Research Council. The council has a Royal charter. It is grant-aided by my Department. It is totally autonomous when it places a contract. Some of the figures and statistics quoted by the hon. Gentleman are not wholly accurate. I think that he is aware of the correspondence that has emanated from my Department. The hon. Gentleman has expressed his anxiety, but he must understand that value for money for the council is of prime importance.

Prime Minister (Engagements)

Q1.

asked the Prime Minister if she will list her official engagements for Tuesday 1 April.

In addition to my duties in this House, I shall be having meetings with ministerial colleagues and others.

How in Heaven's name can the right hon. Lady explain and justify increasing prescription charges to £1 when the £30 million that will be raised by the increase could so easily have been produced by adding another couple of pence to the price of cigarettes? Is this, as people suspect, part of party dogma and not financial reasoning? Will the right hon. Lady give an assurance that this is not a move towards increasing prescription charges to cover the whole of the cost of prescriptions? Will she give a further assurance that the Government will consider the possibility of extending exemptions, especially to those in receipt of invalidity benefit?

I explained to the House last week that by December the cost of a prescription would be £2·90 per item. It would not seem unreasonable, therefore, to make a charge of £1 for the prescription. Further, about 66 per cent. of prescriptions are already exempt from the charge because they go to groups who are exempt from the charge.

As First Lord of the Treasury, will my right hon. Friend continue on the path that she is going along so effectively of assisting small businesses by the special provisions in the Budget?

We shall certainly do so. The provisions in my right hon. and learned Friend's Budget for small businesses have been warmly welcomed by small businesses.

Why is it that the Government are prepared to increase prescription charges to £1, which is a tax on the sick, but to do nothing about the massive increases in profits that the banks are making as a result of the Government's policies? What is the Prime Minister going to do about that?

If the hon. Gentleman had listened to my right hon. and learned Friend's statement, he would know that the leasing provisions that he proposes to introduce will affect the banks. During the coming year it is clear that manufacturing industry will need the services of the banks, and of sound banks.

Q2.

asked the Prime Minister if she will list her official engagements for Tuesday 1 April.

Would my right hon. Friend like to comment on the letter in The Guardian yesterday, in which an official of the Society of Civil and Public Servants said that his members in the Department of Health and Social Security might decide to defy the law and not deduct the £12 deemed in the Budget proposals from the social security payments to strikers' families?

I saw the letter to which my hon. Friend refers, and I believe that my right hon. Friend the Secretary of State for Social Services referred to it yesterday. The person who wrote the letter is not a member of the Civil Service, but it is clear that the basis of the standing and reputation of the Civil Service is that it serves the Government of the day, whatever the political complexion of that Government. Anyone who seeks to undermine that principle does a great disservice not only to the Civil Service but to the cause of democracy.

Will the Prime Minister be seeing the Minister of Transport among her colleagues today? If so, will she ask him to refrain from bringing forward the latest Government scheme to clobber rural areas, namely, the closure of vehicle licensing offices? Is she aware that the plan, if it goes ahead, will mean, in my constituency, that people, particularly motor traders, will have to do a round trip of 100 miles to register a car? Is it not time, after recent reverses in the other place, for Ministers in all Departments to wake up to the interests of the rural areas?

With all due respect to the right hon. Gentleman, there is such a thing as the postal service, even if the right hon. Gentleman may not like the service that it gives.

Has my right hon. Friend seen reports that, in the past two weeks, 5,000 people, including many women and children, have been killed by the Russians in Afghanistan? In the light of those deaths, will my right hon. Friend continue her efforts to get British athletes to take off their blinkers and realise that if they persist in going to Moscow they will simply be delivering themselves to be exploited by the Communist propaganda machine?

I have seen a number of reports in the press that purport to be eye-witness accounts of those who have had to flee from Afghanistan. They have indicated what they saw in that country. Some members of the football team have sought refuge in Europe. These are factors that must be taken into account by those considering going to Moscow. Their action would be seen by the Russians as giving some kind of approval to their foreign policy.

Will the Prime Minister take time to discuss with the Secretary of State, who is to take £12 not from strikers but from strikers' families, by what authority he instructed officers of the Department of Health and Social Security to deduct from payments to strikers' families money that they have not received from trade unions?

My right hon. Friend has made it clear that this matter will have to be introduced in the ordinary way in the House, through a Bill. I trust that it will go through in the ordinary way and that it will be approved by many people.

Will my right hon. Friend take time today to confirm that, unlike the Leader of the Opposition, she does not feel, and nor do her right hon. Friends, that it is necessary to seek permission from the Russian ambassador in London before visiting China?

I saw the report in The Times to which my hon. Friend refers. If true, it is a very sad state of affairs that certainly would not have suited the last Leader of the Opposition; but, then, she would never have had to apply.

Is the Prime Minister aware that at a meeting this morning dock shop stewards throughout the country decided to make the strike in Liverpool docks in support of the steel workers a national one? Is not this another example of how the Prime Minister and Government policy have galvanised the trade union movement into taking action against confrontation policies? Will the Prime Minister change her policy to that of conciliation, and start by dropping the Employment Bill?

One of the outstanding things in the last few weeks of the steel strike has been the way that ordinary members of trade unions have kept on at their jobs and not come out in support of the main steel strike. Whatever the past may have held, I hope that the steel workers will go back to work today or next week and that by turning out steel of quality at the right time and at the right price we shall be able to recover many of the orders that have been lost.

Has the right hon. Lady had a chance to calculate the cost to the nation and the burden on the nation that follows from her refusal before Christmas to appoint a reasonable intervention in the steel dispute? Does she understand that her obstinacy in the matter has cost the country hundreds of millions of pounds?

The right hon. Gentleman, in Opposition, only ever has one reply to a strike. That is to buy it off. That remedy lasts only until the next strike.

The right hon. Lady talked about buying off strikes. Does she think that the appointment of the latest inquiry that has gone into the matter was buying off a strike?

This was, in fact, an arbitration, provision for which is contained in one of the agreements of one of the unions, which it could have had many weeks ago. The strikers might have been back to work much earlier. The union refused to have that arbitration even though the British Steel Corporation wished to have it.

Is the right hon. Lady aware that she is the person who refused to have the inquiry? She is the person who blocked the door to any intervention then. When will she accept her responsibilities in these matters?

I really must correct the right hon. Gentleman. He knows full well that what he says is not true. He knows full well—we have said so in this House a number of times when the right hon. Gentleman the Leader of the Opposition was here—that the British Steel Corporation would have gone for arbitration or mediation, that it accepted going for arbitration or mediation some time ago, but that it took some time before the unions would accept the proposal. The right hon. Gentleman knows that. There is no point in persisting in a denial.

Q3.

asked the Prime Minister if she will list her official engagements for 1 April.

Has my right hon. Friend found time to study the reports in The Sunday Times showing that the majority of people in this country support the theme of the Budget? Will she hold to her last?

I believe that the majority of people in this country support the Budget. They believe that it is the only way to get Britain out of its economic difficulties. They are urging us to stick to the path that we are determined to tread.

Is the right hon. Lady aware, following her discussions with Chancellor Schmidt, that suggestions have been made by Euro-fanatics that outstanding problems should be settled in one package? Is she aware that this would cause a great outbreak of rage in the country? Questions such as sheepmeat, fishing and oil have to be settled as separate issues. Will she confirm that that is her policy?

There is perhaps a certain amount of misunderstanding. It is not suggested that settlement on one particular issue should be bartered against another. Chancellor Schmidt put to me the argument that if we expect the Community to settle our problems in a certain time scale, there are certain problems that other countries might expect to be settled in a similar time scale. I have always said, and will persist in saying, that each must be settled on its merits. I do not think, for example, that the fish question could possibly be settled in that time scale.

When my right hon. Friend reflects, in the course of today, on the outcome of the steel strike, will she accept that the vast majority of people are more than satisfied that the Govern- ment have not been a party to the dispute? Will she further reflect that if only the workers had been given the opportunity of a secret ballot the issue would have been settled long ago?

I know that the workers have had to suffer for many weeks without having the opportunity to ballot over whether they wanted to go on strike or whether they would have accepted the earlier offer. I hope now, however, that work will soon be resumed and that we shall be able to recover the orders for steel which this country needs.

May I revert to the public opinion poll to which the Prime Minister referred and in which she took so much pleasure? Will she comment on the fact that the poll sought to purport that the Chancellor of the Exchequer was the most charismatic figure in the Cabinet? Does the Prime Minister think that something might have gone wrong with the computer?

I think that the public share my view that we have an excellent Chancellor of the Exchequer.

When my right hon. Friend next has an opportunity to speak to the Norwegian Prime Minister, will she draw his attention to the splendid job done by the RAF during the recent disaster in the North Sea?

I believe that the Norwegian Prime Minister has thanked us for the excellent work done by the Nimrods, the helicopters, the Royal Fleet Auxiliaries and HMS "Lindisfarne". We all wish to join in the thanks for the splendid work that was done under such tragic circumstances. I am grateful to my hon. Friend.

Telephone Calls (Interception)

On a point of order, Mr. Speaker. The document on telephone tapping applies specifically to Great Britain since its title is"The Interception of Communications in Great Britain." May we please have a clear statement from the Government, before the Home Secretary makes his statement, that any legislation will apply to the whole of the United Kingdom so that the present system of Army telephone tapping at Churchill House, Belfast will be continued only under supervision, as it is in the rest of the United Kingdom?

I suggest that the hon. Member for Down, North (Mr. Kilfedder) awaits the statement that the Home Secretary is about to make.

With permission, Mr. Speaker, I shall make a statement on the interception of communications.

The House will recall that, following the Vice-Chancellor's judgment in Malone v Commissioner of Police of the Metropolis, my predecessor, the right hon. Member for Leeds, South (Mr. Rees), informed the House on 8 March 1979 that he proposed to put in hand a study of the implications of that judgment. On 13 June 1979 I told the House that I had directed that this study should be continued to its completion and would inform the House of my conclusions in due course.

Since that study began, a number of questions have been raised about the practice and extent of interception. The study has been completed. The Government have also made a thorough review of the procedures and conditions which, since the report of the Committee of Privy Councillors under the chairmanship of Lord Birkett in 1957, have been the basis of our arrangements in these matters. Over the years there have been minor changes of practice; but in all essentials the principles and procedures laid down by Birkett continue to be observed, including the fact that interception takes place only on the personal warrant of the Secretary of State. I have today published a Command Paper which sets out the Birkett principles and procedures as they operate today. It covers, as the Birkett report did, interception on behalf of the police, Her Majesty's Customs and Excise and the security service.

Information about interception in Northern Ireland is excluded from the Command Paper because the need to be able to combat terrorism there makes it undesirable to disclose any details. However, I can assure the House that the procedures, conditions and safeguards set out in the Command Paper are observed in Northern Ireland, subject only to the overriding requirements for dealing with terrorism. In particular, the personal authorisation of the Secretary of State for Northern Ireland has to be obtained for each individual interception.

The interception of communications, whether by the opening and reading of letters or by recording and listening to telephone communications, is an interference with the freedom of the individual in a democratic society. None the less, when carried out by the properly constituted authorities it is justified if its aims and consequences help to protect the law-abiding citizen from the threats of crime and violence and the fabric of democracy from the menaces of espionage, terrorism and subversion.

Allegations have been made that interception is now practised on a vastly wider scale than at the time of the Birkett inquiry. I hope that the figures quoted in the Command Paper, which bring up to date those in the Birkett report, will provide reassurance on this score. There has been a modest overall increase in the total number of warrants signed and a change in the balance between telephone and letter interception which reflects the greatly increased use of the telephone since 1957. But, given the very considerable growth in serious crime and in particular the development of the terrorist threat during the intervening years, I believe that the figures demonstrate that the use of interception continues to be tightly controlled.

In his judgment in Malone v Commissioner of Police of the Metropolis, the Vice-Chancellor, Sir Robert Megarry, found that interception undertaken on behalf of the police under the warrant of the Secretary of State was not illegal There is, therefore, no need for legislation to make duly authorised interception lawful. He drew attention to the fact that the restrictions and safeguards under which interception is conducted are, in this country, matters of administrative practice and not, as in some other countries, of statute. He went on to suggest that it was for consideration whether the procedures and conditions governing the use of interception should be embodied in legislation.

In their review, the Government have considered that suggestion with great care. The interception of communications is, by definition, a practice that depends for its effectiveness and value upon being carried out in secret and cannot, therefore, be subject to the normal processes of parliamentary control. Its acceptability in a democratic society depends on its being subject to ministerial control and on the readiness of the public and their representatives in Parliament to repose their trust in the Ministers concerned to exercise that control responsibly and with a right sense of balance between the value of interception as a means of protecting order and security and the threat which it may present to the liberty of the subject.

Within the necessary limits of secrecy, I and my right hon. Friends who are concerned are responsible to Parliament for our stewardship in this sphere. There would be no more sense in making such secret matters justiciable than there would be in my being obliged to reveal them in the House. If the power to intercept were to be regulated by statute, the courts would have power to inquire into the matter and to do so, if not publicly, at least in the presence of the complainant. This must surely limit the use of interception as a tool of investigation. The Government have come to the clear conclusion that the procedures, conditions and safeguards described in the Command Paper ensure strict control of interception by Ministers, are a good and sufficient protection for the liberty of the subject, and would not be made significantly more effective for that purpose by being embodied in legislation. The Government have accordingly decided not to introduce legislation on these matters.

The Government have, however, decided that it would be desirable if there were a continuous independent check that interception was being carried out in accordance with the established purposes and procedures. We propose to invite a senior member of the judiciary to carry out this task. His terms of reference will be
"To review on a continuing basis the purposes, procedures, conditions and safeguards governing the interception of communications on behalf of the police, H.M. Customs and Excise and the security service as set out in Cmnd Paper 7873; and to report to the Prime Minister."
He will have the right of access to papers and the right to request additional information from the Departments and organisations concerned. For the purpose of his first report, which will be published, he will examine all the arrangements set out in Cmnd. 7873. His subsequent reports on the detailed operation of the arrangements will not be published, but Parliament will be informed of any findings of a general nature and of any changes that are made in the arrangements.

The Government believe that these standing arrangements for monitoring the operation and control of interception will be a valuable additional assurance to Parliament and the public that the powers of interception are exercised strictly, sparingly and responsibly.

First, I give a firm welcome to the publication of the White Paper. The facts contained in it are those which I wish I could have used in the face of the published articles of recent months. Is the Home Secretary aware in particular that I am glad to see the figures on the incidence of telephone tapping and the clear statement on procedures, conditions and safeguards that are followed? I note that continuous checks are carried out by the Home Secretary personally. I confirm that they were carried out in the past and I accept that they are carried out now.

Concerning the inquiry for which I asked, is the right hon. Gentleman aware that the real question is whether another Birkett-type inquiry is necessary before the start of the continuous review suggested in the White Paper? In any event, I welcome the proposal for a continuous check on
"the purposes, procedures, conditions and safeguards governing the interception of communications."
To help me—and also to assist the House—in my evaluation of whether a Birkett-type inquiry is necessary, will the right hon. Gentleman expand on the meaning of the word "purpose"? It is a new word in the light of previous White Papers. Taken at face value, it would seem to be an important part of an inquiry. In this respect, may I indicate to the right hon. Gentleman that the major reason why I wanted an inquiry was to reconsider the reasons why interception was carried out? It was acceptable 20 years ago to say that interception was necessary for the three major purposes. The purposes of interception, therefore, are of great importance.

May I express the hope that, however the matter is dealt with, the allegations about unauthorised tapping will be cleared up? Unauthorised tapping has given rise to the allegations. I notice that the first report will be published and that in subsequent reports Parliament will be informed of any findings of a general nature and of any changes that are made. I regard that as important.

The right hon. Gentleman said as much, but I use parliamentary form when I ask him whether he is aware that I always felt, and still feel, that trust in a Home Secretary is vital in carrying out his duties. No matter what legislation is proposed and no matter what form White Papers take, unless there is complete trust—and it is a two-way process—no procedures will work. I know what I did and I am prepared to accept that the right hon. Gentleman carries out the firm procedures that I inherited and with which I dealt on a daily basis in all parts of the country. Nevertheless, from time to time there is need for the Executive to be accountable to Parliament on the basis of a suitable inquiry. However, accountability should take into account the secrecy that is vital, particularly in the context of terrorism.

The hon. Member for Down, North (Mr. Kilfedder) should be assured that the White Paper clearly states that the procedures are being carried out in Northern Ireland. I believe that it would be the height of folly to give numbers of any kind about Northern Ireland—much as I am assured of them—because terrorism is established in Northern Ire- land in a way that we do not experience in the rest of the United Kingdom.

I have not made up my mind on the need for legislation. I shall read the White Paper carefully and I hope that we shall have a debate on the whole matter as a first step in the process of accountability. I welcome the White Paper as a start.

I am grateful to the hon. Member for Leeds, South (Mr. Rees). When we were in Opposition, we certainly trusted the way in which he carried out these duties. I have sought to carry them out in exactly the same way as he and my predecessors did, and I hope that I can be seen to have done so.

When I was questioned previously, I felt that it was right to update the Birkett inquiry and to publish the figure in a Command Paper. I was asked to do that by many hon. Members on both sides of the House in order to make the position clear. I hope that the House will accept that we have done that. It is important that we did that, because the updating of the Birkett inquiry sets out as fully as any inquiry could do the policy and the practice of interception.

I am equally grateful to the right hon. Gentleman for his welcome for the monitoring arrangements. I believe that the monitoring role, which will be a continuing one, is valuable and that it will provide, in the long term, a more effective check than any single inquiry. It is important to point out, in the context of the allegations of unauthorised interception, that section 58(1) of the Post Office Act 1953 and other provisions mentioned in schedule 5 to the Post Office Act 1969 make illegal certain unauthorised interferences with communications. The only way in which they become legal is on the warrant of the Secretary of State. That is an important safeguard.

As for the right hon. Gentleman's wish for a debate, I feel particularly responsible to the House for the difficult task which I have to perform in this case. Therefore, subject to what my right hon. Friend the Chancellor of the Duchy of Lancaster may say, if the House wishes to question me further—or to subject me to its arguments—I am, of course, only too ready for that to be done. That is my duty to the House and I am ready to accept it.

In considering these matters further, will my right hon. Friend never forget that his first duty is the protection of this country from crime, terrorism and subversion? Will he also bear in mind that upon his vigilance depends the maintenance of freedom under the law?

Will my right hon. Friend be assured that just as we, when the right hon. Member for Leeds, South (Mr. Rees) was Home Secretary, had the utmost confidence in the way in which the right hon. Gentleman exercised his powers in these matters, we have confidence in my right hon. Friend and we look to other right hon. and hon. Gentlemen to have similar confidence? Will my right hon. Friend be assured that there will be a general welcome for the proposal that the judiciary and a high-ranking judicial figure will be associated with the protection of the freedom of Her Majesty's subjects?

I thank my hon. and learned Friend. It is, of course, true that interception plays an extremely important part in the protection of our citizens from terrorism. It also plays a particularly important part in dealing with sophisticated crime as it performs an important role in dealing with drug smuggling. On all these fronts I know—and it has been previously expressed to me by the House—that the whole House is behind the principle of interception for these particular purposes.

I am conscious that I have to balance that role against the liberty of the subject and the vital importance which I believe that the House attaches—as I do—to that liberty. My purpose is to establish the right balance between these two aspects, and I am more than ready to be answerable to the House in carrying out this duty.

Order. I appeal to hon. Members to be as brief as possible with questions. A large number of right hon. and hon. Members wish to take part in the final day's debate on the Budget. The time we are now spending comes out of the time allocated to the Budget debate.

Will the Home Secretary tell the House whether any Member of Parliament has been the subject of an interception order? Will he consider subdividing the number of interceptions into those instigated by the police, those by Customs and Excise officials and those by the security forces?

Thirdly, will he explain whether the number of interception orders listed in the White Paper are cumulative—that is to say, those currently in force—or is the number given simply that of the new orders that have been published?

Fourthly, will he accept that my right hon. and hon. Friends and I welcome the senior judiciary intervention? Would it not be wise either to publish the name of the person whom he has appointed or to consider making it three officers of the judiciary?

With regard to the hon. Gentleman's last point, I thought it courteous to the House and to the Opposition to put forward this proposal and then to decide on who would be appropriate. I believe that is still right, and I would argue in support of that.

The hon. Gentleman also asked about Members of Parliament. I refer him to the replies that were given by the right hon. Member for Huyton (Sir H. Wilson) in 1966, which have subsequently been repeated by all Prime Ministers, including my right hon. Friend in February of this year. In view of the importance of the subject, I hope that I shall be excused if I read out the relevant passages. The right hon. Member for Huyton said:
"Nevertheless, on this one occasion, and exceptionally because these Questions on the Order Paper may be thought to touch the rights and privileges of this House, I feel it right to inform the House that there is no tapping of the telephones of hon. Members, nor has there been since this Government came into office…
There was to be no tapping of the telephones of Members of Parliament. That was our decision and that is our policy. But if there was any development of a kind which required a change in the general policy, I would, at such moment as seemed compatible with the security of the country, on my own initiative make a statement in the House about it"—[Official Report, 17 November 1966 Vol. 736, c. 635–9.]
I heard one hon. Gentleman say that he did not believe that. If he does not believe it, he will have to disbelieve the words of all Prime Ministers, from both sides of the House, since that date. That would be an unreasonable thing to do.

As we now know that even the Prime Minister of the day was kept in ignorance of the activities and confession of Anthony Blunt, how can the right hon. Gentleman guarantee that he, his predecessors and his successors are kept fully in the picture about the degree of interception?

I can guarantee that I am in the fullest touch with the procedures, in that any interception can take place only if I have signed a warrant. I cannot sign a warrant unless I am given the facts, and I certainly would not do so without the facts, given my responsibility to the House. That is why I know that I am kept informed.

I thank my right hon. Friend for the seriousness and concern which he has shown on this worrying subject. I am sure that he will agree with me that there never has been a Parliament which has welcomed interception, but we recognise that interception is necessary in the very special circumstances relating to the protection of citizens.

However, my right hon. Friend said something this afternoon which must give rise to concern. He said that there had been a moderate overall increase in the use of interception. Will he confirm the assurance which he gave earlier that when he grants a personal warrant it will be just that and that in no way will it be a case of something slipping through the Department on a recommendation of his officials, on a say-so from him or on anything less than a very close personal examination?

I am grateful to my hon. Friend for what he said about the way in which I approach this matter. When I said that there had been a modest overall increase, I was referring to the figures given in the White Paper. I think it will be agreed that, in view of the considerable increase in terrorism, and in sophisticated crime of all sorts, during the period under review, the increase is very modest.

My hon. Friend perhaps has come to know me well enough over the years to be pretty clear that I am unlikely to put my signature to any document which I have nor studied extremely carefully, nor do I think that I would have lived as long in politics or in life if I had been prepared to put my signature to docu- ments without taking a great deal of trouble to see what they contained.

Is the right hon. Gentleman aware that there is a widespread view that the balance between the security of the State and the liberties of the individual should not be vested in individuals but should be brought before Parliament for proper legislation and proper accountability to the House—not on operational details but on the principles upon which such interception occurs? Does not he also agree that, in rejecting the view of the judge that there should be legislation, he is rejecting the rights of Parliament to debate the proper safeguards and is denying the House the right to receive proper reports from those responsible? In the light of the great concern that there is about this matter, not just in this country but all over the world, will he press urgently for a proper debate in which those views can be properly expressed?

I appreciate the right hon. Gentleman's view about legislation, but for the reasons set out in my statement I do not agree about the value of legislation in this case. However, I understand the right hon. Gentleman's argument.

As for a debate, I think that I made the position perfectly clear in answer to the right hon. Member for Leeds, South (Mr. Rees). Because of my peculiar responsibility in the circumstances, which I believe to be right, although the right hon. Gentleman does not, it is even more important for me to be ready to subject myself to the arguments of the House. Of course, I am prepared to do that.

Will my right hon. Friend revert to the key word that was used by the right hon. Member for Leeds, South (Mr. Rees)—"trust"? In a matter which cannot be justiciable and cannot be legislated upon, is not it right for this House to look to the Home Secretary of the day, whom it can call to account, as the person to trust in establishing the right balance between the undoubted rights of the individual and his freedom to personal privacy and the equal right of the State to secure itself against subversion, espionage and terror?

I am grateful to my hon. Friend. Of course, in the final event, this is a matter which must be decided upon a narrow judgment. I believe that in the long run the House would very much regret it if it removed the responsibility from a Minister and gave it to people outside who were not responsible to the House. I believe that the House would regret such a decision. That is why I favour maintaining the present arrangements, and I accept the responsibility which that places on all the Ministers concerned.

Is it not a fact that the right hon. Gentleman's Department has laboured on this matter for a year and has produced a mouse, as the White Paper tells us nothing that we did not know already? Is it right that the judge's assertion that there should be legislation should be turned aside on the basis that this is a matter which can hardly be justiciable? For example, most of the signatories to the European convention have legislation, and, although application can be made to a magistrate for a search warrant to search the premises of terrorists, apparently we cannot trust judges to issue a warrant in relation to telephone tapping.

The hon. Gentleman is entitled to his view. I think that it is a little ungenerous, because a few months ago, when I was asked to produce these figures and to set out the procedures, I said that I would consider the matter and come back to the House as soon as possible with the White Paper. To have done that within a few months is not unreasonable, in my view. In fact, I believe that it meets the desire of the House.

The hon. Gentleman said that my Department had laboured for a long time and had produced a mouse. I must take the responsibility. The Department has given all the facts to me, but I believe that a new Government, particularly following the various arguments that were put forward in the House, are entitled to weigh up all the considerations and to take the decisions. I take full responsibility for that, and I do not apologise for it. I believe that I have come forward pretty quickly with my proposals.

I turn to the question of the law. The hon. Gentleman is expert in the law, and I am sure that he will be the first to appreciate that our law is different from the laws of the other countries which he mentioned. I still believe that we are right to proceed in the way I have outlined. I honestly believe that legislation would risk undermining the value of interception to the public at large, without offering more safeguards than we have at present. The hon. Gentleman may not agree with me, but I believe that it is right to have the responsibility firmly within the House. That is my judgment. That is why we have proceeded in this way.

Will my right hon. Friend accept that there will be widespread reassurance because of the contents of his White Paper and the safeguards that he has reaffirmed he intends to observe? Does he not think that it is important to draw to the attention of the House and the public the fact that intervention has played an important role not only in conserving a considerable amount of public revenue but in the interception of over 50 per cent. of cases involving the seizure of heroin and cocaine?

The vast majority of interceptions by Customs and Excise have been to do with drugs. It is estimated that in 1978 about 62 per cent. of the seizures of heroin and about 56 per cent. of the seizures of cocaine were due to interceptions, and there are results of a similar substantial nature for 1979. I do not think that anyone can afford to neglect the importance of such seizures to the whole life of the nation.

Order. To be fair to the House, I will call four more hon. Members from either side.

Does the Home Secretary accept that in confirming the Birkett principles his view may or may not be right, but that it would have been greatly strengthened if he had set up an independent inquiry at the highest level to support or at least to examine the issues again? The Birkett principles have operated for 23 years. Does he also accept that the historical circumstances which gave rise to the establishment of these principles have considerably changed and that it is not adequate wholly to have to rely upon the internal inquiry which he has set up in support of a matter which so deeply touches individual liberty?

I understand the hon. Gentleman's point of view. First, let me say—I think the hon. Gentleman accepts this—that updating the Birkett inquiry in the way the White Paper has done is a valuable step forward. The hon. Gentleman may wish that we had gone further, but I am sure that he will agree that it is an important step forward.

On the point of a further inquiry, what we have proposed is a continuing check—and I must emphasise that it is an independent continuing check. I must also emphasise that the first report made under this procedure will be published to Parliament. Such a continuing check is more valuable and effective in all the circumstances than a single inquiry.

Is my right hon. Friend aware that his statement will be widely welcomed? Would he like to comment on the rumours that have been circulating in past months about the use of this procedure for VAT investigations?

Yes; it is very important to be clear. The Customs and Excise warrants, as will be seen from the very stringent safeguards under which they have to be issued, deal almost entirely with drugs. In so far as they deal with matters other than drugs they would deal only with major frauds, such as setting up a company for the purpose of defrauding the Exchequer of large sums of money. There is no question that such warrants will be used for inquiring into the VAT commitments of legitimate firms.

Will the Home Secretary accept that many of us will find difficulty in accepting the brief White Paper tabled today as a substitute for the thoroughgoing inquiry for which we had hoped? Will he also accept that there is nothing in the White Paper that will shake the growing conviction of a number of people that a system whereby the Government decide whom their agents will listen in on is a basically unsound system? If that is the way in which the Home Secretary intends to proceed, can he at least assure us that the senior judge he is appointing will be enabled to look into the use of electronic bugging by the security services, as at present that does not even require the formality of a warrant?

Under the arrangements that have been put forward the judge would inquire into telephone interceptions as such. That would be his remit in accordance with the terms of reference that I read out. The White Paper, which the hon. Gentleman says is very brief, completely updates what the Birkett inquiry said; therefore, I do not accept his stricture on it.

As regards a further inquiry, I believe that a continuing independent check is more valuable in the long run than a once-for-all inquiry.

On the further point about electronic surveillance, of course surveillance devices of various kinds are used. They are used by the police. But we must be clear that often the police use such devices at the request of individuals to check on offensive, indecent and threatening telephone calls. I should have thought that the House would agree that the use of such techniques for that purpose was important. If such devices are used in such circumstances, or for the investigation of serious crimes, it is a matter for chief officers of police. But when one looks at the way in which these surveillance techniques are used one sees that surely they are justifiable.

Because of the evil terrorist campaign that has been waged in Northern Ireland for the past 10 years or more, it is naturally assumed that a far greater number of telephone tappings will take place in the Province in proportion to the rest of the United Kingdom, but that does not justify the Home Secretary's refusal to give the figures. Is the right hon. Gentleman aware that his refusal to do so, and his refusal to extend judicial monitoring to Ulster, will create greater concern in Northern Ireland, where many believe that phone tapping, conducted by the Army, takes place and extends to those who are not engaged in criminal or terrorist activities? Therefore, I hope that the Home Secretary will reconsider his statement.

At one time the hon. Gentleman was a great critic of myself for lacking in determination on security. I must now retort that I think that the way he is pressing me shows that I am the person who is standing up for the vital operational and security needs of Northern Ireland and not him. I tell him that in perfect honesty, because to follow the course that he has requested would mean that I would be doing harm to the action against terrorists in Northern Ireland. I accept at once that the hon. Gentleman has been as keen as everyone to pursue the terrorists in Northern Ireland, but I say to him—as he once criticised me, I put it back to him quietly—that on this occasion I have some right on my side.

Will the Home Secretary seriously consider the possibility of another Birkett inquiry? He will recollect that Mr. Gordon Walker, as he then was, expressed a serious reservation in the Birkett report, in that he took the view that this exceptional power should be reserved for matters involving counter espionage and the security of the State and did not favour its use for routine police matters or such matters as VAT investigations. In the light of what Mr. Gordon Walker had to say, will the right hon. Gentleman reconsider his position as regards a new Birkett-type inquiry?

If the hon. Gentleman looks at the procedures set out in the White Paper and how they are to be followed, he will see that there is no question of warrants being used for what might be described as routine police matters or routine VAT matters because they are specifically excluded by the strict criteria. I hope that the House will note the strict criteria laid down for the issue of these warrants. I understand the feelings of the hon. Gentleman, but I maintain that the continuous and independent check that we propose is better than a once-for-all inquiry.

After all the recent tumult and shouting on this subject, is it not a great tribute to the responsibility of successive Home Secretaries that the number of interceptions has remained broadly static over the past 10 years, at a time of increasing criminal sophistication? Will the Secretary of State, for the benefit of those who have not yet had the opportunity to read the White Paper, underline the fact that he personally not only signs each warrant, but reviews it and places a time limit on it in the first place?

I am grateful to my hon. Friend. Yes, I can give an absolute assurance that the Home Secretary not only signs the first individual warrant but also reviews each one, as set out plainly in paragraph 11 of the White Paper. He must also agree to the renewal of any warrant in accordance with what is set out in that paragraph.

Will the Home Secretary, at this late stage, consider broadening the terms of reference? Is he aware that there is far more bugging and tapping by commercial individuals and organisations than is referred to in the report? We must realise that a tap is a tap and a bug is a bug, whether it is used by the security services or by private investigators. We must root out such practices as well as establish controls for official agencies.

I repeat what I said at the beginning. Section 58 (1) of the Post Office Act 1953 and other provisions mentioned in schedule 5 of the Post Office Act 1969 make illegal certain unauthorised interferences with communications. Therefore, the practices to which the hon. Member refers are, in many cases, illegal interceptions. They could be legal only if they were authorised to the Post Office by the signature of the Secretary of State.

Will my right hon. Friend agree that the bugging of someone's house could be just as much a potential threat to the freedom of the individual as the tapping of his telephone? Although my right hon. Friend's statement this afternoon has dealt exclusively with telephone interceptions, will he tell the House whether there is any good reason why the same procedures and safeguards which apply to telephone interception should not also apply to bugging?

As always, when I am asked to make a specific statement about a particular matter, I confine my answer to that matter. I was asked to deal with telephone interceptions. I have dealt with them in some detail, and I think that it is right that I should confine myself to them.

Transport And General Workers Union

I beg to ask leave 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,

"the fact that the docks delegate conference of the Transport and General Workers Union this morning has called a national dock strike in support of the official strike at the port of Liverpool from 8 o'clock tomorrow morning."
The matter is specific, because the strike will begin tomorrow morning. It is important, because it can affect the whole country and because the Government should state clearly where they stand in relation to this dispute and what action they will take to bring it to an end. I believe that the dockers are correct in what they are doing, but it is quite obvious that the effect on the country's economy could be very serious.

The matter is also important, because it hinges on the settlement of the steel dispute. It can affect the outcome of that dispute and therefore it is clear that the House should express its opinion on this matter. More than 150 hon. Members have signed an early-day motion on the question of the Liverpool dock strike and therefore I urge that the House discuss this matter before the Easter Recess.

The hon. Member for Liverpool, Walton (Mr. Heller) has asked 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,

"the fact that the docks delegate conference of the Transport and General Workers Union this morning has called a national dock strike in support of the official strike at the port of Liverpool from 8 o'clock tomorrow morning."
The House will be aware that the hon. Member has brought to our notice a very serious matter. It also knows that I am directed to take account of the several factors set out in the Order but to give no reasons for my decision.

I cannot grant the hon. Member's application today, but I emphasise that we are very close to the recess and that there is an Adjournment debate in the House tomorrow. I am aware of the seriousness of the matter, but I cannot rule today that the hon. Member's submission falls within the provisions of the Standing Order, and therefore I cannot submit his application to the House.

Statutory Instruments, &C

Ordered,

That the Value Added Tax (Fuel and Power) Order 1980 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Spencer Le Marchant]

Fishery Limits (Amendment)

4.17 pm

I beg to move,

That leave be given to bring in a Bill to provide that the Fishery Limits Act of 1976 shall apply notwithstanding any provisions of the European Communities Act 1972 so as to allow the enforcement of the Act against all fishing vessels, whether from Common Market countries or from outside; to empower the Minister of Agriculture, Fisheries and Food to make regulations requiring licensing and registration of all foreign vessels fishing within British limits, advance notification through fishing plans of all arrivals of licensed vessels and notification before departure of all catches taken and giving him power to exclude both individual vessels and vessels of denominated countries; and to provide for the bi-lateral negotiation of reciprocal catch quotas with other national governments, thus allowing licensed foreign vessels to take specified catches in British waters in return for British catches within the waters of their country.
The purpose of the Bill is simple and straightforward. It amends the Fishery Limits Act 1976, by which we in Britain followed a world trend and extended our fishing limits to 200 miles, so that that Act shall apply notwithstanding any provisions of the European Communities Act 1972. The intention is that in the event of a conflict between our legislation and the Common Market provisions, British courts will be empowered to enforce British law and to regard it as superior to any Common Market provisions that may conflict with it.

In other words, where we now have the power to control and exclude the vessels of third-party nations from our waters, this amendment would give us the same potential power over Common Market vessels—a power that we do not now have because of our acceptance of the common fisheries agreement, which was cobbled together a matter of months before our accession to the EEC and which we effectively accepted through the European Communities Act.

The Bill will also empower the Minister to impose, by regulation, a system of licensing on foreign vessels to require fishing plans and catch returns, and to come to bilateral catch swaps with third parties, and, if necessary, with EEC members as well, on the basis of a straight swap of specified catches in our waters for specified catches in theirs. We cannot make such arrangements now because such deals are handled by the European Commission. Therefore, the essence of the Bill is to allow us, if necessary and if we so decide, to control our own waters against all parties. I argue that such control is both essential in principle and necessary in practice.

A nation is the best and the only real guarantor of its own conservation. After all, no one else has the same vital interest in conserving our fish stocks. For other nations our fish stocks are a resource to be used and to keep their fleets going. For us they are the future of our industry.

Indeed, the most telling lesson of recent years has been the divergence in fortunes between those nations that took control of their own limits and Britain, which did not enforce control. In the former category I include nations such as Iceland, which is rapidly building up both its decimated stocks and its fishing industry, and those such as Canada, which expects to double its fish exports. On the other hand, Britain has not enforced the same controls, and as a result our stocks are being decimated and plundered by Continental fleets that are kept going at too high a level by subsidy and Government support. Our industry, which has already been hard hit by the loss of distant waters, is not only refused the chance to rebuild and reorganise in our own waters but is being further hit by competition, which at this moment is catching British fish in British waters and dumping much of that fish on our market, to ruin our catching industry.

No amount of Government aid will get around the central problem, which is the fact that the situation can continue, because there is no effective control of conservation. At the moment the principal means of control—quotas—seems to be largely ignored by the fishing fleets and, except in this country, there is no effective enforcement at the ports.

At some Continental ports we see new fish colours—not only white and red fish but grey and black fish, the kinds of fish that seem to have fallen off the back of a trawler.

The net result is to place this country in a Common Market catch-22 situation. If we hold up a fishing settlement to get the best possible terms for this country our stocks are decimated in the meantime by the largely uncontrolled efforts of huge Continental fleets, which are kept in being to inherit the benefits of the settlement. On the other hand, if we agree to a settlement, our stocks will then be hopelessly decimated legally by overlarge Continental fleets, which can do that because they are allowed to do it by the settlement.

Either way, there is a forbidding future for our industry unless we have the power to protect ourselves. At the moment we just do not have that power. We have our own 12-mile limit, which we have only by derogation, and for two more years. We have our national conservation measures, some of which are already in danger of being struck down by the Court. What shall we do if those measures are struck down by the Court?

The Bill will give us the power to control the over-fishing that is now going on. It will also strengthen our hands in the current negotiation situation—one in which, regrettably and tragically, we have all too few cards to play. I am not particularly attracted by the spectacle of our Minister of Agriculture, Fisheries and Food going naked into the conference chamber to face a haggle on the common fisheries settlement.

I give one example of the negotiating pressure that could be brought. France has now upped the negotiating ante by her actions against British lamb, which were undoubtedly taken as a means of increasing negotiating pressure on this country. If we wanted to increase negotiating pressure in the fisheries negotiations we could not do so, even if we wanted to, because we should be in the same humiliating position as that in which the Irish found themselves in 1977, when they imposed a 50-mile limit in respect of the larger vessels, which their courts simply declined to enforce. We should be in exactly the same situation. That is a situation that the Bill is intended to avoid.

As well as strengthening our negotiating hand and allowing us to stop over-fishing until there is a common fisheries settlement, the Bill proposes to take power to enforce our own laws, and will almost certainly be necessary to enforce any settlement, if we get one. Currently we are told that we are negotiating and that we have our cards on the table for either a 50-mile limit or a dominant pre- ference area of 50 miles. I hope that those negotiating positions are meant seriously, because they are what the industry wants.

If we do get an agreement, how can we enforce the limits unless we can act under regulations made under section 3 of the Fishery Limits Act 1976? Those regulations must be enforceable in our courts against all vessels, not just third parties.

Therefore, the case for the Bill is simple. We may be a long way from a fisheries settlement, in which case we need this Bill to protect our interests and our stocks in the meantime. We may be near to a settlement, in which case we need the Bill as a form of negotiating pressure to show that we are serious. We shall also need it to enforce the settlement. In either case the introduction of the Bill will have one further effect. The fishing industry has been disastrously run down in recent years. It is still being run down. For understandable reasons it feels that it has been betrayed. The Bill will show the fishing industry that this honourable House is serious about fishing and is concerned to defend the industry's interests.

I therefore commend the Bill to the House. I hope that right hon. and hon. Members will support its introduction.

Question put and agreed to.

Bill ordered to be brought in by Mr. Austin Mitchell, Mr. A. J. Beith, Dr. David Clark, Mr Robert Hughes, Mr. James Johnson, Mr. Kevin McNamara and Mr. Donald Stewart.

Fishery Limits (Amendment)

Mr. Austin Mitchell accordingly presented a Bill to provide that the Fishery Limits Act of 1976 shall apply notwithstanding any provisions of the European Communities Act 1972 so as to allow the enforcement of the Act against all fishing vessels, whether from Common Market countries or from outside; to empower the Minister of Agriculture, Fisheries and Food to make regulations requiring licensing and registration of all foreign vessels fishing within British limits, advance notification through fishing plans of all arrivals of licensed vessels and notification before departure of all catches taken and giving him power to exclude both individual vessels and vessels of denominated countries; and to provide for the bi-lateral negotiation of reciprocal catch quotas with other national governments, thus allowing licensed foreign vessels to take specified catches in British waters in return for British catches within the waters of their country: And the same was read the First time; and ordered to be read a Second time upon Friday 4 July and to be printed. [Bill 186.]

Orders Of The Day

Ways And Means

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

Amendment Of The Law

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but 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 Geoffrey Howe.]
  • Question again proposed.

    Budget Resolutions And Economic Situation

    4.26 pm

    One of the many notable features of my right hon. and learned Friend's Budget Statement was that throughout he drew a clear distinction between those aspects of economic life over which the Government have control and those aspects of economic life as to which the Government may have aspirations but over which they have no control. He distinguished, in that way, between spending, taxing and public borrowing, on the one hand—over which the Government and no one else have control—and other aspects of economic life, such as growth and the level of unemployment, over which the Government have no control. That was a realistic and, alas, novel way for a Chancellor to approach his task. Indeed, the performance of industry is not within the Government's power to control; nor is the rate of growth. Both are by-products of a wide range of matters. However, what is to some extent, though not entirely, within the Government's power is the climate within which industry operates.

    For some time in this country the economic climate within which industry has had to operate has been hostile. There has been a surfeit of controls, too much legislation, too much regulation, excessive tax on individuals at all levels of income, and overspending and borrowing, with the resultant inflation. Industry has tended to be crowded out by Government and public sector spending.

    The industrial relations climate within which industry has had to operate has also been hostile. There has been an imbalance in favour of union power. In many, though by no means all, work places there has been a lack of co-operation between the work force and management, which is by no means always explained by management weaknesses.

    The intellectual climate has also been hostile to industry. I have an example culled from recent reading which is really startling. I want to give it to the House. The Institute of Economic Affairs has just published a report of a colloquium on entrepreneurs, which it held last November. One of the contributors to that colloquium was an economics professor who has been teaching economics for decades. In his contribution, which is published in the report, he said that the subject of the colloquium, entrepreneurship, was totally novel to him. It had never occurred to him in all his decades of teaching about the firm and the theory of the firm ever to refer to enterprise, entrepreneurs, risk or uncertainty. The idea of making such a reference had never crosssed his mind. The comment of another academic present at the colloquium was that that confession would have been the same from many other teachers at universities. [HON. MEMBERS: "Name him.")

    The evidence was contained in a booklet published last week.

    I regard it as nothing short of marvellous that, despite the hostile economic, industrial relations and intellectual climate—of which I gave an example—British manufacturing business has done relatively well.

    I entirely accept the surprise of the hon. Gentleman. It was because I was so startled to see such evidence of indifference to a crucial subject that I thought it relevant to bring it before the House. Of course, I attribute no blame and make no accusation. It is just surprising that the intellectual indifference to business reality should have gone so far.

    It is the Government's aim and purpose to change the economic climate in as many ways as are practicable to get rid of the present hostility towards industry. We have a far from ideal position from which to start. We inherited high public spending, with a great impetus to further increase. We inherited high borrowing requirements, to finance which high interest rates are required.

    In the light of that background and purpose, the main aim for industry of my right hon. and learned Friend the Chancellor of the Exchequer, as expressed in his Budget speech, is to reduce the cost of financing the public sector and thus get interest rates down. Meanwhile, his reductions in tax at all levels in his 1979 Budget removed some of the worst obstacles to enterprise and effort.

    There has been, throughout the 11 months of this Government's administration, a series of initiatives to remove controls and obstacles to enterprise and there is a continuing effort to reduce the unjustifiable administrative, fiscal and legal hindrances to enterprise and effort.

    In his Budget speech the Chancellor of the Exchequer tackled as his central objective the worst obstacle of all—that is, inflation. His medium-term financial strategy creates a coherent framework for rational hope that inflation will be steadily abated. The gradual monetary contraction which he proposes as the method, with public spending, taxing and borrowing targets compatible with the programme, is based—and again this is a novel feature introduced by my right hon. and learned Friend as Chancellor—on a refusal to be over-optimistic. This is a very different approach from that of many of his predecessors. I believe that he is the first Chancellor and this is the first Government to set themselves, during the decades in which we have been afflicted by inflation, coherent stepping stones to the abatement of inflation. As a Government, we are giving overriding priority to the attainment of this aim, because we believe that abated inflation is the necessary, though not the sufficient, condition of prosperity, a nearer approach to full employment, better public services and better benefits.

    But the programme of returning to monetary continence means, for the companies sector, a difficult year or more. Our present estimates suggest that the squeeze on liquidity could be broadly comparable in severity with that experienced in 1974 and 1975. Trading conditions in the short term will worsen; foreign competition will continue to be strong both at home and overseas; interest rates are unlikely to be substantially reduced for some time. The result will be that profit margins, already dangerously low in real terms, will be squeezed, and many firms will face serious cash-flow problems.

    Because the average contains the relatively better profit performance of the North Sea oil industries, manufacturing companies may be even worse hit than the generality. Many such companies are already cutting back their investment and many will have to run down stocks. They will welcome the Chancellor's decision to allow part of the stock relief recovery following from stock reduction to be deferred for a year. The reduction in stocks will create difficulties for supplying companies. With real profits so low, manufacturing companies will have little, if any, fat to cushion them against this year's difficult conditions.

    Against this forecast, there is very little the Government can do to help.

    The right hon. Member for Ebbw Vale (Mr. Foot) says that the Government should go, but, if by any ghastly chance we were to be succeeded by a Labour Government who carried out the rather incoherent prescriptions of the former Chancellor of the Exchequer, the right hon. Member for Leeds, East (Mr. Healey), the prospect would be catastrophic and, in his own words, terminal for the British economy.

    We cannot—and I should have thought that the Opposition would accept this—simply reflate the economy. It was the Leader of the Opposition who, in memorable words at the 1976 Labour Party conference, explained why that old panacea is no longer believed in on either side of the House. We cannot simply reflate the economy, nor will interest rates come down until the steps we are taking to bring the money supply under control have had their full effect. Any policy other than the one we are following would defeat the very strategy which is essential for our recovery of economic vitality.

    The remedy to the prospect that lies ahead is in the hands of companies. It is in their own interests that they should realise the situation facing them. In 1974–75 companies woke up to the problems far too late in the day. We believe that awareness is very much greater today, partly based on the experiences of 1974–75. But there are still, I fear, large numbers of companies which do not recognise the cash squeeze that lies ahead. Every board of directors ought, in its own interest, to be looking today at its cash-flow forecasts, which will often make distressing reading. But, once companies have grasped the problems they face, it will be open to them to seek remedies. They will look to their stocks; they will look to their level of investment.

    We must hope that the cost of raw materials and fuel will not present the same problem in the coming year as it did in the last, when manufacturing business had to face a rise in the costs of raw materials and fuel of no less than 41 per cent. It was a hideous burden that British industry had to bear, and but for the strength of sterling it would have been much heavier. It is a relief that there appears to be some fall now in the pace of increase.

    I wish the right hon. Gentleman would enlighten us on his attitude to the sterling exchange rate. In a series of answers to questions a week ago he said the higher the better, because it would bring inflation down. Now he is welcoming the fact that the sterling exchange rate has fallen 13 cents in the past few weeks. Will the real Sir Keith Joseph please stand?

    I think the right hon. Gentleman has got it wrong. I think the exchange rate fall to which he refers is sterling-dollar, and, of course, in Smithsonian terms it has not fallen. I recognise that the exchange rate, like interest rates, responds to the market, to supply and demand. We cannot predict it, and if we try to influence it we sacrifice all our other priorities.

    So the lesson for companies is that they should—

    It is idle for me to have a view about an optimium exchange rate since Governments should not try to control exchange rates. The exchange rate, to the extent that it is relatively high, places burdens on our competitiveness but reduces our inflation.

    Every other Government in the world are trying successfully to influence their exchange rates. The Germans and the Swiss, for some reason which is beyond me, are trying to raise theirs, and so are the Americans. Others have from time to time tried to get theirs to fall. The right hon. Gentleman has not yet answered the question I put to him. A week ago he argued that the higher the exchange rate, the better. A moment ago he welcomed the fact that the exchange rate had fallen in dollar terms by about 20 cents in the past two months.

    The right hon. Gentleman is inaccurate. I did not say in answer to a question that the higher the exchange rate, the better. I explained briefly that there were certain advantages and certain disadvantages in a higher exchange rate. As for the Government having a view and attempting to achieve an optimum exchange rate, we all remember the catastrophe for the country when the Chancellor in the previous Government tried to control the exchange rate and brought a monetary surge upon us from which we are still in part suffering today.

    The task of companies, in their own interests, is to contain their costs. At the heart of containing costs is the task of managements to convince their work forces of the desperate need to contain unit labour costs. The survival of jobs and of whole firms will depend upon their being competitive in price terms and in non-price terms. No task will be more important during the coming months than increasing understanding by work forces, induced by constant management explanation, of the importance of being competitive and the lessons of that for wage bargaining and for the attempt to keep unit costs steady, if not reduced, by rising productivity at least as great as any rise in earnings.

    Against this, I hope realistic, picture of the immediate future, I have to emphasise to the House that there are many firms which are, despite all the difficulties, doing very well; that there is much expansion, not as great as quite to balance the decline of other firms; that there are many new starts of businesses, and that there is a great deal of welcome vitality in the economy in firms of all sizes and in all industries.

    I would not want, because I have to emphasise what lies ahead, to give a wrong impression, but we are achieving nearly as many new jobs as we are losing. The detail of the monthly employment and unemployment statistics shows that the flow of people off the unemployment register is very nearly as great as the flow of people on to the unemployment register. It is the balance between these two great magnitudes each month that either increases or decreases the net number registered as unemployed. It is remarkable how many people are finding a job each month—nearly as many as those who are losing a job each month.

    The performance of individual firms will depend upon management drive and enterprise and the co-operation management gets from its work force within the climate created by the Government. That performance will depend a great deal upon productivity. There can be much productivity gain without loss of jobs through the intelligent use by employers of wastage. There can be much productivity gain without loss of jobs where the increased competitiveness of a firm with higher productivity opens up a larger market. But, even where higher productivity can be achieved only by some degree of redundancy, the result will be to that extent a healthier economy with more firms surviving, with increased competitiveness, with higher taxable capacity from increased profits and earning, and, within a short distance in time, more jobs rather than fewer.

    I come back to the distinction which my right hon. and learned Friend the Chancellor makes. Productivity is one aspect of the economy in which the Government can do, if not nothing, relatively little. What the Government can do is to create an economic climate which encourages increased effort and which at least rewards higher productivity; the Government can try to increase understanding of the need for higher productivity in the interests of all and, finally, not obstruct increased productivity in the public sector and within their own area of responsibility.

    I wish to refer to one other aspect of higher productivity, and I shall say twice or three times in the rest of my speech that I am not romantic about small firms. Small firms have a part to play in the task of increasing productivity, not because they are more apt to have higher productivity than are large firms—I do not believe that to be true—but for a reason I shall try to explain.

    Small firms, new businesses have many advantages. They are the yeomen of a modern economy. [Laughter.] What is wrong with the yeomen of England? We could learn much from their character, vitality and independence. Small firms represent decentralised ownership and decentralised decision-taking. Small firms are essential to political freedom. Small firms are the seed bed from which larger firms grow. In small firms there are generally good human relations. With specialised products and services, they serve a huge market directly and indirectly as contractors and subcontractors at home and abroad. But the sad fact is that, for reasons which one day the historians will fully elucidate, we in this country have a smaller cohort of small companies than do equivalent industrial countries overseas.

    One factor in explaining why we have a smaller cohort is already known. We have discouraged the birth and encouraged the death of many small businesses by our no doubt well-intentioned policies over recent decades—by tax policies, by over-regulation, by town planning.

    I repeat that I am not romantic about small businesses, but my right hon. and learned Friend the Chancellor has made an assumption—I hope a realistically modest assumption—about productivity growth during the period covered by his Budget. He has assumed that after the forecast decline this year we shall have 1 per cent. per annum growth until 1983–84. We must hope for more, but, to the extent that my right hon. and learned Friend is being pessimistic, to the extent to which productivity rises by more than 1 per cent. and is not achieved through wastage or through larger markets, we shall face higher unemployment.

    One of the most healthy sources of new jobs will be from small businesses. At a time when we hope for rising productivity with a minimum rise in unemployment, it would be mad not to encourage small businesses, for all the reasons that make them advantageous to the country, not least that they will offer jobs to some of those who are released by the achievement of higher productivity.

    I come now to the whole range of improvements in the economic climate for small businesses which my right hon. and learned Friend has introduced in his Budget as part of a sensible policy to reverse the uncomprehending hostility or indifference to small businesses which has dominated policies over the past years. [Interruption.] It is true that on the way towards achieving a better economic climate for business as a whole we pass through a transitional period of high interest rates which is, alas, inseparable from the strategy which we believe to be the only effective strategy for the country's good.

    My right hon. and learned Friend introduced a whole battery of measures. He made a start—by his own admission, a deliberately modest Start because of the general shape of his Budget this year—on reforming capital gains tax and capital transfer tax. He has increased the VAT threshold. He has modified the subcontractors' section 714 certificate. He has introduced a venture capital scheme—which will be defined in the Finance Bill and by which investment in small companies can be offset against individual tax. He has improved the treatment of retirement annuity relief. He has modified the condition of life-long employment in a firm for which a loan was accompanied by tax relief on the interest, and he has declared his intention to remove a thicket of regulations about close companies. He has reduced the tax on small companies, and he has raised the threshold on which small companies start paying corporation tax. He has introduced a special batch of measures to meet and identify the needs of small businesses.

    I turn to one aspect of the uncomprehending hostility which policy over recent years has shown to small businesses. When I was Minister of Housing nearly 20 years ago, I wielded the bulldozer enthusiastically, but, alas, the result probably did more harm than good.

    Over recent years, the operations of town planning have destroyed the natural habitat of the start-up of small businesses. The arches have now either been sanitised or refused as accommodation. The twilight areas of towns have been subjected to zoning laws. The result is that the supply of small premises in which new businesses can start is far below demand all over the country. Even in areas which are dogged by high unemployment, any small workshop premises which are made available immediately evoke a queue of would-be tenants. Surely the House will find that encouraging.

    A few months ago the Department of Industry commissioned a report by Coopers and Lybrand, accountants and management consultants. The report has now been published and it shows that there is an excess of demand over supply for small workshop premises, defined as less than 2,500 sq. ft. My right hon. and learned Friend the Chancellor of the Exchequer has reacted to that demonstrated scope for increased business activity and jobs in a number of imaginative ways. He has doubled the industrial building allowance from 50 per cent. to 100 per cent. for a period of three years where the buildings to be erected are of 2,500 sq. ft. or less. He has reduced the demands of the conditions for receiving the industrial building allowance. My right hon. Friend the Secretary of State for the Environment has declared his intention to consult about relaxations in town planning to encourage the provision of more smaller workshop units.

    My right hon. Friends and I believe that there will be widespread interest in the private sector in taking advantage of these new encouragements. Four days after my right hon. and learned Friend the Chancellor spoke, there is already strong anecdotal evidence of such increased interest. We expect the changes proposed by the Chancellor to result in thousands of workshop factories all over the non-assisted areas of the country. But because there will not be the same private sector readiness to go into assisted areas, we are taking action which will help it also.

    In some of the most—for this purpose—difficult parts of the assisted areas, the English Industrial Estates Commission will be increasing the provision of small workshop units. But in the rest of the assisted areas we believe that there can be private sector investment and interest. In order to encourage that, we are making available £5 million of taxpayers' money from the Department of Industry, and within our cash limits, to carry out a partnership scheme with the private sector. We are seeking at least that amount of money from the private sector, and with the combined total we shall enter into partnership to provide workshop units within the assisted areas. We expect those initiatives to result in at least 1,000 workshop units within the assisted areas in the next three years, as well as thousands outside the assisted areas.

    Will my right hon. Friend explain why it is necessary for the taxpayer to make a contribution? If there is such a demand for those premises, why cannot private industry provide the money?

    My hon. Friend asks a valid question. I distinguished between the non-assisted areas where there is an application of an existing tax allowance—namely, the industrial building allowance—at an enhanced rate, and a special sector that has not been much patronised by the private sector because it did not realise the demand. We believe that it is the function of the tax system to encourage healthy trends in the national interest, and that is an example of a clear need for such an encouragement.

    Is my right hon. Friend aware that the North British Housing Association is branching out and is about to build small factories in my constituency? We hope that the idea will spread.

    I did not realise that, and I am interested to know of it.

    My right hon. and learned Friend the Chancellor has helped not only small firms in his Budget. He has also made some provision, in a Budget filled with innovations, for medium and larger companies. He has proposed to remove tax obstacles to the demerging of companies if they wish to follow that course. He has introduced stock relief proposals, to which I have referred. He has offered some improvement in profit-sharing and share option schemes. He has introduced his own brainchild—the enterprise zone.

    In about six areas of up to approximately 500 acres each, which we shall seek to locate, with the agreement of the local authorities—areas which have been blighted and which, despite all efforts, have not shown the extra economic vitality that is needed—we shall introduce a range of reduced fiscal and administrative demands. With the agreement of the local authorities, there will be a pruned system of town planning, a low development land tax, no IDC control, no commercial rating, no industrial training board levies and 100 per cent. capital allowance on business buildings.

    We hope that this regime will encourage a greater vitality in those areas—to their benefit—and we expect to learn whether the expansion of some of those modifications may be a way forward.

    The Budget is a massive recognition of reality. It contains a strategy for creating a stable currency and a climate that will encourage enterprise and effort, thus sustaining prosperity and offering the prospect of more jobs and better public services and benefits. The Government have never offered instant solutions. Difficult conditions are on the way, but the Budget offers a coherent framework for rational hope.

    4.59 pm

    If I have understood the Secretary of State correctly, his policy is one of Government by dissociation. Like the eccentric professor whom he told us about, he wishes to be faceless and nameless in our industrial policy. However, he did at least talk about the policy. That is important. To discuss the Budget merely in terms of short-term accounts and day-to-day management is to miss the point.

    Budgets are not just catalogues of tax changes, although the public have become accustomed to look upon them in that way. Our duty is to examine the philosophy that lies behind them or, as my right hon. Friend the Leader of the Opposition said last Wednesday, "the theme". To that extent, it is right to relate this Budget to the Budget of last June and to put both in the context of the Government's objectives over the next few years.

    Those objectives are now out in the open, as they were not during the run-up to the election last May. The present Prime Minister then attacked high interest rates and the cost of mortgages. Our prophecies that prescription charges would increase and that VAT would double were dismissed as Labour fabrications. The Government have now revealed their philosophy. Thus, they have made clear once and for all the gulf that lies between us. For us, as democratic Socialists, the first priority is the quality of life and human values. However, for the Government it is the quantity of profit and financial gain.

    Every item in this Budget and in the Government's expenditure plans reveals that basic difference. The Budget paves the way for a massive and inexorable growth in unemployment. We believe that of all social ills unemployment is among the worst. Unemployment robs a man not only of his livelihood—although that is important enough—but of his dignity and aspirations. As Browning said,
    "Ah, but a man's reach should exceed his grasp,
    Or what's heaven for?"
    The question is not of prime importance to this Government. They are complacent about the destruction of Britain's basic industries. They boast of the 50.000 redundancies in the steel industry this year which their policies will create. They greet redundancies in textiles, in the motor industry and in shipbuilding with equal enthusiasm. It is here that the real Tory philosophy can be measured.

    I shall give way shortly. For the first time since the war, a Tory Government are expressing what Tories have always instinctively believed—that poverty and unemployment are a small price to pay provided that the few can profit.

    I would not raise this issue if the right hon. Gentleman were not making such a disingenuous speech. Was he not a member of the Government under whom unemployment doubled?

    The doubling of unemployment is not a thing to be proud of, no matter which Government are in power. However, therein lies the difference between us. The right hon. Gentleman and his Government welcome that increase. Conservative Members should listen to the facts. They have given us those facts. By the summer of next year unemployment in the United Kingdom will have passed the 2 million mark. Those 2 million will be unemployed not just for a few days or weeks but for years. As long as a Tory Government last, the number will continue to rise.

    There is an old adage that lightning never strikes twice in the same place. However, to the people who live in Scotland, in the valleys of South Wales, in the North and in the North-West it is an old story. Most of them have seen it before and they did not believe that it would happen again. These are the areas that the Government have written off. They are the areas where there are few Tory votes to be picked up, and to a Tory Government they count for little. However, an undercurrent of frustration and anger is growing up in those areas that any Government neglect at their peril.

    We are a great nation and our greatness rests upon our stability, our tolerance and our preservation of the social fabric. The Government's policy is now putting all those at risk. They think that they can afford to ignore these areas, but they have also ignored the increasing interlocking and dependency of industries upon one another. It is not only in the traditional areas that we shall see the effect of that unemployment. Even in areas such as the West and East Midlands, which somehow survived the cataclysm of the 1930s, the decay of British industry is well under way.

    It has always been part of Tory dogma to try to separate one group of workers from another. The talk of scroungers and of shirkers is nothing new. Those same words were applied during the 1930s. They deserve the same answer that Clem Attlee gave in 1935. He said:
    "the only real test possible, in order to find out the tiny percentage of shirkers from the vast majority of willing workers, is the offer of work under fair conditions."
    That offer is not forthcoming. All we have been offered instead is a blinkered refusal to apply the resources of the Government to the real needs of the nation. If the quality of life is to be improved, there must be more people at work, not less. Industry must be used to provide the work and the manufactured goods necessary for that development. We all know that to thrive, this country must export more manufactured goods than it imports. The unhappy truth is that we have now become a net importer.

    To what extent does the right hon. Gentleman agree that our unemployment is partly the result of industrial strife, low productivity and the restrictive practices of trade unions?

    I hope to deal with that point shortly. Perhaps the hon. Gentleman will be patient.

    The Secretary of State for Trade spoke on television the other day and, despite the evidence, dismissed my arguments for a ceiling on imports. He said:
    "All we have to do is to increase our exports. And our exports are doing very well."
    Given that we have a cripplingly overvalued currency, boosted by the highest interest rates in our history, it is remarkable that they have held up at all. The real problem is the balance between exports and imports. The Secretary of State's complacency will not change that balance. Last year, while our exports of manufactured goods remained at the same level, our imports of manufactured goods rose by 18 per cent.

    What is the Government's answer? The Secretary of State gave that answer this afternoon—namely, deflation, more deflation, always deflation. However, history —even recent history—teaches us the opposite lesson. The higher the level of domestic demand, the higher our manufacturing output and industrial investment. During the decade 1968–78 there were five years when the annual growth of GDP exceeded 2 per cent. and five years when it did not. In the five growth years, manufacturing output rose by an annual average of 3 per cent. In the other years it fell by an annual average of 1 per cent. In the growth years manufacturing investment rose by an annual average of 7 per cent. In the other five years it fell by an annual average of 5 per cent. Increased demand is the key to increased investment, provided that it is not met by the excessive import of foreign goods.

    There has been a 2½ per cent. fall in output. What is that if not deflation?

    Faced with this, what are the Government's plans? They are slashing home demand. They plan to cut aids to industry by 50 per cent. between now and 1984. Their figures show a nil growth in the economy. What will that mean for industrial output, investment and jobs? The truth is much worse. The Government are deliberately masking the reality by including the effects of North Sea oil.

    In addition, regional aid to industry is, after all, dependent on provision by the industrialist of his own money. The amount he can afford is governed by the high rate of interest that he will have to pay.

    For all the Government's talk about helping small firms—and we heard it from the Secretary of State this afternoon—the reverse is true. First, there are record interest rates, which are the direct result of Government policies.

    Secondly, the Government have specifically aimed some public spending cuts at the small firm. The small firms employment subsidy has gone completely. It disappeared yesterday. The minimum size for projects eligible for regional development grants has been raised substantially. The reality of Tory plans for small firms is beginning to show through. In the final quarter of 1979, company liquidations rose by over two-thirds. How many more bankruptcies can we expect as the full impact of the Government's policies takes effect?

    We need new investment to modernise our industry, and we need that investment to be used effectively. The key lies in good industrial relations, which is the point that the hon. Member for Bridlington (Mr. Townend) asked me a moment ago, and it is that key that the Government are so wilfully throwing away.

    We all know that industrial relations need to be improved, yet the Government are going out of their way to alienate the unions instead of working with them. I fully accept, as, incidentally, would most trade union leaders, that there is a great deal of rigidity in our working practices and that productivity would benefit from a more flexible approach.

    However, instead of going all out to obtain the co-operation of workers, the Government are intent on destroying their power. How on earth can we expect union leaders to respond other than defensively when their hard-won rights are being deliberately jettisioned by the so-called Employment Bill? How can we expect workers on the shop floor to respond other than defensively when their families are deliberately penalised if they go on strike?

    The Government are always talking about reality, as did the Secretary of State this afternoon. Let them face reality. At a time of mass unemployment, with a savagely deflated economy, buttressed by anti-union legislation, it is the logic of bedlam to expect co-operation from the workers. What will inevitably happen is that every trade union leader will be forced to protect his own members at all costs. Each union will become a little fortress, since all will be aware of the penalties of letting down the drawbridge.

    The Government want a return to the hire-and-fire mentality of earlier days, when what is needed in the 1980s is the harnessing of the skill, expertise and ideas of the shop floor to the industrial decision-making process. Industrial democracy, not economic tryanny, is the only answer today.

    A real national strategy for industry is vital, but instead of such a strategy the Chancellor has come up with his idea. In the face of disaster he gives us one little joke—his so-called enterprise zones. Among his many qualities—and I have always been the first to pay tribute to them—the Secretary of State for Industry is not especially renowned for his sense of humour. He has taken the idea seriously. He was lamenting a moment ago the disappearance of the railway arches workshop, which is a perfect illustration of the Tory quality of life, as exemplified by the bucket shop and the bucket toilet.

    We can perhaps get some satisfaction from the fact that the Cabinet clearly did not wish to go all the way with the implications of the Chancellor's Isle of Dogs speech. I have never made much distinction between wet Tories and desiccated Tories, but I suppose that it was the "wets" who, at least for the moment, stopped the Chancellor from waiving the health and safety regulations and thus completing his Hong Kong analogy.

    However, it wills be bad enough. The jobs will be at the expense of surrounding areas. The profits will be at the expense of the country. For a few profits will grow like pirate gold, but in each zone the quality of life, so long protected by planning and by the zeal of the inhabitants, will be fatally eroded.

    In the last resort, what is so appalling about this Budget is the assumptions that it makes. It is the utter poverty of vision and vulgarity that is so depressing.

    As I am sure the right hon. Gentleman appreciates, any business values stability as much as anything. Perhaps he will give us some guidance on the Labour Party's intentions with regard to enterprise zones should he and his right hon. and hon. Friends ever get back into power.

    We had better see where enterprise zones go first. [HoN. MEMBERS: "Ah !"] The hon. Gentleman will be grateful for what I am about to say. When these enterprise zones come about, I hope that every hon. Member in whose constituency they are—and this will more than include my own—will show them to be what they are—a vulgar, tinsel method of taking shops and workshops—mainly service industries—out of the surrounding areas and creaming off the profit to the Tories' friends.

    It is the vulgarity and poverty of vision that is depressing. It is to be condemned mostly because it undermines the self-confidence of a great country.

    This Budget is dangerous and divisive. It is symbolic of the voyage charted for us under our Tory masters—a rudderless ship heading for the rocks and still defiantly flying the "Jolly Roger". The Budget merely reinforces our fears for our country, and accordingly we reject it.

    Mr. Deputy Speaker
    (Mr. Bernard Weatherill)