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Commons Chamber

Volume 12: debated on Wednesday 11 November 1981

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House Of Commons

Wednesday 11 November 1981

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Private Business

Midlothian District Council Order Confirmation

Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to the Midlothian District Council; and the same was read the First time; and ordered to be considered upon Tuesday 17 November and to be printed [Bill 9].

Oral Answers To Questions

Oral Answers To Questions

I remind the House that brief supplementary questions will enable me to call more questions on the Order Paper.

Scotland

Gourock-Dunoon (Ferry)

1.

asked the Secretary of State for Scotland if he will make a statement about his negotiations with Caledonian MacBrayne on the operation of a passenger-only ferry between Gourock and Dunoon; and if he will estimate the annual cost to the public purse of this scheme.

Discussions with the Scottish Transport Group are continuing. My right hon. Friend's object is to secure a substantial saving on the level of subsidy now being paid to Caledonian MacBrayne for its service on this route.

Does the Minister accept that this whole business is a disgraceful example of political prejudice? Is it not wrong to create a monopoly for one operator whose facilities are essentially unsuitable for non-vehicular traffic? Will not the sum total of the Minister's efforts be redundancies, a capital loss for Caledonian MacBrayne, and a second-class service heavily supported by the taxpayer? Is it not time to abandon the whole woeful exercise, which is merely an attempt to fix the market at the expense of the travelling public?

The hon. Gentleman has an extraordinary concept of a monopoly if he suggests that it is creating a monopoly to remove a subsidy from one of the competitors which, even with the subsidy, has been constantly losing traffic to the unsubsidised competitor. Seventy per cent. of the car traffic is voluntarily choosing to use the unsubsidised service, and no responsible Government could properly ignore that.

As the whole issue was thrashed out at a hearing before the Scottish Transport Users Consultative Committee, which found in favour of the existing arrangement, why does the Minister not accept its findings, each side having had plenty of opportunity to present its case?

Is the hon. Gentleman aware that there is no comparison between the service being offered by Caledonian MacBrayne and the inferior vessels being run by Western Ferries?

If the right hon. Gentleman believes that conclusion, it is of some interest to note that he voted for the undertaking when the matter was before the House. I remind him that the substance of the STUCC's inquiry and report was to point to the inadequacy of the "Highland Seabird" option which had been proposed at that time. In the light of that report, my right hon. Friend indicated that that option would not be pursued. He further indicated that there was no question but that a full and, if necessary, subsidised service to ensure a proper service for foot passengers would be provided for this route.

Did my hon. Friend discuss with Caledonian MacBrayne the option put to him by the members of the Cowal users committee when he met them last week in Dunoon—namely, that the subsidy should continue to be given to the passenger portion of the "Juno" run by Caledonian MacBrayne, and that it should then compete for the vehicle traffic on equal terms with Western Ferries after that?

When I met the local community in Dunoon and the local councillors, what was impressive and interesting, as my hon. Friend indicates, was that each group emphasised that it could see no justification for a subsidy for any car service provided by Caledonian MacBrayne given that Western Ferries, without a subsidy, was able to attract so much of the traffic. They put forward the proposals to which my hon. Friend referred. We are, of course, prepared to look at any proposals that are consistent with the objective of ensuring a proper service to the community and the removal of unfair competition.

The hon. Member for Argyll (Mr. MacKay) is yet another sinner who has come to repent at Question Time. Does the Minister still not grasp the fact that the damage that will be done to Dunoon, even by this half-cocked compromise that is now being put forward, will be such that local opinion will still be mobilised against everything that he says? Will he even now reconsider his decision, given the consequences that it will have for the people of Dunoon?

The outcome of my meeting with the local community was that they, unlike the hon. Gentleman and his hon. Friends, certainly did not argue that the status quo—involving a massive subsidy on the one route in Scotland that should never have had a subsidy—was acceptable. Labour Members should come to terms with the fact that it is a poor use of a large sum of money to provide a subsidy to a car service when, without any subsidy, the alternative company is meeting the needs of 70 per cent. of the car users on that particular route.

Order. I was intending to move on at this stage, but it has been indicated to me that this question relates to the constituency of the hon. Member for Renfrewshire, West (Mr. Buchan). To preserve the balance, I call the hon. Member for Bute and North Ayrshire (Mr. Corrie).

Can my hon. Friend assure me that any subsidies that are saved on this run will be used in the west of Scotland on expensive routes such as the Ardrossan-Brodick run in my constituency?

I can give that assurance. The whole objective that the Government are seeking is not simply a reduction in public expenditure in the area concerned. We are seeking to ensure that the subsidies, which have been doubled in real terms to the Scottish ferry services over the last few years, are provided where they are required. We are not prepared to give a subsidy where it is clearly unnecessary, and where, indeed, local users of the route have opted for the unsubsidised company.

Is the hon. Gentleman aware not only of the anger but of the total astonishment with which this ludicrous decision was received on the lower reaches of the Clyde? Is not the truth of the matter that he is replacing a semi-public monopoly with a private monopoly which has no social obligation whatsoever? Will he now tell us that, if he is going ahead with this ludicrous scheme, he will not be asking local authorities to fund the money for the two quite useless terminal points and claim that that is public saving?

Even if he wished to do so, my right hon. Friend has no power to create a monopoly either for that route or for any other. There is nothing to stop any provider of a ferry service from setting up and carrying it out on an unsubsidised basis. My right hon. Friend has indicated that he is not prepared to give a massive subsidy of £500,000 to a company which, even with that subsidy, has, over the last five years, lost more and more car traffic to the other, unsubsidised, operator. If a solution that recognises the absurdity of the present position can be found, we shall be prepared to consider it. What we are not prepared to do, and what the local community did not ask us to do, is to continue the status with a subsidy of that kind.

In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek an early opportunity to raise the matter on the Adjournment.

Lothian Regional Council (Expenditure)

2.

asked the Secretary of State for Scotland if he is satisfied that the expenditure of Lothian regional council is now not excessive and unreasonable.

No, Sir. The council is due to submit a report to me in January on progress towards planned reductions in its expenditure.

Does the Secretary of State accept that the logic of the penalty that he has imposed on the Lothian region is that if Lothian region succeeds in bringing its expenditure down to the base line that he has established during the course of negotiations it will be impossible for him to invoke the 1981 Act against that same base line in the forthcoming financial year? In view of the inability of the Lothian region to open an old folks' home in the constituency of his hon. Friend the Under-Secretary of State, the Member for Edinburgh, Pentlands (Mr. Rifkind) or to provide the transport for a club for the physically handicapped in my constituency, would he care to endorse his hon. Friend's statement that no vital services will be affected by the cut that he has imposed on the council?

On the first point, the penalty imposed on Lothian region referred to the year in question. It does not foreclose any options for other years.

Secondly, on the type of economies made, two points are worth making. First, if the council had even begun to make such economies at the beginning of the time for which I asked it to do so—about one and a half years ago—it would not have made any cuts of the sort that it has had to make at the end of the day.

Secondly, the precise choice of ways of making the economies is no business of mine, but the council's choice is rather strange.

Does my right hon. Friend agree that the people of Lothian region are now having to pay for the crass political obduracy of the Lothian Labour group?

I agree with my hon. Friend. I could hardly believe my eyes when I read that Lothian region had chosen to give £30 million back to the Treasury rather than to its ratepayers. But there it is. We have to live with people who have strange priorities.

Is the Secretary of State aware that all shades of political opinion in the Lothian region are united in thinking that the most excessive thing that has happened in Lothian this year has been the spiriting away of £30 million from the region to the Treasury by the Secretary of State for Scotland? What has happened to that money? Is it not sheer humbug for the Secretary of State, who has spent so much time saying that he is protecting the ratepayers' interests, to hand over their money to the Treasury?

I find myself in total agreement with the hon. Gentleman. All shades of political opinion in the Lothian region are quite mystified by the extraordinary decision of the Lothian regional council to give the money to the Treasury rather than to its ratepayers.

Will my right hon. Friend take our right hon. Friend the Secretary of State for the Environment to one side and explain to him that it is possible to control high spending local authorities without resort to referendums?

I have many responsibilities, but one of them is not to take my right hon. Friend to one side.

The right hon. Gentleman is, after all, a member of the Cabinet. Will he explain why a referendum is all right in England but not in Scotland?

It is not my responsibility to discuss local government affairs in England. All that I can say—I think that the right hon. Gentleman will agree with me—is that the methods of supporting local government in Scotland and in England and Wales are completely different in all sorts of ways.

Small Businesses (Assistance)

3.

asked the Secretary of State for Scotland if he is satisfied that the assistance provided by his Department to small businesses in Scotland has proved adequate.

Yes, Sir. Financial assistance is provided for viable investments in firms large and small. In addition, we have considerably extended the range of incentives available to small businesses and we have launched the business opportunities programme specifically to draw attention to these measures.

Will the Under-Secretary of State look at the uptake of the loan guarantee scheme in Scotland? Will he confess that the 3 per cent. premium charged on this scheme is in no way justified by any consideration of default in terms of the warrant? Additionally, will he note that the best bank to approach for a loan is the Co-operative Bank? Will he welcome the expansion of these activities in Edinburgh?

On the last point, I agree. The Co-operative Bank is included in the scheme for small businesses. I am pleased with the progress so far of the loan guarantee scheme. In the past few months 104 guarantees, to the value of £3 million, were issued in Scotland. That is very satisfactory beginning.

In view of the great importance of stimulating small businesses to reduce unemployment, does my hon. Friend think that the incentives are sufficient? What has been the general take-up since my right hon. and learned Friend the Chancellor of the Exchequer announced new incentives in the summer?

My hon. Friend will know that, since the Government took office, 72 specific measures have been introduced to help small businesses throughout the country. The take-up is encouraging. The response to the business opportunities seminars that my right hon. Friend and I are holding throughout the country is most encouraging.

If the Government are to hive off certain bits and pieces of the nationalised industries, will they bear in mind that Scotland has an interest in this matter—for instance, in the oil of the BNOC? Will he ensure that workers and managers in Scotland are given an opportunity, where suitable, to set up their own small businesses in the pieces of the nationalised industries that are to be hived off?

I agree with the right hon. Gentleman. He will know that British Aerospace workers in Scotland have recently had an opportunity to take a share in that company's future.

Will my hon. Friend ensure that all the assistance that is being offered to businesses is made simple and effective? One of the problems related to this matter is the difficulty that is sometimes encountered in obtaining assistance. Will he link that to the fact that United Biscuits, BAT and other large companies are offering assistance to small businesses setting up by providing accommodation, premises and advice? Will he ensure that that aspect is fully exploited?

Yes, Sir. I agree that the assistance available should be expressed as simply as possible. I also agree that the assistance and encouragement provided by large companies and by some of the nationalised industries, such as the BSC, is extremely helpful to the small business sector.

Cowal Ferry

4.

asked the Secretary of State for Scotland if he has received representations from the Cowal Ferry Services Retention Committee; what reply he has made; and if he will make a statement.

I met representatives of the Cowal Ferry Services Retention Committee and other local interests in Dunoon on 5 November. They appeared to accept the need to reduce subsidy on this service. They represented against the provision of a passenger-only service between Gourock and Dunoon piers, and they asked that Caledonian MacBrayne be allowed to continue on the present basis, but with subsidy restricted to the losses incurred in carrying foot passengers.

I notice that the Minister said that they "appeared" to agree with him. I use this service regularly. Will the Minister take it from me that I have still to find any sizeable number of people who are in agreement with the total programme, not merely the pure ferry service, but the effect that the removal of the vehicle ferry will have on the town of Dunoon? Will the hon. Gentleman reconsider the whole matter, in terms not just of the subsidy, but of the total effect on the Cowal peninsula?

I accept that there is considerable concern in Dunoon and the Cowal peninsula about the overall proposals. I was emphasising, as it was emphasised to me, that local opinion had accepted, or appeared to accept—I do not want to put words into people's mouths—in an unqualified way that any eventual solution to the problem should not involve the continuation of a subsidy for the car service provided by Caledonian MacBrayne and that there was no basis for Caledonian MacBrayne having such a subsidy when Western Ferries, without a subsidy, was able to attract the overwhelming proportion of the car traffic.

One of the points of concern is that the tourist traffic tends to use the existing Caledonian MacBrayne service, while many of the local community. according to what they told me, prefer to use the Western Ferries service. It is significant that local users tend to prefer Western Ferries, but clearly we have to take into account the overall tourist implications.

If Caledonian MacBrayne withdraws its car ferry service from the route, what guarantee can the Minister give that the roll-on/roll-off service at Gourock will be maintained as a storm weather port for boats from other parts of the Clyde Estuary, in particular Arran and Rothesay?

We are having discussions with Caledonian MacBrayne and also, for its own interests, with Strathclyde regional council. All the relevant implications of any decision by Caledonian MacBrayne will be taken into account.

What will be the cost of a standby vessel, such as that described by my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton)——

He is still my friend. I shall even embrace the hon. Member for West Stirlingshire (Mr. Canavan) if I am obliged to do so, but not with that beard. What will be the on-cost of a standby vessel, such as one of the two at present on the Gourock-Dunoon run? Further, what will be the cost of purchasing this passenger-only vessel for Cal-Mac to replace the other vessel?

Caledonian MacBrayne and the Scottish Transport Group are looking into both matters. They will be bringing to us their conclusions when final details have been worked out. One of the objectives of this exercise—I stress only one—is to reduce an unnecessary subsidy. Any final decision will depend on the financial implications of the proposals put forward.

Talbot Uk Ltd (Linwood Factory Sale)

5.

asked the Secretary of State if he will take steps to ensure that any moneys gained by the proposed sale of plant and machinery by Talbot in its factory at Linwood will be returned to the Exchequer.

The assets involved are in the ownership of Talbot UK Ltd. and their disposal is primarily a matter for the company. Regional development grants made to Talbot UK Ltd, formerly Chrysler, are the subject of a set of conditions that are binding on a company for a period of four years from the relevant date of provision of the asset in question. Matters in connection with the recovery of grants made in respect of any asset still the subject of conditions are for my right hon. Friend the Secretary of State for Industry.

Despite his smooth technical answer, the hon. Gentleman will be aware of the outrage with which it will be received in the west of Scotland. Is he aware that this is a factory to which the whole community has contributed vast sums—certainly over £100 million of public money has gone into the factory and infrastructure—and that none, according to the Minister, is to come back? Will he therefore take the obvious course and stop the sale and use the plant and machinery to get the 1,000 men in the village of Linwood who are unemployed back to work in the factory?

It is not correct to say that none of the money will come back. If any of the assets involved are within the four-year period, repayment will have to be made to the Department of Industry. In regard to the hon. Gentleman's protestations about the factory and his request to stop the sale, I understand his depth of feeling, which is shared by every hon. Member. He must, however, realise that the Linwood car factory is dead. There is no prospect of another car factory at Linwood. My right hon. Friend and I are doing everything possible to bring new industries and jobs to the area. That is what the hon. Gentleman's constituents must demand above all else.

Does the Minister realise that the outrage in the area is compounded by the advertisement that appeared in many Scottish newspapers in September headed by Peugeot "Not every car firm can bring you good news" with, at the bottom, the words "Scotland on the move"? Does the Minister also realise that it is time that this kind of asset stripping was stopped because, together with the BNOC removal planned by the Government, there will soon be nothing left for Scotland?

There is no BNOC removal. The advertisement is not a matter for me or for my right hon. Friend.

Does my hon. Friend agree that Talbot's experience shows that customers create jobs? Where products cannot be sold, there is no future. Will he assure the House that the Government will not make public funds available where commercial prospects are dim, bleak, or even worse, as they were with Talbot?

To put matters positively, the Scottish Office and the Department of Industry are ready to give financial assistance to any viable investment that will provide new jobs in any part of Scotland.

Does the Minister realise that it is extremely offensive to the people of the area that, following the devastation caused by the company and by the Government to Linwood, the factory and its equipment are being sold off as the industrial sale of the century? In view of the special effort that the Government were making to bring alternative jobs to Linwood, will the Minister tell us how many jobs have actually been brought there and how many are in prospect?

The right hon. Member for Glasgow, Craigton (Mr. Millan) knows better than most Opposition Members that the first thing that must be done to bring more jobs to Linwood is to dismantle the relic that is the Linwood car plant and provide modern facilities for modern jobs.

The hon. Gentleman has dodged the question. Not a single new job has been brought to Linwood or is in prospect, despite all the grand talk about special efforts.

At a recent meeting my right hon. Friend listed many items and outlined the steps that the Government and the Scottish Development Agency are taking to provide the facilities for new jobs to come to Linwood.

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

Clydebank Enterprise Zone

6.

asked the Secretary of State for Scotland if he will make a statement about progress in the Clydebank enterprise zone, including the number of firms that have established or announced a decision to establish in the zone and the jobs created and in prospect.

Already, over 70 companies with a potential for 860 new jobs have either moved into the zone or have expanded their operations there. This is a most encouraging start, and I am confident that the Government's enterprise zone policy will make a substantial contribution to the regeneration of the area's economy.

I thank my right hon. Friend for that encouraging answer. Can he give any further information about the number of inquiries by companies that may come to the enterprise zone?

The zone has created considerable interest. In August, when the announcement of the zone was put into operation, we had no fewer than 200 inquiries. More than 1,000 companies have now made inquiries about establishment in the zone.

Will any of these new companies or new jobs have transferred from other areas in Scotland? If so, from which areas will they have transferred? Will the Secretary of State tell us whether we shall see enterprising new policies to get back to work the 350,000 Scots whom he has deliberately made redundant?

I recognise that there are fears that some of the firms may come into the zone from other parts of Scotland. A significant number of the firms that have set up at Clydebank are new companies. Firms have relocated from other parts of Strathclyde because their existing premises were no longer suitable. I had hoped that the hon. Gentleman would say that the Government had produced a very good idea and that he wished it success.

Local Authority Housing (Dampness)

7.

asked the Secretary of State for Scotland whether he has any plans to allocate additional resources to district authorities in Scotland to alleviate the problem of dampness in local authority housing.

I am glad to say that the success of the Government's policy on the sale of council houses has enabled us to allocate a further £22 million to district and islands councils for capital expenditure on housing in the current year. The Government indicated that they would be willing to consider proposals for alleviating dampness, and 14 councils have said that this is how they plan to use some of the additional resources allocated to them.

Does the Minister accept that Glasgow is unlikely to receive any of this money, although it is in Glasgow where the major dampness problem exists? Dampness causes immense human suffering and the local authority has to divert expenditure from other areas to cope with it. Does the Minister agree that it is time that he gave extra money for this specific purpose?

That is what we are doing. Glasgow could have allocated to it a further £4 million. I understand that a considerable part is intended for use on dampness eradication schemes. All that we need to receive from Glasgow is an assurance that the revenue to pay for the schemes, from the sale of council houses, will be that previously estimated. I am confident that Glasgow will be able to give such an assurance.

Have any authorities earmarked some of this capital for expenditure on dampness eradication schemes? Has my hon. Friend's Department carried out an evaluation of dehumidifiers, which may be one solution to the problem? Those devices could be bought by local authorities if they sold their council houses, as is demanded by their tenants.

We are prepared to look at all proposals for dealing with excessive wetness, some of which are likely to be more successful than others. I am happy to tell my hon. Friend that Argyll and Bute intends to use part of its resources to solve the problems of dampness and condensation.

What criteria does the Minister apply in spending the extra £22 million which he says is available? Is one of those criteria the climatic conditions in certain parts of the north of Scotland where there is a greater need than in other areas to tackle the problem of dampness?

We told local authorities that we were prepared to consider any projects that they wished to carry out during this financial year. If the number of projects submitted were to exceed the resources that are available, we should give priority to those concerned with dampness and condensation.

Leaving aside the touching appeal of the hon. Member for Argyll (Mr. MacKay) for special equipment for Conservative Members' desk rooms, I suggest that it is confounded cheek to say that money is being given to local authorities to deal with this problem, when they are receiving only a small percentage of the money that was deducted from capital allowances because, in the opinion of the Minister, rents had not been raised to a high enough level. Does the Minister accept that dampness makes life intolerable for many tenants, that the present capital allocations are not enough and that the Government must make a special effort to help heavy urban areas where the problem is pressing?

If local authorities prefer a low rent policy, when a reasonable rent policy could lead to greater allocations for them to deal with their housing problems, they must accept at least part of the responsibility for what flows from such a policy. We have told local authorities that, in assessing their housing plans and needs, we shall give considerably greater attention than did the Labour Government to the problems of condensation and dampness.

National Mobility Scheme

8.

asked the Secretary of State for Scotland if he will take steps to make the national mobility scheme applicable in Scotland, as in England.

This scheme, which is meant to assist incomers applying for council houses, is a voluntary arrangement, and it is for Scottish local authorities to decide for themselves whether they wish to participate in it. The Convention of Scottish Local Authorities has so far declined to do so because Scottish authorities are already subject to statutory obligations in respect of residential qualifications, which do not bind local authorities in England and Wales.

I have in my constituency, as my hon. Friend knows, an excellent and expanding high technology firm which is in a position to recruit the skilled workers—in this case, skilled turners—for whom, unfortunately, work is not available in Scotland. The problem is the transfer of those good people, who have found work but not houses. Will the Minister ask Scottish local authorities to get together with English local authorities to organise this transfer?

I agree with my hon. Friend. Under the Tenants' Rights, Etc. (Scotland) Act 1980 Scottish local authorities afford to people coming for work from other parts of the United Kingdom the same advantages as my hon. Friend seeks for those going to his constituency. I understand that the Association of Metropolitan Authorities is likely to seek to persuade the convention to change its attitude. In my view it would be in the interests of all concerned if that were to happen, but I emphasise that it is for the convention to decide whether to make such a change.

Will the Minister give serious consideration to another aspect of the problem—not the question of the unemployed cycling from Glasgow to North Devon, but the distress and difficulties caused when families who live in council houses cannot move near to an elderly relative, or vice versa? Will he consider taking action through either legislation or discussions with the Convention of Scottish Local Authorities?

If the hon. Gentleman had read the Tenants' Rights Etc. (Scotland) Act before he voted against it, he would have seen that one of its provisions was to require local authorities to pay attention to just those considerations.

Farming (Profitability)

10.

asked the Secretary of State for Scotland what is his current assessment of the profitability of Scottish farming.

The annual review is just beginning, so it is too early to give a firm assessment of the situation in the light of this year's results. There are, however, encouraging signs. Returns, particularly in the livestock sector, have improved and the rate of increase in input costs has declined. Taken together with the increased support that we have provided, these should bring about a reversal of the downward trend in farming net income which we inherited.

Will my right hon. Friend ensure that nothing is done to destroy, by any erosion in the hill livestock compensatory allowances for the coming year, the small degree of confidence that has begun to reappear in the Scottish hill livestock sector?

I am grateful to my hon. Friend, but I am sure that he will not expect me to anticipate our autumn review of the hill livestock compensatory amounts. I agree that some return in confidence is much to be welcomed and that we do not wish to do anything to discourage it.

Will the Secretary of State take into account the heavy liabilities of Scottish farmers to banks and the heavy interest charges from which the farmers suffer, those charges being the most serious handicaps facing them at present?

I entirely agree with the right hon. Gentleman. It is one of the most worrying features of agriculture at the moment. That is another reason why it is important to seek to lower interest rates. During the past year the overall interest rate burden for the year will probably have been less than it was for the previous year. That may be a small help, but I should like to see more help than that.

I accept that my right hon. Friend cannot anticipate the outcome of the review, but will he accept that many of his hon. Friends will be drawing to his attention the serious debts of many farming enterprises? Will he bear in mind that, although this year has been better than last year, last year was positively disastrous for many farmers and that some time will be needed for them to recover from it?

I agree that farmers' incomes have seriously deteriorated over recent years, and we shall recognise that fact in our review.

Will the Secretary of State say what steps he intends to take, in the light of the report last week, which showed that one-third of Scottish dairy farmers are now operating at a loss, to encourage local authorities to increase the take-up of EEC milk subsidies?

I, too, am concerned about the returns to dairy farmers. I hope that the new arrangements that are being made for milk prices and so on will be of some help to them eventually. We shall look into the question of encouraging the consumption of milk and do what we can to help.

Youth Opportunities Scheme

11.

asked the Secretary of State for Scotland what percentage of young people in Scotland found employment after participating in a youth opportunities programme scheme at the most recent available date.

The most recent survey of young people who had taken part in the youth opportunities programme, carried out by the Manpower Services Commission, indicated that 42 per cent. of respondents in Scotland were in employment or further education or on another scheme 23 weeks after leaving the programme.

Is the Minister aware that the youth opportunities programme cannot cope with the disastrous fact that over half of Scotland's young people now cannot find real jobs? Will he accept that very real concern exists about the operation of the YOP work experience programme on private employers' premises, because some companies are using the work experience participants as free labour while paying off full-time workers, and that now fewer than one-third of these young people are being offered jobs at the end of the scheme?

The hon. Gentleman will be aware that the Government have introduced new plans and new programmes to improve the youth opportunities programme and to introduce a new training initiative, which is badly needed, apart from the fact that unemployment among young people is now extremely high.

I know that there are criticisms of employers under the scheme, but those criticisms are greatly exaggerated where they relate to substitution. The hon. Gentleman will be aware that the schemes have been approved by the relevant trade unions, and that in itself is a safeguard against abuse.

Will my hon. Friend confirm that, unlike a few years ago, the percentage of youth employment in Scotland, particularly in my area of Grampian, is better than in the North-West and North-East of England, the English Midlands and Wales?

My hon. Friend is correct. In the midst of the worst world recession for 50 years, there is no doubt that the situation in Scotland, serious though it is, is very much better than that in most parts of the United Kingdom, including those parts which previously had an economic advantage over Scotland.

Does the Minister appreciate that, whereas until recently about 50 per cent. of young people leaving the YOP schemes were able to obtain employment, as a result of the mess that he and his right hon. Friend have made of the Scottish economy that proportion is now 29 per cent.? Does he further accept that children who are now leaving school in Scotland face the bleak prospect of possibly never being able to obtain a full-time job throughout their working lives?

I do not accept the hon. Gentleman's last, gloomy prediction. I can only say that it is a great pity that when he and his friends were in Government they did nothing to improve the Scottish economy.

Robb Caledon Shipyard, Dundee

12.

asked the Secretary of State for Scotland if he will make a statement on the outcome of the discussions in which his Department has been involved as to the future development of the site of the Robb Caledon shipyard, Dundee.

My Department is not a party to the negotiations about the future of the Robb Caledon site. But I understand that the Dundee port authority has responded to Kestrel Marine's bid to take over the yard with proposals designed to meet Kestrel's demand for additional space while preserving the potential for future ports development and that negotiations are continuing.

I have made it clear that my Department will be prepared to consider the provision of financial support for any viable proposition that might emerge involving investment by Kestrel Marine. The Scottish Development Agency stands ready to assist also.

I appreciate that the negotiations between Kestrel and the Dundee port authority are in progress today. I hope that a reasonable solution will be reached. Is the Minister prepared to advise his nominees on the Dundee port authority that if the negotiations fail the authority should give suitable recognition to the industrial needs of the city of Dundee in its aim of enhancing the port and the shipping industry?

I have no reason to suspect that the authority is not giving suitable priority to the industrial problems of Dundee. It is doing everything in its power to reach with Kestrel an agreement that will benefit the city generally and provide a solution to the present questions and negotiations.

Does the Minister accept that if the responsible attitude initially adopted by the port authority becomes irresponsible—as it is daily becoming—in terms of an argument over a piece of land, when 140 jobs at Robb Caledon are threatened, he has power to instruct his nominees on the authority to advise it to make the land available?

As the hon. Member for Dundee, East (Mr. Wilson) said, negotiations are taking place today. I understand that fresh proposals have been made and are being considered by the parties responsible. I do not believe that any statement in the House would be helpful at this stage.

I do not wish in any way to make the current negotiations difficult——

Does my hon. Friend agree that the Dundee port authority has a wider responsibility than just the Robb Caledon project, and that, while supporting the efforts of Robb Caledon to find new job opportunities for its employees, it is important for it constantly to bear in mind its wider responsibilities?

Cardiosurgical Facilities, Edinburgh

13.

asked the Secretary of State for Scotland what progress has been made by his Department on the provision of adequate cardiosurgical facilities in Edinburgh; and if he will make a statement.

My Department has recently approved a proposal by Lothian health board, which is in accord with the recommendations of the Kay report on cardiac surgery, to build a second cardiac surgery theatre at Edinburgh Royal infirmary. Consultations are well advanced regarding the temporary transfer, for the interim period, of part of the cardiac surgery work load from Edinburgh to Glasgow.

I congratulate my hon. Friend on his first appearance at the Dispatch Box. Is he aware that there is concern in the Lothian region that the health board's proposals will not be adequate to provide for the 800 operations per year that it believes will be necessary? Is he aware that, on the Kay criteria, the number of operations likely to be performed is nearer 600? What does he intend to do about the shortfall?

I am grateful to my hon. Friend for his kind remarks.

The figure of 800 does not appear in the Kay report. We must therefore consider the national picture. The report recommended, and the Government are implementing, a system of three centralised cardiac surgery units in Scotland, each able to carry out at least 600 major heart operations. That meets the estimated needs of the Scottish adult population within the range of 1,600 to 2,000 operations per annum.

I entirely accept my hon. Friend's concern about the difficulties in obtaining information about waiting lists in this respect, a matter on which he has been in correspondence with me. I therefore propose to establish a national cardiac surgery register in consultation with the health board and the clinicians concerned.

Is the Minister aware of the great controversy before he took office about continued centralisation in Glasgow and Edinburgh? If the facilities in Edinburgh have now been outstripped, rather than expanding the facilities there, would it not make more sense to use at least some of the money to expand the services already available in Aberdeen, which everyone believes could be acceptable and would be of great benefit to the population not only of Aberdeen but of the whole of the North and North-East of Scotland?

I am aware of the hon. Gentleman's concern in this matter and have read the Adjournment debate that he initiated in February 1980. The facilities in Edinburgh have not been outstripped. The number of patients in the Grampian area would not justify a unit with a capacity of 600 operations per annum. The Grampian health board acknowledges that it receives a satisfactory service under the present arrangements, but intends to review the matter next spring.

Is the Minister aware that Dundee falls within the Edinburgh area for heart operations, and that, because of the difficulties experienced by the Lothian health board, there is a knock-on problem for Dundee and for Tayside as a whole? Will he consider using the accommodation currently available in the modern hospital at Ninewells in Dundee for cardiac operations to deal with the backlog and to ensure that a decent service is available to seriously sick people in that area?

I entirely accept the hon. Gentleman's point that there is concern about the current delays in the Tayside area because the Edinburgh programme has not yet gone ahead. I must stress, however, that patients who require to be treated urgently are operated on at once. The temporary transfer of some of the work load from Edinburgh to Glasgow, to which I have referred, should help to reduce the waiting times for patients in Tayside.

I welcome my hon. Friend's introduction of a national register for these operations. Will he consider the possibility of establishing a similar register for a small number of other very expensive, high-technology operations, such as hip joint surgery?

I am grateful to my hon. Friend for making that suggestion. I shall certainly look into it.

Considering the choice that might have been made, may I also congratulate the hon. Gentleman on his appointment?

Oil-Related Jobs

14.

asked the Secretary of State for Scotland what is his estimate of the total number of oil-related jobs in Scotland.

It is estimated that in June 1981 total oil-related employment in Scotland was in the range 80,000 to 95,000. Of this, the Manpower Services Commission's six-monthly survey of oil-related companies has found that 50,000 jobs were in firms which are wholly oil-related. The remainder are to by found in firms which are partly oil-related, either as direct or as indirect suppliers to the industry.

Will the Minister give an assurance that when the Government force through their plans to privatise the BNOC no individual or company will acquire a majority of the shares, thus endangering the planned office block in the centre of Glasgow, for which 2,500 jobs are zoned, and which has already been considered by Glasgow district council's planning committee?

There is no reason for the hon. Gentleman to be concerned about job losses in Glasgow as a result of the Government's privatisation plans. Indeed, all the signs are that the number of oil-related jobs in Scotland will continue to expand. Conservative Members believe in public ownership in the full sense of the term, but the difficulty with the Labour Party is that it believes in State control. That does nothing for the quality of service to customers or for the country's prosperity.

What estimate has the Under-Secretary of State made of the number of jobs lost to Scotland through the failure to go ahead with the gas-gathering pipeline and the failure to connect our pipelines to those on the Continent, thus deriving revenue through the passage of Norwegian oil and gas to the Continent? How many jobs have been lost directly through the Government's policies?

The right hon. Gentleman will be pleased to hear that the oil companies are currently considering how they can take up proposals to bring the gas ashore. It is not expected that any jobs will be lost as a result. There are companies which, in the near future, will have an improved incentive to bring the gas ashore.

Solicitor-General For Scotland

Warrant Sales

39.

asked the Solicitor-General for Scotland whether he will arrange to meet the Scottish Law Commission to discuss the abolition of warrant sales.

Bearing in mind that it is about 10 years since the Law Commission started looking into that matter and over a year since it published its findings, will the Government consider introducing a Bill this Session to abolish warrant sales or, failing that, give support to a Private Member's Bill similar to the one that I tried to introduce last Session? That Bill was supported not only by Labour Members but by Conservatives who want an end to that inhuman practice which causes untold misery to many low income people and their families.

It would be difficult for the Government to support the hon. Gentleman's Private Member's Bill that he introduced in June, because he never published it, so we do not know what it contained.

Order. Out of the kindness of my heart, I shall call the hon. Gentleman for a second supplementary question, so I hope that the House will now subside.

Published or not, it would not be possible to give support to such a Bill. As the hon. Gentleman knows, the Law Commission published proposals that are the subject of comments and criticisms that are still coming in. Warrant sales are part of the law of diligence and cannot be separated from it. Whatever reforms are made, warrant sales will continue to be part of the characteristics of Scots laws as of all other laws.

Will the Solicitor-General for Scotland now consider withdrawing his untruthful reply to me earlier? The Bill was published and the names of some of his hon. Friends appeared in support of it. In view of the support not just from Labour Party Members but from even the Scottish Tory Reform Group, will the Solicitor-General consider introducing legislation to ban that practice? Otherwise, he and he alone will be out of step even with members of his party in Scotland.

On Armistice Day I would want to apologise to the hon. Gentleman if I said anything inaccurate. If he published his Bill. I am sure that it has been extremely useful to all hon. Members. My information is that he did not publish it, but it will never see the light of day in any event.

Will my hon. and learned Friend accept that I was not a signatory to that Bill? Will he further accept that, none the less, a great number of my hon. Friends are concerned about the law of diligence and warrant sales and are looking for reforms in that direction?

Yes, Sir. I know that people are concerned about that law. I also hope that they are informed about it. The recent survey of Defenders in Debt Actions in Scotland is one that I hope that those who propose changes in the law will have read before they do so.

Some of us are informed about this matter and are fed up with the continued delay. It has gone on for years. There is no reason why there should not be an immediate and radical reform of the whole business.

I take it that the right hon. Gentleman is talking about that enormously long period when he was Secretary of State for Scotland and did nothing about it himself.

On a point of order, Mr. Speaker. In view of the unsatisfactory reply given by the Solicitor-General for Scotland, I give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

Firearms Offences

40.

asked the Solicitor General for Scotland how many prosecutions for offences involving firearms have been initiated since January 1981.

As many of the offences in which firearms are used are charged under the common law headings of assault and robbery, murder, attempted murder and so on, it would not be possible to obtain the information requested except at disproportionate cost. What can be said, however, is that in relation to serious offences involving the use of firearms, 29 cases which involved their use have been dealt with in the High Court so far this year.

Will my hon. and learned Friend accept that, for the High Court, those are disturbingly high figures? Will he take this opportunity to confirm that the Government will do all in their power to assist the police and the courts in bringing such offenders to justice?

Yes, Sir. Both sides of the House and many people outside regard the use of firearms in the pursuit of crime as particularly obnoxious. We should be thankful that our legislation has controlled it so far as it has. It is disturbing that a number of organisations claiming to have political or terrorist interests have resorted to the use of firearms in the pursuit of their abominable aims.

Does the Solicitor-General accept that the figures that he has given would be worse if they included offences involving air weapons? Will he take steps to include those weapons in the firearms laws, particularly with regard to licensing?

That is an important matter. However, the figures include air weapons. The total figures include the theft of air weapons, their use and so on. If a person is a victim—a bank employee or whatever—he does not decide whether an air weapon, a rifle or a revolver is being used. It is the use of weapons that is particularly obnoxious, and we want to do everything to control it.

Vandalism

41.

asked the Solicitor-General for Scotland how many prosecutions the Crown Office has initiated on charges of vandalism.

The precise number of cases where proceedings have been instituted by procurators fiscal under section 78 of the Criminal Justice (Scotland) Act 1980 are not recorded separately and could be obtained only at disproportionate cost. But I am able to say that during the period from the beginning of April to the end of September this year over 400 cases of vandalism were subject to compensation orders in which the compensation ranged from £5 to £400, and that the total amount of those orders exceeded £25,000.

I thank my hon. and learned Friend for that full answer, but will he examine the present campaign of civil disobedience being conducted by the Scottish National Party? Does he agree that it resembles less the conduct of Mahatma Gandhi than the behaviour of teenage hooligans chucking bricks at greenhouses only to defy authority?

I deplore the concept of civil disobedience, whoever uses it. I am glad to say that those who attempted to get into what is about to be my office were arrested.

Does the Solicitor-General for Scotland recall that an undertaking was given in Committee on the Criminal Justice (Scotland) Act that the statistics for those new offences would be monitored? Therefore, is it not shameful that he now says that no statistics are being kept? Does he know of any offence prosecuted under vandalism that would not have been prosecuted under the old categories of breach of the peace or malicious mischief? Does he agree that this is all cosmetic window dressing with no real meaning?

I am confused by the references to window dressing, window breaking, and cosmetics. However, it has concentrated the minds of the public and the judiciary and has been a useful reform. The naming of crimes is important. I assure the hon. Gentleman that I shall take steps to see that during the monitoring process we collect figures that will be helpful to him.

In view of the widespread concern about the extent of vandalism in Scotland, it is surprising that the hon. and learned Gentleman has not adhered to his promise about statistics. Is he aware that he will have the support of the whole House in ensuring that from now on such statistics are kept and made available?

The Act has been in force for only a short time. The annual statistics that are collected and published are not yet available, but I will ensure that these trends are contained in the figures and that the House has full information about the great benefit of the introduction of this offence.

Liverpool-Belfast Ferry Service

(by private notice) asked the Secretary of State for Northern Ireland what is Government policy with regard to a ferry service between Liverpool and Belfast after the withdrawal today of the P & O ferry service, and if he will make a statement.

I regard a ferry service between Liverpool and Belfast as a highly desirable link between the two cities and between England and Northern Ireland. This link, which has been in existence for more than 160 years, is of importance for the convenience of the travelling public, the development of tourism and, to a lesser extent, the movement of freight.

The decision to close the service as from today has been taken by P & O for its own commercial reasons. I regret the loss of jobs and the inconvenience that this will cause to the public, but I hope that the closure will be only temporary.

It seems clear that the major reasons for the loss incurred on the service in recent years have been the unsuitability of the vessels and unrealistic manning levels. P & O could not see its way to reinvesting in suitable ships, but I believe that other operators may well be prepared, in the light of the demand for this service and its potential development, to make that investment.

Since the threat to the P & O service some months ago, my officials have been in touch with a wide range of alternative potential operators. A number of these have expressed a serious interest in reopening the service. I stress that, while the Government have been doing everything possible to interest the companies in operating on the route, final decisions will be taken on purely commercial grounds. It has been suggested by various groups, including among others the right hon. Gentleman and his colleagues, that subsidies should be provided. I have made it clear that, in my view, it would not be right to spend taxpayers' money on subsidising a service that has prospects of viability and which other operators are willing to test commercially. I very much hope that a Belfast to Liverpool ferry service will soon be restored.

I thank you, Mr. Speaker, for allowing this private notice question to be asked on a subject that is important not only to Northern Ireland but to a vast number of people in the rest of the United Kingdom.

It is inconceivable to Labour Members, and I suspect to many Conservative Members, that as from today, after well over 100 years, there is no ferry link between Belfast and Liverpool. We view the situation with alarm and despondency. We are amazed at the Government's inflexibility and dogmatic adherence to the doctrine of privatisation. It allows them no room for manoeuvre to carry out common-sense and proper policies. Frankly, I expected better things from the Secretary of State.

We asked the right hon. Gentleman to step in now that P & O is out of the way. Will the Government take over the operation of the ferry link, even on an agency basis, for a short interim period until new operators can be found to run the service? The amount of money involved will be absolute peanuts compared with the benefits that will inevitably flow. I am sorry that the "Minister for Liverpool", the Secretary of State for the Environment, is not present. Perhaps both right hon. Gentlemen should take advice from one of their colleagues, get on their bikes and start talking to the people of Belfast and Liverpool who are losing their jobs and bearing the brunt of Government inflexibility.

This is a commercial service which could be run at a profit. While that opportunity exists, it would be utterly wrong for the Government to intervene to subsidise with taxpayers' money a service that can be run at a profit on a commercial basis. Until the P & O service is out of the way, no one else will be prepared to come forward. It would be absolutely fatal to other people coming forward if I were now to step in and run the service temporarily with a subsidy.

I want to keep the service going. I do not want any more unemployment than is absolutely necessary by a demanning exercise. However, to continue with the present service would not save employment in the long run. It would certainly prevent more jobs from coming from a new service as soon as it can be set up.

As we have said before, if the service is closed more Government money will be spent on redundancy pay and benefits for those who lose their jobs than it would cost to keep the service open on an interim, basis until new operators came along. That could take a short time or a long time.

We are now getting involved in an economic argument about whether all jobs should be retained and no unemployment permitted. That has not been the policy of either Government. The fact is that no one else will come forward while this operation continues, be it by P & O or on an agency basis by the Government. It must finish before other people will be prepared to come forward. That is what I must consider, because we all wish to see some service maintained over a long period.

I propose to call all those hon. Members who have been rising, to speak. However, this may be an opportune moment for me to say that, on reflection, I should have called another Labour Member yesterday. But I must act under the pressure of events in the Chamber.

Do not these events emphasise the wisdom of a recommedation of the Economic Council for Northern Ireland that Ulster requires three sea links—north, centre and south—with the mainland and, therefore, the urgency of exploring the means of bringing into use the roll-on/roll-off services that are already available at the port of Warrenpoint?

These are commercial matters. From all that I have seen in a short time, the roll-on/roll-off operation from Warrenpoint would be very important.

Is my right hon. Friend aware that, while the P & O men are understandably fighting for their jobs, the typists employed by Liverpool city council have been on strike since May and the Liberal alliance refuses to fill their places with some of the city's unemployed? Why must the private sector, in this case P & O, lay off men because it cannot afford to pay them while the public sector can afford to hold on to staff who refuse to work?

These matters do not fall within my jurisdiction. The sooner it is recognised that the P & O service has come to an end and the men cease their sit-in on the ships, the sooner there will be a chance for others to come forward.

Which firms are interested in taking over this service? Does the right hon. Gentleman believe that realistically they will take the place of P & O? He said that they will be able to demonstrate whether this service is viable. If they do not come forward, will the Government then intervene? How many jobs are ultimately likely to be lost even if new operators get involved.

A number of ferry operators have shown an interest. Two in particular have carried out detailed surveys. I am not prepared to state who they are, because if I did so there is a good chance that they might not come forward. I assure the hon. Gentleman and the House that at least two are potential operators. As soon as the present ferry service is out of the way, they will be free in their minds to begin negotiations with the trade unions and, with the two port operators concerned.

I recognise that the question of employment is important. Undoubtedly the new operators would operate with considerably fewer seamen than are at present used on the two P & O ferries. But even if the two P & O ferries had been kept in existence, as was desired early last summer, there would have been considerable redundancies.

Is my right hon. Friend aware that many hon. Members consider it vital to maintain efficient communications between Great Britain and Northern Ireland, particularly at a time of suspicion of economic and political disengagement? Is he further aware that many hon. Members think that he is right to give private enterprise the chance to come forward and fill this gap?

I am grateful to my hon. Friend for his comments. I make it plain that I regard the maintenance of a ferry between Liverpool and Belfast as important not only from the commercial point of view but from a symbolic point of view, which we must understand.

If I have to subsidise a service that I believe can be profitable and commercial in its own right, even on a temporary basis, that denies me the money to spend on many other projects in Northern Ireland that are of great value to the community.

If the Secretary of State is so certain that the service can be run as a commercially profitable enterprise, can he tell us, in the light of discussions that he has held with various deputations, particularly those led by trade unions, which group is overmanned and losing money? Is it the National Union of Seamen or the shore-based union? Is it not a fact that the Government are not encouraging another company to start up the service immediately and that they want a gap of at least six months so that a new company can run an inferior service to that which has been provided?

No, Sir. As I understand it, there is overmanning both on the ships and on shore. The total saving required that was mentioned in earlier discussions was about £800,000, which is equivalent to the percentage of overmanning both on the ships and on shore.

I have no doubt that there will have to be a gap between the termination of the P & O service and a new company coming in. I have no indication that there will be an inferior service. In fact, as experience shows, any service that has to be subsidised over a period nearly always becomes an inferior service.

Will my right hon. Friend note that I, among other Merseyside Conservative Members, welcome the moderately optimistic tone of his statement? First, does he not think that it would help to attract private operators if the peace of the Province were assured? I am sure that Opposition Members could help in that direction by supporting the recent talks between the Prime Minister and the Taoiseach. Secondly, and more important, will my right hon. Friend confirm that the Government are not merely not against the union but are positively in favour of it?

Obviously it is of great importance, and the House thinks that it is of great importance, that the link should be preserved. It is also important for Liverpool and Merseyside that the maximum number of people should be employed. Until the sit-in and the P & O service have come to an end, no other company will come forward, and that means that the time when a new service can come into operation and jobs can be provided is delayed.

Will the Secretary of State give a guarantee today that a private operator will take over this link? Does not he appreciate that if there is a break in employment, the men now occupying the ships in Liverpool will go to the back of the dole queue and possibly be unemployed for the next 18 months or two years? Nearly 1,000 seamen are at present unemployed.

I cannot give a guarantee about particular seamen. That is entirely a matter for the company that takes over the service and makes its commercial arrangements with the National Union of Seamen. That is how the matter must rest. If I were in the position of a would-be firm, I would not come forward while seamen were sitting-in on the ships.

Does not the Secretary of State accept that it would take even the most enthusiastic operator some time to replace the present operation, and that it would not be difficult, once a commitment was obtained from an alternative operator, to introduce, on an agency basis, a British Rail ship? There would be no problem with contractual negotiations. Will the Secretary of State examine the 40 per cent. concession that is given to Service men using British Airways and see whether it is possible to afford a similar concession on the new link between England and Northern Ireland?

I do not believe that concessions are necessary, but I shall examine the hon. Gentleman's last point. Whatever may be the interim arrangement involving a British Rail ship or some other ship, it will be much better to get the new operator in position and then he can start to operate from whatever date he wishes. Of course, one would negotiate as early a date as possible. Any other arrangement is bound to detract from that operator coming forward.

Is it not disgraceful that the Government, because of an insensitive, doctrinaire attitude, should callously and arrogantly stand aloof from all the people who have been thrown on to the dole in Northern Ireland and Merseyside and when the last sea link between Britain and Northern Ireland has been broken? Does he not recognise that there is a clear duty on the Government to finance this service and to take it over? Will he give an assurance that, if private enterprise does not come forward within a reasonable time, the Government will provide the service?

The last part of what the hon. Gentleman said is entirely hypothetical. I hope very much that an operator will come forward. If I gave the answer that he wants to the last part of his question, why should any operator bother to come forward? I am not prepared to do that.

It is disgraceful that the hon. Gentleman should make accusations against the Government when he knows perfectly well that there are thousands of unemployed people in Northern Ireland who need help from the Government, and whom I wish to help, whereas I am not prepared to help what could be a commercially profitable operation.

Does not the right hon. Gentleman agree that the argument that intervention by the Government is likely to stop independent operators from coming forward is phoney? Surely the Government can take an immediate stand by temporarily keeping the route open and allowing the negotiations to go on and a settlement to be reached. Will he assure the House that if there is a long period between the P and O service closing and a new operator coming forward the Government will do precisely that? Is not the right hon. Gentleman aware that many of us believe that the workers in Liverpool are entitled to sit-in on the ships and should receive the support of everyone?

The hon. Gentleman's last comment does a good deal of damage to Liverpool's reputation. I hope that on reflection he will not make that sort of comment. I am working to try to get a new ferry service operating between Liverpool and Belfast. The hon. Gentleman's remarks will have exactly the opposite effect. New ferry services will not operate while the old service exists or while employees are sitting in on ships. New operators are not prepared to come forward while there is any question of the old service continuing in operation or being subsidised for even a short period. They require a fresh start between Liverpool and Belfast and in the circumstances I think that that requirement is justified.

Is the right hon. Gentleman aware that the employees have made savings of over £1 million and that the failure of the service is due to inadequate ships and the troubles in Northern Ireland? Does he recognise that the seamen are facing two years on the dole and will, therefore, further the dispute? Does he understand that they are angered by the Government's unpreparedness to give an interim subsidy far less than the unemployment benefits that will be involved and far less than the £8 million paid by the Government for ferries in Scotland, including P & O services? Will the right hon. Gentleman, in view of his refusal to guarantee a service and to retain jobs in Liverpool and Belfast, ask the Secretary of State for the Environment to lift his embargo upon meeting those who are concerned to retain the service? Does the right hon. Gentleman want another riot in Liverpool before he does something?

One is constantly worried and concerned about the level of unemployment in Liverpool and in Northern Ireland. Remarks of the sort made by the hon. Gentleman merely make the problem more difficult. Despite some savings that have resulted from reductions in overmanning, and granted that P & O is operating the wrong type of ship, I ask the hon. Gentleman to realise that there is still a considerable degree of overmanning which P & O was unable to negotiate away during the summer. That overmanning is claimed to be costing about £800,000.

Is the right hon. Gentleman aware that his arguments about purity, market forces and lack of Government intervention would ring true if they were applied straight across the board? Will he confirm that the Government are handing out subsidies and grants to keep some people in employment, albeit in some instances only temporarily? How does he reconcile the Government's ability to continue to throw money at De Lorean and to subsidise Harland and Wolff with his apparently being unable to help to bail out this organisation?

Quite a lot of public money is put into various operations in Northern Ireland to help employment. I support that policy. The purpose of that operation is to provide jobs, to keep jobs and to make jobs more profitable. We are dealing with an example where jobs can be profitable without a subsidy. Therefore, it would be wrong to introduce a subsidy.

Will the right hon. Gentleman try to look slightly beyond his blind ideology? A vacuum in the continuation of a vital service will have immeasurable political, economic and social consequences for Northern Iraland and Liverpool. Cannot he envisage that the negotiations that he has in mind could be quite protracted and that in the meantime no service will be provided? What will happen if there in no bidder at the end of the negotiations? What stance would the Government take? Are they committed to the reintroduction of the service? Does not the right hon. Gentleman's decision and that of his right hon. Friend the Secretary of State for the Environment reveal that the brave words that the Secretary of State for the Environment issued at the Conservative Party conference about bringing relief to the plight of Liverpool are mere gossamer in the wind?

It is beginning to become apparent that the Opposition Front Bench has lost all commercial reality. A commercial transaction is in the process of taking place. The hon. Gentleman must know only too well that any remarks that I made on the future of the service would merely prejudice the outcome of what I hope will be successful negotiations. I should prefer there to be no gap between the beginning of a new service and the ending of the old one. The social, political and economic consequences that the hon. Gentleman talks about are not as severe as all that. The social and economic consequences of subsidising a service which could be profitable in its own right have to be considered in the context of Northern Ireland and in what I am able to do to help other industries which have a much greater need of the money.

Hon Members For Antrim, North And Belfast, East

I have a brief statement to make about an incident that occurred yesterday at the outset of the Prime Minister's statement on the Anglo-Irish talks. It concerns the conduct of the hon. Members for Antrim, North (Rev. Ian Paisley) and for Belfast, East (Mr. Robinson).

Last night, when I had my attention drawn to reports in the media of the words that the hon. Gentlemen were alleged to have used, I gave notice to the hon. Member for Antrim, North that I would wish him to be in his usual place to hear what I had to say. I understand that the hon. Gentleman has been in the precincts of the House and, indeed, was here when we begun our business this afternoon, but I had a message from him to the effect that he could not come to the House because he was receiving a deputation.

The hon. Member for Antrim, North shouted an interruption from that part of the Gallery that constitutes part of the Chamber and then hurriedly left. Shortly afterwards the hon. Member for Belfast, East behaved in a similar way. I strongly deprecate the conduct of both hon. Members in leaving the Chamber to avoid the authority of the Chair as well as, if they spoke the alleged words, the words that were uttered. It so happens that neither I nor Hansard, nor, I believe, anyone else in the Chamber, heard the actual words, but apparently they were given to the media at some stage yesterday evening.

As I think that it is entirely wrong for any hon. Member to be able to decline to enter the Chamber to say whether he used completely unparliamentary, abusive and offensive words, I shall deal with the matter on Monday next as though it were this day. That gives the hon. Member for Antrim, North plenty of notice to come to the House. If he does not do so, I shall act in his absence.

Ballot For Notices Of Motions For Friday 27 November

Members successful in the ballot were:

  • Mr. Robert Atkins
  • Sir William van Straubenzee

The hon. Gentleman may be right.

The third Member successful in the ballot was Mr. Les Huckfield.

Nato Nuclear Strategy

I have received notice from the hon. Member for Keighley (Mr. Cryer) of an application under Standing Order No. 9, the subject being the

"Potential dangers of NATO nuclear strategy"
The hon. Gentleman is out of order unless he wishes to deal with a fact that has emerged since 12 o'clock. He should give me notice before 12 noon. He may like to consider the matter and give me notice on another day.

In view of your comments, Mr. Speaker, I shall not raise the issue now. I have been seeking some verification of information that was on tape last night but not in the newspapers today. That is the reason for the delay. I give notice that I shall raise the issue tomorrow.

Orders Of The Day

Debate On The Address

[SIXTH DAY]

Order read for resuming adjourned debate on Question [4 November],

That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Michael Shaw.]

Question again proposed.

The Economy

I have selected the amendment in the name of the Leader of the Opposition.

4 pm

I beg to move, at the end of the Question, to add:

But humbly regret that Your Government has decided to continue its disastrous economic policies which have already resulted in record levels of unemployment and loss of output; and that the Gracious Speech does not contain any measures which even begin to deal with the grave economic problems which now face the country.
Our country is living through a tragedy, the dimensions and consequences of which we have yet scarcely begun to grasp. We are experiencing, and have experienced, a massive and unparalleled deindustrialisation. With manufacturing industry down 16 per cent., industrial output down 12 per cent., and the gross domestic product down 8 per cent. during the past two and a half years, our total national output is now lower than it was four years ago—including North Sea oil—and our industrial output is no higher than it was in 1968. In short, we have endured a process of collapse that is greater than any in our memory. It is greater than that experienced in any other industrial country.

Not only have labour forces been laid off, management teams dispersed and research and development abandoned, but the very plant and machinery of our factories have been auctioned—the old for scrap and the new to the eager purchasers among our competitors in developed and developing countries alike. That can be put right only by massive new investment.

It is almost exactly a year since Ministers, forced to face the realities of our position, began to comfort themselves and the country by detecting signs of bottoming out and upturn. But whatever prospect there might have been was quashed, first by the Government's massive fiscal deflation in the March Budget and then by the reversal of the cut in the minimum lending rate to 12 per cent. that accompanied the Budget by the raising of the bank base rate to 16 per cent. last month, which stands at 15 per cent. today.

On each occasion during the past 12 months that we have debated these grave matters, the Governmet, from the Prime Minister downwards, have evaded the question with a handful of statistical dust thrown into our eyes momentarily to distract us and the nation from the grim and unchanging realities. I warrant that today will be no exception. The Government will say that the bank base rate has fallen by ½ per cent., that large contracts have been won in Mexico, Brazil and Hong Kong and that manufacturing industry output rose by ½ per cent. last month. No doubt those items will be added to with trivia, prattle and crumbs of hope.

The Government say that productivity has risen 6 per cent. this year and that that is evidence of a recovery. Unhappily the truth is different. Productivity—output per man—is 4 per cent. lower today than it was two and a half years ago when the Prime Minister formed her Government. If productivity has climbed a little way back for some firms, what does the right hon. Lady say about the productivity of the many thousands of firms that have simply ceased to exist? Does she not know that companies in liquidation rose by 50 per cent. in 1980 and that, judging by the first three quarters of this year, the figure will rise again to double the 1979 figure, to an all-time record of 8,000 firms?

In a fortnight's time we shall have the mid-year Treasury forecast for 1982–83. We shall then see, in a more comprehensive form, the outlook for the economy. My prognosis is that, having fallen into the deep pit of recession, we are now more or less resting, bruised and battered, upon a ledge. With present policies we can look forward to little more than a further decline in 1983. Where are the forces of recovery? Are they in exports? The Civil Service dispute has shrouded the trends. Exports may hold up, but the greater probability is that they will, as the 1981 Red Book forecast, decline. Are they in domestic production? Real incomes are now falling. The gap between planned pay settlements this year and the rate of inflation is dramatic, almost unparalleled.

In spite of dis-saving, demand will fall, with offset coming only from a fall in the enormous rate of destocking that has been experienced during the past 18 months. Industrial investment will continue to fall, as the intention surveys confirm. What about public sector expenditure? Local authority housing and public sector capital projects of all sorts will be curtailed still further—how severely we shall shortly be informed when the present Cabinet discussions are completed.

So where is the demand for additional output? Where is the stimulus for expansion to come from?

The House and country must recognise that we are in a downward spiral of decline—a decline so grave and so deep as to be almost beyond our comprehension. It reminds me, in its scale and wantonness, of the 1944 Morgenthau plan, luckily abandoned, to dismantle West Germany's industry, or the actual and massive reparation policies carried out by the conquering Soviet armies when they occupied East Germany and Manchuria in 1945 and physically transported their industrial equipment to the Soviet homeland—[HON. MEMBERS: "Rubbish."] It is on a comparable scale to that. It almost defies analysis and comparison in recent history.

There are two marvels and paradoxes about the whole dreadful process. First, there is the passionately declared intent of the Government to halt and reverse the long-established relative decline of the slowly growing British economy. Secondly, the whole ghastly experience has taken place precisely at the time when the full flood of North Sea oil has at last reached our shores. What a grim irony it is that the relative decline of which the Prime Minister has said so much should, under her rule, have been replaced not by an improvement but by absolute decline. What grimmer irony still it is that the vast enrichment that self-sufficiency in North Sea oil has brought to us, both in the 50 per cent. increase in production since 1978 and the doubling of oil prices in 1979, should have taken place precisely during this period of unparalleled contraction in our national income and industrial output. By what miracle of mismanagement has that which should have enriched us been turned into the very agent of our impoverishment and decline?

What about the consequences of that? First, there is unemployment, with one in eight people registered out of work, another 750,000 in short-term work experience, youth opportunities and temporary employment schemes, and up to a further 1 million not even on the employment registers.

Let the House contemplate, and let the Prime Minister and the Chancellor of the Exchequer consider, what the Government have done so far. Nine hundred days have passed since the Prime Minister crossed the threshold of No. 10—900 days in which registered unemployment has risen by 1,700,000. Every day 1,850, every week some 13,000, every month 52,000 and every year more than 620,000, people lose their jobs. Should that continue, should the Government run their full five-year course, should the decline simply continue and not quicken, more than 3 million jobs will have been lost and unemployment will stand at about 4½ million, by 1984.

Let us think about it. Since the Queen's Speech last Wednesday, 13,000 of our fellow citizens have lost their jobs. Let us think also of the particular categories—the school leavers, the unskilled and the semi-skilled, older workers who have been made redundant, and women part-time and full-time workers who are particularly affected by the public sector cuts. The ethnic communities, the West Indians in particular, are affected.

I never make a simple cause and effect claim about the summer of discontent which flared across our cities this year or the wave of youth crime, which has been growing apace. However, it is a potent factor, and if the policies remain unchanged there is a risk that it could become immeasureably worse. Let us think, too, of the decline in our capacity to influence events in the world outside—our slippage down the league table of nations, our reduced capacity to help our friends, to discomfort our enemies and to assist in the great task of defeating world poverty.

When the right hon. Lady said in her speech last Wednesday that the Opposition rejoiced in bad news, she could not have been more wrong. It is not only that her failures will make our task more difficult when, as will come to pass, we pick up the reins of government. It is because we want to assist, to protect and to defend the living standards of our citizens. We want to see our nation lifted from economic defeat into economic success.

We scan the sentences in the Queen's Speech and study the text of the Prime Minister's speech, searching for those signs of understanding and concern which we must all feel. Alas, they are missing. We saw instead a bald and uncompromising restatement of the policies of the last two and a half years:
"the pursuit of firm monetary and fiscal policies, to further improving the efficiency of the economy, and to strengthening industry … and … further reductions in the level of wage settlements."
These policies will be buttressed by further expenditure cuts. Or, as the Queen's Speech says
"Plans for public expenditure will reflect the importance of restricting the claims of the public sector on the nation's resources."
We heard some astonishing assertions in the right hon. Lady's speech of 4 November that the disastrous policies of the last two and a half years will—not in the distant future but in the next 12 months—be transformed into visible success. The right hon. Lady said:
"In the coming year, I believe that Britain's confidence in herself will grow. That confidence will come from an increasing realisation that the signs of economic success are no mere passing hopes, but are instead a testament to our new economic strength … Real jobs will not be quickly won, nor will unemployment fall dramatically; but slowly and surely the British people will create the new jobs which these difficult years have made possible."
She went on to say:
"The Government have created the conditions in which out of the recession can come renewed confidence. It is in the coming year that our confidence will be rewarded."—[Official Report, 4 November 1981; Vol. 12, c. 28–29.]
No doubt the Chancellor of the Exchequer, when he speaks, will supply some substantial evidence upon which those assertions are made. I see the assertions, not as evidence of real world changes but of an increasing flight from reality—the world of make-believe into which the Prime Minister is increasingly withdrawing.

The Prime Minister is a prisoner of dogma. When and why she came under the spell of those alien philosophers, the Dr. Strangeloves of economic policy such as Professor Friedman and Professor von Hayek, I do not know. Unhappily they cannot be with her all the time. That is why she is so openly grateful for the sustaining influences, in public and private debate, of those two other domestic disciples, the right hon. Member for Down, South (Mr. Powell) and the Secretary of State for Education and Science. What we do know is how strongly reinforced are her economic dogmas by her personal values and priorities and by her extraordinary capacity for misreading the history of her times.

We know the Prime Minister's attitude to unemployment. She genuinely thinks that it matters less than inflation, as her remarkable address to the congregation of St. Lawrence Jewry last year demonstrated. She described inflation as an evil and unemployment as a great problem. The Queen's Speech contains a sentence on that matter:
"My Government share the nation's concern at the growth of unemployment".
In her speeches the Prime Minister defensively asserts that the Labour Party does not have a monopoly of concern. There is not much real feeling in that, and we sense it. Last year she told the unemployed to leave their homes and go to the places where work was still available. This year, she has left it to her newly appointed Secretary of State for Employment to tell people to "get on their bikes" and find the work which is no longer in their own areas.

Her best defence is, of course, that unemployment is inevitable—while inflation continues. From that dubious proposition she allows herself to argue that she is creating employment by reducing inflation, even when unemployment has more than doubled and while inflation, in spite of all her endeavours, remains stubbornly high.

To give credence to that view, the Prime Minister is driven to rewrite the history of the whole post-war period. Indeed, when I hear the right hon. Lady on this subject I am irresistibly reminded of George Orwell's great book "1984." Somewhere in No. 10 Downing Street I suspect that there is an unannounced and undiscovered "Ministry of Truth" whose job is to rewrite and rewrite again the history of our time. And so, the right hon. Lady asserts that the whole post-war period from 1945 to 1970—the period when, apart from certain regions, we enjoyed uninterrupted full employment and when high employment was sustained until 1974—was one of growing disaster in which unemployment inexorably rose decade by decade. As a result the present levels of unemployment, in her picture, appear to be a simple and inevitable extrapolation of previous trends. What nonsense that is.

Unemployment was under 3 per cent. until 1973, with the exception of two years, 1971 and 1972, when her predecessor, the right hon. Member for Sidcup (Mr. Heath) pursued deflationary policies which, as soon as he recognised their consequences, he reversed rapidly.

The whole OECD area pursued similar policies of giving high priority to full employment and economic expansion. The area includes North America, Australasia, Japan and the whole of Western Europe. It maintained throughout the period to 1974 levels of employment which were broadly similar to ours—and levels of output which were considerably higher.

The great discontinuity in our post-war experience occurred in 1974, under the major impact of the quadrupling of oil prices by the OPEC cartel. Far from that being a uniquely British problem, it was shared by virtually every country in the Western world. One has only to glance at the OECD figures to see the truth of that contention.

Unemployment, which in that vast area stood at 8 million in 1973, rose to 15 million only two years later after the first oil shock, and, following the second oil shock in 1979, it rose to over 21 million in 1980 and is projected to be 26 million in 1982. That is the story of the change that has so grievously affected us. We have not yet collectively found the wisdom nationally and internationally to overcome the consequences.

If, therefore, as the Prime Minister loves to allege, a peculiarly British weakness has led to the great growth in unemployment; if it is due to low productivity, to unreasonable trade unions, and to wrong attitudes of mind, how on earth does the Prime Minister explain the trebling of unemployment in every part of the Western world? Have the workers there suddenly become lazy, unproductive and over-demanding in their wage claims since 1979, or could it be that, like Britain, they have suffered from the immense disruption of the world economy that followed the quadrupling of oil prices, the inflationary impulse engendered by higher oil costs, and the massive balance of payments deficits that those imported supplies inevitably entailed?

Did my ears deceive me or was the House told a moment ago that the unemployment position in Britain was consistent with that in the rest of the Western world? If so, the right hon. Gentleman cannot blame the Government for unemployment.

Before my right hon. Friend is led on, and while he is still looking back, will he confirm that during the last 16 months of the Labour Government unemployment went down every month? Will he also confirm that during the same period inflation decreased dramatically?

We pursued moderate and carefully-thought-out demand expansionary policies. That: is why unemployment decreased from 1·5 million to 1·3 million. My right hon. Friend will agree that there was prospect of substantially greater progress in the summer of that year.

I shall resume my main topic and give way later.

During the first oil shock of 1974, Britain and its OECD colleagues were faced with almost total dependence on imported oil. In the second oil shock of 1979–80, because of North Sea oil, Britain was in the unique position of being self-sufficient in oil and a beneficiary of the price increase that afflicted our OECD colleagues. How can the Prime Minister explain the fact that while the other OECD countries between 1978 and 1981 have suffered an increase of about 50 per cent. in unemployment, Britain has suffered an increase of 120 per cent.? When Britain did not have oil, unemployment rose at a lesser rate and in line with other countries. Now Britain has oil, unemployment has risen much faster than in any other OECD country.

We all know the explanation of the right hon. Member for Down, South, because he told us in an earlier debate on the economy. He assumes that the enrichment of oil is an economic curse. Because he, in his philosophy, is morally disarmed from acting upon the exchange rate and free market forces, he believes that the possession of large quantities of high-priced oil must inevitably lift high the value of the pound and thus price out of competitiveness and employment the manufacturing sector of British industry.

That is the right hon. Gentleman's explanation, but what about the Prime Minister and the Chancellor of the Exchequer? They believe that we have problems because we have paid ourselves too much. That is why we see in the Queen's Speech that not only is the old and discredited medium-term financial policy to be retained, but it is to be reinforced by measures which, in the Prime Minister's words, will alter the balance of power between labour and management.

That was the advice given to the Prime Minister by her revered Professor von Hayek as long ago as June 1980. In a letter to The Times, he told the Prime Minister that, although her monetary and PSBR policies were absolutely splendid, they would not have time to work within the compass of a single Parliament. He concluded his advice with the words:
"The Government must at once rescind all the special privileges which have been granted to the Trade Unions by law … only this can make it possible for the beneficial effects of such a money supply policy to manifest itself in time before the term of the present Government runs out."
That is the task allotted to the new Secretary of State for Employment. It is the way of confrontation and the way towards the further destabilisation of our society.

Just how little the Prime Minister has learnt from her experience in Government and from the worrying events of the summer of 1981 is illustrated in what she said in her speech about the inner cities—or what she did not say. Instead, she asserted her determination to deal with what she called a small minority of local authorities that
"have absorbed virtually the whole of the economies achieved by the rest".—[Official Report, 4 November 1981; Vol. 12, c. 24.]
She went on to promise that the Government would introduce a Bill to ensure greater accountability of high-spending authorities.

I shall not give way now.

It has not even occurred to the Prime Minister that that small minority of authorities includes the same authorities that administer the inner areas of our great cities. It was to one of the worst afflicted of those areas, Liverpool, that she despatched, of all people, the Secretary of State for the Environment in the wake of those fearsome and disturbing riots. At least he came back a little wiser and with the heretical message that
"the principle of self-help was not applicable to inner city problems."
Further, he said that
"there will be no recovery without more resources, preferably in the form of investments for the private sector and from better use of existing public programmes. But if the case can be made it may also be from extra public expenditure."
Those comments were made by the man who had presided over and enforced massive cuts in the inner city programmes embarked upon by the Labour Government.

Does the Prime Minister know that the 14 inner city area local authorities—which, because of their obvious and growing needs, the Labour Government designated in 1978 as preferential partnership areas and which we were able to assist through a favourable rate support grant settlement, housing investment programme allocations and specific inner city grants—have had no less than £325 million subtracted from them in the two years that the Government have been in office? What does she expect the consequences to be?

Finally, to be safe inside her own intellectual and moral prison, the Prime Minister must assert repeatedly, with parrot-like persistence, that there is no alternative. I tell her, first, that there is an alternative, and, secondly, that there is hardly anyone of intellectual substance in Britain who now holds her view.

There must be a substantial and growing reflation of demand, through a combination of increased public expenditure and reduced taxation, if we are to get the economy moving again. With 77 per cent. of CBI members reporting as recently as October 1981 that they are working below a satisfactory full rate of operation due to shortage of demand, how does the Prime Minister imagine that we shall get the expansion that we so desperately need? There is hardly a reputable body of opinion—industrial, political or in the City of London, including some of the most intelligent members of the Conservative Party—that does not now urge a substantial increase in public expenditure.

There will be problems with the PSBR. The PSBR is already enormously inflated by high unemployment. One can take either the Government's figure of over £9 billion a year or the recent Manpower Services Commission figure of no less than £12·5 billion a year, which is more than the whole of the present PSBR.

Expenditure to get unemployment down will not lead to completely matching savings in the cost of unemployment. However, sums spent to increase employment will undoubtedly be substantially offset by the reduction of public expenditure on unemployment pay and in the increased yield to the tax and national insurance authorities that will flow from additional people at work.

Nor am I impressed with the assertion that I have heard many times that to expand the economy we must tax, borrow or print. Increasing overall taxation in the middle of a recession is clearly out, although the pattern of taxation—redistribution of taxation—undoubtedly has a part to play. The main burden must fall on borrowing, long or short term. I simply will not take seriously the argument that increased borrowing would crowd out the private sector, while, in the absence of exchange controls, billions of pounds of British money are flowing abroad to foreign havens and investments.

There is no evidence that there is an automatic relationship between the volume of borrowing and the level of interest rates, certainly within the United Kingdom domestic money market. Much larger sums were borrowed successfully by my right hon. Friend the Member for Leeds, East (Mr. Healey) when he was Chancellor of the Exchequer—and at considerably lower interest rates than prevail now. The level at which new gilts are taken up is largely influenced by the level of the much larger market in existing gilts. That in turn is as much influenced by the expected trend of interest rates as by the immediately prevailing rates. It is for the authorities to set and guide the expectations of the market.

Nor am I influenced by the thought that, as the economy picks up, the money supply will increase. Over a time expansion of production and of money supply inevitably go hand in hand. However, it is totally unproven that the increase in the money supply has a short-term or medium-term connection with inflation and prices. At full or near full employment an increase in money supply that cannot be matched by an increase in production could have inflationary effects, but we are a long way from the full use of resources and full employment. The obsession, madness and theoretical nonsense that the Chicago school has so sedulously propagated has imprisoned those who from the start were only too willing to be imprisoned.

I accept, however, that reflation, although essential, needs strong supporting policies. It is possible that increases in public expenditure and economic expansion could find their way not into increased employment but simply into increased earnings, costs and prices for those at work. It is here that a new and strong understanding with the trade union movement, together with effective price controls, will play a major part.

Some may dismiss the prospect of a new understanding as undesirable or ineffective, but my confidence rests on the overriding priority to reduce unemployment throughout the country. Where that exists, and where the links between the Government, particularly a Labour Government, and the trade union movement are properly forged, we have
"ties which, though light as air, are as strong as links of iron."
We must not forget or ignore, as many other critics of the Government do, the urgent need to operate more effectively on what is properly called the supply side of the economy. I do not mean by that the Government's absurd doctrine of trying to run the economy on the single engine of the private sector, powered by ever-increasing tax incentives. That has not worked and will not work. I mean the development of partnership, support and intervention in new forms between the Government and industry.

I have no illusions about the problems that a Labour Government will inherit or the difficulties of finding effective solutions, but there is an alternative strategy—a Labour strategy—which offers new hope to the people. In contrast, the economic proposals in the Queen's Speech offer the people and the economy nothing but decline and despair. That is why we have tabled, and why we shall vote for, the amendment.

4.34 pm

As so often, the speech of the right hon. Member for Stepney and Poplar (Mr. Shore) has not only emphasised the differences in our approach to the nation's economic problems but demonstrated the emptiness of his prescriptions. Even so, it may help if I spend a minute or two spelling out the points on which there is widespread agreement in all parts of the House.

Despite what the right hon. Gentleman said about my right hon. Friend the Prime Minister, there is no difference in our objectives. We all wish to secure higher living standards and more jobs in a stable economic environment. In pursuit of those aims, successive Governments have sought to put in place two sets of policies. Governments of both complexions have sought to generate economic activity by more productive use of resources and faster growth. In that respect, as the right hon. Gentleman's speech made plain, there remains a clear difference of view. As we heard yesterday, hon. Members on the Labour Benches look chiefly to the State—to so-called public enterprise—as the main agent of change. On the Government Benches, and possibly elsewhere, we are convinced that the main drive for fruitful change must come from individual, independent enterprise.

In contrast to that division of opinion, whatever the right hon. Gentleman pretends, successive Governments of all parties have been of one mind about the other objective—the need to maintain a framework of economic and financial discipline. We all recognise that to preserve the currency and to protect our people from runaway inflation some such framework is essential.

Successive Governments have faced immense political and economic pressures to modify or throw over their framework. All too often those not in office argue for kicking over the traces and gambling on inflationary solutions, as the right hon. Gentleman did.

Over the years several different kinds of policy have been challenged in that way. For more than a quarter of a century after the Bretton Woods agreement the discipline took the form of a fixed exchange rate. That defence was decisively breached at the end of the Chancellorship of the right hon. Member for Cardiff, South-East (Mr. Callaghan). At other times Governments of both parties have relied to a large extent on some form of incomes policy, and at others the strategy has rested on a tight fiscal policy such as that adopted by Mr. Roy Jenkins when he was Chancellor of the Exchequer, and the right hon. Member for Leeds, East (Mr. Healey) after the intervention of the IMF in 1976.

Each policy in turn required measures by the Government and a response from society that proved unsustainable. They all fell victims to the temptation to alter or displace the framework. If we face the truth, we should all recognise that is the main reason why in the past two decades successive Governments have not achieved their economic objectives.

The last thing that I wish to suggest is that those whose policies did not prevail are not entitled to criticise ours. However, I invite all who have been involved in such struggles to remember the moments when they were criticised for obstinacy in defence of the realities and disciplines that they regarded as essential. The right hon. Member for Stepney and Poplar tried to defend his Government's disciplines.

Although we have all learnt different lessons from our experiences, I see no reason to apologise for the role that I was privileged to play alongside my right hon. Friend the Member for Sidcup (Mr. Heath) in 1974. On the contrary, the fundamental problem, then as now, is how to reverse the long decline in Britain's relative economic performance. The right hon. Gentleman tried to argue today, not for the first time, that the decline is somehow a new phenomenon—something that results from the policies of the last two years. That is a short-sighted and politically blinkered view. Nobody outside the House would believe that for one moment.

I am very dissatisfied with Britain's relative post-war economic performance as a whole compared with those of other countries. I submit to the Chancellor of the Exchequer that in no year since 1945—until he took up his present post—had we suffered an absolute decline in output and production. He has to bear that very heavy and special responsibility.

That is not true; production has fallen in previous years, as the right hon. Gentleman knows. In reality, the impact of the past two years has been the combination of the second tremendous oil shock, to which he referred, and the long-run accumulation of inefficiencies and overmanning in the British economy.

For a long time, the truth of our steady economic decline was masked by the growth imported into Britain from the rest of the industrialised world. For a long time the basic defects in our economy were concealed or ignored when world growth was apparently guaranteed.

In order to improve productivity and to secure or retain orders in the last two years, industry has been obliged, after long delay and at great human cost, to dismiss many people who for many years have been much less than fully employed. To all our dismay, the huge extent of concealed unemployment has been made very evident. For example, in the steel industry in my home town in South Wales, productivity has improved by nine man-hours per tonne to five man-hours per tonne in the last 18 months and the numbers employed have been halved. That persistent over-employment has not been built up in the past two years. It has been a pattern deliberately preserved by the Opposition, by subsidising the industry at great expense and by seeking to keep it from the change that was inevitable and that now comes crowding in on us.

The Government are determined to cushion against that shock those most harshly hit. However, none of us can restore the illusion by which we were once protected.

Is the Minister aware that the increase in productivity can only be achieved by the kind of massive public investment that occurred in the steel industry under the Labour Government? Until we get that massive public investment in new equipment and machinery we will not get any comparable increase in productivity.

Productivity improvements can only be achieved by a combination of measures. Investment is necessary but investment by itself is useless unless manning arrangements are transformed, investment successfully used and the old capacity put out of use. It is all those measures, so long postponed under the previous Labour Government, that we have had to accept to achieve the dramatic changes to which the right hon. Gentleman referred.

As all hon. Members know, for the past 10 years we saw an increase of over 300 per cent. in money incomes while output rose by a little more than 15 per cent. The right hon. Gentleman spoke, as he often does, of the need for extra demand. However, out of every extra £1 of demand in those 10 years, only 5p worth went into higher output and the other 95 pence went into higher prices or imports. Over-manning and pay increases far ahead of productivity have for too long been pricing us out of markets at home and overseas. Over the last 25 years our share of total exports of manufactures from the world's major economies has fallen from 20 per cent. to less than 10 per cent. Had we retained our share of 20 years ago—about 16 per cent.—as all our major Community partners have done, our exports would be about £25 to £30 billion more than they actually are. That is the basic problem that has to be tackled in circumstances of maximum world-wide difficulty. For that reason we must hold in place a policy framework. The Government must be flexible about particular policies within that framework. However, we cannot allow the foundations to be destroyed.

The right hon. Gentleman conceded in the debate that there were causes at work outside Britain that the whole world now experiences. There are ravages of persistent and unevenly controlled inflation and economic stagnation, while we are still adjusting to the effects of the second oil shock. Those conditions were referred to by the IMF earlier this year in Washington. Attention was drawn to high interest rates, massive balance of payments disequilibria and the fact that exchange markets were more unstable than at any time since the major currency realignment of the early 1970s.

It is important to see the country's problems in an international perspective. I digress to remind the House that the oil-induced conditions, which create a crisis for the West, create a catastrophe for many less developed countries. That is why it is right that, despite our domestic difficulties, our aid programme for this year should exceed £1,000 million—the fifth largest aid programme in the world—why we have been glad to play our part in promoting the new IMF loan to India, and one powerful reason why we should all wish to maintain an open economy and avoid unnecessary restraints on trade with less developed countries. "Ring fences", even if their construction were feasible, might be very well in the short term for those within the ring, but are highly damaging for those without, in the long run they are damaging for us all.

We all understand the problems posed to other countries by the second oil shock. We understand that the balance of payments effects have been major. However, we want to know from the right hon. and learned Gentleman why Britain, which was shielded from that second oil shock and actually benefited through the balance of payments should have suffered more severely than any other country. Why has that happened?

Britain has suffered more than any other country because it is a trading nation and relies on trade to the rest of the world to the extent of about one-third of its output. That output had already gone far towards pricing itself out of world markets. At its maximum, oil makes only a modest contribution to Britain's economic growth. The total revenue from oil is less than half the total borrowing that the Government are already undertaking. The impact of oil, certainly in the short run, has been to raise our exchange rates in a way that could not have been prevented. All those factors created difficulties and, astonishingly, because of the rundown condition of our economy, we had to face those problems in that way.

I quote from the IMF's statement last autumn:
"It is essential, not to relax efforts to combat inflation, but rather to sustain them with determination."
I quote the managing director of the fund:
"Experience has amply demonstrated that sustained sound growth requires that inflation first be brought under control. In some conditions, it may be possible to increase economic activity temporarily through demand-stimulated policies, but an economy in the grip of inflation cannot be permanently revived by printing more money."
That has nothing to do with some "alien philosophy". If our economy is to be restored to health, we need a framework that will contain and progressively reduce inflationary pressures.

The framework that has been adopted, not since 1979 but since the IMF prescribed it in 1976 to the last Labour Government, of which the right hon. Gentleman was a member, is that of monetary targets. It is the sort of framework that almost every other major Western economy now has. That is not a policy of dogma but a policy of common sense.

The right hon. Gentleman accused us, as he has on other occasions, of some preoccupation with holding down the public sector borrowing requirement; preventing the growth of further debt, to give it a more straightforward name. That is without foundation in itself. On the contrary, we have accepted that it is legitimate, in the course of the present recession, to borrow more than we had earlier intended. The Prime Minister told the House that the PSBR in the current year is, at £10½ billion—and the Government are still on track for that figure—about £3 billion above what we had in mind at the time of my 1980 Budget.

It has been suggested by some hon. Members during the debate that we should do better to pursue an exchange rate target. A number of hon. Members have suggested that we should consider joining the exchange rate mechanism of the EMS. That suggestion comes both from those who want sterling to depreciate, in the interests of our exports, as well as from those who want it at least to stay stable in the interests of lower inflation. Whatever the effects of membership, it is clear that both cannot be achieved.

The EMS question is a serious one which deserves careful consideration. Difficult questions are involved. As we have one of the world's major international currencies and because of our self-sufficiency in oil, the effects of world events on sterling tend to be diametrically opposite to their effects on other EMS currencies. It has been widely accepted, at least up to now, that sterling's full membership would have been helpful neither to the system nor to ourselves. However, with some prospects of increased stability in the price of oil, it is right that the issue should be kept under constant review.

Many of those who advocate early membership seem not to recognise that the mere act of joining would do nothing to secure exchange rate stability. Membership would involve obligations to act promptly when sterling reached the limit of the EMS band. As has been demonstrated time and again, most recently in the French experience, that means policy action to raise interest rates, to raise taxes, to cut public spending or to do all three. Those who see EMS membership as an alternative to such action are deceiving themselves. It might provide an alternative framework for discipline, but it would certainly not enable us to do without one.

One other message is clear. Whether sterling is pegged to some other currency or currencies or whether we simply continue to regard the exchange rate as one of the factors to be taken into account in the conduct of monetary policy, if we try to borrow too much we cannot avoid pushing up interest rates. That is the simple central proposition which the right hon. Member for Stepney and Poplar blithely brushes aside and fails to grasp.

That is why when I was in Washington earlier this year I spoke on behalf of the Commonwealth Finance Ministers as well as on behalf of the Community Finance Ministers and urged the United States Administration to reduce their deficit in order to bring down the level of interest rates. It is foolish indeed to think that one can take that message across the Atlantic, as Labour Members wish me to do, while ignoring its implications for ourselves.

That is the fundamental difficulty with the more or less detailed and more or less tempting reflationary packages offered from all sides. Some, like that proposed by the right hon. Member for Stepney and Poplar, are vague, massive, uncosted and totally irresponsible. He brushes aside the practical difficulties by saying that of course there will be problems for the PSBR. He can say that again! There were problems for the PSBR when the right hon. Gentleman was last in Government.

Other packages, such as those offered by the hon. Member for Gateshead, West (Mr. Horam) and my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), have clearly been composed with more care. The right hon. Member for Stepney and Poplar should not laugh. His package is the most careless and heedless of all.

My right hon. Friend proposed a package, beguilingly attractive in its modesty, totalling £5 billion and including abolition of the national insurance surcharge, adoption of some of the Layard employment measures and additional capital spending of about £½ billion. Last, but by no means least, interest rates were to be reduced and the exchange rate stabilised by our joining the EMS.

Precisely how increased borrowing and lower interest rates, even at that level, are to be made compatible with each other or how lower interest rates are to be compatible with exchange rate stability through the EMS has never been disclosed. But those are key questions. There may be no automatic relationship between the size of one's attempts to borrow and interest rates, but the House should be in no doubt that there is a close and real relationship.

In those circumstances, what would be the cost of maintaining the exchange rate within the EMS? The cost would be a massive drain on the reserves for intervention, higher interest rates or both. My right hon. Friend the Member for Chesham and Amersham did not consider the first possibility and assumed that the second would not exist.

Although the right hon. Member for Stepney and Poplar tried to brush the matter aside, there would inevitably be a rapid rise in domestic money supply. The problem of holding the exchange rate and keeping interest rates at a lower level, both of which are essential to the delivery of the sort of results that all the prescriptions seek, would become progressively more difficult. If it were the right hon. Member for Stepney and Poplar offering the prescription, the country would have to add the price of the catastrophic loss in confidence that would follow his arrival anywhere near the levers of the Treasury.

My right hon. and learned Friend has painted a good picture, but will he also pay attention to the political implications? Is there not a danger that we shall remain permanently behind the course of events and are there not great political advantages in being a member of the EMS?

There are certainly some political factors to be taken into account and my hon. Friend is entitled to draw attention to them, but I am discussing the economic implications.

A critic such as Mr. Wynne Godley, from whom I think my right hon. Friend the Member for Chesham and Amersham and the right hon. Member for Stepney and Poplar have both borrowed much ammunition, is much closer to the mark with his warning that in the face of a policy for reflation the exchange rate would take the punishment and inflation would soar.

Of course, Mr. Godley goes on, as does the right hon. Member for Stepney and Poplar on some occasions, to take the policy to its extreme and to advocate a fortress economy. I do not believe that that drastic remedy would work either, and nor, I am certain, do any of my right hon. and hon. Friends who commend it. However, there is more internal consistency in Mr. Godley's alternative strategy than in some of the others.

There is a middle position, which I hold, between that of Mr. Wynne Godley and that of those who believe that the solution is to join the EMS.

Will my right hon. and learned Friend address his mind to the fact that the proportion of our gross domestic product represented by the PSBR is about half of what it was in the mid-1970s, when interest rates were much lower than they are now? My right hon. and learned Friend has clearly acknowledged today that there is no direct relationship between interest rates and the PSBR, but in his policies he often seems to act as though he thought that the link is much closer than it is in practice.