Skip to main content

Commons Chamber

Volume 22: debated on Monday 26 April 1982

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Commons

Monday 26 April 1982

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Oral Answers To Questions


Robot Support Programme


asked the Secretary of State for Industry how many firm applications have now been submitted under the Government's robot support programme.

Since April 1981 there have been 97 firm applications for assistance under the scheme. In addition, the Production Engineering Research Association has undertaken 54 robot consultancy studies.

I thank my hon. Friend for that information. Does he agree that in the long term the best way to ensure the regeneration of British industry, and therefore to create more jobs, is to introduce more modern methods, such as robotics? Does he therefore agree that nobody on either side of industry need fear the introduction of those techniques?

Yes, I do. I have made it clear many times that British industry will be competitive for the rest of the century only if it embraces the new technologies. I am glad that this scheme has been so successful.

British Leyland


asked the Secretary of State for Industry when he last met the chairman of British Leyland to discuss investment in the industry.

My right hon. Friend the Secretary of State and I meet the chairman of BL, whenever the need arises, to discuss a variety of topics.

Is the Minister aware that in the West Midlands male unemployment is now almost one in five and that one in six jobs are dependent on the vehicle industry? What will the Minister do to reassure industrialists and workers alike in the West Midlands that the vehicle industry will not be destroyed?

I am fully aware of the employment implications of the hon. Gentleman's questions. The Government have shown their willingness to support the motor industry and British Leyland in particular. We have put £970 million into British Leyland since coming to office. Nobody can say that the Government have not made a strong commitment to the motor industry.

Is my hon. Friend aware that British Leyland now requires to maintain and increase its market share? With respect to the hon. Member for Newcastle under Lyme (Mr. Golding), British Leyland wants more customers, not more speeches.

I entirely agree. Last year British Leyland managed to increase its market share above what it had planned. New models have been introduced and the response both to the Metro and the Acclaim has been encouraging. Productivity is rising sharply in British Leyland, and at Longbridge, on the Metro line, it is comparable to the best in Europe. British Leyland's future will be secured by its becoming competitive.

Has the Minister discussed with British Leyland the question of buying British? I noted what the Secretary of State said the other day about buying British. It is proposed that British Leyland may buy steel from Brazil. That would be very much against the interests of our steel industry. Is there not a policy for nationalised industries to buy British?

The right hon. Gentleman knows that there is a Government public purchasing policy. British Leyland is well aware of that. The buying power of the public sector should be used to strengthen British industry. That is the Government's objective, although relations between the British Steel Corporation and British Leyland are a matter for commercial negotiation. We have certainly made the Government's public sector purchasing policy clear to BL.

Is my hon. Friend aware how much the taxpayer resents paying large sums into British Leyland when certain parts of it could be divested and financed privately? That particularly applies to the Land Rover part of the group. Has my hon. Friend plans to ensure that that is sold off in the reasonably near future?

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), the former Secretary of State for Industry, made it clear in his statement on 26 January 1981 that the Government supported British Leyland's intentions to create viable businesses and to attract private capital into them. That remains the Government's intention.

Regional Development


asked the Secretary of State for Industry whether he will take fresh initiatives to aid the regional development of industry.


asked the Secretary of State for Industry whether he proposes to take any additional regional policy initiative in view of the serious and continuing unemployment figures in the United Kingdom; and if he will make a statement.

The most effective stimulus to regional industrial development will be for British industry to continue the improvements in performance which our economic policies are encouraging. Beyond that our regional industrial policy is intended to concentrate the available assistance on those areas that are worst affected.

Is it not about time that there was a reversal of the deplorable decision taken by the previous Secretary of State for Industry? He reduced the development area status of many areas, including the Stirling travel-to-work area. That area is now faced with the proposed closure of the Player's factory as well as with job losses at Stirling university as a direct result of the Government's policy. Will the Secretary of State now consider restoring Stirling's development area status and uprating Denny to special development area status, because unemployment there is now higher than 30 per cent.?

Although unemployment in Stirling is regrettably high, it is not as high as in the assisted areas as a whole. Therefore, I cannot see a strong case for restoring development area status. However, Stirling will remain an intermediate area after the changes that come into force next August.

With tens of thousands of school leavers footloose on the streets, and nearly 1 million long-term unemployed, does not the right hon. Gentleman's regional policy look hesitant and unconvincing? Does he know that the deprived regions have so little confidence in his policies that several of them are competing for the proposed Nissen car project? What can he tell us about that project?

I have a feeling that there would be a good deal of competition for the Nissan car project—if that company decided to come to Britain—whatever the level of unemployment. All the evidence suggests that the impact of regional policy on the creation of jobs is more effective if it is concentrated on the areas of greatest need. On the whole, regional policy was more effective in the 1960s, when it was fairly narrowly based, than in the 1970s, when it covered, towards the end, more than half the country and almost 40 per cent. of the working population. The decisions announced in July 1979 by my right hon. Friend the present Secretary of State for Education and Science were designed, once again, to concentrate help on the areas of greatest need.

Is my right hon. Friend aware that one way of helping the regions is to help enterprise agencies such as the one called "Make Lancaster Your Business", which is anxious to be granted approval so that contributions from companies will be granted tax relief? Is my right hon. Friend in a position to say when he will announce his Department's criteria for such approval?

Help for enterprise agencies is not confined to the regions. The decision to give tax relief was widely welcomed at the time of the Budget. My Department will be responsible for giving approval and it is working on the criteria. I hope to be able to give some information on that fairly soon.

How can the Secretary of State claim that regional policy has been more effective in the past two years during which it has been more accurately pinpointed, when more jobs have been lost in the past two years than were created in 10 to 15 years of positive regional development policy? Does he realise that unemployment now stands at 20 per cent. in the areas of the Sedgefield and Wear Valley district councils? If the closure of the British Rail works goes ahead unemployment will increase to 30 per cent.

I think that the hon. Gentleman has misquoted me. Of course unemployment has risen everywhere during the deepest recession for 50 years. Although it is notoriously difficult to ascribe any change in the level of employment to any particular measure, there is broad agreement that, on the whole, measures are more effective if they are concentrated on the areas of greatest need instead of regional help being spread too thinly across the whole country.

Although I accept that regional aid should be given to the areas of greatest need, is my right hon. Friend aware that in Grampian and in my constituency of East Aberdeenshire unemployment is rising very quickly because oil and gas constructional work and the indigenous industries are suffering as work has come to an end and there is no alternative employment? Will he take steps to alter what his predecessor did in removing the assisted area status of Grampian region, and particularly that of East Aberdeenshire?

My hon. Friend will know that we undertook to review areas in which there was a two-step change in the assisted area status. That review is in hand and I hope to announce the results later in the spring. We have also been looking—as I think the House knows—at some of the other areas in which circumstances have changed substantially and beyond the normal trends of the recession. I hope to announce those changes at the same time.

What are the industrial improvements of which the right hon. Gentleman spoke in his initial reply, and how have the Government's regional policies brought them about? Surely the most hard-hit regions in Britain have the highest unemployment of any regions in Western Europe. That is a direct result of Government policy.

Those industrial improvements consisted of last year's 10 per cent. increase in productivity, the reduction in the growth of unit labour costs from 25 per cent. a year ago to 2·5 per cent. according to the latest figures—a remarkable change—and our increased competitiveness, which is helping us to win substantial contracts overseas. That will restore the health of British industry.

British Steel Corporation


asked the Secretary of State for Industry when he last met the chairman of the British Steel Corporation to discuss the corporation's corporate plan.


asked the Secretary of State for Industry when he last met the chairman of the British Steel Corporation to discuss the corporation's external financing limits.

My hon. Friend the Minister of State, Department of Industry met the chairman of the British Steel Corporation on 30 March. They discussed a range of questions arising from the BSC's new corporate plan for 1982–85, including the external financing limit for 1982–83.

As there has been considerable speculation about whether the BSC will meet its targets for the current year, will the right hon. Gentleman make the exact position clear? If the corporation does not meet its targets, what are the implications for the external financing limits and employment?

In 1981–82 the BSC hopes to live firmly within its external financing limit. However, as the hon. Gentleman knows, there are a number of considerable uncertainties in the current year and the BSC has brought them to the attention of my hon. Friend the Minister. I refer, for example, to American markets, to anti-dumping and countervailing duty cases, and to the future of the prices regime in Europe. Until those matters are clear, we cannot be certain about the extent to which the BSC can meet its targets.

Given the corporation's present circumstances, does it make sense for it to sell a significant asset, Redpath Dorman Long, which has a full order book for what appears to many people to be a knock-down price? Will not the sale to Trafalgar House create a monopoly in the private sector? Is it not another example of the way in which the Government give away taxpayers' assets at ridiculously low prices?

The hon. Gentleman knows perfectly well that the disposal of non-mainstream activities by the corporation is a matter for the BSC. It did not require the Government's consent and was a matter for its management. If the hon. Gentleman wishes to substitute his judgment about the value of RDL for that of Mr. MacGregor and his extremely experienced board, he must take responsibility for that. The price was agreed between the seller and the buyer and the advice of merchant banks was taken about the appropriate figure, given RDL's profit record.

With the greatest respect to the hon. Gentleman, this sale has nothing to do with Amersham International. It is a straight sale by BSC of a non-steel making activity. It is entirely appropriate that the BSC should finance part of its development by disposing of assets that are saleable in the market.

Manufacturing Output


asked the Secretary of State for Industry if he will give the latest 12-month figures available of the increased percentage in output per head in manufacturing industry and the same information relating to nationalised industries.

Output per head in manufacturing industry increased by some 10½ per cent. between the fourth quarter of 1980 and the fourth quarter of 1981, the latest period for which figures are available. Aggregated figures for the nationalised industries, many of which do not form part of manufacturing industry, are not compiled.

May I congratulate my hon. Friend on his appointment and wish him well in his important responsibilities? May I welcome his answer and ask whether he agrees that increased output leads to the greater likelihood of increased investment in industry, which in turn leads to better job prospects and the prospect of new jobs and to higher wages for all employees in industry?

My hon. Friend is absolutely right, and I thank him for his kind remarks. There is a benign relationship between productivity, profit and investment, and the regeneration and recreation of jobs that are soundly based on productivity.

May I add my congratulations to my lion. Friend on his well-deserved appointment? Notwithstanding the welcome increase in output announced by my hon. Friend, does he agree that it is imperative that the increase should continue if British industry is to remain competitive, prevent import penetration and resecure many of the overseas markets lost during the years of uncompetitiveness?

The problems with which the Government are currently wrestling are both long-standing and deep-seated. I agree wholeheartedly with my lion. Friend's observations, and I assure him that the improvements that he has outlined will be sought by the Government, especially in the public sector.

Is the Minister aware that average productivity will rise if every firm, except the most productive, is driven into bankruptcy?

That is rather a simplification of economic objectives. Output increases genuinely when a fixed number of workers produce an enhanced amount of output for the same input. I hope that the hon. Gentleman, when he joins us in debates, especially on British Telecom, will agree with that assertion and that we shall be working on the same side to achieve that objective.


asked the Secretary of State for Industry if he is satisfied with the rate of recovery of output from British manufacturing industry.

No. Much obviously depends on the world-wide recovery from the international recession. It is, however, encouraging that between the first half of last year and the second half manufacturing output increased by 2·5 per cent.

In view of the Minister's reputation for fairness, does he accept that output in the manufacturing industry is lower than when the Government first took office and lower than it has been for the past 14 years? Does he accept that his Department has reigned over the destruction of the base of the British manufacturing industry and the addition of 2 million or 3 million people to the dole queue?

Manufacturing output is lower, but the hon. Gentleman—who is also very fair—must acknowledge that that is true of most parts of the world. No doubt he will have seen, according to press reports last Friday, that the Conference Board, a distinguished American body, has concluded that a world recovery may be shaping up—and that Japan, Britain and France are in the vanguard of that recovery. It is significant that Britain is singled out as being in the vanguard. It is certainly the case that manufacturing output is higher now than it was in the spring of 1981.

Does the Minister agree that it will help to increase manufacturing output if. we attract overseas investment? Will he explain how Wales, with a population and rate of unemployment similar to the Northern region, has a budget four times that of the North of England Development Council for industrial promotion?

Manufacturing output and, often, productivity are enhanced by inward investment, and the United Kingdom has been successful in that. There is a separate question on the order paper on the point that the hon. Gentleman has raised, but it is important to bear in mind that 90 per cent. of all American investment has been attracted here by central Government activity, mainly through the Invest in Britain Bureau and the overseas diplomatic posts.

Does my hon. Friend agree that in some industries, such as the whisky industry, where there is over production, if management and workers apply themselves, increased sales can be obtained and increased profits can be achieved, such as was done by Arthur Bell and Sons?

I entirely agree with the general point. What is most important about the way in which improvements are now showing in the British economy is that they are concerned with fundamental problems such as that to which my hon. Friend drew attention. It is significant that in the last quarter of last year output per man hour in manufacturing industry reached a record level and was more than 6 per cent. higher than the average for 1979—the previous best. In many other ways there are improvements on the shop floor and between management and work force, which is where improvement is needed if we are to sell our products.

What hope does the Minister have for the recovery of the pottery industry? Three more firms in my constituency have closed during the past few months and unemployment is serious. We need ministerial intervention. May we have that as soon as possible and then some Government help?

The Government give assistance in many ways, not only through tax reliefs for capital investment, but with schemes designed to improve economic performance and competitiveness. If the right hon. Gentleman wishes to contact me about the prospects for the pottery industry I shall endeavour to answer his questions.

Does the Minister agree that the fall in output in manufacturing industry since 1979 has been 14 per cent., and that both the CBI and the TUC see no longterm propects for that industry? What will the Government do about employment and the manufacturing sector?

The important points are that manufacturing output is again rising and that many of the changes are highly beneficial for our future competitiveness. My right hon. Friend referred to unit labour costs, but industrial stoppages are at their lowest for 40 years. The most hopeful sign for the future is that we are tackling our fundamental problems.

British Leyland


asked the Secretary of State for Industry if he will make a statement on productivity in British Leyland.

I refer my hon. Friend to the answer that my right hon. Friend the Secretary of State for Industry gave to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) on 22 February 1982. I have nothing further to add.

Will my hon. Friend confirm that the production of the British Leyland Metro has increased from 7·7 per man-year in 1980 to 22 per man-year in 1982? Is not this welcome improvement due to more flexible working practices, less rigid demarcation lines, a more determined management and a more realistic attitude on the shop floor?

All those improvements have occurred at British Leyland, especially at the Longbridge plant. My hon. Friend will be interested to know that British Leyland generally had a 30 per cent. increase in productivity during the past year, but almost a 100 per cent. increase at the Longbridge plant, which must be welcomed.

Does my hon. Friend accept that British Leyland productivity has failed to increase during recent years because of the lack of a market? Does he welcome the reports that that market will lift off, and will he do everything possible to ensure that British Leyland increases its share of the market in these difficult times?

Within the confines of decisions that can be made at Department of Industry level, we shall do everything that we can to ensure that British Leyland's corporate plan and its plans for commercial vehicles receive all due support. We look forward to the commercial division achieving its targets when demand returns.

Information Technology Advisory Panel (Report)


asked the Secretary of State for Industry what action the Government have taken following the publication of the Information Technology Advisory Panel report.

I refer my hon. Friend to the statement made by my right hon. Friend the Home Secretary at the beginning of the debate on direct broadcasting by satellite and cable systems on 20 April 1982 and to my own speech in the same debate.

I thank my hon. Friend for that reply. How long will consideration of the ITAP report take?

Our aim—it is ambitious—is to conclude all discussions and consultations by the end of the summer and for Lord Hunt to report by 30 September. If we keep to that ambitious timetable we hope that, by the end of the year, we can announce the technical, regulatory and commercial framework that will allow cabling to become a reality.

Is the Minister aware that the Post Office Engineering Union has been disturbed to read of leaks that the Home Office intends to ignore the Department of Industry's desire to provide a modern system of cable and will patch up instead, in the interests of Visionhire and Rediffusion?

If the union has heard that, it has been listening to unfounded rumours. The technical nature of the cable system is very much in the hands of my Department. A committee is deciding whether it should be a copper or fibre optic system and I made our position clear during the debate. Some people have said that the Home Office is dragging its feet, but I do not agree with that assessment. The Home Secretary has given a clear steer to the Home Office and the decision on direct broadcasting by satellite shows the remarkable speed with which the Home Office is moving.

What steps is my hon. Friend taking in relation to information and production technology to discuss, for example, with my right hon. Friend the Secretary of State for Defence how he might best assist the British aerospace industry?

That question goes wider than the question that we are discussing. As regards the industrial input into the new cabling system, I made it clear to the House before that that will be the most exciting and important economic programme before the country over the next 10 to 15 years. We are discussing with British industry and with those who make cable and attachments that are put on to the cable system how they can plan and make arrangements so that British industry will benefit.

Is the Minister completely satisfied that a report made by a panel of interested parties can be a sufficiently realistic and objective report on which to base future progress?

People have schizophrenic attitudes towards the report. We could have done one of two things. We could have gone to business men and asked them to produce a report—which we have done—which is imaginative and challenging, but the report is essentially a consultative document. We could have gone to the Government and asked for a report that put half a dozen reasons on one side and half a dozen on the other, only to be rightly criticised as being dull and unimaginative. We have produced a discussion document which we hope will allow cabling to start in this country in the reasonably near future.

Is the Minister aware that his decision on timing will be welcomed, but does he expect that there will be legislation in the next Session, or will it be delayed until the subsequent Session?

It is probable that, in order to establish a cable framework that will involve broadcasting as well as narrowcasting all the extra services—I emphasise that cable television is much more than extra television channels—legislation will be required.

Is my hon. Friend aware that we in Havering are looking forward to welcoming him to Romford this Wednesday morning when he opens the Havering information technology exhibition? Will he take the opportunity then to reconfirm that innovative industries such as information technology provide the opportunity for increased new employment rather than act as a source of increased unemployment, as is commonly feared?

I am looking forward to my visit to Romford on Wednesday morning. I hope that the citizens will be there in their numbers to greet me. I assure my hon. Friend that one of my main purposes in my various activities in information technology is to release and create job opportunities in Britain for that range of activity in electronics, computing, cable and telecommunications. It will be the fastest-growing area of economic activity for the next 10 years. We cannot afford to lose out on that.

By his answer to my hon. Friend the Member for Blaydon (Mr. McWilliam), has not the Minister conceded that the report is written by people with a narrow, vested interest and that it is a prejudiced report? Is not that the sort of evidence that is being put to the Government by wider representatives of British industry? On a practical note, if the report is so important, will the Minister arrange for it to be placed in the Vote Office so that hon. Members can have easier access to it?

Hon. Members have access to the report. It is a public document and has already gone into a second printing. I shall see whether it can be provided in the Vote Office. I disagree with the hon. Gentleman. The report was written by people who wanted something to happen. Therefore, there is an urgency about it. We have not accepted all its recommendations. The report is essentially a consultative document. I believe that it will he looked upon as historically important in the future.

Young Persons (Businesses)


asked the Secretary of State for Industry if he is satisfied that enough help is being given to encourage young people to start up in business on their own account.

We have taken various steps to encourage enterprise in young people. They are, of course, able to take advantage of the many measures available to stimulate and help small businesses. I am happy to consider any other suggestions that my hon. Friend or others may wish to put forward.

I thank my hon. Friend for that reply. Does he agree that we should do more to make more young people aware of the rewards of creating their own business? Will he liaise with the Departments of Education and Science and of Employment to see that proper instruction is given in schools and in the new youth training programme to make young people aware of the many possibilities and challenges of starting their own business?

I entirely agree with my hon. Friend. Much more is now happening. The Department has an industry education unit. We are currently working on a number of initiatives to encourage young people to think in terms of starting their own businesses. For example, there are films for showing in schools. I shall continue to liaise along the lines recommended by my hon. Friend.

Does the Minister agree that one of the best ways to help young people to set up their own business is to encourage the establishment of cooperatives? What lesson does he learn from the difficulties of the Breckland poultry co-operative in his constituency? Will he make further efforts to help that co-operative?

There is a place for co-operatives, but it must not be over-exaggerated. The lesson of the Breckland poultry firm is relevant. On Saturday afternoon I had a long meeting with those who are trying to get things moving. I have spent a great deal of time trying to help the co-operative. It has decided that it would like to proceed as a private firm, making use of schemes such as the business start-up scheme. I have written to the firm today advising it of other ways in which it can go forword.

Engineering Investment Scheme


asked the Secretary of State for Industry how many small firms he expects to benefit from the small engineering firms investment scheme.


asked the Secretary of State for Industry what response there has been to the new small engineering firms investment scheme for small firms in the Midlands.

Interest in the scheme has been very high and 397 applications for assistance have already been received. The average project cost to date is about £50,000. On this basis, at least several hundred small firms will benefit. A large number of these applications have originated in the West Midlands.

I congratulate my hon. Friend on his answer and on this latest example of Government assistance to small businesses. Will he undertake to look carefully at giving greater publicity to the scheme, given the time limit, so that other companies that may be eligible do not miss out on the chance of the grant?

We have done much already to market the scheme both in terms of general publicity and in sending leaflets direct to 4,000 small engineering firms. The remarkably high rate of applications within the three weeks since the scheme began shows that we are getting the message through. The scheme is organised on the basis of "first come, first served". The fact that so many people have already applied should serve as a warning to others to make their applications as quickly as possible.

Are not those schemes desperately needed because of the appalling decline in the engineering industry as a result of the Government's policies? Is the Minister aware that the engineering industry in West Yorkshire has lost one in four jobs since the Government came to office, which is the most significant loss next to job losses in clothing and textiles in West Yorkshire? What is being done to help the engineering industry in Yorkshire as part of the progress that has been reported?

Part of the problem was the lack of sufficient investment in a number of small engineering firms before the Government came to office. The worldwide recession has compounded that problem in the sense that those firms do not have the resources to make investment in advanced capital equipment. That is why we have introduced this generous scheme. It is available in Yorkshire and Humberside, where already about 34 firms have applied.

I congratulate my hon. Friend on what he has said. Is he aware that many of the problems associated with small engineering companies are related to the cut-off level of the temporary short-time working compensation scheme being for 10 or more employees being made redundant? Will my hon. Friend consider whether there is a chance of reducing that cut-off level?

That is a matter for my right hon. and hon. Friends in the Department of Employment. They have reviewed that point, but the decision was made not to lower the cut-off level, because of administrative difficulties. However, I shall draw my hon. Friend's comments to the attention of the appropriate Ministers in the Department of Employment.

Confectionery Industry


asked the Secretary of State for Industry whether, in view of the effect of present levels of value added tax on the confectionery industry, he will seek to introduce a scheme to provide additional financial support for the industry.

The Government have no plans to introduce a scheme to provide additional financial assistance to the confectionery industry. This industry is eligible for the same range of Government support measures as the generality of manufacturing industry.

Will the Minister bear in mind that Rowntree Mackintosh, which is the largest employer in Halifax, and which has a proud reputation nationally and internationally, has been severely hit by value added tax and that, without urgent financial help, hundreds of jobs will be lost as a result of the Government's industrial and economic policies?

I shall certainly bear in mind what the hon. Lady said, but there is no evidence to suggest that the confectionery industry faces difficulties greater than those that the recession has caused for many industries. Obviously, regional grants in assisted areas and the normal sectoral schemes—product and process development schemes, and Science and Technology Act 1965 assistance—are available for that industry.

Manufacturing Industry (Investment)


asked the Secretary of State for Industry what was the level of investment in manufacturing industry in each of the last three years, at constant prices.

Including assets leased to manufacturers, at 1975 prices the figures are £4,439 million, £4,157 million and £3,602 million in 1979, 1980 and 1981, respectively.

Does my right hon. Friend agree that those figures provide evidence of a worrying decline in investment in manufacturing industry? Does he further agree that the decline in investment in manufacturing industry will have an adverse effect on our future competitiveness in world markets? Is there not a strong case, if the decline is to be reversed, for a substantial increase in domestic demand to persuade manufacturers that more investment is worth while?

I agree that the fall in investment is not welcome. I can take some comfort from the fact that it is not as great as the fall in the last recession, although this recession has gone very much deeper. In other words, firms have maintained a substantial part of their investment programmes. The signs now are that investment is turning the corner. I would expect there to be an increase in 1982 and a bigger increase in 1983. Those are the forecasts.

I am sure that the right stance now is to help to make industry more competitive and not necessarily to inject a substantial sum of additional demand into the economy. All the evidence suggests that that would lead to higher inflation, not higher output.

Is the Secretary of State aware that falling investment in manufacturing industry has meant the advent of depression for many communities in the Northern region, including the town of Maryport in my constituency, where unemployment is now nearly 30 per cent., following the latest redundancies from Spillers last week? Will the Minister introduce selective measures to help such communities to attract the investment that the general strategy of the Government has failed to provide?

Many of the firms making equipment for industry have looked overseas and have won some spectacular contracts in other countries, which have gone some way to replace the fall in business in the domestic economy. Many firms in the North of England and elsewhere have taken the opportunity substantially to increase their efficiency and productivity and to reduce their costs relative to those of their competitors. That is the way to win business both here and overseas.

Will my right hon. Friend seek to expedite the passing of the new draft regulations on the European regional development fund, which will be very much more effective and flexible than the present regulations and should help to increase investment in manufacturing industry and the all-important infrastructure to go with it?

Will the Secretary of State give the House the facts relating to increased investment? All the forecasts—not least from the CBI—are that investment is going down. Where is the evidence for his statement?

The right hon. Gentleman will be familiar with the forecasts, published at the time of the Budget, of my right hon. and learned Friend the Chancellor of the Exchequer. In the public sector, investment in new construction will be up by 14 per cent. this year over last, and investment by the nationalised industries will be up by 26 per cent. this year over last. Nationalised industry investment amounts to £½ billion—about one-third of it in British Telecom. The Government are playing their part. We want to see the higher levels of investment which are necessary to get industry moving.

North Of England Development Council


asked the Secretary of State for Industry when he expects to conclude his discussions with representatives of the North of England Development Council on the level of grant to be paid to the council for the three-year period 1983–85.

My hon. Friend the Minister of State had a useful meeting with the chairman and directors of the four English regional development organisations on 1 April, and we now hope to reach a decision quickly about the future level of grant.

What are the so-called constitutional differences which may lead to Wales and Scotland receiving a bigger grant than the North of England Development Council? Why will Wales receive its grant from April 1982, whereas the North of England Development Council will receive its grant from April 1983? We in the north strongly support the case for Wales and Scotland, but the Minister must be under no illusions. We in the north must receive similar treatment.

My hon. Friend the Minister of State made it clear that we are anxious that there should be reasonable equity of treatment between the different parts of the United Kingdom, but that does not mean identical amounts of grant, as other factors have to be taken into account. As I indicated in answer to an earlier question, 90 per cent. of successful United States inward investment projects come by way of United Kingdom central Government effort, through the Invest in Britain Bureau and overseas diplomatic posts.

Many English local authorities in new towns spend public money on overseas promotion, whereas Scottish and Welsh local authorities are not very active in that area. No new Government money is being given to the Development Commission for Wales. The money is being redirected from elsewhere within the Welsh Development Agency budget.

However much the Minister may wriggle, is it not clear that extra resources, which we welcome, have been given to Wales? Should not the critieria be the nature of the problems and the number of people out of work, not some constitutional excuse? Will not the people in the Northern region conclude that yet again the Government have taken a deliberate decision to damage their prospects?

Extra resources have not been given. As I indicated a moment ago, it is a change in the distribution of the WDA's budget. There is no extra central Government money, in the sense of new money, going for that purpose this year. It is just a movement within the budget itself.

The hon. Gentleman ought to be fair and recognise that a very high proportion of regional development grant, which is caused because of investment, goes to the Northern region. We expect nearly 4,000 jobs in the North-East to be created as a result of foreign-owned companies, known to the Invest in Britain Bureau, starling or firmly deciding to start during 1980 and 1981. Inward investment projects have been going to the Northern region. I assure the hon. Gentleman that the interests of that region are always borne in mind in all the activities concerning inward investment.

North-East Lancashire


asked the Secretary of State for Industry what representations he has received on development area status for North-East Lancashire; and if he has made a decision.

My right hon. Friend and I have received a number of representations urging development area status for North-East Lancashire. My right hon. Friend saw a deputation from the North-East Lancashire Development Association on 18 March, and he is giving its case careful consideration.

Is the Minister aware that, even since the Adjournment debate last Thursday, yet another firm in the Blackburn travel-to-work area, Mossbridge Yarns, has announced closure, and that there is no sign in North-East Lancashire of the recession coming to an end, let alone being over?

Is the Minister further aware that the travel-to-work areas of Blackburn, Hyndburn and Burnley have unemployment levels which, although not the average for assisted areas keeping their status, certainly come within the band of areas keeping assisted area status? Therefore, the case for assisted area status for our areas is overwhelming.

As the hon. Gentleman knows, we had a full Adjournment debate on the subject on Thursday evening, when I set out the criteria. We have always made it plain that we are prepared to look at any permanent changes in the structural decline of an area relative to other parts of the country. That would apply to North-East Lancashire as well as elsewhere. We shall continue to monitor the position.

Will the Minister examine closely the projected unemployment figures for the Accrington travel-to-work area of 19 per cent. and for the Hyndburn area of 16½ per cent.? If he accepts those figures, which have been worked out by the Hyndburn borough council, is not the case for granting development area status not just overwhelming, but unanswerable?

One must always be careful about projected figures as distinct from the real, existing figures. The situation can change considerably over the course of a few months. I have seen that happen in other travel-to-work areas. I believe that the hon. and learned Gentleman and representatives of the district council are to see me shortly. We can look at his projections then.


Police (Complaints)


asked the Attorney-General what is the average prosecution rate by the Director of Public Prosecutions with regard to complaints against the police referred to him.

The average prosecution rate over the years 1975 to 1979 was 14 per cent.

Why is it that, according to an answer given to me by the Attorney-General on 4 March, the prosecution rate against police officers is 23 per cent. for road traffic offences and 14 per cent. for theft, but less than 2 per cent. in cases of assault? If the reason is lack of independent witnesses, why is the prosecution rate seven times higher—15 per cent.—for sex offences?

I think that the main reason—not the only reason—is the peculiarity of the right of private prosecution for common assault. Most common assault cases are initiated by the person who has been assaulted. In the minor cases, particularly where there has been a complaint that a police officer pushed a member of the public, the Director of Public Prosecutions usually writes to the complainant advising him of his ordinary remedies.

Does my right hon. and learned Friend agree that many of the complaints against the police are mischievous and, when investigated, found to have no basis in fact?

Inevitably, that is so. An allegation of assault is easily made, even when it is totally unjustified.

Does the Attorney-General agree that the so-called double jeopardy rule in section 49 investigations has no statutory basis? Does he further agree that if the Director of Public Prosecutions decides not to prosecute a case, it cannot meaningfully be said that the officer concerned has never been in jeopardy, because there is no real reason why, if appropriate, he should not be proceeded against for a disciplinary offence?

I am grateful to the right hon. and learned Gentleman. This matter, which I know caused him anxiety when he was in the Department, remains an anxiety for me. I should welcome any chance of a discussion with him on how we might improve the situation.

Does the Attorney-General agree that the position is unsatisfactory, particularly in the light of a recent case where, six years after the event, a citizen of this country has been given record substantial damages against the police? Does he further agree that in such a case it is difficult to initiate a prosecution, although the papers have been sent to the DPP, because, six years after the event, no one can remember exactly what happened? Is there no way of initiating prosecutions earlier?

When I read about that case, which I am sure must have horrified every hon. Member as much as it did me, I instigated inquiries. Much to my surprise, I found that no complaint had been made to the police. Therefore, no section 49 report was made under the Police Act for the Director of Public Prosecutions to consider. His first knowledge of the case was the same as ours—reading of it in the newspapers. That delay was not the fault of the Director of Public Prosecutions or anyone else. Principally, for a reason that I do not understand, it was the fact that no complaint was made in the first place.

Republic Of Ireland (Extradition)


asked the Attorney-General if he has had discussions with the new Attorney-General of the Republic of Ireland about extradition arrangements between the United Kingdom and the Republic of Ireland.

I have been in touch with the new Attorney-General of the Republic of Ireland with a view to resuming the discussions initiated last year with his predecessor. I hope to meet Mr. Connolly very soon for personal talks at which we can carry the discussions forward.

When my right hon. and learned Friend meets his opposite number in the Republic of Ireland, will he seek the maximum co-operation in bringing suspected terrorists to justice? Will he emphasise that such co-operation is in the best interests of both countries?

In my discussions with Mr. Peter Sutherland, the former Attorney-General in the Republic, those issues were very much in mind and agreed upon. I have no reason to believe that I shall not find exactly the same response from the new Attorney-General.

Did the Attorney-General for the Republic refer to the supposed constitutional difficulty in the way of the Republic's ratifying the suppression of terrorism convention? If so, did my right hon. and learned Friend remind him that such difficulty was not apparent when the Republic ratified the genocide convention, which contains similar provisions?

I have always made it clear that the ability of terrorists to shelter behind the exception of political offenders is one of the major obstacles facing us. The Irish side is well aware of this. A number of ways of overcoming the difficulty are available and they were discussed during my previous talks. However, I am not prepared to go into details of what were private and confidential discussions.

Can the right hon. and learned Gentleman say how many cases we have submitted to the Republic of Ireland to be tried there on the basis of evidence taken in the United Kindgom or in Northern Ireland?

I cannot give the exact number off the cuff. I shall write to the hon. Gentleman. However, he will no doubt share my pleasure in finding that the response to those requests over the past few months has been quick and effective.



asked the Attorney-General if he will consider the introduction of new legislation on the appointment and dismissal of judges.

Why have the Government not introduced a Bill to enforce the long-overdue retirement of some of the geriatric fossils who use their judicial position to overrule the wishes of the elected representatives of the people on matters such as public transport fares and subsidies?

The three judges who are over the existing retirement age—two English and one Scottish—could not be described by any of the adjectives so poisonously used by the hon. Gentleman. They are respected judges who carry out their job impartially and fairly, as we expect them to do.

If my right hon. and learned Friend ever has occasion to consider the processes for dismissing judges, will he ensure, in so far as Parliament is involved, that those processes involve the accused judge being heard either in person or at least by a Committee of the House, as happened in the Jonah Barrington case, but did not happen in the Peter Thomson case?

Since, fortunately, I see no prospect on the horizon of that happening, I will bear in mind what my hon. Friend said, but I shall not promise to do any more than that.

What is the objection to introducing a fixed period of training for potential appointments to the judiciary and a periodic refresher course, particularly in sentencing attitudes, during their tenure of office on the Bench? Many other careers have an in-service type of updating. Why not judges?

I should be more ready to accept that question from someone who is not a lawyer and has not had great experience in the courts. Most judges have practised widely in the courts. Furthermore. courses and seminars are regularly arranged on various matters which will come before them, particularly the problems involved in sentencing.

Theatrical Performances (Prosecutions)


asked the Attorney-General whether, having regard to the statutory provisions relating to the content of theatrical performances, he will discuss with the Director of Public Prosecutions a policy towards initiating or allowing prosections in such cases.

Is the right hon. and learned Gentleman aware that, since the unsatisfactory denouement of Mary Whitehouse's reent dramatic action in the courts, theatre producers simply do not know where they are? Is he further aware that they thought that they were given a guarantee by the Theatres Act that they were subject to that Act, not to the sort of prosecution that we have seen recently under the common law? Does not the Attorney-General think that it is his responsibility, as a member of the Government, to give theatre producers some sort of guidance on when they will be subject to such common law prosecutions and what certainty they may have?

They have the certainty that anything that could be considered an offence under the Treatres Act can be prosecuted only with my consent and at my institution. Unfortunately, it is not only the common law. For example, if a director were determined to be totally realistic in staging the play "Lolita" and insisted that the girl was 14-years-old and that, in the course of the play she was indecently fondled, that would be an offence under the Sexual Offences Act and obviously should be prosecuted as such.

Falkland Islands

3.31 pm

With permission, Mr. Speaker, I should like to make a statement about recent developments in relation to the Falkland Islands and South Georgia.

In our continuing pursuit of a negotiated settlement, my right hon. Friend the Foreign and Commonwealth Secretary visited Washington on 22 and 23 April. He had many hours of intensive detailed discussion with Mr. Haig. Their talks proved constructive and helpful, but there are still considerable difficulties. Mr. Haig now intends to pursue his efforts further with the Argentine Government.

However, the Argentine Foreign Minister is reported to be unwilling to continue negotiations at present. I hope that he will reconsider this. As the British task force approaches closer to the Falklands, the urgent need is to speed up the negotiations, not to slow them down. We remain in close touch with Mr. Haig.

I now turn to events on South Georgia yesterday. The first phase of the operation to repossess the island began at first light when the Argentine submarine "Sante Fe" was detected close to British warships that were preparing to land forces on South Georgia.

The United Kingdom had already made it clear to Argentina that any approach on the part of Argentine warships, including submarines, or military aircraft which could amount to a threat to interfere with the mission of British forces would encounter the appropriate response. The "Santa Fe" posed a significant threat to the successful completion of the operation and to British warships and forces launching the landing. Helicopters therefore engaged and disabled the Argentine submarine.

Just after 4 pm London time yesterday, British troops landed on South Georgia and advanced towards Grytviken. At about 6 pm the commander of the Argentine forces in Grytviken surrendered, having offered only limited resistance.

British forces continued to advance during the night and are now in control of Leith, the other main settlement on South Georgia. At 10 o'clock this morning the officer commanding the Argentine forces on South Georgia formally surrendered.

British forces throughout the operation used the minimum force necessary to achieve a successful outcome. No British casualties have been notified and it is reported that only one Argentine sustained serious injuries. About 180 prisoners were taken, including up to 50 military reinforcements who had been on the Argentine submarine. The prisoners will be returned to Argentina.

British Antarctic survey personnel on the island were reported to be safe when we last heard from them early yesterday afternoon. Our forces are making contact with them and arrangements are in hand to evacuate them, if they so wish.

I am sure that the House will join me in congratulating our forces on carrying out this operation successfully, and recapturing the island. The action that we have taken is fully in accord with our inherent right of self-defence under article 51 of the United Nations Charter.

My right hon. Friends and I will continue to keep the House fully informed on the situation as it develops.

I should like to emphasise that the repossession of South Georgia, including the attack on the Argentine submarine, in no way alters the Government's determination to do everything possible to achieve a negotiated solution to the present crisis. We seek the implementation of the Security Council resolution, and we seek it by peaceful means if possible.

I am sure that the Prime Minister must appreciate that, along with other moods, there is a deepening sense of anxiety throughout the country and I trust that she and the Government will take account of it. I am sure that the whole country will be relieved to know that the South Georgia operation was carried through without loss of life on our side and without serious injury on either side.

We are entitled to stress to all concerned that the recovery of South Georgia was fully within our international rights. It was in no sense a breach of the charter, as some have falsely alleged. Indeed, it may help us in other areas, particularly in view of the extreme skill with which the operation was executed. Of course, the Falkland Islands and South Georgia are two very different propositions and I am sure that the House and the country understand that.

However, the most important and persistent question remains, and is indeed intensified. I put the question in the light of what the Prime Minister has said. How are we to pursue the search for the diplomatic and peaceful settlement to which she has referred? What is to happen next? The right hon. Lady spoke of speeding up the negotiations. What steps are the Government taking to speed up those negotiations?

What stage has Mr. Haig's mediation reached, and what will happen if that mediation is not able to be pursued? A question that we have constantly asked throughout the discussions is reiterated in a notable leading article in today's Financial Times. Why have we so far refused to go back to the Security Council? Perhaps I should put the question in a way that the Prime Minister might prefer. When will we return to the Security Council on these matters? In the meantime, how are we to ensure—indeed, to be absolutely sure—that there will be no dangerous escalation of the crisis in any way?

What is the form of political control over military operations? In present circumstances that political control must be absolute and there must be no possibility of any mistakes whatever.

The Opposition remain firmly, unshakably and persistently committed to fresh initiatives in the search for a peaceful settlement. If one initiative fails, another has to be started. Some Conservative Members are laughing, but the approach that I have outlined is the spirit in which the Government should be going about their business.

I retract nothing of what I have said about the charter and South Georgia, but let us take account of the fact that what is legal is not necessarily also prudent. That also has to be taken into account. The search for peace must never be torpedoed by us, and I believe that the House can play a considerable part in ensuring that that spirit informs all our actions.

I ask the Prime Minister not merely to agree to report to the House consistently but to give us much fuller reports than we have been given so far. There is still much to be reported to the House about the negotiations and the possible options. The best course would be for the right hon. Lady not only to agree to give reports over the next few days to the House but to agree that there should be a debate on Thursday. We on the Opposition Benches have a right to speak to these matters. We in the House of Commons should keep a persistent control over what the Government propose and intend. I ask the Prime Minister to accede to that request here and now.

I thank the right hon. Gentleman for his remarks at the beginning of his intervention. I thank him especially for stressing that we had a right to retake and recapture South Georgia in accordance with the rules of the United Nations charter. I join the right hon. Gentleman in congratulating our forces on the professional skill with which they carried out their task. The right hon. Gentleman says that people are anxious. We share that anxiety in the search for a diplomatic settlement. More than three weeks have elapsed since the United Nations Security Council resolution was passed calling upon the Argentine forces to withdraw. During that time, far from withdrawing, the Argentine Government have put reinforcements of men, equipment, and materials on the island. If we have not yet reached a settlement, the blame lies at the feet of the Argentine Government.

We are naturally ready and anxious at any time to continue these negotiations. We have stayed constantly in touch with Mr. Haig. I hope that Mr. Costa Mendez will reconsider his decision not to see Mr. Haig and that he will see him shortly. If not, Mr. Haig can, of course, communicate with the Argentine Government in other ways.

The right hon. Gentleman mentioned the United Nations. It is, of course, the United Nations Security Council resolution that we want implemented. I do not think that there is any disposition in New York to involve the United Nations further while the negotiations with Mr. Haig are still continuing—[Interruption.] I am reporting what I believe to be the position at the United Nations in New York. I believe that most people there reckon that the best hope for a peaceful settlement is through the negotiations with Mr. Haig, I believe that we must continue those negotiations with all possible speed.

Of course we search for peace. We did not break the peace. We must remember that while we search for that peace our people—British people—are under the occupation of the Argentine invader. We must remember that in the way in which we carry out these negotiations.

The right hon. Gentleman asked for a debate. I hope that he will pursue this matter through the usual channels.

We shall certainly pursue the matter through the usual channels, but the right hon. Lady has some influence with the Leader of the House. After all, she has only just appointed him. We are entitled to have a debate this week, especially in the light of the right hon. Lady's replies about what is to be done about getting the negotiations going. She devoted only one half sentence to that matter. "We are keeping in touch with Mr. Haig", was all that she said about the way in which we are making efforts to keep the negotiations going. I hope that the right hon. Lady will agree to the debate and give a much more responsive reply on that aspect of the matter.

I trust, nevertheless, that the right hon. Gentleman will pursue the matter through the usual channels.

As I think the right hon. Gentleman will understand, I cannot give him details of negotiations while they continue, but we pursue them as vigorously as possible. After all, what we are asking for is the withdrawal of Argentine troops in accordance with the United Nations Security Council resolution.

Will my right hon. Friend clarify the position about the reference of this dispute to the International Court of Justice, a matter to which reference was made in a leading article in the Financial Times, and it was mentioned by t he Leader of the Opposition, and also in The Times and the Sunday Telegraph? Can she say that, subject to the prior withdrawal of troops by Argentina in conformity with United Nations resolution 502, it is the Government's policy to suggest a reference of the dispute to the Court in accordance with the United Nations charter and the statute of the Court? If, unhappily, there should be a drift to war without any attempt at arbitration, which is so clearly envisaged in the charter, would not posterity marvel, and might it not condemn?

I believe that we referred the matter of the dependencies of the Falklands to the International Court of Justice in, I think I am right in saying, 1955. My right hon. and learned Friend will know that both parties have to agree to go to the International Court of Justice for it to adjudicate. We took the case to the Court, but the Argentines did not agree to the jurisdiction of the Court with regard to the dependencies. It is not through any lack of consent on our part that the case has not gone to the International Court of Justice.

Order. I propose to allow 20 minutes for questions today as on previous days.

Is the Prime Minister aware that we on these Benches fully and unequivocally support the decision to repossess South Georgia and congratulate all the Services and Service men, who have taken considerable risks? We are grateful for the fact that there has been no loss of life.

Will the right hon. Lady accept that many of us believe that it is right, with the Organisation of American States meeting in Washington today, to give Secretary of State Haig a few more days, but that the time is approaching when the United States, if it is unable to achieve movement, will have to make a decision to apply economic sanctions? Can the House be given some assurance that before any major escalation of violence took place the Prime Minister would be ready to go to the United Nations to discuss, under articles 82 and 83—these relate to strategic trust areas which would allow for British administration—the possibility of using those provisions for any interim administration?

I am grateful to the right hon. Gentleman for what he said at the beginning of his remarks. With regard to the United Nations, it is, after all, the implementation of the United Nations resolution that we seek. As the right hon. Gentleman knows, the United Nations is not in a position to implement the resolution itself. I repeat what I said to the Leader of the Opposition. I believe that it is right at the moment to continue through Mr. Haig to try to seek a peaceful settlement.

With regard to what the right hon. Gentleman said about the future course of negotiations as a whole, I must point out that time is getting extremely short as the task force approaches the islands. Three weeks have elapsed since the resolution. One cannot have a wide range of choice and a wide range of military options with the task force in the wild and stormy weathers of that area.

I returned from Washington this morning. Is my right hon. Friend aware of the overwhelming support that exists in America for the action that we are taking and the overwhelming understanding among many Members of Congress and others that the principle at stake is as important to America and the Western world as it is to this country?

I am grateful to my right hon. and learned Friend. I believe that the American people know that unprovoked aggression must not be allowed to succeed. If it does, there will be no international law and many people will fear for their future.

Is the Prime Minister aware that, although the House and the country are united in condemning the aggression, public opinion, so far as it can be ascertained, favours a much more serious attempt at negotiation through the United Nations than has occurred, and that a majority of people would not follow the Government into a war with the Argentine, which would threaten the loss of many lives, including Service men and Falkland Islanders, which might spread the conflict and which would isolate this country? If the Prime Minister continues to underrate the importance of negotiation and proceeds with the war, the responsibility for the loss of life will rest upon her shoulders.

The Government lack no vigour or will to pursue negotiations. The lack is on the part of the Argentine Government to obey the Security Council resolution. In the meantime, perhaps the right hon. Member for Bristol, South-East (Mr. Benn) will remember that our people are under the heel of the Argentine invader.

Is the Prime Minister aware that few things could do more to bring support to the action that she and the Government are taking than the thoroughly mischievous question asked by the right hon. Member for Bristol, South-East (Mr. Benn)?

What is the attitude to the Government's policy of Commonwealth countries in general and those in the West Indies area in particular?

Commonwealth countries have been most helpful in condemning the unprovoked aggression of the Argentine. Many of them have stopped imports from that country. New Zealand has also stopped exports. Mr. Fraser has sent a very strong message of support, to the United States Government.

As to the countries in the Caribbean area, Guyana in particular is a member of the Security Council and voted for United Nations resolution 502. There are many territorial disputes in the Caribbean, and many people realise that it is crucial to them that the Argentine should not succeed in its invasion of the Falkland Islands.

Will the Prime Minister convey to the British forces who recaptured South Georgia the admiration of Liberal Members for the skill, courage and restraint that they demonstrated in that operation?

As the right hon. Lady has emphasised several times today that time is short, with all that that implies, does she realise that it will inevitably be increasingly difficult to give her a blank cheque without far more information? Has she further considered the suggestion of my right hon. Friend the leader of the Liberal Party that there should be all-party discussions on the matter? Can she say more about economic sanctions, especially the supply of arms? Is it true that Israel is supplying ammunition to the Argentine?

The whole House admires what our forces have done, and I shall gladly send that message on behalf of the whole House.

With regard to the hon. Gentleman's first point, time is indeed short. There is no lack of will on our part to negotiate. The trouble is in getting Argentina to withdraw. It may not be possible to achieve an Argentine withdrawal by negotiation, but that is what we are seeking. Argentina has had more than three weeks in which to comply with the Security Council resolution, but it has shown no inclination to do so. Indeed, it has reinforced its troops.

The hon. Gentleman will be aware of European sanctions and those taken by a number of Commonwealth countries. I am not in a position to say precisely what Israel has or has not supplied to the Argentine.

I join other right hon. and hon. Members in congratulating the Armed Forces on the skill with which they liberated South Georgia. I also congratulate the Government on taking the decision to authorise that operation.

I welcome the decision to keep the door for negotiation open, but does my right hon. Friend agree that we cannot keep the task force treading water indefinitely at the mercy of the Atlantic storms or the changing tides of political opinion? Does she agree that, having achieved a first success, we must, as soon as all preparations are ready, proceed to the next stage as soon as possible?

I am grateful to my right hon. Friend for his comments. I am especially grateful to him for pointing out that time is short because of the weather conditions, the distance from home and because the task force is now approaching the islands. We must take account of that and do everything to speed up negotiations. I hope that that message will get through to the Argentine Government, because that is where it needs to go.

Is it not clear that there will be a far better prospect of an acceptable negotiated settlement if, meanwhile, we fully exercise our unchallengeable rights of self-defence?

Yes; I am grateful to the right hon. Gentleman for making that point. We shall have greater chances of a peaceful settlement if we bring greater military pressure to bear on the Argentine Government.

Will my right hon. Friend emphasise that since the Government came to office they have done almost everything to attempt to negotiate a peaceful settlement between 1979 and the advent of hostilities and have continued with that approach since? Will she also emphasise that it is not us but the Argentine which has infringed not only the principle but also the letter of the United Nations charter and that it is infringing resolution 502? Does she agree that, although recent events have been tragic, they have, nevertheless, shown that Britain has pursued the cause of peace throughout and that we are now defending our rights?

I confirm what my hon. Friend says. We are doing everything in accordance with the United Nations charter. We continue to seek a peaceful solution. If we are not successful, the fault will lie not with us or Mr. Haig, but fairly and squarely with the Argentine Government.

Will the Prime Minister find time to give her attention to the problem of British Falkland Island citizens who are in the United Kingdom? Her Majesty's representatives, the governor, and the deputy governor— Mr. Baker—are in. Britain, as are two elected representatives, John Cheek and John Luxton. They have had some support from the Foreign Office, but not very much. The Foreign Office has not yet found a home for the governor. He has not complained, but I do.

Will the right hon. Lady also consider the suggestion made by her hon. Friend the Member for Uxbridge (Mr. Shersby) and myself to the Foreign Office last October that a Falkland Islands secretariat or Government office should be established so that they would receive some support and not be dependent on the good will of the Foreign Office or the charity of the Falkland Island Office?

I shall examine the matter urgently. We are in touch with those people. If they need help, of course we must give it.

With regard to the Falkland Islanders still in the Falkland Islands, I have made it clear that if some of them wish to be evacuated temporarily and have not the means to do so, the Government will ensure that the necessary means are provided.

Did not the Government make it clear from the outset that if Argentina would not be talked out of the Falkland Islands it would have to be fought out? Now that there can be no doubt about the determination and ability of Britain to take any necessary military action, will the Prime Minister ensure that in the continuing negotiations to secure observance of resolution 502 she will keep the initiative firmly in her hands?

We are trying constantly to take initiatives to ensure that the negotiations continue. We shall continue doing that. Only one thing needs to be done immediately under the Security Council resolution—the withdrawal of Argentine forces. After that, negotiations can continue. They have been going on for many years. As soon as the Argentine forces withdraw, we shall be prepared to start negotiations once again.

As the runway at Port Stanley has been strengthened and lengthened to take Mirages, MiGs and Skyhawks, what are the consequences for air superiority and what will be the next action of the task force?

I do not wholly accept the premises upon which the hon. Gentleman's question is founded.

Will the right hon. Lady, both directly and through the United Nations, bring to the attention of the Argentine Government their obligations under the fourth Geneva convention of 1949 with regard to not compelling Falkland Islanders to remain in those parts of the Falkland Islands that are particularly subject to combat danger?

I shall, of course, consider doing what the hon. Gentleman says. Many of the Falkland Islanders have left Port Stanley and gone out to the camp. There are far fewer in Port Stanley now than there were previously, but we shall certainly consider the hon. Gentlman's suggestion.

I am sure that in these circumstances it is right and humane to return prisoners of war to the Argentine, but will my right hon. Friend give an assurance that if any difficulty arises about this the names and state of health of such men will be made known to their anxious relatives—in sharp contrast to the inhumane treatment by the Fascist junta of the relatives of thousands of Argentines who have disappeared in recent years and many of whom are now dead?

I should make one point clear. These are not prisoners of war. A state of war does not exist between ourselves and the Argentine. They are prisoners, and they will be returned as soon as possible. We shall, of course, let their names and state of health be known to their relatives as soon as possible. I understand that the commander of the Argentine forces on the island is already grateful for the prompt medical attention that was given to the one Argentine marine who was badly hurt.

Does the Prime Minister agree that now is the time for resolution and for her to earn the soubriquet of the Iron Lady by standing firm against the wild voices calling for an increase in violence and a drift to war? Does she agree that neither Britain not the Argentine can benefit from a war? Will she emphasise that we shall seek a negotiated settlement and that, if that requires economic force, we shall use economic force and economic sanctions and, indeed, every sanction short of war, because war would be disastrous?

First, a number of countries have joined us in imposing economic sanctions. As the right hon. Gentleman knows, such sanctions are slow to operate and tend not to be wholly successful as there is a good deal of leakage through third countries. Secondly, I agree that resolution is required—resolution to ensure that unprovoked aggression does not succeed.

Despite the comments of my right hon. Friend about economic sanctions, may I revert to the point made by the right hon. Member for Plymouth, Devonport (Dr. Owen)? As Mr. Haig's valiant efforts to mediate have now apparently ended for the time being by the decision of the Argentine Foreign Minister, will my right hon. Friend reconsider the position and suggest to the United States Government that it might now be appropriate for them to impose economic sanctions against the Argentine, if only to show which side they are on?

I understand the feelings of my hon. Friend and of many right hon. and hon. Members on this matter. Such economic sanctions would be of a kind and a degree perhaps greater than any other that could be brought to bear. I understand, however, that Mr. Haig believes that the meeting with Mr. Costa Mendez has only been postponed and will take place. Even if it does not, there are means of contacting and negotiating with the Argentine junta direct.

Why must the pace of negotiations be dictated by the requirements of military strategy in the South Atlantic, when our priorities should surely be the other way round?

The pace of negotiations has been very swift. When one has a task force such as we have in the wild and stormy weathers of the South Atlantic, that is a limiting factor on possible military activities which any sensible Government must take into account.

Is my right hon. Friend aware that her handling of this crisis has the support of the vast majority of the people of this country? Does she agree that it is important to continue to follow the policy of the stick and the carrot—the stick to ensure that aggression pays no dividends and the carrot to show that we have no quarrel with the Argentine people, but only with the illegal actions of their Government?

I accept that negotiations are more likely to succeed if military pressure is kept up. One must always consider the military options, and in doing so we must look after our soldiers and Marines who have to undertake them.

Order. I am sure that we shall be returning to this subject during the week.

British Rail, Shildon

4.6 pm

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

"the announced closure of the British Rail engineering works at Shildon, Co. Durham, throwing 2,500 mostly skilled men on to the dole in a town of only 14,000 in which the unemployment rate is already well above the national average."

Shildon produced almost £800,000 of the £1·3 million profit of British Rail Engineering Ltd. last year. The previous managing director of BREL described it as the most efficient wagon works in Europe. Industrial relations have been excellent for many years. The men have cooperated fully in the cost cutting and new working practices to keep their products internationally competitive. Their reward for co-operation has been a hefty kick in the teeth.

Shildon was a birthplace of railways 150 years ago. Timothy Hackworth, who opened the works, was a great rival of George Stephenson, and the first railway in the world ran through Shildon. Four or five generations have given their lives to the works. In any family in Shildon, one will find more commitment to railways than in the entire British Rail Board. Yet no task force will be dispatched to preserve Shildon's way of life. No cash limit free, £275 million operation will be mounted to rescue Shildon from disaster. No brashly baying public-school cultivated voice from the Government Benches will be raised to acclaim the paramountcy of Shildon people's wishes.

This decision is as bad for Shildon as was the closing of the steelworks for Consett. The people of Shildon are shocked, stunned and disbelieving. What can the future hold now for them and their families? The Government and British Rail must recognise the social catastrophe that they are inflicting on this long-suffering Durham community, where the people embrace the solid working-class values of hard work, thrift, sturdy independence and self-help that the Prime Minister purports to admire.

The hon. Member gave me notice before 12 o'clock midday that he would seek to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,

"the announced closure of the British Rail engineering works at Shildon, Co. Durham, throwing 2,500 mostly skilled men on to the dole in a town of only 14,000 in which the unemployment rate is already well above the national average."

The House knows that it is always difficult for me when applications are made for emergency debates on the closure of factories. On this occasion I must tell the House that I was in the locality of the works at the weekend. Therefore, it is all the more difficult for me to explain that it is not in my power to decide whether this matter is to be debated. I merely have the right to decide whether we must change our business tonight or tomorrow night for an emergency debate on the proposed action.

I hope that the hon. Gentleman will appreciate that I listened to him with sympathetic concern. However, I have to rule that his submission does not fall within the provisions of the Standing Order, and, therefore, I cannot submit his application to the House.

Members (Personal Attacks)

On a point of order, Mr. Speaker. On Thursday 22 April the hon. Member for York (Mr. Lyon) raised a point of order with you in which he claimed that during the Adjournment debate on the previous night I had used about half the time available to me to launch a personal attack on him. You said in your reply, Mr. Speaker, that you had not read the details of the Adjournment debate, as, indeed, you could not have done because it had not been printed in Hansard at that time. As you have now had a chance to read my speech, I should be grateful for your ruling on whether I made a personal attack on the hon. Member for York.

I have had time to read the speech now. My arithmetic differs very considerably from that of the hon. Member for York (Mr. Lyon). It is not really for me to say as I was not in the Chair, but I did not sense in the speech of the hon. Member for Altrincham and Sale (Mr. Montgomery) a personal attack on anyone that was stronger than what is normal in debate in the House. I have read some that have been a great deal tougher.

Further to that point of order, Mr. Speaker. I am sorry if I exaggerated the nature of my complaint. I assumed that where it was the intention of one hon. Member to criticise the views of another in a way that was personally directed at him, there was a duty on that hon. Member to inform the other hon. Member of his intentions. In this case, the hon. Member for Altrincham and Sale (Mr. Montgomery) referred to me a number of times, read out a considerable section of a piece that I had written, and subjected that to criticism. If that is to happen, Mr. Speaker, surely it is normal for notification to take place. It was only in that sense that I referred to the hon. Gentleman's remarks as a personal attack. I did not suggest for one moment that the hon. Gentleman had abused me.

Order. The hon. Members for Altrincham and Sale (Mr. Montgomery) and York (Mr. Lyon) should have settled this matter between themselves in the Tea Room. It is not big enough to bring to the Floor of the House.

Statutory Instruments, &C


That the draft Electricity (Borrowing Powers) (Scotland) Order 1982 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Hovercraft (Application of Enactments) (Amendment) Order 1982 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. David Hunt.]

Orders Of The Day

Finance Bill

(Clauses 18, 22, 29, 65, 71, 75, 117 and 128 and
Schedule 10.)

Considered in Committee. [Progress 22 April.]


Clause 29

Social Security Benefits

4.13 pm

I beg to move amendment No. 13, in page 19, line 3, at end insert 'any condition contained in'

With this it will be convenient to take Government amendment No. 16.

As the Committee knows, section 27 of the Finance Act 1981 brought into tax benefits paid to the unemployed. That included supplementary benefit paid to the unemployed because a substantial proportion of the unemployed receive supplementary benefit either in place of, or in addition to, unemployment benefit Supplementary benefit that is paid to the unemployed is distinguished for this purpose from other supplementary benefit by reference to social security legislation, the distinction being that that benefit should be taxable if the person's right to it is subject to the condition that he is both registered and available for employment. That condition is set out in section 5 of the Supplementary Benefits Act 1976.

The social security legislation that is before the House of Commons makes necessary a technical change in the wording. It is for that reason that I move the amendment.

Amendment agreed to.

I beg to move amendment No. 14, in page 19, line 18, at end insert—

'(bb) at the end of subsection (5) (meaning of "relevant amount" in respect of any week) there shall be inserted the following words—
"Any reference in this subsection to an amount or rate or increase specified in any provision is a reference to the amount or rate or increase so specified for the week in question.";'
This is a highly technical amendment that follows a recent court ruling. It clarifies the law and makes it certain that it is as we thought it to be.

Amendment agreed to.

I beg to move amendment No. 15, in page 19, line 29, after `1982', insert

`provided that unemployment benefit is increased by 5 per cent.'

The purpose of the amendment is to postpone the date when unemployment benefit would come into tax, until such time as the Government restore to the unemployed the 5 per cent. in unemployment benefit that they took from them two years ago on the basis that unemployment benefit was not liable to tax. The gravamen of my remarks will therefore be addressed to the elementary justice of giving that 5 per cent. back to the unemployed so that they and they alone among the taxpaying public of Great Britain will not be left in the double jeopardy of being subject to two separate forms of taxation on the same income.

I wish also to put before the Committee a number of reasons why delay in the introduction of this measure should commend itself to the Committee. Last year, the Opposition warned the Government that they were entering into a matter of great complexity and that there was a real probability that their proposal would disappear into a morass of complexity sunk under a weight of anomalies.

The extent to which we have been proved correct in forecasting the complexity and foreseeing those complications is vividly borne out by the Bill. Only one year after last year's Finance Bill we are faced with a lengthy clause that amends the provisions that were made only last year. Since this lengthy clause was published we have for debate three further Government amendments on a clause that the Government published only last month. I challenge any member of the Committee to take the clause as drafted or, for that matter, to take the amendments that have just been agreed to and, without the advantage of notes on clauses, to make sense of the clause. That is not a rhetorical statement because if we have difficulty in grappling with the text of the Bill and comprehending it, we should reflect on the fact that to put it into practice we depend on the actions of fallible human beings who have to make sense of the dense texture of the legislation that we have passed.

I wish to turn to a press statement that was issued by the Society of Civil and Public Servants last November by Mr. David Luxton. Mr. Luxton is quoted in the press statement as saying:
"We would like the Government to postpone the scheme"—
that is the scheme for the taxation of unemployment benefit—
"until April, 1983. There is no way our staff could learn all the new procedures and run the system without a gigantic series of blunders before then, given conditions in unemployment benefit offices."
The full extent of the undertaking facing unemployment benefit offices is conveyed when Mr. Luxton rightly and properly observes that we are considering the taxation of 8 million who every year move in and out of unemployment. We are not merely considering the taxation of 3 million unemployed.

If the Government were to propose a change in taxation that affected those on the higher rate bands, or those that pay capital transfer tax, and that was likely to give rise to
"a gigantic series of blunders",
the bodies that would administer it would not be the only organisations to complain. There would be riots in constituencies, letters would be sent to The Times and the entire tax avoidance industry would hire the Dining Rooms downstairs to lobby us on the necessity to clarify the issue before it passed into law. Conservative Members would queue to intervene in the debate.

However, we are dealing not with blunders that will affect the wealthiest section of the electorate, but with those that will affect the poorest section. All that we know about unemployment tells us that those who are poor are the most likely to become unemployed, and that the effect of unemployment is likely to make them even poorer. It is those people who are now to be subject to the possibility of a
"gigantic series of blunders."
These blunders may push their income below the breadline.

There is another reason why we should be concerned about the poorest in society being liable to blunders in the assessment of their tax liability. A provision was inserted in last year's Finance Bill to the effect that this group of taxpayers, and this group alone, will have no right of appeal against assessment after 30 days have elapsed. The group that will be subjected to the possibility of a series of blunders is the same group that will have the least remedy after 30 days against the wrongful assessment of tax liability.

In response to criticisms from Inland Revenue staff, representations from the unions and representations from the Department of Employment and the Inland Revenue, the Government propose to delay the implementation of the scheme. That proposal is contained in the clause that we are debating. It is proposed to delay implementation from April 1982 to July 1982.

Can the Minister of State give the assurance that the Committee wants that the short delay of three months will be sufficient to ensure that those who are subjected to taxation as a result of this provision will not suffer the
"gigantic series of blunders"
that those involved in assessment believe is likely to occur?

I shall be grateful if the Minister tells us what has happened to the training period for the scheme. Training for the application of taxation of unemployment benefit was supposed to start in August 1981 and to continue until April 1982. It could not start in August 1981 because the Civil Service was then in dispute with the Government. It did not start until February 1982. Even with the postponement contained in the clause, there will be a training period of only five months, and not eight months. The training period will be substantially shorter than that envisaged when Ministers urged us to accept the proposal when we were debating last year's Finance Bill. Can the Minister of State give us the assurance that the truncated period of training will be sufficient?

I was considerably worried when I discovered earlier today that it will be necessary in every case where a claim for unemployment benefit is made for the unemployment benefit officer to add on to the computer code of that claim 17 items, most of which will be taken from the P45. It is the judgment of those involved that if 17 pieces of information are fed on to the computer tape it is highly probable that an error will occur in a number of instances. When that occurs the result is one for concern, for the computer will reject the application for unemployment benefit. That is even more serious than an incorrect assessment of tax liability. The applicant who is seeking unemployment benefit to which he is entitled, which previously he would have received after the first round, will have to encounter a period of delay before he receives the benefit.

If those who seek unemployment benefit will be liable to a series of blunders in the assessment of tax liability and will have to wait an additional period of delay to get their benefit, it is plain that the Government in all decency should postpone the introduction of the scheme until they can avoid these outcomes.

It would be appropriate and suitable if the Government considered delaying the introduction of the scheme until the autumn of this year. If they did that there would be two results. First, the Government would be able to retain the original training period of eight months. Secondly, the Government would be able to introduce the taxation of unemployment benefit in November in conjunction with the restoration of the 5 per cent. of unemployment benefit in the upratings in November.

Whatever date is set for the implementation of this measure, it should in all decency be the date on which the Government restore the 5 per cent. that they took away last March. We understand that the cost of restoring the 5 per cent. will be £60 million. We understand also from a parliamentary question that was answered shortly before the Easter Recess that the total revenue that the Government will receive from the taxation of unemployment benefit is £650 million. There has been a striking change in the estimate that we were given last year. Last year the estimated yield was a mere £240 million. It now stands at nearly treble that which was estimated a year ago. Given such a wide margin of error in the calculation of likely revenue, one cannot but suspect that the Government have no idea what will happen once the clause is introduced.

If the Government are to receive £650 million in additional taxation, in all honesty, fairness and justice the first charge against that sum should be to pay £60 million to the unemployed to restore the 5 per cent. that was taken from them. However, that is not what the Government propose. One cannot resist the natural temptation to go through the Red Book to ascertain where the money has gone. The Red Book makes it clear that the Government have found £160 million for higher rate thresholds, £50 million for investment income thresholds and £85 million to change the bands of capital transfer tax. By what conceivable perversion of social priorities is it considered more worth while and more just to spend the money taken in the taxation of unemployment benefit on those purposes rather than restoring the 5 per cent. abatement?

There is another factor that the Committee is entitled to bear in mind when considering the cost of restoring the 5 per cent. abatement. When the then Secretary of State for Social Services qualified earlier statements on the issue he said about the cost of restoring the 5 per cent.:
"It is a matter for judgment at the time, in relation to available resources, the general level of earnings, what the country can afford, the borrowing requirement and all other factors as to what is the appropriate level."—[Official Report, 21 May 1980; Vol. 985, c. 555–56.]
It was the Secretary of State who identified the borrowing requirement as the relevant factor when we come to consider whether we can afford to spend £60 million to restore the 5 per cent. abatement.

The Committee will be aware that the background to the debate is the discovery by the Government that the borrowing requirement for the past financial year was £2 billion less than they had predicted as recently as March. Indeed, it would have been a further £1½ billion less had not the Civil Service dispute fortuitously intervened to keep the Government nearer target on their PSBR requirement.

4.30 pm

The discovery cast an ironic light on much of the debate on last year's Budget. The sum of £2 billion would nicely have covered a 15 per cent. increase in the tax threshold.

It would have enabled the Government to avoid increasing the tax burden and widening the poverty trap, which they introduced last year by not increasing tax thresholds.

The Government were not to know at the time that their estimate was so far adrift, but they know now. They cannot avoid the fact that any decision that they take on the Finance Bill is taken in the clear knowledge of what happened to the PSBR last year. They could not have hoped for a more favourable background on the borrowing requirement for a decision on whether to restore the 5 per cent. to the unemployed. If, against the background of a much more relaxed borrowing requirement than they had anticipated, they persist in denying the 5 per cent. to the unemployed, they will demonstrate a great meanness of spirit, although I hope that at the end of the debate the Committee can acquit Treasury Ministers of that.

There are two main reasons why Treasury Ministers should respond to the concern on both sides of the House. First, at the time the 5 per cent. abatement was made, the Government established the relationship between the abatement and the taxation of unemployment benefit. Hon. Members in the Chamber will be familiar with the sacred texts on the matters. Little is to be gained by arguing whether the words as they were spoken formulated a clear, precise and legally binding commitment. Two years ago we were led to believe that the 5 per cent. abatement was a temporary measure and that it would be restored when unemployment benefit was brought into tax. That clear understanding on both sides of the House is much more significant to what we now do than the precise form of words that may have been used at the time.

The idea that the 5 per cent. was to be restored when taxation was brought in was not held simply on the Opposition Benches. In the debate on 18 March, of the nine Conservative Back Bench speakers only one supported the Government in resisting restoration of the 5 per cent. The other eight urged the Government to restore the 5 per cent.

The speech made in favour of the Government proved without a scintilla of doubt that the Government did not have a leg to stand on.

I entirely accept that. To avoid an accusation of being unfair or selective in my quotations, I propose to quote the speech of the only Back Bencher to support the Government's position. The hon. Member for Grantham (Mr. Hogg) stated:

"There is no doubt that many hon. Members, and people outside the House, believed that the abatement would be made good when unemployment benefit was brought into taxation. There is also no doubt that Ministers have made statements that gave colour to that belief."—[Official Report, 18 March 1982; Vol. 19, c. 516.]
That was the single Back-Bench speech in support of the Government's position.

The point was made with greater clarity and perhaps brutality by the Bow Group. In its pre-Budget submission it urged the Government to restore the 5 per cent.
"on the grounds … that the Conservative Party should not be seen to cheat."
At the end of the debate we shall know whether the Government—I distinguish between the Conservative Party and the Government—are seen to cheat. The present position is a cheat. It leaves the unemployed 5 per cent. worse off. They were not liable to tax and it is now proposed to tax them on what they have left.

That brings me to the second main reason why the 5 per cent. should be restored. Irrespective of whether the Government committed themselves to restoring the 5 per cent., it should be restored for the simple and basic reasons that the unemployed need the money. They have experienced a steady erosion in the value of benefits since the Government came to office. They lost the earnings-related supplement, which was worth, on average, £11 a week. They have also witnessed a change in the calculation of the child addition, which removes £3·80 a week from the pocket of a person who is unemployed with two children. They have also lost the 5 per cent., which is now worth £1·75 a week. We are considering households that are struggling to survive on £40 to £50 a week, depending on whether the family has two, one or no children.

When we debated tax thresholds last week my hon. Friends criticised Conservative Members for not understanding the problems of people on low incomes because of their own incomes. In a spirit of humility, and recognising that, to a degree, the debate is not party political, I point out that, living as we do on a comparatively comfortable salary, no hon. Member can comprehend the desperation of a family living on £50 a week or the extent to which its choice might be widened by an additional £1·75.

For those of us who meet unemployed people among our constituents it is difficult not to be moved by the extent to which simple and straightforward decisions acquire enormous significance in their lives. They have to decide whether they can afford the fare to a job interview or whether they can find the cost of a school outing to which the other children in the class are going, or the price of a pair of children's shoes. Such decisions could be made much easier by the addition of £1·75 a week.

When the Chancellor introduced the abatement two years ago he said that if we did not cut the benefit to the unemployed they would not find work. He should ponder his experience since then. The unemployed have had their benefit repeatedly cut. It is now only two-fifths of average earnings, which is the lowest since 1948. Unemployment has steadily mounted. The number of people unemployed continues to increase, not because they lead the life of Riley on unemployment benefit but because over the past three years 2 million jobs have been lost. The men are unable to find work. They require no incentive to look for it.

None of the reputable bodies that has turned over the evidence on the "Why work?" syndrome has found proof to substantiate the claim that anything remotely approaching the present level of unemployment is due to there being no incentive to go back to work. Only 3 per cent. of the unemployed get more benefit than they would in work, and even they make diligent efforts to find work.

All the authoritative bodies that have examined the question of the 5 per cent. abatement urge the Government to restore it. I pray in aid a body that the Government set up—the Social Security Advisory Committee. It was appointed by the Government in the wake of the closure of the Supplementary Benefits Commission. I expect that, to the chagrin of the Government, it has consistently criticised many aspects of their social security policy. Last October its chairman submitted a letter to the Secretary of State for Social Services. Speaking of the unemployed he stated:
"We believe that the first priority for this group must be restoration of the 5 per cent. cut as soon as possible after unemployment benefit comes into tax; otherwise there would, in effect, be double taxation for this hard-pressed group."

The Social Security Advisory Committee recommended this as a first priority. The Government have hitherto decided not to do so.

This debate and our amendment provide a last opportunity for the Government to act and to restore that 5 per cent. to the unemployed. If the Government are not prepared to take that opportunity, the Committee, in all decency, ought to deny the Government the right to tax the unemployed.

As the hon. Member for Edinburgh, Central (Mr. Cook) pointed out, this is the second time that we have discussed the question of the abatement. The last time was on 18 March, when all the speeches were in the same direction. There has been some doubt about the direction of the speech of my hon. Friend the Member for Grantham (Mr. Hogg) and which side he was on. The answer is that he was on both sides. That is why there has been confusion. Apart from his speech, there was unanimity throughout the House.

Even my hon. Friend the Minister for Social Security, who, no doubt because of Treasury bludgeoning was not able to agree to the arguments put forward, did not advance any argument as to why the Government should not do what it was obvious to the House they should. I presume that he did not advance an argument because there was not one to advance. He merely said that a line must be drawn somewhere. He did not say why the line should be drawn at that particular and rather eccentric point and why it should exclude the unemployed. Presumably he did not give that explanation, because there is no explanation to give.

Today, as the hon. Member for Edinburgh, Central has pointed out, the case is even weaker. The hon. Gentleman made a comprehensive speech on the subject, with nearly all of which I agree, and, because this is a simple matter and the facts are not in dispute, I shall not delay the Committee long. I shall go through the facts only briefly.

First, there is no doubt that the abatement of 5 per cent. was meant to be temporary and interim. That was the impression of those who attended the relevant debate. That is also borne out by common sense and elementary logic. It is common sense and elementary logic that the worst off should not be doubly penalised. If one says that one will do A because at that time it is impossible to do B, it is elementary logic that, when it is possible to do B, one should stop doing A. That is so simple that I am sure that the Minister's advisers will agree that it is incontestable. I hope that he will say something to that effect at the end of the debate.

The second fact, as the hon. Member for Edinburgh, Central pointed out, is that there are now far more unemployed persons than there were when the abatement was made. Therefore, there is far more hardship than was envisaged at that time. The idea that there should be a problem about the so-called "Why work?" syndrome is a delusion when there are 3 million unemployed.

The third point is, or should be, common ground to all hon. Members. The least well off should not be made to bear the brunt of the Government's policies. Whatever we may think of the Government's economic policies in general—and some of us have different views from others—it ought to be common ground that the unemployed—the least well off and the most unprivileged in our society—should not have to bear the major burden of those policies.

I wish that we could go even further than is envisaged this afternoon. The Minister, in a previous debate, said:
"We would like to pay the long-term rate of supplementary benefit to the unemployed, which would cost about £200 million." [Official Report, 18 March 1982; Vol. 20, c. 536.]
That is what should be done. It is wrong that the unemployed are not entitled to the long-term supplementary rate. We are not discussing that matter this afternoon, but it is incontestable that the unemployed should not be doubly taxed.

4.45 pm

The fourth question relates to cost. In the previous debate we were told that we cannot hypothecate revenue. We all accept that, but I hope that the Minister will not use that word this evening. Nevertheless, it is striking to look at the figures. The £375 million in the current year is the figure that the Government will obtain from taxing the short-term unemployment and supplementary benefits. They will receive £650 million in a full year. I do not know the exact cost of doing the right thing and uprating by 5 per cent., but it would be about one-tenth of that sum. From any view, the Government are making a handsome profit out of taxing the unemployed. Therefore, it is plain that they should do what we ask.

My final point concerns the PSBR. That is a figure to which some people pay more attention than do others. The Government pay the greatest attention to it. They specifically mentioned the PSBR when they talked about uprating or taking away the abatement, and when they imposed it. However, we now have £2 billion more, which destroys the PSBR argument.

Even before there was no reason why the unemployed should be hit. Now that we have had the new figures, there is even less reason why they should be hit. If my hon. Friend were to attempt to defend his position, he would find it indefensible. It would be sheer irrational meanness not to get rid of the abatement immediately. I cannot believe that the Government will not get rid of it. If they do not, I shall have to vote against them. In common sense and minimum justice, the amendment should be supported by the Government. I trust that that is what they will do.

The right hon. Member for Chesham and Amersham (Sir I. Gilmour) has stated his position with honesty and clarity. There are now a number of hon. Members sitting on the Conservative Benches. I may be wrong, but I believe that they are hon. Members who are likely to follow the lead given by the right hon. Member for Chesham and Amersham.

I have recently finished reading the last book by the late Lord Butler, which was brought out a few weeks after he died. He was as much a Conservative as any hon. Member on the Conservative Benches today, but I find it difficult to believe that if he were around now he would justify what the Government intend to do. I wonder whether those Conservative Members who believe that the Government are justified intend to come to the Chamber to make speeches accordingly.

Unemployment is by no means an academic question in the part of the country that I have the honour to represent. I have figures relating to the increase in unemployment in the last three years in the West Midlands. In my travel-to-work area unemployment has increased by 240·9 per cent., in Birmingham by 182 per cent., in Coventry by nearly 145 per cent. and in Dudley and Sandwell by nearly 272 per cent. We have many people who had previously been earning their living but are now in the dole queue. What is so unfortunate is that many of them will remain in the dole queue for a long time.

It is difficult to understand how anyone can justify the continuing deduction of the 5 per cent. in unemployment benefit, especially now that unemployment benefit is to be subject to income tax. If we were dealing with people with average or higher than average incomes it would not be so important, though the principle would remain important, as my hon. Friend the Member for Edinburgh, Central (Mr. Cook) said. We are, however dealing with those whose incomes are amongst the lowest in the country I remind the Committee that the present rate of unemployment benefit is £22·50 for a single person and £36·40 for a married person, plus 80p for each child. It is clear that every penny must help for anyone living on that sort of income.

It has to be borne in mind that unemployed people have been singled out by the Government for punishment in a number of ways. An example which makes the amendment all the more relevant is that earnings-related benefit was finally abolished from January of this year. When the appropriate Minister was asked in a parliamentary question the estimated sum that would have been received by unemployed people if the earnings-related supplement had not been abolished, the answer was £11·20 weekly. Here is a considerable amount of money, especially for an unemployed person, which is no longer received by an unemployed person because of Government action.

Unemployed people will no longer be able to claim a tax refund when they are made redundant. The tax will be adjusted only at the end of the financial year or when employment starts again.

In all these ways, the person who finds himself, through no fault of his own, without a job is being hit much harder than previously. I can understand the feelings of those who are unemployed, since many of them believe that they are unemployed because of Government policies, and no doubt they are correct in their thinking.

The increase in unemployment benefit this coming November will mean £25 for a single person and £40·45 for a married couple. But if the 5 per cent. were included from November 1980 it would mean a single person getting £26·10 and a married couple £42·25. When one considers the smallness of the incomes involved, one recognises the importance of the sums that have been lost to the unemployed person—that is, unless the Government decide to change their mind.

Many unemployed people will not pay income tax because, despite what the Government are doing, their incomes will remain insufficient. Yet they will remain penalised as a result of the 5 per cent. reduction.

What the Government are doing is the worst type of cheating. They are hitting out at the people who can least afford to lose a penny. Even if no other section of the community was being penalised, this would remain indefensible. But when we consider how those on the highest incomes have benefited, it becomes even more indefensible and even more difficult to understand how the Government can consider the action that they are taking against the unemployed.

We have to bear in mind all the social tension and aggravation which is bound to occur as a result of a return of mass unemployment. Unemployed people face tremendous difficulties, leaving aside even the financial aspect. They face psychological difficulties, with men in middle age finding themselves without jobs and with the fear that they may not work again. These factors create tremendous hardship for that section of the community who find themselves in the dole queue.

Our need as a House of Commons is to do all in our power to make their lives more bearable. If Government policy is that the present level of unemployment is inevitable—it is certainly not the Opposition's view—and that there is no alternative, the Government should be taking even more action to defend the people who are the victims of their policy. They are doing the very opposite.

Sometimes when I speak to unemployed people in my own constituency they say "You have to be unemployed before you realise what we have to face day in and day out." What is more, it affects not just the unemployed person. We have to remember their wives and children. My hon. Friend the Member for Edinburgh, Central spoke of the sorts of decisions that have to be made—whether shoes can be bought, or whether they should go to a jumble sale. They have to face all these difficulties.

The House of Commons has an obligation to try to alleviate the problems faced by this section of the community—our fellow citizens who are denied the opportunity to work. I hope, therefore, that the amendment will be supported by Government Back Benchers. I doubt whether at the end of the day it will succeed, but the extent to which hon. Members are prepared to back this Opposition amendment will demonstrate just how deep is their commitment to dealing with the plight of the unemployed.

With the possible exception of 3 September 1939, the Opposition could not have chosen a better day to debate this proposal.

I stand corrected by my hon. Friend the Member for Bath (Mr. Patten). But why did they do it? When they tabled the amendment, they must have known that the Falkland Islands crisis was upon us and that to produce such an amendment for debate today would be to put almost every possible obstacle in its path.

I suppose that there are two possible reasons. The first is incompetence. However, bearing in mind that the hon. Members for Edinburgh, Central (Mr. Cook) and for Blackburn (Mr. Straw) have put their names to the amendment, it is clear that it was not tabled through incompetence, whatever else it might have been. A more likely explanation is that it was designed to embarrass the Government. Probably that has more to do with it than anything else. But if it was to embarrass the Government, it rings a little hollow to hear the hon. Member for Edinburgh, Central, even when he gets his facts right—he did not about children's shoes—talk about the problems of the unemployed. If he was really keen to see the acceptance of the amendment, he would have chosen the place for his battle rather more cleverly. It does not please me and my hon. Friends who have genuine concern for the unemployed to see the tactics of the Opposition, which are either incompetent or designed to embarrass the Government.

The hon. Gentleman will be aware that today's business is chosen by the Government.

I am well aware of that, but the right hon. Gentleman is equally aware that the amendments are tabled by the Opposition. They could perfectly well have tabled this amendment for Report.

I can see no reason why it should be.

It might perhaps be worth considering for a few moments why the Government refuse to allow this 5 per cent. abatement to be reintroduced and why they have decided to abate the 5 per cent.

I do not want to go back over the debate on 18 March, but it was clear from that that the Government's earlier decision had been that the 5 per cent. was in lieu of taxation. No one argued about that. The point was whether the Government would have sufficient resources to be able to allow that 5 per cent. to be put back. As my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) and the hon. Member for Edinburgh, Central said, there can be no argument about the savings. The Government are getting £650 million now compared to an additional expenditure of £60 million. That figure is an increase since the debate on 18 March.

5 pm

The reply concerning the amount of £525 million, which was uprated to £650 million, was dated 23 March. Therefore, £125 million extra has been added to the Government's take since the debate on 18 March, whereas the cost is £60 million. Therefore, the question whether it is in lieu of taxation cannot be related to cost.

What is the reason for the Government's present position? I suspect, along with my right hon. and hon. Friends—it was referred to by the hon. Member for Edinburgh, Central—that the main reason is the "Why work?" syndrome. If the abatement is to be allowed, the difference between being in and out of work will be narrowed. But will that really be the case? The answer is "No". My hon. Friends know perfectly well that in the last few years the gap between being in and out of work has increased.

What other reason is there then? My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) asked about those in work who are now getting such small increases. What do they feel when they find that the unemployed will get larger increases than they are receiving? That may be a fair argument this year, but what about last year and the year before that, when the unemployed received much less than those in work were getting? Therefore, that reason cannot stand up.

My hon. Friend will say that there will be those scroungers who find it better to be on unemployment or supplementary benefit than to be in work. How many of the present number of unemployed does my hon. Friend suggest that applies to? Is it 100,000, 200,000, 500,000 or 1 million? What about those who live in Corby or Workington or those parts of Britain where work does not exist? The argument that less money means more work cannot apply there.

How many of those who have assisted in the loading of the task force will find themselves out of work in the not-too-distant future? How will they feel when the work that they have been doing is rewarded by a 5 per cent. decrease in their unemployment benefit and their short-term supplementary benefit when they become redundant? That brings me to one of the real problems that unemployed people face.

One of my constituents, who is a single parent with three children, came to me this week. She has been on long-term supplementary benefit because she receives no maintenance from her divorced husband. Her youngest daughter has now reached the age of 16 and she suddenly finds that she must register for work as being unemployed. Immediately she registers for work she is no longer entitled to long-term supplementary benefit. She will get only short-term supplementary benefit, which is £6·50 a week less than long-term supplementary benefit. Have her needs decreased because her daughter has reached the age of 16? Of course, they have not.

Overall, that woman is £3 a week less well off. On what grounds? I was under the mistaken impression that supplementary benefit was designed to assist people according to their needs. Now it appears that that is not so. The needs of this woman are not less on the day her daughter becomes 16 than they were on the day before. Surely the opposite is true. Why should the needs of an unemployed family be less than the needs of anybody else on long-term supplementary benefit? Why should the financial needs of the unemployed be less than those of anybody else receiving benefit? For the life of me, I cannot understand why.

If my hon. Friend cannot explain it, will he reconsider the 5 per cent.? In my view, and in the view of my right hon. and hon. Friends, restoring the 5 per cent. does not go as far as we would like it to. Will he give the House the real reason behind the Government's attitude? If he does not do so, however much we would want to support the Government at this difficult time, it will be impossible when the needs of the long-term unemployed are as great as they ever were and when the numbers of the long-term unemployed are increasing.

Never before in its history has the Conservative Party defended the position that those who cannot care for themselves should suffer. It is high time that the Government—who have got themselves into this mess—took the opportunity that they are offered today to put the matter right, regardless of the Opposition. Those who trust the Conservative Party to represent them demand that that should be done.

This is a matter of equity for the unemployed. I hope that all those who speak today, as did those who spoke in previous debates, will agree with that.

The hon. Member for Edinburgh, Central (Mr. Cook) and the right hon. Member for Chesham and Amersham (Sir I. Gilmour) covered the ground comprehensively. We have been over the ground fully in previous debates and I do not want to go over the same ground again. However, there is one point which brings out the full enormity of what the Government have done which I should like to stress.

Hon. Members support the idea of taxing unemployment benefit in this way, because the prime effect will be to equalise the taxation of those who earn a little during the year compared with those two move in and out of employment during the year and whose income is derived from both earnings and unemployment benefit. In principle, those two groups of people should be taxed equally.

However, the abatement does something different. It abates the income of all those on unemployment benefit. The income of many of those people would not come into taxation because their unemployment benefit would be below the tax threshold. Therefore, the Government are taxing people at a lower level of income than those who have been in and out of work during the course of the year. While it is true to say that there is a link in time between the idea of a 5 per cent. abatement and taxation of benefits—that the abatement was in lieu of taxation has been established to the satisfaction of the Committee—those two measures are not on all fours. The abatement has a far worse effect on those on the lowest incomes than does taxation. Therefore, although I support the amendment of the hon. Member for Edinburgh, Central, in many ways it does not go far enough. For, even if the amendment is accepted, damage will have been done to people by the abatement far worse than if they had been caught by income tax from the beginning. I refer to those who were unemployed for all that period or for long periods, and they are people at the worst extremity of poverty.

The Government must answer not only for the unemployment that they have created, but for the level of poverty. By definition, we are talking about those who are affected by both unemployment and poverty. Sometimes journalists point that out, as I represent a tough, North-East constituency with many problems and high unemployment. They ask about the effect of the recession on my constituents. My reply is that I see the effect of the recession in the number of women who break down in tears at my surgery, because they are in despair and at the end of their tether. They do not know how to meet the financial problems facing their families. In the North-East it is often the woman who has to pick up the pieces, sort out the rent, and so on. She has to bear the burden, and she cannot make ends meet. The husband may be unemployed or on short-time working.

On the whole, I hope that no partisan points will be made in the debate. The urgency and depth of our concern should be expressed by both sides of the Committee so that the Government understand it. I hope that the Government will accept the amendment.

At the moment, at least, I am bemused by the Government's attitude. Two general principles are involved.

First, I support the principle that income regardless of its source should be taxed if it is above the tax threshold. If that means that people are taxed as a result of the receipt of benefits, so be it. It is simply a matter of equity of treatment.

Secondly, we should always—as the Conservative Party has always done—treat the unemployed as generously as possible. That principle is even more important when many people are unemployed not through any fault of their own or through idleness, but simply as a result of a world recession and of a very swift change in industry. Therefore, the question of a work deterrent is not involved.

Unfortunately, it is only too clear that the Government are in breach of my second principle. It is always possible that circumstances will override any principle or consideration, but I can see no overriding circumstances relating to unemployment benefit. First, the Government believe that they will receive about £650 million from the taxation of benefits, whereas the amendment would cost only about £60 million. Secondly, the estimate of the revenue from the taxation of benefits has been vastly increased. Thirdly, as my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) pointed out, the public sector borrowing requirement is about £2 billion less than originally estimated. Fourthly, not to put it too strongly, it was at least implied that the 5 per cent. abatement would be temporary.

The needs of the long-term unemployed are as great as, or greater than, those of anyone else. The best solution would be the provision of jobs, but there are not likely to be jobs for many in the near future, and there will probably never be jobs for a great number of our people. Therefore, we must treat the unemployed as generously as we can and as generously as the Conservative Party has always done. Regrettably, the Government's proposal is far from generous. It comes much nearer to being mean. I hope that the Minister will disabuse me of that. If not, I shall support the amendment.

5.15 pm