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Commons Chamber

Volume 936: debated on Monday 25 July 1977

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House Of Commons

Monday 25th July 1977

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Prices And Consumer Protection

Petrol Prices

2.

asked the Secretary of State for Prices and Consumer Protection what arrangements are being made for the alteration of petrol pump prices following the reduction of excise duty in August.

The Under-Secretary of State for Prices and Consumer Protection
(Mr. Robert Maclennan)

Under the Price Code, the reduction of excise duty on 8th August has to be passed on in full in lower price. Any complaints of dealers taking unfair advantage of the motoring public will be carefully investigated. The Petrol Prices (Display) Order, which comes into effect on 12th August, will also protect motorists' interests by requiring prices to be clearly displayed.

How does the Under-Secretary propose to overcome the danger of some petrol pumps running dry at the end of next week because small garages will not be prepared to hold supplies at the higher rate of duty in order to sell at the low rate?

It was with that possible problem in mind that an amendment to the Finance Bill was passed postponing by three days the implementation of the reduction in excise duty—which I am sure the hon. Member will welcome —to a period after the holiday.

Is the Under-Secretary aware that, following the conversion of petrol pumps to litres, confusion arose precisely as I predicted when the Government first embarked on their metrication programme? Does he agree that that confusion is likely to increase as the Government are not doing sufficient to protect consumers in this respect?

The only confusion appears to be in the mind of the hon. Lady. She does her best to obscure the clear on every possible occasion.

Can the Under-Secretary confirm that the arrangements are no different from those which apply when there is a rise in the cost of petrol? Is he satisfied that there is no reason for any shortage at this time?

20.

asked the Secretary of State for Prices and Consumer Protection if he will make a further statement about petrol price display.

The Minister of State, Department of Prices and Consumer Protection
(Mr. John Fraser)

The Petrol Prices (Display) Order 1977 was laid before the House on 30th June and will come into operation on 12th August 1977. We shall, of course, watch to see the effects of the order.

Will my hon. Friend take a closer look at the way in which the order is to operate? At the moment there is a jungle. There is complete confusion on the forecourts of petrol stations, with ridiculous prices such as 84.9p per gallon. How can one pay ·9p? is not some protection needed in this regard?

The order will not only cover displays outside forecourts but will require the display of information on or near the pumps themselves. As to the percentage point of a penny, when we made the Petrol Prices (Display) Order we had no powers to ban petrol price displays giving fractions of a penny, because the power is contained in the Price Commission Act, but we shall watch the operation of the order carefully.

When the order starts, it will be quite difficult for consumers to see prices clearly displayed on the new modern pumps, particularly the electronic ones, and this will undo for the consumer the good effects of the fall in petrol prices. Will the Minister pay particular attention to this?

I have already paid particular attention to it. Electronic pumps will have to show the maximum price per gallon being charged to the consumer as well as give an indication on the pricing indicator on the pump.

Vegetables

3.

asked the Secretary of State for Prices and Consumer Protection if he will refer to the Price Commission the level of prices charged by retailers for fresh vegetables and salad ingredients.

As part of its standing reference on fresh food prices, the Price Commission already monitors the prices and distributors' margins of potatoes and other vegetables the prices of which were forced up by the effects of last summer's drought. This exercise will continue until it is clear that supplies have returned to normal and that prices reflect this.

Does my hon. Friend agree that somebody is not getting to the truth in this matter? Is he aware that until recently farmers were receiving 1p or 2p for lettuces which were being sold at between 10p and 13p in the shops? Does he agree that daylight robbery is taking place and that neither the growers nor the consumers are benefiting? Will he ask the Price Commission to sort this out? Is he aware that when there is a drought it is given as the reason for price increases but that when we have a glut prices do not come down? That is not acceptable.

It would be unacceptable if prices did not come down when producers' prices were falling, but the price of lettuces today is 9p or 10p cheaper than it was two months ago.

It takes time fully to analyse distributors' margins. I believe that the Price Commission's standing reference will cover the anxieties raised by my hon. Friend.

If the Under-Secretary wishes to help concerning the retailing of lettuces, he should look at the Covent Garden Market Authority. Does he think it fair that the entrance charge to Covent Garden has gone up from 20p to £1—an increase of 500 per cent.—in the last few months? Does not that prove that the Government do not care about distribution costs?

Is my hon. Friend aware that the wholesaling of fruit and vegetables escapes weights and measures legislation? Does he not agree that that is bizarre? Is he aware that today I have sent him a list which makes it clear that there are considerable discrepancies? Does he accept that if he does not instigate a full inquiry he will be failing in his duty?

I shall look carefully at the figures which my hon. Friend has sent to me. I hope she will accept that the Price Commission is already seized of the question of distributors' margins. As the Price Commission's report shows, there is no evidence to suggest that there is profiteering of the kind which she has suggested.

My hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) has rightly drawn attention to the fact that the Price Commission's report relates to a situation which is some weeks out of date. My hon. Friends will be aware that our powers under the new legislation will be considerably greater than they are at present. I am proposing to discuss with the new Price Commission whether it is possible to improve and speed up the mechanism for examining distributors' margins.

Does not my hon. Friend agree that the real need in this matter is for an investigation into the whole mechanism of sale? There are innumerable stages before the produce reaches the customer. The whole thing is a racket, with people cashing in at every stage.

I am not sure that my hon. Friend is right in saying that what is needed is an investigation. I believe that what is needed is power to act on a recommendation from the Price Commission. That is why the House has passed the Price Commission Act. I believe that investigations carried out under these standing references may in future lead to more results than is the case in the present situation.

Consumer Complaints

4.

asked the Secretary of State for Prices and Consumer Protection which commercial activities have led to the greatest number of complaints at consumer advice centres in the last 12 months.

The information available does not separately indentify consumer complaints made to consumer advice centres. Details of complaints received by a number of advice services, including these centres, are provided in the latest annual report of the Director General of Fair Trading which was laid before the House on 10th March. The greatest number of complaints were about motor vehicles, followed by clothing and furniture.

In the light of those figures, what does my hon. Friend propose to do about the appalling situation in which there is such a high level of consumer complaints about cars in particular?

The Director General has brought about a voluntary code of practice, but I am afraid that many car dealers, particularly second-hand dealers, do not subscribe to it. I have made some suggestions about a possible system of licensing or regulation of those carrying on trade like this in order that we may secure better protection for the public. In the case of the other complaints, the use of our existing labelling requirements and the use of regulations made under them may be a useful avenue.

Retail Price Index

5.

asked the Secretary of State for Prices and Consumer Protection what is the current percentage rate of increase in the retail price index.

The latest figure available is the increase for June, published on 14th July. It was 1 per cent., well in line with the forecast that the rate of inflation will begin to decline in the autumn.

Is it not a fact that year upon year to last month the retail price index has gone up by 17·7 per cent.? Is not that deplorable figure higher than in any other industrialised country? Is it not the case that the true figure for inflation over the past year would be still some points higher, nearer the wholesale price index increase of 20·9 per cent.?

It is a fact that year on year the index went up by 17·7 per cent. It is not a fact that the true rate of inflation is even higher. That selective figure is normally offered by the Opposition on a different Question and I have no doubt that the hon. Member for Gloucester (Mrs. Oppenheim) will want to make her prejudiced point on Question No. 7.

Is it not a fact that one of the longest sittings of this House was because of the attitude of the Opposition in opposing any form of price control? Is it not therefore deplorable that we should have such two-faced Questions from the Opposition when they are not in favour of any form of price control? Does not my right hon. Friend agree that he has to be successful in his policy because it has such a vital contribution to make to the next round of wage bargaining?

It is widely understood in the country that the Opposition fought the Price Commission Bill in this House and subsequently in the House of Lords for so long because of their determination to have no form of price control at all. I noticed the references in every newspaper to the cheers which went up from the Opposition on the second day of the Report stage in this House when the prospect was mooted that the Bill might be lost. If we are to have a prosperous economy in the years to come, we need a moderated price prospect, just as we need a moderated wages prospect. These two factors influence each other, and we must therefore play our full part in bringing that situation about.

Does not the right hon. Gentleman agree that, despite the social contract, subsidies, the Price Commission Act and other various and assorted gimmicks, even if single-figure inflation is reached next year prices will have risen by 100 per cent. under this Government? That is a matter for the deepest shame and not for the kind of boasting that he has brought to the House today.

I am grateful to have got the supplementary question on Question No. 7 earlier. The hon. Lady must understand that, in common with every other industrialised country, the United Kingdom suffered the major disadvantage of an oil price increase two years ago, with a number of economic disadvantages flowing from that. In the last two years we have made substantial strides in improving the economy. After all the depressing things that the hon. Lady has said about what has happened over the last two years, I look forward to seeing her at that Box after Christmas rejoicing with me about the fall in the rate of inflation which will have come about.

7.

asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the cost of living during the past 12 months at the latest available date; what were the figures on the corresponding date for the two previous years; and what action he is taking to bring the future percentage down.

12.

asked the Secretary of State for Prices and Consumer Protection whether he will give the three-monthly increase in the retail price index expressed at an annual rate.

The percentage increase in the cost of living over the 12 months to June 1977, as measured by the retail price index, was 17·7 per cent. In the 12 months to June 1975 and June 1976 it was 26.·1 and 13·8 per cent. respectively. The most recent three-monthly increase is 4·4 per cent. to June 1977. For what it is worth, this gives a figure of 19 per cent. on an annualised basis. As I have already said, the rate of inflation is expected to fall substantially in the months ahead, as foreshadowed in the Chancellor's forecasts. The measures announced by the Chancellor on 15th July and the Price Commission Act will reinforce this expected deceleration.

I thank my right hon. Friend for giving so much information. Is he satisfied that he has sufficient powers further to reduce the cost of living? Is it not true that he can prevent prices from increasing in certain circumstances but that he cannot compel wholesalers and retailers to reduce them? Will he do something about the cost of frozen chips? Is he aware that when potatoes cost £200 a ton the cost of frozen chips went up correspondingly but that since the price of potatoes has come down to £100 a ton and less the price of frozen chips has remained at the higher figure?

On the general point, I am satisfied that the new powers in the Price Commission Act which come into force on 1st August will be a substantial help in the fight that we are trying to wage, and in certain circumstances we expect a reduction in prices. A general reference from me about prices in a whole sector could result in prices over a wide range of products being reduced if the Price Commission so recommended.

On the more specific question, I am advised that paragraph 25 of the existing Price Code insists that where there is a net reduction in costs prices should be so constructed as to reflect that reduction. Frozen chips are a matter of great concern and are the subject of many letters to my Department. My officials are discussing with the Price Commission whether the reduction in cost is being adequately reflected in the price to the consumer.

Will the right hon. Gentleman confirm that there is not much that the Government can do further to reduce prices, because they have not been coming down at all over the past three years? Secondly, can he tell the House why other countries do not appear to have suffered as much as we have from rising prices, and whether it is the Government's aim to reduce our level of price increases to that of our international competitors?

The power to reduce specific prices exists in the Price Commission Act. Our inflation rate has been at a high level compared with our industrial competitors for a variety of reasons. We have been more vulnerable to outside pressures and to pressure on sterling than have most other European and North Atlantic countries. However, thanks to the efforts of the Government, sterling is now stable, and that is why there is a better price prospect for 1978.

How does my right hon. Friend work out tie percentage increase in the cost of living. in which the price of beer is an ingredient, when no two pubs charge the same price and when the cost of a pint of beer varies enormously, even in one street?

The calculation of the RPI is a technical matter. I should be ruled out of order if I were to try to describe it in the next 20 minutes, but it is statistically accurate. It is not a perfect pattern of spending for every family, but it is an indication of how prices have risen in the recent past.

With inflation-proofed pensions, with an index-linked savings scheme, with index-linked welfare benefits and now with index-linked personal tax allowances, does not the right hon. Gentleman get the feeling that he is fighting a losing battle against inflation? Is not there a danger that increasing income without controlling wage costs and import prices is inflationary?

No, Sir. With the monthly increase in the index at 1 per cent. or less for six out of eight months, I sometimes get the feeling that we are winning the battle against inflation.

8.

asked the Secretary of State for Prices and Consumer Protection what increase in the retail price index over the last 12 months has resulted from the common agricultural policy of the European Community.

Will the right hon. Gentleman give that figure the maximum possible publicity and inform the Secretary of State for Agriculture, Fisheries and Food, who does not seem to have got the message?

He is the Minister of Agriculture, Fisheries and Food, and he was the first to quote statistics very similar to those that I have given. Not only has my right hon. Friend got the message, but he has helped to bring about this situation. It is because of the way in which he has negotiated in Brussels that prices in this country have been kept down in the way that they have.

As so many essential foods can be bought more cheaply outside the Common Market, the figure that my right hon. Friend has given will be treated with considerable scepticism by most housewives.

It will be treated with disbelief by those who do not want to believe it. I think that my hon. Friend needs to provide much more convincing evidence than has been provided so far that substantial savings in food prices are to be achieved by buying cheap food from outside the Community. The evidence is that if the cheap food exists at all it does not exist in quantities that would radically change the British spending picture.

Does the right hon. Gentleman agree that the prices of animal feeding stuffs are coming down for the first time for many months, and does he expect that trend to continue?

So that we may assess the significance of the ½ per cent. to which the right hon. Gentleman referred, will he circulate in the Official Report what prices he thinks would have been paid for temperate foodstuffs which are important to this country if Britain had been out-side the EEC for the period under review?

I do not think that it is possible with any statistical legitimacy to describe what prices I think might have been paid in different circumstances. What I shall do, as I have done already for some sceptics, is to describe publicly the statistical method that brought about this figure. I cannot remember whether I described it in individual letters or in the Official Report, but I shall do so in the Official Report in future if I have not done it already.

Does my right hon. Friend agree that if the green pound had been revalued along the lines suggested by Conservative Members the rise in the cost of living would have been considerably greater than has been the case? Is it not therefore hypocritical of right hon. and hon. Members opposite to criticise what has been done by the Government in this respect?

Of course. Had the green pound been changed in value to represent the normal value of the pound against the dollar, the picutre would have been substantially different. That is why am sure we are right to insist that the only possible devaluation is one that is matched by other benefits to the British consumer and why the attitude of right hon. and hon. Gentlemen opposite differs from price debates to common agricultural policy debates.

Does the compilation by the statistical department of the figure given by the right hon. Gentlemen include such things as the cost of all the intervention stores, the food thrown away through failing to meet the size set by the Brussels bureaucracy, an apportionment of the overheads of the Common Market bureaucracy and the cost of not buying cheaper food where it exists outside the Market? Is all that included?

Motorway Service Stations

6.

asked the Secretary of State for Prices and Consumer Protection whether he will institute an inquiry into the prices charged by motorway service stations.

Is not my hon. Friend aware that this scandal has been going on over the years and that it is about time something was done about it? Does not he agree that, in the virtual monopoly situation that appertains at present, the people who need this protection are those who use these service stations? Should he eventually come round to the idea of an investigation, will he look into prices and conditions in the restaurants and cafeterias as well as at the petrol pumps? Will he also consult the Secretary of State for Transport on the question of the concessions to the various firms on the motorways?

It is with those points in mind that I am considering seriously and urgently the possibility of a reference to the Price Commission.

Does the hon. Gentleman realise that after the major oil compaines had reduced petrol prices by 3p, sometimes as much as a fortnight afterwards certain service stations, using their monopoly position, had still not reduced their prices to the consumer? If there is to be a monopoly, the Government must control it. I would prefer to see more competition. In the circumstances, will the hon. Gentleman consider whether more than one supplier should be granted a licence when the applications for motorway petrol licences are made? After all, six or seven different petrols are being sold and more than one supplier should be licensed.

The method of granting licences is for my right hon. Friend the Secretary of State for Transport, but I take the point about the importance and desirability of competition. That is likewise a factor that we have in mind.

Will the hon. Gentleman change the tense of his answer from "shall consider" to "am considering"? Is it not the case that his right hon. Friend wrote to me last week saying that he was already considering it? Does not the hon. Gentleman agree that all the factors of scale and distribution costs are in favour of a lower petrol price on motorways than in small, more widely-flung stations? How many companies are involved in providing these services? What is the duration of the franchise in each case, and how often are the franchises renewed?

Perhaps I can amend my answer to say that the possibility of an inquiry is under consideration. The hon. Gentleman has reflected the anxiety of both sides of the House about this matter, and it would be into precisely the sort of points he has raised that any inquiry carried out by the Price Commission would focus.

As well as instituting an inquiry, should not my hon. Friend consider giving a warning to motorists that they can expect this sort of thing on motorways? For example, many people travelling on motorways at holiday times are not used to motorway prices. Should not motorists be recommended to fill up before they get on to a motorway? Would not this contribute to a fall in prices on motorways?

Hallmarking

11.

asked the Secretary of State for Prices and Consumer Protection if he will instruct the assay offices to hallmark articles submitted for hall-marking in the position requested by the sponsors rather than at the discretion of the assay offices.

The assay offices are autonomous bodies and I have no powers to issue such an instruction. I understand that the assay offices try to meet sponsored requests for the placing of hall- marks, but there are sometimes practical or technical reasons why this cannot be done. Anyone who has a specific complaint against any assay office may bring it to the attention of the British Hall-marking Council, which has a statutory duty to supervise the activities of the offices.

Is the hon. Gentleman aware that individual craftsmen sometimes have difficulty with assay offices? Is it not necessary to distinguish between the work load provided by craftsmen and the industrial work load? Is he aware that the three days' delay at the assay offices in 1975 was aceptable but that it is now 18 days for silver, and that when marking individual craft-made items great difficulties are encountered?

I understand the difficulties of marking. What I think I might do to help the hon. and learned Gentleman is to ask the Chairman of the Hallmarking Council to see me to discuss this and other problems raised in hon. Members' correspondence.

Does the hon. Gentleman realise that when the new legislation was going through the House as a Private Members' Bill the assay offices gave an assurance that they would do everything possible to co-operate in hallmarking in the future? However, because of the Jubilee hallmarking there has been a major demand, which has been greater than the assay offices could possibly have expected.

I understand that there has been a demand due to the Jubilee, but perhaps that that might have been anticipated. Secondly, I understand that in the placing of hallmarks the assay offices have to take into account the preventing of fraud, not by the producer but subsequent fraud, and that is one consideration in placing the hallmark.

Food Prices

13.

asked the Secretary of State for Prices and Consumer Protection whether he will give the latest recorded percentage increase in food prices since February 1974.

Excluding seasonal foods, the retail food index has increased by 86 per cent. from February 1974 to June 1977, or 20·5 per cent. expressed at an annual rate. Over the same period, the figure including seasonal food is 92 per cent. or 21·6 per cent. at an annual rate.

Does the hon. Gentleman agree that these are appalling figures for the British housewife? Will he admit that part of the reason for them is the low sterling rate that we get, especially when dealing with those countries from which we purchase a good deal of our food supplies? Does he agree that this is entirely due to the Government's economic policies and is he aware that it is no good the Secretary of State saying that sterling is doing much better when it is at such an appallingly low rate?

The stabilisation of sterling is a factor that will lead to a deceleration in the rate of increase of food prices. The latest picture is quite encouraging. The retail food index increased by 4·4 per cent. in the three months up to June, and that is a marked improvement compared with the 5·6 per cent. increase in the three previous months. In addition, none of this improvement takes account of recent substantial falls in the price of fresh fruit and vegetables.

Is my hon. Friend aware that the increase in food prices caused by our membership of the Common Market is cumulative and that the price increases referred to earlier have been superimposed on other and deliberate price increases? Does he agree that it is inevitable that prices will continue to increase?

It is inevitable that prices will continue to increase, but not at the rate that they have increased during the past year, when they were severely adversely affected first by drought, the effects of which have virtually worked through, and then by the fall in the value of sterling last autumn.

As the Question refers to February 1974, does the hon. Gentleman remember fighting the General Election on the slogan that the Labour Government and the social contract would reduce inflation? Did the social contract fail, or was the Labour Party misleading people?

The Labour Party fought that General Election on policies that included the introduction of food subsidies, which the Opposition have consistently opposed and continue to oppose.

For the purposes of comparison, can my hon. Friend tell us how much of the increase since February 1974 has been due to our membership of the EEC and how much to the fall in the value of the pound?

As my right hon. Friend has already said, the further we get from the date of entry, the more difficult it becomes to calculate what prices would be if we were not members of the EEC. However, it is possible to calculate the additional increase in prices that is directly attributable to CAP adjustments and changes this year. That is the figure,·5 per cent., to which my right hon. Friend referred earlier.

15.

asked the Secretary of State for Prices and Consumer Protection whether he remains satisfied with the machinery available to his Department for monitoring the level of food prices.

I am satisfied that the retail food index provides an accurate and up-to-date indicator of movements in food prices. Where closer scrutiny appears necessary, the Price Commission is asked to carry out investigations of prices and distributors' margins for specific foodstuffs.

Was it that machinery, among others, that produced the statistics showing that in the year ended in May the cost of living had risen by 17·1 per cent., giving us the biggest gap between that and earnings since records started? What proportion of that 17·1 per cent. is due to increases in food prices?

The machinery for collecting the retail price index is the machinery that gave us the figures for the latest monthly change in the index.

Since my hon. Friend said earlier that he would refer particular items to the Price Commission, will he consider referring the price of bread, since the Safeguard Britain Committee recently stated that, according to its calculations, the increased levy on grain from North America had put 7p on the price of a loaf? In order to get the facts straight, will my hon. Friend refer that matter to the Price Commission?

The bread industry has been subjected to a number of inquiries recently, including one by the Monopolies and Mergers Commission, which has just published its report. The major bread manufacturing companies are subject to the control of the Price Commission under the new Price Commission Act. The three major companies will have to pre-notify proposed price increases, and in the past the Commission has not hesitated to reduce the proposed increases if it has felt that they are not justified.

What, in the opinion of the Government, would be the effect on the levels of prices, employment and investment if the Price Commission were abolished forthwith?

The effect would be exceedingly adverse, because there would be no guarantee that unjustified price increases would not be made by companies enjoying monopolistic or oligopolistic positions in the market.

May I refer to my hon. Friend's original answer? Does he recognise that the earlier exchanges about fresh fruit and vegetables indicated that the Price Commission's methods of monitoring, particularly on seasonal foods, cannot be effective if it is not producing reports until two months after the prices have been paid?

As I indicated earlier, I propose to discuss with the new Commission the question of the time lag between its examination of prices and the publication of its reports on standing references. My hon. Friend is right to draw attention to the rapid fluctuations that occur in prices, largely because of changing supplies. Is it important to ensure that the consumer enjoys the benefit of the producer's reduced costs.

Will the hon. Gentleman comment on the Price Commission's report on coffee, bearing in mind his statement that the consumer should benefit from any reduction in costs? Does he think that the distribution of coffee will be maintained if, as is proposed, there is intervention in the distributors' margins for the sale of coffee? As the report exonerated those who trade in coffee from profiteering, is this the way that he expects the Price Commission to operate in future? What will happen to the distributive margin policy if coffee prices come down?

I notice that the hon. Gentleman was careful to refrain from saying that the Opposition approve of price control where cash margins would be increased. It would be helpful if they would make clear their position on this matter. It was made abundantly clear by the Price Commission that because of increases in the gross percentage margins the cash margins had widened considerably. That is why my right hon. Friend announced measures to control the cash margins on the pound of coffee that the housewife has to buy. As for the hon. Gentleman's question whether the Price Commission's action on this matter portends its future action, it is up to the Commission, following reference by my right hon. Friend of a particular price or sector, to make its examination and to recommend proposals, which can include a freeze on cash margins or the setting of maximum prices.

Wholesale Prices

14.

asked the Secretary of State for Prices and Consumer Protection what was the latest recorded percentage increase in the year-on-year wholesale prices index.

The wholesale prices index of the output of manufacturing industry rose by 20·9 per cent. in the year ending June 1977, but the index for inputs of materials and fuel rose by 15·.2 per cent.—about half of the January figure.

Can the right hon. Gentleman say when the year-on-year increase was last in single figures?

Not without notice, but I can repeat the last part of my original reply. There has been a substantial improvement in the index, and we hope and believe that it will soon be reflected in prices in the shops.

Hire-Purchase Interest Charges

17.

asked the Secretary of State for Prices and Consumer Protection if he will now require hire-purchase companies to disclose the real rate of interest which they charge.

The stautory formula employed where interest rates are shown in current hire-purchase advertisements gives only an approximation. I am having consultations about new regulations under the Consumer Credit Act which will apply to all types of credit and which for the first time will allow consumers to compare the effective annual percentage rate of charge of all kinds of credit transactions.

Is my hon. Friend aware that his reply will be received with satisfaction, as it is really very important that consumers should be in a position to make sensible comparisons, but will he ensure that his new regulations receive adequate publicity?

I am glad that my hon. Friend gives a welcome to the proposed new regulations. I shall certainly do what I did on the last occasion and give as much publicity as possible, with explanatory leaflets, so that traders and the public can understand the regulations.

In the light of the Price Commission's report on the sale of commercial hearing aids, which showed that the majority were bought on hire purchase on the doorstep and that the cost of production is £22 and the selling price £140, will my hon. Friend have a special look at the way in which the credit terms are made known to elderly people? Will he also look at the margin of £120 between the cost of production and the selling price?

The matter of cost does not arise from the Question, but if my hon. Friend has complaints about the selling practices and the credit practices of any companies, which may be relevant to the licensing of those companies this year, perhaps he will give any appropriate information to the Director General of Fair Trading.

Citizens' Advice Bureaux

18.

asked the Secretary of State for Prices and Consumer Protection whether citizens' advice bureaux are to be encouraged to expand their service in giving consumer advice or whether it is his policy that they should disband these in favour of local authority advice centres.

I consider both types of service to be extremely valuable and complementary. That is why my Department is this year providing grants totalling £4·5 million towards the work of both citizens' advice bureaux and consumer advice centres.

In view of the large figure that the Minister has mentioned, may I ask him whether he is aware that the grant to the citizens' advice bureaux ends in April 1979 and that at this point of time they have no knowledge whether their work in this sector can continue?

My Department is in close consultation with the citizens' advice bureaux about the amount of the grant after 1979 and will give the matter very serious consideration, because the bureaux do a very valuable job of work for the general public.

Is the Minister satisfied that his undertaking to give that degree of financial support for consumer advice centres will be enough to deter the now too numerous Tory authorities from closing down large numbers of consumer advice centres and thereby sabotaging our efforts to control prices?

I must exonerate many Conservative authorities which have a good record on consumer advice centres. I should be sorry to see the centres become a political football. I deplore what has happened in Birmingham. I have spoken to the chairman of the appropriate committee, but the authority still seems bent on closing every conceivable advice centre. It would be extremely valuable if we could have a word from the hon. Member for Gloucester (Mrs. Oppenheim) encouraging her colleagues in the West Midlands at least to think twice before cutting, in an almost vandalistic way, an extremely valuable service to the citizens of the country.

Pricing Practice (Value Added Tax)

19.

asked the Secretary of State for Prices and Consumer Protection whether he will legislate to require all prices to be shown inclusive of VAT.

This question has been the subject of a very full and helpful report by the Consumer Protection Advisory Committee, published a few days ago, which substantially endorsed the proposals put forward by the Director General of Fair Trading. I am urgently considering the report and hope shortly to announce the action I propose to take on it.

May I say how very welcome that announcement will be and that one hopes that the action which my hon. Friend proposes to take will be taken very swiftly? In the meantime, will he advise traders to include VAT in the total price shown? In so far as they see fit to show VAT separately, will he advise them to ensure that the words "plus VAT" are given in large letters and to state the percentage of VAT which will be added?

I should be very happy to offer that advice. I think that most traders follow it. A minority does not follow it. That ought to lead to legislation under, I think, Part II of the Fair Trading Act 1973.

Is it not interesting that recommended retail prices were not required to be inclusive of VAT, and is not this additional evidence that recommended retail prices are a valuable point of reference to the prospective purchaser and are in general well understood by the consumer?

I do not think that advertising a maker's recommended prices exclusive of VAT is of any use to anyone, but that is the view that the CPAC took of it and, therefore, I must accept it.

Credit Cards

21.

asked the Secretary of State for Prices and Consumer Protection how long he expects the Monopolies Commission to take to report on credit cards.

This reference, which was made by the Director General of Fair Trading on 23rd June, requires the Commission to report within 18 months.

I thank my hon. Friend for that answer, but will he not consider ensuring that the Monopolies Commission looks at the rate of interest charged to credit card holders, which is currently 26·82 per cent., or does he think that the publicity given to the real rate of interest, following the extension of the Consumer Credit Act, will be sufficient to discourage potential customers?

I think it is probably within the terms of reference of the Monopolies Commission to look at the rate of interest being charged. I suppose it is the hope of all of us that, following the very welcome reduction in interest rates brought about by the Government, the credit card companies might follow that Government example.

Is it the Government's policy that the Monopolies Commission should be encouraged to look at foreign-owned credit cards as well as at our own domestic credit cards?

I am not certain, but I rather believe that the reference would include those companies as well.

Electrical Plugs And Sockets

22.

asked the Secretary of State for Prices and Consumer Protection what reply he has sent to any representations from the British Standards Institution concerning the proposed international 16-amp plug and socket system.

Government comments have been sent to the British Standards Institution by my Department on proposals leading to a voluntary international standard for a new and unique system of electrical plugs and sockets. These proposals, although fundamental, do not specify a complete system, and until full details of this are available the Government cannot endorse their formal acceptance.

Does the Minister understand that even the prospect of a voluntary system for operating some of the proposals which have been made public is arousing deep misgiving among the British public, and particularly among people who have ring mains? Will he let the House know his views on whether any future standards should involve fusing for each plug? Has he any plans for displaying to the public some of the proposals relating to this voluntary system, whatever his views may be about them?

It is a proposed voluntary international standard, and the proposals are at such an early stage that it is too soon to make any judgment at all about fusing, integration with ring main circuits and so on. It is such a long way off that I must reserve my position until I can see in detail how the international standard works out.

I understand that some publicity has already been given to explaining the system, but it is probably too early a stage at which to be able to explain any kind of comprehensive system as to the interface between the plug and the socket.

Is the Minister aware that some of those who are not enthusiastic above the common Market, are trying to persuade the public that all the latest 13 amp systems in this country are out of date? Will the Minister make it clear that they are not?

They are not out of date. If this country were to adopt the new system, it would not come into general use for 60 or 70 years.

Price Commission Investigations

23.

asked the Secretary of State for Prices and Consumer Protection whether he will seek to change the delaying powers of the Price Commission during investigations from preventing increases until approved to permitting until disapproved.

No, Sir. The hon. Member's suggestion was specifically rejected by the Standing Committee on the Price Commission Bill on 17th May. The power to freeze prices during investigation is justified and will not jeopardise the viability of firms under investigation.

Is the Minister aware that, while it may not jeopardise the viability of firms under investigation, the price in the small firms sector is determined by the price leaders in the market, and that what may enable a large firm to go on trading semi-economically will bankrupt a small firm and lead to unemployment?

The Chairman-designate of the Price Commission made very clear at his first Press conference that he believed that investigations into each company had to bear in mind the interests of other companies that might be directly affected in the way that the hon. Gentleman has stated. I have no reason to believe that the exercise of proper powers by the Commission would have the adverse effect that the hon. Gentleman proposes.

Does my right hon. Friend agree that the action of the brewery companies in proposing to increase their prices by 1p or 2p a pint before publication of the Price Commission's report or before prices legislation constitutes sharp practice? What can my right hon. Friend do to stop the brewers acting in this irresponsible fashion?

I have no power to prevent the increases that the brewers announced. Some people say that they did it because they do it every three months and it is their normal practice. I await the Price Commission's report with great interest, and I hope that the House may want to return to this subject after the report has been presented to me and when I have seen its recommendations, if any.

In relation to the question of my hon. Friend the Member for Basingstoke (Mr. Mitchell), will the Secretary of State comment on the question of allowable costs being allowed in the period of investigation? This would substantially help small firms and firms uder investigation.

No. There are substantial safeguards already for the viability of small firms. There are the formal safeguards under Section 9 of the new Act. There are other safeguards—for instance, the safeguards inherent in Section 2. Neither the company under investigation nor companies with which it is associated face the danger that the Opposition pretend. It is much more of a political debating point than a real fear of industry.

European Community Economics Ministers

50.

asked the Chancellor of the Duchy of Lancaster whether, in his capacity as special adviser to the Prime Minister on economic matters, he will make a statement on his meetings with his EEC colleagues at the end of June.

51.

asked the Chancellor of the Duchy of Lancaster whether, in his capacity of special adviser on economic matters, he will make a statement on his meetings with his EEC colleagues at the end of June.

I had no meetings with EEC colleagues at the end of June.

If the right hon. Gentleman had had such meetings, would he have drawn the attention of his colleagues to the imbalance between the level of public expenditure in the United Kingdom and the level of public expenditure in the other countries of the Community? If he had done so, would he have acknowledged his own repentance in that the Government are now committed to a continuing and substantial reduction in the resources required for public expenditure in the next few years?

Any educational activity that I might have been tempted to pursue in relation to the size of public expenditure I should have focused where it was most clearly needed—namely, on the Opposition Benches. Public expenditure in this country is not at all out of line with the level of public expenditure in other countries of the European Community. Public expendture is not ex hypothesi a bad thing. It is a good thing in principle if it is wisely and in proper proportion directed. It is the Government's intention to continue wise public expenditure and to have due regard to the proportions and timing of that public expenditure.

In the course of the right hon. Gentleman's many informal meetings with his colleagues on the Continent, is he able to convince his EEC colleagues that Britain is ready to embrace the European cause? Does he believe that himself? If so, when will he start to convince those of his Cabinet colleagues —one of whom is sitting close to him on the Government Front Bench—who voted against the direct elections Bill?

I do not regard it as my function specifically to assert the right direction that any of my right hon. Friends embraces. Other members of the Community have recognised that there is a genuine difference of opinion on both sides of this House about the wisdom and attractions of being members of the Community. They recognise that and also recognise that the overwhelming majority of Members on both sides—in aggregate at any rate—fully recognise that we have joined the Community and that we are determined to make a success of our membership as a loyal, if critically constructive, member of the Community.

In any discussions that my right hon. Friend has with his EEC colleagues, will he emphasise the importance of expanding resources for the IMF, particularly with a view to helping developing countries with balance of payments problems?

Yes, Sir. I think that it is of great importance for the general prosperity of the world and the fuller recovery of the world from the present recession that we should advance our co-operative thinking in precisely those areas.

Reverting to the question asked about public expenditure, may I ask the right hon. Gentleman to confirm that the borrowing requirement in the current financial year is approximately the same proportion of the GNP as it was in the last year of the last Conservative Government? Will he confirm that public expenditure in this country is not a higher proportion of GNP than in most of the OECD countries? Will he also categorically state that, unless private investment takes up the slack and brings down unemployment, some Government will have to increase public investment?

There is a very natural reticence on this side of the House, especially in my case, to emphasise those areas —whether it be the weather or proportions of public expenditure—which in the case of my Government resemble what happened under the Conservative Government. When I said "my Government" it was intended as shorthand to mean the Government of which I have the privilege to be a member. I have already answered the point about the proportion of public expenditure. On investment, I am absolutely clear that there is plenty of scope for useful public investment in the nationalised and publicly-controlled industries. I am also clear that we will get ample investment in the private sector if the conditions favouring successful investment in that sector exist.

Does my right hon. Friend agree with the recommendations of the TUC Economic Committee apropos public expenditure, warning that indiscriminate cutting of public expenditure could have disastrous effects on prices and employment? Does my right hon. Friend further agree that these are the sort of things that he should be talking about to his EEC colleagues because they are recommendations from people who know far more about industry and finance than do many Opposition Members?

I am very much opposed to any indiscriminate cutting of public expenditure. It is not necessary to discuss this with my EEC colleagues.

In the right hon. Gentleman's role as special economic adviser, will he use all his authority and influence to support those in the Council of Ministers who are resisting the grotesquely inflated budget for the Common Market which has been proposed by the Commission, even if in so doing he treads on the sensitive corns of Commissioner Jenkins?

I was not aware until the hon. Gentleman mentioned it that Commissioner Jenkins—or President Jenkins—had any specially sensitive portions of his anatomy that I should avoid. I shall always support my colleagues in constructive and useful contributions to the EEC.

Chancellor Of The Duchy Of Lancaster (Engagements)

52.

asked the Chancellor of the Duchy of Lancaster if he will list his official engagements for 25th July.

Apart from my duties in this House, I have meetings today with ministerial colleagues and with officials.

Will my right hon. Friend make a statement about his attitude towards the TUC-Labour Party working group proposals for a wealth tax? As my right hon. Friend appears to be the Government's tax consultant, will he advise the Treasury to implement this proposal, which would bring in about £550 million from very rich people such as Sir Hugh Fraser, the Shadow Secretary of State for Prices and Consumer Protection—the hon. Lady the Member for Gloucester (Mrs. Oppenheim)—and the Chancellor of the Duchy of Lancaster?

I have not had the advantage that my hon. Friend has obviously had of being privy to these secret and valuable discussions. I assure him that I shall react to them on their merits. I shall give them such support as they deserve.

Questions To Ministers

On a point of order, Mr. Speaker. Have you had any request from the Chancellor of the Exchequer to make a statement today about the large issue of faulty Treasury notes by the Bank of England?

Postal Services (North-West London)

(by Private Notice) asked the Secretary of State for Industry what action has been taken to provide a normal postal service in the NW2 district of London.

Following the removal of 65 bags of Grunwick mail on Saturday, the Post Office called upon all workers at the Cricklewood office to resume normal working. I understand that the postal workers at Cricklewood held a meeting this morning, and a further meeting is to be held later today.

The Post Office and the Union of Post Office Workers are doing all possible to persuade the staff to work normally.

Is the Secretary of State aware that it is reported that pension books are being held up, and it is certain that business men and people in the Cricklewood area totally unconnected with the industrial dispute are suffering damage? Are such people entitled to compensation? Second, has the Secretary of State received any request that the postal monopoly should be removed for the relevant duration and area?

Third, recognising that the Post Office has difficulty in carrying out its statutory duties and that there is bound to be a risk in enforcing the law, will the right hon. Gentleman not acknowledge that there is much greater risk in not enforcing the law?

I am, of course, aware of the difficulty being caused in the NW2 district to those who use the postal service and of the damage which it is causing. That is the reason why the Post Office, with the Union of Post Office Workers, has consistently advised those who work in that office to resume normal working. Their efforts are taking place today, and they will continue through the day until they achieve their objective.

As regards compensation, I understand that people are not entitled to compensation as a result of this difficulty, but it is something I shall look into further with the Post Office Corporation.

I have not received any specific request from anybody living in the NW2 area for the lifting of the monopoly, but, of course, I have discussed it with the Post Office Corporation. I have not come to any decision at this stage. The House will recall that, on the last occasion when the right hon. Gentleman put a Private Notice Question to me, I said that lifting the monopoly at this stage could well exacerbate the situation.

Does the Secretary of State agree with the statement recently made by the General Secretary of the Electrical Power Engineers' Association, following a request made by APEX that his members should withhold supplies of electricity to Grunwick, that, irrespective of the merits of a particular dispute, if workers with a statutory obligation to provide services to the whole community start down the road of discrimination we would indeed be on the highway to anarchy?

If the right hon. Gentleman agrees with that, will he forcibly bring it to the notice of the Post Office? Second, has the right hon. Gentleman personally considered the many letters which I have sent to him from people in the NW2 area who are suffering considerable damage, and, if he has personally considered them, why has he not given me the courtesy of any replies?

Third, is the Secretary of State aware that, unless the Post Office insists on the performance of its clear statutory duty to provide services to the NW2 area, there will be a widespread and irresistible demand for a change in the Post Office monopoly and a change in the 1969 Act so that people who suffer damage may receive compensation?

I am not aware of any statement made by the General Secretary of the Electrical Power Engineers' Association, but, of course, both my colleagues and I, speaking from this Dispatch Box, have consistently made plain that we think that normal services ought to be resumed in the Cricklewood sorting office —and that is the view of the Union of Post Office Workers, too.

As to the right hon. and learned Gentleman's letters, I have seen a good many letters concerning this dispute, and many of them are receiving my personal attention.

Will my right hon. Friend use his influence with the Post Office to ensure that, irrespective of their attitude towards the Grunwick mail bags, Post Office workers be permitted to clear every other letter in the NW2 district, as they have been willing to do for the past three weeks? Further, before the provocative action took place last Saturday afternoon—when 65 Grunwick mail bags were removed, although business men in the NW2 area had been requesting the same facility for three weeks and had been denied it—was there any consultation with the Government, including the Department of Employment? I ask because of the possibility of the escalation of this trouble on account of what seems to the people in the area to be justice not appearing to be done, with Grunwick being treated in one way, and its mail bags being escorted by the police, whereas other people's mail remains still in the office? Is my right hon. Friend aware that this makes the rule of law and order look rather silly?

I understand from the Post Office that the 65 bags of Grunwick mail removed on Saturday had not yet entered the postal system—that is to say, it was unfranked mail. It was a decision of the Post Office, after consulting the Union of Post Office Workers. I was not informed until the action had been carried out.

Reverting to his earlier answer to me, will the right hon. Gentleman say whether the Post Office has itself suggested to him that the monopoly be removed for the duration and area concerned?

The Post Office has put to me that it would be as well for the Government to consider—[HON. MEMBERS: "Get on with it."] I am trying to choose my words. This is a difficult matter, and I want to get it right. It is all very well for hon. Members to shout, but it is a difficult matter. The Post Office has put to me the suggestion that the Government should consider revocation. I told the Post Office, when it put it to me, that at this stage it is the view of the Government—the political view of the Government—that to do that would exacerbate the situation.

Can the right hon. Gentleman confirm that, apart from the two places in NW2, mail is being interfered with in both W1 and EC1? Second, will he give a general direction to the Post Office to dismiss those workers who refuse to handle the mail? Third, can the right hon. Gentleman confirm that it was the Prime Minister himself who vetoed the suspension of the Post Office monopoly?

No, it was not the Prime Minister himself. I took the decision, I recommended that decision to my colleagues, and they accepted it. As regards other mail being interfered with, I understand that there is some trouble in other districts, but our decision is as I have stated it on many occasions, namely, that we want to see services pursued normally throughout.

Does the Secretary of State agree that for the Post Office to tolerate selective interference with the mail will create a dangerous precedent and that hon. Members on his side of the House who are cheering might reflect that that selective interference could one day be used against their interests? Second, does the right hon. Gentleman agree that the sole justification for a monopoly in the Post Office is so that the Post Office itself and its employees could carry out their statutory duty?

Our view is as I have already stated it, that normal working ought to be resumed right throughout the Post Office service. That is what the Post Office Corporation is trying to achieve, and in that it is assisted by the Union of Post Office Workers.

Will my right hon. Friend agree that in any strike or industrial conflict someone is bound to get hurt? That would apply if the doctors were to go on strike, as they have suggested they might do, in the relatively near future. Does my right hon. Friend further agree that in the Post Office strike of 1971, which was created by the Opposition who were then in government, there was wide-scale disruption throughout the length and breadth of the country for many small business men, industrialists and others? Does he also agree that in the Tory-orchestrated miners' strike of 1974, during the three-day week, the activities of millions of people were disrupted as a result of the Tories' campaign against the miners? If compensation is to be paid, should it not be put at the door of the hon. Member for Hendon, North (Mr. Gorst) and George Ward?

There are difficulties and inconveniences in any industrial dispute. That is axiomatic. My hon. Friend is right in what he says about the history of Post Office disputes. In 1971, there was massive disruption and, as I understand, no member of the Opposition, who were then sitting on this side of the House, said that prosecutions or other action should be taken against the Post Office workers. Similarly, in 1973, when highly discriminatory action was taken when the Post Office workers blacked communications between this country and France in protest against the test ban treaty, no action was taken by the then Conservative Government.

I appreciate that the right hon. Gentleman has had a bad run lately, but will he promise the House that he will get a grip on this absurd and ridiculous dispute and crisis? Is he aware that at the meeting of small businesses last Thursday a large number of small companies made it clear that they are literally on the verge of bankruptcy as a result of this dispute?

Will the right hon. Gentleman therefore undertake to do three things without further delay: first, to sack Sir William Ryland for gross incompetence and complacency as a result of the actions of the last few days; secondly, to meet the Post Office workers in the location concerned to get them back to work; and, thirdly, to make sure, as a result of sorting out the Post Office's legal and statutory duties, that a similar situation does not arise again?

The answer to the first question is, "No". The answer to the second is that I shall get in touch with the officials of the Union of Post Office Workers. The answer to the third is that I, together with my colleagues, are urging that normal services be resumed in NW2.

I acknowledge that postmen cannot be compelled to deliver Grunwick mail if they do not wish to do so. Is it not the case that innocent users in Cricklewood of the Post Office service are suffering because the discriminatory action was enlarged as a result of Opposition Members urging the Government to put pressure on the Post Office to deal with its workpeople? Before the hon. and learned Member for Montgomery (Mr. Hooson) goes further with his line of argument, will my right hon. Friend recognise that if further pressure is put on the men by sacking them the likelihood is that none of us will get any mail?

That is one of the considerations which we have had to have in mind, and I am sure that right hon. Members opposite had it in mind when they were in government during the 1971 and 1973 disputes. I have not been able to advise my colleagues that we should lift the monopoly because we think at this stage that it would only create even further difficulties for postal users in Britain.

First, can the right hon. Gentleman say whether there is any precedent for the Post Office asking for its statutory monopoly to be suspended and the Secretary of State refusing to recommend that course of action to his colleagues? Secondly, can he tell us exactly why postmen will not go to work in NW2?

I understand that further meetings are to take place today and that discussions will take place about the handling of the mail and backlog of mail of the small businesses which are being severely affected. Quite frankly, I do not know whether the lifting of the monopoly has been refused when requested.

Rhodesia

I will, with permission, make a statement on my talks on Rhodesia with the United States Administration.

As the House knows, I visited Washington over the weekend, primarily to discuss the Anglo-United States peace initiative for achieving a negotiated settlement in Rhodesia. I spent nine hours in discussion with Secretary Vance and one and a half hours with the President.

Mr. Vance and I have agreed to meet again in London around 11th and 12th August. Meanwhile, detailed work will continue with a view to putting forward specific Anglo-United States proposals to all the parties.

We are all agreed that the situation in Rhodesia is potentially so serious that the Anglo-United States initiative, despite all the difficulties, should continue and that we should do all we can to bring about an independent non-racial Zimbabwe after a fair election and on the basis of universal suffrage. In the last analysis, peace can only come from agreement between those people, black and white, who will be living together in an independent Zimbabwe.

Is the Foreign Secretary aware that, although we thank him for his statement, it is not sufficient to allay the anxieties of the House before it goes into recess at the end of the week? The right hon. Gentleman has indicated that there will be consultations, which we much welcome, with the United States to reach an agreed position, and no doubt with others, if we are to judge correctly from the Press. But is it not a fact that the House will not have had any opportunity of expressing its views on the proposals which the Foreign Secretary means to put forward? Is not that a very serious situation, given the fact that, as he says, the position in Rhodesia could hardly be more grave?

Secondly, we have gained the impression—again largely from Press reports, but the right hon. Gentleman has confirmed it to a certain degree—that the reception given to the mission organised under Graham and Low has been, on the whole, pretty negative from both sides. May we feel confident that it is on the basis of their work that the alternative proposals will be put forward? Is this the basis upon which we may expect some kind of suggestion? If so, will the right hon. Gentleman clarify how he proposes to handle the all-important question of security during any interim arrangement which may be made?

Finally, over many months the Opposition have, with great forbearance, suggested and suggested and suggested that there was an urgent need for a permanent mission in Salisbury. We have felt throughout that without such a permanent mission it would be literally impossible within a reasonable time for there to take place that which the right hon. Gentleman advocates and which we think is right—a fair election on the basis of universal suffrage. Why will not the right hon. Gentleman organise within a reasonable time such a mission from which alone he can draw the necessary information in a country which has never had a fair election on the basis of universal suffrage?

I understand the right hon. Gentleman's first point about the question of consulting the House. I should have wished to be able to bring proposals before the House in time for normal debate. Unfortunately, as he knows, and as I think right hon. and hon. Members on both sides of the House recognise, I am not in total control of the timetable, and I regret that. It is not simply a question of negotiation with the United States. I should have wished to be able to achieve this earlier.

I welcome the right hon. Gentleman's support for the concept of fair elections on the basis of universal suffrage. It is very important that we should agree on this basic element. It is one of the central elements in the proposals which have been discussed by the Anglo-United States consultative group and it has been broadly welcomed by all the nationalist leaders and many other leaders in Africa. Where there is apparent disagreement is in what Mr. Smith said in his broadcast to the nation, but if one examines carefully what he said one can see that it is not an absolute rejection of the principle of "one man, one vote", although he has given the impression to the electorate, at least, that he rejects it and wishes to go back to a qualified franchise.

The question of having a permanent mission in Salisbury has been under constant and careful thought. I openly admit that on a number of occasions we have been on the point of doing something and Mr. Smith has responded in a way which gives one cause to doubt his genuine commitment both to the purposes of the Anglo-United States consultation—[HON. MEMBERS: "Give an example."] On one occasion, for instance, he took the decision to have a raid 80 miles into Mozambique. On a further occasion there was a question of putting into detention people who would normally be involved in any process of elections. Now, without consultation with anyone—as he is entitled to do—he has—[Interruption.] We do not recognise his régime. He is de facto—[Interruption.] I was just saying that we do not recognise his régime. But he is entitled, if he wishes to, to call an election. That is a de facto fact of life that I have to live with. [HON. MEMBERS: "It is an illegal Government."] I agree. If hon. Gentlemen had listened, that is what I said. What I am saying is that all the actions which have been undertaken by Mr. Smith since April have given me grounds for pessimism about the extent and the genuineness of his commitment to black majority rule.

Is the right hon. Gentleman aware that we warmly welcome the continuing interest and involvement by the President of the United States in these negotiations? Perhaps, understandably, the statement gives us a modicum of hope with a minimum of information. Will the right hon. Gentleman comment on the four-point proposal recently put forward by Bishop Muzorewa? Does he feel that there is sufficient agreement on the principle of majority rule to set up a constitutional working party now and should not Mr. Smith be obliged to agree to such a measure? Finally, on interim security, since the Commonwealth appears to be out and the United Nations appears to present real difficulties, can the right hon. Gentleman tell us what he now has in mind?

We have had extensive consultations with Bishop Muzorewa, all the major nationalist leaders and many of the white Rhodesians inside Rhodesia about a constitution. We are close to being able to produce proposals which, although not consensus, are proposals on which we think it is possible to reach some measure of agreement.

If they were to be broadly acceptable it would be possible to hold a normal constitutional conference. That is an objective which I share. Similarly, Bishop Muzorewa, as have all the other nationalist leaders, has endorsed the concept of "one man, one vote". The difference is not very great and Bishop Muzorewa has said that he wishes the Anglo-United States initiative to be pursued.

The transitional period—this was a point also raised by the right hon. Member for Knutsford (Mr. Davies)—is a very difficult issue. We need to keep an open mind on all the various options. I am not in a position at this moment to tell the House what we intend to do because we genuinely intend to have further consultations to try to ensure that when we do put forward proposals they have as great a degree of agreement as possible. But this is; a central difficulty which we still have to resolve.

Given a firm commitment from the United States and ourselves, and given some measure of unanimity particularly from the Front Line Presidents and possibly South Africa, I think that it may be possible to resolve this problem.

Bearing in mind my right hon. Friend's strong moves to try to bring about a settlement in Southern Rhodesia, may I ask him to think again about his use of the word "entitlement" with regard to the calling of a General Election by Mr. Smith? Is my right hon. Friend not aware that that word will cause a great deal of alarm to the nationalist leaders in Southern Rhodesia and that the use of the word "entitlement" with regard to an illegal régime could also bring about the concept that the hangings and the various other acts that have taken place since UDI have "an entitlement" about them which many hon. Members do not accept?

I do not claim to have used very good words to describe the situation. I am happy to accept my hon. Friend's minor rebuke and to withdraw the word "entitlement". It is not a legal entitlement. However, one problem is that I have had to deal with Mr. Smith as the de facto controlling power although his is not a legal régime as this House and successive Governments have been prepared to accept, and rightly so. It is very important for those people who are pursuing the objective of an orderly and peaceful transition to majority rule to recognise that we in this House have still a legal responsibility, but similarly we have to recognise that we do not have the power to enforce that legal responsibility.

In view of certain reports that have appeared today, may I ask the right hon. Gentleman whether there would not he a total inconsistency between this country's claim to possess exclusive sovereignty in Rhodesia and the acceptance of a United Nations presence in that country?

I do not want to define sovereignty with the right hon. Gentleman. It is an issue on which we have often clashed in the past. I would not claim that we have exclusive sovereignty in the sense of political reality. Although we do have a legal position with regard to the situation in Rhodesia, we do not, as I have openly said, have the power to enforce it.

In my definition of sovereignty, it is not exclusive. I have made it clear all along that I do not believe that Britain alone can bring about a settlement. That is why I have worked on an Anglo-United States initiative. I do not believe that we can exclude a rôle either for the United Nations, the Commonwealth, the Organisation of African Unity or any group of nations which is concerned about the situation which currently exists in Rhodesia.

In the course of his conversations with Mr. Vance, did my right hon. Friend discuss the question of the hangings in Rhodesia by the illegal régime? Did he discuss the possibility, which I believe to be essential, of creating some form of international force to carry out the transitional period?

We did discuss the transitional period. It is a key element and we went into it in some detail. I had no need to discuss the hangings with Mr. Vance because we have both made our views publicly known about them and we agree.

I told Mr. Smith in April that these hangings were offensive to international public opinion and that if he genuinely wanted to show that he was moving towards majority rule, one of the ways of doing so would be to desist from them. Unfortunately, he has continued with them, and that decision is one of the problems.

Will the right hon. Gentleman agree that moderate African nationalist leaders, such as Bishop Muzorewa and the Reverend Ndabaningi Sithole, have come increasingly to the view that they have more to fear from the Patriotic Front than they have from the régime, while the régime on its side has increasingly come to the conclusion that it must do a deal if it is to survive in the long term? Does the right hon. Gentleman not agree that the scene is set for a possible settlement? Will he be careful that his proposals do nothing to prevent an internal settlement or give any power of veto to the Patriotic Front?

I have always made it clear that any proposals which are put forward would be aimed at trying to achieve a settlement. At the outset of the negotiations I could not accept a system where any one group had an ultimate veto. This was one of the difficulties of the Geneva negotiations and the discussions following Geneva.

With regard to an interim settlement, one of the grave dangers in talk about an internal settlement is that it does not recognise the cardinal principle of universal suffrage. As often espoused, it does not satisfy the prime commitment which everyone in this House wishes to see to fair elections, and it would allow a continuation of the armed struggle, in which case it would be difficult to hold elections in the present climate.

But, in order to survive, any Government in Zimbabwe, either black or white, needs to have recognition by the international community. To exclude any nationalist leaders from a fair electoral process would be a recipe for continued strife. It is a cardinal principle of the Anglo-United States initiative that we do not intend to choose the leadership of a future Zimbabwe. That is for the people of Zimbabwe.

That is why, despite many claims to the contrary, I have refused to accept that we should talk only to the Patriotic Front. We have talked to the Patriotic Front, to Bishop Muzorewa, to Mr. Sithole and to many other different groupings.

Is my right hon. Friend aware that, although we wish him well, some of us have doubts about the policy being pursued? As this may be the last occasion before the House rises to express a personal opinion, may I plead with my right hon. Friend not to take a decision to place British troops in Rhodesia?

I know that my right hon. Friend follows this subject very carefully, and I respect his views. There are many people who have been advising me against becoming involved in this problem. As Foreign Secretary, I do not believe that I have any alternative but to continue to try to achieve a peaceful settlement. As for British troops, that is a threshold across which successive Governments since 1965 have not been prepared to go. It is quite understandable why. There would be severe problems involved. I wish to produce proposals which will give a lasting peace to the area. I do not know whether it can be achieved. But I shall take into account all the feelings expressed to me.

If, ultimately, there is to be an election in Rhodesia based upon national suffrage, is it not of the first importance in the meantime that the British Government should show no partiality as between one nationalist group and another, and is it not a fact that, in the opinion of many people, the Foreign Secretary has already shown towards the Patriotic Front a favouritism which he should not have shown?

If that is the hon. Gentleman's view, I regret it. I have attempted at all times to uphold the position. The House should remember how at one time it was said that the Anglo-United States consultative group would never get off the ground because of my insistence that it should speak to all nationalist leaders. If hon. Members were to look in my diary, they would see that my door had been open to all groups, and I have expressed this view clearly. However, I have to take account of certain realities. When it comes to the transitional period and to attempting to end the armed struggle, I am bound to have to focus my attention on those who are taking part in the armed struggle. That is a realitiy of power of which I have to take account.

Does not my right hon. Friend agree that one of the essential requirements for a peaceful and responsible transfer of power during the transitional period is the enforced retirement of the white officers of the regime and their replacement by Commonwealth officers to help the integration of the black forces of the regime with the guerrilla forces in order to prevent murderous and bloody recriminations?

This is one of the difficult questions under discussion. I do not want to comment too much on it. In our consultations, there has always been a recognition by all sides that this transitional period would require some people who had become very exposed to personal and political criticism to make way for others. That is one of the issues at which we shall have to look. There is an acceptance that this is a legitimate problem, and there is some understanding of it amongst Cute Rhodesians

In talking to the Americans internationally about this very grave difficulty, will the Foreign Secretary make it plain that the United Kingdom has an interest which is slightly different from that of other countries in that we are more dependent on a peaceful transition and secure access to the raw materials in Southern Rhodesia and on the prevention of the domination of the sea routes by other countries, including the Soviet Union?

Yes, but I think that it is in the interests of all the Western democracies that there is a stable peace in the whole area of Southern Africa. When we look at Rhodesia—concentrating though we in this House are bound to be on it—we cannot exclude considerations about Namibia and South Africa itself. It has always been my belief that it is in the interests of South Africa that there should be a transition to majority rule after democratic elections in Namibia and Rhodesia. There is some recognition inside South Africa that this is the case. We shall continue, however, to make clear to the South Africans our abhorrence of the policy of apartheid.

Am I right in thinking that the call of the right hon. Member for Knutsford (Mr. Davies) for fair elections in Zimbabwe on the basis of universal adult suffrage represents a conversion to majority rule? Notwithstanding the very strange change of heart of the right hon. Member for Brighton, Pavilion (Mr. Amery)—that Mr. Sithole is a moderate—for all things are possible, does my right hon. Friend remember that, before Geneva and before his own initiative in April, he was warned time and time again that Mr. Smith had no intention of having any peaceful transition to majority rule? How long will my right hon. Friend allow him to continue to desecrate the borders around Zimbabwe, and how long will he allow this illegal regime to continue?

If it had been in my power, I would have removed Mr. Smith the day that I took office. I make no secret of that. I do not believe that he has a contribution to make to black majority rule and peace in the country. But he is de facto the person with whom I have to deal and negotiate. Therefore, I have been prepared to meet him and to discuss these matters with him. I have not the power to make that change. I have only the power to use influence and to try to achieve a settlement and the removal of Mr. Smith from his office by negotiation. That is one of our main purposes.

The right hon. Member for Knutsford must speak for himself. But, on the basis of my understanding of his remarks, my hon. Friend's interpretation is correct. They are important. It is true that the nationalist leaders are moving around their alliances and their positions. It was only about a year ago that Mr. Nkomo and Mr. Smith negotiated on the basis that Mr. Smith thought Mr. Nkomo was the person who could lead Rhodesia peacefully. In the last few months, there have been the most stringent criticisms of Mr. Sithole. It is comforting now that he can go back into Rhodesia and be regarded by the right hon. Member for Knutsford as a moderate leader of nationalist opinion.

Order. There is an im-important statement to follow. I shall take three more questions from each side of the House and, of course, the Opposition Front Bench afterwards.

In view of the regrettable but quite inescapable evidence, first, that the introduction of universal suffrage in some 20 States north of the Zambesi has led to the introduction of either ethnic or party dictatorships and, secondly, that the introduction of universal suffrage will cotinue to be resolutely and absolutely opposed by the 4 million Europeans living south of the Zambesi, what hard evidence can the right hon. Gentleman give this House or anyone in Rhodesia that the introduction of universal suffrage in Rhodesia will not lead to exactly the same consequence?

The hon. Member for Havant and Waterloo (Mr. Lloyd) does not live in the world in Africa as it now is. There are many white people living in Africa who accept universal suffrage. In Zambia, a few months ago, a white person won an election in the Copper Belt totally dominated by black voters. That is not unusual. It has happened in other countries. We must look to what has happened in Botswana, we must take hope from what has happened in Kenya, and we must pursue the possibility that we can achieve a non-racial Zimbabwe I believe that we can.

In my right hon. Friend's discussions with President Carter and Mr. Vance, was there on the agenda our attitude to South Africa? Does not my right hon. Friend agree that, until we get South Africa to agree not to trade and work with Rhodesia, the illegal regime will continue, and that that is the key to the issue?

I do not disagree with my hon. Friend's analysis. It is the support which Rhodesia has had from South Africa—obviously in terms of key elements such as oil, but also in terms of armaments and many other ways— which has sustained it. Were that support not to have occurred, in direct contravention of the mandatory sanctions applied through the United Nations, it would have been a very different saga over the past 11 years. Then the violence now threatening to engulf everyone in Rhodesia, black and white, could never have taken place. The key to it all still lies in the South Africans recognising that a settlement in Rhodesia is in their interests and in the interests of the white Rhodesians.

Although I agree with the Foreign Secretary that Mr. Smith's Government is de jure an illegal one, is the right hon. Gentleman aware that he has given the impression in recent months that the Patriotic Front has a de jure status? Secondly, will the right hon. Gentleman return again to the matter raised by my right hon. Friend the Member for Knutsford (Mr. Davies)? Will he consider the possibility as a matter of urgency of reopening a permanent British mission in Salisbury to which all people of whatever opinion have the right of access?

The Patriotic Front is not de jure. I must make it clear that it is a de facto-like fact of life of which I have to take account.

As for this proposed mission, I have expressed to the House a readiness to look at it. At the right moment, I believe that it would be helpful. If we were able, for instance, to present proposals for the consideration of the Rhodesian people, I believe that at that moment it would be very helpful to have a mission there. That is what happened during the Pearce Commission and the consultation.

When we were coming close to presenting proposals, Mr. Smith suddenly called an election. I am not sure that it would be the most appropriate time to introduce such proposals in an election period. I shall keep an open mind.

Does my right hon. Friend accept that his efforts towards a peaceful and democratic solution are much appreciated, but is he aware that many of us differ over what he is doing? Does he realise that his efforts to bring in the United States, after the terrible results of intervention by America in Vietnam, are open to a different viewpoint—particularly that which is widely held by the black nationalist leaders, who have repeatedly made it clear that they do not wish to see America involved in Southern Africa? Will the Foreign Secretary take an initiative in terms of Southern Africa which does not demand that America should be involved? Does he not agree that only by taking such a course will he prevent the delaying tactics in which Mr. Smith is engaging by wishing to discuss these matters with America?

My hon. Friend must accept that the United States Administration has made clear that it has no intention of putting troops into Rhodesia or in any other place in Africa. There is no question of combatant troops being employed. In so far as the United States Administration is involved in Southern Africa at the moment, that is widely welcomed by the Africans. I know of no major African nationalist leader who does not welcome the responsible attitude and tough stance taken by the present United States Administration on the subject of apartheid, black majority rights and the need for a wider franchise and discussion.

I believe, however, that my hon. Friend is living in the past in talking of United States involvement in Vietnam. Many of those who support the present United States Administration were themselves critical of aspects of the position adopted by the previous United States Government on the subject of Vietnam. Any new Administration must not be allowed to be bedevilled by the sins, omissions or advantages of past Administrations. It must be judged on its merits.

Will the Foreign Secretary accept that the key to success is the preservation of the integrity of the Rhodesian security forces under their present commanders as a strictly neutral force, and that the failure to recognise this could lead to a rapid evaporation of confidence among the European population and, almost inevitably, to bloody tribal war? Will he recognise that there is no other possible body that is capable of maintaining law and order either during transition or after majority rule?

The hon. Gentleman has put a problem that is at the core of the difficulties over the transitional period. General Hickman has made it clear that he sees the Rhodesian defence force as not being a political army but as owing allegiance to any legitimate Government and as a force that would serve any new elected black majority Government. The trouble is that it is not seen as a neutral force. The history of the past 11 years makes it questionable that it is seen as a neutral force. I cannot endorse all the hon. Gentleman said, particularly about the fact that there should not be some change of officers. That inevitably is a fact of life. One should take account of the anxieties of the black nationalists at the continued presence of such a force. This is one of the major problems.

I recognise what the hon. Gentleman said about keeping the confidence of the white Rhodesians during the difficult transitional period, especially if there is to be an election. We are examining this issue closely. I wish that there were easy answers, but we must recognise that these matters lie at the core of the problem.

In view of the reply given to the right hon. Member for Brighton, Pavilion (Mr. Amery), will my right hon. Friend make it clear that there is no question whatever of accepting the proposals of Bishop Muzorewa on the basis of the exclusion of the Patriotic Front? Will my right hon. Friend go further and emphasise to the Opposition that the non-acceptance of the Patriotic Front would inevitably lead to further bloodshed and further war in Rhodesia?

Just as I have not been prepared to exclude from my consultations Bishop Muzorewa and other nationalist leaders. I hope that nobody will adopt a stance of seeking to exclude the Patriotic Front. I have already made it clear that this issue, which goes to the heart of the differences between the nationalist leaders, can be resolved only by an election in which all of them can go to the people in a future Zimbabwe and ask for their decision. It is easy to set this forth as a principle, but it is a great deal harder, I fear, to achieve it.

May I ask the right hon. Gentlemen to clarify one matter which has not been made clear in questions and answers so far in this discussion? Does he make a clear differentiation between any involvement by Britain in military or other terms in seeking to impose a settlement beyond that whish seems more realistic at the moment and aiding the security situation in any interim situation? It is important that he should make that clear

Secondly, will the Foreign Secretary go on to say that there will be no rejection of that aspect in any British involvement, perhaps as part of an international force in ensuring that in the interim period the situation may be safeguarded, and that British participation will play a part, since without such participation any British action is itself suspect?

I am grateful for the right hon. Gentleman's comments, particularly for his mention of an international effort. It is an open secret that consideration has been given to ways in which to bring about stability in this period. In regard to British involvement, let me make it clear that we put forward proposals in January that we would be prepared to see a British interim commission in some circumstances. We have always accepted that it might be helpful to put in some administration as an over-structure which would be more acceptable.

The subject of peacekeeping has yet to be decided and no definite decisions have been taken, but one has to take note of the fact that successive Governments have been unprepared to put in troops on the ground. My hon. Friend makes a distinction between putting in troops on the ground to impose a settlement, which is completely out of the question, and putting in troops on the ground in a peacekeeping rôle. This matter would have to be considered on its merits. The United States has ruled out this option. It might be better for the major Powers to stay out of any question of a peacekeeping role. Such peacekeeping operations in the past have been conducted by countries with a clear record of neutrality between the differing parties. These are issues that may need to be considered with great care.

British Leyland (Finance)

With permission, Mr. Speaker, I should like to make a statement on finance for British Leyland.

On 26th May in my statement on the Mini replacement, I said that if progress was sufficient to justify the provision of further funds this summer, I would provide the House with a report by the National Enterprise Board on British Leyland's performance.

I have placed in the Vote Office copies of the NEB's report to me which includes figures on British Leyland's performance up to the end of June. It gives a full account of the key aspects of performance. The House will note that production has been maintained at high levels over the last three months of this period.

The report also gives NEB's considered views on progress towards achieving a radical improvement in industrial relations. It concludes that solid progress has been made, although it emphasises that much remains to be achieved. It recommends that it should be authorised to release further loan funds up to £100 million—subject to the NEB being satisfied at each stage that progress on industrial relations reform is being maintained. The Government accept the NEB's recommendation.

The Government have considered how these funds should best be channelled to British Leyland. The House will recall that, when we debated the subject of British Leyland finances on 3rd August last year, I said that there was a case for all public funds for British Leyland being provided directly by the NEB. I received a recommendation to this effect last summer from the Industrial Development Advisory Board. The Government have not taken a final view on this but have decided that, for this tranche at any rate, British Leyland's requirements should be met from NEB's funds. This arrangement will emphasise the NEB's responsibility for satisfying itself that sufficient progress on industrial relations reforms is being maintained at each stage at which the company seeks to draw on the new tranche.

The House will note that the NEB's report anticipates a further requirement for funds before the end of the present financial year. Tits is, of course, in line with the original expectation in the Ryder Report that a total of £200 million would be needed this year. I shall inform the House when I receive a recommendation from the NEB about the remaining part of this year's requirement. By then the NEB will have reported further to me on its review of British Leyland's forward plans and I shall keep the House informed of the outcome.

Is the Secretary of State aware that we welcome such improvement as there has been but regard the three months since the strike as a very short period on which to judge progress, and that we shall need to study the NEB report with care?

I have three questions for the right hon. Gentleman. First, now that the taxpayers' money is being spent, is he satisfied that the new Mini will be a more profitable investment than the car that it replaces and also a better investment than a new middle-range model or models? Secondly, does the Government support for the 12-months rule mean that British Leyland will be prevented from moving to a common negotiating date, as it wants?

Thirdly, is the company providing from its own earnings the 50 per cent. of the investment cost set by the Government and endorsed by the company as a condition for contributions from the taxpayer? Without such a contribution from the earnings of the company, it is very hard to justify further money from the taxpayer.

The Mini replacement programme and policy are the programme and policy that the British Leyland Board recommended to the NEB and that it accepted. The NEB says that it is certainly better than any other options, and it expects it to be profitable.

The question of the common negotiating date is a matter for further discussions following the arrangements that were agreed after the troubles earlier in the year with the toolmakers, and it remains the objective of the work force of British Leyland and British Leyland management.

The answer to the right hon. Gentleman's third question is that it is a condition that a major part of the investment programme will have to come from British Leyland, earned from its own profitability.

Is my right hon. Friend aware that the delay in bringing for-ward the long-term options for British Leyland is counter-productive to good industrial relations? Does he not agree that if good industrial relations, about which he is concerned, are a prerequisite for his being able to make a statement on the long-term review, the very industrial relations that he wants to bring about could be endangered by any further delays? I urge him, therefore, to give full consideration to this point.

I shall give full consideration to it. I know that delays are un-satisfactory to some people. It was the NEB's decision that it should review the situation further following the troubles earlier in the year. I am pleased that we have been able to go ahead with the first tranche of the £200 million that was envisaged when I made my statement last year.

Will the Secretary of State assure the House that he understands the need for confidence amongst those working in British Leyland, those selling the cars and those who will buy them? Will he, therefore, tell the House whether there has been any change from the Ryder plan on which the House originally agreed to the giving of these funds, changes in particular in the organisation of British Leyland and in the financing of British Leyland, to which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) referred? I did not find the right hon. Gentleman's answer clear on the 50 per cent. question or on the question of the model policy. Are we going ahead on the basis of the Ryder plan or are we waiting for a new plan? Will the House have a full opportunity of debating any new plan which is proposed?

The broad plan that was first laid before the House is still basic-ally the policy being pursued by the NEB and British Leyland. Of course, from time to time there will be modifications to it, and when those modifications are agreed suitable steps will be taken to inform the House. The question of organisation is a matter for the NEB. It has not made recommendations to me about the management or anything of that kind.

I thought that I had made it clear, on the question of British Leyland's own contribution to the investment, that it is still the intention that the bulk of the investment necessary will have to come from British Leyland's own profitability.

If the Government are now satisfied that there will be no further investment from them to finance this project, is my right hon. Friend satisfied that the financial resources of the NEB will be sufficient to finance it?

I am satisfied that there are sufficient resources with the NEB for it to be authorised to pay the £100 million to British Leyland.

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