asked the Chancellor of the Exchequer what plans the British Government are putting forward for the reform of the international monetary system.

At the annual meeting of the International Monetary Fund in 1971 I put forward comprehensive proposals for the reform of the international monetary system. The basis of that scheme is, I believe, now generally accepted. Some of the still unresolved points turn on operational details which are now being closely studied by technical groups under the Committee of Twenty Deputies. When we met in Nairobi last month the Committee of Twenty announced its intention to arrive at final recommendations by 31st July 1974. We shall be meeting again in January and in the spring.

Was not one of the areas of disagreement and uncertainty at Nairobi both the criteria for establishing when a country is in fundamental disequilibrium in its balance of payments and the pressures that ought to be applied in that situation? Have the Government now come to a conclusion on the way in which that problem ought to be dealt with? Does not that lie at the centre of the whole problem?

Those were certainly two of the subjects that we discussed and which we shall certainly have to take further. But I think that the important thing is that the general shape of the reformed system has been defined and there really has been considerable progress on a number of important issues. After all, we are agreed on the basis of the exchange rate system, and that the SDR will become the principal reserve asset. We have made considerable progress towards a consensus on the adjustment process and on convertibility. In short, I think that we have reached the stage where the immediate need is for deputies to test out and to elaborate the agreement reached in more operational detail. But I am sure that we shall have to pursue further the two points mentioned by my hon. Friend.

asked the Chancellor of the Exchequer what, on the basis of the Official Index of Retail Prices, is the purchasing power of £ sterling now, taking it as 100p on 18th June 1970.

asked the Chancellor of the Exchequer what is the value of the £ sterling now compared to 18th June 1970, based on the General Index of Retail Prices.

asked the Chancellor of the Exchequer by how much the buying power of the £ sterling has been reduced since June 1970 generally and specifically in connection with the purchase of food.

asked the Chancellor of the Exchequer, following the publication of the latest General Index of Retail Prices Statistics on 19th October, what is the purchasing power of the £ sterling now, taking it as 100p on 18th June 1970.

Taking the internal purchasing power of the £ sterling as 100p in June 1970, its value in September 1973 is estimated to be 77p. Movements of food prices accounted for one third of the reduction.

For how much longer do the Government intend to continue devaluing the pound?

The important feature, which has often been repeated to hon. Members on the Opposition side of the House, is that the standard of living has increased much faster under the present Government than it did under their predecessors, and it continues to do so.

As bad as that figure is, may I remind the Minister of the fall in the external value of the pound? Is he aware that since June 1970, against the franc the pound has fallen by 23 per cent., against the mark by 33 per cent. and against the guilder by 31 per cent.? Is that not a suicidal descent, and is it not morally bankrupt of the present Government to show so great a lack of concern about it?

As the hon. Gentleman knows, relative exchange rates are continually changing, day by day, and the present under-valuation of sterling will be made perfectly clear to hon. Members of the Opposition when I answer a later Question on the Order Paper, on the way in which inflation is moving in the countries which are our principal industrial competitors. That will show that at present sterling is under-valued. But for years and years the hon. Gentleman's Labour Government sacrificed the prosperity of the British people by treating the exchange rate as a shibboleth, and after all that they failed We shall not do that.

Has my hon. Friend tried to calculate what would have happened to the pound had either the Labour Party or the Liberal Party been in power?

I would shudder to think about that.

Is the Minister aware that while the standard of living may have risen, as he says, for the better off in the community, it has fallen for all those who are worse off? How does he square the shocking and disgraceful figures he has given to the House with the Prime Minister's promise, made in Leicester during the election campaign, that if his party were returned to power it would hold down the cost of living and keep up the value of the pound?

The hon. and learned Gentleman is entirely wrong. The poorer sections of the community have done better than the rest of the population. The real net earnings of the family man earning half the national average wage —if everything is taken into account, including prices, rents, FIS, FAM and everything else—have increased by an annual rate of almost 4 per cent. since mid-1970, which is double the rate under the Labour Government.

Is the hon. Gentleman aware that with bread up 25 per cent., beef 79 per cent., eggs 99 per cent., cheese 78 per cent., rents 33 per cent., rates 40 per cent. and medicines 27 per cent., under this Government people can no longer afford to eat, to pay for a roof over their head, or to be ill? With telephone charges up 44 per cent, they cannot afford to telephone the Prime Minister to complain about it.

The hon. Gentleman always exaggerates his case to such an absurd extent that his supplementary questions are totally useless. His figures are partly wrong. I can only repeat that the real earnings of poorer people, including pensioners, have increased far faster than the cost of living.

Does my hon. Friend agree that during the six years of Labour Government world food prices were completely on a plateau, that since the present Government have been in power there has been an astronomical rise in world food prices, and that no Government, Labour or Conservative, can credibly control international food prices?

Yes, of course I can agree with that. So does the right hon. Member for Leeds, East (Mr. Healey), who said on television the other day that the increase in food, wheat and meat prices is not primarily the responsibility of the British Government. So my hon. Friend has support from the so-called Shadow Chancellor

I am very grateful to the Minister of State. Will he also quote from my speech in which I pointed out that a 20 per cent. devaluation in itself is responsible for a 20 per cent. increase in the price of imported food and that countries like Germany, which have managed their affairs better, have not suffered an increase in their food prices, because they have managed to revalue their currency?

Does not the hon. Gentleman agree that the figure of 77p which he has announced shows that the value of the pound has fallen by nearly one quarter since his party took power and that the rate of inflation since the prices and incomes policies were introduced last November has, if anything, been slightly greater than during the previous year? As the Chancellor of the Exchequer recently accepted personal responsibility for maintaining the value of the £ sterling, will the Minister of State explain why his right hon. Friend shuffled off on to him the responsibility for giving this appalling answer rather than face the music himself?

The right hon. Gentleman is quite wrong. Retail prices have increased less than 3 per cent. since April, the last month of the standstill. This is in spite of soaring basic raw material costs, which have increased by 38 per cent. in the last year.

As far as I can understand it, the right hon. Gentleman's policy to is increase Government expenditure by £6,000 million, to nationalise to the extent of £10,000 million, completely to remove any kind of control on wages, and after that massively to increase taxes. So perhaps the right hon. Gentleman could tell us what his remedy for the present problem is.

asked the Chancellor of the Exchequer if he will make a statement about progress towards monetary union within the Common Market.

asked the Chancellor of the Exchequer what further consideration he has given to the second stage of EEC economic and monetary union.

Work is continuing on these matters and progress will be reviewed at the next meeting of Community Finance Ministers.

As it is the Government's intention to go for the second stage of economic and monetary union by 1st January next year, will my right hon. Friend explain what it means in reality and in practice and, secondly, what provisions are being made for democratic parliamentary control of economic and monetary union?

Obviously Parliament will have the usual opportunities to discuss any proposals as they arise. As regards the substance, the Government's view is that the decisions on the second stage of EMU should be taken in accordance with the summit communiqué of October 1972.

Under the second stage, what obligation do the British Government have to harmonise the coverage of value added tax? If they have any such obligation, will it not be a case of Britain going into step with the other eight rather than the other eight coining into step with Britain as regards coverage?

That might be what the hon. Gentleman and his hon. Friends would do. I will explain the position to the House. First, the content of the second stage of EMU is obviously now being considered. As to the specific question concerning VAT, paragraph 2 of Article 28 of the Draft Directive allows all zero rates which were in force in the United Kingdom on 1st July 1973 to be retained until the Council of Ministers by unanimous vote decides otherwise, but not later than the abolition of fiscal frontiers, which would also require a unanimous decision by the Council.

In order that our partners in the Community may know precisely where we stand in this matter, can my right hon. Friend say that there will be contained in the Conservative election manifesto at the next election the same explicit pledge that was given at the last election, that we in this party would not countenance value added tax on foodstuffs?

I shall be consulting my hon. Friend about the content of the manifesto in due course.

Will the right hon. Gentleman confirm the reports that appeared during the Nairobi meeting of the International Monetary Fund, namely, that he told his colleageus that he would not re-peg the parity of the pound until July next year? Will he also confirm the statement by President Pompidou and other French officials that France is not prepared to proceed to stage 2 of the economic and monetary union until the British pound has rejoined the snake? If the right hon. Gentleman can confirm these two statements, is it not total hypocrisy for him to pretend that he or the Prime Minister has the slightest intention of carrying out the pledge made at the summit meeting last year?

The position is simple. As regards observations of those in other member countries of the Community, all I can say is that it is the British Government's view that decisions on the second stage of EMU should be taken in accordance with the summit communiqué of October 1972. With regard to the question of the pound, the position is exactly as I have stated it to the House in the past.

asked the Chancellor of the Exchequer if any calculation has yet been made of the revenue derived from value added tax in the first half-year of its operation; and whether the amount exceeds the estimated yield.

While it is not the practice to publish forward estimates for periods of less than a complete year, I can tell my hon. Friend that provisional net receipts of value added tax in the half-year ended 30th September are £18 million. He will recognise that receipts in the first six months give no indication of the normal yield of the tax.

In any review of value added tax or of its rate, will my right hon. Friend ask the Chancellor to give first priority to dealing with the anomalies and unfairnesses that have come to light in the new tax, bearing in mind that these anomalies and unfairnesses are far fewer than in the old selective employment tax and purchase tax?

My right hon. Friend and I will certainly be prepared to consider any proposals that my hon. Friend may wish to make.

As the Chancellor would not give the right sort of answer to the hon. Member for Oswestry (Mr. Biffen) about food, and after what has recently been mentioned about the need for there to be unanimity in the EEC, will the Chief Secretary give a clear and cate- goric assurance to the House today that the Government will veto any proposals to increase the coverage of VAT in Britain?

It has never been the practice of any Government to enter into any binding commitments about the future movements of taxation. The hon. Gentleman knows that perfectly well, and he knows equally well that the right hon. Member for Leeds, East (Mr. Healey) would not say anything different. I remind the hon. Gentleman that there would have been £225 million of tax charged on food now if we had retained the cover age and rates of purchase tax which we inherited in 1970.

Does that mean that the Minister is not prepared to give an assurance that he will refuse to tax food with value added tax?

I did not say anything of the sort. I stand by what I said.

asked the Chancellor of the Exchequer what requests he has had for the re-examination of VAT in relation to catering establishments.

My right hon. Friend has received various suggestions. The operation of the tax will be kept under review.

Has the Minister any evidence that the service charge is being used by management in the catering industry to offset the administrative costs of value added tax? Does he not agree that in view of the suspect legality of this practice, and as it is robbing waiters and waitresses, there is a case for some investigation?

I cannot agree with that. Value added tax is a tax on services as well as on goods.

The Conservative Party in its manifesto pledged itself to value added tax. On their own admission the Conservatives did not foresee the rise that has taken place in world food prices and even when we were legislating for the tax we did not expect the rise to continue for so long. Is it not foolish further to increase food prices for those who eat in canteens? If there is to be a review of the tax would it not make sense to remove this charge?

Food generally is zero rated. It was decided at the time the tax was compiled that catering establishments should be included in the charge to VAT. Any changes that might be contemplated are a budgetary matter and there is nothing I can add to that.

asked the Chancellor of the Exchequer what advice his Department has received from the clothing trade regarding VAT on certain sizes of children's clothing and the percentage of children's clothing likely to be worn by adults.

Representations have been received from the clothing trade about the maximum sizes of certain items of young children's clothing and the revised Customs and Excise Notice No. 714 issued in July took account of those representations. The percentage of young children's clothing likely to be worn by adults has not been mentioned by the clothing trades.

That is a surprising reply especially in view of the letter of Mrs. MacDonald of the Scottish TUC. The Minister is on record as saying that 25 per cent. of children's clothing is likely to be worn by adults. Where did he get that figure? The mothers of these young children, who are by no stretch of the imagination fanatics, are frustrated by the value added tax on children's clothing. In the measures that he is to introduce will the Minister consider reducing the maximum size chargeable to tax for clothing worn by these young children, as was the position under purchase tax?

As far as I can see the first part of the question was in complete contradiction to the latter part. The whole purpose of the relief, which was sought by hon. Members on both sides, was to exempt young children's clothing from VAT. We have taken what we believed to be the average size of a child of 12. In fact, the limits are largely above the average size of a 12-year-old child and there must be a dividing line somewhere.

In view of the anomalies and complexities that arise because of this situation, will my hon. Friend consider removing children's wear from the exemption from VAT and com- pensate for it through an increase in family allowances?

My hon. Friend will recall that when we originally introduced value added tax there was no exemption for young children's wear. Clearly, before we introduced the tax we considered other alternatives, but we believed that this proposal was the best in the circumstances.

Is the Minister aware that some of us believe that the people in the Department must think that some schoolchildren these days were born of pygmies? I have an 11-year-old son who last weekend was politely told that he was now in the VAT range. I wondered whether he was in line for a rocket from somewhere, but he is now in line for VAT. This is all right for me, but for many of my constituents it is an added burden of tax in a very low income area. We should reconsider this matter and take into consideration the fact that our children are growing bigger and more masculine at an earlier age than in previous generations.

I am delighted that the hon. Gentleman's son is a big boy, like his father. It is necessary to draw a dividing line. Unfortunately, some children and-grown-ups will fall on the wrong side of that line. My right hon. Friend, in his Budget Statement, said that Miss World, whose statistics are 34, 22, 34, is in fact a young child for the purpose of this dividing line. This is something that we cannot avoid. We must draw the line somewhere.

asked the Chancellor of the Exchequer if he will now remove VAT from telephone bills in respect of telephones supplied to disabled people by local councils.

Under the Chronically Sick and Disabled Persons Act 1970 local authorities have power to meet telephone rental charges or give assistance towards the cost. My right hon. Friend believes that this is the best means of helping disabled people.

Is the hon. Gentleman aware that that is a most deplorable reply? His lack of action in this matter is severely restricting the efforts of local authorities whi0063h have to work within the budget of supplying telephones to disabled people. Will he tell the House why pin-table machines are exempt but many items essential need to disabled people are taxed?

We have debated VAT and the disabled on many occasions. I have told the hon. Gentleman before that there is no reason why any disabled person should have to pay VAT on items that he needs to help him in his disability. In this matter local authorities have discretion in assisting disabled people. If local authorities are not doing so, then I think that this question should be put to my right hon. Friend the Secretary of State for Social Services.

This is a very important matter. There can be a differentiation in a local authority's action which is not particularly helpful to the disabled. Instead of waiting for a Question to be put down to my right hon. Friend the Secretary of State for Social Services, could not my hon. Friend institute an investigation, as local authorities might be more interested if the Treasury found out rather than other Departments? Will he prepare an analysis for us so that we may know where to exercise our pressure?

With respect to my hon. Friend, I think that that question, which is basically about the working of the Act, should be put to my right hon. Friend the Secretary of State for Social Services.

Is the hon. Gentleman aware that in health and welfare, with the powers being invested in local authorities, there have been and always will be wide discrepancies between good and bad authorities? Will he take this fact into account and recognise that a slightly different emphasis should be placed on this matter, because we are dealing with the question of VAT? Would it not be better for his Department to deal with this as a specific issue, as distinct from a health and welfare service?

I do not doubt that there is a discrepancy of treatment between one local authority and another. As I have already said, this is a matter that should be taken up with my right hon. Friend. If relief were to be given in this area a whole host of other equally deserving groups would feel that they were not being singled out for special treatment. This is of not the type of situation which should be dealt with by a tax concession.

asked the Chancellor of the Exchequer what steps have been taken to provide independent reserves for the European Fund for Monetary Co-operation; what is now the total amount of funds available to it; and if it has been agreed to appoint a managing director.

The question of providing the European Monetary Co-operation Fund with reserves is being considered in the context of the discussions on the second stage of economic and monetary union. At present the EMCF has no such reserves, and though the fund's board of governors meets regularly it is premature to consider appointing a managing director at this stage.

As it is obvious that the members of the International Monetary Fund have not come to a clear decision about the future of gold or the value of special drawing rights, should we not expect that it will be virtually impossible to secure a progressive pooling of primary assets in the Community in the immediate future? Will the Government therefore think of other ways in which the activities of the fund can be strengthened by practical measures which will win the respect of the Governments and financial communities within the EEC?

The problem which my hon. Friend mentions is a real one. Agreement has not yet been reached over the valuation of special drawing rights and gold. I cannot go further than my right hon. Friend, however, who said a moment ago that these were all matters that will have to be taken into account when the Government formulate a final view on the Commission's proposals for stage 2.

asked the Chancellor of the Exchequer what is his latest estimate of the rate of growth.

The growth of the economy is in line with the Budget forecast of 5 per cent. per annum over the 18 months to the first half of 1974, with some slowing down in the later part of the period.

My right hon. Friend referred to the economy beginning to slow down in the later part of the period. Has not the time come to introduce measures to ensure a rate of growth in the next two years as high as it has been in the last two years?

My hon. Friend has always been a great supporter of the growth policy that we have been pursuing and I am grateful to him for that. [ Interruption. ] I do not expect much support from the Labour benches after that party's record in Government. However, once the margin of spare capacity in the economy has been taken up it is neither feasible nor wise for economic growth to continue at a pace significantly different from the rate of growth of productive potential. It was always our intention that it should be that way, and the evidence suggests that we are being successful in making the transition to a more moderate and sustainable rate of growth, which we expect to continue during 1974.

In his Budget statement the Chancellor said that looking ahead over the next year or so he believed the rate of growth would be around 5 per cent. To the bankers, a few days ago, however, he said that he was moving on to the second stage of his policy, which implied a growth of somewhat less than 3½ per cent. What has happened to the Chancellor's Budget strategy?

What I said, and what was clearly laid down in the Budget report, was that over the 18-months' period—

The right hon. Gentleman said over the next year or so.

— to the first half of 1974 we would aim at a rate of growth of 5 per cent., and it looks as though we shall achieve that, just as we achieved a 5 per cent. rate of growth over the previous 18-months' period, which I outlined in the previous Budget. It was always contemplated that the rate of growth would be higher in the early part of that period and lower during the later part.

In those areas where there is a high rate of employment will my right hon. Friend consider the abolition of the earnings rule?

That is a much wider question.

Is it essential to this rate of growth to run a vast Budget deficit even with an under-valued pound?

Of course, it would be possible to take the sort of action which some people have contemplated, but which I do not subscribe to, which would have a depressing effect on the economy. I do not think that is necessary.

In view of the complete success of the Government's policy for full employment, does my right hon. Friend think the slowdown will come rather sooner?

No, the course of the economy and the growth rate is broadly as we anticipated in the Budget.

Has the Chancellor not just confirmed that we have been saying for a long time, namely that the spurt in growth over the last 12 months consisted entirely in taking up slack created by I million unemployed, which was the result of the Chancellor's first two years in office? How can he justify a borrowing requirement of £4,000 million in a year when growth has sunk back to the post-war average?

I must tell the right hon. Gentleman two things. First, I am confident that the policy that we are pursuing will lead to the sort of growth rate that was referred to in the White Paper on stage 3, which is substantially higher than what was achieved by the Labour Government, when I believe the average growth rate was less than 2 per cent. over their six years in office. I am astonished to hear that the right hon. Gentleman, of all people, after his Blackpool speech, has the audacity to talk about the borrowing requirement. I recently appointed a new Chairman of the Board of the Inland Revenue. But for that I should certainly have considered the right hon. Gentleman as being the best and most zealous tax collector of all time.

asked the Chancellor of the Exchequer what action he intends to take about National Savings following the Page Report.

Consultations with the Trustee Savings Banks Association, the National Savings Movement and other interested parties are continuing, and I am not yet in a position to make a further statement.

Is it not a disgrace that the Treasury, which has been swindling ordinary people for years by paying lower rates of return on National Savings than almost anywhere else, is now stalling so outrageously when it has the opportunity to make some amends? We have now had this report for over seven months. When will there be some action on it?

I entirely disagree with the hon. Gentleman. He has no justification for saying what he did. It is generally recognised that the Page Report raises a number of complex issues which need to be discussed with outside bodies. This is what we are doing, and we shall report in due course.

Does my right hon. Friend agree that while the take for National Savings this year has been reasonable it has not been as good as was expected at the beginning of the year? Does he further agree that the position will not be restored properly unless there is an index-linked form of National Savings?

I agree that this is one of the most important questions that we must decide.

The remark by my hon. Friend the Member for Gateshead, West (Mr. Horam) was wholly right. "Swindle" was the word to use in this connection. Is the Chancellor aware that some people who are holding millions of pounds worth of the early issues of savings certificates are getting a rate of interest which is less than 2 per cent. in money terms, not real terms, when the current rate of inflation is between 9 per cent. and 10 per cent.?

As both my hon. Friends said at the time the hon. Gentleman was speaking, these people should send in their certificates.

Does my right hon. Friend agree that, at a time of both high rates of interest and inflation, there is a case for an index-linked bond, which would help him to borrow the money necessary to cut the Government's deficit?

I can only repeat that this is a most important issue, on which we must make a decision. I think that my hon. Friend will understand that I do not wish to anticipate it. The fact is that many forms of saving, not just National Savings, are affected by inflation. This is just one more very cogent reason why it is so important to take every action that we can to bring inflation under control. If hon. Members who have asked me questions on this matter are genuine in their concern for small savers, they should throw their support behind the Government's counter-inflation policy.

asked the Chancellor of the Exchequer how the rate of inflation in the United Kingdom so far this year has compared with that of each of the EEC countries and of the United Kingdom's other main industrial competitors; and if he will list the comparative figures both for wholesale and retail prices in the OFFICIAL REPORT.

In the 11 major countries considered, the rate of inflation ranges from 5½ per cent. to 16 per cent. for retail prices and 3¾ per cent. to 35 per cent. for wholesale prices. The United Kingdom, at 8 per cent., suffered the lowest rate of inflation of wholesale prices of all countries except Belgium, and at 8¾ per cent. for retail prices it had approximately the same rate of inflation as France and a lower rate than Canada, Denmark, Italy, Ireland and Japan. I will list the comparative figures in the OFFICIAL REPORT.

Does not that statement confirm what Opposition Members have refused to recognise, namely, that inflation is a world-wide phenomenon and that most countries are worse hit than ourselves? Further, does it confirm that the Government's prices and incomes policy has been successful, particularly with regard to wholesale prices?

Yes, Sir. It certainly shows that. The United Kingdom was suffering one of the highest rates of inflation amongst advanced industrial countries in November 1972 when stage 1 of the counter-inflation programme began. We now have one of the lowest rates of inflation. Stage 3 is designed to continue that success.

If we are doing so well compared with our competitors in the EEC countries, why is it that the hon. Gentleman's Department told me in an answer this week that the balance of trade between the United Kingdom and its main competitors in Europe is running at a deficit of £1,400 million? If we are doing so well, why have we that deficit? Why is it that the United Kingdom is the country which is running its rate of exchange at 18 per cent. below the Smithsonian average when the other countries are above it, or just below it?

The hon. Gentleman will appreciate that there have been few years during the last 150 years when this country has not run a deficit in its visible trade. He must take into account as well the invisible payments. The figures show that our trade with Europe is increasing fast in volume terms. I believe that that will continue. Now that the value of the pound has changed in relation to some of the European countries, that gives our exporters additional benefit and advantage.

Will my hon, Friend say what steps and initiatives have been taken by his right hon. Friend to get concerted action taken within the EEC to counter inflation?

Yes, Sir. There have been several meetings of the Finance Ministers of the EEC to consider concerted action against inflation. I am sure that the Council of Ministers and Finance Ministers will meet again to discuss that important issue.

Should not the hon. Gentleman share with us his thoughts about all the bogus elements in this planted Question? I shall direct his mind to three such elements. First, is it not nonsense to take one year of inflation in any group of countries without stating the base figure from which one starts? If we took a five-year period, would we not get a different result? Second, is it not a fact that wages in the EEC countries, except Holland, have risen dramatically faster, on any computation, specifically or generally, than they have in this country? In Belgium, the only country with a lower rate of inflation than this country on the chart from which the hon. Gentleman has quoted, there has been a threefold increase in wages—[HON. MEMBERS: "No."] Yes. Hon. Members may care to consider the EEC figures. Finally, if we consider one of the best of all tests—namely, the valuation of currencies against each other—is not our record absolutely appalling under this Government?

First, I answered the Question that was tabled. It is entirely false to say that it was planted, in any way. It happens that I have not spoken to my hon. Friend the Member for Bosworth (Mr. Adam Butler) for four months. Secondly, wages certainly have been rising in all the EEC countries. If the hon. Member for Birmingham, All Saints (Mr. Brian Walden) would like to table a Question about that, I shall give him the precise details. Further, we have already dealt with the movement of currencies in an earlier Question. There has been a shift in currency relationships and currency values relative to one another. Those relationships are changing every day.

Following are the figures:

Percentage change of consumer prices (retail prices), annual rates, between January 1973 and latest available month: per cent. Belgium 5½ Germany 6¾ Netherlands 7¼ USA 7¾ France 8¼ United Kingdom 8¾ Canada 9 Denmark 12¼ Italy 12¾ Ireland 14¼ Japan 16½

Source: OECD MAIN ECONOMIC INDICATORS.

Percentage change of wholesale prices of manufacturers, annual rates, between January 1973 and the latest available month.

Source: NATIONAL OFFICIAL SOURCES.

asked the Chancellor of the Exchequer what recent discussions he has had with the Building Societies Association.

There have been a number of discussions between the Government and the Building Societies Association in recent weeks, as a result of which my right hon. Friend the Prime Minister announced proposals on 8th October for stabilising the flow of mortgage funds and helping first-time house purchasers.

I appreciate the assistance that it is proposed to extend to first-time buyers, but will my right hon. Friend not consider improving the tax relief on all mortgages up to £10,000 and, at the same time, improving the option mortgage system so that the assistance which the Government propose to direct could be spread over a much larger number of people?

The assistance that has already been provided is considerable. I am always willing to consider any suggestions which are made by my hon. Friend or from any other quarter of the House. The cost of tax relief on mortgage interest is now approximately £400 million a year. Further, there is the option mortgage subsidy.

Is the right hon. Gentleman aware that the Woolwich Equitable Building Society has announced today that it has no intention of adopting the proposals made by his right hon. Friend the Prime Minister? It has described those proposals as highly inflationary. Is the right hon. Gentleman aware that it has complained bitterly that they should have been put forward without detailed discussions with those who were asked to adopt them?

I think that the right hon. Gentleman has totally misunderstood the situation. The fact is that there were detailed discussions with the Building Societies Association. Apparently the right hon. Gentleman does not know that as a result of the discussions the council of the association has agreed in principle to recommend a scheme to its members. The association itself is now considering the details. It is hoped that the scheme can be introduced as soon as practicable That is reality.

asked the Prime Minister whether he remains satisfied with co-ordination between the Department of Trade and Industry and the Department of the Environment on the Maplin developments.

Yes, Sir.

As the Maplin development is neither a piece of high priority social investment nor a piece of vital direct industrial investment, as it will cost the equivalent of over 70 new hospitals, or half the manufacturing investment in any one year, and now that Lord Rothschild has spoken we all know the importance of investing our meagre resources as sensibly as possible, does not the right hon. Gentleman accept that there is a strong case for scrapping the project altogether?

No, I do not accept that at all. The House has now approved the project. The total amount in any one year would be only 0.3 per cent. of the GDP* That is surely something that a country of this size can afford—a modern airport that can take some of the evils from the existing airports for the millions of people who live around them.

As the official Opposition are now unalterably opposed to a third London Airport at Maplin, does my right hon. Friend agree that they should say where they would put a third airport? If they will not do so, should not my right hon. Friend remind the hundreds and thousands of people who live around Heathrow, Luton and Gatwick of the extra noise and nuisance which they will have to suffer?

That is absolutely right. Those who are opposed to Maplin must say what the consequences will be for the millions of people who are living around existing airports, which will have to be greatly increased in size to take increasing traffic. At least the Opposition should be straightforward about that.

Will the Government apply the same cost benefit analysis to this project as they have done to the Greater Manchester trunk passenger transport proposals?

That is an entirely separate matter. If the hon. Gentleman is expressing a relationship between regional development and the Maplin development, then obviously the regions are receiving an overwhelming amount of money in comparison with Maplin.

asked the Prime Minister whether he will make a statement on his latest meetings with the TUC and the CBI concerning phase 3.

asked the Prime Minister whether he will make a statement on his talks with the TUC and the CBI.

I met the CBI on Tuesday of last week and the TUC on Monday of this week, when the two bodies gave the Government their views on the proposals for stage 3.

Will my right hon. Friend agree to refer to the Pay Board the most thorough and searching examination of any individual increases in salary in excess of the limits imposed under the counter-inflation policy, so that the British people can be assured that no one is above the law in that regard?

The Pay Board already has full powers to follow up any cases of that kind or any complaints about unjustifiable increases. It makes investigations of that kind, and its conclusions have been published. There is no need whatever for me to give it, or ask the House to give it, any greater powers to carry out its duties.

Is the right hon. Gentleman aware that the coal mines in the North Midlands and in my constituency are facing an immediate crisis because of the loss of manpower to other industries? Will he tell us how he expects nationalised industries to do their job and to attract and keep the necessary men while their wages are restricted? How will he solve the current energy crisis which Britain is facing if the pits cannot keep their men?

I would ask the hon. Gentleman and his Friends how they would deal with inflation if everybody were allowed to leapfrog over one another in wage claims. I do not wish to comment on the position of the mines, because the National Union of Mineworkers came to see me on Tuesday and we discussed the whole position. The union will be negotiating with the National Coal Board under the stage 3 proposals when they are published.

With reference to the Housing Finance Act, has my right hon. Friend's attention been drawn to the fact that the housing commissioner at Clay Cross has now discovered that because of the non-implementation there of the Housing Finance Act many of those who can least afford it have been paying too much rent for the whole of the last year? Is it not remarkable that a party which claims to be a party of compassion should put defiance of the law before help for those who most need it?

Yes, Sir. Of course that is absolutely the case, and until the housing commissioner can get to work and rectify this situation, those who are less well-off will be paying more rent than they should.

Is the Prime Minister aware that the councillors at Clay Cross wrote to the Secretary of State for the Environment 18 months ago, asking his Government to implement the appropriate section of the Act, and to send in a housing commissioner to collect the rent and do the Minister's dirty work? Is he further aware that when Patrick Skillington came to Clay Cross last week he was there for only five minutes, so it seems highly unlikely that he was able to find out how much any of the tenants were paying in rent, let alone the fact that some were already paying too much.

My right hon. Friend appointed a housing commissioner as soon as the stage reached for legal proceedings taken by the councillors permitted him to do so. I understand that the housing commissioner was able to find out that many people have been paying far more rent over the last year than they should have done

On the question of the counter-inflationary policy, may I make a helpful suggestion to the Prime Minister? Is he aware that on 1st January the Government have to impose an 8 per cent. tax on imported lamb, which is very much a Sunday lunch joint for English families? Would it not be helpful if we did not impose that 8 per cent. tax?

I know that my hon. Friend's interventions are always intended to be helpful. This arrangement is part of our agreement on going into the Community.

Is the Government aware that the figures published by the European Commission on Monday of this week show that in the 12 months up to July this year hourly earnings in manufacturing industry in Britain, after tax rose less than consumer prices? How then, has he justified to the TUC the fact that during a year in which he claims production and national wealth were rising at a rate over 5 per cent. the standard of life of ordinary people in Britain was actually falling?

I have not seen the figures to which the right hon. Gentleman has referred, but he has the statistics produced by the Government's own statistical service. The Government's statistical office shows quite clearly that earnings have risen much faster than prices.

asked the Prime Minister if he will pay an official visit to the Cities of London and Westminster.

I carry out a large number of official engagements in the Cities of London and Westminster.

Is the Prime Minister aware that if he visits Fleet Street he will find that many journalists are contemptuous of the law of contempt, be- cause the British Press is not as free as it is thought to be and it is not as free as it ought to be. Instead of waiting for the report of the leisurely Phillimore Committee, which has been sitting for a numbers of years, will the Prime Minister initiate urgent legislation to prevent the issuing of gagging writs by villains with something to hide?

I am well aware of the concern of all journalists with the present state of the law of contempt. But I understand that the Phillimore Committee is expected to complete its work before the end of this year—in other words, in about two months' time—and will publish its report as soon as possible thereafter. In these circumstances, we ought to await the report—I knew that it has taken a considerable time—and not try to initiate legislation ourselves without it.

Is the Prime Minister aware that as the Member for the Cities of London and Westminster I am not only his MP but also the MP for the Leader of the Opposition? Is he further aware that my constituents hope he will remain in Downing Street for a long time to come? Does he agree with me that we all wish the Leader of the Opposition a long and happy stay at his house in Lord North Street?

If the situation is as satisfactory to my hon. Friend as it is to myself, I am quite happy to leave it there.

asked the Prime Minister if he has any further plans for meeting representatives of the TUC and the CBI to discuss matters of mutual concern.

No dates for further meetings have yet been arranged but I expect to continue our useful series of discussions on specific subjects as required in the future.

Will the Prime Minister give his reaction to the CBI's proposition that supplementary benefit payable to the wives and dependents of strikers should be repaid when the men get back to work? Also, can he give an assurance that he will be as firm about the miners' pay claim this year as he was last year?

The matter referred to in the first part of the question was not discussed in the talks with the CBI. I read in the Press that it was put forward by Mr. Campbell Adamson, but the CBI must take responsibility for that.

When the right hon. Gentleman gives his figures and his comparisons between earnings and prices, will he accept that one-third of the increase in earnings between the first and second quarters of this year was due to dividends and the receipt of rents, and that a further high proportion was also due to self-employment? Is he really saying now that ordinary families have had quite such a good crack of the whip as he says in public outside this House, and as he has tried to imply this afternoon?

I am. If the right hon. Gentleman wants to have a complete breakdown of total earnings throughout the nation, including rents, dividends, and so on, I shall gladly try to get it for him. But he will recognise that dividends are strictly controlled, and have been since the standstill, and that rents are covered by the Act itself. I am quite prepared to get a breakdown if he wants it.

The right hon. Gentleman does not need to get a breakdown; it was published by the Central Statistical Office last week. I asked him whether he would allow for this in what he is saying. Has he not seen that statement? Will he now say whether he agrees with the statement in the Central Statistical Office's document, that one-third is due to the causes I have mentioned and that a further major proportion is due to other causes. Does he agree with the CSO's statement or does he not?

I am quite prepared to let the right hon. Gentleman have my views on the statement. I do not question the statistical office's statement and I hope that he will not do so, either.

Does my right hon. Friend agree that public support for the counter-inflation policy is now so self-evident and strong that the public will be watching very closely indeed to see whether the unions behave with the same commendable restraint in phase 3 as they did in phase 2?

My hon. Friend is right. But it was quite clear throughout the talks that we have had with the TUC and the CBI, and in the views that they gave us, that they believe there must be a counter-inflation policy. Although they would like to be able to have a complete free-for-all, I think they all recognise that to operate within the framework which we have proposed is both reasonable and fair.

Can the Prime Minister say what rate of inflation he has taken, in his talks with the CBI and with the TUC, as the expected annual rate for phase 3, and will he agree that, far from phase 3 being counter-inflationary, its central purpose is to teach the British people how to live in a banana republic?

I really could not disagree more with the hon. Gentleman. If he wants to make any sort of constructive contribution to the nation's life, he will have to drop that sort of approach.

asked the Prime Minister if he will publish a list of his official engagements during the Parliamentary Recess.

I refer the hon. Gentleman to the reply which I gave on 23rd October to the hon. Member for Liverpool, Exchange (Mr. Parry).—[Vol. 861, c. 472. ]

Why did not the Prime Minister at one of his engagements spend some time in explaining precisely why he so severely criticised Lord Rothschild's remarks about Britain's possible future, when all sensible people regard those remarks as 100 per cent. correct.

I did not criticise Lord Rothschild's remarks. The position is that Lord Rothschild is a Permanent Secretary in the Civil Service, and under Estacode Permanent Secretaries do not make public speeches which can become matters for political controversy. Lord Rothschild thereupon apologised to me and that was the end of the matter. So far as the substance of his talk was concerned, Lord Rothschild was speaking to a gathering of scientists and emphasising to them that the resources of this country that are available for science are limited and that they must therefore make up their minds about the extent to which they want to use those resources—whether on pure science or on practical development.

Does the right hon. Gentleman believe that in such turbulent times, in view of what happened this summer, a 12-weeks' parliamentary recess is conducive to good democratic government?

The House always has the opportunity to decide that for itself before it rises.

I am grateful to the right hon. Gentleman for giving me the opportunity to make a statement about the tragic explosion which occurred in Sheffield yesterday morning.

I would first like to express my deepest sympathy for the relatives of the men who were killed and for those who were injured. I am sure that the whole House will wish to join with me in so doing.

Three men were killed and one was seriously injured when an underground storage tank exploded at the premises of the East Midlands Gas Board in Sussex Street, Sheffield. A number of members of the public were also injured by flying debris. The men concerned were employed by a contractor to alter pipe-work and a supporting gantry for the pipework at this very large underground storage tank. I understand that up to some 15 months before the accident the tank had contained primary flash distillate used to enrich the town gas.

It is too soon yet to say what caused the explosion. It is a tragic example of the kind of industrial hazard to which the Chief Inspector of Factories drew attention in his recently published Annual Report, where members of the community might be put at risk in addition to industrial workers.

A full investigation into the accident is taking place now. A team of inspectors of factories, including a chemical inspector with specialist knowledge of industrial explosions, was at the scene of the accident within about an hour. A deputy chief inspector with responsibility for industrial fire and explosion hazards, who was returning from Scotland to London, was diverted immediately to the scene of the accident. The Chief Inspector of Factories and a superintending chemical inspector with specialist knowledge of industrial fire and explosive hazards are also now in Sheffield making a personal investigation.

I am keeping in closest touch with my Chief Inspector of Factories, who will, of course, present me with a full report as soon as possible.

I am most grateful to the Secretary of State for his full reply. I should like to join him, particularly on behalf of my hon. Friends who represent the workmen who were killed and injured, in expressing sympathy to the relatives. Would he say a little more about the form of the inquiry? I am grateful for the speed with which the investigation is taking place, but could the right hon. Gentleman say whether there will be a public inquiry and whether a report will be published at the end of the inquiry? In the meantime, since these tragic circumstances could be repeated elsewhere, can he say whether there are any steps which he or the Gas Council could take to avoid such a calamity?

I think it is a little soon to say whether anything more could be disclosed at a public inquiry than can be disclosed by the sort of investigations which are being undertaken. The situation is not yet as clear as I should like it to be, because my inspectors have not yet had time to clarify it. Certainly I will consider either a public enquiry or publishing a full report from the Chief Inspector when I get it.

What happened in this case was this. The tank had been licensed under the Petroleum Consolidation Act, but the licence had lapsed when the tank ceased to be used for the purpose of storing the distillate. It had been filled with water, and, so far as I understand, it had been drained before his work began and the work started on the structural steel on top of the tank. It was then that the explosion occurred.

May I, as a representative of a neighbouring constituency, be associated with the message of sympathy and say that those in the Hallam constituency have benefited from the gas produced by this works and appreciate it? May I add that the Effingham Gasworks has been a leader in the transition from ordinary town gas to natural gas, and, therefore, it is important to the whole of Sheffield. Will my right hon. Friend indicate the extent to which safety provisions operate when contractors are brought on to the site?

I ought to make clear that the factory inspectors were not consulted before work started on the site; nor, indeed was there any statutory obligation for them to be consulted, although it is common practice to do so in this sort of situation. The tank concerned was not, and had not been, in use as part of the manufacture of town gas for 15 months preceding the accident, and, therefore, there is no question of any repercussions, as it were, in the gas supply in the locality. It is rather difficult to say anything further about the nature of the accident until I get further reports from the inspectorate.

I am sure that all on this side of the House—indeed, in the whole House—will wish to be associated with the expressions of deep sympathy to those who have been bereaved and also to those who have been injured.

I remind the right hon. Gentleman that the House has repeatedly pressed for a full debate on the relevant recommendations of the Robens Committee, and this is now re-emphasised by the tragic accident which occurred in Sheffield.

I regret that the Minister's statement—perhaps one can understand it—does not at this stage provide for an inquiry, but so far as we know the facts, this tragic incident appears to be a very similar kind of occurrence to that at Dudgeon's Wharf on the Isle of Dogs in July, 1969. The right hon. Gentleman will know that the subsequent inquiry into that occurrence was held under Section 33 of the Fire Services Act 1947 and that it was heavily criticised by the inspector at the time because of the restrictions and inhibitions which it imposed. Will the right hon. Gentleman assure us that he has not ruled out a full and independent inquiry, and that there will be an inquiry under procedures which do not have the same inhibitions and which will allow the inspector to investigate fully and report?

Will the right hon. Gentleman in due course report to the House whether the recommendations of the Dudgeon's Wharf inquiry, which seem to have particular relevance and application in this case, were followed in this case, and whether the recommendations which had specific reference to his own Department have been implemented?

One of the problems is that the Dudgeon's Wharf incident is not a true parallel to this one. The Dudgeon's Wharf problem was one of demolition, and this led to the drawing up by my Factory Inspectorate of proposals to protect and to give guidance to people engaged in this sort of work. Some of them are protected under sections of the Factories Act. This was not a work of demolition. It was a work of alteration and the erection of a superstructure on top of an existing tank. This is one of the problems. I can assure the hon. Gentleman that we shall conduct our inquiry under whatever system seems best to get to the root of the matter and to get the full facts before the public.

Does not this accident, with serious industrial hazards to which my right hon. Friend referred, point to the need to encourage the revival of industrial emergency services which have not been operating on the same scale as they should since civil defence was abolished by the previous Government?

I thank my right hon. and learned Friend for that suggestion. I think there has been no criticism of the fire services or the rescue services, and I hope there has been no criticism of the Factory Inspectorate, for the speed with which they got to work in this case. Where there is perhaps more need to look carefully at this incident is in the degree to which there may have been a lacuna in the responsibilities concerned, of a nature which the Robens proposals were designed to put right. We hope to deal with it in due course, as I have already told the House.

On a point of order. Mr. Speaker. I wanted to ask a question about next week's business, but there will not be a statement on it. Could you indicate to me when I might raise a point of order with you arising from that situation?

We have two Government statements and I myself have a brief statement to make. I also have notice of another point of order. Then perhaps the right hon. Gentleman will raise his own point of order with me.

With your permission, Mr. Speaker, and that of the House, I would like to make a statement on the Middle East.

I warned the House on 22nd October that we should not become too euphoric about the prospects for peace in the Middle East and that there were many difficulties ahead. The fragile cease-fire, although reinforced by a second Security Council resolution, has repeatedly broken down, mainly in the Suez area. My most recent information is that no fighting is in progress at present. The Security Council met again last night following a broadcast appeal by President Sadat for Soviet and United States intervention. But this proposal was not pressed in the Council.

There are already a few United Nations observers in the battlefield area. What we believe is needed now is the immediate despatch of substantial numbers of additional United Nations truce supervisors to the sensitive area, in whatever numbers the United Nations commander considers necessary. I understand that the Secretary-General has the necessary personnel on call. They could be sent to the battlefield within hours. We have been pressing for this from the start.

A draft resolution tabled by the non-aligned group in the Security Council provides for this, and we shall support it. It also provides for the establishment of a United Nations emergency force. I have always said that some such action would be needed and that we would participate if required to do so. That pledge stands. We favour immediate planning by the Secretary-General, as also envisaged in the non-aligned draft.

Before coming to any final decisions, we must be quite clear on what the mandate of such a force would be—what precisely it would be expected to do, and where it could be deployed. There is a great difference between truce supervision which is done by groups of unarmed observers and the guaranteeing of demilitarised zones. The latter is the kind of task which we have envisaged for a United Nations force. We shall be in the closest consultation with the Secretary-General and the members of the Security Council about the task, size, and composition of such a United Nations force.

At the same time as all this is going on, it is imperative that the negotiations envisaged in the Security Council resolution of 22nd October should start immediately. These negotiations should be used not only to make progress towards a settlement of the main Arab-Israel dispute but also to deal with the immediate situations of greatest danger to the cease-fire, and thus to the whole prospect of peace.

Hon. Members will have been concerned to see reports that the Soviet Union may be considering moving its own troops into the Middle East area and that American forces have been put on an increased state of alert. The United States Secretary of State, Dr. Kissinger, will be giving a Press conference a little later this afternoon, and hon. Members will understand that I should not anticipate what he will be saying then. As regards Russian intentions, we have no confirmation of these reports, but I have instructed our Ambassador in Moscow to seek clarification at the highest level immediately.

This latest news of an increased state of tension can, however, only underline what I have just said about the urgent need for the negotiating process to start between the parties, and at once.

I hope that the right hon. Member for Cardiff, South-East (Mr. Callaghan) will forgive me if his copy of my statement does not exactly correspond to mine, because I was anxious to get the latest information to the House into my statement, and that I have done.

I thank the right hon. Gentleman for his courtesy and for the statement, which the House will have heard with great interest.

Although the actions of the United States and the USSR in recent days seem to have had the purpose of reducing tension, nevertheless military moves of the kind which have been reported will increase world tension—this should be made clear—and could lead to misunderstandings and mistakes that neither side may desire but that could, if pressed, endanger the whole world. I hope that the right hon. Gentleman will represent to both the United States and the USSR that they would be most imprudent to act unilaterally in this matter and that it should be their effort and endeavour to place their whole weight behind the creation of a United Nations force at the earliest possible moment.

I understand that it will be very wise to define the task and complexion of the United Nations force before it gets into place, but the urgency of the situation is such that I hope that the right hon. Gentleman will not insist on having the last button on the last soldier's gaiter in place and will not mind a few rough edges in order to get this force into place at the earliest possible moment in order to prevent the serious difficulties that could ensue.

I am bound to say that the United States reaction, for whatever reason it may have been taken, appears to be a little like over-reaction. Have Her Majesty's Government been consulted about the United States air force which operates from this country and what state of alert it is in? Has permission been sought from us, and have we given it?

I entirely agree with the right hon. Gentleman that we must place the United Nations force at the earliest possible moment. Could he confirm that we would have troops available, if needed, to support such a force, and that we could provide logistic support for any other nation which might wish to provide troops but did not have that support?

Finally, I emphasise the point which the right hon. Gentleman himself made. If his information is correct, apparently no fighting is taking place at present, apart from small sporadic actions. In that case, I hope that he will represent urgently both to the United States and to the USSR our view that over-reaction at this stage will worsen matters and not improve them.

I respond at once to the right hon. Gentleman in what he said at the conclusion of his remarks. We are urging on the United States and on the Soviet Union that they should put their whole weight behind an international force and not try to deal with this matter bilaterally. If they could deal with it bilaterally in agreement, that would be another matter in the early stages, but I think the answer must be an international force.

The right hon. Gentleman hoped that we would not insist on the last button of the last soldier being in place and would be prepared to leave some rough edges. I understand very well what he means, but there are two operations here. There is a hugh Israeli salient, inside which are pockets of Egyptian troops all over the place, and the Egyptian Third Army is totally isolated on the east side of the Suez Canal. Therefore, there is a preliminary job to be done at the beginning—for example, to provide water and food for these troops, and other kinds of services.

The difficulty of introducing an international force right away is that the proper situation for an international force is in some de-militarised zone between the forces which has some definable lines, and that is not the situation yet. That is why I emphasised the importance of getting a line on which an international force could operate.

I am in touch with Dr. Kissinger about the alert. At this moment I do not know enough to answer the right hon. Gentleman's questions about it, but I hope to know something very shortly.

The answer to the last question of the right hon. Gentleman is—yes, we have troops available. We would have them available when necessary—when the Secretary-General of the United Nations, asked for them. We would be able to give logistic support. It will depend, I think, on the judgment of the Secretary-General himself very largely as to what the composition of the force might be following the initiative of the non-aligned countries.

Will my right hon. Friend try to ensure that any international force is so composed that it is not withdrawn suddenly, in whole or in part, at the whim of some national Government?

That is an essential condition of putting in an international force.

Will the Government give instructions to the British representative on the Security Council to oppose firmly the suggestion that Russian and American troops should go there? Apart from the grave dangers of either of those powers sending their troops on their own initiative, it would create grave dangers at present and in future because it would be unacceptable to those who hitherto have been engaged in the fighting.

Further, will the right hon. Gentleman press in the Security Council for a proposal that the force to be sent should be made up of people from countries which are regarded as trustworthy by all the sides involved—perhaps representatives of the forces of Canada, India, Sweden and Holland—so that we may be certain that nobody feels in danger of being treated with bias by any of the troops in the force?

I am sure that the right answer is an international force. I do not think that we want to be dogmatic about how it should be formed. That must be a matter for the Secretary-General's judgment, because he is able to judge how it would be most effective and how the parties would receive it. On the question of Russian or American troops acting alone, there is a great deal of difference between Russian and American troops appearing in the area separately, without any agreement between them on what they are to do, and an agreement between the United States and the Soviet Union on how they should carry out their initial tasks.

As the events of the last few hours have shown that it is impossible to rely on the joint action of the two super-Powers to resolve the present crisis, can my right hon. Friend assure us that he is in close touch with our European partners in the Community and in NATO with a view to agreeing upon a common European attitude in the present situation?

I think that the European Community countries are certainly willing to help if that is desired. All of us could produce elements of an international force, but it must be for the Secretary-General to judge its exact composition.

Is the Foreign Secretary aware that there will be widespread support for his statement? Is he also aware that one cannot over-estimate the importance of the United Nations observers having adequate emergency forces, with ground and air cover, in what could be a very explosive military situation?

May I ask the right hon. Gentleman two further questions? First, may there not be a case for the Red Cross carrying out a massive task of carrying supplies and food to the 30,000 Egyptian troops who are encircled? Secondly, can the right hon. Gentleman say what has been the attitude to date of the immediate disputants—Syria, Iraq, Jordan, Saudi Arabia and Israel—to the proposal of the non-aligned States?

The Security Council meeting last night adjourned without a decision. We shall have to see what decision it takes when it resumes. Syria has now accepted the cease-fire. Jordan, Syria, Egypt and Israel have all accepted the cease-fire.

In the event that it should prove to be the intention of the Soviet Union to intervene unilaterally with military forces in the Middle East, will my right hon. Friend give the assurance that the British Government will stand four square with the United States and with as many of our partners in Europe as possible in dissuading the Soviet Union from any such foolhardy enterprise?

I said earlier that there was no confirmation that that was the Soviet Union's intention. I think that it is better to pursue the diplomatic contacts and try to persuade the Soviet Union that the right way to proceed is by the introduction of the international force and not to take unilateral action.

Will the Foreign Secretary amplify a reply which he gave a few moments ago about the United States and the Soviet Union? He said that if there was a joint agreement between them it would be a different matter as regards policing the area. I take it that he means that it could not be done unless there was also agreement by Egypt and Israel.

That goes without saying.

Was it necessary for the right hon. Gentleman to wait until Dr. Kissinger has held a Press conference later this afternoon before trying to ascertain the significance of the so-called low-level alert? Cannot he get directly in touch with President Nixon—if he is still available [ Interruption ]—and express the great concern which is felt in this country and, indeed, throughout the rest of the world at the prospect of either of the super-Powers, whether it be the Soviet Union or the Americans, sending armed forces into the danger area? Does not this follow on the danger which was evident last week when 2,000 American marines were dispatched to somewhere near the danger zone?

We can certainly get in touch direct with President Nixon or Dr. Kissinger, and we are in direct touch, but I do not have the information at this moment.

In the meantime, will my right hon. Friend use his influence to strive to ensure that the terms of the Geneva Convention about the treatment of prisoners are honoured by all the belligerents, because it is reported that the Israelis have furnished a full list of their prisoners to the proper quarters whereas the two other States have not yet done so?

I think that it is fair to say that the confusion has been such that it has been impossible to identify a great many of the prisoners, but I give my hon. Friend the assurance that I think it is right that the convention should be applied.

May I say in reply to the earlier supplementary question of the Leader of the Liberal Party that I will inquire from the Red Cross whether it thinks that it can do some useful work in this matter.

As the United States nuclear strike forces have been alerted, and in view of the strain which the President of the United States is under at present, is the right hon. Gentleman satisfied that sufficient restraints are in operation to prevent the conflict from being widened by any unbalanced decision?

I hope that the strains which the President is under will not influence this matter at all and that he will be able to conduct his foreign policy exactly as it has been conducted before, without any restraints imposed by the domestic situation. I have no doubt whatever that Dr. Kissinger is in direct touch with Moscow at this time. We shall wait to see what he has to say, but I hope that there will be better news in a few hours.

Will my right hon. Friend agree that this time a cease-fire should be linked to a genuine and determined effort to find a lasting settlement? The matter must not be allowed to fall into suspense, which would be a certain prescription for fighting to start again in a few years' time.

There was perhaps an inclination on behalf of the Soviet Union and the United States to think that the two sides might be allowed to look at each other and absorb some of the lessons of the war. I have said from the start that that should not be so and that the cease-fire must be followed up directly and quickly by the initial processes of a peace settlement.

While not dissenting from what the right hon. Gentleman has said about the necessity and value of an international force, may I ask him to bear in mind that if such a force is under the control of the Security Council it is under the control of a body the majority of whose members—seven out of 13—do not even recognise Israel and the majority of whose veto members—three, perhaps four, out of five—are manifestly anti-Israeli? Will the right hon. Gentleman bear in mind that that inevitably causes some difficulty?

I should not think that that need cause the Secretary-General any difficulty in providing an international force. It is not for the members of an international force to say whether they are anti-Israeli or pro-Israeli, anti-Arab or pro-Arab. They will have the job of keeping the peace in a demilitarised zone. That is the task of an international force. I do not think the hon. Gentleman's fears are valid.

Reverting to the point made by my hon. Friend the Member for Hertfordshire, South-West (Sir Gilbert Longden), may I ask my right hon. Friend to make it an urgent priority of his diplomacy, once it is clear that an effective cease-fire exists, to press the relevant Governments to make a complete and early exchange of all prisoners?

Yes, Sir; this will be an essential element in the first stages of peacemaking.

Is the Foreign Secretary aware that, despite his earlier reply, unless there is specific evidence of the alleged Soviet intention to send troops to the Middle East, the alerting of the entire United States nuclear deterrent at this stage must be taken as confirming the fears about the stability of judgment of the United States President at this time? Is the right hon. Gentleman aware that there is a widespread feeling among the Arabs that, despite specific and written assurances from the Russians, the Americans and Israelis are preparing to stall on their part of the bargain relating to withdrawal from the occupied territories, and that this would cause immediate tension between the United States and the Soviet Union and the greatest danger to the world as a whole?

We have to be very careful about the language we use. I will repeat what I said earlier; namely, that hon. Members will have been concerned to see reports that American forces have been put on an increased state of alert—the actual state of alert is uncertain—and that the Soviet Union may be considering movement of its troops. There is no evidence at the moment that it is seriously considering this, but these are just reports of which the House must take note. I think we shall know a little more in a few hours' time before we decide what words we ourselves use about these reported movements.

If, as appears likely, large Egyptian forces are surrounded, unless they get food and water they are likely to die of hunger or thirst. Before that happens, does not my right hon. Friend feel that fighting may well break out again, and does he not feel that some approach should be made to see that those forces get food and water?

Yes, Sir. There are now about 218 observers available in this area, and one of their first tasks must be to see how food and water can be got to isolated pockets of troops. The Secretary-General has all over the world about 2,000 of these people ready to put on their blue berets and go to such an area as this. I hope that the Secretary-General will be able to mobilise a much larger force to do exactly what my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) suggests should be done.

In view of the gravity of the situation and the fact that the right hon. Gentleman says that he is now getting in touch with Moscow, will he give the House an assurance that before we conclude our business this evening he will give the House a further statement on the situation, because it is obvious that the House should know before we leave exactly what the situation is? Furthermore, is he aware that some of us are of the opinion that possibly this Russian proposal is mythical, and that this is much more to do with President Nixon's internal difficulties in the United States at present than it is with the situation in the Middle East?

I have just said some very cautious words in response to an earlier supplementary question put to me by the hon. Member for Woolwich, East (Mr. Mayhew). This may be mythical, and I hope it is, but we shall know more about the situation in a short time.