House of Commons
Tuesday, July 22, 1975
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair ]
BROOKWOOD CEMETERY BILL [Lords]
Order for Second Reading read.
To be read a Second time upon Tuesday next.
McDERMOTT SCOTLAND ORDER CONFIRMATION BILL
Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
DEFENCE
Naval Building Programme
asked the Secretary of State for Defence if he will make a statement on the naval building programme.
The naval shipbuilding programme is proceeding as planned.
Does the Minister agree that British naval shipbuilders like Yarrow and Vosper Thornycroft have a superb record of building ships for the Royal Navy and for foreign Governments, at the same time providing secure employment and profitability for British industry? As these firms believe that nationalisation will do them a great deal of damage, will the Minister discuss with his colleagues, especially the Secretary of State for Industry, whether the nationalisation Bill might be dropped or amended?
I agree with the opening remarks of the hon. Gentleman that the shipbuilding yards have a very good record, by and large, and I was delighted to discuss the work of Yarrow with Sir Eric Yarrow and his colleagues earlier this year, but I do not honestly think that the discussions which the hon. Gentleman proposes would serve a useful purpose. We intend to take the shipbuilding industry into public ownership.
Will the Minister state what is the latest decision concerning the deep-sea search and recovery vessel which is so badly needed in the North Sea?
The position is as it was when my hon. Friend the Under-Secretary of State for Defence for the Royal Navy last reported to the House.
Will the Minister confirm reports in the Press on Tyneside that no fleet auxiliaries will be going to Tyneside for repair after December, and say how these reports compare with ministerial utterances that the unemployment situation in the North would be borne in mind? Might I suggest that more Type 42 destroyer orders be allocated to Swan Hunter?
I cannot now and would never seek to confirm reports in the Press, but I am not aware of a change of policy here. I shall look at it and write to the hon. Gentleman.
Is it not a fact that naval shipbuilding firms have far more to fear from defence cuts than from nationalisation? What assurance will my right hon. Friend give us that the naval shipbuilding programme will continue?
It is always very difficult to give an assurance of the kind that my hon. Friend mentions. He is absolutely right to draw attention to the fact that we cannot have continued substantial savings on defence, particularly on defence equipment, without there being consequences for employment, but the position is as previously reported to the House. We do not at the moment anticipate any changes in what was announced in the Defence White Paper.
Beira Patrol
asked the Secretary of State for Defence how many Royal Navy ships and men have been involved in the Beira Patrol during its operation.
Seventy-six Royal Navy ships and 28 Royal Fleet auxiliaries have taken part in the Beira Patrol. About 24,000 RN personnel were involved.
Despite the persistent cynicism of Conservative Members as to the value of this naval exercise, will my hon. Friend feel assured that Members on the Government benches and, in my view, all patriotic British citizens outside the House will agree that the Royal Navy has done a gallant and first-class job in blockading the illegal Smith régime? Does my hon. Friend expect to have more cooperation now from the new Government in Mozambique than he received from the Portuguese authorities before the revolution?
I thank my hon. Friend for the tribute in the first part of his question, and I am sure we would all wish to associate ourselves with what he said. To anyone who has looked at the work of the Beira Patrol it is clear that it was carried out, often under the most difficult circumstances, with great distinction by all personnel concerned over the years of its existence. As to the latter part of the question, that would be appropriately addressed to my right hon. Friend the Foreign Secretary.
While associating myself with the Minister's tribute to the Royal Navy, may I ask him why he is so coy in giving the total cost of the Beira Patrol since its inception? The Question has been asked on a number of occasions and the hon. Gentleman has refused to answer, in spite of the fact that answers have been given over the years. Therefore, will the Minister now give us an answer, or is he still coy about letting the country know how much money has been wasted on this operation?
I do not regard myself as being any more coy on this subject than hon. Gentlemen opposite who might have held my post before me. The fact is that the Beira Patrol has always been operated as part of wider naval operations. Therefore a costing of the kind that the hon. Member suggests would not be relevant.
Pensions (NCOs' Widows)
asked the Secretary of State for Defence whether he will make a progress report on his study into the possibility of awarding pensions to widows of non-commissioned Service men who retired before 1950.
The matter is still under consideration.
I thank my hon. Friend for that reply. Does he agree that it is an extraordinary anomaly that the widows of non-commissioned Service men who served the country before 1950 in the Royal Navy, the Royal Air Force and the Army in precisely the same way as those who were commissioned should get no pension at all? Does he not think that this is an intolerable position for a Labour Government to allow to continue?
I can assure my hon. Friend that we understand the strength of feeling behind his Question among a great many people. We are looking at the issue seriously. I shall report to the House as soon as possible.
What is there to consider? Is not the hon. Gentleman making heavy weather of a simple decision about whether to award pensions to widows, to decide on a date and to set a priority?
I appreciate the hon. Gentleman's deep concern, which he has expressed frequently in the House and elsewhere. His right hon. and hon. Friends were unable to come to a positive decision on this matter during their years of office. We are looking at it actively. It is not an easy matter. There are repercussions for the remainder of the public service. We hope to make a decision as soon as possible.
Following the real improvement in Service pensions which the previous Conservative Government were able to put into effect, does the hon. Gentleman recognise that the major ex-Service organisations now agree that the first priority must be the care of widows?
Following the implementation of the last stage of the improvements in pension conditions introduced by the present Government—which we were glad to do—I can assure the hon. Gentleman that we understand this is a matter on which the ex-Service associations have expressed themselves forcefully.
Diego Garcia
asked the Secretary of State for Defence when he expects the proposed expansion of facilities at Diego Garcia to be completed.
I understand that the Americans are planning to complete the proposed expansion by 1978, subject to congressional approval.
Can my right hon. Friend say whether the agreement with the United States of America for the use of the facilities at Diego Garcia precludes the handling or storage of nuclear weapons there, in view of the interest of neighbouring Slates in having the ocean declared a nuclear-free zone? Can he assure the House that the proposed expansion does not go beyond the modest one which he announced last December?
I can assure my hon. Friend on that latter point. He knows, however, that it is not the policy of any Government—ourselves or any previous administration—to confirm or deny the presence of nuclear weapons in locations, ships or aircraft. But because of the very modest developments on Diego Garcia, nuclear facilities will not be available.
Does the Secretary of State agree that it is very much in our interests that this base should be developed, bearing in mind that the American fleet has to rely on Subic Bay, 4,000 miles away, for re-supply facilities? In view also of the increased Soviet interest in that part of the world, is it not important that our allies should have proper bases from which to operate?
I want first to correct the impression that it is a base. It is not a base. It is only a very austere communications facility for aircraft and ships. If the Americans manage to get congressional approval for this £37.8 million improvement, it will still be a very austere communications facility.
What is the difference between a base and an austere communications facility?
A base will supply facilities for replenishment, stores and recrea- tion, as distinct from merely signals and communications.
Can the Secretary of State say in what way the facility at Diego Garcia is regarded, if it is, as an alternative for the abandonment of Gan? In the context of the abandonment of Gan, what steps has the right hon. Gentleman taken to ensure that the facilities there, which were paid for by our money, will be denied to a hostile Power in the future?
The future of Gan will be subject to discussions through the Foreign Office with the Maldivian Government. But there is no comparison between Diego Garcia and Gan. Gan was a major air staging post on the Far East route. Diego Garcia is just a communications facility at this stage with an 8,000-ft. airstrip, which will be improved to 12,000 ft. if the Americans get congressional approval.
Trawler "Coral Bank"
asked the Secretary of State for Defence if he will make a statement on the discovery of an unexploded bomb by the fishing vessel "Coral Bank" on 5th July.
The Royal Navy authorities were informed by Her Majesty's Coastguard at 0815 hours on 6th July that the trawler "Coral Bank" had reported picking up an object which appeared to be a bomb. The skipper was advised of alternative courses he might follow and in the event chose to dump and buoy it where it had been picked up. The object has since been recovered by HMS "Jura" and proved to be an inert practice round.
I thank the right hon. Gentleman for his reply, and I am glad to hear about this happy outcome to the incident. Is he aware, however, that the skipper of the vessel was extremely alarmed to be asked to convey this bomb almost 140 miles to Peterhead in my constituency and to beach it there? If a citizen were to find a bomb in the street, he would not be asked to put it in his car and take it to a police station. Why should a fisherman be expected to take it up in his trawl at great hazard and to take it to land?
There are long-standing rules about the way to deal with objects of this kind based on the best advice that the Royal Navy can give. I am not aware of any problems of the kind that the hon. Gentleman mentions in the recent past. But I appreciate his concern. I have looked carefully into the course of events. If there are lessons to be learnt, they will be learnt.
Hydrographic Service
asked the Secretary of State for Defence what arrangements he is making for the implementation of the proposals by the special working party on the future of the hydrographic service.
The report of the Hydro-graphic Study Group is still under consideration. A statement will be made as soon as possible. Meanwhile, I shall arrange for a copy of the report to be placed in the Library.
I thank my hon. Friend for that reply. Does he anticipate the expenditure of more public funds? If so, will a Vote of the House be required?
I refer my hon. Friend to our recent debate on the Royal Navy when I said that only the part of hydrographic work necessary for the work and operations of the Royal Navy could be financed out of the defence budget. Any other funds required will obviously have to come from other sources. This is what is being considered.
Did not the Hydrographer of the Royal Navy say in 1973 that many of our charts were already obsolete? Is it not more important today than in former years to keep them up to date, bearing in mind the needs of oil exploration? Does what the hon. Gentleman has just said mean that the proposals that the financing of the hydrographic service should be separate from the defence budget are accepted, or is he going less far than that?
The Hydrographer, in fighting for his unrivalled service in terms of hydrographic services anywhere else in the world, has spoken frequently of the quality of the service and of the problems that it faces. Obviously the Government are concerned to maintain the highest standard of charts. As to the issue of a separate Vote, this is under active consideration. The serious argu- ments put forward are being examined closely.
Suez Canal
asked the Secretary of State for Defence if he will make a statement of the implication for NATO of the reopening of the Suez Canal.
I would refer my hon. Friend to the answer I gave to the hon. Member for Esher (Mr. Mather) on 24th June.—[Vol. 894, c. 212.]
Does not my right hon. Friend agree that the opening of the Suez Canal means that the Royal Navy can operate east of the Cape without Simonstown?
Yes, this is pointedly so. But my right hon. Friend the Minister of State has tried to indicate in the past that with or without the Suez Canal we can operate east of the Cape and that we have many major ports which we can use on a customer basis if we request them—especially Karachi, Colombo, Singapore and minor ones at Mauritius and Mombasa.
Does not the opening of the Suez Canal make nonsense of the NATO geographical guidelines? Will the right hon. Gentleman and the Prime Minister initiate a happening in NATO to make sure that this matter is aired, bearing in mind that he will find that quite a lot of preliminary work was done on this matter by his predecessors in NATO circles?
The hon. and learned Gentleman is merely reminding the House of what it knows already. The Supreme Allied Commander, Atlantic embarked upon a study of the protection of shipping during war time east of the Cape in 1972.
Army Juniors
asked the Secretary of State for Defence if he will review the system under which boys of 16 years of age can bind themselves to serve in the Army for periods of up to six years.
No, Sir. This matter was reviewed recently by Lord Donaldson's Committee on Boy Entrants and Young Servicemen, and the Army's terms of engagement now incorporate certain options designed to safeguard the interests of junior entrants.
Will my hon. Friend accept that in any case it is to the advantage of neither the Army nor the boy concerned that the boy should be kept in the Army against his will and that it cannot do any good for the Army's long-term recruiting prospects? How does my hon. Friend justify the use of the police to enforce this sort of obligation, as has been illustrated recently in the case of a 17-year-old constituent of mine? Is it not time that contracts of service contained the normal civilised provisions for termination by either side on the giving of adequate notice?
There are two issues involved. First, it is fair to say and to expect that a young man of 17 years will feel the pangs of homesickness and so on. In my view it would not be good to concede immediate release for a boy who was feeling the pangs of homesickness because it would probably deprive him of the opportunity to have a worthwhile and rewarding career later in life.
Enlistment into the Armed Forces does not involve entering into a contract. The engagement of members of the Armed Forces is at the discretion of the Crown. Consequently the law relating to contracts as it affects citizens does not apply.
Although I recognise that Scottish law allows a 16-year-old to enter into the lifelong commitment of matrimony, may I ask whether the Minister agrees that many 16-year-olds are too immature psychologically to enter into even six-year commitments in the Armed Services, especially bearing in mind the alluring advertisements used by the Services to attract these young men which fail to point out that they will be trained to kill and to be killed?
I accept what the hon. Gentleman has said about the immaturity of 16-year-olds. That is exactly why all junior entrants may leave as of right at any time during the first six months of service.
Military Bands
asked the Secretary of State for Defence if he will initiate a review of the purposes being served by the maintenance of military bands by his Department.
A review of all Service bands was completed as part of the recent defence review. I have no plans to conduct any further examination.
Does my hon. Friend agree that in the context of nuclear missiles and electronic guidance systems the 95 bands are no longer relevant for any military purpose? Does he also agree that the public relations and recruitment functions, which for a long time appear to have been a large part of the bands' activities, are now best carried out by the media and that, therefore, the bands' contributions to the cultural life of the nation might be better served if they were demobilised and reformed as civilian organisations forming music centres throughout the British Isles?
My hon. Friend will not be surprised when I say that I do not agree that the military bands are irrelevant. In my view silver, brass and military bands are a part of the tradition of this country which I hope we shall never lose. I think that my view is shared by the vast majority of the population.
The Minister's reply will be warmly welcomed since the British Army bands are the envy of the world. In my constituency we are very proud of Kneller Hall where they are all trained. The Minister was very welcome on his recent visit there, as was the Secretary of State last week. Does the hon. Gentleman agree that, apart from the vital function of being morale boosters, these bands are worth their weight in gold because they are a big draw for tourists?
I cannot disagree with anything that the hon. Gentleman has said. I endorse all he has said about Kneller Hall. I should like to invite my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) to go to Kneller Hall and enjoy a band concert. Although military bands are much loved in this country, in my area brass bands from miners' lodges are loved just as much.
Without in any way dissenting from the views advanced by my hon. Friend, may I ask him to be realistic and tell us whether the military bands actually earn any money either in Britain or abroad? If so, how much does it amount to in an ordinary year?
And where does it go?
I certainly could not hope to give a direct answer to that question, because I am sure my hon. Friend the Member for Rother Valley (Mr. Hardy) will appreciate that the value of military bands in terms of tourism alone is incalculable.
Although I welcome the Minister's robust reply, may I ask him to remind his hon. Friends that both the Soviet Army and the Chinese People's Republic Army attach high importance to maintaining military bands?
I am sure that the people of the Soviet Union and of the Chinese People's Republic enjoy military band music, and indeed, silver and brass band music, as much as I and the majority of the people of this country enjoy it.
Young Persons (Service Wastage)
asked the Secretary of State for Defence what progress he has made concerning his study about the wastage of young persons in Her Majesty's Services; and if he will make a statement.
I have nothing to add to the reply I gave my hon. Friend on 24th June 1975.
Will my hon. Friend accept my thanks for the very courteous letter he sent me in connection with this subject? May I remind him that in general industry all apprenticeships can be terminated at the end of three years? Why should he not consider a similar provision for the Services? Would it not be in everyone's interests for recruits who have lost their enthusiasm to go, as they have an unsettling influence on other young people who are anxious to make a success of a Service career?
My hon. Friend asked a Question specifically about the wastage of young people. Apprentices form a very small proportion of the total intake of the Services. We are undertaking this study precisely to establish where the wastage is and in what numbers. I hope that we shall complete it as quickly as possible.
Egypt
asked the Secretary of State for Defence if he will make a statement on his recent meeting with the Deputy Prime Minister of Egypt.
I have not met him.
Is the right hon. Gentleman aware that the Deputy Prime Minister and the Foreign Minister of Egypt came here with a shopping list for £450 million worth of arms which they were successfully able to buy? Surely the right hon. Gentleman, as Secretary of State for Defence, should have seen a successful buyer of £450 million worth of British arms and should not have delegated this responsibility to a Foreign Office Minister, who might not know one end of a missile from another?
The hon. Gentleman is as completely misinformed in his supplementary question as he was in his original Question.
Let me put a question to the Secretary of State which does concern him. Apart from the obvious danger of pouring more arms into either side in this tinder-box which may start a world war, is he satisfied that we shall be paid for these orders, since Egypt already owes $3 billion to the West for arms supplied to her?
The Question was whether I met the Deputy Prime Minister of Egypt. The answer was "No, Sir." My hon. Friend the Member for Salford, East (Mr. Allaun) has referred to major contracts in the offing. No firm proposals have been put to me yet.
In courtesy to my hon. Friend the Member for Thanet, East (Mr. Aitken), the right hon. Gentleman owes him an explanation of why he said he was misinformed.
I have just given the reason. There are no firm proposals.
Recruitment
asked the Secretary of State for Defence whether he is satisfied with the recruitment procedure of the Armed Forces.
In general, yes, Sir.
In view of the very bleak employment prospects faced by young school leavers in many areas of the country, will my hon. Friend issue instructions to recruiting officers not to use undue pressure to exert unfair advantage on young people, many of whom are possibly faced with the dilemma of joining either the Forces or the dole queue? In particular will he do something about the recruiting officers who go into schools to lure young people into the Forces with the help of audio-visual aids which often give a misleading and exaggerated view of life in the Forces, because such practices are often tantamount to baby snatching?
In so far as I follow the burden of my hon. Friend's supplementary question, the situation is that we accept only one in three of all applicants who come before the Service Recruiting Agency. I should have thought that that was sufficient rebuttal of his point that we are anxious to snatch whoever comes into a recruiting office.
Secondly, Service officers and personnel go into schools, as do other careers advisers, to give factual information about careers open to young people. I am anxious that they should give as realistic a picture of life in the Forces as possible. It does not suit our book to have glamorised pictures which the reality does not match.
Will the Under-Secretary tell us the present cost of recruiting a soldier? Secondly, in his review of recruiting has he decided to close any of the recruiting centres?
I cannot give the figure offhand. Recruiting centres are constantly under review. Only those that are the most cost-effective will be kept open. We are satisfied that the recruiting offices which are open are fulfilling a useful function.
The hon. Gentleman said that the hard facts were issued to persons who were being recruited. Does he agree that one of the vital hard facts concerns the roof over the head of a Service man when his term of service is over? Is the hon. Gentleman aware of my oft-repeated suggestion that Service men should be treated no less favourably than civilians by being given the right to have their names put on the local authority housing list of their choice on entry or on marriage, whichever happens later? Is he aware that that suggestion has been welcomed by Members of Parliament of all parties, whatever their views? Is it not time that the Ministry of Defence now came out with some hard facts on what it proposes to do about the mountainous problem of local authorities with bases in their areas which cannot accommodate the men who have served for many years and have nowhere to stay at the end of their service?
The hon. Lady, not for the first time, is under a complete misapprehension about the responsibility of the Ministry of Defence. The Department of the Environment, the Welsh Office and the Scottish Office are responsible for housing in this country. I could understand what the hon. Lady's comments would be if the Ministry of Defence was responsible for Scottish housing.
Is my hon. Friend aware that recruiting officers for any branch of the Services go on to school premises only with the express permission of the school governing body and that the more enlightened governing bodies, such as in my area, always consistently refuse to give that permission?
I am sorry to hear that my hon. Friend's local education authority refuses to give permission. In my view, no education authority or anyone else should seek arbitrarily to deny the choice of a career to young people. What they have a right to ask for, and what we merely present, are the facts about a career in the Forces. It is then left to the young men and women concerned to choose that career if they wish.
NATO Defence Concept
asked the Secretary of State for Defence if he will give further details of the guidelines laid down by the NATO Defence Ministers on the adoption of a long-range defence concept.
I would refer the hon. Member of the annex to the communiqué issued after the NATO Defence Planning Committee ministerial meeting on 22nd and 23rd May which is available in the Library of the House.
Is it the desire of the NATO Defence Ministers as a whole to agree on a long-range defence concept connected with the production, harmonising and standardising of weapons procurement? If so, how is it related to the decision of the Eurogroup Defence Ministers in 1972 to agree on tactical concepts?
The hon. Gentleman is right on the first point. We shall now have to be more keen than before in using our resources more sensibly and wisely. Therefore, rationalisation and standardisation and greater co-operative efforts between the NATO nations is more than ever necessary.
Secondly, because of the rethinking on the long-range defence concept, we must bear in mind that because of the sophistication of new weaponry and the longer time scales before it goes into production and development, instead of planning on a seven-year cycle we must plan for much longer.
On the question of greater co-operative effort, in the light of the Belgian decision on the F16 and the well-known future problems of Dassault, what is the thinking of the Ministry of Defence about involving the French in, at any rate, the next stage of the multi-rôle combat aircraft?
I do not know to what extent the French would be interested in the MRCA, but we are particularly keen to involve them in the activities of the Eurogroup. There is a chair available for the French Government to become involved. From then on they would be involved in the co-operative efforts of the Eurogroup nations which are particularly keen to develop the standardisation of weaponry in Europe.
United States U2 Aircraft
asked the Secretary of State for Defence if United States U2 planes are currently using facilities in this country.
Yes, Sir.
Does my hon. Friend agree that these aircraft are notorious for their spying activities? Will he assure the House that they are not being used in spying activities? Does he agree that if they were so used détente could be seriously damaged? Will he make clear to the Americans that if these planes are used for spying elsewhere, they are not welcome here? Will he press the Americans to get rid of them as practice for the future in getting rid of American Polaris bases here?
As I made clear to my hon. Friend the Member for Salford, East (Mr. Allaun) on 11th June, they are not on spying missions, they are not taking photographs and they are not armed. In those circumstances we have no intention of asking the Americans to terminate the trials, which are of a precision high altitude and navigation system.
Southampton Area Establishments
asked the Secretary of State for Defence if he will pay a visit to defence establishments in the Southampton area.
I have no plans at present to do so.
When the Secretary of State next visits the Southampton area, will he visit Netley military hospital, which is due to close in the next couple of years, and do his best to reassure the civilian employees there that his Department will do everything possible to find them alternative employment?
When next I visit Southampton I shall try to fulfil my hon. Friend's wishes.
Malta (Naval Medical Facilities)
asked the Secretary of State for Defence whether he will make a statement on implementation of arrangements for the population of Malta to have access to naval medical facilities.
Arrangements have long existed for Maltese locally-entered personnel, their dependants and Maltese locally-entered civilians injured at work to receive treatment in the Royal Naval Hospital, Malta. In addition the Maltese Government have recently accepted our offer of beds in the Royal Naval Hospital's maternity unit for other patients at rates based on the extra costs arising from their attendance.
I congratulate my hon. Friend on achieving this agreement because I know that he has worked hard and long to reach this arrangement with the Maltese. Does he agree that the principle is important because it means the sensible use of existing facilities? Will he assure the House that if this principle can be applied elsewhere he will not hesitate to apply it?
I certainly assure my hon. Friend that wherever we can co-operate in ways of this kind we are anxious to do so.
I should like to add my congratulations to the hon. Gentleman on what he has achieved. Will he move a little further down the Mediterranean and tell us whether he has had any success in Gibraltar along similar lines with the hospital there?
The hon. and learned Gentleman knows that that is a completely different question. If he cares to put it down, I shall be more than willing to answer it on a subsequent occasion.
North Sea Oil Installations
asked the Secretary of State for Defence if he will explore with the Norwegian Government arrangements for joint defence of oil rigs in the North Sea.
The defence of North Sea oil installations against external attack is covered by NATO planning procedures. The protection of these installations in peace time is already under discussion outside NATO by the United Kingdom and Norway, together with other interested countries.
I welcome the second part of that answer. Is Norway constructing special vessels for the purpose? If so, could we not co-operate with Norway in the construction and design of such vessels?
My hon. Friend is correct in saying that Norway has recently announced a programme of vessels rather similar to our own. It is not altogether clear whether there is room for co-operation in design and building since we have already placed our orders and the time scale is rather different. Certainly there will be co-operation as far as we are concerned.
How are oil rigs in the North Sea defended at the moment?
As the hon. Gentleman knows, it is important to distinguish between what happens in war-time circumstances, when the full resources of NATO and the Royal Navy would be available, and what happens in very different circumstances in peace time, for which we have new provisions about which the hon. Gentleman also knows.
Will the Minister consider not only the safety of the oil rigs but also the safety of the men who work on them and urge his right hon. Friend the Secretary of State for Employment to bring all North Sea and offshore installations connected with the oil industry within the ambit of the Health and Safety at Work etc. Act?
I am sure my right hon. Friend will note what my hon. Friend says and will write to him if necessary.
Is the right hon. Gentleman aware that there is a great deal of confusion in the House about the different threats against which we are trying to defend the oil rigs? Is he aware that I think the installations are virtually indefensible in war time against a conventional enemy but that there could be a threat from subversion and sabotage, which would require a different solution? Can the right hon. Gentleman tell us what steps his Ministry is taking to defend the rigs against subversion and sabotage, as opposed to the threat from the Warsaw Pact countries or anywhere else in war time?
The hon. Gentleman is correct in saying that there is a confusion between these different rôles. We have attempted to make plain the difference on a number of occasions. I made a statement in the House earlier this year about the peace-time rôle, and, in the last two or three weeks we have announced that the order has been placed for the vessels to carry out this requirement. We can only repeat that there is a distinction and that, as far as possible, we are providing against both sorts of danger.
Northern Ireland
asked the Secretary of State for Defence whether he will make a statement on the military rôle and operations in Northern Ireland.
asked the Secretary of State for Defence if he will make a statement about the current operations of the security forces in Northern Ireland.
I would refer the hon. Members to the reply my right hon. Friend gave on 13th May 1975. The Army continues to assist the Royal Ulster Constabulary in the difficult task of combating violence and terrorism in the Province, and the level of is operations continues to be related to the level of violence which occurs.
In view of the atrocious ambush near Forkill in which four very brave soldiers, one from Belfast and the others from Great Britain, died in defence of the United Kingdom, and in view of the references by the Secretary of State for Northern Ireland yesterday to the fragility of the so-called cease-fire, can we be assured that security forces are on the fullest alert and that they have their eyes on the known organisers of terrorism who are at present openly at large?
Yes, Sir.
Can the hon. Gentleman tell us the number of security forces now in Northern Ireland and give an assurance that while the level of violence remains as intense as it is now there will be no reduction in the forces?
The number of forces in Northern Ireland at the moment is about 14,000. Any question of a reduction would depend entirely on the prevailing situation.
Brunei (Gurkha Battalion)
asked the Secretary of State for Defence what consideration he has given to the representations made by the Sultan about the withdrawal of the Gurkha battalion from Brunei; and if he will make a statement.
As my right. hon. Friend the Minister of State for Foreign and Commonwealth Affairs explained on 12th March, the talks have been adjourned while both sides study certain questions further. That remains the situation, and there will be further consultations with the Sultan before a final decision is taken on the withdrawal date.
Can the Secretary of State inform the House of any reason, other than a dogmatic desire to please the Left Wing, for this withdrawal, which will not save the taxpayers any money and will deprive the Gurkhas of a useful training area outside Hong Kong?
We recognise that this is not a cost-saving measure, but during the defence review commitments and capabilities were reviewed and this was one of the commitments. Subject to consultations with the Sultan, it is the intention to plan for a withdrawal. We shall have to await the next round of talks.
TUC AND CBI (TALKS)
asked the Prime Minister what recent consultations he has had with the TUC and CBI.
I refer my hon. Friend to the statement which I made to the House on 11th July, Sir.
Is my right hon. Friend aware that many of us who will support him wholeheartedly in the Lobby tonight welcome the support he has received from trade unions at the Durham Miners' Gala and elsewhere? However, is he also aware that we do not believe that support will continue to be forthcoming if there are further massive cuts in public expenditure? Is he aware that there is probably only a short time in which to work out a satisfactory voluntary incomes policy that avoids re-entry into either the thickets of a statutory policy which would be unworkable or the morass of so-called free collective bargaining?
I thank my hon. Friend. My right hon. Friends and I who attended the Durham Gala were gratified by the wholehearted reaction of that great mining community to the Government's proposals. With regard to public expenditure, that was dealt with very fully by my right hon. Friend the Chancellor of the Exchequer in his speech yesterday afternoon. I agree with my hon. Friend—and this was a point made by the Leader of the Opposition on 11th July—that we must use this year to work out some satisfactory plan for the period that follows. We must avoid the re-entry problems that almost invariably follow a period of this kind.
Can the Prime Minister say whether it is likely, in his view, that by the winter of 1976–77 unemployment will be at 2 million?
That is not, in our view, likely. It is a fact that we are facing a very serious rise in unemployment in common with every other advanced country in the world. The fact that it has not risen as much in this country up to the present time and that exports have been maintained and industrial production has fallen less is no cause for satisfaction for anyone. The Western world—this came out clearly at the Heads of Government conference last week—is deeply concerned about the virulence and depth of the world depression which, as many of us forecast, is now as bad as the 1930s in many respects.
DURHAM
asked the Prime Minister if he will pay an official visit to Durham.
I was at the Durham Miners' Gala on 19th July, Sir, and I have at present no plans for a further visit to the area.
Can my right hon. Friend say whether he has found, in Dur- ham or anywhere else, any appreciation of the attitude of the official Opposition, who claim that they want a more dramatic cut in the rate of inflation than that proposed by the Government while at the same time demanding cuts in housing and food subsidies, which would simply increase the cost of living of the ordinary worker and, therefore, make inflation still worse?
I found no support for the views of the Opposition whether from the Durham miners or the leaders of other coalfields who were present at the gala. I think that some of the miners felt it might have been a good idea if they had invited leaders of the Opposition to Durham. If they spent more time with mineworkers and less with monetarists, they would learn a great deal more about not only the muscle and backbone but also the heart of Britain.
Even if the Prime Minister cannot visit Durham, can he find a way of telling the Durham miners why he had abandoned his commitment to free collective bargaining and done a U-turn in favour of statutory controls which he has opposed in the past few years?
The hon. Gentleman will be aware that we said in our manifesto that these matters should be dealt with in consultation with the trade union movement. That movement has now made a historic pronouncement which the previous Prime Minister spent many months trying to get. He was right to do so. We are fortifying with legislation, which is to be debated tomorrow, measures and protections required to make a reality of the voluntary proposals and policy of the TUC.
Will my right hon, Friend accept that my constituents and I are deeply touched by the solicitude of my hon. Friend the Member for Woolwich, East (Mr. Cartwright) in asking my right hon. Friend to visit us? Will he, however, comment on the most notable speech of Mr. Lawrence Daly last Saturday from the platform at Durham?
It was indeed a notable speech. Mr. Daly made certain comments about Members' pay which might not be totally acceptable in all quarters of the House, but what he said about the decision of the NUM executive and the advice he was giving in respect of the coalfield ballot this year was extremely encouraging, coming as it did after the decision of the executive. I should like to hear some praise and support from the Opposition Front Bench for what Mr. Daly had the courage to say last Saturday.
If the Prime Minister finds it possible to go to Durham, he could do so by going through my constituency of Rochdale. If he did that, would he be prepared to tell the textile workers in my constituency when he proposes that the Government should make their statement on textiles? Is he aware that I have in my hand a telegram from the trade union movement in Rochdale certifying that the closure of another textile mill affecting 250 employees has been announced in Rochdale today? When are we to know the Government's policy on this matter?
The hon. Member is perfectly fair in what he says. If one went to Durham through the textile areas of Yorkshire and Lancashire I am sure that one would hear expressed the sense of urgency to which the hon. Member referred. My right hon. Friend has made clear that a statement will be made within the next few days.
As the Prime Minister has returned to the point about the Government's policy on inflation, will he say something about the reserve powers? Is he saying that he will drop the reserve powers in the Bill if he cannot find a way of absolving the unions from the consequences of refusing to abide by a court's decision, or will he go ahead with them in any event?
We have not said that at all. The House will be debating these matters further, and I hope to catch your eye this afternoon, Mr. Speaker. The Bill which we have said we will hold in reserve and would introduce if the general strategy was imperilled would not involve the problem about which the right hon. Lady is rightly concerned. The question she has put raises issues which do not arise.
ECONOMIC AFFAIRS (PRIME MINISTER'S SPEECH)
asked the Prime Minister if he will place in the Library a copy of his public speech to the National Union of Mineworkers at Scarborough on 7th July on economic matters.
asked the Prime Minister if he will place in the Library a copy of his public speech on the economic situation to the National Union of Mineworkers at Scarborough on 7th July.
asked the Prime Minister if he will place in the Library of the House a copy of his public speech on inflation to the National Union of Mineworkers conference at Scarborough on 7th July.
I did so on the same day, Sir.
Is the Prime Minister aware that many people outside the Parliamentary Labour Party will welcome the way in which the executive of the National Union of Mineworkers has agreed not to try to sabotage immediately what many people have described as phase 4 of the last Conservative Government's incomes policy? Will he accept that he should be grateful that on this occasion Her Majesty's Opposition are not acting as Scargill's parliamentary fifth column, trying to destroy Her Majesty's Government regardless of the effects on the nation or inflation?
I rather formed the view, from reading a story, which I am sure will be denied by the Opposition Front Bench, about some motion that the Opposition were putting down on the Order Paper to reject the means of carrying out the White Paper proposals, that they were specifically identifying themselves with the fifth column of those who want to see the White Paper fail. I may be wrong. Perhaps that was for them just a rush of blood to the head after midnight. However, the motion certainly appeared on the Order Paper. If the Opposition are to vote against the Bill which is the legislative vehicle for the White Paper, which I am sure in general they wish to commend to the House, I believe that that would be an act of parliamentary sabotage.
When my right hon. Friend is speaking in the country, will he carefully explain that the aspect of wage restraint in the White Paper and in the Government's policy reflects only one side of TUC policy and that a lot of TUC policy has been rejected so far by the Government? Will he undertake to continue discussions with the TUC about the rest of its statement?
I am glad that my hon. Friend responds to the initiative taken by the TUC. He knows that this is the substantial majority view of the General Council and that since the General Council decision union after union has come into line with it. I am sure that in forming his view about the proposals before the House my hon. Friend will attach great weight to the fact that the policy has been agreed with the TUC. We discussed and debated in direct discussions with the TUC, at NEDC and at yesterday morning's meeting of the liaison committee all aspects of the TUC's proposals and wider issues of economic policy.
As one who hopes that the White Paper will be successful and who will be voting for it tonight, I hope the Prime Minister is aware that many of us who have grave reservations about details of the legislation to be debated tomorrow and the reserve powers which have not been disclosed believe that it would be very much better if they were disclosed to the TUC, the CBI and the House of Commons. Why are the Government so coy about telling us precisely what reserve powers they have in mind?
The right hon. Gentleman has made clear his general support for the White Paper. He will have every opportunity to debate on the Bill later this week any anxieties he may have about the operation of the legislation before the House. As for the measure that we have said we must keep in reserve, hoping that we shall never have to introduce it but which we shall introduce if the general strategy is threatened, this was dealt with fully by my right hon. Friend the Chancellor of the Exchequer yesterday afternoon.
In the speech to which the Questions refer the Prime Minister rightly stressed the need for consent, and that obviously goes far wider than the miners. Will the right hon. Gentleman clarify the position of employers in the light of his answers today? After 1st August, will not employers be entering into commitments with their work force which might constitute a legal offence of which they have no knowledge, carrying a penalty of which they have no idea? Is not the only certainty that they will receive no protection if other people try to force them to break the law?
The hon. Member has misunderstood the situation. There is no question of employers entering into commitments after 1st August which they might find retrospectively to be against the law. There has been a misunderstanding here and I understand why, but the hon. Gentleman need have no anxieties on that score.
Is my right hon. Friend aware that he will find it much less pleasant to address the NUM in 12 months' time if the rate of inflation is still between 15 per cent, and 18 per cent.? Will he concede that there is a real prospect of that, given the increases in the pipeline from last year's and this year's wage round and from raw material price increases? Will he take action to tighten up the prices side of the package to try to make sure that this does not happen?
I agree that that would be the position in a year's time if what my hon. Friend predicts were to happen. No one realises this more clearly than the NUM and the other unions, and that is why they are taking such a robust line in support of the Government's policy. On the question of the Price Code, and this is to some extent involved in the legislation before the House tomorrow, my right hon. Friend the Secretary of State for Prices and Consumer Protection—I do not think that Hansard is yet available with the full record of what she said—dealt fully with some of these matters last night. She made clear that apart from the specific measures she is proposing, some by way of legislation, it is not the case that the present level of profits in some of the key sectors of wholesale, retail and manufacturing are such that it will be possible greatly to tighten them up without very serious effects, possibly on employment.
I welcome much of the Prime Minister's rather belated conversion to realism as demonstrated in his Scarborough speech. Will he explain why he spent so long blaming the problems of the economy on such bogies as wet hens running around the cocktail circuit and why he did not speak in blunt language to the miners and the other unions much sooner?
I did. I gave my view to the TUC last September. On the point about a quotation from a broadcast some weeks ago, this was because there was a concerted drive against sterling based on a lot of gossip at the very time when it was becoming clear that our balance of payments deficit was falling to one quarter of what it was a year ago. Since then successively we have had very good export and trade figures. In the first six months of this year we achieved a current deficit of less than £500 million—an annual rate of £1,000 million—against estimates of £4 billion and £5 billion last year. This is a remarkable achievement and justifies what I said about some who are selling sterling short.
As the House and the people have been conned on several occasions into buying the gold brick of a statutory incomes policy, is it not sheer gall that we are presented with it once again, except that on this occasion the gold brick will not even pass before our very eyes?
I do not know about the gold bricks and the gall around here. However, the position was made clear by my right hon. Friend the Chancellor of the Exchequer that the legislation which we are asking the House to pass to fortify the voluntary policy agreed with the TUC will be debated by the House tomorrow. Any other legislation will be in reserve only in case the strategy breaks down. The House would have the first opportunity of debating that legislation before it could possibly become law. As to what the legislation will contain, my right hon. Friend the Chancellor of the Exchequer explained in detailed terms yesterday what the Government have in mind.
—
Order. There are 75 hon. Members who wish to speak in the debate which is to follow.
BUSINESS OF THE HOUSE (SUPPLY)
Ordered, That this day, as soon as the House has entered upon the Business of Supply, Mr. Speaker shall put forthwith the Question which, under the provisions of paragraph 11 of Standing Order No. 18 (Business of Supply), he is directed to put at Ten o'clock.—[ Prime Minister. ]
HIGH COURT ATTENDANCES (OFFICERS OF THE HOUSE)
On a point of order, Mr. Speaker. Will you confirm, with respect to Item No. 6 on the Order Paper—the ill-starred motion by the Attorney-General—that the fact that it has lost its star means that it is not debatable in the House tonight and that it merely receives unanimous assent, or, given one objection, it again fails? Would you be good enough to confirm that to the House? I think there is general interest in it.
The star—the asterisk has nothing to do with it. The point is that it is now on the Order Paper, and the hon. Member will know that it can proceed only if it is not objected to.
LOCAL LAND CHARGES BILL [Lords]
Ordered, That the Local Land Charges Bill [Lords] be referred to a Second Reading Committee.—[ Mr. David Stoddart. ]
STATUTORY INSTRUMENTS
Ordered, That the Regional Employment Premium (Continuation of Payment) (Winsford) (Amendment) Order 1975 be referred to a Standing Committee on Statutory Instruments.—[ Mr. Edward Short. ]
RENT ACT 1974 (AMENDMENT)
3.33 p.m.
I beg to move, That leave be given to bring in a Bill to extend security of tenure and rent regulations to tenants of non-resident landlords where meals are provided which are not prepared on the premises. The Bill that I seek leave to introduce is part of a continuing fight against evasion of the laws guaranteeing security of tenure to tenants. Every time Parliament acts to protect tenants from excessive rents or eviction at the whim of a landlord, the more cunning and unscrupulous landlords embark on the search for loopholes in the law.
When the tenants of unfurnished accommodation were granted security of tenure and tenants of furnished accommodation were not, it was common practice for many landlords to seek to provide a collection of cheap, tatty and often delapidated furniture to transform their accommodation into the furnished category. Now, despite the synthetic indignation of the estate agents and the Conservative Party, that distinction has been abolished in the 1974 Rent Act.
Now there is evidence that an even more ingenious and dishonest device is being used to ensure that accommodation can be portrayed as something that it patently is not so that tenants can be charged extortionate rents and be kicked out if they complain. That device is the provision of food—not food cooked on the premises by the proprietor and served to his tenants but food delivered by the landlords as a device to seek to have their accommodation regarded as hotels rather than as rented accommodation.
Such meals are not available to tenants as optional extras or as service provided by catering landlords deeply concerned with the nutrition of their tenants. The acceptance of meals is a condition imposed on those seeking housing—a condition imposed in order to deprive them of their other rights. The accommodation provided is not that of a five star or even a no-star hotel. It is a strange hotel indeed that provides no bed linen, or installs meters for all gas and electricity, It is a pretty poor hotel that fails even to provide breakfast on most mornings when it has contracted to provide it.
The landlords involved in this scandalous practice are driving a coach and horses right through the 1974 Rent Act. In this case it is a coach disguised as a food wagon. This meals-on-wheels service provides, without doubt, the most expensive food in the country. The provision of a few eggs and bacon can increase the income from the property tenfold. By the evasion of Rents Acts one estate agent in the Medway towns, namely, C. O. Bills Ltd., is already charging two families occupying one house a total of £50 a week in rent. One of the firm's directors, Mr. Michael Bills, is planning to build himself a £300,000 golf course—paid for, no doubt, by his ill-gotten gains extorted from homeless families.
This company's victims cone not just from the Gillingham area in which this estate agent's premises are situated, but they include constituents of mine on the council waiting lists in Medway and Gravesham. The company's directors grow rich while its tenants live in rodent-infested, damp and inadequate accommodation. The rents are too high for most people to afford so the county council's social services department has to contribute to them from the ratepayers' money. These firms are, therefore, concerned not only in exploiting the homeless but also in milking the ratepayers.
The Bill is not aimed at eliminating the genuine hotel or boarding house. It is intended to clip the wings of those unscrupulous landlords and estate agents who pose as hoteliers because they see the chance of making extortionate profit from sub-standard accommodation and the opportunity to line their pockets at the expense of the homeless or the ratepayers.
The unscrupulous people involved in this racket are not making extra accommodation available. Their activities are actually reducing the number of permanent homes which are available. They create ther own demand by ensuring that the sort of accommodation which people need is not available to them.
I ask the House for leave to introduce the Bill so that we may put an end to the scurrilous activities of these parasitic landlords before this practice grows and becomes a national scandal instead of a local council scandal.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Ovenden, Mr. Ivor Clemitson, Mr. Martin Flannery, Mr. Bruce George, Mr. Bryan Gould, Mr. Mike Noble, Mr. George Rodgers, Mr. J. W. Rooker and Mr. Ron Thomas.
RENT ACT 1974 (AMENDMENT)
Mr. John Ovenden accordingly presented the Bill to extend security of tenure and rent regulations to tenants of nonresident landlords where meals are provided which are not prepared on the premises: and the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 219.]
SUPPLY
[29TH ALLOTTED DAY],— considered.
DEFENCE AND CIVIL ESTIMATES 1975–76 (OUTSTANDING VOTES)
MR. SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Question, That a sum, not exceeding £19,647,600,900, be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges for Defence and Civil Services for the year ending on 31st March 1976.
Question agreed to
Bill ordered to be brought in upon the foregoing resolution by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Edmund Dell, Mr. Joel Barnett, Mr. Robert Sheldon and Mr. Denzil Davies.
CONSOLIDATED FUND (APPROPRIATION)
Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31st March 1976, presented accordingly and read the First time; to be read a Second time tomorrow and to be printed. [Bill 220.]
ATTACK ON INFLATION
Order read for resuming adjourned debate on Question [21 st July ], That this House approves the White Paper on The Attack on Inflation (Command Paper No. 6151).
Amendment proposed, to leave out from "House" to the end of the Question and to add instead thereof: supports Her Majesty's Government's belated commitment to reduce the disastrous rate of inflation and their acceptance of the need both for strict cash limits throughout the public sector and for a substantial reduction in the level of pay settlements; regrets, however, Her Majesty's Government's prolonged failure to reduce public spending and to promote the prosperity of the private sector; and deplores their decision to increase indiscriminate subsidies and to proceed with further measures of nationalisation, which are damaging in themselves and inconsistent with the conquest of inflation".—[ Mrs. Thatcher. ]
Question again proposed, That the amendment be made.
3.39 p.m.
Yesterday my right hon. Friends concentrated on an analysis of the Government's responsibility for the present disastrous situation and the extent to which the proposals contained in the White Paper fall short of what is necessary. I intend today to devote some time to expounding the case set out in the amendment moved by my right hon. Friend the Leader of the Opposition. I begin by explaining our approach and the way in which Parliament should approach matters of this kind.
It is the function of the House of Commons, and most of all in a crisis such as the present, to hammer out policies which are in the interests of the nation, and to push and to persuade the Government in the right direction. When the Government are moving in that direction, the function is to offer them support and certainly not to oppose them. That is the simple reason why we shall not be asking my right hon. and hon. Friends to vote against the White Paper itself tonight.
We have been urging the Government to take action on inflation for months. When the Prime Minister and the Chancellor of the Exchequer and their colleagues were saying that all was well, we were urging him to take action. When the Chancellor was saying that inflation was running at 8.4 per cent., we were urging him to take action. Month after month since then we have been urging them to do just that, so we certainly welcome their belated repentance now, so far as it is well conceived.
Those who thought that we should have acted otherwise must have been expecting us to follow the example of the Opposition when it was led by the right hon. Gentleman the Prime Minister. I can give him this assurance. We shall not follow his example. Some may have been expecting us to seek to undermine the authority of Government, as he did. We shall not follow him in that respect either. It is worth devoting a moment or two to the record of the Prime Minister.
These are interesting revelations. However, although I am sorry to be a minute or two late in getting in, may I ask the right hon. and learned Gentleman, in view of what he has said, whether this means that the Opposition will not be voting against the Second Reading of the Remuneration, Charges and Grants Bill?
The right hon. Gentleman certainly has some effrontery in interrupting my speech within seconds of his arrival without having heard the beginning of it. Let me answer the question. We have tabled an amendment drawing the Government's attention to our clear reasons for anxiety about the Bill which is now before the House. We shall be debating it tomorrow. The Government will have every opportunity of indicating how far they will respond to our anxiety, and how far they will respond to the amendments already on the Notice Paper. If they fail to do that we shall certainly vote in support of our amendment. [ Interruption. ]
I want to examine the record of the over-talkative Prime Minister—if he can contain himself for a moment—because it is almost 13 years since the right hon. Gentleman replaced the late Hugh Gaitskell as the Leader of the Labour Party. I do not know what verdict his party will pronounce on the record of those 13 years, although I can make some guesses. [HON. MEMBERS: "Wasted years."] The nation can hardly congratulate itself on the impact of his service during those 13 wasted years—as my hon. Friends describe them. [ Interruption. ] The Patronage Secretary says that the right hon. Gentleman has won four General Elections. That is about the beginning and the end of the standards the Prime Minister has set himself.
They have been years in which the Prime Minister has sought to deceive his party and the nation and has ended up deceiving no one but himself. They have been years of false expectations, beginning with the "white heat of the technological revolution"—what a faded phrase that now seems—and ending with the social contract, described by the Prime Minister last September as The boldest experiment in civilised Government that Britain has ever seen. They have been years in which the Prime Minister has taken up policies only to dispose of them a few months later when others, under the leadership of my right hon. Friend the Member for Sidcup (Mr. Heath), have applied themselves to the same task—in relation to the Prime Minister's position on Europe, on the reform of industrial relations and, above all, on his position on the conquest of inflation. Having himself been driven, despite all his earlier protestations, rightly or wrongly, to adopt a statutory policy, when the time came for our Government to do the same he uttered not a syllable in support. Last January the cry was "A victory for the mineworkers will be a victory for the nation." Tragically, it was not. In 1972 and 1974, as in 1975, it was a victory for inflation. Yet until two weeks ago the Prime Minister has continued to march in the opposite direction.
When the history of our time comes to be written, the verdict on the right hon. Gentleman's 13 Houdini years as Leader of the Labour Party will be harsh indeed.
What a turgid old bore you are.
The Prime Minister will be seen to have done more harm to the social and economic fabric of this country than any other party leader in our history—13 wasted years indeed.
I turn now to consider the condition of the nation's economy, over which the Prime Minister continues to preside. The OECD had produced a report about the condition of our nation. It confirms that production is stagnant at best and that our trade balance is still very far from right.
When the Prime Minister dealt with this in the last debate, he had a tendency towards euphoria, to which he returned during Question Time this afternoon. He paid tribute to the remarkable achievement of his Government in going so far to redress the balance of trade. I join with him and anyone else who pays tribute to our exporters, but the Prime Minister, in this as in so many other matters, really must not deceive himself. The truth is that many factors in the underlying recent improvements in the balance of trade conceal unsatisfactory features for the future. Exports are up by 1 per cent. only. Why have they risen by only that extent? It is because prices are growing at about 20 per cent. per annum. while those of our competitors are growing at about half that rate—10 per cent. per annum? [ Interruption. ] Of course they have fallen—but wait for it! The volume of our exports fell by 28 per cent. in the first two quarters of the year, faster that the fall in world trade—and because of the excessive rate of price increases. That is why the Prime Minister is being driven to take action now. Those factors are already sapping the position and adding to the serious effects of declining world trade. The other half of the balance has improved because the volume of imports fell by 28 per cent. between the first two quarters of this year, much faster than the 8 per cent. fall in industrial production.
That position cannot be sustained. The present trend is unsustainable. I take no pleasure in saying that. I merely wish that the Prime Minister would from time to time have the courage to face the facts instead of leaping at any statistic that seems to point in his favour. [ Interruption. ] I need no lectures on patriotism from the Chancellor of the Exchequer.
Unemployment, according to the OECD forecast figures, will be almost twice what it is today. Again according to those forecasts, inflation will be well in double figures. On these policies, which the House is now debating, we shall still be facing a long and rocky road ahead.
Is it not also a fact that German unemployment is markedly higher than our own and that German exports have fallen dramatically?
German unemployment is not, I think, now higher than ours. [HON. MEMBERS: "It is."] Not markedly higher. The hon. Gentleman must try to analyse the gravity of the situation. If one could point to the massive accumulated surpluses of Germany, to their booming investment record and to a society in which the Social Democratic Party had had the good sense to discard socialism, we too might well be on the way.
However, the Prime Minister has never really implied that the situation is as serious as it is. Last February the Labour Party, in its manifesto, was said to be "ready with policies essential to rescue the nation." In October the magic phrase appeared in its manifesto: At the heart of … our programme to save the nation lies the Social Contract. If during the last 16 months we have been witnessing the salvation of the nation, heaven save us from the second coming of this particular saviour.
We may be forgiven a feeling of anxiety when we see set out in paragraph 48 of the White Paper a plan that is once again described as "a plan to save our country", and we are still more anxious when the Prime Minister qualifies the position still further by calling on the nation, as he put it, to "give a year to Britain". The nation is certainly ready to make sacrifices provided the policies set before it are firm enough, and, I would say, severe enough, and provided the people have some conviction that they will be maintained, because the situation is now so grave that every one of the options now before us is immensely hard.
Reductions in living standards are inescapable, so let the Prime Minister spell that out with a great deal more clarity than he has done so far. Cuts in social programmes are inescapable. Let him spell that out with greater clarity, as well. A period of rising unemployment is unavoidable. Let him spell that out with equal clarity. The question facing us is whether our society, our system of government, can sustain these things, and, if so, for how long? The choice is horrific, and on present plans all these things will need to be sustained for a number of years.
One asks oneself whether it can be done. Certainly, it cannot unless these prospects are more clearly understood and spelt out. That is why, first of all, we call on the Prime Minister to demonstrate a far greater candour than he has so far displayed. This is why we have to state the case for even more severe measures now. We have constantly said that the longer action is delayed, the more severe that action will have to be. That is why we indict the Government for the prolonged delay which has landed us in this position.
There are two other matters with which I want to deal first, on which no doubt the Prime Minister is more than capable of trying once again to misrepresent the position of our party. First of all, on unemployment. The Conservative Party abhors the idea of enforced and unavoidable idleness for a single individual. We wish to return, and so does everyone else in this House, as soon as it is consistent with the conquest of inflation, to the "high and stable level of employment" set out in the 1944 White Paper. [ Interruption. ] I will deal with the Prime Minister's petty interruptions in a moment. I need no lectures from right hon. Gentlemen opposite about the evils of the alternative, high unemployment, for I was born and brought up in South Wales.
Oh!
Hon. Gentlemen opposite may moan, but it is a fact that we on this side of the House know at least as much as they do about the social consequences of unemployment. I saw for myself the length and the horror of dole queues. But let there be no misunderstanding—[ Interruption. ]
How can the right hon. and learned Gentleman remain a Tory?
Because I have more sense than the right hon. Gentleman. Let there be no misunderstanding about the present position. A Socialist Government are now presiding over an increase in unemployment. Unemployment has risen under a Socialist Government from 588,000 in March of last year to 810,000 this year and is expected to rise to about 1½ million next year. This Socialist Government are doing, and can do, nothing to prevent it. In the words of the White Paper, they are "shackled" by the burden of inflation. We take no pleasure whatsoever in that. It is an inevitable accompaniment of the attack on inflation to which the Government are committed. It is a consequence of their failure, which we deplore, to act sooner than they have done. Let us hear nothing from the Prime Minister to the effect that our policies will create unemployment.
If the right hon. and learned Gentleman will allow me, the amendment which he and his Friends have tabled asks for large increases in the cuts in public expenditure for the current year. Could he answer the question which his Leader consistently failed to answer yesterday: how big an increase in unemployment is he prepared to accept as a consequence of these cuts? Let him not dodge the question as his Leader did yesterday, because if he really takes seriously the problem of unemployment, as he has just told us, he must be honest about this and not conceal his views.
We reach a fine pass when anyone in this House has to take lectures—
Answer the question.
The right hon. Gentleman will have an answer to his question, which is more than he gave my right hon. Friends yesterday. The right hon. Gentleman is not in a position to give me lectures in honesty.
Mr. Healey rose —
8.4 per cent.
I will deal with the public expenditure point later, but I will tell the right hon. Gentleman now that if this Government had had the courage to restrain public expenditure sooner than they did we would not now be facing the prospect of high and rising unemployment. We have now reached a situation in which whatever any Government may do the prospect of unemployment is inevitable.
Answer the question.
I am going to do so. The right hon. Gentleman must contain his arrogance and his impatience, if that is possible. We have reached a situation where we have to make cuts in public spending now to prevent the prospect of still higher unemployment in the future, after that, and there is no escape from that. Action now on these lines—rather than action this year, next year, sometime, never—is an essential foundation for long-term strategy to restore the economy.
Mr. Healey rose —
Sit down.
Order. I did indicate that we have 75 hon. and right hon. Gentlemen who want to speak. Can we have a fairly good tempered debate?
Mr. Healey rose —
Order.
On a point of order, Mr. Speaker, the right hon. and learned Gentleman has just—[ Interruption. ]
Order. If the right hon. Gentleman rises on a point of order I must be allowed to hear him.
Thank you, Mr. Speaker. The right hon. and learned Gentleman has just undertaken to answer the question which I put to him. He has failed to do it. Is it in order, Mr. Speaker, for the right hon. and learned Gentleman to break an undertaking which he has made to the House within 10 seconds of making it?
The right hon. Gentleman knows that that is a matter of argument, not a point of order.
I have answered the right hon. Gentleman's question, Mr. Speaker. I do so again. The Chancellor of the Exchequer is adept at using his hectoring and bullying manner to distract attention from the focal point. The position, which he ought to have had the candour to explain, is that we are now in a situation in which the prospect of unemployment for a substantial period ahead is inescapable. The question is how quickly we can improve on that, and the only cuts in public expenditure we are advocating are a more certain way of getting us back on the road to recovery than any alternative.
Mr. Norman Tebbit (Chingford) rose —
Let us hear nothing further from the Prime Minister to the effect that our policies will create unemployment. His policies are doing so, and it is inescapable. It is part of the price that the British people have to pay for his earlier delusions. It would be very easy for us to jibe, as he jibed at my right hon. Friend, "Dole queue millionaire", but we shall not do so. It would be easy for us to agitate upon the basis that there is at least one honour that the right hon. Gentleman will share with Ramsey McDonald, that of being the second Socialist Prime Minister this century to preside over more than 1 million unemployed in this country. We shall not do that. There is now no escape from this vale of tears and the tragedy is that the Prime Minister has never had the courage to be as frank as he ought to have been about this.
The second point that I want to deal with is the one which provoked the Prime Minister's other sedentary interruption on monetary policy. Monetary policy, properly managed, is an essential of economic management. It is not in itself sufficient. [An HON. MEMBER: "Enoch said so."] The right hon. Member for Down, South (Mr. Powell) may have said it, but there are sources nearer home than that. [ Interruption. ] The Prime Minister, interrupting from a sitting position, says that he did not mention monetary policy. No he did not. He muttered sotto voce, as he is so often inclined to do, "What about Joseph?" referring to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph).
I made a reference to the fact that when the last unemployment figures came out the right hon. and learned Gentleman made light of them, and said that unemployment was only about a third of what the figures showed. Will the right hon. and learned Gentleman comment on that?
The Prime Minister knows perfectly well that analysts on all sides of politics—
Answer the question.
I shall. The right hon. Gentleman must have the patience to allow me to finish a sentence.
The Prime Minister knows perfectly well that analysts on all sides of politics have been studying the shape and accuracy of the unemployment statistics. But if he suggests that my right hon. Friend the Member for Leeds, North-East cares less than he does about the impact or unemployment—[HON. MEMBERS: "Answer the question."] I am answering the question. My right hon. Friend and all hon. Members on this side of the House care about unemployment, and wish to see it reduced.
Let me deal with the second point. The White Paper says that the Government: will continue to use the full range of instruments available to them to keep the growth of the money supply under firm control. Fine. In the Labour Party's last manifesto we find the following sentence: We have: Stopped printing money to finance unnecessary expenditure. Fine. Let this be noted, then. The Prime Minister and the Labour Party are self-confessed monetarists and, if they are to stick to this aspect of their manifesto, intend to remain so. If the cap fits, let the Prime Minister have the courage to wear it from now on without any further deception.
The Prime Minister and the Chancellor are fond of blaming part of their present troubles on the monetary policy of the last Government. If so, so be it. But let the Prime Minister understand why it came about. I commend to him the excellent speech, among so many others, made by the Paymaster-General to the Canada Club on 1st July, when he said: It should not be imagined that Governments that have in the past allowed the money supply to get out of control have done so out of a particuular love for printing money. It is done under political pressure. Let the Prime Minister ask himself this: by whom was that political pressure orchestrated? To his shame, it was orchestrated by the Prime Minister himself.
The Conservative Party will not seek to undermine the Prime Minister's position. It is a tragedy for the nation that we cannot expect similar support from him. So let the Prime Minister write out of his speech now the misleading and hypocritical attack that he has no doubt already prepared on my right hon. Friends the Leader of the Opposition and the Member for Leeds, North-East, because both my right hon. Friends have higher standards of integrity than any to which the Prime Minister could ever hope to aspire.
What, then, of the other elements in the policy? We shall be discussing some of the details tomorrow. There is the Government's commitment to the use of cash limits to contain public expenditure —at last. We have long pressed them to do just that. It is essential that those limits should be strictly defined tnd rigorously enforced. They need to be supported by much clearer policies than we have yet seen for local government, and carried through with no weakening of will. We shall certainly support them if they are.
But is that enough for public spending? I am driven to the conclusion that it is not. I endorse the Chancellor's programme to cut back in the years ahead. Sadly, that will impinge on social programmes. God knows, there is more than enough that we all wish to do in social reform. Here, too, the Labour Party has no monopoly of care and concern. I have presided in the constituency of the hon. Member for Bethnal Green and Bow (Mr. Mikardo) over a comprehensive school where it was manifest for all to see that we needed far more resources to improve the conditions in which the children were being taught.
Under the last Labour Government I reported to the late Richard Crossman on conditions in Ely hospital, in South Wales. Heaven knows, that hospital needed help. We all want to help people —the elderly, the frail, the sick, the young, the dependent—in our community. Let there be no doubt about that.
But if we are to do it—and to do better in that respect, as we must, can and shall —we must return to the creation of wealth before we spend it. The conquest of inflation is an essential prerequisite to that, and so is an end to the Government's habit of living beyond their means, and continued dependence on international credit, which leaves them perilously at risk. So, too, is the transfer of resources into investment, above all into profitable private industry, returning as soon as possible into the pockets of our people.
That is why we believe that the Chancellor needs to go still further, sooner, in reducing public expenditure. Last year he told the CBI at its annual dinner: I have planned a drastic cut in the public sector borrowing requirement. Yet he ended up with a public sector borrowing requirement three times larger than that for which he had planned. Therefore, we trembled when we heard him make a similar commitment in this year's Budget speech, and we trembled still more when we saw published last week, and saw brought on to the Floor of the House only half an hour ago, Supplementary Estimates for the first three months of this year falling just short of £2,000 million. Already in the first three months of this year public expenditure is 31 per cent. up at an annual rate, on what the Chancellor said it would be in his Budget speech.
The horrifying thing about that is that last year the right hon. Gentleman missed the target by only 25 per cent., so this year he is doing even worse than last year. That is why we are apprehensive about his approach, and why we criticise —[ Interruption. ] The Chancellor may laugh, but £2 billion excess spending is not much of a laughing matter.
Mr. Healey rose —
Sit down.
Therefore, we criticise the further planned growth of subsidies and the failure to reduce those in payment. We understand the temptations—
Mr. Eric S. Heffer (Liverpool, Walton) rose —
I shall not give way at present.
I had 24 interruptions.
I dare say the right hon. Gentleman needed them.
We succumbed to the temptation to make subsidy payments. Some may be justifiable in some circumstances.
Mr. Heifer rose —
I shall give way to the hon. Gentleman at the end of this section of my speech, which will not be long.
The Chancellor now takes credit for his reduction of the price subsidies payable to the nationalised industries. So be it. That is an inevitable part of the temporary reduction in our standard of living that we face. That is why the Prime Minister needs to be so much more candid than he has been.
The Secretary of State for the Environment has argued in recent weeks and months the case for higher rents and lower housing subsidies. What a pity he was not more frank about that in the face of our own fair rents legislation! The Secretary of State for Prices and Consumer Protection has been explaining in recent weeks and months why food subsidies will have to go. What a pity the Labour Party did not say the same when we explained that such subsidies would not solve our problems.
That is why we regret the fact that the Government are not now prepared to take further action to reduce public spending along these lines. Action now is an essential part of a long-term strategy. The sooner we are through these unpalatable policies, the sooner we can resume the path towards prosperity. The Government's failure to act in that direction is only one of the reasons set out in our amendment why we shall not be able to support them tonight.
The right hon. and learned Gentleman has said that the bread subsidies should not be increased, and that there should be no food subsidies. As that will mean further price increases, and that is not the end of the story as far as he is concerned, will he explain in which other directions there would be cuts in public expenditure if we had a Conservative Government? Would he like to spell out in detail what this will mean to the people?
I have been explaining the areas which cry out for early reduction—housing subsidies, which are now running at double what they were two years ago, and food subsidies and subsidies to nationalised industries, which are all running at substantial figures. [ Interruption. ] The Chancellor says that that would bring about an increase in the retail price index, but so does the reduction of the subsidies to nationalised industries.
So, too, when the Chancellor imposed increases in taxation. There can be no escape from changes of that kind if we are to move from this vale of tears. The Chancellor should be more candid about it. It is not that we do not wish to help homeless families. However, it is irrational and absurd for families earning incomes in excess of £100 a week to receive huge subsidies towards their rents when others are in need. That is the essential case which we put forward.
There is an even more compelling reason for criticising the Government. I refer to the Government's obstinate insistence in going ahead with their nationalisation programme—land, oil, ships, aircraft. In heaven's name, why? What reasonable Government could wish to drive our greatest asset, North Sea oil, into following, for example, the dynamic example set by the Post Office? What sensible Government could possibly wish to drive our aviation and shipbuilding industries to emulate the enterprising profitability of British Rail or British Steel?
That is very cheap.
The Prime Minister says "very cheap". But that is the reality. When a Socialist Government have demonstrated that nationalisation improves the management of an industry, that will be the time to put forward further cases in that direction.
Whom will the Prime Minister be able to persuade to take on the Herculean tasks of running these new giants? Does he hope to absorb the energies of the growing army of disenchanted ex-Ministers now on his back benches—jobs for the hon. Member for Liverpool, Walton (Mr. Heffer), for the right hon. Member for Lanark (Mrs. Hart) or for the hon. Member for Aberdeen, North (Mr. Hughes)?
Mr. Arthur Lewis (Newham, North-West) rose —
It is much more serious than that. The extension of the public sector enlarges—
Mr. Arthur Lewis rose —
Hon. Members must control themselves. The Attorney-General is entitled to address the House. [ Interruption. ] Order. At least everyone Knows when I am wrong.
I do not know whether to be flattered or dismayed by that.
On a point of order. You have rebuked me, Mr. Deputy Speaker. I should like to apologise to you and to say that my apology is sincerely meant. It is reserved for you, Mr. Deputy Speaker. The right hon. and learned Member for Surrey, East (Sir G. Howe) will never give way, so I must get my point in. Perhaps he is being hypocritical because he knows that his wife has just been appointed a chairman of a board at £7,000 a year, although he claims that he supports wage restraint.
The trouble is that in getting his point in, the hon. Member got me into trouble.
The situation is more serious than that. The extension of the public sector enlarges the scope of inefficiency within our economy. It is also serious in economic terms. Last week the Prime Minister suggested that nationalisation made no addition to public sector expenditure. Nationalisation goes far beyond its implications for demand within the economy. It increases the cash total of public expenditure. It pushes up the borrowing and interest rates. The profit inflow to the Government from the nationalised industries is less than the interest payable on compensation. The longer-term effects of nationalisation lead inevitably to declining profitability and efficiency, loss making and a waste of the community's resources.
The Government are entitled to call upon the nation to make sacrifices for the sake of economic sanity and for salvation from the great dangers facing us. But the Government are not entitled by any standards to call upon the nation to make further sacrifices simply for the sake of Socialism. We reject that. That is one more reason for our amendment. That is why we cannot support the Government.
We point to the Government's failure to recognise the need to promote the prosperity of the private sector, which is recognised in the White Paper, yet which faces still tighter price control and a vastly egalitarian Price Code. In that respect the Prime Minister produced a policy which could transform the brain drain, of which he once complained, into a tidal wave of emigration. That is another reason why we cannot support the Government.
Pay restraint is necessary for the reasons given by the Leader of the Opposition yesterday. Above all, it is necessary in the public sector. But what a horror it is that we must enter this tunnel, and do so in this fashion. In his approach to this question the Prime Minister surpassed even his own records in equivocation. Is the policy statutory? Yesterday the Chancellor of the Exchequer described it as a voluntary policy with powerful sanctions and support from legislation. That does not exactly reek of voluntarism. Indeed, there is to be a Bill. Or are we to see two Bills?
Let us examine the Title of the Bill. It reads "Remuneration, Charges, and Grants Bill." What skill there is in that! The word "income" is translated into "remuneration". The word "prices" is translated into "charges". I suppose it is some comfort to know that the Prime Minister still has the time and energy to thumb his way through Roget's "Thesaurus". Clause 1(1) says that there is a contractual obligation to pay money above the limits when the limitation is no greater than necessary to keep the remuneration within the limits imposed by the policy set out". The Bill seeks to set aside contractual rights within the limits imposed by the policy set out in the White Paper. What will happen if the limpid draftsmanship of Congress House, annexed to this White Paper, is less than clear? That is easy. Clause 1(5) reads: Any question arising under this section whether any remuneration exceeds the limits mentioned therein shall be referred to and determined by the Secretary of State". That refers to the Secretary of State for Employment. What a farce this is! There he sits, the champion of the rights of man, as he used to be, the defender of the rule of law, as he used to be, the upholder of parliamentary sovereignty. In the good old days he used to speak about those subjects as if he had invented them. He was the hammer of the European Court of Justice and the scourge of Sir John Donaldson in the "political court". Under this legislation the Secretary of State for Employment alone is to be the prosecutor, judge, jury and court of appeal in one. Indeed, we should not be surprised to find him going for the job of Official Solicitor as well. Everything is to rest upon the sagging shoulders of the commissar for Ebbw Vale. What a fall is this! But that is not all.
We have been told that there will be another Bill, upon which all will depend. The Chancellor of the Exchequer said that the Bill would contain no sanctions against work people. But will it contain, as in 1966, sanctions against trade unions? How are we to judge?
Another question must be asked. Where is this phantom Bill, this ectoplasmic document? It must exist. The Chancellor quoted from it. The Prime Minister, heaven help us, has even promised to publish it. But when will it be published? [HON. MEMBERS: "Answer."] I will offer an answer to my hon. Friends—in the next volume of the Prime Minister's memoirs perhaps. That may come a great deal sooner than he thinks. We very much hope it will, but even that will not be soon enough. Even then we might not be satisfied, because the Attorney-General might appear before the House and move a writ to prohibit publication.
This is no way to treat Parliament, and it is no way to treat the nation. It is one last reason, going beyond our amendment, why we cannot vote for the Government tonight. We cannot be expected to vote for a phantom pig within a phantom poke. These are the reasons why we shall not vote for the Government tonight—because of their contempt for Parliament and the nation, because of their continued commitment to disastrous and expensive measures of Socialism, because of their failure to satisfy the House that they have yet come to the end of their rake's progress of public spending, because of the failure of their present strategy for the recovery of the private sector. Those are the reasons why we cannot support the Government in the Lobby tonight.
I will say something to the Prime Minister which he has never said to us. I shall tell him why we shall not be voting against him tonight—because we support his commitment at last to attack the inflation that is destroying our society and we support his commitment at last to set strict cash limits to the size of public spending. I will add something else which he has never said to us. When the time comes for him to stand firm upon those commitments, from wherever the challenge may come, the Conservative Party will give him or any other elected Government of this country our positive and united support. We shall give him that support not because the Prime Minister has done anything to deserve it—he certainly has not—
Mr. Healey rose —
Order. Only one right hon. Gentleman at a time.
We shall give the Prime Minister our support not because he has done anything to deserve it—he has not. We shall give him our support not even because he is the best Prime Minister we have—he is not that either. We shall give him support at that time because the survival of democratic government in this country depends upon the willingness of the House of Commons to give just that kind of support to its elected Government. That support will certainly be forthcoming from the Conservative Party, and when the time comes for us to resume the government of the country we must devoutly hope that the Labour Party will by then at least have found a Leader with the guts to say the same.
4.23 p.m.
Before I come to the general debate, I wish to congratulate the hon. Member for Woolwich, West (Mr. Bottomley) on his maiden speech yesterday and to thank him for his reference to Bill Hamling. I personally treasure the fact that when the hon. Member took his seat—which is rather an awesome moment for a new Member after a byelection—just before he read the Oath he turned round to me and expressed sympathy to me on the death of my Parliamentary Private Secretary. I am sure that the hon. Member will have a great welcome in the House, particularly as he expressed himself as desirous of following the standards set in Woolwich, West by my former hon. Friend.
The debate so far has shown the contrast between the Government, with a clear and courageous policy, and the will and determination to carry it through, and an Opposition with no clear policy to assert. We read—and the right hon. and learned Member for Surrey, East (Sir G. Howe) confirmed—that the Opposition propose not to vote against the Government or the White Paper tonight but that they will then vote against the legislative vehicle which makes the White Paper policy a reality. I have never heard such humbug in my life. I will come to the point about the Opposition's intended vote later in my speech.
As for the speech made by the right hon. and learned Gentleman, it is a matter of common observation in the House that when an Opposition have no policy or are divided three ways—as are the Conservative Opposition—they usually do only one of two things: either they get preoccupied with picking petty procedural points, as the right hon. and learned Gentleman did, or they get preoccupied and ride off from the lack of policy by attacking personalities. In fact, the right hon. and learned Gentleman spent his whole speech doing both.
We are talking about consensus and the consent of the nation, and the right hon. and learned Gentleman should realise that one of the biggest problems we have had in helping to reach agreement in a disastrously divided nation is his responsibility for the Industrial Relations Act and his sneering contempt of the House throughout its passage.
The crisis we are debating—and here I agree to some extent with speeches which have been made, indeed from the Opposition Benches; the world crisis, crisis for Britain—was endemic in 1973. It was in the making even before the decisions of the Middle East oil producers. Already, before the oil crisis, the feverish industrial boom had petered out. Industrial production had reached its peak in the second quarter of 1973. Manufacturing investment, which had never under our predecessors even regained its 1970 peak, was beginning to fall back. The current balance of pay- ments deficit in the fourth quarter was running at an annual rate of some £2,000 million, and that was before the increase in oil prices had hit this country more than marginally.
As regards inflation and unemployment, in January 1974, when sections of the Conservative Press—and Conservative leadership—were urging an early snap election, the most true blue newspapers at that time were forecasting price increases of 15 per cent. rising to 20 per cent. and heavy unemployment within a few months—so, they pressed, have an election and get back before it all happens. All that was happening before Labour came into power.
When we became the Government, it was clear that we faced rapidly rising prices—partly through world factors and oil and the commodity boom—but also, as the right hon. and learned Gentleman fairly said yesterday, through the inevitable re-entry problems which follow a period of freeze and statutory control, the anomalies and relativities, and the catching up of those groups who had been left behind, some of them for years. It was also clear at that time that we faced the prospect of sharply rising unemployment, stemming from world inflation, and that our balance of payments was deteriorating sharply.
These undeniable facts were clearly stated by all the party leaders in the February election and again in the October election. All of us warned about the impact of world prices and what they would mean for inflation and unemployment. All of us—however much we might disagree about the right domestic policy to follow—made clear the nature of the danger the country would face if to these world factors we added further aggravation by actions taken here in our own country. Where we disagreed was on the right policies to avoid that aggravation.
These warnings were spelled out again and again. At the meeting of Prime Ministers and other party leaders of the Socialist International at Chequers on 30th June last year, I said this: I believe that the nub of the problem—the problem of 1974 and 1975—is this. Over the last year or two, world prices have soared —not only oil but raw materials of manufacturing industries, and of grain, meat and other produce … But the danger for 1975–76 is that, as these outside pressures ease, the inflation problem will become increasingly caused by internal factors—as month by month incomes rise to meet last month's price increases. This is certainly the situation which we in Britain have had to face. Throughout the October election I warned, as did the right hon. Member for Sidcup (Mr. Heath), the then Leader of the Opposition, that we were facing the prospect of the worst world depression since the 1930s. All of us emphasised that while in 1974 the world inflation and its inevitable aftermath was caused by world prices, in 1975 the danger would arise mainly from a further aggravation caused by our internal cost structure, from industrial costs reflecting internal incomes settlements.
While the consequences of world depression have joined with our encouraging export record—our export record is extremely encouraging but I concede that imports have been affected by the world depression—in reducing the balance of payments deficit to a figure well under £500 million in the first half of this year, only a quarter of what it was last year, we have suffered the inevitable consequences both in terms of unemployment and in the rise in costs and prices.
I believe that the House will be ready, as were the EEC Heads of Government last week, to recognise the gravity and magnitude of the world depression. It was world inflation that we talked about two years ago but it is now world depression. That recognition has confirmed the predictions that we all made last year about this being the worst depression world-wide since the 1930s.
The five-fold increase in oil prices has enriched some countries and caused strains for many others of us. It has hit hardest all those countries with no oil, with no high priced raw materials, countries needing oil and other imports and unable to pay for them, countries, some of them, through primeval poverty or through natural disasters, such as flood or drought, which are living on the very margin of subsistence, the very margin of life itself.
What my European Prime Ministerial colleagues expressed so clearly last week —I think that the whole House will agree with this—was that the world has rightly condemned the depression of the 1930s, the cost of which was tens of millions of workers throughout the world losing their jobs, but the consequence of the world prices of today can be the loss of hundreds of thousands of lives in wide areas of Asia and Africa, where starvation was already endemic.
There has been a considerable easement in world commodity prices over recent months, though not, of course, oil prices. I will not speculate today—and I do not think that anyone else would—either about the possibilities of further oil price increases or on the future movements of commodities, particularly with the uncertainty now surrounding world harvests, where the prospects are for a high yield in North America, drought in Western Europe and scorched crops in the Soviet Union.
The reductions in commodity prices which have already occurred have begun to be reflected in some of the more important internal indices here, and notably two published last week, the import cost index and the increase in wholesale prices. Both indices are significant in presaging what can happen in future. The import cost index and the increase in wholesale prices show the lowest increase since April 1973, some two and a quarter years ago. Let it be remembered that in April 1973 we had a full 100 per cent. price freeze. The fact that they show the lowest increase since 1973 is encouraging, but the challenge still remains. It is a challenge to Government, to industry, to trade unions and to the whole nation. If world prices continue to ease, we must not, by increased internal costs, reject the prospect of profiting from easier world prices. If they were to worsen again, all the more would we have the obligation to ensure that we do not add to that worsening in the world by harmful actions or harmful attitudes within our own economy. That is the inspiration of the White Paper that the House is being asked to approve tonight.
I know that right hon. and hon. Members have shown some impatience about the time that was taken before the policy could be announced. I believe that it was right to seek the maximum agreement with the trade union movement in a situation which had so much to deal—not exclusively, but so much—with incomes. The right hon. Member for Sidcup, my predecessor, spent many months in discussion with the TUC in the pursuit of a voluntary policy. He was right to do so. The right hon. Gentleman told the House on many occasions of the number of meetings that he had with the TUC and the number of hours he spent in discussions with it. We, for our part, were not only entitled but duty bound to give whatever time was needed to achieve the aim the right hon. Gentleman set himself.
Whatever the views of hon. Members on either side of the House—and I hope that we shall sec less of the crabbing attitude that has been displayed as regards what the TUC has done—the decision of the TUC General Council is historic. No less significant has been the increasing rallying to that lead over the past 10 days, including the response of certain unions which had voted against the TUC General Council's policy of a fortnight ago, and of those unions whose attitude at ground level was in doubt. The response of the mineworkers' executive has been clearly backed, as my right hon. and hon. Friends who were with me can confirm, by the support we were given last Saturday by the mineworkers of Durham. The three to one vote of the NUR conference will have been noted by the whole House, as will the response of other unions.
A vote against the White Paper tonight is a vote against the TUC decision. Still more, it is a clear signal from this House that we do not want the TUC's help and that the House thinks it can do better on its own. In a democracy, no anti-inflation policy can be successful which does not carry the consent of the great majority of those principally affected by it.
The aim of us all, of Government, the TUC and the CBI—and, I believe, an overwhelming majority in the country—is to get the rate of inflation down to 10 per cent. by the end of the coming pay round, by the late summer or early autumn of next year, and to single figures by the end of next year. The overriding pay limit of £6 which we have set—and the TUC has agreed—is consistent with that target inflation rate. Equally, the achievement of that target is utterly dependent on the limitation of incomes which we have said must be honoured.
No other proposals put forward from either side of the House or from any part of the country, however wide-ranging, and regardless of whether they include import controls or controls on movements of capital, can ignore the central fact—indeed, some other proposals would demand even more than the Government's policy, even more than that which the Government are proposing— that they must be buttressed by a comprehensive and tough policy on incomes, and—
My right hon. Friend has said that if there is a vote against the White Paper it will be a vote against the TUC. Will my right hon. Friend say whether it will be a vote against the 19 who were the majority or the 13 who were in the minority, who themselves were against the Government's position?
I am glad that my hon. Friend has picked up that point. Those who vote against the White Paper tonight will be voting against the TUC. It will be a vote against the TUC General Council. Any hon. Member who decides so to vote will be voting against what was, admittedly, a majority decision. My hon. Friend will have noticed—and I hope that he was gratified—the fact that some of those who voted for the minority have reversed their decision either by conference decision, executive decision or by reconsideration. For example, I believe that USDAW found the proposal that the Government were making to be very different from that which it had been led to believe.
Therefore, I say again that a vote tonight against the White Paper—I understand that it would be a perfectly honest thing to do, a perfectly fair and reasonable attitude for anyone to take against the background of particular views—will be a vote against the TUC. Let those who vote in that way not again talk about the TUC. Let them not, after voting in that way, talk about what we said in our manifesto about reaching agreement with the TUC and the agreed view of the trade union and political Labour movement. That is what it is about. Hon. Members may disagree with the TUC, but if they vote against the White Paper tonight do not let them pretend that they are safeguarding TUC interests. They will be flying in the face of a previous decision.
Does my right hon. Friend ask us to accept that it was an agreement in the accepted sense of the word when for a number of weeks the TUC had been told that unless it came to some such agreement statutory controls would be introduced? I am afraid that we see this as a piece of blackmail as far as the TUC is concerned.
My hon. Friend cannot get away with that. He must recognise that the TUC General Council is composed of responsible, adult, mature people with a great deal more experience of trade unions and of life that has my hon. Friend. They are not the sort of people who would be blackmailed. They put forward proposals on their own initiative before the Government made any recommendations on the matter. My hon. Friend may vote against the proposals, but do not let him pretend that he is saving the soul of the TUC, or that he knows better than they.
As one is tempted to vote for the Government's White Paper, may I put a question to the right hon. Gentleman? How can the Prime Minister offer any concessions to people, such as myself, who are worried about nationalisation plans and feel that they will spoil the chance of any success for the Government's policy? Is there anything he can offer to people such as myself who are listening to his speech and deciding how to vote tonight?
That is a fair question, and no doubt it is in the minds of those Conservative Members who are considering this matter. I shall be dealing with it a little later. I hope that what I say will be of some help to the hon. Gentleman. I cannot guarantee anything, so I must leave the matter to him to decide for himself.
We have made clear—and the House and the country should be in no doubt about this—our total commitment and determination to carry this policy through. This is the year of fight back—fight back against inflation and against the steadily, remorselessly rising unemployment figures. This year, as we have all agreed—and I refer to the remarks of the right hon. Lady the Leader of the Opposition about ten days ago—must be used to work out the policies for the period which follows. This year, starting in the public sector, the Government as employer will ensure that all settlements in respect of its employees in the Civil Service, National Health Service and the Armed Forces comply with the pay limits.
We have discussed with the chairmen of the boards of publicly-owned industries and services the measures for enforcing the limit over that substantial part of the public sector. Both in our meetings with the chairmen and in public announcements and broadcast statements by nationalised industry chairmen, we have had their full, and indeed their enthusiastic, assent for the policy. Nobody realises better than they what are the implications of measures designed to bring down the level of inflation in their predominantly Labour-intensive industries.
Mr. Hugh Dykes (Harrow, East) rose —
The right hon. and learned Member for Surrey, East (Sir G. Howe) gave way on very few occasions indeed. I have not yet finished the point. Perhaps the hon. Gentleman can intervene a little later. I shall signal to him when I have reached that point.
The money available to the chairmen of publicly-owned industries will be strictly controlled and there will be not a penny for the payment of increases over the agreed limit. We have made clear to them, as I did in the House, that no money will be made available for excess settlements, whether by subsidies, by permission to borrow, by loading excess costs on the public, or by increased costs or charges.
I believe that the majority of workers in these industries have understood what the alternative would mean if they secured settlements over the limit. It would mean an inevitable and sharp offsetting cutback in the operations of the public boards, other than incomes. In these predominantly labour-intensive industries this could only mean a loss of jobs. In the coal-mining industry, to which reference has been made, it would mean inhibiting the expenditure which the Government have sanctioned for the sake of saving pits or of making pits economic and viable in already hard-hit coalfields. Yorkshire's wage increases would have been Scotland's pit closure, and that of Wales and other areas, too.
Now that the chairmen of the nationalised industries are precluded from salary increases because of the stipulations in the White Paper, will the Prime Minister confirm that it will be Government policy—if the Government last that long—to restrain those chairmen from having any increase at all until the operational performance of those industries improves tangibly and significantly?
That is not in the White Paper, nor is it in our policy. Last year we stated on other grounds the Government position in relation to top salaries, including these salaries. I am satisfied—as I am sure are former Conservative Ministers who held responsibility in the nationalised industries in respect of transport, energy and other industries — that those chairmen, appointed by the previous Government or by the present Government, have their hearts in their jobs and are skilled in management. We have to make changes from time to time, and changes might be required, but the hon. Gentleman's suggestion, although the House might like to study it, is not the right way of securing what he has in mind.
Similarly in local government, the White Paper sets out a stringent system to ensure that local authorities adhere strictly to the Government's policy. Parallel with what is proposed in the new extension of price control for private employers, rate support grant will be withheld from local authorities who exceed the pay limit. In the event of a national pay settlement which exceeds the limit, no grant will be paid on the excess. In the case of an individual authority which breaks the limit, the Government will be taking powers to withhold not just any excess over the £6 but the full amount of the settlement. If an individual local authority seeks to finance an evasion of the limit by manipulation of its capital finance, the Government have made clear that they will use all their existing powers to control, case by case, that authority's borrowing, including access to the capital market.
I am grateful to the Prime Minister for giving way. The right hon. Gentleman has been helpful to the House by spelling out some of the consequences to the local authority sector, to nationalised industries and particularly to mining if there is an increase in excess of the limits set in the White Paper. What he has not said, and what the House wants to know, is whether one the consequences will involve bringing in the reserve powers.
Is the hon. Gentleman referring to reserve powers in existing Acts?
No. Will the other legislation be brought in if the nationalised industries agree to excessive pay increases?
The hon. Gentleman must appreciate that I cannot simultaneously make speeches about local authorities, about public industries and about the private sector. They are matters which should be dealt with later.
Mr. Lawson rose —
Perhaps the hon. Gentleman will contain his soul in patience until a little later. I have given way five times. The right hon. Lady gave way six times, and her right hon. and learned Friend hardly at all.
Dealing with the local authorities, we have also made clear in the White Paper that the Government will reconsider the scale of the rate support grant provision if local authorities fail to exercise tight control over staff numbers.
In the private sector my right hon. Friend last night set out in detail how the price control system will operate in support of the White Paper policy. We have also made clear that companies that break the pay limit must not expect selective assistance under the Industry Act. This may appear harsh, but Parliament has voted assistance under the Industry Act—and this is equally true in the case of British Leyland and will also be the case in schemes for industrial modernisation, including those announced in the Budget by my right hon. Friend.
Parliament clearly intends that such funds should be available specifically to preserve or provide jobs, to encourage modernisation and firms' consequent viability on a competitive basis. The Government believe that it will be inconsistent with these objectives to underwrite income settlements higher than the country can afford. In other words, we do not want to see an alienation of money, designed to help jobs, in fact going to increased salary levels.
In regard to the private sector, my right hon. Friend the Chancellor of the Exchequer yesterday referred to the powers in the reserve Bill. I have noticed a great deal of interest in this matter among the Opposition. It is a fact that when they have no policy, they take up positions on procedure.
My right hon. Friend made clear what would be in the Bill in broad terms. He made it absolutely clear, and was right to do so, that while there are a number of queries, as well as discussions with the various interests concerned, such as the CBI and the retail consortia, we cannot finalise these matters, nor would it be right to publish them in legislative form. However, I would reiterate what my right hon. Friend said. If we have to bring in statutory powers, the CBI accepts that it would have to fall only on individual employers and that it would have to be protected against suits for conspiracy. It was then said that we would consider publication. We shall decide that probably in relation to the debate.
My right hon. Friend has told the House as much as any Government can about legislation which we hope we shall not have to bring in. It is legislation that the Government do not intend to bring in unless it becomes necessary through the breakdown of the policies for which we are asking the support of the House and the support of the Opposition tomorrow.
Against this clearly defined policy, and the Government's equally clear determination to make it effective—[ Interruption. ]
Mr. David Price (Eastleigh) rose —
Order. The Prime Minister is addressing the House.
—we have to set the reactions expressed in this debate from the official Opposition. Their amendment has been moved and it has, of course, been studied by the House.
The right hon. Lady yesterday, in a brief philosophical passage—as reported at col. 79 of Hansard —seemed distinctly sceptical about the possibility of success of any incomes policy at all. She set out the problems, I thought perfectly fairly, referring to the problems of the successive phases of an incomes policy—the initial phase; the second phase, when rigidities set in, and anomalies and differentials and all the rest; and then the third phase, when, she said, everything breaks down.
This was, of course, an instinctive but not uncharacteristic repudiation of her own Government, because that is exactly what happened. We had to deal with all those anomalies, rigidities and hard cases, such as the groups which had been left out for years on end, for example the nurses, and what are now known as the re-entry problems.
I did not understand from what she said yesterday whether she agreed with her own Government's policy at that time or whether she disagreed with it but kept tactically silent about it.
Nevertheless, in what she said I think there were one or two important truths. One was that, on the day when the White Paper was published, she stressed as she did again yesterday, the need this year to ensure that enough thought is given to preparing for what she rightly described as the re-entry period. She is obviously right about that. I think also that there was some validity in her three-phase criticism, on which not only the Government but the whole House must be ready with ideas. But the simple fact about her speech yesterday is that she did not spell out any alternative policy whatsoever to what the Government propose.
When she was referring to these three-phase difficulties, she entirely failed to draw a distinction between an imposed policy, such as that upon which her own Government in the end had to insist, and a voluntary policy such as her Government sought to get but failed to get—a policy which we have secured by agreement, which I think some members of her Government would have dearly liked to get. It is a policy which carries with it the general agreement of the trade union movement, and now, as our policy is becoming increasingly apparent, it has also the strong support of the country.
As to her own policies, she was repeatedly challenged by my right hon. Friend the Chancellor of the Exchequer —and, indeed, by the Leader of the Liberal Party—but she had none to put forward yesterday. All she could do, in answer to every challenge she had yesterday, was to plead the fifth amendment and to say that she was only the Leader of the Opposition and that her party did not have to have a policy.
But her amendment to this motion, and to some extent her speech, centred on her party's ululations about what it regards as our failure to reduce public expenditure. There were also the usual ritual incantations about subsidies and about measures now going through the House, or in another place, or shortly to be brought before the House, on nationalisation and other things in relation to the regeneration of industry, including the extension of the public sector in cases where public funds are committed.
On public expenditure, I told the right hon. Lady in the debate in May that not only the House but the country would like to have the privilege of being made privy to her secret thoughts about those items of expenditure which ought to be cut. I am disappointed yet again by her response yesterday. I thought we might have had it spelled out more clearly yesterday. I know that the country will also be disappointed.
Perhaps I could correct one thing that she said yesterday about public expenditure—to the effect that in the major OECD countries there has been no real increase since 1973".—[ Official Report, 21st July 1975; Vol. 896, c. 88.] That is not true of the USA, and it is above all not true of France and Germany. It is not true in regard to public consumption of any major OECD country—Japan, the USA, France, Germany, Italy and Canada. Apart from that she got it about right. I thought it right, perhaps, to have that statement in its correct setting.
She welcomes our determination substantially to expand the use of cash limits both with direct Government spending and more widely in the public sector. She agrees that that is good doctrine. In that case, why did not her Government apply that doctrine of cash limits between 1970 and 1974?
She is against the totality of Government expenditure in general, but, apart from food and housing subsidies, she shows an uncharacteristic coyness about identifying specific reductions to which she would put her name and pledge the authority of her party.
The House knows that any possible analysis of her proposals here in the House and her speeches outside the House must lead to one simple, incontrovertible conclusion. It is not that she is against public expenditure, whatever she may say. It is that her proposed reductions in expenditure add up to far less than the increased expenditure for which she has so frequently and urgently called, as has her party.
First, in successive defence debates over the past year her party has consistently opposed the reductions we have made in defence expenditure—more than £600 million over this year and next. On the Social Security Bill her party voted to spend £145 million more, over three years, as a result of its vote on the earnings rule. She talked of the public sector borrowing requirement. Her party added £50 million to £60 million more to the public sector borrowing requirement by its vote last Thursday night.
Every time we debate food subsidies or housing subsidies her party complains that these subsidies are indiscriminate. I think that on radio or television she asked why the bread and cheese she eats or I eat should be subsidised. On that argument, why should the colour television that she watches and that I watch benefit from the expensive vote her party carried through the House the other day, if she does not believe in these discriminations?
Yesterday the economies that she specified in non-capital spending were food and housing subsidies. Surely she must realise that food subsidies are important not only in their effect on the Retail Price Index. Still more important, she must know that rising food prices, for whatever reason, are psychologically important in leading to pressure—almost irresistible pressure—for wage claims.
As for housing subsidies, has she no sense of the psychology of ordinary people? Has she no sense of what would be the impact of rent increases of £1 a week at this time? We stopped the previous Government's rent increases in April and October last year. Had we not done so the results for inflation would have been a great deal worse. In this situation does not she agree with us—I do not suggest that she should necessarily rush in straight away with an answer—that it is right to temper the increases now in prospect after the freeze that we have had for the last 16 months?
When she dealt with housing on BBC radio the Sunday after the White Paper, she complained that housing subsidies had doubled. That, she said, really is ridiculous. It is not as if the housing problem is any better now than it was two years ago. Is housing no better than two years ago? In the public sector there have been 34,000 more starts in 1974 than in 1973; 39,000 more houses in new contracts approved; over 12,000 new houses, standing unsold because of mortgage famine, acquired from private developers, since we came into office, and 23,000 existing houses, many of them empty, acquired by local authorities from private owners. In the first five months of this year, starts were up by 7 per cent., completions were up by 26 per cent., and houses in new contracts let by local authorities were up by 19 per cent. compared with the same period for 1974. Yet the right hon. Lady says that there are no improvements. I could give her the figures in the private sector, too.
I am surprised that in this debate the right hon. Lady refers to housing at all. In her General Election bribe last October, she said that she would reduce mortgage interest rates, which her Government had not succeeded in bringing down, from 11 per cent. to 9½ per cent. This would have cost £180 million a year. The estimate of the building societies was £300 million a year, but I settle for the lower figure.
That was not all. She said that she would abolish rates and transfer teachers' salaries to the Exchequer. That would have cost the Exchequer £1,500 million. Oh, yes, it would have fallen on the taxpayer—the taxpayer who, the right hon. Lady so often says, has been pressed against the utter upper limit of taxable capacity.
Then again, in two elections the right hon. Lady's party was committed to her Government's tax credit scheme, with £2,300 million to be handed out, but we never heard how it was to be paid for.
These are the increased expenditures to which the right hon. Lady is committed, to which her Government were committed and to which her party is committed: defence, plus £300 million a year; mortgage interest rates, £180 million; rates, £1,500 million; the tax credit scheme, £2,300 million—getting on for £3,000 million of increased expenditure, excluding the abolition of rates. All this and Maplin, too, and the Channel Tunnel, rail-link and all—and the Opposition talk about cutting Government expenditure. On the right hon. Lady's own commitments, on her own speeches, on her own election bribes, she starts with an increased expenditure of thousands of millions of pounds before she ever begins to tell us what she would cut.
But I must ask the right hon. Lady, since she referred to housing yesterday, how she thinks her election housing proposal would help to create a more united country? She knows that there are well over 5 million families living in local authority and new town houses—all kinds of people, and not just the old and the disabled. During the last election campaign she said that she would like to see the end of council housing apart from local authority housing for old-age pensioners, slum clearance schemes and special cases.
Does the right hon. Lady seriously suggest that we would have had any chance of getting the co-operation of millions of workers in our nationalised industries and services on the basis of condemning the old, the disabled and the disadvantaged to live out their lives in ghettos? [HON. MEMBERS: "Come off it."] That is what the right hon. Lady proposed—as Nye Bevan once described the policy of a previous Tory leader, housing estates exclusively populated by old-age pensioners watching the funerals of their neighbours through lace curtains. That is what the right hon. Lady proposed during the last election campaign, and I do not believe that any of the Opposition Members who are bellowing now dissociated himself from it at the time.
An increasing proportion of public expenditure over successive Governments has been in the area of local authorities. The White Paper sets out the policy. My right hon. Friend yesterday and I today have said plainly what this means. We have not yet heard in detail from the right hon. Lady the views of the Conservative Party. I think that the Opposition agree substantially with what I have said about local authorities, but we have not had this in any detail.
I hope to spend only a minute replying to the right hon. Lady's philosophy on public ownership in relation to public expenditure. As I understand it, she would like to halt the Government's legislation on North Sea oil and the National Enterprise Board and, of course, the Scottish and Welsh Development Agencies. She should go to Scotland and Wales and tell them about it. She would also like to halt the Community Land Bill.
Does not the right hon. Lady realise the simple economic distinction between expenditure which involves a call on resources and expenditure which involves the simple transfer of assets between one ownership and another? As for Government participation in North Sea oil, the economic effect is exactly the same whether multinational oil companies raise the money by borrowing on the market or, where Government participation involves financing part of the capital cost, whether the Government borrow the same money on that same market. The effects on resources are the same. I grant that the effect is not the same in respect of the public sector borrowing requirement. But, in terms of resources—and inflation is a matter of a call on resources—a transfer of assets has no effect at all. That is why these arguments are fallacious.
I grant that the effect on the public sector borrowing requirement is not the same—
The right hon. Gentleman is returning again to his half-presentation of this fact. In his own public expenditure White Paper, it is stated that it is wrong to look at these matters simply in demand terms and to look at them simply because they have a low direct demand content. It goes on: The indirect effects arising from the financing of such expenditure will also need to be carefully considered", and that we … must pay full regard not only to their direct demand on resources, but also to their implications for the money supply, interest rates, and general financial conditions in the economy. That is why we urge him to take back this plan.
As the right hon. and learned Gentleman will have noticed, I was able to complete the quotation that he had in mind. I have stressed that it is important to consider the resources expenditure. That is the main feature in inflation and, in his quotation, the right hon. and learned Gentleman picked up that point. But that is not the only one. I have just said that it was not the only one. I have referred twice to the public sector borrowing requirement, to the financial operations involved and the financial market conditions, which is what the right hon. and learned Gentleman was dredging out of that document.
If that is the argument which the Opposition intend to press—that all that matters is the total and not the increase —they could easily make a fictitious, phantom saving in Government expenditure and in public sector borrowing by, for example, handing over the whole hospital building programme to a private organisation. That would save a fictitious amount of money. They could hand it over to Aims of Industry, or whatever alias it goes under these days. They could save this money for bookkeeping purposes, which is what concerns them, if the whole school building programme were undertaken by a consortium of private builders, who would then have to borrow from the market. Local authorities have to borrow. There is no economic distinction in real resource terms.
I am still dealing with the public sector. Does the right hon. Lady object to the public expenditure involved in her own Government's Industry Bill, which we are using as her Government did? Everything that she said about this was equally a condemnation of her own Government's Industry Bill. Or is she simply saying that, when money is paid out to help a firm to maintain employment, we should forgo any suggestion that, where Government money goes, so should go a corresponding degree of participation, control and share in the ultimate profits?
So I come to the question of the vote tonight. I am still not clear, having listened to the right hon. and learned Gentleman, how the Opposition will vote tonight, still less how they will vote tomorrow. I am not sure that they are all that clear themselves. But I hope that the right hon. Lady will allow me to plead with her. I ask her to forget the monetarists for a moment, if she can. I ask her to forget the picking over of detail and the procedural niceties. I suggest that, because we are all interested in the maintenance of democray, she should not pin the future of her party on monetarism. It is only a reaction from her Government's monetary irresponsibility in the early 1970s. The remorse which follows a hang-over is no basis for a life-time of abstention, still less is it a basis for abstaining tonight.
After making it clear that the right hon. Lady is still running away—that is what the right hon. and learned Gentleman made clear—from the decision "Yes" or "No" to the White Paper—and the Opposition will have to decide in about five hours—we read this morning that, following some extraordinary psychological phenomenon in the Shadow Cabinet room last night—it must have been collective —the right hon. Lady now intends, not having opposed the White Paper, to vote against the legislative vehicle necessary to support the White Paper policy—the Bill now before the House.
That is incredible. I cannot believe it. I read it in The Times, in The Telegraph and in a motion on the Order Paper—and that was when I began to believe it. This means that they will abstain on the end but tomorrow night will reject the means. Their reasons, apparently, are that the White Paper cannot now be amended. This is important. I want to deal with the matter seriously, because I am sure that the right hon. Lady would like to find a way out—if not three ways out, for all the sections of her party. Apparently their anxiety is that the White Paper cannot be amended. But nor could the Pay Code under their own legislation be amended.
The legislation now before the House, apart from the specific provisions for local authorities, and the amendment of the Price Code, which was described by my right hon. Friend last night, relieves em- ployers of certain obligations. The Opposition's motion objects to the relief of employers of certain obligations, but this is necessary for the employers if this policy is to work. The CBI wants it but the right hon. Lady in her motion says that they should not have it. I hope that she will think again.
Their other midnight objection—I understand that they put this motion down after midnight—is that it will be a Minister not a judge who will construe the measure before the House.
Under the Pay Code that job was laid on an appointed chairman of the Pay Board together with his members. It was not laid even on a Minister elected and accountable to this House. It was not under the control—we certainly did not support it—of a Minister who had been elected to anything or by anybody at any time. We saw this, as we warned, in the most tragic farce at the end of 1973, when certainly the then Secretary of State for Employment, as we think, would have wished the Code to be interpreted in a way which would have ended the coalmining dispute by the inclusion of waiting time and so on. That should have been done at the end of December, but whatever the Secretary of State for Employment wanted, whatever the House wanted and whatever everybody else wanted, it was the Pay Board which frustrated the clear wishes of at least one Minister and, I believe, of the whole House. That was why we had the three-day week for another two months. I submit that it is right that if a Minister is to be responsible, he should be responsible and accountable to this House.
Therefore, in conclusion I say to the right hon. Lady that now, as I hope, the Shadow Cabinet have awakened to what they did last night—some day there will be a mass psychological explanation of what happened—they must realise the gravity of their proposed course of action. They know that the vast majority of the people in this country, of all parties, trade unionists, and non-trade unionists, desperately want to see the Government's White Paper policy succeed.
By one single, ill-considered and perhaps wilful act in pursuit of some procedural objective with which they are concerned, the right hon. Lady and her colleagues are, by the motion on the Order Paper, telling the country that they know better and that if their manoeuvre as presented on the Order Paper succeeds, they will frustrate our policy, which is supported by almost the entire nation, by denying it the necessary legislative support. That is why I describe as utter humbug some of the things said by the right hon. and learned Member for Surrey, East about how they will support the Government. They cannot say that and still let the motion remain on the Order Paper. I call on the right hon. Lady to think again and I equally call on the House, in the Division Lobby tonight, to accord to the Government White Paper the same measure of support and resolve as the British people all over the country themselves demand.
5.14 p.m.
I have not sought to intervene in an economic debate in the House since the one on 18th December 1974 which, no doubt, many right hon. and hon. Gentlemen will remember. I should have thought it a matter of regret for the whole House that the forecasts then made about the economic situation of this country have come all too true, and perhaps much more quickly than any of us thought at the time.
I have no desire tonight to go over the past. This was dealt with yesterday very effectively by my right hon. Friend the Leader of the Opposition and again today by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). I wish to bring the House back to the central issue of this two-day debate and that is the question, is it necessary for this Government to embark upon the incomes policy which is set out in the White Paper? That is, I believe, for the whole House and for the country the crucial issue with which we are now confronted. My answer to it is a quite unequivocal "Yes".
I believe it is essential that this Government should now pursue the incomes policy set out in the White Paper. I do not wish to haggle about the definition of it—a voluntary policy backed by statutory powers. However, if that is the case, in a voluntary policy in a free society anyone, be he an employer or trade unionist, has the freedom and the opportunity not to follow it. It therefore becomes essential, if the policy is to hold good, that there should be sanctions behind it.
This is where the Prime Minister should not make it more difficult than is necessary for those who wish to support his policy to do so. To say that the Bill is prepared and not to bring it to the House is indefensible. More than that, not to give any reason for not bringing it to the House is offensive to it. If the Bill is not prepared and not ready I for one will quite understand, because we have had to handle the difficulties concerning this matter ourselves: but let the Prime Minister or the Chancellor tell the House so quite frankly. At any rate we could then judge the Government on their incompetence rather than suspect their motives. On the whole, I have always believed the former to be better than the latter.
I ask the Prime Minister, or whomsoever winds up the debate, to clear the air on this matter and not to make it more difficult. If a voluntary policy of the kind set out is to succeed, we must know the sanctions which are to lie behind it. With the House due to rise for the Summer Recess it is intolerable that one should be asked to accept that people should become liable to penalties retrospectively to 1st August when the legislation has not been seen and not been passed. I must ask the Prime Minister and the Cabinet to think further about this matter.
The right hon. Gentleman is being helpful. He may not have been present at Question Time. I was asked that particular question, and I said that there was no question of it.
If the Prime Minister is saying that there is no question of retrospection of any kind—
I was asked exactly the same question and I gave the answer that there was no question of it. I was asked exactly the same question as the right hon. Gentleman has just asked.
That clears the air on the question of retrospection, but it does not remove the offence to the House of not presenting the Bill or, alternatively, not saying why it has not been presented today.
One sanction announced by the Secretary of State for Industry is that the chairmen of the nationalised industry boards wil be sacked. The present Secretary of State for Industry has the fewest chairmen of nationalised boards under his influence. As I recall it, he has only the Chairman of the British Steel Corporation, the one nationalised industry chairman who has attempted to put his industry in order by removing overmanning, and has been prevented from doing so. It seems to me that even this threat to a chairman of a nationalised industry—I have seen the problems with which those industries are consistently beset—is almost an incitement to bust the policy. I should have thought that any chairman of a nationalised board still in his senses, given this opportunity, would offer his workers at least £10 a week, get the sack, go off with a golden handshake and live happily ever after. I accept that this is not the intention of the Secretary of State for Industry.
Why have I come to this conclusion about the Government's incomes policy? The reason is that, faced with inflation now at 26 per cent. a month on a year ago and still rising—I am told that it is 48 per cent. a month on three months ago; faced with the rising unemployment, which may now be over a million, according to official statistics; faced with the continuing depreciation of sterling, some of which may be acceptable to the Chancellor because of its effect on export prices but unacceptable because of its effect on foodstuffs and raw materials; faced with a Budget deficit which may be as much as £12 billion, certainly £9 billion or more; faced with the difficulties of raising this money either at home or by continuing loans overseas; faced with the possibility that at any rate the supply of loans will begin to dry up and that some may possibly be withdrawn—it is inevitable and inescapable that the Government must take this action. No other solution I have seen proposed can possibly act in time. Again, I do not wish to go over the past, the reason why the time has been wasted. But no other solution could act in time.
Two possible solutions, broadly speaking, have been put forward. One was put forward from the benches below the Gangway, but even those who are most enthusiastic for it would not say that it would deal with our present inflationary situation. It might over the longer term transform the nature of our economy. Indeed, many of us believe that it would act greatly to the detriment of the freedom of most people in this country. However, I do not believe that it will deal with our immediate inflationary problems.
Alternatively, there are those who say that by budgetary and monetary measures alone we can succeed, but those who have most propounded this doctrine are now saying that the level of inflation is such, and inflationary expectations are so high, that they do not now believe that purely monetary policies can deal with the situation.
What I regret in so many ways is that those who wish to pursue monetary policies and public ownership have sought to elevate those matters to a doctrinal significance which it requires a person of almost Papal infallibility to handle. It is unlike the British House of Commons or people, known for their pragmatic approach, to elevate a particular policy to a doctrinal level of that kind. We shall be able to deal with this economy only if we accept that monetary policy has an important purpose and that there are areas of public ownership which there is now little chance of reversing. Let us accept both those matters without elevating them to that level which makes it impossible to carry on what I believe to be a correct, balanced policy for this country. Neither of these solutions will in any event deal with the national crisis which we face.
I do not wish to go into detail on other parts of the White Paper. I say to the Prime Minister that I am sorry that, with his experience of the 1960s, the White Paper gives so little impression that the lessons of incomes policy and its handling have been learned. It may be that with further discussions these matters can be adjusted, but there are many lessons to be learned.
There is also the question of local government expenditure. In our experience, that was the biggest loophole for inflation in the years 1972 to 1974. In my view, the steps proposed in the White Paper go part of the way, but they still leave a massive loophole for local authorities to indulge in expenditure which is then put on the rates without grants.
One of my reflections is that so many of the classic solutions of our institutions today no longer work as effectively as they once did, if in fact they did. The sanctions on local authorities for over-expenditure are, to say the least, slow, and certainly do not have the speed to catch up with inflation. With the mixed composition of local authorities, very few sanctions will deal drastically with local government expenditure unless pressure is put upon them. I fear that these steps, although steps forward regarding local government and its financial control, but not, local councillors would say, its freedom, will not be sufficient to deal with this loophole in inflation.
I should like to emphasise what, I believe, are three dangers to the policy of the Prime Minister and the Chancellor of the Exchequer.
First, the Prime Minister said that the policy can function only with consent. With that I agree. I have said that I do not wish to go into the past. All I would say is that, regarding the incomes policy of 1972–74, in the freeze and in stages 2 and 3, more than 10 million trade unionists accepted and acquiesced in it. We were challenged by only one union. Consent is necessary, but it is necessary over a far wider area than just that of trade unions, the CBI and the Government. It is necessary over the great majority of people in this country who do not belong to trade unions or take part in CBI activities. They represent very large numbers indeed.
Consent is also required of this House. I ask the Prime Minister to remember this, because there are many things which can be done to allow the House to speak with a more united voice than it has in the past. I say, just as much to hon. Gentlemen below the Gangway, with their views, as to some hon. Members of my own party, who are, perhaps, further to the Right wing than myself with the views which they honestly hold, that it is vital that out of this debate today should go to the nation—a nation faced with crisis—the view that we believe that this policy ought to have consent. After that we can start discussing the details and getting them more suitable, acceptable and adaptable than they seem to be at the moment.
Secondly, what this country faces today in this crisis—everybody has in general said this—is a reduction in its standard of living, but it has never been brought home to the people of this country what that reduction in living standards will be. At the weekend the right hon. Member for Lanark (Mrs. Hart), who formerly held ministerial office, said that she believed that it would be 9 per cent. It depends whether we make the calculation on overseas loans, on the balance of payments, or on Government deficit borrowing. Whichever it is, it must be between 5 per cent. and 10 per cent. That is a substantial reduction in the standard of living and an enormous amount to demand of the people of this country. But they should be told what the position is.
I believe that we can then consider further how the burdens are to be borne, who can best bear them, and who should be helped. That becomes a basis for a sound economic and social policy. Therefore, I ask the Prime Minister and his colleagues to tell the nation facing a crisis precisely what is before it.
What is the reason? Part of the reason is that we are seeing a massive transfer of resources from each country of the Western world to the oil-producing countries. That means that we cannot have those resources for our own standard of living. Of course, there is recycling, but that is no permanent answer. Unless the economy is strong, recycling cannot be maintained. Therefore, it is vital to point out that that is one of the reasons, and that it will go on.
For too long—perhaps over 30 years—we have seen that the payments that we make to ourselves are greater than our production of resources to meet them. At the moment our production is stagnant. The gap between our general production in the second quarter of 1973 and the first quarter of 1975 has widened by 51 per cent. In manufacturing industry it has widened by 9½ per cent. That is the capacity not being used. This is the worsening position which we see in our manufacturing industry. It is another reason why we cannot maintain our present standard of living. I firmly believe that, till the country is told this graphically, and sees what the situation is, we shall not get the response which is absolutely necessary for our survival.
Thirdly, the steps being taken by the Chancellor on the wages front will not deal with inflation. The public have a general impression that £6 a week is equivalent to 10 per cent. across the board and that there will be 10 per cent. inflation. The Chancellor may be right when he gets to the end of the period, but those who make settlements in the autumn will find a continuous and rapid rise in prices. All this is in the pipeline as a result of the wage arrangements of the last year. No price controls can stop them except by bankrupting the firms concerned.
This point has not got though to people. The danger is that, having accepted £6 a week as a settlement, they will find early in the new year that the rise in prices has gone past that settlement and they will then turn on the Government, and, indeed, on this House, and say that they were misled by the arrangement which was made. That is not to say that they will not accept it if it is explained to them now at the beginning as being essential for the survival of our economy.
I think that the right lion. Gentleman was present when I spoke yesterday. I am sure that he will agree that I spelt out in great detail that the rate of inflation year on year was bound to increase for some months. Because of the increases in the pipeline and the low base in the third quarter of last year the real benefit from the lower rate of wage increases will not begin till next year. It will take up to six months for that benefit to come through. I think the right hon. Gentleman will agree that I made that point very clearly yesterday. However, I agree with the point he is now making.
The Chancellor of the Exchequer certainly said that in his speech. I recollect it clearly, but that is not what the people understand, and they do not recognise what "month on month over the year" means. By January the rate will be coming down, but they will find postal charges and national industry charges going up. Let us remember that a £6 a week wage increase for nationalised industry workers will cost £600 million and for local government workers the cost will be £900 million. This money has to be found somewhere. With the decreasing production in industry come higher unit costs, and these also have to be taken care of somehow. The Chancellor of the Exchequer also mentioned the depreciation of sterling and this will mean that prices continue to rise. It is vital that all this should be made clear now.
My third point is that unemployment will continue to rise very substantially. OECD reports are based on information provided by Government Departments, although the information may often be unknown to Ministers, and today's report states that, even on the best projections, unemployment will reach 1½ million next year.
I think I should correct the right hon. Gentleman. The report projects a figure of 1¼ million by the middle of next year.
I accept that. The figure is much higher than anybody has been told before, certainly by the Government.
The Government adhere to the position that these forecasts are not made, but in our situation of crisis the country should be told what is going to happen to unemployment. I believe it will go higher than the projected figures. Some people say that, if the present figures are analysed, they show that not all the people are unemployed, but I do not share that view. What is, however, true is that very large numbers of people are kept on the payroll when they are not economically productive. As the Price Code bears harder on employers they will have no alternative but to stand off these people.
If the country is told that unemployment will, as I believe, rise higher than the current projections, and that the £6 a week pay limit will not stop that from happening, we shall have a better chance of the country's understanding the situation and at least tolerating it for a period till it can be put right. Perhaps in the 1920s unemployment was effective in dealing with wage levels, but it is far less effective now, and unemployment is less acceptable to people than it was in the 1920s and 1930s.
OECD says the figure is 1½ million. The Chancellor is wrong.
If the Chancellor admits it, it would not be the first time he has been wrong. I always check the accuracy of my figures carefully.
My anxiety is that workers on the shop floor today are not prepared to see unemployment rising to what they would describe as unacceptable levels. They expect our institutions and economic system to deal with the matter.
I must warn my hon. and right hon. Friends that there is a great danger to free enterprise here. We may see those on the shop floor turning on free enterprise and saying that the system is not capable of providing employment for those who want it. Hon. Members below the Gangway will be the first to play on this, and it would not surprise me to see the new Secretary of State for Energy playing a prominent part, because it is his honest belief that employment cannot be provided by private enterprise. He would be at their head. This would be a grave danger to this country and to democracy. It is not the fault of private enterprise. If, as the Prime Minister says, he believes in a mixed economy it is time he created the conditions to ensure the survival of a mixed economy.
I urge the Prime Minister to give attention to these three aspects of his policy with great speed. In part, it is a matter of communication—but who am I to talk about communication? But till the nation is asked to recognise these facts in all their stark horror we shall not get a response.
The Chancellor of the Exchequer said he was now thinking in terms of several years for working out what should happen. Nobody who has had any experience in Government could possibly want an incomes policy laid down by the Government with statutory backing. All the difficulties have been mentioned by my right hon. Friend the Leader of the Opposition.
Of course, there are unfairnesses, but I must say that they are not as bad as the unfairnesses of roaring inflation. To those who talk of free wage negotiations I say that many of the unfairnesses to which the Prime Minister alluded stem from free wage negotiations. These have also been elevated to a doctrine which cannot be maintained. Those below the Gangway will be the first to insist on wage councils, but they were established by legislation by the 1945 Labour Government following on the policies of Mr. Ernest Bevin. Those below the Gangway are also the first to ask for a minimum wage policy, backing up the TUC, but how can we have that except by Government intervention and legislation? Let us not elevate this to a great doctrine either.
Anyone who has been in Government thinks of the hours spent by officials, Cabinet committees and the Cabinet itself on settling the whole approach to a statutory pay and prices policy and all that arises from it. Some may want such a policy, but I would never want it for a moment, if it could possibly be avoided. I hope the right hon. Gentlemen on the Government Front Bench will agree with me.
The Chancellor of the Exchequer and the Prime Minister ought to ask themselves why we have never been able to run our economy at a reasonable rate in the last 30 years without crises of this kind. The fundamental answer is that this is an unbalanced economy in many ways—regionally, for one, and in the developing power of trade unions, for another. The whole problem of what part the Government should play in a modern, complex society like our own is probably the most searching we now face. Our policy now should he concentrated on turning our economy into one with reasonable balance through its distribution regionally, or through wealth, trade union power, management expertise and so on, in the same way, broadly, as the economy of the Federal Republic of Germany is balanced today. That is how we can get away from statutory or voluntary policies or price controls of this kind. That is the way a free and democratic society ought to move.
Looking back on the referendum campaign, one thing stands out clearly. There were many people, probably from both sides, who had previously played no part in our institutions. Suddenly they felt they had a purpose to fulfil and they did it with enormous skill and enthusiasm. I believe they ought to be mobilised in the general battle against inflation, and that is what I mean by obtaining a wider consent than that of trade unions or the CBI.
The other thing which emerged from the campaign was that, although in the beginning there were all the detailed arguments, what finally settled the issue was not the niceties of the renegotiations and little differences here and there, because in the last ten days or a fortnight all that dropped out of the public discussion. What happened was that the public recognised this as a big issue which, perhaps, might not affect them so much as it would affect their children and, even more, their grandchildren. It was one of the highest issues, because it involved the peace of the European Continent and the means of getting prosperity for its people; and when that issue was put to the people they responded. Who on earth thought that there would be a 66 per cent. poll? How on earth could it have been achieved had the people not responded to the big issue of the day?
The issue which we have been debating this week is just such a big issue, the major issue of peace time since 1931. It requires to be lifted to a level at which people can see that the future of their whole standard of living is at stake. For that purpose there will be a sacrifice which will have to be fairly borne. It will have to be a heavy sacrifice for a period till we can start moving forward again. The responsibility lies on this House to show the nation that this is the issue, and that it is to this issue that it can respond.
Hear, hear.
Come back, Ted. All is forgiven.
5.41 p.m.
It is appropriate that the first back bencher who is called to speak after the right hon Member for Sidcup (Mr. Heath) should with care and some modesty say that he has been present on an historic occasion. This is the first speech that the right hon. Gentleman has made on domestic economic policy since he gave up the office of Prime Minister, and it was his first opportunity to put forward his ideas, not as the official spokesman for Her Majesty's Government but as a Member of the House of Commons. He has shown a good example of the democracy of the House of Commons in the way in which he was heard and the impact which he has made.
Just as he did not deal with the past and dwell on the details of old disagreements, so the occasion requires those who speak after him to concentrate on the task in hand and to deal immediately with the ideas and proposals that the Government have put before the House, reflecting on what the right hon. Gentleman said. That does not mean that one necessarily accepts all the analyses that he has made of the past, where he dealt with the past. There will be other opportunities to continue the critical examination of the part the right hon. Gentleman played in the history of the last seven years when an incomes policy was part of our public debate.
The Government's proposals contain one element on which I wish to commend the Government. I am conscious that on this occasion I do not carry the full support of my hon. and right hon. Friends who over the last seven years have agreed with me on these matters. I believe that the Government have kept close to the TUC and have taken the counsel of the trade union movement over the last year. I believe that these consultations have been good for the Government and good for the country. The result of the discussions is to be seen in the proposals which have the support of some leaders of the trade union movement who put forward such propositions before they constituted Government policy. These are simple facts which have not yet been put on the record by any back bencher so far in the debate.
It is to the credit of the trade union movement that at some point over the last six months the leader of the Transport and General Workers' Union, the General Secretary of the National Union of Mineworkers and other trade union leaders, on their own initiative, looking at the economic situation and analysing the rate at which inflation was advancing, themselves started to put forward a number of propositions of how the country should deal with the situation.
It is the duty of anybody, particularly my hon. Friends, to start from that proposition if history is to be properly recorded. That is not something to sneer at. No policy in industry is worth the paper it is written on unless it has the broad consent of those who work in industry. It does not matter what sort of policy is advanced. If it is to be carried through—and I want to link this point later with some more critical remarks I shall say about the Government's proposals—it must have the support of the work people or it will not succeed.
It is often said that the view of the trade union movement is not important in consideration of a Government's foreign policy, whether that policy applies to Vietnam or some other far-off place. What of it if a lot of people working in industry do not agree with a particular aspect of foreign policy? It is suggested that perhaps the Government and the House of Commons know better, anyway. But no industrial policy can continue for 12 months without the support and active co-operation of the people who work in industry. The policy simply comes apart in the Government's hands.
It is possible that in the later stages of the capitalist economic system a rate of inflation of perhaps up to 9 per cent. is acceptable and containable. Economists in Britain and the United States have even maintained over the last 25 years that with a falling rate of profit a provocative level of inflation of 5, 6 or 7 per cent. is necessary to make the capitalist system work. It is profoundly true, however, that no Government can sit idly by and let a situation continue in which inflation is running at perhaps 30 per cent. That situation hits hardest those who can least afford to bear it.
When those who earn wages and salaries or who draw pensions, whether retirement, widow or disability pensions, find the money in their hand is suddenly worth 30 per cent. less than they expect, a corrosive, destructive element creeps in to destroy the social cohesion of the community and present a profound danger to any kind of social advance and reform.
People frightened by such a level of inflation do not listen to the proposals of Socialist theoreticians to my hon. Friends or to me. They begin to wish for strong men who bring quick, immediate solutions, who lead them to panaceas, who do away with the slow parliamentary process of reform and bring sudden solutions that are hostile to Socialism and parliamentary democracy. Although dangers will be involved, those are the implied dangers of a rate of inflation of 25 per cent to 30 per cent. Any analysis that does not begin from that starting point is blind to the political dangers that such a rate of inflation brings with it and brings about.
Having justified to my satisfaction the need for action, I turn to the kind of action that the Government have taken. The Opposition are profoundly misguided in making such a fuss about what they call compulsory powers and whether Bills are produced at one time or another. If they agree—as by their silence some Conservative Members seem to agree—that the situation is as serious as I have described, by blowing up this disagreement over the production of certain statutory proposals into a major argument of crisis proportions they are behaving in a rather small and petty way.
The Opposition should understand that there has been an argument within the Government over this. They should also understand that the Government cannot say to the trade union movement, "We are proposing, in response in part to some of the ideas proposed by some of your leaders, a voluntary policy", and then, if the trade unions agree that there should be a voluntary policy, at the same time be so appallingly idiotic as to produce a set of proposals, bang them on the table and say, "Hey, voluntary policy here, voluntary there, but this is what you will get if we cannot agree on a policy". A Government would be out of their senses if, in such a situation, they decided to rush in and produce proposals which at present they do not want to implement.
What is wrong with not producing a Bill that we shall not be asked to pass? It is right not to introduce a Bill that the House of Commons will not be asked to pass. If we were facing a situation in which the Government were to say "We shall ask you anyhow to pass it", we should have reason for complaint. As it is, we have no reason for complaint on that score.
Will the hon. Gentleman give way?
I do not want to give way. Other hon. Members have had to answer many questions and, therefore, many hon. Members will not have a chance to speak. My speech will not be as prolonged as some other speeches.
I turn to my third and penultimate contribution to the discussion. It links with what I call my more critical views about the Government's proposals. I profoundly believe that the White Paper and the Government's position on price control is wholly unsatisfactory. I urge them to reconsider the whole position. From recent discussions with members of the trade union movement—which members of the Government must have also had—I am profoundly convinced that with the support of the Trades Union Congress and the support of many individual active trade unionists, this policy will be implemented. If it is found that because of the controlled price rises, brought about by the many reasons that have been rehearsed in this debate, there is a further increase of 25 per cent. by December or January in the level of prices, particularly in those expenditure types which are essential to every working-class household, lower-middle-class home and many middle-class homes where people are living on small margins—it is not a matter that affects only the industrial working class—the whole policy will come apart in the Government's hands.
Whereas there is now a good and reasonable case to be made for people in the mining areas and in the various industrial districts of the United Kingdom—which I fully support and am prepared to argue up and down my part of the country—it will not be possible nor would it be right, to say to working-class people, many of whom will be on average and not high working-class incomes, "In spite of the fact that there has been this large, further rise in prices, you must go on accepting a very small increase in your wages". What would have been a justifiable policy would have turned into the opposite. Those who support the policy because they are in favour of a reduction by 15 per cent. to 20 per cent. in working-class living standards had better come clean if that is what they want. I shall not support such a policy.
If, by the end of the year and the beginning of next year, such a reduction in the standard of living for working people comes about, my support for this policy will cease publicly and in this House for the reasons I have given. Many people in the trade union and Labour movement will take the same view. Therefore, I say frankly to the Government that the explanations given so far by both my right hon. Friend the Chancellor and my right hon. Friend the Secretary of State for Prices and Consumer Protection are unsatisfactory and unconvincing.
As some of my colleagues who were with me on a parliamentary visit to France recently will testify, the French Government have found it possible to select ten essential items that are important to the average family and have imposed a price freeze on them. It is not true to say, as the CBI have argued, that all firms that would be involved are in such a poor position that they could not afford it. Nor could it be argued—this brings me to my last point—that these firms in the past have used the profits they have made for further investment. That is a propaganda argument which they have invented. I wish they had, but they have not. However, where the investment argument holds true, it has more profound implications for the Government.
As the former Prime Minister, the right hon. Member for Sidcup, knows very well, the Government have an uphill task with regard to investment. In spite of the fact that some of the firms would have enough to invest and are reluctant to do so, there will be others that do not have the necessary capital. In the early summer of 1973 the right hon. Gentleman in an article in the Director, which reprinted an address he had given to the Institute of Directors, chided British industry and told them "You told us that the rate of taxation was too high. I have reduced it. You told us that there was not enough money left to you for investment. I have seen that there was enough money left to you for investment, and yet you were not prepared to invest". The right hon. Gentleman is on record out of his own mouth as the chief critic of British industry, saying that it did not do the job for the nation.
The Government have no right to adopt a one-sided policy of suspending the right to free collective bargaining over the next year if at the same time they shirk the task of also doing something about investment. The Government have a perfectly moral right and duty to argue for control over institutions that accumulate a great deal of capital but refuse to invest, and instead spend their money on speculative buying of property abroad with money earned in this country—instead of fulfilling their moral and economic obligations to the country in which they earn the money. In a year in which we take some control over the collective bargaining freedom of our trade unions, we have a right to take control of some of the investment capital of British financial institutions. One has only to go to Hamburg, Paris, or Brussels to appreciate that the British property speculator is a well-known personality over there.
If the Government have the courage of their convictions, they ought forthwith to introduce measures backed by legislation, without waiting for next year or the year thereafter—legislation which is already to some extent well advanced in the minds and the research laboratory of the Labour Party. The Government ought to work that up into proper legislative proposals and to produce in double quick time a body of legislation which would allow them to direct investment where it is needed for the nation.
Does not the hon. Gentleman realise that in the present short-term crisis confronting the Government they will be basing all their efforts on persuading the public and the institutions to buy gilts to help them finance the borrowing requirement?
I have already said that the first task—this was obvious from the way in which I used the first 10 minutes of my speech—is to give support to the proposals that the trade union movement and the Government have worked out together and that I would do so. I said that I would also do that in the months that lie ahead, but that unless something drastic is done about price control and, secondly, unless we deal with the problem of investment—which the right hon. Member for Sidcup also identified as one of the decisive weaknesses of our economy—this policy will not produce the desired result in itself. Therefore, what I am talking about is not something that must happen next Friday afternoon. However, it must happen over the next 12 months, and it must be prepared now. The Government must have the courage to do it.
At present the greatest danger to this policy is that—although it is not meant to be so—it will be attacked as a completely one-sided further attempt to solve another British economic crisis only at the expense of the industrial working class. If there is to be a defence against that charge, the measures on prices and investment that I have proposed must be taken forthwith to turn the policy into a complete whole, acceptable to the progressive and Socialist movement in Britain. But while we are doing that and I am demanding that, I am saying, first, that the present policy is an honest attempt, which has become necessary in this dangerous situation for the nation, to deal with inflation, and it is a policy which must be started and carried out straight away. But if it is to be a policy that is to succeed, the other measures are as essential and must be taken without delay.
In those proposals there is a beginning. This policy is a difficult one for my right hon. Friends in the Government and for the trade union movement, who have worked it out together in good faith, starting from the same principles from which the rest of us here start. In these proposals there is the germ of laying the ground work not only for the immediate but for the long-term support for what they are trying to do, for linking the immediate necessity to the long-term policy to the working out of which my right hon. Friend the Secretary of State for Employment has made such a large contribution. I wish that the Government could be persuaded to embrace such a programme. If they do not do so, this policy will work for a short time but it will not last.
6.6 p.m.
It is generally accepted on all sides of the House that the present economic crisis of this nation demanded stern measures. It is also a feature of this debate so far that the support for the measures that the Government have introduced has come mainly from the Opposition side of the House, and that the criticisms and fears have come from the Government side of the House, especially below the Gangway. Indeed, I think that many Labour Members would consider that the Government have failed.
I believe that that is true. The White Paper that we are debating is an illustration of the failure of the Labour Government. In the foreword to the Labour Party manifesto for the last General Election, the Prime Minister stated: In February we but before the Britsh people our manifesto, Labour's Way Out of the Crisis." The Prime Minister went on to say: It was a programme for getting Britain back to work, for overcoming what was universally acknowledged to be the gravest economic crisis Britain had faced since the war … Labour formed the Government, got Britain hack to work and showed our determination to fulfil the programme which we had put before the people. No post-war British government has achieved more in six months. There was then an acceptance on the part of the Government that the country was in a crisis. But then the next election came along, and the crisis was minimised. As has been mentioned on many occasions, the Chancellor of the Exchequer then told the country that inflation was down to 8½ per cent. To substantiate the claim made in October and the Chancellor's statement that inflation was down to just over 8 per cent., it was necessary for the Labour Government to prove that they had done more in their first six months of Government than any previous Government and that they had taken great steps towards solving the economic crisis which they had stated the country was in when they came to power. Otherwise, their claims were not only misleading but meaningless political jargon, with the one idea of getting returned to power at the last General Election.
If they were so successful, why do we have this White Paper? However it is viewed, it must be an admission of total failure. It is proof that if they believed their claims, the Prime Minister and his Cabinet were either completely out of touch with reality or—and this is the only alternative—they deliberately misled Parliament and conned the nation.
Just what have this Government achieved in the last 15 months towards solving the economic crisis? One can disregard the Chancellor's flights into the realms of fantasy last September and concentrate on what he said during one of his more responsible moments, in the statement he made almost a year ago to the very day. Speaking on the economy on 23rd July last he stated: When the present Government took power live months ago the rate of inflation was already over 13 per cent. It is now 164 per cent. and yet two months later he told the country that he had halved the rate and that it was down to 8 per cent. The Chancellor must have known that that was untrue. He had stated in this debate only three months earlier that it was running at l6½ per cent.; an increase of 3 per cent. in five months, or a rate of about 7½ per cent. a year. On the same day he stated: Our central problem is a rate of inflation which"— and it is well for us to mark the right hon. Gentleman's words— some say could have been 20 per cent. by the end of this year …". By October 1974 the rate had reached 17.1 per cent., not a great increase. Now, a year later—a year after it was 16½ per cent.—it is not 17 per cent. or even 20 per cent.; it is nearer 30 per cent. During the same debate a year ago the right hon. Gentleman the Prime Minister stated: The prices of materials and fuels purchased by industry last month showed the first fall for over two years. These will work through."—[ Official Report, 24th July 1974; Vol. 974, c. 1312–1628] In other words, the right hon. Gentleman was saying that these falls would work through in lower prices. That statement—an admission that the prices of raw materials and fuels for industry were falling—and the subsequent galloping rise in inflation are surely a measure of the abysmal failure of the Government to deal with the crisis. As pointed out by hon. Members opposite, the effect of continuing inflation on the lower paid, people living on fixed incomes and pensioners, and their savings was offensive to every decent person in the land.
What about jobs? The Labour Government have always stated that it is the right of every man to be found a job and to be able to work if he so wills. They have stated what we all know—that inflation is the enemy of full employment, but they failed abysmally to control it. What of the Government's record on jobs? Let us look at that. In February 1974 there were 628,800 out of work, representing 2.7 per cent. In October, 1974 there were 643,400—a rate of 2.8 per cent. By February, 1975 the total had reached 791,800, or 3.4 per cent. I remember Hugh Gaitskell saying in this House on several occasions that 3 per cent. unemployment was the highest acceptable figure to any Labour Government.
By last June—the month with the latest available figures—there were 869,822, unemployed—a rate of 3.7 per cent. Half a million school leavers will soon come looking for jobs. We know, too, as the right hon. Member for Sidcup (Mr. Heath) has pointed out, that there is overmanning in a great many of our industries, while there is not that overmanning in many industries abroad. This is falsely keeping down the unemployment figure in this country, but one wonders for how long that can continue if firms suffer further setbacks in profits.
Fully to appreciate the scale of the Government's failure we must turn again to the debate on the economic situation on 23rd and 24th July last year. The Chancellor of the Exchequer apologised to the hon. Member for Cornwall North (Mr. Pardoe), saying: I unwittingly misled the House on the employment effect on the total package of measures I announced yesterday. The figure of 20,000 reduction in unemployment by the end of next year which I quoted is a bare minimum … The total effect is likely to be more than twice that … The total effect on employment of all the measures I announced yesterday could be to increase employment by the end of next year by between 100,000 and 150,000."—[Official Report, 23rd July 1974; Vol. 974, c. 1324.] Compare that with the situation today and those promises with what has happened. Can anyone have any confidence in the future forecasting or actions of a Chancellor or a Government who have failed so abysmally in all their projections about the economic results of inflation and the effect on jobs?
There are other factors showing where they have failed lamentably in both these areas, but I must speak shortly so that other hon. Members may catch your eye Mr. Deputy Speaker. The figures throw a light of stark reality on the Government's record. What has given concern to many people in this country has been the growing similarity of the parallel between what happened under the Weimar Republic in Germany in the 1920s and what is happening here. It is all very well for hon. Gentlemen opposite to laugh. Inflation ran away, and there was a great increase in unemployment, with results that the hon. Member for Penistone (Mr. Mendelson) feared might happen in similar circumstances here.
In a speech at Tolpuddle last weekend the Chancellor said unless the measures now proposed were successful, unemployment in this country could reach a figure not of 1½ million, not of 2 million, but of 3 million—[ Interruption. ] Is it possible, Mr. Deputy Speaker, to protect myself from the constant remarks made by the hon. Member for Newham, North-West (Mr. A. Lewis) from a sedentary position?
On a point of order, Mr. Deputy Speaker, I confess to having made my first interjection, which is not unsual. The hon. Member for Gillingham (Mr. Burden) is the last one to complain, because he does so constantly.
I know that we shall be as polite to each other as we always are.
We have had an enormous debt hanging around our neck as a result of borrowings by the Government. No one knows their full extent, or the terms of such borrowings, but we all know that the cost will go on during this and future generations. In the White Paper there is no hint that the vast nationalisation plans will be abandoned or shelved. I believe that there will be no money from overseas to purchase those industries. Money to do so will either have to be printed or raised in loans in this country—and I find it difficult to believe that they will be available; or will they be acquired by confiscatory measures, without reasonable compensation?
The Government must realise that if they continue to try to placate the Left, by watering down the measures necessary for the economic survival of this country, it is the duty of this Government to put the survival of the country and the interests of Britain above papering over the enormous cracks that are beginning to appear between the Left and the moderate part of the Labour Party. The Government should immediately, or before the end of this debate, make it clear that there will be no more nationalisation, certainly for the next two or three years while we are going through this crisis.
Many hon. Members on the Government benches suffer from the belief that bigness is a virtue in itself, that the creation of big, monolithic industries means the creation of good and successful industries. That is what they think about nationalisation. The idea is entirely false. Every Government should encourage small businesses. They should give people the opportunity to start businesses and make it possible for them to be profitable. They can make a great contribution to the future standards of living of our people.
We should stop further overseas borrowing, and live within our means. That will have to be done sooner or later. No Government, any more than a private person or a company, can borrow their way out of bankruptcy. The Government's ability to borrow has almost come to an end. Unless we start to live within our means, the consequences will indeed be desperate. We should stop printing money, because printing money merely reduces the value of everything we have and increases inflation and unemployment.
Above all, this country must live by its exports. I believe that much of our industry is now suffering from age. It has not had enough innovation in recent years. The most urgent task for any Government, if we are to restore the economy and ensure a rising standard of life for our people, is to see that the country becomes technologically as advanced as any of our industrial competitors, or more so. It is not enough to be just an industrial country. We must be a great technological country.
I hope that the steps taken today will be the first steps towards this country's recovery, although taken belatedly by the Government. But I shall stand aside, and see what happens, because it is the Government who are being judged, not me. I do not think that the steps go far enough. That is why I cannot support them in the Lobby. We shall have to see whether the Government fail to take the next steps, in order to ensure that the right hon. Members for Ebbw Vale (Mr. Foot), Bristol, South-East (Mr. Benn), and some others who are critical even of these steps, remain in the Government.
Before I call the next hon. Member to speak, I remind the House that there is a long queue of hon. Members wishing to speak. I hope that those who are fortunate enough to be called will bear in mind those who are waiting.
6.23 p.m.
I regard the White Paper as essentially a political document designed to gain the co-operation of the TUC and the CBI. Judged from that standpoint, it is undoubtedly a skilful compromise, and has a reasonable chance of achieving its purpose. Even its most surprising single feature—the fact that reserve powers to make it illegal for employers to exceed the pay limit are to be contained in separate legislation—makes some sort of sense.
The support of the TUC for the Government a fortnight ago, by 19 votes to 13, is significant. The majority of trade union leaders realise that the recession will go deeper, and unemployment will mount even more steeply, if some such counter-inflationary measures are not adopted. We were told this afternoon that those trade union leaders, reinforced by my right hon. Friend the Prime Minister, would disagree, therefore, with the first point made by some of my hon. Friends in their letter in today's issue of The Times. They would certainly think that if the present measures had not been taken—
On a point of order, Mr. Deputy Speaker. When you have a few minutes to spare, will you look at the Hansard reports of all our economic debates? You will find that the same hon. Members are continually called. Will you suggest to Mr. Speaker that he puts it around a bit?
The hon. Gentleman knows that Mr. Speaker's choice of right hon. and hon. Members who are called to speak is not open to question.
My hon. Friends responsible for the letter to which I have referred may find, when they consult today's OECD report on the economies of the member nations, that that report is also at variance not only with their first point but with the remaining points.
In spite of this defiance by my hon. Friends, and any lengths to which it might be taken later tonight, there are growing signs that the British Labour movement is coming to terms with economic realities, that a slow but sure understanding is calculated to prove far more effective than compulsion by State decree. I believe that the social contract has assisted the growth of that understanding.
None of us can any longer be in doubt, in view of what happened to it, that the trade unions are not equipped to enforce a wages policy on their own. They simply cannot deliver. Nevertheless, they know that someone must deliver. There must be a policy, and if they cannot enforce it someone must—and who better than a Labour Government?
Moreover, opinion polls demonstrate a remarkable unanimity among all types of voters that an incomes policy must be introduced if inflation is to be defeated. A joint conference at the grass roots of the Park and Attercliffe Constituency Labour Parties in Sheffield on Sunday produced only one implacable opponent of the White Paper. The same person also accused the Labour Government of reneging on the social contract. The record suggests that, whoever might have undermined it, the Labour Government certainly did not, as my right hon. Friend the Prime Minister reminded the Yorkshire miners at their annual conference in Barnsley a month ago.
Several of those present at the Sheffield conference had reservations about the White Paper. In the main, the reservations came down to the fact that, for it to remain acceptable, the Government, and especially my right hon. Friend the Chancellor of the Exchequer, must be fair and must have continuing regard for the acute needs of the deprived areas of Sheffield and South Yorkshire.
Can the hon. Gentleman say what the attitude of those two associations was when the Conservatives imposed their policy four years ago?
That was not discussed.
My hon. Friends may be interested to know that the greatest indignation was reserved for those Labour Members who failed to support a Labour Government in the Division Lobby.
That does not frighten me.
Once the immediate problem of acceptability is overcome, however, the effectiveness of the policy as a means of controlling inflation must be considered. Will it work? Any comment must be prefaced by a reminder that an incomes policy is designed to alter the climate of expectation and keep unemployment lower than it might otherwise have had to be, but that it is bound to produce distortions, whose practical effect becomes more serious as time goes by.
Of course, an incomes policy is difficult. But one must acknowledge that if other incomes policies have failed, or been abjured by parties in advance of their coming to power, all Governments since 1959 have found it necessary to bring one in.
The White Paper makes it clear that the Government mean to maintain anti-inflationary policies of some sort over a number of years, and that agreement will have to be reached on how to arrange our affairs so as to avoid a resurgence of rapid inflation". If that points to difficulties for the future—and, clearly, there must be more sensitive and sophisticated guidelines a year hence—the White Paper is at least more realistic than its predecessors.
The White Paper is concerned primarily concerned with wage settlements and has relatively little to say about the control of public spending and the public sector borrowing requirement. or about the use of monetary policy. Yet for the control of inflation, as opposed to limiting the unpleasant effects of bringing it under control, these are matters of primary importance. Not that public expenditure, even in the present grave circumstances, would have come in for such pressing scrutiny if economic growth had not seriously faltered.
The success of the policy depends ultimately on public opinion. As the TUC has already pointed out, individual unions and their members must associate themselves with the policy if it is to succeed. Public opinion therefore remains the ultimate sanction on pay.
The real bite of the policy, though, will ultimately come not from the sanctions which ostensibly back it up, let alone those which the Government are brandishing in the background; its most telling thrust will come from the worsening economic climate.
Past incomes policies have often faltered because they were brought in to deal with the inflation generated by economic expansion. Employers and workers had the incentive and the opportunity to break those policies, but not so this time. Against the background of contracting markets at home and abroad, it is already true, as the Prime Minister reminded us, that one man's pay increase is another man's price increase, and may also mean the loss of his own or his neighbour's job. Until that is realised there can be little hope of remedying our nation's economic ills.
In the last resort, any incomes policy, voluntary or otherwise, depends on public opinion. The right hon. Member for Sidcup (Mr. Heath), the former Prime Minister, who spoke earlier, did not have the support of public opinion, perhaps because people were more afraid of disruption than of inflation. The difference now is that every family in the land has experienced inflation and is aware of its reality. Contrary to what some of my hon. Friends have said since the 2nd July statement, we are not now reliving the years between 1970 and 1971, much less the years between 1966 and 1970. These are changed circumstances.
Perhaps the real hope for salvation lies in the general truism, and its wider acceptance, that unemployment can be restrained only if inflation is brought under control. It is a vicious circle. But one vital aspect is that while, theoretically—if wages match the inflation rate—standards of living can be maintained, in practice that can happen only if an industry or firm forgoes something else. It is impossible, theoretically, for a firm or industry to maintain an all-round balance if it tries to match total revenue with total expenditure on wages. A firm cannot ensure that its revenue matches increased spending on wages, but those which cannot maintain a balance are setting their workers' jobs at risk.
Every income earner needs to recognise that his contribution to the battle against inflation is decisive. Any section of the economy has the power to destroy the rest and in the end to destroy itself. By contrast, a general acceptance of the need for moderation provides the indispensable key to stability. Nowhere is this recognition more necessary and yet more possible than in the ranks of the trade unions. Concern for others is at the roots of trade unionism. To abandon those aims and ideals for a continued free-for-all scramble against a policy which seeks to safeguard the interests of all is surely to adopt a position which is untenable in the eyes of the people. Last Sunday I consulted my constituency party and that in a neighbouring constituency. I am left in no doubt that such an attitude of the workers, whether organised or not, would be unacceptable.
The months ahead will not be easy for the Government. Labour Governments always prefer to proceed on the basis of voluntarism and consent. No one can say that this Government have not persevered with such policies, or that they have abandoned them. However, earlier this month the Government were left in no doubt that they must strike out in a new direction. They were left with no choice but to adopt an unshakeable and immutable commitment to reduce sharply the rate of rise of inflation by the end of next year. If the Government are resolute and keep their nerve during the coming year they will receive the overwhelming support of the people, especially in their movement for policies which they consider are necessary for the achievement of their target.
6.30 p.m.
I listened to the hon. Member for Sheffield, Attercliffe (Mr. Duffy) with interest. I do not disagree with a good deal of what he said. However, it seemed to me that many of his remarks were addressed to his hon. Friends sitting below the Gangway. I do not seek to interfere in a dispute within his party. However, he made one remark about the policies of the right hon. Member for Sidcup (Mr. Heath) which I should like to take up, especially in the light of the remarkable speech made by my right hon. Friend this afternoon.
The hon. Gentleman said that my right hon. Friend did not have public support for his incomes policy. My right hon. Friend reminded us that phase 3 of his policy received the support and acquiescence of over 10 million workers. Only one trade union stood out against it. Had the Labour Party, which was at that time in Opposition, supported the then Conservative Government, I do not believe that that trade union would have stood out. The failure of this House to speak with one voice caused the problems which led to the Labour Government taking over and to the disastrous economic situation that has developed since then.
The Labour Party bitterly complained that my right hon. Friends said that we will not vote for the White Paper. The Government should go down on their knees in thanks for the undertaking given this afternoon by my right hon. and learned Friend for Surrey, East (Sir G. Howe), who pledged a substantial degree of support for the Government. Had the Conservative Government received anything like the same degree of support from the then Labour Opposition we would now be in a different situation. That is the answer to those who claim that the Opposition should vote with the Government tonight.
I should like to refer to ways in which the Government could encourage us. In considering whether the Government deserve support for their measures, it is necessary to consider not only the measure themselves but also the Government record in the area of wages, salaries and prices since coming to office in March last year. It is also relevant to bear in mind the other major factors in the Government economic strategy, and especially the degree of Government spending and borrowing.
Part of the Government case is an appeal for national unity and for a combined attempt to overcome inflation. It is pertinent to ask what real attempt the Government are making to create unity in the country. After all, what controversial measures, what Socialist doctrines or what divisive legislation are they jettisoning, or are they prepared to jettison, to create the good will and the united approach required to overcome our economic difficulties?
After the speeches made this afternoon by my right hon. and learned Friend the Member for Surrey, East and my right hon. Friend the Member for Sidcup compared with the Prime Minister's speech, my conclusion is that it is the Prime Minister who failed the nation. He spent at least one-third of his speech indulging in petty abuse and chiding the Conservative Party. He should remember that we represent nearly as many voters as does the Labour Party. If he wants to invoke the passages on national unity contained in the last two paragraphs of the White Paper to which he referred the other day, he should speak as a national leader and not as a party leader. That was his failure today.
I turn to the Government record on incomes and prices since they took over in March last year. The official figures show that at the time they took over prices were rising at an annual rate of 13.5 per cent. and average earnings were rising at 14.1 per cent.—in other words, salaries and wages were keeping ahead of prices. But that was against the background of the enormous upsurge of world prices which had started 18 months before and with which the then Conservative Government had had to contend. The Economist sterling index of world commodity prices records that in March of last year the rise in commodity prices over the preceding 12 months was 52.3 per cent. So the picture when the Labour Government took over was one of earnings rising at 14.1 per cent., prices at 13.5 per cent. and world prices at over 52 per cent.
Putting it at its lowest, therefore, it is undeniable that the British people at that time were being protected from the worst effects of world inflation. I was the Minister responsible for food prices in that Conservative Government and I clearly recall the shouts of rage and indignation when I reported to the House the monthly figures showing the percentage change in the retail price index. It was in vain that I pointed out to the House that world prices were rising much faster. The Labour Opposition were loud in their condemnation of the Government for failing to keep down the cost of living. The concern that many Labour Members showed at that time for the poor housewives seems to be strangely muted now.
I have here the whole range of the three sets of figures to which I referred, from March last year to the latest available. Together, they constitute the biggest indictment of any Government that it is possible to imagine. Under the baleful influence of the totally bogus social contract, earnings rose with extreme rapidity. In June last year they had reached 16.1 per cent., in August 20.5 per cent., in November 25.3 per cent. and in April 30.5 per cent. The figures announced yesterday show a slight fall to 28.3 per cent., but that figure is of earnings, and the wage rate continues to rise. The total abdication of the Government from this vital sector of the economy has meant a rise in wage and salary payments of more than double in just over a year.
While this was going on, all the country got from the General Secretary of the TUC were pious platitudes and incantations about the social contract. All we got from the right hon. Gentleman now on the Government Front Bench—the Secretary of State for Employment—was apparent paralysis; no action at all.
Turning to the prices side, the inevitable result is there for all to see. The sudden rise in earnings was reflected in the inexorable rise in prices. The Prime Minister's phrase that one man's pay rise is another man's price rise has been used in the House today. In Durham at the weekend the Prime Minister enlarged that phrase to include another man's dole queue. However it is expressed, that is what has happened.
In June last year the retail price index had risen to 16.5 per cent. By November it was 18.3 per cent., and by March this year 21.2 per cent.—and the latest figure is 26.1 per cent., which is almost double the figure when the Government took over. The movement in those two sets of figures is painfully evident to us all, but it is the contrast between what has happened to earnings and prices on the one hand and to world commodity prices on the other which I want to emphasise.
The movement in world commodity prices has been in precisely the opposite direction. At the time the Government came to office that index showed a rise of just over 52 per cent. By June last year it had dropped to 23.6 per cent., by December it was 1.9 per cent., by March this year it was minus 17.5 per cent. and then, in June, when the fall in the value of the pound affected it, it was minus 13.9 per cent. For the current month the figure is minus 5.8 per cent. Since January this year, world commodity prices have been falling, and in spite of the lowered value of sterling they are still lower, in terms of sterling, than they were this time last year.
Therefore, the main element in pushing up the cost of living when the Labour Government came to power is no longer a problem. A rise of 50 per cent. has not only been eliminated, it has been replaced by a fall in commodity prices which, if other things were equal, would mean that we should be entitled to look for reductions in prices. The external pressure on prices has eliminated itself, and what the country suffers from at this time is a totally self-inflicted wound. It is the enormous rise in wages and salaries which is largely responsible for the Latin American level of inflation we have reached. To the impartial observer there is nothing particularly surprising in that. What should surprise him is that any Government should ever establish a régime in which prices are controlled while wages are not. It is the surest recipe for inflation which could ever be devised, and so it has proved. For the last 16 months the country has been suffering from the economics of a "Mad Hatter's Tea Party".
That, then, is the picture of incomes and prices, and it justifies up to the hilt the introduction of measures designed to bring this runaway wage and salary inflation under control. What we have to consider, however, is whether the Government's proposed measures are adequate and whether they are likely to be effective. Before examining those measures I should like to consider another aspect of the Government's economic policy which has added fuel to the fire of inflation. I refer to Government borrowing.
The previous Conservative Government engaged in deficit financing. As a member of that Government I accept my share of responsibility for that, and I am ready to admit, with the benefit of hindsight, that in doing this we erred. If we were at fault, however, the Labour Government have made our sins seem very small by comparison with their activities.
The public sector borrowing for 1973–74 for which we were responsible showed a final outturn of £4,465 million. For 1974–75, the estimate given by the Chancellor of the Exchequer last November was £6,331 million. In his last Budget speech he gave the provisional outturn as £7,602 million, but the final quarterly figures for the first three quarters are now out, and they show, for those three quarters alone, a total of £6,436 million. Based on those figures the final outturn for a full financial year will amount to £8,581 million. As the figure was rising sharply in the third quarter there is every likelihood that the final figure will be even higher. Even on that basis, public sector borrowing has doubled in a year.
For the current financial year the Chancellor's Budget estimate was £9,055 million. No later official figures have been made available to us. I heard suggestions in the House today that it might be £12,000 million, and there are suggestions in the Press that it might be £13,000 million. I have no means of knowing whether any of these guesses are correct, but such a growth of borrowing would not be out of line with the Rake's Progress of the previous year.
A growth of public sector borrowing of this order must have already created enormous inflationary pressures. So far we have heard virtually nothing of plans to curb the present level of Government borrowing. Indeed, on 11 th July the Prime Minister talked about another £150 million. When Labour Members shout at my right hon. Friends on the Opposition Front Bench "What would you do?", my answer would be "We would not have increased Government borrowing, as you have done. You have increased it by this amount. It is your duty to choose where the cuts should come." It is a cheap device to claim that the Opposition should declare what the cuts should be. I am saying that the Government should not have allowed this runaway inflation in their spending to occur.
That is the background to the anti-inflationary measures. What of the measures themselves? The first thing to note is that there was a definite softening of the proposals between the Chancellor's statement on 1st July and the Prime Minister's statement on 11th July. The Chancellor said that he was determined to bring down wage inflation to 10 per cent. per annum, but it is questionable now whether the limit of £6 a week will achieve that. Secondly, the loading of all responsibility on the employer is unreasonable and unfair. However, as the Government are, in various forms, the country's largest employer, it would not be unreasonable to proceed on that basis, provided the Government refused every threat and every blandishment to get them, in their capacity as employers, to weaken their resolve. We have had certain assurances about that, but we shall want to see the results.
Thirdly, there is the total absence of any attempt to cut back the public borrowing requirement to a more tolerable level. I have demonstrated the devastating way in which the borrowing requirement is growing. Fourthly, there is the lack of any detailed knowledge of the powers which it is said are being held in reserve. It is not sufficient that we should be called upon to take such matters on trust. In any case, it is my belief that such powers as are envisaged should be placed on the statute book now, so that they are available immediately if the need should arise.
I do not understand or accept the argument put forward by the Government that there is no need to bring the powers forward at this stage. If anything happened during the recess I suppose we would be called back immediately to enact the new legislation. That should be a requirement, otherwise the whole programme could break down. It is folly for us to rise for the recess without being told what is involved.
Fifthly, there is the appeal in the last two paragraphs of the White Paper which the Prime Minister commended so strongly to the House on 11th July. I believe myself to be as patriotically minded as most hon. Members, but I am bound to ask what right this Government have to seek the support of the nation unless they acknowledge the attitudes, desires and feelings of the whole nation. This is a Government which, on any analysis, have never had more than the flimsiest claim to a mandate. Because of the number of small opposition groups, in addition to the main opposition party, the Government are able to carry out their policies, but at this very moment their majority rests on the absent vote of the right hon. Member for Walsall, North (Mr. Stonehouse).
You have absent friends who never turn up.
Some of them have turned up.
Yet the Government have not hesitated to bring forward a range of measures that are controversial and divisive in the extreme. Furthermore, many of the Government's measures are costly in terms of Government expenditure. To name only one, there is the Community Land Bill. Then there are all the nationalisation measures which we have been promised. If the Government want national unity, let them start by trying to unite the country instead of dividing it.
The Government talk of sacrifices. Let them set an example by dropping some of their measures, which are urgent only in the eyes of dedicated Socialists. They may be urgent in their eyes, but they should recognise that there are many people who do not share their views. Many of the measures that the Government promise are anathema to many people.
I say that the Government have failed the nation in many ways. Nevertheless, I have to admit that the proposals that we are considering, although inadequate and dangerously late, at least show that the Government have at last started to realise the need for action on their part. They will find that they have a great deal further to go if they are to restore our economy. In my view, the Government's proposals represent the first, faltering steps in the right direction. They are nothing more than that, but because they are in the right direction I shall not oppose them. However, I shall vote for the amendment standing in the names of my right hon. Friends. Although we support the need to limit wage inflation, the amendment emphasises the areas of economic policy in which the Government are still failing the nation.
Now we have it.
Labour Members who jeer should understand that our approach goes a great deal further than anyone had the guts to do in the Labour Opposition when we were in Government and were confronted with the same problem. I suggest that they remember that and show a little more humility in future.
6.57 p.m.
I do not intend to take up the arguments of the right hon. Member for Grantham (Mr. Godber), except to say that although his tortuous explanation of his decision on how he will vote may be clear to him it left the rest of the House in some puzzlement. The right hon. Gentleman's speech contrasted markedly with that of his right hon. Friend the Member for Sidcup (Mr. Heath). who at least had the honesty, in an interesting speech, to admit that over his four years of office—a period when the right hon. Member for Grantham was also in office—he had learned some lessons.
Apparently the right hon. Member for Grantham learned very few lessons from his four years in government. One of the lessons that he has not learned is that statutory incomes policies have been an abysmal failure throughout history. The acceptance of the right hon. Gentleman's suggestion that a Bill giving effect to statutory measures should be published would serve no useful purpose other than to create further problems in a situation which is already very complex and difficult.
This country has been in this economic crisis since 1973 at least, and the right hon. Gentleman was a member of a Conservative Government whose policies on money supply laid the foundations for the present difficulties. Two General Elections were fought in which the Labour Party argued against the then Conservative Government that we were actually facing an economic crisis. Apparently the nation is beginning to accept the realities of the situation which many of us have been trying to face them with for a long time.
As well as the economic crisis, we have been going through a political crisis. The previous Conservative administration must accept its share of the responsibility. It was that Government which produced the kind of confrontation and lack of consensus about which Conservative Members have been arguing. However, I hope that behind the present package which the Government are introducing some measure of consensus will be reconstructed.
In my view, the most significant feature of the Government's activities in the last few weeks has been the lengths to which the Cabinet has gone to carry with it the General Council of the TUC, and also the CBI. It was fundamentally important that any decision on a wages policy should be based on consent and, without any coercion from the Government, that it should be acceptable to the TUC. A good deal has been said in this debate about coercion, and it is interesting to note that nobody on the General Council of the TUC has seriously argued that point. In fact, the situation is quite the reverse.
That is not true.
Does my hon. Friend wish to intervene?
Will my hon. Friend take it from me that at least one leading member of the TUC has seen a number of us, and certainly what my hon. Friend said about the General Council is not correct.
That is an interesting intervention. I was making the point that, publicly at least, members of the General Council have not made the assertion which my hon. Friend attributes to them. However I still believe that this is the most significant feature of the Government's approach to this aspect of the package. Statutory policies have failed, will fail, and should be avoided at all costs.
It is crucial that the Government should now start working to ensure that agreement follows at the end of the 12 months' period of agreement. The problem with incomes policies in the past has been not that many of them have not had a limited measure of success but simply that, the moment they have ended, the whole framework of control, in terms of agree- ment on the policy, has vanished and a free-for-all has resulted. This has been disastrous and has immediately eroded any good flowing from sacrifices made in the previous period of control. It is crucial that the Government should now be working with the TUC—as, indeed, I understand is happening—and with the CBI to ensure that this does not happen on this occasion. I do not accept that wages are the only problem, or, indeed, the main problem that we face, but I would argue strongly that they play a very important part in the economic crisis.
Much has been said about the failure of industrial investment. As with many other generalisations, that statement is not true. It is certainly not a valid criticism of the chemical and petro-chemical industry which has an excellent record of investment, and other industries can also point to good investment records. If we want to create the circumstances in which industry, either in the private or public sector, has a good record of investment, we must bring about a situation in which industries can make profits. There is a dangerously schizophrenic attitude in the Labour Party about profitability. We cannot have good working conditions, high wages and many of the things we want in the Employment Protection Bill, and other measures which are part of our package, if industry is not in a profitable situation. The argument should not be about profits in industry; it should be about the way in which profits are deployed after they have been made.
The United Kingdom faces not only the problem of lack of investment in industry, but also—and this point was made by the right hon. Member for Sidcup—the problem of a distorted industrial economy. Currently, the Northern Region has the highest percentage of unemployment in the United Kingdom. This is not a new situation for people in that region, but it is all too often the case. As well as seeking to increase our record of investment in industry, the Labour Government—and indeed all Governments—-should be taking a fundamental look at the distribution of industrial investment throughout the United Kingdom as a whole. I welcome the work carried out by the Northern Region strategy team, and I give the Opposition the credit for at least establishing that team during the time of the Conservative Government. I welcome the team's report, and also its attempts to produce a map on a regional basis showing the distribution of public investment in the United Kingdom. From the Government's point of view, that area is far too obscure. Although I appreciate that there must inevitably be some falling off in the level of public expenditure among local authorities and the like, I believe that such a course will be more crucial than ever in a period of austerity, in face of deprived regions, regions with major urban problems, and areas with higher-than-average unemployment.
I support the package, but I also wish to comment on the alternative proposals made by several of my hon. Friends below the Gangway. The problem is not that I disagree with their arguments—indeed, I am very much in support of many of their arguments—but that I believe those arguments would have no immediate effect on the crisis that we face—and, in my view, the effect they would have would exacerbate rather than help the situation. The road to Socialism will not be built on a litter of bankrupt industries, unemployment and a collapse in the economy of the United Kingdom. Any suggestion that that is a quick way to obtain the objectives of this movement is misleading to our supporters.
What my hon. Friend says is correct, but he is directing his homily to the wrong quarter. It should be addressed not to his right, but straight in front of him.
My hon. Friend will forgive me if I gave the impression that I was addressing my remarks solely to him and to his colleagues. Of course, I am addressing myself to the Opposition, too. From what we have heard so far. I wonder which of the "Oppositions" will muster the most votes in the Lobbies tonight. My point is that my hon. Friends are not so much fiddling while Rome burns; they are still composing the music. We have not time to dally in that way.
I believe that people will accept firm action from the Government in respect of public expenditure, incomes, and all other aspects of the package, but there are many dangers. I believe that people in general would have accepted the social contract. The trouble with the social contract, from the point of view of the Labour Government and the Labour movement, was not that it was unworkable or unacceptable, but that it was damned with faint praise. That was the attitude of a number of people who are now loudest in their complaints about the present package. We on the Government side cannot have it all ways. We are running out of options, in terms of policies. If we are to resolve the political crisis that surrounds the whole debate about incomes in the United Kingdom, we must be prepared to stand up and be counted—in a way that too few people were willing to do when we were saying that the social contract was central to the whole economic strategy of the Labour Government. If those steps were central to our strategy and all our other policies that flowed from it, it must be said that a number of people were careless with the social contract and also with the rest of the Labour Government programme, which I wholeheartedly support.
I mentioned unemployment briefly a little while ago. I want to finish by talking about unemployment in the Northern Region and in areas like West Cumbria, in which my constituency is situated. For too many years—for many decades, in fact—areas like this have had a raw deal from successive Governments. Many of us want to see, once and for all, an end to this kind of "poor relation" area in the country.
It is time for the Government to act, and it is opportune in terms of the review of public expenditure and of industrial policies. I favour the National Enterprise Board and planning agreements. We do not, however, have a short-term industrial strategy, any more than a short-term strategy for wages, but the time is right for a fundamental review of regional policies, not only in terms of the provision of new jobs but of the whole effect of Government expenditure in the peripheral areas of the United Kingdom. I hope that the Government will accept that that case has been made and will look very closely at what they intend to do in the future.
I end with a question to my right hon. Friend the Secretary of State for Employment on this whole subject of unemployment. Many of us on this side of the House remember participating in a demonstration here in 1972–73 under a Conservative Government, when the figure of 1 million unemployed was reached. What advice has he to give us if that figure is reached under a Labour Government?
7.11 p.m.
A certain element of drama, which was introduced into this debate at an earlier stage—not actually by the Prime Minister—might have given the impression that there was an equally striking novelty about the subject that we are debating. In fact, what is remarkable about the subject we are debating is its staggering lack of novelty.
Apart from the title—which does show a certain variation from the titles of the White Papers on the same subject which have drearily preceded it at intervals of about three or four years each—the contents are easily recognisable. There is the proposal of a freeze, in this case at the flat rate of £6; the indication that, if that does not work, then, of course, compulsion must be introduced; the realisation that out beyond all flat rates lies the insoluble problem of variety and differentials; and, finally, the concluding exhortation to "give us time to find the answer." That is expressed with a certain novelty that ought to be recognised: the words in paragraph 47 of the White Paper are reach agreement on how to arrange our affairs so as to avoid a resurgence. Otherwise we know exactly the pattern, and it is a pattern which right hon. Gentlemen who are putting forward this White Paper know perfectly well.
They know it from beginning to end. They have agonised on it under their own administration. They have destroyed it when it was put forward by their political opponents. The right hon. Member for Ebbw Vale (Mr. Foot) was one of the chief destroyers of the Prices and Incomes Policy of 1972–74, and I joined in the work gaily with him. They knew then—and, of course, the right hon. Gentleman explored with glee and in detail—the inherent impracticabilities of the course on which they are now setting out. They do not come to this as strangers.
There might have been a time, 10 or 15 years ago, when this was a new adventure and some of them actually thought that it might work. But these men, Mr. Speaker, are not fools. They have been through it all before, many times, and they are not so stupid as to think that it will turn out as advertised. They know perfectly well by now that such a policy is irrelevant to the causes and therefore to the cure of inflation.
There is a certain amount of badinage which goes on, and it is well understood—the motives of the right hon. Gentleman the Prime Minister are well understood—about monetarism; but, as the right hon. and learned Member for Surrey, East (Sir G. Howe) remarked in an earlier debate, we are all monetarists now, and even the hon. Member for Whitehaven (Dr. Cunningham) has just stated that the basis of our present troubles was the increase of the money supply by the previous administration.
One of the bases.
One of them—all right. As for the right hon. Gentleman the Chancellor of the Exchequer, whence his anxiety about the size of the net borrowing requirement, his recurrent preoccupation with it and the possibility of financing it? It is not that the Labour Party are averse either to public expenditure or to borrowing the money for public expenditure. It is, of course, that the right hon. Gentleman realises perfectly well that inflation is built upon the monetary consequences of an uncovered deficit on public expenditure.
As The Times put it, with delightful brevity, in one exceptionally lucid and unambiguous—both at the same time—leading article on 15th April 1975: Inflation is a monetary problem susceptible alone to monetary cures. The right hon. Gentleman the Chancellor of the Exchequer knows all that perfectly well. He is not so "economically illiterate", if I may borrow a phrase, as to imagine that the effect of trade union action is other than to alter relative prices. He knows perfectly well that wage pressures, and so on, only alter relative wages: they put up some wages in relation to others, strong bargaining increases one group of wages in relation to the rest. Again, he is not so ignorant as to imagine that the rise of the price of an imported commodity, be it food or be it oil, causes the rise in all prices; for he is not guilty of the vulgar confusion between real prices and inflation—between relative prices, the change of one price in relation to another, which all those causes can produce, and inflation, which can alone be produced by a relative glut of money itself.
So the House is confronted with the question: why is it, then, that once again Members on both sides of the House, Government and Opposition—who know all this perfectly well, at any rate, by now—are setting off on the old, old adventure? I believe the answer is connected with unemployment. I believe that it is in the fear—I almost said the magic—of unemployment that the key to the problem posed to us is to be found.
The right hon. Gentleman the Chancellor of the Exchequer intends to reduce—or foresees that there will be a reduction of—the rate of inflation from the present 25–26 per cent. to 10 per cent. over the next 12 months. He knows what the consequences of such an unprecedented fall in the rate of inflation—something of which we have no knowledge or experience in this country—will be upon employment. He knows that in itself a fall in the rate of inflation from 25 to 10 per cent. in one year does mean massive unemployment. Indeed, he suspects that the present rise in unemployment is due to that trend towards a lower rate of inflation, which gives him the confidence to talk about rates of 10 per cent. or less in 10 to 15 months' time. So as inflation diminishes—if it does diminish—he sees himself facing the emergence of rates of unemployment with which, except for brief periods, we have also been unacquainted.
This connection of the fall in the rate of inflation with unemployment should not be misunderstood, though many have a vested interest in causing it to be misunderstood. It is not the unemployment which causes the rate of inflation to fall. The unemployment emerges as one of the consequences of the fall in the rate of inflation, which demands that a different pattern of economic activity shall be established to correspond with the expectation of 10 per cent. and not 25 per cent. inflation and more in the few months ahead.
Neither is the unemployment caused by any reduction of public expenditure to eliminate the part of public borrowing which is financed by inflation. Inflation is a form of taxation: inflation is a method whereby resources are withdrawn from the private sector and entrusted to the public sector. Therefore, except for transitional and frictional effects, the elimination of public expenditure financed by inflation no more causes unemployment than does the elimination of public expenditure financed by borrowing from the public or of public expenditure financed by taxation. There is an automatic balance between the two: the resources which are not claimed in the public sector are left available—are still there, the demand is still there—in the private sector. In short, the unemployment is the automatic, unavoidable consequence of doing what sooner or later we have to do—namely, ensure that the, rate of inflation does come down from 25 per cent. to 10 per cent. and stays there.
At this point, all Governments—like this one at this present time—take avoiding action. They do so by pivoting upon the myth or fallacy that, if the fall of inflation from 25 per cent. to 10 per cent. is brought about by the voluntary or compulsory behaviour of all elements in the community, it will not hurt anyone, and there will not be any unemployment—in other words, that we can come down from 25 per cent. to 10 per cent. and not notice it because it will not hurt.
Now this is not so, for the reasons already given. But I will illustrate the point further by an assumption even more improbable than that this policy will work on a voluntary basis, or indeed work at all. My assumption is that we send up a national prayer—perhaps we have a national day of prayer—to be liberated from the scourge of inflation or at any rate to be liberated from the difference between 10 per cent. and 25 per cent inflation, and that our prayer, like that of so many unfortunate persons before us is heard and that as from tomorrow morning "all with one accord", as it says in the Acts of the Apostles, behave in such a way that inflation falls to 10 per cent. Still, the mere fact that it happened in the manner in which I have described—which might be regarded as the marginal case for a prices and incomes policy—would not alter the dislocation which is inherent in the fall in the rate of inflation.
So the purpose of this policy is to act as a guilt transfer mechanism. It is the action of men who are not prepared to tell the people what is the cause of our difficulties and what will be the price of ending our difficulties. It is the action of men who are looking for scapegoats, who want to take the credit if perchance there should be such a decline in inflation, but who want to be able to say, if there is no decline or when the unemployment emerges, "If you had only done what we told you, obeyed the guidelines and complied with whatever was the phase of our prices and incomes policy at the time, it would not have hurt you." They want to say to the people, "It is your fault and not ours." That is what the right hon. Member for Sidcup (Mr. Heath) said throughout his version of this adventure. It was always the people who were wrong because they were not behaving as he told them they should be behaving and, consequently, the appropriate consequences were not following.
This is the mystification which is being practised on a grand scale upon the nation, in place of telling the nation what it is that has to be done, how it is to be done and what the price will be.
There has already been more than one reference in the debate to the Tolpuddle speech—how evocative—of the Chancellor of the Exchequer at the weekend. He dared to say to the public: For the past 18 months we have been living above what we were earning. We have been able to do this because foreigners have been prepared to back us with their money I do not know who that "we" was intended to mean to those whom he was addressing. But I am sure that he did not spell it out to the audience at Tolpuddle, because he has not spelt it out to any audience, that the people living above their means were the Government.
It is the Government's deficit that is being borrowed from overseas, or which has been borrowed hitherto; and our deficit on current account is simply the unavoidable contra of that borrowing which, fortunately for us and for the Government, they have been able to accomplish in order to meet their determination—not to live above the nation's means, because it is our means that have been used—but to live above what even this Government were willing to obtain by taxation or were able to borrow.
It is a strange irony that in this same Sitting during which we are to vote on the White Paper, we shall proceed afterwards—though I hope not, because I shall vote against it—to award ourselves some more money. If anyone wants to see the people who are guilty of inflation and whose fault it is, they are not the people to whom White Papers and Tolpuddle speeches are addressed. They are right hon. and hon. Members in this Chamber, who sustain Governments, who form Governments and who fail adequately to criticise Governments. It is their actions not just in the present but in the past, too, which were bound to produce this effect, which it was predicted would produce this effect, and which did produce this effect.
I shall not trench upon the debates which are to follow later tonight save to say that at other times many considerations might have been passed in review when we awarded ourselves what we consider to be our appropriate "remuneration", to use the terms of the Bill. But tonight one is outstanding. It is that the people who, by their actions over the years, are solely responsible for the scourge of inflation in this country will be taking steps, on a scale which they purport not to permit to anyone else, to protect themselves against the consequences of inflation. I do not know how with any sense of shame or decency they can do that.
However, that is to come after 10 o'clock. At 10 o'clock, by omission or commission, once again, instead of telling the people of this country what they need to be told about the cause and the cure and the price of the cure of their ailment, we shall embark on the course of make-believe of which everyone knows the main elements and items, and a majority will vote for the piece of buffoonery between the covers of the White Paper entitled "The Attack"—the attack, forsooth, from the predators themselves—"on Inflation."
But the dereliction of duty lies not by any means wholly upon the Treasury Bench. At a time like this, when the nation needs to be told, that function falls pre-eminently upon Her Majesty's Opposition, untrammelled as they are by the immediate consequences of what they do and say and not subject to the pressures day to day which rest upon all administrations. That is why at historic moments it has been Her Majesty's Opposition that have had the duty and privilege to speak for England.
However, on your left, Mr. Deputy Speaker, you survey what is largely a vacuum. The right hon. Ladies and Gentlemen on the Front Bench bear a certain resemblance to barnyard fowl—say, a hen and chickens—huddled together in one corner, for fear that someone will ask them the inevitable question to which they are not prepared to give the answer. The function of an Opposition is to be in the position to replace the Government. No Opposition, when it is challenged to say what in this grave hour needs to be done, dare reply, "You got us into this mess. It is your business to get us out of it." That is non-opposition. That is the renunciation of the constitutional function of Her Majesty's Opposition in the House and in the country.
The practice has already been inaugurated in this Session, by none other than the right hon. Member for Sidcup, of quoting, of all people, the Marquess of Salisbury—the great Marquess of Salisbury. I shall conclude with a quotation from 1872. The right hon. Member for Sidcup quoted from 1867. The Marquess of Salisbury said: The plea of necessity, the claim of party fealty, the fear of making bad worse, or the hope of mitigating the inevitable, are motives of real cogency … and though after the event they are seen to afford no defence for a shifty policy, they often appear at the time sufficient". He continued Such pleas may serve to excuse exceptional deviations from the consistency which the law of honour requires between the promises of opposition and the performances of office—but only so long as they are exceptional. If ever they become so habitual to any party that leaders can plan them without scruple, and followers can be brought to accept them— how contemporary it all is— without shame or resistance, that party must renounce, unless the English character shall greatly change, all substantial share in the councils of the nation. The tragedy of the nation at present is that that description, as some Labour Members to their credit have recognised, applies not to one great party in the State but to two.
The Marquess of Salisbury attached to that statement, as will have been observed, the qualification: unless the English character shall greatly change". There are those, throughout the world and in this country, who say that it has changed and that this is now a nation which expects to be deceived, which looks to its party politicians to deceive it, which wants not to be told the truth, and which will muddle or be bamboozled along to the edge of the abyss and over it.
The moral issue behind these debates is whether or not we have become the reflection of a nation whose character has indeed changed or whether temporarily we in this House are misrepresenting the nation. For my own part I shall not, as long as I live, believe that the character of this nation has changed. I shall never believe it—never, never, never.
7.35 p.m.
I certainly agree with the right hon. Member for Down, South (Mr. Powell) that whilst time may change the solutions offered to the House by successive Governments have not changed one bit. Perhaps we may also agree that this is the fifth or sixth time that these measures have been tried. I am sure that just as they were found to be wanting in the past they will be found to be lacking in exactly the same respects in the future.
I am sorry that I cannot agree with the solutions offered by the right hon. Member for Down, South but I certainly agree that it is time that both Front Benches rejected the advice of the Treasury mandarins, who have been wrong on every occasion since the war. They have been wrong from the time when they said that the American loan should be convertible and it disappeared overnight. Yet theirs comes forward as the respected view. It is accepted. We hear the same part-worn arguments and platitudes from both sides. We hear about the strong Government and their determination to force through measures whatever the cost. When the analysis is placed before the House it is always said—this time it has not been lacking—that the people are behind the Government that the measures are necessary, and that they will receive full backing.
It is natural that with raging inflation people should be desirous of seeking a solution. What inevitably happens, as night follows day, is that six months later, as the full effects of a policy become known, it becomes unpopular. Those who supported it begin to re-examine the policy. I suggest that we shall follow that pattern.
We have been told today—and I am sure we shall be told later in the debate—that this is not a statutory policy. It is like a horse that is drawing a cart. A person can tell the horse that the whip is in the locker but not in his hand, and that if the horse does not follow the route the man wishes he will bring the whip out. What else can that be but a warning that even worse is to follow. That is what is now happening. A statutory policy will follow.
Looking back on the actions of successive Governments we have seen the policy fail and unemployment begin to rise. I tell my hon. Friend the Member for Whitehaven (Dr. Cunningham) that this policy will do nothing for his constituents. Indeed, the position of Whitehaven and the Northern Region, in which unemployment is already high, will be made worse.
Certainly the present rate of inflation is doing something for the people of Whitehaven. It is rapidly destroying their standard of living. They will welcome any action in the short term which will militate against that. If my hon. Friend wants to advance the argument that what I am supporting will not do anything for the people of Whitehaven, perhaps he will explain how his proposals will do something for them in the immediate future.
I am saying not only that it will do nothing for them, but that unemployment will rise. I predict that by the beginning of next year unemployment will rise to 1½ million. If there is no redress before the end of the year, it will reach 2 million. I suggest that, then, if not before, a different tune will be played by the Front Bench and those who support it.
My hon. Friend has been critical of the alternative measures which we put forward. He rightly said that they do not help in the short term, but they do help in the long term. If the Government would follow the policies advocated in the manifestos on which they fought two elections, it would be more relevant to the crisis now facing us. At that time they said that a statutory incomes policy would fail and that the way to tackle inflation was first to tackle prices. We are saying that if we began to combat price rises of essential goods and services—for example, foodstuffs, rents and rates—that, by its very nature, would take out the anticipatory nature of wage bargaining. I suggest that at the wage bargaining table it must be in the region of at least 12 per cent. If we took that element out by our attack on prices, as we advocated at the election, it would be an immediate measure that the Government had taken and on which they were elected to office.
I think that my hon. Friend the Member for Whitehaven and I are in agreement. The measures that we are suggesting—import controls, the re-establishment and re-equipment of British industry through the National Enterprise Board and the setting up of public industry in the regions—are the longer-term measures. But a start must be made now if we are to prevent the erosion of the base of manufacturing industry. That is what I and some of my hon. Friends put forward as the alternative strategy.
I know that many hon. Members still wish to take part in the debate, so I will conclude on this note: the late Aneurin Bevan said that it was no use looking into the crystal when one could read the book. The measure that is being proposed tonight is the same well-worn book that, so often in the past, has been taken down from the library shelf, read, put into practice, and has failed. I suggest that it is time that the Labour Party and, indeed, the Labour Government, threw that book away if we are not to follow the same path as we followed from 1966 to 1970 and the path which destroyed the Conservative administration.
7.43 p.m.
In a few minutes I should like to try to take a balanced view of a statutory incomes policy, but at this stage I should like to dispute the point made by the hon. Member for Nelson and Colne (Mr. Hoyle) that statutory incomes policies quickly become unpopular with the public. During the February election campaign, polls showed the same 70 per cent.-plus support for such polices as the recent poll on the policy put forward by this Government. The hon. Gentleman may recall that in the February election about 17 million people voted for the Conservative and Liberal Parties, who were then in favour of statutory incomes polices, compared with only 11 million who voted for the Labour Party, which was against such policies. Something of a myth has arisen about this matter and it is only right to put it in its proper perspective.
I should like to join those who have paid tribute to the speech made by my right hon. Friend the Member for Sid-cup (Mr. Heath). It was one of the most outstanding speeches that I have heard during the five years that I have been a Member of this House. I found myself in considerable agreement with the points made by my right hon. Friend. In particular, I should like to endorse his remarks about the effect of a high level of unemployment on people's attitudes to free enterprise. Those who advocate unemployment are no friends of the free enterprise system. I wish that from time to time some of the more extreme monetarists would recognise that if free enterprise is to survive in this country it must be seen to be successful, and success is not measured by people in Britain by a high level of unemployment.
Having believed in an incomes policy for some time and particularly that the last incomes policy should not have been stopped, it would be churlish not to welcome the proposals in the White Paper. They are a considerable step forward after the dither, delay and incompetence of the last 17 months since this Government came to power. The White Paper deserves a welcome because it is the first real attempt by the Labour Government to deal with the major economic problem facing us—inflation—a problem which has got worse since the present Government came to power. The White Paper is to be welcomed because it is better later than never.
The amendment rightly mentions the Government's belated commitment to reduce the disastrous rate of inflation. It might also have mentioned the considerable escalation in the rate of inflation over which the Government have presided. While prices rose by 13 per cent. in the year to February 1974—the last year of the Conservation Goverment—they have risen by 26 per cent. in the year to June 1975 under this Government. While most of the increases in the year to February 1974 was the result of the steep rise in import prices, particularly oil, over which we had very limited control, most of the increase in prices during the past year has been due to excessive increases in incomes. I use the word "incomes" advisedly, because I include salaries quite as much as wages.
What is particularly worrying about these figures is that whereas British prices went up by about the average of the OECD countries in the last year of the Conservative Government, they have gone up by double the average increase in the OECD countries during the past year.
Why has this escalation in inflation happened? It has not happened as the inevitable consequence of the Conservative Government's statutory incomes policy. It has happened simply because the present Government abandoned that prices and incomes policy and put nothing in its place They gave the green light to everyone to ask for and get as big a wage and salary increase as possible. The Government have encouraged every trade union and professional body to exploit their monopolistic powers to the full. They have pretended during the last 17 months, that everything in the garden was lovely. Today's inflation is the inevitable consequence not of the Conservative Government's prices and incomes policy but of the Labour Government's absence of any meaningful incomes policy so far.
Now, after 17 wasted months in which great harm has been done to the British economy in terms of inflation, unemployment and the balance of payments, at Ion last the Government have introduced a statutory incomes policy which they said they would never do. They have done what the 1964–70 Labour Government found they had to do even though they disliked doing it and what the 1970–74 Conservative Government found they had to do even though they disliked doing it. It is a pity that Government's in Britain will not learn from the bitter experience of their predecessors.
Even though I condemn the Government's attitude, until very recently, towards incomes policies, I welcome the White Paper and the Government's conversion to an incomes policy. This does not mean that I agree with every detail of the White Paper—far from it. Every incomes policy has defects which should be criticised and discussed even if one accepts the principle of the policy.
Phases 1, 2 and 3 of the Conservative Government's policy had defects but I supported all three in principle. It would be surprising if phase 4 did not also have defects. For this is phase 4 of that policy. That is how I see the White Paper proposals and I suspect that most people in the country will see them in the same way.
The Prime Minister has explained that his previous objections to statutory incomes policies were not really objections to a statutory policy but only against criminal sanctions on workers. I hope that he believes this explanation, because very few other people do. If it enables him to convince himself that he has not changed his mind and that he is the personification of consistency, so be it. The rest of us prefer to take a different view.
In welcoming phase 4 of the incomes policy, I hope that it will have at least as much success as phases 1, 2 and 3. Despite the myths that have arisen, these phases were undoubtedly much more successful than unsuccessful.
As my right hon. Friend the Member for Farnham (Mr. Macmillan) said in the Second Reading debate on the Finance (No. 2) Bill, That policy was not such a failure as it is sometimes made out to be … when we were forced to move to a statutory policy, despite the fact that world prices and commodity costs were escalating to an unprecedented degree, we contained inflation and prevented the hyperinflation that would otherwise have happened. We obtained the consent of the great mass of work people, including the trade unions, right up to the end."—[Official Report, 8th May 1975; Vol. 999, c. 1672.] In the same debate, the hon. Member for Berwick and East Lothian (Mr. Mackintosh) concurred in this view. Certainly the Conservative Government's statutory incomes policy succeeded in keeping inflation at a lower level than it has been since, despite the escalation of import prices during phases 1, 2 and 3. Certainly the Conservative Government's policy did not cause anything like the industrial strife that is claimed. There were far fewer days lost through strikes than there were before or have been since.
Of course phase 3 finally came unstuck as a result of the General Election defeat of the Conservative Government in February last year, but it would be wrong to judge statutory incomes policies on that one reverse, serious though it undoubtedly was. If a true judgment is to be made, one must look at the whole, and phases 1, 2 and 3 had many more successes than failures. I hope that phase 4 will be equally successful.
My main worry about the Government's proposals is the absence of real teeth in the policy. After the complete failure of the social contract, one inevitably has doubts about toothless monsters. I am particularly concerned about the lack of direct powers to ensure that the pay limits are observed in both the public and the private sectors. It is not enough to threaten to sack the chairman of a nationalised industry if the limit is exceeded or for the Government to say, as the White Paper does, that it will not foot the bill for excessive settlements in the nationalised industries through subsidies, by permitting extra borrowing, or by allowing excess costs to be loaded on the public through increased prices or charges. The White Paper continues: All this means that excessive pay settlements will affect employment in the industry concerned. The Government know perfectly well that they could not and would not sack miners if there were an excessive settlement in that industry. Nor is it enough for the Government to threaten action through the Price Code to deal with the private sector. We need much stronger powers of a more direct nature over pay—both wages and salaries—and I hope that the Government will think again about this. Perhaps they might even let us see their back-up proposals. It would be even better if they introduced statutory back-up powers with real teeth that would have some effect.
Despite some reservations, I believe that the White Paper deserves support in principle. Its authors have not earned any support. Their behaviour in Opposition to every move by the last Conservative Government to deal with inflation was nothing short of disgraceful. They supported every wage and salary claim, no matter how exorbitant. They did everything in their power to undermine the Conservative's Government policy against inflation.
However tempting it may be for the Conservative Party to launch an all out attack on the White Paper, this is rightly being resisted. If this Government's proposals fail, Britain will fail. The British people will suffer. The Government should get our support now, but if they are to keep it, they must earn it. There must be no backsliding on the policy and the White Paper. If there is, the Government will forfeit any right to support or respect. Belatedly, they have acted. For as long as they act with decision and resolution, they should be supported.
I would remind hon. Members that the wind-up speeches are due to begin at 9 p.m. It is now almost 8 p.m.
7.58 p.m.
The hon. Member for Leek (Mr. Knox) made an interesting speech. It was reassuring to hear him welcome the White Paper. He said he hoped that there would be no backsliding from the White Paper. I hope there will be no blacksliding from his speech and that he will join us in the Lobby this evening.
I congratulate the Chancellor of the Exchequer and the Secretary of State for Employment on their joint effort. It has obviously involved considerable political disturbance to them. The White Paper has one unique quality which escaped the right hon. Member for Down, South (Mr. Powell). He said that it was the same as before, and claimed that there was a staggering similarity to other wage policies we have had in the past. The one important difference is that this policy has the support of the TUC General Council, the principal unions and the general public. That is the important difference between this policy and the other five we have had in the last 10 years, and that is why it is more likely to be successful.
It would be gracious to express some appreciation of the trade union leaders who have taken considerable personal risks to make a substantial contribution to this policy. Jack Jones, Joe Gormley and others have put themselves in considerable personal jeopardy with some members of their unions in order to support a policy whch they believe to be in the best interests of the nation.
I have some sympathy with my hon. Friends who feel that they cannot support the White Paper. There is no doubt that it involves a substantial departure from the manifesto, and we accept that it will cause some heartsearching among many active workers in the Labour Party throughout the country. I shall probably have some difficulty in explaining the White Paper to the Loughborough Constituency Labour Party. However, the manifesto cannot be regarded as tablets of stone coming down from the mountain, to be adhered to rigidly, when we face a national crisis of the greatest magnitude.
I am therefore sorry that some of my hon. Friends have put down an amendment and that some, I understand, are to vote against the White Paper. It is unfortunate that at a time of national crisis we cannot have more solidarity on the Government benches. I am surprised at some aspects of the amendment. One of its principle demands is for import controls. It is generally agreed that import controls always produce reciprocal import controls in other countries—
That is not at all true.
I could imagine nothing more deleterious to our trade situation.
My hon. Friends seem to have in mind some direct control of private investment into public investment. When done on the scale envisaged by my hon. Friends I can imagine nothing more calculated to reduce international commercial confidence in this country. The crisis we face is very much a crisis of confidence.
It is suggested in the amendment that we should mobilise our overseas assets. Surely that simply means spending our reserves. What does "mobilise" mean, if it does not mean spending the reserves?
I am sorry that my hon. Friend has not read the amendment more closely, or studied the documents which explain it. We are proposing to mobilise a sector of private portfolio holdings. The effect of that would not be to dissipate them it would mean that certain liabilities which we now have to discharge across the exchanges could be discharged in sterling. It is as simple as that.
What my hon. Friend suggests is simple but my point is that it would have disastrous effects. I understand perfectly what he wants to do. What my hon. Friends have in mind would immediately cause a great reduction in the living standards of this country.
What does my hon. Friend expect of the White Paper?
It is extraordinary that the amendment suggests nothing for coping with the unquestionable problem of wage inflation. Yesterday my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said that wage increases were not an important element in the present inflation; that they had merely a marginal effect. I should have thought that both sides of the House, practically all economists, and anyone who has any dealings with political economies, accepted that the principal crisis is created by wage inflation.
When I heard my hon. Friend assuring us that increased wages were not an important part of inflation I felt that I was listening to him in some sort of nightmare, hearing him say that the earth was flat. Everyone except for a very small section agrees that wage inflation is the biggest cause of our troubles.
My hon. Friend certainly will have difficulties in Loughborough.
I trust that I will not have the same difficulties as those which my right hon. Friend the Member for Newham, North-East (Mr. Prentice) is having, because although there are those who disagree with my views, there are not the manoeuvres which are taking place in my right hon. Friend's constituency.
Hon. Members on both sides of the House have suggested that the Bill which provides sanctions against breaking what is at present a voluntary policy should be published. There is a respectable argument for that case. It is tiresome to debate a White Paper, the ultimate sanction of which is a Bill which has not yet been published. It is clear that our overseas creditors would like to see sanctions with teeth. The financial institutions would like a Bill with sanctions. It would greatly increase confidence. We must realise, however, that this is the most sensitive part of the White Paper policy, and since, in September, the TUC General Council and leading trade unionists will be trying to steer the Trades Union Congress into agreement with the White Paper policies, it would be absolute folly to publish the Bill at this stage. The Bill is not necessary, and its absence does not cause any injustice.
Will the consultants and the British Medical Association follow the guidelines laid down by the TUC?
I cannot speak for my professional colleagues, but I assume that they will have to do so. The most they can get is an increase of £6 per week—[ Interruption. ] Speaking as one who believes in the White Paper, I think the answer to my hon. Friend's question must be "Yes".
The policy base of this White Paper will not produce successful results immediately. There will be continuing price increases as a result of what is already in the pipeline, and all the economic indicators show that there will be a deepening recession in this country. Obviously, through the next few months there will be great pressure on the Government to abandon or modify the policy. I hope that my right hon. Friend the Secretary of State for Employment will make it clear that the Government will adhere rigidly to the policy. Unless they do, the present deplorable economic situation will rapidly deteriorate further.
This is a psychological exercise, and the whole effect of the White Paper will depend on creating the realisation that the Government mean what they say and will pursue their policy. Yesterday, my right hon. Friend the Chancellor said that there would be a review of public expenditure, and in the Budget he sought to put in hand measures to reduce public spending by about £900 million in 1976–77. There has been an enormous runaway increase in public expenditure. Even a few hours after the White Paper was published there was a request for Supplementary Estimates of £2 billion. There has been a 44 per cent. increase in public expenditure, which is now approaching 50 per cent. of the GNP.
As a Socialist I welcome public expenditure, because it is a redistribution of resources. Obviously we need more public expenditure on such things as homes, better medical services, better education and better social security benefits. But public expenditure has now increased to an extraordinary degree, and that applies to the increases in local authority rates. I hear ceaseless complaints from my constituents about the rate increases, as, no doubt, do all other hon. Members. I hope, therefore, that after the review the Chancellor will take more effective action to keep public expenditure under control, while maintaining all the necessary Socialist priorities. Public expenditure must be decreased in the immediate future.
I entirely accept that it would be most unwise to attempt any short-term cuts in public expenditure. However, public expenditure always has to compete with capital investment and with consumer expenditure. Capital investment is inadequate at present and it is politically impossible without enormous increases in taxation, to reduce consumer expenditure to the substantial degree necessary to keep public expenditure at its present rate. I hope that the Chancellor will be firm when dealing with that cause of inflation.
The right hon. and learned Member for Surrey, East (Sir G. Howe) and the right hon. Lady the Leader of the Opposition have said that the present economic crisis is the fourth which this Government have experienced. I suggest that this is totally untrue, because there would never have been this enormous escalation of wages had it not been provoked by the attitude of the previous Conservative Government. If we had not had the Industrial Relations Act and the confrontation with the miners, there would be a more helpful attitude on the part of the trade unions.
The Conservative Government expanded the monetary supply in a most reckless way—they induced Lord Barber to trans- fer his activities to an entirely different place. Everyone knows that increases in the money supply take approximately two years to work through. In 1972 Lord Barber increased the money supply by 22 per cent. and in 1973 by 24 per cent. We are now beginning to feel the real effects of this. For right hon. Gentlemen opposite to indicate that the present crisis is the Government's doing is as hypocritical as their intention to abstain tonight. It is extraordinary that at a time of great national crisis all we can expect from the Opposition is that they will reserve their judgment and abstain. History will not forgive them, but will remember the toughness, courage and determination of my right hon. Friends on the Government Front Bench, who will enforce this policy.
8.13 p.m.
The House has listened with great interest to the remarks made by the hon. Member for Loughborough (Mr. Cronin) and is pleased with the sort of chat he had with his hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). The House is indebted to the hon. Member for Loughborough for demolishing the manifesto myth that seems to keep cropping up. He should have gone on to say that only 39 per cent. of those who voted went along with that manifesto.
It has come out in the debate that the action that the Government have taken has been too late. It has been delayed for 17 months. Our competitors, especially in Europe, have taken action against inflation. I shall not bore the House with the figures of their rates of inflation, because those figures have been bandied about sufficiently. It is obvious that in the United Kingdom we cannot measure up to the records of our overseas competitors.
One thing that upsets the public is the effrontery of the Prime Minister. A few days ago when the Prime Minister was being pressed on what he would do about inflation, he said that no panic measures were necessary, as if our inflation had just crept up on him the day before. Inflation has been going on for some time. The Government bear heavy responsibility for allowing it to continue for as long as it has. Now we have a package deal, and many people are asking the question: will it work? We all agree that the enemy is inflation. We differ only on how to tackle it. The Conservative Party believes that inflation should be tackled one way and the Labour Party believes that it should be tackled another. No doubt the Liberal Party has its own solution to the problem. It has emerged from this two-days' debate that all hon. Members agree—even the hon. Member for Loughborough conceded this—that public expenditure has got out of hand and that we are spending too much money that we do not have.
It is all very well for the hon. Member for Loughborough to say that to increase public expenditure or to have a high public expenditure means a redistribution of wealth or resources. However, this does not apply if the country does not have the money. This is the trouble we are in, and this is what I cannot understand about the White Paper.
Having regard to the position of sterling and our international financial standing in the world, foreigners will say that as a country we are living above our means, and consequently we must cut Government expenditure. It is complete madness for the White Paper to contain proposals for increasing Government expenditure. I know that £200 million is a drop in the ocean, but it is a step in the wrong direction. The Government should be going the other way and reducing their expenditure. This is why sterling is so weak.
Put up the rates.
It does not matter what we do. Labour Members do not seem to understand that we can only go on for so long spending money that we do not have. Eventually the situation catches up with us and the price becomes greater and greater the longer we continue.
Cut defence.
At last the Government have accepted, in the White Paper, that there will be cash limits on the nationalised industries. That is a step in the right direction. The other day a Minister said that if a chairman of a nationalised industry exceeded the £6 guideline he would be sacked. That is an interesting remark. I should have thought, with our parliamentary tradition, that the Minister in charge of the Department which dealt with that nationalised industry should also be sacked. There are many anomalies. Labour Members may laugh but a Minister cannot shed responsibility to the chairman of a nationalised industry. He must take some responsibility himself. Many more anomalies will arise from this £6 guideline.
The point has been made, and it is worth repeating, that although the flat-rate £6 guideline sounds attractive, it does, at the end of the day, upset the differentials between the craftsman and the labourer. Therefore, more trouble is being stored up for the country. The rate of inflation is 26 per cent. and the Chancellor is trying to reduce it to 10 per cent. within one year. As the right hon. Member for Down, South (Mr. Powell) said, this will be a painful operation.
I should like to remind the Minister that when the Conservative Government were in power they took action against inflation when it was running at only 9 per cent., 10 per cent., and 11 per cent. This Government have waited until inflation has reached 26 per cent. before thinking that some action should be taken.
One thing that we do understand is that people want increased wages or salaries. However, insufficient attention is given to what rate of production will result. It is no good comparing the United Kingdom with Germany and saying that the Germans receive high wages. The Germans have a high rate of production, whereas our rate of production is low and stagnant. It is no good our sitting in cloud-cuckoo land and expecting a German day's pay for a British day's work. We have to increase our production—
Or investment.
I am grateful to the hon. Gentleman for reminding me about investment. What we must realise, from the indications internationally, is that, probably towards the end of next year but certainly in 1977, world trade will take a reasonable upturn. As an industrial nation, we should now be planning to take advantage of that upturn.
That brings me to investment. I am engaged in industry. Investment in industry depends on two things—confidence and profitability. The question is whether one can get one's money back after a period. So much is said by Labour Members—as it is in one of the amendments on the Order Paper—to the effect that investment must be directed. What is not said is how it will be paid for. As far as I can see, there will be confiscation. We cannot direct investment without confiscation, and it is no good Labour Members below the Gangway thinking that we can.
Investment in Britain is slack for many reasons. It might be a good idea if the Minister got rid of the myth that investment depends on a political party. It has nothing to do with that at all. It might be a good idea for the Government to undertake an investigation into why business men do or do not invest. The results of such an investigation would be very salutary for many Labour Members. If one is to invest, obviously one must get one's money back. We cannot get people to lend money for new machinery, or whatever it is, on any other basis.
There are many reasons why British business men are not investing. One reason is the lack of confidence, about which there can be no doubt. We have high taxation, advance corporation tax, capital transfer tax, dividend limitation and price control, and as if that is not good enough, we shall probably have a wealth tax in addition. What incentive is there for any business man, or anyone for that matter, to invest, with all these shackles on him? The investor may be a foreigner, and he will look at this country and its strike record. We must get back to realism if we are to have an upturn in investment. One cannot legislate for investment.
That sounds beautiful, but can the hon. Gentleman say why it was that in the three years 1971, 1972 and 1973, when the profits of manufacturing industry rose by a half and its taxation was reduced by one-third, its investment still fell by one-third?
The investment continued. The rate of growth of the investment did not rise as fast as it had been rising. That is very different from saying that it fell by one-third. It was the rate of growth in investment that fell.
If we are to have investment we must have an adequate return on capital.
They had it then.
I do not want to delay the House for too long.
Answer the question.
There is also the question of the Government's nationalisation policy. When we have a national crisis on our hands, to devote our energies to trying to take over this or that industry, whether or not it takes resources, when all our energies should be directed at trying to solve the crisis, is complete madness. Of our exports, 97 per cent. come from private enterprise. If we keep nationalising the manufacturers of goods for export, our exports are bound to drop. Hon. Members on both sides of the House know that the efficiency of the nationalised industries cannot compare with that of private enterprise. [ Interruption. ] Labour Members below the Gangway must do their homework. They ought to look into private enterprise, which last year paid £3,000 million in tax. If we had taxed the nationalised industries, how much tax would they have paid? They would not have paid anything. Consequently, the nationalisation proposals are irrelevant and absolute nonsense. They are merely a sop to the Left wing of the Labour Party and to the detriment of Britain. The more people talk about this matter, the better.
We must let industry get on with its job. We want less Government intervention in industry. One cannot direct investment or legislate for prosperity. We must also stop trying to hide the unpalatable facts. We should tell the public the absolute truth, which is that the standard of living in Britain must come down before we can get out of this trouble.
I am not a critic of the trade union movement. I agree with it wholeheartedly.
That is kind.
It is not a question of being kind. It would not be a bad idea if some Labour Members below the Gangway were sometimes to say something good about capitalism. However, we must avoid putting the TUC on such a pinnacle, as though if the TUC says something, it is gospel. There are only 10 million trade unionists out of 55 million people in Britain. Let us keep them in perspective. Of course, they are an important part of our economic life, but let us not exaggerate their importance.
In order to get out of our difficulty we must be united. One thing that the Conservative Party will always do, including this occasion, is support anything that is in the national interest—unlike what happened when the miners confronted the democratically elected Government of the day and when Labour Members not only did not support the Conservative Government but actively worked against that Government, working up a feeling that the Conservative Government were against the trade unionists. Labour Members knew that that was untrue and unfair. What they did was done for party political purposes. We all know that. However, in this case the Conservative Party will not play the same game.
8.27 p.m.
I never like to sound discourteous even to hon. Members with whom I profoundly disagree, but I am bound to say, in all honesty, that the only description that can be applied to the speech to which we have just listened is one which I shall have to borrow from the right hon. Member for Down, South (Mr. Powell). It was a niece of economic illiteracy. The hon. Member for Croydon, South (Mr. Clark) said in a blinding flash of original thought that we are all against inflation and disagree only on how to deal with it. The reason we disagree about how to deal with it is that we disagree about what causes it. We write different prescriptions because we make different diagnoses.
But one diagnosis which has been made over and over again today deserves some examination. The hon. Member for Leek (Mr. Knox) and my hon. Friend the Member for Loughborough (Mr. Cronin) made speeches which were virtually identical and would qualify both for office as junior ministers—I should think very junior ministers—in a coalition government. They made exactly the same speech and both said that the only cause of our inflation is the rise in wages and salaries. I do not blame them altogether, for many others have said it, including one Minister of Her Majesty's Government who ought to know better.
I want to look at that assertion. It is true, of course, that wages are a contributory cause, and a significant one, of price rises; but we have only to examine some figures to see, first, that they are not the only cause; secondly, that they are not the principal cause; and thirdly, that they are not even the largest cause. I invite the hon. Members for Leek and Loughborough, and any other hon. Gentlemen who wishes, to do a very simple piece of arithmetic. Perhaps it is not all that simple for it involves a little research. They should get two sheets of paper. On one they should calculate what has been the contribution, over the last 12 months, to the increase in the retail price index of all wage and salary rises. That is not an easy calculation but it can be made. I am sure that it has been made by the Department of Employment which will have the figure.
Hon. Gentlemen should then take another sheet of paper and write down all the things the Government have themselves done which have increased prices—and we shall find that there are quite a lot of them. They should then do the arithmetic to quantify that. There are, for example, increases in indirect taxation which are inflationary, VAT and the second rate of VAT. I am not saying whether these actions were right. I am only saying that they are major contributors to inflation. Then there are the results of the insistence on charging economic prices for the products of nationalised industries. Again, I do not say whether this is right or wrong, but there have been increases in postal and telephone charges, and gas and electricity, and all the rest. These can be quantified as a contributor.
There is the increased cost of imports derived from the progressive devaluation of the pound which is, of course, Government policy; and one can quantify what contribution that has made to the increase in prices. There is our membership of the Common Market. There is the cancellation, now happily slightly reversed, of rent controls, with a considerable consequent rise in rents. If one adds all up all those one gets the figure of the contribution which direct action, direct decisions, by the Government—whether they were right or wrong decisions—has made. And it will be found that the contribution made to inflation by all the increases that there have been in wages and salaries is a very small fraction of the increases which have been made as a direct result of governmental decisions and governmental policy. There are, of course, other contributors to inflation, so to start with the idea that we have only to hold down wages and salaries and we have got rid of the problem of inflation is absolutely nonsensical.
I will speak of my attitude towards wages and salaries. I begin by saying that I do not believe in unregulated, free wage bargaining. I never have done. I differ from many of my hon. Friends and many members of my trade union in that. I am not a new convert to this idea. I wrote a pamphlet explaining the need for, and setting out a method for, the planning of the wages sector more than 20 years ago—I would guess long before any member of the Cabinet or the Shadow Cabinet ever began to think about the problem.
The reason I took that view, and still do, is simple. I am a Socialist and therefore I believe in a planned economy, and of course it is a nonsense to say that we can have a planned economy with an unplanned wages sector. But that coin has an obverse and a reverse. There is another side to the coin. If we cannot have a planned economy with an unplanned wages sector, we cannot have a planned wages sector in an otherwise unplanned economy—and that is what the Government are trying to create. This is why their analysis has gone absolutely wrong. I am not saying that we have to wait for a complete, beautifully, tidily planned economy and a Socialist State before we can plan a wages sector. But I am saying that the planning of the one and of the other have to go along part passu.
The Government's and our party's commitment to full employment has been abandoned. For the first time for many years we heard the Chancellor of the Exchequer say, in a speech horrifyingly similar to that of one of his predecessors, Philip Snowden, in May 1931, that he will introduce measures deliberately to create unemployment. That is not planning.
We have a price control which is at best marginal and at worst ineffective. We have no control over capital outlays, no control over imports, no control over investment, no measures generally to stimulate investment. We had an Industry Bill, which was to correct the defects that the right hon. Member for Sidcup (Mr. Heath) listed in that speech which my hon. Friend the Member for Penistone (Mr. Mendelson) quoted this afternoon, in which he condemned the private sector of industry for its failure to invest, and invest intelligently. The vitals have been cut out of that Bill, to make sure that the Government have no power to put right those defects.
My hon. Friend the Member for White-haven (Dr. Cunningham) spoke of the necessity not merely to increase investment but to spread it out better. He spoke with feeling of the had economic situation in his area of West Cumbria. Under our original Industry Bill plans, under the Bill as we envisaged it and described it in considerable detail in the Labour Party's election programme, the Government would have been able to help my hon. Friend to stimulate the economy of West Cumbria. He said that it could be done through planning agreements. We have now ensured that there will be no planning agreements, except when a company asks for them. I do not know any company in West Cumbria which will tell the Government "Please make us out a planning agreement." That is no sort of planning as the other side of the medal of a planned wages sector.
We are to have sharp cuts in the social services. We are not told what they are, but I can inform the House when we shall be told. It will be in the second week in September, the week after the Annual Congress of the TUC. The wraps will come off then. The cuts are being kept carefully under wraps in the hope that they will not cause the annual congress of the TUC to lose confidence in the Government's policy.
What contribution will those cuts make to what was the core of the thesis on which we won two elections last year, that we were seeking to create a fundamental and irreversible shift in the balance of wealth and power towards working people and their families? If we cut the social wage, if we reduce spending on education, the health services, the welfare services and other services of local authorities, what contribution are we making there?
It was an interesting coincidence that a few minutes before we began our debate my hon. Friend the Member for Gravesend (Mr. Ovenden) sought leave to introduce a Bill under the Ten Minutes Rule. He referred in his speech to the activities of a gentleman who has made enough profit recently out of finding a loophole in the rent legislation, and rent racketeering on working people, to build himself a £300,000 golf course. How can we allow that to go on and then say "Nevertheless, we must have controls over wages"?
A contract is a bi-partisan matter. Both sides have obligations. I do not believe that the Government have done nearly enough. Those who say that they have done nothing are at best grossly exaggerating and at worst wrong. But I do not think that the Government have done nearly enough to honour their side of the contract to give themselves the authority to demand a real control over wages. I say to my right hon. Friend the Prime Minister, although he is the last man who needs to be told, that the social contract was not a contract only with the General Council of the TUC. It was a contract with the nation. The people who elected the Labour Government feel let down, as the Government are not carrying out the policy on which they were elected.
I must explain why I shall vote against this White Paper. I never pretend to speak for anybody but myself. I shall vote against the White Paper for two reasons. The first is that I shall not have the opportunity of expressing my views by voting for the amendment in the name of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). I understand that there are procedural reasons why that could not be taken, although I judge from what Mr. Speaker said yesterday that if the debate had finished a little earlier that vote could have been taken. However, I do not want to become involved in procedural questions.
That amendment contains a policy alternative to that proposed by the Government. Whether right hon. and hon. Members agree or not, they cannot dismiss it. Nobody argued that its contents were wrong, although the right hon. Member for Sidcup and my hon. Friend the Member for Whitehaven said that the policy might be all right but that it would not take effect quickly. I do not agree. Some of its measures would take effect quickly.
The basic policy in the amendment was first put forward by us in 1966. That policy has since been continually refined, improved, extended and updated. We were told that the policy would not have an immediate effect. However, if someone had acted on it in 1966 we should be reaping the benefits of it in 1975. It was said that the policy would have no effect. I stake what little reputation I have as a forecaster of future events on the prediction that within 12 months the Government will have adopted at least two of the measures contained in the amendment but with which they do not now agree.
My second reason for voting against the White Paper is the unpublished, secret Bill. My hon. Friend the Member for Penistone said that the Opposition were indulging in a parliamentary gimmick act about the secrecy of the Bill and were making a great point about what the Prime Minister did or did not say, and whether he made a slip of the tongue. However, this is a real and serious point.
I am curious to see the Bill. I have not seen it. I know that it does not establish a statutory incomes policy. How do I know that? All my right hon. Friends have been telling me for years that only over their dead bodies would there be a statutory incomes policy. I know that none of them is in the mood for suicide. Therefore, I know that the Bill does not contain a statutory incomes policy.
Next Tuesday will mark the 30th anniversary of my election to Parliament. In all that time I have not seen—I am very curious to see it—a statute containing non-statutory provisions. That will be remarkable.
However, that is not the reason which compels me to go into the Lobby. I should like to spell out the reason. The Bill is mentioned in the White Paper, it has figured prominently in the debate and yesterday the Chancellor of the Exchequer gave an indication of what was in it, although we do not know everything that is in it. When that Bill is introduced in four or five months' time, if there is no Division on the White Paper my right hon. Friends would have the right to say to me "What are you beefing about? You had your opportunity to vote against the White Paper. What are you beefing about now that the Bill has been introduced?"
We hear phrases such as "a voluntary policy with sanctions", and so on. I am concerned about Joe Bloggs, the ordinary bloke on the shop floor. Whatever esoteric phraseology the Government use and whatever etiolated formulae the Government give birth to, they will not persuade me that if Joe Bloggs cannot get an increase which he is claiming because he is prevented from claiming it, that is a statutory policy, whereas if Joe Bloggs cannot get the increase he is claiming because his employer is statutorily forbidden to give it to him, that is not a statutory policy. That is nonsense.
I wish to say something to the Prime Minister in his absence and I hope that he will read it, busy as he is. He turned to us on the benches below the Gangway and, waving a metaphorical, admonitory finger, he said, "You naughty boys. If you vote tonight you will be voting against a decision of the TUC". I do not need any curtain lectures from the Prime Minister about the proper relations between the House and the trade union movement and between the Labour Party and the trade union movement.
As is well known, the Prime Minister has a phenomenal memory. He has much the best memory of any man I ever met, but he also has a very good "forgettery". At times he has a convenient "forgettery". When he waves that metaphorical, admonitory finger at me telling me that I must not do something because it is against what the trade unions want, my less good memory goes back to the years between 1968 and 1970. I wonder whether the Prime Minister has forgotten that during that time he consistently spat in the eye of the General Council of the TUC. He derided what it said and he trod on all the TUC's desires and feelings.
Some of us opposed him in that. I do not know whether my right hon. Friend the Prime Minister still remembers, but I bet that my right hon. Friend the Secretary of State for Employment remembers. He was the leading and most effective figure amongst those who constantly told the Prime Minister that he would not succeed and that he would engineer a defeat for the Labour Government—which unhappily proved all too true. I do not want any curtain lectures from the Prime Minister about that.
I am delighted that there has been a closer relationship between the Government and the TUC in the last few years. It started when the Conservative Government were in office. There has been over the past three years a tripartite committee of, first, the Shadow Cabinet and now the Cabinet as one party, the Labour Party as the second party and the General Council of the TUC as the third party. It has met regularly over the past three years. I have been a member of that committee ever since it was established. I am delighted with it. It has done a marvellous job of work and it continues to do so. My only regret is that we did not have it in 1966. If we had had the committee we should have avoided the mistakes of that awful period from 1966 to 1970, and we would not have lost the 1970 election. However, better late than never. We now have the committee and I hope that it will go from strength to strength.
Having said that, I believe that I am sent here by my electors to exercise my judgment and not to take a Messianic view of anybody. I do not believe in tablets of stone. I do not accept the doctrine that I have to accept what somebody says because he comes down out of a cloud from the top of a mountain. I would not take tablets of stone from any Conservative Member, and in my early days I refused to take them from Herbert Morrison. I will not take them from the Prime Minister. I will not even take them from my good and dear friend Jack Jones, for whom I have the greatest admiration. I want to think things out for myself. I shall vote tonight in the way that I believe is right and not because X says so, Y says so or even Jones says so, God bless him.
I think that the Prime Minister's little intervention was a little below his normal standard. Of course, it is true that the General Council has given support to what the Government are doing, and I can understand the importance that the Government attach to that. But let us wait six months. Let us see what the trade union movement's attitude is on 22nd January 1976 when it discovers that not all workers will get the £6, when it discovers that some employers, with Government encouragement, will resist even the £6 increase. That is the first shock that the boys on the General Council will get.
When unemployment rises above 1,500,000—and to my deep regret I fear that will almost certainly happen—when the trade union movement, and above all its members, finds that price increases are still much higher than the Chancellor has forecast, and that the cut in the real standard of living is much greater than forecast, and when it finds that the secret Bill is enacted, many trade union leaders will take a different view.
My hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) has said that his constituents took a certain view at a meeting last Sunday. I invite my hon. Friend to have another constituency meeting on 22nd January 1976 after all the events that I have mentioned have taken place, and especially after the Bill has come to light.
I noticed today that my right hon. Friend the Prime Minister replied vigorously to every question that was put to him except one. That was the question about what happens if an employer seeks an injunction against workers who go for more than £6 and how one legislates against such employers. In other words, how does one legislate along the lines described by my right hon. Friend the Chancellor of the Exchequer yesterday without creating—I put it no higher—the possibility that workers may be sued for contempt of court? My right hon. Friend the Prime Minister did not answer that question. Perhaps he did not know the answer. Perhaps the Government are still thinking about it. If that is the case, they are asking for a blank cheque. I shall not go into the Lobby tonight to give them a blank cheque.
Finally, I apologise for trespassing on the time of the House and for boring the House with what the French call an Explication do vote. Since I shall not be called tomorrow, perhaps I can give an Explication de mon vote demain. Although I shall vote against the White Paper, I shall not vote against the Second Reading of the Bill which is to come later because it contains a couple of provisions that I applaud. My hon. Friends and I have tabled some rough, tough amendments to that Bill. In Committee, I assure the Government, we shall pursue those amendments with all the power at our command.
Since in this speech I have fallen into the habit of quoting the French, I wish to remind the House that the French also have a saying to the effect that what is worse than a crime is a mistake. My hon. Friend the Member for Penistone said, "Let us not get all doctrinal about statutory policy". Let me say to my dear hon. Friend that it is not the doctrine that matters, or whether that doctrine is good or bad. What worries me about propositions in the White Paper is not whether they are doctrinally beautiful or whether they shine in a blazing light surrounded by cherubim and seraphim. What worries me is that they "ain't gonna work". It is not that the propositions are wrong but that they will be unsuccessful. My objection to them is not a moral one but a practical one. We have been through all this before—at least that applies to some of us. It is like waking from a nightmare and being relieved that one has awakened, then taking a sip of water and returning to sleep and having the nightmare over again. It is for that reason that I shall not be in the Government Lobby tonight.
9.58 p.m.
I am sorry that the hon. Member for Bethnal Green and Bow (Mr. Mikardo) went on for so long that the hon. Member for Cornwall, North (Mr. Pardoe) was unable to take part in the debate.
I can understand the hon. Member for Bethnal Green and Bow saying that he feels that he has awakened after a nightmare. I am only a little worried that the right hon. Gentleman the Secretary of State for Employment may tonight find himself in a position of still being in a nightmare and of never waking again.
It is no surprise to us that the Secretary of State for Employment has been asked to reply to the debate. After two difficult days of debate, he is expected to provide one of his firework displays—[HON. MEMBERS: "He has gone."] I do not know where the right hon. Gentleman has gone. Obviously he is expected to stir the hearts of the Tribune Group before they lose the battle, having taken their Socialist consciences through the Lobby. Unfortunately, some of the right hon. Gentleman's Socialist fire and powder has got a little damp after the last year or so.
The right hon. Gentleman must look back with nostalgia to the days when he was a back bencher below the Gangway or when, as a new Minister heady with power, he would tell the House that the miners could have all that they wanted and no harm would come of it or, on the other hand, that the Pay Board was to be wound up and that the social contract would deal with everything. He has said: I regard the whole apparatus of the statutory control of incomes as a cancerous institutional growth. In the feast of broken promises and pledges that the Government are now having to chew their way through, the right hon. Gentleman's plate is heaped especially high, and it ill becomes the Chancellor of the Exchequer or the Prime Minister to ask us what is our policy. For a Government who have changed their policy completely in the space of a few weeks it really is quite extraordinary that they should have the nerve even to mention policy to us.
Tonight we are taking part in a burial—a burial of the social contract. It really is quite remarkable that that old fraud, of which we have heard so little during this debate, has become the great unmentionable. It is a bit odd when we recall some of the things said about it in the recent past—the Prime Minister, of course, taking the first prize for hyperbole. He said, at Bury, on 26th September 1974: The Social Contract is our answer in the short term, the medium term and the long term to the problems of a modern industrialised society". At Cardigan, on 28th September 1974, he described it as the boldest experiment in civilised government that Britain has ever seen The right hon. Gentleman won the last election on those slogans, and, even as the social contract began to founder, he and his colleagues went on telling us that it was really working—or perhaps I should say that it would have worked if only Sir Kenneth Keith, the BBC, Henry Ford and others had made it work. Even if it was not working, the impression was given that there was no alternative. While it was conspicuously a total flop, there was the feeling that it was unpatriotic to say so—rather like making criticisms of the England cricket team. Even Labour Ministers began making a few critical noises. When the Minister for Overseas Development, for example, noted the blindingly obvious fact that some unions had welshed on the social contract, he was condemned as "economically illiterate" by the Secretary of State for Employment, and had his wrist slapped by the Prime Minister.
But now we know that the social contract is dead and buried. The Daily Mirror has said so. A couple of weeks ago it told us: Let's face it, the Social Contract is shameful flop; a national sick joke". What an extraordinary about-turn. It is rather like Pravda attacking the Red Army. There could be no surprise, therefore, at the speech of the Prime Minister. I must say that I should have thought that for the winding up of a debate of this nature the Prime Minister and Chancellor of the Exchequer would have had the courtesy to attend. They talk a great deal about the importance of Parliament but they treat it with scant respect.
The Secretary of State for Employment—who has always regarded himself as a great parliamentarian—will, I hope, convey to the Prime Minister and the Chancellor of the Exchequer that when the concluding speeches begin at 9 o'clock they ought at least to have the decency to be here to take part in them. But, of course, we have had no apology, no appreciation from the Prime Minister of where his policies have taken us, no understanding of the enormity of the about-face and the about-turn that he has performed. As the hon. Gentleman the Member for Bethnal Green and Bow has so well put it, the Prime Minister has a very good memory but he has an equally good "forgettery".
Characteristically, we have had the defence from the Prime Minister today that the course which he is following is the course that he meant to follow all along. Condemning statutory pay policies totally and without condition really meant not using criminal sanctions against workers. Although he thus explains away the situation, the question posed yesterday by the hon. Member for Liverpool, Walton (Mr. Heffer) has received no answer.
We ought to ask the Secretary of State. The hon. Member for Walton asked yesterday about a situation in which the Government used their statutory powers, under the Bill which we have not seen, to roll back a settlement that an employer had reached with the unions so that it conformed to the statutory pay limit. If an injunction were taken out by the employer against his workers, who then went on strike, and if the workers were then taken to court and refused to go to court, would this not give rise to a committal for contempt of court? We have had no answer from the Government to that question.
The pathetic answer that we had from the Chancellor of the Exchequer when he was asked a similar question by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) was that that was precisely one of the drafting points still under consideration. A drafting point? How long has the Chancellor of the Exchequer to be a member of the Government to think that this is a drafting point?
The Prime Minister has tried hard to convince us that what we have here is not a statutory wages policy but a voluntary remuneration, charges and grants policy. How a policy which removes from employers a contractual obligation to make pay settlements above the norm can be described as "voluntary", I do not know.
I should like to take up one more point which was made strongly by my right hon. Friend the Member for Sidcup (Mr. Heath) and which the Prime Minister apparently dealt with at Question Time and interrupted my right hon. Friend to say again that any retrospection of powers under the statutory policy would not apply. However, discussing the Bill which he have not seen, the Chancellor of the Exchequer said yesterday: The Bill would, thirdly, provide for compulsory notification of all wage settlements and, fourthly, once passed, it would enable the Government to reduce to the White Paper level any settlements made after 1st August 1975.'—[ Official Report, 21st July 1975; Vol. 896 c. 58.] Who is right? Who is responsible for this policy? Will the Secretary of State tell us tonight whether any reserve powers Bill will enable the Government to reduce to the pay limit any award made, or is it not to operate retrospectively, as the Prime Minister now says is the case?
All this merely points out the need for this Bill to be published forthwith. The hon. Member for Bethnal Green and Bow said that the Government were asking for a blank cheque. They are. But they are asking for a good deal more than that from the House of Commons. They are asking us to judge the determination and effectiveness of what they seek to do, but to do so without any of the information on which to base our decision.
The Government whisper to us. They tell their creditors abroad rather less coyly that there is a great statutory weapon in their bottom drawer. Therefore, this policy is voluntary, except that it needs statutory powers to make it work, and, if it does not work, new statutory powers will be introduced.
Is this a voluntary policy, a voluntary statutory policy or a statutory voluntary policy? We just do not know. The Government play with words and think that they are taking everyone in. They are intent only on finding some reasonable words which will provide a fig leaf for the right hon. Gentleman so that he does not have to go naked in to the conference chamber with the Tribune Group. With or without his fig leaf, we are optimistic about his chances. His right hon. Friend the Prime Minister also takes that view, because, like many before him, he believes that the Left can speak to the Left. We take a simpler view. We know that a paper tiger can speak to a paper tiger.
The White Paper leaves many questions unanswered. How do the Government intend to obtain information about pay settlements if the supply of voluntary information is not coming forward in the required amount, particularly if, afterwards, the reserve powers are brought in to penalise an employer for exceeding the limit? Who will monitor the policy? Will it be the right hon. Gentleman, or some high and mighty authority on which the right hon. Gentleman has always poured scorn? What about the position of small firms? Certainly some will pay over the odds. This policy can lead only to a sense of unfairness, which will break it. If there is to be a statutory policy or a pay policy, should there not be a mandatory system of reporting claims as well as settlements?
What about increments? How are they to be monitored? What is the difference between an incremental scale and a structured merit review? If some people get increments, others will also want them. There will be unfairness all round, especially to the blue collar workers.
What are the policy guidelines? What will be the position of an agreement made, for example, in May for a further increase later in the year, or for a threshold agreement later in the year? Will that fall outside the pay limit or within it? What about an agreement made before 1st August, or before the publication of the White Paper—an agreement which is due to come into operation during the course of the year, having already been negotiated, as, for example, in the electrical contracting industry?
What will happen to pensions, which have been mentioned by my right hon. and hon. Friends? What will happen to those people whose pay is being scaled down in their last year and whose pensions depend upon their salary in the last three years of their service? Will they receive the same sort of treatment as, apparently, Members of Parliament, or will they he held down? What is the position of someone who has some sort of index-linked Pension and who expects an increase perhaps in excess of £6? Will he be allowed to have it?
Those are all perfectly fair questions, which the Government should answer. Without those answers we are in no position to judge the effectiveness of the policy.
What happens when the year is over? We all know—the right hon. Gentleman has told us time and again—that the difficulties created by the statutory policy resulted in the flexible use of the social contract. The difficulties, anomalies and differentials had to be cleared up. Yet the Government have gone for the one type of policy, the fixed lump sum, which creates the most difficulties when we start to come out at the other end.
I turn to the attitude of the TUC. The TUC has done the Government and the country proud. It has gone very much further than before, and we should all recognise that fact. But we should also recognise, as the hon. Member for Sheffield, Attercliffe (Mr. Duffy) said, that the situation is much more serious. Unemployment is rising rapidly and inflation is at the astronomical level of 26 per cent.
There has been a feeling, certainly in the rank and file of trade unionists, of disillusionment with national leadership, to which the leadership has had to respond on this occasion. But, as my right hon. Friend the Member for Sidcup said in his great speech today, why must we go so far downhill before recognition of the problem breaks through?
The unions and the work force are enormously powerful in many industries, particularly the nationalised industries, the computer industry and the car industry. They can hold the rest of the country to ransom. Until we come to terms with that power and seek to understand it, and until we learn to live with it and harness it for the good of all, no economic policy, no statutory policy, no voluntary policy or monetarist policy can work in Britain.
It is not that our wages are too high; it is that our productivity is too low. We push up our paper wages, we devalue our currency, and we fall further behind our competitors. Compare what has happened in Germany since about 1965 with what has happened in Britain. We have had far bigger paper increases in cash, but a far smaller real increase in proper terms.
My hon. Friend the Member for Croydon, South (Mr. Clark) said that we must all learn that investment comes from profits and that profits come from using new investment to the full. It is only after that that increases in real pay become possible.
It is significant to see how the Germans have dealt with this matter, compared with ourselves. Some 12 million German workers this year settled for a wage increase averaging 6.8 per cent. The employers argued that today's profits were tomorrow's investments and the day after tomorrow's jobs and mass incomes. That is the lesson that we in Britain have not learned since the war. Therefore, we are and will go on struggling until we learn that lesson.
The Government must play their part. Looking back to the time when we were in government, I recall that at last, after great difficulty, we were getting profit margins up. But who were the people who condemned us for allowing profits to rise in the way that they were rising at that time? Who can blame industrialists for being slow to invest? We wanted them to invest much quicker than they did, but they were not prepared to invest until, first, they could see the market and, secondly, the labour situation improving. That is the lesson that we must learn.
I believe that there is a much greater understanding of this problem on the shop floor than is generally recognised. Leaders need the support of their rank and file. They need the confidence that comes from that massive support. The actions of unions, just like the actions of certain political parties, are not always representative of their total membership.
We believe that further efforts to improve participation in union affairs is absolutely essential to the success of the nation. Why cannot we bring in a Bill now which will provide an opportunity for a free postal ballot for unions? Why cannot we bring before this House a measure, which we know is overdue, which will provide that employer's time is made available on the employer's premises for election to union office at local level? These are matters which would enormously aid the democratisation of trade unions. They would give power and authority to trade union leaders which they lack at the moment. So many trade union leaders tell me that they have to go to the left in order to hold their memberships—[HON. MEMBERS: "Name them."] I could name them, but I am not going to embarrass them in public. Hon. Members know who they are and the Government Front Bench knows only too well.
The central part of the right hon. Gentleman's policies is what he calls the democratisation of unions. He claims, on the basis of personal acquaintance of trade union leaders, that they have told him they are forced to the left because of the absence of these policies. The right hon. Gentleman has an obligation to this House to name the people to whom he is referring.
It conies very ill from the party opposite to demand that I name anyone or anything. They cannot even produce a Bill to the House. They cannot expect me to name these trade union leaders. I have no intention of doing so. I am already getting behind with what I wish to say.
I agree very much with my right hon. and learned Friend, the Member for Surrey, East and what he has said today about unemployment. High unemployment is a scourge, and I do not want young people of today to look back at 1975 and 1976 as their grandfathers look back on the 1920s and 1930s.
A statutory pay policy in an emergency such as this can help us to reduce what would otherwise be high unemployment. I do not like it, but it is infinitely preferable to high unemployment. The rest of the policy militates against success in what the Government hope to achieve. Nowhere is this more marked than in the lack of a policy to deal with unemployment. We had a debate two months ago about school leavers and drew attention to the fact that they would have great difficulty in getting jobs this summer. The Government have been complacent in the extreme. An additional 3,000 apprenticeships have been granted by the Engineering Industry Training Board and a similar number have been provided by other boards, but generally not enough is being done to help school leavers.
Not enough is being done to create the skills which we may not need at the moment but we hope we shall need in two or three years' time. Nothing is being done to keep school leavers off the streets and out of trouble. If they cannot find work, we shall have to pay them unemployment benefit or social security. We urge the Government to do much more than they are doing at the moment. Let us have from the Government tonight a greater commitment to the training scheme, and if it costs money, adding to public expenditure, let us do that instead of subsidising food and rents. If the Government asked my constituents whether they preferred a job or a penny less on a loaf of bread, they would soon get their answer, as it has been given to me. The British regard jobs as more important than anything. The Government are going about this in precisely the wrong way.
Right hon. and hon. Members on the Labour side have made a number of charges against the Opposition which I should like to deal with. First they argued that our policy could only lead again to a three-day working week throughout British industry, and to increasing unemployment. That is what they said at the two General Elections in 1974. That argument is a little difficult for them now to maintain. Currently, industrial production is actually lower than it was during the three-day working week, and unemployment has increased by 120,000 in a month, to the worst June figures ever recorded. We know there is much worse to come.
The Prime Minister and his right hon. Friends spent much of their time at the last General Election saying that our policies, particularly what was proposed by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), would lead to a massive increase in unemployment. The Prime Minister told us: We won't have our people unemployed. Who is unemployed now, and what is the Prime Minister's message for them? He said: The Opposition want panic measures; we won't take panic measures. I am sure that most people who have read the White Paper will agree that never have measures been cobbled together with so much haste, with so little thought, and in so much evident panic.
It is all very well for the Secretary of State to shake his head. If he had been here as he should have been at the start of my speech he might have been able to answer certain questions which were not answered by the Prime Minister when he spoke. It comes to something when the Prime Minister has to borrow from his friend, the Editor of The Times, the suggestion that we are being indecisive and even unpatriotic. The Prime Minister put up his former propaganda Minister to say that last weekend. Let me explode that charge, too.
The Government's policies have doubled the rate of inflation, while in other countries it has been halved or cut even further. The social contract was a grossly irresponsible electoral fraud. For months we have urged the Government to tackle inflation, and now they have been impelled by events, by our creditors, by the plummeting pound, to act. With the rest of the nation the Opposition heave a sigh of relief. But even now the Government are doing too little, much too late. So we are now telling them patiently, once again, what they must do, and we are giving them another shove in the right direction.
This afternoon my hon. Friend the Member for Chippenham (Mr. Awdry) told the Prime Minister that he wanted to support the Government's measures because they were moving in the right direction, but would the Government not make any concession in respect of nationalisation? Of course, we have had not the slightest indication from the Government that they are prepared to vary their policies in any way in order to help win our support in the Lobby. We shall push the Prime Minister in the right direction, but he cannot expect us to slap him on the back.
I can promise him that when he and his colleagues are fighting to hold the line against an inflationary pay demand or an increase in a charge for a service, or to cut public expenditure, as they will have to do if their policy is to succeed, we shall support them. We shall remember what they did in a similar situation when they were in opposition. We shall remember the industrial action which regularly received the Labour Party's seal of approval. We shall remember how the Deputy Leader of the Labour Party even found it impossible, under a Conservative Government, to tell the people to obey the law. We shall remember all that, but we shall still support the Government when the fight against inflation and even the future of parliamentary democracy hangs in the balance. The terrible irony, which was made all the more poignant by the moving and masterly speech by my right hon. Friend the Member for Sidcup this afternoon—[ Interruption. ] How Labour Members can cheer his speech now, when they did what they did to him in December 1973 and January 1974, I do not know.
The Prime Minister is having to take these measures today, at a time when we are poised on the very brink of hyperinflation, precisely because he and his colleagues refused to give us a scintilla of support when we were fighting the battle against rising prices. The events of the past year and the suffering and hardship that we shall have to experience over the next two, three or four years, as right hon. Gentlemen have told us, is, in great part, the price we have to pay for the attitude of the right hon. Gentleman when he was Leader of the Opposition. However, when the right hon. Gentleman has to hold the line—as he will if this policy is to succeed—when his resolution and that of many of his colleagues melts like the snow in spring, we shall support him. I hope that for the sake of our country he has the courage to deserve it.
9.32 p.m.
The right hon. Member for Lowestoft (Mr. Prior) has asked me a number of general and detailed questions, as have many right hon. and hon. Gentlemen who have spoken in this debate. I shall do my best to deal with most of those questions. If I fail to answer all the detailed questions, perhaps I shall be forgiven and an opportunity will arise in the debate tomorrow to deal with some of them further. As the right hon. Member for Sidcup (Mr. Heath) said, in any such policy as this, there are a number of details that have to be worked out and I believe that some of those can best be dealt with tomorrow.
However, I shall try to deal tonight with the main questions which the right hon. Member for Lowestoft has put to me. I hope that he will allow me to start my remarks by referring, first, to the speech made by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), who certainly made some critical remarks on which I shall comment. My hon. Friend underlined what he calls the central core of the policy which the Labour Party has fought to pursue in recent years. That central core is concerned with the association between the Labour Party and the trade union movement which we sought to build in the years before the 1974 General Election and which we have sought to sustain since. Certainly the basis on which I and the Government have sought to act during the period since March 1974 has been of strengthening that association. That has been part of the meaning, as I have understood it, of the much-derided but still extant social contract.
At one stage the right hon. Member for Lowestoft paid tribute to the statesmanship of the TUC and he paid an even more glowing tribute to the contribution it has made in recent days than that paid by any other right hon. or hon. Conservative Member. But the title of the document to which he was paying tribute, the document which the General Council of the TUC has recently drawn up, is "The Development of the Social Contract", so whatever the right hon. Gentleman may say about it, the TUC certainly has not altered its view about the central part which the social contract must play in all our affairs.
It has been on that basis that we have sought to sustain a close relationship between the Government and the TUC during all of this period. Sometimes we have been attacked for that; but I believe that, especially in a time of national crisis—and I certainly believe that it is a time of national crisis, as described by many who have contributed to the debate from one side of the House or the other—it has been of immense importance for this country that we have had such a close relationship on which we are able to build.
Long before my right hon. Friend the Chancellor of the Exchequer made his statement to the House on 1st July, which is the origin of the discussions we are having now—indeed, for some months before—we had been having conversations with the representatives of the General Council on the way in which we would devise a new social contract or new guidelines under the social contract to govern the period ahead. We had the most detailed discussions, and out of those discussions a framework of policy was devised. It was a framework in which we still had to fix the figures. But a framework had been devised, and a framework which is of great importance in the policy we are devising now.
Perhaps I may remind the House of what were some of the central propositions to which the spokesmen of the General Council committed themselves, as we did, during those conversations. I believe that they are propositions most apposite to the crisis we face, propositions that cannot be denied by right hon. or hon. Members in any part of the House.
The first proposition was that they agreed with us that the current rate of inflation imposed an intolerable burden on our society and our economic prospects. It constituted a serious threat of a most grave kind to employment, and particularly to employment in the export trades over the coming weeks and months. How many people might be thrown out of their jobs if the rate of inflation continued in Britain at a level twice, or perhaps even more than twice, the level of that in many of the other countries in the Western World? That was the first general proposition on which we were agreed.
The second proposition in which they also concurred—this was not so easy for them, particularly in view of the wild and grotesque statements that were made about greedy trade unionists grabbing for money and all the rest of it—was that one factor, not by any means the sole factor, contributing to the inflationary situation was wages.
My hon. Friend the Member for Bethnal Green and Bow and my right hon. Friend the Member for Lanark (Mrs. Hart) have referred to some of these questions. But we went into these figures in great detail in our discussions, and if they had agreed with the figures produced by my right hon. Friend the Member for Lanark, certainly the TUC would not have agreed with the statement which was included in the proposition which we put to the General Council a week ago. But the fact remains that they said that wages, too, are playing a major part in this development at the present time.
A third proposition to which we agreed was that there should and must be dramatic and deliberate efforts made to break the vicious inflationary spiral and that it should be done by direct intervention, by having a flat-rate concept to deal with the next wage round. These were the propositions on which they agreed, and all of that was the framework established long before my right hon. Friend came to the House and made his statement on 1st July. This was to be achieved, also, by voluntary means, by persuasion and consent, and not by any system of statutory enforcement.
The right hon. Lady the Leader of the Opposition yesterday quoted a statement of mine on the statutory policy in which I said—and I still hold to the view—that I believed that it would be quite wrong for people to imagine that these problems can be solved by the establishment of some vast central apparatus, a point to which I shall return. I wish to underline that we have had these intimate discussions with representatives of the General Council over the whole of this period. We had devised a general framework of policy to try to deal with the problems facing the country and had come near to agreement upon those policies.
It was one of my fears and anxieties when my right hon. Friend the Chancellor of the Exchequer made his statement and told us of the situation that he felt impelled him to ask for those measures, that the work that had been done between the Government and the TUC to build up the arrangements by which we were to deal with the problem were to be undermined and destroyed because of the attempt to establish a legislative method of dealing with the problems. It has not turned out in that sense. We renewed our discussions during the subsequent 10 days and out of those discussions secured the voluntary approval of the TUC of the proposals to be incorporated in the plan to be put to this House. I believe that the House would be most unwise to disregard the significance of what the TUC has done in making these proposals to us.
My hon. Friend said it was an historic gesture by the TUC. I believe that it was an act by the TUC which can be of incalculable significance in enabling us all to try to devise the policy for dealing with our problems—and what I think was so important was that the TUC felt that it was the immediate test that had to be faced, that it was not possible for anybody to dodge it or to say, "We will postpone it to see what other policies can be devised. They did so, I think, because they understood how impossible it was for this country to continue with the rate of inflation prevailing at the time, and accepted that action had to be taken to deal with it in the immediate future.
The TUC saw that danger and therefore were prepared for the action to be taken, but they also saw the possibilities, too. They saw that a great prize was available. They were not only concerned about the danger if the current rate of inflation were allowed to persist; they were not only determined to take action and not to be deflected from that course; they also saw the great advantage that could be secured if this policy could be carried out and if, over the next 12 months, we achieved the objectives on which the Government and the TUC had agreed together. If we did achieve them, there would be a transformation in this country. We should be all the better able to proceed with all the other policies that we wish to pursue.
That was the situation. I believe that it was the right course for the TUC and the Government to take and that it would have been impossible for us to turn aside from it. We had to face the challenge of that time. Nobody could dodge it.
Some of my hon. Friends and other hon. Members have raised important objections. They ask "Is this a statutory policy or not?" I am not interested in any semantic quibbles.
Will the right hon. Gentleman confirm that the price of his staying in the Cabinet was the non-publication of the statutory reserve powers Bill? If so, how is that compatible with his oft-proclaimed belief in a sovereign Parliament and open Government?
I shall come to that point.
Under the so-called secret reserve powers Bill, to which reference has been made, there would be powers making it an offence for an employer to pay above a particular figure. It would be a quibble, and one that would hardly be successful, to deny that that is a statutory policy, so I am not denying it.
If such a reserve powers Bill were to be introduced, I should certainly have great difficulties. Indeed, I think that I should hardly be the proper person to do it—but I do not want to add enticement to the dish. If that were the case, I think that that would be a statutory policy. It would certainly be very much opposed to what I have argued for through many years.
But I am very gratified that much earlier in the White Paper is a phrase to which much less attention is paid, the statement in paragraph 9, long before there is any reference to reserve powers, that The Government have made and will continue to make every possible effort to achieve the necessary restraint on incomes by consent.
Is there a real difference between a policy that has been agreed to under the threat of the implementation of a reserve power that is already stated to exist in draft and the implementation of the draft?
The sentence that I have just read was perfectly well understood by the TUC in all our conversations. One of my hon. Friends talked of blackmail in the methods by which agreement was induced. There was nothing of the sort. There was a perfectly sensible agreement between the Government and the TUC that it was much better to try to deal with these matters by consent and voluntary actions. I believe that that proposition will command general assent, though not, of course, among Opposition Members who have always favoured a statutory policy. However, I should have thought that it would command general support on this side of the House. Certainly, that is the right way in which we should proceed. I believe that we should proceed by those means.
The Opposition asked me about retrospection. That matter was properly dealt with by the Prime Minister this afternoon. He said that there was no question of employers entering into commitments after 1st August which they might find retrospectively to be against the law. I trust and believe that such a Bill will never be introduced. The dangers referred to by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) are never likely to arise. If such legislation were ever produced, it would contain safeguards guaranteeing against that situation.
I listened carefully to those who spoke about retrospection and constitutional rights. Nothing would be more offensive to proper constitutional practice than that the Government should introduce such a Bill and brandish it in the face of the House of Commons and the country. That would not be the right way to proceed. I trust that such a Bill will never see the light of day and will never be passed by the House of Commons.
Much the best course is to proceed upon the basis of the voluntary agreement we have reached with the TUC. That is the only way in which any policy can be satisfactorily secured.
Have any of the details of the reserve powers Bill been made known to members of the TUC?
What was said to the TUC on the subject was the same as was said by the Chancellor of the Exchequer in the House of Commons yesterday.
If we said that such a policy could be carried through only by force—by statutory enactment in that sense—we would be near a situation in which that policy had failed. I hope that the House will support the voluntary policy, which is not defined by the measure to be presented tomorrow. It is not a measure of statutory enforcement in the sense in which statutory policies on wages have operated before. It is a policy to enable the voluntary agreement with the TUC to be carried through. It is no good the Opposition laughing. It seems that the Opposition are in no fit mood to be educated tonight. We must do that tomorrow.
If it were not for the measure which we shall propose tomorrow, it would be impossible to carry out the voluntary policy. Indeed if the voluntary policy is to be carried out we must lift from employers the contractual obligations to pay more than £6. There is no possibility of altering that fact.
The drift of the right hon. Gentleman's speech is that nothing matters except the understanding between the Government and the TUC. If I understood him rightly, he went further than that and took on the hypothetical position that if the TUC did not accept the Government's proposals and a statutory policy had to be introduced he would not be the man to commend it to the House. Am I right in understanding that?
I was not dealing with a hypothetical situation. I was explaining the position, I hope clearly enough for the right hon. Gentleman to comprehend. It has been my view throughout all these discussions—I am sorry to repeat it and underline it but I believe it to be of paramount importance—that if we are to deal with inflation—and it cannot be dodged—if we are to deal with the economic crisis —and we cannot run away from it—we can do so only in association with the TUC and the trade union movement as a whole.
We should have learned by now that Governments which try to go to war with the trade union movement will not solve the problem of inflation or any other problem. We face not only inflation but the kindred, interwoven problem which is as serious as inflation, and that is the menace of unemployment, which is at a hideous level already, still rising and likely to rise for some period ahead. I understand perfectly the anxieties and fears not only of my hon. Friends but of millions of people throughout the country. Those fears dominate the whole country. That is one of the paramount reasons why the Government believe it is essential to proceed with these measures. We face an economic typhoon of unparalleled ferocity, a combination of inflation and unemployment, and we cannot run away from it. We cannot imagine that the problem will disappear on its own account.
There are many measures which the Government seek to carry through, measures which have been described by many of my hon. Friends, for dealing with the fundamental problems of our society in industry, investment and the rest. There remains the necessity of facing the immediate challenge of overcoming inflation, curbing the danger and ensuring that we survive to be able to deal with these problems. I believe that the response from the country to our policy will be better than the response which has been given by many hon. Members.
It is our duty in the House to speak plainly and boldly. I believe that the response from the country may be better than collectively we deserve. It will be a response which the country will give to a Government who say that they will not make war upon the trade union movement but will solve the problems in company with those who have helped to bring it to power and whose policies we are determined to carry through.
We have heard the most outrageous display of hypocrisy that a Minister has ever subjected the House to. The right hon. Gentleman has ignored every question that has been asked, he has treated the House with gross contempt, and he should resign. By doing
so he would lend credibility to his Government's policy which it manifestly lacks at the moment.
rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the amendment be made:—
The House divided: Ayes 269, Noes 327.
Qusetion accordingly negatived.
Main Question put: —
The House divided: Ayes 262, Noes 54.
Question accordingly agreed to.
Resolved, That this House approves the White Paper on The Attack on Inflation (Command Paper No. 6151).
BUSINESS OF THE HOUSE
Ordered, That, at this day's sitting, the Motions relating to Members' Salaries, Parliamentary Expenses and Parliamentary Remuneration may be proceeded with, though opposed, until any hour.—[ Mr. David Stoddart. ]
REMUNERATION, CHARGES AND GRANTS BILL
Order for Second Reading read.
Bill to be read a Second time tomorrow.
MEMBERS (PAY AND ALLOWANCES)
10.27 p.m.
I beg to move, That in the opinion of this House it is desirable in principle that the salaries of Members should be regulated to correspond with the amounts of the salary paid to a specified grade in the Public Service.
I hope that it will be for the convenience of the House if with this motion we take the two other motions in the name of the Leader of the House.
The first concerns parliamentary expenses: That, in the opinion of this House, further Provision with respect to allowances, facilities and other payments for Members of this House should be made as follows:— (1) the rate of the supplementary London allowance (£228 a year under the 1974 Resolution) to be £340 a year in respect of periods beginning on or after 13th June 1975, but as and when thereafter any change is made in the Civil Service rate of Inner London weighting, the rate payable in respect of Members entitled to the allowance to correspond to that Civil Service rate, omitting the element in it which represents the cost of travel to work; (2) the annual limit on the additional costs allowance (£1,050 under the 1974 Resolution) to be— ( a ) for the period 1st April 1979 to 31st March 1976, 1,639, and ( b ) for any subsequent period of twelve months ending with 31st March, an amount equal to 144 times the Class A(i) London rate (regular visitors) for a night's subsistence, as obtaining in the Civil Service in that period, and allowing for any 442 change in the rate in the period by taking a weighted average; (3) the annual limit on secretarial allowance (£1,750 under the 1974 Resolution) to be replaced by a limit of £2,910 for the period from 1st April 1975 to 31st March 1976, and £3,200 for any subsequent period of twelve months beginning with 1st April; (4) the car mileage allowance (7.7 pence a mile under the 1974 Resolution) to be 10.2 pence per mile for journeys commenced on or after 13th June 1975, but as from when the corresponding Civil Service rate is next altered thereafter, the allowance for Members of this House to be the same as that corresponding rate (which is the rate for cars over 1,750 cc used for journeys on official business); (5) the number of return journeys for which, in accordance with the 1971 Resolution, facilities for free travel are available to the spouses of Members of this House (ten journeys a year under that Resolution) to be fifteen for the period of twelve months ending with 31st December 1975 or any subsesequent period of twelve months beginning with 1st January. In this Resolution— 'the 1971 Resolution' means the Resolution relating to Parliamentary Expenses which was passed by this House on 20th December 1971; 'the 1974 Resolution' means the Resolution relating to such expenses passed by this House on 30th July 1974. The second concerns parliamentary remuneration: That, in the opinion of this House, the following provision should be made with respect to the salaries and pensions of Members of this House:— (1) the salary payable to a Member (other than one who is for the time being an officer of the House or a salaried holder of Ministerial office) to be at the rate of £5,750 a year; (2) the salary payable to a Member who is for the time being an officer of the House or a salaried holder of Ministerial office, but is not a member of the Cabinet, to be at the rate of £3,700 a year; (3) the salary payable to a Member who is for the time being a holder of Ministerial office and a member of the Cabinet to continue at the rate of £3,000 a year, as under the resolution passed by this House on 20th December 1971; (4) the proper rate of salary under head (1) of this Resolution is £8,000 a year, and in the case of all Members their ordinary salary for pension purposes (and in particular for the purposes of enactments relating to contributory pensions and the deduction of contributions from salary) is to be regarded as being at the rate of 443 £8,000 a year notwithstanding that payment at that rate is not actually made; (5) each Member is, by way of supplement to his salary payable under head (1), (2) or (3) above, to be credited with £112–50 a year (that is to say a yearly amount equal to 5 per cent. of the difference between £5,750 and £8,000); (6) this Resolution has effect as respect service on and after 13th June 1975. In this Resolution— ( a ) 'salaried' means for the time being in receipt of a salary under the Ministerial and other Salaries Act 1975; and ( b ) 'Ministerial office' means the same as in section 2 of the House of Commons Disqualification Act 1975, as that Act is for the time being in force. The contents of all the amendments will be relevant to the discussion on the main Questions, but I have selected for Division the amendment to the first motion, in the name of the hon. Member for Bassetlaw (Mr. Ashton) and his hon. Friends, to leave out from 'with' to end and add 'a point on the scale paid to an Assistant Secretary in the public service, not later than three months after the next General Election, and annually until that date, the salaries of Members should be increased by not less than the same amount of increase as these Assistant Secretaries'. I have also selected the amendment to the motion on parliamentary remuneration, in the name of the hon. Member for Islington, South and Finsbury (Mr. Cunningham), in paragraph (1), leave out '£5,750' and insert '£6,300'.
Finally, I have selected the amendment to the motion on parliamentary remuneration, in the name of the hon. Member for Derby, South (Mr. Johnson), in paragraph (1), leave out '£5,750 a year' and insert '£4,812 a year, being an increase of £6 a week'.
I have put down the first motion to give Members an opportunity to express their views on the important issue whether their salaries should be linked to that of a grade in the public service. If that were done, parliamentary salaries would automatically follow those of the particular grade.
The Review Body considered this and was not attracted to the idea of a pay link because of the unique nature of an MP's job and the absence of any real justification in terms of job comparability. However when I announced the Government's recommendations on Members' pay and allowances last week, I said that we would be carrying out consultations on whether or not the time had come to establish a link between the salaries of Members of Parliament and some other salary groups. This motion will give Members an opportunity to express their points of view on the issue of principle. If it is carried, we will have to consider the best way in which a linkage could be established, and I should he very glad to hear the views of hon. Members on this point. The matter will, of course, have to be considered again by the House before any proposal could be implemented.
A Civil Service grade is not the only possibility. A link might, for example, be made with one of the staff grades of this House. Progress in this direction will be subject to the constraints of the current counter-inflation policies, but we could be preparing for the time when it would be opportune to put a fresh motion before the House about parliamentary salaries. It is, I believe, common ground that a better way must be found for settling this difficult and sensitive pay problem—a way which commands the support both of the public and of Members themselves.
I should say a word here about the amendment in the name of my hon. Friend the Member for Bassetlaw (Mr. Ashton) and others. When I discussed this with my hon. Friend, I made it clear that the Government's first concern was to find out the view of the House on the issue of principle and that the implementation of any decision would have to be considered subsequently. I cannot therefore accept this amendment, which would tie the House and the Government to one particular Civil Service scale and a particular time scale —neither of which might be found to be appropriate.
I have honoured my promise that hon. Members would be able to express their views on the issue of principle. I have given the House the opportunity to decide this matter for the first time ever. I hope that the House will not try to take advantage of the opportunity I have given to force us into too hasty a conclusion on a very difficult subject. As I have already said, Members' salaries will for the future have to be subject to incomes policy and the constraints of our current economic situation, and the implementation of any linkage will have to be considered in relation to the difficult problem for all sectors of the economy of reentry from a period of severe pay restraint. When the Government have considered the matter in the light of all the circumstances, I will certainly undertake to bring proposals before the House. In view of this undertaking, I hope that my hon. Friend will feel able to withdraw his amendment.
The next two motions give effect to the proposals I put before the House on 16th July. That on parliamentary expenses deals with the improvements in Members' allowances recommended in the Boyle Report and accepted in full by the Government. It covers the increase in secretarial allowance, additional costs allowance, London supplement, car mileage allowance and the free travel warrants for the wife or husband of a Member. The secretarial allowance will now be available to provide any combination of secretarial and research assistance, as recommended by the Review Body. I hope that this will reassure the hon. Member for Lewes (Mr. Rathbone), whose amendment was not selected for discussion. General office expenses will, I understand, be dealt with by Lord Boyle in part 2 of his report later this year.
The implementation in full of the Review Body's recommendation on secretarial allowance will allow hon. Members who wish to do so to employ a fulltime secretary. This meets the substance of a major recommendation of the Select Committee on Assistance to Private Members under the chairmanship of the hon. Member for Wokingham (Mr. van Straubenzee). I think it will be most appropriate for the other recommendations on the report to be considered at the same time as part 2 of the Review Body's Report which is to deal with the difficult question of pensions for secretarial and research assistants.
A number of Members have asked me about some of the more obscure figures in the motion. In the case of additional costs allowance and secretarial allowance, the annual limits are expressed in cash terms for the current financial year. These amounts are those which are obtained for the current financial year by implementing the increases recommended in the Boyle Report with effect from 13th June 1975 and, in the case of the additional costs allowance, take account of a further increase now being introduced with effect from 1st July in the Civil Service rate of night subsistence allowance. This means that the additional costs allowance will go up to £1,639 this year and to £1,814 in a full year on the basis of the current subsistence rate for the Civil Service. From now on, the additional cost will be calculated on the basis of the formula set out in paragraph 2( b ) of the motion. The motion also provides for automatic increases in London supplement, additional costs allowance and car mileage allowance in line with corresponding Civil Service rates as recommended by the Review Body.
The motion on parliamentary remuneration increases parliamentary salaries to £5,750. Parliamentary salaries for Ministers outside the Cabinet go up to £3,700, but there will be no increase in the parliamentary salary drawn by Cabinet Ministers who are also Members of this House.
The third motion enables Members to have their pensions calculated on a salary of £8,000 in accordance with the proposal made in my statement. To achieve that end the motion accepts that £8,000 is the proper rate for the job. As I explained last Wednesday, the Government accept that the Boyle recommendation is justified although they cannot support its full implementation at this time when Members are being asked to make a contribution in the fight against inflation.
I am sure that many Members will ask when they will receive the £8,000 a year which the motion recognises is the proper rate for the job, and which will be promulgated as such if this motion is carried. I have said that the Government accept that this recommendation is justified, but in the light of the economic circumstances of the country I regret that I can give no firm date for its implementation.
Perhaps I may explain how this will work. In order to qualify for a pension based on £8,000, it will be necessary for Members to make contributions based on that figure. Provision is therefore being made in the motion to credit Members with the extra cost of the contributions they will have to pay to enable their pensions to be based on the full £8,000. This extra cost works out at £112.50 a year, that is to say 5 per cent. of the difference between £5,750 and £8,000. This extra sum will form part of the Members' taxable pay, but Members are entitled to tax relief on their contributions, so in practice there will be no extra tax to pay on this amount.
I should make it clear that in the next Session a retrospective amendment to the Parliamentary and other Pensions Act, 1972, will be necessary, among other reasons, in order to bring it into conformity with the terms of the motion which I am inviting the House to approve tonight. In the meantime, in the remote likelihood of any financial point arising on the construction and operation of the 1972 Act, payment of the extra pension would be deferred until the amendment had been made, but Parliament will be asked to make it in the next Session.
I am only to well aware that the increase in salary which the Government have felt able to recommend is a disappointment to many hon. Members. It will mean that they have had a smaller percentage increase since the beginning of 1972 than any other group of workers in the community. At the same time, they have to incur more expenses than almost any other group. And whilst the increases I am proposing in expense allowances are reasonable, it should be understood—and it is not—outside the House that not all of a M.P's expenses can be categorised, and certainly not all are covered by the allowances. I need only mention entertaining or the many subscriptions to the numerous good causes in our constituencies.
In the light of what has been said in the Press and elsewhere about the first salary increase which Members are being asked to award themselves after 3½ years, perhaps I could make it clear beyond any possible doubt that these increases are within current pay policy requirements. The new pay limit of £6 a week applies to settlements with an operative date from 1st August onwards. Agreements before this date may be settled within the existing social contract guidelines. Hon. Members will see what I mean from para. 3 of the Appendix to the White Paper.
Will my right hon. Friend go a little further and answer the question I asked him when he made the announcement and say whether the whole of the award would have been within the guidelines?
Yes. The whole of the award would have been within the guidelines.
I often wish that some of the nameless commentators in the Press would show a little more objectivity and honesty in reporting and commenting on these matters. I have in mind two leading articles which appeared in the Daily Mail and the Daily Express. Perhaps we might be told what percentage increases the leader writers on those two newspapers have had since 1972. I am quite sure that hon. Members would settle for the same percentage increases. Perhaps we can have a little more honesty in the reporting of these matters in the Press.
In the extremely grave economic situation in which we have only just reached agreement on a firm but voluntary policy to restrain incomes, these proposals form a rather harsh but, I believe, tolerable package. I commend them to the House and I ask hon. Members to carry them without amendment.
The Leader of the House having moved the first motion, I want to make absolutely clear what the procedure will be. I intend to allow a debate on all three motions and on the three amendments that I have selected for Division. As I have said, the other amendments may be discussed but cannot be voted upon. I shall deal with the formalities of putting those three amendments later. The Question which I now propose relates to the first motion, which has been moved by the Leader of the House.
10.41 p.m.
It is a culmination of the muddles made by the Government in dealing with the Boyle recommendations that we are discussing this matter at this hour of the night. I have tried to make my view quite clear in an amendment I have tabled to the motion dealing with parliamentary expenses.
The Boyle Committee is an independent Committee. No Member of this House sits on it and nor—as has frequently been suggested by the Press—have recommendations been made by hon. Members which will benefit themselves. The Government should make it absolutely clear that they will have carried out the recommendation before the last day of this Parliament—the last day on which this Parliament can act—because we cannot commit another Parliament that has not yet been elected.
If that is stated, it is right that the House should now give a better example to the country than they are asking of any wage or salary earner or worker. The dignity of the House would be preserved if we were to set a maximum limit for the next 12 months, which we are asking many other people to accept from 1st August, 1975 to 31st July, 1976.
The argument that it is understood by those outside this House, that we fall within the old social contract—heaven preserve us from whatever that may or may not mean—is just not correct. Therefore, we should be setting an example. It is an example that many hon. Members would follow if the Government were to give us a lead and if they knew that the Government had accepted, ultimately, within the aegis of this Parliament, the overall recommendation of the Boyle Committee.
If the hon. Gentleman is developing that point, would it not be proper for him to declare, first, what increases he has had in outside emoluments and, secondly, what outside interests he has?
I am more than delighted to do so. I would refer the hon. Gentleman to Who's Who, where everything that I do has, over—
How much?
—the last 15 years, been included. Secondly—[HON. MEMBERS: "Tell us how much."]—I have had no increase in salary since the position I took when I ceased to be a member—[HON. MEMBERS: "How much?"]—The interesting fact about this debate—
Give us a figure.
—is that surely we, as a House of Commons, ought to be in the position to lead, and not to have to fol- low. Surely we should be able to set an example which is accepted by everyone in the nation.
The last part of the amendment which I have placed on the Order Paper seeks to ensure that the expenses and allowances which Members could claim should be thoroughly understood by people outside the House as being only the reimbursement of expenditure which Members have incurred. Many people interpret the allowances as a mass amount which automatically is given and automatically, therefore, is an increase in salary. That is not true and it is well that it should be properly understood that allowances and expenses are paid to Members only to reimburse them for actual amounts they are claiming which they have properly spent in their parliamentary duties. That point needs to be hammered home.
I believe that the Government would do a service to the House if, even at this time of economic problems for the nation, they would ask the House to do exactly what they are asking the rest of the country to do.
10.47 p.m.
I want to begin by making it clear that in common with, I suspect, most hon. Members who will take part in the debate, I speak only for myself. Even though I have consulted my colleagues about what I might say, I do not pretend that I shall carry all of them with me on every point.
First, I support the principle of linking. I think that the Boyle Committee was wrong in its conclusions on page 9 of its report, where it said, The adoption of such a link might well do no more than shift the focus of the political sensitivity which attaches to MP's pay to the pay of the group with which the link was established. I do not accept that for one moment. The basic flaw in the Boyle Committee's consideration was that it did not attach enough weight to the fact that we are the only group in this country who are left in the invidious position of deciding our own salaries. That is a grave weakness of the present system.
However, I am not certain that the motion moved by the Leader of the House is correct. Even though on balance I would vote for the first motion, I invite him to consider the possibility that instead of linking to some specified grade in the public service, by which I assume he means the Civil Service—and that would be an undesirable principle; I am glad to see the right hon. Gentleman shaking his head—there is another option. That is that we might be linked to some average of earnings of different groups of people in different areas of the public service, so that we are not clearly identified as being involved automatically in the wage negotiations of any one group. If that is in the mind of the Leader of the House—and I am glad to see him indicating some assent to this—one specific grade in the public service would not be the right solution. Some form of average may be the best approach.
Secondly, it is time that the House faced up to the difficult question of Members' outside earnings. We have just introduced a register of interests. There is no question that there is a big difference between the Member who has no outside interests, or virtually none, and who does a full-time job here, and other hon. Members who may, quite properly and possibly even to the benefit of Parliament. have substantial outside interests and who may therefore regard their membership of this House as part time, to a varying degree—a quarter of their time, four-fifths, or whatever it is.
One of my predecessors as Liberal Chief Whip in a previous Parliament, the then hon. Member for Orpington, Mr. Lubbock, now the noble Lord, Lord Avebury, put forward a very radical proposition when he suggested that Members of Parliament should be obliged to publish their tax returns. I do not necessarily go as far as that, but I believe that he was on to a good point. We in this House have inflicted on the nation as a whole about 44 different means tests. I see no reason in principle why the parliamentary salary should not be subject to some form of limited means test, why we should not establish a minimum salary to which every hon. Member is entitled but with a full-time salary much higher, to which Members who did not have an outside income should be entitled. There is no reason why a sliding scale could not be adopted.
What the hon. Gentleman is talking about is not full-time and part-time Members. He is distinguishing between Members, whether full-time or not, who have an outside income, and Members whether full-time or not, who do not. Those who have outside incomes will lose in tax a substantial part of any salary award from here, particularly if it is high. Therefore, the point is taken care of, without the elaborate facade that the hon. Gentleman is developing.
That, is a point of argument. I am merely putting forward my view. It has been suggested outside the House, and may well be suggested in the debate, that there should be a differential in payment between those who serve on Standing Committees, for example, and those who do not. That would be an impossible situation. It is far better to look at the needs of Members as a whole.
Thirdly, whatever our views on the subject, the Government certainly cannot be congratulated on their handling of the question. There is no doubt that in a time of high inflation since the end of 1971 the whole matter should have been referred to the Boyle Committee much earlier. Moreover, when the committee reported, action should have been taken, instead of leaving us until we got into the most difficult of political and economic situations, in which it became impossible for the Government to act.
Having got into this situation, we start from here. I believe that it would be impossible for the House to accept the Boyle Committee's recommendations in full. We have no alternative but to accept as a temporary measure the Government's salary proposals.
It is extremely important that we look again at the whole question of parliamentary expenses. In a letter in The Scotsman the other day, one of the officials responsible for negotiating the salaries of chief executives of local authorities referred to parliamentary pay and to the non-taxable part of MPs' remuneration. There is no such thing as the non-taxable part of MPs' remuneration. But, sadly, the system of going on paying substantial expenses is open to that interpretation. The Government should wake up to the fact that if they go on extending the cash expenses and restricting the salary they are laying open temptations for abuse of that system which should not be encouraged.
The hon. Member for Warley, East (Mr. Faulds) made a fair point when the Leader of the House made his announcement. The chief executive of a local authority, or anyone else in a responsible position in the public service, has a secretary provided for him and not a cash payment out of which he is expected to pay a secretary. It is time we moved to such a system, with our secretaries on the public payroll, though with it still open to us to appoint or sack them.
I am convinced that the average member of the public who does not follow these matters closely believes that the member of any legislature is in a sufficiently important position to merit having a secretary on the public payroll to help him. I should like the cash allowances to be diminished, in return for the creation of the facilities we need to do our job. We should then have a proper cash salary, taxable like everybody else's assessed on the basis of the job, as the Boyle Committee attempted to assess it.
It is time we got the relation of salary and expenses right. I do not think that the Government have done that, but, faced with the present economic situation, we can do nothing else for the present but accept their proposals.
10.55 p.m.
The Leader of the House said that the proposed increase in Members' salaries was the first adjustment since 1972. I have corresponded with him. I now point out, especially for the benefit of the hon. Member for Honiton (Mr. Emery), that we waited from 1964 until 1972, a period of 8½ years, for the last award. It was not opportune then. Hon. Members were told that they should wait and that it was not economically wise to implement it then. The salaries of Members of Parliament have been adjusted on five occasions in the period 1937 to 1975. I include this award, which we have not yet received, in that total. There was a period of 8½ years between each review. Why? On every occasion we were either entering or coming out of an economic crisis. We have always responded to the request not to take the increases which were awarded.
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) mentioned the average wage. In 1937, Members of Parliament received a wage of £600 a year.
The hon. Member for Newham, North-West (Mr. Lewis) is not right. At that time it was expenses. It was not a salary. The sum was treated wholly as expenses. It was not until after the war that the salary was allowed.
I am sorry that I gave way to the hon. and learned Gentleman. I have a document produced by the finest service—the House of Commons Library. Thanks to your excellent staff, Mr. Speaker, I have all the facts.
In 1937 Members of Parliament received £600 a year. The average wage was about £3 a week. Members of Parliament then received on average four times the national average wage. I do not know what is the current national average wage. It depends on the part of the country in which we live. It could vary between £30 and £50 a week. Members of Parliament do not at present receive four times the national average wage. No group of workers can say that their pay has been adjusted on only five occasions since 1937.
I asked the Secretary of State for Employment whether he could state the position on wages. He said that on average the workers in almost every industry received an annual increment. That may or may not be true. We must thank the Civil Service for initiating the wage freeze and anti-inflation policies. My hon. Friends laugh. The last freeze was initiated by Mr. Armstrong. Before he did so he raised the salaries of the top civil servants. The freeze followed. He was knighted. He retired and became the chairman of a bank, at a salary of £20,000 a year, on top of a pension of about £20,000 a year.
I resent the fact that journalists, radio commentators and Members of Parliament who receive—I do not say earn—more as a result of their five-minute or 10-minute contributions on radio and television than the average worker earns in one week should come here and say that they are in favour of a wage freeze or an incomes policy and in favour of showing an example.
The Sunday Express has a rotation system whereby several Conservative right hon. Members and the ex-Lord Chancellor share the centre page of the newspaper. For the past 18 months they have been writing articles demanding a wage freeze, an anti-inflation policy and all the rest, for each of which they receive £300, £400 or £500.
The same applies to the most highly paid lawyers. Tonight the Shadow Chancellor told us that he is in favour of wage control and setting an example to the public. I am told that lawyers arrange their own fees. A big case is being heard in the courts at the moment which I must not mention, and I read in the newspaper that one of the great Liberal pioneers is to receive several thousands of pounds plus refreshers of £300 or £400 a day. I understand "refresher" to be trade union jargon. In industry it is known as beer money.
Let us have honesty in debating these issues. Any hon. Member who conscientiously feels that he does not need the increase can telephone or visit the Fees Office and say that he does not want it and ask for it to go to the Exchequer. I have heard this issue debated over many years, and each time it is debated many hon. Members on both sides of the House say that they will not draw the increase. I have taken the trouble to ask the Fees Office, and I have been told that only on one occasion did one hon. Member fail to draw the increase, and that was the former hon. Member for Wimbledon, Sir Cyril Black. I believe that he is a director of about 150 companies. Perhaps it was too much trouble for him to draw it.
Editors have suites in hotels for entertaining, and they receive virtually unlimited expenses. Then they have the audacity to write articles that they know are not true. They deliberately try to foster opinion against the House of Commons and against Members on both sides of the House.
I do not think that that is good for Parliament. By all means let us have criticism. Let constituents write to their Members of Parliament if they want to ask for information, but if anyone wants to criticise, let that person examine the facts. Let it be remembered that on average the elector pays about 1 p a week for his Member of Parliament. I think that most constituents will agree that on that basis, whatever the political persuasion of the Member of Parliament who represents their constituency, that they are getting value for money.
Some hon. Members are solicitors. What do solicitors charge for advice and for the sending of letters? I am sure that most of us have had constituents come to our surgeries when they have found that their solicitors or lawyers have led them into a bit of a muddle. That often happens after they have paid a lot of money. Constituents then expect their Member of Parliament to help them.
My approach is to support the recommendations of the Boyle Report without equivocation. I am disappointed in the attitude adopted by the Government on the whole subject.
11.7 p.m.
I am sure that we have all been fascinated by the speech of the hon. Member for Newham, North-West (Mr. Lewis). It is a good speech and I have heard it many times. It has more to do with the salaries and rates of pay of various other professions than with the remuneration of Members of Parliament. Perhaps I might bring the House back to the salaries of Members.
I must make the point that we are discussing two matters at once and that it would be better to separate them out. First, what remuneration is appropriate for a Member of Parliament in normal times? Secondly, if we are able to arrive at an answer to that question, how far should the figure be conditioned by existing circumstances?
Does my hon. Friend not think that normal times now are periods in the middle of economic crises?
That may be so, but what I said still stands.
I hold the view that it is not right for any man to fix his own salary. Insofar as it is possible to evade that position, we should evade it. The hon. Member for Newham, North-West and myself came into the House at approximately the same time and we know that on the five occasions on which Members' salaries have been discussed, and in progression, we have had a worse Press and we have done ourselves more harm. There has been unreasonable criticism and we have added more to the disrepute of the House on this matter than on any other. The five occasions have so far been widely separated out, but given the present state of inflation this is likely to become an annual or six-monthly debate.
The most important thing to do is to remove this area of debate from the Floor of the House. How can that best be done? I accept the Lord President's view that there should be linkage. However, I do not accept his view or the view of the Boyle Committee there should be at link with the Civil Service. Incidentally, I think the Civil Service is overpaid. That may be an unpopular view, but I am sure it is correct. I also believe that it is unwise to be linked to a professional occupation over which we have no direct control. Indeed, I believe that it is unwise to link it with any single scale. If there is to be a linkage, I believe that we should be linked with two or three professions. One could speculate as to which two or three it should be, but I need not be didactic.
My strong view is that never again in the lifetime of sitting Members of Parliament should this discussion be held on the Floor of the House. I would go to great length to achieve that situation. I believe that, above all, we should bring in the average national wage. At least if we take the national average wage, we are following what the rest of the country is doing.
I must now turn to the second and probably more difficult part of my argument. It is only a matter of weeks since the Government said that no wage increase after 1st August should exceed £6 per week. Therefore, it seems to me to be monstrous that we should seek to do something else for ourselves. I cannot defend this move because I regard it as wrong.
What are the hon. Gentleman's outside interests?
I am happy to answer that question. As the hon. Gentleman well knows, our outside interests are declared on a register, and he can look at that register at any time he wishes.
Mr. William Hamilton rose —
The hon. Gentleman does not desire to give way.
He must de so.
Is it not possible, Mr. Deputy Speaker, for you to give a ruling at this stage? We cannot have speeches made in which there are constant cries about interests having to be declared. Serious points are being made in this debate and constant interventions asking for Member's outside interests to be declared are neither here nor there.
It is entirely a matter for the discretion of the hon. Member concerned.
Could you make a clear ruling on this important matter, Mr. Deputy Speaker. If we are to have to listen to lectures from Members of Parliament about our accepting £6 a week, surely it is right that we should know exactly the situation of hon. Members who make such a claim in relation to their outside interests in money terms.
Order. This debate is concerned with a matter of public policy, and it is for a Member to decide whether he should declare his interest during the debate which is now taking place.
I am obliged to both hon. Members for their interruptions, particularly the hon. Member for Derby, North (Mr. Whitehead.) We have to vote tonight upon the legal and authorised salary of a Member of Parliament. We are not concerned to express an opinion on the earnings of the hon. Member for Fife, Central (Mr. Hamilton), my earnings, or anybody else's earnings, but on the salary of a Member of Parliament, and nothing else. I continue to express my view—which I believe is widely and rightly held in the country, and certainly in my constituency—that to ask other persons not to accept any wage increase beyond £6 a week and then to put ourselves in breach of that Governmental undertaking is a wrong and a foolish thing to do, and that it ought not to be done.
11 16 p.m.
The hon. Member for Dorset, South (Mr. King) and the hon. Member for Honiton (Mr. Emery) are, I think, confusing two matters. The £6 beyond which nobody must go refers to prospective increases. The Members of Parliament who wish the Boyle Report to be implemented are referring to retrospective increases from 1972 onwards. From 1972, judges, lawyers, civil servants, miners, and so on, have received increases on three or four occasions. We are not referring to those increases when we refer to the £6 limit. The increases that Members of Parliament want are increases retrospective from 1972 to now. They are not demanding increases from now onwards.
Will the hon. Gentleman tell the House how little he earns outside this House, so that we can understand why he is making such a big pay claim?
I will. I find that my legal practice has gone down very much because of my parliamentary duties. I am earning enough to cover my legal expenses, which are somewhere between £2,000 and £2,500 a year, and before I earn one penny I have to pay that out. In some years I have made a loss at the Bar.
The hon. Member for Honiton has asked us to make a sacrifice and to show a lead in not accepting more than £6 a week above that which we were getting in 1972. I am willing to make that sacrifice provided that it is not only Members of Parliament who are asked to make it and provided that the sacrifice is general. That means that lord justices, for example, instead of receiving £18,675, would receive the salary they received in 1972—£15,750—plus £6 a week. Circuit judges would be in the same position. A permanent secretary in the Civil Service, instead of receiving £18,000, would receive £15,000 plus £6 a week. Miners, instead of receiving £61 a week, would receive £34.50 plus £6 a week. If we are all to receive no more than £6 a week above what we were receiving in 1972, then, and then only, I am willing to make that sacrifice. Members of Parliament should not be called upon to make that sacrifice alone. It should be a general sacrifice throughout the country.
11.20 p.m.
I want to draw attention to one action in contemplation which I find wholly objectionable. It is the proposal in paragraph (4) of Motion No. 5 to relate the pensions of Members of this House to a notional salary of £8,000 a year. I believe that by doing this we shall create for ourselves a privilege which will be deeply resented outside this House when it is understood.
I have to declare an interest, because it explains why I feel so strongly on this subject. It is that I am chairman of the trustees of an occupational pension fund and for some years I have been concerned with the attempt to secure the best possible pension benefits for members of that fund.
By this motion, we are establishing for Members of this House a position of advantage which, as I understand it, is not available to the member of any occupational pension fund in the country. We are doing so by a resolution of this House relating to Members' remuneration and conditions, and not by an amendment of the general law of the land.
In fact, quite the reverse of what the hon. Gentleman is saying is the case. We are taking a pension that is our entitlement and forgoing the salary, rather than taking it the other way and suggesting that we are cheating on the pension. We are forgoing more than £2,000 of the salary which an independent arbitration tribunal has awarded us and which every other group in a similar position to us in the pipeline will get—and the £6.
I am interested to hear that comment. However, as I hope to illustrate, that is not how people outside this House will see it, nor do I think they will be very sympathetic with the hon. Gentleman's comment.
Members of pension schemes outside this House are governed by the Finance Acts and the Revenue Rules laid down under those Acts. So far as I know, there is no legal provision in any of those Acts for any occupational pension fund to pay a pension related to a salary which is not being paid and has not been paid to the member of the fund going on pension.
I wish to quote two specific examples of the kind of situation which will give rise to the resentment to which I refer. The first is the simple one which I am sure is evident to all hon. Members. It is the case of the man approaching pensionable age, perhaps anticipating retiring at this time next year. If he is on average industrial earnings, with a salary equivalent to £3,000 a year, under the interpretation of the social contract which was ruling until two or three weeks ago he could have anticipated an increase in salary of no less than £750 a year—25 per cent., in line with the increase in the cost of living—and that could have been reflected in a pension increase of £500 had he been fortunate enough to have a 40-year entitlement under his pension scheme. Now he will get an increase of £312 and a pension uplift over the next 12 months of £208. That is a very substantial forgoing of pension.
My other example is that of the man who is being made redundant, perhaps two years before his normal retirement date under the rules of his scheme. We have to remember that these rules are governed by Acts of Parliament. If he retires before his normal retiring date, there is no way by which his employer can give him his full anticipated pension if he has not at the time of retirement completed 40 years' pensionable service.
The simple solution which many employers would like to follow is the very course of action proposed by the Lord President. They would like to relate that man's pensionable salary to a notional salary—that which he would have expected to receive in two years' time. They are not able to do that because it is against the law of the land, which, as I understand it, is being overridden by a resolution of the House for the benefit of hon. Members and of hon. Members alone.
Is the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) aware that at present there are civil servants who are forgoing incremental increases and are having their pensions based on increments which they are forgoing?
I appreciate the point about someone getting the sack or suffering redundancy, but I have done nearly 31 years in the House, and if my parliamentary seat were redistributed out of existence tomorrow—[HON. MEMBERS: "Hear, hear."]—I hope hon. Members will try to be a little serious for a moment. If hon. Members, even the laughing hyenas behind me, have seats redistributed out of existence, they will find that they cannot draw pensions until they reach 65. They may well have difficulty in finding employment for the period before reaching pension age. It is regrettable for people in that situation. It is exactly the same for hon. Members.
I would not disagree with the hon. Member for Newham North-west (Mr. Lewis) that many occupational schemes in the private sector are more generous for their members than that in the House.
The hon. Member was protesting that this change in pension practice was being brought about in favour of hon. Members by resolution without a change in the law, but I should like to give him an assurance that legislation will have to be brought forward to effect this change and that it cannot be effected without that legislation.
If that is the case, I should like the Lord President to give an assurance that if legislation is brought forward, private occupational pension schemes will be able to anticipate this and be safe in doing so, as is apparently to be the case for Members of this House.
This proposal is objectionable because it conveys to Members of the House a benefit of a size not appreciated by those not conversant with these matters. The TUC document "The Development of the Social Contract", published as an appendix to the White Paper, said: Negotiators will be expected to offset any improvement in non-wage benefits against the pay figure I always hesitate in making a rough judgment on a pension costing, but if one looks at the pamphlet with which we are provided, it tells us that the Chancellor of the Exchequer contributes three times the Member's contribution to the Members' Pension Fund. I think the Actuary's report of April is not yet available. I have not, at any rate, been able to find it. But if one takes the notional figure of £2,250, 15 per cent., three times the Member's contribution conies to £337.50 in respect of each Member. More than that. We are not being called upon even to pay our own 5 per cent., so that this proposal means that the increase in cost falling on the Exchequer, in my approximate estimate, is no less than £450 per annum.
I do not know whether the Government will observe the TUC development guideline. If they do I shall find it totally unacceptable that we are making ourselves an exception of this kind.
To make it clear to hon. Members opposite—and this will be within the recollection of the Lord President—I said that the course of action I felt should be followed was that we should have had a resolution to pay a salary increase of £1,800 per annum, precisely in line with the statutory fixed increases and the strict interpretation of the social contract, and should have related our pensions to that figure until we had a higher salary.
On a point of order, Mr. Speaker. I think that it would be helpful to the House if you would guide us on how the debate is to be conducted, particularly as we are having a wide-ranging general discussion. You have said that we may speak to all the amendments. If we carry on like this it will be four or five o'clock in the morning before we get to the amendments which you have selected for Division, with an almost empty House debating the important aspects of this policy. I ask for your guidance on this matter.
I am grateful to the hon. Gentleman for raising this matter. It is present to my mind. I am at the disposal of the House. I am prepared to sit up all night, but I doubt whether that is what the House would wish. I think that we want to come to a conclusion by voting on these issues. I have selected three amendments to be voted upon. It was put to me that it would be the wish of the House to have a general debate on the three motions together. I hoped that we could soon dispose of those in one way or another and get on to other matters.
Another way, before voting on the first amendment, would be to present the arguments for all the amendments and then, as quickly as possible, having done that, come to the voting later and the formal proposals, and so on. I am very much in the hands of the House. I think that it is the general wish that these matters should be debated together. I am willing to hear what anybody has to say on the matter.
On a point of order, Mr. Speaker. We have not yet had one of the amendments moved. I wonder whether it is possible to have some discussion by the protagonists on the amendments which you have selected.
Further to that point of order, Mr. Speaker. Part of our difficulty might lie in the calling of speakers. This is no criticism of your predecessor in the Chair. Those hon. Members who have spoken have had to speak in ignorance, or at least in guesswork, of what the proposers of the three amendments will say in their support. We think we know what they will say, but it might be for the convenience of the House if those who are to speak to the three amendments were allowed to do so now. Then any comments on the amendments would be made on what they have said tonight, not on what we think they may have said.
If that is what the House would like, I am willing to follow that course. That being so, I call the hon. Member for Bassetlaw (Mr. Ashton).
Further to that point of order, Mr. Speaker. The House accepted your original suggestion and has been proceeding with an interesting debate. The first objection came from the prospective mover of one of the amendments, my hon. Friend the Member for Derby, South (Mr. Johnson). I think that the House was prepared to and did accept your original ruling.
On a point of order, Mr. Speaker. I put it to you, that, since we have embarked on this procedure, it would be the worst of all possible worlds to change it now. I think that the procedure will work admirably if only we could have short speeches.
I do not think there is any conflict. If I call the hon. Member for Bassetlaw (Mr. Ashton) now, that will not prevent the hon. Member for Nottingham, West (Mr. English) from speaking afterwards. I will allow the proposer of each amendment to develop his argument and then put the Questions to the vote as we come to them.
The hon. and learned Member for Beaconsfield (Mr. Bell) made a most valid point about short speeches.
11.33 p.m.
I beg to move to leave out from "with" to the end of the Question and to add instead thereof, 'a point on the scale paid to an Assistant Secretary in the public service, not later than three months after the next General Election, and annually until that date, the salaries of Members should he increased by not less than the same amount of increase as these Assistant Secretaries'. Earlier we listened to a major statement from the Leader of the House. As usual, in his courteous way, he tried to answer many of the points which might be made.
My colleagues and I have discussed this matter at length over many hours in the past two to three weeks. I refer not only to the 13 hon. Members whose names are down to my amendment but to perhaps 80 or 90 other back benchers.
The Leader of the House must be more specific. Some of us have become extremely wary of what we have been told and promised in the last two to three weeks in view of what has eventually turned out to be the case. I mean no disrespect to my right hon. Friend. However, the collective wisdom of back benchers on what would happen to Boyle was apparent in March when 142 of my hon. Friends signed a letter, which I personally handed to the Leader of the House, in which we said that we would run into trouble in the summer, because inflation would continue and Government measures would be necessary. We said that it was in the interests of everybody in the House, in politics and in general, that Boyle should produce an interim report by March which simply recommended a cost of living increase and left it at that.
I regret to say that that advice was not acted upon by the Boyle Committee. It was passed on to it but not acted upon. We ran into an unfortunate period of Tea Room winks and nods. There is no other phrase for it. It was the sort of inflection that suggested, "Boyle will be published after the referendum", "Keep quiet for a week or two because there looks like being a National Union of Railwaymen strike", "There is a Woolwich by-election next Thursday." It was not put quite as blatantly as that. It was, "It is in the interests of all politicians of all parties not to press too hard at this time." There is never a right time.
Suddenly, three weeks ago today, up got the Chancellor to make an announcement and the back benches on both sides could see the door beginning to close. That was probably the beginning of this so-called "shop stewards' committee" when 13 Members—those who have signed the amendment—sent an instant deputation to see my right hon. Friend the Leader of the House. He met us courteously and asked us to see the Prime Minister. I regret to say that we did not see the Prime Minister.
It was an unfortunate action on the Prime Minister's part. I am trying to be fair. Maybe he was too busy to see us. I do not know what it was, but it rebounded instantly right across the back benches. Unfortunately Divisions were taking place when 75 angry back benchers met the Chief Whip and demanded to see the Prime Minister at once. It was not a very good way to conduct wage negotiations, when it was clear that Boyle would not be acted upon. Any personnel officer in any factory in the country would at least have met the lads from the shop floor when they were marching to see him.
We were told that it would be a Cabinet decision, that there was no one man who would make the decision, and that the way to go about it was to put pressure on members of the Cabinet to implement the Boyle Report in full. Of the 13 names, there were seven Parliamentary Private Secretaries to members of the Cabinet. But we were warned that we had better act quickly because the Cabinet were meeting the day after—Thursday morning—and on Wednesday evening they were all at Hampton Court at some big "do". We had to act pretty quickly.
In effect, it was the beginning of the charade. There is no other word for it. We went to see the Prime Minister at quarter to three. He said, "It has all been arranged. On Question No. 5 the leader of the liaison committee will stand up and catch Mr. Speaker's eye"— [HON. MEMBERS: "Oh".] I regret having to divulge this sort of information but I feel strongly that we ought to put this on the record. One of the reasons why we have tabled this amendment is that we are determined that this should not happen again.
Never ever again will I be a party to any sort of wage negotiation on the basis of the sort of promises we have had in the past three weeks. Some of us feel very angry about it and we are determined that this motion should be more specific.
I wrote down some of the things said at that meeting with the Prime Minister. "We cannot give you figures now but it will not be a bad settlement". "It is not the size of the package that is the problem, it is the timing. We are involved in delicate trade union negotiations on the White Paper". I am sorry if I am offending people by revealing this, but I have been a trade unionist since I was 15. I have sat around tables talking to employers since I was 15. I do not believe in conducting wage negotiations with inferences of this sort behind people's backs. I believe in doing it openly and above board.
When I give these quotations they are not quotations from the Leader of the House. This is the Prime Minister. A question was asked of the Prime Minister —did he realise that if MPs got even £1 a week rise it would bring down opprobrium from the Press? The answer was, "That will be opprobrium worth having".
Perhaps I am breaking the rules by divulging this sort of thing. I am sorry if I am, but perhaps I am an honest, open and gullible guy. I am disgusted at what has happened—the moulding of public opinion, the softening up of the Press and the demands by trade union leaders that Members of Parliament should have only modest pay rises when those leaders have had damned good pay rises themselves in the past three years. The popular Press has been conned. There were leaks that Cabinet Ministers would be accepting a cut of £2,000 a year in their pay. The so-called shop stewards have been the villians for standing up for a cost-of-living increase and those who were taking the £2,000-a-year cut have been the heroes.
We were being told that a statement would be made in the House within 10 days, within a week and within a day, but eventually my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) had to raise a point of order to get the statement. I have tremendous respect for my right hon. Friend. He has been saddled with a bad job by his Cabinet colleagues and has done his best. Even at this late stage he has made substantial amendments to the proposals in an attempt to help back benchers. I have no respect for those faceless men in the Cabinet who took a hard line and never appeared for questioning or met us round the table.
Our amendment is designed to make sure that this sort of disgraceful episode never happens again. I have been ashamed of what has happened. The shop stewards have had to take criticism from our constituents. We did not mind. We knew that we were representing a substantial body of opinion. I accept that we do not represent everybody in the House or even all back benchers on this side, but what I have said needed to be put on the record, and I hope that it helps to persuade hon. Members that the only way to stop this situation from arising is by linkage. As politicians, we cannot afford the loss of still more respect by having these debates and arguments.
We welcome the thoughts of the Leader of the House in bringing forward his amendment on linkage, but if we are to adopt the principle, we cannot have any more pie in the sky such as the Boyle Report. We do not want jam tomorrow. We are not fools. We know that the end of this period will be followed by wage ceilings of £7 or 8 per cent. or whatever. Most people would agree that we are going to have a wages policy for the rest of this Parliament and that the only way we can have proper linkage is to link after the next election. There is a good precedent from 1964 when the Lawrence Committee reviewed Members' pay. It was very near the election and both sides agreed that whoever was in power after the election would implement the report —and they did. It was a very delicate time for the Labour Government which had a majority of three or four, but the House implemented the report and stood by it. The Government kept their word, and that sort of action builds up respect.
If we pass the amendment we shall have a time scale. It would not be my right hon. Friends the Prime Minister and the Leader of the House who would have to worry about implementing it; it would be the next Parliament, but that Parliament would be committed. The second point therefore is to keep us in line with a grade until that situation arises. If we did nothing until three months after the next election, the grade with which we were linked would by then be receiving double what we were and our salaries would have to be doubled. That would again attract the opprobrium of the public and once more we should be in trouble. We therefore must hang on to the coat tails of the grade we select to be linked to until after the next General Election. That would mean that when they got £6 a week we would get it.
But we then come to the most important point of having to name a grade. Everybody in the House has a different idea of what we should link to. Some people say that we should set up a Select Committee, but that would sit for a couple of years and not come to a conclusive agreement. We should be in the position of trying to amend the £5,750.
We looked at the grade which was nearest to the Boyle Report recommendations. That is the assistant secretary, who earns £8,000 and a few hundreds. We decided that since that figure was the nearest to what Boyle recommended we should be linked to that grade. That is a bit drastic and it ties the Government down, but in view of the happenings of the last few weeks I feel strongly that we have to tie down a little the people who are in charge of our salaries. I hope that arising out of this we might get some negotiations going so that we can get our proposals implemented in time.
Order. We are in difficulties here. Would it be a good idea if I first call hon. Members who wish to speak on the linkage question? We could then move on to the next point dealing with allowances and so on and then on to the third motion.
On a point of order, Mr. Speaker. I think that we should continue on the course which we have started. All these matters are closely related. My hon. Friend the Member for Bassetlaw (Mr. Ashton) dealt with all these matters. Can we not continue with a general debate and take all the votes separately at the end?
I thought that we were to have a general debate in the sense that anyone could speak on any of the motions and any of the amendments and that no votes would be taken until the end, when all the various Questions would be put formally. What surprised some of us, Mr. Speaker, was that you did not call to speak at an early stage the hon. Members whose amendments you have selected. I understand that you will not want to call in series the three whose amendments you have selected because that would mean calling three Labour Members in succession, but if you could alternate in the normal way but bring those three hon. Members into the debate reasonably soon we would all be happy.
I agree with the lion. Member for Islington, South and Finsbury (Mr. Cunningham). What he suggests would be preferable to attempting artificially to segregate the three debates.
All I shall say in my own defence is that there was an extremely strong representation by a mover of one of the amendments which led me to say what I said, but I am in the hands of the House in this matter.
11.50 p.m.
I wish to address my remarks to the third motion, which concerns the pension proposals. As the House will be aware, we are proposing a pension which is based on a salary which we are not yet receiving, although we shall soon be receiving it.
I wish to refer to a group of people—a dwindling band of people—who were Members of Parliament, who retired before October, 1964 or who were defeated at the polls at that time, and who are not entitled to any form of pension. I hope that the House will allow some consideration to be given to what I consider to be an important part of our affairs. The position, as the House will know, is that those who served for ten years before 1964 and who remained Members of Parliament after 1964 are allowed pensions and are entitled to pensions reckonable as from 1954.
The position is that those who retired in 1964, however many years they may have served, are entitled to no form of pension of any kind. There are some Members in this House today who served in this House before 1964 for some years—perhaps for three or four years—but who were defeated at the polls in 1964 and who subsequently came back having, perhaps, been elected for another constituency. Those hon. Members are entitled to a pension which is reckonable from the time at which they first came to this House.
So far as I am aware, there is no group within the public service today which has no pension entitlement as of right. This small and dwindling group of people is the only one in the public service which is not entitled to this right.
I have every sympathy with the point that the hon. Gentleman is putting forward, but the Leader of the House has said that the second part of the Boyle Committee's deliberations would relate to pensions and that there would be another debate later in the year. The hon. Member is discussing the one subject that is not included within these motions.
With respect, I do not agree with the hon. Gentleman and I am glad that you do not either. Mr. Speaker. I agree with the hon. Gentleman that there will be time to return to this matter later —I hope.
It is right to draw attention to the condition of service of these people. When I first raised the subject with the Leader of the House he said that it was a matter for the Boyle Committee. When I raised it with the Boyle Committee I was told that it was not within its terms of reference. I am glad to say that as a result of pressure from several hon. Members on both sides of the House, the Leader of the House was able to persuade the Boyle Committee that it should consider this matter. I understand that it is to do so in the second part of its report.
The argument advanced by the Lord President's Office is that there are no precedents for short-term civil servants to have pensions granted in this way. There are people who come into the Civil Service for a short period, and they know that they will not be entitled to any pension at the end of that period. However, I draw the distinction that there is every difference between that situation and the situation of a Member of Parliament who may be here for a short space of time but for whom special provisions are now being made in respect of pensions.
It is right to make pensions available for Members of Parliament who have been here for some time and it is, surely right that some entitlement should be made available to those Members who retired before October 1964. Those hon. Members in that position are allowed to apply to what is known as the Members' Fund. Hon. Members will know that this is a procedure which does not appeal to many of those who retired in 1964, besides which, it is a means-tested benefit. This aspect of the matter is one which cannot appeal to hon. Members who have severe doubts about this sort of practice anyway. It should not apply to those who have served their country, many with distinction, and who deserve better consideration.
It may be said that there is no precedent for granting a section of the population a pension of this sort. I would only refer to the time when the Government whom I supported introduced a pension for the over-80s, who then had no entitlement whatsoever because they were too old to join the original National Insurance Scheme. There is a precedent which we can follow.
Therefore, I hope that when the time comes, as I hope and trust that it will on the second part of the Boyle Report, hon. Members on both sides of the House will feel that those ladies and gentlemen who retired before 1964, with a reckonable period of service of perhaps some 10 years, ought to be given proper consideration and some form of pension as of right.
11.56 p.m.
I have tabled an amendment to the third motion in the trio that we are debating, which is in paragraph (1) of that motion, to leave out "£5,750" and insert "£6,300".
The manner in which we are considering these motions is necessarily confused because the Government's proposals depart from the proposals put forward by the Boyle Committee. Some hon. Members seem to be hoping for something which they can never have. They think that they can avoid taking decisions upon this matter by appointing either the Boyle Committee or a Select Committee, or by picking a basket of circuit judges and goodness knows what, to determine salary. One of those formulae might provide us with a guide for the decision which we take, but any Member who is elected to this place must face the fact that he is elected here to take all decisions.
This is one of the embarrassing decisions. My threshold for embarrassment may be higher than that of others. I do not find it embarrassing, but if others find it embarrassing they should remember that this is one of the decisions that they are elected here to take. We cannot have a decision as intimate to the legislature as this one taken in the end by anyone except the legislature.
Though I am a colleague of my hon. Friend the Member for Bassetlaw (Mr. Ashton) in the discussions which took place, I shall not add to his revelations. I must say to him that I shall not do so because I believe that private discussions must be private and not revealed afterwards.
As I have said my amendment is to substitute for the figure of £5,750 the alternative figure of £6,300. There is nothing magic about the figure of £6,300. I shall try to explain, briefly, why I put forward that figure, and why I invite the serious support of hon. Members for it.
First, it is a modest figure. It is not the figure recommended by the independent review body which we set up particularly for the purpose, which was £8,000. It is not the figure said by Boyle to be needed to make up for inflation, which is about £7,500. It is not even within £1,000 of that second figure. By any standards it is, therefore, a modest figure. It is, for example, equivalent to £3,900 in January 1972, which is 13 per cent. less than we determined was proper for a Member of Parliament at that time. The Government's proposal for £5,750 is equivalent to £3,550 in January 1972, which is 20 per cent. below what we decided was proper at that time. Therefore, I make no apology for putting forward an increase. But it is a very modest figure indeed.
The second very serious point—which I am very glad the Lord President dealt with—is that it is not against any rules of the pay policy. The Lord President made that perfectly clear. The pay policy does not bite upon this demon. It precedes the pay policy. I should like to back up what the Lord President said by referring to a letter which I have received from the Secretary of State for Education and Science in respect of a similar situation concerning the pay of university teachers. Thet relevant paragraph of the letter stated that the board of arbitration on university teachers' pay announced its award on 2nd June, and that its decision will result, with effect from October 1975, in an overall increase of just over 21 per cent. in the present remuneration of university teachers. It also said that the salary scales determined by the Board of Arbitration would be implemented with effect from 1st October 1975.
We are not saying that Members of Parliament are a special, unique case. We are applying to ourselves the same rules as apply to others, but we are applying them much more ferociously. That is the main point that we must dispose of.
Then it is said that it may not be against the rules but that we have to set an example, particularly to the trade unions. The first point about that is that, if it is not against the rules, the problem technically does not arise. But let us face the broader background. How have the economic crisis and the pay policy arisen? Have they arisen because Members of Parliament have indulged themselves with excessive pay rises over the past three or four years? No. Some people say that the economic crisis is in part a result of excessive public expenditure. If the unions have expressed any view on that, it is to support the current levels of public expenditure.
Is our economic crisis perhaps attributable to excessive wage settlements? People differ about whether it is wholly attributable to them, or a bit attributable to them. But no one denies that it is attributable to them at least in part.
I do.
I know that the right hon. Gentleman, with whom, to my surprise. I often find myself in agreement, disagrees with that. But he and his supporters are in a minority on that matter.
Many people believe that excessive wage settlements have played a significant part in the situation in which we find ourselves. We have set an example, and I find it obscene that any trade union leader should then tell Members "We have not followed your example. Please set us a more painful example, and maybe we shall follow it."
It is not part of my conception of the role of a Member that he should indulge in self-flagellation in public—[AN HON. MEMBER: "Or in private"]—and I do not think that the public would respect him for it. Is it a worthy spectacle for the public to see Members doing a sort of political striptease on their pay, with one saying "I'll take only £6", someone else being popular for taking only £5, and our ending up with no clothes? I do not think that that would be good for Members individually, and I am certain that it would not be good for the House and good government.
Next there is the question of public opinion in general. We all know what the public think of Members of Parliament. Whenever we knock on a door, the member of the public who answers says "You are all in it to feather your own nests." Then one asks "Am I in it to feather my nest?", and he replies "I don't mean it about you." The public never mean it about any Member whom they know. It is just habit for everyone to abuse Members, and we must put up with it but not take decisions as if that were a serious view.
If we are serious about good government, it is preposterous that a Member of Parliament should be paid less than an assistant borough secretary in a London borough. It is preposterous that he should be paid less than a person in a No. 4 position in a social services department in a local authority. It is preposterous that 29 political advisers to Ministers, advisers who have excited no public opprobrium, should be paid on average just under £6,000—more than a Member is paid now, and more than the Government propose that he should be paid in the future.
Will the hon. Gentleman confirm that in the last election campaign he made known to the constituents in his division his views on the level of pay of Members of Parliament?
The hon. Gentleman is one of my constituents. He bombards me with letters about council points. He is entitled to ask the question. I do not remember whether anyone asked me that question. If they asked it, or if I raised it, this is the kind of remark I should have made. If the hon. Gentleman can find any evidence of inconsistency on my part, let him go ahead. I do not think that he will find that evidence.
Broader implications of the pay of Members of Parliament must be faced. My amendment does not have an effect upon Ministers' salaries. I stress that. The justification which I put forward relates to Ministers' salaries. It does not affect Ministers' salaries. The salary of £6,300 is bearable and payable, even in present circumstances. If the Government feel that the situation is so serious, that relations with the unions are so delicate and that no addition to public expenditure can be borne, they can make a decision to find the cost of this increase by a modest abatement of ministerial salaries.
Ministerial salaries are the great untouched subject in this House. That is a most important subject for the working of the House. The ratio between the pay of ministerial and non-ministerial Members of Parliament is delicate and far reaching in its effect. A Cabinet Minister is now paid £16,200. A full Minister who is not in the Cabinet is paid £12,700. A Minister of State receives £10,700. A Parliamentary Secretary is paid £8,700. These sums include ministerial and parliamentary figures and the London allowance.
The Government proposal provides for a not insignificant increase in most of those salaries, although not in the case of a Cabinet Minister, except to an infinitesimal degree. The Government's proposal is that the pay of a full Minister outside the Cabinet should go up from £12,700 to £13,500, that of a Minister of State from £10,700 to £11,500, and that of a Parliamentary Secretary from £8,700 to £9,500—an increase in, the last case of 10 per cent.
It is not commensurate that a Member of Parliament who is not a Minister should be asked to forgo £2,250 of the Boyle recommendation if highly-paid Ministers are not proposing any reduction in their salaries.
I do not wish to come to the aid of some less competent members of the Government Front Bench. However, Ministers, of whatever level, are not able to take on outside appointments, as can back benchers. Indeed back benchers should, in the present economic climate, be encouraged to do so. After all, they have long holidays, which are not available to Ministers.
Of course any Minister has those restrictions which do not apply to back benchers. We all know that. There is no need to draw attention to it. To suggest that in present circumstances the situation of the country is so severe that Members of Parliament should take their attention away from this place and earn extra money elsewhere is an attitude towards the proper government of the country which is not my attitude. To suggest that they can do this by taking themselves off Committees—which is what it means—and taking a holiday job to supplement their salary is laughable.
The increase in Members' pay which I am suggesting could be paid for if necessary by an adaptation of ministerial remuneration—and I give what is only an illustration. It could be paid for by cutting the ministerial part of a Minister's remuneration by rather less than half and at the same time increasing his parliamentary salary to the proper level equivalent to a Member of Parliament's pay of £6,300, which is about £4,500. In their total remuneration Ministers would suffer decreases ranging from 30 per cent. for Cabinet Ministers down to only 6 per cent. for the most junior Ministers. Those are pre-tax figures. A member of the Cabinet would lose just under £5,000 gross salary, and he would lose in cash, after tax, under £2,000 upon any assumptions about allowances and outgoings.
The back-bench Member suffering £2,250 loss in his gross salary will at the basic rate of tax lose £1,500 in cash. At a time when Members are being asked to take that loss of £1,500 in cash, it is not incommensurate that Cabinet Ministers should be prepared to take a loss of less than £2,000 in cash.
In the last few months we have heard a lot about the broadest backs taking the strain, the need for sacrifice and the year for Britain. I resent the fact that the year for Britain will probably be a burden upon back-bench Members and not upon members of the Cabinet and junior Ministers unless my amendment is carried, as I hope it will be.
12.13 a.m.
I wish to make three brief observations, one on each of the three motions. I am not in agreement, for the reasons given by the hon. Member for Islington, South and Finsbury (Mr. Cunningham), with the principle of linkage. The proposition which I wish to put to the Leader of the House, of which I have given him brief notice and to which I hope he may respond, is that whether or not the motion is carried in its present form, this matter should be maturely considered by a Select Committee of the House. It is inappropriate for us to take a snap decision on the motion. If the amendment is passed, the House will have bound itself to a specific method of dealing with the matter. I suggest that it is unwise and inappropriate for a matter of principle of this sort to be decided in the course of this debate alone, and that it is proper to be considered by a Select Committee of the House.
After considering the various ways in which linkage could be achieved, the Select Committee might come to the conclusion that linkage itself in principle did not have the attractions which at first sight it appeared to have. I hope that there will be some move in that respect from the Government Front Bench.
As regards parliamentary expenses, the point that I put to the House is that there are now considerable sums of public money being claimed by hon. Members for reimbursement. The House is the ultimate guardian of public money and it is to the House that the Comptroller and Auditor General is responsible. It is in no disrespect to the House and its Members—much to the contrary—that I suggest that it is no longer appropriate that such sums should be claimed on merely the ipse dixit of hon. Members. In every other case where sums of this magnitude are reimbursed, some form of voucher, evidence or receipt would be required to be produced. Certainly the Comptroller and Auditor General would return a severe comment to the House if he found payments being made in any other context as little vouched for as those that are made to hon. Members. I hope that that practice will be reconsidered. Indeed, it would be a protection to the House against the danger that the hon. Member for Warley, East (Mr. Faulds) has foreseen.
Finally, I turn to remuneration. I have earlier today, in the course of my argument in the debate on the anti-inflation measures, expressed the view that as it is the House which has ultimate responsibility for inflation, it is inappropriate that we should now adjust our remuneration to take account of inflation. Therefore, it would be disingenuous of me not to indicate to the House that if Tellers are put in against the motion, I shall vote against it. Nevertheless, I do not wish to shelter behind that argument from making two further observations—
I think that we all appreciate the right hon. Gentleman's sincerity in disagreeing so bitterly with the policies of the previous Conservative Government. We appreciate that he had the courage not to stand for re-election under the political banner of the Conservative Party. However, does not the right hon. Gentleman agree that those of us on this side of the House who feel no responsibility for the current rate of inflation, and who have tried to share some part of his own courage by disagreeing in the House with the policies of our own Government, should regard ourselves as being worthy of an increase? Like the right hon. Gentleman, we have no responsibility for the present situation.
I hope that I chose my words in such a way as to show that I believe the conclusion which I have drawn, and which I hope I shall have an opportunity of drawing in the Lobby, to be one which is binding upon myself only.
I turn to two further observations from which I think I should not be stopped by the decision that I have just mentioned.
First, I agree most strongly with the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis). It is true, as the Father of the House has pointed out, that we shall have to give legislative sanction to what we are proposing to do, otherwise irregularly, in respect of our pensions. But the very fact that we have to make a special Act of Parliament to cover the situation goes very far to make his point. It will be in the literal sense of the term a private law, a special law for ourselves. It will be a privilege. I do not believe that it is the type of privilege that we should be enacting for ourselves.
Secondly, I do not believe—and we are all speaking for ourselves in this debate—that there is any justification for an increase in our parliamentary remuneration. The remuneration today is greater in purchasing power than it was when I first entered the House in 1950. I have ascertained that on the retail price index in June—the latest available—the present salary is still in purchasing power well above the remuneration of an hon. Member entering the House in the year 1950. I have therefore personally opposed every successive stage—
Why has the right hon. Gentleman taken the money then?
I shall answer that before I sit down. I have opposed every stage at which there has been an increase proposed in that remuneration. The principle I have adopted in consequence is never to accept any increase in remuneration brought in during the course of a Parliament unless it was specifically indicated at the time of the election at which that Parliament began. I shall follow that principle on this occasion. I thought it better that I disclose that fact here rather than anywhere else.
12.22 a.m.
The logic of the right hon. Member for Down, South (Mr. Powell) appears for once to have failed him. He compared the salary of an hon. Member with what it was in real terms in 1950. As one who came into the House in 1964, I can assure him that the salary in real terms has declined considerably since then. But that kind of chopping about with dates impresses nobody.
I do not think there can be said to be complete unanimity in this debate, except on the issue that the matter has been absolutely mishandled. That has been said from behind the Government as well as in front of them. It is equally true that there is not a single person in this House who wishes this system to continue. But the real mishandling I must attribute to the members of the Cabinet. I congratulate my right hon. Friend the Secretary of State for Employment on being one of the two members of Cabinet now present. I think that perhaps the right hon. Member for Antrim South (Mr. Molyneaux), the leader of the Unionist Party, should be congratulated. He is the only leader of any party in this House who did not walk out before the decision was taken on what his back benchers should be paid.
We are sitting here—and only the House of Commons could do it—discussing the first breach of a White Paper which we passed only at ten o'clock yesterday evening. It is not a breach people expected. It is not a breach by a trade union asking for a massive increase. It is a breach of the provision in relation to formal arbitration awards if they were referred, not merely adjudged, before the White Paper came out. This matter was not merely referred long before the White Paper. The judgment was made on 13th June—long before 1st August, the date in the White Paper. The Government with their usual savoir faire in these matters, are going forward saying "We said something at ten o'clock, but at about one o'clock we shall say something different". It does not inspire much trust in this House or outside it. In 1964 much the same thing happened. I remember it well. The Lawrence Committee reported on that earlier occasion and came up with a sum of money. Back benchers received the sum due, but Ministers had their award chopped by half. I do not remember at any subssequent election any citizen of this country mentioning to me that he was impressed by the fact that at one point a Labour Government said that it would cut recommended Ministers' salaries by half. I do not think it gained a vote. Now we have it the other way round.
When the Boyle Committee reported in 1971 it found, not unjustly, that Ministers were paid too little. Several of the Conservative Government's junior Ministers had stated that if they did not receive an increase they would have to cease to be Ministers. They simply could not support their wives and families on the salary then paid. The last Boyle Committee produced a reasonable recommendation for Ministers' pay, though, quite frankly, it was not particularly reasonable for back benchers by comparison.
I heard no one in this debate so far mention wives and families. I rather understand why that is so. Most Members are married and have families, and perhaps they felt a little too shy or embarrassed to speak for themselves. Maybe as a bachelor I can speak for them. Is any person seriously claiming that Members looking for this sum of money are doing so for themselves alone, or that they do not support their wives and children? If we should make a sacrifice, why is it that the wives and children of my honourable colleagues should be forced to make sacrifices too?
I feel a little sorry that several speakers in the debate have blamed the Press as a whole for some of the comments made. I think we have a certain responsibility, too. I also think that we should be fair to papers like The Guardian, The Sun, and even the News of the World, which have supported our case, unlike the Daily Express and the Daily Mirror, which have attacked it. If I might say so, the News of the World and The Sun are a great deal more successful in circulation terms than the papers which have attacked us. It may be relevant that one of the least successful editors in Fleet Street is one of our principal attackers.
For other reasons.
Perhaps he is struggling for readership and thinks that the cheapest method of getting it is the best. That may not be wholly dissociated from the reason.
But there is another group that we should mention. Several trade union secretaries have suggested that we should not get what their members and they themselves have got. I took the trouble, after Jack Jones made his speech about our pay to telephone his office, and I only wanted the answer to a simple question. I did not want to show a morbid interest in his income. I do not agree with those who have been shouting at Members to declare their income. I was always in favour of declaring interests but not income. I think it is very largely morbid curiosity that drives a mant to want to know whether someone else is earning more or less than he is himself.
I made it clear that I did not want to know Jack Jones' income but just the percentage change in it since 1st January 1972. For the benefit of Conservative Members, it is not fixed quite as publicly as ours. It is not fixed, as I understand it, at a Transport and General Workers' Union conference, meeting in public. It is at the National Executive Committee, which meets in private and contains a large number of trade union officers, who are also paid rates fixed in the same way. It will not, perhaps, surprise Members to know that Jack Jones did not provide the information, even though I did not want to know the exact sum. But perhaps I achieved my object, because he has not commented on our salaries since.
It really is a ludicrous system, and we should change it. While we are on the system, though I shall support the amendment from my hon. Friend the Member for Bassetlaw (Mr. Ashton) to link us to the position of an Assistant Secretary in the Civil Service, I am doing that basically because the Leader of the House has suggested linking us to a grade in the public service.
I believe, as one Opposition Member said, that we should link ourselves to the average earnings index of the United Kingdom. The earnings index is much more subtle than people think. In the past few years, it would have done us slightly better than the Boyle recommendation. But, at the moment, the rate of increase in average earnings has dropped to zero, strangly enough, because it reflects matters like overtime, the level of production and so forth. However, it is a more accurate index than any other.
But I object to those hon. Members, even Ministers, who have suggested, "We shall not put up the salary because that would be inconvenient and bad publicity. But do not worry. We shall give you all of it in allowances. We shall put up your allowances." As the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said, we are in danger of creating a world in which people seek for money in terms of allowances—a fiddler's paradise. I do not think that it has happened yet, but we are on the verge of it. If we continue to increase allowances and not salaries, we are in danger of creating a fiddler's paradise.
Only yesterday there was a letter in the Evening Standard from a taxi driver saying that he was allowed to charge only 7.7p a mile in London and that he could not understand how anyone could justify civil servants or Members of Parliament getting 10.2p a mile. We are in danger of getting these comments and of encouraging Members of Parliament to pay their secretaries less than their secretarial allowance and to siphon the extra money off elsewhere. Many of us do not wish to see that. Some of us do not wish to receive a secretarial allowance but simply to have a secretary, as everyone else does. I am sure that the editor of the Daily Express does not get a secretarial allowance and have to pay a secretary out of it. Lord Beaverbrook's Daily Express pays the secretary. That is all that we want.
I am sorry that Mr. Speaker did not select my amendment on this point. It had wide suport on both sides of the House. But the van Straubenzee Report, which was a unanimous one, is far more important in some ways than merely increasing the allowances, because it gives Members the option of having the Exchequer pay their secretaries just like a civil servant's secretary. We would not have to touch the money. I think that that would improve the conditions of secretaries. It was an altruistic proposal. It would not have made a penny for a single hon. Member, but it would have benefited secretaries in this House.
I hope, therefore, that my hon. Friend will assure us that he will bring that report forward as soon as possible after the Summer Recess. Meanwhile, the Government have acted in a way which shows that they are frightened of a little publicity which probably will be forgotten next week. What is more, when all is said and done, I think that they have acted rather cheaply.
12.34 a.m.
Anyone from either Front Bench who tenders advice on this subject at this hour would do well to be careful. If I were to be so bold, I would suggest that we might be misunderstood if we carried this discussion right on into the small hours of the morning. I do not recall a single occasion on which this subject has come up when the air has not become thick with charges and counter-charges of greed, hypocrisy and the rest of it. The only certain conclusion is that Parliament has not benefited as a result.
I do not recall ever before taking part in one of these debates, and I can say quite honestly that I do not greatly look forward to doing so tonight.
There are several propositions which, though there may be some conflict between them, command fairly general consent. The first is that there never is a good time to do these things, with the result that we get so nervous and wrought up about it that we tend to attract criticism and biting comment from rather predatory persons who take a lofty view of it all.
The least awful time to do it is at the very beginning of a Parliament when everybody says with a laugh which they almost enjoy, "Now we know why they were so keen to get in and we understand it very well"—and there is a bit of a cynical laugh and it is gone. However, I doubt the wisdom of having special reviews and getting into the habit of rejecting their conclusions.
I suggest also that the worst possible time is immediately following the announcement of restrictions, however necesary, in the national interest, because, no matter how clearly the small print is laid down to satisfy all those with legal minds, the public have received a different measure, and that invites the kind of comment we have had.
The Leader of the House has an unhappy rôle from time to time and never more so than in handling this problem. He has been saddled fairly and squarely by his colleagues with carrying out their edicts whatever his wishes may be. When he says that this issue should be settled in a way which commands the approval both of hon. Members and of the public, I think he is sailing into the area of Never-Never Land and of wishful thinking— an ideal world which will never exist. But we have to search for some means of making the clash a little less bitter and unpleasant.
I look very much askance at the idea of linking the salary of Members of Parliament with that of a particular rank in the Civil Service, for the reason given by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) and by my hon. Friend the Member for Dorset, South (Mr. King). They both took exception to this on the ground that we ourselves were so near to being in control of the salaries of civil servants that it would look unpleasantly like a trick.
The right hon. Member for Down, South (Mr. Powell) was right in suggesting that we would make a mistake if we made a sudden snap decision on this motion at this hour. Much the best thing is to have it considered quickly by a Select Committee. I am talking now about linkage. That could be considered. The right hon. Member for Down, South is right in suggesting that this is a matter which could suitably be submitted to a Select Committee.
On the question of expenses, particularly secretarial expenses, I rather agree with those who have said that we have to tidy this up a bit. It should be made to look a little respectable. There should be the kind of proof of payment which would not be humiliating to Members of Parliament. It is a formality which we ought to be seen to require of ourselves.
On pensions, I echo the anxieties expressed by hon. Members who have called attention to the questionable proposals that a contribution should now be made by Members of Parliament as if they were being paid at the rate of £8,000 a year, and that the extra cost should be contributed by the taxpayer free of tax to Members of Parliament. That is creating a very privileged position and we should be careful about pursuing it. There are arguments on both sides. I am merely sounding a note of caution, and the House would do well to take note of it.
I do not wish to make a long speech, but I ought to refer to the passionate call made by the hon. Member for Newham, North-West (Mr. Lewis) who said that we should examine the facts. The hon. Gentleman did so with the air of one who is determined to do nothing of the kind.
I think that many of us felt like intruders in a private discussion when the hon. Member for Bassetlaw (Mr. Ashton) was on his feet. At least, one could not help but be fascinated by the quotation, "That will be opprobrium worth having". As if we could not guess the source of such gallant sentiments—the right hon. Gentleman the Prime Minister himself. Whether the Prime Minister will feel that his attempted gallantry and obvious confidence in the hon. Member for Bassetlaw have been reciprocated and welcomed in the manner he would like, I leave to him. It will be interesting to see how it is received. I am sorry that the Prime Minister was not here tonight, because that would have rounded the circle and made us all feel very happy.
I know that we are not discussing pensions tonight, but I should like to take this opportunity, since my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) mentioned it, of saying that those who ceased to be Members of Parliament in 1964 and are without pensions of any kind are deserving of consideration even at times like this.
The hon. Member for Islington, South and Finsbury (Mr. Cunningham) made one of his characteristically interesting contributions. I shall not follow him at any length. I do not think that he was particularly wise in wishing to impose upon Cabinet Ministers some punitive experience. I only wish that I had some grounds for praising Members of the present Cabinet, but I believe that it would be wrong to think that this country's interests would be well served if we persisted, as we have in the past, in under-paying Ministers.
Or Members.
I am not challenging that. I am just taking up the point made by the hon. Gentleman.
The hon. Member for Nottingham, West (Mr. English) commented that the matter had been badly handled. I think that we must all agree about that. The fact that there has been no consultation with the Opposition and the timing of the whole matter singles it out for that description. The House would be wrong to single out the Leader of the House, who has probably done his best in this matter, for special blame when it should be fully shared with his colleagues.
As I said when I started, this is a thoroughly unpleasant subject. The public discussion of it at great length, with heat, does no good to the House of Commons. Of that there can be no doubt, on whichever side of the controversy we may find ourselves. I repeat the advice I was bold enough to tender at the beginning of my remarks, namely that to carry this discussion into the small hours of the morning would serve ill the purposes of those who wish, for good reasons, to see Members properly paid.
12.45 a.m.
I think it would be for the convenience of the House if I moved the amendments standing in my name—
Order. The hon. Gentleman may discuss the amendments. He can move them formally later.
This debate has clearly been disgraceful. It is one of the worst debates ever to have taken place in the House. I agree with those who have said that some way must be found to take this subject out of the House, either by linking Members' pay with the salary levels of civil servants or deciding that this issue should be considered in the light of the average increase over the whole of the Civil Service. The Leader of the House might also like to consider the method whereby the House regularly enacts Pensions (Increase) Measures designed to compensate for the effect of the cost of living on Service pensioners and others similarly placed.
I ask the Leader of the House to find some way of taking this subject away from the House. The effect of the two amendments standing in my name will be to limit the pay increase to £6, which seems to be the right and proper way of handling this subject. We completed our debate on the Government's policy for attacking inflation at ten o'clock this evening. The main provision in that policy is that the pay of workers should be restricted, across the board, to an increase of £6 from 1st August. By a masterly stroke of timing, having spent the past two days debating that important subject dealing with the interests of the entire nation, we then go on to debate our own salaries and allowances.
This is shocking, and those responsible bear a heavy burden for the tone of this debate. There have been a number of references to allowances. This is a package deal. We last had a pay increase in 1972. The secretarial allowance stood at £1,000 per annum at that time. The additional costs allowance stood at £750 when it was introduced in 1972. In August 1974 it was raised to £1,050. On the Order Paper today the figure is £1,639. Even leaving aside the secretarial allowance increase, which is substantial—and those who employ a full-time secretary or research assistance make full use of the £3,200—the House must take into account the improvement in the out-of-London allowance. As a result of further information that has come to us today, this allowance is known to represent £589 per annum. In other words, it is £11 a week free of tax. I believe that it was overdue.
If there has been any real hardship, it has been among hon. Members who have had to keep two homes going. At present tax rates, an £11-a-week increase is worth £15 a week and if the House agrees with my suggested amendment this will be increased by another £6 a week. This leaves aside the secretarial allowance which will help hon. Members because, when the figure was £1,000 hon. Members had to fork out of their own pockets to make up the difference, but the new figure is enough to pay for a full-time secretary.
Will my hon. Friend not agree that the figures he has just given do not apply to hon. Members in the London area? Assuming that they pay their secretaries the full allowance, they face a cut in their purchasing power of 20 per cent. since 1972. Can he also say how many hon. Members who signed his amendment have other interests?
I accept the point the hon. Member makes about London Members. They are paid a London allowance and are in a different position. However, they get the car allowance and one must take into account the fact that the secretarial allowance is the top rate and would allow an hon. Member to employ a first-class secretary, even with the high rates now being paid in the London area.
The amendment asks hon. Members to face the facts of life—
My hon. Friend for Newham, South (Mr. Spearing) asked which Members who signed the amendment in the name of my hon. Friend for Derby, South (Mr. Johnson) had outside interests. I hope to catch your eye and to speak in this debate, Mr. Deputy Speaker, but I have an outside interest. I am paid just under £3,600 by the Post Office Engineering Union, and I hope, Mr. Deputy Speaker, to be able to explain in the debate why I feel that we should back the £6, even though I am more fortunate than many hon. Members on this side of the House.
I was coming to the point about outside interests. I am honorary national officer of a trade union and for that I receive £100 honorarium a year plus meal expenses if I attend meetings on behalf of the union. That should clear up some of the points my hon. Friends have found a little disturbing.
We are asking hon. Members on both sides, at this very difficult time for our country, to support the £6 limit of the Government's policy. This is essential if we are to get the backing of the people of this country, particularly the trade union movement, for the policy.
I am as aware as anyone else of the way in which the cost of living has affected Members and I am aware that prices have risen by 65 per cent. since we had the last increase. I am aware that average earnings have gone up by 85 per cent., and were we not in the grip of one of the worst economic crises in our history there would be a very strong case for implementing the Boyle recommendations in full.
But we must win the battle of inflation. By setting an example to the nation we shall make it possible for the Government's policy on inflation to succeed. Our action would be a massive boost to the attack on inflation and it would be enthusiastically received by the country. It would make it far easier for trade union national officers to get the policy accepted. Only yesterday the finance and general purposes committee of the TUC gave its views on Members' salaries. I believe that it did so not in a spirit of selfishness, greed or vindictiveness. [HON. MEMBERS: "Oh."]— That is my opinion and I probably have more dealings with members of the committee than many of the hon. Members who are making all the noises. The committee adopted that view because it could see the difficulty of getting the Government's policy accepted by the rank and file.
The amendment provides the House with a great opportunity to win back the confidence of the people who sent us here. It will mean sacrifice and in some cases real hardship, but if we are prepared to put the nation first we shall give a massive boost to the Government's policy for attacking inflation. I ask for support for the amendment.
12.58 p.m.
There were moments when the hon. Member for Derby, South (Mr. Johnson) seemed to lose the sympathy of the House.
None of us seems to have gained much in stature or public affection from the way in which this affair has been handled. What an odd debate we have had. Sometimes we almost got round to talking about what Members of Parliament should be paid as Members of Parliament. All too often, however, we have drifted off into what Members of Parliament ought to earn in total with their other interests included. Some hon. Members, undoubtedly highly principled, think that we should take no more from this place but that it would be all right if we took as much as we could from outside. That is a reasonable principle.
I listened carefully to my right hon. Friend the Member for Down, South (Mr. Powell), and, as always, I respect greatly the intellect that he brings to bear on these matters. The understanding on which I stood again for this Parliament was that there would be a Boyle Report, now, and that there would be one in each Parliament of normal length, or approximately every four years. I am not unduly timorous, therefore, when I say that Members are entitled to some increase in remuneration, in spite of my right hon. Friend's views.
The curious thing is that as usual most hon. Members who have spoken have seen the national interest coinciding closely with our own personal interests. We have had Members baring their breasts on the subject of their personal income, although one or two have not bared their breasts as fully as they might. After all, one did not have to say exactly what was the income of one's wife. All these things are rather important to the view that a man takes when he decides the extent of the sacrifice that he should make.
I confess that I have had a great deal of sympathy in recent weeks with the Leader of the House. He has just become a natural target for custard pies from every direction. I believe that he has done his best with the pretty ghastly mess that he has been offered. I welcome his proposal for linkages. Indeed, I welcome the proposal by the hon. Member for Bassetlaw (Mr. Ashton) also, although I would not want us to be linked with a Civil Service grade. [AN HON. MEMBER: "What about the airline pilots?"] The hon. Gentleman suggests airline pilots. I confess that I should not mind that. There are two objections to being linked to the Civil Service. First, it is wrong that we should link our pay to salaries that we immediately and directly set. Secondly, it is unhealthy that when a Member of Parliament looks across the table at a civil servant, the latter should have at the back of his mind "This chap is two grades below me."
That is what he thinks now.
With great respect, that is not what he thinks now. It was most certainly not what he thought when hon. Members received no pay whatever. However, that thought would be in his mind if we were linked directly to a Civil Service grade.
My own preference is for some form of linking to the judiciary. That is probably as near as we can get. It is not the easiest of things to do. The House would be wise this evening to take the view that our pay should be linked. I do not believe that this would be the all-time answer, because then a resolution of this House would be required to activate that complete linkage proposal on each and every occasion.
No.
My hon. Friend says "No". It would depend on how we legislated, but I believe that it would be proper, even if we linked our pay, that we should still leave ourselves the option of taking it or leaving it on every occasion. This would solve most of the problems and the power would still remain in our own hands.
There has been a great deal of comment on the proposal put forward by the hon. Member for Islington, South and Finsbury (Mr. Cunningham) that if people had strong views on public expenditure and inflation, any increase that we might take could be covered by reducing the salaries of Ministers. I normally would have no sympathy with that view because I believe that, if anything, Ministers are under-paid. However, if the Prime Minister and the Cabinet hold the view, as seems to be the case, that being a Member of this House is a privilege for which hon. Members should pay out of their own pockets, I am driven to the conclusion that to be a Minister is an even greater privilege and that one should, therefore, pay even more for it —which is a pretty rough justice form of sauce for the goose and gander
I should certainly oppose any suggestion of two scales of pay for those who are so-called full-timers and those who are so-called part-timers. I believe myself to be more or less a full-timer. I have no real wish to do very much work outside this House, outside parliamentary affairs. I do some, primarily because I need to earn extra money in order to do my job as a Member of Parliament. That is probably the case with most of us.
I think that most of us find, as I do, that we subsidise our role as Members of Parliament out of our earnings from outside. Some of us subsidise it to a considerable extent. Some, like the hon. Member for Derby, South take the view that we ought not to pay ourselves any more than £6 a week more, or indeed, some say nothing more at all. They quote the public attitude about this. I wonder what the public attitude in fact is about this matter.
As hon. Members will know, I have not been reticent in saying that I believe that Members have more than given an example on pay restraint. I do not be- lieve that I have been reticent in saying that Members deserve at least that which the Government have recommended should be paid to them. I have received only one letter criticising my point of view. I have read in the newspapers far more accounts of how wicked I have been but only one letter from a member of the public criticising my view on this matter.
Perhaps the electorate is a little more sophisticated about this than we think. Perhaps the electorate has noted that it is not the cheapest assembly in Europe that has been the most successful assembly in controlling the problems of inflation. Perhaps they think that if we could concentrate our minds a little more on the business of the House, we would do a little better. Perhaps they think that if all of us were able to get in to attend Standing Committees and Select Committees, this place would run better and we might even have a better chance of controlling the executive from time to time.
My attitude to the whole of this problem can be summed up quite simply. Above all, I do not believe that this place ought to be a club only for rich men. We got rid of that concept some years ago. Each time we take a salary cut by allowing inflation to erode Members' salaries, we are moving back towards the days when this was a place for rich Members, or some sort of rag-tag popular image of what a trade union leader ought to be or what a Labour Member ought to be—a cloth-capped fellow eating cow-heel sandwiches in the Tea Room.
I should like to see a far more professional—in the best sense of that word —approach to the way we run this place. I do not believe that we shall get that approach while we continue to reduce the pay of Members.
1.9 a.m.
I wonder whether I could be the first Member who has spoken in the debate to declare his interest? I have a parliamentary salary. I earn a little money from television and radio, and a little by illiterate scribblings. The total of those outside earnings does not amount to more than about £500 or £600 a year. I have two £1 shares in the Hull and East Riding Co-operative Society, five £1 shares in the Hull Kingston Rovers Football Club, and four family allowances. Only one of those sources of income—apart from tonight—can I see any prospect of increasing—and then, chance would be a fine opportunity.
But that is the lot of the provincial Member, the lot of most Members who have no outside interest, and who therefore do not take too kindly to Members who have substantial interests lecturing them on tightening their belts and setting an example, or telling their wives and children to set an example.
My wife shops at the same shops as my constituents. Costs have risen for her as they have for the rest of society. I am not claiming that we are on the poverty level or that we are starving, but we want a proper living standard. Our salary, worth £4,500 in 1972, is now worth £2,773 in 1972 terms. A salary to keep up with inflation, on the May figures, would be £7,302, and a salary to keep up with the increase in average earnings to April would be £7,849.
Our case is not based on how much better we are than the rest of society and that we must be a privileged class. It is simply that, having gone to arbitration, we should have received the rate for the job, the rate that we were denied by the Government, who allowed the matter to drift. The sacrifice will not be made by us. We shall have our invitations to free lunches and dinners and embassy parties. We can have our status and ride first class on the train. But our immediate families are being asked to bear the brunt. The Member is here five days a week.
It is not right to ask our wives and families to make the sacrifice, which is what hon. Members on both sides of the House are suggesting, whether they have two union incomes or union expenses, whether they are at the Bar, are directors, or whatever. They are saying to Members who basically want to do a job for which they were elected "You set the example, and we shall go along with increases in allowances, because increases in allowances are tax-free". I claim five children on my taxes—five legitimately, anyway. If thought were father to the deed—but unfortunately it is not.
What we have sought from the Government in justice, not something to take us above the poverty line. I do not see myself in penury compared with a man sleeping on the steps of Caxton Hall or at Charing Cross. I want just to live properly. That is why I bitterly resent the way in which the Government have treated us.
My hon. Friend the Member for Bassetlaw (Mr. Ashton) has made a great step forward with the linkage amendment, to which my name is attached. I welcomed what he said about it, but if we are to have more revelations of secret talks let us give credit where it is due. The suggestion for the amendment came from my right hon. Friend the Prime Minister when we went to see him. Incidentally, I do not know how successful my hon. Friend was in his union negotiations, but whenever I negotiated with anyone I did not spill all the beans, because I might have to negotiate with him again.
My hon. Friend has said his piece. He is courageous, and I admire what he has done to help to organise us on the back benches. It is vital that we reject the advice of my right hon. Friend the Leader of the House and support my hon. Friend's amendment. If we do not, we shall have debates of this nature again. We shall for ever wonder when to pluck up courage to ask what will be done about salaries, how long we shall have to wait, and how much the increase will be. Let us get rid of that.
I did not come here to spend my time debating what my wages would be. I came to Parliament to do a job. I do not even want allowances for secretaries. I want somebody else to pay them. I do not want to fill in forms for anybody else. We want a system which provides decency and certainty. The Government have not treated us decently. Our amendment gives back benchers certainty for the future.
1.16 a.m.
I do not entirely agree with what was said by the hon. Member for Kingston upon Hull, Central (Mr. McNamara). Nor do I believe that the debate has been disgusting or degrading. Members have stated their honestly held views. I should like to share my views with hon. Members as reflected in some of my amendments.
I declare the fact that I have a business interest outside the House, as indicated on the parliamentary register. It is a business interest. I do not depend entirely on a parliamentary salary.
I refer first to the linking of the pay of Members of Parliament to a level of pay in the Civil Service or elsewhere. The matter is dealt with on pages 8 and 9 of the Boyle Report. The report is right. I share the worries of other Members about linking our pay to that of a Civil Service sector. We should not link our pay to that of any other group of salaries elsewhere. If we did that we would give ourselves the advantage of protection against wage and price movements which the electorate do not enjoy.
The Boyle Report says that the frequency of review is at fault. If the frequency of review is increased to every two years, the review of our own pay will no longer be a problem.
The Government are flying in the face of many of the Boyle Committee recommendations by showing too little appreciation of the careful consideration and thought which the distinguished and objective members of that Committee brought to bear on the true costs of being a Member of Parliament and the justifiable salary for doing that job. By almost any comparison or assessment, the arguments for expenses and salary increases as recommended by the Boyle Committee are almost irrefutable. I hope that one day soon the increase will be fully implemented. However, I believe that that day is not now.
Before developing the reasons for my view I should like to separate the two elements which became muddled in many of the speeches this evening. They have also been muddled by Press and television commentators on this subject. I refer to the difference between recompense for some of the expenses of doing the job of a Member of Parliament and the remuneration due to him for doing that job. I do not believe that Mr. David Wood of The Times rendered a service in his article of a week ago.
Many of the so-called benefits described as being enjoyed by back benchers are simply the accepted services which go with any office job—a desk, a chair, no office for some, certainly no office for me, a telephone, stationery, postage, travel and expenses concerned with living away from home on parliamentary work. A secretary is essential for parliamentary work as for any office work, and that is why an allowance is given for secretarial assistance.
The amendment in my name is designed to draw attention to the fact that the new so-called secretarial allowance of £3,200 covers not only secretarial costs but general office expenses and, if there is anything left over, the cost of research assistance. Perhaps now there may be something left over for research assistance, which more than anything else might improve the efficiency of Members at a time when our efficiency should be at a premium providing, as it does, one of the most potent checks on the steadily increasing power of the executive.
I applaud the suggestion which was made by the right hon. Member for Down, South (Mr. Powell) for the provision of vouchers to support the expenses incurred. That is normal business practice outside the House and it would give greater credibility to the expenses incurred.
So much for the cost of doing the job. What of the timing of the Government's announcement of the increased rate for doing it? I am struck, as other hon. Members have been, by the peculiar juxtaposition of the introduction of the White Paper "The Attack on Inflation" one Friday morning, and the Government's suggestion on the following Wednesday that Members of Parliament should drive a gaping hole in the basic tenet of the attack and in the £6 a week wage increase. The small print in the White Paper may allow it, as it will allow many other increases between now and 1st August. Because the small print allows it, I believe that we have a special role to play as Members of Parliament in trying to lead the country out of the inflationary cycle.
The hon Gentleman seems to be getting his past and future tenses mixed up. He eventually accepted that the proposals in the Boyle Report are entirely within the guidelines of any social contract or wages legislation in the past three-and-a-half years. We should still not get the back pay but merely be brought up to date. Will the hon. Gentleman please get his tenses right.
I thank the hon. Gentleman for his interjection, but I do not think that I am mixing up my tenses. I am making exactly that point. By accepting the suggested increase we should be showing ourselves not to be giving absolute priority to the fight against inflation. We should not be following the principle of no special cases, no exceptions, no jumping the queue before 1st August, which was so emphatically stated by the Prime Minister when he introduced the White Paper.
All hon. Members will accept that any limit to pay increases is rough justice and that injustice and anomalies will abound. That is perhaps a major reason why any pay limitation should be short and sharp. But if a national limit to pay increases is to sound sincere it must be applied at the level of those who dictate it. That is what is meant by leadership and trust in leadership. Hon. Members who have been in the House for three-and-a-half years have not set an example by not having an increase for three-and-a-half years because the statement was not made at the start of that period. This is the example we are setting.
I turn to the pension suggestions. This is a matter of importance not only for hon. Members but for the country. Others have had a chance to develop their arguments and I intend to develop mine. The Lord President suggested that a special pension deal be given to hon. Members, a deal the likes of which I rather doubt would be accepted by the Inland Revenue if it were suggested by a private employer.
I join my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) in the views that he has expressed. Given the job that we do and the character of the job, the Government's recommendation on pay does not go far enough, but given the present economic conditions the Government's recommendation in this respect goes too far. To use the Prime Minister's own words, it is the Government who are now the rogue employer. It is the Government who are now in breach. This is an example of "Don't do as I do, do as I say". It is for that reason that I tabled the amendments to the motion. If it is called, I intend to support the amendment of the hon. Member for Derby, South (Mr. Johnson).
1.26 a.m.
May I thank the right hon. Member for Yeovil (Mr. Peyton) for the way in which he approached the debate. I sense general support for his view that this discussion should not be prolonged for any longer than necessary.
This has been in many ways a miserable debate. It cannot be a happy spectacle when we have to argue about our own pay, given the wide differences of opinion amongst us. I suspect that if there is one matter on which we are all agreed it is that the sooner we end this nonsense the better. I could never understand why the House accepted the Boyle recommendation that there should be one review every Parliament. If that was not storing up trouble for ourselves it is difficult to know what was. It could be argued that no one at that time envisaged the inflation of the past three or four years and that the possibility of Boyle recommending an increase of £3,500 all in one go was remote, but it happened.
It was against a background of economic crisis, demands for sacrifices from many people and of cuts in public expenditure that my right hon. Friend the Lord President had to make his statement last week. I know that he expected to make few friends in the Chamber and even fewer outside. One matter on which many of my constituents are quite clear, although interestingly enough I have not had one letter about it, is that the award should be £6 and no more. That is the clear impression that I gained over the weekend. The Government recommended a compromise which satisfied few people.
I suggest that the three motions, taken together, are fair and realistic. Most important of all, they point the way forward. If we can once and for all take the question of pay out of public controversy, the argument over the current award will have served a useful purpose. The sooner we take an income of £4,500 away from the Top Salary Review Body the better. I wonder how it ever got there in the first place.
We are top people.
But we do not get top salaries.
I found the suggestion of the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) that our salary should be based on a set of averages rather than upon one specific grade an attractive proposition. That will be considered along with other proposals.
The hon. Member for Dorset, South (Mr. King) asked what was an appropriate salary in normal times. He knows as well as I do that there are no normal times for Members of Parliament. There never will be an occasion on which any increase, however small or large, will be popular in the country. The hon. Gentleman said that it was monstrous for us to award ourselves more than £6 a week. What he did not say was whether he himself intends to take the money.
My hon. Friend the Member for Watford (Mr. Tuck) talked of the need for general sacrifice. I agree, but I find it strange that certain hon. Members who want restraint upon our salaries did not deploy the same arguments about the salaries of judges, military personnel and consultants. [HON. MEMBERS: "We did."] Some did but not all.
The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) asked whether the same treatment on pensions will be conceded to other groups. I know that this is a matter that is worrying many hon. Members. There are those who wish to have their pensions related to what their pay might have been but for the Government's counter-inflation policy. The answer is that the circumstances are different. First, there was a three-and-a-half year interval since Members had their last increase, and there is the generally recognised fact that there is a unique, complex problem surrounding the proper determination of proper pay and pensions for hon. Members.
Paragraph (4) of the motion determines £8,000 a year as the rate for the job, even though the whole amount will not —and cannot—be paid at this time. That is the logical conclusion of the motion put to the House on 16th July in which the Government accepted the concept that the Boyle recommendations were justified. There are Civil Service precedents for basing pensions on the full amount of the pay award, even though part of it is temporarily deferred on incomes policy grounds. In particular, Assistant Secretaries have their pensions related to the full amount of the latest pay award, even though part of their award was deferred and at that time no date could be set for full implementation.
Will there not be an anomaly in that the rate for the job is to be set at £8,000? Will the death benefit to hon. Members be based on a salary at that rate?
Yes. My understanding is that that benefit will be based on the £8,000 figure.
If any of us lives long enough to collect it.
I agree—if hon. Members live long enough to collect it.
My hon. Friend the Member for Bassetlaw (Mr. Ashton) wanted us to be more specific. My right hon. Friend the Leader of the House has made clear that the question of linkage will be urgently considered. I was at the meeting at which my right hon. Friend offered to discuss the matter in detail with shop stewards and many other Members in this House who wished to make representations. There are many opinions about linkage. It is right that they should be considered carefully, and my right hon. Friend the Lord President of the Council will bring forward proposals in due course. That seems to me to be sensible and logical.
The right hon. Member for Down, South (Mr. Powell) wanted a Select Committee. We shall have discussions to establish whether there is a general demand for such a move. The right hon. Gentleman argued that it was wrong to protect ourselves from inflation. We are entitled to remind him that we are not doing so. The retail price index has risen 66 per cent., whereas our salary has increased by 28 per cent. We are not protecting ourselves from the inflation we have seen since the last increase.
My hon. Friend the Member for Derby, South (Mr. Johnson) made a speech which I am sure he would agree was controversial. I respect his honesty and sincerity. Again, there was one element missing. He did not say whether he would take the money. If he believes that he should not take it, I put it to him that there is a simple remedy.
It is doubtful whether any pay increase in recent years has attracted as much attention as our own, and I make no complaint about that because we must expect to be scrutinised. But one wonders whether some of our friends in Fleet Street are as fair and objective as they might be. It is right to recognise, as my hon. Friend the Member for Nottingham, West (Mr. English) did, that some newspapers have supported us. Others have approached this matter with a vindictiveness and a malice which ought not to go without reply, and I hope that the House will allow me a few minutes in which to explain to Members and to the empty Gallery just what I have in mind.
I speak as a journalist by trade. In the five years prior to my election to this House I was Midlands Secretary of the National Union of Journalists. I know what goes on in the newspaper business, and I am bound to say that on this matter some of my old colleagues are hypocrites.
We have suffered abuse from such august quarters as Mr. Alexander of the Daily Mail, a failed would-be Member of Parliament, and from Mr. Woodrow Wyatt, that well-known paupe from Bosworth, who made it twice and was kicked out twice.
We have suffered abuse, above all, from the Mirror group of newspapers. I am astonished how their journalists have been able to write those stories and those leader articles when they themselves have just received an extra £23 a week. I quote from this month's edition of The Journalist: "Mirror accept £1,167".
We have had to incur the wrath of the whole of the Mirror staff—none more so than Mr. Keith Waterhouse who I understands receives between £11,000 and £13,000 a year from the Mirror for two short pieces a week, and whose income from all sources, I suspect, puts him in the £40,000 a year pay bracket. It is difficult to take lectures on restraint from a man whose earnings, if I am right, are around 10 times that of the back-bench Members of Parliament upon whom he is laying his abuse.
We could also consider Mr. Alastair Burnet, Editor of the Daily Express, who produced quite the most wicked editorial of the lot, entitled "The Gravy Train". He described our performance as disgraceful. He said that we are all part-timers. We are, he said, in receipt of £5,000 worth of perks. It is quite astonishing how those expenses which to a newspaper editor are legitimate—secretary, postage, telephone, car mileage—become perks when applied to Members of this House. Mr. Burnet offered to take a salary cut if others would do the same. He can afford to do so. His contract has been variously reported as being worth between £20,000 and £35,000 a year, depending on which rival newspaper one happens to take.
There has been a lot of talk tonight about linkage with the Civil Service, or with some grade in this House. I think we have got it wrong.
Surely the Minister is not going to compare the reputation that these journalists have with the public with the reputation that Members of Parliament have with the public?
If I may say so, I would not be prepared to judge our success rate against that of the Daily Express.
I think we have the question of linkage all wrong. Here I can speak only for myself and not for the Government. I do not believe that we should link with the Civil Service at all but with Fleet Street editors.
Perhaps I might mention one final figure. It is difficult to know which increases these journalists have had in the last 3½ years, because they have replaced national negotiations with house agreements, but I have the basic salary for journalists on the Financial Times. It is about the only figure available in the Library. I am sorry, because this is one newspaper which has been supporting us, and it is right to recognise that, but I suspect that their increase is similar to the rest, and the figure given me by the Library is that since 1971 the basic rate for journalists on the Financial Times has increased by 131 per cent.
I have dealt with journalists at some length because I believe that they have done much to sour the attitude of our constituents towards the whole question of our pay. There are some honourable exceptions in the Gallery and I, for one, am grateful to them.
I do not differ very much from the hon. Gentleman, but there is one caveat which we should bear in mind. It is that these gentlemen are paid from private funds whereas we are paid from public funds. Therefore, although I do not differ from the hon. Gentleman, we have to be just a little careful before we carry this too far.
I agree about that. I also think that there is a limit to what we should be expected to take here without someone, preferably one of them—and it happens to be me—giving them back some of their stick. In any case, I do not regard newspapers' money as private. It really is not. Newspapers are financed out of what I pay for my newspapers and out of what my wife pays for every commodity advertised in them. Therefore, it is as much public money as the salaries of Members of Parliament. But I agree that we should not overdo it.
My right hon. Friend has been well aware of the strength of feeling on both sides of the House for and against Boyle, and I believe that he has come as near a consensus as was possible. It is interesting that practically no one, certainly not the Government, has criticised the Boyle Report. The argument has been whether we could implement part of it, all of it, or what on a realistic assessment we thought was acceptable not only to hon. Members but to our constituents. We have a good case. We are setting an example and one for which some trade union leaders would do well to give us a little credit. How many of them would be prepared to go back to their members to tell them that they were to receive little more than a third of the amount recommended by an independent review body? Not one of them would dare try it.
Having listened to all the arguments—and it has been a good debate, although a miserable one—it is clear to me that this House is deeply divided over the matter. But I have come to the view after a lot of thought that possibly my right hon. Friend has it about right—and certainly I put it no higher than that. On that basis, I ask the House to accept the motions and to reject the amendments. If we do that, I for one will be quite prepared to argue my case this weekend in any pub in my constituency.
1.43 a.m.
Mr. John Stokes (Halesowen and Stourbridge) rose —
Vote.
I have been sitting here since the debate started. I have listened to every speech. I have not interrupted once. I have been asked to be brief, and I shall be brief. Therefore, I hope that, for a few minutes, Government supporters will have the courtesy to listen to what I have to say.
I speak only because I have spent many years of my life dealing professionally with salaries and salary levels—and I declare an interest in that respect. I am bound to say that the Government's handling of this matter and the subsequent debate are hardly in line with the highest standards of practice in personnel management. We seem, in fact, to have got the worst of all worlds and to have upset everyone.
My first comment is about Ministers salaries. These are far too low, being below the salaries of the top civil servants. That, in my view, is an absurdity. They are also far below those of many outside levels of jobs carrying comparable responsibility. For instance, surely the Prime Minister should receive at least £30,000 per anum and Ministers £20,000
My second comment is even more important. It is that Members' salaries cannot and should not strictly be compared with anyone else's. It cannot be too strongly emphasised that the job of a Member of Parliament is unique. For this reason, I am opposed to Members' salaries being tied by any linkage or other means to that of any other body. It might lead in time to an attempt to pay Members for attendance, for hours within the House—and all those things should be resisted. It is all part of an attempt to make us full-time salaried officials and we must hold out to the end against that.
I think that Lord Boyle got his £8,000 about right, and even that figure—no one else has made this point today—will still make the House of Commons one of the lowest-paid assemblies, in the Western world. I nevertheless believe that it would not be seemly for us to receive such an increase now.
We are unfortunately the victims of circumstances and of Government mishandling and we have to accept the £5,750 with a good grace. We have made a sacrifice and should not be ashamed to say so. I should like to know of another class of person who has made a similar sacrifice.
Nevertheless, we should make a contribution to try to lessen the increase in public expenditure and we must also never forget the self-employed, many of whose incomes have not kept pace with the cost of living.
I deplore the pension proposals. To earn one's salary and receive a pension entitlement based on a notional figure is not only unnecessarily complex but places us in an invidious and especially favoured category. Nevertheless, the whole pension scheme badly needs re-examination. It bears down particularly hardly on the older Members due to retire.
So strong is envy in some sections of our society now and so great is the force of egalitarianism that sometimes all salaries above average earnings come under attack. High taxation in any event so greatly reduces net take-home pay that the latter figure should always be quoted in addition to gross salary. I do not see why the arrangements which apply in so many private firms should not apply also in this House.
rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the amendment be made:—
The House divided: Ayes, 128; Noes, 127.
Question accordingly agreed to.
Main Question, as amended, put:
The House divided: Ayes 160, Noes 70.
Question accordingly agreed to.
Resolved, That in the opinion of this House it is desirable in principle that the salaries of Members should be regulated to correspond with a point on the scale paid to an Assistant Secretary in the public service, not later than three months after the next General Election, and annually until that date, the salaries of Members should be increased by not less than the same amount of increase as these Assistant Secretaries.
Resolved, That, in the opinion of this House, further Provision with respect to allowances, facilities and other payments for Members of this House should be made as follows:— (1) the rate of the supplementary London allowance (£228 a year under the 1974 Resolution) to be £340 a year in respect of periods 512 beginning on or after 13th June 1975, but as and when thereafter any change is made in the Civil Service rate of Inner London weighting, the rate payable in respect of Members entitled to the allowance to correspond to that Civil Service rate, omitting the element in it which represents the cost of travel to work; (2) the annual limit on the additional costs allowance (£1,050 under the 1974 Resolution) to be— ( a ) for the period 1st April 1975 to 31st March 1976, £1,639, and ( b ) for any subsequent period of twelve months ending with 31st March, an amount equal to 144 times the Class A(i) London rate (regular visitors) for a night's subsistence, as obtaining in the Civil Service in that period, and allowing for any change in the rate in the period by taking a weighted average; 513 (3) the annual limit on the secretarial allowance (£1,750 under the 1974 Resolution) to be replaced by a limit of £2,910 for the period from 1st April 1975 to 31st March 1976, and £3,200 for any subsequent period of twelve months beginning with 1st April; (4) the car mileage allowance (7.7 pence a mile under the 1974 Resolution) to be 10.2 pence per mile for journeys commenced on or after 13th June 1975, but as from when the corresponding Civil Service rate is next altered thereafter, the allowance for Members of this House to be the same as that corresponding rate (which is the rate for cars over 1,750 cc used for journeys on official business); (5) the number of return journeys for which, in accordance with the 1971 Resolution, facilities for free travel are available to the spouses of Members of this House (ten journeys a year under that Resolution) to be fifteen for the period of twelve months ending with 31st December 1975 or any subsequent period of twelve months beginning with 1st January. In this Resolution— 'the 1971 Resolution' means the Resolution relating to Parliamentary Expenses which was passed by this House on 20th December 1971; 'the 1974 Resolution' means the Resolution relating to such expenses passed by this House on 30th July 1974.—[ Mr. Walter Harrison. ]
Question proposed, That, in the opinion of this House, the following provision should be made with respect to the salaries and pensions of Members of this House:— (1) the salary payable to a Member (other than one who is for the time being an officer of the House or a salaried holder of Ministerial office) to be at the rate of £5,750 a year; (2) the salary payable to a Member who is for the time being an officer of the House or a salaried holder of Ministerial office, but is not a member of the Cabinet, to be at the rate of £3,700 a year;
(3) the salary payable to a Member who is for the time being a holder of Ministerial office and a member of the Cabinet to continue at the rate of £3,000 a year, as under the resolution passed by this House on 20th December 1971;
(4) the proper rate of salary under head (1) of this Resolution is £8,000 a year, and in the case of all Members of their ordinary salary for pension purposes (and in particular for the purposes of enactments relating to contributory pensions and the deduction of contributions from salary) is to be regarded as being at the rate of £8,000 a year notwithstanding that payment at that rate is not actually made;
(5) each Member is, by way of supplement to his salary payable under head (1), (2) or (3) above, to be credited with £112.50 a year (that is to say a yearly amount equal to 5 per cent. of the difference between £5,750 and £8,000).
(6) This Resolution has effect as respect service on and after 13th June 1975.
In this Resolution— ( a ) 'salaried' means for the time being in receipt of a salary under the Ministerial and other Salaries Act 1975; and ( b ) 'Ministerial office' means the same as in section 2 of the House of Commons Disqualification Act 1975, as that Act is for the time being in force.—[ Mr. Walter Harrison. ]
Amendment proposed: In paragraph (1), leave out '£5,750' and insert '£6,300'.—[ Mr. George Cunningham. ]
Question, That the amendment be made, put and negatived.
Amendment proposed: In paragraph (1), to leave out '£5,750 a year' and insert '£4,812 a year, being an increase of £6 a week'.—[ Mr. Walter Johnson. ]
Question put, That the amendment be made:—
The House divided: Ayes 37, Noes 197.
Question accordingly negatived.
Main Question put and agreed to.
ADJOURNMENT
Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Walter Harrison. ]
CARNOCK PRIMARY SCHOOL
2.21 a.m.
I make no apologies for raising the simple, straightforward subject of the Carnock Primary School in the early hours of the morning in this Adjournment debate. It is an important constituency matter.
In a previous Adjournment debate which I initiated on a Scottish subject, the reply was given not by a Scottish Minister but by a Treasury Minister. That was a formidable experience for me. Tonight the situation is much better and I am less apprehensive because, due to certain circumstances, the Minister who should have replied is not here. Fortunately for me, the Minister in his place is one of my colleagues from the county of Fife, so I am expecting a great deal of sympathy and consideration.
It is necessary to raise the subject of the future of the Carnock Primary School for numerous reasons, but I shall confine myself to two main reasons. One is that it is wrong to deprive a community of full primary education. This is the crux of the matter. The parents' action committee and I want to know whether full primary education will be restored to the village of Carnock. That presupposes that there will be a new school some day in the not too distant future providing full primary education.
The former Under-Secretary of State, my hon. Friend the Member for Aberdeen, North (Mr. Hughes), knows the case which I could put forward on behalf of the Carnock community. The Minister who is to reply also knows the case well. I am sure that since last night he has been able to obtain some information about the matter.
The hon. Member for Aberdeen, North listened courteously to our deputation. We met him on 18th April this year. After almost an hour with the deputation he must have realised that before him were representatives of a young and growing community voicing fears which to this day are not yet dispelled.
There has been full primary education in Carnock for 100 years. Carnock is an old village. The majority of the present community came to live in the village seven or eight years ago, attracted by new, private housing developments.
The old school having a limited life, it was natural to expect a new school in due course. That was the main reason for the quick growth of the community. It was on the list of priorities at one time. There was never any doubt that the school would materialise. Uncertainty has been created by the Fife Education Authority. Therefore, I appeal to the Minister to state clearly what are the parents' rights for their children to be educated in the school of their choice.
The education authority in Fife has not been forthcoming about the school's future. It decided to stabilise the school at around 100 to 120 pupils in the primary 1 to primary 4 range and to transfer the top class to Inzievar School in Oakley, which is about two miles away. When that decision was first communicated to the Carnock people they were angry, because it seemed to be the thin end of the wedge which would deny them primary school facilities in the future. The action committee was also displeased about the way the transfer was intimated to it.
Despite my intervention by correspondence and parents' efforts through discussion with education officials, in addition to their correspondence over a six-month period, there was no disclosure of the fact that the current decision by the education authority could be implemented only on the basis of the approval of the Secretary of State. Regrettably it was only after I had raised the matter on the Floor of the House that the education authority took this step.
Despite our meeting with my hon. Friend the Member for Aberdeen, North, the transfer goes on. The action committee's request for temporary accommodation until a new school is built has been rejected. Its fears about primary pupils having to travel to school, thereby encountering danger on the road, were ignored. Free school transport was promised, but no mention was made of whether the children will have this facility to return home for their midday meal. The cost of transport will continue and increase year by year. It would have been cheaper to have built or temporarily to have rented accommodation for the top classes.
Unfortunately, and fortuitously, Inzievar School is situated in Oakley. It was a former secondary school but for various reasons it was not successful as such. Even with the Carnock children added there will still be spare capacity for more pupils. Will this school be filled to capacity with other primary school pupils? The Carnock people have the right to know the education authority's long-term plans.
Two regional councillors have tried to extract an unequivocal answer from the regional council about this school's future. One of the councillors felt he had received a firm assurance that Carnock school would be maintained indefinitely. He is not so sure now because, having pressed the matter again with the education convener, he had the same reply as I received from the director of education dated 30th May 1975. I quote the main part of that reply: An assurance was given by the Chairman of the Schools Sub-Committee that, apart from the older children being accommodated in Inzievar primary school from the beginning of session 1975–76, there would be no further reduction in primary educational facilities being provided at Carnock. The situation would be examined annually, however, in the light of prevailing circumstances. The Chairman of the Schools Sub-Committee was not prepared to say anything further about the future of Carnock school. One sentence is a critical factor in that reply, and I am sure that the future hinges on it. I shall read it again: The situation would be examined annually, however, in the light of prevailing circumstances. That could mean anything, but I am sure it does not mean that there will not be a further reduction in the school population in the existing Carnock school or that we shall be guaranteed a new school in Carnock in the future.
In view of what I have said, does not my hon. Friend feel that the Carnock community has grounds for feeling aggrieved and alarmed? The village of Carnock is one of several similar villages in that part of Fife west of Dunfermline. All are integrated community units with most of the essential social services at their disposal. There are primary schools, community centres, general practitioners and public cleansing services, and the larger communities have a health centre and public transport.
Before the February 1974 General Election, although those communities were not in my constituency, I worked there and gave the service that a Member of Parliament gives to his own constituency. In several of the villages there appeared then to be efforts to erode the normal and general services. This trend was arrested.
It is galling to think that in the years to come Carnock could be without a school which provides full primary facilities, or even without any school. Some of the villages in the area I have mentioned are in desperate need of new schools. One school is celebrating this year its hundredth anniversary. Housing conditions could be improved in other villages, for example in Blairhall.
It is the duty of councillors and Members of Parliament to see that the interests and way of life of the villagers are preserved. My hon. Friend the Minister can make a contribution to this end by extracting from the Fife Regional Council information about the future of Carnock school. The parents' action committee, the Provost of the Dunfermline District Council, some regional councillors and I have so far failed. I trust that my hon. Friend has more success.
2.34 a.m.
As my hon. Friend the Member for Dunfermline (Mr. Hunter) said at the beginning, this set of circumstances is beyond the control of my hon. Friend and myself.
I share a common bond with my hon. Friend in that we both live in that rather beautiful part of Scotland known as the county of Fife. I do not know where you intend to spend the Summer Recess, Mr. Deputy Speaker, but I assure you that you would receive a warm welcome should you visit that county.
I know also the geography of the area to which my hon. Friend refers. Carnock is a beautiful village. It is a self-contained unit. It is an area through which I pass regularly on my way from my home to my constituency. Therefore, I recognise the sincerity and the feeling that my hon. Friend expresses when he raises this important constituency matter. I know also the dedicated way in which he has pursued this matter on behalf of the people whom he represents in Carnock. I welcome the opportunity to reply to the debate as it gives me the chance to set the record straight on the rôle of my right hon. Friend the Secretary of State in approving changes in educational provision in an authority's area.
Under Section 1 of the Education (Scotland) Act 1962 it is the duty of each education authority—and since May, as my hon. Friend knows, it is the duty of the regional and island councils—to provide adequate and efficient education for its area. Under Section 7 of the same Act an authority's functions—and these include provision of primary education—must be exercised in accordance with schemes approved by the Secretary of State. Decisions on the way primary education is to be provided locally, therefore, are basically for the education authority to make, with the Secretary of State having a general oversight and an overall responsibility for ensuring that standards of provision are satisfactory. The Secretary of State, however, expects authorities to take the initiative in suggesting changes in provision.
In considering whether or not to grant approval to any such changes my right hon. Friend is required, under Section 29(1) of the Act, to have regard to parents' wishes. That is important in the context of what we are discussing. Additionally my right hon. Friend would wish, before reaching a decision, to be assured that the education authority concerned had also fulfilled its duty to have regard to parents' wishes. This is not to say that parents' wishes are the overriding factor in any decision, although they are, of course, very important. The Act, for example, mentions the provision of suitable instruction and training and the avoidance of unreasonable public expenditure as factors to be taken into consideration, and other factors not specifically mentioned by the Act may be taken into account. The statutory duty on an authority will have been fulfilled if the authority has duly considered parents' wishes even if it decides not to accede to them. It is most important that at least consultations have been held and that the parents' wishes have been considered.
I turn now to the particular case raised this morning. Earlier this year, as my hon. Friend rightly said, Fife Education Authority put to the Secretary of State a proposal that, because of overcrowding at Carnock Primary School, some of the older children there should transfer to Inzievar Primary School, a mile and a half away in Oakley, where there was a good deal of spare accommodation. The authority planned to transfer P5 and P6 children, only at the start of next session. As my hon. Friend knows, these children are in the age groups 9 and 10 years. These children would then complete their primary education at Inzievar. The authority felt that P7 children should remain at Carnock so that they would not have to change school twice in two years. In succeeding years the authority proposed to transfer to Inzievar as many senior primary classes as would be necessary to restrict the numbers at Carnock to the accommodation available.
A number of objections were received from parents, particularly from the Carnock New School Action Committee, which expressed keen disappointment that the authority appeared to have removed from its priority school building programme a replacement for the existing Carnock Primary School. The committee made the case for continuing to have all stages of primary education in Carnock and suggested that to relieve the overcrowding a temporary extension should be erected at the present school.
As my hon. Friend has mentioned, the then Under-Secretary of State met a deputation from the action committee—a deputation led by my hon. Friend—in April and they had a full exchange of views.
In reaching a decision on the authority's proposals following that meeting, my right hon. Friend took into account all representations received. He was of the view, however, that the balance of educational advantage lay in the transfer of this limited number of Carnock pupils to Inzievar to superior accommodation in a much newer building. He was content that the authority had fully considered the Carnock parents' views, although it had not acceded to the parents' wishes. He therefore decided to approve the change in the scheme which the proposals required. The authority may therefore transfer the pupils to Inzievar from the beginning of next session.
I turn now to the future of Carnock Primary School, an important element in my hon. Friend's argument. This is for Fife Education Authority to determine, although if it were to propose that the school should be closed it would require my right hon. Friend's approval under Section 22(1)( b ) of the 1962 Act. There is no question of the Fife Education Authority taking a decision to close the Carnock Primary School without in the first place receiving the approval of my right hon. Friend under that provision of the 1962 Act. I should stress, however, that no such proposal has been received from the authority, and I believe that no such proposal is likely, at least in the short term. I understand that while the authority has not decided against ever providing a new school at Carnock, it felt it wrong to spend money on temporary buildings there when there was so much under-used accommodation nearby at the Inzievar school in Oakley. I can only support the decision which has been taken, however disappointing this might be for my hon. Friend.
Before the Secretary of State would agree to any proposal to close Carnock school completely he would consider a large number of factors, including the wishes of parents. We would expect that if such a move were made by Fife Education Authority, parents would make fresh representations to my right hon. Friend, and those wishes would be considered. These factors might include the reasons for the proposed closure, such as the state of the building, a falling roll, overcrowding or difficulties in staffing, and he would take into account details of the alternative accommodation arrangements and facilities suggested, details of travel arrangements proposed for pupils displaced—details which are not unimportant—and financial considerations. I must emphasise that each proposal that a school should close is considered on its individual merits at the time of the proposal and not against the background of anything which might have happened in the past or which might happen in the future.
I should like to return now to the arguments put forward by parents against the proposed transfer to Inzievar. My hon. Friend has already mentioned several of these points. With regard to the cost of hired transport and school meals, parents claimed that it would be less expensive to meet loan charges on temporary classrooms at Carnock to accommodate the excess numbers than to pay for transport to Inzievar for children concerned together with the deficit on the extra school meals for these pupils. This was not an argument upon which we could properly reach a view. We felt, however, that the authority's decision not to provide temporary classrooms was reasonable in view of the availability of good accommodation at Inzievar and because of the present restrictions on capital investment—again, not an unimportant consideration.
Parents suggested that the existing Carnock building would eventually be replaced and that a new school, if it were to cater only for P1 to P4, would be relatively more expensive. There are two points which I can make. First, the authority is not committed to replacing the building at Carnock. Secondly, and on the other hand, the Secretary of State's approval of the change proposed by the authority does not preclude the authority's seeking approval to accommodating once again all P1 to P7 children in Carnock in the future. That possibility is not excluded by the decision that has been taken.
Parents felt that transfer of Carnock pupils to Inzievar, despite the available accommodation there, would result in too high a roll at the receiving school. My right hon. Friend did not feel that this was a particular valid point as the roll at Inzievar next session, increased by about 40 pupils from Carnock, will still be only about 400. This is well below the capacity of many fairly recently-built primary schools. We would however, consider this point afresh if any question arose of the complete closure of the school.
The action committee claimed that 175 pupils—more than the present school roll of about 150—could be accommodated in the five available classrooms at 35 per class at Carnock. They suggested that the authority were too ready to introduce the new SED staffing standards with an average class size of 30. However, even under the old standards the school was full to capacity. Allowance has to be made for the free time which the head teacher and staff require to discharge their non-teaching responsibilities, and the true capacity of Carnock is only 149 under the old standards and 125 under the Scottish Education Department's new standards. In wishing to meet the new standards in Carnock, Fife is acting as in other schools in its area.
The parents expressed concern about pupils' safety. They were worried about lunchtime supervision at Inzievar and that the transfer of the older children to Inzievar would prevent them from escorting their younger brothers and sisters within Carnock village itself. My right hon. Friend believed that the arrangements at Inzievar would be satisfactory. I understand that they are to be similar to those in operation at other schools in the county of Fife. While it was appreciated that there might be some extra risk in Carnock for the younger children, it was suggested that parents if they felt that the risk was increased, might take up with the Fife Education Authority the possibility of crossing patrols being introduced.
Parents also complained that the authority had not fully consulted them before deciding to change arrangements at Carnock. This is a point quite rightly brought out by my hon. Friend. While I agree that the authority may have been slow to consult before approaching my right hon. Friend, the Scottish Education Department made certain that the authority acquainted itself fully with parents' views and that these views were considered by the authority before the proposals were agreed. The Secretary of State indeed always ensures, before reaching a decision on a proposal, that the authority concerned has consulted parents.
Parents represented that the need to change primary school at P5 would be to the educational disadvantage of the children concerned. However, where the curriculum is properly co-ordinated between the sending and the receiving schools there need be no disadvantage. Indeed, there can be advantages in separate, and therefore smaller, schools for younger children. Transfer at the middle stages of primary education occurs in other areas in Scotland and quite widely here in England. I thought that that would be an interesting point to make.
To sum up, therefore, the decision has been made and I can see no reason why the new arrangements should not be to the benefit of all concerned. I believe that on 10th June the head teacher of Inzievar school met parents of Carnock pupils who will transfer at the beginning of next session—
The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at nine minutes to Three o'clock a.m.