Commons Chamber

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

House Of Commons

Thursday 9th November 1978

The House met at half-past Two o'clock

Prayers

[Mr. SPEAKER in the Chair]

With the agreement of the House, and in accordance with recent practice, I propose to call the Second Deputy Chairman of Ways and Means to move all nine of his motions for unopposed returns together.

respecting application of Standing Order No. 30 (Closure of Debate) during Session 1977–78, (1) in the House and in Committee of the whole House, under the following heads:—
1	2	3	4	5	6
Date when Closure claimed, and by whom	Question before House or Committee when claimed	Whether in House or Committee	Whether assent given to Motion or withheld by the Chair	Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion	Result of Motion and, if a Division, Numbers for and against.

and (2) in the Standing Committees under the following heads:—
1	2	3	4	5
Date when Closure claimed, and by whom	Question before Committee when cliamed	Whether assent given to Motion or withheld by the Chair	Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion	Result of Motion and, if a Division, Numbers for and against.
—[The Second Deputy Chairman of Ways and Means.]

Delegated Legislation

Return ordered,

of the number of Instruments considered in Session 1977–78 by the Joint Committee and the Select Committee on Statutory Instruments respectively pursuant to their orders of reference, showing in each case the numbers of Instruments subject to the different forms of Parliamentary procedure and of those within the committee's orders of reference for which no Parliamentary procedure is prescribed by statute, and the numbers drawn to the special attention of the House or of both Houses distinguishing the ground in the committees' orders of reference upon which such attention was invited; and of the numbers of Instruments considered by a Standing Committee on Statutory Instruments and by the House respectively, in Session 1977–78 showing the number where the question on the proceedings relating thereto was put forthwith under

Adjournment Motions Under Standing Order No 9

Return ordered,

of motions for Adjournment under Standing Order No. 9, showing the date of such Motion, the name of the Member proposing the specific and important matter and the result of any Division taken thereon, during Session 1977–78. —[The Second Deputy Chairman of Ways and Means.]

Closure Of Debate (Standing Order No 30)

Return ordered,

Standing Order No. 73A(5).—[ The Second Deputy Chairman of Ways and Means.]

Private Bills And Private Business

Return ordered,

of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders introduced into this House and brought from the House of Lords, and of Acts passed in Session 1977–78:

Of all Private Bills, Hybrid Bills, and Bills for confirming Provisional Orders which in Session 1977–78 were reported on by Committees on Opposed Bills or by Committees nominated partly by the House and partly by the Committee of Selection, together with the names of the selected Members who served on each Committee; the first and also the last day of the sitting of each Committee; the number of days on which each Committee sat; the number of days on which each selected Member served; the number of days occupied by each Bill in Committee; the Bills of which the Preambles were reported to have been proved; the Bills of which the Preambles were reported to have been not proved; and, in the case of Bills for confirming Provisional Orders whether the Provisional Orders ought or ought not to be confirmed:

Of all Private Bills and Bills for confirming Provisional Orders which, in Session 1977–78 were referred by the Committee of Selection to the Committee on Unopposed Bills, together with the names of the Members who served on the Committee; the number of days in which the Committee sat; and the number of days on which each Member attended:

And, of the number of Private Bills, Hybrid Bills, and Bills for confirming Provisional Orders withdrawn or not proceeded with by the parties, those Bills being specified which were referred to Committees and dropped during the sittings of the Committee.—[The Second Deputy Chairman of Ways and Means.]

Public Bills

Return ordered,

of the number of Public Bills, distinguishing Government from other Bills, introduced into this House, or brought from the House of Lords, during Session 1977–78, showing:
(1) the number which received the Royal Assent, and
(2) the number which did not receive the Royal Assent, indicating those which were introduced into but not passed by this House, those passed by this House but not by the House of Lords, those passed by the House of Lords but not by this House, those passed by both Houses but Amendments not agreed to; and distinguishing the stages at which such Bills were dropped, postponed or rejected in either House of Parliament, or the stages which such Bills had reached by the time of the Prorogation or Dissolution.—[The Second Deputy Chairman of Ways and Means.]

Select Committees

Return ordered,

of Select Committees in Session 1977–78 with the Sub-Committees appointed by them; the names of the Members appointed to serve on each, and the Chairman of each; the number of days each met, and the number of days each Member attended; the number of meetings held by each Select Committee and Sub-Committee, and the number of meetings each Member attended; the total expenses of the attendances of witnesses at each Select Committee and Sub-Committee; and the total number of Members who served on Select Committees; together with so much of the same information as is relevant to the Chairmen's Panel and the Court of Referees.—[The Second Deputy Chairman of Ways and Means.]

Sittings Of The House And Business Of Supply

Return ordered,

of (1) the days on which the House sat in Session 1977–78 stating for each day the day of the month and day of the week, the hour of the meeting, and the hour of the adjournment; and the total number of hours occupied in the Sittings of the House, and the average time; and showing the number of hours on which the House sat each day, and the number of hours after the time appointed for the interruption of business; and (2) the days on which Business of Supply was considered.—[The Second Deputy Chairman of Ways and Means.]

Standing Committees

Return ordered,

for Session 1977–78, of (1) the total number and the names of all Members (including and distinguishing Chairmen) who have been appointed to serve on one or more of the Standing Committees showing, with regard to each of such Members, the number of sittings to which he was summoned and at which he was present; (2) the number of Bills, Estimates Matters and other items referred to Standing Committees pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c. considered by all and by each of the Standing Committees, the number of sittings of each Committee and the titles of all Bills, Estimates, Matters and other items as above considered by a Committee, distinguishing where a Bill was a Government Bill or was brought from the House of Lords, and showing in the case of each Bill Estimate, Matter and other item, the particular Committee by whom it was considered, the number of sittings at which it was considered and the number of Members present at each of those sittings.—[The Second Deputy Chairman of Ways and Means.]

Special Procedure Orders

Return ordered,

of the number of Special Procedure Orders presented in Session 1977–78; the number withdrawn; the number against which Petitions or copies of Petitions were deposited; the number of Petitions of General Objection and for Amendment respectively considered by the Chairmen; the number of such Petitions certified by the Chairmen as proper to be received, and the number certified by them as being petitions of General Objection and for Amendment respectively; the number referred to a Joint Committee of both Houses; the number reported with Amendments by a Joint Committee, and the number in relation to which a Joint Committee reported that the Order be not approved; and the number of Bills introduced for the confirmation of Special Procedure Orders:

Of Special Procedure Orders which, in Session 1977–78, were referred to a Joint Committee, together with the names of the Commons Members who served on each Committee; the number of days on which each Committee sat; and the number of days on which each such Member attended.—[The Second Deputy Chairman of Ways and Means.]

Oral Answers To Questions

Northern Ireland

Belfast

asked the Secretary of State for Northern Ireland if he will bring forward proposals to bring life back into the city of Belfast.

I am very much aware of the problems which Belfast faces as a result of severe unemployment and acute social deprivation, together with the many physical scars of the recent civil unrest. In addition, Belfast, like most other British cities, has inherited a legacy of roads, houses and infrastructure designed to meet needs quite different from those of today.

The Government have already demonstrated their determination to improve the appearance of the city and to rejuvenate its social and commercial life. Tenders have been invited from consultants for a new shopping complex for the city centre, and a range of other current and potential initiatives is now being pursued. Special efforts are being made in the most deprived areas under the Belfast areas of need programme.

I have also set up a working party to consider what is required to make the centre of Belfast a lively centre of social entertainment for citizens and visitors.

I am grateful to my right hon. Friend for that reply, but can he at this stage give an indication of what amount of money the Government have allocated for the revitalisation of the city of Belfast? Has he any idea of how the money will be used, and of any projects and priorities?

At this stage we have allocated over £17 million to help with the social, economic and physical problems of the city. I am pleased to say that the new Lord Mayor of Belfast is very closely involved in this drive and is personally involved in the development.

Since this Government and their predecessors, and the planners, have torn apart areas of Belfast more so, perhaps, than the provisional IRA, and dispersed closely-knit communities in the Shankill, Ballymacarrett and other areas, may we have an assurance that action will be taken by the Government to rebuild the houses, schools and factories in those areas for the same number of people who previously lived there? The people of Northern Ireland will not be satisfied with the original answer given by the right hon. Gentleman.

The hon. Gentleman is harking back to what happened in the past. He must admit that the 10 years of troubles have certainly left their scars on the city of Belfast. There are now plans to build 5,000 new homes in the redevelopment areas that we have designated in Belfast.

De Lorean Motor Company

asked the Secretary of State for Northern Ireland if he will make a statement about the financial arrangements entered into with the De Lorean company for the manufacture of cars in Northern Ireland.

The financial arrangements entered into with the De Lorean Motor Company consist of the provision of equity and loan capital by the Northern Ireland Development Agency and of grants and loans by the Department of Commerce for Northern Ireland. It would not be appropriate to give the details now, as these remain confidential between the parties concerned. However, I understand that the company will have to file information in the United States which will become publicly known, and I intend to consult the company about the extent to which the Government may, by agreement, make known the basis of the assistance provided in Northern Ireland.

But it is intolerable for the Minister of State to spend at least £52 million of taxpayers' money and refuse to tell the House the total extent of that expenditure, how much has been given by way of grant, and how much by loan. Will he say here and now specifically to the House, and therefore to the taxpayer, just what involvement he has entered into and how open-ended is the commitment to Mr. De Lorean in the event of his company requiring more money for this somewhat doubtful project?

I am in continual consultation with quite a number of companies througout the world. Many of the negotiations are extremely delicate and are treated as confidential. If I were now openly to go against the confidentiality of one firm without that firm's permission I should put at risk quite a few other projects that I have in mind.

The hon. Gentleman mentioned £52 million. He is responsible for that figure, because it is not a figure I have mentioned.

Will the Minister inform the House approximately how much per job is to go into the company?

That is impossible at present, and the hon. Gentleman knows it. I am delighted to have secured this project and I hope that the vast majority of people in Northern Ireland, especially in those areas where it is needed, will also welcome it.

When I have the agreement of the company, I shall publish the figures, but I shall do so only with the agreement of the company, because I do not want to put at risk any of our other negotiations with many other companies to come and bring jobs to Northern Ireland.

Does my right hon. Friend accept that there are many thousands of people, particularly in Belfast, who welcome the enthusiasm and endeavour that he has put into attracting the industry to Belfast? It has given hope to thousands of people who had no hope before. Does he deprecate the view of those who are trying to knock this project—those in the media and those on the Conservative Benches? It appears that there are many people who do not want to see this much-needed undertaking in Belfast.

I thank my hon. Friend for his remarks and for giving me the opportunity of doing so. I have wondered whether as a result of all the bashing that we have taken in Northern Ireland we are frightened of success. This is one of the worrying aspects, in my view. But we have to make this a success, because the prizes for Northern Ireland are so great.

If the Minister is not to give figures—I am sure that he is right in not wishing to publish them—will he at least tell the House what percentage of the total equity is provided by the parent company?

Again, I cannot do that now, because the company spent considerable amounts of money before even coming to Northern Ireland. I ask the hon. Gentleman to await what I shall do with the consent of the company when the opportunity arises. If I do otherwise, I shall be putting at risk many other negotiations that we are pursuing at present.

As the proposed vehicle uses a French engine, as the French engine makers put it into their own car, which is not selling, and as the planned output equals that of Porsche and is six times that of Lotus, can the Minister continue to say that the project has been thoroughly vetted and is soundly based? What provision has been made for the losses to be shared between the public purse and the private promoter?

That is pessimism in the extreme. I do not expect losses. I expect success. For the people of Northern Ireland this is a great opportunity. I do not think that it would be wise to go any further into the matter. The opportunities are there in Northern Ireland for numbers of firms. All sorts of pessimistic papers can be waved at me, but I am not filled with pessimism about this project. I am going forward with success in mind.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's reply, I intend to raise this matter on the Adjournment at the earliest possible date.

Political Talks

asked the Secretary of State for Northern Ireland if he has any plans to hold discussions with the various political groupings in Northern Ireland.

10.

asked the Secretary of State for Northern Ireland if he has any plans to meet the leaders of the main political groupings in Northern Ireland in the immediate future.

11.

asked the Secretary of State for Northern Ireland if he will make a statement about the political situation in Northern Ireland.

The political situation has not changed much in recent months. Since I last reported to the House, I have had informal discussions with the leaders of three of the Northern Ireland parties, and I hope that I shall soon be able to meet their counterparts in the other main parties.

Does my right hon. Friend accept that, although the security situation in Northern Ireland has eased considerably, there do not seem to be—at least to me—any parallel political developments alongside that relaxation? Did my right hon. Friend notice that at last weekend's national conference of the Social Democratic and Labour Party, of which my hon. Friend the Member for Belfast, West (Mr. Fitt) is the leader, a resolution was passed that I am sure caused a great deal of feeling among everybody who is interested in this situation? Can my right hon. Friend comment on that and any similar developments that he has in mind?

My hon. Friend is right. We are making good progress on the security front. Certainly, we are introducing more social reform. We are active in promoting industrial investment in the Province. But we are not making the same progress in political change. The first three matters are well within my own orbit of operations.

On the fourth, political change, I must get the parties in Northern Ireland to be prepared to talk together and eventually work together. I am now going through the second major round of political talks with the parties. I still have to meet the Democratic Unionist Party and the Official Unionist Party. I hope that thereafter we shall be able to make some political progress.

rose

I must call first those hon. Members whose Questions are being answered.

Is my right hon. Friend aware that a number of my hon. Friends feel that his statements on Tuesday were not conducive to the kind of political settlement that he now says he has in mind? May I also suggest that many of my hon. Friends feel that we ought to inject some democracy into Northern Ireland before we talk of giving additional seats to that part of the United Kingdom?

I am sorry if my hon. Friend feels strongly about what I said on Tuesday. I referred to the fact that most of the people in question in Northern Ireland were being charged with offences—and I repeated that at least four times towards the end of my statement. Secondly, I am concerned about security in the Province and about law and order. I am sorry that the prison officers' dispute is tending to affect law and order and that solicitors and barristers feel slighted by what I said on Tuesday. If they do, I am sorry, but no slight was meant.

As for political progress, my hon. Friend must recognise that within Northern Ireland there are still 26 district councils electing 526 district councillors. Therefore, because the Macrory gap between the district councils and Westminster is not filled, there has to be direct rule of the Province, administered by a Secretary of State and four Ministers.

My right hon. Friend acknowledges that the recently introduced emergency order has caused political trouble in Northern Ireland. Is he contemplating any emendations to the order so as to ensure that in some way or other the magistrates actually see the prisoners?

As I told my hon. Friend the other day, I am prepared to consider his suggestion of prisoners being visited. I have also quite clearly stated that the order is just as distasteful and repugnant to me as it is to the lawyers in Northern Ireland. As soon as the prison officers' dispute is at an end I shall take urgent steps to rescind that order.

Does not the Secretary of State agree that those who say that an urgent political initiative is needed in Northern Ireland at present to avoid a political vacuum are quite right? One way is to close the Macrory gap, as he suggested. Will the Secretary of State invite Sir Patrick Macrory to update and review his recommendations of 1970, as he has agreed that he would not have made the same proposals if he had known the circumstances that followed in later years?

The hon. Gentleman is right to say that Macrory's view would have been different if he had known that Stormont would be abolished. However, it is too soon to call for that kind of review. I would rather hold consultations with the rest of the political parties before I take the hon. Gentleman up on that.

Is the Secretary of State aware that we agree with his recent statement in Socialist Commentary, where he said:

"we want to see established in Northern Ireland a new elected regional authority that can take responsibility for the great majority of those matters which affect the daily lives of the people who live there"

Is he further aware that he can count on our co-operation in the fulfilment of that objective?

I am much obliged to the hon. Gentleman. Although qualifications and reservations were omitted from that short statement, generally we are in league. But the matter has to be dealt with on the basis of acceptability to this House, and the major parties in the House have said that if there is to be a regional authority, on which I concur, it has to be on the basis of partnership between the sections of the communities in Northern Ireland.

Does not my right hon. Friend agree that there has been a radical alteration in the political situation? Yesterday we saw the introduction of the Bill providing for extra seats in this House. Last Saturday there was the resolution at the SDLP conference which was a direct result of what was known was to be presented yesterday. Does not my right hon. Friend think that we are drifting into a position of integration and that the Unionists have no need to concede anything because under direct rule they are getting everything and the minority nothing in a political sense?

I should be very sorry if my hon. Friend, and indeed the House, felt that we were rapidly moving towards integration. That is not so. Regarding the extra seats, Scotland and Wales are likely to get their own devolved Assem- blies and will keep their parliamentary seats on the same percentage thereafter. This compounded the difference between Northern Ireland and England, Scotland and Wales. In fairness and equity, it must be admitted that there has been injustice and it ought to be remedied. Therefore, we intend to give Northern Ireland equal parliamentary representation with Scotland, England and Wales. I do not believe, as some people do, that the extra seats will all be Unionist seats. Of the 17, it is quite likely that four or five could be anti-Unionist seats.

Will the Secretary of State take the opportunity in the near future to have further talks with the Republican Clubs, the workers' party representatives, who in recent weeks in a by-election in my constituency showed, by defeating the present chairman of the SDLP, that they have more support than the SDLP has in the Roman Catholic community?

It is very difficult for me—and, I am sure, for my hon. Friends—to understand how political parties mushroom in the spring and die at the first frost. They are always growing and dying. The hon. Gentleman will know that at the last local government elections eight major parties stood and only four withstood the storm, four being wiped out. Since then, the Republican Clubs Party has begun to grow in strength, the Irish Independence Party has come on the scene, and, naturally, they are going for the same electorate as that led by my hon. Friend the Member for Belfast, West (Mr. Fitt). Therefore, politically in the Catholic population there is certainly competition among the parties.

When will my right hon. Friend accept that the Irish prisoners of whom he speaks so scathingly are really prisoners of war? When will he take a real political initiative to bring about a phased withdrawal of the troops in Northern Ireland, in accordance with the wish of the majority of British people?

I am sorry to inform my hon. Friend that I do not agree that those in Her Majesty's Prison Maze should be regarded as political prisoners or as prisoners of war. As far as I am concerned, they are criminals. They have been guilty of criminal acts. They have killed, murdered, bombed and massacred and have been responsible for major terrorism in the Province in past years. Now, because we are treating them as criminals and they are being sentenced to gaol, much of the terrorist activity in Northern Ireland is on the wane.

Criminal Jurisdiction Act 1975 (Cases)

asked the Secretary of State for Northern Ireland how many cases have been instituted under the provisions of the Criminal Jurisdiction Act 1975 on each side of the border, respectively, and with what result.

Prosecution under the extra-territorial legislation is a matter for the legal authorities in whose jurisdiction the suspect is located. Three persons have been charged in Northern Ireland under the Criminal Jurisdiction Act, and I understand that one person has been convicted in the Republic of Ireland by virtue of certain provisions of the Irish Criminal Law (Jurisdiction) Act.

Is the Secretary of State aware that his reply means that there has been virtually no progress under this Act? Does he not agree that those figures illustrate that it is not any inadequacy in the law, or in the administration of justice, but the lack of a will to co-operate which holds up progress towards a settlement in Northern Ireland?

One of the problems is that the Act deals only with cases since June 1976. I hope that he will not damn the co-operation that is building up. Co-operation is forthcoming. For example, Captain Nairac's death is now subject to court proceedings in Northern Ireland and the Garda are helping in the North at present.

The main difficulty is that there are two jurisdictions responsible for the operation of the Act, and, if a suspect is located in the South, it is difficult for the RUC to interrogate that suspect; they are allowed to attend but not to interrogate.

Does the right hon. Gentleman agree that the ideal situation would be a proper extradition treaty, and will he continue to press for that?

Of course, the hon. Gentleman knows quite well our position. We have signed the Council of Europe's convention on the suppression of terrorism. The Republic and Malta have not yet done so. However, I think that they are likely to sign an associated agreement—perhaps with reservations. But the hon. Gentleman knows as well as I do that extradition is really the best answer to the problem.

Nursery Education

asked the Secretary of State for Northern Ireland for what percentage of children under the age of 5 years there is now nursery provision.

About 43 per cent. of all children between the ages of 3 and 5 years receive some playgroup or educational provision, mostly 4-year-olds in primary schools.

I am sure that the whole House welcomed the report about preschool education in Ulster. Will the Minister use his best endeavours to ensure that existing and future nursery education are integrated so that there is at least a basis for integration in the earliest stage of primary education?

We have said that nursery school places will be doubled between now and 1983. As in other aspects of education in Northern Ireland, those facilities will be at the disposal of every section of the community. Indeed, we want to encourage integration, where possible.

As the Under-Secretary has pointed out that much of this education is carried out in primary schools, will the Government hasten the reconsideration of present policy regarding the admission of 4-year-olds, especially in the case of small village schools, where it is important to have suitable sizes of class throughout the years of attendance?

As the right hon. Gentleman knows, in Northern Ireland there is probably a somewhat higher percentage of 4-year-olds in primary schools than in other parts of the United Kingdom. The Question relates to nursery education, and there we are trying to step up the numbers of places available. But, of course, where we can get more 4-year-olds into primary schools, we shall do so.

Is it not a fact that the Under-Secretary's reply is an admission of failure to provide nursery places for all the 26,000 infants, as promised by the Government four years ago, within this four-year period? Will he take steps to talk to the Churches about ending sectarian education?

All that the Government have to answer for, according to the hon. Gentleman, is failure on almost every subject. But the pre-school group of children in Northern Ireland is as well served as pre-school groups in any other part of the United Kingdom. However, we have admitted that we can improve that aspect of education, and we are hoping to double the number of nursery school places between now and 1983.

Building And Construction Industry

asked the Secretary of State for Northern Ireland if he will set up an inquiry into the building and construction industry in Northern Ireland with a view to improving its efficiency and providing greater stability and better opportunities for growth.

The Northern Ireland construction industry advisory council meets regularly under the chairmanship of a Minister, mostly to advise the Government on these matters. There are 23 members, nominated by professional and trade organisations, plus, of course, the relevant Government Departments.

Does the Minister agree that there is reason for concern that costs in Northern Ireland are much higher than in comparable regions in Great Britain—on average, 40 per cent. higher? Is that not a cause for an independent assessment? Do we need to examine the effect of a single authority in public sector housing on the industry? Do we need to look at the planning decisions and the availability of development land? The industry is not giving a good service to Northern Ireland.

Those are matters which we discuss and for which we have working parties within the group. Every professional group and trade group in Northern Ireland is represented in this committee. I can assure the right hon. Gentleman that we do some hard work, and some of our recommendations are worked upon and acted upon. I shall, of course, make sure that anything the right hon. Gentleman says in this respect goes forward to the next meeting of the group.

Does my right hon. Friend the Minister agree that there is an overwhelming case in Northern Ireland for public ownership of the building industry?

What I am concerned about in Northern Ireland is the creation of employment. If I were told that public ownership would create another job in Northern Ireland, I should consider it.

Will the Minister continue to look at the cement supply in Northern Ireland? Has he any further announcement to make about the supply of cement to the building industry?

This is one of the recommendations that came from the group on which we were working. The groups in Northern Ireland asked us to put forward a programme which would make us self-sufficient in cement. That is what is happening now. I have a further meeting with the Blue Circle Group and I shall probably be able to say more after that.

In view of the reply of my right hon. Friend to my hon. Friend the Member for Preston, South (Mr. (Thorne), will my right hon. Friend look at the Labour Party's construction programme "Building for Britain", where he will find some extremely good proposals which could well be applied to Northern Ireland for the benefit of both the operatives and the employers in Northern Ireland?

I have looked at the document and will do so again on the recommendation of my hon. Friend. If there is any way in which Northern Ireland can lead the rest of the United Kingdom, we shall certainly do so.

Gas Industry

asked the Secretary of State for Northern Ireland if he will make a statement on the future of the gas industry in Northern Ireland.

I hope to make the Government's proposals known early in the new year, but I cannot commit myself to a date. All the relevant factors must be considered thoroughly first.

Is the right hon. Gentleman aware that the continuing delay in giving access to natural gas to Northern Ireland is having a very detrimental effect on the industry and is putting in jeopardy the 2,000 jobs of the people employed in it? Can the Minister say what success he has had in discussing this problem with his right hon. Friend the Secretary of State for Energy?

I shall answer the second question first. I am keeping the Department of Energy well informed. It is well informed of the problems of the gas industry—perhaps I should say the energy industry—in Northern Ireland.

It has been often said that I am deliberately delaying giving access to natural gas in Northern Ireland, but I can only tell the hon. Gentleman that the decision I am being accused of prejudging would have been easier some time ago.

Will the Minister confirm that more than 1 million tons of solid fuel is used in Northern Ireland? It is one of our best markets in the British regions for selling coal. Will my right hon. Friend give an assurance that, whatever happens with the gas negotiations, that market will be maintained in order to ensure that British pits are not closed if markets are lost?

I can confirm that 1 million tons of coal is exported to Northern Ireland. I can also tell my hon. Friend that these exports were increased by 13·2 per cent. in the previous year.

There is a problem in Northern Ireland, which has no indigenous resources of energy, and we shall have to look at that in the complete context of energy. The problem is causing us great concern.

Does the Minister recall that the chairman of the Northern Ireland Labour Party has just said that, if Ministers continue to dither over the gas pipeline, they will have to accept full personal responsibility for the destruction of the gas industry in Northern Ireland?

I do not know whether the hon. Gentleman knows how the gas industry is organised in Northern Ireland. I do not run the gas industry in Northern Ireland. That is done by seven or eight local councils and a few private enterprises. Furthermore, it covers only one-third of the population of Northern Ireland.

Many people have been to see me about this matter. It is important, and it is not an easy question to answer when we have a surplus of energy in Northern Ireland. If one is providing another source of energy which will only add to that surplus, some of the industries there will also suffer.

Is my right hon. Friend aware that, whether in Northern Ireland or in this country, the national considerations concerned with fuel energy are likely to be that natural gas will be increasingly used as a feedstock. To some extent it is a waste to burn natural gas in people's fires. Is that not a consideration that the Minister should bear in mind? There will be changes of policy in this country as well as in Northern Ireland and we ought to use coal for heat-creating purposes rather than waste it up chimneys.

This is another of the problems I am facing under this review. We do not have to provide energy just for next year. I shall have to think about the supply of natural gas in the year 2000 and what will be happening to the gas industry then.

All the questions thrown at me today—and I hope that the people in Northern Ireland will read and study this—show that the problem is not an easy one to solve.

Army Casualties

12.

asked the Secretary of State for Northern Ireland what is the number of British troops killed and wounded in Northern Ireland in each of the last five years and so far this year.

I will, with permission, publish full details in the Official Report. In summary, the number of deaths has dropped from 58 in 1973 to nine so far this year, and woundings from 278 to 25.

Does the right hon. Gentleman accept that, although that information will be regarded as good news by both sides of the House, British troops were sent to Northern Ireland in large numbers and these men have died in order to buy the time in which politicians could create a political settlement? Does he recognise that, although there has been a welcome improvement in the security situation, we are as far as ever from procuring a political settlement in which Northern Ireland can live at peace without a veritable army of occupation? How many more soldiers' lives does he think have to be lost before the politicians in Northern Ireland play their part?

Despite the fact that the so-called political solution has not been found, the security forces, with determination, courage and skill, have managed to get on top of terrorism in Northern Ireland. The figures that I have just given are an indication of how well they have been doing their job. In the past year or so, nearly 1,000 troops have been withdrawn. As the situation improves and in keeping with security in the Province, we shall have to consider step-by-step withdrawal. However, I will not condone the precipitate withdrawal which the hon. Gentleman has suggested. Indeed, that is just the language that the Provisional IRA love to hear. They are his friends in Northern Ireland. He is giving them joy and causing despair among the people. During the past weekend the Social Democratic and Labour Party, led by my hon. Friend the Member for Belfast, West (Mr. Fitt), has suggested that withdrawal is desirable and necessary but that it must be in keeping with a political solution.

Is the Secretary of State aware that he will have the full support of the Conservative Party for what he has just said? Is he aware that what the deputy leader of the Liberal Party has been urging involves much more than a withdrawal of soldiers from Northern Ireland? It would involve the removal of Northern Ireland as an entity from the United Kingdom. Is not it also somewhat naive of the deputy leader of the Liberal Party to link demands for political settlement to the killing of British soldiers? Is that not just what encourages the terrorists?

I agree with the hon. Gentleman. The policy enunciated by the hon. Member for Cornwall, North (Mr. Pardoe)—he is, I think, on his own in his party in doing so—is a policy for despair. We are not prepared to accept that.

Allied to the presence of the British Army in Northern Ireland and the fact that, so far as anyone can see at the moment, there is no possibility of a political solution being found, would my right hon. Friend take it from me, with all honesty, that the proposal to increase the number of seats in Northern Ireland will make it all the more difficult to find any sort of agreement? Will he accept that, contrary to what he said earlier, the seats will be created within the city of Belfast and will almost inevitably go to Unionists unless there is deliberate gerrymandering? In that situation when politicians are desperately trying to find a means of success, would my right hon. Friend consider implementing PR for the elections to this House?

My hon. Friend will have a full opportunity to express his point of view on the Second Reading of the Bill and in Committee. He will also be aware that, during the course of the Speaker's Conference, Mr. Speaker ruled that the method of election would be ruled out of the Conference's deliberations. Therefore, PR was not discussed in the Speaker's Conference and is not before us in the Bill.

If the people of Cornwall were under attack by a terrorist organisation of which the object was, by violence, to detach Cornwall from the rest of the United Kingdom, does the right hon. Gentleman think that the Government or the House would withdraw the assistance of the Army from those people?

In those circumstances the hon. Member for Cornwall, North (Mr. Pardoe), as the Member for a constituency there, would be clamouring for military assistance. No doubt those in his area are pretty well ashamed of what he has been saying recently.

Following are the details:

ARMY DEATHS AND WOUNDING IN THE REGULAR ARMY ARISING FROM TERRORIST ACTIVITY SINCE 1973
	Deaths	Woundings
1973	58	278
1974	28	205
1975	14	44
1976	14	143
1977	15	75
1978 (to 31st October)	9	25
	138	770

Fair Employment (Northern Ireland) Act 1976

13.

asked the Secretary of State for Northern Ireland if he is satisfied with the operation of the Fair Employment (Northern Ireland) Act 1976.

Yes, Sir. I shall not however be completely satisfied until the objectives of the Act are fully realised.

I thank the Minister for that answer, but how can he give it confidently? In answer to 48 Questions tabled by me about the operation of the Act as it applied to municipalities, Government Departments and the Armed Services, including the Royal Ulster Constabulary, only the Ulster Defence Regiment was able to say that, of its total recruitment last year, 3 per cent. were Catholics. The Department made clear that all the others either kept no records or, for other reasons, did not know. Therefore, how can the Minister have any idea whether the Act is effective or ineffective?

We certainly have an idea of its effectiveness. If my hon. Friend found out that I was keeping records of who was Catholic and who was Protestant, I think that he would be the first to complain. That is not the way I act in Northern Ireland and I certainly do not intend to do so.

I am very pleased at the response to this legislation and by the signatures to the declaration of intent which over 80 per cent. have signed. Within a month of my decreasing the qualification as to the minimum number employed from 25 to 10, 35 per cent. of those eligible signed the declaration.

Does not the Minister agree that this fair employment agency cannot act except when there is a breakdown on figures? Surely if people sign this agreement they are under an obligation to be able to supply figures.

Those concerned are under certain obligations, but these will take time to percolate through the system. The hon. Gentleman knows as well as I do that in certain factories and establishments over a period of years the only people employed come from a certain area. One can be 90 per cent. sure of people's denomination just by knowing where they live in Northern Ireland.

European Monetary System

14.

asked the Secretary of State for Northern Ireland what discussions he is having with leaders of industry and commerce in Northern Ireland about the possible implications of the United Kingdom joining the proposed European monetary system.

I am in close touch with my right hon. Friend the Chancellor of the Exchequer and other colleagues on this matter, and I will, as always, ensure that full account is taken of Northern Ireland's interests. However, I have not discussed the specific implications of joining the European monetary system with leaders of commerce and industry.

As many experts think that it is probable that there will be a substantial dislocation of trade in Northern Ireland if the Republic joins the EMS and the United Kingdom does not, would it not be wiser for Ministers to give some thought to this problem now?

The hon. Gentleman will understand that I have given a great deal of thought to this matter. But I think that it is too soon to involve the industrial and commercial leaders in Northern Ireland, because the terms of entry into the EMS are still very unclear.

In addition to the advantage outlined by my hon. Friend, does not the Secretary of State agree, too, that there is every possibility that the Province would get even more Community resources and aid than at present?

It is difficult to say because we do not know whether the Irish Republic will join or whether the United Kingdom will stay out. These are all hypothetical questions at this stage and much of the future in this respect is unclear.

Maze Prison

15.

asked the Secretary of State for Northern Ireland what recent representation he has received about conditions in the H-blocks at the Maze prison; and if he will make a statement.

Over recent months, I have received various representations from individuals and interested organisations about conditions in the cell blocks where the protest against the refusal of special category status for convicted prisoners is taking place.

Some 330 prisoners are still fouling their cells as part of their protest. The cells are cleaned regularly but are promptly dirtied again. I must continue to make it clear that neither this bizarre protest in the prison, nor any other form of protest action, will deflect us from our determination to phase out special category status and to treat all convicted criminals alike.

In view of the representations which Members of this House have received, especially the allegations of maltreatment, including beatings and deprivation of adequate food, and the fact that the European Court of Human Rights has agreed to consider certain complaints, will my right hon. Friend conduct an urgent inquiry into this matter and allow an all-party delegation of Members of Parliament to visit the prison to see conditions for themselves? Failure to do so will lead to further allegations of a massive cover-up.

I am sorry that my hon. Friend thinks like that. He must understand from my original answer that the conditions referred to are self-imposed by the prisoners and could be put in the class of self-inflicted wounds. It is a propaganda exercise, not about the conditions in the cells but about the abandoning of our policy of ending special category status. I keep under review the question of visits to the prisons but at present, while this propaganda exercise is being perpetrated, I do not intend to give the prisoners concerned that satisfaction.

Will the Minister of State discourage even piecemeal attempts to extend any degree of special status to convicted criminals?

There is no piecemeal attempt. There is nothing piecemeal about this at all. I can only repeat, and shall go on repeating at every opportunity, that we are not going back to special category status. These prisoners are criminals, and will be treated as such.

Tuc And Cbi

Q1.

asked the Prime Minister when he intends next to meet the TUC and CBI.

I meet representatives of the TUC and CBI from time to time, at NEDC and on other occasions. Further meetings will be arranged as necessary.

Will my right hon. Friend discuss with the TUC and the CBI the severe misgivings which they have both expressed about the European monetary system—misgivings which must surely have been intensified by today's increase in the minimum lending rate, which is surely a foretaste of the sort of policies that would be necessary if we were to join an EMS or, indeed, pursue policies parallel to it?

We discussed with the TUC on 30th October the proposals for a European monetary system. It was a useful and valuable discussion. The TUC set out the kind of conditions that it thought would need to be observed if we were to join, and we shall continue to bear those and other representations in mind, including the evidence that the Expenditure Sub-Committee is now taking.

Does the Prime Minister recall that the last time the minimum lending rate went up, in June, to 10 per cent., the Chancellor of the Exchequer told the House that he expected it to come down within—at most—a few weeks? What went wrong this time?

Yes, it certainly was our expectation at that time that MLR would come down within a matter of weeks, and I regret very much that world conditions have prevented it from doing so. [HON. MEMBERS: "Oh."] It may have escaped the notice of Conservative hon. Members that there has been a certain turbulence in the position of the dollar, and a general rise in short-term interest rates. The increase in the MLR reflects that but goes a little further, because we are determined to keep inflation under control. I hope that we have the right hon. Lady's support in that.

As the American rate went up 1 per cent. to 9½ per cent., the Prime Minister can hardly claim that the cause of the increase to 12½ per cent. is what has happened to the dollar. Why does he not accept cause and effect—namely, that the reason that MLR has gone up to 12½ per cent. is that he is borrowing far too much and trying to take far too much out of the economy for Government spending, and that those who will bear the increase to 12½ per cent. are the home owners and the small businesses—the very businesses that are trying to expand and make more jobs, which he also wants?

I partly agree with the right hon. Lady—that it is our borrowing requirement that determines to some extent the level of interest rates. But the corollary of that, as the right hon. Lady has always said, is that we should cut down public expenditure—items such as education and the social services. As is well known, old age pensions and child benefit are going up next week. Perhaps the right hon. Lady would care to choose which of those she would like to reduce.

Given that the pound is rather too strong to suit our international trade convenience and that it is difficult to understand why a rise of 2½ per cent. in the MLR will assist in stabilising the turbulence of which my right hon. Friend speaks, will he tell us whether this change has anything to do with conformity to a possible European monetary system, or whether it is in order to enforce, by indirect means, the 5 per cent. wage policy?

The change does not enforce a 5 per cent. wage policy, because we are in a period of free collective bargaining. [HON. MEMBERS: "Oh."] If we were not, I promise that some of the settlements would be a lot different from what they look likely to be. We cannot enforce anything there.

But I am sure that my hon. Friend will have studied what I have said consistently on many occasions. We have three legs to this tripod. We intend to use them all to keep inflation down. The country will have to make up its mind whether it prefers these short-term mea- sures, as I trust they will be short-term, in order to keep inflation down to prevent unemployment from soaring, or whether it is ready to let inflation rip. The Government are not ready to do that. I have said more than once, and say again, that we shall take all the necessary measures.

The Prime Minister told the House last week about the three-legged stool. He told us that if the leg of pay policy were weakened the other two legs would have to be strengthened. But surely his principle of carpentry is wrong. If that one leg is weak it is that one that should be strengthened. Otherwise, the stool will collapse. Therefore, in talking to the CBI and the TUC will the Prime Minister discuss with them, particularly in the context of the Ford pay claim, the fact that the Ford company in America has a very sophisticated profit-sharing scheme, whereas in Britain there is no way in which the Ford employees can share in the increased profitability of the company in the past year?

I am obliged to the right hon. Gentleman. I dare say that in logic he is right but, alas, logic does not always cover all political decisions. Let me add that when it is strictly applied one always comes a cropper.

I am still waiting to hear from Ford. I cannot really believe it when its spokesman says that it does not know what effect the impact of the proposed wage settlement would have on the price of its cars. It seems to me very unlikely that a company of that size should take decisions about pay without knowing in advance how they will feed through to its prices.

European Community Heads Of Government

Q2.

asked the Prime Minister when he intends next to meet the Prime Ministers of other EEC Governments.

I shall be meeting EEC Heads of Government at the European Council in Brussels on 4th and 5th December. I shall also be meeting Signor Andreotti in London on 22nd November and President Giscard d'Estaing in Paris on 24th November.

Apart from telling the Prime Ministers of the other EEC countries by what recondite reasoning putting up interest rates brings inflation down, will my right hon. Friend tell them that the majority on the Labour Benches and the party we represent are opposed to joining a European monetary system that will mean an erosion of our economic sovereignty? Will he ensure that we have a free vote on this matter, and that all relevant documents that will assist us to make the decision are made available in the interests of open government?

I take it that my hon. Friend will want a free vote even if the Government come down against joining.

I think that the subject of erosion of sovereignty is getting a little moth-eaten. The power of Governments to control their rates of exchange has been severely eroded in recent years. I should not have thought we had much control over the rate of sterling in the autumn of 1976, and I have not noticed that the American authorities have had much control over the value of the dollar during recent weeks. I beg my hon. Friend and others who think like him to consider whether a zone of monetary stability, irrespective of the merits of any particular scheme, would not have advantages that are denied when the speculators have a free run.

Regardless of what may be happening over the German pressures for the system of EMS, will the Prime Minister undertake to discuss with his colleagues the whole question of managed exchanges, as it is becoming clearer and clearer that since the breakdown of Bretton Woods the world may be facing monetary chaos by the middle of next year?

I agree with the right hon. Gentleman in every respect. Indeed, it seems to me that when the EMS was conceived the dollar was not in the difficulties that it has recently passed through. I hope that this will give us an opportunity of beginning discussions for a new world monetary system, although I would not want to advance that if my colleagues in Europe thought that it was merely a means of ditching their EMS which we may or may not decide to join.

Will my right hon. Friend also take the opportunity of discussing with his fellow Prime Ministers the fact that it is very inefficient and expensive for the Nine to insist that the European Parliament meets in rotation in different cities? Surely it is time that the Nine Governments reached agreement on one city whether Brussels, Strasbourg or Luxembourg.

That matter has been discussed in the past, but the powers of the European Ministers are limited in deciding the issue.

Tuc

Q3.

asked the Prime Minister when he expects next to meet the TUC.

I meet representatives of the TUC from time to time, at NEDC and on other occasions. Further meetings will be arranged as necessary.

I wonder whether the Prime Minister will tell the TUC that his pay policy will be kept in respect of those who proliferate on the housing market—estate agents, property solicitors and the rest of the speculators who have just made a killing out of the 25 per cent. increase in house prices in a year. Instead of supplying us with this rickety three-legged stool that he keeps talking about, why does not he add another stave and call it controlling prices?

Talks are going on between the TUC and the Chancellor, and I should like to thank my colleagues who are conducting them and the representatives of the TUC for those thorough discussions. The question of prices will be covered in their debates. My hon. Friend will recognise that the elements about which we have been talking today all form constituents of prices. We shall certainly be ready to strengthen price controls if it seems likely that they would have the effect that my hon. Friend described. But if I may say so—indeed, my hon. Friend has said it himself on many occasions—we have had considerable success in keeping prices down as a result of our policies over the past 12 months.

When the Prime Minister next meets members of the TUC, will he tell them that the massive increase in MLR announced this morning is the beginning of the end of the pre-election boom which was so conveniently arranged in anticipation of the October election which did not take place?

No. I would not tell them that because I would not want to rub salt into the wounds of those who really thought that there was a pre-election boom. The simple fact is, and I hope that some day the hon. Gentleman will recognise it, that this country's position is such that the Government ought, whether there is an election ahead or not, to take the appropriate decision that will keep inflation down and prevent unemployment from soaring. Nothing will deter us from those objectives.

Does my right hon. Friend remember the answer of the Secretary of State for Economic Affairs in 1968 that it was impossible to control prices and that the Government must retain control over the part of the economy which they already controlled? Is that the policy of this Government?

I do not recall the exact occasion on which that was said, but certainly it is not impossible to control prices. The work of the Price Commission has reduced price increases, that would otherwise have taken place, to the tune of well over £100 million a year. A control is taking place and my hon. Friend may take it for granted that we shall use every means to prevent unwarranted price increases. What we cannot prevent, if industry is to remain healthy, are price increases that arise out of cost increases. Therefore, costs must also be kept down.

Will the Prime Minister tell us what the increase in American interest rates has been, what the increase in British interest rates has been and, in the light of what my right hon. Friend the Leader of the Opposition has said, what has changed since the Chancellor made his statement some time ago?

I cannot answer about the American rates off-hand, but if the hon. Gentleman puts a Question down to the Chancellor I am sure he will receive a detailed reply. But it is known, even to the hon. Gentleman, that American rates have gone up during the past few months, which is the general point that I was making. What has changed are the fears of the market about certain consequences that might arise during the winter. Those fears arise out of a number of different considerations. They do not know which way to go. If we enter the EMS, will it make sterling weaker? [Interruption.] We know where we are going. The point is that the market do not know where they are going. Let us see the result of the vote tonight, and then see what the country has to say if it goes the wrong way.

There are, as I think the hon. Member knows in his more rational moments, a number of uncertainties. The Government do not intend to be caught by those uncertainties and we are therefore taking steps in anticipation of them, in order to prevent their developing into reality.

Business Of The House

May I ask the Lord President to state the business for next week?

The business for next week will be as follows:

MONDAY 13TH NOVEMBER—Second Reading of the Nurses, Midwives and Health Visitors Bill. Proceedings on the Pensioners Payments Bill.

TUESDAY 14TH NOVEMBER—Motions on EEC documents S/763/78, S/911/78 and addendum 1 on enlargement, on R/1277/77 and R/1131/78 on display and pricing of foodstuffs and on R/236/78 on groundwater pollution.

WEDNESDAY 15TH NOVEMBER—Supply [1st Allotted Day]: debate on a motion to take note of developments in the European Communities January to June 1978, Command No. 7361. Motion on EEC document R/1123/78 on mutual assistance.

THURSDAY 16TH NOVEMBER—Second Reading of the Estate Agents Bill. Motion on the Assistance for House Purchase and Improvement (Variation of Subsidy) Order. Motion on EEC document on R/511/78 on misleading and unfair advertising.

FRIDAY 17TH NOVEMBER—Debate on the report of the Royal Commission on civil liability and compensation for personal injury, Command No. 7054.

MONDAY 20TH NOVEMBER—Second Reading of the Companies Bill.

May I put one or two points to the Leader of the House? First, can he say when the Boundary Commission's report on European constituencies will be available? It was expected in October but has not been published.

Secondly, can he say what is the present state of the strikes affecting this House? He will know that the public find it impossible to get copies of Bills which may affect the way in which they conduct their business. We shall have the Companies Bill shortly, and companies simply cannot obtain copies unless hon. Members send them or unless members of the public come here for them.

Thirdly, when are we to have a debate on the European monetary system? It seems that decisions are close at hand and there has been precious little debate officially in the House and practically no official documentation from the Government on the very big issues at stake and whether we go in or stay out.

I certainly appreciate the importance of all the points that the right hon. Lady has raised. On her second question concerning the hold-up of papers I fully acknowledge the great inconvenience that has been caused to the House and to members of the public resulting from the industrial dispute in Her Majesty's Stationery Office publishing and bookselling activities section which has been continued since the beginning of September. Every effort is being made to overcome it. I fully acknowledge what the right hon. Lady has said and I certainly hope that it will be brought to an end as soon as possible.

The Boundary Commission's report and the draft order will be laid before the House as soon as possible. I hope that it may be next week.

Regarding the third question, about a debate on the European monetary system, the Government have already given an undertaking to the House that we shall have such a full debate before any decisions are taken. I cannot give the House the exact date now, but I agree that it should be very soon.

I have always believed in the cock-up rather than the conspiracy theory of history. Will my right hon. Friend reconsider the business for next week? It seems that the EMS debate is now likely to take place, unintentionally, after the decisions have been taken. When the General Sub-Committee, or some members of it, yesterday visited the Commission in Brussels, we were told that the crucial decisions were likely to be taken on Monday, 20th November at a meeting of the Council of Finance Ministers. If that is true, we ought to have the debate this coming week.

Apart from the two theories to which my hon. Friend has referred, there is also the misapprehension theory. I think he is under the misapprehension that the decision will be made before the debate.

That is not so. We shall have the debate before the decisions.

On the assumption that the Treasury minute will be published within the next 14 days, can the Leader of the House tell us how soon thereafter he thinks we shall be able to have a day for a debate on the reports of the Public Accounts Committee?

Secondly, does the right hon. Gentleman remember the several occasions on which a wish has been expressed by both sides of the House that more time should be allocated whenever possible for debates on reports of Select Committees? As the Government do not have as heavy a timetable and programme as is sometimes the case, will he see whether he can allocate more time to this purpose now—[HON. MEMBERS: "No."]—and, in particular, to a debate upon the report which many of us, inside and outside the House, regard as being of fundamental importance—the report of the Select Committee on Procedure?

I said last week in response to a question that I regarded the report of the Select Committee on Procedure as a major report to the House, and, of course, there must be a full debate upon it. I hope that we shall have a debate on the subject before Christmas.

As to the first of the other matters mentioned by the right hon. Gentleman, I hope that I may be able to make at any rate, a reference to it in the Business Statement next week, although I do not absolutely guarantee it. Of course, I have taken into account also the representations that he and others have made for fuller opportunities for debates on these subjects. I have also to take account of the representations that he and others have made for fuller and earlier debates on many questions affecting EEC business. I am sure the right hon. Gentleman will have noticed that in next week's business I am helping to fulfil that obligation.

With regard to the Pensioners Payments Bill to be debated on Monday night, a Bill which I presume relates to the £10 Christmas increase for pensioners, will my right hon. Friend confirm that if the Government are defeated tonight by the Tories and the minority parties there will be no £10 bonus for pensioners this Christmas?

If in my reply to my hon. Friend I were to give all the reasons why we should not make a mistake about the vote tonight, I should be at the Dispatch Box for many hours on end, but I am glad to confirm the general idea behind my hon. Friend's question.

In view of the publication this week of the "Directory of Paid Public Appointments made by Ministers", which I think has aroused concern in all parts of the House, showing as it does that there are now over 5,600 salaried jobs in the gift of Ministers and over 360 quangos, could we not now have an early debate on the uses and abuses of ministerial patronage?

I should be very happy to have such a debate, although I know that there are many other pressures for debate, and to discuss all the proposed quangos, if that is the proper name for them. But when I arrived at the Department of Employment in 1974 I discovered that some of those who feature in the document were already fixed by the previous Government, and there was no greater collator of so-called quangos than the previous Government.

Is my right hon. Friend aware of the concern in the country about the inability of the House to find time to discuss the question of the export of live animals? As over half the Back-Benchers in the House signed an early-day motion calling for such a debate many months ago, will he now find time for it?

[ That this House considers that the contents of the report by agriculture departments of the Ministry of Agriculture, Fisheries and Food that was issued in March 1978 under the title "The Export Trade in Live Animals for Slaughter or Further Fattening" are of great interest and concern to honourable Members of this House, to animal welfare organisations, the farming industry and the general public; and asks Her Majesty's Government to set aside time for an early debate.]

I will look afresh at all the representations that were made on this subject. I know very well that at the end of the last Session many representations were made about it, and I will see what opportunity there may be or whether private Members should seek to claim time for it.

Will the right hon. Gentleman ensure that the Order in Council on remand procedure in Northern Ireland is brought forward as soon as possible for the approval of the House, since it is in the public interest that there should be an early debate upon it?

I accept what the right hon. Gentleman said about the desirability of having a debate in the House on the subject. That was made clear by my right hon. Friend the Secretary of State when he made the statement to the House. We will consider when such an affirmative order can be brought forward.

Will my right hon. Friend provide time soon for a debate on the disgraceful dismissal by the South African Government of Mr. Justice Mostert? Meanwhile, will he express unequivocal condemnation of that dismissal?

I do not believe that That is necessarily a matter which calls for a debate in the House, although hon. Members such as my hon. and learned Friend are fully capable of expressing our views about it, and I certainly share the view which he has expressed.

With regard to Friday's debate on personal injury and civil compensation, will the Leader of the House give an assurance that the Government will bring forward in that debate their proposals for compensating slate quarrymen suffering from silicosis?

I cannot guarantee that the Government will bring forward the detailed proposals on that subject in the debate, but, of course, the Government will listen most carefully to the representations that are made on that subject and others in the debate. It would be in order for discussion then. The Government have already given a commitment in the Queen's Speech on this subject, and we have every intention of fulfilling it.

The Lord President will have heard the Prime Minister say earlier how we are controlling prices. I am particularly pleased to hear of the Government's effort to control the price of bread. However, since rail fares are to rise by 10 per cent. in January, will he ask the responsible Minister to control that increase, at least within 5 per cent., which seems to be the magic figure for wages and salaries?

No doubt all these questions of how the Government seek to control prices and how nationalised industries have contributed to that—and they have made a considerable contribution to the solution of the problem—are open for debate in the House this afternoon.

Since it was reported the other day in The Guardian that the Prime Minister is taking a personal interest in the affair of the Select Committee's report on the National Land Fund, may we have an early Government decision and debate on this?

I note what the hon. Gentleman says, but obviously I am not making any promise about next week.

Will my right hon. Friend arrange for a full debate during the present Session of Parliament on unemployment? This is one of the country's major problems and there is no evidence that the steps so far taken by the Government are dramatically reducing unemployment.

There are persistently continuing debates in the House at different times, as I am sure my hon. Friend will acknowledge, on different aspects of the unemployment problem. Many of these matters were open for debate during the debates we had on the Queen's Speech, but I will certainly look afresh at the suggestion which my hon. Friend is making that we should have debates on unemployment affecting particular areas. There are some areas, such as Merseyside, which are more deeply and harshly afflicted than almost any other, so I will take into account what my hon. Friend has said.

Is the right hon. Gentleman aware that it is now some two years since an inquiry made its pronouncements about the Stroud inner ring road and that I have been promised a decision every month since May? In view of the great inconvenience and expense, will he ask his right hon. Friend the Secretary of State for the Environment to make an announcement during the coming week?

The point about the Stroud motorway had escaped my attention for a moment—I cannot understand how this could have occurred—but I shall discuss it with my right hon. Friend.

In view of the visibly ever-rising tide of EEC legislation, including demands for even more debates, is it not even more important that the Government should discharge their undertaking of 28th November last year to have a debate on the procedure for EEC legislation, particularly in view of the report of the Scrutiny Committee, House of Commons Paper 642, which remarks on the Lord President's withdrawal of the undertaking, and the report of the Select Committee on Procedure on EEC legislation? May we have an early opportunity to deal with this matter?

I freely acknowledge that the House must return afresh to this matter. That was understood when we had references to the subject in July, and the necessity to deal with it has been underlined by the two reports to which my hon. Friend refers. Last week I indicated to the House that I thought that perhaps we should deal with that part of the procedure report in a different way from the rest of the report. I am fully conscious of my hon. Friend's point.

rose—

I have a very long list of Members who hope to catch my eye today. There is a statement to follow after business questions, so I propose to take four more Questions from either side and then move on to the statement.

The Leader of the House will recall that during the recess another Select Committee reported on the consequences of oil spillage. I drew this to the right hon. Gentleman's attention and received a courteous reply. He said that he realised the importance of a debate on that report but suggested that we should wait until the Government's comments were available. Will those comments be available before Christmas, and when will a debate follow?

I have nothing further to say to the hon. Gentleman now, but I may be able to make a further statement on the matter next week.

When the Leader of the House has information about the Stationery Office strike, especially about the Boundary Commission report, will he give an early warning to those of us on both sides of the House who are anti-Marketeers so that we can ensure that that very important strike continues? We are thinking of setting up a fighting fund to keep these reports from being produced in order that these gallant men can prevent Britain from being dragged even further into the European mire.

With the best of good will towards my hon. Friend, I must say that I feel we have enough industrial strikes affecting the supply of documents to the House without any assistance from him.

Will the Leader of the House ensure that debates on the report of the Select Committee on Procedure take place before the Government publish their findings on that report? This is essentially a matter for the House of Commons, and all hon. Members want to express their views. As some of the recommendations are fundamental and controversial, does the right hon. Gentleman agree that it may be necessary for such a debate to stretch over more than one day?

I am not sure about the length of time that should be allocated, but I fully concur with what the hon. Gentleman said during the first part of his remarks—indeed, I think I said as much last week.

In view of the Bingham report, it is not even more urgent that the House should pay serious attention to its own procedures, with capacity to scrutinise the activitives or non-activities of the Executive, and will my right hon. Friend make this the top priority in formulating the business of the House before Christmas?

I repeat to my hon. Friend what I have already said to the House as a whole. I do not deny that this is a report of major importance, and obviously the House will want a full opportunity to discuss it. As my hon. Friend has just indicated, the best way may be for the House to discuss it before the Government reach any conclusions. I believe that that is the right way to proceed.

Will the right hon. Gentleman ensure that the House has a chance to debate the findings of the Select Committee's report on the National Land Fund before any decision is taken to reject it?

We have to watch these matters closely. If it were the practice that all reports had to be discussed before Governments gave their views, I believe that we would make the procedures of the House extraordinarily cumbersome in many respects. I do not believe that it would be for the convenience of the House. There are special occasions when reports such as the procedure report should be subject to a debate before the Government have presented their view, but I do not believe that it is normally the best practice to have debates on reports on which the Government have not expressed any opinion.

Will my right hon. Friend find time for a debate on early-day motion no. 33 relating to the coal industry in Wales—or, if not specifically on the coal industry, may we have a general energy debate?

[ That this House, mindful of the essential part which the coal industry plays in the energy requirements of the United Kingdom, deplores the proposal to close further pits in South Wales other than those exhausted; and calls upon Her Majesty's Government with all its powers to sustain and protect the industry as a vital part of its energy policy.]

I accept the importance of the subject raised by my hon. Friend, and I am certainly aware of the considerable concern in South Wales on the subject, although I see that my hon. Friend is raising this subject himself in an Adjournment debate next week.

Since there is a growth in the number of criminals who are prepared to use guns to shoot down people in order to escape arrest—I suggest that there has been a considerable increase in the number of murders recently—will the Lord President give time for an early debate on the whole question of capital punishment?

I do not believe that that is the best way for the House to proceed. The House of Commons made its view clear during the previous debate and decision on the matter. I do not believe that there is a requirement for another such debate.

Will my right hon. Friend bring forward a motion next week, which is a rather busy week, to give the House an opportunity to remove from all Select Committees those hon. Members who are Ministers, because they are clearly in no position to do the job that this House expects them to do?

I do not agree with what my hon. Friend said about the composition of Select Committees. Indeed, in the case which occurred this week the member of that Select Committee is just as able to perform his functions on it during the coming week as he has in the past week. I do not, therefore, believe that any such question arises.

Later—

On a point of order, Mr. Speaker. The Leader of the House, in answer to my earlier question, referred to misapprehensions. I have been out of the Chamber to check with the local office of the European Commission and I am again informed by that office that the Council of European Finance Ministers will meet on 20th November—not after, but before the debate. As I understand it, that is the occasion when the crucial decisions will be taken.

Further to that point of order. My hon. Friend most uncharacteristically has again misapprehended the situation. There is no proposal that there should be a decision at that meeting. Therefore, the undertaking that I gave to the House is absolutely clear. The debate will take place in this House before there is any decision.

Question Of Privilege

I have to inform the House that I have received a letter from the hon. Member for Lewisham, West (Mr. Price) on a question concerning the privileges of this House. In accordance with the procedure for dealing with such matters which was brought into effect on 6th February this year, the hon. Member has made a submission to me in writing which I have duly considered.

The hon. Gentleman informs me that use has been made in the case of Regina v. Aubrey, Berry and Campbell, now proceeding at the Central Criminal Court, of passages in the Official Report of our debates and of other proceedings of the House without the prior leave of the House being obtained. In the light of this information, I give precedence over the Orders of the Day tomorrow to a motion relating to the hon. Gentleman's complaint. No debate can arise now.

Small Firms (Employment Subsidy)

Mr. Secretary Booth—statement.

As the House is aware, the Government have introduced during the last two or three years a range of measures for promoting employment and training which have had as their object a reduction in the high level of unemployment. In the current financial year, the expenditure on these measures is likely to be between £450 million and £500 million, and they are making a substantial contribution to bringing down the level of unemployment. Most of these measures run to 31st March 1979, and we are at present considering what needs to be done in the year which will commence on 1st April 1979. Meanwhile, we have decided to extend further from 1st January 1979 the scope of the small firms employment subsidy.

Under the scheme a subsidy of £20 a week for six months is paid for each additional full-time worker taken on in a manufacturing firm with fewer than 200 employees.

There has been an encouraging response to the present scheme, which was extended from the special development areas to the assisted areas generally and inner city partnership areas on 1st July 1978. Since 1st July, about 5,000 firms have applied to join, and we would have expected some 10,000 new jobs to be created in a full year.

From 1st January 1979, the present scheme will be extended to small manufacturing firms throughout Great Britain. Furthermore, the subsidy will be available to small non-manufacturing firms in the special development areas, development areas and inner city partnership areas. The new scheme will be open for applications to 31st March 1980. The changes have been notified to the EEC Commission. I estimate that these changes will more than treble the number of new jobs created by the scheme.

If the right hon. Gentleman can estimate the number of jobs that will be created by the scheme, can he give an estimate of the number of jobs that will be lost as a result of the increase in the minimum lending rate to 12½ per cent.? Is the right hon. Gentleman aware that we are becoming a subsidised society, constantly propping up small firms by subsidies? If he made sensible changes to the Employment Protection Act, he could get the employment without any additional subsidies.

Is the Secretary of State aware that in so far as we believe that these schemes have any part to play in solving our unemployment problem—and we believe it is a small part—we are glad that the scheme has been extended to the country as a whole, which seems sensible? Generally speaking, we believe that the Government show an incompetence in the running of the economy which is matched only by the kind of scheme produced today.

That is not the warmest welcome I have heard the hon. Gentleman give to a measure designed to assist in solving the unemployment problem.

We can measure our ability to estimate the effect of this extension, compared with the effect of MLR, because we ran a pilot scheme in special development areas prior to July, which I understood had the approval of the House. I acknowledge that it will play only a small part, but it is only one of a great many measures which, added together, are having a considerable impact on levels of employment. As to our being a country which is dependent upon the help of subsidies, I would have thought that the benefit that we are reaping—with more people being employed as a result of those subsidies—would be welcomed in all parts of the House.

Does my right hon. Friend accept that despite the rather grumpy remarks from the Opposition Front Bench there will be a warm welcome in special development areas for the extension to the non-manufacturing sector, which has been the Cinderella in the past? I hope that it will set a trend of more assistance in the form of grants for the service industries, which are important in areas such as Scotland.

I welcome my hon. Friend's comments. We have received an increasing number of representations of the view that to pay a subsidy to small manufacturing firms but to deny it to firms servicing those manufacturing firms is not the best way to aid the development of small firms in the special development areas.

I give a warm welcome to the Minister's statement. Does he accept that perhaps all the jobs being subsidised under the scheme are jobs which would have occurred anyway, without the subsidy—not all of them but some of them—and therefore that it is not strictly true to say that every job being subsidised is a job created as a consequence of the scheme?

Does the Minister also accept that while some of us do not accept that the Employment Protection Act has had the major effect on employment that the official Opposition Front Bench make out, we agree that there is a vast amount of form filling—particularly for the statistics office at Cardiff—which small companies are called upon to complete? Many of us who have to complete those forms take the view that they are an utter waste of time.

The problem of form filling by small firms runs much wider than the Employment Protection Act, as the hon. Gentleman appreciates. It is a matter to which the Government are giving attention.

I do not claim that every subsidy paid under the small firms employment subsidy scheme represents an additional job but when, as an experiment, we ran a small firms employment subsidy in special development areas for manufacturing firms employing fewer than 50 people, and compared what was happening in those areas with others as comparable as it was possible to find, we found that 40 per cent. more jobs came about in the small manufacturing firms in the areas in receipt of the subsidy.

Is my right hon. Friend aware that he should not be discouraged by the nit-picking attitude of the right hon. Member for Lowestoft (Mr. Prior), because if this country had adopted his policies another 1 million could have been added to the unemployed? The important thing for my right hon. Friend to understand is that what will help to make his proposals a real success will be his ensuring that local organisations such as employers' organisations and trades councils are brought into a full understanding of, and discussion on, how the scheme should operate. It is at this level that its success can be assured.

I agree with my hon. Friend that an understanding of this and many other employment schemes by local organisations is essential to the success of the schemes. Having introduced so many schemes during the past few years, I find that it is often six or 12 months before their availability is realised by the people whom they are intended to assist.

Does the Secretary of State accept that by extending this scheme throughout Great Britain, he is eroding regional policy by failing to give the development areas special incentives? Will he qualify further the example of non-manufacturing firms? Will that description apply to agricultural partnerships, to professional offices and to retailing?

To take the last point first, certainly "non-manufacturing" for this purpose covers agriculture as it covers the construction industry. These are both areas in which there are many small firms. That is why I expect that in areas where this wider definition will be used it will have a much wider impact. But, by the same test, I do not consider the hon. Member to be justified in saying that it will put these areas at a disadvantage, because it is in special development areas, development areas, and inner city partnership areas that the scheme will apply to non-manufacturing firms, not to the remainder of the country.

Is my right hon. Friend aware that any help to non-manufacturing firms is particularly welcome? Has he noticed that small firms, officially, have strongly opposed the devolution proposals? Can he say what good small firms can expect from an Assembly in Edinburgh?

I bow to the views of my hon. Friend, who has posed the question of the particular merits or demerits of devolution as applied to small firms. All I can say is that when considering Wales and Scotland for the application of the small firm employment subsidy, I took the view that development and special development areas in both countries should have maximum benefit from the scheme.

Is the Secretary of State aware that a survey published recently by his Department showed that 24 per cent. of small firms would have taken on more employees had it not been for the employment protection legislation? Is he aware that this indicates that about 300,000 jobs have been lost as a result, and can he indicate whether the subsidy announced today will create more or fewer jobs than that number?

I am not aware that the survey undertaken by my Department indicates anything like what the hon. Gentleman suggests. I have read that report, as I have read the wider survey. Certainly the scheme that I have announced today is of the order that I have indicated. If the hon. Gentleman and other hon. Members go around the country suggesting to small employers that they should not take on additional labour because we are operating a measure that protects employees in all firms equally, whether they be the employees of large or small firms, they will do considerable damage to employment prospects.

Is my right hon. Friend aware that his proposal will be much welcomed on Merseyside, particularly in the construction industry? It is bound to help construction workers considerably. Will he emphasise the point that it maintains regional policy, contrary to what was said by the hon. Member for Aberdeenshire, East (Mr. Henderson)?

Certainly it gives preference to the development areas and special development areas of the regions. That is not to say, if we find that this extension to services is a particularly good way of increasing employment, that we shall not have to consider a wider application of our proposal. I agree with my hon. Friend that its application to the construction industry will be most helpful, and I hope that, particularly on Merseyside, not only will it result in additional people being employed in an industry in which there is terribly high unemployment, but that some firms will expand sooner than they would have done otherwise.

On a point of order, Mr. Speaker. Is it in order for a Back Bencher to pass to a Minister a copy of the circular—produced by his own Department—the existence of which he has just denied?

Order. It could be dangerous.

I welcome measures which will create new jobs, and I should like to ask the Minister whether he will examine previous measures which were introduced relating to the construction and engineering industries training boards, the only result of which was that those boards locked up tens of millions of pounds in cash which is not being used to create jobs. Indeed, in the case of one training board, the return on its investments is now more than £1 million a year. Surely, that is not the way the Secretary of State would want to create jobs.

Certainly I do not imagine that industrial training boards locking up money is a way of creating jobs. In my view, the overall effect of our support for industrial training boards, particularly in the engineering industry, which the hon. Gentleman mentioned, has been to sustain and increase the intake of apprentices since 1974—something which, as far as I know, has never previously happened in a recession.

Order. I propose to call those Members who have been rising to their feet, but I hope that they will co-operate by asking brief questions.

May I come back to the question of the circular which was put out by the Secretary of State's Department? Is it not quite wrong for a Minister to deny a piece of paper which has come from his Department, and which clearly states that according to the Gallup poll that his Department carried out 24 per cent. of employers would have taken on more labour had it not been for the Employment Protection Act? It deliberately hits at the rights of Back Benchers for a Minister deliberately to deny the existence of a piece of paper that has originated from his Department.

I do not deny the existence of the piece of paper. I do not deny what employers say. They say many things, particularly when they are urged to participate in a campaign against the Employment Protection Act. But if the official Opposition believe that it is better to do away with the Employment Protection Act than to assist small firms in employing people, I profoundly disagree.

Will my right hon. Friend ensure that this new scheme, like the last, enables the Conservative Central Office to take part in it? Is he aware that the Conservative Central Office had £11,000 from the job creation scheme in 1978 to employ six people to go round Kensington and Chelsea counting the shop windows? May we have a guarantee that, despite its objection in principle, Conservative Central Office will take the money if it has half a chance?

It is certainly true that the Conservative Central Office put up a proposal for a job creation programme which was approved by the MSC, but I do not believe that at the moment it qualifies as a small firm. I hope that that situation will soon arise.

What estimate has the Secretary of State made of the number of jobs that might be forthcoming in the small business sector if small businesses in this country operated against a background rather closer, in terms of taxation and industrial relations, to that enjoyed in Germany and France?

In Germany there is a higher proportion of total employment in small firms than in this country. I do not know that that is entirely due to the practice that the hon. Gentleman mentioned, but I think that it is a reason why he should join with me in seeking to ensure that this scheme succeeds in building up the size of our small firms.

Is my right hon. Friend aware that neither Germany nor France has constructive measures such as that which he has just announced? Will he make it clear to the Commissioners when he is talking to them that we shall not accept Commissioner Vouel taking a negative view of the only methods that have been suggested anywhere in the Community which will help to create new jobs?

I shall certainly make clear to Commissioner Vouel the extent to which such measures have been successful in creating jobs. Whether I shall succeed in convincing him that all the measures we have run should be allowed to continue remains to be seen.

If the Secretary of State does not agree with the survey published by his Department, will he publish separately his own opinion of the effect on small firms' employment of the Employment Protection Act?

I certainly agree that my Department should publish the results of this survey. I was able to provide the House only with a survey which covered larger firms. When we first discussed the effect of the Employment Protection Act I could not provide a survey. I have taken steps to ensure that such a survey can be provided for the House. It is published and is available. I issued it in the hope that among those who would read it would be hon. Members with an interest in the issue, and I am glad to see that some hon. Gentlemen have already done so.

I do not suggest that one should take every answer provided by an employer to questions put in that survey as representing a basis on which to calculate employment effects.

My right hon. Friend's announcement today will be welcomed by the small business men operating the inner city partnership areas in Birmingham and other cities. Will he undertake to do what he can to encourage those small groups of ethnic minority business men who are now trying to put small businesses together, particularly in the big cities, to take note of the measures announced today, and to do whatever he can to encourage them to augment their small businesses in this way?

I certainly appreciate that among those who are keenest to found small businesses in this country are some members of the ethnic minorities. I therefore hope that they, as everyone else who can benefit from this scheme, can be made aware of it as quickly as possible.

Does the Minister agree that if a company believes that it can make more profit and increase production by taking someone on, it does not need any spur so to do? Does he further agree that the small subsidy to encourage the company to do so is infinitesimal and will have no real effect upon the employment situation? Does it not, however, show, as the Minister said, the parlous condition to which our industry has descended under this Government?

I believe that in calculating whether it is right in certain circumstances to expand a small firm the management must take into account, among a range of other factors, the initial labour costs, including those incurred over the six-months period. This scheme gives the employer a considerable advantage in dealing with high initial labour costs when he seeks to increase the size of his small firm.

May I, too, express appreciation that the scheme is to be extended? What proportion of the subsidy has been directed towards the North-West region, and how many jobs have been created as a consequence?

Since 1st July, when the scheme was expanded to its present coverage, more than one-quarter of all the applications in Great Britain have come from firms in the North-West—a total of 1,442 of the 5,038 applications. About 6,000 jobs in the North-West are covered by the small firms employment subsidy.

Is it true that the increase in jobs created by this scheme will be dramatically and tragically offset by the redundancies that small businesses will experience in the next few days as a result of the dramatic increase in MLR? Is it not ironic that on the day that the right hon. Gentleman has announced measures to try to help small businesses and create jobs there has also been this panic measure by the Bank of England?

No.

Will my right hon. Friend accept that the welcome from my hon. Friend the Member for Birmingham, Ladywood (Mr. Sever) is echoed by representatives of the inner city areas of London, where we have been pressing for some time that the opportunities for the expansion of small firms and worker co-operatives lie in the distributive and service sector? Will my right hon. Friend consider increasing the flexibility of the scheme, particularly in terms of the amount and period of the subsidy, for the special problems that these non-manufacturing firms meet in the inner city?

I gave careful consideration to the possibility of extending the period, rather than the scope, of the scheme, but I believe that it is better to apply the scheme to a wider range of firms over a six-month period in which they will face the heaviest initial costs of establishing additional jobs rather than to a smaller number of firms—which I am sure would not be the wish of my hon. Friend—and paying them for a longer period.

Is it not absolute bunk to talk of employment problems in areas such as Wandsworth when it is well known that there is a grave shortage of workers for the public transport services in London? Given that the country's main problems are overmanning and inefficient use of labour, does it really make sense to spend money on subsidising overmanning rather than on spending the money, if it is available, on genuine public sector work in the Health Service, defence, or on tax reductions to encourage investment?

There are not serious problems of overmanning in any of the firms that are likely to apply for the subsidy. If we have an overmanning problem. I cannot see that it is particularly located in small firms. As to the application of the scheme in certain inner city partnership areas, I have found that in very large cities one can have pockets of unemployment which represent as serious a social problem as exists on the wider scale in some of the development areas.

Will my right hon. Friend draw to the attention of his colleagues in the Cabinet the fact that they could reduce unemployment by at least 4,000 tomorrow if they had a fairer system of sharing out quango jobs—one man or woman, one quango?

I have never thought that quango jobs were the best form of job creation.

What is the Secretary of State's estimate of the cost of the extension of this scheme? Is it not a fact that if one is anxious to try to increase the number of people in employment, far greater job security could be provided by applying that money to reducing national insurance contributions, as the companies that would take up the employment would be more able to justify their extra employment on commercial grounds?

The answer to the first of the hon. Gentleman's questions is also the answer to the other. The extension of the scheme from 1st January 1979 to 31st March 1980 will cost £130 million gross and about £36 million net. The net cost of continuing our present scheme from 1st July 1978 to 31st March 1979 is £6 million. Obviously, spreading those two sums across the total range of national insurance contributions would bring about a very small reduction in the contributions.

The Hon Member For Luton, West

On a point of order, Mr. Speaker. As you will be aware, yesterday, 8th November, I wrote you a letter on the privileges of Parliament and pressure from the Executive, and you replied to me today, 9th November. I want to thank you, Mr. Speaker, for your prompt reply and to thank you and your staff for the courtesy shown to me over this matter.

May I also ask for your permission to make the correspondence public and to place copies in the Library? I ask this for two reasons. First, the suggestion has been made, which I find particularly offensive, that I should leak the correspondence. Secondly, the matter has aroused some public interest, and in my view the methods of proceedings of the House raise a genuine problem.

Under the new procedure whereby hon. Members write to you, Mr. Speaker, more often than not, because you are unable to give the matter precedence over the Orders of the Day, you will, in effect, turn down the application. Therefore, unless the correspondence is published, many serious matters concerning privilege will not be known to the House and the House will not know the way you are thinking.

I am much obliged to the hon. Gentleman for the way in which he has presented his point of order. Let me first make the point to the House that correspondence between Mr. Speaker and right hon. and hon. Members is usually regarded as written in confidence. In general, when right hon. and hon. Members write to me I treat the correspondence on that basis, and so do the right hon. and hon. Members. However, in this case half the correspondence has already been published. Before I received the hon. Gentleman's letter, I learnt on the radio that I was to receive it, and I knew the substance of it. But it is up to him to decide whether he wishes to publish the letter. There is no question of my giving permission. It is up to the hon. Gentleman, who must reach his own decision.

Without in any way commenting upon the propriety of the course that the hon. Member wishes to take in this case, I wish to put it to you, Mr. Speaker, that it adds much to the importance of parliamentary proceedings for the original matter to be fully reported to the House at the earliest possible opportunity, so that a submission may be made to you on the circumstances in which confidential information was leaked in this way and the action which the House might seek to take against those responsible.

I cannot go into that matter now. As the House knows, the House itself decided in February last that when an application for privilege is made to me, if I do not afford it precedence, it cannot be referred to in the House afterwards. That was the decision of the House itself as recently as February.

Further to that point of order, Mr. Speaker—

Sit down!

I hope that the right hon. Gentleman is not referring to me. Let me say that I shall listen to the hon. Member's point of order, but I know that he is too old a parliamentary hand to want to refer to the question of privilege with which I have been dealing.

On a point of order, Mr. Speaker. I am a member of the same Sub-Committee as the hon. Member for Luton, West (Mr. Sedgemore), and the other members of that Sub-Committee have been placed in great difficulty because this confidential document was available to the hon. Gentleman but was not available to the other seven members of the Sub-Committee. It would seem only right, Mr. Speaker, that you should ponder whether the hon. Gentleman could be asked to distribute copies of the document at least to his colleagues so that we may share the confidential information which he has shared with the press.

Order. The House knows that what happens in a Committee is not my business but is that of the Chairman of the Committee.

On a point of order, Mr. Speaker. I thank you for your forbearance, but, as you have reminded us, we are operating under a novel procedure with which the House is not yet totally familiar, and I put it to you respectfully that we may not fully have understood all its implications.

May I ask you this, Mr. Speaker. Does the fact that an aspect of this matter has been raised as a purported matter of privilege mean that it would be out of order for the Prime Minister to seek to make a statement on other aspects of it, such as, specifically, the circumstances in which a confidential document was leaked to, and published by, the hon. Member?

All I can say is that I always give special consideration to any representations made to me for someone to make a statement, whether by the Prime Minister, the Leader of the Opposition or anyone else.

Bills Presented

Banking

The Chancellor of the Exchequer, supported by Mr. Secretary Millan, Mr. Secretary Dell, Mr. Joel Barnett, Mr. Robert Sheldon, and Mr. Denzil Davies, presented a Bill to regulate the acceptance of deposits in the course of a business; to confer functions on the Bank of England with respect to the control of institutions carrying on deposit-taking businesses; to give further protection to persons who are depositors with such institutions; to make provision with respect to advertisements inviting the making of deposits; to restrict the use of names and descriptions associated with banks and banking; to prohibit fraudulent inducement to make a deposit; to repeal certain enactments relating to banks and banking, and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 7].

Social Security

Mr. Secretary Ennals, supported by Mr. Secretary Millan, Mr. Secretary Morris, Mr. Secretary Booth, Mr. Stanley Orme, Mr. Attorney-General, Mr. Charles Morris, Mr. Alfred Morris, and Mr. Eric Deakins, presented a Bill to amend the law relating to social security: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 8].

Statutory Instruments, &C

Ordered,

That the Distribution of Footwear (Prices) Order 1978 (S.I., 1978, No. 1307) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]

Orders Of The Day

Debate On The Address

[SEVENTH DAY]

Order read for resuming adjourned debate on Question [1 st November].

That an humble Address be presented to Her Majesty, as follows:—

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Cledwyn Hughey.]

Question again proposed.

Economic Affairs

I have selected the amendment in the name of the right hon. Lady the Leader of the Opposition.

4.25 p.m.

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

But humbly regret that the policies set out in the Gracious Speech are totally inadequate to deal with the serious economic problems of the country, and that Your Majesty's Government have denied the British people the opportunity to elect a new administration capable of creating a lasting prosperity in which all can share.

When this amendment was drafted, my right hon. Friends and I referred to

"the serious economic problems of the country",

but we did not know, of course, of the new dimension that was to be added to those problems by the announcement made today that the minimum lending rate has been raised to 12½ per cent. We look forward to hearing what the Chancellor of the Exchequer has to say about that important matter.

The House has not had the privilege of hearing from the Chancellor for quite some time. Some other audiences have had that privilege. In the Mansion House on 19th October, he told that distinguished audience of

"The sustained improvement…in our economic performance"

which, he said had arisen because he had

"created the fiscal and monetary conditions for faster growth in the real economy."

At the Labour Party conference, which some Labour Members may have had the privilege of attending, the Chancellor was not even as modest as that. In his speech from the floor to the conference, he spoke as follows—and the House may be a little surprised by this:

"The fact is that whoever wins the next election is going to inherit the best balanced economy, the best economic prospects, of any country since the war."

To both audiences he unloaded masses of statistics to justify those extravagant claims. It is no wonder that he added, in his speech at the Mansion House, a sentence that sits in his mouth better than in most others:

"One must never take statistics entirely at their face value".

The Chancellor should know better than most other people about that.

The House will look forward to hearing how those triumphant claims at the conference and the Mansion House are to be reconciled with the fact that today we hear that minimum lending rate has been raised to a higher level than at any time in this Parliament except for the three months following the Chancellor's triumphant appearance at the Labour Party conference in 1976, when he decided to go there instead of to the International Monetary Fund.

How are the economic prospects of the construction industry to be improved by a minimum lending rate at this level? How are the prospects of industrial investment on Merseyside, in Wales, in Scotland or anywhere else to be improved by it? How are the prospects for employment on Merseyside, in Wales, Scotland, Wales or Northern Ireland to he improved by a minimum lending rate at this level?

The truth is that the consumer pseudo-boom that the Chancellor so carefully designed for the election that never was has now been killed stone dead. The Prime Minister decided in September that he would not take advantage of the boat that had been designed for him by the Chancellor. He decided to miss it because he did not trust it. How right the Prime Minister was. The boat will not come in again.

The reality of the boom was always transparently clear and transparently "phoney". The Chancellor is fond of quoting sometimes from Mr. Samuel Brittan, the well-known contributor to the Financial Times. On occasions they compliment each other.

On 23rd September Mr. Sam Brittan wrote about the subject "Why the Economy is Booming". He described the dramatic apparent growth in the economic statistics at that time. He included this comment:

"even Mr. Healey thought my growth estimates exaggerated.…The optimistic features I have been discussing relate entirely to short-term variations of a business cycle stop-go kind. Any politician who cites them should be immediately reminded that underlying performance continues to deteriorate. Despite the present boom total output this year is unlikely to be more than 4 per cent. above the previous peak of 1973 even on the new re-based index. Without North Sea oil the rise would have been 2 per cent.—or less than½per cent. per annum."

That is the reality on which the Chancellor has been seeking to present this picture of euphoria and boom.

If one looks at the record of this Government over the whole of their period in office, one sees that the figures are as dismal as they possibly can be. If one looks at the trade weighted value of the pound, it is almost as low as at any time—it has lost a quarter of its value. A couple of years ago, the Chancellor was looking forward to the balance of payments being in credit to the tune of 2 billion or £3 billion. That was what he told the International Monetary Fund in 1976. He will be lucky if the balance of payments shows any surplus at all in the current year.

Production and living standards have barely crept back to the level of the three-day-week and are far behind those achieved in every other Western country without North Sea oil. Ten years ago, steel imports were 2 million tons a year. Today, with massive unemployment throughout the British steel industry, imports are 4 million tons a year. Five years ago, one-quarter of the cars supplied to this country came from abroad. Now 50 per cent. of our cars are supplied from abroad. Last year, manufactured goods made up three-fifths of our total imports. In every sense, the boom has indeed collapsed—the boom that never was. There are even more visible signs than this.

The Government—the House may scarcely remember it now—were elected on a programme of tranquility, prosperity, social peace and harmony, which was then described to the electorate as the social contract. Yet today we live in a society in which Parliament is to be required to discuss Bills which are not even available to the public who are to be affected by them. We live in a society in which prisoners are being denied the right to be brought to trial; where the Government are introducing legislation to set aside the right of habeas corpus; where patients or seriously ill people are being denied the right to treatment.

Is that the kind of society that the social contract was meant to introduce—a society in which standards in every sense, let alone standards of living and standards of wealth, have been allowed to collapse with scarcely a voice of protest at any of those things being raised by the members of the Government who are responsible for this state of affairs?

The acid test of the prosperity of this magnificent society over which the Government preside can be seen in the subject we shall be debating fully in a week or two's time—the attitude of the Government to the European monetary system. Only a moment or so ago the Prime Minister was saying "We know where we are going." Is it not time that he told us where they are going on that point?

However, the reality for the Government is that there is only one question to be decided about the response to that system. Because of the weakness of the economy over which they have presided, the only question is whether the economy will suffer more through that weakness by being left outside than it will suffer through that weakness by joining the system. Why else should they be so anxious to deny the House and the country the facts that we ought to have to decide this question?

The reality of our problems still remains very serious. Inflation and production, of course, have to be taken together. Inflation, of course, is of fundamental importance, but it is one half of the problems that face us. When one considers inflation, as the Prime Minister has invited us to do, one has to look both at the implications of monetary policy and at the attitudes that this House or society ought to have towards pay and pay bargaining. Monetary policy is essential. It is essential, too, that it should be properly understood. Its necessary effect, if it is to work properly, on expectations and on the habits and behaviour of people in the community should be properly explained.

One of the issues that worries the Opposition most about the presentation by the Government is why they spend half their time not explaining their monetary policy and the effect that it is intended to have but misrepresenting it as though it were some form of vulgar abuse by suggesting that monetary policy is likely to do huge damage and is something to be touched only with the utmost care. Of course, if monetary policy was the only aspect of the economic policy that we need, and if it was to be applied in a sudden shock halt, the consequences would be intolerable. But no one is suggesting that it should be used in that way.

The Chancellor understands perfectly well—this is what we have been arguing for a long time—that monetary growth should be reduced gradually, steadily and inexorably so that it takes effect in the way that it should. Why do the Government misrepresent it? Why does the Prime Minister tend so often to brandish it as a kind of alternative punishment—if people do not behave, then we shall have to use this dreadful weapon? Although it may not be much understood by their colleagues, it is their policy, and it seems to me to be extremely foolish to destroy the effectiveness and credibility of it in that way.

It is equally essential for the policy to be properly applied. The Chancellor will remember what he said on 14th June on this matter. He quoted from the Financial Times:

"the market expects that the first of what is usually a long series of cuts in the lending rate can be expected in a matter of days or, at most, a few weeks".

The Chancellor added:

"I believe that to be true."—[Official Report, 14th June 1978; Vol. 951, c. 1030–31.]

At that time the lending rate was 10 per cent. We waited month after month for the Chancellor's forecast to be fulfilled like the weeks that were meant to follow the imposition of sanctions in Rhodesia. The reduction in the MLR never happened. Today it is up to 12½ per cent.

We look forward to hearing—as we have already heard from the Prime Minister—some of the excuses that will be offered for this change of affairs. United States interest rates have gone up. But by how much? By 1 per cent. to 9½ per cent. How does that justify an escalation in this country by 2½ per cent. to 12½ per cent.?

No doubt it will be said that the Government have been blown off course—a familiar excuse—by the bakers' strike, by the Ford strike, by the Vauxhall strike. There is only one reason—which the Chancellor ought to acknowledge—for the increase in minimum lending rate. It is that this Government, throughout their existence, have continued to spend and to borrow too much and to drive interest rates up in order to raise that money.

It is characteristic, of course, that the Chancellor has tried to take credit even for that as well, because, at the same time as he was telling the Labour Party conference about the success he had had in controlling the economy he also said—with that personal modesty we know so well—that he had put £3 billion into the economy this year, and that we should think what that would do for us.

The right hon. Gentleman may have put it in. He may have "increased" the resources of the economy in that way, but now other people, through higher interest rates, higher mortgage rates and the loss of jobs, will have to pay for the very thing that the Chancellor was boasting about at the Labour Party conference.

The Opposition want to know whether there will be other consequences and what else the Chancellor might be offering by way of fiscal or monetary penalty for the consequences of his own earlier incompetence. Will another, fuller package of that kind be announced today? If not today, will it be announced on a future occasion? When is the interest rate likely to move again?

Will the Chancellor offer any predictions this time? He told his hon. Friends in June that the rate was likely to come down within weeks from 10 per cent., and, not for the first time, they have seen it going up to 12½ per cent. How many more times will he promise his hon. Friends one thing and proceed to do exactly the opposite and continue to expect his hon. Friends to support him? How many more times will the Labour Party go on obliging the Chancellor in this way?

There was a time when the Chancellor made some rather unfriendly observations about some of his hon. Friends and said that he thought some of them were out of their "tiny Chinese minds". They might be asking themselves now, "Who is out of whose Chinese mind?" It seems to us that the Chancellor is the man who, more than most patients who consult the psychiatrist, seems increasingly to lack a true insight into his condition.

Pay is the other half of what we have to consider on inflation, and it is much too simple to argue that pay increasing faster than production is, over a long period of time, the cause of inflation. In a healthy economy, there must be a close relationship between the rate of growth of money supply and the average general total level of earnings. If one moves out of line with the other, unemployment will rise as workers price themselves out of their jobs. Or profits will fall and investment will be destroyed as companies are cleaned out of their resources. Or the public sector pay bill will expand beyond the capacity of the ratepayer and taxpayer to finance it and become destructively high. If all that happens, the political pressures on the money supply can threaten to overwhelm the political will that is seeking to control it.

It is essential that the monetary imperatives should be understood, all the more so when the Government are seeking to reduce the rate of monetary expansion. It is essential that that understanding should be reflected in a declining average rate of growth in earnings. Therefore, in that sense, we need a policy for pay. But in what sense and in what kind?

Does that conclusion—which I think nobody would challenge, as I hope it is common ground on both sides of the House—imply that a Government must intervene and fix, apart from their own employees, particular pay settlements at particular levels? Does it imply that Governments should be intervening even more fundamentally to fix the level of every settlement at the same figure as is happening today? The most sensible conclusion comes from a description of the West German economy—which the Chancellor is fond of admiring—a description given by the Federal Government:

"wage freezes or the fixing or limiting of wage increases are not included amongst the instruments employed in evolving the State's economic policy."

That is what can be done.

In our collective past, there is scarcely a Member of this House who has not argued for exactly the same conclusion. In the manifestos on which the Labour Party was elected in 1974 and on which we were elected in 1970, we all argued for the conclusion that there should not be intervention by Government in that kind of pay bargaining, and no one, I may say, more eloquently than the present Leader of the House. I give one representative but all-embracing quotation from him:

"I am bitterly opposed to the idea that you can settle wages by some high and mighty authority from London, be it Downing Street, the Pay Board or anything else."

How the high and mighty is fallen now that he is one of the authorities.

The Chancellor, indeed, has understood this lesson too, because in July 1977, when he announced what was then known as stage 3, his announcement was welcomed by everyone in the House, from the right hon. Member for Down, South (Mr. Powell) to his hon. Friend the Member for Liverpool, Walton (Mr. Heffer), and the Chancellor said that we now had to set about the business of an orderly return to normal collective bargaining. Surely there is no real doubt that that is the objective which we would like to arrive at, as we know that the pattern of intervention, whether blanket, rigid or selective, has all the effects we have all experienced several times.

Differentials are increasingly destroyed. Businesses that are short of skilled workers are unable to recruit them because they cannot pay them. A target is set up for militants to attack and, more fundamentally, employers up and down the country are conniving with their work people in signing contracts with the Government saying "We have complied with this policy" when they have done no such thing in arriving at agreements which they know are outside the policy. So where are we going now, and where do the Government think they are?

The Prime Minister was in full flood last week saying that 5 per cent. was the figure that had to be applied across the country, banging away at the Dispatch Box. This afternoon he was back here again saying "We are back in a world of free collective bargaining".

What is the present position? The White Paper made it clear that the settlement for any group of workers should not exceed 5 per cent. and that the Government would exercise their discretion to see whether that was happening. Will they or will they not? When, and at what figure, will they seek to exercise that discretion? What exceptions will they make, if any? What authority will they seek to exercise? Will Ford be the subject of this nameless series of sanctions, or British Oxygen or British Leyland or the bakers—and when? Is this policy to linger for ever somewhere between the Prime Minister's hand on the Dispatch Box being brandished but never used? How are people conducting collective bargaining up and down the country to know where they stand?

Is this the way in which we are to expect our society to be conducted for ever and a day? Of course, Governments should be prepared to consider the use of every weapon, but what if the weapon, as successive Governments have seen, turns out, as I suspect the Prime Minister is finding, not to work but sometimes to recoil and do more damage to the person wielding the weapon than to those against whom the discharge is directed? Is it not wise to agree, and have we not all at different stages reached this conclusion, that we ought to try to discard that weapon and discard it—because it is a very difficult task—with the utmost care? Was that not the task on which the Government embarked in July last year—namely, to return to normal collective bargaining? Is not the real tragedy the fact that the Government, having set their hand to that course in July 1977, have abdicated the responsibility and, under the guise of great strength, are now brandishing a norm up and down the country, although believing that it will not work?

The way in which this task is carried out will not be easy to follow. It should not be presented, as the Prime Minister seeks to present it, as a return to free collective bargaining, but as a difficult but necessary return to what I still insist on describing as realistic and responsible collective bargaining. The two words are important. In one sense the bargainers must be responsible for the consequences to themselves. But if bargaining is irresponsible it has savage consequences on innocent people well outside those who are party to the negotiations.

The search for responsibility implies a role for the Government. If the Government are applying the monetary policy, they must seek to inform and influence those who are to respond to that. They must consider what institutions to use, whether the NEDC or those which have worked in Germany. But they must seek not to dictate but to guide those who are following this painful path back to collective bargaining. They should not be brandishing a norm; they should be brandishing guidance and the idea of an average figure. [HON. MEMBERS: "Oh."] The Prime Minister is right to recognise the dangers in mentioning a single figure, whether it is an average or anything else. The pity is that the Prime Minister himself did not do more to minimise the damage that would follow from that.

How can one expect people to bargain responsibly and to understand the difficulties they are facing in a nation whose wealth is not growing if the Prime Minister and the Chancellor stalk up and down the country all the time talking about the "golden decade" that lies ahead, with the Chancellor at the Labour Party conference borrowing a phrase from Chairman Mao and referring to the "great leap forward" on which this nation was about to embark? Instead of presenting a single figure, it is the Government's duty to promote a discussion of the realities. They have been more concerned, unhappily, to build a short-life platform for the election that never was than to give true guidance to the people of this country.

Much more must be done if we are to get back to good sense and a sense of responsibility and to have a chance of making collective bargaining work sensibly. One thing we do not need is a return to a tighter form of price control. It is odd that the tighter price control has been, the faster prices have actually risen. If we were now to return to price control in a tightened form, it would do great damage to the job prospects of the people of this country.

Let me put to the House some ways in which we could seek to increase responsibility. I take three examples with which the House will be familiar—the disputes taking place at Ford, at Vauxhall and in the baking industry. In two out of three of those cases, the strike commenced weeks before the expiry of the agreement being renegotiated. How is that compatible with responsibility? Why was not a single voice, so far as I am aware, raised from within the trade unions or from the Government to ask "Why are you infringing agreements weeks before they run out?" In each one of those three cases the strike decision was taken not by ballot, however conducted, but at mass meetings. At those meetings the case for responsibility was scarcely even given a hearing. At some of those meetings, as we have seen on television and reported in the press, those who tried to argue the case for responsibility, either by claiming a ballot or by seeking to go to work, faced threats and intimidation of various kinds. Even now they are being faced with the threat of the loss of their jobs.

The right hon. and learned Gentleman was not there.

I did not need to be there. One may look at what is in today's newspapers, attributed to Mr. Samuel Maddox, general secretary of the Bakers' Union. We know that there are people in that industry who have not been entitled to have a secret ballot and who are seeking to go back to work. Mr. Maddox says:

"Any member who works will be dealt with after the strike. They will have their cards taken off them, there is no doubt about that."

Yet all that people have done—and again I quote—is to say:

"We asked the union to put the strike issue to a ballot but they didn't think it necessary. Perhaps our return to work will make them realise that it would have been a more democratic way to handle matters."

What kind of a contribution is that to the running of a responsible, collective bargaining system? Yet, from the other side, in the union movement and outside it and in the Labour Government, none of the people who have preached to us over the years about the fundamental democratic nature of the trade union movement has raised a voice in favour of the democratic issue of a ballot in such a situation.

Is the right hon. and learned Gentleman not aware that each union has its own particular rules, that some unions have ballots and some give their national executives the power to take actions? Is he not aware that quite often in the old days, when national executives took powers not to take strike action, they were regarded as being absolutely moderate, first-class, responsible people when the membership was clamouring that there should be a ballot because they actually wanted a strike? The right hon. and learned Gentleman really ought to know a bit more about trade union organisation before making statements of that kind.

I do not need the hon. Gentleman to remind me—I know that he knows and cares a great deal about this matter—that trade unions have different rules regulating these matters. I do not, nor does anybody else in this House, need to be told that we cannot predict the outcome of ballots of this kind, but we say that it is very odd that the situation should continue to be accepted, without comment from Labour Members, that men who wish to have ballots in situations of this sort do not even have the right to require such ballots.

What would the right hon. and learned Gentleman do about it?

I am not suggesting—it is important that the House should understand this—that the House should begin to legislate by law about this issue. It is also true—the Government ought to learn this—that the House ought not to begin legislating about employee consultation in company law. In neither area should legislation be embarked upon without discussion and consultation, so at this stage I am not proposing change by law.

But I say to the Government, who seek to take their stand on democracy, on participation and on the right of people to be consulted about the conditions affecting their lives, that they ought not—as the Prime Minister was last week—to be waiting submissively for the trade union movement to make a request for legslation but should be leading a great national debate, as the Prime Minister has attempted on other issues, about why there should or should not be ballots on these matters.

After all, the Prime Minister said that he was reluctant to discuss these matters with the trade union movement for fear of causing offence. He has not been reluctant to lay down for the entire trade union movement a single pay norm to exclude the unions altogether from pay bargaining. If he is prepared to do that, should he not address himself to this?

The irony is shown in a quotation from the Gracious Speech, which states:

"Government are resolved to strengthen our democracy by providing new opportunities for citizens to take part in the decisions that affect their lives."

Who could believe that? What decisions more affect the life of a citizen than the decision to break a contract, to go out on strike, to forgo his wages of £80 a week for the sake of a gain of £200 when it will perhaps take him years to recover his lost earnings?

Is it not time for us to hear from trade union leaders and Labour Members why people in the trade union movement should not be given opportunities, whether the rules do or do not so provide, for taking part in a secret ballot, fairly conducted? Would that not be a better method, a method worth trying, of promoting the responsibility that the Prime Minister and the Chancellor rightly say we need and that, for heaven's sake, we do need if we are to get this country back to a pattern of responsible collective bargaining?

I suspect that many Labour Members agree with what I am saying. Some of them voiced those feelings in the debates on "In Place of Strife" early in 1969. Why do they not say so? Why is there almost a conspiracy of silence on such issues? Is this not just one example of the malign influence over our economy and many aspects of our society of the Left, an example of the extent to which the mythology of the Left has in many respects become entrenched as the road block to the economic progress which everyone in the House wants? It is a road block maintained by a craven alliance—I use the word deliberately—between the Parliamentary Labour Party, many of whose Members understand the realities which I am talking about, and the economically blind but sometimes obstructive minority which wields such disproportionate influence in the Labour movement.

I am not against trade unions. I say without any fear of contradiction that the Opposition would fight a great deal more effectively for a free trade union movement than, for example, Mr. Alex Kitson, who has such an adoration for the system on the other side of the Iron Curtain.

These myths, which the Prime Minister and the Chancellor know just as well as I do, must be challenged: the myths that resources are somehow limitless; that someone else can always be coerced into paying; that industrial action, for whatever cause, is presumed to be right; that it is better to share today's work than to create tomorrow's jobs; that it is better to defend yesterday's jobs than to take part in helping to create the jobs of tomorrow.

The right hon. and learned Gentleman is out of his depth when speaking of ballots. He must have a very short memory, because night after night the House debated the issues involved in ballots during industrial disputes. Apart from the coal mining industry, where there is a single product and it is therefore possible to have a coalfield ballot prior to strike action, in all other industries, where negotiations are about a multiplicity of products, it is not possible to bargain by ballot. The employers themselves are, therefore, the first opponents of balloting because they fear—

Order. If the hon. Gentleman intends to make a speech, perhaps he will take a suitable opportunity of seeking to catch the eye of the Chair.

My point is, Mr. Deputy Speaker, that the employers themselves fear the idea of balloting because the return to work must also be decided by ballot, in the same way as the ballot is used to decide disputes—

Order. An intervention must be reasonably brief.

I am delighted to have at last drawn the hon. Gentleman, with his distinguished experience of the trade union movement, into discussing the merits of this matter. If the House and the country are to get back to sanity on this sort of issue, let us at least regard the subject as no longer holy ground not to be discussed but to be resolved by slogans.

The introduction of balloting must be looked at within the rules of each union and within the work situation. Of course, there will be disadvantages as well as advantages. But let us recognise that there are now many responsible people in this country who feel that they are denied rights to participate in decisions that affect them because they do not have the opportunity of balloting. That opportunity is being denied by threats of depriving them of their jobs through the closed shop. That is what we must get away from.

This is all part of the mythology to which we have been shackled by this link within the Labour Party. The great majority of people know that many of the myths are nonsense. The great majority of Labour voters know that many of the myths are nonsense. Yet the Labour Party—this is the saddest and most serious matter for the country at present— has all too often allowed itself to become a means of imposing these views of the madcap Left upon our economy and society as a whole. It is still doing so today.

As a result, there is no trade union movement in the West that has a greater political influence than the trade union movement in this country. There is no trade union movement in the West that is more militant and more firmly entrenched at the seats of power, and yet no trade union movement in the West whose members have done less well in improving living standards in the last 15 years.

We therefore have a society which is in many senses immobilised when it ought not to be. We have a mountain of institutional savings, far too much of it being consumed by Government for subsidising the present and shoring up the past. We have a tax system almost uniquely designed to be hostile to the people upon whom the enterprise of our society depends. We have a marginal rate that is still almost 5p higher than it was when the present Government came to office, and a tax threshold that has fallen from 50 per cent. of average earnings to one third of average earnings since the present Government came to office. It is a tax system that is still taking £2,500 million more in income tax out of the pockets of ordinary wage earners than it was when the present Government came to office.

As a result, we have a steady emigration of talent from the shores of this country. We have lost 5 per cent. of our population in the last decade, and almost certainly the people we can ill afford to lose. As a consequence, we have a larger and less usefully employed pool of labour at lower wages than that in any other Western economy.

What else have the Government done to change that? Since they have been in office, we have had the development land tax, the Community Land Act and a mountain of legislation in that field. Net return: a cost of £28 million, a revenue of £13 million, and proceeds of land for sale for redevelopment of about 150 acres—about one-third of one Wimpey housing estate, at the cost of huge obstructions to enterprise.

The oil industry is a blessing which we could ill afford to do without, and the Government's attitude to the North Sea oil industry ever since it has existed has been one of hostility, of regulation and of taxation.

Finally, we have the ultimate lunacy that this great responsible Labour Party conference that met in Blackpool last October voted with no dissentient for nationalising the production of North Sea oil. Why should we wonder if the oil companies of the world are taking fright at the prospect of another Labour Government in charge of this country?

Then there is the nationalisation of almost everything else that the Government can think of. What has it done for the steel industry? What has it done for British Leyland, or even for the shipbuilding industry? The Lord President would be interested to read a newspaper to which he is normally well disposed and which is not normally very critical of him—The Guardian—describing what has happened at Austin and Pickersgill since it has been nationalised. The Guardian article says:

"A profitable and highly efficient yard employing some 3,000 men churning out bestselling standardised cargo ships..has degenerated…into a demoralised mess in the 46 weeks since nationalisation. Productivity has slumped by 26 per cent., delivery dates are being missed, and commercial good will is being eroded…Workers…are less happy and less productive than they were a year ago. In no sense has Austin and Pickersgill become 'their' company."

That is the kind of policy which the present Governement wish to go on imposing upon the people of Britain.

What else of that kind is in this Queen's Speech? The most outstanding example is the proposal to subsidise a shorter working week. The present Government were elected to office on the denunciation of the three-day working week. They are now positively planning to reduce us to a four-day working week, and paying for it. It might be legitimate in economies such as those of Germany and Japan, where it is a short-term measure for the retention of skilled labour, but in this country that kind of approach panders to all that is worst in our attitudes—less work for the same pay, more men for less output, and higher costs on the future to sustain the past. There is £500 million a year to go in that direction to save the past. Think how much better we could do if that kind of resources was being voted in tax relief and encouragement for the jobs, industries and firms of the future.

The reality is that the present Government, in every sense, have reached the end of the road. They are following a clutch of policies which make no kind of sense even to them. One policy that they are offering is the policy of monetarism. At least the Chancellor and the Prime Minister claim to understand that. None of their colleagues supports it. Their colleagues would denounce it at the first opportunity. In some ways it is not sur- prising, for the Chancellor is conducting his monetary policy almost as though he was intending to give monetarism a bad name.

The second policy is one in which neither the Chancellor nor any of his colleagues believes, but it is one to which they are committed. It is a policy of universal wage control. In the end, they have neither the skill nor the courage to undertake the difficult task of getting away from it.

The third policy in which they believe with great enthusiasm is a multiplication of the regulations applied to our society and an increase in the burden of tax applied to our society, to such an extent that the enterprise and talent of our people are almost near to being destroyed.

Those policies were rejected by an insultingly large majority at the Labour Party conference. The Chancellor received his come-uppance there, and rightly so. They surely deserve to be condemned out of hand by this House tonight.

Did the right hon. and learned Gentleman move an amendment?

indicated assent.

5.5 p.m.

I do not think that any of us was surprised that the right hon. and learned Member for Surrey, East (Sir G. Howe) did not have the nerve to move his amendment, after a speech such as that.

I propose to deal with the two elements in the amendment. The first part criticises the Government on economic policy and says nothing whatever about what the Opposition would do in its place. The second part makes some criticism of the fact that there was not a General Election last month.

When I addressed the House in the debate on the Gracious Speech a year ago, I was able to report a dramatic transformation in Britain's financial position. Inflation was beginning to fall. The pound was strong and rising steadily. The balance of payments was moving into surplus. This year I am able to report an improvement in the real economy which I then predicted was bound to follow the improvement in our financial situation.

I was a little surprised at the mournful bleating of the right hon. and learned Gentleman about the economy, because it makes such an extremely interesting comparison with what is being said by his friends in industry and his friends in the newspapers. The economics correspondent of The Daily Telegraph had to admit the other day:

"Fleet Street Jeremiahs like myself are finding it remarkably difficult to find any horror stories to write about the economy at present."

He was followed by a leading article in the Financial Times which said:

"Each successive economic indicator makes it clearer that in real terms the United Kingdom economy is performing better than for a long time past."

On Monday of this week, the Financial Times monthly survey of business opinion showed that the recovery was spreading to more sectors of industry every month and that the improvement in business confidence was being sustained. Last week's survey by the CBI told the same story. It is a very different picture from the partisan twaddle we had from the right hon. and learned Gentleman.

The record is encouraging. We have maintained the financial gains that we made last year. The pound remains firm. We are paying our way in the world. We have now repaid $2 billion worth of debt to the IMF ahead of time. Inflation has been reduced dramatically to under 8 per cent.—half what it was a year ago and lower than the inflation rate in the United States or in France. Because of this and the substantial cuts in income tax during the year, the real living standard of the average family in Britain has improved by 7 per cent.—one of the fastest increases in a single year since the war.

And we have seen the improvement in the real economy which I predicted a year ago. Unemployment has fallen by 90,000 in the last 12 months. Output has been rising this year at a rate well over 3 per cent. a year. Incidentally, the right hon. and learned Gentleman was quite wrong in saying that the output this year is only 4 per cent. above what it was in 1973. In fact, last year it was already 1 per cent. above that level. In the second quarter of this year it was 4 per cent. above that of last year, and it is still rising fast.

According to the European Commission, growth in this country will be higher this year than in any other country in the Community except Ireland. As was to be hoped at this stage of the recovery, productivity has been growing fast and so has manufacturing investment. Private manufacturing investment rose in volume by about 13 per cent. last year, and looks like rising about as fast this year, too. That is twice as fast as in Germany, which the right hon. and learned Gentleman is always quoting to us as an example. Moreover, the CBI is expecting a further increase in private manufacturing investment next year as well. It is essential that that should continue if our recovery is to be sustained.

The reason that we have been able to achieve these substantial improvements in the real economy at the same time as we have cut inflation by half is, as the Prime Minister told the House last week, that we have combined the right fiscal and monetary policies with an effective policy for pay.

Our fiscal policy has been firm and responsible. We have maintained cash limits for most programmes in the public sector and have kept tight control of the contigency reserve so that public spending is within the plans in last January's White Paper. The increase in public spending on our priority social programmes during the present year is bringing real benefits for ordinary families and enabling us to make a start on dealing with some of the problems in our social services, especially the Health Service.

Next week the increase in the old-age pension will bring the pension for a married couple up to £31·20. It will be followed on 4th December by a £10 Christmas bonus for over 10 million retirement pensioners, widows and the chronically sick and disabled. The child benefit is being raised to £3 next week, and a further increase will bring it to £4 for every child next April. The annual White Paper on public expenditure will show how we intend to distribute the increase of 2 per cent. in public expenditure programmes next year.

Is the recovery so great and has production increased so much when the Government have to tell us this afternoon that they are subsidising small companies to get them to take on one extra person?

I do not know whether the hon. Gentleman is in favour of my right hon. Friend's proposal. However, every Government in Europe is now giving that type of assistance, although very few of them are offering it on such a generous scale. I am proud that we are doing so.

Our monetary policy has been equally successful. In our four and a half years of office the rate of growth of sterling M3 has averaged 9½ per cent. a year. That is only a third as high as in the last two years when the Conservative Party was in power.

We had very little from the right hon. and learned Gentleman about the profligate increase in the money supply when he and the right hon. Lady the Leader of the Opposition, as she is now, were members of the Conservative Government. At that time the right hon. and learned Gentleman was busy introducing legal curbs on the trade unions. He told us this afternoon that he has learned his lesson and that he has not the slightest intention of introducing curbs again if ever, God forbid, he has the opportunity to do so. Domestic credit expansion has been kept well within the limits which I set in my letter of intent to the IMF.

In the first two years that we had some form of target for sterling M3, we undershot in the first year—8 per cent. compared with 12 per cent.—and overshot in the second—16 per cent. compared with a target range of 9 per cent. to 13 per cent. As I have emphasised several times, it is the underlying rate of growth over a period that matters rather than the absolute level on a particular day, or the figure for a particular month or two. For example, the German M3 has been increasing at an annual rate of 16 per cent. for the past three months. That is almost as profligate as the increase in the money supply under the previous Conservative Government. I have no doubt that the German M3 will soon return to a more normal situation just as ours has, as I shall show in a moment.

One of the reasons for my deciding at Budget time to switch to a system of annual targets rolled forward every six months was to be able to take account of the fluctuations that we inevitably get over a period of months in the underlying rate of money supply. At Budget time I said that 8 per cent. to 12 per cent. was the target range for the growth of sterling M3 in the 12 months ending with banking April 1979.

Full figures for banking October will not be available until next week, but it is already clear from the preliminary figures, including those published on Tuesday, that the rate of growth of sterling M3 in the first six months was below the bottom end of the target range —probably nearer to 7 per cent. than 8 per cent. This lower rate of growth in the past six months has offset the higher growth in the last months of the preceding banking year.

I have now decided that the target range for the 12 months to the end of banking October 1979 should also be 8 per cent. to 12 per cent. Although the numbers are the same, this represents a slight tightening compared with the existing range because the starting level is below the range then envisaged.

As the House knows, the Bank of England, with my approval, announced today an increase in minimum lending rate to 12½ per cent. A significant part of the increase merely validates the recent increase in short-term market interest rates in the face of uncertainties about the foreign exchange markets and United States interest rates and about pay settlements in Britain. Given those uncertainties, the Government thought it right and prudent to err on the side of caution by establishing a level of short-term interest rates somewhat higher than at present. I expect short-term market rates to rise on average by about three-quarters of a per cent., some more and some less. These decisions were necessary and they will allow for the essential financing needs of the economy and help to keep inflation at its present level.

There were many questions earlier this afternoon about the likely effect on employment of the increase in interest rates. In the past, hon. Members on both sides of the House and many economists have grossly exaggerated the effect of changes in interest rates on the real economy. It is worth noting that, although we have had a steady creep-up in interest rates over the whole of the past 12 months, we have also seen a steady increase in growth, an exceptionally high increase in investment and a fall of 90,000 in the number unemployed.

Surely it follows that tomorrow the building societies will take a decision to increase—we do not know by how much—mortgage rates. If that is so, that will have an enormous impact on millions of our people within weeks. When the Government are talking—rightly, in my view—of restraint on the wages front, it must be accepted that for many people one of the most important budgets, and one of the hardest to balance, is the repayment of loans, which will be subject to dramatic change.

If that were the position, I should regret it, as my right hon. Friend knows. However, a number of the leading representatives of the building societies have been saying for some weeks that they believe an increase in their rates is justified. The only question is how much and when.

If the Government were to follow the precedent set by the Conservative Government, fail to take timely action when necessary and lose control of the money supply, the sufferings of the whole of the British people, whether mortgages or not, would be infinitely more serious than suffering brought about by increases in mortgage rates that may at some stage, either tomorrow or perhaps in two months' time, be decided by the building societies.

Does the Chancellor recognise that there is no point in his trying to preach that message by references to the Conservative Government? His own performance in allowing the money supply to go out of control in September 1976 gave us the best possible demonstration, when he had to jack up interest rates to 15 per cent. Will he not use his own incompetence as the lesson for the future? Will he recognise that the underlying reason why he has to increase interest rates to this extent and in this way is that he is insisting on spending and borrowing too much?

The right hon. and learned Gentleman is, as always when he attempts to animadvert on monetary policy, totally wrong and totally mistaken. The small increase in money supply that took place at the end of the last banking year, or in 1976, was the sort of fluctuation that occurs in all countries. For example, in Switzerland the money supply is running at three times the rate that the Government set themselves as a target. It is running at 16 per cent., although the inflation rate is scarcely 1 per cent. and the balance of payments is in balance.

The right hon. and learned Gentleman must accept, as everyone does, who has studied these matters, that fluctuations over a month, or a number of months, are quite normal. Those who pay excessive attention to them are giving monetarism a bad name.

It is in the light of our commitment to a firm fiscal and monetary policy that we are now discussing with our Community partners proposals to establish a zone of greater monetary stability in Europe. I gave evidence at length on the European monetary system to a Sub-Committee of the Select Committee on Public Expenditure last week. However, it may be convenient if I tell the House the main features of our approach.

The Government believe that the turbulence of international financial markets has been an important obstacle to growth throughout the world over the last few years, and particularly since the weakening of the dollar which began in the summer of 1977. That is why the Prime Minister included monetary stabilisation in his five-point plan for the Bonn summit.

We believe that the measures announced by President Carter last week will make an important contribution towards greater stability in the dollar exchange rate, and will thereby help to reduce the turbulence of currencies worldwide. But, as the Prime Minister said last week, we must use the time gained by President Carter's measures to produce a better system of monetary order worldwide, because the weakness of the international system is an important factor in the recent currency instability inside Europe.

It is the effect of weakness of the dollar on the external value of the deutschemark which has been mainly responsible for the divergence between exchange rates in the European Community in the last year or so. Sterling has remained relatively stable throughout the turbulent conditions of recent months. In terms of the effective rate for sterling, which is the measure of sterling's overall external value, the pound has for the most part moved within a relatively narrow range between 61·5 and 63. The dollar rate has fluctuated sharply, but we have been far less subject to pressure in this respect than the deutschemark.

The Chancellor of the Exchequer said that the Government believe that the turbulence caused by the instability of the dollar in the last year had been inimical to growth. Will he explain why we had absolutely no growth at all in this country until the dollar started to be turbulent, since when we have had 4 per cent. growth, on his own figure?

We have had 4 per cent. growth over the last year because of the excellent mix of policies of the present Government, which I have been describing to the House. I am extremely grateful to the hon. Gentleman for drawing my attention, and the attention of the House, to the achievement of the Government.

As I explained in my speech at the Mansion House, the recent stability of sterling has contributed to the success of our counter-inflation policy and has reflected it. We aim to maintain this stability in our exchange rate whether or not we join the European monetary system. That means that we must keep inflation under control. We have shown many times—and again in our decisions today—that we are prepared to use the whole range of economic policies for this purpose.

If we in the European Community are able to create a zone of greater monetary stability among ourselves, we can make an important contribution to the better international monetary order at which we aim.

But an essential condition of exchange rate stability inside the Community is compatibility in the economic performance of the members of the system. Therefore, a concerted strategy for economic convergence is the key to the success of a European monetary system. Earlier this year the Community carried out valuable studies on such a concerted strategy, and these studies formed a basis for commitments entered into at the Bonn summit. We believe that this concerted strategy for growth without inflation must be further developed in the coming years, and Britain intends to play her full part in formulating and carrying out such a strategy as the necessary foundation for a successful European monetary system.

It is also necessary, if such a system is to be durable, that the financial flows arising from the Community mechanisms should help towards this convergence in the economic performance of its members. At present, the net flows of resources brought about by the Community Budget and the common agricultural policy do not reflect the relative prosperity of the countries concerned. That is why the Heads of Government in Bremen agreed to study means of producing a less perverse flow of resources within the Community concurrent with discussions on the monetary aspects of the EMS.

It is against the need for concerted action to produce convergence in our economic performance, and for progress towards a more rational flow of resources within the Community that we approach the question of guidelines and techniques for intervention in a possible European monetary system. Intervention is worse than useless if the underlying economic conditions are not right, and it is fair to say that this was a view which was generally held by members of the Select Committee whom I addressed last Friday.

We start from the firm belief that a European monetary system must not have a built-in deflationary bias, and that for this reason the economic and financial obligations it entails must fall on the stronger countries no less than on the weaker ones otherwise a greater stability in exchange rates will be achieved only by compelling the weaker countries to adopt unnecessarily deflationary policies, so reducing growth in the Community and, indeed, in the world as a whole.

If the proposed arrangement is to be durable, it must be significantly different from the existing European joint float or snake. The present snake system performs a useful function for Germany and four of her smaller neighbours, one of which, Norway, is outside the Community. But it has proved incapable of containing the three larger Community countries—Britain, France and Italy. All of them were compelled to leave the snake, France on two occasions and Britain after seven weeks, under the previous Government. In most cases they left after heavy losses of reserves. It would not be in the interest of either currency stability or of the wider aims of the European Community to repeat that unhappy experience.

Another lesson of the snake is that the existing procedures through which realignments of parities within the system must take place tend to mean that realignments are preceded by heavy intervention, which produces a massive inflation of the money supply in the stronger countries and a damaging loss of reserves in the weaker countries. Dr. Emminger of the German Bundesbank has drawn particular attention to this problem, and rightly so.

We are at present discussing with our Community partners possible ways of avoiding these dangers. These discussions inevitably involve considerations of highly technical matters such as parity grids and ECU baskets. Discussions which affect exchange rates must be conducted in private if they are not to provide speculators with an instruction book on how to get rich quick at our expense.

I cannot conceal from the House that we have serious doubts about the wisdom and durability of the arrangements at present favoured by some of our European colleagues. I hope that we shall be able to resolve these problems in the coming weeks, and I look forward to debating the matter in the House before the summit meeting takes place on 4th December, but I think I should make two elements in our position absolutely clear now.

First, the reason that we oppose some of the technical proposals for intervention which have been made is that we believe they might break down in practice and produce greater turbulence rather than greater stability in the exchange markets. We do not, however, regard the intervention mechanism as the beginning and end of a European monetary system. If it were, the system would not survive for long, as I have explained. We believe that the concept of developing the ECU into a new reserve asset should be, as suggested at Bremen, the centre of the system, and that existing credit mechanisms in the Community should be further developed to support it. Moreover, we believe that recent experience has shown that far more attention should be given to relationships between the Community system and the wider international system if we are to achieve a zone of monetary stability in Europe.

The second point that I should like to make at this stage is that, because we regard the control of inflation as a precondition for higher growth and lower unemployment, we aim at stability in our external rate, in or out of an EMS. We do not regard depreciation as a soft option or as a cure for our economic and industrial problems.

Is my right hon. Friend aware that yesterday Lord Goronwy-Roberts, in another place, talked about a further Government statement on EMS and possibly a Green Paper? Can my right hon. Friend say whether the statement he has made is the statement which the Government had in mind, or will there be a Green Paper on this prior to the debate? Secondly, he refers to the decision of the summit on 4th December. Is it not the case that this meeting of Heads of Government is extra-treaty? Can we assume from that that, some decision having been come to, there will be a further meeting of Finance Ministers finally to agree the details? If that is the case, can my right hon. Friend say when that will be?

The Government propose to publish a Green Paper in good time for the debate. It is too early to be certain of what decisions, if any, will be reached on 4th December. Each Head of Government will attend that meeting with the constitutional powers which he holds as Head of Government. In our case, no decision could be taken which required legislation or which had important implications unless it were later put to the House for approval. Whether there would be further decisions required following any decision in December it is too early to say. It may be possible for me to throw more light on that when we debate this point before the summit meeting on 4th December. I hope that that answers my lion. Friend's questions.

Will the Green Paper contain a detailed evaluation of the areas of economic sovereignty which will be eroded if we join a scheme of this kind? Is my right hon. Friend aware that all that the press seems to talk about is bringing about a stability of exchange rates, without taking into account the fact that monetary policy, public expenditure and a whole range of other economic variables as well as economic sovereignty will be affected?

The Government and the House will have to make up their minds and come to a decision as to the extent to which their freedom to act in the economic sphere will be greater or less as a result of joining the system. The only point that I make at this stage is that no one should imagine that any British Government—indeed, these days, any Government in the world—have total freedom or total sovereignty in these matters. We are now members of an extremely complicated commercial, financial and trading system. This inevitably imposes all manner of limitations on our freedom of action which we are prepared to organise in discussion with foreign countries—as, for example, we are seeking to do now in the Tokyo round—to try to reach agreement on a freer world trading system. This Government, like every government, will have to make up their mind ultimately whether they gain or lose more, either in sovereignty or in other areas, as a result of joining whatever system emerges from the discussions. I know that the House will expect the Government to form their judgment on that basis, and I expect that the House will do so, too.

I come now to the question of pay on which the right hon. and learned Member for Surrey, East spent some part of his speech. Fiscal and monetary policy alone are not likely to control inflation or to lead to a fall in unemployment unless they are accompanied by moderation in pay settlements. That is why we regard pay policy as the essential third leg of the stool, to use the Prime Minister's analogy. It is no accident that Britain is almost the only country which in the past 12 months has achieved not only a dramatic fall in its inflation rate but a significant drop in unemployment. Most of our European partners have achieved a reduction in their inflation rates, but at the cost of some increase in unemployment. The United States has cut unemployment at the cost of an increase in inflation.

Pay policy is the factor which has enabled us to halve our inflation rate and cut unemployment at the same time. It is because there is a livelier perception of this fact developing all over the world that the Governments of the United States, Belgium, Holland, France and Italy are now considering, with their trade union movements, how they can develop effective policies for pay.

So far as I can see, the Opposition do not contest the truth of what I say, namely, that fiscal and monetary policy alone—although they may in the long run reduce inflation—cannot reduce unemployment. The Opposition accept that by relying on fiscal and monetary policies alone they would increase unemployment. The right hon. and learned Gentleman has admitted that the £5 billion worth of cuts he proposes in public expenditure are bound to lead to an increase in unemployment, at least in the short run.

The sort of monetary policies which the right hon. and learned Gentleman and his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) continually espouse would be certain to produce unemployment on a far greater scale than we see today. In reviewing the prospects for Britain to December 1979 the economic review published by James Capel and Company in August—I am happy to see the hon. Member for Horn-castle (Mr. Tapsell) in his seat—pointed out that if the monetarist policies of the Opposition were adopted

"in the second half of 1979 rising inflation together with an attempt to reduce simultaneously the increase in the money supply could produce a monetary squeeze which, combined with cuts in public expenditure, would lead to a recession. Sole reliance upon the control of the money supply, albeit with a consistent fiscal policy, could lead either to the abandonment of the monetary guidelines themselves or to an attempt to come to some accommodation with the trade unions over incomes policy."

I have quoted this forecast because it appears under the name of one of the Opposition's official spokesmen on economic policy, the hon. Member for Horn-castle, whose eloquence in attacking the policies of the majority of the leadership of his party was illustrated by another quotation by the Prime Minister last week.

Has the right hon. Gentleman so lost confidence in his own case that he now has to fall back on the scribblings of teenage City analysts?

The hon. Gentleman is being a little unkind to himself. If he does not like that quotation, let me read a quotation directly ascribed to him in the Official Report of 6th July 1976 when the hon. Member said:

"Those people who wish to rely solely on control of the money supply and do not wish to have an incomes policy are entitled to say that it could stop inflation. I do not doubt that if we pursued a sufficiently rigorous control of the money supply we would bring inflation virtually to a standstill, and that would be a very desirable result to achieve, but the price we should have to pay for that would be very high. The price in terms of the level of unemployment and the level of bankruptcies in industry, the City and agriculture would be an intolerable price."—[Official Report, 6th July 1976; Vol. 914, c. 1238.]

I do not regard that as an adolescent remark. I regard it as pregnant with economic wisdom. I am sorry that the hon. Gentleman should denigrate his intellect in the way that he sought to do a moment ago—even if he might curry favour with his right hon. Friend by doing so.

As the right hon. Gentleman may recollect, the Prime Minister has already done me the honour of quoting that remark of two years ago during the first day's debate on the Gracious Speech. The fact is, as my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) made clear in his speech today, that no one on the Tory Benches is advocating an immediate and abrupt cut in the money supply. If it is done gradually and steadily over a period of years, the dangers to which I was pointing then would not arise.

I apologise for embarrassing the hon. Gentleman. If he wants to remain a member of the Shadow Cabinet—which is a precarious role these days, I understand—he will have to watch his words as carefully as some of his hon. Friends have had to watch their votes. The hon. Gentleman is quite right. The Opposition's policies are a recipe for recession.

The Government's mix of fiscal, monetary and pay policies is best for Britain because it is the only way in which we can hope to reduce inflation and unemployment at the same time. That is why the Government felt it necessary to lay down a guideline for pay settlements in the White Paper last July. That is why the Government are determined to do everything in their power to see that the guideline is observed, We chose 5 per cent. as our guideline because, as the Prime Minister told the House last week, if the general level of settlements comes out at significantly more than 5 per cent., the level of inflation will not go down. Moreover, any excess will throw people out of work as well as raising prices. It is because the overwhelming majority of the British people now know that this is a fact that our pay policy has their overwhelming support. If anyone doubts that, let him ask the electors of Berwick and East Lothian.

Nobody knows better than I the disadvantages of laying down a single figure as a guideline for individual settlements even when, as is the case this year, we provide for flexibility through use of the kitty principle, through self-financing productivity deals, and so on.

So far as I can detect the latest policy of the right hon. and learned Gentleman—we discover him in a different posture every time the fog surrounding his opinions clears for a moment or so—this week he, like his right hon. Friend the Member for Lowestoft (Mr. Prior), believes that 5 per cent. is the average which the country can afford, but that it should not be treated as a guideline for individual settlements. The right hon. and learned Gentleman does not confirm that. The fog has descended once again. No doubt we shall see him sitting there like a wounded boar the next time it clears.

Will the right hon. Gentleman give way?

If I may finish with the right hon. and learned Gentleman, I shall be glad to defer to the hon. Gentleman.

I understand this approach which the right hon. and learned Member for Surrey, East has espoused—that 5 per cent. is right as an average, but not for individual settlements—because I hoped last year, with the rest of the Government, that we might be able to achieve the necessary responsibility in collective bargaining simply by making clear what increase in earnings the nation as a whole could afford. Indeed, as Opposition Members have often pointed out, I expressed this view in an exchange of letters with the right hon. Member for Lowestoft. But we learned from hard experience that any figure which is published—whether described as an average increase for earnings or wage rates or as a guideline for individual settlements—is likely to be treated by negotiators as a minimum which they must aim to achieve.

As this became clear during the early negotiations in the last pay round, we found ourselves compelled to treat 10 per cent. not. as we had hoped, as an average around which individual settlements should cluster—some higher, some lower—but as a maximum limit for all settlements. When we did so, we found it necessary to answer the questions which had been put to me in August by the right hon. Member for Lowestoft. In his letter to me on 7th August 1977, he had said that

"without early knowledge of the answers to these questions, bargainers will be thrown increasingly into confusion and so will the fight against inflation"

I readily admit that on that occasion he was right and I was wrong. But we have learned from our experience while he, having failed to convince his colleagues that he was right, has now moved to the position which he criticised me for adopting 15 months ago.

The question which the Government are now considering with the TUC is whether it will be possible to introduce more flexibility into the 5 per cent. limit without jeopardising our overriding objective, which is to keep inflation from rising once again. On this objective there is no difference whatever between the Government and the TUC.

Our discussions are still proceeding, and I will, of course, inform the House as soon as they are concluded. They have not been easy. The Government remain convinced that the policy they have adopted in the White Paper is the best means of keeping inflation under control.

The TUC, for its part, remains committed not only to the process of voluntary collective bargaining but to the belief that, properly conducted, such bargaining will result in settlements consistent with our agreed inflation objective. But our discussions have been marked by a continuing and, I think, growing determination on both sides to discover and define areas of agreement which are consistent both with this difference in our approaches and with our common determination to keep inflation down. That is why we trust that they will soon be crowned with success.

The Ford settlement is likely to be over the 16 per cent. plus which has already been offered by the Ford Motor Company. Will the Chancellor apply sanctions against Ford? If so, what will they be? If he does not apply sanctions, does it mean that the 5 per cent. has now become 16 per cent. plus? Will he tell us how this situation is conceivably compatible with the policy that he had two months ago?

I hesitate to apply to the hon. Gentleman the epithets that the hon. Member for Horncastle applied to himself. The hon. Gentleman knows perfectly well that no Government will take a decision on this matter before knowing what the final settlement is. When the settlement is reached, we shall announce our decision to the House, to the country and to the Ford Motor Company.

I turn finally to that part of the Opposition's amendment which concerns the deferment of the election. The amendment as a whole, as the newspapers pointed out, was skilfully drafted to conceal divisions in the Conservative Party and to tempt members of other parties to join the Conservative Party in the Lobby, although they detest everything that it stands for. It attacks the Government for not holding the election in October. I know that it means what it says on that. I suppose it did not very much like seeing all the money that it had spent on its advertising campaign pouring down the drain. But I wonder how sincere its regret is now in the light of the Berwick and East Lothian by-election and the latest Gallup poll.

The Conservative Opposition describe the purposes of an election in the amendment as being

"to elect a new administration capable of creating a lasting prospertity in which all can share."

I can only conclude that the meaning of that is a new Labour Government with an overall majority in the House. It cannot mean a Conservative Government, because the Opposition are committed to policies which would reduce prosperity and prevent it from being shared fairly.

I have already quoted official Conservative spokesmen as saying that their policies would increase unemployment and produce recession. The policies of the right hon. Member for Leeds, North-East and the right hon. Lady the Leader of the Opposition, with their attacks on the very concept of equality, the concept of entitlement to social security benefits, public expenditure cuts, which would include massive increase in council rents, cuts in the National Health Service, payment for hospital beds and enormous increases in school meal charges will not contribute towards equality and better sharing whatever prosperity the country is still allowed if the Conservative Party ever achieved power. These will be the admitted results—admitted by them—of those policies which they have allowed us to know something about.

The real problem is that there is an enormous area of total obscurity about the Conservative Opposition's policy on some of the major issues facing the nation. That area of obscurity conceals violent disagreements inside the Conservative Party. I am talking now of disagreements not between the hon. Members for Cirencester and Tewkesbury (Mr. Ridley) or Oswestry (Mr. Biffen), on the one side, or Moby Dick—the right hon. Member for Sidcup (Mr. Heath)—on the other, but between members of the Shadow Cabinet, and never was the word "Shadow" more richly deserved. The fact is that they tried to conceal their intentions and divisions in what way they thought was the run-up to the election by an expensive advertising campaign characterised mainly by dishonesty and outright deceit.

For example, two years ago the right hon. and learned Member for Surrey, East told us that

"to use the present…unemployment figures as a stick with which to make political capital "

was something with which the

"Conservative Party would have nothing to do with".

Then we get Saatchi & Saatchi producing a queue of unemployed who turn out to be not real unemployed but layabouts from the North Hendon Conservative Association.

We then had one of the most delightful episodes in recent political history—the saga of Sarah Cramp. I quote from the Daily Mail:

"Pensioner Sarah Cramp revealed today how she was tricked into playing the part of a hard up widow called Annie for a Conservative Party political broadcast…Mrs. Cramp said today: 'That was all nonsense. The film crew deceived me.…I don't blame the Labour Government for inflation. And if the Labour Party asked me to do a film for them I would agree'."

I can understand the dismay of the Conservatives at the thought of all that money pouring down the drain. Now, of course, they face the run-up to the real election—not the "phoney" one they tried to force us into—and they will face, in every debate in this House between now and whatever is the date of the election, the need to define their policies on the central problems facing the nation today.

The right hon. Member for Lowestoft told the television viewers the other day that a statutory pay policy might well have to happen under certain circumstances. But his right hon. Friend the Member for Leeds, North-East was nervous at the Brighton conference of his party even about the policy designed in "The Right Approach". I am not surprised that he was nervous about that, because the reference to the pay policy in "The Right Approach" was a pretty uncertain trumpet. It said:

"Experience does not suggest that (a prices and incomes policy) is the best way of finding a long-term solution to the problem. The same experience demonstrates the unwisdom of flatly and permanently rejecting the idea."

What a magnificent prospectus for the people who claim the right to govern the country to put before the electorate.

It occurs to us to wonder whether the right hon. Gentleman would take a little time off from creating imaginary divisions in our ranks to explain how his own party conference rejected by a two-to-one majority the policy that the Prime Minister said was essential to the success of the Labour Government.

That was a pretty feeble intervention. Let us consider the major issue facing the country in foreign affairs, Rhodesia, which was debated over the past two days. The only positive idea for solving the Rhodesia problem put forward on Tuesday was a request to the Prime Minister to use his unique skill and authority to solve the problem. That was the only thing the Opposition had to suggest. When it came to the question of sanctions, members of the Shadow Cabinet opted out of a decision entirely. They sat huddled in a nervous neutrality while a third of their party voted against the Whip they had imposed.

There has been an interesting change in political fortunes in the last few months. Only a week or two ago the Leader of the Opposition was presenting herself as a sort of Good Queen Bess who would launch us on a new Elizabethan age. She now resembles nothing so much as the last Empress of the Manchus, raging and impotent in the ruins of her summer palace while her empire crumbles into dust around her.

I ask the House to reject the Opposition amendment.

5.54 p.m.

Towards the end of his speech the Chancellor of the Exchequer did pay some attention to the terms of the amendment to the Address. I think it is right that the House should do so, since, after all, it is upon that proposition that the House will come to a decision at the termination of the debate. He passed lightly over a phrase in that amendment on which I think we should dwell a little longer. It refers to the opportunity to elect an Administration

"capable of creating a lasting prosperity".

When I read those words, it occurred to me that the Greeks had a word for it. To assert that an Administration can create lasting prosperity is an assertion that no self-respecting politician ought to allow himself to make. Least of all should such an assertion come from a party which once had some affiliation with Toryism. It is indeed possible for Administrations to assist to some extent the endeavours of a people. It is certainly possible for Administrations more seriously to hamper them. But to suggest to the House and to the people that an Administration is capable of "creating a lasting prosperity" falls under the definition of hubris; that is, arrogance which brings upon itself its own downfall. We are not entitled to pretend that we in this House can create lasting prosperity; but it is our business as far as possible to ensure that what we do takes us in that direction rather than carries us further away from it.

It was no accident that the greater part of both the two speeches with which this debate opened was concerned with the subject of incomes policy or control of wages—give it what label one pleases. If one were to ask most members of the public what they apprehend as the most worrying aspect of our life they would point to the intersection between inflation and industrial relations, to the incessant disturbance and anxiety created by that intersection.

There is a paradox here. The paradox is that if one looks at the statistics, whether they be statistics of days lost or numbers on strike and so on, one does not find that this country is at all high in the league table. We do not appear to be suffering from difficulties of industrial relations or interruptions of production more than many other nations. Yet the fact is that our industrial relations stand at the centre of our anxieties in a way that they do not in most other countries. We have so contrived it—we have arrived at such a state—that every negotiation, every interruption of production, every bargain—I do not need to say every strike—is front-page headline news, is seen as a crisis in the relations between Government and governed, as an event upon which the outcome of the fortunes of this country turn.

I do not believe that the paradox is an unreal one. I do not believe that it is simply due to misapprehension on our part, something febrile in our constitution whereby we take excessively seriously things which are shrugged off in other countries. Still less do I believe that it is due to some obliquity of the British media, which causes them to publicise that which in other countries is not regarded as having anything like the same news rating.

Could the right hon. Gentleman not argue from a different premise—that, in fact, the organs of publicity create this feeling? He is surely speaking in a subjective way when he compares this country with other countries in assuming that basically feeling is less concerned about industrial relations in other countries than this one.

That is indeed a different premise from the one upon which I was arguing; and I hope that the hon. Member will suffer me to proceed upon my own premise. I do believe that the media are not mistaken in what they regard as newsworthy. What they regard as newsworthy we have made newsworthy by our policies over the years, by the legislation of this House and by the behaviour of successive Administrations. We have contrived that every industrial dispute, every bargain, every discussion over wages, every alteration in differentials shall be not merely represented but openly seen as a direct clash of authority and of wills between the State and the citizen.

That is the truth of this paradox. This is a damaging reality: it is not just a minor worry at the breakfast table which passes away as people get down to their daily work. It damages our industrial morale. Certainly it damages the views which others and we ourselves take of our situation. It embattles one section of the community against another and the citizens against the State. It creates deep division where there ought to be harmony—by "harmony" I do not mean agreement, but there can still be harmony where people are arriving by bargaining, by industrial processes, at a conclusion which somehow has to be reached.

If this evil could be banished, if somehow we could be rid of this paradox which has darkened our affairs for many years and does so to this very day—one can take the newspapers on any day and see that the news still conforms to my description—we might claim that we had done something to help and not to hinder.

There has been a change—and a helpful change for the purposes of this de- Bate—in the assumptions with which the relationship between inflation and industrial relations is approached. It is generally accepted now that there cannot be a general increase in earnings unless additional money has been previously created to finance that general increase. I can remember times when that was disputed. I do not think that it is disputed today. Everyone understands today that it is not possible for one wage increase to be followed by another until the whole gamut is complete unless the prior condition is fulfilled that there shall be additional money to enable those increased wages to be paid. Sometimes I think that even the right hon. Member for Sidcup (Mr. Heath) has received some intimations of this truth.

But still people say—and I want to ask why this is—that nevertheless we cannot let the natural consequences follow, namely, that the increase in wages will accommodate itself to the money supply available for paying it. It is that refusal which lies at the heart of the struggles which go on year after year and are going on in boardrooms and in factories at this very moment.

There are two alternative reasons which, so far as I can see, are produced. The first is that the level of inflation can be reduced not only by preventing the increase in the money supply which would finance it but through large numbers of recipients of income voluntarily declining to accept money which is on the table and available to be had; that, as it were, the trade unions and the great processes of industrial bargaining can bring about a fall in the velocity of circulation, so that, for the same increase in the quantity of money, there is a lesser final effect upon the prices of goods and services.

Theoretically, that would probably stand up. Theoretically, the proposition makes sense. But I have only two comments to make about it. The first is that I do not think anyone seriously believes it. I do not think anyone seriously believes that it is possible to have a wages policy which will succeed in neutralising the actual rate of increase in the supply of money, or that there exists that degree of self-restraint and altruism in the collective breast of millions of our fellow human beings.

The other observation which I have to make—and it is very pertinent to the exchanges which occurred between the Chancellor of the Exchequer and the hon. Member for Horncastle (Mr. Tapsell)—is that if a given fall in the rate of inflation, say a fall of 50 per cent. in one year, was achieved partly by restraint and only partly by control of the money supply, the effects of that sudden fall upon employment would be exactly the same as if it had been achieved wholly by control of the money supply. It is the sudden change in the rate of inflation which causes the unemployment, and not the causes, whatever they may be, by which that change in the rate of inflation is brought about.

However, I leave on one side that explanation and theoretical base of wages policy because I do not believe that people have really accepted it sufficiently to have ever been willing to argue it through. At least, I have never heard the theory of it argued through in this House.

So I turn to the alternative theory which is voiced. This one we hear from all and sundry, and it was referred to earlier in both the Front Bench speeches. It is that if inflation is to fall from 10 per cent. to 5 per cent., if the growth of the money supply is to be such that overall no more than the 5 per cent. increase in earnings is to be payable but some trade unions, industries and firms obtain exorbitant wages for those whom they represent or employ, the result will be that they will push either those persons or other workers somewhere else out of employment.

There is a bifurcation in this alternative. The argument either goes on "When the Government see that happening, when they see large wage increases being given for large numbers of persons, they will betake themselves to inflation in order to neutralise the consequences", or else "If the Government let the consequences follow, those consequences will be an increase in unemployment". I dismiss the former fork of the bifurcation by saying that at any rate I have never belonged to any Administration and I have never heard tell of any Administration where at a meeting of the Cabinet, upon the Secretary of State for Employment announcing that there had been what he would call an "inflationary" pay settlement in this or that industry, the members of the Cabinet all said with one accord "We must ask the Chancellor of the Exchequer to create some more inflation." It just does not happen in that way. It does not happen that Governments deliberately set out to create inflation in order to neutralise either a particular wage settlement or a whole series of wage settlements.

So we come to the proposition in its most naked form, namely, that unless wages are controlled or guided—controlled in some sense of the word "control"—the trade unions will bargain their members and other workers out of their jobs. That is what it comes down to in the end. It is no more than that. The proposition is that the unions will insist on obtaining settlements which are inconsistent with what is actually going to be the supply of money during the period ahead.

I do not know whether that proposition is more insulting to the trade union leadership or to the rank and file. It is insulting to the trade union leadership because, to say the worst one can about them, at least this is a class of men who have been trained, specialised and selected in a hard school to do one thing—to ascertain with reasonable accuracy the maximum earnings which will be obtainable in their firm or industry without putting their members out of a job. If they cannot do that, if they cannot perform that specialised function, it is unlikely that we can create an organ of the State that can do their job for them better than they do it themselves.

The alternative hypothesis and the alternative insult is just as gross. That is to say that 95 per cent. of 97 per cent. of the workers are such mute, dumb sheep that they will follow those who are demonstrably bargaining them and their fellow workers into unemployment. Of course, there are cases when a bargain goes wrong. The essence of all estimates is that sometimes one gets the estimate wrong. However, what is beyond all belief is that as a general rule, overall and year by year, the workers follow trade unions which are bargaining them into unemployment.

So the last logical basis for control of wages disappears. There is no rational basis for it whatsoever, unless we are prepared to make the assumption that we are dealing with men—either the leaders or the rank and file of the trade unions—who, year after year, apparently happily and with total satisfaction, engage in self-destructive folly. If one checks back at the experience of previous years, one will not often find a case, even in the most contentious settlements, where it turned out afterwards that the settlement was very far from the relativity which could, as proved by after events, be maintained.

Yet, after all these years, we continue, upon no rational ground, to court and enforce this daily, weekly clash between authority and the citizen. We go on erecting into a divisive force in our society and industry the perfectly ordinary process of continuous reassessment of the relative remuneration and value of the different skills and tasks.

One might well exclaim with St. Paul

"Oh miserable us! Who will deliver us from this body of doctrine?"

If the Conservative Party and the Opposition Front Bench could indeed perform that function, whatever other considerations there were, one might be inclined to forgive them for the hubris in their amendment, give them the benefit of the doubt, and support it

I have been following the right hon. Gentleman's argument closely. He has intimated that in the private sector there are clear limitations to what the trade unions can bargain. Against what do the trade unions bargain in the public sector? Is it the money supply limit which has been determined, and does that not then become a form of incomes policy?

Bargaining in the public sector is in the context of the total economy. If one wishes to recruit nurses for the hospital service, one has to find what price one needs to pay for that job to compete with the relative attractions of all the other jobs in the community. Of course there must be a budget in the National Health Service. Of course the Secretary of State has to decide within that budget—this is his only creative function and he can only do so to a slight extent year by year—where he will put the emphasis. He has to decide whether he will put it on strengthening the nursing side or some other sides of the Service. But it is a fallacy to suppose that the State, as employer, is in an essentially different situation from the private employer in the fixing of remuneration.

I return to the question whether we have been offered any escape, any answer, to this predicament with which we have been tormented for so many years—this intersection of the problem of inflation with industrial relations.

I have not only listened intently this afternoon to the speech by the right hon. and learned Member for Surrey, East (Sir G. Howe), I have been an addicted reader of the Leader of the Opposition's speeches and other sources of illumination on Conservative thinking. I detected one formulation in recent weeks. It came from the Leader of the Opposition. She said that the Government were quite wrong and rigid in fixing a norm. She said that it would not work. What one had to do instead, she said, was to fix an average.

There seems to have been some thought going on since then. I held my breath as the word "norm" was uttered by the right hon. and learned Member for Surrey, East. He used the word "brandishing". For a moment I thought that he was going on to say "brandishing an average"; but no, he was "brandishing guidance".

Let us, however, return to the attempt by the right hon. Lady the Leader of the Opposition. Her's was a valiant attempt. It is true that a norm will fail because one cannot select—and if one tries to select, one will be wrong—which cases are to be above and which below the norm. It is the old problem of who are to be the exceptions, and nobody wants to be the exception. So nowadays the Government have a norm which is a maximum, hoping that people will arrange themselves below that ceiling.

But the Leader of the Opposition's average will not work at all. All average is ex post facto. One can arrive at an average only when one finds out what the increases have been in a period of time and then averages them out. While the events are rolling—while Ford is on strike—no one can predict what average will be the outcome of a 16 per cent. settlement for Ford, 5 per cent. for somebody else, nought per cent. for somebody else and minus 5 per cent. for another group of workers. It is a counsel of despair.

If we have embraced the truth—as I hope we have at last—of the relationship between monetary policy—monetary behaviour—and inflation, we have in our hands the key to free collective bargaining; that is, we have the means to take the State out of these industrial relations and to allow the people occasionally to make their own mistakes, but usually to make the right assessments.

Dare we do that?

I do not know whether the Labour Party dare and it is obvious that the Opposition do not dare. They are like the members of a heathen tribe who have been converted to Christianity but are not quite sure about its truth. So they think they had better continue worshipping the old gods on Saturday as well as going to church on Sunday.

There is no justification of an overwhelming national interest in substituting an average in preference to a norm for the mistaken policy of confrontation—a skilful form of confrontation but nevertheless confrontation—which is still being pursued by the Government. On the ground of that general consideration one would not feel obliged to support this amendment.

But my hon. Friends and I have also to look at the amendment from a more particular point of view, a point of view more directly germane—peculiarly germane—to the responsibilities with which we were charged when we were sent to this House. There was published today the Bill to give full representation in this House—to give justice, as the Secretary of State for Northern Ireland said earlier—to the Province which we represent. That act of justice was one of the major tasks which we were instructed to fulfil, if we could, when we were sent to this Parliament.

In what I am about to say I mean to cast no aspersion upon any other party, for it is of the utmost importance for the future of Northern Ireland that that act of justice is going to be performed with the almost unanimous consent of the House of Commons, first, in the Conference of Mr. Speaker, in which there was only one dissenting voice and, secondly, by the agreement of all but one of the political parties, and that one an individual hon. Member. That is something of too much value for me to discount it.

Nevertheless, I say that, presented in this Session of Parliament with the achievement of that legislative act, an act which we believe in all conscience will be beneficial and peaceable to all classes and persons in Northern Ireland. it must be a compelling duty upon us to see it through on to the statute book. We are duty bound not to suffer, so far as in us lies, this Session of Parliament to be brought to an end until that act of justice of the House of Commons has been enshrined in a statute

Fortunately, there has been no painful dilemma which we have had to resolve between the national interest as a whole and our own peculiar duty. Neither in the general nor in the particular would we feel justified in supporting the amendment which is before the House tonight.

6.24 p.m.

I do not see how I can adequately follow the right hon. Member for Down, South (Mr. Powell) in his expert demolition of the case presented by the Front Bench of the Conservative Opposition, but in rising for this first time to address the House I am bound to refer to my great predecessor, John Mackintosh, the former Member for Berwick and East Lothian.

This House, and the country as a whole, can ill-afford to lose men of his stature. He was an inspiration to many of us, not least his constituents. I well remember how only 12 years ago I, like many young people at that time, was a cynical youth convinced that all politicians were by definition liars. Nevertheless, I went along to the election meetings of the various parties in my local village school at Paxton and that was when I first heard and saw John Mackintosh. He impressed me then, and he continued to do so right up to his death, with his eloquence, learning, wit, hard work and, above all, his integrity. The great quality which he possessed of saying and doing what he thought was right, rather than what might have seemed convenient, earned him the respect and the affection of people of all political persuasions throughout the constituency.

Many hon. Members must have been impressed during the run-up to the by-election by the genuine sense of loss and distress expressed by so many people throughout Berwickshire and East Lothian, both at meetings and on the doorstep, at the loss of their former Member of Parliament. There is a lesson for all of us in this. If we are always open and stick to what we believe in we may not always be able to satisfy our Whips, but in the end we shall earn the respect of our constituents. I believe that they are the people who really matter to us.

John Mackintosh was one of the great pioneers in the argument for devolved power for Scotland. He was also one of the main advocates of British participation in the European Community. It is extremely sad that he has not lived to see the democratic elections to the Scottish and European Asemblies, things in which he always believed and which will take place not so very long from now. I am no academic, and it will take me a long time to achieve any level of eloquence, but I am determined to stick to John Mackintosh's tradition of political integrity.

I understand that at this stage in a maiden speech it is traditional to make some reference to one's constituency. In the circumstances this is a little superfluous, because practically every hon. Member, for one reason or another, must have been in my constituency during the run-up to the by-election. But so far as I know you, Mr. Deputy Speaker, were not, so I shall refer briefly to the two counties which I now represent.

Berwick and East Lothian is a diverse constituency. It is also a big one. Agriculture, together with its associated services, constitutes our main industry. There are also mining communities, a cement works, a brewery which makes real ale and, largely thanks to the Scottish Development Agency, an increasing amount of light engineering, food processing industries and other small new industries have been brought into many of the communities in the area. Berwick and East Lothian must also be one of the most beautiful constituencies in Britain.

We have the Lammermuir Hills, the Bass Rock, a stretch of the River Tweed and about 100 miles of coastline. It is also unquestionably one of the most politically astute constituencies in the land.

I think that I should now refer to the Gracious Speech because I should hate to be ruled out of order at this stage in my career. I am particularly pleased to be able to contribute to this debate while we are discussing the economy, because that was the main issue in the by-election. I believe that that was an issue on which we won the argument hands down. It would perhaps be churlish of me not to make reference to the fact that the right hon. Member for Sid-cup (Mr. Heath) also did very well in that argument, but then, of course, he was speaking from a position of experience and wisdom which left many Tories in my constituency rather perplexed, to put it mildly.

My constituency is an area of low wages because the bulk of the people work either in agriculture and related industries or in the public sector. It is also an area of high costs because it is a remote, sparsely populated piece of the country which obviously has high distribution costs. I believe that in such an area of low wages and high costs it is imperative that inflation is kept under control. I urge the Government to stick to their guns on their strategy for controlling inflation. Let us have price controls and let us have the guts to stick to the incomes policy. I believe that we as Socialists are seeking to plan the economy and to protect the weak. I cannot see how we can achieve either of those aims if we leave either prices or incomes out of our calculations.

Our incomes policy must be fair for everyone. It must be fair for the low paid and the badly organised as well as for everyone else. It must also be flexible and voluntary, but above all it has to work. The Government can certainly rely on my support in their fight against inflation. Indeed, as one who has perhaps had more recent experience than have most hon. Members of the wishes of the ordinary people of this country I can safely say that the Government have the support of the ordinary people of the whole country and certainly of those in Scotland.

My constituency is predominantly agricultural, and as a farmer I particularly welcome the references in the Gracious Speech to the expansion of home food production and the conservation of tish stocks. I look forward to seeing the detailed proposals on those subjects. If the proposals are effective they are bound to be helpful to all my constituents. Moves to improve home production of food are also bound to be good for the economy of the whole country because they will reduce the level of unnecessary food imports that we face at present.

In passing I express the pious hope that many of our farmers—who are doing extremely well despite protestations to the contrary and who will do even better with the Government's proposed measures —will pass on some of the additional benefits and greater profits that they will receive to the highly skilled but shockingly underpaid workers in agriculture.

The Scottish Development Agency, which I have already mentioned, has contributed a great deal to the restructuring of industry and to the creation and preservation of jobs in Berwick and East Lothian, not only in the bigger towns but in some of the more remote communities. I welcome the proposal in the Gracious Speech to provide additional finance for the SDA. The Agency is doing valuable, positive and constructive work throughout Scotland, especially in places where private investors abdicated their responsibilities a long time ago. The SDA's work must not be curtailed.

I also welcome the announcement today by the Secretary of State for Employment about extending grants to small businesses and service industries. This is bound to be helpful in many parts of the country. My constituency stands to gain a great deal from items of projected public expenditure of one kind or another, not only through the SDA but through local authorities' spending on roads and housing, through the health boards' spending on new hospital buildings and health centres, through the National Coal Board and its workings at Musselburgh, through the South of Scotland Electricity Board with the new Torness power station and through increased pensions for our old people.

The Conservative Party has not yet divulged whether any or all of those schemes will be scrapped under its proposed comprehensive attack on public expenditure. Also, the Scottish National Party has a particularly confusing standpoint on the Torness nuclear power station issue. In Berwickshire and East Lothian the SNP is against the use of nuclear power. In Caithness, where there is already a nuclear power station, the party is in favour of it. In Renfrewshire, where the boilers for power stations are made, the SNP is in favour of nuclear power. It is small wonder that the people do not take that party seriously any more.

I am disappointed at the bigotry being shown by the Scottish National Party. I was listening to a speech the other night from the hon. Member for South Angus (Mr. Welsh). He was making a perfectly valid point about the state of communications and roads to Aberdeen where the oil industry is creating so much activity, but he spoiled the whole effect of it by making out that this was some kind of a sinister conspiracy by the English to do down the Scots. I do not think that anybody takes that seriously any more.

People in Scotland know that Labour's plans for the economy are good for them. They are scared stiff by the Tories plans for a free-for-all. They can see that the SNP is now utterly irrelevant. That, in a nutshell, is why I am here instead of any of my opponents.

The right hon. and learned Member for Surrey, East (Sir G. Howe) made a brave speech at the beginning of the debate, but I must remind him that only two weeks ago today the voters of Berwick and East Lothian—supposedly a marginal seat—gave me the biggest majority that anyone has had in that constituency since the Labour landslide of 1945. On behalf of those voters in my constituency I shall be supporting the Government in the Lobby tonight.

6.36 p.m.

I pay tribute to the hon. Member for Berwick and East Lothian (Mr. Home Robertson) on his maiden speech. I believe that it also fell to me to follow the hon. Member for Hamilton (Mr. Robertson) when he made his maiden speech. I cannot describe the hon. Gentleman's speech today as non-controversial, but nevertheless it was enjoyable. I am sure that the House welcomed it and will look forward to further contributions from him to enliven our debates.

I thank the hon. Gentleman for his eloquent and well-deserved tribute to his predecessor, John Mackintosh, who was a friend to all of us in all sections of the House. I detected in the hon. Gentleman's speech some suggestion that he is a man of independent mind, like his predecessor. I do not know whether that will be very good news for the Whips. Anyway, he had a signal victory in his by-election which caused great joy in his own party. It is not surprising that that joy is not shared throughout the House, but the whole House will join me in wishing the hon. Gentleman well and thanking him for a felicitous and witty maiden speech.

It would be surprising to have a Gracious Speech which did not contain the promise of certain measures with which one can heartily agree. This Speech is no exception. That is not surprising at a time when we have a minority Government and we are in the last Session before a General Election. It would be impossible for the Government to put through any serious measures of nationalisation. Therefore circumstances dictate that the Gracious Speech should be broadly in favour of "longer holidays and sunnier days".

We in the SNP welcome the promise of a measure to extend benefits for the disabled. I acknowledge that some useful advances have been made in recent years in this respect, but there is still a long way to go. Governments here, whatever their colour, often underestimate the desire of the community to see the disabled, old-age pensioners and people in similar under-privileged categories being properly looked after. People would be willing to sacrifice something to achieve that end, but they must be sure that any increase in contributions will be earmarked and used for such purposes and will not disappear into the Treasury's coffers.

We in the SNP welcome the promised legislation to provide additional finance for the SDA. In view of oil revenues, to which I shall return later, the finance allowed to the SDA so far has been ludicrously inadequate. We have heard noises from the Conservatives about the SDA, and they should tell both the House and Scotland what they will do if they are ever in a position of power.

We support the promise to give full support to strengthening the police service and to ensuring that respect for the law is maintained. We shall give our full backing to such measures.

We welcome the establishment of a system of registration of title to land in Scotland. I hope that this will be an early measure in the Government's programme.

We support fully grants to be made in Wales towards the cost of bilingual education but regret and resent the fact that there is no mention of any similar aid for bilingual education in Scotland. Most Governments accept their responsibility for helping minority cultures, but aid for Gaelic from successive Governments has fallen disgracefully short of what it should be.

We regret also that there is no mention of any means to alleviate the high cost of transport to the Scottish Islands by means of a road-equivalent tariff. This must come, but it is sad that in the meantime the Islands will be existing in the face of these transport burdens.

I turn now to the Scottish economy. On recent occasions I have drawn attention to the figures of Scottish unemployment, which the Government undertook to deal with as a first priority when they came to office in 1974. On 12th October Scottish unemployment was 7·9 per cent., against the United Kingdom figure of 6 per cent. At the end of September the international comparisons were: Scotland 8·1 per pent., United Kingdom 5·8 per cent., and Holland, Belgium, France, Japan and the United States all lower. Even Italy was lower at 7·5 per cent. That is the situation that my hon. Friends and I are determined to correct in so far as it lies within our powers to do so.

Manufacturing industry's share of total employment in Scotland is falling steadily at a time when oil revenues are bringing in fantastic wealth to the Treasury. It is clear that Scotland can expect major improvements in its economy only when oil revenues are invested at home. I am, of course, aware that there have been gloom and doom recently from the oil companies. This is not new. The House will recall similar gloomy forecasts not unconnected with the Oil Taxation Bill, when the oil companies said they could lose interest in the North Sea if taxes were raised.

Although decisions were taken as recently as last year to develop the oilfields, the prospect of an increase in petroleum revenue tax again produced a fit of the blues among the oil companies. We have only to read the recent report about oil sanctions against Rhodesia to realise that not everything the oil companies say can be regarded as gospel.

The SNP has been right all along on the question of oil. We were derided by the Tories when we declared at an early stage that the oil would be worth £800 million. They accused us of gross exaggeration However, as they were busy giving away the licences to the oil companies for peanuts they doubtless thought that they could get away with that sort of approach.

We have been derided by he Labour Party for demanding a more moderate rate of extraction. Our views are now backed by the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), the Minister of State for Energy. In a radio programme on 18th October it was put to him by Mr. Robin Wylie:

"It's not the case, is it, that too much oil has been extracted too fast and you are having to slow down?"

The right hon. Gentleman replied:

"In a way it is. In a way we can see ourselves getting to self-sufficiency in 1980 quite fast, and also getting into a surplus in the eighties quite fast. We are not, therefore, necessarily all that anxious to open up new fields, or, if we are going to open up new fields, it will be at a slower pace than before."

I turn for proof of the correctness of the SNP attitude on Scottish oil and gas to the study "The Economic impact of North Sea Oil on Scotland". This report was compiled for the Scottish economic planning department by Professors Gaskin and Mackay, and on page 34 it states:

"the contributions also make it clear that the contribution of North Sea oil activities to Scottish national income, whilst far from negligible, is not sufficient to transform Scottish living standards or the dominance of the traditional industrial structure. In short, the direct impact of North Sea oil activities, either in terms of employment opportunities or in terms of income generation provides a welcome relief from short-run difficulties rather than a solu- tion to the long-run problems of building a more efficient and prosperous economy."

The report ends with striking words on page 99:

"In other words, North Sea oil and gas have so far done little to transform the industrial base and the long-run economic prospects of the Scottish economy. Nevertheless, they have the potential to do so and this potential rests largely on the use the Central Government will make of oil revenues. The test of Government policy will be whether they can use the breathing space provided to build a more secure foundation for economic prosperity."

The evidence of the Government's own economic experts is that so far they have totally failed to do so.

The SNP makes no distinction between the Unionist, Labour and Tory Parties here. They have all failed Scotland in the past. The sad record is there for all to see. My hon. Friends and I came to this House with two objectives. The first was to assist in the beginnings of a Scottish Parliament. As Mr. Neal Ascherson said in The Scotsman,

"Labour provided the Bill, but the SNP gave the orders."

That objective has now been achieved. An Assembly for Scotland is now in the bag. The Scotland Act requires Labour and Conservative Parties to hold a referendum, and both are pledged to hold it in March.

The second objective was to bring maximum pressure to bear on the Government of the day to expand the Scottish economy The Government have totally failed to do that. Our objective must be to give a lead, as we gave a lead before, and to force this Parliament to return to Scotland the oil revenues which have been filched away. The Government took a deliberate decision not to set up an oil fund. Just as the weight of public opinion in Scotland drove them to an Assembly, so it is only a matter of time before the weight of public opinion in Scotland forces them to adopt an oil fund.

As before, the SNP is the only vehicle by which justice will be made available to Scotland. In tonight's Division we shall be voting to begin exerting pressure on United Kingdom Governments to establish a Scottish oil fund and to give Scotland true economic justice at last.

I am grateful to the hon Gentleman for giving way. I am sorry. I should have said the right hon. Gentleman. I had forgotten for a moment that he is one of the grateful recipients of the wee bit of English patronage that is going in this place. Is he saying—I gather that he is—that the criterion by which the SNP makes up its mind about how to vote tonight is "What is good for Scotland?" How can the right hon. Gentleman justify that when he knows that in the unlikely event of the Government being defeated tonight he and his hon. Friends will be contributing to that defeat, and that if the Conservatives were returned to power that would lessen the chances of the Scottish Assembly coming about? There would be no guarantee of a Government who would campaign vociferously for a Scottish Assembly in the coming referendum. Does that not prove that the SNP's slogan about it being "good for Scotland" is nothing but a lie, and that It is good for nothing?

I repudiate that suggestion entirely. The Scotland Act binds the Conservative and Labour Parties. It guarantees that there will be a referendum and nothing can turn that back, regardless of what happens tonight.

Our amendment regrets

"that the Gracious Speech contains no proposals to reduce unemployment in Scotland and fails to implement the main recommendation of the Scottish Office Report…that only the investment of oil revenues within Scotland can bring about any long-term structural improvement in the Scottish economy."

That is why my hon. Friends and I will be voting for the Opposition amendment tonight.

6.48 p.m.

It is not traditional, but I should certainly like to associate myself with the remarks about the maiden speech of my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson). It could not have been easy for him to make a maiden speech after the powerful intervention by the right hon. Member for Down, South (Mr. Powell). I am a great reader of the columns of The Scotsman, and I have noticed that among the whole plethora of letters someone has criticised my hon. Friend as being a wobbly Member of Parliament. That was before we had the privilege of hearing him address this House. I think that everyone will join me in saying that his contribution was far from being a maiden speech by any wobbly Member of Parliament. It was one of great wit and eloquence, and I for one look forward to hearing him again.

One aspect of his speech was ironic. Most hon. Members on the Labour Benches and certainly on the Treasury Bench were elected to Parliament on a programme condemning the policies of the right hon. Member for Sidcup (Mr. Heath). It is an ironic commentary on how far the Labour Party has veered away from the basis of its election victory to hear my hon. Friend praise the right hon. Gentleman's intervention in my hon. Friend's by-election.

This Parliament started with severe criticism of norms and authoritarian attitudes to pay. Anybody who does not believe me should dip into the speeches of my right hon. Friend the Lord President. The early attitudes were by no means accidental. They arose out of the manifesto on which the Labour Party fought the elections of February and October 1974. That manifesto did not say that the idea of free collective bargaining or of workers seeking a good rise from a multinational motor company—one of the richest in the world—was a danger to the national well-being. What the manifesto said in its introduction was:

"Injustice is the enemy of national unity".

At present there are workers who are unemployed in numbers hitherto unprecedented in post-war years. The extent of poverty—I know that some of my hon. Friends will deny this—has increased, not decreased, over the last four years, and also the extent of human unhappiness among working-class people has increased rather than decreased in that period. There is still a great deal of ostentation around to rub home the injustice which four years ago the Labour Party said was the enemy of national unity. While shipyards have shed men and steelworks and pits have closed in areas hitherto prosperous, we all know that there has been no rush of bankruptcies among the owners of five-star hotels.

This Parliament came about because of the promotion of one single basic idea called the social contract. It figured prominently in Labour's election manifesto. This is what it said about the social contract:

"It is not concerned solely or even primarily with wages. It covers the whole range of national policies."

The manifesto goes on to expand its meaning:

"Labour describes…the firm and detailed commitments which will be fulfilled in the field of social policy, in the fairer sharing of the nation's wealth, in the determination to restore and sustain full employment. The unions in response confirm how they will seek to exercise the newly restored right of free collective bargaining."

Therefore, in the grand strategy to regenerate British industry and revitalise economic life wages were properly in-included, because one cannot exclude the consumption power and expenditure patterns of 25 million insured workers. Wages were properly included—but so were all the other crucial factors in the working parts of a modern economy. I refer to pricing, manpower planning, research and development, training, retraining, the spread of wealth, the right to work with its attendant benefits in relaxed attitudes to change and demarcation, planning and the control and direction of investment. They were all inherent in the arguments that led to the compilation of the social contract.

That was all part of a comprehensive attack on the inherent weaknesses of our economy for the Socialist purpose

"to cause an irreversible shift in the balance of wealth and power to working people and their families."

The original social contract rested correctly on the analysis of the inherent weaknesses of the British economy. Between losing office in June 1970 and the resumption of responsibility in February 1974, there was a fundamental debate inside the Labour movement about where it had gone wrong between 1964 and 1970—an analysis of the problems of capitalism moving into a new crisis.

I remember one purple patch upstairs at a meeting of the Parliamentary Labour Party when the present Chancellor of the Exchequer regaled us with an analysis of the problems and crises thrown up by international capitalism. At the end of it all, we emerged with "Labour's Programme for Britain" in 1973 which gave rise to the manifesto which incorporated the social contract. That gave fuller recognition to the post-Empire decline, with its inevitable loss of captive markets, with nothing basically to replace them, the erosion of our resource base by staying east of Suez far too long, the loss of our capital stock by constant massive investment overseas, and the serious lack of any planned strategy for an investment-led recovery.

The result of that internal debate was what was widely recognised as the most Socialist manifesto on which the Labour Party had ever fought an election since 1945. The great tragedy came in July 1975 when we were faced with the inevitable difficulties that always arise at the end of a statutory or non-statutory wages policy, because Labour allowed itself to be panicked by the Treasury into a further round of wages policy. From then on the gift of Socialist analysis which had brought forth the manifesto was put aside. Our Chancellor of the Exchequer swallowed capitalist thinking and practice as a man born to it, namely, that when capitalism is in trouble one blames the working people and attacks their wages —and it is even better if one is in the City of London when the Labour Government are putting their boot into trade unionists.

In four years we have been in full retreat from the platform on which the Labour Party was elected and from the concept of a comprehensive regenerative approach. The results for working people are appalling. Unemployment is at post-war levels but perhaps the major condemnation of the Government on employment lies in the position of our young people. By definition, they are the most dynamic and vital part of our society; they are the most optimistic of our inhabitants and their vision is undimmed and their optimism has not come up against the problems that life inevitably brings. Yet these young people, whom we have encouraged to take part in the education system, and whom we have groomed to take the advantages that can be offered for a good life, are now totally frustrated in the dole queues and on street corners. They are turning sour. Inevitably, there will be social problems and consequences arising out of a deliberate policy to maintain high levels of unemployment.

Perhaps the greatest crime of all that we can level against the Treasury Bench is that it has introduced for the first time ever in the Socialist movement the idea that there is an acceptable level of unemployment.

indicated dissent.

I see that my right hon. Friend disagrees with that statement. I have heard him say ad nauseam that these levels of unemployment are unacceptable, but unemployment has almost doubled since Labour came to office. Therefore, statements to the effect that such levels are unacceptable do not reduce the dole queues.

What Labour has done is to ease the anger which used to emerge from working-class people when unemployment started to rise. When last was there a TUC demonstration of the magnitude we used to see when unemployment was rife? The last demonstration I attended in Scotland was organised by the Scottish TUC. A total of 4,000 of us marched through Glasgow in the morning like a defeated army. On the next occasion that we tried to organise a demonstration against unemployment involving the Clyde confederation, the Scottish TUC and Glasgow trades council we were lucky to see 300 people turn up at the demonstration. That shows how demoralised working-class people have become about unemployment.

When we persuade people collectively to accept high levels of unemployment, we also persuade them collectively to accept a permanently socially submerged section of our society. Each technical leap forward in a modern economy will leave more and more people in the category of permanent uemployment. It will leave them easy prey to people such as the hon. Member for Aberdeen, South (Mr. Sproat). That is the legacy of four years of retreat. The double tragedy is that all these sacrifices have been in vain. I have never understood how one is supposed to promote expansion or create full employment by first creating mass unemployment. That kind of argument is absurd. There has been no fundamental turn-round in the state of the economy of the United Kingdom. Oil has partly saved the day, but only temporarily, be- cause there is more myth than reality surrounding the value of the oil revenues.

Like the right hon. Member for Down, South, I would put my finger on the main problem as being the obsession with wages policy, which has meant that everything else has been taken out of focus. We have become almost sick in the mind about the contribution of wages and apparently cannot understand that other matters are involved in the production of policies for curing, or contributing towards a cure of. economic malaise.

When have we seen in the Labour movement over the past four year the promotion of planning agreements being made compulsory rather than voluntary? When have we seen the arguments about the need to control the flow of capital? Where has there been the same agony as we have seen over wages over the constant loss of our industrial capacity? Because of the obsession with wages policy, the Labour movement has not presented the public with the other factors that matter.

I find it incredible that the obsession with wages policy should continue to possess the minds of Ministers and others. I do not think that there can be any question about the disastrous effects of wages policy, both in diverting attention from other more substantial economic issues and in wreaking havoc in industrial relations.

I should like to take up the point made by the right hon. Gentleman, who spoke about the skill that is employed in industrial negotiations, about how men in the trade union movement come up through a very hard school and learn their craft as they go. When they finally emerge in front of an employer, they are capable of a whole series of very subtle but important judgments valuable in negotiation.

One of the great tragedies about statutory and non-statutory "statutory" wages policies is that we are quickly producing a generation of trade union officials and management who know nothing about negotiations. We are destroying the ability to negotiate.

I give the House an example from my own experience. A couple of years ago I served on an arbitration panel as the teachers' nominee. We were discussing problems in phase 2. We discovered that they arose from the fact that in phase 1 negotiations took exactly 30 seconds. One side came in and said, "It is phase 1 on offer" and the other side said "We shall take it". There was no attempt to analyse the anomalies and the problems that would arise. We discovered later that the problems did arise. The negotiating skill was not there, as it had been previously. We are not training apprentices now in industrial negotiations.

Wages policy is not new. I can recall being caught in the first wages policy trap in 1961, when I was a serving fireman. From then to the present date on and off—more on than off—we have had almost constant wages policy.

The proponents of wages policy cannot claim that it has not worked, by their definition, given that one of their definitions—an important one—is worker acceptability. I have sat here for about eight years and seen three Prime Ministers argue with critics that X million workers have accepted phase 1, phase 2, phase 3 or whatever. For example, last year there were constant arguments between my right hon. Friend the present Prime Minister and my hon. Friend the Member for Bolsover (Mr. Skinner) about who genuinely spoke for the working-class movement. My right hon. Friend would say that X million workers, 11 million in the TUC, had all happily and satisfactorily accepted a particular norm. Therefore, by the Government's own definition, it has worked. If that is so, why has there not been a turn-round in the economy?

:Three has.

My hon. Friend says that on the day that the Government have produced a 12½ per cent. minimum lending rate. I shall remember that "There has" in about two months' time, when we meet the next crisis. There has been no fundamental turn-round in the economy. If wages policy was the magic key, it has been put in the door for nearly 17 years, so why has the door not swung open to what the Tories call "lasting prosperity"? We are chasing a holy grail that we shall never get our hands on, while the real world goes in exactly the opposite direction.

We are like the medical men of old. It is not unusual for the orthodox mind at any given point in a society's history to claim that it is absolutely right and to say that it is a lot of nonsense for critics to criticise a certain policy. The proponents of wages policy today are like the medical men of mediaeval times who believed that the main way of solving some problems was to bleed the patient. When he did not get better, they bled him again, and when he died their diagnosis was that whatever else he died of it was certainly not bleeding. It is the same with the proponents of wages policy today. They say that whatever else the British economy ails of it is not the repetitive dose of wages policy. I disagree.

My right hon. and hon. Friends have tried Heathism and monetarism. I believe that it is time for them to try a fair degree of Socialism.

Finally, I want to speak about the position of the Scottish National Party. When the right hon. Member for Down, South finally told us the exact position about the vote tonight, I did not look at the Government Front Bench to see how the Whips were reacting. I looked at those on the SNP Bench, and I was not at all surprised to see more than a ripple of relief spread among them. It would have been a laugh if tonight at ten o'clock, as in the First World War, everyone had mobilised for something he did not want and finally got it.

I do not think that anyone here, or certainly inside Scotland, is unaware of the tactics of the SNP, which wants to keep this Labour Government in office for a period yet, but whose Members nevertheless want to go back to what they believe are basically Conservative constituencies and say "We have clean hands. We voted against the Government. Do not blame us ", and then add sotto voce "Thank God for the Ulster Unionists."

I stand open to correction on this, but I think that the following is a fair point. Twice in recent Scottish political history two groups have come from Scotland to Westminster with a fund of good will drawn from almost the whole of Scotland, including many who did not vote for them. The first group was the Clydesiders, and they proved worth sending. The quality of their speeches, the clarity of their thought and ideas, and the purposeful,

principled action that they took, based on a clear strategy, made them and all that they stood for renowned in every part of the United Kingdom and well outside its boundaries. They did not achieve all that they came to achieve, but they laid a foundation for considerable advance and were an inspiration for generations to come.

The second group was the SNP, which came in February 1974 billed as "The Magnificent Seven" and then in October 1974 as Scotland's team. I can only conclude that that is the lot that Ally McLeod played in Argentina. I think that it is fair to say that those SNP Members carried a great deal of good will from people in Scotland. I remember a woman in my constituency telling me that, although she had voted for me and the Labour Party, she was nevertheless delighted that SNP Members were here in a group, because she thought that that would be, to quote that interesting phrase, "good for Scotland".

The fact is that when we examine their performance we see that the SNP Members have never won a debate or an argument, even when the facts were on their side. They are renowned for one significant action here in regard to the working class in the West of Scotland—tearing up telegrams from Scottish shipyard workers and workers in Scottish Aviation at Prestwick. They are also renowned for voting against public ownership.

I can recall that when I addressed Clydeside shipyard workers at Yarrow's yard during the Garscadden by-election I said that I was not there to attack the SNP candidate, Keith Bovey, for his pacifism. In West Scotland pacifism is a most honourable tradition. All the men nodded. I said "I am here to attack him and his parliamentary group for their vote in relation to the public ownership of shipbuilding, which we do not say guarantees your job but guarantees the ability to bring your pressure to bear on the people who will decide about your job."

Throughout the last four years that SNP Members have sat in this House they have lacked cohesion and strategy and they are—as they have shown themselves to be today, and there will be problems when they go back to Scotland at the weekend—hopeless tacticians.

The right hon. Gentleman the leader of the SNP says that he judges things on the basis of "good for Scotland." He has demanded certain guarantees from the Government. I say in relation to my right hon. Friend the Minister of State. Privy Council Office, that I have found him to be most receptive to the ideas that we have put to him for the Government engaging, quite properly, in the referendum within declared Government policy.

What about the Conservative Party? The political reality is that if there is an election on 6th December, we shall have either a Tory Government or a Labour Government. What guarantees has the right hon. Gentleman sought from the Tories in the time up until now about the Scottish Assembly? It is not enough to say that they will have a referendum. There is a mighty difference between having a Government who favour an Act and having a Government who disfavour that Act and who will actively campaign against it.

I can quite imagine the hon. Gentleman's interest in the SNP, as he is speaking as a leader without a party and is probably quite desperate to find some followers somewhere and is having great difficulty. However, does he not accept that within the Labour Party there is a very substantial number of people against a Scottish Assembly, and they will vote against it and do nothing to help it? Equally within the Conservative Party, which will be campaigning against it, some people will be voting for it.

In those circumstances, bearing in mind that the Government have refused to commit any resources in response to the hon. Gentleman's request or, indeed, even to issue a leaflet of explanation, as was done prior to the EEC referendum, why is he taking such a supine view? Is it really the case that he is desperately afraid of losing his seat in a by-election?

I would rather be in my party with no members than be a member of the hon. Gentleman's party. But I will take the hon. Gentleman up on a point. Nobody is better able or more proper to intervene than the hon. Gentleman, because in the very last debate that we had in this House on the Scotland Act, or the Scotland Bill at that time, he and I were in the Chamber along with my right hon. Friends and the hon. Member for Glasgow, Cathcart (Mr. Taylor), when the Tory Front Bench spokesman was asked to declare whether the Tories would not use the power of the Government machine to campaign if they were the Government before the referendum took place. The hon. Gentleman will remember very clearly that in no way did they give that commitment.

I refer the hon. Gentleman to the speech of his hon. Friend the Member for Dunbartonshire, East (Mrs. Bain) earlier in our debate on the Address. One of her most bitter complaints was against the hon. Member for Cathcart on Radio Clyde, in "Clyde Comment", when she claimed that he did nothing but waffle while he was put on the spot in relation to what a Conservative Government would do. What guarantees has the hon. Gentleman got from the Tories?

What guarantees has the leader of the SNP got from the Tories in relation to the function of the Scottish Development Agency and the level of its budget? The SNP has been complaining about the Conservative Party not spelling out in detail how it would cut public expenditure. I am not asking the Conservative Party. I am asking the right hon. Gentleman whether he asked the Conservative Party and if he got a satisfactory answer which would meet the test, "Is it good for Scotland?"

The right hon. Gentleman is in a bit of difficulty. That is understandable. It was not in his prepared notes.

Let us move ahead to the other two much more major issues, from the SNP point of view, and they are oil and independence. That is what the right hon. Gentleman came here in relation to—not an Assembly, but independence. I checked the manifesto yesterday. Will it be easier or more difficult to extract from Westminster at least a share of that oil, with or without an Assembly? If there is a Tory Government here, there is no chance of that happening, especially if we have no Assembly north of the border. If we have an Assembly north of the border, for the first time in Scotland's history the people of Scotland will have an institution through which they can come and talk to Westminster not in a partisan, party-political sense but in an institutional sense, with the Scottish Administration meeting the British Administration, putting together and placing before the latter a comprehensive case for a share of the oil based on justice.

I would think that tactically, indeed strategically—

The hon. Gentleman is living in cloud-cuckoo-land.

Well, the hon. Gentleman has actually got to argue with me that if the Conservative Party came into office and there was no Assembly that would mean oil for Scotland and would bring independence much more quickly than seems to be the case at the moment.

I believe that the SNP is absolutely cynical about the vote tonight. I do not think that at the end of the day anything will save SNP Members from the consequences of their own folly. One must go back a very considerable period in the history of Scotland to find the Scottish people so badly served by a group of self-appointed generals. The only time that I can think of is Flodden. The best description of the Scottish National Party is that if they had been in charge at Flodden we Scots would have lost even if the English Army had been on our side.

rose—

Order. In the interests of the 17 hon. Members who are anxious to take part in the debate in the two hours, roughly, remaining, I feel compelled to say that some brevity should be exercised. If we have half-hour speeches we shall be able to fit in only four speakers during the rest of the evening before the winding-up speeches. Hon. Members should try to accommodate each other by being as brief as possible.

7.17 p.m.

It is nice to break the Scottish run and almost a Scottish monopoly. Nevertheless, although it is not actual tradition, I, too, pay my respects and offer my congratulations to the hon. Member for Berwick and East Lothian (Mr. Home Robertson) on his delightful and witty maiden speech. I hope that he will be with us for a long time and will make many such amusing speeches in the House.

I shall follow the arguments of the hon. Member for South Ayrshire (Mr. Sillars) in a moment when I come to deal with the question of pay policy. However, although this is primarily an economic debate, I want to deal first with what is essentially a political matter, and that is the vote tonight.

Some surprise seems to have been expressed in certain quarters, some on the Labour Benches and some even in the always correct British press, that the Liberal Party should be going to vote against the Government tonight. The starting point, I suppose, is a curious article which appeared in The Guardian yesterday by Mr. Ian Aitken, for whom I normally have great respect. On this occasion he wrote a load of rubbish. He said:

"Thanks to some skilful tactical footwork by Mrs. Thatcher, the 13 Liberal MPs seem certain to be forced to join the Conservatives after all in the Division Lobbies."

He went on to say:

"Tempted by Mr. David Steel's weekend declaration that the Liberal Party would not vote in favour of Tory economic policies but would have been ready to vote for an early general election, Mrs. Thatcher and her Shadow Cabinet colleagues sensibly decided to put the Liberal Party to the test. As soon as the amendment went down Liberal MPs were in no doubt that they had been out-manoeuvered."

That really is standing the argument completely on its head. The fact is that there has never been any doubt in my mind or in the minds of all but one of my colleagues that we would be voting against the Government at the end of these days of debate on the Queen's Speech.

My right hon. Friend the leader of the Liberal Party has made it clear that as we ended the agreement with the Government in the summer we believe that a General Election is now appropriate and timely. Of course we were not going to say that we would be voting against the Queen's Speech willy-nilly whatever was in it, any more than the official Opposition would say that. That would be a ridiculous stance to take. We have said on several occasions—I have said it myself and my right hon. Friend the Mem- ber for Roxburgh, Selkirk and Peebles (Mr. Steel) has said it—that it would be hard to imagine a Queen's Speech that would persuade us that it was in the national interest to postpone a General Election any longer.

That is a reasonable formula. Anyone, even those in the press, should be able to understand it. It means that we shall vote for a General Election. That is what we shall do today. Our problem on this occasion, as on others, is that, unfortunately, there are only two Lobbies. That is a great disaster in terms of parliamentary democracy. However, that is with us and we can do little about it. Votes are always seen by the press and the two party dinosaurs in the House as either for the Government or for the Conservatives. We do not accept that grotesque limitation of choice. We realised that the amendment on which the vote would take place would be crucial. Having announced our intention to vote for a General Election, we had to ensure that the amendment enabled us to do so.

The vote at the end of the Queen's Speech debate is bound to be on an amendment tabled by the Official Opposition. That is another of the disasters in this place. That is another indication that the House is ruled by dinosaurs. We were somewhat afraid that the Conservative Opposition would bungle the amendment. We tabled our own amendment not because we thought that it would be selected—we knew that it would not—but to give hints to those who needed them. My right hon. Friend followed that up by a weekend speech in which he told the Conservative leadership what to write or, more importantly, what not to write. Never have so many hints been dropped.

Even the brain of the dinosaur proved capable of absorbing some sensation. The Opposition amendment reads as though it was written by someone who had our amendment on his desk. It does not call upon the House to support a lot of old Tory rubbish. If it had, it would have been impossible for us to vote for it. It does not even ask for the return of a Tory Administration. O, modesty!

The vote tonight is for a General Election. It is not a vote for a Conservative Government. It is certainly not a vote for Conservative policies. It is a vote for a General Election, when all parties in the House and all politicians may put their respective policies before the British people and let them decide. That has always been our intention, and I do not know why there should have been any doubt about it.

At the beginning of the debate the right hon. Lady the Leader of the Opposition made an extremely important speech about Conservative attitudes to incomes policy. I shall take up one or two of her remarks. She said:

"All Governments from time to time have had incomes policies".

The right hon. Lady listed the dates. I fundamentally disagree with her. Britain has never had an incomes policy. It has had a series of incomes freezes at temperatures rather less than freezing. In other words, we have had a series of nil-plus-something norms. If we say that a freeze is at zero, zero plus one is a freeze rather than an incomes policy. We have not had an incomes policy from any Government.

The right hon. Lady was right to attack a rigid national norm. She accepted that any Government had to take a view of the general level of wage settlements commensurate with the projected growth rate. She said:

"The dispute arises, I think, over whether that view is an average or whether it becomes a norm. I must say very strongly indeed that in our view that figure is an average and can never be a norm except in conditions of emergency."

The right hon. Member for Down, South (Mr. Powell) has had some fun with that. I am not surprised. It is pretty easy to have fun with it. However, without a sophisticated pay policy it is impossible to distinguish between a norm and an average. Having taken a view about a desirable average, how will a Conservative Government go about achieving it? If that is not to be done by making it a norm, who will decide who is to have more than the average and who is to have less?

Having picked up what might have been an extremely interesting piece of speculation, the right hon. Lady dropped it like a hot brick. Instead of following it through and declaring what sort of incomes policy would enable a Conservative Government to distinguish between the two factors and impose some sort of average on the country, she reintroduced the dreaded cure-all of responsible collective bargaining.

Speaking of the breakdown of the Conservative Government's pay policy—she called it a breakdown, I did not—she said:

"It broke because after one has had a certain number of rigid phases, one must in fact return to responsible collective bargaining."

Was not the reason for the rigid phases of pay policy that she was castigating the fact that responsible collective bargaining had broken down? All Governments tried responsible collective bargaining, and under all Governments responsible collective bargaining broke down and failed. It was only when responsible collective bargaining failed that Governments turned to some form of rigid pay policy.

The right hon. Lady says that the reason for the return to responsible collective bargaining is that rigid phases of pay policy have broken down. Where does that lead us? It seems that we can have neither rigid pay policy nor collective bargaining. It may be that I have the right hon. Lady's argument slightly wrong. It may be that she believes that the trouble with the collective bargaining that we had in the past was that it was not responsible. That begs a vital question about the three words "responsible collective bargaining" Who will decide what is responsible? If the Government make a decision, they become as firmly entrenched in pay policy under the right hon. Lady's proposals as ever they have been.

The right hon. Lady referred to one fundamental factor, namely, the effect of the monopoly power in the labour market. On 1st November she referred to

"whether trade unions have so much power that they will abuse that power."—[Official Report, 1st November 1978, Vol. 957, c. 27–30.]

She said that the Prime Minister should be addressing himself to that issue, but so should she; so should we all. Some of us have been addressing ourselves to it for many years. The only conclusion that we can draw is that most of our modern inflation has been caused by the interaction of two factors. There is the Keynesian commitment to full employment, which I wholeheartedly share, and there is the monopoly bargaining power of trade unions, which has increased enormously in Britain.

The right hon. Member for Down, South made a sophisticated, argumentative and seemingly logical speech. I remind hon. Members on the Left wing of the Labour Party, whose heads were nodding so vigorously throughout that splendid deployment of the argument, that the right hon. Gentleman's argument on immigration controls sounds just as logical in his mouth. It is extremely dangerous to be led along these subterranean logicians' paths by the right hon. Gentleman. The fact is that today the right hon. Gentleman was virtually denying that monopoly power in any market can ever have any effect on prices. That is a nonsensical conclusion at which to arrive.

In the long term we must reduce the monopoly bargaining power of trade unions. We cannot do that by measures such as the Industrial Relations Act. That measure would have centralised trade union power. That was its purpose. Its aim was to give more of the power to the hierarchies in the trade unions and less to the shop floor. We can tackle the problem of monopoly bargaining power only by diffusing power to the shop floor by means of a radical change to industrial democracy at plant level. That will take time, and meanwhile we shall have to continue to control the price that monopoly suppliers of labour can charge through an incomes policy. That means an incomes policy that will last not from year to year, but for at least five years. Such a policy must be flexible but enforceable.

That can be done only by having regard to the labour force's share of the wealth which the enterprise in which they work creates. I get a bit sick of hearing trade union negotiators at Ford saying that the company can afford to pay because the company has made profits. I dare suggest that never at any time in the negotiations over the years have the trade union negotiators on behalf of the Ford workers asked the company seriously for a profit-sharing scheme, yet as a result of the Finance Act 1978 they could, if they put pressure on the Ford company, ensure that every member of the Ford labour force could have up to £500 a year this year, tax-free, in the form of shares in the company. They would have real assets in the company and a share of the wealth, which I believe some Labour Members want. But the trade union negotiators have never asked for that. Of course the Ford company will not give away its American wealth in that way to mere British workers, but I believe that if the trade unions were to negotiate for it that they could get it and solve a large number of their problems.

We need a pay policy based on the principle that for a five-year period labour costs must stay constant as a proportion of the added value of the enterprise. That cannot be inflationary. If its added value increases its labour costs can increase. Where an enterprise increases its labour costs as a percentage of added value it and its employees must incur a penalty, and the best penalty, in our view, is an increased tax burden on the individual firm and its employees.

I know that many Members on both sides of the House will disagree fundamentally with that kind of argument, but many of those who disagree with that sort of pay policy believe in what they call incomes policy. It is up to them to come up with a flexible but enforceable incomes policy, because that is what everybody in this House who believes in incomes policy is trying to find.

I do not believe that we can do without pay policy. The right hon. and learned Member for Surrey, East (Sir G. Howe) played with words this afternoon when he said that he was in favour of something called a policy for pay. I do not know how a policy for pay differs from a pay policy. I think that it is just a question of rearranging the words to make it sound a little less awful to some of the monetarists behind him. The question is not whether we have incomes restraint, but what kind of incomes restraint we have. The Government are now incapable of devising, or are unwilling to devise, an effective pay policy. That is one good reason for having a General Election as soon as possible.

The Government are also incapable of coming to a decision on the European monetary system, and again we are in great danger of missing the European bus. We have had to go into Europe cap in hand—a Europe fashioned by other hands long before we got there and long before we were able to influence its shape. If we are not very careful we shall be the only EEC country which will be so weak and have so infirm an economy that we shall not dare to put our feet into the European monetary system. Have we really reached the stage where we cannot go even where Italy dares to tread? Is that what the Government have brought us to?

Yes.

This is a nonsensical argument. The fact is that there are technical arguments one way and the other about European monetary stability. We can enter into all those arguments, but the basic political imperative is that we must be there in shaping the future institutions of Europe, just as we should have been there in shaping the foundations of Europe. It is a tragedy that we were not there, and it will be even more of a tragedy if we are not there shaping the European monetary system in the future. The reason that the Labour Government cannot come to a conclusion on this is that they are bargaining from the weakness of a total and utter split within the Cabinet over the very first principles of European policy.

The immediate economic outlook has not been improved in the mind of any of us by the action of the Bank of England and the Treasury today on interest rates. Three months ago it seemed that the world's view of Britain had changed for the better. There was certainly a new confidence about. The Prime Minister was even heard to claim that somehow his great contribution to Britain was that he had made this country governable again. That has all changed. One of the most worrying things in recent weeks when talking to investment analysts, business men and bankers from abroad has been to hear them ask "What has happened to Britain?" They refer to the strikes and to the excessive wage increases.

Who will say that the Ford claim is responsible? Does it appear responsible to the Conservative leader? What about the bakers' claim? The cost of bread has gone up by 23 per cent. since the beginning of this year and the workers are now asking for a 26 per cent. increase in wages. It is a totally irresponsible claim by any standards and it must not be allowed to go through, but what will the Government do about it?

I am glad that the hon. Gentleman mentioned bread prices. We know that the world has had two successive bumper grain crops. We know that the basic prices of producing bread have fallen to rock bottom. We also know that the price of bread in the shops will not fall. That has nothing to do with wages. I suggest to the hon. Member that it is irresponsible even to suggest that it has anything to do with wages. It has to do with the kinds of market mechanisms that the world's people have to face.

It has everything to do with monopoly. The major part of the bread industry in this country is now in the hands of two companies and the union has the labour side tied up. Where capitalists and union are working a monopoly together they are able to squeeze the last ounce out of the consumer, and that is what is happening in the bread market. It has to do with wages, but it has to do primarily with the monopoly—

No.

—in the bread market. It is a question of the power that collusive monopoly gives to a trade union, as in the case of this particular trade union. It is that which has enabled the prices to be raised.

The hon. Gentleman has talked about the trade unions squeezing the orange dry. The trade unions do not seem to have been squeezing very hard in this case, as I think the hon. Gentleman will agree, because the workers in the industry get only £41 for a 40-hour week.

It is a pity that some Labour Members have not read a letter that was written by a rather better Socialist, Frank Field of the Child Poverty Action Group, in The Guardian yesterday. Talking of the sorts of increases now being claimed by, for instance, the printers on The Times and the Ford workers, he went on to say:

"These are just some of the differences in rewards which result from free collective bargaining. Free collective bargaining, however responsible, does not help the agricultural workers, the nurses or the millions of other low paid workers who are not covered by trade unions. Moreover, they are witnessing a determined attempt by the powerful unions to break incomes policy."

That is as good a Socialist view as any that will come from the Labour Benches.

What did he say about the bakers?

The man whose main responsibility is to look after the interests of the low paid in Britain believes that free collective bargaining is one of his worst enemies, and one of the worst enemies of the low paid. So it is.

The virtual collapse of pay policy that we are now witnessing and the obvious inability of a lame-duck Government to do anything about it are in my view good enough reasons for holding a General Election. The sooner we hold it, the better.

7.40 p.m.

In view of your request to limit our remarks, Mr. Deputy Speaker. I shall try to be as brief as possible. I make one comment on the speech of the hon. Member for Cornwall, North (Mr. Pardoe). We have been here before. It is rather like a nightmare which returns every two or three years. Each time it comes back it is more intense than it was on the previous occasion. The interesting thing about the low paid is that every time we have an incomes policy we are told that it is necessary to help the low paid. Yet at the end of each incomes policy we discover that the low paid are still the low paid. They are still at the bottom of the pile. Their position is worse than it was before. I remind the House that low pay does not stop being low pay because of an incomes policy.

Look at what happened to the former Leader of the Tory Party, the right hon. Member for Sidcup (Mr. Heath), who occupies—when he is here—the Bench below the Gangway. Let us look at what happened in 1973, after periods of statutory incomes policy. We did not introduce a statutory incomes policy. Well, we did and we did not. It was and was not. The truth is that it has been an incomes policy for three years and it is remarkable that the trade union movement has been willing to go along with it for that time. However, the unions have now said quite categorically that they are at the end of the road.

The other day the Prime Minister said that 5 per cent. was the Government's policy and that they were not moving from it—rather like King Canute as he went beneath the waves. Yet today he says that there is to be free collective bargaining. That is the case. The trade unions are no longer prepared to accept an incomes policy of the type we have had, or to accept a 5 per cent. norm. The Labour Party is not prepared to accept that either.

My hon. Friend for South Ayrshire, (Mr. Sillars) made an absolutely marvellous speech, particularly his devastating remarks about the Scottish National Party. I hope that every one of those remarks is reported back in Scotland. I particularly like the reference he made to the battle of Flodden, when he said that the Scottish nationalists would not have won even if the English had been on their side. I am not surprised that this is the view taken by himself and others in Scotland.

My hon. Friend is quite wrong on one point. He talked about the retreat of the Labour Party. I would like to make it quite clear that the Labour Party has not retreated. We have not gone back on our manifesto. The Labour Party has been having a discussion with its right hon. and hon. Friends who make up the Labour Government. The Labour Party is not entirely the Labour Government. It is not exactly the same thing. The Labour Party conference passed a resolution calling for an end to incomes policy, to any suggestion of a 5 per cent. norm. Let us be clear. It is not the Labour Party which has retreated; it is my right hon. and hon. Friends on the Front Bench who have tended to depart from some of their policies.

A great deal of our manifesto has been carried through and this has been beneficial for the ordinary working people. I am not ashamed of any of the progressive measures that have been enacted by the Government, supported by the Labour Party. We may, however, have objected to certain policies when there has been a retreat on the part of my right hon. and hon. Friends. We are at the end of the road for the incomes policy. That does not mean that we line up with the Leader of the Opposition or the right hon. Member for Down, South (Mr. Powell). Although one or two of us may have nodded on the odd occasions when the right hon. Gentleman said something about the role of trade unions and trade union officials, we are not accepting the monetarist concept. We do not believe that the answer to our problem is to produce a squeeze, which is bound to create unemployment. That is likely to happen on the right hon. Gentleman's arguments as much as it is if the Opposition's policies were followed.

My right hon. and hon. Friends have to recognise that if we are to make any further progress there cannot be this 5 per cent. figure, like some phallic symbol, as if it were a test of manhood. It is as though we had to prove ourselves. That is not good enough. People will not accept this. It is creating an artificial barrier through which they are bound to break. This is happening and my right hon. Friend does not seem to realise it. Workers are settling above 5 per cent. It is true that my right hon. Friend boasts of those who have settled below 5 per cent. but a lot of others are settling above that figure. The policy is now as dead as the dodo. That ought to be recognised.

If the Government want to concentrate on a wages policy they should concentrate upon something decided by the Labour Party conference, namely, the introduction of minimum national wage legislation. That is the Labour Party's policy, carried at our conference. That is the only thing that we have argued. Beyond that there should be free collective bargaining, based upon the arguments which trade union officials are able to put up and the strength of the workers in relation to their industries.

We were told that, without an incomes policy, there would be an increase in unemployment. The truth is that we have had incomes policies and an increase in unemployment. Some of us said that an incomes policy would not prevent unemployment because unemployment is inherent in the capitalist system. I agree with my hon. Friend the Member for South Ayrshire. The way to deal with unemployment is to carry through Socialist policies. I do not agree with him if he believes that we can carry out such policies in isolation.

We cannot have a nice Socialist Utopia in Britain and nowhere else in the world. That will not work. Whether we like it or not, we are subject to market forces throughout the world. In all of the countries of the Western world controlled by market forces unemployment is high. This is true of all the Western capitalist world. There is no isolated planning of our resources and of the economy in a Socialist direction. We have to move in a Socialist direction, but we must not delude ourselves that we can do so in total isolation.

I will be brief because I know that many of my hon. Friends wish to speak. I had a nicely written-out speech, which I fear would have lasted at least 20 minutes, possibly half an hour. I want now to direct my remarks to my right hon. Friends A small group of people meeting in Downing Street round a table is not necessarily correct about everything. Those people might be correct about many things, but not necessarily all.

My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) made an excellent maiden speech in the tradition of the late John Mackintosh. Incidentally, it was politically on much the same lines. I liked John Mackintosh very much. My hon. Friend said that the Government's policies led to his victory at Berwick. We had just had the Labour Party conference at which there had been a good old dust-up and differences of opinion between the Front Bench and members of the Labour Party. Therefore, it could also be argued with much the same justification that the debate on wages at the Labour Party conference was responsible for our victory at Berwick.

The debate at the Labour Party conference was serious. People there were trying to get to grips with inflation, but with different approaches to how it should be solved. I think that the British people welcomed that serious debate rather than the "phoney" debates that take place at the Tory Party conference.

What about the Liberal Party conference?

I do not watch the Liberal Party conference, so I do not know what goes on there.

It is a good show.

I take my hon. Friend's word for that. Perhaps next time I shall look at it.

The TUC is opposed to the continuation of an incomes policy—particularly the 5 per cent. It wants a return to free collective bargaining. The Labour Party conference was equally opposed to it. Let no one believe for a moment that those delegates who voted were only those with block votes in their pockets. The constituency parties voted by an absolutely overwhelming majority in favour of getting rid of the 5 per cent. I watched the original vote. People try to twist things the way that they see them, but I was watching that vote from the platform. A card vote was called for, and that completely consolidated it.

The British people are fully aware of the Labour Party's stance on incomes policy. I ask my hon. Friends not to be like King Canute. They must not pretend that they can stop the waves from coming in. The waves are not only coming in, but they will overwhelm them.

It is nice being popular on the question of wages no strikes are taking place, when bread is regularly available, when the lights are on and when the trains are running. It is marvellous. The right hon. Member for Sidcup was popular until things began to happen and people got stuck in lifts, the bins were not emptied and the trains did not run. Are we to have a winter of discontent similar to that?

Some of the anger of the people will be turned on trade unionists—it always is—but a great deal of that anger will also be turned on the Labour Government. People will ask "Why did you not act more flexibly? Why did you put up the barrier? Why were you acting in this way, particularly in relation to public services, sewage, water?"

I suggest that we can breathe a little easier tonight and that, as we shall continue in office for a period, there is time to deal with this matter before it is too late. I appeal to my hon. Friends to consider the decisions of the Labour Party and the TUC. They should not believe that 12 or so people in Downing Street know best. Perhaps the Labour movement knows better than they do when it comes-to incomes policy.

7.55 p.m.

When we consider what has happened to the British economy over the last four years and then look at our industrial competitors in Western Europe, as well as the position in Japan and America, we are entitled to criticism this Government's handling of our economy. Without going into all the details of productivity, we know that, by any measurement. we are not as efficient as these countries and it is now affecting the standard of living of all our people.

It does not matter whether we take the number of people needed to produce a car in West Germany or the number of hours it takes to produce a television set in Japan, the message is always the same—productivity in Britain is lower. As a result, our standard of living is now lower.

In Western Europe, the working population have better pensions, better benefits, higher wages and shorter hours, and the gap is still widening.

If this is happening under our present policies, surely we should change them. It has never been my habit to mount only a destructive case, but I believe that even this Government should face up to some radical changes. These changes must be in taxation, wage policies and industrial strategy.

It is quite ridiculous that in this country, with our huge unemployment problem, we should have tens of thousands of vacancies for skilled people in, for example, electronics and engineering. But is this not understandable when people can receive virtually as much take-home pay for being under-employed and over-manned in an unskilled job as they would get after years of training to make themselves proficient in skilled careers?

Again, whilst it is absolutely vital that those who are out of work, through no fault of their own, suffer no hardship to their families or themselves, surely the gap between that position and the lowest wage earners should be wider.

All industrial history shows that to preserve jobs in industries where the demand for the products has changed may for a short time help employment, but in the long term destroys it. Our competitors seize upon every technological advance because they know that this makes the product cheaper, therefore available to a much larger market, and so the eventual result is more people employed in the industry concerned.

Here the attempt to introduce new technology more often than not leads to manning disputes; attempts are made to retain a higher than necessary work force; productivity drops and the product becomes too expensive for a wider market, with the inevitable consequence of higher unemployment and lower wages for those retained to work the new technology inefficiently.

I see that the chairman of the TUC has now suggested that price rises, not wage rises, are the cause of inflation. How is it possible to hold prices unless every increase in wages is accompanied by better productivity? For how long can a country award itself an annual wage increase without an annual productivity increase?

Again, on taxation, there must be a cutting of rates at all levels and there should be some adjustment between direct and indirect taxation. It is far better, and it gives people far more incentive, to tax spending than to tax earning, and this is what a shift from direct to indirect taxation means.

On the problem of wages, which is currently causing areas of disagreement in both political parties, may I say that some day, somehow, there must be a return to responsible free collective bargaining in industry. If that is agreed and can be accepted by the whole population in the long-term interests of this country, then how should the start be made?

To make this start means moderation in large sectors of earnings so that a start can be made to get real wages and differentials up in other sectors, which can then become the expanding high fliers which will eventually haul up everybody's standard of living in their wake. I suggest that the place to start is in productive manufacturing and particularly exporting industry, which is the area which gives the nation its standard of living. This of course means Government responsibility to hold wage increases at a lower overall level in all those sectors where basically the job is administrative. service and governmental.

I end by saying that the measures that I have outlined should be accompanied by movements to start reducing Government expenditure of the GNP from its present 60 per cent. towards 40 per cent. This can be done by putting large parts of the public sector over to more efficient private management. Besides raising the income level at which taxation begins, a start should be made on reducing the present top rate on earned incomes of 80 per cent. towards 60 per cent. The present legislation and bureaucracy should be pruned and savaged to allow enter-price and initiative to flourish and there should be introduced immediately exemptions to many provisions of the destructive Employment Protection Act to firms employing below a certain work force and with turnover below a certain level.

To those who disagree with what I see as ways of making a start on getting the standard of living of the British people catching up with that of our friends across the Channel I would say let them spell out clearly other methods of doing so.

8.1 p.m.

I congratulate my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) on his outstanding maiden speech and join in his tribute to John Mackintosh, whose eloquence, integrity and courage were an example to many of us. For me at any rate he was one of the outstanding Members of this House.

The trouble with the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe) was that it was in two parts and that those two parts did not hang together. First, he criticised the Government for interfering in collective bargaining and then spent a great deal of time telling the unions how to run themselves. He said little that was positive about Tory policy, except that the Tories would brandish guidelines —I think that that is the phrase he used —which was stirring stuff and will, I am sure, bring his party many votes.

I, too, want to discuss incomes policy, which, as the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) said, divides both parties. I do not underrate the problems caused by incomes policies, particularly in their fourth stage. There are arguments over anomalies and differentials and the distortions which they can create in the labour market. There are the problems created for unions by shop stewards who want to go back to what they see, understandably, as their main function of bargaining about pay.

All this causes considerable difficulty, although I do not accept the argument of the right hon. Member for Down, South (Mr. Powell) that the reason for our industrial relations problems being always highlighted is incomes policy. That is far too simplified an explanation, but I agree that incomes policy causes many difficulties.

Despite those difficulties, however, having looked at the matter for many years, I do not see that there is any alternative. Of course there are many causes of inflation—the price of raw materials, the pricing policies of particular companies and industries and the actions of Government, including taxation policy and control of the money supply; and, as we have seen over the last few years, changes in the international money markets are often beyond our control and have an important effect on prices in this country.

All these factors have to be taken into account in the formulation of policy, but I do not see how one can dismiss pay from price determination, considering all the evidence that we have had, particularly in 1974–75. I can still vividly remember Hugh Scanlon, one of the great supporters of unrestrained collective bargaining, saying, "I looked over the abyss and I did not like what I saw." We should remember what happened in those years before we extol the virtues of unrestrained collective bargaining.

Of course it would be possible, as the Prime Minister has said, for us completely to abandon any form of incomes policy and to rely on fiscal and monetary controls, but in the end that would almost certainly mean much higher unemployment and would certainly be at the expense of growth. The beauty of incomes policy is that it enables one to combine policies for reducing inflation with policies for reducing unemployment. One cannot do that with unrestrained collective bargaining.

In any case, the phrase is a bit of a myth. When a third of all employees are working, in some form or another, in the public sector, the Government will have to take a view about their pay. Whether one likes it or not, that is one of the facts of life.

I can understand the free market supporters of the Conservative Party being in favour of this kind of bargaining. What I fail to understand and would genuinely like to know is how some of my colleagues who are good Socialists can still believe in the merits of unrestrained collective bargaining. I ask them, what about the impact on fellow workers? What about fellow workers' jobs? What about fellow workers' living standards? What about low pay? It is unrestrained collective bargaining which has to take the major share of the blame for the existence of low pay. What has created the differentials over the years but unrestrained collective bargaining? As Sid Weighell said at the Labour Party conference—

He is a great authority.

He is certainly a great authority. As he said, under free collective bargaining, those with the biggest snouts get the biggest share. I do not happen to believe that is a very good Socialist policy.

Is my hon. Friend seriously suggesting that there was no low pay until there was collective bargaining? He must face the logic of his own arguments. If he is asserting that low pay—

Order. I remind the hon. Gentleman that this is an intervention, not a speech. Will he please address the Chair?

Is my hon. Friend seriously suggesting that low pay did not occur until what he has called unrestricted collective bargaining occurred in industrialised economies? If he is not saying that, what is he saying?

I am not saying that. What I am saying is that under unrestrained collective bargaining the biggest rewards go to those with the biggest power. It is not a recipe for reducing differentials. It is only under incomes policy that any attempt has been made to reduce those differentials. It has not been entirely successful, but it is only under incomes policy that the attempt has been made.

I am often told by my colleagues that once we get to a Socialist society things will be different. But I have never understood how one gets to Socialism by aping the most selfish attitudes in society today. I do not believe that that is the way forward to Socialism. For Socialists, I believe, there is no alternative but some kind of incomes policy.

Of course, I accept the argument that incomes policy, and this stage of incomes policy in particular, can be improved and should be improved. The most important thing, as my hon. Friend the Member for Berwick and East Lothian said, is that incomes policy should be seen to be fair. One key element in fairness is that those who settle within the limit should have at least some guarantee that others will also settle within the limit. That is the major problem at the moment. That indeed was one of the main arguments put for a statutory incomes policy on the lines of that of the Conservative Government.

My own experience of statutory incomes policy on the lines of that of the last Conservative Administration is that it is counter-productive. But the Government must have some weapons in their hands. The sanctions they possess at the moment are patchy and not always credible. There is a case for strengthening the powers of the Price Commission to refuse price increases to companies which deliberately and obviously flout the pay limits.

On issues like low pay, differentials, anomalies and so on, we have had over the past two or three years a plethora of ad hoc inquiries producing all sorts of results. The reason is that they have no consistent policy or view. So I think that there is a case, despite trade union opposition, for a body set up on a voluntary basis and with the participation of the trade unions which could make considered judgments on matters of this kind. Trade union participation is important for two reasons. The first is that collective bargaining is at least partly a bargain between trade unions as well as between employers and trade unions. It is a bar- gain about how the cake is to be shared by employees. The second reason is that, if the trade unions do not participate in making policy, they have no right to criticise if the policy is wrong because they have not shared in trying to work out the details.

I also agree with those who say that incomes policy must be seen in a broader context. That is why I believe strongly in the idea of a social contract Prices have to be taken into account. It has to include all kinds of incomes and wealth and it must be seen as part of a move to greater equality. It will also have to be supported by moves towards more industrial democracy. That is why I welcomed the mention of industrial democracy in the Queen's Speech. Many more people are coming to believe that trade unionists must have a greater share in the running of industry. Trade unions have considerable power, but it is a negative power. On the whole, it is a power to stop things happening. I should like trade unionists to have more positive power and much more constructive power.

Finally, I say a word or two about this House. Many of us now agree that Members of Parliament should play a greater role and have greater powers in the surveillance of Government policy, especially economic policy. It will not surprise the House to learn that I am a strong supporter of the proposals of the Procedure Committee to strengthen the Select Committee system as I was a member of that Committee, and I am disappointed that there is no mention of this in the Queen's Speech. I hope very much that over the next few months the Government will make a statement that they support the main proposals in the report of the Procedure Committee. It would be ironic if a Government who in so many other respects have rightly prided themselves on democratic reform did nothing to reform this House.

The Queen's Speech deserves wide support in this House. Once again the Government have shown themselves to be a reforming Administration with policies which they are prepared to see through. It seems that they will secure a majority in the House tonight, and I am certain that, whenever the General Election comes, they will also have the backing of the British people.

8.13 p.m.

As the first English Conservative to take part in the debate from the Back Benches today, I should like to congratulate the hon. Member for Berwick and East Lothian (Mr. Home Robertson) on a charming and engaging maiden speech. We liked his references to his predecessor, who had friends in all parts of the House, and I must say that I welcome the hon. Gentleman's arrival as a reinforcement to the dwindling band of patrician land owners in this House. I hope that he will be able to bring his considerable agricultural experience to bear in our debates in the future, if only to correct the obvious misconceptions of the hon. Member for Cornwall, North (Mr. Pardoe), who was able to conduct an inquest upon the recent price of bread without taking account of any of the evidence supplied by the Food and Drink Industry Council that the Common Market levy on wheat was as high as the world price itself.

However, this is not one of those pastoral occasions, and therefore I turn to the economic debate which has preoccupied the House and say how refreshing it was to hear the hon. Member for Liverpool, Walton (Mr. Heffer) digress a little upon incomes policy.

The hon. Member for Walton is the divine discontent of these debates. Ever since the halcyon days of the 1966 Prices and Incomes Act he has been here, baleful, irritated, hectoring, warning and usually being vindicated about the ineptitude, inadequacies and foolishness of the policy. But I thought that the discontent was that much sharper today because something called "monetarism" seems to have infected many parts of the House hitherto thought to be immune from the disease.

It is one of the fascinations that whether it is experience, fashion, events or conviction, there is no doubt that among many hon. Members—including, for all I know, the Lord President—there is now an acceptance that monetary policy is indispensable in the management of economic affairs, so much so that at one stage today the Chancellor of the Exchequer berated my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) for using arguments which were

"giving monetarism a bad name."

That might be a useful starting point for what contribution I have to make. It is that although monetary policy has a central role it is not the exclusive requirement of economic policy. The Prime Minister, who, rather like a mediaeval schoolmarm, is addicted to the three-legged stool, says that he wants a monetary policy but also a tax policy and also, of course, an incomes policy. He rather distanced himself from my right hon. Friends on the Opposition Front Bench, thinking that he stood for qualified monetarism whereas they stood for some crude, unrefined product.

The Prime Minister is very amiable and I have a great affection for him. However, there is a learning curve, and the truth is that the right hon. Gentleman has arrived at refined monetarism about two years after my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), because in his Stockton lecture of 1976 he said:

"monetarism is not enough; there are other parallel imperatives".

It seems to me that it would be a truly helpful pre-election debate if we could concentrate upon what were the most appropriate supporting policies of monetarism.

The Prime Minister and the Chancellor of the Exchequer have made it quite clear that, for them, incomes policy is in a major supporting role. At this point I think that it is always helpful to define for oneself and one's audience just what is meant by "incomes policy". In my mind there is only one definition which is adequate. It is that it is a policy which gives the Government or their agencies the power to identify, select and enforce differential wage movements throughout the whole economy. It really is to that that the present Government have committed themselves, including the Lord President, who is one of the most unhappily reformed characters on the Treasury Bench.

There are many cases which can be made against this policy. They have been made with great force today. I shall not be repetitious, but I want to add four reasons why I think it is a policy which is defective and which in its totality can be profoundly dangerous.

First, it is an absolute illusion to suppose that incomes policy will produce higher productivity. If anything, it will lead to marginal distortions which in their cumulative form are damaging.

Secondly, I do not believe that incomes policy will relieve poverty, because the politicisation of wages almost certainly leads to higher unemployment than otherwise for those in low income brackets. In any event, I am inclined to agree with the hon. Member for Walton who said that on the cumulative evidence it did not look as though it was very effective to that end. If this House wants to do something about poverty, which is a legitimate objective, it has to be done through social policy—for example, a policy in respect of child benefits—or through the tax system. That is the way to do it, rather than attempting to politicise wage negotiations.

Thirdly, I do not believe that an incomes policy will disarm trade union power. Eventually, the unions are more likely to try to accommodate it in a corporatist fashion. However, I must dissent from my pair, the hon. Member for Chester-le-Street (Mr. Radice), because it seems to me that the more he elaborated the role that he was casting for the trade unions the more my analysis seems to be justified.

That is not so.

I am glad that the hon. Member has made himself clear. Perhaps we can debate this on another occasion.

We should.

The hon. Member for Birmingham, Selly Oak (Mr. Litterick) confirms my wisdom and I am worried. Perhaps we can adjourn this debate and continue it on another occasion.

If there is genuine concern about the exercise of trade union power, one should make no mistake. That invites the House to consider the appropriateness of the present law and how it might or might not have to be modified.

Finally, the policy will lead to a deep sense of injustice over a period of time. If I were to have to identify the most likely source of injustice from the present phase of incomes policy it would be the application of the black list. Does anybody seriously suppose that if British Oxygen concludes a settlement outside the 5 per cent. British Steel will be invited not to order oxygen from BOC? Does anybody suppose that the same injustice and the same law, enforceability and rigour will be applied to British Oxygen as to some luckless road haulier in the West Midlands? The question has only to be asked to render the answer. Once again it is a demonstration of how the policy teeters between farce and tyranny.

If that is not an appropriate supporting policy for monetarism, what is a preferable alternative? My right hon. Friend the Member for Leeds, North-East in his Stockton speech said:

"The strict and unflinching control of money supply, though essential, is not enough. We must also have substantial cuts in tax and public spending and bold incentives and encouragements to the wealth creators, without whose renewed efforts we shall all grow poorer."

I should like to test that policy against the Queen's Speech and our immediate situation. I believe that there is a requirement on the House to see that there is a curb on public spending so that it is stabilised in real terms. That is an immediate and attainable objective. In the context of the Queen's Speech it means a rejection of the enhanced role being sought for the National Enterprise Board.

Does it not also suggest a rejection of the further reorganisation of local government?

Yes, but I do not wish to make my hon. Friend's speech.

I agree with my hon. Friend the Member for Aberdeenshire, West (Mr. Fair-grieve) that there must be a change in the balance of taxation so that we tax people more in their spending capacity than in their earning capacity. In the present context I believe that the regulator should be used in respect of excise duties on alcohol, tobacco and petrol. I do not believe that we can defer that increase in taxation.

The Government must so arrange their spending and taxation that the borrowing requirement does not necessitate an over-reliance on high interest rates. The present level of borrowing is profoundly unhealthy for the conduct of public finance. That fear is validated by the movement today of the minimum lending rate to 12½ per cent. The balance is inappropriate. The only immediate action that can be taken is the use of the regulator as a preliminary to budget estimates which will be converted into public spending of the restrained character to which I have referred.

I turn to the question of trade union reform. The debacle of "In Place of Strife" and the efforts involving the Industrial Relations Act may persuade hon. Members that somehow or other that item has been taken off the agenda. However, I do not think that it has. Again and again there will be growing anxiety that the House should address itself to this delicate, social and political issue.

The Prime Minister said:

"Not crossing the picket line has become an expression of solidarity to a degree which I certainly did not know in my younger days."

I wonder whether he thought of that at the time of Saltley or when he was advising the Leader of the House on what legislation was appropriate for trade unions in the early part of this Parliament. The Prime Minister continued:

"There are a few wild voices today which are seeking to thrust vital groups of workers into the forefront in the belief that the State will not in the end be able to resist a withdrawal of labour by such workers."

We should address ourselves to this subject with considerable delicacy. As a West Country radical I always warm to the Leader of the House in his denunciation of those great established interests in the land which he thinks from time to time need a little verbal discipline. For occasional reference I keep his comments close by me. Some years ago he said:

"Trade union leaders are not a special breed of humanity, always to be shielded from the rough breezes of democracy, rare birds to be protected by special game laws."

That is not the rhetoric that I would recommend when approaching the question of trade union reform. I would rather turn to the Prime Minister, who said of the industrial democracy provisions:

"We hope that as far as possible the arrangements for extending industrial democracy in factories and workshops will be secured through voluntary agreement and through negotiation."—[Official Report, 1st November 1978; Vol. 957, c. 40–53.]

I should like to see reform within trade unions proceed on a voluntary basis, but we delude ourselves if we think that at the end of the day there is no role that Government, State or Parliament can fulfill.

I turn to tonight's debate. The supporting roles which I should give to monetary policy are to be preferred to the Government's reliance on incomes policy, although ultimately that is clearly an issue to be debated and judged by a wider electorate. I believe that the present economic situation is deteriorating. On the whole I should prefer an early rather than a late election. The county of Shropshire is adequately represented in numbers and exquisitely represented in membership. Therefore the problems do not arise for me as they arise in the Province of Northern Ireland. I appreciate the arguments portrayed by my right hon. Friend the Member for Down, South (Mr. Powell), but I suspect that a pre-election Parliament will simply not be invested with that sense of austerity which our present situation requires. I think that an election will end that situation and at least offer a chance of monetary policies being buttressed by overall liberal actions rather than being buttressed by the steady and debilitating intrusion of the State into every boardroom and on to every shop floor.

8.30 p.m.

Perhaps the House will forgive me for not taking up some of the arguments about which party has done the most somersaults on incomes policy over the last few years, or go down the by-road on the question of trade union reform, because I do not believe that playing with the symptoms solves any problems.

Perhaps I can do what other speakers have done and refer to the programme on which I and my colleagues were elected in 1974. The right hon. Members for Western Isles (Mr. Stewart) and Down, South (Mr. Powell) did that, and to some extent so did the hon. Member for Berwick and East Lothian (Mr. Home Robertson) when he referred to his own recent by-election. I congratulate the hon. Gentleman on his maiden speech.

We in Plaid Cymru were elected under three main headings. One was constitutional change. Although the proposed Welsh Assembly under the Wales Act is far short of what we would like to see, it is something which is worth establishing and we welcome the announcement of the date of the referendum. A number of other problems need to be sorted out in Wales in relation to the referendum, and we believe that in all probability we shall have a somewhat more constructive approach from the present Government than from a possible Conservative Government, because the Conservatives have had nothing but a totally unconstructive approach to the whole question of the referendum and the Welsh Assembly.

The second heading under which we stood for election related to the economic well-being of Wales. For many years we pressed for the setting-up of a development authority. We now have the Welsh Development Agency. In many ways its work is falling short of what we would hope, but at least it is there and it is doing some good work. We also pressed for a development authority in rural Wales. That has been established and is doing excellent work in all directions. We pressed for an economic plan. We do not yet have that, but it is something which we hope will still progress. I suspect that we are marginally more likely to get it from a Labour Government than from a Conservative Government, although both Governments have been sadly lacking in this direction.

The third heading under which we stood election was that of safeguarding the Welsh language. Our language interests are known in this House. This Government have increased contributions to several bodies relevant to the Welsh language and have taken some steps on the most critical question of the establishment of the fourth television channel in Wales. We feel that the delays until 1982 in the timetable announced this summer by the Government are totally unacceptable. We hope that there will be some way of streamlining this critical path. We also hope that funds will be available for the early establishment of more Welsh language television programmes for children. We also welcome the announcement in the Queen's Speech of greater resources for the teaching of the Welsh language.

It is against these three headings that we must measure the Queen's Speech. When the announcement was made that we were not to have an election this autumn, Plaid Cymru made its position quite clear in relation to the forthcoming Session. We made it clear that there was no question whatever of our doing what the Liberal Party did—entering any sort of pact agreement or coalition. We also made it clear that there were certain issues for which we would be seeking in the Queen's Speech, and that we would judge the Speech on its merits with particular regard to those issues and to any other relevant matters.

The issues included primarily unemployment, and we stressed the need for additional funds for the Welsh Development Agency in order that it could step up the work which it must undertake to get more jobs for Wales. We referred to the need for compensation for slate quarrymen suffering from silicosis, for those hundreds of people suffering from this terrible disease and for the widows of many hundreds more. We stressed the need to accelerate the fourth television channel as well as the need for a Bill to provide more funds for teaching the language. We stressed the need for leasehold reform—there are several areas in Wales where there is a severe problem in this direction. We pressed for help for young persons going into agriculture who were trying to buy a farm for the first time, something which is virtually impossible these days.

Let us look at what the Queen's Speech contains in relation to these headings and our general programme for the last election. The Financial Times, not a newspaper which I always quote in relation to Welsh interests, spoke of "unprecedented Welsh measures" in the Queen's Speech. The BBC reported it as the "Welsh" Queen's Speech. I am not quite sure whether it was a Welsh Queen or a Welsh speech, but the BBC made the point. Therefore, four of the six issues which we itemised had, to a greater or lesser extent, been included in the speech. Subsequent to the Queen's Speech there have been further announcements. There is the possibility of progress on leasehold reform in this Session. We had the announcement of 1st March—St. David's Day—as the date of the referendum, to encourage agricultural production and we also had welcome steps this afternoon to help small businesses.

We cannot in all conscience vote against a Gracious Speech with such a massive Welsh content. That is a point that has been recognised not only by ourselves but by the hon. Member for Cardigan (Mr. Howell), who will go in a different direction from the rest of his party tonight.

However, we must stress that we are not in any way putting ourselves in a pact with this Government. In the coming months we shall continue to do what we have done in relation to this Queen's Speech—try to measure any proposal on the balance of its content. We shall support items that are of relevance and benefit to Wales and oppose those that are not.

I take this opportunity to warn the Government that if the electricity reorganisation, referred to in the Queen's Speech, follows in detail the lines of the Plowden proposals, we shall most certainly oppose it. I warn the Government even more that if a proposal comes forward to increase the price of petrol by 20p a gallon, with all the serious consequences for the rural areas, we shall do everything we can to stop it.

This brings me to the Conservative amendment tonight. As the hon. Member for Cornwall, North (Mr. Pardoe) said, this is really an amendment calling for an election rather than judging the economic content of the Queen's Speech. Personally, I would have been very glad to have had an October election. On the day that the Prime Minister announced that there would be no election, my party won a seat in my constituency on the local council that it had never won before. We achieved 63 per cent. of the vote in a three-cornered contest.

But there was no election and now we must balance against a possible election the consequence of losing this programme for Wales. Would any new Administration, whether Conservative or Labour, go forward with these sort of proposals? The Conservatives would not.

I wrote to the Leader of the Opposition on 15th September to ask what the Conservative Party had in mind for Wales. It was interesting that on two questions I drew an absolute blank. There was no response. I asked a question about the Conservative attitude to reducing unemployment and increasing the effectiveness of regional policy, which has been eroded. There was not a word of response on that. I asked what proposals a Tory Government would have for helping those people who were suffering from silicosis and pneumoconiosis, and surprisingly there was not a peep of a reply.

But, then, there is a possibility that Labour would win the next election. However, there is no guarantee at all that we would see these measures forthcoming from a new Labour Administration. There might be new priorities. Other measures that have been excluded from this Queen's Speech might find their way into the next one, in a new Government. Therefore, in the interests of Wales we feel it is necessary to go forward this Session and get these measures accomplished.

That does not mean that we are happy with the unemployment figure which has passed the 100,000 mark in Wales. We have heard this afternoon of the declining unemployment in Britain as a whole, but this has not been the pattern in Wales in recent months. Unemployment has passed the 100,000 mark for the first time in 40 years.

We seek a degree of economic planning that we have not had before in Wales. We want to make sure that we do not underspend against the cash limits that we have as in previous years. Last year we underspent by £57 million in Wales against cash limits. Of this, £17 million was on roads, £14 million on housing and £26 million on water and sewerage services. That £57 million is equivalent to 10,000 jobs. This is something that we want to see avoided next year.

We want to see initiatives on communications—on our air services and roads—in Wales. We believe that there is room to look at the possibility of more stockpiling of certain types of steel, of coal and of coke. In this context particularly the Nantgarw coke ovens most certainly could be kept open within the rules of the ECSC.

We look for an accelerated house building programme. It is ridiculous that there are 16,000 house building workers unemployed in Wales at a time when there are 60,000 people on the waiting lists for council houses and there are over 100,000 unfit houses in Wales. This could be done and done quickly.

We look for progress with earlier retirement, cutting unnecessary overtime, the reactivation of regional policy and a restriction on non-essential imports.

We suspect that we would not see any of these measures from an incoming Conservative Administration. Certainly in the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe) there was not one positive proposal for overcoming the economic problems of Wales.

Governments are elected to get things done. We look to Governments to respond to the circumstances and the needs of Wales. Of itself, having a Labour rather than a Tory Government is insufficient. We contend that only when we have a Government who are aware of Welsh needs and a group of Welsh MPs who are independent of London party Whips will things get done in Wales. That is the rationale of our existence here. We hope that soon we shall be able to sort out our own problems in our own Parliament. In the meantime, the menu offered by this year's Queen's Speech represents as much as we are likely to get in present circumstances from this or any other London Administration. For that reason, we shall vote against the amendment.

8.41 p.m.

Those of us who have been sitting through the debate and who have been able to do our arithmetic and translate speeches into votes can calculate, if we understand correctly what the right hon. Member for Down, South (Mr. Powell) has promised to deliver, that the majority will be three in the Division and that therefore the Government will survive.

That takes me on to the speech by the hon. Member for Oswestry (Mr. Biffen) and, at the same time, back to the days from which he was quoting. He quoted my right hon. Friend who is now the Leader of the House. In those days, I think that the hon. Member referred to me as "20 per cent. Norm". I can assure him that the same arguments do not apply now. I am arguing not for a 20 per cent. norm now, but for the total abolition of norms. That is the only change that I can detect in our argu- ments as they have developed over the years.

I link Oswestry with Down, South in the sense that the money gurus come repeatedly to the House and display this aplomb, this absolute brass neck in the way in which they present arguments which are not supported by a shred of evidence. The monetarists' whole case is unfolded yet again and massive assumptions are made. These economists make their assertion in support of their case without producing any evidence. No other profession in the world could do that and survive.

When the right hon. Member for Down, South reads his speech tomorrow, he will see there contradictions on the question of velocity in the economy and what happens as a result of the rapidity with which money is used and the effect of the rapidity of exchange within the economy and its effect on money supply.

I consider today's announcement about minimum lending rate to be outrageous. An increase in bank rate at this point is an affront, almost deliberate sabotage of what is being done to the economy. It is as though the Government had devoted themselves to devising a method by which they could deliberately increase unemployment and scuttle any hope they have of a successful wage policy. If many of us had been asked to devise a way by which to undermine wage negotiations and a return to full employment, we would have nominated an increase in the interest rate of 2½ per cent. at least. That decision will have a greater effect on inflation than will a hundred Ford-type settlements. That must be in our minds when we appreciate what will happen as a result of a minimum lending rate of 12½ per cent.

I have been challenged by Labour colleagues to substantiate the call for the abolition of the present wage policy. Many hon. Members have referred to the policy as the voluntary-involuntary policy, or the statutory non-statutory policy. I have been asked why Socialists such as myself are opposed to these ideas. I wish to take a few moments to set out my view.

All wage policies in a mixed economy, and certainly in a capitalist economy, are of necessity policies of wage restraint. They cannot be otherwise. There is no way in our kind of economy in which we could devise a wage policy by which it is possible for a Government to instruct employers in the private sector to increase the wages they are paying to their employees. Again that cannot be done.

Therefore, in that context there is no transfer of resources. There is no way in which the Ford workers will say "We will stand back to enable somebody else to have a little more". There is no mechanism by which we can transfer resources or move wage levels in our economy. Certainly by such a method one cannot transfer resources from the private to the public sector, particularly into the social services. The present policy by its nature is a policy of wage restraint. If we put upon it a figure of 5 per cent., with an inflation rate of about 8 per cent. this year, we know that even if we allow for the tax allowances in respect of increased margins, thresholds and all the rest of it, it must mean a drop in living standards this year. In these circumstances, the Government should not expect their supporters to argue in favour of such a policy.

In face of an increase in MLR to 12½ per cent., it must be regarded as sabotage to say to workers that their levels must be lowered. That is a lethal argument when the whole of our activities should be directed to the attainment of economic growth. Part of the alternative strategy in seeking to get out of our present difficulties is to go for growth. However, we cannot take that course if restraints are built into the system. Such a policy assists an employer who is hostile to a wage increase.

The phrase "free bargaining" is a misnomer. I have never heard of an employer standing at the factory gate handing out spare wage packets and saying, "Here is a little more. Please take it with you because it might help."

Does my hon. Friend agree that the reason the Government are afraid to go for growth is that they do not have a trade policy to allow them to go for such a policy without the community immediately incurring a devastating penalty?

My hon. Friend has put the point precisely. In the absence of some restriction on trade and imports, my hon. Friend will know that it is not possible to go for growth because the methods which would have to be employed by the Government to obtain it would have to be hived off into additional imports. That would be a contradictory policy.

Let us consider what the Government's policy will mean. The Government are envisaging the start of a permanent wage policy. The longer this continues, we all know that there will be no hope of getting away from the permanent element built into the system as it now stands. On 31st July next year we cannot suddenly escape from the limits of the restraints built into the system. However, we know that there is a General Election in the offing—and what is quite certain is that the Labour Party will not go into it with a manifesto based on a permanent wage policy.

For the British Labour Party, on the basis of the conference decisions, there will be no phase 5 spelt out in our manifesto. There will be no arguments at the next General Election that this party is campaigning on the basis of a further incomes policy. I am certain that that will not be in the manifesto. That is what the discussion is about and why the debate is so important.

What has happened? What are the effects of the present wages policy? What is the distortion? I shall relate the answer to the Ford question a little later. This morning I dug out some overtime figures, which are staggering. I am sorry that my Socialist friends who argue for a permanent wages policy are not here, because I should like them to know that overtime comes into the matter.

Over the post-war years we have had a dominance of incomes policy, a whole succession of incomes policies. That fact has ensured that overtime working is now an integral part of our system in industry. At a time when we have more than 1½ million unemployed, the overtime figures are alarming.

In the week ending 12th August, the latest date for which we have figures produced by the Department of Employment, in manufacturing alone 30 per cent. of the work force worked 8·8 hours overtime each per week. About 1,600,000 workers worked a total of 14 million hours overtime a week in manufacturing alone in August. In July the highest weekly figure was 17½ million hours of overtime in manufacturing. All this was because of incomes policies.

One assessment made not by the Department but by the trade unions, in a survey based on 2½ million manual workers in the service industries, is that 18 million hours' overtime a week is worked in those industries. When we put the figures together we see that there is an overwhelming case against what is happening. The whole fabric of our industrial life is now conditioned by the hours of overtime that are available.

If we reduced the hours worked by married women working in full-time jobs as well as the hours of overtime, there would be a revolution in the country. Then we should see exposed the true character of wage rates and the fact that we are a low-wage society.

I now turn to the argument about Ford, which is very interesting. I shall take a 10-year period from July 1968 to October 1978. In July 1968 grade E workers, skilled workers, were receiving the equivalent of 56½p an hour. Their latest rate, up until 21st October this year, was 194·2p an hour. That is the top skilled rate at Ford, the one that is now being argued about.

Over the 10-year period the grade E workers—there are five grades—have gained 21p an hour in advance of the retail price index. They have increased their living standards over that period by 21p. an hour.

It is possible to measure precisely what is happening at Ford. Having had some experience of machine shop techniques, I have had a look at some of the figures. The comparison in metal removal, the weight of metal and everything else is exact.

What has happened to the Ford worker? I have looked at all the figures relating to manufacture of a four-cylinder engine and exactly comparable retail prices from the same source. In 1968 it took a grade E Ford worker—a skilled worker, I remind the House—90 hours to earn enough to pay for his own product in the engine shop. Today, although he has gained on the retail price index by 21p an hour over the 10-year period, he takes 105 hours to earn enough to pay for his own product, viewed in exactly equivalent terms. So who has gained as a result of an incomes policy? What is happening to restraint? Does that benefit the customer? Does it benefit the nation? It certainly does not benefit the Ford worker in the purchase of his own product.

What has happened on the railways? We have comparisons there, too, in what a weekly ticket costs in terms of hours to be worked by an engine driver. It takes an engine driver now far longer to earn enough to pay for a weekly ticket—to pay for his own product—than it did 10 years ago. One can go through most of the trades in the country and ask skilled workers particularly, but all workers in all grades, doing a precise exercise, how long it takes a worker today to earn enough to pay for his own product as compared with 10 years ago, and one finds that he has to work longer.

So it is against the interests of the workers and of trade unionists generally to support policies of this sort. These are the reasons why we are opposed to, and have consistently opposed, the introduction of a wages policy of this sort. So, without going into the interesting questions that have been raised about monetary policy, I want to deal with some of the major issues about wages policy and the reasons why we should get rid of it shortly.

I hope that within my remarks there is ample evidence that the case against wage policy is based on fact, that, a long way from being a Socialist proposition, it is against the interest of the workers we on this side of the House claim to represent. That is the contradiction. That is why we say that the sooner the Government come to the conclusion that we have to start practising policies and an alternative strategy, not only on cheap money and a stable pound—these are essential ingredients of the alternative approach—and allow workers responsibly to negotiate against prices that they can agree, whether in the public sector or private industry, the better. Let trade unionists come to grips with the price of their own product. Let them bargain their wages against prices in the way in which they have often claimed the right to do.

My hon. Friend will have noted that the Gracious Speech talks about industrial democracy. A number of our colleagues are much in favour of industrial democracy while being at the same time in favour of a statutory incomes policy. Would not he agree that the best piece of industrial democracy for working people is to be able to negotiate their terms and conditions, wages and salaries, of employment?

Exactly, and not from the position of being board members. We are not advocates of that in this position. Let us talk about industrial democracy as a means of creating a mechanism whereby workers can responsibly bargain, backed by planning agreements, in a fair and equitable agreement with employers across the table, first, on their own wages and, secondly, on the question of the price of their own product. Let all workers become involved in the battle against inflation. In the coalfields, let the National Union of Mineworkers talk about the price of the miners' product in its wage bargaining.

The whole question of subsidy and the rest and of the allocation of resources should be a matter with which trade unions are directly concerned. If they are saying that in some area of industry the bargain that they are about to strike means an increase in the price of their product above the goal set by the Government, we have to talk seriously about a reallocation of resources, subsidy and the rest.

There is I believe a positive alternative strategy which can get us out of the position in which we are placed. Yes, free wage bargaining can get us away from mass unemployment; it can allow us to escape from the grip of some of these falling standards to which I have referred. I believe that there is a comprehensive case in support of a shift from the policy being pursued by the Government.

9.0 p.m.

A great deal of frustration and resentment has been building up in Northern Ireland over one aspect of the Government's pay policy which does not affect either England or Wales but which places Northern Ireland in an inferior position in relation to the rest of the United Kingdom. I refer to the pay parity arrangements. In both the public and private sectors trade union negotiators in Northern Ireland agree settlements based on negotiations conducted at national level. The purpose is to ensure that Northern Ireland workers obtain the same wages and conditions as workers elsewhere in the United Kingdom.

The rigidity of the pay policy has broken down that arrangement. There is, naturally, a time lag between agreement being reached in London and the end of negotiations in Northern Ireland. If agreement on pay parity had not been reached before the magic date of 11th July 1975, when the first phase of pay policy was introduced, the Government say that parity in pay is not permitted to the Ulster workers. That is a ridiculous situation and one which I cannot countenance.

Many groups of workers are caught up in this nonsense. The argument that is put forward by the Government to justify the injustice is completely without a vestige of validity. If they were sincere about the special cases which are mentioned in the White Paper they would accept that workers in the water services in Northern Ireland in particular are a special case. Some parts of Ulster have been without water supplies for many weeks because of industrial action by these men who are asking only for equality of treatment with their colleagues in England. It is absolute rubbish to deny them their claim on the grounds put forward by the Secretary of State for the Environment.

Meanwhile, towns and villages in the Province have no water to flush lavatories. Schools are closed and children are denied their school dinners. Mothers are driven to distraction in trying to cope with family work, while farms and factories are placed in an impossible situation. I call on the Government to put an end to the crisis immediately.

Some school teachers in technical colleges have been refused the conditions enjoyed by teachers in England. It is alleged that it would be a breach of pay policy to give teachers in Northern Ireland conditions similar to those which their English colleagues have enjoyed for four years. That argument is a complete distortion of common sense.

That is not the only unfairness which the Government have visited on the people of Ulster. I shall briefly list some of the others in order to explain to the Government and to others in this House why I shall vote against the Government tonight, unlike the right hon. Member for Down, South (Mr. Powell) and the six Unionist Members in his parliamentary group.

Ulster housewives have consistently had to pay more for their basket of groceries than have housewives elsewhere in the United Kingdom. The price of children's clothing and footwear is about 10 per cent. more in Northern Ireland than the average cost of these items in England. Electricity costs are three times higher in the Province than in Britain. Gas is about 10 per cent. or 12 per cent. more mostly in Ulster and coal is more expensive than it is in Great Britain. Ulster people have to meet colossal bills for heating and cooking. It is hard on everyone in the Province, but it is particularly hard on pensioners, especially those living in all-electric dwellings. It is against that catalogue of unfairness that one has to judge the average wage level in Northern Ireland.

According to the Government's figures, family incomes in Ulster is £6 or £7 less than the average for Great Britain. The rate of unemployment in Northern Ireland is more than twice the average rate for the rest of the United Kingdom. The proportion of claims for family income supplement is four and a half times what it is in England. The price of privately built homes in Northern Ireland has soared high above the average for the rest of the country, and ground rents and increasing mortgage repayments place an intolerable burden on young married couples in particular. The number of families on the waiting list for Housing Executive dwellings is disgraceful. The conditions in which so many people have to live in Northern Ireland are appalling.

The total picture that I present to this House tonight is one of social deprivation of a kind which has not been experienced in England since before the war. That war lasted six years. Many people in Great Britain thought that it was endless and morale began to suffer. However, the Provisional IRA has been waging its campaign of terror and hate in Northern Ireland for 10 long years. For 10 years the Ulster people, with remarkable tolerance, restraint and patience, have withstood that evil terror despite largely hostile news media and Westminster Governments who have frequently treated the Ulster majority with indifference or contempt. The present Government are no exception.

The Ulster people have had enough of English platitudes and English lectures. They want their rights, and I demand their rights tonight. That means not only a standard of living equal to that in the rest of the United Kingdom—which was promised by a previous Labour Government years ago but has not yet been provided—but full British democracy in Northern Ireland.

What have the Ulster people been offered in the Queen's Speech? They have been offered nothing except a paltry Bill to provide a few extra seats. I am surprised that the right hon. Member for Down, South welcomes the Bill and says that getting those seats has been his and his colleagues' main task since the last General Election. The people of Northern Ireland would say to the right hon. Gentleman and his hon. Friends that that is not their main task. Their main task is to harass the Government, not to keep them in office.

The people of Northern Ireland will find great anger in their hearts tomorrow when they read the result of the Division. There is to be no Stormont Parliament for Northern Ireland people, but Scotland and Wales are to have an Assembly. There is to be no referendum for the Ulster people, but there will be referendums for the people of Scotland and Wales. The Ulster people have been offered a few extra seats in this House. That is a mean offer, when we should have had 21 or 22 seats here. What is offered in the Bill is an insult to the people of Northern Ireland.

I disagree with the right hon. Member for Down, South. The people of Northern Ireland are sick of patronising English politicians lecturing them from Westminster. In the name of the long-suffering and hard-pressed Ulster people I condemn the Government. I regret that the Government cannot be defeated in tonight's Division. That is because the right hon. Member for Down, South and his colleagues will ensure that they survive.

9.8 p.m.

According to a convention, it falls to me to sum up, as will the Leader of the House, today's debate on the Opposition's economic amendment and the whole debate on the Queen's Speech. I doubt whether the right hon. Gentleman or I will feel able to do that in 25 minutes each. I shall confine myself to a considerable extent to today's debate, although it has been assumed by a number of hon. Members that tonight's Division will involve a judgment on the whole of the Queen's Speech.

At the outset I wish to congratulate the hon. Member for Berwick and East Lothian (Mr. Home Roberston) on his maiden speech, which I am sure everyone enjoyed. It may be that it did not conform completely to the convention that a maiden speech should be non-controversial. However, it was not dull and we shall look forward with enjoyment to hearing him again.

I should also say at the outset that we welcome the decision of the Liberal Party and the Scottish National Party to vote for the Opposition amendment. We note that the representative of Plaid Cymru, having no doubt consulted his colleagues, has decided that he has no confidence in the intentions of the next Labour Government towards Wales. However, he reckons that he has the present Government so firmly over a barrel that he had better keep them there until he has squeezed the last drop out of them.

We also noted that the right hon. Member for Down, South (Mr. Powell), after a deep economic analysis of the present position, came to the conclusion that the important thing was to get his Representation of the People Act as quickly as possible. That seems to be the way in which the decision tonight will be taken.

The Queen's Speech was, as we know, quite deliberately designed to keep the present Government in power with as little trouble as possible, and with the maximum support from the fringe parties. Some of my hon. Friends have begun to feel, Mr. Speaker, that this has become a Celtic fringe party Parliament, because today, with the exception of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and myself, only one English Conservative Member has been called to speak—[Interruption.] My right hon. and learned Friend is a Welshman, so that makes the position worse. We have had a slanging match between various Scottish splinter groups, a wide diversion between two separate Ulster Unionist parties, and, in one way and another, the rights of English Members, at least on the Opposition side, seem to some of us, Mr. Speaker, to be in some peril. It is something that perhaps the usual channels might care to discuss.

As to the Queen's Speech, and the amendment with which we are dealing today, I noticed that in an amusing article in The Guardian one of its political writers said about the Queen's Speech that it was so innocuous that it might almost have been written by the Royal Family. Nevertheless, of one thing we can be certain. The Chancellor of the Exchequer's speech today was so bad—or, at least, the second half of it—that he must have written it himself. We have heard from the representatives of those parties whom the Queen's Speech was designed to attract. Well, a drib here and a drab there—it all adds up to something, one must suppose, but it cannot be said to be particularly attractive when dealing with the economic problems of this country.

This is the last Session of a Parliament in which the tired remnants of this Labour Government might have been expected to make good their boasts and promises of the past with some constructive policies which might do something about unemployment, about industrial expansion and about the creation of wealth.

It is perhaps appropriate that, at the end of the last Queen's Speech in this Parliament, we should look back at the record of the Government, and at some of the things which the Chancellor and the Prime Minister are now claiming, compared with what they once claimed. It is the Lord President of the Council who is to reply to the debate. We remember that perhaps one of the most impressive things he ever said was when he assured the readers of the Daily Mirror, from the fastnesses of the Department of Employment, that he had not come here to preside over mass unemployment. Being an honourable man, he honoured his pledge to the letter. He got the hell out of the Department and let the new Secretary of State preside over it.

The Lord President does not care, does he? Look at him.

It was, of course, a perfectly decent and natural reaction for an honourable man, as we know him to be.

"So are they all, all honourable men."

And women, too, of course. I had forgotten the Secretary of State for Education. The right hon. Lady was also on record, at the time of the October Election in 1974, as saying that there was no indication that there were any more price increases in the pipeline. She did not hang around to preside over the largest bout of price inflation in modern history, either.

The Chancellor of the Exchequer is the only one who has really stayed put, firmly and doggedly. We know what he said in the election of 1974. He said that the rate of inflation was running at 8·4 per cent. He also said on the same day—though to a different audience:

"I"—

note the "I"—

"have cut the rate of inflation I inherited by half."

My right hon. Friend the Leader of the Opposition said in her speech last week that the Chancellor had said that the inflation rate was 8·4 per cent. Of course it was not. There are some of my right hon. and hon. Friends who have assumed from that that he knew that it was not. I do not assume that at all. Being the least cynical and suspicious of men, I am perfectly prepared to believe that he genuinely thought that that was the going rate of inflation. After all, he has believed so many extraordinary things in his time that it would not be very surprising if he had believed that. He has gone on—and I said that he was the only one who has stayed firmly put—believing so many things, for example, that the economic miracle was just around the corner.

Perhaps the most familiar cry that echoed around the corridors of Westminster and beyond were the words "I think I've got it right this time" 13 or 14 times, each time just before the roof fell in on him again. If he believed that—and I am perfectly prepared to believe that he thought it was so—all we ask of him is that he should not try to have it both ways.

There is one thing that follows inexorably from his belief that the going rate of inflation was 8·4 per cent. in the summer and autumn of 1974. It is that if he claimed to have cut the rate of inflation which he inherited from the Conservative Government by half, he must have been claiming that this success was due to the policies and actions of himself and of the Labour Government. In that case, what followed after October 1974 must also have been due to the policies and actions of himself and the Labour Government. He cannot simultaneously claim that and also claim that everything that happened between 1974 and 1976 was due to the so-called mess that he inherited from the Conservative Government. He either got it right by October 1974 or he did not, and he had better make up his mind which it is. He can say now that he was quite mistaken about the 8·4 per cent. figure, in which case the electorate will no doubt view his claims and figures at the next election with a certain amount of reserve, to put it mildly. Alternatively, he can claim that he was right about the 8·4 per cent. figure. Then he has to admit that everything that happened after that was the fault of himself and his Government.

Indeed, if we were in any doubt about this, the most compelling verdict on the Chancellor's record during all these years—and they seem interminable—was provided by the Prime Minister in a speech at the Labour Party conference at Blackpool in September 1976. Hon. Members should take this to heart. The Prime Minister said:

"Over the last three years, whilst our domestic product has risen by 2 per cent. the increase in our public expenditure—including central and local government—has been 18 per cent. We have bridged the gap by higher taxation, by borrowing from abroad and, worst of all—by printing money."

As a good reference for a Chancellor of the Exchequer over those three years and for the Government who supported him, that could hardly be bettered.

The fact is that the Chancellor of the Exchequer has stayed firmly put in the Treasury introducing Budget after auxiliary Budget with the dogged persistence of a gambler chasing his losses at the table: borrowing and borrowing at ever higher interest rates until finally the management—in this instance the IMF—stepped in and put him in a straitjacket.

The right hon. Gentleman is now torn between his desire to tell the country how responsible he is being now and how successful his policies have been and his desire to convince his fellow Socialists below the Gangway that he cannot wait to go mad again.

In March this year, the right hon. Gentleman said:

"I will offer you proper Socialism when we get a decent majority in the House of Commons to enable us to do it.".

That, in the light of the record of 1974 to 1976, is perhaps not the most attractive prospect for the electors of this country. The theory of the cure by a hair of the dog that bit you has, as far as I know, been embraced only by chronic alcoholics, not by sound, sober, sane citizens.

We had always known, of course, that the gall of the Chancellor of the Exchequer was almost unmatchable. But in the second part of his speech today he excelled himself. The right hon. Gentleman spent a considerable time pointing out what he described as splits and divisions in the Conservative Party and in the Shadow Cabinet. I will deal with those later. He asked what we were going to do, and I will deal with that later. But—for sheer nerve, even by the Chancellor's standards, this was pretty good—in the course of talking about splits in the Conservative Party, not one word did we have about the fact that at the Labour Party conference at Blackpool this year, the policy-making body of the Labour Party threw out, by a two-to-one majority, the pay policy which the Prime Minister had consistently said was essential to the survival of the country and, what was more important to him, perhaps, the survival of the Labour Party at the next General Election. How anyone could imagine that the differences of emphasis on the Opposition side compared with that I cannot imagine, because the Prime Minister was saying that his 5 per cent. pay policy was essential to the Labour Government's policies, if not to their survival.

We have heard the Labour Party conference's verdict repeated again and again by Labour Members below the Gangway today and, incidentally, by the hon. Member for South Ayrshire (Mr. Sillars) in what was a striking and helpful speech. Yet, the Prime Minister, who asked us what we would do, still has not told us what he will do.

I noticed in The Guardian a report by, I think, Mr. Peter Jenkins, that at the Labour Party conference the Prime Minister had been overhead to say to the general secretary of ASTMS:

"I'm worried, Clive, I can't see my way through this one."

I must tell the Prime Minister that we cannot see his way through this one either. If we could, not just see his way through it, but even see the direction of the path which he was trying to take, we might find it easier to support it. [HON. MEMBERS: "Oh, come on."] Oh, yes. The Labour Party and the Labour Front Bench can never grasp the difference between a responsible Conservative Opposition and an irresponsible Labour one.

My right hon. Friend the Leader of the Opposition said in her speech, quite rightly, that we should not try to undermine the pay policy of the Government in the same way as the Prime Minister and his colleagues did their best to undermine the pay policy of the last Conservative Government. But if we are to help him—goodness knows it is important enough for the future of this country that these problems should be solved—we must know what he means and what he is trying to do. That is what we simply do not know.

The Prime Minister apparently has said that 5 per cent. is the limit and that 5 per cent. is all that he is prepared to accept, that no one in any industry or firm should get more, subject to a few points on self-financing productivity agreements and so on.

But does he mean it? It does not look to us as if he can possibly mean it. It does not look to us as if, in the light of the Ford negotiations, the Ford strike, and in the light of settlements which have already been made, 5 per cent. can possibly be what he means. We are entitled to ask him, what figure does he mean?

I shall not waste the time of the House by asking the Leader of the House to answer these questions, because we know that he never answers any questions in any debate at all.

rose

No, both the Leader of the House and I have cut our time to 25 minutes, so I think that I should not give way.

If the Prime Minister—or the Chancellor or the Lord President—will tell us what they mean by this 5 per cent. figure, how far they are prepared to go, how much flexibility they are prepared to allow in negotiations and settlements, we should find it much easier to be sympathetic with him. But it seems to us that he is saying one thing and proposing to do another and that the left hand will not know what the right hand is doing. With the division below and above the Gangway, that is not uncommon in the Labour Party, but in this case it is a little too serious for that to be left where it is.

My hon. Friend the Member for Oswestry (Mr. Biffen) said a number of penetrating things about the difficulties of pay policy. We know only too well—we share our knowledge with the Prime Minister and with right hon. and hon. Members opposite—the troubles of pay policy and the troubles that one gets into with pay policies. My record, I think, is fairly consistent on this one. I have always said that circumstances altered cases. [Laughter.] It is surprising that Labour Members should find that so funny. If they do not believe that circumstances alter cases, there is something seriously wrong with them. It is pretty clear from their behaviour that some of them do not. In other words, they have not noticed that circumstances have changed and that they are standing still.

In 1972 and 1973, during the period in office of the last Conservative Government, in speeches at two consecutive party conferences I supported absolutely the pay policy of the then Conservative Government. [An HON. MEMBER: "The hon. Gentleman would, would not he?"] I was not noted for my slavish adherence to the party line. At the same time, I had always believed that only in the very last resort should any Government resort to a rigid pay policy. But I believed then—and with hindsight I do not change my opinion—that with a quadrupling of oil prices and a 90 per cent. rise in the cost of world food and raw materials, at that time a pay policy, pause or freeze, was essential.

But I never believed then, and I do not believe now, that it is possible to keep any form of pay control going year after year and hope that it will hold. The anomalies, injustices and the squeezing of differentials which will happen inevitably will make it impossible to hold.

Both the Chancellor of the Exchequer and the Prime Minister asked what the Opposition would do. Let me tell the House some of the things that we would do. First, we believe that it is essential immediately to cut the rates of direct taxation so that take-home pay is increased without the necessity to make irresponsible pay claims in order to increase take-home pay. We also believe that it is essential to stop trying to prevent the creation of wealth and to stifle and strangle initiative and enterprise. Unless we get rid of some of the disincentives to effort, employment and investment, we shall never create wealth and the jobs that the country needs.

The Opposition are perfectly clear about pay policy—[Interruption]. We are a darned sight clearer than anyone on the Treasury Bench. There we have a Prime Minister who pins himself to a 5 per cent. norm, average, maximum, minimum or whatever he chooses to call it. Because he has pinned himself to it without adequate thought, he has actually provoked a strike in Ford before negotiations have started. A Conservative Government would never do that.

Our pay policy, which was agreed by all of us, is set forth quite clearly in the publication "The Right Approach to the Economy". We have never varied from it. It is there for all to read on pages 13 to 17 of that document. We believe that there has to be flexibility in pay bargaining.

The Prime Minister asked "If some get more, who is to get less?" as though the answer must inevitably be that everyone gets the same. But that is what negotiation is all about. The hon. Member for South Ayrshire made this point clearly. He said that as a result of the pay policies of successive Governments, negotiation had become a lost art and that the skills and technique of the trained people who knew how to negotiate and how to arrive at a fair bargain had been lost. He was quite right. The longer that this goes on, the more certain this will become.

Unless this Government can say clearly what this pay policy means—and I ask the Lord President to do this—we must vote against them tonight.

It is clear—and the hon. Member for Cornwall, North (Mr. Pardoe) said this—that in the last resort tonight's Division is about whether there should be an election. On this side of the House we have no doubt that it cannot come too soon. We should welcome it. We have no doubt that there is no hope whatsoever for the Labour Party. All my right hon. and hon. Friends would love to have an election as soon as possible.

Government Members are euphoric about the Gallup poll, but they should remember what happened in 1970 when the Labour Party had an 8 per cent. lead and the right hon. Member for Huyton (Sir H. Wilson) called an election. They should look at the Marplan poll in the West Midlands. Above all, we know why the Government did not have an election in October. It was because Mr. Worcester told the Prime Minister that he could not win.

If the country is to get on the road to recovery it is essential that this tired, fag-end Government go. As soon as Mr. Robert Worcester is ready for an election, so are we.

9.37 p.m.

I should like to follow the comments that have been made about the remarkable speech earlier in the debate by my hon Friend the Member for Berwick and East Lothian (Mr. Home Robertson). It was a speech of wit, charm and great generosity of spirit. Ever since he made it, all those who heard the speech have paid their tributes to him. I can assure him that those tributes are not formal in any sense.

It was a speech which paid great tribute to his predecessor, John Mackintosh. It also showed that we have a new Member of Parliament of strong character and great capacity. Indeed, as I listened to his speech the only criticism that I could find was that it was so good that it might be deduced that part of his victory in Berwick was due to his own qualities and not to the Government's qualities.

Many parts of the discussion have turned on other questions, but I shall seek to confine myself principally to the amendment, which was moved, or nearly moved, at the beginning of the debate. I thought that the amendment was extremely good. I am sorry not to see the leader of the Liberal Party in his place, because I wondered whether he was the author. I wondered whether we could account for the improvement in the literary standard because the right hon. Lady the Leader of the Opposition and her right hon. Friends had decided to adopt the ideas of the leader of the Liberal Party in order to assist in the vote or to seduce him, if that is not a too indelicate word.

It is a great change from the scenes that we saw a few months ago. I remember the effective speech of the Leader of the Opposition when she rebuked the leader of the Liberal Party in strong terms. But the Leader of the Liberal Party is now being elevated at a single leap from his youthful follies to eligible manhood. The right hon. Lady has changed her attitude too. There is now none of this "My young man" stuff. Not at all. She turned such a benign and eager eye on the right hon. Gentleman that she might be the serpent of old Nile herself. Therefore, I am glad to see the alteration in these matters.

I am very happy to give the leader of the Liberal Party a reference. Indeed, I do not see why he should not take a place on the Opposition Front Bench in order to draft these excellent Opposition amendments. I gather there are a few vacancies, and he would certainly be a very great addition.

I should also like to offer some advice to the right hon. Lady. She knows how jealous I am about all these divergences into which she happens to stray. But I think that she should follow more carefully the advice that I sometimes give her. She must be careful not to follow these extravagant charges against the Labour Party and its East European policies. I do not know where the right hon. Lady gets her information from. I suppose she gets it from the right hon Member for Newham, North-East (Mr. Prentice). But I must warn the right hon. Lady about him, because there is a strong rumour abroad that the right hon. Gentleman has not sacrificed or abandoned his revolutionary past at all. He has gone into the ranks of the Conservative Party as a kind of agent provocateur just to see what palpable absurdities he can pass off on the right hon. Lady. All I can say is that it is a theory with a great deal to sustain it. I only wish that we had thought of it earlier.

I should like to give the right hon. Lady a further piece of advice. Indeed, I offered it to her a year ago and if only she had followed it then she would be in a much happier situation today. There is the position of the right hon. Member for Sidcup (Mr. Heath) who I see is now trying to pass himself off as an ex-Chief Whip. I hope that the right hon. Gentleman has not now been thrown out like the others. I hope that he tendered his resignation in time. I am sorry to have to say it in the absence of the right hon. Gentleman—[HON. MEMBERS: "Tell us about the Government's economic policy."] I am trying to fill in the gaps of the hon. Member for Stratford-on-Avon (Mr. Maude) who told us that he would tell us about the divisions in the Conservative Party. I am trying to make good the omissions. Had the right hon. Lady followed my advice of a year ago she would be making it up with the right hon. Gentleman. He is the best of the bunch, even if—to quote Shakespeare again—

"the small choice in rotten apples."

The right hon. Lady really should take my advice on this occasion and try to make a proper reconciliation.

I am happy to assist her further in that respect, because the hon. Member for Stratford-on-Avon said that the incomes policy of his party was absolutely clear. I am very happy to have the hon. Gentleman's assurance. But it was not absolutely clear at the Conservative Party conference, because I took the precaution of reading the report in that excellent journal, the Spectator, which carried the excellent reports of Mr. Frank Johnson which did not appear in The DailyTelegraph day by day because of an industrial dispute. If the House were to allow me to do so I could spend the rest of the evening reading extracts.

Mr. Johnson followed these matters very carefully. He described how the right hon. Member for Sidcup had received a great ovation. Then he talked about the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe). He went on to say that the right hon. and learned Member for Surrey, East praised the contribution of the right hon. Member for Sidcup and then went on to advocate more or less the opposite. The conference either did not notice this nuance or was not much bothered by it. Well, here in this House we have a great reputation to sustain and we have to look at the nuances.

In order to report this matter faithfully I must look at the report of the following day—and remember this was in a Conservative newspaper written by a most excellent Conservative reporter. Mr. Johnson said that

"although he was no longer in the hall, Mr. Heath's monstrous presence dominated the morning's economic debate. He was the spectre at the Ancient Mariner's wedding, though not having one's library to hand in Brighton one is unable to check the accuracy of the Coleridgean allusion. So perhaps it would be more correct to say that he was the albatross on the wall. Anyway, he was the spanner down the trousers of party unity, all right, that's for sure."

I know that hon. Gentlemen opposite do not like this. I am filling in the gaps about what happened at their conference.

The report goes on:

"The conference draws the line at going on the box and saying that the Labour Government is all right."

That is what the right hon. Member for Sidcup did at the conference. Therefore I thought I would have had special thanks from the hon. Member for Stratford-on-Avon for having filled in the gaps on these matters which he said he would deal with but which, unfortunately, he did not have time to cover.

I now come to the speech of the right hon. Gentleman—

The right hon. Member should make his own speech.

One of the old-fashioned habits that we have on this side of the House is to answer the debate. I see that the right hon. Member for Lowestoft (Mr. Prior) is sitting on the Back Benches. Has he, too, been thrown out? Why does he not come and face the music? We had to listen to the right hon. and learned Member for Surrey, East at close quarters. So why does he not come and take his medicine?

Both the House and the country should study with the utmost care not only the speech of the right hon. and learned Member for Surrey, East but the addition to it—or the embroidery—by the hon. Member for Oswestry (Mr. Biffen). Both of them returned to a theme that was not elaborated in the previous Session of this Parliament, but which dominated the House during the early 1970s.

My right hon. Friend the Chancellor of the Exchequer said that the right hon. and learned Member for Surrey, East had not urged any return to the Industrial Relations Act 1971. I am not sure whether that was the case. Certainly from what I heard I thought that he was advocating a return to some form of legislation. The hon. Member for Oswestry was not advocating it in detailed form but he was suggesting that one of the main lines of activity that a Conservative Government would have to follow in some form or another was what he might describe as the reform of trade union law or the trade union situation.

The House and the country should have learned from what happened under the previous Conservative Governments. I should have thought that the right hon. and learned Member for Surrey, East was the last person to tell the House how these matters should be dealt with. I am certain that the right hon. Member for Lowestoft would much prefer his right hon. and learned Friend not to deal with these topics, because every time he returns to them he makes it much more difficult for a solution to be found.

The hon. Member for Oswestry put his finger on the truth to this extent. Of course we must debate these questions in the House. I fully agree that the trade union movement is not perfect and that there should be debates on these topics. However, anyone who studied the industrial history of this country over the past 10 or 25 years would begin to appreciate what enormous advances have been achieved by the trade union movement in terms of democracy, intelligent policy and active support for the welfare of the nation. It would be wrong of hon. Members to write that off—[Interruption.] Hon. Members may jeer. That is exactly the spirit that we had from them all through 1971, 1972 and 1973. Do they want to recreate all their follies?

The Conservatives should tell the country clearly, if they want that chapter properly and finally closed, that they will not attempt to return to any such legislative action. That does not mean that we cannot discuss the various aspects. There are many changes and reforms to be carried through in the trade union movement, and the movement will carry them through itself, as it has been willing to do over the past 10 or 20 years.

Anyone who thinks that there has not been great progress in the amalgamation of trade unions does not appreciate the problem. It is a most serious and difficult problem which can be solved only by persuasion and consent within the trade union movement. The same applies to a whole range of other policies. The only response given to most trade union leaders for what they have done in contributing to the welfare of the nation over this period is vilification in the Tory press and an echo of it here in the House of Commons. We heard echoes of it a few minutes ago. I hope, however, that all other hon. Members appreciate that if it had not been for the voluntary association and leadership of many of the heads of the trade union movement, backed by their members—they cannot achieve anything unless they have that backing—we should not have been able to make all these achievements.

What achievements?

Are Conservative Members interested in bringing down the rate of inflation or not? When I first went to the Department of Employment the rate was running at 15 per cent.—

Who put it there?

The Conservative Government. The people who raised the inflation rate to its 1974 level were those who were responsible for the conduct of our affairs at that period. When I went to the Department there were forecasts for the year ahead of a rate of inflation of 17 per cent. or 18 per cent. by the autumn and of 20 per cent. to 22 per cent. by the following year. That is what was left for us by the Conservative Party and we had to fight and struggle to persuade people to bring it down.

I notice that the right hon. Lady the Leader of the Opposition does not say these things so raucously as do her right hon. and hon. Friends. Perhaps she understands that the people of this country are seriously interested in bringing down the inflation rate. They know that if we do not succeed in that task we shall not succeed in many of our other aims.

When I hear shouts on the lines of "What achievements have the Labour Government made?", I am minded to ask the right hon. Lady to consider the balance of payments. Is she interested in that aspect? [HON. MEMBERS: "What about our oil?"] Not only our oil should be taken into consideration. Half the record deficit in the balance of payments in 1974 was due to oil considerations and the other half to the incompetence of the Conservative Party. When we came into power in February 1974 not only were we left with a record inflation rate but we inherited a huge deficit on the balance of payments which we had to bring under control. Therefore, it must be said that those, too, are achievements. Furthermore, throughout this period we have laid the basis for advances in many other respects.

What would the figure have been this year if the balance of payments in respect of oil was the same this year as it was in 1974?

Of course the balance of payments on oil has made a considerable contribution, but when the Conservatives charge us with having made no achievement I ask them to examine the figures. They will see what a record deficit on the balance of payments was left to us by their Government. The fact that we had to deal with that record rate of inflation made it all the more difficult to deal with the world-wide problem of unemployment.

I fully acknowledge what was said by my hon. Friend the Member for South Ayrshire (Mr. Sillars) and I accept his criticisms and also his analysis of the wider problems. When we come back in the next Parliament, with the full majority which I am sure we shall all seek to secure, one of our major aims will be to ensure that we supply all our energies to dealing with unemployment. But, even in the circumstances of the last four years, we have taken a series of steps without which the unemployment figure would be higher. My hon. Friend knows that that is as much the case in Scotland as anywhere else.

At the same time we had to ensure that we held the United Kingdom together and carried through policies which were acceptable in the different parts of the United Kingdom. I do not know whether the right hon. Lady the Leader of the Opposition has learned at last that during this period this House had to take adventurous steps in an effort to hold the United Kingdom together. [HON. MEMBERS: "Oh."] It is all very well for Conservative Members to jeer. If the right hon. Lady had been in Berwick-upon-Tweed recently she would know that to be true.

I went there.

I apologise to the right hon. Lady; she was in Berwick. I think that she has paid more visits to Scotland than has any Conservative Leader in modern times. Surely on some of those visits she would have learned that that is what the great majority of Scottish people want to secure.

My view is that in this House of Commons, limited, constrained and difficult though our position has been—and nobody knows better than I do how difficult it has been to get legislation through the House—we have been able to clear up part of the mess left to us by the Conservatives. At the same time we have been able to carry through major reforms and changes designed to hold the United Kingdom together and to enable us to overcome this problem in the future. We look forward with confidence to an election chosen at a date set by my right hon. Friend the Prime Minister rather than by Saatchi & Saatchi.

Question put, That the amendment be made:—

Division No. 3]	AYES	10.0 p.m.
Adley, Robert	Fox, Marcus	Luce, Richard
Aitken, Jonathan	Fraser, Rt Hon H. (Stafford & St)	McAdden, Sir Stephen
Alison, Michael	Freud, Clement	MacCormick, Iain
Amery, Rt Hon Julian	Fry, Peter	McCrindle, Robert
Arnold, Tom	Galbraith, Hon T. G. D.	Macfarlane, Neil
Atkins, Rt Hon H. (Spelthorne)	Gardiner, George (Reigate)	MacGregor, John
Atkinson, David (B'mouth, East)	Gardner, Edward (S Fylde)	MacKay, Andrew (Stechford)
Awdry, Daniel	Gilmour, Rt Hon Sir Ian (Chesham)	Macmillan, Rt Hon M. (Farnham)
Bain, Mrs Margaret	Gilmour, Sir John (East Fife)	McNair-Wilson, M. (Newbury)
Baker, Kenneth	Glyn, Dr Alan	McNair-Wilson, P. (New Forest)
Banks, Robert	Godber, Rt Hon Joseph	Madel, David
Beith, A. J.	Goodhart, Philip	Marshall, Michael (Arundel)
Bell, Ronald	Goodhew, Victor	Marten, Neil
Bendall, Vivian	Goodlad, Alastair	Mates, Michael
Bennett, Sir Frederic (Torbay)	Gorst, John	Mather, Carol
Bennett, Dr Reginald (Fareham)	Gow, Ian (Eastbourne)	Maude, Angus
Benyon, W.	Gower, Sir Raymond (Barry)	Maudling, Rt Hon Reginald
Berry, Hon Anthony	Grant Anthony (Harrow C)	Mawby, Ray
Biffen, John	Gray, Hamish	Maxwell-Hyslop, Robin
Biggs-Davison, John	Grieve, Percy	Mayhew, Patrick
Blaker, Peter	Griffiths, Eldon	Meyer, Sir Anthony
Boscawen, Hon Robert	Grimond, Rt Hon J.	Miller, Hal (Bromsgrove)
Bottomley, Peter	Grist, Ian	Mills, Peter
Bowden, A. (Brighton, Kemptown)	Grylls, Michael	Miscampbell, Norman
Boyson, Dr Rhodes (Brent)	Hall-Davis, A. G. F.	Mitchell, David (Basingstoke)
Braine, Sir Bernard	Hamilton, Archibald (Epsom & Ewell)	Moate, Roger
Brittan, Leon	Hamilton, Michael (Salisbury)	Monro, Hector
Brocklebank-Fowler, C.	Hampson, Dr Keith	Montgomery, Fergus
Brooke, Hon Peter	Hannam, John	Moore, John (Croydon C)
Brotherton, Michael	Harrison, Col Sir Harwood (Eye)	More, Jasper (Ludlow)
Brown, Sir Edward (Bath)	Harvie Anderson, Rt Hon Miss	Morgan, Geraint
Bryan, Sir Paul	Haselhurst, Alan	Morgan-Giles, Roar-Admiral
Buchanan-Smith, Alick	Hastings, Stephen	Morris, Michael (Northampton S)
Buck, Antony	Havers, Rt Hon Sir Michael	Morrison, Rt Hon Charles (Devizes)
Budgen, Nick	Hawkins, Paul	Morrison, Hon Peter (Chester)
Bulmer, Esmond	Hayhoe, Barney	Mudd, David
Burden, F. A.	Heath, Rt Hon Edward	Neave, Airey
Butler, Adam (Bosworth)	Henderson, Douglas	Nelson, Anthony
Carlisle, Mark	Heseltine, Michael	Neubert, Michael
Chalker, Mrs Lynda	Hicks, Robert	Newton, Tony
Channon, Paul	Higgins, Terence L.	Normanton, Tom
Churchill, W. S.	Hodgson, Robin	Nott, John
Clark, Alan (Plymouth, Sutton)	Holland, Philip	Onslow, Cranley
Clark, William (Croydon S)	Hooson, Emlyn	Oppenheim, Mrs Sally
Clarke, Kenneth (Rushcliffe)	Hordern, Peter	Osborn, John
Clegg, Walter	Howe, Rt Hon Sir Geoffrey	Page, John (Harrow West)
Cockcroft, John	Howell, David (Guildford)	Page, Rt Hon R. Graham (Crosby)
Cooke, Robert (Bristol W)	Howell, Ralph (North Norfolk)	Page, Richard (Workington)
Cope, John	Hunt, David (Wirral)	Paisley, Rev Ian
Cormack, Patrick	Hunt, John (Ravensbourne)	Pardoe, John
Corrie, John	Hurd, Douglas	Parkinson, Cecil
Costain, A. P.	Hutchison, Michael Clark	Pattie, Geoffrey
Crawford, Douglas	Irving, Charles (Cheltenham)	Penhaligon, David
Critchley, Julian	James, David	Percival, Ian
Crouch, David	Jenkin, Rt Hon P. (Wanst'd&W'df'd)	Peyton, Rt Hon John
Crowder, F. P.	Jessel, Toby	Pink, R. Bonner
Dean, Paul (N Somerset)	Johnson Smith, G. (E Grinstead)	Prentice, Rt Hon Reg
Dodsworth, Geoffrey	Johnston, Russell (Inverness)	Price, David (Eastleigh)
Douglas-Hamilton, Lord James	Jones, Arthur (Daventry)	Prior, Rt Hon James
Drayson, Burnaby	Jopling, Michael	Pym, Rt Hon Francis
du Cann, Rt Hon Edward	Joseph, Rt Hon Sir Keith	Raison, Timothy
Durant, Tony	Kaberry, Sir Donald	Rathbone, Tim
Dykes, Hugh	Kellett-Bowman, Mrs Elaine	Rees, Peter (Dover & Deal)
Eden, Rt Hon Sir John	Kershaw, Anthony	Rees-Davies, W. R.
Edwards, Nicholas (Pembroke)	Kilfedder, James	Renton, Rt Hon Sir D. (Hunts)
Elliott, Sir William	Kimball, Marcus	Renton, Tim (Mid-Sussex)
Emery, Peter	King, Evelyn (South Dorset)	Rhodes James, R.
Ewing, Mrs. Winifred (Moray)	King, Tom (Bridgwater)	Rhys Williams, Sir Brandon
Eyre, Reginald	Kitson, Sir Timothy	Ridley, Hon Nicholas
Fairbairn, Nicholas	Knight, Mrs Jill	Ridsdale, Julian
Fairgrieve, Russell	Knox, David	Rifkind, Malcolm
Farr, John	Lamont, Norman	Rippon, Rt Hon Geoffrey
Fell, Anthony	Langford-Holt, Sir John	Roberts, Wyn (Conway)
Finsberg, Geoffrey	Latham, Michael (Melton)	Rodgers, Sir John (Sevenoaks)
Fisher, Sir Nigel	Lawrence, Ivan	Ross, Stephen (Isle of Wight)
Fletcher, Alex (Edinburgh N)	Lawson, Nigel	Rossi, Hugh (Hornsey)
Fletcher-Cooke, Charles	Lester, Jim (Beeston)	Rost, Peter (SE Derbyshire)
Fookes, Miss Janet	Lewis, Kenneth (Rutland)	Royle, Sir Anthony
Forman, Nigel	Lloyd, Ian	Sainsbury, Tim
Fowler, Norman (Sutton C'l'd)	Loveridge, John	St. John-Stevas, Norman

The House divided: Ayes 300, Noes 312.

Scott, Nicholas	Steel, Rt Hon David	Wakeham, John
Scott-Hopkins, James	Steen, Anthony (Wavertree)	Walker, Rt Hon P. (Worcester)
Shaw, Giles (Pudsey)	Stewart, Rt Hon Donald	Walker-Smith, Rt Hon Sir Derek
Shaw, Michael (Scarborough)	Stewart, Ian (Hitchln)	Wall, Patrick
Shelton, William (Streatham)	Stokes, John	Walters, Dennis
Shepherd, Colin	Stradling Thomas, J.	Warren, Kenneth
Shersby, Michael	Tapsell, Peter	Weatherill, Bernard
Silvester, Fred	Taylor, R. (Croydon NW)	Wells, John
Sims, Roger	Taylor, Teddy (Cathcart)	Welsh, Andrew
Sinclair, Sir George	Tebbit, Norman	Whitelaw, Rt Hon William
Skeet, T. H. H.	Temple-Morris, Peter	Whitney, Raymond
Smith, Cyril (Rochdale)	Thatcher, Rt Hon Margaret	Wiggin, Jerry
Smith, Dudley (Warwick)	Thomas, Rt Hon P. (Hendon S)	Wilson, Gordon (Dundee E)
Smith, Timothy John (Ashfield)	Thompson, George	Winterton, Nicholas
Speed, Keith	Thorpe, Rt Hon Jeremy (N Devon)	Wood, Rt Hon Richard
Spence, John	Townsend, Cyril D.	Young, Sir G. (Ealing, Acton)
Spicer, Jim (W Dorset)	Trotter, Neville	Younger, Hon George
Spicer, Michael (S Worcester)	van Straubenzee, W. R.
Sproat, Iain	Vaughan, Dr Gerard	TELLERS FOR THE AYES:
Stainton, Keith	Viggers, Peter	Mr. Spencer Le Marchant and Mr. Michael Roberts.
Stanbrook, Ivor	Wainwright, Richard (Colne V)
Stanley, John

NOES
Abse, Leo	Davidson, Arthur	Hooley, Frank
Allaun, Frank	Davies, Bryan (Enfield N)	Horam, John
Anderson, Donald	Davies, Rt Hon Denzil	Howell, Rt Hon Denis (B'ham, Sm H)
Archer, Rt Hon Peter	Davies, Ifor (Gower)	Howells, Geraint (Cardigan)
Armstrong, Ernest	Davis, Clinton (Hackney C)	Hoyle, Doug (Nelson)
Ashley, Jack	Deakins, Eric	Huckfield, Les
Ashton, Joe	Dean, Joseph (Leeds West)	Hughes, Rt Hon C. (Anglesey)
Atkins, Ronald (Preston N)	de Freitas, Rt Hon Sir Geoffrey	Hughes, Mark (Durham)
Atkinson, Norman (H'gey, Tott'ham)	Dell, Rt Hon Edmund	Hughes, Robert (Aberdeen N)
Bagier, Gordon A. T.	Dempsey, James	Hughes, Roy (Newport)
Barnett, Guy (Greenwich)	Dewar, Donald	Hunter, Adam
Barnett, Rt Hon Joel (Heywood)	Doig, Peter	Irvine, Rt Hon Sir A. (Edge Hill)
Bates, Alf	Dormand, J. D.	Irving, Rt Hon S. (Dartford)
Bean, R. E.	Douglas-Mann, Bruce	Jackson, Colin (Brighouse)
Benn, Rt Hon Anthony Wedgwood	Duffy, A. E. P.	Jackson, Miss Margaret (Lincoln)
Bennett, Andrew (Stockport N)	Dunnet, Jack	Janner, Greville
Bidwell, Sydney	Dunwoody, Mrs Gwyneth	Jay, Rt Hon Douglas
Bishop, Rt Hon Edward	Eadie, Alex	Jeger, Mrs Lena
Blenkinsop, Arthur	Edge, Geoff	Jenkins, Hugh (Putney)
Boardman, H.	Edwards, Robert (Wolv SE)	John, Brynmor
Booth, Rt Hon Albert	Ellis, John (Brigg & Scun)	Johnson, James (Hull West)
Boothroyd, Miss Betty	Ellis, Tom (Wrexham)	Johnson, Walter (Derby S)
Bottomley, Rt Hon Arthur	English, Michael	Jones, Alec (Rhondda)
Boyden, James (Bish Auck)	Ennals, Rt Hon David	Jones, Barry (East Flint)
Bradley, Tom	Evans, Fred (Caerphilly)	Jones, Dan (Burnley)
Bray, Dr Jeremy	Evans, Gwynfor (Carmarthen)	Judd, Frank
Broughton, Sir Alfred	Evans, Ioan (Aberdare)	Kaufman, Rt Hon Gerald
Brown, Hugh D. (Provan)	Evans, John (Newton)	Kelley, Richard
Brown, Robert C. (Newcastle W)	Ewing, Harry (Stirling)	Kerr, Russell
Brown, Ronald (Hackney S)	Faulds, Andrew	Kilroy-Silk, Robert
Buchan, Norman	Fernyhough, Rt Hon E.	Kinnock, Neil
Buchanan, Richard	Fitch, Alan (Wigan)	Lambie, David
Butler, Adam (Bosworth)	Flannery, Martin	Lamborn, Harry
Callaghan, Rt Hon J. (Cardiff SE)	Fletcher, L. R. (Ilkeston)	Lamond, James
Callaghan, Jim (Middleton & P)	Fletcher, Ted (Darlington)	Latham, Arthur (Paddington)
Campbell, Ian	Foot, Rt Hon Michael	Leadbitter, Ted
Canavan, Dennis	Ford, Ben	Lee, John
Cant, R. B.	Forrester, John	Lestor, Miss Joan (Eton & Slough)
Carmichael, Neil	Fowler, Gerald (The Wrekin)	Lever, Rt Hon Harold
Carter, Ray	Fraser, John (Lambeth, N'w'd)	Lewis, Arthur (Newham N)
Carter-Jones, Lewis	Freeson, Rt Hon Reginald	Lewis, Ron (Carlisle)
Cartwright, John	Garrett, John (Norwich S)	Litterick, Tom
Castle, Rt Hon Barbara	Garrett, W. E. (Wallsend)	Lofthouse, Geoffrey
Clemitson, Ivor	George Bruce	Lomas, Kenneth
Cocks, Rt Hon Michael (Bristol S)	Gilbert, Rt Hon Dr John	Loyden, Eddie
Cohen, Stanley	Ginsburg, David	Luard, Evan
Colquhoun, Ms Maureen	Golding, John	Lyon, Alexander (York)
Concannon, Rt Hon John	Gould, Bryan	Lyons, Edward (Bradford W)
Conlan, Bernard	Gourlay, Harry	Mabon, Rt Hon Dr J. Dickson
Cook, Robin F. (Edin C)	Graham, Ted	McCartney, Hugh
Corbett, Robin	Grant, George (Morpeth)	McDonald, Dr Oonagh
Cowans, Harry	Grant, John (Islington C)	McElhone, Frank
Cox, Thomas (Tooting)	Grocott, Bruce	MacFarquhar, Roderick
Craigen, Jim (Maryhill)	Hamilton, W. W. (Central Fife)	McGuire, Michael (Ince)
Crawshaw, Richard	Hardy, Peter	McKay, Alan (Penistone)
Cronin, John	Harrison, Rt Hon Walter	MacKenzie, Rt Hon Gregor
Crowther, Stan (Rotherham)	Hart, Rt Hon Judith	Maclennan, Robert
Cryer, Bob	Hattersley, Rt Hon Roy	McMillan, Tom (Glasgow C)
Cunningham, G. (Islington S)	Hayman, Mrs Helene	McNamara, Kevin
Cunningham, Dr J. (Whiteh)	Healey, Rt Hon Denis	Madden, Max
Dalyell, Tam	Heffer, Eric S.	Magee, Bryan

Mahon, Simon	Rees, Rt Hon Merlyn (Leeds S)	Thomas, Dafydd (Merioneth)
Mallalieu, J. P. W.	Reid, George	Thomas, Jeffrey (Abertillery)
Marks, Kenneth	Richardson, Miss Jo	Thomas, Mike (Newcastle E)
Marshall, Dr Edmund (Goole)	Roberts, Albert (Normanton)	Thomas, Ron (Bristol NW)
Marshall, Jim (Leicester S)	Roberts, Gwilym (Canunock)	Thorne, Stan (Preston South)
Mason, Rt Hon Roy	Robertson, George (Hamilton)	Tierney, Sydney
Maynard. Miss Joan	Robertson, John (Paisley)	Tilley, John
Meacher, Michael	Robertson, Home	Tinn, James
Mellish, Rt Hon Robert	Robinson, Geoffrey	Tomlinson, John
Mikardo, Ian	Roderick, Caerwyn	Tornney, Frank
Millan, Rt Hon Bruce	Rodgers, George (Chorley)	Torney, Tom
Miller, Dr M. S. (E Kilbride)	Rodgers, Rt Hon William (Stockton)	Tuck, Raphael
Mitchell, Austin (Grimsby)	Rooker, J. W.	Urwin, T. W.
Mitchell, R. C. (Soton, Itchen)	Roper, John	Varley, Rt Hon Eric G.
Molloy, William	Rose, Paul B.	Wainwright, Edwin (Dearne V)
Moonman, Eric	Ross, Rt Hon W. (Kilmarnock)	Walker, Harold (Doncaster)
Morris, Alfred (Wythenshawe)	Rowlands, Ted	Walker, Terry (Kingswood)
Morris, Rt Hon Charles R.	Ryman, John	Ward, Michael
Morris, Rt Hon J. (Aberavon)	Sandelson, Neville	Watkins, David
Morton, George	Sedgemore, Brian	Watkinson, John
Moyle, Rt Hon Roland	Selby, Harry	Weetch, Ken
Mulley, Rt Hon Frederick	Sever, John	Weitzman, David
Murray, Rt Hon Ronald King	Shaw, Arnold (Ilford South)	Wellbeloved, James
Newens, Stanley	Sheldon, Rt Hon Robert	White, Frank R. (Bury)
Noble, Mike	Shore, Rt Hon Peter	White, James (Pollok)
Oakes, Gordon	Short, Mrs Renée (Wolv NE)	Whitehead, Philip
Ogden, Eric	Silkin, Rt Hon John (Deptford)	Whitlock, William
O'Halloran, Michael	Silkin, Rt Hon S. C. (Dulwich)	Wigley, Dafydd
Orbach, Maurice	Sillars, James	Willey, Rt Hon Frederick
Orme, Rt Hon Stanley	Silverman, Julius	Williams, Rt Hon Allan (Swansea W)
Ovenden, John	Skinner, Dennis	Williams, Alan Lee (Hornch'ch)
Owen, Rt Hon Dr David	Smith, Rt Hon John (N Lanarkshire)	Williams, Rt Hon Shirley (Hertford)
Padley, Walter	Snape, Peter	Williams, Sir Thomas (Warrington)
Palmer, Arthur	Spearing, Nigel	Wilson, Rt Hon Sir Harold (Huyton)
Park, George	Sprigs, Leslie	Wilson, William (Coventry SE)
Parker, John	Stallard, A. W.	Wise, Mrs Audrey
Parry, Robert	Stewart, Rt Hon M. (Fulham)	Woodall, Alec
Pavitt, Laurie	Stoddart, David	Woof, Robert
Pendry, Tom	Stott, Roger	Wrigglesworth, Ian
Perry, Ernest	Strang, Gavin	Young, David (Bolton E)
Phipps, Dr Colin	Strauss, Rt Hon G. R.
Prescott, John	Summerskill, Hon Dr Shirley	TELLERS FOR THE NOES:
Price, C. (Lewisham W)	Swain, Thomas	Mr. James Hamilton and Mr. Donald Coleman.
Price, Willam (Rugby)	Taylor, Mrs Ann (Bolton W)
Radice, Giles

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

Heart Surgery (Merseyside)

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Snape.]

10.20 p.m.

I wish to draw attention tonight to the deplorable, indeed scandalous, state of affairs which now exists on Merseyside for patients waiting for heart surgery.

The region of Merseyside has the longest waiting list of any region for investigatory operations and has the fourth longest waiting list of any region in the country for open heart surgery. There are at the moment 581 patients waiting for investigatory operations, compared with only 24 in the South-East region. There are a further 173 patients awaiting open heart surgery on Merseyside, compared again with only 43 in the South-West region.

But worse—and in many ways much worse—is the length of time that people on Merseyside have to wait for both investigatory and open heart surgery. There are 210 patients on Merseyside who have been waiting for over two years for investigatory operations. A further 125 patients have been waiting for between one and two years. A further 91 patients have waited for between six and 12 months, and 125 have waited for up to six months. For open heart surgery 14 patients have been waiting for over two years for an operation, 23 patients have been waiting for between one and two years, and 38 patients have been waiting for up to 12 months.

These by any standards are extremely long waits. Such a time is an inordinate wait. It imposes considerable strains upon the individual and upon his family, particularly with a complaint such as a heart complaint. No one can adequately describe the psychological and emotional stress imposed upon the spouse, the children and the relatives of an individual who is known to be suffering from a heart complaint and when it is known that he will have an extremely long and excessive wait before he receives either the investigatory or the open heart surgery operation.

But what is totally indefensible is that it is known and accepted by the Minister that patients on Merseyside die while on the waiting list. Indeed, he confirmed to me in this Chamber before the Summer Recess that 20 patients on the waiting list on Merseyside had died simply and solely because they were not able to get the operation in time. It says very little for the apparently compassionate, caring and civilised society in which we allegedly live that it will allow people on the waiting list to die, not because we lack the knowledge, not because we lack the technology, not because we lack the personnel or the expertise, but simply and solely because we are not prepared to put sufficient funds into this essential service.

Indeed, it is ironic that there are no Opposition Members—except the leader of the Ulster Unionist Party—who could hear today that this in in fact the reality behind their demands for cuts in public expenditure. This is the harsh, sharp reality that lies behind the vociferous and ever-growing demands for cuts in personal taxation, and no one seems to make the connection between cuts in public expenditure, cuts in taxation and people on Merseyside on the waiting list dying for the want of adequate financial resources.

But this is not the case in other regions. It is specific to and peculiar to Merseyside. It is a fact, for instance, that patients in South Hammersmith and in Staffordshire will get investigatory and open heart surgery immediately and that in many other areas of the country the wait will be extremely small—in terms of months. In the Minister's own words in a letter to me earlier this year, they will get the operation "at their convenience". In South Hammersmith even non-urgent operations will be dealt with within six weeks.

There are, therefore, certain questions which need asking. First, why are there more of my patients waiting for open heart and investigatory operations than anywhere else in the country? Why is the wait longest on Merseyside? Why do my constituents have to face a long wait, in agony, under considerable stress and strain? Why are they discriminated against and provided with an inadequate and inferior service as compared with that provided in other parts of the country? The answer is that the region does not have sufficient resources provided nationally to enable it to provide adequate facilities. Most important, this situation arises because we do not have a truly national Health Service. What we have instead is a series of regional health services in which there are huge discrepancies and enormous anomalies as between areas in the type and quality of service.

Whatever the Minister may say later tonight, he is responsible for this service. I know that the regional health authorities have a managerial responsibility, but it is the Minister who has to come here to answer the debate. It is the Minister who has to answer in this House at Question Time. He has to take the criticism, the rap, for whatever goes wrong in the Health Service, whether in his Department or down at the regions. Given that, why has he not taken the step of applying the normal management function of monitoring the Service and finding out what is happening in the regions?

How can the Minister know that there is a bottleneck on Merseyside and yet, as it happens, spare capacity in Wessex or London, unless and until he collects national statistics on waiting lists and waiting times? I understand why the Minister has always been reluctant to provide this kind of information. Yet, unless the Department and the Minister take the initiative in finding out what is happening in the regions, how the money that is apportioned nationally is allocated and spent, they cannot know whether an effective local service is being provided, whether there is a surplus of resources in one area and a bottleneck in another. They cannot know whether they should be diverting resources from one area to another.

The answer to this is simple. All we need is a simple computer system. A policeman in the street can press a button on his personal radio, have someone punch in the number of a car licence, and obtain within minutes, sometimes seconds, the name, age, occupation, background and any previous criminal convictions of the driver. If that is so, why cannot my constituents, through their doctors and the regional health authority, punch a button on a computer and discover whether there is spare capacity in other parts of the country which should be made available to them? We should have a National Health Service, not a regional health service or a National Health Service lottery, which is what we have now.

There are many who will say that patients will not want to transfer and to travel. A Dr. Stuart Rubin, a cardiologist at Birmingham—where patients are said to have died while on the waiting list—is quoted as saying that it would be inhuman to send patients on long journeys for surgery. If the patients were given the information, they would make the decision, not the doctors. When they are given the opportunity to travel to London or elsewhere and have an operation at once, rather than spend months on the waiting list they invariably choose to travel. This happened recently with the two ladies from Liverpool who were rescued—it was disgraceful that it had to be the case—by private medical practice from the medical waiting list. It has happened frequently in the past when Merseyside children with congenital heart diseases have travelled the world to get an operation rather than wait on the Merseyside waiting lists and have their condition deteriorate.

The patients should come first. They should be given the information exactly as it applies to their condition and then, in the light of all the facts known to them, they should be the ones to make the decision. What we want to know tonight is what precisely is being done by the Minister to alleviate the terrible situation on Merseyside. When will the waiting list and the waiting time come down to a reasonable level, such as applies in the best region in the country?

We on Merseyside will not be satisfied with a simple answer saying "We shall do our best and try to bring about some amelioration of the present position by diverting more resources." We want no less than the best that is available in any other region. As that happens to be immediate operations, whether open heart or investigatory surgery, we want the same consideration to apply to Merseyside and to my constituents as applies elsewhere.

We also want to know what extra resources are being allocated. What plans has the Minister for transferring patients who wish voluntarily to make the transfer from Merseyside to London? My right hon. Friend knows that consultants in London hospitals have written to me saying that they have the places and that they are willing and able to take patients from Liverpool. He also knows that people from Liverpool want to travel. What is he doing to facilitate that transfer? How many people have already been transferred, are planned to be transferred and to where?

What provision is being made—this is an important question—for visits by relatives of patients who transfer to London or elsewhere? Will the Department meet the cost of travel of relatives who visit patients? It should. It is its responsibility because of the failure of the NHS to provide proper facilities on Merseyside. If patients have to travel elsewhere to get what is their right, the Department should pick up the Bill for the expenses involved.

I make no criticism of the National Health Service. Those who, like me, believe in the principle of a free medical service at the point of need should be even more vigorous and outspoken in their criticisms of the failings and shortcomings of the Service now. Labour Members expect higher standards from the National Health Service than do Opposition Members. Therefore, we should be far more vigorous and militant in exposing the failings that exist.

The guilding principle is simple. It is that patients—not doctors, nurses, bureaucrats, administrators or ancillary workers—should come first. The Minister must demonstrate tonight by both words and actions that we care about patients and that patients come first.

I shall not stand idly by whilst people in Ormskirk, in Kirkby and on Merseyside die waiting for heart operations. Nor do I expect the Minister to stand by complacently. I expect him now to tell us precisely what steps he is taking to provide a proper, effective and civilised service on Merseyside.

10.33 p.m.

The subject about which we are talking tonight has aroused much concern over the past few months. I have great sympathy with what was said by my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk). Indeed, he has demonstrated great zeal on behalf of his constituents and others on Merseyside and has been supported by a number of his hon. Friends.

I think that the opportunity should be taken to discuss the problems of cardiac services on Merseyside and to mention what is being done to develop and improve them. In passing, I am pleased that my hon. Friend has discovered that there are discrepancies in the level of health provision in different parts of the country. I think that he first gave vent to this discovery in an article in The Daily Telegraph a week or two ago. He asked why this should he so. It is because of 30 years of allocation of resources to the National Health Service on an irrational basis. That is what we have to try to counteract.

The discovery is not entirely new. The phenomenon was noticed in 1968 by Dick Crossman, who devised the unsuccessful Crossman formula as a means of equalisation. It was observed again by my right hon. Friend the Member for Blackburn (Mrs. Castle), who set up the resource allocation working party, which reported about two years ago. Since then my right hon. Friend the Secretary of State and I have been labouring hard to use the formula to counteract the discrepancies to which my hon. Friend has drawn attention. Therefore, I welcome him to the club of those of us who have been attempting to redirect resources.

I would counsel my hon. Friend, though, that waiting lists are no yardstick for measuring health discrepancy. Without going into too much precise detail, I put it to him that there are connections between waiting lists and the argument which goes on about the removal of pay beds from NHS, and also between those two about the introduction of common waiting lists. If my hon. Friend turns his mind to those matters, I am sure that in time he will come to the conclusion, as we have done, that the only proper basis on which to redirect resources is to use the RAWP formula, which, translated into English, means using death rates as an indication of illness and working out targets to meet the needs so revealed.

Let me first deal with some of the general matters raised by my hon. Friend. He suggested the national distribution of facilities and instituting a national waiting list for cardiac surgery. It is a regional specialty. Admittedly, postgraduate hospitals and other centres in London have traditionally attracted patients, especially those with rare or complex conditions, from all parts of the country. It is no wish of mine to restrict that freedom. But, on the whole, having considered the idea, I do not propose to institute a central clearing scheme, because I think that it would create a lot of major problems.

In general, it is not in the interests of patients to travel long distances for major operations. Obviously, we are in a slightly critical situation in Merseyside and, for that reason, we are tending to infringe that principle. But I do not think that it is a good idea to make it a major and continuing national policy.

That is not my right hon. Friend's decision. That is the patient's decision. If the patient decides in the light of all the evidence available to him that he will make that distressing journey, that is his right—not the Minister's or anyone else's.

Indeed, and there is nothing that I can do to stop patients travelling not only to London but to New York or California to get their treatment. But I am saying that I have decided not to assist them by setting up a national clearing house, for reasons which I am about to give.

There is considerable inconvenience to the patient and his family involved in travelling. My hon. Friend more or less admitted that. But, more important, it is very difficult to provide continuity of care when the cardiac condition occurs on Merseyside, the operative treatment is in London, and the post-operative treatment is back on Merseyside. That is a substantial obstacle, and I am advised—and I have no difficulty in accepting the advice—that the best interests of patients are served when they are treated throughout by a medical and surgical team who are working in close co-operation with each other for pre-operational, operational and post-operational care.

There is also the morale of hospital staff to be considered. Many medical and nursing teams in this specialty get great satisfaction from providing an efficient service to the populations which their units are intended to serve, and the health authorities should aim to provide the facilities to enable them to give such a service. Similarly, we need to consider the effect on the morale of such a team which builds up an excellent service and then is faced with a seemingly endless stream of urgent cases from other regions. That again might be an effect of a national clearing house.

Then, of course, our resource allocation policies, to which I have alluded already, are directed to achieving an equal distribution of health services among regions, and we want in the longer term to work the other way and, rather than lean on patients to bring them to hospital and specialised services, bring the hospitals and specialised services to the places where the patients live, even though, for historical reasons, that is not the siutation which prevails at the moment.

The introduction of a national waiting list could lead to a state of affairs in which there was little or no incentive to health authorities to fill the existing gaps in the provision of health services within their areas. This would perpetuate the situation which we inherited.

My hon. Friend will know what I mean when I cite the example of the Brook hospital in South-East London, which offered to take heart patients from Merseyside if that hospital were given an extra consultant. Appointing an extra consultant in South-East London is not the way to solve the problem of cardiac waiting lists in Liverpool.

The present arrangements in the Mersey region are that adult cardiac investigatory work involving catheterisation is carried out at Sefton general hospital. Cardiac surgery for adults is performed at Broadgreen hospital. This includes bypass surgery, to replace sections of the coronary arteries and valve replacement surgery. For childen, both cardiothoracic surgery and catheterisations are carried out at the Royal Liverpool children's hospital.

These three units are administered by the area health authority and draw patients from the whole of the Mersey health region. The facilities of these units are also available under an agency arrangement to patients from North Wales.

My hon. Friend has made clear his concern about the current cardiac waiting lists in Mersey. I share his concern. I do not question his figures. Mersey has the longest waiting list for investigations of any region.

I must repeat the warning that I gave earlier. Comparative figures such as these have to be interpreted with care. They give no indication of the urgency of individual patients' needs for treatment. Nor do they give any clue to why a particular patient has had to wait for a certain length of time. For example, a patient who, in his consultant's opinion, does not require surgery now but may do so in two or three years' time will not necessarily have to wait if the treatment is needed sooner.

Some patients condition might improve during the time that they are on the waiting list. Social factors and family circumstances may also affect the length of time an individual has to wait.

Despite these reservations, I accept that my hon. Friend's figures are so unsatisfactory that action is especially required for the Mersey region. The allocation of resources among individual specialties is essentially something for health authorities to decide. They must, for example, decide between cardiology and neurosurgery and the other specialties. Cardiology is a regional specialty.

One of our main jobs as Ministers is to ensure a fair share-out of NHS resources among the regions. We have given the Merseyside region a growth rate of 2 per cent. in its allocation for 1978–79 because it is a little below its target.

What are the plans and problems of the regional health authority? First, a steady throughput of investigations at Sefton general hospital could not be achieved because of the need for frequent maintenance of the catheterisation equipment. On some occasions equipment failed while investigations were under way, which meant that the work had to be abandoned and repeated at a later date. In order to remedy this situation the regional health authority has authorised expenditure of about £25,000 for the years 1977–78 and 1978–79 to buy new equipment for the cardiology unit at Sefton general hospital. With the exception of one item, the equipment has been delivered and is now in use.

The second main pressure is the increase in demand for cardiac bypass surgery, which is a difficult and time-consuming procedure. Demand for this operation is still increasing and it is not clear at this stage what level of resources would be needed to cope with this demand.

There are, of course, many competing demands on the resources of the Health Service and the development of specialties such as cardiology is something which has to be settled in consultation with the individual areas in the region. Developments in regional specialties are a call on the region's growth money. More money for them means less money for the areas to finance their own local services. Nevertheless, following a review of specialties completed in June this year, the Merseyside authority has now agreed with the areas on a broad level of development over the next three years.

There have been a number of staffing improvements in cardiac surgery. The region has already begun appointing extra nurses to both Broadgreen hospital and the Royal Liverpool children's hospital and financial provision has been made for a further consultant in cardiothoracic surgery to be appointed from February 1979. The regional health authority is continuing its efforts to fill an existing consultant vacancy and will be readvertising the post later this month. This may entail consultations with the Health Service in Wales.

A small scheme was completed in April this year at Broadgreen hospital to convert existing premises into an emergency operating theatre. There are already two theatres at Broadgreen, but the emergency theatre, which is now in use, allows emergencies to be handled without interruption to the throughput of the other two theatres. It is available for use in the event of one of the other theatres being shut down for any reason.

Looking further ahead, the regional health authority is carrying out feasibility studies into the possibility of transferring medical cardiology from Sefton general and providing both the medical and surgical services at Broadgreen. The authority's view is that this would lead to more efficient working and it is giving priority to this development.

These measures will improve the region's capacity to meet demands for cardiac surgery, but it will be appreciated that their effect on reducing the current backlog of cases will necessarily be gradual. There is an immediate need to be met. As I mentioned in answer to my hon. Friend's Question on 12th July, I have made arrangements for a number of patients to be referred from Liverpool to cardiac centres in London. As I indicated, I do not regard that as an ideal solution to the problem at all, but it is something that we have had to accept in the circumstances on Merseyside. Thirteen patients have so far been referred to the London National Health Service, and 12 have so far been treated at four National Health Service hospitals in London—eight at the Brompton, two at St. George's and, one each at Guy's and the National heart hospital.

We have looked at whether these arrangements might be extended, but the difficulty is that many hospitals in London also have quite long waiting lists of their own. However, a number have said that they will accept patients from Liverpool in an emergency. My hon. Friend has taken a particular interest in the Brook general hospital, and I mentioned that earlier in my speech.

Another event that attracted a lot of attention and that was quite controversial at the time was the acceptance by the Liverpool area health authority, which I endorsed, of an offer by American Medical (Europe) Ltd. to make two private beds available free of charge for cardiac surgery for patients from Liverpool. I stress "free of charge". Ten patients have had operations under this agreement so far. It has been the subject of some criticism and all I should like to say is that I am not concerned with the motive of the private sector. At the time, my view about the proposal was that the only consideration which really mattered was the welfare of the patients concerned and that I should not stand in the way of anything that offered help with the immediate problem. But, as the problem is only a temporary one, the facility has been sought for only a 12-month period and is subject to review after that.

That is a list of the action being taken and to be taken. It also sets out some of the emergency measures. The service about which we are talking is very much at the frontier of modern medicine. It is very difficult to keep the balance right between our investment in this service and what we do for others, but I hope that my hon. Friend will accept that the problems are well recognised and that the health authorities are reacting as quickly as they can to bring about improvements in Liverpool and to bridge the gaps in the short term.

I shall continue to keep closely in touch with the regional health authority and I give my hon. Friend the assurance that I am ready to consider giving any help I can in order to relieve the problems further. I am open to suggestions at any time.

My right hon. Friend did not touch upon the other matter about which I asked. Is he able to pay any contribution at all to the relatives of those patients who have been transferred to London, whether to NHS hospitals or private hospitals, because they are involved in considerable expense in coming down to London?

There are the provisions of the supplementary benefits scheme for assisting people who can travel, but people outside that must make their own arrangements. That will obviously affect their decision on whether to go to London or be treated elsewhere.

Why cannot the consultant who is taking up an appointment in February take up the appointment right away?

The Question having been proposed after Ten o'clock 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 ten minutes to Eleven o'clock.

Volume 957: debated on Thursday 9 November 1978

House Of Commons

Prayers

Delegated Legislation

Adjournment Motions Under Standing Order No 9

Closure Of Debate (Standing Order No 30)

Private Bills And Private Business

Public Bills

Select Committees

Sittings Of The House And Business Of Supply

Standing Committees

Special Procedure Orders

Oral Answers To Questions

Northern Ireland

Belfast

De Lorean Motor Company

Political Talks

Criminal Jurisdiction Act 1975 (Cases)

Nursery Education

Building And Construction Industry

Gas Industry

Army Casualties

Fair Employment (Northern Ireland) Act 1976

European Monetary System

Maze Prison

Tuc And Cbi

European Community Heads Of Government

Tuc

Business Of The House

Question Of Privilege

Small Firms (Employment Subsidy)

The Hon Member For Luton, West

Bills Presented

Banking

Social Security

Statutory Instruments, &C

Orders Of The Day

Debate On The Address

Economic Affairs

Heart Surgery (Merseyside)