The Opposition, as is their right, have chosen to debate social services today. We had a full day's debate on the National Health Service only two or three weeks ago, so hon. Members will not be surprised if I devote the main part of my remarks to social security. Towards the end of my speech I hope to make an announcement about smoking and the outcome of the Government's negotiations with the tobacco industry.

The Gracious Speech refers to next week's increases in pensions and other social security benefits. It is not necessary to rehearse all the details, but the increase in the pension will be the biggest cash increase ever. The total cost of the increases that come into effect next week will be no less than £3,000 million in a full year. They will bring the cost of the whole social security programme to £20 billion a year or more.

Yesterday we listened to the Leader of the Opposition—the right hon. Member for Ebbw Vale (Mr. Foot)—make a speech that at times was mildly witty but was totally unconstructive throughout. The right hon. Gentleman obviously enjoyed himself but he gave no inkling that he had any understanding of the problems confronting the nation. In his references to social security he seemed to imply that spending programmes on the scale of our social security programme could simply go charging merrily ahead irrespective of the nation's ability to afford the cost.

I do not believe that the public are under any such delusion. They know that benefits have to be paid for. They know that many people in work are receiving pay increases well below the rise in the cost of living, that many people are receiving no increases and that, indeed, many hundreds of thousands of people are losing their jobs. It is frankly absurd to believe, as the Labour Party seems to believe, that people, including elderly people, do not understand those facts of life.

It is for my right hon. and learned Friend the Chancellor of the Exchequer to report on the outcome of the Cabinet's discussions on public expenditure. The House will understand that I cannot today enter into any discussion on next year's review to which reference is made in the Gracious Speech. The Government are fully alive to their responsibility to look after those people who, through age, infirmity or family circumstances, are unable without help to manage on their own. We shall stand by the pledges that we have given.

It would be wrong to move on from next week's benefit increases without referring to the other major changes in the system which will take effect at the same time. I refer to the reform of supplementary benefits.

Many hon. Members in the Chamber spent long hours debating the first Social Security Bill in the last Session. However, hon. Members will not necessarily be aware of the enormous amount of work behind the scenes involved in drafting regulations and making the other preparations to bring the new supplementary scheme into effect. We have had to devise new instructions for local office staff on how to operate the new scheme. We have had to engage in substantial training programmes. We have had to produce all the new publications, including the dew supplementary benefits handbook, a copy of which I hope has reached all hon. Members.

Hon. Members will share my view that the handbook is first-class. It is beautifully produced, clearly understandable, and cogent. Since we spend so much time criticising Government Departments, it is right that the House should take the opportunity to praise this first-class production.

I am grateful to my hon. and learned Friend. I shall see that his kind remarks are drawn to the attention of those responsible for the publication. I pay tribute to the Under-Secretary of State, my hon. Friend the Member for Wallasey (Mrs. Chalker), who has taken a close interest in the publication and production of the document.

When I announced the uprating earlier this year, I warned the House that we were asking such a lot of the staff that we might not get through the uprating by the due date. It had to be combined with preparations for the new supplementary benefits scheme. A great deal of training has taken place, and we had to maintain normal service. It is all the more gratifying, therefore, to be able to report that all the new and extra work has been successfully completed. Out of more than 500 local offices, there are probably less than a dozen that still have to clear up the final loose ends of the uprating. If any beneficiary does not receive his uprating by the due date next week, it will follow quickly with payment of full arrears.

I wish to thank the staff of the local offices, who have performed nobly this year when dealing with a complicated combination of administrative changes. I am sure that the right hon. Member for Salford, West (Mr. Orme) will join me in recognising that local office staff have to bear a considerable burden in the ordinary course of their work. They give good service to the overwhelming majority of those whom they serve.

In the press and elsewhere there has been much totally unmerited criticism of civil servants. We must give credit where it is due. DHSS staff have responded loyally and efficiently to the challenges of introducing one new scheme after another during the past two decades. They have done it again with the new supplementary benefits scheme this year. It has been one of the biggest, one of the most intensive and one of the most successful operations. When I say "Thank you" to all concerned, I am sure that I do so on behalf of the whole House.

Of course, there will be teething problems. One cannot make major changes in a scheme with such wide ramifications without some problems. I hope that right hon. and hon. Members will not be too censorious if it takes a little time to get things working smoothly.

It is true that there has been an enormous amount of criticism of civil servants. Will not the Minister, as a senior Minister, have a word withhis hon. Friend the Member for Aberdeen, South (Mr. Sproat), who deluges the Scottish press with unsubstantiated anti-civil servant propaganda? It is the Minister's responsibility to do something about that.

My hon. Friend the Member for Aberdeen, South (Mr. Sproat) has called attention to what he sees as abuses of the system. The hon. Member for West Lothian (Mr. Dalyell) knows that many of the steps that we are taking, not least those in the area of supplementary benefit reform, are designed to cut down the abuse of the system. We have found additional staff to fulfil the jobs of unemployment review officer and special investigation officer. No doubt my hon. Friend the Member for Aberdeen, South is capable of answering for himself.

Along with the changes in benefits are the changes in the new bodies to monitor the system. Next week will see the birth of the Social Security Advisory Committee. Before the recess I announced that the chairman of the body would be Sir Arthur Armitage, who is a distinguished figure in the academic world. I recently announced the names of the committee members. We are determined to ensure that that committee has full independence and autonomy, in accordance with the wishes expressed by the House during our debates. In no way is it to be the poodle of Ministers. I have made that clear to Sir Arthur. His predecessor, the chairman of the Supplementary Benefits Commission — Professor Donnison, to whom I pay tribute — established a high reputation for the independence of the views that he expressed, not always to the comfort of Ministers of either party. I have made it clear to Sir Arthur that he must feel as free as he wishes to pursue the same course. I wish the committee well.

As the body is a United Kingdom body that provides, for the first time in 60 years, a uniform system of advice for the whole of the kingdom, does the Minister accept that its appointment is welcome in Northern Ireland? Northern Ireland Members will look forward to having the advice of the chairman and the body, as they have had from the local body in the past.

I am grateful to the right hon. Gentleman for his remarks. We see this measure as an advance. Not only does it bring supplementary benefit and national insurance under one roof; it brings the four constituent parts of the United Kingdom under one committee. That is an improvement.

The Minister spoke about independence for the new chairman of the committee, which I welcome. Under the Supplementary Benefits Commission that independence was underlined, because it could produce an annual report that could criticise the Government and be independent of the Government. Ministers in the previous Labour Administration were sometimes aware that that criticism went deep. Will the same facilities apply to the new body?

That is a matter for the committee. It is free to report as and when it wishes. The Supplementary Benefits Commission never had any statutory authority for its wider advisory role. The new committee expressly has that authority under statutory provision passed by Parliament. To that extent its position is strengthened.

I turn to other issues in the area of social security. The first concerns the efficiency of the system. I wish to say something about our plans to modernise the administration and to take maximum advantage of new technology. The House already knows that we have been looking intensively at the method of paying benefits. Earlier in the year the Social Services Select Commitee heard evidence and reported its views about our proposals, which had been drawn up with the advice of Sir Derek Rayner. We have studied that report with great care. We have reached preliminary views on how to proceed. We shall publish shortly a response to the Select Committee in the form of a consultative paper. It is clear that there are a number of issues to be discussed and a number of bodies whose views we need on the precise proposals that we shall put forward. We shall publish in full the original report of the scrutiny team. The House and the public will be able to compare their proposals with our proposals. Some hon. Members may have seen a report in The Times earlier this week referring to an earlier document that has long since been overtaken.

When we debated the matter earlier in the year I promised that we should consult all the main interests involved before reaching final decisions. Of course, the House, if it wishes, will have an opportunity for a debate before we go ahead. The changes envisaged in this exercise, including the option for payment by automated credit transfer into a bank account, are only a start.

A number of my hon. Friends—my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has been among the most insistent critics—have repeatedly pressed me and other Ministers to get better value for money, and tighter administration. Nowhere is that more important than in the administration of social security. The House knows that we employ over 80,000 officials to administer the social security scheme. The cost of that amounts to a staggering £940 million a year.

Social security staff have faced many new pressures in recent years. New benefits have been added, new rules and procedures have been applied, and work loads have moved upwards — under Goverments of both parties. My predecessor, the right hon. Member for Norwich, North (Mr. Ennals), whom I am glad to see in his place, knows that the staff have coped well with the pressures. But there are still too many cases where things go wrong. We still do not give a good enough service to the public.

What are we to do? One answer must be a simplification of the rules. Next week's changes in supplementary benefits are only the first stage of the simplification of that scheme. We intend to press ahead with further simplification whenever we can. Another answer is the constant search for greater efficiency. The Rayner scrutinies are proving invaluable in that task, and a number of changes are in the pipeline. But piecemeal changes can never be enough. We need a more radical approach if we are to modernise the way in which we run the system and give the public a quicker and more accurate service. We also want the staff to have more worthwhile jobs with greater satisfaction.

To put it shortly, the whole operation needs to be modernised. It is a huge task, and we are still in the early stages, even though work began before the last election. In doing this we have to carry the public with us. For that reason I propose an exercise in open government. I intend shortly to place in the Library of the House and to make available to interested bodies outside a brief working paper setting out the stage that we have reached. The paper will describe the problems and some of the ways in which the system might be improved over the next decade.

We shall not be presenting firm proposals. Our object is to clear the ground for decisions that will have to be taken later. The paper will indicate that it is our aim to make the best use of modern technology to handle routine administrative work and so release staff partly to achieve savings, but more importantly to give a better and more personal service to the public.

Will the right hon. Gentleman concede that in going for modern technology we must remember the human factor? Does he agree that one of the most important aspects is privacy for the client?

The hon. Gentleman will be relieved to know that that is a matter very much in the forefront of my mind. The hon. Gentleman will recognise that computers and all the modern peripheral equipment that goes with them should enable the system to give a swifter and more accurate service to the public, better advice on entitlement to benefits, quicker settlement of claims and, perhaps most important of all — one has been conscious of this especially in relation to the disabled—the ability to deal with the individual "in the round". By that I mean that as much as possible of a person's social security business should be handled together instead of in a series of separate benefit-by-benefit transactions.

To achieve this, we shall have to have a modernised communications and recording system. We shall need to draw together the information that we already hold about people in different parts of the system. We shall have to bring the information about their entitlement to different benefits together-at the point where it is needed. That will be not merely in the back office, where the complex calculations are made, but, if possible, at the counter, where staff deal face-to-face with the claimant who may be seeking advice. This will require capital investment. I must make it clear that any capital investment will have to be fully cost effective and justified against other competing claims on resources. There is reason to believe that we can make savings and provide a better service if we make a proper use of what technology is now able to provide.

Such a system would bring other benefits. It would avoid duplication of work and of records. It would reduce the scope for overpayments and other mistakes and make fraud a great deal harder to perpetrate. One route that we could follow would be to use the national insurance number throughout the social security system. That is not the only way. There are other routes.

I turn to the point raised by the hon. Member for Dunfermline ( Mr. Douglas). There are implications that rightly arouse concern about any move in the direction that I have described. Computers can always be made to sound like "Big Brother". That is not a fanciful fear. In our planning we shall have to pay, throughout, the closest regard to security and privacy. These are issues of cardinal importace. No modernisation could ever be recommended to Parliament that did not make proper provision for them. Those who give information to the Department on their personal circumstances must know that it is secure, in the sense that those outside the Department cannot get hold of it and that only those in the Department who are entitled to see a person's records have access to them.

In the context of reforming the social security administration, has my right hon friend abandoned the allied reform of taxation, which we used to know as the tax credit system, or the negative income tax system? it seemed to some of us that it would be better to go the whole way.

Any computer scheme that we adopted would have to be fully compatible with the Inland Revenue's computers if we were going to the tax credit scheme. When considering proposals on the tax front, my right hon. and learned Friend the Chancellor of the Exchequer and I constantly bear in mind the desirability, ultimately—when it can be afforded—of achieving the tax credit objectives that were studied so exhaustively in the Parliament before last.

I attach great importance to minimising the vulnerability of any future computer system to breakdown or disruption. That must be a prime requirement. We have been discussing these issues with the trade union side of the Department. I hope to begin discussions with others outside the Department who we think can help and advise us. I hope that by bringing our thinking into the open and by sharing it not only with hon Members but with interested bodies we shall demonstrate our commitment to open government and help to build a really modern and efficient social security system. We hope to do so by drawing on the skills and wisdom of those who are experienced on these areas.

I turn from the longer-term startegy to a specific proposal that is referred to in the Gracious Speech, namely, the scheme to put an obligation on employers

"to provide sick pay for their employees during the early weeks of sickness."

The House will remember that the proposal was set out in detail in the Green Paper entitled "Income During Initial Sickness: A New Strategy", which was published last April.

I shall bring the House up to date. In round numbers we had about 1,000 responses to the Green Paper. The vast majority supported our objectives to save £400 million in public expenditure, matched by a cut in employers' national insurance contributions, and to reduce the size of the Civil Service by about 5,000—the largest single saving in the number of officials in any Department that is likely to be achieved in this Parliament. Thirdly, our objective is to bring into tax—this is common ground between the two sides of the House—over 90 per cent. of the claims for sickness benefit.

There is reference in this morning's press to the continuing anxieties of the CBI. I quote the CBI's response to the Green Paper:

"The CBI supports the objectives set out in the Green Paper of reducing public expenditure, bringing sickness benefits into the tax net and thus helping to ensure that employees are not better off when sick than at work. The CBI shares the Government's overall economic objectives, including a reduction of public expenditure and keeping the number employed in the public services at an efficient minimum. The Green Paper's intention of fulfilling both objectives is, therefore, welcomed."

Does the right hon. Gentleman agree that it is wrong to keep talking about public expenditure when at least 50 per cent. of the revenue comes from earnings-related benefits from the employed and the self-employed?

The hon. Gentleman will know that in the conventions the spending by the national insurance fund is part of public expenditure. I made it clear that the reduction in public spending would be matched by a reduction in contributions, as any reduction in spending may be matched by a reduction in taxation. I do not think that there is anything wrong or erroneous in saying that. The substantive objectives are reductions in the number of staff in my Department and bringing the payments into taxation.

rose—

We have another objective in putting forward our suggestions. We propose to provide a minimum standard for arrangements that already exist widely in industry. As long ago as 1974, 80 per cent. of employees were covered by some form of an employer's sick pay scheme. If our proposals are accepted by the House and implemented, they will do away with an absurd duplication of effort between my Department and industry.

There are many employers who recognise that short-term sickness cover is a proper responsibility of the employer, as part of the total employment package.

The right hon. Gentleman referred to 1,000 responses and quoted the CBI, which in the main represents large companies. How many small employers gave endorsement to the plan, and how many opposed it?

I ask the right hon. Gentleman to hold his horses. I am coming to some of the criticisms.

It is common knowledge that the details of what was proposed in the scheme have been widely criticised. That is one purpose of putting them forward in a Green Paper. If one is introducing what will be a fairly controversial new scheme affecting industry, it does not make sense to go ahead without taking the views of both sides of industry. That is what we have done. Moreover, we should listen to the responses and react appropriately.

The original proposals in broad outline were for statutory sick pay for up to eight weeks for every employee for whom national insurance contributions were payable, with the exception of married women who are opted out; secondly, that the sick pay should be at the rate of £30 a week—that is at 1979 rates—and be subject to the three waiting days for which the House has already legislated; thirdly, in order to compensate employers for the extra expense, that their national insurance contribution liability should be reduced by an amount that would be calculated as roughly equivalent to the extra wage costs that they would bear, which we put at half of 1 per cent. of the wage bill on which contributions are paid; and, fourthly, that there should be a special reimbursement scheme in respect of new employees—those on the books for eight weeks or less.

The main criticisms have turned not on the substance of the scheme but on the level and inequity of the compensation for industry and the disproportionate burden that it was said would fall on small firms. In the light of those criticisms, we have had a rethink of the scheme. When we introduce our Bill we shall come forward with what I might call the mark 2 scheme. The changes from mark I will go a long way to meet the anxieties that have been expressed.

Perhaps I might outline what we have in mind. The contribution reduction originally proposed would have fully compensated industry as a whole for the extra wage costs, but I have been impressed by the evidence that there will be indirect costs in addition. The statutory scheme will cut across some arrangements already in existence and firms will find themselves, as it were, incurring extra costs in making provision for sick pay and administrative costs. Many firms will be able to resist pressures for extravagant provision, and there will often be good reasons for limiting the availability of private benefits. However, some firms will want to make minor changes for their own purposes, and I am certain that we should recognise that there will be additional costs.

One also recognises that there will be gainers and losers. Some industries will gain and some will not, particularly those with a poor sickness record. The only practical way to pay out the compensation is through a reduction in the national insurance contribution, but, with the best will in the world, that cannot take account of variations in sickness experience. In any case, where an industry has a higher level of sickness than the average, that will already be reflected, as it should be, in the cost of its goods or services to the purchaser, and the proposals that I ant making will add only marginally to that.

However, I accept the case, and, both for the indirect cost and for the apparent inequity, we are prepared to offer additional help in the form of an extra £100 million in round figures to help industry. It will take the form of an extra 0·1 per cent. reduction in the employer's contribution liability, making it 0·6 per cent., which is a 20 per cent. increase. I am satisfied that that will go a long way towards helping industry at large.

How will the scheme affect the quota of the disabled that is statutorily required to be employed?

We have that very much in mind. As the hon. Gentleman will know, because he follows these matters closely, there is widespread evidence that the sickness record of the disabled is substantially better than that for employees as a whole, for the very good reason that whenever they have a job they have every possible incentive to keep it. Although we have looked carefully at the arguments that have been addressed to us about the disabled, we do not see any reason for making an exception, and certainly it could not be based on registration, because many of the disabled do not wish to be singled out through the registration scheme.

Small businesses pose a different problem, and they have raised considerable arguments for modification of the scheme. They have higher than average costs, but many small firms already have sick pay arrangements and should not have extra costs because of the scheme. However, there is a vast difference between a firm of five people where ore goes sick and a firm of 500 where one goes sick, and we must take account of that. We are therefore proposing a package of extra help for small businesses. It will take the form of a reimbursement scheme, of which the main features will be, first, the reimbursement of 50 per cent. of statutory sick pay paid out above a certain level in respect of each employee who goes sick and, secondly, an increase in the level of reimbursement to 100 per cent. of sick pay above a certain level for new employees—that is to say, to those who have been in the job for less than eight weeks. That was one point made very strongly by small firms.

The small firms that will benefit from that package will be defined by reference to the the total amount of annual earnings on which the employer is liable to pay national insurance contributions. We are aiming at firms employing up to, on average, between seven and 10 people. However, because the scheme is based on average earnings, if a firm pays less than average earnings, a bigger firm will qualify. If it pays more than average earnings, a smaller firm will qualify. It also has the advantage that, because it is based on annual earnings, casual work in a short period will not necessarily take the firm out of the reimbursement scheme, which is of great importance, particularly to farmers, horticulturists and small firms in the building trade.

The full details of the scheme remain to be settled and we need to consult further—

Oh!

I hope that the right hon. Gentleman is not criticising that. We need to consult further with the interests involved, particularly small business interests, before we make up our minds finally. However, the total package of reimbursement will cost around £40 million and the great bulk of that will go to small firms. I am grateful to my hon. Friend the Under-Secretary of State of Industry for his help and advice in devising the package.

If a package on those lines is accepted, 70 to 75 per cent. of all employers will qualify for the reimbursement scheme, including the overwhelming number of the self-employed, which seemed to be the only point that worried the right hon. Member for Ebbw Vale. In addition, employers will get the 0·6 per cent. reduction in the employer's national insurance contribution.

In those changes we are making a good start on a fresh scheme which will prove attractive. It will achieve our objectives of saving staff in the Department, of making the benefits taxable and of recognising the absurdity of the great overlapping and duplication between my Department and employers both paying short-term sick pay.

Finally, I come to the announcement about smoking, which concerns the discussions that we have been having with representatives of the tobacco industry on what should follow the voluntary agreement between Health Ministers and the industry on such matters as advertising and promotion, the health warning on cigarette packets and product modfication. In the debate on 9 May I undertook to report to the House as soon as those discussions had reached finality, and this they did a day or two ago.

The agreement reached in 1977 by the right hon. Member for Norwich, North was intended to last for three years. It was extended by mutual agreement while the negotiations continued. My duty as a Health Minister, as was the right hon. Gentleman's, must be to seek to reduce the toll of disease and death brought about by smoking. I do not need to repeat all the arguments to the House. We debated them fully on 9 May. They have recently been reinforced by the representations that the conference of medical Royal colleges made in its well-publicised letter to me of 13 November. It wants the House to legislate, and it is not alone in that. However, despite those pressures, I have been determined to try to get a genuinely voluntary agreement, if that is possible.

Naturally enough, the industry wanted the certainty and stability that would flow from an agreement lasting several years, so for many months it pressed for a four-year agreement, and I tried to meet the industry on that. However, from the health standpoint I had to secure terms that I could commend to the House as a sufficient advance to warrant tying our hands for four years, because that is what it would amount to. That has proved impossible. The industry could not accept proposals on reducing advertising and promotion which seemed to me to justify a four-year agreement.

Four years would have taken us up to 1984, beyond the likely end of this Parliament. Given the limited concessions that the industry was prepared to make, I took the view that that was not on. We therefore proposed last summer a two-year agreement on the main issues other than product modification. I shall come to that in a moment. The two years would run from 1 August 1980 to 31 July 1982 and so would leave the House free, if it wished, to take action in this Parliament.

I am today placing copies of the new agreement in the Vote Office, but I shall mention here some of the main points covered. We took the view that cigarette posters were the most obtrusive and influential form of advertising. Expenditure on these is running at more than £20 million a year. In the year ending 31 July 1982 this type of expenditure is to be cut to 70 per cent. of the 1979–80 level, a cut of £6 million, with reductions also in the preceding eight months.

There will be four new wordings for the Government health warnings and 50 per cent. more room on posters for them. In addition, the smoker will buy cigarette packs with different warnings at different times. There will be other restrictions on promotion and advertising. For example, the industry will take steps to stop poster advertising next to schools and playgrounds. It will not advertise on television tobacco goods that bear the same name as cigarette brands. It will take steps to discourage manufacturers of non-tobacco products from including tobacco brand names or designs on goods that have a special appeal to young people. The unaddressed and anonymous promotional offers that come through the post will in future be confined to named adult smokers.

On product modification we need to press ahead with reducing tar yields, because that is certainly important. The recommendations of the independent scientific committee on smoking and health have been taken into account. The industry has agreed to undertake, in a supplementary agreement, to reduce tar yields of cigarettes to an average of 15 milligrams by the end of 1983. The present average tar yield is about 16½ milligrams.

I did not find a satisfactory basis for a major agreement extending beyond the summer of 1982. I have made it clear to the industry that the House must be free to continue to express its view on smoking and to initiate such action as it sees fit. I have indicated to the industry that I can give no undertaking on behalf of the Government to obstruct legislation in the meantime. I have said only that I would seek to persuade the House not to implement any legislation during the currency of the main agreement—that is, before the end of July 1982.

The two-year agreement—it now has only one year and eight months to run—provides a modest advance along the road to reducing the toll of disease and death from smoking, while leaving the House free thereafter to take such further steps in the same direction as might be thought appropriate. I commend it to hon Members.

I am certain that the Secretary of State will have done his best to get a better agreement than he has, but does he realise that most of us on the Labour Benches regard the agreement as wet? Is he aware that those of us who negotiated the original three-year agreement did it to buy time during which there would be a change in public opinion so that we could then go the whole hog and ban advertising? In view of the right hon. Gentleman's comments, the pressure from the medical profession and the assurance from the Labour Front Bench that our party would support legislation, why cannot he proceed now with legislation instead of with this unsatisfactory agreement?

If I had not had an agreement and had indicated instead that I was proceeding with legislation, it would have been many months before that legislation could have been enacted. In the meantime I should have had no control over poster advertising, warning systems, product modification and all the other matters that we have sought to include in the agreement.

My first responsibility in this issue was to secure and improve upon the existing safeguards. That we have done. I am sure that the right hon. Gentleman recognises that we have gone further in many directions than his agreement. That could have been achieved in the immediate future only on a voluntary basis. Legislation would be controversial and, in the view of many, an action of last resort. My second responsibility has been to leave the Government and the House the maximum freedom to respond to the circumstances. I made that clear to the industry. Of course, we shall want to listen carefully to opinion within and outside the House on the controversial question of legislation. I was, however, determined not to tie my hands or those of the House with a four-year agreement, which was what the industry wanted, on terms that I could not commend to the House.

Does my right hon. Friend accept that this is a limited advance, which in itself is welcome? He is right to go for a two-year agreement rather than a longer one. Will he spell out more clearly what the Government's attitude would be to legislation promoted during the two-year period that would come into effect or give my right hon. Friend powers to bring it into effect immediately after the end of the present agreement?

I have no doubt that legislation introduced in that way would have to be the subject of a free vote in the House. This is one of those issues on which it would be impossible to whip hon. Members one way or the other. In those circumstances, the Government would express their view on the proposal that was put forward. The only undertaking that I have given is to seek to prevent implementations of controls on promotion and advertising before the two-year period runs out. I might not succeed, but that is what I have undertaken to do.

Is the right hon. Gentleman aware that we shall want an early debate on the agreement? At first reading it seems exceedingly feeble. It falls far short not only of the proposals that we have been putting forward but of what Professor Black and his committee propounded and the resolute action that they proposed. We shall certainly be considering legislation during the coming months, because we feel that only by legislation will we achieve positive results. The Secretary of State's limited achievement fails to deal with advertising in sport, the use of television and all the other factors.

The sponsorship of sport is not a matter for my Department. It is the responsibility of the Minister with responsibility for sport, my hon. Friend the Under-Secretary of State for the Environment. That was the case under the previous Government, when the right hon. Member for Birmingham, Small Heath (Mr. Howell) made his arrangements with the tobacco companies, as we are doing now. I take note of the right hon. Gentleman's request for a debate.

I greatly welcome my right hon. Friend's assurance that if there were to be legislation, which would be the wrong way to deal with the matter, there would be a free vote. What is the Government's attitude towards cigar smoking? Does he agree that it is much less dangerous than smoking cigarettes and that in any event there are fewer statistics about it?

I recognise that my right hon. arid learned Friend enjoys a cigar. He will know that the major risks from smoking—they are not the only risks—come from inhaling. On the whole, cigar smokers do not inhale to the same extent as do cigarette smokers. For that reason, cigars are regarded by the medical profession as less of a hazard. However, one of the terms of the agreement is an end to the television advertising of cigars in the same trade name as cigarettes. In that way, we hope to reduce the attraction of cigarettes of those names.

I have touched on a few of the main concerns that will engage our attention in the year ahead. There are many others. We shall proceed steadily with the reorganisation of the Health Service. We shall reply to the Select Committee reports on expenditure and perinatal mortality. We shall publish guidance on the strategy on the health and personal social services. We shall publish a White Paper on services for the elderly. We shall play our part in the International Year of Disabled People. A number of hon. Members were present the other day when the ten thousandth Motability car was presented to a disabled family by the Prime Minister outside No. 10.

That is an all-party venture and an excellent example of the partnership that can exist between voluntary and statutory services. That is the characteristic of our approach to the International Year of Disabled People.

The aims of the year are to further the integration and participation of disabled people. Integration means that, to the greatest extent possible, they should be able to live full and dignified lives in the community. Participation means that disabled people should be involved in all decisions that affect them. It is the year of disabled people and not the year for disabled people. The Government's main legislative contribution will be in the sphere of education, in the Bill to implement the Warnock report, to which my right hon. Friend the Prime Minister referred yesterday.

The Session on which we are embarking will be one of steady progress and reform. Of course, getting the economy right must dominate everything that we do, but that is no reason for battening down the hatches and just waiting for better times. The public we serve deserve better than that, and in the Gracious Speech we point the way.

The Secretary of State concentrated a great deal on administration and said little about the Health Service or the benefits side of social security. The reason is obvious. It is fair to look at the Government's record over the past 18 months. It is there for all to see. That record is not a promise in a manifesto or a Bill before the House but lies in actions and decisions taken by the Secretary of State and Cabinet colleagues.

The Secretary of State said at this year's Conservative Party conference:

"We believe that it is the duty of the strong to help the weak, and that is why we seek to help the most vulnerable in our society. These words are not just pious platitudes. Look at the record."

Let us look at that record. In the previous Session many of us were involved in a battle to try to prevent the Government from dismantling the Welfare State as we know it. Direct attacks were made on the elderly, the mentally ill and handicapped, the sick, the disabled, the unemployed, children and families, through cuts in expenditure on the NHS, social security benefits and grants to local authorities.

It was odd that the Secretary of State should finish his speech with a reference to the year of the disabled. He endorsed that year, but he has been responsible for cutting the benefits to the disabled.

Does the right hon. Gentleman agree that the rate of pension payable next week will be the highest in the history of this country and that we are spending more on the NHS than was spent in any single year of the Labour Government?

I shall come to that point; I will not avoid it. However, the right hon. Gentleman must recognise that cash limits and the imposition of VAT have led to the closure of wards and, in some instances, hospitals. Cuts in capital expenditure have led to maintenance and the improvement of buildings being neglected and to new building plans being shelved. In addition, prescription charges are to go up to £1 per item next month.

The lack of adequate funding has given rise to private fund-raising activities — lotteries and so on. That is gambling with the health of British people. I was astonished by a circular from a fund-raising organisation advising people how to raise money to finance hospital services. That is obscene and we are totally opposed to it.

There was nothing in the Queen's Speech, but we have had a great deal of information in the press and in statements by the Minister for Health, about the possibility of an insurance element being introduced into the NHS. When shall we see any proposals? Is it likely that we shall have a Green Paper from the Government during this Session? We keep reading reports in the press and the Minister for Health continues to make statements about the matter. The kite is flying and we should like to know the Government's intentions.

It goes without saying that we are opposed to any such developments. The Minister for Health has spelt out some of the ideas. He talked of the costing of treatment, whereby about 75 per cent. or 80 per cent. of the cost would be reimbursed. We have questions to ask. How will the poor, the unemployed and the elderly meet that gap? Even more important, what would such a scheme mean in terms of administrative costs and numbers to be employed? Those are valid questions and we are entitled to answers.

The Secretary of State does not have to take our word on such a proposal. The Royal Commission on the NHS was clear about it. It said that to introduce an insurance element would be a breach of the main principle that access to health care should be according to need, not ability to pay. That is where we stand.

We have seen the personal social services suffering. Cuts in the home help service, meals on wheels, aids and adaptations for the disabled, residential care and field work have all resulted from the lack of Government funding to local authorities. The Secretary of State knows that, by the charges that have been imposed, particularly for home helps, he has closed the door to those on supplementary benefit being reimbursed for such costs.

The social security Acts that were pushed through in the previous Session have had devastating effects. The Secretary of State asked me about pensions. Some of my colleagues and I spent many nights in Committee on the first Bill, which broke the link between earnings and prices. If that had not been done, a married couple would be entitled to £2·20 a week more later this year. The pensions link is only with prices.

I think that the right hon. Gentleman means the link between earnings and pensions. If we could break the link between earnings and prices we should achieve the economic millennium.

The Secretary of State is trying to be clever and it does not suit him. Under the Labour Government, pensions were raised in line with earnings or prices, whichever were the higher. The situation is clear. The link with earnings was removed by the first Bill. The effect is that because earnings are running 4 per cent. or 5 per cent. higher than prices, there is a difference of £2·20 a week to a married couple. That is the reality.

I turn to the 54-week year—the two-weeks swindle. Pensioners are becoming aware that in the uprating married couples have lost £12·30 over those two weeks. I hope that they are making their views known to the Secretary of State. The feedback that I am getting is that pensioners feel that they have been robbed.

The earnings rule was frozen by the Government under those Acts, and we have had a direct cut in real terms in the short-term benefits for the unemployed, the sick and those on invalidity and industrial injury benefits. Cuts have been made, and we have had the first reduction in real terms in the unemployment benefit for 50 years, at a time of rising unemployment, some of which has been deliberately created by the economic policies of the Government.

The Secretary of State referred to the year of the disabled, 1981. My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), who is unfortunately away on another engagement today, will play a prominent part in the year of the disabled because he will chair the international committee. He is a worthy person to carry out such duties on behalf of this country. But, while paying lip service to the year of the disabled, the Secretary of State is cutting benefits for the disabled.

One of the meanest actions of the Government is the cut in real terms in invalidity benefit. In Committee we were promised that that cut would be reviewed, but the immediate effect is a 5 per cent. loss. We have also had a reduction in linkage in benefits for the sick. Despite election pledges, plans for the disabled have been ditched by the Government.

During the term of office of the Labour Government, despite some of the economic difficulties, new benefits were introduced and we took positive steps to help the disabled. Now, those advances are being eroded by the actions of this Government.

The earnings-related supplement is to be phased out and abolished by 1982. That will affect 70 per cent. of all women, because widows' benefits and benefits to mothers will also be affected. There has also been a delay in implementing the EEC directive on social security proposals. It has been delayed to almost the last possible date in 1984.

One of the most important areas that the Government have invaded is that of insurance. The Government are considering an insurance principle for the National Health Service, but at the same time they are considering dismantling the insurance principle on contributory benefits. That break is serious because many of the benefits are self-financing through the insurance principle to which people contribute. The move away from it is to be regretted.

Child benefit is an area where the Secretary of State and his right hon. Friends are most vulnerable. There has not been an increase for 18 or 19 months, and the increase to be paid on 24 November will be 45p per week below the rise in the cost of living. Despite promises by the Secretary of State and his right hon. Friends to maintain its real value, that has not taken place. The Government are considering monthly payment of benefits, although the Secretary of State glossed over it in his remarks. Not least would child benefit be affected. A document leaked by the Child Poverty Action Group showed that if the Government paid the benefit in arrears they would save £50 million a year.

Does the right hon. Gentleman realise that that can happen only in one year?

That is once too many. Again, this is where the Government are cheeseparing, making savings in the crucial areas of family and child benefit. I think that the Government hoped that it would not be noticed and that it would not even need to be mentioned in a Green Paper on the subject. That is a dishonest approach, and I am glad that the Child Poverty Action Group has been able to expose it.

With increasing unemployment and the economic circumstances that exist in our society today, child benefit is an essential and crucial factor to millions of working families. There are Conservative Members who would have supported an increase in child benefit, and I believe that we have all been cheated. The Government argue that they have maintained a safety net of supplementary benefit, but the Supplementary Benefits Commission says in its annual report:

"For most people, current rates of benefit do not allow people to participate fully in the community."

The real cost of children is not reflected in the scale rates, and differentials operate to the disadvantage of the majority.

The Supplementary Benefits Commission report continued:

"We de not believe it is sufficient to increase benefit in line with movement of prices."

That brings me to two points in the Queen's Speech. It is stated in the paragraph dealing with social benefits:

"Pensions, war pensions and other social security benefits will be increased on 24 November and reviewed again next year."

What does the word "reviewed" mean? I have looked back to 1973 and I have not found the word used in any previous Queen's Speech. Does it mean that the Government are contemplating cuts in supplementary benefit? Can the Secretary of State say that the linkage, as it now exists, will remain for all benefits, or is that one of the measures that we shall hear about on Monday?

Wait and see.

The Secretary of State says "Wait and see". That is a significant statement, because if the Government are to cut supplementary benefit it is a direct attack on the poorest section of our community and it flies in the face of every commitment that they have made, both in their manifesto and in statements inside and outside the House. The word "reviewed" has important connotations. We shall wait with interest, but I fear that we may be in for some shocks.

I warn the Secretary of State that he will not get any support whatever for measures such as these. Already changes have been made which are having a direct effect upon the living standards of millions of people. If there is now to be a further inroad into what had become an established right—the link between prices and benefits—it will be clear that nothing is sacrosanct, in spite of agreements and understandings which had been established in this area.

I now turn to the question of sickness benefit and the points that the Secretary of State made this morning concerning the Bill that he is to introduce. In listening to him, all could envisage was an increase in bureaucracy, an increase in paper work for small businesses, the moving about of claims of people who were or were not entitled to benefit, and so on. A figure of £100 million was mentioned for the purpose of reimbursing small employers. All these things are to take place in order to enable the Government to move away from the insurance principle which has so far been firmly established. In its place there is to be a complicated bureaucratic system which will hit both employees and employers.

This is a real hotchpotch of a proposal, and I ask the Secretary of State to take it away and scrap it. He gave no evidence to the House as to the employers who were in favour of it. He did not name any such employers. He did not give us the numbers of those opposed to it. I am sure that the vast majority of the 1,000 replies that he has had were in opposition to the proposal.

The Secretary of State is now talking about Green Paper mark 2. It is no improvement on the Green Paper mark 1. It brings forward all sorts of complications and difficulties. Again, it attacks the main national insurance principle. It will mean extensive record-keeping by employers and an undermining of the confidentiality of information from employers, unions and doctors in regard to national insurance. All these bodies have opposed this proposal for all sorts of reasons, and we ask the Government to take it away and scrap it.

In the next year we shall see the unfolding of the Government's measures for the Health Service. We are threatened with further actions connected with the breaking of the proposals concerning short-term benefits and, not least, supplementary benefits. There is to be the hotchpotch of a sickness scheme.

We shall deal with all these proposals against the background of the Government's current economic policy. The Prime Minister admitted yesterday to my right hon. Friend the Leader of the Opposition that the increase in unemployment had increased the pressure on public expenditure and the borrowing requirement. It is necessary to tackle these problems at source and not to try to resolve some of them by attacking people and their benefits—benefits to which they are justly entitled. This is the basis on which we shall be dealing with the Government's programme during the Session.

There is much that the Government could be doing. The Secretary of State could implement the Black report. There are proposals in that report across a wide range, relating to social security, health, education and housing, which could be to the benefit of our society and the people who live in it. But no, we are to be faced instead with the Government's arid economic policies. We are to have from the Chancellor of the Exchequer on Monday a mini-Budget statement which will make further inroads into people's rights in our society.

We are facing a bleak winter, and I want to say to the people who will come under attack—some of the most vulnerable in our society—that Labour will be standing by them and fighting with them, not only to get a change of policy from the Government but to get rid of the Government altogether.

The speech of the right hon. Member for Salford, West (Mr. Orme) was a hotchpotch. Not only was it a hotchpotch of ideas, hardly knit together, but it ended with a suggestion that the Black report should be considered and possibly implemented. The proposals in the report are about the most expensive that one could possibly find. To implement them would involve an expenditure of untold millions of pounds at a time when we are trying to get efficiency and good housekeeping within the Department.

My right hon. Friend the Secretary of State is to be congratulated on the tenor and nature of his speech. He is showing the way towards a period of continuing consultation in the matters that he is seeking to put before the country. He was right to produce the first Green Paper dealing with sickness benefit. He was also right to produce another document, taking a fresh look at maternity benefits, because, obviously, the maternity benefits are part and parcel of the package deal relating to sickness benefit. The two must go hand in hand. When my right hon. Friend produces the legislation for the former, it must at the same time contain any necessary changes arising from maternity benefits.

It is extremely difficult to get the package absolutely right in its administrative detail. My right hon. Friend is right in saying that it must be done by first giving compensation to those in industry who have to implement the scheme to provide for the eight weeks of sickness pay. I note that he has carefully considered the scheme that is in existence in Germany. Under that scheme, which is effective and runs extremely well, employers are obliged to pay 100 per cent. of the gross earnings, up to a prescribed maximum, for the first six weeks, provided that a medical certificate of incapacity for work is produced within three days of the incapacity beginning. There is also an arrangement under the scheme to cover small firms for the economic risks that they run under the scheme. Employers who regularly have not more than 20 workers can receive various advantages in relation to it. Thereafter, the State takes over. Broadly speaking, that is the right way to look at the problem.

The difficulties of administration can easily be ironed out. They would best be ironed out if we could look at them ourselves. I shall therefore invite my colleagues on the Select Committee next week to give immediate consideration to the sickness benefit scheme and to the maternity benefit proposals. This can be done quickly, as evidence has already been given and can be obtained quite easily. Legislation will probably be introduced in February. Before then, I hope that some useful ideas will be put before the Secretary of State to show that the sickness and maternity proposals can be implemented effectively.

On a point of order, Mr. Speaker. Would you prefer me to resume my seat and continue my speech later?

The hon. and learned Gentleman was about to resume his seat in any case.

With permission, Mr. Speaker, I wish to make a statement on the programme of special employment measures to operate in 1981–82.

The present high level of unemployment affects young people fresh from school more than most. We have a special duty to ensure that in these difficult times their prospects are not permanently damaged. The Prime Minister made clear yesterday the Government's deep concern on this score. Accordingly, my right hon. Friend announced that it is our intention to expand the youth opportunities programme to provide 440,000 opportunities in 1981–82. That is 180,000 more than planned for the current year and more than double the number of opportunities that were available last year. There will also be 1,000 more places in the separate community industry scheme.

The youth opportunities programme has been very successful hitherto in meeting the undertakings to school leavers and the longer-term unemployed. The overwhelming majority of young people involved have been offered places. Nevertheless, those young people may have to wait as long as a year from the date they leave school before they get any chance to work—and this is a long period for young and active people. And sometimes the opportunity, when it comes, does too little to prepare them for proper work. I have therefore asked the Manpower Services Commission to make some important changes in the youth opportunities programme scheme, which are designed to improve substantially the position of those in the vital two years between leaving school and their eighteenth birthday. I am requesting the Manpower Services Commission to undertake next year to offer a suitable opportunity to all unemployed school leavers by Christmas rather than by the following Easter. I am also requesting the Manpower Services Commission to try next year to offer a suitable opportunity, within three months, to any 16 or 17-year-old who has been registered as unemployed for three months. Moreover, I intend there to be more emphasis on giving the young person who has completed a course or scheme within the programme and who still has no job a chance to progress to another course or scheme. Since the programme is now focused on 16 and 17-year-olds, the allowance for next year will remain at £23.50 per week.

The emphasis in the programme will increasingly be placed on good quality training for work, and two-thirds of the places will provide work experience on employers' premises. We are trying, as resources permit, to work towards the point where every 16 and 17-year-old not in education or a job will be assured of vocational preparation lasting as necessary up to his or her eighteenth birthday. This is an extremely ambitious programme. It is nothing less than a new deal for the young unemployed, and its success depends on full co-operation from all those concerned, particularly from employers, whose assistance in sponsoring projects is vital. To help the careers service make its essential contribution to the expanded programme, the Government will fund another 200 places for this work.

We see this development of the youth opportunities programme in the wider context of improving preparation for and training in work for all young people and not just the unemployed. The Manpower Services Commission and Education Departments will accordingly also accelerate the extension of vocational preparation schemes over the next three years for those who have jobs but who are given little or no systematic training or further education. What we are tying to build up in those ways is a system whereby 16 and 17-year-olds will be better equipped for working life, and that is being further considered within our review of industrial training.

I turn now to measures for the adult unemployed. It is unrealistic to suppose that special measures can do as much for them as for the young. For most of the unemployed the only solution is the creation of lasting and viable jobs, which will appear only as we establish a sound economy. Nevertheless, in so far as it is possible to ease the transition by special measures we have a duty to do so, and the Government are convinced that more opportunities for useful activity could be provided if greater emphasis were placed on work of environmental improvement and if much greater encouragement were given for projects arranged by voluntary agencies. Although many worthwhile projects were conducted under the special temporary employment programme, we feel that a new impetus is now needed. I am therefore asking the Manpower Services Commission to replace the special temporary employment programme with a new programme — the community enterprise programme — which will be subject to annual review, like the youth opportunities programme, but which it is our firm intention to continue for at least three years.

The community enterprise programme will aim to provide 25,000 filled places by March 1982, which will more than double the number under the special temporary employment programme at present. Priority will continue to be given to the long-term unemployed, and for the first time 18-year-olds will be admitted to the programme if they have been unemployed for more than six months. The community enterprise programme will be nationwide but with priority given to projects in areas of high unemployment. It will therefore be available in areas of high unemployment not covered at present by the special temporary employment programme. Under the new programme, we shall encourage private sector sponsorship of projects involving community benefit and provide funds for partnerships involving the private sector and public and community bodies in the creation of new enterprises.

As I made clear some months ago, we also want to see more opportunities for voluntary activity for those who find themselves out of work and yet wish to have a chance of some such activity. Under the community enterprise programme, therefore, there will be many more opportunities for voluntary organisations to sponsor projects, and they will be able to recruit full-time temporary employees to assist the unemployed in finding part-time voluntary work in the local community. We are anxious that there should be no unnecessary obstacles in the way of the unemployed taking up voluntary work that is useful to them and to the community. My right hon. Friend the Secretary of State for Social Services will accordingly be putting proposals to the Social Security Advisory Committee for modifying the regulations to provide rather more scope for such work to be undertaken without loss of benefit.

We intend to continue the job release scheme for another year on the present basis. We also propose to continue the temporary short-time working compensation scheme for another year. There has been a considerable increase in assistance under this scheme so far this year, and there have been many demands that the period of support should be lengthened. Accordingly, we intend that all applications received after today should be eligible to receive the support for a period of nine rather than the existing six months and the level of assistance given will be 50 per cent. of normal earnings rather than 75 per cent. All those currently using the scheme will continue to receive the 75 per cent. rate until their six months end, when they will have the opportunity to apply for a three-month extension at the 50 per cent. rate.

The total cost of all these measures in 1981–82 will be some £570 million, an increase over existing provision of nearly £250 million. This is a massive practical demonstration of our concern for the unemployed. I have received a great deal of help from the Manpower Services Commission in framing these measures. I have also been greatly heartened in the course of this review by the widespread desire expressed by so many in the community to have the opportunity to help. I trust that these new programmes—the youth opportunities programme and the community enterprise programme— will receive the full co-operation of employers, unions, local authorities and voluntary bodies, on whom their implementation so largely depends, and that the House will also give its full support to all the measures that I have announced today.

We are grateful to the Secretary of State for taking the first available opportunity to announce these measures so that the House may take them into account in the amendment to the Loyal Address on unemployment that we are to debate next week.

Is the right hon. Gentleman aware that what he has announced will, at best, only partly alleviate the greatest unemployment crisis that this country has known for half a century? On what will become a desperately bleak situation, which has been deliberately engineered by the Cabinet, of which he has been an active participant, will the right hon. Gentleman answer some questions so that we may consider the matter further?

Will the right hon. Gentleman confirm that the 700,000 people who have lost their jobs in record time since this Government came to office are now costing the taxpayer an additional £2,000 million?

Whilst warmly welcoming the expansion of the youth opportunities programme, may I ask why the right hon. Gentleman has found it necessary to freeze the weekly allowance at the present rate when I understand that all the advice that he has received from the Manpower Services Commission and others is that the allowance should be improved?

As the right hon. Gentleman is aware, it was planned that there would be 25,000 filled places in the special temporary employment programme by April 1982, which, in view of everything that has happened, is totally inadequate. That scheme is now to be replaced by the new community enterprise programme. Why can we not, under the new programme, expand the number of places beyond the 25,000 envisaged, especially as the number of long-term unemployed will quickly top 500,000?

On the community industry scheme, I understand that the right hon. Gentleman plans to have an additional 1,000 places only. Will he confirm that those who thought of this scheme could administer many more places than those announced by him?

I should like to ask a couple of questions about the Department's own measures. Why cannot the temporary short-time working compensation scheme be expanded beyond the announcement made by the right hon. Gentleman today? For example, is there not an overwhelming argument for a scheme allowing firms to claim reimbursement for 12 months at the 75 per cent. rate?

Is it not time for the Government to reinstate at least the provisions of the job release scheme that was envisaged by the previous Labour Government, in view of the rapidly deteriorating situation? Should not eligibility go further, to allow men at the age of 60 and women at the age of 55 to qualify? Would not that prove extremely cost effective?

I welcome the improvements announced by the right hon. Gentleman, but the total package still falls far short of what is required. It must be understood that these measures will not solve the grave and growing unemployment crisis, which is doing so much social and psychological damage to the country?

No measures of this nature can in any way replace the need for full-time productive jobs in British industry. That is the first point that we must always remember. In so far as we try to help certain groups of people in the way that I have announced today, we deny resources to other jobs which otherwise might be created. One must always have a balance in these matters, and that balance has to take account of the availability of resources. It was one thing to have great extensions and expansions of scheme just before the general election, but it was another to pay for them afterwards.

The right hon. Gentleman said that we were discussing this matter against the background of a bleak situation, and I agree with him, but he also said that the unemployment created in the past 18 months had been deliberately engineered. Is he suggesting, in those circumstances, that the increase of between 700,000 and 800,000 unemployed during the Labour Government's period in office was deliberately engineered? I did not say that at that time. I think that he ought to repay the compliment by not saying that we have deliberately engineered it either. Unemployment went up under the Labour Government, and it is going up under this Government. We must do our best to deal with the situation as it is. The cost of unemployment is high, and we, as a country, must bear it. The Labour Government had to bear it when they were in office. We now have to bear it.

The purpose of the schemes that I have announced is to provide help and assistance to those groups that are least able to help themselves and at the same time to try to provide that additional basis of training, which has been long overdue, for 16 and 17-year-olds who leave school and have no other form of training during their working lives.

This year we have frozen the youth opportunities programme allowance. As I announced, we are restricting the youth opportunities programme more to 16 and 17-year-olds. We believe that that is reasonable. The allowance is still about £9 more than the supplementary benefit arrangements. In view of the enormous increase in the numbers of people being taken on, I believe that we should be prepared to make this one economy.

For the community enterprise programme we have set what we believe is a realistic target to reach by 1982. I do not believe that targets that were set at other times were realistic.

The community industry scheme could possibly have been expanded by another 1,000 or so. At the moment it is set at 6,000 and it will go up to 7,000. It is mostly for the very disadvantaged, for the ethnic minorities and for those who otherwise in ordinary circumstances would be unlikely to get jobs. Therefore, we are concentrating more on those groups.

The temporary short-time working compensation scheme is valuable but expensive. The costs of this scheme are rising rapidly. I tried to meet the point that it ought to last longer to try to tide companies over a longer period, but again I felt that we must make some contribution to the costs in view of the resources available to me.

The job release scheme has value, but again it is costly. To reduce the qualifying age for men from 64 to 62 would cost an additional £200 million over three years. We must balance what we are trying to do for special groups in our society with the overall effect on public expenditure. The previous Labour Government left any number of postdated cheques to be picked up, including an already very high level of unemployment.

Is my right hon. Friend aware that the additional measures that he has announced will be very helpful to unemployed young people, especially as there is to be an increased training content in the work experience scheme? Does it mean that it will now be much easier for a young unemployed person to transfer from a basic scheme to a more specialist scheme so that he can learn additional skills?

On the question of the use of resources, is it intended that skillcentres should play an increasing role in offering training opportunities to young people?

What we hope is that a young person will do a YOP scheme for perhaps six months in one scheme and will then be eligible to transfer to another scheme for a further six months. In certain parts of the country—Merseyside, for example—it is already possible to stay in a scheme for up to about 15 months. There might be a gap of three months, during which we hope people will get a job, and then they would be eligible to come back into further schemes.

As to training, already, under the work experience on employers' premises scheme, about 38 per cent. are getting off-the-job training. We want to see that percentage improved and encouraged. The skillcentres will play their part in providing some of that off-the-job training.

Although it is not connected directly with this matter, we also want more and more people aged 16 and 17 to leave school with an ability to read and write and to do the many things that they ought to be taught at school but do not appear to be.

My hon. Friends and I welcome the provisions outlined by the Secretary of State, particularly those for the creation of CEP. Will the right hon. Gentleman consider renewing the small business temporary employment subsidy? One cannot help remembering that his right hon. Friend the Prime Minister was very keen on that on 1 May 1979.

Does the Secretary of State accept the excellent work that is being done for the disabled by Pathway? Has it occurred to him that it would be right for the disabled and the handicapped groups also to have some encouragement from this package?

Finally, will the right hon. Gentleman look into the delays in awards under the temporary short-time working compensation scheme, such as are being encountered by David Johnson, in my constituency, who has had to wait many months for a payment decision?

If the hon. Gentleman will send me details concerning the last matter that he raises—if he has not already sent details—I shall look into it.

There have been some delays in paying out under this scheme and in approving schemes. We have had a flood of schemes over the last two or three months. We have had to take on more labour to deal with them. We have caught up with nearly all the delays, but if there are particular delays in hon. Members' constituencies and they let us know we shall try to deal with them.

The Pathway scheme is enormously valuable. I want, in conjunction with my right hon. Friend, to give it every possible support.

I am now looking at the question of the induction allowance, which can now be given for 13 weeks but which I think is, on the whole, probably given for only about six weeks. That might help enormously with the Pathway scheme. Brian Rix has put other proposals to me, which I am considering. I pay tribute to the work that he is doing in helping the disabled and mentally handicapped people to obtain proper jobs in society. I commend those people for the excellent work that they are able to do.

The small firms employment subsidy was one of the least cost-effective schemes because it was paid very largely to employed people who would have been employed in any case by those firms. It was a cash injection for those firms. I believe that there ought to be better ways of using the £15 million than doing it on a straight employment subsidy basis.

I congratulate my right hon. Friend on this valuable scheme, but I should like to put to him a point on industrial training. There come before the House, almost weekly, long and complex levy orders for industrial training hoards. One can see that behind those there is a massive bureaucracy, resulting in triplication of effort between the Department, the Manpower Services Commission and industry. Is there any good reason why the MSC should have the responsibility for industrial training? Would it not be better to put a far more direct statutory responsibiliy on industry, direct to my right hon. Friend's Department?

As was announced in the Queen's Speech yesterday, we shall be producing a measure on training that will take into account what my right hon. Friend has said today. We shall discuss this next week, I believe, and I shall make a preliminary statement then. We have to get the money that we spend on training concentrated on training, and we have to reduce the amount of money that is spent on the bureaucracy of training.

Is the Secretary of State aware that if a Labour Government had been elected in May 1979 they would have honoured their post-dated cheques, that there would have been a permanent short-time working compensation scheme, that they would have continued to pay the compensation for 12 months, and not nine months, and that the age for the job release scheme would be 62 for men and not 64?

Is the Secretary of State further aware that with one-third of a million long-term unemployed—estimated to increase to half a million by 1981–82—the figure of 25,000 places in the new community employment programme is totally inadequate?

A Labour Government would have honoured their commitments in the same way as the previous Labour Government honoured their election campaign slogan of 1974 on the basis of "Back to Work with Labour", which resulted in an increase in unemployment of about 700,000 in the next four years. I am not convinced by the argument that they would have honoured their post-dated cheques.

Although under the STEP there was a write-in figure of 25,000 for the programme, the fact was that a comparatively small percentage of those people were being drawn from what are known as the eligible categories—that is, those who had been unemployed for more than a year if they were over the age of 24, and for six months if they were between 19 and 24.

I believe that this new programme will relax the private gain criteria, which will enable far more voluntary organisations to play a part, and will reserve a certain sum for community enterprise projects, where we can get private capital, local capital and the community enterprise money in as well. It will do more than anything to generate more employment, so it is not just the effect of providing 25,000 jobs. What we are seeking to do is to use this money, as much as we can, as seed corn to generate other jobs.

Is my right hon. Friend aware that many Conservative Members will welcome his statement, particularly the part in which he said that the greatest emphasis in the programme is to be on where the need is greatest? With that in mind, and as 1981 is the International Year of Disabled People, will my right hon. Friend invite the MSC to give particular emphasis in its YOP to the young disabled worker, who has an even harder time in getting a job than the normal person?

Yes. I am grateful for what my hon. Friend has said. We shall certainly draw the MSC's attention to the serious problems that the young disabled are experiencing. I repeat what I said to the hon. Member for Isle of Ely (Mr. Freud). We shall give every assistance as well to the Pathway schemes, as we hope that they will develop throughout the whole country.

What will be the effect of the right hon. Gentleman's announcement in Northern Ireland? Will he give a breakdown of the extra places that will appear there in the YOP and CEP as a result of this announcement, or will his right hon. Friend the Secretary of State for Northern Ireland make a separate and parallel statement in respect of Northern Ireland?

Does the right hon. Gentleman understand that, although he is extending the short-time working compensation scheme, he is really leaving only the same amount of money per employee? Will this help those firms that are on the verge of closure or are shedding jobs as a result of the cost of labour?

On the latter point, the cost of the scheme has been increasing considerably in recent months. Although I have not been able to consult widely on the question of changing the 75 to 50 per cent., I believe that many companies will welcome the extension to nine months. I think that it is an important change in the scheme.

As for Northern Ireland generally, as the hon. Gentleman will know, these schemes are not administered by the Department of Employment or the Manpower Services Commission. I have had consultations with my right hon. Friend the Secretary of State for Northern Ireland and his hon. Friends, and they will be expanding their schemes pan passu with the schemes that I have announced today.

Right hon. and hon. Members on the Conservative Benches believe it right to reduce the obstacles facing the unemployed to do voluntary work. However, two problems still remain. The first is that it is necessary to provide some incentive for young people to do voluntary work—perhaps some recognition other than a financial one. The second problem of the unemployed doing voluntary work is that of finding out where voluntary work is required. Perhaps each locality should have a focal point in its jobcentre so that the voluntary organisations can advertise the work that they require doing.

We have thought a lot about this, and we believe that the jobcentres can help. The community enterprise programme will also make it possible for voluntary organisations to take on people full-time to provide information and to co-ordinate the activities that might be performed by people in an entirely voluntary capacity.

We are also aware that we have to look at the problems of the availability for work rules, and also perhaps to consider out-of-pocket expenses for those who wish to partake in these schemes.

We are catering for that. It will take some time to work up these schemes, but I believe that many thousands of people wish to make a contribution to society on an entirely voluntary basis, and I hope that this scheme will be used very largely for that purpose.

Will the Secretary of State assure the House that, when considering youth unemployment, the Manpower Services Commission will look especially hard at the problems of the inner parts of large cities with multiracial communities, such as St. Paul's. in Bristol? Will those areas have special attention?

Areas of high youth unemployment are already given special attention, and there is a good deal of flexibility in the operation of these schemes. For example, although we are concentrating on 16 and 17-year-olds, 18-year-olds can be in the schemes, and the length of the schemes under the youth opportunities programme can be extended flexibly where the resources are available.

I do not know whether St. Paul's has a community industry scheme, but schemes are focused particularly on difficult areas such as certain inner city areas and areas with large ethnic populations. I should like to see schemes of this sort running in areas of the type mentioned by the hon. Member for Bristol, North-East (Mr. Palmer).

Will my right hon. Friend accept that no policy of any kind, whether it be this Government's or any other Government's, can stop inflation without creating a transitional rise in the level of unemployment? Therefore, will my right hon. Friend accept that Government supporters welcome the Government's acceptance of their obligation to those who are unemployed for what will be a transitional period and congratulate him on his statement today?

I am grateful to my hon. Friend. There is no long-term answer to unemployment other than providing proper jobs. We intend to do that. I hope that today's announcement will kill the view that this Government do not care about the unemployed. We care deeply about the unemployed, especially those who are unemployed through no fault of their own. However, in a society such as ours, and given the experience of the past 20 years, we shall not cure this problem in old-fashioned ways. We have to seek new methods.

Is the Secretary of State aware that, despite some improvements, his total package represents an inadequate response to a catastrophic level of unemployment, especially in the North? Is he aware also that there will be considerable disappointment that he has not immediately decided to extend the life of the youth opportunities programme beyond one year? This is very important in towns such as Sunderland and Gateshead, where young people will go from the youth opportunities programme straight back on to the dole queues.

We have made a very considerable improvement. First, we have brought forward the guarantee from Easter to Christmas. I have also made it plain that, with the likelihood of at least a break some time between 16 and 17 so as to give some people an incentive at least to find work, they will be able to come back into another scheme after three months. In many ways, I have dealt with problems of the sort mentioned by the hon. Member for Chester-le-Street (Mr. Radice).

The hon. Gentleman referred to disappointment about our inability to provide more resources. Given the severe constraints at the moment on public expenditure, and considering all the assistance that we are giving to the nationalised industries, which otherwise would mean that employment would not be sustained at even the present levels in those industries, the Government are doing all they can to help.

I welcome my right hon. Friend's statement. However, does he agree that, in the present economic circumstances, it is not possible to offer the number of places in these various schemes that we should all like to see? Might not we obtain a better return on the investment if more attention were paid to the employment of retired persons, perhaps on a part-time basis, to give the leadership that is so desperately important to the success of the schemes? I have in mind especially the community enterprise programme, where people with a lifetime of experience in work have a great deal to offer. Will my right hon. Friend consider the employment of such people, possibly part-time?

There is no reason why retired people with a particular vocation should not come forward and offer themselves for permanent employment in the voluntary organisations to help generate work for others, bearing in mind especially that the voluntary agencies have asked that the scheme should last a minimum of three years so that they may plan ahead for three years instead of the one year that is possible at the moment. We have given thorn that guarantee.

I hope that many more retired people will offer their services through the voluntary agencies so that we can provide jobs of a community enterprise nature or of an environmental nature which can do so much to help improve our environment at a time when we have large numbers of unemployed and when we ought to be making opportunities available to them to help.

Does not the right hon. Gentleman consider that, when he speaks "in a wider context", his wider context is extremely narrow? He gave some indication of that with his trite remark about the educational qualifications of young people leaving school.

We have, especially among young people, the most highly qualified unemployed labour force in our history. Even though the Secretary of State is screwing up his courage to defy the Prime Minister, all that he is providing is a mere palliative. Will he consider what Gordon Richardson said last night, namely, that, if we go on the way we are going we shall have a lot of people in all these temporary schemes, but no manufacturing industry in which to employ them?

I did not hear Mr. Gordon Richardson last night, but, on listening on the radio this morning to an account of what he had said, my impression was that he was emphasising the importance of Britain's being competitive and getting down its rate of inflation. Unless we can compete with other countries, we shall not increase employment.

I am anxious about the education and training of girls. What resources will the Minister make available to deflect girls from shorthand and typing, which are rapidly becoming redundant, bearing in mind that training in new technologies is expensive?

The youth opportunities programme devotes 50 per cent. of its resources to girls. The more off-the-job training for girls that we can give, the better. The Government will make different proposals, not necessarily more expensive ones, and the House will have plenty of opportunity during the Session to discuss them.

Is my right hon. Friend aware that his statement will be warmly welcomed by the British Youth Council, by the National Youth Bureau and by others involved in tackling the problems of youth unemployment? Will he confirm not only that he is aware of the continuing need to increase the number of people who will benefit from the youth opportunities programme but that he will pay attention to the quality of training and the nature of the jobs?

It is important that we increase the quality of training and the quality of jobs provided. I emphasised that in my statement. We must move away from the simple proposition of trying to find anything for the 16-year-olds and 17-year-olds to do. We must try to find jobs that involve some element of training and which, in time, as we bring down the numbers of unemployed young people, can be translated into a unified vocational programme to help the vast numbers of young people who at present leave school and go into jobs without any training. We have a bad record in Britain in that respect, and this is the best way to put it right.

Is my right hon. Friend aware that his new deal for the young unemployed is further evidence to all fair-minded people that the creation of unemployment is no part of the Government's deliberate policy? Is he further aware that his proposals for co-operation with the private sector will be widely welcomed as one of the most cost-effective ways of bringing help to young people and others?

Yes. I am grateful to my hon. Friend. I am also grateful to my colleagues who, when we are having to make considerable cuts in public expenditure, have thought it right that the programme should be increased in this way. It is therefore all the more important to make the best possible use of the extra resources being made available for the schemes.

Is the right hon. Gentleman aware that the measures that he has announced, although welcome, are mere palliatives and only tinker with the problem? Is he further aware that the jobs that he is creating will not match the jobs that will be destroyed by the further package of public expenditure cuts and tax increases that we understand is to come? Will he examine further the job release scheme? Is that not the best means of creating real jobs for young people?

No. The job release scheme has many merits, but I do not believe that it creates more jobs for young people. It helps to remove numbers from the register. One cannot argue that the provision of 440,000 places for young people is a palliative or a cosmetic. We are taking enormous steps forward. They should be welcomed in al parts of the House. The hon. Gentleman should examine the proposals before making such a comment.

Is my right hon. Friend aware that everyone who is anxious about the terrible and tragic problem will warmly welcome what he has said? Does he accept that young people want permanent jobs and permanent work? Does he agree that there is a lack of craftsmen in Britain? Will he talk to the Crafts Advisory Committee and others to see what can be done to encourage young people to be properly trained in crafts so that they can make a real and lasting contribution to the country and to restoring our reputation for excellent craftsmanship? Will my right hon. Friend be careful about spending extra money on lavish High Street jobcentres when such money could be used in the way that I suggest?

I am prepared to talk to the crafts committee to see how we can help. Even more important is the need for a concerted effort by employers, trade unions and the Government, with the support of the House, to examine the whole basis of our apprenticeship system. I shall be asking the House to consider that. It is not right to continue to judge a person's ability to do a job on the basis of the time that he has spent training instead of on standards reached.

We must make our jobcentres attractive. We should continue with our jobcentre programme. However, I agree that when we are asking everyone in the country to be careful how he spends his money, we must expect the Manpower Services Commission to have regard to the importance of economy.

Will the Secretary of State reconsider the remarks that he made earlier, because they might be considered to be a slur on Britain's teachers and the education system? I congratulate the right hon. Gentleman on getting another £200 million for his Department, but is he aware that if that money is taken out of the education system to make teachers' jobs even more difficult that will be robbing Peter to pay Paul? Will he co-operate much more with the Department of Education and Science?

I am not casting any slur on the teaching profession. I am afraid that I am stating a fact which too often is related to me. Far too many 16-year-olds are leaving school with extraordinarily low standards. I attended a meeting of the Parliamentary Scientific Committee earlier this week, when the abysmal level of mathematics teaching was brought home to me in no uncertain manner. Let us not decry the efforts that are being made, but let us face the facts. We are spending vast sums on education, and have done for years. As a nation we must receive good value for money. That is the only point that I am trying to make. It needs to be made.

Is my right hon. Friend aware that his statement will be widely welcomed as a major expansion of the special measures programme? Will he look again at the job release scheme to see whether additional steps can be taken next year if, unfortunately, unemployment is still rising? Does he agree that it would be helpful if hon. Members, with the local offices, could monitor the schemes in three, six and nine months' time as the programme develops? Is he further aware that even if, as we hope, the unemployment figures come down in 1982–83, there might still be a case for deploying additional resources over and above this increase to help the specially harsh problem of the young unemployed?

All the programmes must be kept under review. I hope that unemployment will improve. However, the forecasts are bleak and one must face that. It could cost between £180 million and £200 million extra over three years to reduce the age of those entitled to be involved in the job release scheme. Even next year we have to provide an additional £25 million for the 64-yearolds because the scheme is going faster than expected. The temporary short-time working scheme is costing a great deal. The increased allocation is considerably more than that for the present year.

We shall monitor the schemes. That will require an enormous effort, especially by British industry. I am grateful to industry for its co-operation, and also for the co-operation that was promised by the CBI at its conference. Unless we can find good sponsors, and many more sponsors, the Manpower Services Commission will not be able to meet its guarantees.

rose—

Order. I propose to call the hon. Members who have been rising from the beginning.

Will the Secretary of State say how soon the welcome increase of 150,000 youth opportunity places will take place? I am thinking of last year's school leavers, many of whom have been wandering about the streets for six months. Will something happen before next April? Will the right hon. Gentleman bear in mind the problems of inner London, where there are many unemployed youngsters? I hope that the schemes will not concentrate only on the North of England. The right hon. Gentleman mentioned the extra cost of the schemes. Was he referring to the net increase, taking into account the offsetting savings through people on the YOP schemes not drawing supplementary benefit?

I was talking about gross cost. The net cost can be estimated at about 50 per cent. of the gross cost, taking into account supplementary benefit or unemployment benefit that will not be drawn. That has always been the case. As for building up the scheme, as the House knows, last year there were about 180,000 to 190,000 places in the youth opportunities programme. This year we expanded that to 250,000 places. The scheme is already running at an annual rate of about 300,000 places. We are already building up in excess of what we thought would happen this year because of the great pressure of school leavers. It is not a question of waiting until after April to start to build up the 440,000 places. They will be built up continuously the whole way through. One of the purposes of announcing the schemes so early, and not waiting until February or March, is that we can get on with the preparation and build-up of the schemes, especially the youth opportunities programme.

Is the Secretary of State aware that in constituencies such as Lambeth, where his Cabinet colleagues have carried out cuts that have destroyed hundreds, if not thousands, of job opportunities, this announcement, far from being regarded as a new deal for the young unemployed, will be regarded as a package of cynical gimmicks, because the provision is nowhere near enough to meet the problem? Is the right hon. Gentleman further aware that youth unemployment in that borough has trebled since May 1979? Young people are taken off the dole for a few months, their hopes are raised, and then they are back on the street corners, where they become even more bitter as they realise that the jobs for which they have allegedly been trained do not exist.

Lambeth could make a large contribution to helping itself. If it planned its resources properly so that it did not have to raise rates to the extent that it has, it would not drive industry out of the borough. As a result, more jobs would be available.

Will the Secretary of State turn to paragraph 10 of his original statement and put a cost tag on the phrase "work of environmental improvement"? What sense does it make to promote what, frankly, are often seen as fancy and peripheral jobs rather than allow local authorities to go ahead with central, nitty-gritty, vital jobs such as sewers and house maintenance? Can we be sure that paragraph 10, for all its wording, amounts to anything more than a suggestion that there should be a little more training of thatchers here and there?

The hon. Gentleman can be sure that the schemes under the community enterprise programme will be of a better nature than those under the special temporary employment programme, though they have been improving rapidly under that scheme also. They are not meant to be the cosmetic or synthetic schemes that were prevalent in anecdotal fashion to start with. By relaxing some of the private gain criteria, we are hoping to get industry to play a part in clearing up derelict sites. As a result of getting more voluntary effort on a longer-term basis, we hope that the voluntary organisations will carry out more schemes. We hope that the money that we are allocating out of the new community enterprise programme for community enterprise operations such as those carried out by Mr. Colin Ball under the community business ventures will begin to play a larger part. They are different in concept from the old STEP schemes.

Does the Secretary of State realise that the fact that the youth opportunities programme, established by the previous Labour Governent, is to continue will be welcomed? Does he agree that that is a recognition that there must be Government intervention and that we cannot leave the job position to the market forces of Milton Friedman? When he talks about two-thirds of the work experience on the youth opportunities programme being held in employment premises, does he realise that in South Wales, and in many other areas, employment premises are closing every day of the the week? Does he further realise that there will be difficulties in finding employment premises to supply the work experience unless there is a real change in the economic policies of the Government, with their artificially high interest rates, artificially high value of the pound and artificially high energy costs? Artificial jobs will not solve the problem. We need real jobs, with real economic policies.

I have made it clear that we have a mammoth task ahead to get the work on employers' premises schemes under way. Currently, comparatively few firms take part in the schemes. The CBI, at its conference, gave a strong indication that it wished to play a greater part. We had better wait and see how we get on. I have had no indication from the Manpower Services Commission that it does not believe that, in all parts of the country, it will still be possible to keep to the guarantees and provide additional places.

In the long run, we have to provide proper jobs, with an efficient economy. That applies as much to South Wales as to anywhere else. The hon. Gentleman knows of the vast a mount of money that we are putting into the steel industry and also into providing new factories and other facilities in parts of Wales, especially South Wales, to help a desperately serious position, which is recognised by the Government as being such.

On a point of order, Mr. Deputy Speaker. In the Votes and Proceedings of the House there appeared for the first time this morning a notice that the Heavy Goods Vehicles (Drivers Licences) (Amendment) Regulations 1980 and the Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 1980 had been ordered to lie upon the Table of the House on 14 November.

"Erskine May" in chapter 22, page 579, of the 19th edition, states that the laying of statutory instruments on the Table of the House also involves placing a copy in the Library and making copies available to Members of the House in the Vote Office. No copy of either of the instruments had been placed in the Library up to yesterday. No copy had been placed in the Vote Office up to today. This morning I checked with the Vote Office and found that both of the instruments had been in operation since 15 November. They have been in operation without any copies being available.

I have reason to believe that the instruments raise a highly controversial issue, namely, giving to the Defence Council the right to exempt young members of Her Majesty's Forces from the Road Traffic Acts. Is it in order, Mr. Deputy Speaker, for these regulations to remain in force in breach of the clear procedures of the House? Does this not constitute a blatant disregard of the rights of hon. Members to control this important delegated legislation?

The right hon. Gentleman was good enough to inform the Chair that he intended to raise this point of order. I have made inquiries and have found that the documents were laid as required. I am sure that the Minister will have noted the right hon. Gentleman's comments on the availability of the documents.

There has been an oversight in my Department, and I must apologise to the right hon. Member for Barrow-in-Furness (Mr. Booth) and to the House. The instrument was laid in the usual way and copies were provided to the members of the Select Committee on statutory instruments. Unfortunately, our usual procedures for delivering copies to the Library and Vote Office were not put into effect. When the right hon. Gentleman asked for a copy this morning, I discovered that there were no copies available in the Vote Office. We have taken steps to try to have copies brought to the House. I am sure that 100 copies will be delivered to the Vote Office and the Library within the next half hour.

The instrument has come into effect but it has had limited results so far. The only change made by the instrument is that young Service men of 18 years and over who hold heavy goods vehicle licences and who are used to driving heavy goods vehicles can, if necessary, drive "green goddesses" if the Defence Council so wishes.

It was a real pleasure to give way to my right hon. Friend the Secretary of State for Employment about an hour ago. His statement was immensely valuable. It would be churlish for anyone not to concede that the immense expansion of the youth opportunities programme—it is to be expanded from 130,000 places to a level not far short of 500,000 places—will be of enormous value and benefit to our young people. It is clear that my right hon. Friend is proceeding along the German line and developing technological skills for the future. It is along that path that we shall create real and valuable long-term employment for much of our youth.

My right hon. Friend spoke of spending more Government money. Surely that is testimony enough to the way in which he must have persuaded the Cabinet of the viability and the valuable nature of what he intends to introduce.

When my right hon. Friend intervened in our proceedings, I was about to congratulate my right hon. Friend the Secretary of State for Social Services on his scheme to try to save £400 million by making certain effective changes in the sickness benefit scheme. I was saying that maternity benefits were clearly interrelated with sickness benefit payments and that they, too, must be changed.

I was interested to read a document that my right hon. Friend has published on behalf of the Department. It seeks to take a fresh look at maternity benefits and how changes can be achieved. Effective changes of that sort cannot be achieved on the Floor of the House. I hope that the Select Committee will be able to consider these matters before legislation and that it will try to give some guidance, if guidance is necessary—and I believe that it is—within the principles at issue and before legislation is introduced. I hope that consideration will be given to the question whether some of the administrative difficulties can be sorted out and, more particularly, on the sort of choice that should be made

I think that the best choice lies in achieving the closest possible relationship between maternity benefit and sickness payments. We are to introduce a system in which the employee will be able to receive sick pay from the employer for eight weeks, subject to certain protections that will be written into the scheme. I should like to see a system under which women receive the same payment—that is, £30 a week, which is higher than the existing amount—from maternity benefit for 14 weeks. It could be an extremely simple scheme. It would enable pregnant women to receive one payment from the Department of Health and Social Security. That would greatly simplify the procedures under the same financial umbrella.

I accept that others may take a different view. I put forward my suggestion with no particular knowledge of these matters. However, having considered the issue generally and as objectively as I can, I am inclined to think that the system that I have suggested is the best of the options that is put forward in the paper on which we have been asked to comment.

That comment will be concluded in respect of the public on 15 December. It will then be considered by the Minister. It is useful for the Select Committee to run parallel with the Government and to consider the interrelationship between maternity benefit and sickness payments.

The new parliamentary Select Committees are slightly different from the old-fashioned Select Committees on which I served over the years. The new type of Select Committee, as I envisage it, has a duty to try to assist with and monitor the work that the Government are doing. I know that the Whips, and possibly Ministers, will find that rather tiresome at times. It is not the job of the Select Committees purely to criticise or to consider a large external subject. Their task is to examine the problems in parallel with the Government. This is part and parcel of a new approach to open government.

My right hon. Friend is clearly working along the lines of taking the public into his confidence. He is doing that by means of the Green Paper. It does not help very much for Opposition Members or for small businesses to utter every type of vituperative epithet and to suggest that the idea is nonsense. It is essential to introduce practical measures to ensure that the very small business does not suffer. That is done under the German scheme and it can be done here. Measures should apply to firms which have up to 10 employees.

Whatever is the best system — the Minister has indicated one viable system—we must find one that will recompense employers if we are to impose a duty upon them to pay benefit for eight weeks. I believe that the best method will be to set the obligation against national insurance contributions and to make the relevant reduction. By February the Government should be able to introduce a measure in which sickness benefits and maternity benefits are interrelated in reasonable schemes. If that is done, the Minister will be able to take a Bill through the House.

The House will remember that there are new procedures for the techniques that are to be employed. If it is still thought that the scheme has not been effectively thought out to the smallest detail, the special procedure of calling together the members of the Committee to consider it can come into play. It might very effectively come into play with this as the first measure. That will give the Standing Committee the opportunity to take evidence, if it needs to do so, before it reports the measure to the House. The scheme seems to be valuable.

There are many difficult and controversial matters that fall upon the National Health Service and the DHSS, none more so than the problem of Westminster hospital. It is a small problem but it is symptomatic of a fundamental one. The medical school there is the best. It is heart-rending to have to destroy something that is the best. Putting Westminster with Charing Cross is not the right approach. I appreciate the difficulty that Lord Allen and his colleagues had. The difficulty was so great that the voting on the matter was 25 to 23, and it was put back again to February for further consideration.

My solution to the problem will not necessarily commend itself to the Labour Party. First, I believe that the children's hospital must come within Westminster hospital. The Westminster medical school cart stay, but it may be necessary for some of the beds to become pay beds for those who can really pay. There is great demand from abroad. Money can be obtained in that way, and that is right.

That leads me directly to comment on the National Health Service making money for its own benefit. I do not believe that anyone has yet spoken about that in public. Let me give one or two examples. The National Health Service, through its doctors and scientists, brings forward a number of valuable inventions. When the hon. Member for Wolverhampton, North-East (Mrs. Short) was considering perinatal care and the Select Committee reported, I had the opportunity — and let me immediately say that I have no great knowledge of perinatal care and that other members of the Committee were responsible for those matters—to gain knowledge of a number of the inventions of doctors in this country to deal with the care of pregnant women. There are also inventions in other areas, but there appears to be no way that these are being promoted for export. Money could inure to the benefit of the National Health Service as well as to the inventor if the small Department that my right hon. Friend has could examine the matter to see where money could be made in exporting such valuable inventions.

The insurance principle in health is vital. BUPA does immensely valuable work. An increasing number of individuals and families are joining BUPA every day. I have contributed over many years. Such schemes can be extended. It would be a great advantage for big companies such as Unilever and BP to continue the expansion of their sick pay schemes, but more than that I believe that small cottage hospitals for the benefit of big industry would be of great value. They already exist in certain industries.

The hon. and learned Gentleman will have seen an answer to a parliamentary question of mine the other day that said that the fringe benefits given to executives and employees in industry now amount to £35 million. Should that not be taxed?

Fringe benefits, and whether they should be taxed, are a different subject.

I believe that those who want to spend their money on the health of themselves and their families should be able to do so, and that should certainly not be taxed. Such people should be encouraged. However, my argument concerns not private individuals but large industry.

There is no reason why very big companies should not provide their own sick bays and clinics. We have invited them to do so for perinatal care. Family health care generally could be taken care of in clinics in big factories. Those people would then need to use the National Health Service only for operative treatment or serious illness that required admission to a general or district hospital.

Great savings can be made here. I believe that many of our great companies would like to look after the health of their employees. They provide sporting facilities. Not long ago I went down to one of the great companies in Wales and saw excellent cricket, football and swimming facilities. Not only that: the company had its own nurses, who looked after minor injuries and ailments. It had a very low sickness record.

The major reason why it is necessary to pursue schemes such as the sickness benefit scheme is that there are isolated cases of malingerers or those who do not want to work. There is nothing wrong about the National Health Service's seeking to make money. In addition, industry should promote clinics.

Let me give another example, which is one that I have discussed with the chairman of the English Tourist Board. It concerns the development of spas, which is partly a tourist project and partly a health project. The most valuable way to make a great deal of money for the medical services and the tourist industry is to recognise our immense potential for introducing clinics and spas. From Tunbridge Wells to Bath and from Buxton to Harrogate we have a number of great towns, all of which could be restored as spas. If hon. Members visit Baden Baden they will see what I mean. Considerable sums of money are spent by people who go there for health care, rejuvenation or treatment for arthritis. A large amount of money can be brought to health care here in a similar way.

Harley Street plays a leading part in the treatment of arthritis, rejuvenation, dental care and many other areas on the periphery of the Health Service which do not form part of the costs that that service has to carry. Further schemes can be beneficially introduced to bring considerable employment and wealth to the country. We should not only consider saving; we should adopt an imaginative and broad approach to the future and consider developing inventions and expanding spas.

Finally, let me suggest how such schemes could be implemented. We must continue to see how schemes can be improved and adopt a slightly different emphasis. We must ensure that the old are cared for and that the young have preventive treatment to keep them healthy. However, for others—professional people, executives and people working in factories—we should move towards the view that they should provide largely, although not entirely, for their own health needs, partly by insurance, partly through companies having their own sick pay schemes, and so on. It would then be necessary for people to fall upon the advantages of State treatment only when they were seriously ill or needed operative treatment.

Another matter that it is important to get on the record concerns tourism—another hat that I sometimes try to wear. My right hon. Friend the Secretary of State for Trade has said that he will consider the position of the regional development areas. Clearly, he should also create tourist development areas, as distinct from industrial development areas. Such a creation could bring a great deal of additional revenue and employment to the country if they were carefully sited. I hope that my right hon. Friend will be as good as his word this year—I am sure that he will—and bring forward specific proposals for tourist development areas.

Once they were located, the areas would qualify for regional grants from the EEC. That would be particularly important in respect of infrastructure—roads, sewers, beaches, and other such subjects. A relatively small amount spent by way of grant in tourist development areas could bring overriding benefit to many parts of the country. They would have to be newly designated areas. Those that have been fortunate enough to be located in regional development areas in the past—I am thinking of places such as Newquay and Scarborough—have received immense benefit through the hotel and other industries purely because they were in areas of high Unemployment, There are now many other areas of high unemployment, and Thanet is probably among the worst. Nothing would be of greater value to Thanet than that it should come within a tourist development area and thus be able to derive benefit from the EEC and from grants to the tourist industry.

New thinking must be brought to bear on all the problems that I have described, including the use of computer equipment to bring advantage to the Department and the National Health Service. My right hon. Friend is pursuing a form of open and consultative government, and for that he deserves the support of the House.

I should like to devote a little time to the specific subject of today's debate, since I am interested in various aspects and have had experience of it over the past 20 years, but I trust that right hon. and hon. Members with constituencies in Great Britain will not resent a short break in the continuity of the debate—much shorter than the one—hour break between 11 am and 12 when the Secretary of State for Employment made his statement. I hope also that they will accept that if our constituents in Northern Ireland are to benefit from health and social services it is essential that their lives are not snuffed out by the evil men.

I therefore welcome the priority given in the Northern Ireland paragraph of the Gracious Speech committing the Government

"to protect all members of the community against violence and terrorism."

We are further encouraged by the words

"My Government are firmly committed to the maintenance of law and order in all parts of the United Kingdom."

The Queen's Speech of 1977 committed the then Government, of which the right hon. Member for Salford West (Mr. Orme) was a distinguished member and gave sterling service in Northern Ireland, to increasing the effectiveness of the RUC and the UDR.

Some weeks later I suggested in the House that such effectiveness ought to permit a reduction in the scale of the Army's commitment, particularly in that wasteful element of the commitment known as the short-stay formations. Not unexpectedly, I was assailed for not demanding an increase in strength, including, presumably, the strength of the NAAFI services.

Three years later the change has come. Working closely together, the RUC and the UDR are assuming responsibility for more areas. As their effectiveness continues to increase, it should be possible to scale down the Army's strength still further, though not, I trust, by the 2,000 suggested in press reports within the past 48 hours. In my view, such a reduction would impose too sudden a strain on the indigenous security forces. Nor should we in any circumstances contemplate the removal of the Regular Army from its rightful role in defending the land frontier of the United Kingdom.

I trust that increasing use will be made of the specialised counter-insurgency forces and that we, the politicians, particularly the Northern Ireland politicians, will support them in their difficult duties.

There is now in Northern Ireland a far greater sense of normality resulting from greater confidence, but we cannot be complacent as long as even one life remains in danger. To all those who have suffered grievous loss and serious injury—not just those in Northern Ireland but our fellow citizens in Great Britain who have served in the security forces and the Army and their relatives—we can now offer encourgement and consolation in the time-honoured words

"Say not the struggle naught availeth."

In the Gracious Speech the Government go on to commit themselves to fostering economic recovery. It is to the Government's economic policies that public attention will inevitably be preponderantly directed. My colleagues and I have made no secret over the years of our conviction that the evils and injustices of inflation are, if possible, even more disastrous for those we represent than for their fellow citizens in the rest of the United Kingdom. One of the basic duties of the Government we believe is to restore and maintain a reliable currency. In our view that depends upon the nation being prepared to pay honestly, through taxation or savings, for however much it decides to spend, rather than dishonestly and slyly by depreciating the currency.

It is for that reason that under the previous Administration we paid tribute to and supported such policies as were calculated to have that effect. Equally firmly and consistently, we have supported the present Government in the same endeavour, whatever the temporary unpopularities and misconceptions, while holding ourselves at liberty to dissent from and criticise individual aspects of their economic policy. However, the Government can rely upon us to continue to support in general the aims and the philosophy of their approach.

I welcome the assurance given by the Secretary of State for Employment this morning to my hon. Friend the Member for Londonderry (Mr. Ross) that the schemes announced this morning will be applied to Northern Ireland. I am grateful to the Secretary of State for Northern Ireland for arranging to be here today at considerable inconvenience to himself. I assure him that the Ulster Unionist Party will co-operate fully with him in the application of those measures in order to obtain the best results.

Some are tempted to assert that this or that Government have refused to restore Stormont. However much Unionists may deplore it, the fact is that for the past eight years Parliament as a whole has adhered to the view that the restoration of something like the former structure is a development which it is not prepared to countenance.

Hon. Members and noble Lords have arrived at that position by a variety of routes. Some feel that, just ast he present leaders of the SDLP and the IRA destroyed the old Stormont, a similar fate would befall a restored Stormont. Others recognise the impossibility of reconciling not two religions but two national loyalties. Others, conscious of the political fragmentation in Northern Ireland, which has been caused by proportional representation, are convinced that the political stability necessary to sustain a devolved structure simply does not exist. That latter consideration would have spelt disaster for any form of advisory or consultative body.

Ulster Unionists may hope that those opinions could be wished away, but wishing, hoping and even demanding have not changed attitudes. We are tempted to blame Parliament for a lack of understanding, but we have to be fair and remember that the three Northern Ireland political parties that engaged in discussions in the past year could not themselves design a structure or map out an agreed course.

The latest of many attempts to devise for Ulster unique political arrangements to reconcile the political objectives of the relatively small minority who do not wish to remain in the United Kingdom with those of the remainder who do wish to remain has proved abortive. That is not a cause for surprise, because it was an attempt to achieve the inherently impossible.

No one would quarrel with the Government's aspiration to give Ulster's people more control over their own affairs. That aspiration is justified, not because more control would reconcile opposite political objectives—it cannot and will not do any such thing—but because the people in one part of the United Kingdom cannot in the long run be denied the rights and opportunities enjoyed by those in the rest of the kingdom.

So how should the Government proceed, amidst all their other preoccupations of greater moment for the nation as a whole, towards fulfilling their aspiration for Ulster? Dare I suggest that perhaps it was a mistake to try to do too much at once? Suppose that we were instead to begin with the things that are easiest and most obvious and not with those fraught with the most difficulty and controversy.

There are some matters, mostly concerned with the environment, that it cannot be right to leave in the sole responsibility of Ministers and hon. Members and which it cannot be impossible to entrust to local elected administrations. Local councils are already consulted on such topics as a matter of administrative practice. Why not try giving them some real responsibility? That could do no one any harm and it would raise no constitutional or political crisis. Why not try it and see how we get on?

Ulster Unionist Members would gladly contribute our practical experience and local knowledge towards meeting any difficulties and suggesting possible lines of approach. I hope, trust and believe that that is not a suggestion which the Government will dismiss out of hand.

I am sure that the House will welcome the constructive and helpful speech of the hon. Member for Antrim, South (Mr. Molyneaux). I am sure, too, that he will understand if I do not follow his comments, except to say that I warmly welcome the paragraphs in the Gracious Speech dealing with Northern Ireland and I congratulate my right hon. Friend the Secretary of State for Northern Ireland on his efforts to bring about a reconciliation of the divisions in the Province.

There are many aspects of the Queen's Speech that I warmly welcome, though the House will be glad to know that there are only one or two declarations of policy on which I wish to comment. First, I welcome the assurances given on pensions, war pensions and other social security benefits. I am glad that my right hon. Friend the Secretary of State for Social Services made clear that the Government stand by the pledges that they have given. It must be a main principle of Conservative policy to protect the sick, the old, the disabled and those who necessarily depend on the State for protection.

It is probably fair to say that all hon. Members want to do the best they can for such groups. The right hon. Member for Salford, West (Mr. Orme) has called for higher benefits all round, but we must accept that in the long run real improvements in the social services cannot be sustained if we have falling economic growth, as, unfortunately, we have now.

There is one item that I wish to see reduced as a matter of urgency—the current expenditure on unemployment benefits and supplementary benefits for the unemployed and their families. I want to see it reduced not by the cutting of benefits that are properly required but by the cutting of unemployment.

In March my right hon. Friend the Secretary of State for Social Services pointed out that the social security programme cost about £20 billion a year and accounted for about one-quarter of all public expenditure. We must indeed be concerned to see that that vast amount of money goes where it is most needed. Earlier this month, my hon. Friend the Under-Secretary of State for Health and Social Security gave more precise figures. The total cost is rising, and she said:

"The most recent estimates of expenditure on all social security benefits, including pensions, for 1980–81 is £21,620 million, including"

and these are the most significant figures—

"£992 million on unemployment benefit and £2,948 million on supplementary benefits."—[Official Report, 10 November 1980; Vol. 991, c. 79.]

That total figure of £3,940 million for unemployment and supplementary benefits compares with an estimated £1,320 million in 1978–79 and £320 million when the Conservative Government left office in 1974. By any standard, that is a shocking waste of financial and human resources. It is that factor, coupled with the increasing cost of servicing public borrowing through high interest rates, that has upset all the calculations of my right hon. and learned Friend the Chancellor of the Exchequer about this year's public sector borrowing requirement. That, primarily, necessitates curbs on other sections of public expenditure.

If the estimate is correct that for every 100,000 extra unemployed there is a further burden of £250 million a year on public expenditure, that is relatively small compared with the enormous loss of productivity, wealth and tax-producing revenue that that number of people out of work represents.

Social security and other benefits have taken a great deal of the misery and poverty out of unemployment, but, at the same time, the figures that we are considering today highlight the cost of unemployment in national and budgetary, as well as social, terms. Unfortunately, we know that the outlook for unemployment remains grim. For the first half of the year the gross domestic product was 2 per cent. lower than during the same period of 1979. But, more significantly still, within that total manufacturing output fell by just over 6 per cent.

The root of the trouble is, to a large extent, that labour-intensive manufacturing production is being replaced by North Sea oil output. There is a danger here, because that North Sea oil output is masking what is happening in the manufacturing and production industries of this country. The wealth that is being created by North Sea oil output is not being used sufficiently to finance investment and growth. That is what is behind the colourful anxieties expressed by Sir Michael Edwardes at the CBI conference.

According to today's issue of The Times, Professor Hayek is calling for an even more drastic monetary policy and "bigger and better bankruptcies". I have some admiration for Professor Hayek. Indeed, at the end of the war I produced an abridged and, if I may say so, perhaps an even more readable version of his "Road to Serfdom". But he is wholly wrong in his analysis of the situation as it exists today. No doubt, to rely soley on cheap money to make good the harm done by monopolistic wage policies was equally wrong, but either way, whether we talk about cheap or dear money—in the days that Professor Hayek formulated his theories, cheap money was 2 per cent. and dear money was 6 per cent.—any one-sided emphasis on monetary policy may, as we are beginning to see, produce effects as unlooked for as they are undesirable.

I believe that a gentle measure of Professor Hayek's medicine, taken at the right time in the immediate post-war years, might have saved us much sickness. But a massive overdose of the sort that Professor Hayek suggests today could kill the patient.

The professor talks of bigger and better bankruptcies, but the small business without the large reserves is being hardest hit at present. There are about 1¼ million small businesses in this country, employing about 6 million people. That is why I welcome the declaration in the Gracious Speech that special attention is to be given to measures to permit small firms to expand and prosper.

My hon. Friend the Under-Secretary of State for Industry has been present throughout most of the debate, and I know of the tremendous interest that he has taken in that aspect of Government policy. I know that he was as glad as I was to hear the Secretary of State for Social Services emphasise that in the new arrangements for sickness benefits regard will be given to the particular problems of small firms. It is no good talking about their having bigger and better bankruptcies; they just have small bankruptcies, which are just as serious for them.

As I have often said, to enable small businesses to prosper we must remove the present burden of penal interest rates. We must also recognise that for many small firms time is running out. The rate of business failures continues to increase alarmingly. The total of company liquidations increased by 43 per cent. in the first half of this year. That is only the tip of the iceberg. There are many people who cannot afford to have a bankruptcy of any kind, big or small. They simply cease to trade, leaving behind the wreckage of their business and their hopes.

In the real world, uninhabited as it is by economists and statisticians, the crude axe of monetarism hits the very people that it should not hit. Someone once said that the trouble with economists was that they spent 20 years trying to find out what went wrong last time in order that they could get it wrong this time. As for the statisticians, if we lose a telephone number they will tell us how to estimate it.

As on previous occasions, the position is particularly difficult in the North of England. By September this year, unemployment in the Northern region had risen to nearly 162,000–41,500 higher than a year ago. That represents an unemployment rate of 11·7 per cent., compared with 8·3 per cent. nationally. The trend is still upwards, and in many areas the figure is much higher than 11·7 per cent. In Consett it may be that the adult unemployment rate, if further planned closures take place, could go up to over 50 per cent.

In addition, many firms are not only not recruiting; they are avoiding further redundancies only by work sharing and support from the Government's welcome and necessary temporary short-term working compensation scheme, under which 13,000 jobs are currently being supported in the region. That is significant and helpful, but it masks the real damage that is being done now to the productive industry of the country.

Most worrying of all are the concentrations of unemployment in particular areas and the sorry plight of school leavers, of whom more than 30,000 are unemployed in the Northern region. In some areas, as many as 60 per cent. of school leavers are finding it impossible to get a job.

It is against that background that I warmly welcome what my right hon. Friend the Secretary of State for Employment had to say today. He at least demonstrated—this is important—that the Government care, as he put it, about the consequences of unemployment at the present time.

It is right that there should be this extension of the youth opportunities programme. It is right that young people should be given the opportunity of taking part in voluntary programmes. What we have to ensure is that these are not merely palliatives, lasting for only a short time. As the Secretary of State said, in the case of adult unemployment—structural unemployment—it is proving extremely difficult to find new jobs.

We are now on the horns of a dilemma. One horn is labelled inflation and the other deflation. This is a new situation. Hitherto, we have always worried about inflation. Now, increasingly, we have to face the problem of deflation. The object, therefore, of the Government"s exercise must be to avoid being too deeply impaled on either horn. So the important thing is to maintain the maximum degree of flexibility, to be prepared to act quickly and to adjust the balance of the economy at any time by whatever methods or measures may be necessary. That is why I talk about motorway madness. The Government know where they started. They know where they are going. But in driving along the road they must have regard to the conditions that they meet on the way.

To the extent that today's announcement by the Secretary of State for Employment demonstrates the degree of flexibility for which I have always called in Government policy, it is something that I warmly welcome.

Politics and policies are about people. That is why they must be sensitive and flexible. That is why Governments should not go nap on one statistic or one economic expert. Professor Friedman can always opt out. He can say that the policy is not working because the bureaucrats have got it wrong, or because the Treasury or the Bank of England has got it wrong, or because there are no index-linked interest rates on Government borrowing. Economists have a way out, but the Government retain, day by day, the responsibility, and it can be exercised only in a way that enables them to adjust far more quickly to changing circumstances than the economists will allow.

The right hon. and learned Gentleman has raised some interesting points. As an economist, I cannot help thinking of Keynes' dictum that in the long run it will be all right; in the long run we are all dead. That is a valid point. We may reach a stage at which some industries find that it is impossible to receive any form of resuscitation. That is why the right hon. and learned Gentleman's contribution is so important.

Perhaps we underestimate the contribution that Professor Keynes made to our thinking on economics. He never argued for purely reflationary measures. He said once that it was extraordinary that Governments should often spend money on wholly wasteful expenditure rather than on partially wasteful expenditure. He had a lot of sense.

Comparisons with the past can be dangerous. Every economic cycle has its own particular circumstances. It has been said that history never repeats itself but that historic situations occur. People should bear in mind the circumstances in which those such as Professor Keynes worked. In the North, people still remember that the Jarrow shipyard—closed in the early 1930s—was one of the most efficient shipyards in the country. Today, it is often the efficient factories that are closed. Like the Jarrow shipyard in the 1930s, they are in temporary financial difficulties.

What happened when war broke out? Even at the height of the U-boat campaign it proved impossible to reopen the Jarrow shipyard. We may find similar difficulty if we allow factories to close today. Miss Ellen Wilkinson spoke about Jarrow having been murdered. We do not want the next generation to talk about Consett having been murdered. We must find employment for the young, especially in the regions in which they live.

Much is said about mobility of labour. However, it is not particularly easy to move from one area to another, particularly if a person has not got a house. In the famous debate on employment policy on 21 June 1944, Ernest Bevin said:

"Large scale transfer of labour is not, in my view, the answer to localised unemployment. Certain grave social disorders arise from it. One is that it denudes the area concerned of their most valuable resources, their young man-power, and results in appalling waste of social capital which would be better spent on developments."—[Official Report, 21 June 1944; Vol. 401, c. 224.]

That is why I have always believed that it is not sensible, in a time of recession, to defer expenditure which is of great significance to the growth and strength of the nation. That includes the money that the Government contemplate spending on retraining the unemployed and on providing young people with greater employment opportunities. In terms of public expenditure, it also means maintaining a steady flow of capital outlay at a level that is sufficient to employ the manpower, materials and productive capacity available. It is largely a matter of timing.

In a boom such as that experienced in 1972–73, it is necessary to slow down construction starts, but it is never necessary to stop projects in mid-stream. The construction industry is a good economic indicator but a bad economic regulator. The time has come to have two Budgets. One should be a current Budget, which includes such matters as social security and benefits. Normally, it should be financed by revenue rather than by borrowing. There should also be a capital Budget, which could, in appropriate circumstances, be dealt with differently.

The power of the State—as the main buyer of buildings, goods and services—is the best way of countering inflationary or deflationary movement. We could employ that power better. Public expenditure should have regard to regional as well as national considerations. We should turn our backs on arbitrary cuts across the board, of which the Treasury is historically so fond. The Government should not control the money supply as measured by that dubious and highly unreliable statistic, M3, but they should control total spending and, in particular, the direction of that expenditure. That is why the emphasis should be placed on the creation of real growth, real wealth and real jobs. That is the only foundation on which our social services can be built.

Now is the time for the Government to use their power as a client in the market to purchase real developments that can be used for the future—for example, hospitals, roads and airports. That would be much better than spending about £4,000 million a year on unemployment and supplementary benefits. We are very close to a point at which, if the monetary policy in its harshest form does not work, it may be too difficult to try anything else. The alternative to a more constructive attitude to public expenditure may be a depression that, not only in this country but in other countries, could make the crash of 1929–1930 look as if it were a technical correction of the market.

It is a great pleasure for me to speak after the right hon. and learned Member for Hexham (Mr. Rippon), whose speech was like a breath of fresh air blowing from the Government Benches. He is to be commended on his brave and erudite speech.

In view of the time factor, I have cut out one or two items from what I proposed to say. However, I shall refer briefly to them. The first concerns perinatal care. If the Secretary of State is keen on cost effectiveness, I remind him of the statistics that both he and I used in Trafalgar Square, namely, that if in a year we can save 50 babies from being severely handicapped, that will pay the £25 million required to fund such a scheme.

The second point that I wished to mention at some length concerns the safety of medicines. I should like the Secretary of State, who has a genuine interest in this matter, to look again at the effectiveness of the yellow card system and to try to persuade the Committee on Safety of Medicines to consider what it now calls anecdotal cases. These anecdotal cases sometimes represent severe human suffering. I am saddened to think that the committee will not look at such cases when hardship and suffering are involved.

Basically, I want to confine my remarks to the Warnock report. The Prime Minister said yesterday that the report would be implemented. The Gracious Speech promises that

"Legislation will be brought forward to facilitate the education of children with special needs."

That refers to Warnock. At the same time, there is severe control over public expenditure plans. Legislation for Warnock without resources would be meaningless. It would raise false hopes.

I hope that the Secretary of State will indicate that resources will be provided for Warnock. Of course, if he says that he will provide resources for Warnock, he will be in grave difficulty because the rate support grant does not allow him to specify a need. I have a strange feeling that local authorities at this time of cutback will be prepared, though reluctantly, to accept specific, albeit limited, grants for the implementation of Warnock, which involves resource implications.

No one will deny that there is a need for special schools. Indeed, Warnock says so. Basically, Warnock states that we should try to bring handicapped children into ordinary schools where they can be integrated. That means that there must be consultation with parents. But there can be choice only where resources and places are available. We must not make a hollow sham of the word "choice" if there is no choice.

Handicapped children normally suffer from a multiple handicap. Even a child with a single handicap suffers and experiences a double handicap. One results from the physical disability; the second results because resources and facilities are not made available for that child to develop to his or her maximum capacity. If properly implemented, Warnock would assist the child to blossom and to contribute to our society despite the disability.

I should like the Minister to look very carefully at something which has caused me anxiety throughout my professional life in schoolmastering—the discretionary grant. This grant normally applies to the student who attends a technical college or a college of further education. When the Minister implements Warnock in legislation, I urge him to consider whether it would be possible to make the grant for further education of the disabled child mandatory. That would go a long way towards relieving the suffering and hardship experienced by the family, and such children would not be denied the opportunity of further education.

The other matter I should like to raise relates to a slightly personal point—the question of aids for the disabled child. Sometimes aids are personal; sometimes they are teaching aids. Very often for the deaf or partially deaf a teaching aid is required. But sometimes a specific personal aid is required.

I do not suppose that my younger daughter, who is now very pregnant and about to make me a grandfather for the third time—I hope that I have many more—will mind my saying that from the age of two she had to wear spectacles. No one ever doubted who provided the spectacles. They were provided by the DHSS. Without the spectacles, she could not have received an education. But she managed to take a degree at Oxford because she was able to continue with her education. However, there are severely handicapped children who are denied that chance because they do not have the necessary personal equipment.

I am delighted that the Secretary of State is in his place. I should like his Department to consider seriously whether the equipment required to enable a handicapped child to be educated ought to be provided by his Department, while the education per se is provided by the Department of Education and Science.

Finally, one of the constant difficulties of integration is access. Under the Alf Morris Act, and since then, we have tried to ensure that any new public building provides access for the disabled. Every time I mention this matter, people assume that I am referring to access for the person in a wheelchair. There is no one who has not at some time gone around in a vehicle of some sort, on four wheels, pushed by someone else—we have all been in a pram at some time. Why do mothers not have the chance in many cases to go into public buildings with their babies? Why should steps prevent mothers from doing that? Why should steps bar wheelchairs?

As a special case—I should like to pretend that my disability is a rugby injury, but in my heart of hearts I know that it is the onset of arthritis—it would be rather nice if we provided access other than steps for the elderly, so that they, too, could get into public buildings. Once we have access arrangements in schools and places of education, we are well on the way to providing what is required for integrated education. Legislation without resources in terms of aids, access or special teachers will be a heart-rending sham.

It is a great pleasure to be able to congratulate Opposition Members on their speeches, and it is one that does not occur very often. However, on this occasion I want especially to say how much I agreed with the final words of the hon. Member for Eccles (Mr. Carter-Jones) about access.

Next year is International Year of Disabled People and not only the disabled in wheelchairs, and my own contribution has been instigated by an extremely brave constituent of mine who has multiple sclerosis and who leads a difficult life. Having visited him recently, I was just about to leave when I asked whether there was anything else that I could do for him. He replied "No, nothing. Everything's fine." He is a great example to us all. He was telling me that we ought to do more on public transport in London to give access for disabled people and for those with defective sight. I am making a little progress with my campaign, but, if matters get sticky, I hope that I shall be able to enlist the help of the hon. Member for Eccles and see whether we can make a joint venture of it.

Those are the nice words that I have to say today. I turn now to a slightlier nastier subject, which I raised last year during the debate on the Queen's Speech when I had the doubtful privilege in the mind of Mr. Speaker of raising the first point of order after the general election.

When Mr. Speaker announced how the business would be handled in this same debate 18 months ago, he said that a different subject would be allocated to each day. My point of order was to seek Mr. Speaker's assurance that any subject referred to in the Queen's Speech—or even one that was not in it—could be raised at any time during the debate. That being so, I am a little disappointed to see only Ministers from one Department present this morning, whereas, according to yesterday's Hansard, there are 87 Ministers in all.

The hon. Gentleman is being a bit unfair to the Secretary of State for Northern Ireland, who was present for at least part of this debate.

I accept that. Perhaps I did not express myself very well. I agree that there were other Ministers present listening to the statement by my right hon. Friend the Secretary of State for Employment, and the Secretary of State for Northern Ireland was also here. I was about to say, however, that it would not result in too great an inconvenience if the leader of the party in power commanded the attendance of his or her Ministers in debates such as this. In the nicest way, perhaps I might say to my right hon. Friend the Secretary of State for Social Services and to the Government Whip, my hon. and learned Friend the Member for Clitheroe (Mr. Waddington) — and I should have thought that Opposition Members would be even keener to see this than I am—that perhaps debates in this House should have absolute priority for Ministers in the Departments concerned and that virtually all other meetings should be cancelled on the day when one of these debates takes place.

Perhaps I might place on record the understanding with which the cancellation of my appearance at three seperate functions in the North of England was accepted by the organisers, so that I should be able to be here to listen to my hon. Friend the Member for Harrow, West (Mr. Page), whose speeches I always enjoy.

I am especially grateful to see my right hon. Friend the Secretary of State for Social Services. I hope that he will ensure that my message gets to his ministerial colleagues.

I turn to a subject that is of major importance to many of my constituents who are retired. Some live on fixed incomes and others have ordinary or index-linked pensions. I hope that during this Session we shall have a chance to take a new and closer look at the Pensions (Increase) Act 1971. That Act ensures that the portion of a public servant's life earnings that is set aside as savings to provide a personal pension above the State pension shall be protected from the effects of inflation.

Public servants place much importance on their pensions. They believe, rightly, that they have sacrificed part of their income throughout their careers to provide such pensions. However, employees in the private sector who contribute to pension funds are in exactly the same position, because they probably give up at least as much of their incomes in contributions to pension funds as do civil servants. The only difference is that civil servants' pensions are, in theory, non-contributory and their wages and salaries are stated in net terms. The net earnings of workers in the private sector, after deducting pensions contributions, are no greater than the corresponding Civil Service remuneration.

If the House was right in 1971 to safeguard, by statute, savings for pensions by State servants, why has something similar not been done for the rest of the nation? If we were right to safeguard the pensions of the elderly, should we not protect the pension investments of the young, who often save so that they can buy a first home?

Until eight years ago the interest, after deducting standard rate of tax, on almost all forms of savings was just a little higher than the rate of inflation. It will not be news to hear that in the last eight years savings have earned less than the rate of inflation. Eight years is a long time in human terms. In the last eight years, savers from all sections of the community have been losing their nest eggs. If one had saved £100 in 1973, today, even with all the interest accrued, it would have a real worth of £59.

A few weeks ago Vanbrugh Investments, a member of the Prudential group, inserted an advertisement in a Sunday newspaper. One paragraph was particularly telling. It read:

"Take a look at what your savings will buy nowadays and remember 10 years ago for £10,000 you could have bought an average three-bedroom house, plus a Rover 3500, plus a Mini, plus a four-berth sailing cruiser."

That was in 1970. That £10,000 house is probably worth £30,000 today.

At a time when civil servants, hon. Members and others in the public sector have had the most important element of their savings—their pensions—fully protected, can it be right that all other forms of savings for other people are left entirely to the mercy of inflation? Many of us believe that that is wrong. There has been pressure to take action, and a new union has been formed—not a trade union, but the Savers' Union, which, in its wisdom, has elected me as its chairman. It intends to publicise, as widely as possible, the way in which savers have been short-changed for many years.

I do not think that that cheating is deliberate. I am sure that it is not the wish of the Treasury, the banks or the building societies to swindle savers, but those extremely responsible institutions have been doing just that. They have borrowed people's savings at a rate of interest below the rate of inflation. If interest is the wages of thrift, the wages of the thrifty have been cut ruthlessly year afer year.

What are we to do about it? I have one direct and one broad suggestion to make. The Savers' Union, which aims at all times to be extremely sensible and responsible, believes that it is wrong that, for eight years, average savings have fallen by 5 per cent. each year. In the past 12 months, wages and salaries have increased by 21 per cent. while prices have risen by less than 16 per cent., and there has been a 5 per cent. loss to savers because the interest rate has been 5 per cent. below the rate of inflation.

The only genuine long-term way to end that injustice is to stop inflation. Savers must be thankful for the steady fall in the price index during the past four months. They should congratulate the Government on their determined effort to treat a reduction in the rate of inflation as their first priority. Even after the latest fall, prices are still rising well above the net interest rate received by savers. When savers are told that high interest rates create inflation, they do not believe it. They think that it is a joke.

I ask my right hon. Friend to pass on to the Chancellor of the Exchequer the suggestion that to charge income tax on interest, the rate of which is already below the rate of inflation, imposes a capital levy. I ask the Chancellor to consider coming to the rescue of pensioners in private pension schemes and other annuitants—those whose pensions are not index-linked—and allow the gross amount of pension to be deflated each year for tax purposes by the fall in the value of money. That is the only way in which some fairness can be provided.

We often discuss the disadvantaged and the need for a compassionate society, but, in the sum of human distress, the plight of those on small fixed pensions is extremely serious. We must move quickly to end the injustice that is being done to all those who are saving or have saved and who see their savings shrinking rapidly. If there were no savers, there would be no home ownership through building societies. There would be no hire-purchase industry. Most savings would be in the form of valuables dug into the back garden.

I do not often bother to try to catch the eye of the Chair during economic debates. However, over the past few months I have been burdened by the realisation of the sacrifices that have been made over the years by the responsible and the thrifty. In the main they are not wealthy, and their savings have been decimated by inflation.

I hope that the House will not think that my speech is an attack on civil servants or other State employees. I do not want to take from them their index-linked pensions. I am merely trying to draw attention to the reality of their position. I am sure that my right hon. Friend would approve of the ideal that all pensions should be index-linked. I am sure that he and everyone else will agree that at present that must be a pipe dream. There is only one way of making all pensions inflation-proof, and that is to get rid of inflation itself. That must be the Government's prime aim, and it should be the Opposition's prime aim, too.

When speaking of State pensions and of ourselves and others who have index-linked pensions, I am speaking of a group that has more to lose than any other. It is in its self-interest, as well as in the interests of the country, to deny itself demands for high income increases.

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It is as certain as night follows day that if that group continues to demand high wage increases and low productivity, it will cause the Government to abandon the principle of index-linking. The rest of the community will rebel.

rose—

rose—

rose—

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The rest of the community will rebel at the extent of the privilege of this one sector unless the level of demand of those in the public sector is reduced.

Those who work in the public sector have a greater contribution to make than any others to help to defeat inflation. I hope they realise that it is in their common self-interest to curb their wage demands and to support the Government in reducing inflation, with every means in their power.

I know that the hon. Member for Harrow, West (Mr. Page) will forgive me if I do not take up his remarks.

I respond quickly, firmly and positively to the Secretary of State's statement about the protracted negotiations with the tobacco industry. The right hon. Gentleman will recall that three weeks ago I made an offer that if the industry proved to be so recalcitrant that he could get from it only the piddling sort of statement that we have had today, I should be pleased to introduce legislation.

indicated assent.

I am pleased to see that I have the assent of the hon. Member for Isle of Ely (Mr. Freud). When I introduced a Bill of similar effect on a previous occasion, the hon. Gentleman was one of my supporters. That Bill is already drafted. I look forward to a half-day debate—I hope before Second Reading.

The Secretary of State for Employment's intervention during the debate has enabled us to see the statement that has been prepared. I hope that the Secretary of State for Social Services will convey to his hon. Friend the Under-Secretary of State, the hon. Member for Ealing, Acton (Sir G. Young), my sympathy. It must have been heartbreaking to have to keep persisting over all these months and to achieve such a voluntary agreement which is ineffectual.

The concession on poster advertising gets us back to the position only 18 months ago, before the war between British American Tobacco and Imperial Tobacco. Considering the previous figures, £6 million is not a great deal.

My second point concerns the notice on the side of the packet, which is extremely difficult to swallow when the entire medical profession—including the Royal College and the BMA—has been asking for something better than a mere bromide on the side of the packet.

I should not wish the hon. Gentleman to misunderstand the position. The amount of poster advertising has grown rapidly, particularly this year. That is why we have taken as a benchmark for the reduction the level of advertising in 1979–80. We are cutting back from that level, not from the present level, which is a greater cutback.

I realise that it is a cut from £20 million to £14 million.

Sunday advertising in the colour supplements of newspapers has increased greatly, and that will remain unscathed. However, I shall not pursue that matter now.

I wish to give the House an idea of what is incorporated in my Bill. I have received strong support from the BMA, which passed to me the recommendation made by its annual conference. The BMA represents doctors in hospitals and general practitioners. The recommendation states:

"That this meeting notes with dismay that whilst welcome publicity is given to the ill effects of smoking"—

which means one premature death every Eve minutes—a holocaust, a massacre—

"the Government takes no firm action".

At least the Government have now taken a decision, and I congratulate them on confining it to last for only two years. It continues:

"all tobacco advertising should be banned except at the point of sale; greater emphasis should be made to the general public of medical conditions other than cancer of the lung".

It refers to emphysema and all the chronic respiratory diseases, which are far more dangerous and killing than carcinoma. It adds that

"smoking should be restricted in hospitals; smoking should be banned on public transport and at indoor places of public entertainment."

I hope that I shall get an opportunity to debate my Bill. That is more or less what it contains.

I shall be brief, as other hon. Members wish to speak. I shall deal briefly with other omissions from the Gracious Speech. This morning the Secretary of State mentioned discussion documents. I have never seen quite so many discussion documents being produced. I suspect that it is all discussion and very little action. In the Gracious Speech there is nothing very solid.

I strongly protest against the secondary legislation that does not appear in the Gracious Speech. A point of order was raised this morning about legislation that had not been properly digested. In 10 days' time we shall have one of the most pernicious pieces of legislation ever regarding the increased charges for the chronic sick. If a person suffers from rheumatoid arthritis, basic back pains, which so many people have, angina or coronary thrombosis, he will now pay £15 a year for a basic season ticket. The Government are taxing the sick in order to get them out of their financial dilemma.

Those charges will be introduced, without debate, on 1 December. I make the strongest protest, therefore, to the Secretary of State on that score. I am sorry that time does not permit me to go through the whole of that statutory instrument, because it is likely that before we have the opportunity of praying against it, it will have taken effect.

There is an acute shortage of specialised nurses, and the Department is doing nothing about the problem. That particularly includes qualified theatre nurses in operating theatres in acute hospitals. With the creation, especially with American finance, of private hospitals concerned not with geriatrics and the mentally ill but only with operations, the drain from the NHS of trained operating theatre sisters is creating a crisis.

I have received an invitation to visit a private psychiatric hospital financed by American money, and I shall be going there in a few weeks' time.

I am sorry that I do not have longer to develop this case. Let us have a debate about it.

The Royal College of Nursing has conducted an excellent survey of 92 health authorities. It has found that 76 of them are short of specialised, trained theatre nurses. If the right hon. Gentleman wants to do something about the long waiting lists in NHS hospitals, he will have to introduce a crash programme for more theatre nurses. If I had more time, I could cover the whole range of specialised nursing—nursing for transplant operations, renal dialysis and other specialties. Let us hope that at long last someone in the Department, instead of looking at nursing generally and going through the long procedures of the Whitley council, will institute crash programmes to deal with the acute shortages and bottlenecks which exist within out National Health Service.

I plead with the Secretary of State to hold another Sunningdale conference for his Department. Instead of dealing with the daily pressures on the Department—and I sympathise with him because I know of them—the conference might look at the Reith lectures given this year by Mr. Ian Kennedy. For once we are provided from outside with a statement of what medicine is all about. I feel certain that a seminar at Sunningdale, involving all the senior officials in the Department, could do nothing but good in that regard and certainly make an innovation affecting future policy decisions.

The Gracious Speech says nothing about the Black report and the inequalities in health care. If I cannot get the Secretary of State to hold a seminar at Sunningdale, will he at least, at one of his departmental meetings with his senior officials, examine chapter 8, page 228, of the report? There is listed there a series of positive steps that could be taken, not to cure people but to prevent them from becoming ill in the first place. That is what health care is all about. However, the report has received a very cool reception and has provoked no positive response from the Department.

I am grateful for this opportunity to bring a few points before the Secretary of State. He and I have known each other for so long that he probably realises that I have bottled up about 90 per cent. of what I wanted to say. I urge him in the coming Session to move along the lines that I have indicated. He is in a financial straitjacket. It is no good his talking of spending more money than ever before. He knows that, in practical terms, cuts are being made. Rising costs and the pay awards mean that he is working on a much lower budget. Even if he were working on the same budget, that would still be inadequate. I therefore urge him to become a little humid, a little damp, in the Cabinet and get a bit more money for the National Health Service.

I shall follow the example of brevity set by the hon. Member for Brent, South (Mr. Pavitt) and make only a few comments. It will be necessary for me to break the continuity of the debate. I regret having to do that, but I do not apologise, because Northern Ireland Members have to do that as no day has been set for the discussion of matters affecting Northern Ireland.

It is not difficult to be brief if one follows the example of the Prime Minister's speech yesterday and that of the Gracious Speech, which contained only 46 words in relation to Northern Ireland, or, to be more exact, 46 words, two commas and a full stop. It took only about 15 seconds to pass over that section. The shortness of the remarks was matched by the fact that the 46 words did not say a great deal anyway.

I should like to consider the three main points contained within those words. First, we were told that the Government

"will continue in its efforts to protect all members of the community against violence and terrorism".

Hon. Members should mark the words "will continue". If they mean that we shall have more of the policy that has left behind it many mangled bodies and mutilated corpses, they offer little comfort to the people of Northern Ireland. More than 2,000 people have died and more than 25,000 have been injured in a campaign of violence that the Government answered with the same policy as was pursued by previous Governments. That policy has failed. We need a new policy for Northern Ireland, not of reaction but of the vigorous pursuit of terrorism from whatever source it may arise.

The second point made in the Gracious Speech was that the Government will continue in their efforts to foster Northern Ireland's economic recovery. There are 100,000 people in the dole queues of Northern Ireland as a result of those policies, yet the Government say that they will continue with them.

Northern Ireland has some of the longest housing waiting lists in the United Kingdom. In my constituency more than 4,500 families are waiting for houses. Behind that statistic there are untold misery, hardship and overcrowding. Recent statistics have shown that Northern Ireland has the worst housing in the United Kingdom. It has three times as many unfit houses as anywhere in Britain.

There is an urgent need for action on the economy. If the Government are telling us that they intend to continue with their present policies, it will be a sick joke to the people of Northern Ireland. Businesses are closing at an alarming rate in Northern Ireland. The agriculture industry is bleeding from its wounds, and the construction industry is on its knees. Please do not let the Government tell us that they are to continue with a policy that has been disastrous for Northern Ireland.

The third Northern Ireland aspect in the Gracious Speech is a commitment that the Government will continue their efforts to create a form of administration that will better serve local needs. The Prime Minister elaborated on that slightly when she said:

"we are now considering other ways of making the administration of the Province more responsive to local needs".—[Official Report, 20 November 1980; Vol. 994, c. 7–39.]

That comment rang a bell. It is almost exactly the verbiage used in paragraph 64 of the document "The Government of Northern Ireland: Proposals for Further Discussion", which said:

"In the absence of such acceptance, the Government would then explore other ways of making the government in Northern Ireland more responsive to the wishes of the people of Northern Ireland."

It went further:

"Such alternatives could involve a progressive approach to the transfer of a range of powers to a locally elected Assembly, such as that mentioned in paragraph 6 of the original Working Paper for the Conference."

That may be one of the ways that the Government see of moving forward. I was a member of a delegation that attended the conference. We had to attend. Like other political parties in Northern Ireland, my party promised the electors that we would pursue every avenue to try to get an acceptable devolved Government. It would have been ludicrous if, having made that promise and having been elected on that basis, we had refused to take part in such a conference.

We attended the conference and put forward the view of Unionists in Northern Ireland without apology. We believe that the answer to many of Northern Ireland's problems is a devolved Assembly, so that local people will have some control over local affairs. I ask the Secretary of State to continue to strive towards devolved government in Northern Ireland. He must not be deflected from that course because of the hardships that he sees. Some people, for one reason or another, do not like the democratic process when it does not put them in the majority. But democracy must be the basis of whatever establishment or Administration is put forward for Northern Ireland.

The hon. Member for Antrim, South (Mr. Molyneaux) commented on what the Secretary of State might do now. He suggested that some minor modification could be made to the present local government system. If the Secretary of State is considering that possibility, if he makes any change in local government it should be a non-structural change. The manifesto of the Democratic Unionist Party suggested in 1977 that certain powers could be given to local government—powers concerning planning, roads and so on—that are now in the control of the Northern Ireland Office. That could be done, consistent with striving towards devolved government in Northern Ireland. There should be no obstacle to that, and a devolved government should be the Government's first priority if they are to stay in tune with the needs and desires of the people of Northern Ireland.

There are many people in Northern Ireland who, for a variety of reasons, do not want devolved government in Northern Ireland. There are people in the SDLP who would prefer the Republic of Ireland to be brought into the consultative process. That would be totally against the wishes of the people of Northern Ireland and it should not be contemplated by the Government. There are others in the Unionist camp, who, unfortunately, are not present now, who do not want devolved government because they follow more closely their mentor, the right hon. Member for Down, South (Mr. Powell), who wants integration and does not want the return of Stormont. The reason that many Official Unionists give for not wanting devolved government is that they feel that it would be a danger to the Union, despite the fact that it worked for 50 years without endangering the Union. Those voices should be resisted, because the people of Northern Ireland have made clear that they want devolved government and that they see it as the way forward.

In her remarks yesterday, the Prime Minister referred to the present hunger strike by prisoners in the Maze prison. She made clear—here, at least, I can end on a note of agreement with the Government—that they would not give political status to those prisoners. But she did not say that she would not make any further concessions to them. The Government have already made a concession on prison clothes. I should like an assurance from the Government that they will not make any concessions to prisoners who are trying to blackmail them. Those prisoners are in gaol because they have committed the most hideous crimes. Three of the prisoners are serving sentences for murder and another is serving a sentence for a list of crimes. If the sentences for those crimes had run consecutively instead of concurrently, he would be in gaol for three centuries,

Those are the sort of people who are on hunger strike, and it would be ridiculous in the extreme if the Government were to concede anything to them. Will the Government make it clear that there will be no further attempt to make concessions to those who have caused so much misery in Northern Ireland and who have left behind a trail of bloodshed? Those people should be resisted at all costs. They do not deserve special treatment; they do not deserve privileged treatment. The Government must make clear that they will not concede in any way to them.

Mr. Aneurin Bevan, in giving advice to a young Member of Parliament, said "When you speak, you speak to an audience of one, and that is yourself." One could not help remembering that in listening to the speech of the hon. Member for Harrow, West (Mr. Page).

In a debate of this kind, it is difficult to know whether to make a broad assessment of the subjects which fall under today's business in the Loyal Address or whether one should perhaps home in and make a sustained attack on a single subject. I have decided, in the cause of brevity—and because my right hon. and hon. Friends and I will oppose most vigorously many individual items which have been raised today—to give a very broad outline of such opposition as we have to such measures as are pinpointed in the Loyal Address.

I should like to begin with the factor which was very ably argued by the hon. Member for Flint, East (Mr. Jones). I know that the Secretary of State is an ally and that his junior Minister has worked very hard for the cause, but one has to say that the report that we have received is a pussyfooting attempt at achieving not nearly enough. I do not think that anyone will be impressed by the reduction of expenditure on posters, because that is the sort of expenditure which can very easily be falsified.

We know that a cut-down in tobacco is an argument between the benefits to health and the loss of income in revenue. I know that the Secretary of State and his Department have our sympathy in treading this delicate path, but there are aspects of the tobacco ban which must be looked at more carefully. Sponsorship is one of them. It is plumb wrong for the Government to stand by and allow sporting activities to be sponsored willy-nilly by the tobacco companies.

If a tobacco company wants to sponsor motor racing or horse racing or snooker, there is a lukewarm argument in favour of it. If it wants to sponsor the sort of activity in which smoking is detrimental to performance, such as cricket and athletics, it is plumb wrong.

With regard to tar yield, the Department is absolutely on the right path, but if the tar content is small, perhaps the warning might be in slightly smaller print; or, to put it much more constructively, the higher the tar content, the bigger must be the warning because the greater is the danger.

With regard to the change of benefits announced by the Secretary of State, I hope that he will accept that the number of supplementary benefit claims is far too high and that it is the fault of the system. I was delighted to listen to the intervention of the hon. Member for Eastleigh (Sir D. Price). who said that he hoped that any plans currently being made would be made with the tax credit system in mind, because it is only with that sort of enlightened system—for which my party has been arguing, world without end—that we shall reduce the number of supplementary benefit claims.

The Secretary of State seemed to take some pride in having announced the results of the work of a committee. He called it open government. He must know how much I approve of open government. But I disapprove of anyone taking pride merely in publishing the findings of a committee. One would hope that they would be published without anyone having to point to the fact that they were published. It is a step in the right direction and I hope that it is the type of thing that is taken for granted.

I wish to refer to income during initial sickness. A very good paper has been produced by the Federation of Self Employed and Small Businesses. It is called "Income during sickness—a prescription for disaster." My hon. Friends and I completely agree with the complaint but disagree with the solution put forward.

I listened carefully to the Secretary of State, who put forward so many palliative and conditional clauses. When those are taken into account and when the little hit for the extra person—up to 100 per cent. and down to 50 per cent.—is considered, one is forced to ask the right hon. Gentleman to look at the proposals again. Given the extra administration, the difficulty in comprehension and the additional numbers involved, it might not prove to be the saving that he anticipates.

Great apprehension has been caused in small businesses in my constituency and, indeed, in small businesses in many other constituencies. Many small businesses have pared down their staff to the minimum. Such businesses will have to employ someone every time an employee is sick. I despair of any genuine understanding on the part of the Government.

I asked the Prime Minister a question on 27 March 1980 and raised this subject. I asked how small businesses and post offices, which might employ only one person, could cope when that person became sick and when they had to replace that person at the extra expense of paying two salaries. The Prime Minister replied:

"I would be very surprised if a sub-postmaster with one employee had no alterative source of income."—[Official Report, 27 March 1980; Vol. 980, c. 1649.]

There speaks a really enlightened person. The Prime Minister knows that most sub-postmasters and sub-postmistresses have a yacht on the Riviera and a little business in Bond Street that just manages to help them pay their employees' salaries. One can do nothing but weep at the utter irrelevance of that reply and its distance from reality.

Early-day motion No. 14 stands in the name of the leader of the Liberal Party, my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel). It calls attention to the new threat to sub-post offices and states:

[That this House is seriously disturbed by reports in 'The Times' that certain across the counter payments of child benefits and old age pensions are to be replaced by direct transfers into bank accounts; regrets the cheap swindle involved in proposing that most mothers receive child benefit in arrears, effectively depriving them of four weeks' benefit; wishes to reiterate its dismay at any further threat to sub-post offices, many of which only survive by virtue of their functions in paying benefits; and believes that any compensation fund tor sub-postmasters cannot compensate people in villages and far-flung estates for the loss of what may be their only local shop.]

I hope that hon. Members on both sides will sign that motion before long. It does not seek to make a party political point. The Secretary of State has admitted that there will be a saving of some £50 million. This measure simply represents another clandestine way of taking money away from those who need it, in order to finance those who may not.

I now turn to extra public expenditure by the DHSS. I make a plea to the Secretary of State that he should rationalise public expenditure. He should bear in mind that 82 per cent. of half of that amount is made up from contributions that he receives from employers, employees and the self-employed. If the Secretary of State uses such terms as £20,000 million, he is using emotive language. Such language might make many people agree that. he should save money.

The wise Lord Banks wrote:

"The Government argue that the social security budget has become too large. They ignore the fact that half the benefits are national insurance benefits, paid for as to 82 per cent. by earnings related contributions. It is questionable whether these contributions should be regarded as public expenditure at all. Motorists are required by law to insure their cars. No one regards motor insurance as public expenditure."

On that note, I give the Government notice that, as ever, we shall oppose those cuts and measures which, we feel, disadvantage the wrong people and are too hastily brought before the House.

Normally, it is a formality for one to ask for legislation in the debate on the Queen's Speech. I do this more in an informal way because I do not think that kidney legislation should be introduced through the Ten Minutes Rule procedure or even through private Members' legislation.

I draw the Secretary of State's attention to the present situation. In the four weeks following the "Panorama" programme on 13 October, the numbers of kidney donors have fallen by more than half. In the period 1 to 28 September, 50 donors provided 80 kidneys; in the period 13 October to 9 November, 28 donors provided 43 kidneys.

Several transplant centres reported refusals by relatives after the programme. The Royal Victoria infirmary in Newcastle reported five refusals in the last four weeks. The normal refusal rate is three a year. The Queen Elizabeth hospital in Birmingham in 1979 had an annual rate of 110 transplants. There has been only one transplant in the past three and a half weeks. The Queen Elizabeth hospital would normally have carried out nine transplant operations in that time. The Addenbrooke hospital in Cambridge has performed only two operations, compared with five normally.

The worst fears of those of us who before the event contacted the chairman of the board of governors of the BBC and Mr. Ian Trethowan, the director-general—something that I have never done in my 18 years as a Member of Parliament—have been confirmed. I realise that relations with the BBC are delicate.

The purpose of my intervention is to ask the Department — I know that it is difficult — to do something about its view of the definition of clinical death. Does the Department agree with the diagnosis of death by Lord Smith in his well-known report? He stated:

"There is no legal definition of death. Death has traditionally been diagnosed by the irreversible cessation of respiration and heart beat. This Working Party accepts the view held by the Conference of Royal Colleges that death can also be diagnosed by the irreversible cessation of brain-stem function—'brain death'. In dianosing brain death the criteria laid down by the Colleges should be followed."

Paragraphs 28 and 29 are also important. Perhaps in the winding-up speech, be it on Thursday or another day, reference can be made to the problem of spare-parts surgery. Expectations have been raised.

For me, the most disturbing recent event has been the BBC's refusal to meet the reasonable requirements of the medical profession to have a proper opportunity to defend the criteria. The result is that the medical profession is refusing to take part in the second programme. If the hon Gentleman can bring any influence to bear, I am sure that that would be helpful.

I was about to make that point the other way round by asking the Secretary of State to bring some influence to bear. Some of us have sweated our guts out with the BBC and seen the chairman of the board of governors. It is absolutely disgraceful—I do not use loose language in the House of Commons—that what one might call pip-squeak producers of certain popular programmes can deny the medical profession a proper hearing in a matter on which it is uniquely qualified to give a verdict.

The question of editorial control is so much bunkum in these circumstances. This is not about editorial control. We are not taking away the freedom of journalists in this matter. This is a very serious matter. Let the "Panorama" team or anybody else put themselves in the position of those who, but for their frivolous efforts, would have had kidney transplants.

I turn to the cost of renal dialysis. It is £14,000 or more. A transplant can often be done for £5,000. I simply ask whether it is true, as has been said, that it can be done more cheaply by private medicine. I should like a factual comment from the Secretary of State on that.

On kidney donor cards, one of the reasons why some of us are doubtful has been summed up in an interesting paper by Barry Fletcher and Arvind Sivarama Krishnan. What they say is this:

"However, it has been suggested that the action of carrying a donor card raises deeper psychological issues. For many people, carrying a card saying 'On my death my organs to go to so-and-so' is psychologically almost impossible.

It may be that the Human Tissue Act is based on an inadequate understanding of the psychological problems involved in giving human organs."

As the grandfather of the hon. Member for Isle of Ely (Mr. Freud), Sigmund Freud, put it:

"Our own death is indeed unimaginable, and whenever we make the attempt to imagine it we can perceive that we really survive as spectators. Hence…at bottom no one believes in his own death, or to put the same thing in another way, in the unconscious every one of us is convinced of his own immortality."

Fletcher and Krishnan continue:

"One's organs are so much a part of oneself that signing a document of organ gift can touch very deep emotions.

If there are deep psychological obstacles to the carrying of a donor card, be it a kidney card or an all-organ card, then it is likely that only a small proportion of the population will actually carry one."

It is for that reason, apart from others that I have already given and will cut out of my speech, that, with the best will in the world, I doubt very much that the kidney donor card scheme, which I and others have supported as strongly as we can, will ever yield the number of organs that are necessary. I refer to Hansard for 23 October 1979, when I gave other reasons when I brought in the Bill.

On a recent "You the Jury" programme, I opposed the motion that heart transplants are a luxury that we cannot afford. Until now I have always been extremely careful to keep heart and kidney separate. After contact with one of my witnesses on that programme—Keith Castle—I was so impressed by what it had done for individuals and those surrounding him — and Keith Castle, after all, is a symbol of hope for many of us—that I have come to the conclusion that heart surgery is indeed something that is an iceberg that we should look at. It is an enormous problem. It may be said: "Heart transplants can be given only to very few people." The truth is that the more that are done, the better is the record.

Therefore, I end with a simple question. In the light of the fact that heart transplant surgeons are becoming more expert and their record is becoming better, in the light of the fact that there are great discoveries relating to prostocyclenes overcoming clotting elements, in the light of the fact that there are now growth-limiting substances such as chalone, and in the light of the fact that there are noninvasive instruments, have the Government any philosophy — I am not putting this in a party, spirit, because I would ask the same question of my right hon. Friend the Member for Norwich, North (Mr. Ennals)—about what ought to be done on the whole issue of funding of transplant operations in relation to the most sophisticated surgery? Anyone who has interested himself in this subject knows what an enormous amount of money, potentially, a programme of heart transplant surgery could cost. There are some of us who think that with this degree of civilisation it at least ought to be embarked upon and who would like to see the Government and not private Members bringing forward amendments to the Human Tissue Act.

In view of the brief time at my disposal. I have discarded half my speech. When I sit down, I hope that hon. Members will not think that I threw away the better half.

My reason for speaking in this debate is that, with the increasing impoverishment of people who already are not well off as a result of the Government's policies and the general economic decline, a great deal of attention will be paid to the level of benefits provided to the badly off. In particular, a lot of attention will be paid by Opposition Members to the fact that benefits will not rise in line with inflation. However, even if benefits rise in line with inflation, all the evidence suggests that, on present take-up levels, a substantial number of our citizens who are entitled to benefits will not get them.

Looking at the most recent figures, we see that the number who take up benefits as a percentage of those eligible is remarkably small. The take-up of supplementary benefits is only 74 per cent. That of family income supplement is 75 per cent. That of rent rebates is 72 per cent. The take-up of rate rebates is 70 per cent. Most disgusting of all, the take-up of rent allowances on unfurnished tenancies is a mere 50 per cent.

Hundreds of thousands of our fellow citizens are being denied benefits to which this Parliament has decided they are entitled. On my reckoning, more than 2½ million people entitled to benefits are not claiming them. On supplementary benefits alone, that represents a saving to the Government, on the last official estimate, of no less than £340 million. We hear a great deal about the poor scrounging from the Government. These figures suggest that the Government are scrounging from the poor. A great deal of the savings which the Government seek by their budgetary economies are being achieved at the expense of the poorest and worst-informed in our society.

I invite right hon. and hon. Members to consider why the take-up levels are so bad. They have been bad over recent years. This is not just a matter of the failures of the present Government. It seems to me that there are two major reasons. One is that a lot of benefits are extremely difficult to claim, especially supplementary benefits, because of the extreme complexity of the schemes. The other reason is the lack of publicity. In many cases the people who are worst off do not know their entitlement.

I illustrate that by citing the case of one of my constituents. I happened to visit him at his invitation because I had helped him about a different and unrelated matter. I discovered that he lived in a flat with his wife and two school-age children. His wife was sick and also pregnant. He had given up his job to look after her because he did not know there were other means of getting her looked after at home.

I discovered that he was not getting all the supplementary benefits to which he was entitled. He was getting no rent rebate, no rate rebate, no free school meals for his children and no free prescriptions for his sick wife or his children. What is more, his children at school were getting no form of clothing allowance which the Inner London Education Authority would have provided had it known about their circumstances.

It is disgraceful that our society depends on economies achieved by impoverishing people who are already impoverished. In a parliamentary answer, perhaps ironically on 1 April this year, the Minister concerned reported that the measly sum of £157,000 had been spent on advertising benefits of all kinds on television. That is a minuscule sum compared with what, say, the tobacco companies spend on advertising cigars on television. We have to spend a great deal more money on publicity if people who need to know are to be made to know.

It is not as though the Government are afraid to spend money on television advertising of people's rights. If recent newspaper reports are to be believed, the famous right to buy was advertised on television at a cost of no less than £1 million. The Government are adopting curious priorities in deciding that, of all the rights that should be advertised and drawn to the attention of people most in need, the "right to buy" merits expenditure of £1 million in a fortnight compared to £157,000 on advertising all other forms of benefit in a year. That is a disgrace. The Secretary of State's job is to ensure that the benefits are known to the people who are entitled to them.

When the Prime Minister arrived on the steps of No. 10 Downing Street to take up her post she referred to St. Francis of Assissi, who is supposed to be the patron saint of the Conservative Party. In view of the way in which the Government constantly fail in their duties, Pontius Pilate seems to have become the patron saint of the Conservative Front Bench.

It is no good the Secretary of State waving a green document at me. How many copies have been issued? How many people who need to see the contents of that document have access to it? His response is pathetic and typical.

I leave the Secretary of State with one thought. If he is to discharge his duty properly, he should ensure that every potential claimant is as well informed about the rights to benefit as the Vestey family tax advisers are about tax evasion.

If the last part of the speech by the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) was the worst part, the rest must have been very good indeed. My hon. Friends and I clearly understand his point. We are as committed as he to ensuring that our fellow countrymen take up the maximum benefits to which they are entitled. However, he was not entirely fair in attributing to the Government the wish to deprive them of their just rights. The Government have done their utmost to ensure that benefits receive maximum publicity. My right hon. Friend the Secretary of State for Social Services is doing his utmost to ensure that people are aware of the available benefits.

The hon. Member for West Lothian (Mr. Dalyell) made the type of thoughtful speech that we have now come to expect of him. I, too, saw the BBC programme on clinical death. I agree with all the hon. Gentleman's comments. If I and my hon. Friends are able to assist him in his representations to the BBC, we shall be glad of the opportunity. Like the hon. Gentleman, I thought that the programme was biased and grossly unfair.

The hon. Member for Isle of Ely (Mr. Freud) was worried about tobacco and its tar yield. I saw the recent television programme which depicted graphically the circumstances surrounding smoking. I recall seeing a lung sliced in half being compared with a normal lung. I should have thought that that would put anyone off from smoking for good. There is no doubt that smoking is harmful to health.

I welcome the Gracious Speech, and in particular its reference to small businesses. However, I am a little worried about the sentence:

"Legislation will be brought forward to place a duty on employers to provide sick pay for their employees during early weeks of sickness."

I am a small business man. I am aware of the effects that such legislation will have on my own and other businesses. I shall read and listen with interest to the arguments advanced, for, though I appreciate that the savings involved are enormous, I hope that they will not be achieved at too great a cost.

I wish to refer mainly to improving and increasing voluntary efforts in the social services. I say that not only because money, at the present time, is extremely tight — we all know that it is — but because I feel that voluntary organisations are able to play a part in social services that the State is not able to play. Voluntary organisations, because of their very nature, are likely to be a great deal more responsive to the demands of the immediate society. They can operate without the red tape and are able to respond more exactly to local needs. The voluntary organisations are able to establish real relationships within the community. They can establish a real and worthwhile relationship between local hospitals and the societies served by the hospitals.

Such organisations as the WRVS, with the meals-on-wheels, provide a most important but yet inexpensive part of social services. The WRVS provides a service especially for the elderly which, if taken over by the State, would be entirely cost prohibitive. The action of the WRVS shows the way in which we can stitch a voluntary organisation into the fabric of social services.

I was a little disappointed that there was no specific mention of voluntary effort in the Gracious Speech, and I thought that the remarks of the right hon. Member for Salford, West (Mr. Orme) were disparaging when he referred to voluntary services and the effort that could be made by voluntary organisations. They have a major part to play. I hope that on reflection he will agree.

I wish to make a special plea on behalf of the voluntary organisations. Their purchases should be free of value added tax. If we were able to introduce that amendment to legislation, it would do an enormous amount of good for voluntary services generally. They should be able to satisfy certain criteria—for instance, that they are genuine charities, giving genuine gifts to genuine establishments, for example, hospitals and old people's homes. In any terms, the work done by charitable organisations up and down the land must be cost effective. There can be no doubt about that.

Charities regard VAT as a marked disincentive. Who would be surprised to learn that they view VAT tax in that light? Of the money that they collect, 15 per cent. is collected for the Chancellor of the Exchequer. While the Exchequer may be in need of charity at the present time, I do not feel that that is the correct way to obtain its funds. I do not believe that the Exchequer can be regarded in the same category as a hospital. If the Exchequer is in need of charity, let it organise its own flag days and not batten on to the backs of those charities that do so much good throughout the country.

Surely the major charities, such as the boy scouts, do not pay VAT on their purchases.

My hon. Friend may be right. However, the Friends of Rugby Hospitals has grumbled to me at some length because it must pay VAT on the purchases that it intends to give to the hospital of St. Cross within my constituency. It rightly questions whether it is right that it should collect funds from members of the public when 15 per cent. is directed to the Exchequer.

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Before my right hon. Friend gets up, I wish to acknowledge freely the help that his Department has given to voluntary services, and also the help given in the last Budget.

I do not wish my hon. Friend to mislead the House. Some months ago my right hon. and learned Friend the Chancellor of the Exchequer made a VAT concession in respect of gifts of equipment from the friends of hospitals. I accept that that is a narrow concession, but I know that it has been welcomed by the leagues of friends of hospitals.

I endorse what my right hon. Friend has said. The concession amounted to about £30 million. That is a substantial concession. That sum is estimated as being the relief available for charitable giving. However, the concessions that we have seen so far do not go far enough. I should like to see them taken further. I acknowledge that the DHSS has rightly maintained its grants to voluntary bodies. What is more, it has maintained those grants in real terms. I recognise that that must be a reflection of the excellent fighting that my right hon. Friend has done for this corner in the Cabinet

Each pound that is raised by voluntary effort must be worth at least £1·50 of Government-raised money. That is because the voluntary organisations spend the money that they raise on the project rather than on bureaucracy. Therefore, it is in my right hon. Friend's interests that voluntary organisations be actively helped and encouraged. In what better way can they be helped than by making them exempt from value added tax?

There is another aspect to voluntary organisations. The most familiar yet the most overlooked voluntary organisation is the family. It almost invariably provides the best environment in which children may develop and grow up. It presents the finest environment in which children may develop into mature adults. At the other end of the spectrum, it is able to provide the warmth and understanding that are needed if the elderly are to grow old in peace. There is no substitute for the family. With its warm and close relationship, the family safeguards both our elderly and our young people.

Increasingly, the State seeks to usurp the family's role for what it believes to be the very best of reasons, namely, the need to produce a caring and compassionate society. Almost by definition, the family is both caring and compassionate. As the State seeks to increase its involvement, the fine line that divides care and compassion from positive and outright interference begins to disappear. The bureaucratic State with its rules and regulations cannot be a substitute for the family.

The State seeks to make arrangements for all eventualities, but as the State steps in so often the family—the mother and the father—step out. Families are hard work. Anyone who is involved in a family knows that. I declare my own interest. I am the youngest of five brothers and I have six sons. With those qualifications, I can tell the House that bringing up a family in any circumstances is a hard and demanding job.

Being human, parents will always seek to take the easiest way out. If the breadwinner can get more from benefits than from working, why should he work? If children can be taken into care with the State accepting responsibility, why should parents worry? If we have removed—and I accept that it has been done for the best of reasons — the responsibility from parents of bringing up children, are we not eroding the basic principle of self-reliance with the new concept of the nanny State? Are we not destroying the need for thrift—the need to consider and plan for tomorrow? More emphasis should be placed on families staying together and developing sturdy self-reliance.

With the help of family benefit.

With every respect to the right hon. Gentleman, families existed and kept together before family benefit was introduced. He cannot assume that family benefit is the sole prop of families.

I am aware that my right hon. Friend the Secretary of State wishes to advance the family. He has reminded us elsewhere that more elderly people than ever before are being cared for in the family and in their natural environment.

I do not seek to question the motives of those who advanced the doctrine of the Welfare State from the cradle to the grave. It was an honest endeavour to remove hardship from everyday life. However, in that worthwhile endeavour are we not in danger of weakening the basic building block of society—the family?

Here I wonder whether I might gently refer to divorce. I feel that the increasing incidence of divorce may be damaging society. I know that an atmosphere of continuous argument does not help the development of children, but, in seeking to rectify that fault, have we not thrown out the baby with the bath water? Only a small number of families were in that particular situation, but the liberalisation of divorce laws has naturally increased the number of divorces. It has resulted in an increased number of single-parent families. The increasing incidence of those families may be associated with the increase in vandalism. I do not seek to denigrate or criticise the way in which single-parents bring up families.

It is important to recognise not only the point that my hon. Friend makes but the fact that during the past 70 years the proportion of those getting married for the first time has increased by a drastic percentage. It may be that the quality of marriage has changed. There was a period after the war when the average age of marriage dropped. Perhaps we have stored up trouble for ourselves by some of the changes. However, the important point—and I am sure that my hon. Friend will agree—is that it is vital to try to reduce the total expectation of happiness so that we realise that family life is hard but worth while. We should try to make information available from marriage guidance councils, and so on, so that at a young age people become aware of what is likely to happen if they get married in certain circumstances. I do not suggest that people should be forbidden to get married, but I do suggest that they should be made aware of what they are going in for.

My hon. Friend's intervention is thought-provoking, as one would expect from him. His compassion for the family is well known and respected in the House. However, I feel that the increasing incidence of divorce, the ease of divorce and the fact that it is perhaps no longer necessary to work as hard as we once did to ensure that a marriage stuck together contribute to the number of single-parent families.

I conclude by a specific reference to my hon. Friend the Member for Woolwich, West (Mr. Bottomley). He has sponsored the Family Forum, a group for voluntary organisations that are family-oriented. I hope that his endeavours will prove to be as successful as he hopes. I understand that the annual general meeting is likely to take place on Tuesday, and I trust that he will receive overwhelming support from hon. Members. The forum will be an umbrella organisation and be able to speak for the ordinary family, expressing both its needs and fears. I should have liked to comment on student grants and loans, using as my rider the fact that the money so saved could be used for the social services or other areas that badly need additional finance.

It is with mixed feelings that I raise the subject of unemployment in the South Wales valleys. I am pleased to speak on behaf of the thousands who have become unemployed in South Wales in recent months, but I am sad that there is now a Government who are desperately worsening the situation. In the past hour or so we have heard the news that more jobs are to go—500 jobs are to be lost at the Alcoa aluminium works in Swansea.

I believe that unemployment will dominate the coming Session of Parliament. If the economic forecasters are correct, it will dominate the political scene for years to come. The October statistics showed that 2,062,866 people were unemployed in the United Kingdom. Of those, 129,144 were in Wales—that is, 11·9 per cent. of the Welsh working population. The vast majority of them are in the valleys of South Wales. In the Cynon valley, which I represent, 3,185 people are unemployed. That is 15·1 per cent. of the male working population and 14 per cent. of the female working force, an average of 14·6 per cent. of the total.

Three months ago the Select Committee on Welsh affairs issued a report on developing employment opportunities in Wales. Although a majority of the Committee's members were Conservatives, it was unequivocal. It said:

"The Committee warns Parliament of the risks of serious social disorder if chronic levels of unemployment endure, particularly among the young, and stresses that if condemned to suffer the worklessness of the 1930s Wales is unlikely to respond with the apathy and despair of those days."

In the evidence given in March this year, Sir Hywel Evans, then the permanent secretary at the Welsh Office, predicted in good faith that unemployment would reach 125,000 by next March. But in October the number was over 130,000, and there is obviously worse to come. What will be the figure when the latest statistics are announced next Tuesday? Unemployment has been a problem for some time, but there has been a massive increase since the Government took office.

There are seven major features of unemployment in Wales. Unemployment in the Principality is continually higher than the Great Britain average. Unemployment in the valleys is continually higher then the Welsh average. Changes in the structure of employment in South Wales, the cutback in steel production at Port Talbot and Llanwern, and the consequential effects on the coal industry, combined with the devastating effects on manufacturing industry — the right hon. Member for Sidcup (Mr. Heath) described them as catastrophic—are bound to lead to a massive growth in future unemployment.

The expectation revealed by the Welsh Office to the Select Committee that the labour force in Wales would rise to 179,000 by 1991 shows that we in Wales must be thinking seriously of creating 400,000 new jobs to get us back to full employment.

Unemployment tends to lag behind changes in output, which is still declining. The situation in industry is worse than during the three-day working week under the previous Conservative Government. Some manufacturing industries in Wales are on a one-day working week. The situation is that bad. Vacancies notified to employment offices are much lower than they were 12 or 18 months ago. I have checked with the jobcentre in Aberdare, where there are 3,000 unemployed, and I find that there are only nine notified vacancies in my valley.

One of the characteristics of unemployment in Wales is that some of the many major redundancies that have been announced have not yet been included in the unemployment figures. Some will not be included even in next week's figures, because they will not take effect for a month or so.

My constituency is typical of the many valleys that cover South Wales from Newport to Llanelli. The Cynon valley starts at the Heads of the Valley road, from Hirwaun down the valley to Abercynon and Ynysboeth, taking in the two main towns of Aberdare and Mountain Ash. Unemployment in my constituency has increased to more than 3,000, and more than 2,000 are unemployed men.

Since the Government took office, we have had one piece of bad news after another on jobs. First, we had the closure if the Deep Dyffryn colliery, which was followed by the rejection of proposals for Government investment in the major Phurnacite plant in the valley, which was a large employer. We have also seen in recent months the closure of two major manufacturing engineering firms—Helliwells and Cambrian Castings. One can suffer redundancies if there is the potential for the firm to build up its labour force when an expansion comes, but once a factory or industry is closed it is lost to the valley. Recently, we have seen the closure of the Inega textile factory.

We have also had to bear the effects of the public expenditure cuts imposed on the Mid-Glamorgan council and the Cynon valley borough council. I welcome the proposal for the extention of the youth opportunities programme, which was started by the previous Labour Government, but if youngsters are to get work experience we must have the industries in which they can gain that experience. The Government's financial and economic policies are removing those industries from our valleys.

There is no doubt that the major factory closures are a direct result of the Government's economic policies of high interest rates, high inflation, high energy costs and the artificially high level of the pound. That is being said not only by trade unionists and the TUC but by industrialists and the CBI. The Government must take note.

When the Labour Government left office in 1979, unemployment was 700,000 less and falling. Now, it is more than 2 million, and it is rising at an accelerating rate. The waste of people and resources is enormous. At current levels, it is costing the economy £10 billion a year in lost production. The Treasury is losing £6 billion in reduced tax revenue and increased unemployment benefit payments. On Monday, the Chancellor of the Exchequer will presumably tell us that more taxes will have to be raised. But the revenue has been lost because of the unemployment that has been inflicted upon the country. The weakest suffer most, and Wales has been hardest hit by this Conservative Government's policies.

In occupational terms, manual workers have been hardest hit. In September, 160 general labourers were registered as unemployed for every notified vacancy—11 times the average rate for all occupations. The level of youth unemployment is a major social disaster. In July, 40 per cent. of unemployed males and 60 per cent. of unemployed females were under 25. Over 400,000 jobs that were lost up to 1980 were in industry. More than one in 20 industrial jobs have disappeared under the Government's policy. The statistics of industrial decline since May 1979 are startling. The number of closures, liquidations, redundancies and suicides is growing. On average, 134 companies a week are going bust. The situation in Wales is worse than in any other employment region in Britain.

The Tories keep saying that there is no alternative and that this is the only way in which they can deal with the problem. But there are alternatives that have been spelt out by previous Prime Ministers—for instance, Mr. Harold Macmillan and the right hon. Member for Sidcup (Mr. Heath). Alternatives have been spelt out by the CBI, the Labour Party and the TUC, which has been pressing the Government to accept its six-point emergency package. It asked the Government to cut interest rates immediately by 4 per cent. They were 12 per cent. when the Labour Government were in office. They were increased to 20 per cent., and they are now at 16 per cent. Why do not the Government bring interest rates down? The TUC asked the Government to bring down the exchange rate to help exports. It is artificially high because of North Sea oil. Why can we not channel the funds from North Sea oil and gas into sustaining our industry rather than seeing it collapse around us?

Today, we have been told of the allocation of money for the youth opportunities programme. That is to be welcomed, but more needs to be done, particularly for young people.

The TUC also asked the Government to set up a fund to channel North Sea oil and gas revenue into industrial investment. Let us expand public expenditure, particularly into capital projects, thus improving services and boosting the economy, as well as providing desperately needed jobs. The TUC also asked the Government to introduce selective import controls to halt the extermination of our trading industries. It has been said that the Prime Minister has done for Welsh industry what myxomatosis did for rabbits. The Welsh Office and the Government should look at the special problems of Wales.

I ask the Under-Secretary of State what action is proposed by the Government to implement the Select Committee report on employment opportunities. I look upon those recommendations as a minimum requirement. We need to go much further, because the situation has worsened since the report was produced last August. What action is to be taken to restore special development area status to those areas that lost it? In particular, when will special development area status be restored to Aberdare? We have seen that the removal of that status has led to a massive increase of unemployment, and at least as a minimum requirement we should seek to have that status restored.

What is to be the future of the coal industry in South Wales? Will there be closures because of the downturn in the economy, or are we, because of the need for energy conservation and sustaining our energy industries, to ensure that the coal industry is to be maintained in the years ahead?

What is to be the future of the steel industry in South Wales? We have had the partial closures in Llanwern and Port Talbot. There are still rumours about the future. Can we have some guarantees that at least those who are employed in the steel industry in South Wales will have their employment maintained in the future?

What is to be the future of manufacturing industry in South Wales? It is useless to bring forward proposals for new advance factories unless the Government ensure that existing factories are not allowed to collapse.

There is deep anxiety in Wales at the moment because of the Government's policies, which we believe have aggravated unemployment. I know that discussions are taking place at Cabinet level. Although there are those who say that there is to be no turn, that we are heading for the precipice and that the policy is to be full speed ahead, let us hope that the saner voices now coming from the Conservative Benches, and from industry outside the House, will make themselves heard by the Cabinet, so that in this new parliamentary Session we can reverse the evil trend that was started in the last Session.

The hon. Member for Aberdare (Mr. Evans) has been successful in bringing before the house today a subject which has been of real concern to successive Governments for many years. The industrial valleys of South Wales developed rapidly during the last century and the early part of this in the wake of the Industrial Revolution. But for some time now their traditional industries have been in decline. The result for a long time has been high unemployment, outward migration on a significant scale, particularly among young people, lower income per head of the population, and generally inadequate social conditions.

The hon. Member will know that these are deep-rooted problems and have been of concern to his party when it was in office as well as to ours now. Let me assure him that we as a Government are fully aware of the problems and care about them. We have had numerous meetings with local authority representatives to discuss the situation in the area, and in many of those hon. Members have been involved.

During the last 12 months my right hon. Friend the Secretary of State, my hon. Friend the Under-Secretary and I have all met representatives from local authorities representing the valley areas. No one who has attended those meetings could fail to be impressed by the scale of the problem and the genuine wish of all those living in the valleys to preserve their communities. I have to make clear at the outset, therefore, that we are committed to the retention of the valley communities, and we recognise that to do this we have to try to ensure that sufficient job opportunities exist in the valleys. If we fail to do this, we know that there will be a continuation of the shift of population away from these areas, as has been happening for so many years now.

Unemployment in these areas is certainly too high: 16·7 per cent. in Ebbw Vale, 15·9 per cent. in Bargoed, and 14·6 per cent. in Aberdare. These figures compare unfavourably with an average of 8·4 per cent. in Great Britain as a whole. But let there be no misunderstanding and no misrepresentation about the fact that there is nothing new about this. The relative position of some of these areas such as Aberdare, for example, is no worse now than the situation that existed in the 1960s.

The area has, of course, experienced, and is continuing to experience, a change in the structure of employment with a move away from its dependence on the coal and steel industries. The major change took place in the 1960s, when 61 pits closed in South Wales, with the loss of some 25,000 jobs.

The hon. Gentleman said that he was proud to speak for those in his constituency who had become unemployed in recent months. He comes, as I do, from South Wales. I need not remind him that many of them have been unemployed for much longer than the few months to which he referred. It would have been more responsible to admit the deep underlying problems that have engulfed South Wales for so long. I shall give the hon. Gentleman one fact about the coal industry. When the Labour Government were in office between 1964 and 1970, 46 pits were closed in South Wales, with a job loss of 20,000. Those are the problems that we face. The situation is not something new or something that has occurred in the last few months of South Wales' long industrial history.

The trend continued in the 1970s, when 11 pits were closed, with the loss of 3,700 jobs. The closure of steelmaking at Ebbw Vale was also a significant factor. The hon. Gentleman referred to the importance of the steel and coal industries to the valley communities. That is certainly still the case, although it is sometimes hard to grasp, from what Opposition Members say, that the situation has been changing dramatically over the past 20 years and not simply since this Government came to power.

The difficulties of the steel industry are not new. For the past 10 years there have been warning signals. The hon. Gentleman's Administration did not have the courage to take the necessary action at the right time. They always preferred to put off the evil day. It was left to us to face reality and to put the industry on a sound footing.

The hon. Gentleman will know that the British Steel Corporation is reviewing its operations under its new chairman. I understand that the outcome of the review could be presented to the Government before the end of the year. Obviously, it would be premature for me to make any comment at this stage about future operations in South Wales. We shall have to await the completion of the corporate plan.

Similarly, it is for the National Coal Board to decide on the level of its future operations. The industry faces severe problems caused by reduction in demand, stockpiling and rising costs. I am fully aware of the possible implications for Wales. However, there is also good news. I am sure that the hon. Gentleman will welcome the 5 per cent. increase in productivity in the first half of the current year compared with the same period last year. That is a tribute to both men and management.

At the root of any long-term solution to the problems of the valleys is the general economic situation. Wales is part of a wider economy, and we shall not overcome the problems of the South Wales valleys until we have restored health to the national economy. Successive Governments have attempted to deal with the problems of our economy by giving ever-increasing grants to industrialists and by increasing public expenditure generally in order to alleviate our problems. Those policies have failed to induce a real growth in the economy which would bring with it the new and lasting job opportunities that we so badly need. Indeed, the policies of the Labour Government failed Wales badly. It ill becomes the hon. Gentleman to suggest that our present difficulties stem simply from the Government's economic policy.

I remind the hon. Gentleman that when we came to power the economy was stagnant. Manufacturing output was in decline, imports were rising and the balance of payments was barely in balance despite a massive contribution from North Sea gas and oil. Under the previous Administration unemployment doubled in Wales, and it was on a rising trend when we came to office. Prospects were bleak unless we could tackle inflation, which hung like an albatross around the necks of our industrialists.

The measures that we have had to take have resulted in a difficult transitional period. Over the past few months, we have seen a substantial fall in the rate of inflation. As the economy begins to recover, the encouragement that we have given to enterprise and initiative through fiscal changes should result in the creation of new industries and with it a real chance to tackle the entrenched problems of the South Wales valleys.

Mention has been made about the need to upgrade the assisted area status of some parts. I shall not comment now on the proposal to upgrade the Aberdare travel-to-work area. As the hon. Gentleman said, the need for review was stressed by the Select Committee on Welsh affairs. I am sure that he will understand that my right hon. Friend intends to report back to the House as soon as possible in the new Session with our considered response to all the issues raised in the report.

I should like to say this, however, about the review of assisted area status undertaken last year. Our objective was to ensure that those parts of the country suffering from long-standing problems of high unemployment and structural change should be better placed to attract new industry. The one way of ensuring the relative attractiveness of those areas was to limit the overall size of the special development areas, thus concentrating the highest levels of assistance on the areas of greatest need.

In the South Wales valleys this included areas such as Bargoed and Ebbw Vale where unemployment levels are amongst the highest in the country. We also recognised the deep-seated and long-standing problems of the Rhondda by the retention of SDA status. I can understand why other areas such as Cynon valley may feel that they have a good case, too, but the hon. Member will realise that blanket SDA coverage would detract significantly from the prospects of attracting new jobs to the areas of greatest need.

There is a danger, however, in concentrating solely on regional policy in the fight to stimulate new investment in the valleys. It has a key part to play certainly, but it is only one of the factors which business men take into account in deciding on future investment. The most important factor, to which I have already referred, is the general economic climate at the time. The other important factor is the provision of infrastructure and factory space.

Inevitably in recent years, a great deal of the WDA's effort has been concentrated on the Blaenau Gwent area in view of the difficulties that the area has faced as a result of the closure of steel-making. I am sure that that is right, and we are now beginning to reap the benefits. There are currently 2,500 manufacturing jobs in the pipeline for the Blaenau Gwent area. In addition, the WDA has 22 factories amounting to over 150,000 sq. ft. complete and available in the area. Another 13 units amounting to 137,000 sq. ft. are under construction and there are plans for another two factories amounting to 13,000 sq. ft. to be built, together with a further provision of 50,000 sq. ft. of factory space.

This does not mean that other areas have been neglected. There are seven factories amounting to 45,000 sq. ft. available in the Cynon valley. Another five totaling 30,000 sq. ft. are under construction and there are plans for a further six factories to be built, amounting to 18,000 sq. ft., together with a further provision of 50,000 sq. ft. of factory space for Aberdare and the Cynon valley. I am pleased, too, that the WDA is now in a position to move ahead with its derelict land reclamation work in the valleys.

The picture for South Wales is not as bleak as the hon. Member suggested, although I recognise the difficulties facing us. The decision to locate the Inmos plant in the area will, I am sure, go a long way to restoring confidence. Apart from the jobs directly involved, we expect hundreds more to be created as a spin-off. There is the prospect, too, that South Wales will increasingly prove to be attractive to other firms in high technology. Indeed, there are signs of increasing interest being shown by this type of industry in the area.

Contrary to popular belief, the work force of the area also has a good reputation amongst industrialists. My right hon. Friend was particularly pleased, during his recent visit to the United States of America, to learn of the high regard that American companies had for their employees in Welsh plants. I am sure that this, above all else, can help us to attract new foreign investment, which is becoming of increasing importance to us in Wales.

In the interests of Wales and the future of the Welsh economy, it would be better for all concerned if we stressed the value of the Welsh industrial force, its reliability, its skill, its attractiveness—