Economic and Energy Situation

– in the House of Commons at 12:00 am on 18 December 1973.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Humphrey Atkins.]

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

I have to inform the House that more than 80 hon. and right hon. Members want to speak in the debate, apart from the Front Benchers. Obviously there will be many disappointments, but the shorter the speeches the fewer the disappointments.

4.9 p.m.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The House will be addressing itself during this two-day debate to the difficult and, indeed, grave situation facing the British nation. It is in view of this situation that I have been in communication over the past two days with Premier Chou En-Lai and asked, with the deepest regret, to be allowed to postpone my visit to China which was to take place in January, and he has agreed to this. I say "with the deepest regret" because I believe it would have been in the interest of our two countries as well as in the national interest.

The measures which were announced by me to the House last Thursday and by my right hon. Friend the Chancellor yesterday must be judged both on the extent to which they cope with our problems and on the way they avoid damaging our national interest.

One first point I can make quite briefly. Nothing that is happening now, in the immediate present, in the short-term future, or in the longer term in any way decreases the imperative need for this country to expand its industrial capacity, and thus to be able to sustain economic growth. Indeed, the future outlook for the supply of energy and raw materials makes this more, not less, necessary. There have always been those who are opposed to a policy of growth because they do not mind the waste which comes from unemployment, and those who want the benefit of expansion without being prepared to accept the obligations of making it possible.

The right hon. Gentleman the Leader of the Opposition and his colleagues have never been prepared to recognise the burden bound to be placed on the balance of payments by the demands made by the re-equipping of British industry, and by its needs for fuel and raw materials in a time of expansion. But we cannot escape these demands on the balance of payments. We must be able to meet them if we wish to see expansion, a reasonably low level of unemployment, and an improving standard of living.

If the measures announced yesterday by my right hon. Friend the Chancellor of the Exchequer were to mean the end of the attempt to solve this problem, which has dogged the country for the past 25 years, it would indeed be a sad and bleak day for Britain. But that is not so. Private industrial development is not affected. The energy industries are exempt from the reductions in public expenditure. The overseas markets are there, and our exporters have the edge in price over our competitors. So British industry needs to carry on with investment plans for expansion, and the Chancellor's measures will allow it to do so.

I now turn to those aspects of our problems which need more detailed treatment today. The supply of oil reaching our shores has been reduced, by up to 15 per cent. this month. But this in itself would not call for a drastic reduction in the consumption of electricity and a three-day working week in most of our industry. It would not have called for that.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Mr. Gerald Kaufman (Manchester, Ardwick) rose——

Photo of Mr Edward Heath Mr Edward Heath , Bexley

These measures have been made necessary by the reduction in deliveries of coal to power stations which arise from the overtime bans in the coal industry and among the train drivers. We do not know how long the situation will continue. In this situation the Government were bound to take the measures necessary to safeguard essential services and maintain a reasonable level of industrial production. I shall have more to say about those measures a little later.

For the moment I can only add that it will not be possible to reverse the measures we have taken and restore warmth to our homes and full-time working for the whole of industry until normal working has been resumed in the coal mines and on the railways.

The tragedy is that the effect of these measures is to reduce output, delay exports and postpone investment just when we need above all to do exactly the opposite. The effect of the increase in oil prices makes it necessary for us still further to increase our exports in order to earn the extra foreign exchange we need to pay for our oil. To increase our exports we must expand our output and maintain a high level of investment. So I emphasise again that the measures announced yesterday by the Chancellor are not designed or intended to create deflation or recession. They are intended to limit the demands that the Government and the domestic consumer place upon the economy, so that there is room for the higher exports and the greater investment which we need.

There are those who would not have wished us to take the measures to restrict domestic demand which the Chancellor has taken. They are afraid that the greater danger at present is that of recession in the industrialised countries. I recognise the reality of those fears. It will need international co-operation of a high order to avoid a retreat into protectionism and beggar-my-neighbour policies.

But some of the comments on the economic measures announced by my right hon. Friend yesterday have suggested that the measures do not go far enough, either in the amount of demand they take out of the economy or in the distribution of their impact. I do not think that that first impression will survive a more careful examination. Public spending on investment and procurement is to be reduced by £1,200 million next year. To take the equivalent amount of demand out of the economy by taxation would require an increase of more than 7p in income tax right up the scale or, if one were thinking in terms of indirect taxation, it would mean a doubling of the rate of value added tax.

In addition, there are hire-purchase controls and consumer credit limitations. My right hon. Friend has surely been right, at a time when earnings levels are endangered by fuel shortages, not to resort to fiscal measures which would reduce take-home pay or put up prices further.

As to the social impact, my right hon. Friend has announced measures which will substantially reduce the gains to be made from property speculation. He has also imposed a 10 per cent. surtax surcharge—[An HON. MEMBER: "They are laughing at it."]—a measure which will have an effect on demand roughly equivalent to a 5 per cent. increase in all income tax rates above 40p in the pound. So the impact of the fiscal measures contained m my right hon. Friend's statement is heavily concentrated on property, on those who are rich and those who, because they are paid on a monthly salary basis, are less likely to suffer loss of earnings as a result of short-term working in industry.

Several Hon. Members:

Several Hon. Members rose——

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The foundation for international co-operation for this was laid at Copenhagen. As I have told the House, at their meeting the Heads of Government of the Nine were all concerned at the effect of a prolonged scarcity of energy resources on production and employment. The decisions taken at Copenhagen cover the whole field of energy questions, from the immediate problems of supply to long-term energy policy.

We decided to join with other oil-consuming countries and the OECD in seeking solutions for all these problems. We are looking for ways which will enable us to follow Dr. Kissinger's line of approach, while recognising the need for this to cover the anxieties of the OECD countries as a whole, including, of course, the members of the European Community.

There is no difference between the two sides of the House about the seriousness of the energy problem. There is substantial agreement, too, about the longer-term measures which we need to take at home.

First, there is the maintenance and expansion of the coal industry—though it is difficult to persuade the public of the advantages of investing vast sums in the industry when its products are not available in the hour of the country's need. Secondly, there is the fastest possible exploitation of oil on the Continental Shelf. Thirdly, there is the development of nuclear power.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

By buying American reactors.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman has, again, no justification for implying an accusation of that kind, for the third time today. Let him get a little precision in his remarks.

But we must concern ourselves not just with energy supplies but with the whole range of raw material supplies and natural resources.

There is, I believe, a wide measure of agreement that the twin problems of oil supply and the world prices of other raw materials and essential commodities are two major external factors over which we in this country have no direct control, as the Leader of the Opposition recognised in his broadcast.

The recent massive increases in world food and raw material prices represent an enormous shift in the basic economic conditions in which we as a country must operate. As a nation, we must recognise this change and understand its consequences. Above all, we must so order our society that we can best face the difficulties and the challenges which this enormous shift poses.

But we must also recognise that this development is bound to have most far-reaching effects on the relationship between the developed and the developing world in economic, trading and monetary affairs. In this, the genuine desires of some for better conditions are bolstered by the political determination of others, as we learnt in Copenhagen, to secure redress through the price level for what they believe to be consequences of years of colonial rule.

I want now to deal with our immediate problems here at home and the measures I announced last Thursday. I hope that no one in the House will underestimate the gravity of the short-term situation. The immediate consequences are higher unemployment, a reduced level of industrial activity and wide losses of production. The longer the restrictions are prolonged—and no one wants to keep them a day longer than necessary—the greater the damage to our hopes for the future.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Twice there has been that cry from the Opposition benches. I shall deal with the consequences of carrying out that suggestion a little later in my speech.

In the Government's view, the measures we have taken are the minimum necessary to secure the electricity industry from major disruption, to protect essential services from dislocation, and to ensure the continuation of industrial activity at the highest level consistent with the supply situation.

I should like to give the House the facts about the present situation, as I told the right hon. Gentleman opposite I would. The measures we took on 19th November have ensured that oil stocks have remained at reasonably satisfactory levels. But industrial action by the electricity power engineers, the coal miners and the train drivers has combined to compound the difficulties facing us.

It is coal and not oil upon which we depend for our electricity. Coal accounts for 70 per cent. of electricity generation and oil for only about 20 per cent. Deliveries of coal to power stations over the past four weeks have averaged less than two-thirds of what they were expecting, and they have been burning much more coal than they have been receiving. The Central Electricity Generating Boards' stocks of coal stood at 18 million tons in October. They are now running down at the rate of about 1 million tons a week—three times the normal rate. Moreover, 800,000 tons of coal each week were being moved to the power stations by rail following the miners' overtime ban, and the ASLEF action is already threatening those deliveries.

It is coal and not oil upon which we depend for the production of steel. About 75 per cent. of our total crude steel production relies upon the coking method, and the rest on electric are furnaces.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Deliveries of coking coal over the past four weeks have already fallen by 35 per cent. The result is that steel production is being cut by almost half.

Those are the facts and figures of the present situation. It was on those figures that we based the action I announced last Thursday. We could not let the situation continue. We had to take immediate and decisive action.

Without these measures, widespread and indiscriminate electricity disconnections would have been inevitable before many weeks had passed. That would have meant a real threat to the survival of essential services.

With these measures, we should be able to secure——

Photo of Mr Edward Heath Mr Edward Heath , Bexley

This is a grave national situation, which I suggest——

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. The Prime Minister is not giving way. The hon. Lady must resume her seat.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman has asked for the facts of the case and I have given them, serious as they are, to the House. I have said that we could not let this situation continue. We had to take immediate and decisive action. [Interruption.] Will the hon. Gentleman just give me the courtesy of allowing me to tell the House the facts of the case?

Without these measures, there would have been widespread and indiscriminate electricity disconnections. They would have been inevitable before many weeks passed, and they would have meant a real threat to the survival of essential services.

With these measures, we should be able to secure a 20 per cent. reduction in our electricity consumption. If we can achieve this reduction, we shall reduce coal consumption by about 400,000 tons of coal a week. On our present calculations this will be sufficient to enable us to maintain essential services and to get us through the winter and into the spring.

If these measures are not sufficient, further limitations will have to be imposed.

This short-term situation is not, then, the product of shortages in oil imposed from outside: it is internal and domestic. We ourselves as a country must solve it. We must solve it in a way which leaves us in a position where we are able, as soon as possible, to resume the expansion of our productive capacity, and the growth of our exports. But I must say to the right hon. Gentleman the Leader of the Opposition and those who have interrupted that we cannot hope to achieve that if we simply ignore the central issue that faces us as a nation.

We have to deal with inflation—[Interruption.]

The right hon. Gentleman has publicly stated in the past week that no Government can have control over the prices of raw materials or food which we import. Very well. We all know that the main domestic cause of price increases is the rise in the level of wages.

Everybody knows that we have to find a way of settling wage increases which are within what the nation can afford, which are fair to the groups involved, certainly, but which are also fair to the rest of the community as well as being fair to those who are working in industry.

Stage 3 is not an end in itself. I have never ruled out the possibility that if the situation required or justified it the Government would ask Parliament for a revision of the code's provisions, but I have to tell the House and the country frankly that if any revision is justified by our current circumstances the only logical conclusion is that there should be a greater number of restrictions on the pay increases authorised in the code, not fewer, and that the increases permitted should be less, not more.

Our present difficulties cannot be solved by giving way to wage demands which go beyond what the nation can reasonably afford. That leads inevitably to a situation which would be infinitely more damaging to the national economy and our living standards than the situation that faces us now.

The miners' own experience shows this to be true. At the time of Wilberforce, wage rates and earnings had increased by 11·8 per cent. over the previous year. By October—six months after Wilberforce—wage rates had escalated so that they stood 17·3 per cent. higher than 12 months earlier; by November, earnings were 16·6 per cent. higher. All of this followed Wilberforce. In that time major settlements to the railwaymen, engineers, construction workers and local authority manual workers in the wake of Wilberforce were already contributing to the erosion of the miners' relative advantage in the vain free-for-all that followed.

Photo of Mr Don Concannon Mr Don Concannon , Mansfield

Mr. J. D. Concannon (Mansfield) rose——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. The right hon. Gentleman the Prime Minister is not giving way.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

All the evidence suggests that without stage 3—and I have given the House the facts and figures on the Wilberforce award and what happened after it—we should be poised to resume the same self-destructive process.

The right hon. Gentleman the Leader of the Opposition has lost no opportunity recently to complain about the alleged rigidity of stage 3 and to ask for greater flexibility. This argument does not stand up. The truth is that Stage 3 is already as flexible as it could be, given the need for some kind of effective restraint on incomes as well as on prices. It makes provision for the lower paid; for those who work inconvenient hours; for those who are caught by anomalies in stage 1; and for those who can improve the efficiency of their work. Finally, it makes provision against erosion of living standards by rises beyond a certain point in the cost of living. All these provisions are permitted under stage 3. All are included in the offer made to the miners.

The fact is that anyone who argues that stage 3 should be more flexible is, in effect, arguing that there should be no prices and incomes policy at all. [HON. MEMBERS: "Oh."] Yes, that is the argument—that there should be no incomes policy and no limits on incomes of any kind. Who would benefit from such a situation? We know who would not benefit—and that is the vast majority of working people in this country. Tom Jackson put this very well last week— [Interruption.] I know that Labour Members do not like to hear these things quoted, but this is what he said: I believe if this stage 3 is broken"—[Interruption.]

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. Fun and games are very well in their proper place, but there is a great deal to be heard.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I shall give the quotation to the House. Mr. Jackson said: I believe if this stage 3 is broken as far as the vast majority of workers is concerned they will have a worse deal than they would if stage 3 remains. If stage 3 is broken those who break it will probably surge forward in terms of wages whereas the rest of us may not be able to do so and if that happens we'll be in a much worse situation relatively in the future than we are at this moment". Two-and-three-quarter million other people have already shown that they agree with that statement by accepting stage 3 arrangements.

But there is a wider and more important point to be considered. We have a situation where the miners and the train drivers are, through their action, inflicting serious hardship on other people in this country and serious damage on the country as a whole. If the miners and their families were suffering great hardship, one would see that they might feel compelled to take this kind of action. But no one is making that claim; no one is using that argument—certainly it was not an argument used by the National Union of Mineworkers when the union came to its two discussions with me at No. 10 Downing Street. What the miners and the train drivers are concerned with is not absolute hardship but their relative position compared to other workers. It is for the sake of a relative position that they are taking this dangerous action.

In an article in The Times yesterday Mr. David Basnett said that the issue in the coal miners' dispute was that the miners want the restoration of their relative earnings position, which was recognised as justified by the impartial Wilberforce inquiry". If that is the issue, I can tell Mr. Basnett that the dispute can stop tomorrow. The National Coal Board's offer would restore the miners' relative earning position as it was directly after Wilberforce, and indeed it would improve upon it. All the comparisons between manufacturing industry and the mining industry, after both have received stage 3, show that the miners would be in a better position relatively than they were after Wilberforce.

The miners and the train drivers are not the only people who are worried about their relative position. Nor, indeed, are they the only people who have the power to inflict this kind of hardship on the community. The farmworkers, for example, are indispensable to our production of food. Many trade unionists are just as necessary as are the train drivers for the running of our transport system. Therefore, the argument that the miners or the train drivers are unique cannot be sustained, and it has never been accepted by the rest of the trade union movement.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

It amounts to saying that the Government should accept the demands——

Hon. Members:

Give way !

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. No doubt the point of view of the hon. Member for Liverpool, Walton (Mr. Heffer) will be expressed in due course, but if the Prime Minister is not heard it will be very much later.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

It is a claim that has never been accepted by any other part of the trade union movement. I recognise the difficulties of these workers and I have described the consequences of not recognising the situation. It amounts to saying that the Government should accept the demands of particular groups, not because those demands are just, or even because those groups have a particular importance in the community, but just because they are willing to use their power in a way that is dangerous to the community as a whole. I ask the miners and the train drivers to ponder this matter very seriously.

There are regular talks with the CBI and the TUC in the National Economic Development Council. These discussions will continue this Friday. Both I and my colleagues will be willing to meet both the TUC and the CBI, together or separately, whenever they think right, to seek a way through this grave situation in the interests of the nation as a whole.

I must add this: for 18 months now we have had the most intensive and detailed discussions with the TUC and the CBI which any Government have ever had. As a result, we have deliberately pursued policies designed to meet as many of their desires as possible, in particular, the policy of expansion, major reductions in unemployment, help for the social services, subsidies for nationalised industries, and price, profit and dividend control. In these talks we have not been able to agree on every aspect, but, as the parties will agree, we have met many of the major points put to us. My right hon. Friend the Chancellor of the Exchequer did so again in the measures he announced yesterday.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Indeed he did. He has done nothing to tax the incomes of the trade unionists, nor has he done anything through indirect taxation which will affect their expenditure.

In the talks we recognised that neither side can expect everything. I recognise that the Opposition will be satisfied with nothing less than their own extreme Socalist policies, but those are not what this Government were elected to pursue. As far as the unions are concerned, at no time in the talks have they been able to guarantee that they will pursue an agreed line of policy in any circumstances. Again, I fully respect their difficulties, but I would suggest that the Government are entitled to some response for what they have attempted to achieve in reply to the points put to them by the union leaders. I hope that that response can be forthcoming.

I told the nation last Thursday that this is the time for national unity. In his speech the right hon. Gentleman replied to that, in agreement. I believe, therefore, that the right course is to carry on discussions with both sides of industry on how we can deal with the present situation and how we can rebuild when it is over.

As a nation, we have real prospects and opportunities ahead of us, thanks to the availability of energy supplies which will shortly be within our control, but we shall not be in a position to take those opportunities if we seek to tackle our immediate problems either by feebly giving way to inflation or, in anything but the short term, abandoning plans for expansion. The right economic strategy—[HON. MEMBERS: "A three-day working week?"] The three-day working can end immediately the industrial strife stops. The right economic strategy for this country is to continue the fight to reduce our domestically-caused inflation, to resume the expansion of the economy and the growth of output, to maintain the industrial investments on which our future prosperity and competitiveness depend and to increase our exports still further to pay for the oil and raw materials which we need to import.

Only by following this strategy can we hope to avoid a disastrous and permanent lowering of the living standards of all our people. It must be clear by now to all, except a handful of people, that the right political and social strategy for the country is one of moderation and of good sense. We are in a situation where moderate men and women should no longer stay silent. Increasingly in the weeks to come their voices will be heard.

The measures which I announced last week and the measures which my right hon. Friend the Chancellor of the Exchequer announced yesterday are severe because they are designed to meet an immediate crisis. But they were also designed to hold a fair balance between different sections of the community in our present difficulties. That is in the spirit in which we shall continue to govern and it is in that spirit that we can claim and expect the support of the whole British people.

4.43 p.m.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The economic and energy crises that Britain faces today, as the Chancellor of the Exchequer and others have made clear, are the gravest since the war. I do not propose today to spend much time on the causes which have brought us to this position, whether outside events or policies and actions within this country. This debate is not an inquest. It is a time for fearlessly analysing the situation which confronts us and attempting to find a national answer to a challenge to us as a nation. This means attempting to judge whether the measures now proposed by the Government on energy and on the economic situation are relevant and adequate.

We are debating not one crisis but three. There is the short-run crisis arising from the disputes in coalmining, the railways and electricity—short-run because we all pray they will quickly be resolved. There is the wider energy crisis arising from the oil situation, both the inordinate increase in the price of oil and the deliberate withholding of supplies. There is also the deeper and more fundamental economic crisis arising both from world factors and from domestic policies and attitudes, a crisis which in its turn is aggravated by the new oil threat. It is to confuse counsel and to bewilder the nation to represent all these three crises, as Ministers are doing, as a single problem of bloody-mindedness in the coalfields.

The principal problems we face—inflation, balance of payments deficit, productivity and responsibilities on both sides of industry have been endemic and worsening long before the impact of oil and the industrial situation brought home the realities to the nation. The Chancellor of the Exchequer as good as admitted this in his answer to my right hon. Friend the right hon. and learned Member for Aberavon (Mr. John Morris) yesterday when he said that he would not change yesterday's package if there were an immediate settlement to the industrial dispute. We have to recognise that, while the problems we face are created partly by events and policies within this country, others are created by world causes, largely outside the control of this country. Oil, for example, is one. Again we recognise that world prices of food and raw materials have been affected by cataclysmic changes in supply and demand aggravated by irresponsible speculative activity in this country and abroad. These price tidal waves have been on a world scale.

The right hon. Gentleman was good enough to quote what I said last week about that, but he did not quote my next sentence. I said that even here in the matters affected by world prices the impact in increased food and raw material prices has borne much more heavily on the British people than it otherwise would have done because of the massive and continuing devaluation of the pound brought about by, and since, the floating of sterling 18 months ago. Even the Prime Minister will not deny that other items in the family cost of living, particularly housing, are attributable to Government action—both rent legislation and the failure to deal with the problems of land, mortgages and the structural problems of the building industry, including the "lump". I believe these facts to be inescapable. Other hon. Members will give their version of what they believe to be the main problems facing Britain.

Our balance of trade and payments is running this year at its worst figure in our history and will worsen even further in 1974. Deficits of £1,500 million to £2,000 million cannot be indefinitely covered by costly borrowing. On the borrowing already undertaken, we shall be paying interest at high rates from the new year onwards. Sterling fell last week to its lowest ever figure against the dollar. Barring miracles, this must mean heavy penalties which have to be paid in real money to Commonwealth holders of sterling balances. It also means further increases in the prices of both food and raw materials in this country, providing a further inescapable twist to the inflationary spiral.

Industrial growth, to which the right hon. Gentleman referred, as the most recent industrial production indices for September and October have shown, was already falling before the miners' action, before the oil cut-off, and it was falling to a rate far below the Government's targets before those events occurred. Moreover, acute capacity problems, including shortages of materials, components, labour and packaging were beginning to create serious shortages of goods, export investment, building and construction.

Again, even within the Government's so-called growth figures, production has been badly distorted between essential and totally inessential economic activity. Scarce resources have been ploughed into office blocks and property speculation while industrial investment and production for export and for use have languished, and investment is still not up to 1970 or even 1969.

Before the effects of the oil situation or of industrial action, before yesterday's Budget, social investment was being cut, first in an unplanned way and then by deliberate Government decisions, announced by the right hon. Gentleman. Schools, hospitals, house building, health centres, old people's hostels—all were being cut back even before yesterday. Social investment was suffering from causes generated within this country. For a number of reasons, aggravated by the rigid pay policies of stages 1 2 and 3, essential public services in our large urban areas were suffering through an inability to recruit labour. That, too, was the case before the overtime ban.

The facts have been given in our previous debates, and they are worsening week by week. Industrial relations have been embittered on a scale not known in the post-war generation by the applicaion of the Industrial Relations Act, by the imprisonment of the five dockers, which led to the costly and unnecessary dock strike, by the rail ballot and by the sequestration of protected trade union funds.

The pay and prices machinery has entirely failed to control prices and rents, the two principal items in the average family budget. Under the statutory policy, prices have been, and are, rising more rapidly even than before the policy was introduced. Rents have been deliberately forced up by the Government's Housing Finance Act; house prices have soared, and present mortgage interest rates have driven owner-occupation beyond the dreams of a large proportion of newly-married couples.

The balance of payments deficit, forecast for 1974 at a figure of over £2,000 million, could be worsened still further by developments within the Common Market which are now occurring. In two weeks' time, the agreed cut in the Common Market tariffs will further weight the scales against Britain because its tariffs against our goods average 8 per cent. whereas our tariffs against its goods average 12½ per cent. Thus, the flow of trade across the Channel is likely to continue to worsen against us. Our position will worsen still further with the further cuts which are to take place in Commonwealth preferences to bring them closer to the Common Market tariff.

Britain's critical vulnerability is shown in monetary as well as trade terms. Last year British private gross investment abroad reached £1,500 million, and it is running at a rate not much smaller this year. This means that we have to raise the finance both to balance our adverse trade deficit and to meet the private investment which we are permitting across the Channel. To date, it has been financed by hot money, short-term capital from all over the world taking advantage of our high interest rates. The Government dare not lower the interest rate in relation to the rates ruling abroad lest the money flows out and Britain lurches into bankruptcy.

We face, too, a grave risk of an international financial crisis, worsened for Britain by the City's overstretched adventures in the European financial market. Since 1968 the City's accumulated bank accounts have expanded from £22,000 million to over £56,000 million, much of this in banking institutions not subject to the strict control we have always had in this country.

We do not want to enter into an era of competitive currency devaluations and "devil take the hindmost", and I am glad that the Chancellor's measures yesterday took account of this. I am glad that he recognised that situation. But it is a fact that the financial system of the Western world as a whole is more stretched and vulnerable today than at any time in the post-war generation. The standards required in our own banking system are not applied in the European markets. In a Western world subject to grave monetary shocks, there could at any time develop vast financial problems in which a weakened Britain would be in the front line.

This was the menacing situation before we moved into the new and unprecedented dimension created by the oil shortage. The House and the country have had great difficulty in assessing the scale of the oil problem, partly because of the demeanour of Ministers both in Parliament and on the media. The Prime Minister added nothing to our information today. But on 30th October he told the House: We have received firm assurances from important oil-producing countries that they have no wish whatever to damage this country, and that they will take what steps are within their power to prevent that happening. We welcome these assurances, which we believe are of great value to us."—[OFFICIAL REPORT, 30th October 1973: Vol. 863, c. 38.] Does the right hon. Gentleman regard those assurances as still binding? Were they valueless then, or are they no longer valid, or are they still valid? We have a right to know. We have had contradictory estimates both of oil stocks and of oil on the way here, as, indeed, we have had about coal stocks at power stations. We have had the utterances of the Secretary of State for Trade and Industry, rapidly fluctuating from the complacent to the apocalyptic. I hope that the debate will bring forth a frank and ungilded assessment of the oil situation, as accurate as is possible in the present situation.

Hon. Members:

Give way.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I did not hear any hon. Member opposite telling the Prime Minister to give way, and I will follow his distinguished example.

What we want information about is not only petrol for the motorist and the Government's present assessment of the need for rationing, which seems to fluctuate. Still more important is diesel fuel for road haulage, for public road passenger traffic, the more crowded as more cars desert the road; oil for power stations, for heating homes, offices, factories and schools; oil for industrial process work—one cannot, for example, cut gears or other metal products without oil. We must know more about oil for brickworks, glassworks and others; for agriculture, tractors, farm transport; for the feedstock of industry, the naphtha derivatives, benzine, ethylene, butadiene and the rest, the raw material of our vast plastics and fibre industries.

Could we have some real information about all these things during this debate? Can we have a frank statement, for which we have repeatedly asked, about the activities of multi-national oil companies? We have heard a lot of Ministers' worries about them, and the evidence has grown in the last year or two of multi-nationals acting as supranationals, overriding Governments and behaving as super-States. What has happened in this country and internationally? Are the multi-nationals acting in accordance with the Government's policies, or thinking only of their own customers and the situation when they get back to competition? Can the Prime Minister tell us who is in charge—the Government or multi-national companies?

It is against this background of what I believe to be undeniable fact, aggravated now by the oil and industrial situation, that we must assess the Chancellor's autumn Budget of yesterday. We had been led to expect a great attack on the economic and industrial problems facing Britain. What the nation looked for was a programme which would unite all our people on the basis of fair shares and common burdens commonly borne.

What did we get? We got the lowest common denominator of a tired and demoralised and, as we saw last week, panicky Government. In the whole of the 45 minutes taken yesterday by the Chancellor, nothing was produced to deal with food prices or with rents. It is true that at last he announced some complicated measures against property speculation. Well, well, well! After the number of times we have pressed the Government to take action, all we have got now is the application of cosmetics to the unpleasant and unattractive face of property speculation, with an expected yield to the Treasury of £85 million in a full year. [HON. MEMBERS: £80 million.] No doubt it is inflation. If this is all the Treasury can work out, then the Government should instead have instituted our policy and announced that all land required for development and redevelopment, social investment, and the rest, would be taken into public ownership at a cost related to existing use value.

While the right hon. Gentleman was on this subject yesterday he could have renounced the stage 3 decontrol of office rents which has caused a lot of the difficulty. Had he done so we might have thought that he meant business. Other parts of his Budget statement remain obscure even today—clear evidence that the Government were totally unprepared for the situation that has arisen. It was like the state of emergency a month ago. It was timed, like the Prime Minister's statement on Thursday, as another instant response to a month's bad trade figures.

What exactly was the Chancellor trying to tell us yesterday about coal and electricity prices? What has he in mind? He referred to subsidies "at a mounting rate". Is he trying to tell us that the subsidies will be eliminated and that all our people must expect a large increase in prices, with some kind of means-tested FIS relief, or is he saying only that he will stop the subsidy from rising above the present level? We must have some clarity during this debate because this is inflationary, and the right hon. Gentleman knows it.

Again, the Chancellor of the Exchequer referred to steel investment. I think that the Government benches will agree that the biggest limit on full production for many months past has been the shortage of steel not only in this country but abroad. We should like to know exactly what the cut-back in steel investment will mean for Britain's ability and for the investment programme.

On direct taxation, all the Chancellor of the Exchequer announced was a 10 per cent. surcharge on a surtax that has already gone—a kind of after-glow. It is the only recorded case in fiscal history of a posthumous, retrospective exhumation of a dead tax.

The guts of the Chancellor's proposals are to be found in the reductions in projected public expenditure. I take it that these massive apparent cuts in public expenditure are real. Indeed, I fear that they are. But the Select Committee has received evidence that this year's—not next year's—public expenditure estimates are already not being fulfilled to the tune of an annual rate of about £1,500 million. We all know from our own constituencies the back-log in housing, school building, hospitals and other social investment. Is this the old Treasury game of legitimising on unspent margin?

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

Will the right hon. Gentleman give way?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The Prime Minister did not give way. I do not propose to do so either.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

On a point of order, Mr. Deputy Speaker. The right hon. Gentleman is purporting to quote from a report of the Expenditure Committee which, in fact, he has misquoted. Is it not the custom of the House that he should lay all the documents before the House so that the House may judge for itself?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Further to that point of order——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

I was about to rule that the point is not one of order. It is a point that should never have been put.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Further to that non-point of order, I was quoting from the minutes of evidence before the Expenditure Committee which have been published by the Committee. I was asking whether there is a bogus element in the cut in expenditure because of the Treasury claiming credit for unspent margins. I wish I could feel that that was the answer, but if the Chancellor's statement means anything at all—and he intended it to mean something—he has used this crisis to force on the country a series of grave cuts in social expenditure.

There is a cut of £19 million on "Trade, Industry and Employment". We should like to know more about this, especially after what I regarded as the sinister warning about the regions that the chancellor gave in answer to my right hon. Friend the Member for Birkenhead (Mr. Dell). We should like to know more about the cut in "other environmental services" of £148 million. What do these cuts constitute? There is a cut of £182 million in education. There are threats to cut the rate support grant, which can only mean an additional rate burden on millions of householders. There is the cut of £111 million in health, social services, hospitals, health centres and other personal services. We recall the Prime Minister in his extra-parliamentary mini-Budget at Lancaster House announcing cut-backs in school building, hospital building, old people's homes, nursery schools and classes. Does yesterday's announcement mean a further cut over and above the Prime Minister's cut, or are they one and the same?

Apart from the surtax surcharge, other action was open to the Chancellor. Last Friday, in setting out the proposals that I felt could form part of a national programme for fighting the crisis, I said that the Chancellor should retrieve for the public purse the £300 million handed out as a supplement to the take-home pay of the wealthier taxpayers and the at-home pay of those living on investment income. I said that he should retrieve for the public purse the tax remissions granted in his decisions about the aggregation of child income within wealthy families, and the grant of tax deduction in respect of interest on overdrafts so much of which is incurred for speculative purposes.

I know that a Chancellor when producing a Budget has to balance at the margin his proposed changes in public expenditure against prospective changes in tax revenue. The condemnation of the Chancellor's Budget yesterday means that when he was juggling his respective proposals for revenue and expenditure he decided not to revoke his previous over-generous tax concessions to the rich but to reduce an equivalent amount of essential social spending on education, health, law and order—and environmental services, which when spelt out in detail are related to the quality of life in our cities and towns and the countryside. This he has done at a time of national crisis when he should have been seeking to unify the country. That this was his value judgment suggests to me that he has learnt nothing and forgotten nothing since his divisive mini-Budget of October 1970—milk-snatching and the rest. It means that when the Government are up against it and unable to rely upon printed money it is "Selsdon man" all over again.

The Chancellor had a margin of between £400 million and £500 million to meet. It could have come from a reversal of concessions to wealthier taxpayers. He chose to cut it from education, health, environmental and municipal services. We wonder why this is a divided country. If the Chancellor needed some symbolic, or more than symbolic, cuts in public expenditure to impress our creditors abroad, why not Maplin? I know that the Government tell us that it is only £1 million this year and £2 million the next, but that is how big spending programmes begin. If he had announced that Maplin had been postponed he might have been more impressive. Why not put an immediate stop on the current version of the Channel Tunnel, a project which the Government are falling over themselves to start?

My final comment on the Chancellor's statement is that its frivolity is proved by the fact that he has not swept away the farce of organised anarchy in the City which he set up in 1971 under the heading of competition and credit control. Farce it is, though for young families seeking a mortgage it is a tragedy. He should restore orderly borrowing control based on priorities, as carried out under successive Governments in different periods, including capital issues, and at the same time clean up the underworld of secondary banking. So the Chancellor missed a great opportunity yesterday. Instead of rising to the occasion, he reduced it to his level and rode it. There is nothing in yesterday's statement to unite the country.

I think that the whole House will agree that whenever before Britain has been faced with crisis and danger we have faced it as one national community working for the good of the nation as a whole. For that spirit and determination to be invoked today, there are three overriding requirements.

First, there must be a common, nationwide effort. No one can be allowed to opt out. No one can sit back and enjoy the fruits of the labours of others.

Second, that effort must be directed to maintaining full employment within the limits set by our energy supplies. No one, whether for private profit or for any other motive, has the right to exploit our national difficulties for sectional advantage. That includes the property speculators.

Third—[Interruption.] Conservative hon. Members are getting upset. I am talking about the conditions for a united country and not a divided country. Third, a common nation-wide effort must be directed to fighting inflation as an overriding task. That means Government policies specifically directed to dealing with food prices, the cost of housing and all other household essentials. It means that the old, the sick, the disabled and others unable to withstand economic pressures should be protected. It means that the greatest burdens and sacrifices must be borne by those with the broadest backs.

The programme which I put to the Prime Minister is, first, the breaking of the cycle of inflationary costs, claims and counter-claims. There must be subsidies on main essential foods. There must be much stricter control of essential foods and other prices at all levels—namely, production, wholesale and retail. Gross retail percentage margins conceded in stage 2 must be replaced by strictly controlled cash margins.

Second, rents and mortgage interest rates must be put under strict control. Repeal or sterilisation must take place of those parts of the Housing Finance Act which require the imposition of steadily increasing house rents. There must be control of the flow of funds in the City to ensure that borrowing for essential purposes takes priority over borrowing for speculation or monetary manoeuvring, second mortgage rackets and the rest. High in the priority categories must be provision for all funds needed for mortgages for owner-occupiers, for local authority house building and for all the houses in a programme based on need and related to the supply of materials and manpower available. There must be Government action to ensure that the land is available at or near existing use values. Building costs must be controlled by outlawing labour-only subcontracting.

Third, the poison must be extracted from the industrial scene by repealing or sterilising the provocative sections of the Industrial Relations Act. Pending that, the Government must regularise their existing policy by announcing that no Minister will activate any section of the Act involving recourse to penal provisions. In fact, they have been trying not to do so for a long time. They must announce that that will be their policy. The Act must be placed beyond the reach of private entrepreneurs. That is what we ask the Government to do with the Act before a Labour Government cuts its dirty throat.

Fourth, there must be protection from inflation for everyone covered by social security legislation. The Prime Minister knows that it is my proposal that pensioners and others should now be brought within the threshold provisions of stage 3. They should be entitled to weekly increases in pensions for every percentage increase in the retail price index beyond 7 per cent. over the October 1973 level. Most commentators think that that will occur in the early spring.

Fifth, to get the necessary taxation to enable such measures to be made, and for food subsidies, the Government must claw back the 1971–73 handouts to the very wealthy. They must introduce a tax, not a tickle, on the land and property speculators.

Sixth, we have urged on the Prime Minister to appoint a senior Cabinet Minister as Minister of Fuel and Energy, responsible only to the Prime Minister. His directive should include full responsibility for North Sea and Celtic Seas gas and oil, with the use of quasi-wartime powers to ensure speedy construction and exploitation; the development of new coal seams; the construction of oil from coal plants; and the power to issue directions to multi-national companies.

I now turn to the major issue of stage 3 and the current damaging industrial action. Stage 3 has become the Maginot Line of the Government's defences. Far from providing national protection, it has become, as we warned it would, a national liability. I do not intend to go over all the reasons which we gave for opposing it. The Government must know, as British and American experience has shown, that it is possible to institute a total freeze for a limited time. That can be done just once. In fact, last year's freeze was a wage freeze only. Food prices, rents, house prices, land and property costs soared during that so-called freeze. Such a freeze can be succeeded by a period of severe restraint, but every month brings fresh anomalies, strains and injustices.

Both sides of the House have had such experience. Every nation finds that the second or third succession of freeze, severe restraints and norms is harder to impose and to make succeed than the first. Stage 3 is dead as an effective instrument. It is breaking down, first, because during stage 3 prices and the cost of living of an ordinary family rose faster than ever. It is breaking down because it is creating more anomalies than it removes.

I understand that the Government hoped that the power station staffs' dispute, which is a real and serious dispute, could be resolved with the long-awaited Pay Board anomalies report. That report has now been deferred for a further month. The dispute continues. I put to the Prime Minister, with respect, that he cannot remove from Parliament all control over vital and central sections of our national life and welfare, and transfer the responsibility to an extra-parliamentary administrative tribunal which is not accountable to Parliament, and then suffer delays of this kind over which no one has any control, not even the Government, while Parliament is in balk and a waiting Britain shivers.

Hon. Members will have read evidence last week that the Pay Board itself recognises that it can exercise only a short-run responsibility until accumulated anomalies and injustices overwhelm its work.

Stage 3 is breaking down because the Pay Board's statutory mandate confines its activities to a legalistic code.

There is no provision, for example, as there was in the mandate which we gave to the National Prices and Incomes Board to have regard to the problem of manpower shortage, wastage and recruitment. Not only did we do that in the 1960s, but in Sir Stafford Cripps' first White Paper in 1948 there was, as a first instruction to the authorities concerned, the matter of manning-up all under-manned industries. That is excluded from all the Government's instructions to the Pay Board, which is an extra-parliamentary body. If there had been such an instruction to the Pay Board it would be inconceivable that, with the present energy situation, with coal prices going up, with a shortage of trained manpower and——

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Lord Robens says that you are the guilty man.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

—the mounting problem of recruitment——

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Lord Robens says that you are the guilty man.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I was trying to explain to the more sober Members——

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Lord Robens says that you are the guilty man.

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. An interjection made from a sedentary position is not made better by being made three times.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Mr. Deputy Speaker, I was objecting to something——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. Is this a point of order?

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Is it right for the right hon. Gentleman to suggest that I or any other hon. Member is not sober? [HON. MEMBERS: "Yes."] Further to that point of order—[Interruption.]—

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. If this is a point of order, may I please hear it?

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Further to that point of order, Mr. Deputy Speaker. If the Leader of the Opposition thinks that I am not sober, he should look in the mirror.

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

The hon. Member for Gillingham (Mr. Burden) knows that he is cheating in this respect in that he is depriving his hon. Friends of an opportunity to speak later. Mr. Harold Wilson.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Mr. Wilson rose——

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

Further to that point of order——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. There was no point of order, and I had called the Leader of the Opposition.

Photo of Mr Kenneth Lewis Mr Kenneth Lewis , Rutland and Stamford

Then, on a point of order, Mr. Deputy Speaker. You suggested just now that my hon. Friend the Member for Gillingham (Mr. Burden) had no right to object on a point of order to a comment by the Leader of the Opposition which in my view was wholly out of order since the right hon. Gentleman was expressing——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. I heard nothing that was out of order.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Mr. Wilson rose——

Hon. Members:


Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I did not say that the hon. Member for Gillingham (Mr. Burden) was not sober. I was referring to "the more sober Members of the House".

Perhaps I might now be allowed to go back to the beginning of what I realise was a rather long sentence which the hon. Member for Gillingham interrupted. If the Pay Board in making its determinations had the instruction to pay attention to manpower in important industries I suggest that with the present energy situation, with the drain of manpower and the mounting problems of recruitment, with the likelihood on present form of at least 500 million tons of newly discovered Yorkshire coal remaining unworked because the miners will not be there, it would be inconceivable to have the present situation with the National Coal Board and not to have a settlement of the coal dispute by this time.

The extraordinary feature is that this dispute has reached such grave proportions, leading to a Government-decreed three-day week, without even the Pay Board's advice and ruling being sought. In a letter to me about a proposal which was already publicly before the nation and which was already being canvassed as a means to a solution, the Prime Minister admitted that the decision would be for the Pay Board, and at the same time expressed his own firm personal opinion that it would be ruled out by the Pay Board. How extra-parliamentary can the situation become?

Why was this proposal not submitted to the Pay Board? If it had turned it down, we would at least have known where the power lay and where lay the responsibility for the present paralysis of British industry, now on a three-day week imposed by the Prime Minister with no consultation with management and no consultation with the unions before he announced it.

Stage 3 is being evaded without check or challenge by scores upon scores of employers in search of labour, in many cases themselves seeking men to replace those who have been lured away by others, or seeking to hold labour that they had. Essential public services are nearing breaking point through the loss of men. Public bodies, public industry and local authorities cannot poach labour by breaking the pay code in this way. They and the essential services and industries for which they are statutorily responsible are at the mercy of other private employers who are not so inhibited.

The nation is facing a grave crisis. We should not have had the Prime Minister's statement last Thursday, his ministerial broadcast and the Chancellor's statement were that not so. The crisis is far wider than the issues raised by stage 3. It is the Prime Minister who has sought to concentrate public discussion away from these wider issues to the special case of the mineworkers' overtime ban. We suggest that leadership should be directed to solving problems, not to finding scapegoats, and not to making deep economic and human issues a simple question of the law. Repeatedly I have said that the law must be obeyed, however obnoxious. But no one is breaking the law. Observance of the law is not the issue here. The duty of this House and of the Government, when the law is an obnoxious law and creating great harm, is to change the law. That must be done with stage 3, and it must be done urgently.

I do not believe that the country wants to see Britain crucified on an ill-considered legal enactment which is already failing in its purpose. Perhaps this might help the Government. Even those who defended it in October when it was enunciated must now see that events since last October, including those over which the country and the Government can have no control, now render what might have appeared right to the Government in October to be unjust and inoperable—inoperable save on the basis of an invocation of the law in circumstances which would compound and escalate all the bitterness which already infests our industrial relations. This can be avoided. Britain can return to full working within such limitations as may still be imposed by the shortage of oil and later by the balance of payments.

I therefore appeal to the Prime Minister to reconsider his rejection of the proposal which I put to him in the House on Thursday. I hope that on consideration he regrets the implication of his suggestion then that it was improper, if not downright unconstitutional, to make proposals in this House for the resolving of an industrial dispute. He was never backward in doing so himself. If the dispute is so grave that he rests on its continuance the responsibility for imposing on industry a three-day week, if a dispute occurs because of fundamental causes some of which cannot be resolved without legislation and other action by this House, he must recognise not only the right but the duty of right hon. and hon. Members in this House to propose any solution that they feel to be right.

I ask the Prime Minister to make clear that if the mineworkers, the power supervisors and the train drivers will resume normal working he will authorise the Secretary of State for Employment to resume the traditional rôle of his Department over the years—conciliation and not confrontation—and authorise him in that rôle to meet them and to examine the situation that we have reached with sufficient flexibility to interpret or to vary the unreal rigidities of stage 3 for the purpose of reaching a responsible agreement, because I should never expect the Secretary of State to reach an irresponsible agreement.

I ask that the Secretary of State be authorised, secondly, to meet the TUC and the CBI, which are approaching the problems in a highly responsible and humane manner, to consider what changes are required in the present situation as it affects industrial relations. I ask the Prime Minister to reject now and for all time the scenario of confrontation and to return to consensus based on conciliation. I trust that the right hon. Gentleman will be prepared to consider this proposal.

I must say to the Prime Minister—and I am sure that many right hon. and hon. Members in all parts of the House agree—that there are no more loyal, patriotic and unselfish people in this country than the mineworkers.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Then why did the right hon. Gentleman sell them out?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

They have proved this in peace and in war. Many hon. Members have reason to know that after the ill-considered confrontation of February 1972 no one worked harder than the mineworkers to get the mines back into working order, to get the wheels of industry turning, and to restore stocks.

I feel that the Chancellor in his broadcast last night was unworthy of his office, or any office, when he quoted Britain's wartime leader, Winston Churchill, and went on to equate the miners with the enemies of Britain that Winston Churchill was attacking. The words which he quoted were those used by Winston Churchill referring to the Japanese immediately after Pearl Harbour. I must ask the right hon. Gentleman, hoping that he will withdraw this slur when he speaks later, whether he has forgotten Mr. Churchill's wartime tribute to the miners of Betteshanger, carrying on production under German cross-channel gunfire. If the right hon. Gentleman wants to cite Winston Churchill, what is relevant in this situation is another quotation—not my favourite; it is not a very euphonious one—when he said: Jaw-jaw is better than war-war. —in other words, conciliation, not confrontation, within one people.

They are adult people, responsible people, fair-minded people, people who, confronted with a problem or a division, like to see that problem responsibly resolved round a table, and then to put their backs into it. They seek no confrontation.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Before the right hon. Gentleman leaves that point, may I ask whether his proposal to me means that the miners are now to be offered more than the 16½ per cent and, if so, how much more? Will he tell the House how he proposes to restrain the rest of trade union claims that will follow a much greater award at a time when he has warned the House and the country that there may be no great increase in production, even without industrial disturbances, because of the limitation on oil supplies?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

If the right hon. Gentleman and his Government have now reached the paralysis that they cannot find an answer to the question—[Interruption.]—it is about time—[HON. MEMBERS: "Answer."]—it is about time that we went on to that side of the House as the Government. [HON. MEMBERS: "Answer."] It is a slur on the right hon. Gentleman——

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

—and on his predecessors——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. The hon. and gallant Gentleman must restrain himself.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

This must be for the Secretary of State. I believe that he can find the answer. He did in Northern Ireland. We gave the right hon. Gentleman full backing in Northern Ireland. [HON. MEMBERS: "Answer."] I am sure that he will confirm that. [HON. MEMBERS: "Answer."] He is confirming that. The Prime Minister has never asked us to tell the Secretary of State what particular agreement to reach. I believe that he can do this without an inflationary settlement if he is given this flexibility. [HON. MEMBERS: "Answer."] If the right hon. Gentleman is so much the slave of the rigidity of stage 3, it is time that he abolished it and got out of office. [HON. MEMBERS: "Answer."] If hon. Gentlemen want to know—[HON. MEMBERS: "Yes."] If the Secretary of State says that he cannot do it, then let us handle these negotiations and we will do it for him. I believe—[HON. MEMBERS: "Answer."]—I believe that—[Interruption.]——

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

Order. I think that there has been quite enough noise The right hon. Gentleman should be allowed to get on.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I believe that the Secretary of State can do it. [HON. MEMBERS: "Answer."]

Photo of Mr Winston Churchill Mr Winston Churchill , Stretford

Mr. Churchill (Stretford) rose——

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Unlike hon. Gentlemen opposite, I believe that the Secretary of State can do it, and I am appalled at their lack of faith in him.

Hon. Members:

No. Sit down.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The Prime Minister has every reason to know that two or three weeks ago an agreement could have been reached with a relatively small addition to what had been offered.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The right hon. Gentleman has absolutely no justification for saying that. The proposal that he put to me would have cost £45 million in addition to the £44 million already offered by the National Coal Board.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The Prime Minister is misleading the House about that. I challenge him to publish my letter to him in which I said "some or all" of that pithead time. The figure that he quotes is for all. He knows that he could have got agreement for a great deal less. The right hon. Gentleman bitched it. Therefore, I leave that to the right hon. Gentleman with confidence. [Interruption.]

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I was trying to conclude. The people of this country seek no confrontation. They seek co-operation and conciliation. They resent the fact that confrontation has been thrust upon them. So I say to the right hon. Gentleman: let the people decide. Then we can create the conditions—a consensus of a united people—to give a chance—[Interruption.]—hon. Gentlemen opposite want a divided nation—for British muscle and skill to solve the nation's problems.

5.41 p.m.

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

I do not think that anyone would be disposed to deny, and it is one of the few points which at any rate seem to be agreed between the two Front Benches, that, in the last 18 months, this country has been buffeted by a number of forces from outside, over which we could not possibly have had control. One of those is the marked deterioration in our real terms of trade—I mean ignoring all the effects of domestic inflation here or elsewhere—the fact that the things which we import have upon the whole become scarce relatively to what we have to export. The extreme case of this change has been the exploitation by the producers of oil—perhaps a belated exploitation—of their market power, which has further caused our terms of trade to deteriorate.

On top of this longer-term movement, we are now being subjected to a direct and physical limitation of our imported sources of energy. That limitation, as my right hon. Friend the Prime Minister indicated, is not in itself of extraordinarily large dimensions. Indeed, all these purely external forces are not such as in themselves to have proved disastrous or incapable of being met with our customary resilience and the resources which adversity brings into play.

The wounds from which this country is bleeding today have not been inflicted by an external enemy. They are self-inflicted wounds; they are what we have done to ourselves.

Domestic inflation, the fall in value of our own money, proceeding at what would until recently have seemed the impossible rate of 10 per cent. per annum and upwards, has, in the first place produced a fall in the exchange value of sterling which has done us far more damage than any mere alteration in the real terms of trade. In case anyone, within or without the House, should be tempted to reach for the flattering unction of pointing to other countries and saying "They too have such and such a percentage rate of inflation", we ought to remember that the exchange rates of those countries' currencies rise while ours falls.

In addition, our domestic inflation is the reason for the catastrophic trade deficits, antecedent altogether to the oil crisis, which everyone recognises are a signal set at danger, past which it is absolutely impossible for any Government or any country to drive.

These are the consequences of the internal behaviour of the value of our own money. It is our inflation in this country which has imposed these penalties upon us. Yet even they are not the most serious results of our inflation. Its most dangerous poisoned fruit has been the clash and head-on confrontation, which lies at the heart of the announcement made last Thursday by my right hon. Friend, between the State and great masses of workers engaged in the energy industries, speaking through their unions. It is that clash, the direct result of our cumulative domestic inflation of the last few years, which has brought the House and the country to the pass which we are debating this afternoon.

Let me say first, although it has been said already, even in the opening stages of the debate, that the miners—it is, of course, primarily to the mineworkers that we refer—are neither in breach of the law of this country nor purporting to intend a breach of the law. They are not in breach of the new law on industrial relations which has been passed in this present Parliament; nor are they in breach of the Counter-Inflation Act which stands on the statute book. So they are acting, whether or not we like the way they act, lawfully.

But, it is said, they are in conflict with Parliament, they are defying Parliament; for Parliament has approved—so it runs—stage 3. I say they are not in conflict with Parliament over stage 3; for anyone who cares to read the law and to understand how stage 3 fits into it can easily satisfy himself that the only direct legal validity of stage 3—the price and pay code—is as that to which attention must be given, to which regard must be had, by the Pay Board and the Price Commission. It is not directly binding upon any citizen: it lays down the general principles to which those agencies under the statute must have regard. So even there it is not possible to argue that there is, at the level of law, a conflict or a confrontation.

Moreover, when this House wrote the code into the Counter-Inflation Act, it wrote it into an Act which reserved ultimate responsibility to Her Majesty's Ministers. In the terms of that Act, the agencies are not left completely free to hurtle down the railway lines of whatever might be the price and pay code. There is expressly reserved—and surely, rightly reserved—to the administration the power to intervene, both before and after the board, in its wider judgment of what the national interest may require.

Over what, then, is it, that there is conflict between the unions and the State, so dangerous, so deep, that it threatens to create massive unemployment and a massive fall in the production of this country? It is the determination, incessantly repeated, of Her Maesty's Ministers that their interpretation of what can be extracted by logic from the interstices of the stage 3 price and pay code shall be the ne plus ultra, the law of the Medes and Persians, and that nothing beyond that shall be regarded as in any way reconcilable with the national interest and the national salvation. It is in pursuit of the Ministers' interpretation of statutory control of wages that we have been brought into this conflict, the conflict of which the consequences are not merely before us but are bringing anxiety to every family in the country.

It was not ever so. In 1970 my right hon. Friend the Prime Minister, and all of us who sit on these benches on the Government side of the House, said to the country We utterly reject the philosophy of compulsory wage control, or again— Labour's compulsory wage control was a failure"— the right hon. Gentleman the Leader of the Opposition was very fair and candid this afternoon in his reference to the experience which his Government and the country shared in the last half of the 1960s— and we will not repeat it. Why did we say those things so emphatically, over and over again, to the country in 1970? We said them on the basis of what we had argued, experienced, seen and watched over the preceding years. We said them out of a conviction, often stated, that the inevitable result of combining inflation with the attempt to control it by compulsory control of wages was bound to be the most damaging and irresolvable conflict between State and citizens. We said them because—I invite my hon. Friends to refresh their memories on the context—we were convinced in those days that inflation was the result, overwhelmingly, almost exclusively, of actions and policies which were within the power and control of Government. It was because we were convinced that if Government, for their part, would so manage the finances of the nation, if they would so frame the policies within their control, within their hands, there would, indeed, be industrial conflicts, there would be collective bargaining, carried no doubt sometimes to the use of the strike weapon, and there would be the attempt, natural and inevitable, to reassess and reassess again the real relativities between the wages of one industry and another and those of one job and another, but we would not be bringing into the arena of direct conflict between Government and citizen every wage dispute, every bargain, every price and every wage that was fixed We were convinced that responsibilities would lie where they ought to lie—the responsibility of management and the responsibility of trade union leadership could be exercised where they belonged—if Government would exercise the responsibility which is theirs.

As I listened yesterday afternoon to the speech of my right hon. Friend the Chancellor of the Exchequer, it seemed to me that he was speaking much more in the sense of what we were saying then; that the philosophy which lay behind his words was not the philosophy which we rejected in 1970—the philosophy of compulsory wage control—but the philosophy which we accepted, the philosophy of a Government who so order their own affairs, affairs which no one else can order, that the citizens in turn can arrange theirs in freedom without damaging the State or the national interest.

I do not wish to enter into what is, I think, a superfluous and almost academic argument with my right hon. Friends on the Government Front Bench as to whether Government financing is the sole, or merely overwhelmingly the most important, cause of domestic inflation. I will concede, if it be necessary to get the ground clear, that perhaps there are other minor causes and predisposing conditions. But my right hon. Friend the Chancellor of the Exchequer himself, in the essence of what he was saying yesterday afternoon, was stating that inflation, the problem which existed before the oil crisis and before the miners' strike, the problem with which we would have had to deal in any case—he said so entirely honestly and openly—was a problem which arose predominantly from the manner in which Government had chosen to exercise their powers of taxing and of spending.

In answer to dialogue and Questions my right hon. Friend said to my hon. Friends over and again that his reductions of public expenditure would reduce, pound for pound, the Government's net borrowing requirement. The significance of the £1,200 million—we could all argue as to whether we would have found that amount in the same way, or an even greater amount—but the significance of the turn-round, if I may so put it, of my right hon. Friend the Chancellor's figure—as was evident to the House—is that it would alter the whole proportions of the Government's borrowing posture and would thereby affect the money-creating function of the State, so that the State would be able once again to regain control of the total increase of money demand in the economy over the coming 12 and 18 months. My right hon. Friend, in fact, was introducing measures which in his view were necessary in order to provide a monetary framework, a framework within which there could not be domestic inflation of the dimensions which we have experienced, a framework within which, as we envisaged in 1970, the fatal and foredoomed statutory control of individual wages would be superfluous.

Photo of Mr James Prior Mr James Prior , Lowestoft

The Lord President of the Council and Leader of the House of Commons (Mr. James Prior) indicated dissent.

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

I am sorry to see my right hon. Friend the Lord President of the Council shaking his head, but perhaps we may at least agree on this: there can be different interpretations of the same measures, measures which perhaps we shall both support, and from one interpretation or the other there may spring hope for the future. For of this not only we on the Government side of the House are certain but both sides of the House and, I believe, almost the whole of the country—that reconciliation there must be.

One of the greatest men who ever belonged to this House ended one of his greatest speeches by an appeal to the administration of that day to lay the foundation of the Temple of Concord. I believe that, however partially or imperfectly, my right hon. Friend the Chancellor yesterday afternoon began to assemble some of the materials for doing that. I believe that in the measures he proposed to the House, which are designed to eliminate—I say no more—one of the major factors in the domestic inflation which has brought us to this pass, he was opening the way to answer the question which was thrown backwards and forwards between my right hon. Friend the Prime Minister and the Leader of the Opposition, and to answer that question in the way that it ought to be answered, not across the Dispatch Boxes of the House—of course it would be totally childish for a percentage figure to be laid down as a diktat across the Dispatch Boxes in this House—but by responsible management, acting responsibly, in a framework such that the total wages paid in the economy could not greatly exceed the productive powers of the economy at the time.

Hon. Members:

A U-turn?

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

It is not a U-turn for me. It may be for other people. My right hon. Friend will not find easy the course upon which he has entered and in which the Government——

Photo of Mr James Prior Mr James Prior , Lowestoft

When I shook my head at my right hon. Friend, it was because I thought back to the beginning of 1972, when we were last faced with this problem, at a time when this country had 1 million unemployed. Even at that time, when we had a free collective bargaining system which my right hon. Friend is now justifying to the House, it did not work.

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

No, and my right hon. Friend will also recall that at the time we had a rate of domestic inflation of 7 per cent. as well as the unemployment.

The course upon which my right hon. Friends have engaged——

Photo of Mr Reginald Prentice Mr Reginald Prentice , East Ham North

Ministers have accepted, at least in part, the advice that the right hon. Gentleman has given in successive debates. In those debates he has always conceded to the House that part of the price of following his prescription will be an increase in unemployment. Will he now acknowledge that that is likely to happen as a result of what was decided yesterday?

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

One should never give way towards the end of one's speech, because it usually transpires that the point is exactly the one that one was about to make.

I was about to say—I had already begun the sentence—that the course on which my right hon. Friends have embarked is not one which will be easy or, in the short term, popular; for to eliminate a net borrowing requirement which we have had for two years running and which we were likely to have for a third, totalling several thousand million pounds—that is to say, expenditure of that amount not balanced by real resources—is not something which is easy or pleasant. Moreover—and I am now point—it is a fact, which so far as I know coming to the right hon. Gentleman's no one denies, that to reduce the rate of inflation in an economy from something like 10 per cent. to any figure which we would dare to regard as tolerable, cannot but be accompanied by severe stresses, one of which will be an increase in unemployment. That does not derive from the method by which it is done. It derives from the fact that it is done. That is why my right hon. Friends, in shouldering the burdens of genuinely dealing with the fundamental evil of inflation from which we have suffered in this country have not set out upon an easy or a popular path. Nevertheless, I believe it is one on which they will enjoy the understanding and support of the country, as indeed they ought; for I am sure that one thing beyond all else is desired by the people of this country—that they should be given the conditions under which, at peace with one another, they will be able to meet the demands and the dangers which face them from outside.

6.4 p.m.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

The right hon. Member for Wolverhampton, South-West (Mr. Powell) has admitted perfectly plainly and honestly that one of the effects of the economic policy which he is advocating could be, and almost certainly would be, a very large increase in unemployment. I would say to him that, whatever may be the differences between Governments and parties, that is a social cost which this country is not prepared to pay, and rightly so.

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

In that case the right hon. Gentleman is advocating not merely 10 per cent. inflation for ever, but escalating inflation for ever, which is impossible.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

The right hon. Gentleman is suggesting that I am advocating something which is wholly at variance with what I am advocating. The right hon. Gentleman is speaking as if Keynes had never existed. All his economic theories are pre-Keynes. In the present state of the economy, of course, it is correct that we have 10 per cent. inflation, and that it is because our currency has depreciated at that rate that about £2,000 million is added to the import bill which we have to pay for our raw materials. The right hon. Gentleman is quite correct, and the Prime Minister is wholly wrong in simply throwing up his hands and saying that our difficulty is caused by world prices. The fact is that world prices rise more against us than against some other advanced industrial countries, because our currency has persistently depreciated. I am at one with the right hon. Gentleman in saying that we have to control inflation, but I am not with him in saying that if one has an economic situation which demands the maintenance of full employment in a free society there will inevitably be more than 10 per cent. inflation. I do not accept that, and I will say why in a moment.

Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West

I apologise to the right hon. Member for interrupting him again, but I did not say what he has just attributed to me. He has just said that he thinks inflation ought to be controlled—that is, that the rate of inflation ought to be brought down. I am just telling him that the inescapable accompaniment of that is an increase in unemployment.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

No. I do not share the right hon. Gentleman's pessimistic view, and I do not think that the experience of other countries which have managed their economies rather better than we have proves his point; if anything it disproves it. I take West Germany as an example, and I can think of others. But I will come to that in a moment. What I was saying was that I accept that the right hon. Gentleman has put forward a logical case, based on pre-Keynesian economics, which is a well-known historical school of thought, but it is not one in which I believe and it is not one which I believe the vast majority of people who have a social conscience, to whichever party they belong, wish to aspire to.

The Prime Minister ended his speech with a defence of the Government's present prices and incomes policy, and equated himself with moderation and good sense. I must confess that I found that a little difficult to appreciate from a Prime Minister who for the first three years of office was passionately opposed to the need for a statutory prices and incomes policy and, indeed, during the currency of the previous Labour Government opposed every attempt to introduce one. All I would say is that if the Prime Minister's present posture is that of moderation and good sense, his previous position must have been both immoderate and lacking in sense.

It is generally agreed that we are facing one of the gravest crises in the past 40 years. On a reading of the Chancellor's economic statement yesterday, I found it impossible to decide to which situation he was chiefly addressing his mind. Was it largely a short-term problem, caused by the lack of fuel—whether one is talking about the oil embargo or the energy crisis here at home—or was he really dealing with a long-term crisis which would have to be dealt with anyway? Indeed, the answer which he gave to the right hon. Member for Aberavon (Mr. John Morris), to which the Leader of the Opposition has already referred, was extremely significant—that even if there had not been a miners' strike the majority of these measures would now be necessary. The fact remains that a week ago the Chancellor of the Exchequer was slapping down the Director-General of "Neddy", who dared to suggest that our 3½ per cent. growth rate was unattainable. At the same time, the Secretary of State for Trade and Industry was, as usual, being wildly optimistic about oil and energy supplies. I cannot believe that in seven days there has been such a total transformation of the economic situation as to cause these measures to be introduced.

The best explanation is that it has taken the Government a long time to recognise the gravity of the situation. I saw the Secretary of State for Trade and Industry shaking his head upwards and downwards in order to indicate his complete agreement with the Prime Minister, but remembering the Secretary of State's speeches of only a week ago, methinks he doth assent too much.

If we are dealing with a short-term crisis it is vital that these measures should bite at once. But I would have thought that the Government's greatest need was not merely to persuade the people of the need for a prices and incomes policy but to accept a prices and incomes policy which the people regarded as fair. I believe that the people will respond to a degree of restraint provided they feel that the economy is being run fairly. That is the greatest single prize which any Government should attain.

Psychologically, the Budget could have been the means to achieve this. It could have started a new social contract, and its failure to do this is its greatest defect. That is far more important than the details of the measures themselves. What new arguments have the Government given to the leaders of the unions which are involved in industrial action to persuade them that the economic climate and the measures which the Government are trying to take to distribute wealth and to help those who are suffering from a lack of economic relativity, constitute a new social contract? There are none in the Budget statement.

In the short term, it is clear that the problem is that of the shortage of fuel. If the shortage continues we shall be unable to produce sufficient goods to meet demand. Therefore, since we are unlikely to be able to increase production in the near future—certainly this is so if we have short-time working—there must be measures which damp down demand. They have to be quick-acting and easily reversible, and the hire-purchase and credit controls are therefore probably right. They were inevitable. Longer-term forecasting, however, is much more difficult and it would be difficult for any Government. Previously, the Government committed themselves to growth and were prepared for the price of that growth to be a possible deficit on the balance of payments. I support that strategy. We may well have to choose now between increased unemployment and an increased deficit on the balance of payments.

My money is on a bigger deficit. It will probably be about £2,000 million in 1974, although the Shell Company has suggested that it could be as much as £4,000 million. Much of that will have to be financed by borrowing abroad, but every advanced industrial nation will be in the same boat. It is therefore vital that there should be maximum international co-operation. Here I agreed with the Leader of the Opposition when he said that we were facing a crisis in the international monetary scene. Inevitably, the largest surplus on balance of payments will be shown by the Arab countries. A large amount of that surplus will come back to this country, directly or indirectly, because there are few other places for it to go. Under the swap arrangements I believe that we shall have an artificial balance of payments situation, not a normal trading balance of payments with which we have been familiar since the war.

Therefore, we must steel ourselves and be prepared for a larger deficit on the balance of payments than we have seen for many years. The alternative is mass unemployment, which is not only socially wasteful, but economically disruptive and possibly immensely harmful not only in the immediate future but in longer-term economic planning in this country.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

May I refer back to the right hon. Gentleman's earlier remarks on the dampening down of demand? May we be clear about one thing? Was the right hon. Gentleman implying that a Liberal Chancellor would raise the standard rate of income tax? There may be special reasons for so doing.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

The answer is "No". I was saying that the Government were right to introduce credit and hire-purchase controls which are probably the best way to damp down demand. The Chancellor is also right not to have increased taxation, although the National Institute has suggested that it may be necessary for something like 3 per cent.—a cost of about £1,500 million—to be spent in forms of subsidy or reduction of tax on necessities with a bigger increase in tax higher up the scale in order to prevent the economy from going into the 7 per cent. threshold provided under phase 3.

The cuts in public expenditure are a major social reverse for this country and if we accept, for the sake of argument, that they are totally necessary, they are an appalling indictment of the management of the economy in the last three years. What worries me is that these cuts will bite in the summer although technically they do not take effect until the financial year starting next April. The summer may well be the moment when all Western countries will be facing recession and our one need will be public expenditure on things with a low import content.

Where the Government are at fault—if the impression they gave is correct—is that there is very little forward planning. I wonder whether they have considered which are to be the new declining industries as a result of the shortage of oil. The oil shortage will create new declining industries and new growth industries, and this development must be matched by massive retraining schemes and a switch of investment. Still on the point about forward planning, I believe that there is support on both sides of the House for a total review of the country's energy policy and for the appointment to the Cabinet of a Minister who will co-ordinate the exploitation and conservation of our oil supplies. The sort of problem he should tackle is deciding what additional contribution British Railways could make during the energy crisis. Just as the Government have fed into their computer information which caused them to decide on their previous capital projects, they must now feed in the energy component equation, particularly in view of the present crisis.

On the miners, I agree with the Leader of the Opposition; the law is the law, but it is not a good law when it becomes the last ditch, and the Government have got themselves into a bunker-like mentality. If the Government are right to concede—and they would be lunatics not to—that the economics of oil in this country have changed, not merely in regard to price but also over availability, why do they say that the economics of coal have not changed, because that is the logic of what they are saying. We have to review the industry to see why men are leaving it at the rate of 600 a week. They can go elsewhere to higher-paid, cleaner and far less dangerous jobs. We must review the industry to discover how men can be attracted to it and retained, and the sort of benefits and salary scales that are required. I say to the Government that having enough people to mine coal is more important than phase 3.

The Government might have got a response if they had done more to control prices. They must realise that if prices rise, so that we hit the 7 per cent. threshold early on, it will have a disastrous effect on the economy and it will work its way right through the economy. The Price Commission must be strengthened. We may have to surcharge corporations which fail to conform to an agreed pricing policy. There may even have to be a total price freeze, such as that with which the French experimented in the 1960s. Why the Government should allow continued office building, I know not. This is a non-productive form of capital expenditure which we can do without.

On property, we have had a hotchpotch of measures—the betterment levy, the land hoarding charge, and now the tax on sale or first lease. I should like to see the Government impose taxation on the value of a site, so that society gets back the value which it creates. We are told that £80 million is to be the total yield. Yet in six months the increase in the book value of Land Securities was £267 million. Bearing this in mind, one realises that the latest proposals are extremely small beer.

Photo of Mr George Cunningham Mr George Cunningham , Islington South West

What about London and County?

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

I shall answer that point. I was in a bank which got into great difficulties, and I helped to save it.

Photo of Mr George Cunningham Mr George Cunningham , Islington South West

If it was so desirable for the right hon. Gentleman to do that, why has he now quit the company?

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

I shall explain. I had been wanting for four or five months to give up all my outside commitments. This is well known to my colleagues. But to do this at a certain time could mean doing grave damage to the organisation with which one is connected. There are times when one has a duty and an obligation to people whose interests one looks after. I believe that it was right for me to stay on in London and County until the company was rescued. I hope that if, for example, the Commercial Bank of Wales got into the same problem, the two right hon. Gentlemen involved who sit on the Labour Front Bench would take the same action.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

Mr. Hugh Dykes (Harrow, East) rose——

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

Yesterday's economic statement by the Chancellor could have provided the Government with a chance to get a degree of national unity and support for a prices and incomes policy which they have so far failed to achieve.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

I am most grateful to the right hon. Gentleman for giving way, as I know that he wants to get on with his speech. Taking the period before—four or five months ago—the right hon. Gentleman began to change his mind about the institution to which he referred, and bearing in mind his comments about nonproductive office development and building would he describe London and County Securities, since its inception and flotation in the City of London, as a desirable and productive institution?

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

If the hon. Gentleman looks through the existing portfolio he will see that included there are industrial holdings which have backed up production in this country and assisted in financing jobs for many people.

The political question is, are the measures designed to lead into a General Election? Are the Government seeking a confrontation with the trade union movement? If we continue in the present atmosphere it might be a good thing to get an election over, on purely political grounds. My colleagues and I would greatly welcome it, but it must be realised that if an election is fought on this package it will be because the Government have admitted that the confrontation between them and the trade union movement is now total.

It would not be a happy outcome for the country. The Government may be able to say that the trade union movement has been from time to time—sometimes frequently—unreasonable, but basically it is the Government who have to weld the nation together. The economic statement was the opportunity to do so.

I hope that the measures will prove adequate to deal with the present emergency, but they will do nothing to remove the bitterness and unreasonableness which lead to the self-inflicted wounds which we have visited upon ourselves in this country.

6.24 p.m.

Photo of Mr Airey Neave Mr Airey Neave , Abingdon

I hope that the Leader of the Liberal Party will forgive me for changing the subject. No doubt some of my hon. Friends will wish to reply to some of the right hon. Gentleman's points.

I agree with the Government in their short-term measures, but when the short-run energy crisis is over big decisions will have to be taken on energy policy. Therefore, I do not apologise for raising the question of what our nuclear power policy should be. This raises controversial and important issues which the House must decide in a few weeks' time.

I declare an interest in a boilermaking group in the nuclear power industry, and many of my constituents are employed by the Atomic Energy Authority at Harwell.

The first thing which must be understood about nuclear power is highly relevant to what will happen within the next few years. It is that no nuclear system ordered next year could be delivering power before 1981. That is a fundamental fact. The Select Committee of which I am chairman is at present holding an inquiry. I shall refer to the evidence which has been given to the Committee, but I shall not comment on the evidence until the Committee has reported. The points which I make are from my own knowledge of the nuclear power industry. I hope that hon. Members will agree with what I say. No doubt this matter will be debated fully when what has been described as the short-term energy crisis is over.

The Central Electricity Generating Board said this morning that it will order nine nuclear stations, beginning with two in 1974 which will be for commissioning in the 1980s. This is a very big nuclear programme. It involves 18 reactors, two of which will be the high temperature reactor lead stations. The CEGB proposes that 16 of the reactors should be of the American light water design and manufactured under licence in the United Kingdom through the Westinghouse Corporation. I know that this is of interest to many hon. Members on both sides.

The South of Scotland Electricity Board has told us that it will have to follow suit in what the CEGB does and order eight reactors of less capacity. The CEGB wants to order two reactors for each station of 1,200 to 1,300 megawatts each. However, there is no such size as 1,300 megawatts at present in operation in the United States. There is no operating experience of a 1,300 megawatt reactor, and to undertake this as a crash programme would be totally impractical. No one knows which components will have to be re-designed but some, especially the pressure vessels, must be imported.

Since August the CEGB—which last year said it needed no increase in nuclear capacity for the present—has committed itself to this large programme involving water reactors which are entirely new to British industry. I make no criticism of the Government over this matter. They have not yet made a decision. I hope that they do not make any such decision which the CEGB and others now wish them to make.

The ordering rate for nuclear stations in this country has been overtaken by Germany, France, Japan and even Spain.

Nevertheless, the charts which were given to the Select Committee this morning show a huge expansion in nuclear energy in the United Kingdom by the year 2,000. The CEGB has told us that by then nearly 50 per cent.—or over 100 million tons of coal equivalent—would be nuclear power. We have never heard this proposal before. This is a far bigger amount than has ever been previously suggested.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

The hon. Gentleman has made an important and new statement of policy. He said as an aside that the South of Scotland Electricity Board had stated that it had to follow the CEGB. I declare an interest, in that it affects my constituency, as there is a proposal to have precisely such a power station in Bo'ness in West Lothian. Can the hon. Gentleman say where that assertion is made? It affects not only policy but many people in my area.

Photo of Mr Airey Neave Mr Airey Neave , Abingdon

I thank the hon. Gentleman for that intervention. The chairman-designate, Mr. Tombs, said in evidence at a public session of the Select Committee last Thursday that in his ordering policy he would have to follow what the CEGB wanted. He does not want to order light water reactors. He would prefer to order British technology, but as his is a relatively small organisation he has to follow the CEGB.

The other comparison to put before the House is expenditure on research and development on reactors through the Atomic Energy Authority. That expenditure is much smaller than in many other industrial countries. We spend about £52 million a year on reactor research and development, although over the years the cumulative expenditure has been £500 million. The United States spends 10 times as much, and Germany four times as much, and other countries give launching aid.

Photo of Sir Harmar Nicholls Sir Harmar Nicholls , Peterborough

Is the order for the 16 American reactors out of the 18 being placed because the Americans are the only people who can give delivery or because we are not prepared to put in a bid to make a British contribution on that scale?

Photo of Mr Airey Neave Mr Airey Neave , Abingdon

I am coming to that point.

The reasons the CEGB gives for this very big order, for 16 light water reactors of American design, is that they are proven because a large number have been ordered abroad. Indeed, nearly 200 have been ordered. But that argument ignores some fundamental difficulties, which must be taken into account to avert a rash decision, and before British technology is abandoned. I will give four reasons.

First, although the advanced gas-cooled reactors have suffered serious delays, they could still turn up trumps. That happened with the Magnox reactors in the 1960s. The delays to the AGRs at present are no greater than those to American light water reactors under construction in America now, although the CEGB does not seem to realise that. There are 30 nuclear stations running late in the United States. A great deal of damage would be done to British research and development and technology, and time and costs would not necessarily be saved. Therefore, I do not believe that a crash programme is desirable or that an "off-the-shelf" programme is anything more than an illusion.

Secondly, no one has any operating experience of the size of reactor, 1,300 MW, which the CEGB proposes to order. That point must be made strongly when the House debates the matter. I hope that my right hon. Friend the Secretary of State will publish a Green Paper showing the advice he has been receiving from the Nuclear Power Advisory Board on these issues.

Thirdly, the idea that the United Kingdom will derive export benefit is absolute nonsense. We should not be able to compete against our own licensor, the Westinghouse Corporation, in markets where it is firmly entrenched. How could there be any export potential for light water reactors manufactured here under licence in markets where Westinghouse has the whole market anyway? It is a great pity we did not develop our own design of heavy water reactor when it could have had an export potential.

The fourth and final point is safety. The American philosophy is that a brittle fracture of the thick steel pressure vessel is "incredible". I put the word "incredible" inside quotation marks because that philosophy has been discredited, even in the United States. Unless the Nuclear Inspectorate in the United Kingdom agrees with that philosophy, it will not grant a licence, and light water reactors could not be installed in this country. What would the CEGB do then? It would have to look at existing British designs.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

To a sedentary interruption by my right hon. Friend the Member for Bristol, South-East (Mr. Benn) during the Prime Minister's speech, the Prime Minister snapped back that there was no decision on the buying of American light water reactors. As the Secretary of State for Trade and Industry is here, it would be greatly to the advantage of British industry if he intervened to clear up precisely what the Prime Minister meant in that rather snappy interchange with my right hon. Friend.

Photo of Mr Airey Neave Mr Airey Neave , Abingdon

I do not know whether my right hon. Friend wishes to intervene in my speech. But it is fair to him to say that he has told us several times that he has not made the decision yet. I am making this speech, and my colleagues on both sides of the House are making similar points, in order that my right hon. Friend should know what we feel, because it will be a crucial decision for British industry. I make no apology for raising the matter in this debate, which is, after all, about the energy of the future.

There is a growing demand for additional safety features in the reactors. All that seems to mean that the light water reactors which the CEGB wishes to order will have to be redesigned with new drawings and probably additional costs.

Therefore, there is no need to allow the CEGB or any other organisation to strike this blow at the prestige of British research and development. I have already declared my interest in the AEA through Harwell. I hope that my right hon. Friend will consider seriously directing the CEGB that it should order reactors based on British technology and should abandon the false idea that the national interest demands American know-how and technology.

6.38 p.m.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

I think that you said earlier that 80 hon. Members wanted to take part in the debate, Mr. Speaker, so I promise to be brief.

Having listened to the exchanges between the Prime Minister and my right hon. Friend the Leader of the Opposition, and in particular to the words of the right hon. Member for Wolverhampton, South-West (Mr. Powell), I am reminded of a little jingle which goes something like this: Let opinions be discreetIn view of what may follow themKeep your words both soft and sweetIn case you have to swallow them. The Prime Minister certainly had to swallow the words about a statutory prices and incomes policy which he used to throw across to us when we were in the Government.

I have seen Governments strangle themselves by an exposition of the economic situation, such as we gave in the freeze of 1966 and then the promise in a Budget speech to introduce statutory price controls. As an ordinary backbencher, I have traipsed through the Lobbies defending Government policies, which I could do only generally or out of sheer party loyalty.

I think that the Labour Government came to the knowledge, belated perhaps, that a prices and incomes policy can be carried out on a once-and-for-all basis, on the basis of a freeze for a short period. After that one must rely on a social exhortation programme, in which the Government of the day show they are meeting the needs of all sections of the community. It is within that framework that when trade unionists and employers meet they will have due regard to the national interest.

Miners' MPs in the past have spent many hours debating these matters until late at night and often early in the morning. They have warned the Government—and this included the Labour Government—of some of the follies perpetrated in their energy and prices and incomes policies. Slightly to rephrase an old Lancashire saying, "A striking child gets the most milk"—in other words, those who make the most clamour get the bigger share of the cake. The next Labour Government will face this dilemma and they will have to ask themselves "How shall we meet that challenge?" We have constantly warned the Government of the folly of the lack of an energy plan, and all that has happened is that the miners have had a few crumbs from the table. I see the Under-Secretary of State looking a little quizzically at that statement. He brought in the Coal Industry Bill last year because he was forced by events to do so and for no other reason.

I want to deal at a little greater length with the reasons why the miners in the period from 1958 did not flex their industrial muscles. It could be said that they did not do so because they did not have the economic power to do so. The miners were told, "If you go for a large increase, more pits will be closed". The Wilber-force inquiry examined the logic and justice of the miners' case and it must be said that the miners have tried to remedy the imbalances in the wage structure of the mining industry. The members of the Wilberforce inquiry were astonished at the way the miners had arranged these matters. On the matter of holiday payments and in the distribution of the wages cake the NUM allocated the larger percentage to their lower-paid colleagues. They were practising what they preached, and they certainly did not flex their industrial muscles. With the wonderful constitution under which the miners operate they have not had a strike, and this must be borne in mind.

People now say that the miners are being unpatriotic and have not at heart the national interest. From 1945 to 1958 the miners could have held the country to ransom, because we were then 90 per cent. dependent on coal, and at an earlier stage our dependence was even greater. However, gradually the pendulum swung away from the use of coal, and now electricity generation takes up 70 per cent. of our coal production.

I should like to quote something once said by Arthur Horner. I say, in passing, that people often say how many Communist members sit on the NUM national executive, and they assume that this is a Reds-under-the-bed plot. Some of these comments are often taken out of context. They are matters which, perhaps, on other occasions I could debate at greater length. It is true that we have had Communist leadership. Curiously enough, the miners have always had a Communist general secretary, since 1945. Lawrence Daly is not one, but we had one until Daly came along. Arthur Horner, who was the epitome of this kind of Communist leadership, used to say to the miners, "You can demand the moon, but let us not destroy the temple of nationalisation. Nationalisation has more to offer us in the long run than destructive industrial action. We shall get our rewards in due course."

The miners achieved a much prized objective in 1947, when they signed a five-day week agreement. In the nation's interest the miners voluntarily used to work six days a week—and they did that until they were no longer required. They did that work from a sense of patriotism. They then found that their wages were slipping. The Wilberforce Report points out that miners once earned wages 25 per cent. above average industrial earnings. However, miners saw their position slip to sixteenth in the league table.

We have had put before us today the proposition, "Who runs the country? Can we allow sections of workers as powerful as the miners—as well led as the miners, with all their history of help to the country—to hold the country to ransom?" What we should be asking ourselves is, "Do we need coal and shall we need more coal in the national interest, from the point of view of national security and national economics, in the years to come?" The final question that must be answered is, "Who shall we get to dig this coal?"

At my surgeries I see men who have now left the pits. I also see ambulance men. These workers tell me about their difficulties, and express their dislike of the ban on co-operation. I do not know how Conservative Members who have not been involved in industrial disputes—people who are not members of proper trade unions—can really understand these matters. Within the psyche of every trade unionist there is, curiously enough, a feeling of guilt. They do not want to be put in that position. When I have spoken to ambulance men and other trade unionists and asked what they feel about the miners' claim they have replied, "Our claim is just, but we feel that the miners' claim is infinitely just."

I have spoken to ex-miners—indeed, some of them have become ambulance men—who have told me that they would not return to the pits for £50, £60, £70 or even £80 a week. This is why we have a crisis, involving a net loss of 14,000 men in the pits in the past nine or ten months. We must do everything we can to retain the men who are already working in the coal industry.

The question to which we should be addressing our minds is whether the miners' claim is likely to bankrupt the nation. The answer is that of course it will not bankrupt the nation. The Government have become so entangled in legislation which is found to be unworkable, involving a freeze, and all the rest of it, and phases one after the other, that they have reached the Maginot Line, beyond which they state they will not retreat.

Photo of Mr Daniel Awdry Mr Daniel Awdry , Chippenham

The hon. Member for Ince (Mr. McGuire) knows a great deal about the miners. Will he tell the House whether he thinks it will be a good idea to give the miners the opportunity to vote on these matters, in the form of a ballot?

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

I shall take a moment or two to explain the miners' constitution. The constitution involves lodge and branch committee meetings as a first stage. Those meetings then send delegates to an area conference and then on to a national conference. On the question of a ban on overtime, the national conference decided overwhelmingly to back the national executive in its decision. Everybody agrees that in that respect the miners did not break any law. Indeed, if any Conservative Member wishes to tell me in what respects the miners have broken any law, I shall give way to him. I do not think it can be said that by not working excessive hours to obtain a reasonable wage the miners are breaking the law.

One of the greatest casualties of the present Government was that of arbitration. They set out to destroy it, and destroy it they did. I must remind the Government that it was Wilberforce—one can dress it up in all kinds of euphemistic terms—and arbitration that solved the dispute. There is enough wit and wisdom, particularly with the new Secretary of State for Employment, following his successful travels in Northern Ireland, to be charged with this task. Given a free hand, the right hon. Gentleman could bring this matter to a solution. Not a great deal is required, if one can read the signs. When one listens to people on television one realises that there is not a lot between them.

The right hon. Gentleman has a quality, a personality and a charm—and these qualities are important in this situation—to bring about an atmosphere of conciliation. He has the great gift of making one feel comfortable even on the scaffold. He would make the poor chap on the scaffold think that it was in his own best interests and would kindly ensure that the knot was in the right position.

I believe that the Government and the Prime Minister should get away from this Maginot Line feeling. One of my hon. Friends, in a debate a couple of weeks ago, said that it was a great shame that the Government once again had to take on the Brigade of Guards. There is no doubt about it, there is something in the miners' history and in their personality which commands respect. They are not getting a colossal wage, by modern standards. I do not know anybody who would rush to go down the pit even if the increase were met in full. There will have to be a better deal for the miners.

Look at what they have got after nationalisation for nearly 26 years—a pension of £3 a week when they finish, and not very good sickness or injury benefit schemes. We should all be amazed at the moderation of their demands. Theirs is a just claim. I repeat; there is enough wit and wisdom to solve the issue. If the Government will get away from this confrontation—this "Who rules the country?" attitude—they will find a ready response from the miners, and we can then get back to a situation in which we can attract men to that industry, which is bound to grow as our need for coal grows.

I believe that the Government can demonstrate their interest in wanting a bigger mining industry by implementing projects such as the Drax coal-fired power station to further develop this country's coalfields and thus produce a breed of happy and contented miners.

6.53 p.m.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I thank you, Mr. Speaker, for calling me to speak for the first time on this occasion. Before turning to the subject of the debate, I should like to pay a tribute to my predecessor. I never had the good fortune to know Martin Maddan, but I have heard much about him, both in the constituency and from hon. Members. From all I have heard, I now know that he showed in his life and in his work in the constituency his Christian belief in service to one's neighbours. He also served the cause of Europe well, particularly by his office as Joint-Treasurer of the European Movement.

It is a tradition of these occasions to avoid controversy. I believe that it was an hon. Member of Irish birth who said this placed him in an impossible position and his speech would, therefore, be extremely brief. This is also a debate in which it is difficult to avoid controversy. I trust that hon. Members will grant me the usual courtesy if I do occasionally stray across the bounds of what might be considered controversial or non-controversial. I hope that analysis and description may be admitted as being non-controversial, and I shall try to confine myself to those activities.

I find that I am the first Member to be elected for the first time by the borough constituency of Hove. It is, therefore, appropriate that I should say a few words in description of my constituency, which comprises the borough of Hove and the urban district of Portslade, shortly to be united as the district of Hove.

Recent events have caused a lot to be written and said about my constituency, and I shall do no more than say that Portslade is by far the older of the two communities, being mentioned in the Domesday Book, whereas the fame and the very existence of Hove dates from the nineteenth century. My constituency does not contain any mines, heavy industry or major shopping or office centres. It is mainly residential, with some light industry, a few shops and some offices. It is bounded by the Channel in the south and the Downs in the north. But these are physical characteristics and are not the important part of any description of the place, for that must be about the people who live there.

The 1971 census shows a population of 91,222. Of that population 30,686, or nearly exactly one in three, were over the age of 60. By national standards of persons per room, Hove households are not crowded. Some 12,726, or exactly one-third of all the households, are single-person households. Therefore, there are many elderly people in my constituency and a large proportion of them live alone. Numerous voices more eloquent than mine have on many occasions described the difficulties and the problems of the elderly, and especially the elderly living alone. The House does not need me to remind it why they do not find it easy to keep warm, to stand in queues or to contend with rapidly rising prices. I am, however, sure that hon. Members will understand why, when I speak today, I have the needs of the elderly particularly in mind.

There would seem to be general agreement that the immediate situation is difficult, that the future is uncertain, that some reduction in our level of prosperity is in the short term inevitable and that there is a current problem not of insufficient demand but rather of inadequate output. These are the lowest common denominators of current economic analysis, but on this occasion it is perhaps wiser for me to say no more on the immediate situation but rather to consider the longer-term economic objectives.

I remain an unrepentant believer in the merits of growth. It is difficult enough in times of increasing prosperity to ensure that a generous share of that increase is given to the retired. If the economy stagnates, there is a grave risk that the spending power and the pensions will really decline. Therefore, I believe that it is right, even at this moment, to give thought, as the Prime Minister did, to the longer-term objective, which is to continue to increase the country's prosperity. For this reason I welcome the action that my right hon. Friend the Chancellor of the Exchequer has taken to control consumer credit. It will have an immediate effect, and, equally, the controls can, when the situation allows, be quickly dismantled. They have an immediate and direct effect on demand and also on the demand for imports.

I regret, however, that measures have not been taken in respect of interest on bank overdrafts. Bearing in mind that longer-term objective, it must surely be of the highest priority to ensure that sufficient credit is available for productive investment. The disallowing for taxation of interest on overdrafts could ensure that bank credit is used to the greatest advantage, and it would also be fairer as between different classes of taxpayer.

I also welcome the measures it is proposed should be included in the 1974 Finance Bill to tax development gains and unrealised capital gains of property development companies—and I refer to property development companies because, as my right hon. Friend pointed out, property speculators are treated differently and far more severely.

These measures will bring the taxation treatment of property development on to a more equitable basis in relation to the taxation treatment of other economic activities while avoiding the trap which many hon. Members opposite fall into of discouraging development. It is worth remembering that the increase in value of existing commercial property, whether occupied or not, arises from the demand for that type of property in relation to supply. If the property increases in value very sharply, that in itself is evidence that the supply of that type of property is inadequate to meet the demand.

The right way to reduce the rise in property values, and indeed, perhaps, as has happened in New York, to obtain an absolute reduction in property values in some areas, is to increase the supply of the relevant type of property. In this connection, I hope that my right hon. and learned Friend the Secretary of State for the Environment will give further consideration to introducing measures, in addition to those included in the Local Government Act, for ensuring that, at a time when necessarily the supply of new buildings will be reduced, property, particularly residential property, is not unreasonably kept out of use.

Again bearing in mind the longer-term objective of increasing the prosperity of the country, I welcome the decision not to increase direct personal taxation. An increase in this area would be slow-acting, not easily or quickly reversed. But, above all, it would be a disincentive to effort. Hard work and the sort of economic activity which can create prosperity for all would be discouraged by increases in direct personal taxation, and it is, after all, the efforts of those who are economically active which must pay for both the young and the elderly.

I hope that it may not be considered controversial to suggest that the prosperity of the society in which each of us lives is part of our own individual prosperity. To that extent, to be unselfish is in our own self-interest. At this difficult moment in our affairs, to look beyond our immediate self-interest is to help not just our country but also, and especially, our senior citizens. We all learn as children that we cannot always have everything that we want and that give and take is a necessary part of life. It is the elderly who suffer most if we forget this lesson and ignore the mutual interdependence that is essential to the well-being of any society.

At this time, there is talk of survival. "Survival" is not really the appropriate word in the context of maintaining this or that level of economic activity. But it is survival, not economic but personal, which is the daily concern of many of my constituents. That is why I would like on this occasion to ask those who are seeking for themselves a larger share of the wealth of the nation to give thought to the needs of our senior citizens.

There are many who believe quite sincerely that they have a claim for special treatment. The claim of the elderly to such treatment is very strong indeed. At a time of crisis, we should first ensure that they are not made worse off in relation to other groups and that they have no extra burdens and difficulties to bear.

Yet if the present claims for special treatment were to be met, inevitably the elderly would be worse off, and that is why I say that the cost to the community of meeting those claims is far too high. We must continue to search for ways by which our economic life can be regulated so that those who are not strong enough to join in the fight are not the first to suffer, while at the same time ensuring that, when external circumstances allow, we can once again continue to increase our national prosperity so that all sections of the community can benefit.

7.6 p.m.

Photo of Mr Patrick Gordon Walker Mr Patrick Gordon Walker , Leyton

I am glad to be the first to congratulate the hon. Member for Hove (Mr. Sains-bury) on his maiden speech. I admired his fluency and apparent confidence, which I think grew as he went along. He managed to make a most impressive speech. I liked the sympathy with which he described the people of his constituency, particularly the elderly. I think that when he broadened his appeal to the plight of all elderly and retired people, he got the support certainly of all the Opposition and also of many hon. Members opposite.

I was very interested, as was the House, in the hon. Gentleman's discussion of long-term policies. Some of them were a trifle controversial, but the hon. Gentleman spoke with such cogency and modesty that no one minded at all. Having heard him, we all hope to hear him again before too long, speaking unshackled by fear of transgressing the line of controversy, because I am sure that when he really lets himself go he will make extremely powerful speeches.

The hon. Gentleman said dutifully that he welcomed the Chancellor's measures I must say that he picked out the two 0r three better parts of those measures. But it seems to me that the main thing which the Chancellor did in his autumn Budget was really only to clear up part of the unholy mess he made in his main Budget earlier this year. Up to only a week ago, the right hon. Gentleman was strutting about as proud as a peacock about reducing taxation and getting growth. He did do those things, but he achieved them by taking the easy option of launching a consumption boom by the simple and fatal device of huge expenditure unaccompanied by taxation.

All that the right hon. Gentleman has done is to take back part of the deficit which he himself created so lightheartedly. It has not really been properly noticed that he is taking back only part of the deficit. The outstanding deficit that he has left himself with will still go on, stoking up inflation. The right hon. Gentleman took some credit for cutting public expenditure rather than putting the burden on individuals, but to reduce public expenditure does affect individuals; it does put burdens on them. He made a false distinction. He will be directly responsible for cuts in the building of schools, hospitals, old people's homes and universities. He will be responsible for cuts in social welfare projects. All these latest cuts must be added to the previous cuts announced not so long ago.

The direct consequences of the Chancellor's exuberant multiplication of the money supply are still with us. The main consequence is a catastrophic worsening of the balance of payments. In his statement yesterday, he did very little, if anything, to deal with this critical and central problem. He did try earlier to act against the effects of his policies upon the balance of payments by floating the pound, but this only made matters worse, because the devaluation of the pound led to a great increase in the cost of imports. We have to pay much more for our imports than do other countries with sounder currencies.

The Government, therefore, are not right to say that the turning of the terms of trade against us is wholly out of their control. It is in part, but it has been aggravated by the extreme devaluation of the pound putting up the cost of imports. The rise of imports costs further stoke up inflation. So grave were inflation and the balance of payments crisis that these alone were enough to compel the Chancellor of the Exchequer to make his statement yesterday.

The Prime Minister, who never in his life has admitted to an error or, indeed, to responsibility for anything that has gone wrong in this period in which almost everything has gone wrong, has found yet another scapegoat—the industrial action by miners, train drivers and power supervisors. If the Prime Minister is right in his diagnosis, his obstinate determination to confront the trade unions is insensate. By his own admission, a slight degree of flexibilty in incomes policy would remove this central cause of all our problems—as he sees it—and immediately solve the short-run problem which we face.

I totally disagree with the Prime Minister's argument that this would lead at once to an enormous all-round increase in wages. Even if some consequential wage increases followed from a little flexibility in stage 3, it would not mean abandoning the incomes policy. The Prime Minister is fighting the last battle in the war, as do all generals. He has not realised what is possible in the present circumstances. Our basic problem is not wage increases but inflation, and that, I am afraid, will be with us for a long time yet.

The Chancellor of the Exchequer has taken some new measures to combat inflation—much too late and still too little. The only way to counter inflation is to use all possible means of attacking it together, each one backing up the other, and not to rely primarily upon an incomes policy as the Government have done for so long. We need much stronger fiscal measures, more vigorous direction of credit, and a policy of social fairness and control of prices. Realistic steps of this kind to reduce inflation would check undue wage increases and buttress an incomes policy. We want a vigorous attack on inflation, plus what might be called a stage 3½ policy—not an abandonment of an incomes policy but a relaxation of it in these new circumstances. In any case, in the totally new situation that has arisen the cost of some wage increases would be far less than the price we are paying now, and we should be able to get back to a poilcy of economic growth.

As grave as the challenge of inflation is the mounting despondency and cynicism of public opinion. The Chancellor yesterday missed a great chance. His statement fell far below the measure of what was needed and expected. It was largely irrelevant to our main needs—the balance of payments, in particular. He will, I fear, not succeed in rallying the country. His statement will not give our people the necessary inspiration to brace themselves to face the long haul that still lies ahead of us.

7.15 p.m.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

I join with the right hon. Member for Leyton (Mr. Gordon Walker), for whose opinions and intellect we all on both sides of the House have the greatest respect, in paying tribute to my hon. Friend the Member for Hove (Mr. Sainsbury) for what everyone agrees was an admirable speech. I am not sure whether the right hon. Member for Leyton and I are entirely joined in welcoming the fact of this Budget—the second, I believe, of 1973. I warmly welcome it, above all because it was needed. There, I think, the right hon. Gentleman will totally agree with me.

The economy had without doubt become overheated—the evidence has been consistent and strong. That alone is the principal reason for our balance of payments problems. The need for this Budget was urgent, for the deficit, after taking into account invisibles, would have exhausted the whole of our reserves in one year's time. In addition, in various ways we have incurred a debt of no less than £900 million. Borrowing is all very well in helping the balance of payments temporarily, but in the end all borrowings have to be paid for. I therefore repeat that I warmly welcome this timely Budget.

After many years in public life I increasingly reflect that the only certainty in politics is uncertainty. In the context of this country's economy and the world scene, uncertainty as to how matters will turn out for us and for the world is inevitable. For example, who knows by how much in 1974 or subsequently the Arab nations may reduce our oil supply or that of any other country? All that we can be sure of is that it will be reduced. Who knows by how much the volume of world trade may contract as a result? This may appear to be an extreme situation, but when it first occurs, before one has learnt to live with it and to deal with it, it gives rise to certain stresses.

By way of example, to drive on the M4 from London to Bristol, or to voyage across the Atlantic in a ship, with the steering wheel in a locked position would be obviously absurd. Frequent corrections of course are necessary during any long journey. Equally, the presentation of a Budget in March or April of each year may be a great parliamentary occasion, but it is about as relevant to the nation's affairs and to the regular process of economic management as the annual general meeting of a company is relevant to the running of its vast business. In any voyage, in the management of any enterprise, management must be a continuous affair, and as a rule—I hope that I carry the right hon. Member for Leyton with me, as I fancy I may from what he said—the need for violent or substantial corrections of course can usually be avoided if smaller changes are made in good time.

Perhaps this year the Chancellor's huge cuts in public expenditure will give a greater importance to an occasion which the House has hitherto taken much too lightly, namely, the debate on the Expenditure White Paper and, following that, the work of the Expenditure Committee.

What matters then is that my right hon. Friend and his colleagues should now publicly acknowledge that they are ready to bring before the House in January or February additional proposals—indeed, a fresh set of proposals, if need be. Apart from the general justification that in an uncertain situation one must always be ready to take action, I have one particular reason for making this suggestion, to which I will return.

I come now to the Chancellor's strategy, the relevance of the Budget, and its likely effectiveness. The Leader of the Opposition put it entirely correctly when he said that our problems are both short term and long term, and that the two are quite different. Our short-term problems, broadly speaking, are entirely of our own making. They will pass. Indeed, they must pass, in the interests of us all.

I am sure that the House is broadly united in its anxiety to discover a solution to the present industrial unrest. The right hon. Member for Leyton implied that it will cause hardship. That is true. Worse, it is unhappily divisive of the nation, and it is inefficient. It means that we are not making the best of ourselves. It renders us less well equipped to withstand blows from beyond our shores than we could or should be.

To that end, the Budget, as other hon. Members have said, gives little overt help except in a negative sense. I thought it right that there should be no general increase in income tax or any indirect taxes. I thought it right—and I believe that we can give my right hon. Friend the Chancellor of the Exchequer great credit for this—that there should be no discouragement of what is referred to generally as international trade. In no way can his actions upset our trading partners. It is essential that nothing should be done in any way to set a bad or a restrictive example to the flow of international trade.

I admit that I was surprised—this bears on a point made by my hon. Friend the Member for Abingdon (Mr. Neave)—that the Budget contained no discouragement of the use of various fuels. The need for the most stringent economy is paramount.

I admit to being disappointed on two counts. The judgment of the Chancellor may well be right. My right hon. Friend may be right and I may be wrong. But I speak as I find. I was disappointed that the highest-paid in our society—the most successful and the most senior managers of businesses—are to be singled out for especially heavy taxation. What is the sense of that? In the United States they do not penalise their senior management. They do not do so in Japan, Germany or France. Why should we do it in the United Kingdom?

I am reminded of the occasion when Voltaire visited the United Kingdom to find Admiral Byng about to be executed. On inquiring the reason for his execution, he was told that it was because Admiral Byng had failed to engage the enemy more closely. Voltaire replied, "Pour encourager les autres". There is little encouragement for senior management if especially heavy taxation is imposed.

I now take up a point made by my hon. Friend the Member for Hove. There may be a social reason for imposing taxation on property developers, but in truth—and whatever the reality may be about speculation and this is a subject about which there is great misunderstanding—it is a fact that we need more and not less property development. I hope that, in general, both sides of the House will unite to encourage sensible and wise development.

My second disappointment is that, at the other end of the scale, in the light of experience of the next few months the Chancellor may need to give extra help to the needy. I hope that he will keep his options open to enable him to do so. If he feels that the cause of national unity would be enhanced, that is another reason for flexibility—another reason for not regarding a Budget as an extraordinary occasion. It is another reason for saying that we should have Budgets introduced by Chancellors whenever they think it necessary.

I now turn to the long-term situation, to which the right hon. Member for Leyton was especially adverting. Our most significant long-term problem is not only the potential oil shortage but the likely increase in cost. It may be that some of the figures which we have seen quoted, which have shown price increases of five or six times, are exceptional. I doubt whether increases of two or three times are so exceptional.

I cannot think from where the Arab nations have taken the example of demanding more money for less supply, or the retention of an asset in an inflationary period as being a valuable course of action.

There are two remedies open to any British Government. The first and the most urgent is to reinforce the balance of payments. It must be right to curtail demand at home, and to do so sharply. Thereby we shall encourage exports. As my right hon. Friend the Prime Minister so rightly pointed out, the export prospects for British industry are currently brilliant and should remain so irrespective of the level of world trade. They should remain so, at any rate, while the £ sterling remains substantially undervalued.

Exporting may or may not be fun. I take the view that in the main it is extremely hard work, and often sacrificial. However, it cannot be any less attractive to export at present while home-earned profits suffer a consistent squeeze—and sometimes an unfair squeeze—and while the opportunity for increased profitability exists in overseas markets.

The cut in public expenditure, as the right hon. Member for Leyton so rightly said, is substantial. In so far as it means the cancellation or postponement of favourite projects I regret it deeply, as will my constituents. However, if we have no growth henceforth we must learn the lesson that we cannot spend what we do not possess. It we have learnt that, that surely will be a good reason for celebrating this Christmas.

If, too, we learn the need for economies in various aspects of Government expenditure, that will be thoroughly desirable. I doubt whether any right hon. or hon. Member—and I note that my hon. Friend the Member for Bridgwater (Mr. Tom King) is present—is not aware of individual instances of a profligate waste of taxpayers' money. My hon Friend and I, for example, have watched the patching up of old hospital buildings in our part of the world instead of the provision of a new hospital building, which could have been done years ago, thereby saving a great deal of money.

I applaud the long overdue ending of the fantastic expansion of domestic credit. It has diverted goods from export markets to home supply. Without question, it has been a powerful inflationary force. It seems that all the Chancellor's actions must help exports and reduce the import potential. They should do so promptly. So far so good.

The other remedy which is open to a British Chancellor is less capable of ready definition. If peace is indivisible, as was once suggested, it is all the more true that the British economy cannot be isolated from the world scene. I reflect that we often find it easier to be preoccupied with our own affairs and forget too much of what is going on in the outside world. I have no doubt, as my right hon. Friend the Prime Minister said, that our best strength is in international negotiation—in dealing, for example, with the oil problem. The oil-consuming nations should use their strength to the maximum of their ability. If that point is taken account of, and if the Prime Minister has been busy discussing it on behalf of us all in Copenhagen, that is all to the good.

I say in all seriousness that never in my adult life have there been world economic and monetary affairs of such disorder as at present. Never have I known such potential chaos. For example, there is the indiscipline of the exchanges. We have no agreed system for international monetary movements, that is for foreign exchange. There is an absurdly wasteful international competition in interest rates. There is the careless manufacture of international credit on a vast scale, which for some of the developing countries is again potentially a disaster situation. As the next years go by we shall become increasingly conscious of the potentially disruptive effect of the enormously large earnings of the oil-producing countries upon the exchanges, for which the Euro-dollar surpluses were an easy trailer of experience, so to speak. I could continue, but I give only one more example. We have the abominable poverty of the majority of the world's population, about which Mr. McNamara spoke so movingly at this year's meeting of the World Bank and the International Monetary Fund in Nairobi. They exist side by side with the, until now, growing affluence of the remainder.

Each is a subject in itself. Collectively and in the aggregate they are a recipe for disaster on a grand scale. I suggest that there is an urgent need for international agreement upon each and all of them. I say, again, that the United Kingdom does not exist in a vacuum. I believe that we shall never achieve that peace of mind, that stability and that security for which our people long, until solutions are better attempted for these vast problems that is the apparent case today. I do not believe that either the House or my right hon. Friend the Chancellor of the Exchequer can afford to pay only secondary attention to these affairs.

While we, as a nation, are profligate—as we have been—or careless in the management of our own affairs—as we have been—we cannot exert any influence on the world scene. If yesterday marked the end of that long, unwise chapter in our national history, I rejoice. We have such great opportunities. Given the will, we can achieve the financial leadership of Europe. It could be ours for the taking. I was very glad to hear my right hon. Friend the Prime Minister say that growth remains our long-term objective.

So little is yet done. There is so much yet to do. We can argue for it only on the basis that we manage our own affairs better than we have done hitherto. I am sure that the House is eager to begin this work.

7.32 p.m.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I do not propose to pursue the arguments of the right hon. Member for Taunton (Mr. du Cann). I am prepared to predict that at some time in the future he will find it necessary to go to the confessional to amend some of his views about the great advantages that Europe will be to the British people, because no one really believes that any longer.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

That is not what I said. It is not a view that I have ever taken. The view that I was expressing was that we can offer Europe leadership and that I should like to see that done. That is very different.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I do not propose to argue with the right hon. Gentleman. I say merely that there was a longing and a hope in his speech that we would resume the leadership of Europe, and I was attempting to say that I was prepared to predict that the right hon. Gentleman would find it necessary to go to the confessional about Europe because no one really believes any longer the great advantages which will derive from Europe. This is a matter that the British people will decide for themselves.

I have observed since the crisis began, and even in the Prime Minister's speech on television, a great many references to "the national interest". If Government supporters disagree with everything else that I say, I hope that they will concede that Opposition Members also speak with the national interest at heart. I hope, too, that Government supporters will concede that the national interest is not the private possession of the Conservative Party or of the right hon. Gentleman who happens to be the Prime Minister. It is about time that this Government realised that Parliament is given to them only for three or four years and that it does not belong exclusively to any political party. It belongs to the people. If we can agree about that, we can go on sensibly to discuss some of the problems before us.

There will have to be a great deal of bridge building. I believe that last night's television broadcast by the Chancellor of the Exchequer was a scandal and a disgrace. His implications about the mineworkers will not help bring peace and tranquillity and do away with confrontation. The right hon. Gentleman drew an analogy with the Japanese. I can assure him that when that gets home to the miners it will cause a great deal of bitterness. When it comes to patriotism and being concerned about this country, the miners have buried their dead in peace and war. We shall not take lightly analogies of that kind from the Chancellor of the Exchequer, the Prime Minister or any other member of the Tory Party.

Photo of Patrick Cormack Patrick Cormack , Cannock

While I endorse everything that the hon. Gentleman has just said, may I point out to him that the fact that my right hon. Friend the Chancellor of the Exchequer used a certain form of words does not mean that he was comparing the miners with the Japanese.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I suggest that the hon. Member for Cannock (Mr. Cormack) allows the Chancellor of the Exchequer to defend himself. He was given an opportunity to do so today. I am trying to be as restrained as possible. I am saying that a great many bridges require to be built and that we require a change in relation to confrontation. This nation needs coal, and, as my hon. Friend the Member for Ince (Mr. McGuire) pointed out, in the end it will be a matter of who digs the coal.

We have heard today of the mantle of responsibility being shoved on to the shoulders of the new Secretary of State for Employment. It is a burden which no ordinary man can carry. No one can achieve any solution to our current problems without the necessary power and authority to do so. I listened to the exchange between my right hon. Friend the Leader of the Opposition and the Prime Minister about what was necessary to achieve a settlement with the miners. Can this House be inspired by the knowledge that the Prime Minister intends to give the Secretary of State for Employment the authority to reach a settlement. Is the right hon. Gentleman prepared to give the Secretary of State authority to make sure that the industrial dispute with the miners is finished?

I ask that question because two hours ago I was chairing a meeting of the Power and Steel Group. We were discussing the kind of energy policy which Britain needs. If Government supporters are interested in Britain having an energy policy, I recommend them to read the proposals of the TUC on the subject. They were published back in June, but they make it very clear that the trade union movement is thinking about the national interest.

Two of the people present at that meeting were the President and the General Secretary of the National Union of Mineworkers. I say that bridges need to be built and that authority must be given to the Secretary of State because they told me that the Secretary of State has invited them to meet him on Wednesday and Thursday. If we are to get out of the present industrial difficulties, our attempts will not be helped by the Chancellor of the Exchequer insulting the miners on television or by the Prime Minister conveying to the miners in an exchange in this House with my right hon. Friend the Leader of the Opposition that there "ain't gonna be" any movement, that we have reached an impasse, with the Government adopting a Maginot Line attitude, and that we must have this continual conflict. It is in the interests of both the nation and the miners that a settlement be reached. The miners are working a five-day week. They do not like being involved in this conflict. Throughout history miners have tried to carry out the responsibilities that have been thrust upon them. They have now realised their importance.

The right hon. Member for Taunton spoke for his people. I speak for the miners. I do not believe that I shall have to defend the miners because they are likely to be paying surtax in future. The miners' settlement will not put them in the surtax range. If hon. Gentlemen opposite believe that what the miners are asking for is so attractive, they should persuade people to get jobs in the mines because coal faces are standing empty. Indeed, I am beginning to realise and appreciate the skill that I have. Some of us could train those hon. Gentlemen who are so enthusiastic about the tremendous wages that the miners are to get. It is in the interests of both the nation and the miners that a settlement be made.

The miners are concerned not just about coal but about our energy policy. I was pleased that the right hon. Member for Wolverhampton, South-West (Mr. Powell) mentioned nuclear power and energy. The whole House will have to discuss this subject at some time and make what will be a tremendous decision.

A week last Thursday I was asked as Chairman of the Power and Steel Group to go to Windrush and see the reactor. The Government always seem to give the impression that we must consider the national interest. With my hon. Friends the Members for South Ayrshire (Mr. Sillars) and West Lothian (Mr. Dalyell), I spent a whole day at Windrush studying and examining what is happening about the third generation nuclear reactor. We have spent between £20 million and £40 million developing a prototype of the heavy water reactor. I have discussed this matter with technologists of whom any country would be proud. I understand that the reactor has been generating electricity for eight years and that it is perfectly safe. The American reactor, to which reference has been made, is in a cylinder. If anything goes wrong one cannot get into it. But with our reactor, developed by our brains, if anything goes wrong it is possible to walk in and take out the core. It is completely safe.

I understand that Finland and Australia nearly bought it. Indeed, the Hydro-Electric Board in Scotland nearly bought it. However, the nigger in the woodpile was the CEGB. I do not know why we listen to the Chairman of the CEGB because he has been proved wrong so many times. The board's credibility has been absolutely destroyed on matters connected with decisions affecting the nation's energy.

We have heard rumours that the Government may decide to buy reactors off the shelf from America. If so, it will be one of the biggest betrayals technologically in our history. It will be a wiping out of British technological expertise and, in some aspects, a severe blow to the prestige of British technology.

I am not waving the flag. My hon. Friend the Member for Ince and I tried to warn the House of Commons some time ago that the more we depended for sources of energy on other countries the more serious would be the predicament in which we should find ourselves if something went wrong. At times I made speeches at 7 and 8 o'clock in the morning warning the House that if we became over-dependent on oil we would be in trouble. But no one would listen. I think that the House should listen to the miners' representatives in this situation. The House should take heed of what we were trying to point out in the past not only about coal but about nuclear energy. If we depend on other countries for nuclear power expertise, it will be a betrayal of the British people. It will mean that at some time in the future we shall suffer very severely because we shall not have the necessary expertise.

In 1970 we were told that we were getting a businessman's Government. It certainly is a businessman's Government. All the members of the Government are associated with business. It is no great credit to the businessman's Government that we have been governed with a greater degree of incompetence than at any time in our history.

I understand that it will cost about £400,000 or £500,000 a week to settle the miners' claim. That is taking the highest figure. Yet we are prepared to sacrifice about £400 million production a day in order not to breach stage 3. This is a businessman's Government.

Last week I met and discussed the situation with Sir Eric Drake. He said that the current price of oil was about $16 a barrel. Compared with that, coal is dirt cheap.

The House must take cognisance of the $16 a barrel aspect. It means that every source of indigenous energy is in. In my constituency and that of my hon. Friend the Member for West Lothian we have shale mining. We know what happened about that. We went into EFTA, we could not pay the subsidy, and that collapsed. We used to work out the figures and say that we could not work shale because it would cost $4 or $5 a barrel to produce oil. As an indigenous source of energy, businessmen must surely appreciate that shale mining is now in.

In the past I have referred to producing oil from coal. I was ridiculed when I mentioned it. Those who referred to that matter were treated as eccentrics. We were told that it would cost $9, $10 or $11 a barrel to produce oil from coal. We have to think about this now. An oil-from-coal installation is a possibility on the basis of present knowledge. I understand that this week, $17 and $18 a barrel has been paid for oil. The previous figure I gave was paid last week. We have plenty of coal but not plenty of miners. We have cheap coal but we shall not get cheap miners; we shall have to pay for the miners.

To some extent, this is a phoney crisis, created by the Government. They want to frighten the electorate with the threat of a General Election. One thing that they will have to do before going to the country, if it is in January or February, is to draw up an energy policy and realise that coal will need to play a major part in it. We cannot get coal without miners. If this is businessmen's government, sensible, government, when the Secretary of State for Employment meets the miners on Thursday he should have the power and the authority of his Government to make a settlement with them in the interests of the nation.

7.51 p.m.

Photo of Mr Harold Gurden Mr Harold Gurden , Birmingham, Selly Oak

I am grateful to my hon. Friends and to some members of the Labour Party for the analyses that we have heard, especially in the two Front Bench speeches. They have been nearly exhaustive but no doubt there are more valuable contributions to come.

I certainly share the views of my right hon. Friend the Member for Taunton (Mr. du Cann) expressed in his closely reasoned speech. I want to deal with only one aspect of this matter. We must all recognise that the basis of the Government's problem is inflation, relating to their responsibilities and, no less, the responsibilities of the trade unions. It has been obvious to many people for the last 20 or 25 years that this kind of confrontation had to come. If the nation is to survive, there must be some accounting for what goes on in unions.

The "I'm all right, Jack" attitude which was clearly stated by the miners' leaders, as we have all heard on television—more wages and more pensions, lower prices and lower profits—makes nonsense. What is taken out in wages in almost any business—mining or anything else—leaves little to play with, and certainly not enough to give what the trade unions demand of this Government or any other.

I want to examine the situation of trade unions, because I believe, from talking to workers in my constituency, that they are prisoners of the trade union system. They are controlled by a few leaders with a nineteenth-century mentality on trade union policy. This is preserved closely by the Left-wing militants in the unions, and it is carefully designed to bring about Communism. Some of the so-called responsible union leaders themselves do not deny that they are Communists, and they want to defeat the ballot-box system in this country and every other democratic country.

Listening to Mr. Gormley, I thought that he, too, was a prisoner of the Left wing in the unions. Indeed, it has been said that they wish to defeat phase 3, to defeat the Industrial Relations Act and to defeat this democratically-elected Government—which, of course, in the end would mean that they wanted a dictatorship. When that has been achieved, I suppose that Mr. Gormley would have to change sides, when the dictatorship had been thrust upon him. If he did not conform to that Government, I suppose that he would be sent along to one of these mental hospitals in the company of some of the Jews on the other side of the Iron Curtain. However all this may be, the Reds that were supposed to be under the bed are now out and truly exposed.

My experience in business taught me that trade unions needed to be much stronger and not weaker and that this is most important for the workers themselves. I believe that the unions have to be modernised. I have talked to union leaders in Birmingham about this. If we are to get out of our difficulties, the day must come when trade unions employ their own economic experts to advise them so that they can sit at a table with the employers and say "Let us look at the balance sheet and judge the size of the cake; let us see what all the factors are. Let us see that the profits are preserved for investment in the business in which we earn a living and which pays our pensions. Let us safeguard the selling price of our product, so that it is competitive."

We have heard already that coal, which used to supply 90 per cent. and more of our energy needs, now supplies only 70 per cent. Even that 70 per cent. will decline if the miners continue their pressure. Only after the unions have sat down with the employers and really examined the business and the figures, advised by their own experts, can they decide what wage demands would be sensible. That would be preferable to the present system of putting any old figure on the table, saying "That is what we will settle for and nothing less," and following it up with a strike.

If we are to remain a democratic country, the trade union system must be completely reorganised. The good will is there, and such a strengthening of the system is essential. It has to be modernised. It must be brought to the situation which we shall face in 1974, in which the trade unions understand the size of the matter and how much pressure business will bear in wage demands. Only then will they be able to assess the true demands which are consistent with the interests of their members and, indeed, society itself.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The hon. Member is explaining about understanding economics, balance sheets, and so on. I assume that he will agree that there are experts on both Front Benches. The hon. Gentleman supports a Government who are refusing the miners a wage of up to £40 a week, but last week the Government announced that they will pay £10 per day, free of tax, to local councillors. I do not decry councillors. If a miner is a councillor he can obtain £50 a week, tax free, by not going into the pits. But the same Government refuse to give him £50 a week for working in the pits. I ask the hon. Gentleman: "What would you do, Chum?"

Photo of Mr Harold Gurden Mr Harold Gurden , Birmingham, Selly Oak

We have all been much entertained by the hon. Gentleman. Very few people believe that we are talking about the sort of demands that the miners wish to make. We are talking about what has been said repeatedly, about what follows paying the miners their £10 million, £20 million, £30 million or £40 million more in wage demands, and the inflation in this country. If it were merely a question of settling for what the miners wanted and if we had guarantees against any leapfrogging wage demands——

Photo of Mr Harold Gurden Mr Harold Gurden , Birmingham, Selly Oak

—from other industries, there would be little more to worry about. But I am concerned about whether the trade unions realise what real wages are and what are realistic demands in the light of the economy of the business in which they work. Until that day comes we shall get no further with the problem of inflation.

8.2 p.m.

Photo of Sir John Morris Sir John Morris , Aberavon

I hope that the hon. Member for Birmingham, Selly Oak (Mr. Gurden) will forgive me for not following his remarks. He saw Reds under every bed. He seems to have forgotten the distinguished part played in the mining industry by Will Paynter and Arthur Horner in periods of great difficulty.

The hon. Member for Abingdon (Mr. Neave) and my hon. Friend the Member for Midlothian (Mr. Eadie) drew the attention of the House to the crash nuclear programme which was canvassed. It is many years since, for a short period, I was in the Ministry of Power. I saw then the great promises made regarding nuclear energy. Unfortunately, in the event, many of those promises were not fulfilled, in respect of delivery, cost or coming on stream. It would be highly regrettable if decisions were taken to buy on the scale envisaged and to introduce foreign goods on this scale and we sacrificed—in the same way as we sacrificed coal for oil—long-term considerations on the altar of short-term requirements, particularly if it meant the increased involvement of foreign sources for energy. All the sums of the past will have to be done again. I am sure that the House will agree that before any decision is taken the whole issue should be canvassed fully and debated in the House.

The only fair comment that we had from the Chancellor in his speech yesterday was his answer that if the present industrial troubles were settled there would be no immediate change in his proposals. I ventured to suggest to him—it was this that elicited that important answer—that he would not change his proposals by one comma. That was the agreement that he gave, as I understood it. That is a lesson which we must remember throughout the debate.

The Chancellor has made an admission regarding the significance and the basis of his proposals. However deeply one feels, one way or the other, and however deeply one is inconvenienced by the action of the miners, the power engineers or the engine drivers, it is abundantly clear and follows logically from the Chancellor's admission that they are not the authors of this country's misfortunes today. These are, rather, a combination of Government policy and Arab blackmail. It is regrettable that the alibi of industrial trouble remains and that it has been blown up to the scale that it has. The impression has been created that it is one of the real causes of the Chancellor's actions. With his statement yesterday, the right hon. Gentleman has removed at a stroke the whole of that alibi, and there remains only the tragedy of the oil situation.

The truth of the matter—the right hon. Member for Taunton (Mr. du Cann) came a great deal of the way in this direction—is that a new budgetary proposal, such as we had yesterday, was badly needed months ago. The ship of State has been steered so close to the rocks that anxiety must have been rising in the heart of every right-thinking person, who must have wondered how soon remedial action was to be taken. A crisis was coming upon us long before the Arab action, which only worsened it and made it significantly more important. But even if that were not there, some action would have had to be taken to remedy the inflation with which we are all faced.

Has the Chancellor taken the right action? Has he been able to deal with both the long-term issues and the short-term problems? What must be clear to all of us now is that there is a deep awareness growing throughout the world, particularly among the primary producers themselves, that primary producers have a new bargaining power at their command. One cannot turn back the clock in that respect. Today it is the oil producer; tomorrow it may well be—I think it is already—phosphate producers. Each of the primary producers in turn will be flexing his muscles and telling the Western industrial world of the new power that is at his command. It is at our peril that we forget the lesson that the oil producers have so speedily learned, in terms of the phosphate producers and all other producers, who will be able to get together. Indeed, we in the Western world must realise that never again, perhaps, shall we be able to get our raw materials on the cheap and build our prosperity upon that basis.

We live in an unfair world, in which the rich industrial West has battened for so long upon cheap primary production. We live in an unfair country. Here one sees a free-for-all. In the same way that primary producers are beginning to flex their muscles, combinations of people are beginning to realise their real strength. One example is what the miners are doing today. They are realising their strength. They have had that strength for many a long year, but the combination of world events has resulted in a great and growing awareness of that strength and a great increase in it. Tomorrow it may be those who look after our sewage works or our waterworks. Essential and vital producers and providers of services, each in turn paralleling world action, will be realising the strength at their command.

The new term that has been manufactured is "social contract", and my understanding of it is that instead of the jungle of the free-for-all, with each in turn flexing his muscles—be it within this country or without this country—there must be a consciousness of fair play on the part of all producers, workers and consumers if there is to be any restraint and order in our affairs.

It is against the background of that situation that I ask my next question. Has the Chancellor of the Exchequer begun to build the essential new framework that is so badly needed if we are to avoid a repetition of our current situation? Regrettably, he started with the inheritance of Selsdon Park. Regrettably, he has presided over the financial affairs of the most divisive Government in history. This is a Government who have sought to turn the clock back, who time after time have failed, and been forced to do yet another U-turn. Indeed, a historian looking back at the number of turns that they have had to make will be unable to distinguish between the Government and Hampton Court Maze or "Sphaghetti Junction".

Against the background of the present situation the country was geared to sacrifices. The situation had become so serious and black that it demanded sacrifices right across the board. But what was revealed to this House yesterday by the Chancellor was what I regard as a wholly irrelevant set of proposals. First, let us look at the vital subject of fuel. The least one could have expected was that the Chancellor would face the reality of the fuel situation. We might have expected some charge—some imposition or restriction on the unlimited use of the motor car, or some bias in favour of public transport in order to ensure a saving of vital fuel. Instead of that, the private motorist is able to use his motor car in any part of the country, provided he does not exceed 50 mph. My constituency contains a steelworks, employing 14,000 people, and at the beginning of January it will be working a three-day week. That shows the irrelevance of the approach when giant industries are short of fuel but private users are able to carry on regardless of what is happening.

I am talking about the industrial life-blood of our nation. Major sacrifices will be demanded from our workpeople. We have seen the chicken-feed approach of the Chancellor to surtax payers, property developers, and so on. Those who will be making the great sacrifices are those who will be working not five days a week but three days a week, and receiving only three days' pay for their efforts. If they have been finding it difficult to meet the cost of rents, food, and so on, on five days' pay, how will they be able to survive on three days' pay in the new year?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I am a little puzzled—perhaps the right hon. and learned Member will explain—how saving petrol by restricting private motoring would help to provide coal to keep the steelworks in his constituency going, and to provide electricity which, again, is scarce because of the shortage of coal?

Photo of Sir John Morris Sir John Morris , Aberavon

I do not intend to exhaust the House with a whole series of illustrations about the varied forms of energy, of petroleum and petroleum products. I am merely seeking to indicate by a fairly simple example that while there is no intervention at all as regards one use of fuel, there is a major intervention—be it in respect of coal or fuel oil—which will result in industry throughout the land working for three days as opposed to five days a week. Having served in the same Ministry as the hon. Gentleman himself, I am not totally ignorant about the use of different fuels. I am seeking to illustrate the complete absence of sacrifice from one section of the community and an enormous sacrifice from another. The people who will particularly suffer are the pensioners and those on fixed incomes, and I should like some clarification about the consultations which are to take place on the price of coal and electricity. Those are matters which will affect everyone throughout the land who has found it so difficult to manage and will find it even more difficult in the future.

We shall see a great cut-down in the production of steel. Here I declare my interest, as the representative of an important steel constituency. A cut of 40 per cent. or 50 per cent. will have a galloping effect upon all those who consume the steel that we produce. If the effect is catastrophic in a steel-producing area, how much greater—given the shortage of steel of various kinds in the last few months and the enormous dependence of the North Sea oil exploration on steel and steel products—will be the catastrophic effect in consuming areas? This blanket intervention by the Government will undoubtedly have an enormous effect upon industry throughout the land, and there will be even greater bottlenecks in future.

We are concerned about the development plans for steel. Approximately £400 million is to be invested in the steelworks in my constituency, but I now understand that a total of £70 million may well be cut off from the total national investment of the British Steel Corporation this year. We want to know where that cut will fall and whether it will affect our expansion plans. In the past, we have had booms accompanied by balance of payments difficulties, and many of those difficulties have been caused by the steel imports which we have had to make because the steel industry was unable to cope with our demands. We should really be eating the seed corn if we did not carry out our plans to improve the steel industry and provide the necessary investment.

Another matter which was raised yesterday was the safeguarding of the regions, and Wales and Scotland. I fully appreciate that the road programme must play its part in whatever proposals are put forward by the Government, but I enter one point of speical pleading and say that the completion of the M4 is of vital significance to Wales if employment is to be provided in the years ahead, because our handicap is that as a great producing centre our communications with other parts of the country are much worse than theirs. It is not a question of all parts of the country having to suffer in the same way. Wales, Scotland and the regions are far from the consuming centres and will suffer that much more unless same kind of balance is achieved in terms of the sacrifices that are made. I hope that by the end of the debate we shall have some clarification about the M4.

Instead of giving us the right policies—policies in which the burden falls on the broadest backs—the Chancellor has launched an attack on public expenditure. The test whether our society is fair or not is how much we are able to commit to public expenditure, even at the expense of personal incomes. It is the easist way we know, short of imposing Draconian penalties to redistribute wealth.

I reject completely the Chancellor's approach of a swingeing cut in public expenditure. I well understand why the Government have taken this line. By so doing they can avoid personal unpopularity. It is a cowardly approach, because they do not have to face the income tax payer; they have simply called for chicken-feed contributions from the surtax payer. They have avoided facing the beer drinker and the petrol user. It is more convenient for them to do that, because it delays the effect of the measures and fragments the unpopularity. It means that schools, roads and hospitals will be hit, but only the local communities will be affected and will complain, and they can be picked off one by one. It will be the local councillors and the local Members of Parliament who will have to bear the unpopularity many months ahead—and probably after a General Election. I can understand the philosophy behind the Government's policy. The time will come when the country will realise, if the date of the election is delayed, just what this brake on public expenditure really means.

I come finally to stage 3. Everyone in the country now accepts that it is clearly outdated. It was conceived before the present energy crisis. I hope that there will be a sensible outcome over the miners' dispute. The right hon. Member for Wolverhampton, South-West (Mr. Powell) made it abundantly clear—and I endorse what he said—that the miners have not broken the law. There is a code, and there is an enjoinment to observe the code, but in the final outcome there are residual powers which the Government can take to protect the needs of the nation.

It should not be said that the miners at any time have broken any law. If this code is regarded as sacrosanct, the law is an ass, and something has to be done about it. I hope, at the end of the day, that an understanding will be reached, in a new situation, which will be the least expensive to the nation. Our nation cannot afford a continuation of the present misery with most of the work force on a three-day week. Whatever happens over this dispute, at the end of stage 3 someone will have to work out a figure that will ensure that we have sufficient miners to dig the coal. That is a cardinal requirement for this country in the new situation, and we ignore that fact at our peril. To ignore it is to act, as I fear the Government are acting, like Gadarene swine.

8.25 p.m.

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

The right hon. and learned Member for Aberavon (Mr. John Morris) is the first person I have heard to complain that the Government's proposals are cowardly. Everyone else seems to agree that they are severe and likely to be unpopular. However, I agree with him that between us we must evolve a fairer way of arranging our affairs. I agree with him, too, that we are not likely to get the raw materials that we need except at a very much higher price than we have had to pay hitherto. However, as both sides of the House are constantly paying what I hope is more than lip-service to the need for helping the developing nations, there is only one way we can do that and that is by paying them more for what they produce, and we shall have to face that.

The nation has had a shock, and I hope that that will have had a therapeutic effect. I hope that the average citizen will learn to economise on inessentials and will learn the ancient British virtue of self-reliance as a result. The Prime Minister made it clear again today that our present situation has come about solely because the Government are striving to save the nation from one of the most disastrous evils that can afflict a people and because some members of the more powerful trade unions are determined to prevent the Government from saving the nation from that evil. That evil is inflation.

The simplest citizen by now should understand what this economist's term means. It means that the pound in our pocket buys less and less as the days go by. Its immediate effect is to hit the poorest hardest, and in the long term—and perhaps the not-so-long term—it hits us all. It can reduce a currency to nothing, and it can destroy any democratic form of Government. We have seen it happen elsewhere, and we have long known that it could happen here. I believe that it would have happened here if the Government had not acted when they did.

My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) decries the effect on inflation of wage increases. He grudgingly admitted today that it might have a minimal effect, but the great cause in his opinion is money supply.

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

I did not hear my right hon. Friend say that. Of course, it has an effect on inflation, but I believe that inflation results when people demand to be paid more than their combined productivity justifies. The Government made most strenuous efforts to persuade employers and unions to agree to a sensible way of arranging our affairs. The simple recipe of my right hon. Friend the Member for Wolverhampton, South-West was tried ad infinitum and failed. Never before in our history have a Government taken more time and trouble to consult both sides of industry. The Government failed, so a statutory policy became necessary.

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

That policy has not yet failed. Had it not been for the most unfortunate coincidence of prices in world commodities rising by between 70 and 80 per cent. in one year alone stages 1 and 2 could have been much more effective. No one can laugh this off. When stage 3 came along the militants struck. As my right hon Friend the Member for Wolverhampton, South-West said, our more serious wounds are self-inflicted.

If stage 3 is jettisoned, except to be replaced by lower permitted increases, inflation will run riot again. I fully accept the view that if we had to contend only with a shortage of more expensive oil we could get by. The Leader of the Opposition admitted this afternoon that we could almost be back to normal, subject to any deficiencies there might be in our oil supplies. We are back to where we were before stage 1, and all the Leader of the Opposition has to offer are cures for the effects of inflation. He offers no cures for the cause.

The miners are not breaking the law. I do not know of anyone who suggested that they are. [Interruption.] Whoever suggested that the miners are breaking the law is, in my opinion, wrong. The miners are not in conflict with Parliament. They are in conflict with their fellow citizens. In January 1973 there was an article by Paul Johnson in the New Statesman in which he said, about the unions: They have placed short-term material advantage above every other consideration, and in doing so have lost the substance as well as the shadow. … Thus we have seen groups of workers heedlessly destroying the livelihood of their fellows, operating as it were a brotherhood of Cain. … We have seen unions using their massive collective strength to trample the rights of the individual. That was written by a well-known Socialist journalist. The gist of the article is 100 per cent. anti-capitalist and Socialist.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

How much did he get for that article?

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

The hon. Gentleman had better ask him.

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

The hon. Member for West Ham, North (Mr. Arthur Lewis) knows how I loathe sedentary interjections.

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

I am obliged for your help, Mr. Deputy Speaker, but the hon. Gentleman can go on talking like that until the cows come home for all I care.

That article was written less than a year ago, just before stage 1. That is the situation to which we are now returning. I said that I disagreed with the right hon. and learned Member for Aberavon that the statement by the Chancellor of the Exchequer yesterday was not a step forward on the road to a fairer society. I believe that it was.

I am glad that at long last the Government have done something about the great fortunes made by property speculators. [Interruption.] I am not being wise after the event. I have preached this for many years. I am talking about property speculators, not about developers. I am very pleased that I am giving my right hon. Friend the Member for Wolverhampton, South-West such cause for laughter. There is a difference between speculation and developing. I am talking of property speculators. I have talked about them for many years, including the time when my right hon. Friend was in the Cabinet yet did nothing about the matter.

The opinion which I have long expressed about this matter—in vain, I fear—is better expressed by Bernard Levin in an article in The Times. He wrote: It is clear that our present Government have not the slightest idea of the damage done overnight to our society's chances of survival … by their casual abandonment of their promise to do something about the profits of the property speculators. I said after the 1964 General Election, and I still believe, that we lost that election for that reason.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Surely, the man who buys at the bottom of the market in property prevents the price going even lower, and the man who sells at the top of the market prevents it going even higher? The activities of the property speculators are designed to stabilise fluctuations in the price of property. Why should my hon. Friend want to stop that?

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

If my hon. Friend can make the public believe that, he can make them believe anything. He deserve-to be returned at election after election.

Now something has been done. I am sorry that it is not a great deal more. I do not suggest that it makes much difference one way or the other to the economy, any more than will the 10 per cent. surcharge on surtax. The point is that the methods of making money through property speculation are socially unconscionable. It is a question of psychology. One does not have to be a Socialist, who is naturally envious of anyone better off than himself, to be offended by such profits. They illustrate an unacceptable face of capitalism.

Of course, there is such a face. What economic system has not got an unacceptable face? There is one whose face we should find much less acceptable than the face of capitalism. Has not the time come when more effort should be made to warn the moderate trade unionists, who so vastly outnumber the militants, what the face of Communism as practised in the Soviet Union is like? After all, there is no dearth of information about what the life of the ordinary man and woman in Russia is like.

Photo of Mr George Machin Mr George Machin , Dundee East

They have to work five days a week.

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

Much authentic information pours across the Iron Curtain every week. Is that the kind of life we want here? There is a small but highly organised number within our gates whose object it is to establish just such a system here. They are not only militant trade unionists but are to be found among stage and film producers and among employees of the mass media.

Sir Arthur Bryant tells us in one of his books that the rulers of Rome, by the policies they pursued on the eve of the Dark Ages, turned active and self-respecting citizens into inert and selfish ones; and made the moral shell which protected society so soft that it could protect it no longer. The undoubted fact that only a tiny minority is dedicated to anarchy does not justify our pretending that they do not exist. We know what one rotten apple can do to the others in a barrel, and we should know that there are scattered throughout our society teachers, trade union leaders and, above all, purveyors of entertainment and exploiters of the mass media whose dedicated purpose it is to corrupt the nation and especially its youth. We have the word of the Italian Communists, who make no secret of it. They say: Our aim is to defend an enterprise which is free from the restrictions of ordinary moral rules. The producers and actors are in effect like ants working for us voluntarily and without pay, as they eat at the very roots of our society. Why should we stop them at their work? What is all this in aid of? As I have said, hardly a week passes without authentic news of what life in Russia is like. Need we be ignorant of it? Do we want to be confined in a spiritual and physical straitjacket, with one false step leading to the asylum or the camp? If not, we must do much more than we are doing to defend ourselves from it. As my right hon. Friend the Prime Minister said to-day, it is time the moderates spoke up, stood up and allowed themselves to be counted.

Meanwhile, it is true that our society is in need of reformation. As I am by nature rather idle, I always take the words of others if they precisely sum up what I wish to say, because it saves me from formulating them myself. It so happens that in The Times this morning there is a letter from one of my old friends, a sometime Member of this House, Sir David Llewellyn, and I wish to quote it in conclusion: There is wide agreement that the whole structure of our society needs to be examined in order to see how it could be made fairer. A Royal Commission, chosen to this end, would not by itself heal the wounds from which our country is bleeding. But if it were to examine job evalution in relation not only to wages but to salaries, dividends, the distribution of wealth, inheritance and social benefits, it could have the same influence as the Beveridge Report in pointing the way to a kinder and fairer society. There is no doubt that glaring injustices and conspicuous expenditure make the smooth working of an incomes policy, under Governments of Left and Right, difficult if not impossible, except by fits and starts. Those of us who believe in 'the middle way' could do worse than to recall a speech made by Stanley Baldwin "— which he then quotes. He goes on: A Royal Commission, for the purpose of seeking more equitable foundations upon which statesmen could build, might help towards a truce of God"— which Stanley Baldwin asked for— and so prevent a repetition of the tragedy of 1926—and worse. This is what I myself would hope.

8.42 p.m.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

The hon. Member for Hertfordshire, South-West (Sir Gilbert Longden), like some other Conservative Members, and also the Prime Minister, seems to think that the problems we have in the economy have nothing whatsoever to do with the Government, that they are all a great plot on the part of some Communists, anarchists, Socialists of one kind or another, or wicked trade unionists—and, worst of all, I suppose, Joe Gormley, represented as a dreadful militant—all intent on bringing the country to its knees and to ruin. Those hon. Members who speak in those terms know that this is not true. They know, as the Prime Minister knows, that they are lying—or, rather, let me say, making untruthful statements—to the general public.

What they are happy about is the fact that at this point in time the deep economic crisis which their policies have, not entirely, but largely, brought about has been masked by a number of industrial disputes which they have seized upon to deflect the people's attention away from the policies themselves. I should imagine that they are very happy that those disputes are taking place at the moment.

Listening to the Prime Minister this afternoon, I could not but assume that he was making not a serious statement to the nation to deal with the actual problems but a semi-electoral speech, leaving his options open, since he may feel that it might be a good thing to go to the country on the basis of bashing the unions.

I put this point to hon. Members on both sides of the House, and it is a serious point. Suppose the Government did go to the country, and suppose that their wildest dreams came true and they won a great and overwhelming electoral victory. Suppose that then the miners, the day after the election, continued—not to go on strike, because they are not striking—to work five days a week, a 40-hour week, as they are doing at the moment. What would the Government then do about the miners? Would they say to the country "Overtime must now be made compulsory. We will make it the law of the land and the law of the land must be obeyed because Parliament has so decided. This must be the situation in the future"?

In a free democratic society when a group of workers is involved in an industrial dispute, both sides cannot for too long adopt a rigid position—and the Maginot Line has been referred to. The parties must get round the table and make a compromise agreement. Unfortunately, the Prime Minister keeps making statements which give the clear impression that he does not want a compromise agreement. He keeps taking the line "This has been decided by Parliament". Parliament can sometimes be wrong, and it was wrong on a previous occasion in regard to prices and incomes policy. Some of us then warned that it would lead to situations where we would not get out of difficulty and where there would be trouble with the unions. The Tory Government have made even worse errors in this respect than did the Labour Government.

Conservative Members will have to decide whether they accept the democratic compromise between labour and capital, for in this case the Government stand fully behind capital. They can either have a compromise situation or go one step further and bring in more Draconian laws. They will then begin to talk in terms of a new trade union structure—of a "modernised" trade union movement. We have had some hint of this idea from the Conservative benches today. No doubt that modernised trade union movement would have representatives appointed by the Government of the day, as occurs in Spain and in many other countries. That is the logic of that situation. I do not think Conservative Members—this certainly applies to the majority of them—want that situation. We certainly do not want it.

It is about time Conservative Members said to their right hon. Friend the Prime Minister "You must get into this world. Do not live in a world of your own." They must tell him that he must not become a Walter Mitty character after three or so years in office. He must cope with the real world and not just live in an enclosed world in rooms in this Palace and at No. 10 Downing Street.

They must also tell the Prime Minister that it is time he and his colleagues became flexible on industrial matters. All they are doing at the present is forcing the miners into a position where sooner or later they will stop work altogether. They will not tolerate this sort of abuse much longer. They will not go on being attacked day in and day out as though they are the people who are responsible for the country's economic ills. They will not stand it, and they have a right not to stand it.

I put it to the hon. Members who were arguing about a week ago that we ought to have a ballot that, in the sort of climate that has been created, if the miners held a ballot their answer would be very clear indeed—a full-blown strike. Then where would we get to?

Of course, the Government could dash for an election. Perhaps that is what they have in mind. Perhaps they think they will gain a great deal out of this situation and will be able to appeal to the people to say that Lawrence Daly, Joe Gormley, Jack Jones or Hugh Scanlon do not run the country but that it has got to be the elected Parliamentarians and the Prime Minister.

Photo of Mr Gilbert Longden Mr Gilbert Longden , South West Hertfordshire

Could the hon. Member tell the House what the Government could do after such an election that they cannot do now?

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

I have made precisely that point and I can only assume that the hon. Member for Hertfordshire, South-West was not listening. If the Government believe that when the people go into the polling booths they will be voting for the Prime Minister, Jack Jones or Hugh Scanlon, I want to tell them that that is not how they will be voting. If the Government believe that they are going to be able to appeal to the people by saying, "As far as we are concerned you are voting for law and order against these wicked miners and other sections of workers because it is a question of who runs the country", then the people will say that it is at least clear that this Government do not run the country. They will say, "This Government have got us into such a goddam awful economic mess that the quicker we have a change the better." I do not much mind if the Government dash for an election in January, February or March.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

I should like to go from the hon. Gentleman's hypothetical suggestion to the immediate situation in order to get out of this mess—and I sympathise with much of what he said about the miners. Would the hon. Member support the idea of accepting the existing National Coal Board offer now for a more fundamental review of their position in the energy context from the end of January?

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

As I said in the House the other day, there was one thing, and one thing only, in the Prime Minister's statement which had a certain amount of wisdom—that one should not negotiate trade union matters across the Floor of the House of Commons. I have no authority to speak on behalf of the NUM. Some of my colleagues who are in the NUM and some who are associated with the executive possibly have that authority, but I have not and it is not right for anyone to say across the Floor of the House what the miners will or will not settle for. That is totally wrong.

I agree with the right hon. Member for Wolverhampton, South-West (Mr. Powell), who has argued so many times that these discussions should be left to the people who are, or should be, involved in such discussions—the trade union leaders and the employers. These are the people who determine what exactly will come out of such discussions and what the agreement should be. We are in this difficult position precisely because of Government interference in trade union matters and trade union negotiations. Surely, that is the one great lesson that we should have learned by now.

The Government have returned to the position of Selsdon Man. Once again we are seeing their class character being brought out in a positive way. Mr. Peregrine Worsthorne—who is a perceptive writer, although I do not agree with his political views—said in the Sunday Telegraph this week that the Government were not really talking about the national interest but were concerned with class politics. That, indeed, is what it is all about. It is class politics; it is confrontation. If it were not class politics, we should have had a very different statement from the Chancellor.

The Chancellor is taking £80 million from the total yield of the so-called property speculators. What does that amount to? Nothing. Everyone knows that it means very little to them. It is, as my hon. Friends have said, chicken-feed. The truth is that once again the main burden will be placed in various forms on the ordinary working people. That is what cuts in public expenditure really mean.

The right hon. Member for Wolverhampton, South-West is a very honest man. All of us will acknowledge that, even though we detest many of his views, certainly on issues like race, colour and economics, which are totally wrong. But, being honest, he said that cuts in public expenditure will mean a growth in unemployment. They will indeed. It is no good the Government trying to dodge their responsibilities.

For example, the building and construction industry will almost immediately throw people out of work. In addition, the regions will be affected in a bad way. All this will be on top of the three-day week which the Government are prepared to foist upon our people rather than settle with the miners and the other workers involved in industrial disputes.

The class character of the Government comes out clearly already with the application of social security cuts and the abolition of the three waiting days. When workers are thrown out of work for two days out of the five, they will lose three days' unemployment benefit entirely. That measure was deliberately introduced by the Government as an adjunct to the Industrial Relations Act. The Government have now returned to the class policies they were pursuing in their first year of office.

I say to the Government that they should test out their policies on the public if that is what they want. But I tell them now that the public will understand very clearly, first, who have brought the country into this economic situation, and, secondly, that the Government are pursuing a policy directed against ordinary working-class people, and will give the answer in the ballot box and ensure that this disastrous Government are defeated.

9.0 p.m.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

My first task is to congratulate the hon. Member for Hove (Mr. Sainsbury) on his maiden speech, which was commented upon favourably by several hon. Members. He concentrated on the problems of the elderly and to that extent will have had the ear of hon. Members.

All the speakers in the debate have agreed with the Chancellor at least on one point, in that he admitted for the first time that this country faces the gravest crisis we have had since the war. We are not agreed about the nature of that crisis or its cause, and we are certainly not agreed about the measures that the Government propose. Even if there were not an election atmosphere—which there is—it would be our task in this debate to try to clarify the choices that will have to be made sooner or later when these issues go beyond the Chamber and are resolved, as they must be, in the ballot box.

The Government's case is a simple one. It is that the economic crisis justifies their measures, that the oil crisis has complicated the situation, that industrial disputes have made necessary the measures announced by the Prime Minister, and that the whole nation should now, in duty bound, support the Government. That is a gross over-simplification. The economic crisis, which the Chancellor for the first time admits to exist, did not begin with the oil crisis. There was a massive and growing balance of payments deficit, raging inflation and real poverty among millions of our people. What the Prime Minister was able until recently to dismiss as the 'problems of success' were for many of our people problems of real difficulty that can no longer be neglected.

During this period many of us uttered warnings about what was happening in the overall economic situation, but right up to the last minute the Secretary of State for Trade and Industry pretended that none of these problems existed. He never used his power and authority to warn the nation of what he must have known better than most lay just round the corner. That is the extent of his failure of trust. On the oil crisis, the right hon. Gentleman is the energy supremo. I often read in the newspapers that we need an energy supremo, but I remind the House, as did the Prime Minister this afternoon, that the prime responsibility for the energy situation rests upon the Secretary of State. If, day after day, he reads in the newspapers a demand for an energy supremo, he may well reflect upon what we think he has been doing throughout this developing situation.

The problems of oil supply did not begin with the Middle Eastern war. Anyone who has, even superficially, followed events throughout the summer knows that the likelihood of some cut-back in Arab supplies was evident some months ago.

The main emphasis of the Prime Minister's speech was that the industrial disputes made it necessary for him to introduce the measures that he introduced on Thursday—that what is really at stake is stage 3, and that every decent, honourable, patriotic citizen who believes in a prices and incomes policy must support stage 3.

If the Guardian is to be believed, the Prime Minister warned his colleagues in Copenhagen that Communist elements among the miners and the power engineers were at the root of Britain's problems. If the right hon. Gentleman really believes that the only difficulties he faces derive from the fact that some trade union leaders are members of the Communist Party, it confirms my suspicion that he has not the faintest idea of what is going on.

In the past three-and-a-half years the present Government have done more damage to the fabric of our society than the Communist Party has done in the 50 years of its existence. It is open to the Cabinet at any time it chooses to use the powers which it has taken to test its own theory by putting a ballot to the members of the trade unions to see if they are prepared to reject their leaders in favour of the Government's view. Of course, it has not done so. The Government know in their heart that the trade union leaders speak as best they can for the interests of their members.

In my opinion the three-day week has received less attention than should have been the case. From the point of view of our people it will the first consequence—and a devastating consequence—of the Government's policy. It will create massive cuts in living standards. The Chancellor announced yesterday that there would be no increase in direct taxation. Let the people calculate what the three-day week will mean to them and their wage packets. Let them remember that it may continue for some time. It is a decision that makes no economic sense. If we accept Professor Kaldor's calculation of £400 million cost to national output a week, it will certainly involve a grave dislocation of output and exports. It will be accompanied by a 50 per cent. cut in steel output. It was done without consultation with either the CBI or the TUC.

Therein lies the explanation for the three-day week. It was done as a political measure, in an attempt to pitch the British public against the miners in the present disputes. It is no good Conservative Members pretending otherwise. The Prime Minister proved it today when he said that the three-day week will continue while the ban on overtime continues. It will continue if there is enough coal at the power stations. It will continue regardless of the coal stock position. It is a political decision, introduced by the Prime Minister. There was no consultation.

The coal stock figures, which are available to those who study them, suggest that 20 million tons of distributed stocks were available at the power stations on 1st November, that 9 million tons are burned each month, and that 5 million tons are now being delivered each month. There is a 4 million ton shortfall which, allowing for a reduction in electricity use, would be enough to go through to March or April. I challenge the Minister to publish all the figures about the distributed coal stocks at power stations, and about the deliveries and the delays, so that the trade union movement and the industrial leaders can assess whether these Draconian measures are necessary.

It is my belief that this is deliberate psychological warfare, designed to bring pressure to bear upon the miners in their present situation.

In answer to a question from my right hon. and learned Friend the Member for Aberavon (Mr. John Morris), the Chancellor of the Exchequer said that his measures had nothing to do with the disputes. The omissions from the Chancellor's statement are interesting. There is nothing about food subsidies, rents or mortgages. There will be an increase in coal and electricity charges. The significant feature of the Chancellor's statement is that when, without reference to stage 3, it was open to the Government to make a conciliatory move to the trade union movement on issues which had been raised with it by the TUC since the beginning of stage 1, in September 1972, the Chancellor declined to make a movement in the direction of the TUC. That confirms my suspicion that the Government are trying to escape from their difficulties by heightening the confrontation. I do not believe that the new Secretary of State for Employment will be able to produce an answer by the exercise of personal talents, such as they may be, without regard to the policy which he will have to follow.

Nothing was done about profits. Declared profits have risen by 22 per cent. over the past 12 months. Let no one think, when talking to people who are paying higher prices in shops and in supermarkets, that they do not link in their minds the increase in prices that they pay with the profits of the stores and of the manufacturers from whom they buy their goods.

The second aspect of the Chancellor's statement concerned cuts in public expenditure, with severe cuts in education and in health, and notably in the regions. I mention the regions because this Government have concentrated their regional policy on infrastructure. Any cut-back on the infrastructure does real damage to the policy which the Government themselves have accepted as being the right approach to regional problems. The regional employment premium is to be phased out. The Common Market regional fund has turned out to be a fiasco. Unemployment will rise this year, apart from the three-day working week. Every hon. Member with a regional constituency knows that the first cut to be made when a firm runs into difficulties is its plant in Scotland, the North-West, Wales or the South-West.

The Chancellor of the Exchequer made something of the difference between what he called public expenditure and private individuals. For heaven's sake, does he not think that private individuals benefit from public expenditure? Are not the people who would be attending the health centres which are to be cut, private individuals? Are not the people sending their children to the schools for which the Government pay, private individuals? We had a sudden insight into the total vacuum of the Chancellor's mind. For him there is public expenditure on the one hand and there are private individuals on the other who have some human and almost spiritual merit.

It was the public expenditure cute which brought the right hon. Member for Wolverhampton, South-West (Mr. Powell) back into the fold. The prodigal son came back because he sniffed the fatted calf. He thought that it was there. When he got there he was told that it was not the fatted calf—[An HON. MEMBER: "The golden calf."] That would be speaking too harshly of the right hon. Gentleman. That is language best reserved for others. The right hon. Gentleman has been brought back into the fold because in the theme of the Chancellor's statement he sensed some measure of a return to Selsdon Park.

I come now to the changes announced by the Chancellor of the Exchequer. We have, first, the trifling sniff at the property speculator, with £85 million coming from the whole property market in a year, if those engaged in it pay. Yet one company Land Securities increased its property by £278 million in the six months of phase 2. That is the extent of the Government's bold measure against the offensive speculator.

Then there is to be an increase in surtax of 10 per cent., but not for old surtax payers. Hon. Members who follow their constituency problems will know how many of us have written to the Chancellor about the taxation of pensions only to be told that every bit of income must be seen as taxable, but now we are told that if the person concerned is very rich, then, of course, the surtax payment does not have to be made. This is a perfect example of the two nations applied right up to the moment of national crisis.

Those who think that they are lucky to have escaped higher taxation by means of a general increase in income tax will find themselves being milked in other ways. Incomes will be cut by the three-day week. People will be driven out of employment. The steady and planned erosion of their incomes by inflation will be the taxation that the Government have planned for them. But it is a taxation conveniently done for the Government by the shopkeeper without actually having to be put at the responsibility of the Chancellor of the Exchequer.

The House should ask itself why the nation should support such a policy, and on what grounds the Secretary of State for Employment can go to the country and ask working people to give him backing for a policy as manifestly unjust and unfair as the policy which he puts forward with his colleagues in the Cabinet. This is said to be due to stage 3, but stage 3 is totally out-dated by the very events that made the Chancellor bring his statement forward.

In any case, stage 3 is completely flexible. The right hon. Gentleman will have had time in his new Department to read the Counter-Inflation Act. He knows what its provisons are. A Minister, including himself—indeed, especially himself—can modify any pay deal to any extent at any time that he likes under stage 3 and can override the Pay Board at any time. The Minister is stage 3, if the House understands what I mean. To be told that there are 10 commandments or three stages that cannot be varied without bringing down the Lord Chancellor, together with Sir John Donaldson, like a ton of bricks is to deceive the people. There is no breach of the law in the miners' dispute. That at least is clear.

Since stage 3 came into operation the Government have removed from the Price Commission the responsibility for deciding the prices of all fuels. They have already made a major amendment to their own legislation in the last two weeks. Moreover, they have used that power of bringing the responsibility for coal and electricity back to Ministers not to keep down the price of coal and electricity but to raise it. Although the Prime Minister in an angry mood today denied it, it is absolutely clear that what the Chancellor said about coal and electricity prices is a direct breach of stage 3, because in the price and pay code was a pledge that the nationalised industries' prices would not go up more than allowable costs. So stage 3 has been broken. The truth is that the Prime Minister is set upon a confrontation with the miners.

I turn now not to the management or legislative aspects of this matter but to warn the Government solemnly that if they seek to resolve the issue with the miners by trying to stir public hatred against them they will not succeed. It is astonishing, as any Member of Parliament who is active in his own area will know, that even older people now feeling the effects of electricity cuts, people with no direct or indirect connection with the mining industry, are sympathetic with what the miners are trying to do. That is a fact that the Government had better recognise.

My hon. Friend the Member for Midlothian (Mr. Eadie) referred to the miners' case over the years. I shall not weary the House with it. But anyone who has read the miners' arguments on energy policy will know that—against a Labour as well as a Tory Government—they have argued their case on the ground of national interest. Public sympathy with the miners is hard for the Government to appreciate, because they do not understand either the miners or the public.

The miners are not allowed to be heroes in Fleet Street, except for those not too rare occasions when one or two lie underground in the dark and damp as the rescue teams try to reach them. Then, for a brief instant, the mining communities are heroes; but for the rest of the time they are described as dangerous, radical and undemocratic militants.

It says a great deal for the common sense of the British people that they do not accept what the Prime Minister and the Chancellor say about the miners. There is far wider public sympathy for the miners than the Government appreciate.

If the Government were to be true to the doctrine of demand and supply in which they once believed, we should expect the price of coal and the wages of the miners who mine it to rise in a fuel shortage. It does not escape public attention that when a young married couple want to buy a plot of land on which to build a house the Government do nothing to stop supply and demand operating against that young married couple. That is not described as exploiting the community, although the man who sells his land at the market price is doing individually exactly what the Government now seek to denounce the miners for doing in their more modest wage claim. If the Government try to win this battle, they will cost this country very dear. But in the end it is not a victory that can be won.

Underlying this whole debate is the fact that, from before they came to office, the Conservative Party, the Government of the day, had solemnly concluded that, until the power of the trade union movement could be tamed, they could not implement their policies. That is what the Inns of Court Conservative Association was about. That is what Selsdon was about. That is what the speech to the wives of Leicester was about—to separate the women from their trade union husbands. That is what the "lame duck" policy was about. That is what the Industrial Relations Act was about. Curiously, that is what part of the argument for the Common Market was about—that, in the wider disciplines of European capitalism, the British working class would more easily be brought to heel. In the Counter-Inflation Act and now stage 3, the Government think that they have found an issue on which they can try to go to the people and control the trade union movement.

But things have changed during their time in office. Although in 1970 some people were persuaded that the trade unions were the cause of inflation, and voted Conservative because prices would be cut at a stroke, it is now becoming obvious to more and more families that the only way to defend yourself and your living standards is by supporting the trade union movement. Indeed, where the pay is high, the unions are strong; where the pay is low, the unions are weak; and where starvation wages are paid, as in South Africa, the trade unions are illegal. Let us make no mistake—this is now becoming apparent to many people.

It will, of course, be a central theme of the Government in the election, whenever it comes, that this is a battle between the Government of the day and the trade union movement. But a great deal of sweat and effort and sacrifice and devotion has gone into the trade union movement. It will not be open to the Government. Whatever were to happen in the election—even, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, if the Government were to win an election against the miners—none of these problems would be solved.

At a terrible cost to our social fabric, an embittered work force would face a Government with a parliamentary majority who still had nothing but conciliation or confrontation available to them as a policy. The question that many would ask is: if they had an electoral victory behind them, at what stage would that Government move over the line into a dictatorial control of the trade union movement?

The main responsibility for all this lies on the Prime Minister personally. He has done terrible damage to this country in the policy that he has pursued in respect of the trade union movement. It is absolutely certain that the policy that he has followed has not been in the national interest.

I want to conclude by trying to identify as best I can what is the basis of the national interest upon which we should now proceed.

First, I do not believe that the Dunkirk spirit and buckets of fake patriotism constitute a good guide to what we should do. I believe that we must put first things first, and the first things that must come first are a matter of common sense. A settlement of current disputes by direct ministerial action is in the national interest. There is legislative power to do it. The Secretary of State for Employment should do it. Lord Kearton says that it should be done. There are many other industrialists who can understand the international energy crisis but cannot understand why there should be an unnecessary national energy crisis at the same time.

Secondly, there must be an allocation of fuels, in consultation with industry, by political decision and not by market forces. It is in the national interest that industry should receive priority and the steel industry should be preserved.

Thirdly, it is in the national interest that the Government should take control of the oil supply out of the hands of the multi-national companies and see that the information available to the oil companies is made available to both sides of industry.

Fourthly, it is in the national interest that we should now begin to plan a massive investment programme in domestic fuel, North Sea oil, the coal industry, shale oil, British reactors—which the Prime Minister promised would be British and not American reactors—and the necessary reorganisation of transport and fuel saving.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Nothing of the sort.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

The right hon. Gentleman says that he said nothing of the sort. I hope that we shall have a clear answer tonight from him on the question whether they will be American reactors.

There is a national interest in seeing that the years of neglect of the investment programme in industry are brought forward by direct Government control and, as we say, an extension of public ownership. Indeed, if unemployment and recession reach the levels which they may reach, more lame ducks may have to be brought into the public sector, even by the Conservative Party. There must be first things first at home in dealing with the problems of poverty and social provision, of equality, of education and of pensions. These are the issues that are brought to the attention of Members of Parliament in their constituencies.

I am amazed that when Conservatives come to Parliament to debate economic matters they always make speeches based upon their knowledge of the City or of industry, but never do they represent, in the House, what must be brought to their attention—as it is to our attention, week after week—namely, the problems of people who are confronted with these economic policies. Every speech by a Conservative Member is always a speech from a would-be Chancellor of the Exchequer. These are the issues that are being pressed on the Government of the day by the trade union movement. Unless these issues of industrial and social priority are faced it will not be possible to win the consent necessary to overcome the situation that confronts us.

Some hon. Members, on both sides of the House, believe that the whole thing somehow hinges round a statutory incomes policy. But even a statutory incomes policy works only if it is accepted, or is voluntary. The only chance of getting a voluntary policy working is if the underlying problems which the trade union movement brings to the Government to solve are settled in a way that meets the needs of its members. There is no substitute for consent in modern government. If the Secretary of State for Trade and Industry and his colleagues believe that they can fight an election on the issue of who governs Britain—which is what is alleged to be in store for us—such a campaign would be on exactly what the Labour Party would want to fight, because it would give us an opportunity to reveal to working people that what the Government pretend they can offer—affluence, and "never had it so good"—is really the concealment for the preservation of privileges of wealth and power and not to the advantage of the majority of our people.

It is open to the Government, at any time, to test the views of trade unionists by the ballot which the Government have enshrined in their legislation. If they believed one word of what they said about a handful of militants holding the country to ransom, they would do that and do it now. But they do not do it because they know that it is not true.

I would also point out to the party opposite that very great issues fall to be resolved. The year 1973 will be remembered not only because of the economic and oil crisis, but because, by general consent on both sides of the House, we recognise that we have come to the end of a certain road and have to choose how this country is to go forward. That choice cannot be made by a party elected on a programme that has had to be abandoned because it has no moral authority to set the course itself. The course can be set only by the British people in the ballot box, as soon as the new register bringing 7 million more of them onto the electoral roll gives us the opportunity to take this issue to them.

9.30 p.m.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I want first to add my words of tribute to those of the right hon. Member for Bristol, South-East (Mr. Benn) in congratulating my hon. Friend the Member for Hove (Mr. Sainsbury) on his maiden speech. Certainly, all those who were privileged to listen to that speech will pay tribute to the lucid manner in which it was delivered and the interesting way in which my hon. Friend dealt with the problem. Anybody who won an election victory as he did at that moment of time, with myself as the eve of poll speaker, certainly enjoys my tribute.

In his speech earlier today, the Leader of the Opposition asked to be given fuller information about the oil and energy situation. This evening I want to bring to the attention of the House some of the decisions that have currently been made, and also to review the strategy for energy which this Government have been pursuing and will continue to pursue in the coming months, but before doing so, I wonder whether I can obtain the support of both sides of the House in paying tribute to a group of people who have had an enormous burden of work as a result of the energy problems of the last few months. I refer to the staff of my own Department, who have had to answer many thousands of questions and have worked very long hours in regional offices and in London, gaining praise from members on both sides of the House for the manner in which they have dealt with them.

As regards the charges made today by the Leader of the Opposition and repeated by the right hon. Member for Bristol, South-East, that no proper warning was given to the country about the problems of the energy situation, I wish to illustrate the manner in which, right the way through, proper warning was given and proper action was taken. The Government have been charged with complacency, primarily because the party opposite and many hon. Members on both sides of the House, as well as most newspapers, were urging that it was essential to introduce petrol rationing immediately. I do not believe that the case for that has been made out. Certainly, the current stocks of petrol do not illustrate that rationing was needed, or that it is needed at the present time; and any system of rationing that could have been quickly put into operation would not have resulted in anything other than considerable further disruption of industry and, I believe, considerable chaos as well.

It was absolutely right for this Government, first, to pursue a policy of building up our stocks of oil during the summer months and then to take a series of actions, including cuts, in the months since the trouble in the Middle East. We have now distributed petrol coupons, and I believe that early in the new year it will be right to start dealing with certain categories of people who, if rationing had to be introduced, would obtain various supplementary allowances, so that in the event of the introduction of rationing there would not be unnecessary delays before those people knew the basis of their allocation.

There are also questions concerning the actions announced this week, and I wish to explain the very valid reasons why the decisions concerning the three-day week were taken.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Will the right hon. Gentleman give serious consideration to a human problem? In many constituencies, including mine, old people have been dependent upon paraffin for their heating and cooking. Elderly constituents of mine are having to spend hours trying to get paraffin, and when they get it they have to pay 20p or 25p a gallon for it. The Department has tried to be helpful, but it has done nothing. Will the right hon. Gentleman look at this now, in view of the needs of old people and immigrants?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I appreciate some of the problems, and action is being taken to divert certain supplies of paraffin to areas where the demand has built up.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I wish to make one announcement which I know is of considerable importance——

Photo of Mr Peter Walker Mr Peter Walker , Worcester

—to hon. Members on both sides of the House——

Hon. Members:

Shut up.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

I have aged constituents who cannot afford to buy their paraffin. What about the price?

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. The Minister gave way to the hon. Member and the hon. Member must not now abuse his position.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

On a point of order. I have raised this matter with the Minister and his Department and I cannot get satisfaction. I raised it with the Price Commission and I cannot get satisfaction. I want some satisfaction.

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. This is not a matter of order for the Chair.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I have many matters to cover in a short time——

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I wish to raise with the House a matter——

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

I walk out in disgust.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Mr. Walker —which many hon. Members on both sides of the House have brought to my attention, namely, the use of auxiliary generators. After the previous coal strike people who suffered electricity rota cuts decided not to be caught again and went on at no little expense to purchase their own generators to use on a standby basis to secure their own electricity supply in time of emergency. I applaud this preparedness, but their decision was based on the assumption that there was to be no scarcity of petroleum products, of derv gas oil or petrol used to drive the generators. That is not the case today. Restrictions on delivery have bitten into the industrial and commercial use of oil fuels, so that the wholly unlimited use of standby generation would avoid the effects of the shortage of central generating capacity for electricity only by enlarging the consumption of petroleum fuels which are in limited supply.

However, I am willing to permit the use of private generators in industry and commerce, though not for recreation and sporting purposes. This approval is conditional. Either they must run on waste or supplementary power, usually steam, which otherwise would be wasted, or the fuel must come from existing stocks of petroleum products which fall within the existing allocation of such products issued to the company. Thus, no supplementary allocation will be allowed for the use of generators. If organisations wish to make other economies or to switch fuel from one use to the running of standby generation, as long as it does not increase their total use of petroleum products, this will be allowed.

I wish to bring to the attention of the House the basis of the energy policy that has been pursued, not, I might add, with the support of the Opposition.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

Mr. Robert Hughes (Aberdeen, North) rose——

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I cannot give way. I have had one substantial interruption and I want the House to understand the present position. I wish to examine the steps taken to improve the supply of every indigenous form of energy which is available to this country, as a result of a review that took place about 12 months ago. The Government pursued a series of actions to that end.

Perhaps one of the most important was the introduction of the Coal Industry Act. I resent it when the right hon. Member for Bristol, South-East, who was a member of the previous Government and had energy responsibilities, accuses the present Government of being unfair and unreasonable to the miners, for in fact it was his Government that closed 276 pits. It was under that Government that tens of thousands of miners were made unemployed. [An HON. MEMBER: "With the support of the Tory Opposition."]

When the Leader of the Opposition now says that we should give an increase to the miners of more than 16½ per cent., he knows full well that an increase of 16½ per cent., with a guaranteed increase in the living standard of at least 9 per cent., is far better than any increase given to the miners during the period of a Labour Government. There is a myth created by the right hon. Gentleman about my party, the party that introduced the Coal Industry Act and did not just talk about it, the party that has substantially improved the miners' wages. Its policy and success for the miners contrast well with the Labour Party's.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Both parties have been wrong on this matter. We closed exactly as many pits as the Conservative Government before us. [Interruption.] No, in the three years before we came to office. These are figures for the Conservative Government. It turned out that we were both wrong. Is the right hon. Gentleman aware that when carrying out this policy we were putting a substantial floor under the market for coal, with the coal burn arrangements and so on, but that the present Prime Minister said in the House at the time that in his opinion the closure of pits should move forward as fast as possible, faster than it was moving under the Labour Government?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

We can be judged by our actions compared with the right hon. Gentleman's. Twelve months ago, when the present Government reviewed energy policy, we decided to inject £1,100 million into the mining industry. That was in no way criticised by the Opposition, but neither did they press for the action to be taken. It was an initiative by this Government, having reviewed the energy situation.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The second sphere of indigenous supplies is North Sea oil. When the present Government decided to go ahead with developing oil resources in the North Sea as quickly as possible, that policy did not gain the Opposition's approval. I remind them that the then Opposition Front Bench spokesman on the subject, the hon. Member for Glasgow, Craigton (Mr. Millan) said: I do not believe that the maximum rate of exploitation will necessarily provide the maximum benefit to the United Kingdom or Scottish economies."—[OFFICIAL REPORT, 27th July 1972; Vol. 841, c. 2088.] Lord Balogh, who is always now quoted as the Opposition's great expert on oil matters, said only a year ago: surely it would have been in the British interest to rely at the moment on relatively cheap supplies from the Middle East and to develop the North Sea slowly."—[OFFICIAL REPORT, House of Lords, 22nd November 1972; Vol. 336, c. 1005.] When the Leader of the Opposition made a major speech on North Sea oil last January, he was not arguing that we should increase the pace of development there. Not one passage in the whole of that speech referred to it. He stated that there was no immediate energy problem and said that the whole world feared a desperate fuel and energy crisis in the 1980s.

That was the view the right hon. Gentleman was taking about North Sea oil earlier this year.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

The right hon. Gentleman will recall that one of the Under-Secretaries in his Department in July this year, in a debate which I initiated on the energy crisis, said that it was a "phoney" energy crisis.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I do not know about that, but I remember that it was the hon. Member for East Stirlingshire (Mr. Douglas) himself who said that these difficulties, I submit, were made the greater by the policy decision to push ahead as fast as possible with the exploitation of the resources of the United Kingdom sector of the Continental Shelf."—[OFFICIAL REPORT, 5th February 1973; Vol. 850, c. 189.] So he was one of the many Opposition Members, among many other people, who earlier this year were voicing the view that we were exploiting the North Sea too quickly.

In the past year we have taken a great deal of administrative action to speed up developments in the North Sea. We have set up the offshore supplies office. We have used the Industry Act to a considerable extent to encourage British, including Scottish, firms, and we have given special allocations of steel to see that every possible action should be taken in this sphere.

So, in terms of coal and in terms of the North Sea, this Government, before the present crisis, took these decisions.

I turn to nuclear energy—a matter raised by several of my hon. Friends and Members of the Opposition. We reviewed energy policy before the present crisis. We decided to set up the Nuclear Power Advisory Board and a major production company swiftly and effectively to develop our nuclear resources.

This policy of the Government was not welcomed by the Labour Party. When it was announced, there was no praise by the right hon. Gentleman or anybody on his side of the House for a major, important and fundamental reorganisation of the energy industry.

My hon. Friend the Member for Abingdon (Mr. Neave) has several times expressed concern about the choice of reactor, but he knows full well the composition of the advisory board that we have created; he knows it contains the finest men of Britain's considerable ability in this sphere. We have looked at every alternative form of reactor available to us, and our choice will be made taking careful consideration of safety factors and of the speed with which the reactors can come into production.

Photo of Mr Airey Neave Mr Airey Neave , Abingdon

Will my right hon. Friend publish a Green Paper on the recommendations of his advisory board and have the matter debated in the House?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I shall certainly publish very full details of our decision on the basis of the advice we receive, but my hon. Friend knows full well that the opinion expressed to us by people whom he knows, such as Sir John Hill—whom he respects and admires—is, rightly, that the advice they give to me must be confidential. We have great need of that. If any one of them wishes, for example, to express an opinion that a particular type of reactor is not safe, and gives his reasons for it, that view could not be published in a certain form without the possible result of legal action. It is perfectly plain that an advisory board of this nature should be able to give confidential advice to the Minister concerned, but obviously it would be the duty of the Government to give details of the basis on which they came to their conclusions.

I hope that early in the new year we shall make decisions in this sphere, and we can then go ahead with a programme of nuclear energy which will make a considerable contribution to our energy resources.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

This is an important point. The Secretary of State said that he was about to reach a decision in the new year. I am sure he knows that the Scottish TUC's Fuel and Power Committee is proposing to meet him. Will he meet the committee before he makes his decision?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I have no idea when that meeting is to take place. There is plenty of time for those who wish to do so to put their views to me. Therefore, in another sphere, before the crisis, decisions were made by the Government.

Turning to gas, it was the Government who decided earlier in the year to negotiate the purchase of half of the Frig field belonging to the Norwegians and thereby to increase our potential gas resources. Rather than being complacent about the energy situation in the months before the immediate crisis, the Government in terms of coal, nuclear energy and gas and the development of every form of indigenous resource were making the necessary decisions.

I come to the present crisis, and I wish to deal with the situation in terms of both coal and oil.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

No, I cannot give way.

As regards oil, from the very beginning when the first announcements were made after 15th October I made clear to the country that, if necessary, I would introduce petrol rationing, and I announced that we were enjoying substantial stocks and that further oil supplies were available across the sea. I have already said at this Dispatch Box that the future remains uncertain: nobody can accurately predict what will take place.

I was originally advised in November that our imports of crude oil would probably be 8 per cent. down on what was expected. In the event, they were not down at all. I was advised that there would be a reduction of 15 per cent. in imports of crude oil in December. I again said that the position was uncertain, though I suspected that the position might be better than was thought. The latest figure is that we shall this month be 10 per cent. short in our imports of crude oil and not 15 per cent. short.

For January, against an estimate of a 20 per cent. shortage, the current prospect is that there will be an 18 per cent. shortage of crude oil. Finally, we decided during a review of imports of certain manufactured products to take a certain action. We did so before almost any other country in Europe or outside. We have managed to pursue a policy which has kept our stocks at relatively high levels in most of the major spheres of activity. We first of all took the decision to make the 10 per cent. cuts based on last year's figures. Those cuts are in operation at present. Last week our stocks of petrol actually rose and did not go down as they normally do at this season.

One sphere in which we face potential difficulty, although we still have tolerable stocks at present, is that of fuel oil. In this respect, in view of the increasing shortage of coal, we have had to divert a considerable amount of fuel oil for the benefit of power stations. The decision in terms of a three-day working week was based not, as the right hon. Gentleman the Leader of the Opposition suggested, on some political move, but on the prospect—as I advised my Cabinet colleagues, on the best information I had—that if the present loss of production in the coal mines continued in the coming weeks, by the middle of January we should be facing cuts from the power stations which we could not control, with all the potential dangers of that situation, and that within two or three weeks after that it would bring industry to a total standstill. I therefore advised my colleagues that it was essential to reduce the power from the power stations by 20 per cent. so long as this position continued and we were not getting normal supplies of coal.

The tragedy of the present situation is that not only are we not getting the supplies of coal, which is resulting in this major disruption of industry, but we have aggravated the shortage of fuel oil by using it instead of coal. If we were getting full production from the mines, we could have been saving in our power stations up to 50 per cent. of the fuel oil normally used. This would have made an enormous contribution.

When they say that no warning was given, I remind the Opposition that when the coal strike—[Interruption.]—when the overtime ban first took place and the Government sought to take emergency powers, it was not we who were complacent about the dangers of such a disruption—it was the Opposition. It was the Opposition who claimed that it would hardly bring about any disruption. There is quotation after quotation showing that this is what hon. Members opposite thought. On 13th November I said: If 13 million tons of extra coal is used by the Central Electricity Generating Board, this could save the country 6 million tons of oil at this crucial time. This is a time when the effects on power as a whole could have a considerable impact on the potential growth and our whole export performance. This is a time when it is vital for the industry to recognise the damage which it will do to its own future.'—[OFFICIAL REPORT, 13th November 1973; Vol. 864, c. 285.] That is in stark contrast to the complacent words of the Opposition.

At that time, the Opposition Front Bench specifically stated that they were against the miners going for a ballot of their own. The hon. Member for Chesterfield (Mr. Varley) said categorically on 13th November that he thought it wrong for the miners to go to ballot on this issue. Why did the Leader of the Opposition change his mind last Friday? He said then: I would support a nationwide ballot of the mine workers, even though moderate miners leaders feared that it might produce a devastating result … The right hon. Gentleman wanted it then despite the fact that he thought that it would produce a devastating result.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

At the meeting a month before, most of the moderates said that they did not want a ballot because they feared the result and it might lead to a general strike. The militants did not have to say a word. I said what I did last week, and still think it right, but the union must decide on the timing. If the right hon. Gentleman wants a ballot, why does not he use Section 141 of the Industrial Relations Act?

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The right hon. Gentleman allowed the hon. Member for Chesterfield, speaking from the Opposition Front Bench, to say that the Opposition were against a nation-wide ballot. But I am pleased to say that last Friday the right hon. Gentleman changed his view. Now he is trying to change it again. He is apparently arguing against a ballot, whereas on Friday he wanted one.

Throughout the whole of this period, if the Opposition had at any stage told the miners that the offer of 16½ per cent. is better than anything the Labour Government ever offered, and that if they continued their industrial action they would do immense damage to the economy, they would have made a better contribution to the country than the one they have made.

Photo of Mr Humphrey Atkins Mr Humphrey Atkins , Spelthorne

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.