DEBATE ON THE ADDRESS

§ Mr. Peter Blaker (Blackpool, South)

I beg to move, That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament. Before I move on to discuss the Gracious Speech, the whole House would, I believe, wish me to express our sorrow to the right hon. Gentleman the Leader of the Liberal Party for the tragic blow that has befallen him and his young child.

§ Hon. Members

Hear, hear.

§ Mr. Blaker

I am deeply conscious of the honour which has been done to me by being allowed to move this Motion, and this feeling will be shared with me by all the people of Blackpool whether in the North or South constituency. We have in Blackpool a tradition of political vigour and, I believe, of political wisdom. It was between the wars that a well-known writer, Edgar Wallace, presented himself for Parliament in that constituency, and when asked on the platform, "Why, Mr. Wallace, do you want to go into the House of Commons?", he replied that, as a writer of crook stories, he felt it his duty to go on looking for new material. The House will be reassured to know that the voters of Blackpool showed what they thought of that sentiment about this honourable House by defeating Mr. Wallace by a majority of 33,000 votes.

Many hon. Members will want me to express our thanks to the Leader of the Opposition for holding a June election, and no one will be more pleased than people in my constituency, where, had the election been in the autumn, it would have deprived my constituents, for the second time in six years, of the opportunity of entertaining in Blackpool the party conferences of two of the major parties.

50 My constituency is known for its holiday business. There are not many places in this country where, if one wants to spend a fortnight there, one can go to a different live theatrical entertainment every day.

§ Mr. Arthur Lewis (West Ham, North)

One can do it twice a day here.

§ Mr. Blaker

It was a distinguished member of the other place who in the 1920s described Blackpool as the safety valve of industrial Britain. I would not put it in that way today, but my constituents who cater for 8 million visitors a year feel that they are doing a job which is useful, indeed essential, for the health and economy of our country. Without being controversial, I should like to say that the 300 people who work in the excellent amusement park in the middle of my constituency are puzzled as to why it is that 299 of them are classed as being in service industries whereas the remaining one is given higher status as being a manufacturer: I refer to the one who makes the candy floss. I have no doubt that this situation may be changed by some of the legislation foreshadowed in the Gracious Speech.

Blackpool is not always a place of fresh air and fun, because in the winter months it is very often for many people a place of heartache because of the problem of seasonal unemployment. It is a place in which one person out of five is over the age of 65 years, and these are the people to whom the reference in the Gracious Speech about the curbing of inflation is more important than it is to any other section of our people.

Some hon. Members may not know that out of season Blackpool has a very thriving cultural life. It has a symphony orchestra, it has any number of drama societies, it has two flourishing operatic societies, it has an art society and it has its own annual musical festival.

We have about 150 Members who are new to the House, many of them destined to play a great role in its affairs in future years. As I look around me, I find them rather unsettling because most of them look so young; they even make our policemen look old. There is something to be said for a House like the last one which contained the former right hon. Member for Easington—the noble Lord as he now is—who gave us the feeling 51 that perhaps we might maintain at the age of 85 the sparkle and the humour which he possessed. I welcome the new Members and the fact that so many of them on this side of the House come from my own county of Lancashire.

We have all just fought an election campaign, and some of us will have observed the development of a new and increasing malady amongst candidates. The symptoms are irritability, muttering under one's breath a string of mathematical figures, a furrowed brow and a tendency to snap at one's wife over the breakfast cornflakes. Hon. Members, at least on this side of the Chamber, will recognise at once an acute attack of the opinion polls. I suggest to hon. Members for future reference that there is an antidote to this state of mind which I found in reading John Buchan's "Life of Cromwell". When one learns that at that time this Chamber was cleared three times in quick succession by the use of troops, and that the penalty for the loser in those days was for his head to be displayed on a pike in Westminster Hall, this calms the mind wonderfully and puts into perspective the biggest possible adverse swing.

There is no proposal in the Gracious Speech to curb the activities of the opinion polls, and I believe that this is right. They have devalued themselves, and this is good for democracy. There was a fear that they might help whatever party was in power to remain there indefinitely, but their blatant inaccuracy has turned the calling of an election into a form of "Gallup roulette" in which two out of six chambers of the weapon are loaded.

There are many aspects of the Gracious Speech which I should like to mention. I like the emphasis on terms fair to all in the Common Market negotiations. I like the emphasis on reducing the burden of tax and on encouraging savings. Savings have been neglected too much in the past. But I want to mention in particular those passages which touch on human rights and on the position of the weaker members of our society. It is for that reason that I welcome the reference to the Government's special duty to protect the freedom of the individual under the law, the reference to equality and freedom from discrimination 52 in Northern Ireland, the recognition that a growing national income must be used to improve the social services and the environment in which we live and the proposal for pensions for the over-80's and the connected proposals for the disabled and for widows.

None of our great political parties has a monopoly of ideals. Many of our ideals all parties have in common. The problem is to put our ideals into effect. When it comes down to it the Conservative Party has a record which will stand comparison with any, from Shaftesbury's crusade for better conditions in mines and factories, Disraeli's measures to give the working man the vote, his completion of legalising of trade unions, the founding of the contributory pension system, the founding of public health administration, the launching of slum clearance, milk in schools and the beginning of family allowances under the coalition Government late in the war. Hon. Gentlemen opposite may not accept this, but I believe that all the major parties of this country would accept that the basis of our democracy is summed up in the words of a Parliamentarian in 1647 who said: … the poorest he that is in England hath a life to live as well as the greatest he. It is because I believe that the proposals in the Gracious Speech will be for the benefit of the nation as a whole that I have moved this Motion.

§ Mrs. Jill Knight (Birmingham, Edgbaston)

It is indeed an honour to be invited to second the Motion so fluently moved by my hon. Friend the Member for Blackpool, South (Mr. Blaker). I am conscious that the honour is really to my constituency of Edgbaston which hon. Members will forgive me for observing is the finest part of the finest city in the whole of Britain outside the capital. That this has been duly noted is evident from the fact that my predecessor, Dame Edith Pitt, who sat for Edgbaston from 1953 to 1966 and is remembered with much affection in this House, was asked to second a similar Motion. She did so in a masterly fashion, combining it with her maiden speech, a feat which I am four years too late to emulate.

There have always been too few women Members of the House. Today, after what has been termed a women's election, I am particularly delighted to see 53 more than twice as many women as before sitting with me on these benches. I am sure that all hon. Members will join me in applauding the appointment of my hon. Friend the Member for Renfrew, East (Miss Harvie Anderson) as the new Deputy Chairman of Ways and Means. Since she is the first woman ever to hold this post, I may perhaps be forgiven for wishing her special good fortune in the task ahead.

To return to the subject of my constituency, Edgbaston has very much more than a famous cricket ground, a renowned teaching hospital and an excellent university. It contains a true cross-section of Birmingham people living in all sorts of homes, from the high rise apartment blocks which have replaced the old slums to brand new "executive type" dwellings standing in groups on the grounds of the vast mansions which housed the prosperous Birmingham citizens of a bygone century. But not all my constituents are well housed, even today, and I particularly welcome that part of the Gracious Speech which refers to a policy aimed at helping the homeless and badly housed, for so much human misery springs from this.

Edgbaston has the largest chamber of trade and commerce in the country, and this is not surprising, for Birmingham has always been a city prolific of industry and brilliant at commerce. Today, the importance of the part she plays in the economic life of the country through her export record alone cannot be overstated.

The city will be immensely interested in the proposals in the Address for improving industrial relations. The wording is, I think, significant. It refers not to trade union reform but to improved industrial relations. Reforms are certainly badly needed, not only in the trade unions, but also in management. The country has given a clear mandate for Government action in this difficult and delicate field, but I hope that in the end changes will be wrought more by voluntary action than by enforcement of law.

Birmingham has a proud educational record and will be delighted that the Address indicates that she will be free to take what action she feels will provide the best educational opportunities for her children.

54 I particularly welcome the action to be taken in primary schools. Birmingham has a fine city council, famous for its sturdy independence and the way it pioneers new ideas to help its citizens, such as the sale of council houses, rent rebates for needy people in privately rented accommodation, and so forth.

Those in charge of the roads and traffic of Birmingham have an impish sense of fun which has led them to dream up a system of traffic flow which provides residents and visitors alike with hours of diverting amusement as they struggle in vain to reach a given point. Roads which were one-way north suddenly become one-way south. Barriers appear overnight blocking major and minor roads, with a fine disregard of width or importance. Lightning changes are wrought with the sole purpose of keeping the motorist on his toes, or perhaps I should say on his feet. Living in Birmingham is certainly an exciting business.

One cannot mention too many points from the Gracious Speech, but I am anxious to give a special welcome, which I am sure will be echoed on both sides of the House, for no party has a monopoly in compassion, to the proposal to provide a constant attendance allowance for the seriously disabled. I hope that more reforms will be forthcoming to help those deprived by nature or accident of the blessing of full health and mobility.

In April, 1966, my right hon. Friend the Prime Minister said this, from a seat geometrically opposite, though in practice less elevated than the one he now occupies: … the task of moving and seconding the Loyal Address … is always difficult and delicate, but at no time is it more so than at the beginning of a new Parliament before the mood and temper of the House is known to its Members."—[OFFICIAL REPORT, 21st April, 1966; Vol. 727, c. 55.] How right he was. Not only do the newcomers not know the House, but the House does not know the newcomers. I do not know about the temper of the new Members, but their mood at the moment is doubtless one of utter mystification—[HON. MEMBERS: "Hear, hear."]—that those moving and seconding the Address should spend so much time speaking of their constituencies, though no particle of a reference has 55 been made to anyone's constituency in the Address.

This is just one of the quirks of procedure of which, I warn, there are several. New Members have a fascinating voyage of discovery ahead. It is not only the procedure that must be studied. Many things here, from the customs to the corridors, are long and baffling. So, I am afraid, are rather too many of the speeches. Strange rituals are observed with hats. A Member must never, never stray from the point under discussion, unless one of several exceptions applies. In the debate on something called the Consolidated Fund Bill, for example, Members hop confusingly from topic to topic like earnest questioners at the hustings.

But whatever difficulties lie ahead—for new Members, for Opposition, and for Government—we are all united in one thing: we are all privileged. I believe, because I love the House of Commons, that we are the most privileged section of the community. From the Prime Minister down to the newest, rawest Member, that privilege is to serve. We could ask no greater honour.

§ Mr. Harold Wilson (Huyton)

I know that the whole House will understand if before I move into the main debate on the Gracious Speech I follow the hon. Member for Blackpool, South (Mr. Blaker) in expressing the deep sense of shock and sadness that all of us felt when we heard the tragic news of the death of Caroline, wife of our colleague and friend the Leader of the Liberal Party. The sympathy of every right hon. and hon. Member and their families will go out to our right hon. Friend, conscious as we are of his deep loss and conscious of how much she was able to contribute to British public life. I hope that at this hour the right hon. Gentleman will be strengthened and comforted by the knowledge of the feelings of each one of us and of the House as a whole.

It is an agreeable custom of the House that the first words spoken from either Front Bench are the compliments paid to the mover and seconder of the Loyal Address in reply to the Gracious Speech. This task presents me today with no problems whatsoever. The whole House 56 will wish to congratulate the hon. Member for Blackpool, South and the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight). I think it is fair to say that I know the constituency of the hon. Gentleman considerably better than I know that of the hon. Lady, both from bracing holidays at a very tender age and from still more bracing party conferences.

I am glad that the hon. Lady, in a very illuminating speech, sought to explain to the House the mysteries of the Birmingham road system. Every time I have driven in Birmingham I have found it more and more confusing, more difficult to follow that one-way system. If that continues to be my experience, I hope I shall be able to call on the hon. Lady, if not as a fellow traveller, at any rate as an adviser.

Having said that, I now take this opportunity of congratulating the Prime Minister and his colleagues on taking office as a result of the hard fought election of a fortnight ago. I go further, indeed, and tell the right lion. Gentleman this. He will not find it a factious Opposition, but he will find it a well-informed one. He can rely on the fact that we shall not be tempted to make difficulties for him in the sometimes turbulent area of overseas finance. As a Government, we were ready to sacrifice a great deal in political terms to put sterling on a sound foundation, honoured and respected, and we shall show the same sense of responsibility in opposition. Any measures announced by the present Government directed to Britain's economic strength abroad or to strengthening the internal economy—measures which in our view are well directed—will receive our support. We certainly do not rule out, any more than the right hon. Gentleman does, the consideration of new approaches, provided that they are soundly conceived and, where dashes of adventurism are contemplated, set fully against the risks and perils which can follow reckless lurches of policy; but provided, above all, that they are fair—fair and just to all sections of the community; maintaining, not undermining, the fairer social climate that we claim as one of the achievements of our Administration; fair, not only because social justice is an end in itself and one of the first duties of government, but also fair, as the right hon. Gentleman will 57 rapidly discover, because there can be no solution to Britain's economic difficulties unless all of those who are asked to contribute to that solution, by their efforts, by their restraint—their sacrifices, even—can feel that what they are asked is fair and part of a justly ordered society.

That is why there are very many people concerned with the future of Britain, people whose contribution to that future will be decisive, who will hope that the right hon. Gentleman's action throughout the General Election of muting the themes of Selsdon, even appearing to dissociate himself and his party from them, represent not just electoral opportunism, but a lasting conversion.

It follows from what has been said that Her Majesty's Opposition will not be tempted to censure and negative opposition for opposition's sake. That is not good for Parliament. It is not good for democracy. Opposition, no less than Government, must follow a theme consistent, comprehensive, based on priorities, and subject to a single unifying approach, bringing together every aspect of government—foreign affairs, defence, financial, economic, social, industrial policies. We shall wait for each new development of policy, wait watchfully and keenly, but we shall not rush into condemnation for the sake of it.

It is in that spirit that in a moment I will turn to approach the Gracious Speech; but in the same spirit I propose, also charitably, to suspend judgment on individual Ministerial appointments. It is right that I should say that they, too, will be judged by results, although there are a number of right hon. Gentlemen the whites of whose eyes we can barely wait to see.

It is right to make clear our total opposition to the right hon. Gentleman's decision to appoint a Secretary of State for Defence who sits in another place. It is not only that defence is a major spending department and should be directly and at top level answerable to the elected Chamber. There is the further crucial point that defence policy is capable of generating the greatest possible degree of controversy, particularly if the policies put forward by the Government when in Opposition are to provide the content for our defence debates. But accountability for both expenditure and policy should be to this House, and it is no excuse for the 58 right hon. Gentleman to plead, if he does so plead, that he could not find an adequate Defence Secretary from among his parliamentary party—[An HON. MEMBER: "Paisley?"]

There is another aspect of the Government's composition which must strike the detached observer. I found one of the most agreeable consequences of the election in yesterday morning's Press—that vernal display of Conservative pulchritude surrounding the right hon. Gentleman. It led to the conclusion that had he been photographed not with his back benchers but the no less photogenic women members of his Administration—both of them—it would have been a much lonelier picture. It would have been scarcely less lonely if he had been photographed with the small minority of members of his Administration who went to State schools.

We shall await the right hon. Gentleman's decision about changes in the machinery of Government. He is right to take his time over that. There is one decision that had been taken before he took office which I hope that he will ratify, though this must obviously be for him. I took this decision, but there was then a change of Government. I felt that it was right to bring transport, housing, planning and local government under one head. No doubt the right hon. Gentleman will have received the proposals, which I accepted, that these Departments should now be fully integrated under one Ministerial head and that the Ministry of Works should be brought into the same Department in order to strengthen the attack on Britain's housing and building problems. If that is what he feels, as I hope that he will, in forcing it through he knows that he will have to be prepared ruthlessly to resist departmental and if necessary Ministerial pressures.

I turn now to the Gracious Speech. In so far as it contains specific proposals, they consist largely of two groups of Measures. The first are Bills which we had prepared, from Fiji independence to the legislation to implement the Report of the Beeching Commission on Assize Courts. I am glad that our decision on the Superannuation Bill as regards the constant attendance allowance and the provision for the disabled has been followed by the right hon. Gentleman in the Gracious Speech.

59 The other group of Measures in the Gracious Speech are a small number of expected Tory hardy annuals, such as the Land Commission, the Boundary Commission and, of course, the expected sell-out to the commercial radio lobby. For the rest, the Government's proposals give a singular appearance of being anything but well thought out; indeed, hardly thought out at all.

Five months ago, after Selsdon Park, a credulous Press was induced to believe that their first, if not their second, Gracious Speech was in draft, together with their first Budget and a great deal of the legislation. That is what the Press had fed out to it. But, apart from one or to well-meaning intentions to review such matters as company law, or to inquire into teacher training, the Speech today seems little more specific than the Conservative manifesto: a few general propositions and the hope that something can then be worked out.

In some cases, the anodyne wording of the Gracious Speech is designed to cover up a more sinister intention. The paragraph on education refers to setting local authorities free … to take effective decisions on the organisation of their schools. I am not sure whether that is intended to include the G.L.C. That is what it says. What it means is that the Conservative Party is going into the 1970s and intends to take Britain into the 1970s on the basis of allowing reactionary Tory local authorities, for ideological reasons, to inflict on parents, teachers and, above all, on children the indefensible and archaic crudities of 11-plus selection. That is a denial of equal opportunity to hundreds of thousands of children, a denial to Britain of the full contribution that those children can make, able as they would be under our proposals to benefit to the full by the type of education suited to their needs.

This one paragraph of the Gracious Speech postpones such opportunities for an entire school generation—11 to 15—in every area where there are doctrinaire Tory councils ready and waiting to abuse the licence that the Gracious Speech holds out to them. The right hon. Gentleman must expect that we shall return to this theme later in the debate, since he and his Government have nailed their flag to the 60 perpetuation of the 11-plus system, regardless of the wishes of parents and teachers and regardless of the best interests of the children themselves.

No doubt the right hon. Gentleman will wish this afternoon to spell out the implications of the paragraph about local government reform. The Press briefing suggests that his right hon. Friend the Minister of Housing and Local Government has already decided that the Report of the Royal Commission will not be proceeded with—a Report which held out real hopes for the 'seventies and beyond by modernising a system of local government still governed by the legislation of eighty years ago.

While I am referring to the Minister of Housing and Local Government, the Prime Minister can expect outright opposition from us on the sale of council houses in priority areas where already the stock of houses is inadequate for urgent priority needs—[Interruption.] If I might intervene in the debate between right hon. and hon. Gentlemen opposite and my right hon. Friend the Member for Bermondsey (Mr. Mellish) for a moment, my right hon. Friend specifically referred in his speech to the building of houses for sale, not the selling off of council house stock—and only outside priority areas.

The passage in the Gracious Speech about giving the Scottish people a greater say in their own affairs is presumably a reference to the report produced by the so-called Commission presided over by the Foreign Secretary. That commission had its origin in a spirit of political opportunism, when the right hon. Gentleman thought that Scottish Nationalism had more for him in political terms than actually turned out to be the case. Even his Scottish Unionist Party conference could barely be prevailed upon to approve it—and those who did, did so more out of respect for the Foreign Secretary than for his proposal.

Before I come to some of the more serious issues raised in the Gracious Speech, it is right to mention one or two of the omissions. There is nothing on the Health Service. There is nothing on the mentally handicapped, where we had a Green Paper already published and a White Paper in an advanced stage of preparation—[Interruption.] This is not a matter for amusement, even to right hon. and hon. Gentlemen opposite. I 61 hope that the right hon. Gentleman will be able to tell us what his plans are in that direction.

For a party which for over six months has made law and order its theme, in season and out of season, for a party which has insisted or proclaimed its immediate readiness to introduce legislation on almost every aspect of this subject, the last paragraph of the Gracious Speech borders on bathos when it says: My Government will make it their special duty to protect the freedom of the individual under the law and will examine ways in which this may be more effectively safeguarded. We have been told that powerful working parties, under the chairmanship of the present Attorney-General, another under the inspiring chairmanship of the hon. Member for the Isle of Thanet (Mr. Rees-Davies), to name but two, had prepared draft legislation on every aspect of freedom under the law. Where is the promised legislation on the law of trespass, making trespass a criminal offence? Is it that they have discovered, as we warned, that the nation's police services are singularly reluctant to get mixed up in matters of trespass, for in no time at all they would be involved in the law of landlord and tenant?

There is no indication even of the promised legislation to make the cricket grounds of Britain safe for racially selected teams to play on. Perhaps the right hon. Gentleman will tell us more about that this afternoon.

But there is one serious omission of something that I think the whole House has a right to expect—the Coal Industry Bill which we introduced. I hope that the right hon. Gentleman will tell us whether he has dropped the Bill or whether it was merely an omission that it was not mentioned in the Gracious Speech. The House is well aware from past debates on these issues that under successive Governments there has been a rapid rate of closure of coal mines. The whole House knows the suffering and the hardship, especially for older miners who are unable to find work in the area. The House applauded the compassion with which we treated those miners in the 1967 Bill and applauded our decision to carry it on for a further period of years, I ask the right hon. Gentleman to tell us 62 quite clearly this afternoon whether that Bill is being proceeded with in the form in which we introduced it? Will he tell us whether all our commitments to the coal industry and to the miners will be honoured or whether the coal industry is, so far as right hon. and hon. Gentlemen are concerned, a write-off? He will also expect that, if he does not proceed with the Bill in the form in which we introduced it, he will get the most unremitting opposition from this side.

So much for the omissions about which I hope the right hon. Gentleman can help us.

Now I turn to the real issues in the Gracious Speech, the real issues for this debate for this Session, indeed, for the whole of this Parliament.

First, Northern Ireland. I want to make clear how much we offer our good will to the new Home Secretary on the task that he faces. I offer him a target. If he can show that he is handling this situation with the same firmness, the same coolness and, above all, the same fairness as my right hon. Friend the former Home Secretary displayed, he will earn not only our plaudits and those of fair-minded people everywhere; he will have done more. He will have shown a degree of fairness and detachment on Ulster affairs never previously shown by any member of his party, a party hog-tied, as it is, by its identification with and its responsibility for half a century of unremitting, unchallenged, uncompromising Conservative and Unionist control of affairs in Northern Ireland.

It was clear that the situation in Northern Ireland this summer would be extremely perilous. We had decided, before leaving office, on the movement of the five battalions which moved in last week, and we support the further reinforcements that the Government decided on over the weekend. Those decisions were taken before the confirmation of the prison sentence on the hon. Member for Mid-Ulster (Miss Devlin) and the tactless and clumsy way in which the local police ensured her surrender to that appeal court decision. Last weekend provided the reaction. But there are questions that I must put to the right hon. Gentleman about this.

First, if I am right in thinking that the question of a remission of sentence is for the Stormont Government, not for 63 the Westminster Government, did the right hon. Gentleman or the Home Secretary represent to that Government, in view of our responsibility, through the forces of the Crown, for law and order, that the Northern Ireland Government should remit that sentence? Did they make that representation and, if they did, what answer did they get? If the Northern Ireland Government rejected it, what did the Government do? For law and order have broken down only in Northern Ireland and nowhere else in the United Kingdom, and the United Kingdom Government and United Kingdom forces—and United Kingdom taxpayers—are paying the price.

Second, over and beyond the smoke and fury of petrol bombs, there will be no peace and security in Northern Ireland except on the basis of tolerance and a mutual respect for human rights, the human rights to which we as the Parliament of the United Kingdom of Great Britain and Northern Ireland are pledged. In the Downing Street Declaration last August, which the Labour Government put to the Northern Ireland Prime Minister on the day that United Kingdom forces took over responsibility for public security and the security of the industries in Northern Ireland, for law and order in Nothern Ireland—a declaration to which the Northern Ireland Premier gave his assent—these principles were asserted for the first time in the whole history of Anglo-Irish relations: … that in all legislation and executive decisions of Government, every citizen of Northern Ireland is entitled to the same equality of treatment and freedom from discrimination as obtains in the rest of the United Kingdom, irrespective of political views or religion. In fifty years this had never been asserted by any Ulster Unionist Government. In all the pre-war years of Tory rule, in their years before 1964, no British Tory Government sought to assert it. I must now ask the present Conservative Prime Minister whether he will repeat that this statement of principles is the policy of Her Majesty's Government here at Westminster? Will he assert that he will make it the basis of the Government's Northern Ireland policy? Will he undertake to resist any Ulster Tory pressure to derogate from it? Whatever the implications, whatever the pressures on the Northern Ireland Government from the 64 extremist forces which are set to undermine that Government's commitment to tolerance and fair dealings—[HON. MEMBERS: "Shame."]—will he without fear or favour—fear of extremists or favour towards his political allies in Ulster—recognise that his commitments to this Parliament, his commitments to the wider international community, require him to stand by that Downing Street Declaration, no matter what the pressures, no matter what the cost?

Press reports yesterday of the Home Secretary's visit to Belfast suggested that he was coming under strong pressure from Unionist circles to depart from the neutral rôle that my right hon. Friend successfully maintained, and to force on the Army—in which everyone in this House has the utmost confidence—a change in its posture and approach. This new factor in Northern Ireland, Right speaking to Right, and speaking in the hope that their pressures will succeed, is an ominous development. I welcome the fact that in this morning's accounts of what the right hon. Gentleman has said after these pressures that he stood very firmly by the policy which has been taken so far in Northern Ireland and seeks no changes—[Interruption.]—I was warning him against the pressures that he will get, and he must expect them.

I now turn—[HON. MEMBERS: "Oh."] There is quite a lot of talk in the Gracious Speech. I now turn to the references in the Gracious Speech to the economic situation. On 19th June, I said that the right hon. Gentleman will have the strongest economic position any Prime Minister has taken over in living memory. [Interruption.] This is the fact. No doubt right hon. and hon. Gentlemen will give their own version, on which they have been hard at work, because it is essential for them so to present the facts of the economy as to give them a let-out from honouring their irresponsible election bribes, both on prices and on taxes, which they never should have made and which they are now becoming increasingly clear they cannot carry out.

I will give the House the facts as they were given to us and as we saw them, the facts as they were coldly assessed by those whose duty it was to give an assessment to my right hon. Friend and to myself before the Budget, after the Budget in 65 May, and indeed right up to polling day. If the right hon. Gentleman is going to say that their advisers are giving them a totally different factual picture now, we shall be interested to hear about it and perhaps to compare notes.

The facts as we had them are these. The right hon. Gentleman took over from us a balance of payments surplus on current account running at £500 million a year—[Interruption.] £500 million this year and, on the estimates given to us, likely to remain at that level for some time ahead—[Interruption.] It was not only on current account. It was a strong balance of payments on current and on capital account taken together.

Sterling was strong—he cannot deny that—in foreign exchange markets, particularly forward sterling. Even the Conservative newspaper The Times referred yesterday—[HON. MEMBERS "Oh."]—there cannot be much doubt about that after the election—to the strong balance of payments he inherited. The House will recognise the sharp contrast here between 1970 and 1964. The right hon. Gentleman, on returning from the Palace a fortnight ago, was not presented with a crippling overseas deficit which required a meeting that night—[HON. MEMBERS: "Yes."]—He has inherited—my right hon. Friend gave the facts and the figures in the Budget debate—a net overseas asset position much more favourable than in 1964. He was not faced with the need for a meeting that night where he had only three choices—devaluation, or quotas on imports, or surcharges on imports.

He will not be visited as I was by the Governor of the Bank of England with firm warnings that sterling cannot be held unless he makes immediate cuts in roads, school buildings and the rest; cuts so severe that roads, schools, and hospitals would have to be abandoned half constructed.

Again, in 1964, when we took long overdue action to deal with the plight of old-age pensioners, war pensioners and widows, this led within days to a crippling run on sterling on the ground that Britain was going soft and could not afford such luxuries with such a balance of payments position. If the right hon. Gentleman now, in 1970, were to redeem his election pledge about 66 family allowances, there would not be a ripple on the foreign exchange market because he takes over a Britain economically strong.

Since the right hon. Gentleman took office he has had the official figures showing a record level of engineering export orders. Since he took office he has had the C.B.I.'s report showing that industrialists are more optimistic about exports over the next 12 months, and that new export orders are moving upwards—[Interruption.] It could be that, if the C.B.I. had not said that it took it during the election and saved the publication until after the election. Since the claims of a crisis, I have no doubt that he has read the statement of the Chairman of the C.B.I. Economic Committee that talk of a crisis was irresponsible … even on the most pessimistic assumptions the surplus, including invisibles, was running at £300 million a year, which was a 'hell of a long way from a crisis'". That is an entirely different conclusion from the document which the right hon. Gentleman slipped out to the Press two days before polling day, with his references to crisis, to emergency, and to devaluation, all based on deductions from a single month's trade figures.

Where we inherited crippling economic weakness, the right hon. Gentleman inherited the strongest balance of payments surplus in Britain's history, and with assets which had risen more than debts. Starting from that surplus, the advice which we were given in the last assessment that we received from the Government's economic advisers raised no justification for any of his talk about a crisis.

To judge from the not inconsiderable Press briefings of the days when the new Ministers were being given their first indoctrination into the facts of the economic situation, it would appear that economic experts have not changed their forecasts—we will be told if they have over the last three weeks—but they do now see a somewhat greater amount of slack in the economy, measured in terms of industrial production and employment, than was forecast when my right hon. Friend presented his Budget. The right hon. Gentleman will no doubt tell us whether this is so. If it is, that might have made an easier Budget possible last 67 April. If this is so, then the right hon. Gentleman should have little cause to complain, for a party which secured office on unrealistic tax promises is now given an undeserved opportunity which should help right hon. Gentlemen to go some little way in fulfilling these huge tax reductions they have promised.

All that is provided, of course, that their other policies do not destroy that manoeuvring room. We were told, two days before the election, that it was official Conservative policy deliberately to hold down prices in the nationalised industries while letting them rip in private industry. By this time I have no doubt the right hon. Gentleman will have been told by the Chancellor what it would mean for public expenditure. Every publicly-owned industry forced by selective price control to keep its earnings below the targets laid down by the Treasury upsets the overall Treasury budgeting position by figures of anything from millions to many tens of millions—tens of millions thereby no longer available to the Chancellor of the Exchequer for tax relief.

The right hon. Gentleman has many promises to make good and not only we but many other people will be watching him over every promise and every pledge.

The first test case—we have had it already within a fortnight—is that of doctors' remuneration. On 4th June we accepted for immediate, indeed retrospective, payment up to £57 million of the £85 million recommended by the advisory body which, as the Royal Commission made clear, is only advisory and not arbitrary, and the other £28 million we referred to the Prices and Incomes Board. The right hon. Gentleman's personal commitment was clear: Our position is that it should be accepted unless the Government of the day considers there is a national emergency which does not allow them to implement a report". There is no national emergency. The only reasons he can give for hedging on the full award are, first, the burden on the taxpayer—a perfectly fair argument, and one that we used—and, second, the effect on claims for increased incomes in other areas of the economy. We used precisely those two reasons for limiting and referring to the board the pay of the higher-paid 68 doctors, while we met the junior hospital staffs in full. We bore in mind the cost to the taxpayer and the effect on wages and salaries elsewhere. From all the accounts, the right hon. Gentleman has not fulfilled his pledge to pay them in full and immediately.

No doubt the Chancellor of the Exchequer is exercising restraint—it is his duty to do that—but it was the Chancellor himself who said on 9th June: The doctors have been disgracefully treated as they were in 1966. The Kindersley Committee have been insulted by the Government and are quite right to resign. We have always implemented their recommendations promptly and in full. We would have done so this time". Now is his chance.

But perhaps it is not the Chancellor standing in the way. Perhaps it is the Secretary of State for Employment and Productivity, aware, as we stressed, what an unquestioned award of £33 a week for £80 a week doctors would mean to men in the factories and in the docks where, for example, as the right hon. Gentleman knows, a national dock strike is threatened over a dispute concerning a claim to raise the basic rate from £11 1s.8d. to £20 a week. Let us hear from the right hon. Gentleman whether the doctors are going to prove the first broken pledge into what I can now inform the right hon. Gentleman is the wastepaper basket in which the right hon. Gentleman's friendly critics are investing.

On the same day that he promised to pay the doctors' award in full there was published the text of a letter to the Child Poverty Action Group committing his party to early action: The only way of tackling family poverty in the short term is to increase family allowances. This was taken by the Action Group as "a categorical pledge to the poor". Perhaps we shall hear from the right hon. Gentleman how quickly he will carry out that pledge, because it was "short time", and no longer.

No doubt the right hon. Gentleman will tell us today whether there is to be an autumn Budget to begin the redemption of the pledges. In the heady days of early last week there was well-fed Press speculation about a July 69 Budget. But that evaporated. Now there is hard speculation about an autumn Budget. Presumably that will be confirmed by the right hon. Gentleman this afternoon. After all, if he decided to wait until next April it would be an admission by the Conservatives, after all they said in the election, that my right hon. Friend's Budget last April was, in their view, the last word for this year in fiscal wisdom and inventiveness. They would say that its broad judgment was right and justified by the months which have gone by. It would mean that right hon. Gentlemen opposite have no immediate proposals for improving on it, not even the £700 million tax remissions they voted for only six months ago in the Finance Bill debates. It will be strange, indeed, if the Chancellor does not introduce his Budget quickly. After Selsdon we were told, not only that the Queen's Speech was in draft, but the Budget as well. What happened to it? What happened to the egregious Central Office computer so much trumpeted in the national Press in the latter days of May? I take it that we can expect to get an autumn Budget, and that the right hon. Gentleman will tell us so this afternoon.

In preparation for his Budget the right hon. Gentleman will no doubt wish to be reminded of the things that he is pledged to include in it. Some of his promises, I grant, were not specifically related to the first Budget, but provide for a period of time, though no doubt he will want to make progress on them in his first Budget. There is the reconstruction of the capital gains tax. There is the proposed repeal of the disallowance of bank interest from reckoning as a deduction from tax. There is the proposed repeal of the 1969 provisions aggregating children's income with the income of their parents. There is the pledge to treat the income of married women in relation to their husbands' earnings so that they are not worse off than if they formed an unmarried household. There are the promises to ease estate duty. There are the promises of derating of certain agricultural properties. There are hints I think, perhaps promises, of cuts in the television advertising levy, but this particular easement does not need to await a formal Budget. There are the proposed reforms—easements—in corporation tax.

70 There is what the Chancellor said to the Institute of Directors, as reported in the Financial Times, that the differential against unearned income should be abolished. Good regressive, reactionary, hard-line Tory stuff, unlikely to be helpful in incomes policy, or industrial relations, or in creating the framework of a just society. Still, it is on the record, and the right hon. Gentleman is no doubt including it in his autumn Budget. And when the hoardings of the country were plastered with those pictures of a road fund licence presumably right hon. Gentlemen opposite were intending to commit themselves to a reduction to £15 in an early Budget, if not the next Budget. [interruption.] We expect on this issue to see the hon. Member for Worcestershire, South (Sir G. Nabarro) voting in our Lobby.

There is plenty to work on there, but that is not an exhaustive list. I shall spare the Chancellor by not dwelling on the value-added tax. Not long ago it was an obsession with him. The Tory manifesto played it down. We were told why. The first casualty of the Prime Minister's pledge to deal directly and honestly with the Press and the public was the poor fellow in Conservative Central Office who, when asked why V.A.T. was not a manifesto commitment, replied, "It might lose us votes." The measure of the right hon. Gentleman's pledge to deal directly and honestly with the Press and the public can be gauged from the fact that this young fellow has not been seen in Central Office circles since.

While I have fairly said to the right hon. Gentleman that not all the pledges that I have referred to were committed for the first Budget—and he had made that clear a number of times—the right hon. Gentleman is nevertheless firmly committed to specific action in the first Budget—which is presumably to be in the autumn. He is committed. These are commitments for the first Budget. No doubt he will tell us this afternoon whether the first Budget will be in the autumn, or whether he will simply rest on my right hon. Friend's Budget until next April, but whenever it is, this is what he is committed to in the first Budget. He is committed both to abolishing S.E.T. and making substantial reductions in direct taxation. He cannot deny this. This is his pledge.

71 He said on television, when interviewed by Mr. Alastair Burnett, that the Conservative programme could not be done overnight in one Budget; it must cover a Parliament. Mr. Burnett then asked, But which are you delaying: the cut in direct taxation, or the abolition of the selective employment tax? I quote: Mr. Heath: No, neither, and the two must go together. That is why I said that in the first Budget, we must have a package which will deal with these particular things and it means that we've also got to deal with the question of Government expenditure—and we've faced up to that.' There is a clear commitment. S.E.T. abolished in the first Budget. Cuts in direct taxation. Without hedging, without delay, without qualification. This autumn. [Interruption.] The right hon. Gentleman cannot possibly go on my right hon. Friend's Budget for nine months, as though he had not an idea in his head.

The great master-plan, in his words on 16th June, was to break the price/wage spiral by acting directly to reduce prices … by reducing those taxes"— reducing and not abolishing— which bear directly on prices and costs, such as S.E.T. Perhaps he has been pressed now to reduce and not abolish, but the master-plan is clearly based on the assumption that if S.E.T. goes, as he pledged, or is reduced, as he hedged, prices will fall. He will see how many traders, distributors, wholesalers and retailers, and others in the service industries, pass on the effects of abolition or reduction.

The right hon. Gentleman has spun a dream-web of falling prices which in turn will persuade wage and salary earners, from doctors to dockers, to say nothing of solicitors, with their 30 per cent. bid, to be content with their present lot and remuneration. We shall see. No doubt this afternoon he will tell us. [Interruption.] I am sorry to have to make clear to hon. Members opposite what must be very embarrassing to them when they realise the implications of how they got here.

I recognise the compulsions on the right hon. Gentleman about industrial policy, and why he has to use words 72 such as "liberating industry". He will no doubt make clear today what, if anything, those words mean, because in the minds of many of those on this side of the House, and of many thousands of workers, they mean the closure of shipyards—the closure of shipyards which, with Government help and reorganisation—not least reorganisation of management—are being made efficient and competitive. If those words mean anything—if all that they have told us, especially the right hon. Gentleman, after Selsdon, means anything—Tory policy means—[Interruption.] I am informing the House what the right hon. Gentleman said. [Interruption.]

§ Mr. Speaker

Order. We cannot have a running commentary by the hon. Member for Peterborough (Sir Harmar Nicholls).

§ Mr. Wilson

I am informing the House what the right hon. Gentleman said during the election. What Tory policy means is rejecting the finance that is essential if major world industries, such as Rolls-Royce, are to be able to develop their new technological projects. Tory attitudes mean ending the policy of mergers and streamlining necessary in old and new industries alike. It all adds up to a prescription for industrial decline.

I hope that the right hon. Gentleman today, or the Chancellor next week, will make a good deal clearer the cryptic words in the Gracious Speech about regional policy. Right hon. Gentlemen opposite have committed themselves in the past to ending investment grants, which are an essential weapon of regional policy, and to ending the regional employment premium—although the right hon. Gentleman must tell us whether he accepts the commitment of his right hon. Friend in the House in May that a seven-year period of R.E.P. will be honoured.

But this reference is not the only question raised in the Gracious Speech about industrial relations. For five years the right hon. Gentleman has sought votes by an attack on the trade unions. He was going to call the undisciplined unions to order. He threatened them with every terror that it was possible for his lawyers to devise—always on the eve of a by-election or a G.L.C. election. Now we shall see, in no doubt long delayed legislative form, the reality. His whole posture 73 rests on his proposals to make industrial contracts enforceable. Of little importance to him, perhaps, that the proposals would not have solved the Port Talbot strike, Pilkingtons, the newspaper dispute, the British Leyland 11-week strike, or the American G.E.C. strike, where his proposals were the law of the land.

But what does he mean by enforceable contracts? During the election I challenged him. I asked whether it meant that a contract would be enforceable unless either side said that it should not be enforceable? If so, I asked what was the difference between his proposals and the proposals in the Bill introduced by my right hon. Friend in the last Parliament, that it should be enforceable if both sides agreed that it should be enforceable. Does it mean both sides or one side—the employers—regardless of the fact that few, if any, employers would reject an otherwise acceptable argument because of union refusal to make it enforceable?

What does the right hon. Gentleman mean by "enforceable"? He has been graciously pleased to respond to my challenge. I quote him. At 11 a.m., at his Press conference, he said—[Interruption]—this is an important point about industrial relations. Perhaps hon. Gentlemen will try to follow it. The right hon. Gentleman said: The Conservatives would not give the right to enforce a contract against the wishes of the unions. Is that his policy? A few hours later, at 10 p.m., on television, he said: It will be presumed that contracts are going to be enforceable unless it is decided otherwise by both sides. That is a very important difference from what the Government are putting forward.

Perhaps he will make it clear on what side of those two contradictory formulae his legislation will come down. If it is on his 11 o'clock formulation there is no difference between his proposals and Clause 29 of my right hon. Friend's Bill, but if his evening statement is right, namely, enforceability on the employers' say-so, I warn him that this will be a prescription for total anarchy and chaos in British industrial relations, utterly destructive of the system of collective bargaining which wiser men than he on 74 both sides of industry over a series of generations have devoted their lives to creating and building.

Finally, I turn to the area of policy which may be decisive, not only for our own domestic well-being but for our standing in the Commonwealth and in the wider world. It is true, for example, of immigration, where we welcome the reference in the Gracious Speech to further aid for areas of special social need—a continuation of the policy which we instituted in the summer of 1968. I hope that the right hon. Gentleman can tell the House today exactly what he is proposing in the immigration legislation foreshadowed in the Gracious Speech.

If that legislation involved a new class of citizenship, treating Commonwealth citizens, from the old and the new Commonwealth alike, as aliens, it would not only affect the Government's standing but would profoundly affect relations with all the countries within the Commonwealth. I was glad that the Gracious Speech said that Ministers will take a full part in the Commonwealth Conference scheduled for next January, but how full that part may be will depend on the Government's policies between now and then.

If that will be true if he introduces legislation of the kind I mentioned on immigration, it is no less true of the Government's policies in relation to Southern Africa. It was a more than symbolic commentary on reactions to the election results that, that very weekend, two world figures changed their travelling arrangements. U Thant, who had planned to return to New York via London to meet members of the Government, diverted to Amsterdam. I notice that the Foreign Secretary has not changed from his Berwick speech; that contemptuous reference to U Thant confirms all he said in 1960.

The South African Foreign Minister, who had no plans to come to London, re-routed to come here, and clearly with one object in view. In opposition, the party opposite made no secret of their plans about arms traffic with South Africa. What many of my right hon. Friends found offensive was the haste with which members of the Government rushed to make clear what their policy would be.

§ Mr. William Molloy (Ealing, North)

Back to Munich.

§ Mr. Speaker

Order. The hon. Member must contain himself.

§ Mr. Wilson

On the Tuesday morning after the election, before even the Cabinet had held its first meeting, every newspaper carried a firm story that the Foreign Secretary had decided to supply arms to South Africa—every newspaper. This did not appear in every newspaper by accident, and it was significant that, in the days that followed, there appeared some attempt at back-tracking. The word was put out that South Africa had not yet asked us for arms so there was no answer to be given. Then, the meetings were rearranged, so that Dr. Muller should not be the first Foreign Minister to be received by the right hon. Gentleman.

I hope that the Prime Minister will be able to tell us this afternoon that this more cautious attitude was the result of a directive by him or a resolution by his whole Government of what such policies would mean for the standing of Britain and for the position which the right hon. Gentleman will be able to take up when he meets some 30 Commonwealth Heads of Government in six months' time.

I hope that the Government have worked out for themselves what it will mean for our standing in the United Nations. Have they thought this thing through? Certainly not before the Foreign Secretary rushed into the decision of which we all read. Have they thought out its implications for Britain's representative at the United Nations—now, sadly, no longer a Minister? Have they thought of what it means in terms of the isolation of Britain in a small rump of colonialists and one or two ex-colonial Powers, with all that this means in terms of loss of influence in world affairs? There has been talk of an emergency meeting of the Security Council, and Governments, many indeed in our own Commonwealth, are talking of making the 1963 Resolution on South African arms mandatory and obligatory on every signatory to the Charter.

If that were to happen, would the Government accept this decision, or are they relying on using a veto, just as they divided the country and shocked their friends by the use of the veto in 1956— 76 a veto which, construed as backing apartheid, would have still more far-reaching consequences for the world and above all for the Commonwealth? A few weeks ago, when the right hon. Gentleman, in the much narrower field of sport, showed the Tory attitude to this question, it became clear that, if the then Government had not acted in relation to the Springbok tour, the Commonwealth Games in Edinburgh would have been reduced to an ill-attended farce.

The right hon. Gentleman did not mind about that but I warned him then that, if his party were to gain power and if he were to pursue his declared policies in regard to South Africa and his equivocal policy about Rhodesia, it would not be long before a Tory Prime Minister was sitting in the chair of a Commonwealth Conference not of 28 or 30 members but confined to a small number who might feel able to sit with him—each of them, like him, reduced to international impotence as a result of the actions of this Government.

That was my warning, and it is still more relevant today, because, just as Britain's economic strength depends on the maintenance of firm and fair industrial, social and financial policies, so her standing in the world depends on maintaining a heritage of foreign and Commonwealth policies rooted in morality, idealism and concern for the dignity and equality of men everywhere—a heritage which we fostered, a heritage of which we shall ever be proud.

§ The Prime Minister (Mr. Edward Heath)

I join with my hon. Friend for Blackpool, South (Mr. Blaker) and the right hon. Gentleman the Leader of the Opposition in expressing my own shock and horror, and, indeed, that of all right hon. and hon. Gentlemen, at the news of the death of the wife of the Leader of the Liberal Party. We join with them in expressing our deepest sympathy in relation to the enormous loss which he and his son have suffered.

I also join with the Leader of the Opposition in congratulating my hon. Friends the mover and seconder of the Motion in reply to the Gracious Address. My hon. Friend the Member for Blackpool, South naturally had to touch on Blackpool, which is certainly well known 77 to all of us and figures in many other ways in addition to its political activity. There used to be a legend in our own party that it was impossible to win a General Election unless one had had a conference at Blackpool. This legend has now been laid to rest. In any case, it became rather difficult to carry out when both major parties started holding their conferences at Blackpool. At least we can look forward to conferences at Brighton or Blackpool quite happily for many years to come.

I am particularly happy—perhaps this is more a personal point—that the mover of the Motion should be the son-in-law of the late Sir Pierson Dixon, because this week we have resumed the negotiations to get into Europe, if fair terms can be obtained, and he was the leader of the official delegation from 1961 to 1963. No man did more—indeed, I believe that he gave his life—for those negotiations.

I would also congratulate the seconder, my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight). Perhaps I might couple with that my congratulations on the election by the House of a woman for the first time as Deputy Chairman of Ways and Means, and add my congratulations to the Chairman. She has already had a long career in local government and now has one of great activity in this House. We also appreciate the amount she does in the country. I should like to thank both of my hon. Friends for the eloquent and charming way in which they have moved and seconded this Motion.

I should like to thank the Leader of the Opposition for the congratulations which he kindly tendered to me personally and to my right hon. and hon. Friends. Naturally, of course, the form of opposition which he and his party pursue is a matter for them to decide. I would only add that, on questions such as he has raised, on matters of sterling, I will expect him to tell the House and the country the truth as he sees it, without fear or favour—to use his own words. I ask nothing more and nothing less than that. I have found that the rest of the world knows the truth and there is no reason why it should not be expressed in the House.

The Leader of the Opposition said that we should find that he and his right hon. and hon. Friends were a very well 78 informed Opposition. They raised our hopes to the heights, only to dash them to the ground again within a fraction of a second, because we found that the right hon. Gentleman was no better informed in his speech today than he was in Government, and he has perpetrated all the same misconceptions which were the result of their failure in administration.

We have seen a display of happiness. No man in the House today is more happy than the Leader of the Opposition in resuming the place which he once occupied with such distinction and will now continue to enjoy. Happiness came through every sentence. Words no longer carry responsibility. What a happy position. Verbal activity instead of action—what a happy position. Every verbal gimmick which can be thought up by the right hon. Gentleman—cheap jibes, even mischief-making over Northern Ireland, which I much regret—nothing has been changed by the last four weeks except the position of the party.

What the right hon. Gentleman has not realised is that it is precisely this which the country has so decisively rejected. The country has had six months of almost continuous electioneering since the right hon. Gentleman's speech of 12th December, and it has now just about had enough of it. The result is clear-cut. For the present, the game is over.

When the right hon. Gentleman started, I began to realise that we should have one of his election speeches. By the time he finished, I realised that we had had the whole lot, and the Press conferences thrown in. We quite understand. He wants to show his depressed supporters behind him how he would have played it had he been given a second chance. That we quite understand, and he now wants to get off his chest some of those speeches which he would like to have made in defence of his past policies or in anticipation of the future which for some strange reason he never put forward at the time of the election.

I believe that the Leader of the Opposition misjudges the mood of the country at this moment. The attitude of people today is that they want fewer words and rather more considered action by the Government. They want this Government to get on with the job in the way they are doing it. In the first half of 1970, we had a surfeit of politics and very little 79 responsible Government. It will be exactly the reverse in the second half of 1970 under this Administration. We shall ask to be judged by our success in handling the problems which we put before the country and which we are now facing. That is how the House will judge, that is how the country will judge, and there is no other criterion by which I wish to be judged. We were elected on a programme for a Parliament—the right hon. Gentleman himself has again stated that—but, at the beginning of this Parliament, I wish to state as clearly as I can the broad approach which this Administration will follow in dealing with our affairs. The right hon. Gentleman concluded his speech on the note of overseas matters, and it is here that I shall begin.

I believe that the main aim of our foreign policy must be to make a modern and broadly based assessment of where British interests lie. Then, our task is to sustain those interests with all the energy and determination which we can command. That is what we shall do. My complaint in recent years has frequently been that the trouble with British policy has been that it lacked a coherent theme of this kind. It has been influenced, and dominated, by quite different considerations. Sometimes, as in the Far East and the Gulf, it was influenced by considerations of party unity, without regard to considerations of foreign policy. Sometimes—I think particularly of Africa—decisions have been taken as a result of emotional pressures which, however sincere, have not always been fully reasoned, and neither have they been reasonable.

There is nothing crude or selfish about our foreign policy in trying to achieve these objectives, because our interests as a nation coincide closely not only with those of our friends and allies but with those of the international community as a whole. We share with the rest of the world the desire to promote peace and to further development, and as a trading nation we probably have greater interests at stake than any other country in this respect.

In Europe, it is a British interest that we should come together increasingly with our friends. It is a British interest to work out a way of establishing a common European voice on world affairs. 80 But it is also a general European interest to do both these things. That is why the negotiations which have just been opened by my right hon. Friend the Chancellor of the Duchy must find a settlement fair to all if they are to succeed and give us and our friends a European voice. This goes even wider than Europe. From a European base, we can work more effectively for better East-West relations. We can make a fuller European contribution to the solution of the problems of the Third World. It is, therefore, in both British interests and wider interests that we should bring this about.

Similarly, we share with our friends a critical interest in the maintenance of a strong North Atlantic Alliance. But at the same time as this is the bulwark for the West it is also a means for developing policies with the countries of Western Europe and North America to relax tensions between East and West, and this will be of benefit not only to Europe and Britain but to the rest of the world.

In South-East Asia, it is a British interest that we should work out with our Commonwealth allies in Malaysia and Singapore, in Australia and New Zealand, a way in which we can join effectively with them in helping to maintain stability in that area. So, too, it is in their interest, and they have made quite clear that it is and that they want us there. It is also in the interest of many of their neighbours, about 200 million people in that area who share their need for security.

Now that the election is over, I hope that in discussing these matters we can get away from the nonsense which was talked about conscription which tarnished the election campaign of the party opposite.

The right hon. Gentleman did us a good turn by calling the election a year before he had to do so, and 18 months before the last date for our withdrawal from the Gulf and the Far East. We should have had greater difficulty in carrying through our policy if he had gone to the full length of the Parliament. As it is, we have reasonable time now to work out with our friends a new and up-to-date system of co-operation based on the realities of the situation. This will take account of the concern, which they share 81 with us, to see peace and stability maintained. [An HON. MEMBER: "How much will it cost?"] In time, the hon. Gentleman will get used to the knowledge that different policies will now be followed by this Government. [HON. MEMBERS: "How much?"] Once hon. Members opposite move away from the instant politics which they have suffered from their leader over the past five years, they will see these policies being worked out and pursued steadily.

There is the same need for stability in the Middle East. There is the same British interest in the Middle East, particularly because of our long connections with the Arab world, and our desire to see Israel living safely within secure frontiers, and we shall do our best to this end through the four-Power talks and in any way which is available. Our policies in the Gulf will similarly be directed to seeing how Britain can best contribute to peace and stability there.

In Africa, we have important interests both north and south of the Zambezi. This I have constantly emphasised. But there must be also a recognition that we have vital defence interests in South Africa which we cannot ignore and of which account must be taken. This in no way means that we condone racialist practices. We condemn them wherever they occur. But it is not our intention to be pushed into pursuing courses which could do great damage to this country while having no practical effect in bringing about the results which their advocates wish to see. We entered into the Simonstown Agreement, and the Government intend to give effect to its purposes. What is involved is a matter for careful consideration, and when our examination is complete we shall make an announcement to the House.

We shall also honour our undertaking to make a further effort to see whether a settlement of the Rhodesian problem on the basis of the five principles is possible. We do not propose to take hasty steps. We shall move only with proper preparation and in full recognition of the strong feelings which everyone in the House certainly knows exist. But we believe that it is our duty to determine for ourselves the prospects of finding an acceptable settlement, and we are sure that a further attempt must be made.

82 These are all essential British interests. We also see it as an essential interest to work as closely as possible with the developing world and to build up trade and other contacts with them. But, just as they have vital economic, defence and security interests so must they realise and recognise that we have similar interests which do not damage them and which we cannot sacrifice and are not prepared to sacrifice.

§ Mr. E. Fernyhough (Jarrow)

I am grateful to the right hon. Gentleman for giving way. He will appreciate that it is made perfectly clear in the Simonstown Agreement that there should be no discrimination. Would he therefore insist that coloured people working at the base would get just as much as whites?

§ The Prime Minister

I have said that we will make a full statement about the Simonstown Agreement and how its purposes are to be pursued when we have given further consideration to this and discussed it with all those involved. That is the proper way of handling a matter of this kind.

I want to conclude on the question of foreign policy by saying that our situation calls for policies based on a realistic assessment of our needs and capacity. If this foreign policy which gives high importance to British interests appears to be novel or surprising, it is because for too long we have allowed the real purpose of foreign policy to be obscured, and the danger of this is that we have been misleading both ourselves and others. We have sometimes created the impression that we are prepared to adopt courses which in fact we cannot and will not adopt. We have encouraged exactly those pressures upon us which hard facts compel us to resist.

But no one should read into our determination to pursue policies which take proper account of the real needs of this country a reluctance or a refusal to respond to the challenges which face all the developed countries in the world to-day, and we will do our best to deal with them, as we have done on previous occasions—the challenge of world order, the dangers of racial conflict, and the challenge of world poverty. We shall do our best in conjunction with our friends and 83 allies and the world community to find solutions to them.

Our objection to so much of what has been done in the past is that it has been merely a matter of gesture; it has been to impress rather than for any real, genuine effect. For our part, we shall only take whatever practical and effective steps are within our capacity. But, as the right hon. Gentleman himself has emphasised, this is always bound to depend on the political and economic situation here at home.

Obviously, one of the most urgent problems to which we as a Government have had to give our attention on taking office is the situation in Northern Ireland. Let me state at once the policy of this Government on Northern Ireland. I reaffirm our pledge that the Border is a matter to be decided by the people of Northern Ireland. This undertaking, founded on the provisions of the Ireland Act, 1949, which declared that Northern Ireland will not cease to be part of the United Kingdom without the consent of the Parliament of Northern Ireland, has been repeated by successive Governments, and I reaffirm it today.

I want to make it clear that the Army will remain in Northern Ireland for as long, and in sufficient numbers, as is necessary to deal with the situation there. In the first few days after taking office we authorised the despatch to Northern Ireland of substantial reinforcements to cover the difficult July period. This action was based on an appreciation put forward by the General Officer Commanding before the General Election took place.

§ Mr. James Callaghan (Cardiff, South-East)

indicated assent.

§ The Prime Minister

Last weekend we arranged for the process of reinforcement to be speeded up, and some of these reinforcements are already in Northern Ireland.

I know that the whole House will wish to agree with the expression of appreciation in the Gracious Speech of the manner in which Her Majesty's Forces are carrying out the very trying tasks assigned to them.

The Northern Ireland Government are pledged to the objective of securing peace 84 and harmony in the Province on the basis of justice, equality and freedom from discrimination for all citizens. In our view this is the responsibility of the Government and Parliament of Northern Ireland. It is to them that the people of Northern Ireland must look. We as a Government endorse what they have done and are doing to this end. At the same time, it is a commitment which this Government fully accept.

There can be no going back. There must be no slowing up. Much has already been achieved by the Government of Northern Ireland. Its completion is urgent. We shall fully support them in all the programmes to which they are committed in order to secure justice and equality of treatment in the Province.

I am grateful that my right hon. Friend the Home Secretary went at the earliest possible opportunity to see the situation for himself and discuss it with the Northern Ireland Government. He will be able to tell the House about it himself when he speaks in the debate here tomorrow.

§ Mr. Kevin McNamara (Kingston upon Hull, North)

I am grateful to the Prime Minister for giving way, and particularly for what he said about Northern Ireland. Can he cast any light on statements in today's Press about discussions that are supposed to have been taking place between the Prime Minister of Northern Ireland and various representatives of extreme organisations there about the formation of a people's militia, whether that has been discussed with the General Officer Commanding, and whether it is likely to be the policy of the Northern Ireland Government?

§ The Prime Minister

I cannot give the House any information about this, except to say that it was not a matter that was discussed with my right hon. Friend the Home Secretary.

We also understand the extent to which economic difficulties contribute to some of the strains of the Northern Ireland situation. Last week we endorsed the development programme, of which the right hon. Gentleman and his colleagues have full knowledge, designed to create more opportunities for jobs and the improvement of living conditions in Northern Ireland. We accept the financial implications of this for the United Kingdom. 85 But whatever financial and other inducements are offered by Government, real development will come about only when confidence has been restored.

I hope that this combination of measures should provide confidence for all the communities in Northern Ireland of working towards completely fair dealing, and, given the restoration of quiet and stability, that improved economic conditions will come about in which all in Northern Ireland can share.

I would now like to look at the state of the economy here at home as we found it on taking office. The right hon. Gentleman the Leader of the Opposition has given one of his accounts of the conditions when he took office in 1964. It would therefore seem to be all the more remarkable that the first work of that Administration was to publish a White Paper in which they said that no further economic action needed to be taken. I do not propose to fight over the battles of 1964 and 1966 again, but I would refer to the statement the Leader of the Opposition mentioned which I issued on 16th June, because I would like to quote from it. It was about rising prices. I said: It is agreed on all sides in this election and by all responsible outside observers that Britain and other countries are today facing one of the most serious inflationary problems since the last war. I added: This problem is more serious for Britain than for most other countries because of our poor growth in productivity, our inadequate reserves and substantial overseas debts, the chaotic state of our industrial relations and the fact that we are suffering from the backwash of the collapse of the incomes policy. Now, with the election campaign behind us, and speaking as Prime Minister, I take this opportunity of confirming everything I said then. No one on this side is likely to be surprised, because the situation is as we have said it was all along. No one on the Opposition Front Bench need look surprised—indeed, right hon. Gentlemen do not look surprised—for the situation is as they have known it to be all along. No one outside the House, either at home or abroad, will be surprised, because the situation is as the economic indicators which have been published showed it to be. It is only those who were lulled into complacency by the talk of a sunshine 86 economy who are now in for the rude awakening.

The right hon. Gentleman has criticised me for dealing with the economy in terms of one month's trade figures. Nothing could be further from the truth. I dealt with the trend in the first five months of this year. It is the trend, of course, which matters. There was a downward trend in the surplus on the balance of payments, and the former Chancellor of the Exchequer knows this perfectly well. Of course there will be good months and poor months, but it is the trend which matters. This is no longer a matter of political argument: this is the situation with which the country has to deal.

But let us look at the good aspect. It is that we still have a balance of payments surplus. Our invisible earnings make a crucial contribution to that surplus, and we may pay tribute to what they have achieved.

§ The Prime Minister

I have given way.

§ Mr. Barnett

rose—

§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)

If the Prime Minister does not give way, the hon. Member must resume his seat.

§ The Prime Minister

The surplus on invisibles could have been even greater were it not for the burden of the interest payments on the overseas debts incurred by the last Government—the former Chancellor gave the figure of £1,650 million last March.

The former Prime Minister gaily says that overseas investments can be set against these debts, but they are private investments and no longer on the Government portfolio, and they can be set against debt in the real sense only if the Government are prepared to take them over in order to offset the debt which has been incurred, which, of course, is not the case. What is more, the figures which the Leader of the Opposition quotes are the figures of investment mostly before his time, because his Government took measures to prevent overseas investment. Moreover, the investments have increased their value 87 because of the more rapid growth of the economies of countries overseas where those investments were placed.

But there has been some further reduction in the debt under both the previous Chancellor of the Exchequer and the present Chancellor of the Exchequer as a result of the inflow of funds, and this is reflected in the improved reserve figures for June, which are announced this afternoon.

§ An Hon. Member

How much?

§ The Prime Minister

It was £10 million. That is an improvement. It is due to an inflow of funds which resulted in an increase in sterling balances.

§ Mr. Andrew Faulds (Smethwick)

Crisis, Ted, crisis. Where is it?

§ The Prime Minister

If the hon. Gentleman would stop shouting himself silly and listen, he would have the explanation. Nevertheless, the total of outstanding debt which we have inherited is formidable. This is the legacy which we take over from the outgoing Administration. It is inevitable that this burden is bound to be with the country for some time to come.

But I want to turn to the other aspects of what the Leader of the Opposition described as a strong position. It is not a sign of a healthy nation that there are more than 500,000 men, women and young people out of work. It is not a sign of a healthy economy when the number of strikes in the first four months of this year was 60 per cent. up on the same period for last year. It is not a sign of a healthy economy when industrial output is stagnating and the industrial production index for April has actually fallen one point. It is not a sign of a healthy economy when manufacturing investment, by which the Government rightly set such store, is static. It is not a healthy economy when inflation is as rampant as it is today. This is the condemnation of the outgoing régime. It is not a strong position for us to take over an economic situation of that kind.

The industrial consequences of this are there for all to see. Great firms with household names are unable to finance their expansion out of their own resources and have had to go to the Government in order to borrow. They see their profits 88 squeezed by taxation and their production continually disrupted by industrial disputes, their wage bills soaring in the scramble to keep up with price inflation. They turn to the capital markets, but they cannot get borrowings except at punitive rates of interest. This is how it affects industrial firms throughout the country; it drives them for their very existence to loans and subsidies. That, of course, was what the whole policy of the outgoing Government was really about.

I insisted throughout the election that the greatest problem facing the country was inflation, and the same position is stated in the Gracious Speech. I have never disguised the difficulty of dealing with this problem, nor the fact that it will take time to get on top of it—we have had experience of dealing with inflation from outgoing Socialist Administrations; we had it in 1951. This is the worst inflation the country has faced since 1951. We know the amount of time it takes for the country to get rid of inflation. [Interruption.]

§ Mr. Deputy Speaker

Order. Will hon. Members please remain in their seats?

§ The Prime Minister

Our previous experiences may have been old, but this appears to be new.

We know exactly the problems with which we are confronted. It is no comfort to this country to say that other countries are suffering from inflation. There may be a country here and there where the level is worse than it is in this country, but these countries have higher levels of growth than we have had and higher ratios of savings. No country is as vulnerable to inflation as we are or depends more on international trade. The inflation from which we are suffering is the worst we have known for 20 years, and it is not due, as has previously been the case on occasions, to running the economy at too fast a pace—the levels of industrial production and the large figures of unemployment show that.

Nor can we blame it on the money supply. To be perfectly fair, the outgoing Chancellor did much to redress the errors of his predecessor. Today's inflation is the result—it is the pay-off—of other policies which were pursued by the last Government in allowing Government spending to run ahead of what 89 the nation could afford and covering it up by high taxation and rising prices. That reduced the standard of living of the people. After all, it was a reduction in the standard of living to which lion. Members opposite so strongly objected when they were sitting on this side of the House.

My right hon. Friend the Chancellor of the Exchequer will speak later in the debate, but the path which we intend to follow was clearly set out in our manifesto and in all our election speeches. We repeat our undertaking to reduce the burden of taxation. My right hon. Friend has set in train the necessary examination of Government expenditure and in due course he will announce the action to be taken. Some items are susceptible to immediate reduction; others will take time to mature. But no field is to be exempt from this examination. In the autumn we will lay before the House the results in the appropriate form.

§ Mr. Roy Jenkins: (Birmingham, Stechford)

The right hon. Gentleman has raised a number of points which we can debate next week, but in the course of the election campaign, on 5th June, he used the terms "national emergency" and "crisis". Has he now come to the conclusion that these conditions do not prevail? If not, what measures to deal with this emergency does he propose before the House adjourns for three months?

§ The Prime Minister

The right hon. Gentleman is incorrectly informed. It was his right hon. Friend the Member for Coventry, East (Mr. Crossman), the new editor of the "New Statesman", who used the phrase—[Interruption.]the right hon. Gentleman may well have denied it, but nobody else has denied it. People have given witness to the fact that he used the phrase. We will make our announcement at the appropriate time when we have decided to do so.

§ Mr. Roy Jenkins

Does the right hon. Gentleman deny that during the election campaign he himself used the phrases "national emergency" and "crisis", and is he or is he not withdrawing them now?

§ The Prime Minister

What I did during the election campaign was to quote the phrases of the right hon. Gentleman's right hon. Friend who was then in the Government. I challenged the then Prime 90 Minister to say whether or not he agreed with his right hon. Friend. He never had the courage to stand up and say so. That is the position. The general conclusion is the position. The general conclusion—

§ Mr. Faulds

Remember! Honest government.

§ Mr. Deputy Speaker

The hon. Member for Smethwick (Mr. Faulds) must learn to contain himself in this Parliament just as in the last.

§ The Prime Minister

The general conclusion is that we shall pursue the policies which we clearly put before the electorate and which were set out in the manifesto. Foremost among these policies is that concerning industrial relations.

We have committed ourselves to introducing this Session legislation which will provide a more satisfactory basis for the development and improvement of industrial relations over the next decade. While we were in opposition we gave a very clear indication of the lines of this legislation. No party in opposition has ever set out in such detail and so clearly a policy which would be pursued. Of course, the Leader of the Opposition minimises this today. He knows that these were comprehensive proposals covering all aspects of industrial relations, of which the enforcement of contracts was only one. [Interruption.] I am glad that the hon. Gentleman is better informed than his leader.

Before these proposals are put to Parliament, my right hon. Friend will wish to have discussions and consultations with the T.U.C. and the C.B.I. We have made plain from the beginning that we are prepared to receive constructive ideas over the whole field of industrial relations. We are not prepared to delay proposals. We will carry on constructive discussions with all those who wish to have them.

I want to add simply this. The present rash of strikes, to such a large extent unofficial, is the symptom of impoverished industrial relations, of unsatisfactory machinery and of increasing disregard for obligations which have been undertaken. I believe that as a nation we are not doing justice to ourselves or to our history. The last Administration, in fairness to them, recognised this, 91