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Column 535

son's status, that householder automatically gets the 25 per cent. discount. The neighbouring householder, however, earns only £15, 000--he lives in exactly the same sortof house, but has only half the income of his neighbour and, again, only one other person lives in the house, his non-working wife who brings in nothing. That householder would not receive any discount ; he would pay the full charge. That is just one of many anomalies in what will be a long list in Committee. The discount system has the potential to run us into a substantial amount of trouble and I believe that very few people will be prepared to defend it in a year or two.

Many people have said, "How wonderful, there will be no register." The hon. Member for Eastwood (Mr. Stewart) cheerfully told the nation on radio the other day, "Of course, there will not be a register, but there will have to be a list." The Convention of Scottish Local Authorities has asked me how the discount system, as distinct from the rebate system, will work. It has said, "We do not have the power to have a statutory canvass, but without a statutory canvass, we do not know the real position. Are we supposed to send out bills for 100 per cent. of the liability to everyone and leave householders to claim the discount if they are entitled to 25 per cent. off the full cost because they are single householders? If the bill is to be calculated on a daily rate and someone's auntie comes to stay for a couple of months in the middle of the year, what about all the complications in adjusting for that and how do we account for the period for which someone has lost the discount? If we calculate bills on that basis, the bills of all the affected people will have to be reissued." I am not making pedantic points when I refer to all those complexities and difficulties which are now beginning to bite in a way that I find worrying.

Mr. Ian Bruce (South Dorset) : I have read Labour's document, which is entitled "Fair Rates", in which the Labour party did not tackle the question of how it would deal with houses in multiple occupation or refer to salary levels. How would the hon. Gentleman's party cope with that?

Mr. Dewar : Our view is simple. We should not have a discount and rebate system. We should have simply a rebate system in which a flexible, generous and realistically tapered rebate takes account of the incomes of the people in any house. All the available funds should be targeted in that way to ensure that we achieve the best social return on the available resources-- [Interruption.] If Conservative Members think that I am making a partisan point, I invite the Secretary of State for the Environment to move beyond the Municipal Journal. Why not do something daring and take the Local Government Chronicle ? If the right hon. Gentleman had read the Chronicle this month, he would have seen the leader headed, "To introduce the poll tax is a mistake, to bring in the council tax is a disaster".

I will favour the right hon. Gentleman by quoting one thought that was expressed in that article :

"If the single person discount remains a feature of the tax they will have to create a register--a point Michael Heseltine will eventually have to acknowledge. The discount--the Achilles heel of the system--would be better abandoned now rather than later."

Conservative Members would be well advised to heed those words because all the contact that I have had with local government--I am not talking about Labour


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councillors, but about impartial experts-- has shown that those experts believe that the council tax will eventually run into such trouble that it will become unworkable.

I wish to make a simple plea about the 20 per cent. rule. We listened to the hon. Member for Lancashire, West (Mr. Hind)--we often must do so--and he defended the council tax with all the conviction with which he defended the poll tax just a few months ago. To be fair, he echoed his party's line when he said that of course the 20 per cent. rule has turned out to be a social disaster and an indefensible imposition. As the Audit Commission said, it will cost considerably more to collect than the net yield to the Treasury. We cannot in justice defend it and it does not make any financial sense--to use a good accountant's term, it is imprudent.

Why does not that rule go in 1992 instead of limping on until April 1993? I find that people cannot comprehend why it will not go in the forthcoming legislation. They do not understand the basis of the argument and they ask me to explain the Government's position. I am not, perhaps, the best person to do that. Perhaps I sometimes do that job inadequately, in the view of any Conservative commentator. But on this case, I cannot give it a try-- that is the point. Having been told that the Government have conceded that the whole thing is nonsense, I cannot begin to understand why we are not getting rid of it now, taking the strain off last year's poll tax, which is becoming intolerable. I hope that the Secretary of State can help me on that point.

It is necessary to cut through the confusion and to attack the mess of local government finance which is the legacy of the past few years of Conservative rule. We must find a way of distributing the burden more fairly. In Scotland, we have a valuation base which is comparatively up to date--perhaps that is an advantage which we have over the rest of the country--but we should build upon that base. We should kill the poll tax as quickly as we can. We must then continue with a rolling programme of reform that takes us away from the narrow concept of notional rents. We must build in the kind of rebate system that the hon. Member for South Dorset (Mr. Bruce) tempted me to describe--a rebate system which concentrates on people's ability to pay and which is not concerned with an artificial concept of status. If we took the Labour way, it would be fairer, and I can quickly give some reasons. The broader property base which we would introduce would mean a fairer distribution of the burden. As I understand it--of course, I am open to correction--the discount system which Conservative Members have praised to the sky will be entirely financed within the system, so others who are not getting the 25 per cent. discount will pay more than they would otherwise do. The savings resulting from the administrative efficiency of the new system will largely be dissipated by the effects of the problems to which I referred.

My experience is that a change would bring a sense of relief. The people in my part of the world, and I believe in the United Kingdom as a whole, are weary of the bitterness and frustration that the poll tax has brought. They fear that they are now looking at a successor tax which is designed simply to allow the Government to muddle through to the next election. They want a fair system which is practicable and workable--an acceptable base for genuine local democracy and the delivery of


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services that are the mark of a civilised society. That is what the Labour party intends to bring in after the next election.

9.38 pm

The Secretary of State for Scotland (Mr. Ian Lang) : Charm was never the strong suit of the hon. Member for Glasgow, Garscadden (Mr. Dewar)-- indeed, I think that he is wearing his only suit. What a dismal, doleful, baleful lament of a speech we had from him. Labour knows, and the long faces around the hon. Gentleman confirm, that the council tax is a winner and that we have found in three months the solution that has eluded Labour for three years. We have worked our way directly to a fair, simple and durable solution while Labour has wandered around the highways and byways throwing up and discarding enough nutty ideas to revive the Monty Python show.

We are indebted to the Opposition for tabling the amendment to the Loyal Address which has enabled this subject to be debated and which enables us to prove that we have the best solution for local government funding. It is not often that the Opposition play to the Government's strengths, but, as my hon. Friend the Member for Batley and Spen (Mrs. Peacock) said, the council tax is a simple and fair tax, and she was right to welcome its rebate scheme and its transitional relief.

My hon. Friend the Member for Chelmsford (Mr. Burns) identified the efficiency of administration that the council tax will bring. My hon. Friend the Member for Berkshire, East (Mr. MacKay) welcomed the discounts for students and others. My hon. Friend the Member for Lancashire, West (Mr. Hind) welcomed the banding and the single bills for households. My hon. Friends the Members for Spelthorne (Mr. Wilshire) and for Nottingham, South (Mr. Brandon-Bravo), among others, welcomed the capping provisions to protect residents of profligate councils.

The hon. Member for Eastbourne (Mr. Bellotti) raised, in a passing aside, the question of local income tax. I was most impressed by the effective way in which my hon. Friend the Member for Chelmsford destroyed the hon. Gentleman's case during a short intervention. The hon. Gentleman was wrong to say that we had failed to consult on our proposals for the council tax. We invited hon. Members from all Opposition parties to consult and debate with us the best form of taxation to replace the community charge. Indeed, Liberal Democrat Members took part in those discussions, as did SNP Members. Only the Opposition, who proclaim in their paper "Fair Rates" their willingness to discuss their proposals, failed to take part when the invitation to consult was issued.

The hon. Member for Garscadden complained that the provisions for Scotland and for England were included in the same Bill. Just a few years ago he complained about the exact opposite--that the provisions for the community charge in Scotland were in a separate Bill from those for England and Wales. I note his comments about the representation of Scottish Labour Members on the Standing Committee, but that is a matter not for me, but for the Committee of Selection, which I am sure will hear his words.

Mr. Nellist rose --


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Mr. Lang : I give way to the hon. Gentleman, who is an endangered species on the Opposition Benches as he is one of the few who still speak their mind.

Mr. Nellist : As the provisions for Scotland and for England and Wales are contained in the same Bill, can the right hon. Gentleman explain why the schedules relating to imprisonment as an enforcement penalty still apply to England and Wales, whereas the Debtors (Scotland) Act 1987 abolished that penalty for Scotland? In England and Wales, people may still be imprisoned if they do not pay their council tax.

Mr. Lang : The hon. Gentleman has identified differences between Scotland and England which will persist in the new Bill. That underlines the fact that the one Bill will have the capacity to cater for both Scotland and England. One of the advantages of the Scottish arrangement is that it does not create martyrs, and the hon. Gentleman should know all about that.

The hon. Member for Garscadden raised the issue of discounts and exemptions. It is at the core of our proposals that single-person households should pay less than households comprising two or more adults. It was the failure of domestic rates to take any account of the number of people living in a property which, above all, led to the system being rejected by the public as an acceptable means of raising local government revenue.

In our consultation paper, and now in the Bill, we have recognised further that there will be certain circumstances in which it would be inappropriate for members of a household to add to that household's bill. Those are the cases which, for convenience, we have termed "status discounts". The Bill therefore provides that students, student nurses, apprentices, youth trainees and other categories, who are currently only partially exempt from the community charge, will not, if they are resident in a dwelling, add to the council tax liability of that dwelling.

Mr. Graham : Will the Secretary of State say now why he will not give a 100 per cent. rebate to those people who genuinely cannot pay the poll tax? Why not rescue them from the hell hole created for them by the Government?

Mr. Lang : The hon. Gentleman knows that those on income support were given increased income support to enable them to pay their 20 per cent. liability for the community charge. Labour Members, locally and nationally, have led those people astray, so that they are now facing financial difficulties and are unable to pay.

Mr. Dewar : Would it be a convenient moment for the right hon. Gentleman to answer one of the questions that I asked? Will he explain why, given that the theory has been abandoned, and given that the poll tax is ultimately to go, the 20 per cent. rule cannot be abolished in the council tax Bill with effect from April 1992?

Mr. Lang : The hon. Gentleman can get rid of the 20 per cent. rule quickly by helping us to abolish the community charge and then the package will disappear altogether.

The Opposition call their proposal "Fair Rates", a contradiction in terms if ever there was one. One might as well speak of even-handed socialism. But just as they have done throughout the past three years, we find the Opposition spokesmen contradicting each other. The hon. Member for Derby, South (Mrs. Beckett) now says that there is no question but that Labour will replace the


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council tax with fair rates. But the hon. Member for Sheffield, Brightside (Mr. Blunkett) says that Labour will amend the council tax. The hon. Member for Dagenham (Mr. Gould), the man responsible, as on so many other details, is really not very sure. Even by Labour standards the pantomime season has come early this year.

But unfair rates is what is on the table, along with the tattered remnants of more than 60 other proposals that went before. What a retrograde disaster it represents. After all these years, has the Labour party not learnt that people pay their taxes in sorrow, but they paid their rates in anger? How does the Labour party's policy stand up to examination by comparison with the council tax? Fundamental to the stability of a system of taxation is the level at which people are asked to pay, and the switch from local to central taxation achieved by my right hon. Friend the Chancellor in his Budget was widely welcomed because it recognised that the tax burden had become too high for any system to sustain, and that is why he took steps to reduce it.

That has been welcomed everywhere except on the Opposition Benches. Not for Opposition Members the 14 per cent. contribution from local residents that we have achieved--the figure in Scotland is even lower--but, on the contrary, a commitment to raise it to 20 per cent. The general secretary of the Scottish Trades Union Congress even proposed an increase of up to 50 per cent.

But what does that mean for the local residents? Surely not cuts in income tax by a Labour Government. One has only to mouth that thought to recognise its absurdity. What it means is higher bills for local taxpayers. That is what the Labour party means when it says it wants councils to raise more of the money that they spend.

In the past 12 years, despite the protestations of the hon. Member for Renfrew, West and Inverclyde (Mr. Graham), the funding of Scottish local authorities by Government has risen in real terms by 10 per cent. but spending has risen by no less than 26 per cent. That is the reality of Labour in action in local government. Labour's policy means giving spendthrift councils the green light to send tax bills soaring even further with devastating results for millions of people.

The Labour party claims that its new fair rates policy is easy to administer. "Fair Rates" says that Labour wants to cut unnecessary bureaucracy from local government finance, an admirable objective, but it seems that the Labour party cannot help itself. It could not even make up its mind. Faced with four alternative approaches to valuation--whether it should be based on capital values, rental values, maintenance costs or rebuilding costs--its choice was not to go for one of them, or even a mixture of two of them, but to go for all four of them.

Mr. John Home Robertson (East Lothian) : On the subject of making up his mind or the minds of parties in Scotland, can the Secretary of State say whether the Conservative candidate in Kincardine and Deeside supports that aspect of Conservative party policy?

Mr. Lang : My friend the candidate, soon to be my hon. Friend the Member for Kincardine and Deeside, supports me and my hon. Friends on that policy as on so many other policies.

But what the Opposition call a modernised valuation system has more components than a car manufactured in the constituency of the hon. Member for Dagenham, and


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on top of that we are promised a revaluation every year. That policy is to simplicity what the Leader of the Opposition is to brevity. It would not have the confidence of the people, so it would never work.

When we come to banding we find that the Labour party is incapable of making up its mind. My right hon. Friend the Secretary of State asked today whether it supported banding but received no answer. We referred to its "Fair Rates" document where it argues for it but carefully puts in the word "perhaps". The hon. Member for Garscadden says that banding protects the rich and the hon. Member for Dagenham says that the Government are clobbering the rich, and still we do not know.

The Labour party claims that its policies would be fairer, but the council tax brings fairness to single people with discounts. They are not the rich bachelors or the yuppies that the Labour party fears ; two thirds of single people entitled to discounts will be over 60, single pensioners, widows and widowers, and many more are single parents. Where is the justice for them in a rates policy? If businesses think that they would escape, protected by a fair and stable business rate, they had better think again. Labour says that it will reverse every step that the Government have taken to protect businesses, and would leave them to the mercy of Labour's own local councils. Once again, city centre premises would be boarded up, as business after business moved out of centres, driven away by runaway rates bills.

Mr. Bellotti : The Secretary of State said that those people who were to receive discounts would be separately marked on the lists. Will he explain to the House the difference between a register and a list?

Mr. Lang : There is all the difference in the world between a register and a list. A register is a statutory designated body that is a basis for designating liability, and a list is a source of administrative efficiency for the use of the local authority. If the hon. Gentleman serves on the Committee that is to consider the Bill, he will be able to reassure himself as to the way that works. Another refinement and contrast between the council tax and Labour's rates policy is the control, or lack of it, that Labour would exercise over excessive spending levels. According to Labour's policy document, it would abolish capping. Today, the hon. Member for Dagenham confirmed that, and the hon. Member for Eastbourne joined in on behalf of the Liberal Democrats. They were too modest, because it was a Labour Government who invented capping--back in the 1970s, when Labour said that the party was over. In effect, the party had not even started. It was Labour Ministers who told local authorities that there was to be

"severe restraint in expenditure in the national interest." We all know that without capping there would be an explosion in local authority spending and spiralling local tax bills.

What do we find in Labour's new "Fair Rates" policy ? Where is the smack of firm government ? Labour would throw away all controls, and, according to the hon. Member for Dagenham, would do all it could to encourage councils "to behave sensibly." The only people who would be encouraged by that would be councillors in areas such as Lambeth, Liverpool, and Lothian. For them,


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the party would be on again. It would be spend, spend, spend. For the rest of us, that can clearly be seen as a policy of catastrophe. My hon. Friend the Member for Spelthorne suggested that regional variations in house prices should be taken into account in regional banding. That overlooks the protection that is built in to the dampened banding system. I suggest to those who talk of regional banding that they look at the protection that the banding system will offer to people living in London and the south-east. Do we really want a system in which a couple--

Mr. Dewar : Will the Secretary of State explain exactly what is a "dampened banding system" ?

Mr. Lang : Precisely the system that the hon. Gentleman, if I recall his words, said was restricting and constraining. It narrows the differential, so that those in the top band are not forced to pay more than three times those in the bottom band. I regard that form of protection as highly desirable and an important part of our proposals.

Limiting the range of bills will give all the protection that London and the south-east needs. Bills there will be reasonable if local authorities spend sensibly. That is critical. It is not the Government who play havoc with people's local tax bills but the Lambeths, Liverpools, and Lothians of this world. We have not and, I repeat, we will not allow local authorities to spend irresponsibly and profligately--and we mean what we say.

No local authority will be allowed to undermine the principles of sound and prudent public sector management to which my right hon. Friend the Chancellor of the Exchequer and all the other members of the Government are committed. I repeat that we will maintain firm vigilance over local authority spending. Where necessary, we will cap, and cap vigorously.

It is nonsense to suppose that local authorities should be let off the financial hook for flagrant mismanagement of their

responsibilities. They can and will be called to account. It is in the interests of the ordinary citizen that that should be so. Why should the people of Lambeth be subjected to savage bills because their local authority fails to collect rents, the community charge, and even outstanding rates arrears going back over many years? Why should the people of Liverpool have to pay for the self-inflicted deficits of their local council, and why should the people of Lothian suffer the same dismal experience?

Let us examine the collection rates for 1990-91. The five worst councils are Hackney, with 55 per cent.--Labour ; Lambeth, with 67 per cent.--Labour ; Liverpool, with 68 per cent.--Labour ; Islington, with 69 per cent.-- Labour ; and Newham, with 71 per cent.--Labour. In Scotland, the worst two regions are Strathclyde, with 71 per cent.--Labour ; and Lothian, with 75 per cent.--Labour.

Government is about responsibility, and local government is about local responsibility. We in government have a duty to ensure that local responsibility is not abused, and we intend to carry out that duty.

One of the more unedifying spectacles that emerged from the community charge was the flaunting display of the "can pay, won't pay" brigade. "Can pay, won't pay" is shorthand : written out in full, their credo was, "We have the money to make our proper contribution to the cost of essential local services, but, because we wish to indulge in


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political point-scoring, we will withhold that contribution--knowing full well that by doing so we will force local authorities either to increase charges for the great majority of law- abiding citizens, or to cut services." Put in such terms, that is a cheap and tawdry act, and the whole campaign is rightly reviled by most people. Even the Scottish National party has been forced to acknowledge that it hitched its colours to a vote loser.

Such action becomes particularly distasteful when it is carried out by elected representatives. In our view, it is entirely unacceptable for them to be allowed to continue to exercise any influence over the amount of local taxation that they require their electorate to pay. Such a degree of hypocrisy cannot be tolerated ; it is morally indefensible, and in defiance of the rule of law. We are saying to those councillors, "Won't pay, can't say" ; in other words, "If you are not prepared to obey the law and pay your rightful contribution to the cost of the local services which, as locally elected representatives, you have a say in providing, it is unjustifiable for you to have any influence, through your votes, on the amount of local tax that is levied in your area."

Today--diffidently, quietly and from sedentary positions--Opposition Members agreed with that. Yes, whispered the hon. Member for Dagenham, they would support us. We welcome that deathbed repentance, if it lasts through the Committee stage. But what a pity that, when the heat was on--when the law of the land was being challenged by Labour councillors up and down the country, and by Members of Parliament--the Opposition Front Bench was found wanting, and failed to stand up to the rule of law.

When the Opposition try to throw back at us arguments about increasing accountability, I say this to them. Yes, we believe in local accountability : we have tried to strengthen it, first through funding mechanisms and now through contemplating single-tier authorities. But where is the accountability in a policy that abrogates responsibility, or in a Government who do the same? Where is the accountability in a Government who take all controls off local authorities, and let spending rip ; who switch a larger burden of tax-raising to profligate authorities and abandon the interests of oppressed residents? Where is the accountability in a policy that fails to take account of the number of people living in a house, and leaves businesses without a vote and at the mercy of local authorities?

When asked to hold themselves accountable to their residents, local authorities chose instead to clobber them with a 30 per cent. increase in this year's burden and inadequate efforts to collect until it was far too late. There is no sense of accountability in a council such as Edinburgh, which sought last year to tax residents at £584 per head.

The fact is that Labour wants to keep the poll tax so that it can attack us with it. Labour wants to hide behind it, to disguise the incompetence and extravagance of Labour authorities and their lack of an alternative. If I am wrong, Labour can prove it by helping the Local Government Finance Bill on to the statute book. That is the acid test. How can the nation judge Labour's sincerity if Labour is determined to resist? The truth is that Labour knows that it has no creditable system with which to replace our proposals.

Our council tax forms part of a major undertaking on which we have embarked to reform the structure, funding and function of local government throughout Britain. It is


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fair ; it spreads the burden evenly, providing proper discounts and proper control of local authorities. I urge the House to throw out the amendment.

Question put, That the amendment be made :--

The House divided : Ayes 198, Noes 326.

Division No. 1] [10 pm

AYES

Adams, Mrs Irene (Paisley, N.)

Allen, Graham

Alton, David

Archer, Rt Hon Peter

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashley, Rt Hon Jack

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Beckett, Margaret

Beith, A. J.

Bellotti, David

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

Cartwright, John

Clark, Dr David (S Shields)

Clay, Bob

Cohen, Harry

Corbyn, Jeremy

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cunningham, Dr John

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Duffy, Sir A. E. P.

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Ewing, Harry (Falkirk E)

Ewing, Mrs Margaret (Moray)

Faulds, Andrew

Fearn, Ronald

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Galloway, George

Garrett, John (Norwich South)

Garrett, Ted (Wallsend)

George, Bruce

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Golding, Mrs Llin

Gordon, Mildred

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hain, Peter

Hardy, Peter

Harman, Ms Harriet

Haynes, Frank

Heal, Mrs Sylvia

Henderson, Doug

Hinchliffe, David

Hoey, Kate (Vauxhall)

Hogg, N. (C'nauld & Kilsyth)

Home Robertson, John

Howell, Rt Hon D. (S'heath)

Howells, Geraint

Howells, Dr. Kim (Pontypridd)

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Roy (Newport E)

Illsley, Eric

Ingram, Adam

Janner, Greville

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Kaufman, Rt Hon Gerald

Kinnock, Rt Hon Neil

Kirkwood, Archy

Lambie, David

Lamond, James

Leighton, Ron

Lewis, Terry

Litherland, Robert

Livsey, Richard

Lloyd, Tony (Stretford)

Lofthouse, Geoffrey

Loyden, Eddie

McAllion, John

McAvoy, Thomas

McKay, Allen (Barnsley West)

McKelvey, William

McLeish, Henry

Maclennan, Robert

McMaster, Gordon

McWilliam, John

Madden, Max

Mahon, Mrs Alice

Marek, Dr John

Marshall, David (Shettleston)

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Martlew, Eric

Meacher, Michael

Meale, Alan

Michael, Alun

Michie, Bill (Sheffield Heeley)

Michie, Mrs Ray (Arg'l & Bute)

Morgan, Rhodri

Morley, Elliot

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mullin, Chris

Murphy, Paul

Nellist, Dave

Oakes, Rt Hon Gordon


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