The Guardian from London, Greater London, England • 14

FINANCIAL GUARDIAN 14 Thursday July 15 1982 Ready to leap backward fwgrawk I Weekly publishers Jwpjp in a free-for-all 5 PMHP Kleinman I fcjM who forgot that building societies have almost taken over the deposit market, there will be a surge in dollar funds shortly. It. will be nothing like enough, however, to cover the Federal budget deficit. Government borrowing is bound to rise almost everywhere as the world economy scrabbles up against the side of the trough. By contrast, Britain's dependence on a rising volume and value of North Sea output is about to be cruelly exposed.

The pound has been held at levels that do not allow most manufacturers to compete with rivals in other industrial countries whose currencies have been devalued. In durable consumer goods and machinery, more adaptable production lines in the Far East and Italy have survived the recession much better. Just across the Channel franc devaluations and lower German and Dutch inflation have 1 p. exporters to Britain, though weak home demand could lower imports soon. The budgetary and food import costs of EEC membership seem likely to' rear up again in the face of the Conservative Government.

The conclusion must be that investment in the US and probably Japan and Germany will show higher returns until the pound comes down to a more reasonable level. Since the fall in the pound and rising commodity prices, which have just begun to appear, are threats to the anti-inflation programme, the British economy is likely to remain wedged in its cleft stick. Although several billions of international debt have been repa9d, a rising deficit oh current account would complete the irony by lowering the pound eventually. Most; US shares are much cheaper than those of their UK counterparts, and the leap of nearly a quarter In IBM's latest quarterly profit demonstrates how strong tho high-technology section really is, along, with defence and energy suppliers. After the strong revival in Government stocks and big advance in defence and other research-based issues, small investors might have hoped for an outstanding performance from some unit and investment trust stocks, but above-average gains have been rare indeed.

The erratic nature of the equity market is demonstrated by the fact that while GEC shares have trebled over the last couple of years, those of ICI, have fallen by 10 per cent. The quick sale of several hundred million pounds worth of gilts by the Bank of England this month shows that the former Grand Old Duke of York technique of boosting interest rates has given way to more subtle methods removing the quick subscription gains that could sometimes accrue. Nevertheless, the need for a larger volume of sales in the absence of attractive savings certificate issues is apparent. Government revenues have been sustained by VAT and income tax on deposit inter-, est, plus the North Sea inflow. Extra funds will probably have to be raised along with expenditure before the economy is stimulated enough to bring unemployment under control.

Meanwhile, inflation lias not yet been ironed out of the system as the early flush of pay disputes underlines. Gold and commodities are speculative investments, but they, and more particularly, the underlying mining shares are among the more promising at present. ads 'in freesheets as well as in competitors, some CVof the more substantial sheet publishers have conducted re- search to prove that their papers are well read and not instantly discarded. Confidence rKas y.also; I been bolstered'' byl: agencies ldhger- hajve to take theHpdWShisrl.Vrrifor It that 'theirt' papers are0regu- larly pusjfied through? so many thousandvV'jet'terbbxes. The Audit Butfeatao? i'GijrMla-tions now rurisa" Verified Free Distribution-' sef vice which checks 't3ieVvp'ub'Iifi)iers' claims.

ov'-t Today agencie) 'u'dge i fee-sheets on their. merits as advertising and as newspapers. The' good ones, says who' jrecehtly acted as a judgeihv 'contest to find the freesheets in the are as good as any pa'idSfor though the in many, freesheets is extremely bland. However, what is most striking -to anyone leafs through-a selection of fr.ee- their great), diversity. They range which almost entirely of advertising, to papers with no more than 50 per cent of their space devoted to The latter ratio is more' likely, to result from a Cfail-ure to attract ,1 advertising than from purist editorial policy.

Witfj" no -price and with distribution "costing something like 1,000 for an edition of 60,000 copies, freesheets obviously? cannot afford to have tbo ihany.ad-. free Ian rule of thumb is that -to make money you need to fill 75 per cent of your space with What is often forgotten is that, despite the great difference in their methods of distribution, freesheets and paid-for weeklies are not all that different financially. Paid-for weeklies, after all, derive 85 to 90 per cent of their revenue from advertising. Several weeklies which previously charged a cover price have recently gone free, and some observers seriously predict that their example will be followed bv all the others within a few years. But, pace Teddy Taylor, what works for a local weekly serving a defined market which can be easily reached by door'-to-door distribution, will not necessarily work for larger-scale publications.

WeekEnder, the all-London free- newspaper which never found a precise enough way of distributing itself to convince advertisers its space was worth buying, went bust recently, leavini? debts of 1 million. It stands as. an awful Warning" "to anyone who thinks freesheets are an easy way to get rich quick. INVESTMENT Robin Stoddart MRS THATCHER may not know it yet, but she is poised on the mat, toes clenched, ready for one of the great backward somersaults of economic history- Some might argue that the manoeuvre is already half-completed, adding to the danger. By pumping out funds and forcing interest rates down, the Bank of England has provided industry with a modicum of encouragement, though the trend is not yet all one way.

The high street banks were distinctly sluggish in taking their cue and as their deposits are switched to building societies they may well rue the day the Old Lady stitched the bill market up, contrary to all the tenets of free supply and demand and monetarism. Fortuitously, New York felt a tremor from some banking difficulties, but Wall Street benefited from an erratically steep fall in dollar money supply. Unless all of the analysts of the United States money scene have erred as hugely as M3 watchers, Changing Sir, I would like to correct certain statements which were made in the article on Zaire diamonds published in the Guardian on June 16. The. author stated that Zaire had received only $2 million realised from Miba mine diamond sales in the last year with De Beers and that the balance had gone in Central Selling Organisation charges.

In fact, between January and April, 1981, the last four months of the contract between Zaire and the CSO, the CSO paid a net price of $13.9 million for 1,661,147 carats which represents an average have had their problems, due mainly to cost inflation and the slump in recruitment advertising, formerly a mainstay of provincial press prosperity. But Fletcher argues that the principal economic effect of the proliferation' of freesheets has been to prevent a collapse in the share taken by the regional press (paid and free) of total advertising expenditure. The figures are revealing. Freesheets last year raked in 105 million of advertising money, 25 per cent up on their 1980 score of 84 million. Paid-for weeklies lost ground in real terms, increasing their advertising revenue from 178 million in 1980 to only 186 million last year.

However, the regional press share of the total 2,800 million UK advertising cake declined only marginally from 25.05 to 24.27 per cent, about what lit used to be in the late 1960s before the classified advertising boom helped to push it up to over 30. per cent in 1974. If it. had not been. for the.

freesheets, the number of which has more than doubled favour the idea, that it should be a freesheet simply because that is seen as the quickest way to break into the Gazette's market. In the borough next door the Camden New Journal is making encouraging progress after four months of existence. Started by former employees of the defunct Camden Journal with a 60,000 bank loan under the Government's Small Businesses Scheme, the paper is circulated to 50,000 homes instead of being bought by 7,000 as was its predecessor. Without being in any sense a party organ, it enjoys a friendly relationship with local Labourites. Whatever the Scottish TUC may say, a paper like the Camden New Journal is clearly creating jobs, not destroying any.

In fact Ian Fletcher, chairman of the Association of Free Newspapers and boss of the highly successful Yellow Advertiser group in Essex, maintains that no jobs have been lost anywhere as a direct- result of the rise of freesheets. Of course, local weeklies over the past eight years to nearly 500 (compared with about 1,100 paid-for weeklies) a lot more advertising might have flowed into other media, particularly radio. So says Fletcher, who is of course an interested party. But others with no axe to grind support his view. For instance, Roy Warman, a director of the Saatchi and Saatchi ad agency group, agrees that freesheets are very cost-effective.

In terms of cost per thousand readers they are roughly half as expensive on average, as paid-for weeklies, he says. (Fletcher says a third as expensive). Because of their comparatively low rates they have been able to attract many small advertisers who would otherwise not have advertised at all. Formerly ad agencies tended to be suspicious of freesheets and to prefer to take space in paid-for weeklies, regarded as more authoritative editorially and more effective advertisingwise. But the last couple' of-years there has been a big change.

Experience has shown that PARLIAMENT Future of the railways very dark, Howell tells MPs Pay moderation is needed 'for many says Jenkin FREESHEETS have become a cause for both concern and jubilation. Freesheets is the term used mainly by detractors of what their owners prefer to call free-distribution newspapers. They are the local papers, almost all weeklies, which are given away and' depend for their income entirely on advertising. Much of the concern has come from the political Left. Several Labour MPs have voiced disquiet about the growth of freesheets, and the Scottish TUC has warned that they are a threat to the.

existing, paid-for press. A recent issue of the Hamilton and Motherwell People, which describes itself as Scotland's only independently-owned free newspaper, complained bitterly that the local Labour-controlled council had joined the witchhunt against free papers and was withholding from' it both information and advertising. On the other hand Teddy Taylor, Tory MP for Southend East, writing in the Guardian last month (Agenda, June 28) hailed freesheets as the saviours of the provincial press and looked forward to the day when national papers, too, would be distributed free of charge. A straightforward battle, then, between free market ideologues and Labour movement supporters of restrictive practices Hardly. Just take the case of the London borough of where it is the local paid-for weekly, the Islington Gazette, which is complaining about being boycotted by the new Labour council.

Labour hostility to the Gazette is based not only on its political attitude but on the fact that, during a long industrial dispute with the National Union of Journalists following the closure of its sister paper the Camden Journal, the Gazette's editorial staff were regarded as blacklegs. Now talks are going on with a view to starting a new Islington weekly which would be editorially very much more sympathetic to Labour. Though no decision has yet been taken, party members interested in the project Mr Hughes: Minister has a responsibility Mr Howell replied that he regretted the last-minute efforts of ACAS had not succeeded. If there was any indication in the ASLEF proposals of a change of heart, of a firm commitment to flexible rosters, that they would lift the strike and accept the introduction of flexible rosters, I believe the British Rail Board, and certainly the Government, would be extremely anxious to welcome strongly, the consequent discussions which would lead peaceably to the introduction of flexible rosters." But ASLEF had done none of these things. "The difficulty is now clear.

Under the shadow of this strike the ASLEF offer would again postpone, delay and fudge the which has been fudged and delayed for a long time. Mr Howell said that a good initiative from Mr Booth and the Opposition Leader, Mr Michael Foot, would be. to go Government The. Government was defeated in the Lords yesterday when peers backed an amendment to the Transport Bill outlining fixed penalties for speeding, offences. Voting for a two-tier structure of penalties, which would take account of technical offences as distinct -from' serious ones was 74 to 66, a majority; against the Government of eight.

Urgirig' the change during the Committee- Stage of the bill, Lord Lucas of Chtlworth (C) explained- that the provision 'would ensure that for purely; technical speeding offences where there -was no reckless driving or, inconvenience, to diamond price per carat of $8.37. In arriving at the net figure, and in accordance with the terms of the con-tract agreed with the Zaire authorities, the CSO deducted certain charges in relation to the servicing and the sorting of the diamonds. According to official figures released by AZAP, the Zairois news agency, the average price now being realised under the new selling arrangements for the Miba mine is substantially less than under the original contract with the CSO. The author also stated that under the contract with De Beers the cartel made Zaire wait weeks for its diamond Minister relying on "second or third-hand reports of the dispute without having spoken personally to the parties involved. For the Social Democrats, Mr Tom Bradley said that it was not enough for the Minister to shrug his shoulders over the' dispute.

With the backing of the two other rail unions, who had accepted flexible rostering, "why will he not take an initiative in bringing the parties together and resolving the issue? News of the shut-down was given to MPs in the Commons by Mr Howell, about an hour-and-an-half after the statement issued by the British Rail Board. Mr Howell told MPs that the board had announced that it would-be forced to close the system down from next Wednesday unless there was a substantial return to work by drivers. He said that all drivers' on strike next Tuesday would be dismissed. But striking drivers would be offered immediate re-employment on the same terms if they agreed to work the new rosters. "The decisions to which the British Railways Board have been driven are clearly very grave.

The strike which has caused them is a point-, less one which should never have been called and should and could easily be lifted even now by the ASLEF Executive," said Mr, Mr Howell said that the board had told him that its further offer of constructive ways, on which rostering could be applied, once ASLEF had lifted the strike and accepted the principle, had again been rejected by the union in the last 24 hours; It was the duty of those who believed the rublic should be protected and the he said, 14 lives and some 200 injuries. But Mrs Chalker said that the Department of Transport had. sought in no way to delay implementation of the Act, only to get it right. "I believe it very important to get this right It has been more effective In countries like Austria and Sweden which took their time rather than in those countries which rushed its introduction." Mrs Chalker said that the necessary regulations had been laid before Parliament figures money, until the stones had been resold on the world market. In fact, 80 per cent of the provisional value of each shipment delivered to the Kinshasa sorting office was paid by us within four days of the delivery from the mine.

Any outstanding balances due were paid a few weeks later, following the final valuation by the Zaire Government's own valuator and the CSO. Yours faithfully, T. W. H. Capon.

Director, Central Selling Organisation, Charterhouse Street, London, EC 1. Mr Bradley: Bring the parties together railways saved from disaster, to persuade the ASLEF executive to desist from their futile course." Mr Booth warned Mr Howell The threat of dismissing strikers will only serve to make the sf.utle-ment of the dispute more difficult. It will heighten hostility, when wnat is needed is an attempt to de-escalate the dispute' and reduce the hostility. "The resent railwav crisis owes much to the policy of your Government, and your role in the matter is an abnegation of your responsibility to try to get the railways running again." Mr Booth asked why the Government had not stepped into the dispute. He called on.

Mr Howell to welcome "belatedly" the efforts of AC AS to bring a last-minute solution, and demanded to know what justification there was for the rejection by BR of ASLEF's latest proposals. on But once they had been, approved there had to; be a 23 week period before' they came into force. But she agreed to a request, from Mr Barry Sheer-man (Lab, Huddersfleld E) to look; at fte possibility of bringing forward the -provisions for children's belts. She also agreed with Opposition spokesman, Mr Roger Stott, that Parliament, debate the. matter before: the recess: am using my best endeavours of persuasion to see this is done," she said.

back on their bizarre statements of the weekend, which had given comfort and support to ASLEF. He urged them to consider "the wise words" of NUR leader, Mr Sidney Weighell. Labour backbencher, Mr Leslie Spriggs (St Helens), a former president of the North West District of the NUR, drew Tory cheers, and jeers from his own side, when he spoke in strong support of the British Rail Board. "Many MPs now opposed to the new rosters do not know the first thing about the rosters," the former railwayman said. As far as rail-waymen and their families are concerned these rosters will be of real service to every railwayman," he added turning to his backbench colleagues.

Mr Howell told him: "I hope your practical wisdom, based on hard and real experience, will be listened to very closely by your more theoretical colleagues, who seem all too eager to plunge the industry into grave dangers for no good reason at all." Dealing with further backbench points, Mr Howell said it was right even now, "for all who have influence on the trade unions, i 1 di.n ASLEF, to seek to exercise that influence and bring home the disastrous course, oh which they are set." He rejected a claim by Labour Left-winger, Mr Bob Cryer, that flexible rostering. would only save 1,500,000 a year while the strike was costing 9 million a day. Mr Howell said flexible rostering was the key to an extra 35 million a year. It was not too late for ASLEF to enter into talks on flexible rostering and avert a shutdown. Mr Howell told MPs By Martin Linton THE Transport Secretary, Mr Howell yesterday issued an eleventh hour plea to striking drivers to halt their dispute and avert the planned shut-down of the rail network.

"The path ahead for Britain's, railways is very dark," he. said in the Commons. Vast resources are being bled away. Thousands of jobs could disappear for good and travellers and holidaymakers are being caused much bitter misery and. suffering.

who called this unnecessary strike, as well as those: who have given comfort, and succour to the strike, carry an immense and direct responsibility for all this damage." In answer to questions he said the strike was leading the railways into a diastrbus cul de sac unless ASLEF took the initiative to lift the strike and accept flexible rostering. He said It remains in the hands of the ASLEF executive to call a halt to the destruction." But Mr Howell coupled his appeal to the drivers with an attack on the statements from the Opposition which he claimed had given support and comfort to the strikers. His comments provoked anger on the Labour benches. The' Shadow Transport Secretary, Mr Albert Booth, blamed Government policies for causing the rail crisis, and said Mr Howell had failed in his duty to keep the railways running. Another Labour spokesman Robert Hughes, asked him to live up to the responsibility of his1 office and call the parties to the dispute' together.

With, some movement on both sides ASLEF was prepared to call off the strike, he said. But it; was no good the "The impact of the present" dispute is bound to lead to a revision of views about what kind of railway system can be run." But ASLEF's parliamentary spokesman, Mr Leslie Huckfleld (Lab. Nuneaton), blamed British Rail for refusing to negotiate on the train drivers' offer of a solution to the. dispute. He added: Local management this week on British Railways have been using threats, bullying and intervention against members of ASLEF.

"Tactics like this only confirm what many of us have -believed namely that you and the board all the way through have been seeking a deliberate confrontation with this union." Mr Howell replied that the British Rail board had-'-' bent over backwards" to promote ways in which the flexible rosters could be introduced. And he denied that the Government was seeking to break ASLEF. Talk of "union smashing" and other "fanciful suggestions" were a distraction from the basic aim of all-those with the interests of the railways at heart, Mr Howell said. Replying to Mr Bradley's call for a personal intervention, the Transport Secretary said it was difficult to see how any sensible discussions' about flexible rosters would take place while the strike, continued. Mr Nigel Forman (C.

Car-, shalton) said that many of his commuter constituents were fed up to the back teeth with Mr Ray Buckton and the ASLEF executive. The one thing they would not understand either from the Govenment or from Bri-. tish Rail Board would be if either were, to back down on the sensible way forward that has been suggested." effect to an undertaking given during the Second Reading of the (bill, he said. They meant that any holder of a current orange invalid badge would be immune to immobilisation powers. The Earl hoped regulations, would, come before Parliament before the summer adjournment, although they would not come into force until a few months later, -probably by the end of the year.

Today in Parliament House CunmMii: Debate" 'on Common risherles Policy; Air Force and.Nonl Discipline Acts (Continuation) Order. Home (T Lords: Local Government and. Planning Bill (Report): Merchant Shipping Liner Conferences Bill (Committee); Stock. Bill I Report). jobs a year to get anywhere near the unemployment levels that people are entitled to expect, he said.

Winding up for the Opposition, the Shadow Industry Secretary, Mr Stan Orme brought protests from Tory backbenchers when he suggested the directors of Trafalgar House should be charged with treason for planning a replacement for the Atlantic Conveyor container ship lost in the Falklands operation, from Korea. The seamen who were lost with the ship in the Falklands crisis needed decorating, but the directors of Trafalgar House need charging With treason," he asserted. Mr Jenkin: Can be no let-up on pay For the Government, Industry Minister of State Mr Norman Lamont said that the ideas put forward by the Opposition parties would undermine Britain's long-term competi-tivity, increase inflation and lead to more long-term unemployment. The Opposition motion, condemning the Government's regional policies was defeated by 330 to 216 (Government majority 114). Five die on YOP courses Five youngsters died in the nine months ended March this year while working on Youth Opportunities Programme courses, said the Employment Under-Secretary, Mr Peter Mor-rison, in a Commons written reply yesterday.

The circumstances of the deaths were not' given. In a total of 2,652 accidents, 32 youngsters lost part or all a finger, hand, toe or fooV A warning that the recent moderation in pay settlements must' be sustained for many years if Britain is to' recover its competitiveness, was given by the Industry Secretary, Mr Jenkin, last night Pay a vital element in the fight back to prosperity, Mr, Jenkin told MPs. All the efforts of industry to raise efficiency, design competitive products, and create employment, would come to nothing if the whole benefit was swallowed up in. higher pay. Mr Jenkin was responding during-an Opposition sponsored debate condemning the Government's regional and industrial policies.

Mr Jenkin acknowledged that more moderate pay settlements last year had greatly helped improve competitiveness and saved jobs. But there was still a long way to go. "If we are to succeed this must be sustained over many years. There can be no let up on pay," he insisted. Mr Jenkin warned that Labour's policies could trigger off a massive wave of inflation and were a prescription for bankruptcies, closures and unemployment." Opening the debate, Opposition spokesman Mr John Pres-cott said that some men who manned ships in the South Atlantic were now to be made redundant.

"We reject a Government that calls on men to protect ships and man them in the soum Atlantic war tnenjat a time of peace says they cannot build replacement orders and sail' oh the ships simply because they are too he said. The Opposition motion condemned recent Tory proposals -on assisted areas as "totally inadequate and called for the implementation of Labour's "Plan for. Jobs." Mr. Prescott told MPs that Labour: -would seek to create high and stable employment against a framework of industrial democracy at work and at national and: regional level. All regions would have plan-, ning boards and development agencies.

But Mr said no regional- policy could hope to succeed against present background of high unemployment. If we do not get central and economic policy right there is no possibility that the regional policy can work he said. A future Labour Government would need1 to create, 500,000 speeds to Lords defeat Minister pressed to hasten the introduction of seat belt law other drivers, the penalty would be less than if the driver attempted to argue the case and went to court. Lord Lucas said his amendment attempted to simplify the system of penalties, and went further towards a system of differential between the serious and the serious offences. For the Government, the Earl" of Avon argued that the provisions of the 1981 Act should be continued.

"I think we really must give it a chance before, we start changing Later, the Earl of Avon promised that invalid drivers would not have wheel clamps placed oh. their cars if they were illegally parked. New regulations on this point gave By Martin Linton THE Transport Minister, Mrs Lynda Chalker, was pressed hy-MPs of- all yester-. day to speed up implementation of the -law making the wearing of seatbelts compulsory. The Jaw was Included in-last year's Transport Act--but is not likely to be implemented until March next Mr Toby Jessel (C.

Twlck-enham) urged her to bring the date forward if -possible as every week of delay cost,.