Commons Sitting of 12 July 1954

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    LONDON COUNTY COUNCIL (HOLLAND HOUSE) AMENDMENT BILL [Lords]
    Read the Third time, and passed, without Amendment.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF FOOD

    Canned Fruits
    Mr. Dudley Williamsasked the Minister of Food his estimate of the consumption of canned fruits in the United Kingdom.
    The Parliamentary Secretary to the Ministry of Food (Dr. Charles Hill): In 1951, 1952 and 1953 about 194,000, 137,000 and 195,000 tons, respectively.
    Mr. Williams: While thanking my hon. Friend for that reply, may I ask him to bear in mind that all these supplies can be produced within the Commonwealth or the United Kingdom? Therefore,
    2
    would he be careful before accepting gifts from the United States of America under the Mutual Security Act, otherwise there may be unemployment in the canning industry in this country and Commonwealth relations may be strained?
    Dr. Hill: I remind my hon. Friend that if the total programme supplies of canned fruit under the Mutual Security Act are received, they will amount to 3·9 per cent. of the total consumption of this country.
    Mr. Dodds: Will the hon. Gentleman bear in mind that the housewife can do with more canned fruits if they are cheaper, and if there should be gifts, even from outside the Commonwealth, will he remember the housewife and accept them with thanks?
    Dr. Hill: I appreciate what the hon. Gentleman says.
    Mr. N. Macphersonasked the Minister of Food whether he is aware of the growth of the home packing of canned fruit salad from fruit imported in bulk from the Commonwealth and the threat to this industry constituted by the resumption of shipments from the United States of America; and what steps he will take to protect this industry.
    Dr. Hill: The importation of canned fruit salad from the United States of America has not been resumed.
    Mr. Macpherson: Will my hon. Friend give an undertaking that it will not be resumed without the fullest consultation

    3
    both with the interests in this country and with those in Commonwealth countries?
    Dr. Hill: I have already told my hon. Friend the Member for Exeter (Mr. Dudley Williams) that if the total supplies under the M.S.A. programme are received they will amount to less than 4 per cent. of the total consumed.

    Liquid Milk
    Dr. Strossasked the Minister of Food whether he will take action to reduce the price of liquid milk to the consumer; and what means are available to prevent skimmed milk being wasted.
    Dr. Hill: The answer to the first part of the Question is "No, Sir." No skimmed milk is being wasted now that the milk flush has passed.
    Dr. Stross: Does the Parliamentary Secretary accept that if milk were cheaper the likelihood is that more would be consumed by the public, and that it would be for the benefit of the public if this were so?
    Dr. Hill: I appreciate the hon. Gentleman's concern. He will, no doubt, rejoice in the fact that the average consumption before the war was 2¾ pints per head and that it is now 4½ pints per head. Among the poorest section of the community the amount of milk consumed has been almost trebled.
    Dr. Stross: Is not it true that in other countries—the Scandinavian ones and especially Holland—consumption of liquid milk is much higher than that?
    Dr. Hill: That is certainly true of the Scandinavian countries.
    Dr. Strossasked the Minister of Food whether he estimates the present rate of liquid milk consumption as being the optimum; and what steps he intends to take so that the rate of consumption will increase.
    Dr. Hill: The optimum rate of liquid milk consumption cannot be estimated in isolation from that of milk products, of the general national diet, or, more particularly, the diet of those whose need for milk is greater or less than the average.
    All sections of the milk industry, acting jointly, have launched a publicity
    4
    campaign to encourage the consumption of liquid milk.
    Dr. Stross: That being so, what does the Ministry propose to do to assist? Does it propose to leave the matter purely to the industry or to give any specific assistance either by furthering the campaign or lowering the price of milk?
    Dr. Hill: The hon. Gentleman will recall the transference of powers to the Milk Marketing Board that has taken place. The Ministry will give all the aid it can, though the responsibility now rests primarily on the Board.
    Dr. Summerskill: Does the Parliamentary Secretary agree that the argument which he has previously advanced on this subject is valid, that because there was under-consumption of milk before the war we should be satisfied with the consumption today?
    Dr. Hill: But the consumption of milk should be taken in relation to the consumption of other foods, and the consumption of other foods is. in many cases, up.
    Dr. Summerskill: What is the exact substitute for milk?
    Dr. Hill: We had better not go into the biochemistry of food, but millk, important though it is, is not the only food which is of value to the human body.
    Dr. Kingasked the Minister of Food what steps he is taking to improve the hygienic production and transport of milk following the recommendations made at the meeting recently held in Denmark on behalf of the Organisation for European Economic Co-operation.
    Dr. Hill: The Milk and Dairies Regulations, 1949, and 1953, and the Milk (Special Designations) Regulations, 1949, 1950 and 1953, already give broad effect to the general recommendations made at this meeting.
    Dr. King: Is the Minister aware that that is the first satisfactory answer we have heard this afternoon?

    Technical and Medical Officers (Retention)
    Dr. Strossasked the Minister of Food how many of his technical and medical advisers he proposes to retain

    5
    now that derationing is completed; and to which Ministry or Ministries the remainder will be transferred.
    Dr. Hill: I assume that the hon. Member refers to the small group of technical and medical officers at headquarters concerned with food hygiene, meat inspection and such matters. The end of rationing has not made any of this group redundant.

    Food Stocks
    Sir W. Smithersasked the Minister of Food the details of stocks of food in the possession of his Department on 4th July, 1954, and their cost price, including storage and management.
    Dr. Hill: I cannot usefully add to the reply given to my hon. Friend on 23rd June.
    Sir W. Smithers: Is my hon. Friend not aware that one of the main duties of a Member of Parliament is to be a guardian of the public purse? How can we do our duty if all Ministries are infected with the Crichel Down disease?

    Subsidies (Cost)
    Sir W. Smithersasked the Minister of Food the total loss to the taxpayer on the purchase and sales of food in the last 14 years since rationing began.
    Dr. Hill: The total cost of food subsidies from September, 1939, to March, 1954, including subsidies administered by other Departments, was about £4,065 million.
    Sir W. Smithers: Is not this complete proof of the failure of nationalisation?

    Bulletin (Publication)
    Mrs. Castleasked the Minister of Food why he has decided to discontinue publication of his Department's bulletin.
    Dr. Hill: The bulletin was no longer required as a medium of information for the Ministry's local staffs and the loss on publication could not be justified when rationing ended.
    Mrs. Castle: Has the hon. Gentleman's decision anything to do with the fact that the latest issue of the bulletin shows the general public that last year they consumed fewer calories, proteins and
    6
    carbohydrates than when the present Government came into office and that they ate less meat, oils and fats and eggs than pre-war?
    Dr. Hill: If there were any sinister purpose, we should continue the publication of the bulletin in order to show a vastly improved situation this year.
    Mrs. Castle: Is it not the hon. Gentleman's duty to protect the consumer, and is it not of value to us to know the effects of the Government's food policies on food consumption?
    Dr. Hill: The information will still be available, but this publication, intended for the Ministry's regional and local offices, and losing £50 a week, has properly been brought to an end with the end of food rationing.
    Dr. Summerskill: Is it not a fact that in a previous reincarnation the hon. Gentleman used to disseminate this kind of information on the radio. Since that has stopped, does he not think that it should be continued in this manner?
    Dr. Hill: I admit that I disseminated information in a way which was freer from statistics than the Ministry bulletin.

    Meat Prices
    Lieut.-Colonel Liptonasked the Minister of Food to what extent the wholesale selling price of meat imported under Government contract has increased since meat was decontrolled.
    Mr. Shinwellasked the Minister of Food whether he will consider reimposing price control on meat, in view of the increases in the price which have occurred since derationing.
    Dr. Hill: With permission, I will answer this Question and Question No. 12 together.
    Mr. Shinwell: On a point of order. Question No. 12 is quite distinct from the previous Question. It relates to a different subject. Might I have a separate answer to my Question, Mr. Speaker?
    Mr. Speaker: Perhaps the right hon. Gentleman will wait to see whether the reply answers Question No. 12. I do not yet know whether it will or not.
    Dr. Hill: The initial release of imported meat to the trade has been made

    7
    at the same average prices as under control, with a wider range between choicer and other qualities. Meat prices have already fallen substantially from the levels reached under the naturally uncertain conditions prevailing in the first day or two of free trade and are still tending to fall, There is plenty of meat about and there are many signs that the shopping public and responsible traders are seeing to it that it is sold at reasonable prices It is not intended to re-impose control.
    Lieut.-Colonel Lipton: Is the Parliamentary Secretary aware that there has been a lot of sharp practice in respect of imported meat? Will he make it clear to both butchers and housewives—[Interruption.]—if the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) will shut up for a minute he will hear what I have to say—that there has been no reason whatever for any increase in the selling price of imported meat since meat was decontrolled?
    Dr. Hill: If the hon. and gallant Gentleman has any evidence of sharp practice I shall be glad to have it, but I can reassure him that we are carefully watching the position in relation to the price of imported meat.
    Mr. Shinwell: Is the hon. Gentleman satisfied with the chaos, disorganisation and fluctuations in meat prices which occurred throughout last week? Is he aware of what happened at Smithfield market this morning? Can he assure housewives that there will shortly be some stability in meat prices?
    Dr. Hill: It is inevitable, after 15 years of rigid control, that in the auctions and in Smithfield, there should be some confusion at the outset. For example, so many butchers went to Smithfield to buy meat last Monday that it was difficult to get the meat away, with the result that too many butchers were chasing too little meat. The position has now very considerably improved and prices are tending to settle.
    Mr. Shinwell: Does all this mean that the result of the Government's action in removing price control has been to cause disorganisation and confusion and to hamper housewives?
    Dr. Hill: No, Sir. It means a wider variety and a larger supply of meat available to the people. No one wants to return to prison after 15 years inside because of a few breezes blowing on his face on the first day of freedom.
    Mr. Baldwin: Is my hon. Friend aware that British housewives are buying meat today at less than any country on the Continent, in some cases at half the price charged there? Is he aware that many meat exporting countries are charging their own consumers more for the meat than purchasers in this country are being charged?
    Dr. Hill: Yes, Sir, and I am also aware that in some cases, such as with English mutton, chops and stewing steak, meat is now cheaper than it was under control.
    Mr. Bence: In watching the present situation, will the Parliamentary Secretary make sure that some unscrupulous butchers, in order to meet the resistance of the housewives to the high prices which are being charged, do not attempt to sell the housewife imported meat in place of home-killed meat?
    Mr. Baldwin: The housewife should change her butcher.
    Dr. Hill: I believe that the freedom now given to the housewives through the exercise of shopping skill will be more important than all the statutory rules and orders could be.
    Mr. Willey: If, contrary to the laws of supply and demand, increased supplies are going to cause increased prices, which is the Parliamentary Secretary's case—[HON. MEMBERS: "No."]—will the hon. Gentleman intervene and reimpose price control?
    Dr. Hill: The law of supply and demand is speedily and satisfactorily asserting itself.
    Captain Duncan: is the implication in these Questions that the Labour Party is in favour of returning to rationing?
    Mr. Doddsasked the Minister of Food if, in view of the increased price of meat, he will consider reimposing control.
    Dr. Hill: No, Sir.
    Mr. Dodds: Would the hon. Gentleman be surprised to know that this morning I was in discussion with knowledgeable people in the meat trade who said that there will be no hope of a return to the same prices as obtained under control prices except in the case of offal and scrag ends of meat? Does that mean that the cheaper cuts are the types which are to be available for the mass of the people, and, if so, will the Parliamentary Secretary explain how his Government came into power on promises to reduce the cost of living and not to see it increased?
    Dr. Hill: The hon. Member's friends are entitled to their own forecast of what will happen. I do not share that forecast.
    Sir H. Sutcliffe: Is my hon. Friend aware that there has been very little increase in meat prices in some towns in the north of England, and that some cuts today are as cheap as they were before decontrol?
    Dr. Hill: There have been increases in some cuts and decreases in others.

    Food Hygiene
    Mr. Willeyasked the Minister of Food what changes have been proposed to him by the representative organisations to whom he circulated his revised draft of food hygiene regulations; and what action he has taken regarding them.
    Dr. Hill: Only a few replies have so far come in. My right hon. Friend will consider them together with the replies from other organisations which are still outstanding.
    Mr. Willey: So far, the changes have been made in favour of the trade. Will the Parliamentary Secretary on this occasion redress the balance and make such changes as he will in favour of the consumer?
    Dr. Hill: Among those who have replied are the Public Health Laboratory Service and the Society of Medical Officers of Health, and their views will be given ample weight in the reconsideration.
    Mr. Willeyasked the Minister of Food what items have been omitted from the proposals for food hygiene regulations and do not appear in the revised draft of these proposals.
    Mr. Harold Daviesasked the Minister of Food what items, which have been omitted from the proposals for food hygiene regulations, will now be incorporated in a code of practice not having legal force.
    Dr. Hill: With permission, I am sending to the hon. Members a copy of the earlier draft marked to show what items have been omitted or transferred to a suggested Code of Practice. I am placing copies in the Library of the House.
    Mr. Willey: We are much obliged to the Parliamentary Secretary for the information he will afford us, but does he appreciate that it would have been far better to have afforded the Bill a Second Reading months ago so that we could have discussed these matters in Standing Committee?
    Dr. Hill: The hon. Gentleman heard last week what the Leader of the House said about the prospects of a Second Reading.
    Mr. Haleasked the Minister of Food why the provision that a person handling food should wear a clean, washable overall, has been omitted from the proposals for food hygiene regulations.
    Dr. Hill: Because there are many operations in the handling of food in which the wearing of an overall is not necessary to protect the food from contamination.
    Mr. Hale: Does this not represent a complete surrender to the trading interests, and is not this one of the proposals which the hon. Gentleman supported until recently? Will he now tell the House why he has changed his mind?
    Dr. Hill: The issue is whether this item should be included in the regulations. The hon. Member will appreciate that in the first form the requirement to wear overalls would have covered all waiters in hotels, and. secondly, would have compelled the wearing of a white overall by those like brine workers, whose overalls are to protect themselves and not the fish.
    Mr. Shinwell: Does all this mean that the Tory Party prefers dirty food and high prices?
    Dr. Hill: That kind of question makes me wonder whether there is genuine enthusiasm among hon. Gentlemen opposite for the Food and Drugs Bill.
    Mr. Hale: Is not this purely a Committee point and precisely what we could have cleared up during a Committee stage?
    Dr. Hill: This is a matter of regulations, which will not be dealt with in the course of the progress of the Food and Drugs Bill.
    Mr. Haleasked the Minister of Food the staffing strength of the food hygiene division of his Department at 1st July, 1953, and 1st July, 1954, respectively.
    Dr. Hill: Fifteen at 1st July, 1953, and 17 at 1st July, 1954.
    Mr. Hale: Do not those figures reveal the extinction of the Ministry of Food?
    Dr. Hill: I should have thought that the hon. Member would have rejoiced that there was no reduction in this division, but, on the other hand, an increase.
    Mr. Haleasked the Minister of Food what provision his revised proposals for food hygiene regulations will contain for washhand basins being made available in rooms in which food is prepared, handled and stored.
    Dr. Hill: That suitable and sufficient washhand basins shall be provided for the use of persons engaged in the handling of food employed on or about food premises.
    Mr. Hale: I am obliged, but would the hon. Gentleman consider, in order to allay public apprehension, and after due consultation with all the bodies concerned and taking every relevant fact into consideration, making a statement that the Government are exploring every avenue and leaving no stone unturned to indicate their policy that, other things being equal, they are, on balance, inclined to be in favour of clean food?
    Mr. Willeyasked the Minister of Food what action he proposes to take to implement the recommendations regarding the cleaner handling of meat, made at the meeting of the World Health Organisation on meat hygiene held at Copenhagen.
    Dr. Hill: The more important matters dealt with at this meeting are covered by existing law or by the Ministry's Manual on Meat Inspection.
    Mr. Willey: Does the hon. Gentleman appreciate that there is already a good deal of disquiet about the way in which meat has been handled during the past week, and that it is incumbent on the Minister to see that the regulations are enforced and stiffened?
    Dr. Hill: The hon. Gentleman's Question refers to a study circle at Copenhagen, and I have replied that what was suggested there is already covered in this country.
    Mr. Bingasked the Minister of Food the functions of the food hygiene division of his Department.
    Dr. Hill: To administer those parts of the Food and Drugs Acts, 1938 to 1950, which deal with the inspection of food and food premises and the conditions in which food is manufactured, processed, prepared, stored, distributed and sold.
    Mr. Bing: Does the hon. Gentleman not think, in view of the conditions at Smithfield Market which he has just described, that an increase of two in this division is quite insufficient to deal with a situation in which, the hon. Gentleman tells us, there will be a great deal more meat?
    Dr. Hill: The condition in Smithfield Market arose from a larger amount of meat and a larger number of buyers than usual. It had nothing to do with the Food and Drugs Act.
    Mr. Harold Daviesasked the Minister of Food whether he will discontinue his discussions and consultations with outside bodies about the Food and Drugs Amendment Bill until that Bill becomes an Act of Parliament.
    Dr. Hill: The consultations in progress are on proposals for regulations to be made under the Bill when it becomes an Act in accordance with the requirements of Section 92 of the Food and Drugs Act, 1938.
    Mr. Davies: In view of the fact that
    "There's no art
    To find the mind's construction in the face:" "

    13
    —that is "Macbeth"—will the hon. Gentleman tell us what is going on about the Food and Drugs Bill? Would it not have been better to have considered it in Committee and have had all these points cleared up?
    Dr. Hill: If the hon. Gentleman had listened to other Questions and other answers, he would have had at least a dim idea of what is going on.
    Mr. Harold Daviesasked the Minister of Food why the revised proposals for food hygiene regulations contain no provision that first-aid equipment shall be readily accessible.
    Dr. Hill: Because, so far as food manufacturing premises to which the Factories Act, 1937, applies are concerned, first-aid equipment is required to be provided under Section 45 of that Act.
    Dr. Kingasked the Minister of Food what use has been made of the portable exhibits on clean food which have been prepared by his Department.
    Dr. Hill: The four exhibits have been shown 42 times in five months.
    Dr. King: Is the Minister aware that the excellence of this exhibition and the response of the public means that he should hurry on with carrying out the task, which we desire him to perform, of getting clean food in the country?
    Dr. Hill: I share the desire of all those who seek cleaner food.
    Mr. G. Jeger: Is the Minister aware that a large number of visitors to this country express their surprise at the way in which the food is handled? Will he get on as quickly as possible with the task of ensuring the cleaner handling of food?
    Dr. Hill: Conditions in this country are certainly of a lower standard than in a number of other countries, but the Question refers to the narrow issue of a food exhibition.
    Mr. F. Harris: Does the Minister know why the previous Socialist Government did nothing about legislation for clean food during the six years of their administration?

    Iced Lollies
    Mr. Bingasked the Minister of Food whether, in his proposed food
    14
    hygiene regulations, he will make provision in regard to iced lollies.
    Dr. Hill: The general problem of lead contamination of food, including iced lollies, has been considered by the Food Standards Committee whose report will, I hope, shortly be published. Thereafter, there will be considered any necessary action, by regulation or otherwise.

    Food and Drugs Act, 1938
    Mr. Bingasked the Minister of Food what regulations made by virtue of the Food and Drugs Act, 1938, are now in force.
    Dr. Hill: As the answer comprises a long list of Statutory Instruments, I will, with permission, circulate the information in the OFFICIAL REPORT. I am arranging for a set of the Regulations to be placed in the Library of the House.
    Following is the information:

    Food and Drugs Act, 1938

      REGULATIONS NOW IN FORCE UNDER THE FOOD AND DRUGS ACT, 1938
      (i) The Public Health (Condensed Milk) Regulations, 1923 to 1953. (S.R. & O. 1923, No. 509; 1927 No. 1092; 1943 No, 896; S.I. 1949 No. 1122, S.I. 1953 No. 1609.)
      (ii) The Public Health (Dried Milk) Regulations, 1923 to 1948. (S.R. & O. 1923 No. 1323; 1927 No. 1093; 1943 No. 896; S.I. 1948 No. 1123.)
      (iii) The Public Health (Meat) Regulations, 1924 to 1952. (S.R. & O. 1924 No. 1432; 1935 No. 187; S.I. 1948 No, 1119 and S.I. 1952 No. 1481.)
      (iv) The Public Health (Preservatives etc. in Food) Regulations, 1925 to 1953. (S.R. & O. 1925 No. 775; 1926 No. 1557; 1927 No. 557; 1940 No. 633; 1948 No. 1,118; S.F. 1953 No. 1610 and 1820.)
      (v) The Public Health (Imported Milk) Regulations, 1926. (S.R. & O. 1926 No. 820.)
      (vi) The Public Health (Imported Food) Regulations 1937 to 1948. (S.R. & O. 1937 No. 329 and S.I. 1948 Nos. 886 and 1121.)
      (vii) The Public Health (Shell-Fish) Regulations, 1934 and 1948. (S.R. & O. 1934 No. 1324 and S.I. 1948 No. 1120.)
      (viii) The Public Analysts Regulations, 1939, dated 1st August, 1939 made by the Minister of Health under Sections 66 (2) and 69 (3) of the Food and Drugs Act, 1938 (1 & 2 Geo. 6 c. 56). (S.R. & O. 1939 No. 840.)
      (ix) The Ice-Cream (Heat Treatment etc.) Regulations, 1947 to 1952. (S.R. & O. 1947 No. 612; S.I. 1948 No. 819; 1951 No. 67 and S.I. 1952 No. 815.)
      (x) The Food and Drugs (Whalemeat) Regulations. 1949 and 1950. (S.I. 1949 No. 404 and 1950 No. 189.)

    Slaughterhouses (Regulations)
    Mr. P. Wellsasked the Minister of Food whether, in view of the Slaughterhouse Act, 1954, and the decontrol of meat, he will now make regulations under Section 8 of the Food and Drugs Act, 1938.
    Dr. Hill: No, Sir.
    Mr. Wells: Is not the Minister aware that until the Government do take action the deplorable conditions which he knows exist in the Sittingbourne slaughterhouse and other slaughterhouses will continue indefinitely?
    Dr. Hill: Under Section 13 of the Food and Drugs Act, 1938, under the meat regulations made under that Act and under the model byelaws adopted by practically every local authority, there is ample legislative force for the purpose.

    U.S.A. Fruit (Imports)
    Mr. Remnantasked the Minister of Food what types and quantities of fresh fruit are included in his recent purchase of butter and other foods from the United States of America.
    Dr. Hill: Fresh oranges and grapefruit in small quantities.
    Mr. Remnant: What are the exchange conditions? Has American dollar exchange to be made available or are these commodities being furnished under the M.S.A.?
    Dr. Hill: As has been previously stated, they are being purchased for sterling, that amount being set against defence expenditure.
    Lieut.-Colonel Lipton: Has the hon. Gentleman made any inquiries about the age of this American butter which he is now purchasing, because it has been offered to him for a year or two now, without any action being taken, except last week?
    Dr. Hill: I can assure the hon. and gallant Member that no butter will be admitted to this country unless it is fresh and up to the statutory requirements in force here.
    Mr. Remnant: Can my hon. Friend say what quantities are being purchased for him?
    Dr. Hill: The programme quantities include fresh oranges to the value of 1½ million dollars and fresh grapefruit to the value of ½ million dollars.

    Butter
    Mr. Doddsasked the Minister of Food by what amount the consumption of butter dropped in May and June of this year, when compared with a similar period in 1951.
    Dr. Hill: Though there can be as yet no firm estimate of butter consumption during May and June this year the quantity released by the Ministry, which does not include the butter imported by the trade, shows no fall when compared with the same months in 1951.
    Mr. Dodds: How does the hon. Gentleman reconcile that reply with the official figures that for the first three months butter consumption went down by 16 per cent.? Is it not a fact that before long we shall be referring to the good old days of 1951?
    Dr. Hill: The Question refers to the months of May and June, the supplementary question to some other months.
    Mr. Partridgeasked the Minister of Food how the retail price of butter in this country compares with that in other Western European countries.
    Dr. Hill: I will, with permission, circulate in the OFFICIAL REPORT a list of retail butter prices in some West European countries. It shows that the present price range of 3s. 8d. to 4s. 2d. per lb. in this country compares favourably with prices ruling on the Continent.
    Mr. Partridge: In anticipation of the receipt of those figures, can the Parliamentary Secretary tell us the price of butter in France, for example?
    Dr. Hill: Yes. Sir; 6s. 1½d. per lb.
    Mr. Lewis: When the Parliamentary Secretary circulates those figures will he also include a table of figures showing a comparison with October, 1951, to date?
    Dr. Hill: If the hon. Gentleman will put a Question on the Order Paper I will do my best to satisfy him.
    Mr. Dodds: Is it the ambition of the Government to get butter up to 6s. 1½d. per lb.?
    Dr. Hill: That is not borne out by the recent experience of a fall in butter prices.
    Mr. Baldwin: Is my hon. Friend aware that butter is sold cheaper in this country than in any other country in the world? Is it not a fact that the United States, who are sending us butter, have the surplus which enables them to do so only because they are charging their own people at the rate of 5s. 6d. a lb. for it?
    Mr. Donnelly: Do the supplementary questions which we have heard from the hon. Member for Leominster (Mr. Baldwin) mean that farmers are now asking for more?
    Following is the information:

    SOME RECENT RETAIL BUTTER PRICE QUOTATIONS

    s.

    d.

    France

    6

    1½

    Austria

    4

    3

    West Germany

    4

    8¾

    Switzerland

    7

    6

    Netherlands

    3

    10

    Denmark

    3

    6

    Subsidised Bread (Consumption)
    Mr. Partridgeasked the Minister of Food what percentage of the bread consumed in this country is subsidised.
    Dr. Hill: At present, about 91 per cent., and in giving that information may I express the pleasure of all of us at seeing my hon. Friend back again after so long an absence.

    Pig Marketing (Leaflet)
    Mr. Holtasked the Minister of Food if in view of the monopolistic developments in the marketing of pigs he will withdraw his leaflet to the trade entitled, "Pigs—Farmers Guide to the Fatstock Guarantee Scheme, 1954–55."
    Dr. Hill: No, Sir. The leaflet sets out the arrangements under which the guarantees on pigs are paid, and it is open to all to benefit from these arrangements.
    Mr. Holt: Is the Minister aware that the first sentence of this leaflet says that on 1st July, 1954, one may sell pigs to anyone anywhere and in any way? In view of the fact that under the agreement between the Fatstock Marketing Corporation and the bacon curers there is now a virtual monopoly in the sale of
    18
    bacon pigs, does he not think it time the matter was put right?
    Dr. Hill: The hon. Gentleman's facts are not quite right. It is open to the producer to sell direct to the bacon curers outside the F.M.C. or to the F.M.C. as well as in the market.
    Mr. Holt: Can the Minister tell me who is outside this agreement besides Messrs. Walls and the Co-operative Wholesale Society?
    Dr. Hill: With notice, no doubt I could give the hon. Gentleman some information.

    Food Processing (Coal Tar Dyes)
    Mr. Doddsasked the Minister of Food if he will take steps to impose restrictions upon food processors and manufacturers in relation to the use of dyestuffs derived from coal-tar, having regard to the evidence that the use of such dyestuffs is in some degree responsible for the increase in the number of cancer cases.
    Dr. Hill: The use of certain coal tar dyes is already prohibited. The general question of the addition to foods of colouring matters is being considered by the Food Standards Committee.
    Mr. Dodds: Is it not a fact that the workers handling coal tar have to take special precautions against ill-effects on their health? Is it not a fact that this dye is used for colouring kippers and other coloured foods?
    Dr. Hill: The first statement of the hon. Gentleman is true, but do not let us generalise and so arouse fears and suspicions unless and until there is scientific evidence on the subject.

    Surplus Potatoes (Sale)
    Mr. Emrys Hughesasked the Minister of Food why he has purchased from farmers a large quantity of potatoes at around £14 a ton and is selling them as low as £2 a ton for stock food while at the same time he has imported from Cyprus and sold on the British market quantities of potatoes; if he is aware of the complaints of Ayrshire farmers about this action; and what action he is taking to rectify this anomaly.
    Dr. Hill: The potatoes sold for stock-feeding are surplus old potatoes of the 1953 crop bought from farmers to carry out the guarantee under the Agriculture Act, 1947; they are not comparable to new potatoes. My Department has not imported any potatoes from Cyprus.
    Mr. Hughes: Is the hon. Gentleman saying that the Ayrshire potato farmers—who are nearly all Conservatives—are making frivolous complaints in this matter? Is he aware that there have been strong criticisms and that the farmers are denouncing the Government? What reply am I to make to the potato farmers of Ayrshire when I have to apologise for the hon. Gentleman?
    Dr. Hill: The Ayrshire farmers producing Ayrshire earlies have no reason to fear competition from imported potatoes from Cyprus—grown, incidentally, from Scottish seed.
    Mr. Hughes: Is the Minister saying that these Conservative Ayrshire farmers are making purely frivolous complaints?
    Dr. Hill: I am not concerned with the politics of the farmers, but it may be that the hon. Gentleman has a sensitive nose for criticism of the Government about any sort of thing.
    Mr. Hughes: In view of the completely unsatisfactory nature of the reply, I beg to give notice that I shall endeavour to raise the matter on the Adjournment.

  MINISTRY OF SUPPLY

    Bacteriological Research (Defence Expenditure)
    Mr. Emrys Hughesasked the Minister of Supply in view of the need for economy in defence expenditure, what steps he is taking to reduce expenditure on preparations for bacteriological warfare.
    The Minister of Supply (Mr. Duncan Sandys): We are at present reviewing the entire field of defence expenditure with the object of effecting economies wherever practicable. Expenditure on bacteriological research is being examined along with expenditure on other aspects of defence.
    In view of the wording of the hon. Member's Question, I should make it clear that our preparations are not "for" but "against" bacteriological warfare.
    Mr. Hughes: In view of the Minister's assurance that the preparations are purely defensive preparations, will he not advise the economy of transferring this bacteriological business from the Ministry of Supply to the Ministry of Health?
    Mr. Sandys: This is one of the many bees which the hon. Member has buzzing about in his bonnet. He has asked that question I do not know how many times. He has been assured that this is primarily a defence matter, to make arrangements and to conduct research to protect our people against such an abominable form of warfare should it occur.
    Mr. Shinwell: Can the right hon. Gentleman tell the House when this review of defence expenditure will be completed, and the House informed of the results?
    Mr. Sandys: We are constantly trying to reduce expenditure. I have no doubt that some statement will be made in due course. I was not referring to any statement to be made in the immediate future.

    Comet Aircraft Factories (Alternative Work)
    Brigadier Clarkeasked the Minister of Supply if he is aware that skilled workers are leaving certain aircraft factories for alternative employment, due to the possibility of unemployment caused by the cessation of work on Comets; and what plans he has now for placing Government orders with these factories to overcome this situation.
    Mr. Sandys: Yes, Sir. I have been exploring the possibility of easing the immediate difficulties of aircraft firms affected by the stoppage of Comet construction. In practice, that means giving them more orders for the types of aircraft for which they are already tooled up. Each case has been exhaustively examined. As a result I have regretfully come to the conclusion that we cannot provide these firms quickly with additional suitable work except by ordering more aircraft than the Services require; and I am sure the House would not wish me to do that.
    Brigadier Clarke: Is the Minister aware that the workers at Airspeed. Portsmouth, will be very pleased with the first part of his answer?
    Dr. King: Can the Minister confirm that the research work at Farnborough has discovered the cause of the trouble to the Comets and, if he can, are we going back to fall Comet production?
    Mr. Sandys: As I explained last week, these investigations are not yet completed and I do not feel that it would be a good thing if I made a piecemeal announcement.
    Regarding the firm mentioned by my hon. and gallant Friend, I understand that the position is that over the last three months or so about 180 people have either been discharged or left of their own accord. That represents a reduction of about 7½ per cent. I am advised that there should be work on other types, apart from Comet work, which will keep the present labour force employed for a number of months.

  TRIBUNALS (PROCEDURE)
  Mr. Gowerasked the Attorney-General if he will institute an inquiry or appoint a committee to consider the procedure of all tribunals in the United Kingdom. to review in particular the question whether evidence on oath should be taken in all cases, and whether persons appearing before these tribunals should be given in all cases the right to be represented by an advocate, and a general right of appeal to an ordinary court of law: and if he will make a statement.
  The Attorney-General (Sir Lionel Heald): If my hon. Friend will let me have particulars, I will gladly investigate any specific tribunal which he has in mind. I do not, however, think that any useful purpose would be served by a general inquiry of the kind suggested in his Question.
  Mr. Gower: Is my right hon. and learned Friend aware that I was not referring to any single case, but to the general principle? Does he not agree that the excellence of our legal system has been closely related to the rights of persons to have evidence taken on oath, and. if necessary, to be represented by an advocate, and will he also agree that, with the extension of legal aid, the main barrier
  22
  to extending these procedures to tribunals has now disappeared?
  The Attorney-General: I think that, on every occasion when new tribunals have been set up, Parliament, as it has shown recently, was anxious to investigate this question carefully, and I think that that will be a better way of safeguarding this matter.

  PENSIONS AND NATIONAL INSURANCE

    Disabled War Pensioners
    Mr. Keenanasked the Minister of Pensions and National Insurance the number of pensions reduced and of pensions terminated of those who are, and who were receiving Service pensions from the time the Ministry of National Insurance took over from the Ministry of Pensions to the nearest convenient date.
    The Minister of Pensions and National Insurance (Mr. Osbert Peake): I assume that the hon. Member has in mind basic pensions in respect of disablement due to service in the Armed Forces. As the reply contains a table of figures, I will, if I may, circulate it in the OFFICIAL REPORT.
    Mr. Keenan: While thanking the Minister for that, may I call his attention to the fact that there is a great deal of apprehension now being expressed by those in receipt of pensions that the standard is not quite what it was? Would he carefully watch the matter?
    Mr. Peake: I can assure the hon. Gentleman that there is no need for any apprehension, because the table of figures will show that fewer pensions have been reduced or terminated in the nine months since the merger was completed than in the nine months previously.
    Following are the figures:

    Reductions*

    Terminations

    December, 1952 to August, 1953 (M.O.P.)

    21,330

    14,340 (including 11,750 on account of death).

    September, 1953 to May, 1954 (M.P.N.I.)

    18,400

    12,470 (including 11,010 on account of death).

    *Because of improvement in the pensioner's condition.

    Widows' Benefits (Disregarded Earnings)
    Mr. Wyattasked the Minister of Pensions and National Insurance whether he will introduce legislation to raise the amount that can be earned by widows and widowed mothers without forfeiting any part of their pensions.
    Mr. Peake: The provisions governing widows' benefits are at present being reviewed at my request by the National Insurance Advisory Committee.
    Mr. Wyatt: Would the Minister say when we are likely to get an answer? Does he realise that many of these people are suffering from the rises in the cost of living, which are continuing under his Administration; and does he think it fair further to penalise them by preventing them from earning a little more to offset these increases?
    Mr. Peake: I think we should all be wise to await the report of this eminent body before we come to any conclusion on this matter.

    Paired Limb Pension (Concession)
    Mrs. Castleasked the Minister of Pensions and National Insurance whether he will take steps to make the paired limb pension concession, announced on 15th February last, available in all cases where a war pensioner suffers the total or almost total loss of the use of the remaining limb, resulting in 100 per cent. disability.
    Mr. Peake: Yes, Sir. I have decided to apply the concession in these cases.
    Mrs. Castle: While thanking the right hon. Gentleman very much for that reply, which will give great pleasure to B.L.E.S.M.A., may I ask him whether he will make it quite clear that, in these cases, where loss of the use of the paired limb results from a generalised condition, such as rheumatoid arthritis or coronary thrombosis, the concession will automatically be given?
    Mr. Peake: That is undoubtedly the case.

    Unmarried Pensioners
    Mr. Stewardasked the Minister of Pensions and National Insurance if he is aware that men and women old-age
    24
    pensioners are living together, unmarried, because their pensions would be cut by as much as 19s. a week if they married; and if he will take steps to introduce legislation at an early date to remove this penalty which acts as a deterrent to old people remarrying.
    Mr. Peake: This position only arises where the woman is a widow drawing a pension on her late husband's insurance. It is inherent in the scheme of widows' benefits that they cease on remarriage, and I do not think that the kind of case mentioned by the hon. Member affords any adequate grounds for abandoning this principle.
    Mr. Steward: Is the Minister aware that this policy of encouraging old people of opposite sexes to live together, unmarried, is wrong, and that I know of cases where this state of affairs exists in order that a greater income may be enjoyed? Does he not agree that there should be no reduction for couples who elect to get married in such cases?
    Mr. Peake: There is no reduction of any sort where each of the couple is entitled to a pension in his or her own right by virtue of his or her own contributions, but I do not think it is possible to modify the rule that a widow's pension ceases on remarriage, because, in that case we should get very attractive widows compiling for themselves a very substantial income out of the fund.

  FUEL AND POWER

    Requisitioned Properties
    Mr. Gowerasked the Minister of Fuel and Power how many properties are still held under requisition by his Department: if he will order a new investigation into the circumstances of each case: and if he will direct that prior consideration be given to the original owner, or owners, whenever a sale is contemplated.
    The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. L. W. Joynson-Hicks): Seven hundred and seventy-seven sites for opencast mining, which will be returned automatically to their owners and occupiers as soon as the land has been restored, and two properties for defence purposes.
    The second and third parts of the Question do not arise.
    Mr. Gower: Would my hon. Friend not agree that these are very large figures? Will he look at this matter again very carefully?
    Mr. Joynson-Hicks: About half of the 777 sites are in operation for the recovery of coal, and the other half are in process of restoration for agricultural use.

    Gas Turbine Locomotives
    Mr. G. Darlingasked the Minister of Fuel and Power what information has been gained from the experimental gas turbine locomotives operated on his behalf by British Railways.
    Mr. Joynson-Hicks: The only such locomotive which is being developed on my right hon. Friend's behalf is still under construction and not yet ready for trials.
    Mr. Darling: Has the Ministry any information about the gas turbine locomotives that are in operation?
    Mr. Joynson-Hicks: I think the hon. Gentleman should direct that question to my right hon. Friend the Minister of Transport or try to obtain the information by writing to the British Transport Commission.
    Mr. Noel-Baker: Can the Parliamentary Secretary say whether the experiments proceeding at the Fuel Research Station have given satisfactory results?
    Mr. Joynson-Hicks: Yes, Sir.

    Power Stations (Gas Turbines)
    Mr. G. Darlingasked the Minister of Fuel and Power if he will publish or place in the Library such data as have been transmitted to his scientific and experimental department on the gas turbines in use in electric power stations, giving information on performance, types of fuel used, operating costs, thermal efficiency and other relevant facts.
    Mr. Joynson-Hicks: My right hon. Friend is regularly informed of the progress made in the development of the oilfired gas turbine for which the British Electricity Authority is responsible. This machine is not yet in operational use, and I would refer the hon. Member to the B.E.A. for such detailed information as he requires.

    Domestic Coal (Imports)
    Mr. Holtasked the Minister of Fuel and Power, assuming home production of domestic fuel to remain at its present level, what would be the quantity of imports of domestic fuel which he estimates would be required to do away with the present domestic fuel allocation; and what price it is estimated would have to be paid for such imports.
    Mr. Joynson-Hicks: As my right hon Friend replied to my hon. Friend the Member for Kidderminster (Mr. Nabarro) on 21st June, demand for house coal suppressed through restriction is estimated at about 3 to 4 million tons. The cost of importing this at present c.i.f. prices would be about £20 to £25 million.
    Mr. Holt: Does the hon. Gentleman agree that it would be well worth while and that we could afford it? In view of the speech of the Chancellor of the Exchequer at the weekend, in which he said that he wishes to go forward more quickly in the removal of the remaining controls, will the Minister consult his right hon. Friend to arrange for the necessary imports to be permitted?
    Mr. Joynson-Hicks: My right hon. Friend and the Chancellor of the Exchequer are constantly in consultation on this matter.

    Gas Prices, South-Eastern Region
    Mr. Bottomleyasked the Minister of Fuel and Power if he will give a direction under Section 7 of the Gas Act, 1948, to the South-Eastern Regional Board not to operate the proposed increased charges for gas consumers in the area.
    Mr. Joynson-Hicks: No, Sir.
    Mr. Bottomley: Is there nothing that the Government can do to stop the constant rise in the cost of living?

  GUATEMALA
  Mr. Chetwyndasked the Secretary of State for Foreign Affairs how long the fact-finding commission of the Organisation of American States was in Guatemala.
  Mr. A. Hendersonasked the Secretary of State for Foreign Affairs whether he will make a statement on the report of the fact-finding commission which recently visited Guatemala.
  Mr. Youngerasked the Secretary of State for Foreign Affairs whether the Fact-Finding Committee of the Inter American Peace Committee has carried out an inquiry on the spot into the alleged aggression against Guatemala; and whether a report of its conclusions has yet been made to the Security Council.
  The Minister of State (Mr. Selwyn Lloyd): The Fact-Finding Committee of the Inter-American Peace Committee left Washington for- Mexico City on 29th June. It there received a message from Colonel Monzon, the then leader of the Guatemalan military junta, asking it not to proceed further for the present owing, so he said, to the difficulty of organising a suitable reception in Guatemala.
  On 3rd July, the Committee received messages from the Guatemalan military junta and the Governments of Honduras and Nicaragua, informing it that the dispute which was the cause of its journey had ceased to exist between the three countries. The Committee accordingly returned to Washington on 3rd July.
  On 5th July, the Chairman of the Inter-American Peace Committee made a brief report of these developments to the Secretary General of the United Nations, and informed him that the Committee would shortly submit a complete report on its activities in connection with the dispute.
  Mr. Chehwynd: Is it not a complete farce that this Committee should be expected to produce the facts about this situation in Guatemala without first visiting the country, and do not these very lamentable proceedings provide clear evidence that once again the interests of the United Nations have been subordinated to banana politics?
  Mr. Lloyd: No, Sir; I think that this result, which, I agree, is certainly subject to comment, is due to the veto on 20th June, but for which this Committee would have been able to have a chance of getting all the necessary information in good time.
  Mr. Younger: Is the right hon. and learned Gentleman aware that the United Nations does not have to rely upon a fact-finding committee sent out
  28
  by another body, but has its own responsibility for making its own inquiries before it washes from its agenda, as I now understand it has done, a charge of aggression made by one of its members?
  Mr. Lloyd: This matter has not been washed off the agenda of the United Nations, and we think that the most speedy method of finding the facts would have been to use this machinery of the American States.
  Mr. S. Silverman: On what date was the military junta recognised as the Government of Guatemala? If it has not yet been recognised as the Government of Guatemala, why was any notice taken of its communications?
  Mr. Lloyd: It has not yet been recognised as the Government, so far as this country is concerned.
  Mrs. Castleasked the Secretary of State for Foreign Affairs whether Her Majesty's Government have yet decided which Government they recognise in Guatemala.
  Mr. Selwyn Lloyd: Her Majesty's Minister-designate to Guatemala has not yet presented his credentials. Until he does so, our relations with the Guatemalan authorities will remain on a de facto basis. The presentation of his credentials to the eventual President of the Republic will constitute formal recognition.
  Mrs. Castle: Does not this situation mean the de facto recognition of this Government? Does this mean that Her Majesty's Government are accepting without further protest this defiance of the authority of the United Nations, not only by these aggressors but by those who supported them morally and in other ways? Will the right hon. and learned Gentleman instruct our representative on the Security Council to press even now for a full inquiry by the Security Council into the whole of this sorry business?
  Mr. Lloyd: No aggression has been proved. As to recognition, Her Majesty's Government have a Mission in Guatemala. The situation is slightly complicated by the fact that the Minister-designate, with credentials made out to the ex-President, has not yet presented his credentials.
  Mr. Crossman: Does the Minister deny that the ability of the United Nations to investigate and prove aggression was rendered impossible by the United States' veto on the Security Council investigating the matter? Do we not know that the United States threatened to use their veto, and that that is why we climbed down?
  Mr. Lloyd: The only veto used—
  Mr. Crossman: I said "threatened."
  Mr. Lloyd:—was the Russian veto, on 20th June. As to subsequent action, it is exceedingly doubtful whether a body operating from the Security Council would have been able to get any more information than this organisation.
  Mr. Youngerasked the Secretary of State for Foreign Affairs what steps the British representative on the Security Council took to ensure that the Council would receive an authoritative report upon the events which gave rise to the complaint of aggression lodged by Guatemala; whether any such report has yet been received; or when one is expected.
  Mr. Selwyn Lloyd: The House is already broadly familiar with the proceedings in the Security Council. On 20th June the British representative supported the proposal that the existing machinery of the Organisation of American States should investigate, but, as is known, this was vetoed. If the Soviet representative had not vetoed this proposal, which was supported by all other members of the Council, the Council would have been on record officially as asking the Organisation of American States for a report.
  When, nevertheless, the Inter-American Peace Committee began its inquiry, the British representative stressed the importance which Her Majesty's Government attach to a report being made by this Committee to the Security Council. Since then, he and Her Majesty's Ambassador in Washington have kept in close touch with the United States authorities in order to ensure that the Council should receive this report at an early date. The Inter-American Peace Committee made an interim report to the Council on 6th July in which a complete report was promised very shortly. I now understand that this report may he expected at any moment.
  Mr. Younger: Is the Minister aware that it is almost impossible for this House and for opinion generally to accept as having much value the report of a committee which never got to the spot, and which returned to Washington on being told by the successful party that the whole thing was over?
  Mr. Lloyd: I certainly agree that it is most unfortunate that this committee did not get to work earlier.
  Colonel Gomme-Duncan: Is not this a matter of an attack by one lot of Guatemalans upon another lot of Guatemalans? Is that acceptable as aggression, in the international sense? Are not all these Questions from the opposite benches vicious anti-American propaganda?
  Mr. Lloyd: My hon. and gallant Friend is quite correct in saying that no aggression has been proved.
  Mr. Younger: Is not the intervention of the hon. and gallant Member for East Perthshire (Colonel Gomme-Duncan) further proof that we ought to have proper evidence as the result of authoritative reports, and that we should not simply go on hunches, which, I imagine, is all that the hon. and gallant Gentleman is going on?
  Sir R. Acland: Did not the Minister say last week that the Government were most anxious to know the facts in this matter, which resulted, among other things, in the burning-out of a British ship'? As we are to get no report from the Fact-Finding Committee, what other steps are Her Majesty's Government taking to get to know the facts about that burning-out and sinking?
  Mr. Lloyd: I have promised the House that a White Paper will be issued setting out what facts we have been able to ascertain.
  Sir R. Acland: But what steps are the Government taking to get the facts for the White Paper?
  Mr. Youngerasked the Secretary of State for Foreign Affairs how far items relating to the recent alleged aggression against Guatemala are still upon the agenda of the Security Council, or in what other way is it proposed that the Council should discharge its responsibility in respect of this allegation.
  Mr. Selwyn Lloyd: Among the matters of which the Security Council is seized is an item entitled, "Cablegram dated 19th June, 1954, from the Minister for External Relations of Guatemala addressed to the President of the Security Council." This item was adopted on the Council's agenda on 20th June.
  Mr. Younger: May we take it that when the report to which the previous answers have referred comes before the Security Council the British representative will see that this item is revived and that the question is considered anew?
  Mr. Lloyd: We must wait and see the nature of the report.
  Mr. Younger: If it is not revived, how can we possibly accept the assurance which we had from the Government last week that they would see that the Security Council did not shelve its responsibility?
  Mr. Lloyd: The shelving of the responsibility of the Security Council is not a matter solely for Her Majesty's Government. We have endeavoured to make the point throughout that this report must come to the United Nations. When the report comes, we must see what is in it and decide then what action to take.
  Mr. Noel-Baker: Is it not a fact that the Security Council received an appeal which alleged that aggression had occurred? Will Her Majesty's Government see that the Security Council receives information which disproves that allegation?
  Mr. Lloyd: It is not within the power of Her Majesty's Government to say what does come or does not come before the Security Council. The next stage is to see the nature of the report—the final report—that has been promised.

  U.N. KOREAN RECONSTRUCTION AGENCY (U.K. CONTRIBUTION)
  Mr. Stewardasked the Secretary of State for Foreign Affairs whether he will make a statement about the future British contribution to the work of the United Nations Korean Reconstruction Agency.
  Mr. Selwyn Lloyd: The future of the United Nations Korean Reconstruction Agency is shortly to be discussed in the eighteenth session of the United Nations Economic and Social Council in Geneva, and will, no doubt, also be considered at the next session of the General Assembly. Since 1951, Her Majesty's Government have contributed to the United Nations Korean Reconstruction Agency a little over £8 million, of which £5 million was for the 1953–54 programme. Any further decision required of Her Majesty's Government will be taken in the light of the discussions in the United Nations and after consultation with the other Governments principally concerned.

  GERMANY

    Anglo-American Study Group
    Mr. Warbeyasked the Secretary of State for Foreign Affairs the terms of reference of the Anglo-American Study Group on Germany.
    Mr. Selwyn Lloyd: I would refer to the reply given on 7th July by my right hon. Friend the Foreign Secretary to a Question from my hon. Friend the Member for Woolwich, West (Mr. Steward).
    Mr. Warbey: Why was this body set up with such indecent haste, when M. Mendes-France was preoccupied with other important matters? Could it not have waited until 21st July, by which time it would have been possible for France to participate in the discussion?
    Mr. Lloyd: The hon. Gentleman asked the terms of reference, and those have been given. With regard to the timing, it is highly desirable that such a body should get to work quickly.

    Federal Republic (International Status)
    Mr. Wadeasked the Secretary of State for Foreign Affairs whether he will make a statement on the proceedings of the Anglo-American Committee which is studying plans for the granting of full sovereign rights to the West German Federal Republic.
    Mr. Selwyn Lloyd: My right hon. Friend the Foreign Secretary explained

    33
    the terms of reference of the working group set up to consider the international status of the German Federal Republic on 7th July, in reply to the hon. Member for Woolwich, West (Mr. Steward). I am not yet able to say anything in amplification of that statement.
    Mr. Wade: Could we have an assurance on this point? If a proposal is put forward for granting sovereign rights to the West German Federal Republic before the ratificaion of E.D.C. by France and Italy, will Her Majesty's Government seek a guarantee that this does not necessarily authorise the creation of a purely national German army, with all the dangers that that might entail?
    Mr. Lloyd: That is a hypothetical question, as the hon. Gentleman no doubt realises: but it is one of the factors that are being considered.
    Mr. Paget: Does not the hon. Gentleman's supplementary question illustrate the dangers that we run into if we miss E.D.C.?
    Mr. Lloyd: I entirely agree with the hon. and learned Gentleman.

  SOUTH-EAST ASIA (ANGLO- AMERICAN STUDY GROUP)
  Mr. Stewardasked the Secretary of State for Foreign Affairs whether he will indicate the progress made by the Anglo-American Study Group set up to consider the application of the Washington communiqué to the situation in South-East Asia.
  Mr. Selwyn Lloyd: Not yet, Sir.

ANGLO-AMERICAN TALKS
The Prime Minister (Sir Winston Churchill): Mr. Speaker, I should first like to explain to the House how our visit to America arose. On 17th February of this year Mr. Sterling Cole, the Chairman of the Joint Congressional Committee on Atomic Energy, made a speech which was reported at some length in the "Manchester Guardian." I was astounded by all that he said about the hydrogen bomb and the results of experiments made more than a year before by the United States at Eniwetok Atoll.
Considering what immense differences the facts he disclosed made to our whole outlook for defence, and notably civil defence, depth of shelters, dispersion of population. anti-aircraft artillery and so forth—on which considerable expenditure was being incurred—I was deeply concerned at the lack of information we possessed, and in view of all the past history of this subject, into which I do not propose to go today, I thought I ought to have a personal meeting with President Eisenhower at the first convenient opportunity.
Very little notice was taken over here at first of Mr. Sterling Cole's revelations, but when some Japanese fishermen were slightly affected by the radioactivity generated by the second explosion, at Bikini, an intense sensation was caused in this country, and the House will remember the hydrogen bomb Questions and statements of 23rd and 30th March, and the debate of 5th April.
All this seemed to emphasise the need for me to see the President personally, therefore, having made inquiries about the President's engagements, proposed my coming to the British Embassy in Washington about 20th May and having some talks with him. This suggestion was at once cordially received by the President, and after some correspondence it was arranged that our two Foreign Secretaries would also be present. But as the Geneva meeting had in the meanwhile begun, and was protracted from week to week, a succession of postponements was inevitable and the final date was fixed for the weekend of 25th June, for which the President very kindly invited my right hon. Friend the Foreign Secretary and myself to be his guests at the White House.

35
Very full reports have been made public upon what followed. I had not in the first instance specified any particular topics for our private conversations, which would, as they so often have done on similar occasions, have ranged over the whole field of affairs. The thermo-nuclear problem was, of course, foremost in my mind, and it was evident that if we waited from May to June it would be possible to evaluate more exactly the results of the Bikini experiments which had been concluded.
In the meanwhile, many other questions had arisen connected with the Vietminh operations in Indo-China, which were being sustained by the Communist Government of China. There was also the state of affairs in Europe, including the failure of the French Chamber to ratify, or afford any prospects of ratifying, the Treaty of two years ago upon the European Defence Community, on which so much study, argument and negotiation had been previously consumed. It was evident that these matters would occupy a leading place in our talks.
On 23rd June, the day before our departure, my right hon. Friend the Foreign Secretary made two speeches in this House—one at the beginning and one at the end of the debate—which attracted great attention in the United States, and when we started by air on the night of the 24th it was reported that we should be facing a storm of hostile opinion on our arrival. The contrary proved to be true.
I have never had a more agreeable or fruitful visit than on this occasion, and I never had the feeling of general good will more strongly borne in upon me. I had many hours of conversation with the President alone, and also in company with my right hon. Friend and Mr. Foster Dulles; and the two Foreign Ministers had prolonged and more detailed discussions at the State Department and at Mr. Dulles's residence. Lord Cherwell, whom I had planned from the beginning to take with me, and Sir Edwin Plowden—Chairman of the Atomic Energy Authority—discussed at length with Admiral Strauss and other American authorities the technical matters connected with the current atomic and hydrogen problems.
36
In their discussions and in my talks with the President about the exchange of information and technical co-operation in this sphere we were, of course, governed by the conditions created by the United States legislation, by which the President himself and all his officials are equally bound. It would not be in the public interest for me to make any detailed statement upon what passed. I can only say that there was cordial agreement that both our countries would benefit from a wider latitude both in cooperation and in the exchange of knowledge. Far-reaching amendments to the MacMahon Act had been proposed by the President some time ago, and as the result the Congressional Committee is preparing a Bill which, among other things, would enable the United States Government to impart more information to or exchange more information with, friendly and allied countries. As this Bill is now before Congress, I shall make no comment beyond wishing it a fair passage.
The United States experts are of course well aware of the very high level which has been reached independently by our own scientists on this whole subject, and we are also both aware of the formidable progress of the Russian Soviet Government. Close contact on this topic was kept by us with the Canadian Government, who have so long been a powerful factor in these affairs.
It would not be helpful for me at the present time to say more on this subject, except that I have every hope that more satisfactory conditions will prevail between our two countries in the future than has been the case since the war with Germany came to an end.
We spent four and a half days in Washington and we worked hard. We had no fixed agenda, but we had an exchange of views on all subjects of major current importance. We talked with perfect frankness and in full friendship to each other. We dispelled, I think, some misunderstandings—even some nightmares—from the minds of our American friends about the direction of our policies. I think we convinced them that we have changed none of our ultimate joint objectives, and that there is at any rate some wisdom in the means by which we are proposing to reach them.
The House has no doubt studied the two documents which were published in

37
Washington on successive days about world affairs. The first was the communiqué or statement—which term the President prefers—usual on these occasions. And the second a reaffirmation of the Atlantic Charter together with further declarations relating to present circumstances.
In addition to our exchange of views on particular current problems, President Eisenhower and I decided to use this occasion to reaffirm the fundamentals on which the policies of our two Governments have been and will continue to be built. We did so in a declaration of six points. I would ask you, Mr. Speaker, to bear in mind this declaration of our basic unity in days when the newspapers are so full of bickerings and disagreements; for these points of unity transcend all passing differences and give a framework within which the incidents of daily life can be amicably resolved and dealt with.
In that declaration we affirmed our comradeship with one another; we stretched out the hand of friendship to all who might seek it sincerely; we reasserted our sympathy for and loyalty to those still in bondage; we proclaimed our desire to reduce armaments and to turn nuclear power into peaceful channels: we confirmed our support of the United Nations and of subsidiary organisations designed to promote and preserve the peace of the world: and we proclaimed our determination to develop and maintain in unity the spiritual, economic and military strength necessary to pursue our purposes effectively. These are the principles which we share with our American friends.
No one, I think, should complain of these declarations, or still less mock at them, because of their necessarily general and sometimes vague character. When the representatives of two great countries, comprising hundreds of millions of people, are trying to set forth the principles which will be right and in the main acceptable to the immense number of men and women for whom they are responsible, it is not the occasion for the sharp and sprightly literary peformances such as we so often have the pleasure of reading in our daily and weekly newspapers. Disagreement is much more easy to express, and often much more exciting to the reader, than agreement. The highest common factor of public
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opinion is not a fertile ground for lively epigrams and sharp antithesis. The expression of broad and simple principles likely to command the assent and not to excite the dissent of vast communities must necessarily be in guarded terms. I should not myself fear even the accusation of platitude in such a statement if it only sought the greatest good of the greatest number.
But for myself, on this occasion, I was thrilled by the wish of the President of the United States to bring our two countries so directly together in a new declaration or charter, and to revive and renew the comradeship and brotherhood which joined the English-speaking world together in the late war, and is now, if carried into effect, the strongest hope that all mankind may survive in freedom and justice. I can well understand that such a document may incur the criticism of mischief makers of all kinds in any country, but for myself I rejoice to have had the honour of adding my signature to it.
The Washington communiqué states that the President and the Prime Minister
" agreed that the German Federal Republic should take its place as an equal partner in the community of Western nations where it can make its proper contribution to the defence of the free world. We are determined to achieve this goal—
says the communiqué—
" convinced that the Bonn and Paris Treaties provide the hest way."
Nobody can call that a platitude. It is a grave decision but not a new decision. It is a policy which has been steadfastly pursued by successive British Governments. The need for a German contribution to Western defence was recognised by all the members of N.A.T.O. as long ago as December, 1950. There have, of course, been differences about how this contribution should be made. There has been no difference that it must be made.
It was the French Government which put forward this idea of a European Defence Community instead of an army based—as I had myself somewhat conceived—on the principles of a Grand Alliance. This French plan offered a means of associating Germany politically as well as militarily with the West, and of creating a partnership of nations in place of the rivalries and hatreds which have torn Europe for so many centuries.
After long negotiations the E.D.C. Treaty was signed in May, 1952. It has

39
been ratified by four of the six signatory States. Her Majesty's Government and the United States Government have given the most solemn and far-reaching pledges of their practical support and intimate partnership with the Defence Community. They have substantial armies now standing on what we must call the Eastern front, both of which, in the event of war, would serve in a single line of battle with the E.D.C. under the supreme N.A.T.O. commander. But although France was the author of the plan the French Chamber has so far been unable to ratify it. It is not easy to foresee, nor would it at this moment be wise to forecast, the consequences of this deadlock should it continue.
We have both in Britain and the United States to consider the position of Germany. Under the Bonn Treaty the Federal Government will not regain her sovereignty until the E.D.C. Treaty comes into force. At present she remains in law a State under military occupation. The Federal Republic of Germany is willing and anxious to co-operate with the Western world, and it is right that she should do so on a footing of equality. Germany under Dr. Adenauer has shown a very high degree of patience during the last two years when we have all been hoping, almost from month to month, that the French Chamber would ratify the Treaties signed by the representatives of France and supported by her Allies in the war.
It would indeed be a tragedy if this opportunity were lost of bringing Germany back into the European family while also at the same time preventing the recreation of a German national army. Dr. Adenauer in his wisdom has made it clear that he much prefers an international army. To me, the bulk of whose public life has been spent in war or preparation for war with Germany, it seems little less than madness to leave that active and virile nation with no choice but to raise an independent national army—[HON. MEMBERS: "Oh!"]—and to reject associations with her in the Western world.
Mr. Bevan: On a point of order. I should like to ask your guidance, Mr. Speaker, as to what we are to do about the statements to which we have just listened. [HON. MEMBERS: "Sit down."]
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Is it not a complete abuse of the proceedings of the House that it should have, not a statement which the House can study in preparation for the debate next Wednesday, not a statement of such urgency that it could not be withheld, but a series of opinions on policies—indeed, a speech which the right hon. Gentleman is now making? [HON. MEMBERS: "Why not? "] Because it cannot be answered today. I respectfully submit to you, Mr. Speaker, that this is a complete abuse of the proceedings.
Mr. Speaker: I do not think there is any point of order in this for me. The Prime Minister is giving us an account of the subjects discussed at Washington—[HON. MEMBERS: "No."] That is what I understood. Anything of an argumentative character can easily be discussed during the debate that we are to have next Wednesday. I think the Prime Minister ought to be allowed to finish his statement.
Several Hon. Members rose—
Mr. Bellenger: May I raise at the end of the Prime Minister's statement—
Mr. Speaker: I cannot have two right hon. Gentlemen standing at the same time. I understand that the right hon. Member for Bassetlaw (Mr. Bellenger) is raising a point of order.
Mr. Bellenger: At the end of the right hon. Gentleman's statement, will the House be permitted to put any question on these personal points, or are questions to be reserved for Wednesday when we properly discuss foreign affairs, as the right hon. Gentleman now seems to be doing?
Several Hon. Members rose—
Mr. Speaker: Only one hon. Member can speak at a time. Naturally, I should have supposed that with the debate so imminent as Wednesday the House would desire to pass at once to the Orders of the Day.
Several Hon. Members rose—
Mr. Speaker: The Prime Minister.
Mr. Donnelly: On a point of order.
The Prime Minister rose—
Mr. Speaker: Is the right hon. Gentleman speaking to the point of order?
The Prime Minister: Might I say, Mr. Speaker, that I expressed through the usual channels my willingness to do whatever the House wished, to make the statement fully, as I am trying to do, today and then have the foreign affairs debate on Wednesday, or to make the statement on Wednesday at the beginning of the foreign affairs debate, or to have the foreign affairs debate this afternoon. However, the decisions which were reached, in agreement, were that I was to make the statement today, and I hope I may be allowed to do so, so that it may be studied and the whole subject debated on Wednesday.
Mr. S. Silverman: On a point of order. Whatever may have been agreed between the usual channels would not, I feel sure, determine your judgment, Mr. Speaker, on a point of order relating to the rights of the House. In so far as the right hon. Gentleman had given us or had intended to give us a factual account of what took place in Washington in preparation for the debate on Wednesday, that would have been one thing, but, as I understand it, my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) has put to you, as a point of order, that the Prime Minister is not doing that at all but is making an argumentative and very controversial speech about matters which are very much in dispute and which will be the subject of the debate on Wednesday. The point I am putting is that either the right hon. Gentleman should confine his statement to the facts of what took place or that his speech should be debatable today when he sits down.
Mr. Speaker: I do not see how it is possible reasonably to give an account of conversations which were held embracing foreign affairs without some expression of views on the questions of policy which arose out of them. I cannot myself draw such a hard-and-fast line as the hon. Member invites me to draw. I have heard nothing in the Prime Minister's statement which is out of order. I do think it is the duty of the House to listen to him.
Mr. Donnelly: Further to that point of order—
Hon. Members: Sit down.
Mr. Speaker: What is the point of order? I have ruled on the first point of order.
Mr. Donnelly: Might I respectfully make this submission to you, Mr. Speaker? The system of making statements at the end of Questions has grown up in the last few years—[HON. MEMBERS: "No."]—and it has been respected by the House because it is a convenient administrative arrangement for the House of Commons. What is extremely difficult for back-benchers is for a statement to be made which becomes a controversial speech and which is then not debated. The point which I am seeking to establish, and which my right hon. and hon. Friends have sought to establish, is that a tradition of this House has been violated and that the rights of hon. Members are to be prejudiced as a result. I respectfully put to you, as the Speaker of the House of Commons, that you should look into this matter and reconsider the Ruling which you have given.
Mr. Speaker: There is nothing in this for me to look into. The practice of Ministers making statements upon policy is a very old one and by no means of recent origin. I honestly do not see how one can separate these matters of policy on which differences of opinion are held, from questions of fact as to what actually occurred. This arrangement has apparently been come to by some sort of common consent. It is rather an abuse of the system of points of order to interrupt this statement. Anything of a controversial character can be dealt with fully and freely on Wednesday, and that is the proper time to do it.
The Prime Minister: I think it is my duty, as far as I can, to avoid controversy, but it is necessary for me to do justice to the character of the conversation which we have had. I never have known, Mr. Speaker, even before your Ruling today, that statements by Ministers were supposed to be confined only to subjects and issues on which everyone in the House was agreed. Even on domestic matters—very domestic matters—some differences of opinion have been felt about statements which it has been my duty to make quite recently. I assure the House that I have no wish to raise controversy. I thought it would be convenient for hon. Gentlemen to be able to consider the most scathing terms with which they could repel any point in my narrative on which they differ from me.

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I was speaking on the question of bringing Germany into the system of European defence. The convictions of Her Majesty's Government upon this issue, as were those of our predecessors, are in full harmony with those of the United States. That is factual, anyhow.
We feel that we are bound to act in good faith towards Germany in accordance with the Treaties we have signed and ratified and also that those concerned in these decisions owe this to Dr. Adenauer, who, during a score of long and weary months of delay and uncertainty, has never shrunk from facing unpopularity in his own country in order to keep his word and to range Germany definitely with what is called the Free World, including Britain and the United States. We welcome the statement of the new French Prime Minister, who has other anxieties on his hands, that France should now put an end to the present uncertainties, and that the French Chamber should take a decision before it separates for the Summer Recess.
The Treaty contains effective safeguards for the future peace of Europe—the E.D.C. Treaty—and these safeguards the Federal Republic of Germany has freely accepted. Dr. Adenauer has recently stated that the guarantees are a benefit for everyone concerned, the Germans not excepted. We earnestly hope that what Britain and the United States have said in unison at Washington may play its part in averting the measureless consequences which may follow from further delay by the French Chamber.
The Washington talks have helped to get Anglo-American discussion of the problems of South-East Asia back on to a realistic and constructive level. My right hon. Friend the Foreign Secretary has returned today to Geneva with the feeling that we have moved towards a common outlook on the problems now being discussed there. Further progress at the Geneva Conference depends largely on the results of the military negotiations now taking place between the French, the Associated States and the Vietminh. We and the United States share the hope that the parties will be able to reach an understanding which can be referred back to the Geneva Conference with some hope of success.
44
Our ideas about a guarantee of any settlement that may be reached at Geneva were explained to the Americans and are now better understood. It is hoped that, should an acceptable settlement be reached on the Indo-China problem, means may be found of getting the countries which participated at the Conference to underwrite it. We hope, too, that other countries with interests in the area might also subscribe to such an undertaking. This was the basis on which the idea was put to the Americans and it is one of the problems to be examined in Washington by the Anglo-United States Study Group set up as the result of our talks.
The other problem which this Group is studying is that of South-East Asia defence. We have to plan not only for the contingency of a negotiated settlement but for other eventualities less agreeable. The arrangements for collective defence in South-East Asia will proceed whether or not agreement is reached at Geneva, though their nature will depend on the results of the Conference. The concept of a collective defence system is not incompatible with the settlement we hope for at Geneva and, after all, the Communists have their own defensive arrangement in the form of the Sino-Soviet Treaty. There is no doubt that the Foreign Secretary's care and zeal in bringing the five Asian Colombo powers prominently into the situation is fully appreciated now by the United States Government. Their association would be and is regarded as important and welcome. All I say on the subject today is that there is no intention of presenting cut-and-dried formulas on a "take it or leave it" basis to potential Asian members.
The Study Group is therefore examining methods of associating other countries with any settlement of the Indo-China problem that may be reached at Geneva. This involves a security arrangement for South-East Asia assuming an Indo-China agreement, or alternatively a security arrangement for South-East Asia assuming no agreement on Indo-China. The cases are different, quite different.
The joint statement issued in Washington on 28th June stated that if the French Government are confronted with demands which prevent an acceptable agreement regarding Indo-China, the

45
international situation will be seriously aggravated. These words are not intended to be a threat; they are undoubtedly a blunt assertion of fact.
That is all I have to say today upon this complicated and dangerous subject. But I should not conceal from the House the deep anxiety which must naturally be felt lest the military events which are taking place become dominant, with a consequent serious increase of tension in every quarter. We meet under that direct and immediate anxiety.
I now come to a question which has suddenly received a degree of publicity out of all proportion, in my opinion, either to its importance or urgency when compared with the vital matters which I have been outlining. My right hon. Friend the Foreign Secretary and I were astonished on our homeward voyage to read the Press extracts and other reports which were sent us of the storm suddenly raised in the United States by Senator Knowland about the possibility of Communist China being admitted to U.N.O. against American wishes, and still more that these reports seemed to be in some way or other linked with our visit as if we had come over for such a purpose. In fact, although it was mentioned, it played no notable part in our discussions, and was not an immediate issue. It cannot in any way be raised for some time and if it should be raised, which is by no means certain, we shall undoubtedly have a different situation to face than any which now exists.
The United Kingdom policy on the subject of the admission of Communist China to the United Nations has been unchanged since 1951 when the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison), then Foreign Secretary, stated that His Majesty's Government believed that the Central People's Government should represent China in the United Nations but that, in view of that Government's persistence in behaviour inconsistent with the purposes and principles of the Charter, it appeared to His Majesty's Government that consideration of the question should be postponed. That was the policy of the late Government and it has been the policy of the present Government, reaffirmed in July last by the Chancellor of the Exchequer.
Since then the Geneva Conference has discussed but failed to reach agreement
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on the reunification of Korea, and although the armistice remains in force the arrangements for its supervision have proved far from satisfactory. Although no actual fighting is taking place, the armies still remain in the presence of each other.
Moreover, as we can all see, the problem of Indo-China has assumed far more serious proportions. Indeed, as I have indicated, a military climax may well be approaching. No agreement has yet been reached at Geneva either about Indo-China or Korea. If such agreements were reached in either or both these theatres, the arrangements would still depend on good faith and co-operation, for which time would certainly be required. In these circumstances, although, Her Majesty's Government still believe that the Central People's Government should represent China in the United Nations, they certainly do not consider that this is the moment for the matter to be reconsidered.
Before our return home, the Foreign Secretary and I paid a flying visit to Canada. We were received with glowing warmth of friendship and full understanding, and during our 30 vibrant hours in Ottawa we had very good talks with Mr. St. Laurent. We sat at the Canadian Cabinet table—I have the honour to be a Canadian Privy Councillor—and we carried away with us renewed conviction of the harmony in sentiment and policy of our two countries.
I have a final thought, which I do not think will raise disagreement, to present to the House, and I should be glad for it to travel as far as my words can reach. In the speech which my right hon. Friend the Foreign Secretary made in winding up the debate before our departure, in speaking about the relations of the Communist and free worlds, he used the remarkable phrase "peaceful co-existence." This fundamental and far-reaching conception certainly had its part in some of our conversations at Washington, and I was very glad when I read, after we had left, that President Eisenhower had said that the hope of the world lies in peaceful co-existence of the Communist and non-Communist Powers, adding also the warning, with which I entirely agree, that this doctrine must not lead to appeasement that compels any nation to submit to foreign domination.
The House must not under-rate the importance of this broad measure of

47
concurrence of what in this case I may call the English-speaking world. What a vast ideological gulf there is between the idea of peaceful co-existence vigilantly safeguarded, and the mood of forcibly extirpating the Communist fallacy and heresy. It is, indeed, a gulf. This statement is a recognition of the appalling character which war has now assumed and that its fearful consequences go even beyond the difficulties and dangers of dwelling side by side with Communist States.
Indeed, I believe that the widespread acceptance of this policy may in the passage of years lead to the problems which divide the world being solved or solving themselves, as so many problems do, in a manner which will avert the mass destruction of the human race and give time, human nature and the mercy of God their chance to win salvation for us.
Mr. Attlee: We shall, of course, study very carefully the statement of the Prime Minister prior to the debate on Wednesday, in which we shall want to consider very fully just how far common ends and aims are worked out in practice by the English-speaking peoples on the two sides of the Atlantic.
I should like to put only one question to the Prime Minister at the present time. In the course of his talks did he consider the suggestion, which was put by this House, of a meeting between President Eisenhower, Mr. Malenkov and himself to deal with the, biggest question of all that threatens the world—the hydrogen bomb? The Prime Minister has rightly said that he does not intend to discuss detailed points and matters of technical importance, but this, after all, is an over-riding question. Was it discussed at all?
The Prime Minister: Yes, Sir, it was certainly discussed in general terms between me and the President and in our circle, and all its difficulties were surveyed. Broadly speaking, the question is more of timing than of anything else, but I do not feel that it would be of advantage for me to make any detailed statement upon the subject at the present time, and I do not expect that that would be so on Wednesday. I assure
48
the right hon. Gentleman, however, that it is always in my mind.
Mr. A. Henderson: In view of the importance which President Eisenhower and the Prime Minister attached to a reaffirmation of the principles of the Atlantic Charter, may I ask the Prime Minister whether it is intended to invite the 11 Governments, including the Soviet Union, who subscribed in 1941 to the principles of the Charter, to reaffirm their support for them, so that we may look forward to the principles being put into operation and not merely remaining as generalities?
The Prime Minister: We did not deal with that particular aspect.
Mr. Strachey: In view of the refusal of Mr. Dulles to attend the renewal of the Geneva Conference, what assurance can the Prime Minister give to the House that the United States Government does, in fact, favour a negotiated settlement in Indo-China, as the Prime Minister stated they do?
The Prime Minister: The United States Government are officially represented at the Geneva Conference. The fact that they have not sent Mr. Dulles or General Bedell Smith is a matter which really is for them to decide.
Mr. Donnelly: Referring to the question by my right hon. Friend the Leader of the Opposition, has it occurred to the Prime Minister that for a start it might be possible or more suitable for him to meet Mr. Malenkov on his own? Has the right hon. Gentleman given any consideration to this possibility? Does he not think that a suitable opportunity might occur in the near future after the outcome of the Geneva Conference is known?
The Prime Minister: I do not desire at the present time to add in any way to the statements I have made from time to time in answer to Questions in the House since I first raised this question of top-level meetings on 11th May last year.
Mr. H. Morrison: As one who accepts the view that it would be a tragedy to lose the opportunity for military cooperation between the Western Powers and Germany without the creation of a German national army and general staff, may I ask the Prime Minister whether

49
he and the President discussed whether there was any means of discussing this matter with the present Prime Minister of France, M. Mendes-France, with a view to seeing whether the issue cannot be brought to a decision, and a right decision, in France? Is there any way in which the representatives of the three countries could get together with a view to a peaceful settlement of this matter being made and France coming into friendly collaboration with us about it?
The Prime Minister: I am quite sure that every effort is being made by the United States to present to the new French Prime Minister the importance which they attach to this issue being settled. I understand that continuous discussion is going forward in the most friendly spirit but without in any way under-valuing the gravity of the issues at stake.
Mr. Wyatt: Can the Prime Minister say as well as drafting the part of his communiqué with the President in which France was urged to sign E.D.C., what discussions they had about devising some alternative supposing the French do not do what the President and the Prime Minister have told them to do?
The Prime Minister: Everyone can conceive of alternatives for himself. I certainly have thought of several alternatives, none of them very agreeable, but I did not think that this was a good moment to endeavour to outline them.

ANGLO-AMERICAN TALKS
  BUSINESS OF THE HOUSE
  Proceedings on Government Business exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]
ORDERS OF THE DAY

  FEDERATION OF RHODESIA AND NYASALAND (GIFT OF MACE)
  Resolution reported
  That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a Mace to the Federal Assembly of the Federation of Rhodesia and Nyasaland, and assuring Her Majesty that this House will make good the expenses attending the same.
  Resolution agreed to.
  Address to be presented by Privy Councillors or members of Her Majesty's Household.

  FINANCE BILL
  Order for Third Reading read.
  4.20 p.m.
  The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I beg to move, "That the Bill be now read the Third time."
  The lusty infant which I carried in from the Bar of this House just three months ago now reaches its last stage in this House. No doubt that fact will be a source of not inconsiderable consolation to a certain number of hon. Members. In the course of our debates, like other people as they grow older, the Bill has put on a little weight, but I do not think that in the process it has lost any of its initial vigour. A good deal of that bulk is, of course, due to necessary amendment of our tax law.
  It is one of the many disadvantages of the present very high levels of both direct and indirect taxation that there is a great inducement and incentive to individuals to find such loopholes as they can in our tax law in order to minimise or avoid the burden of taxation. It then becomes the duty of the Government of the day to stop up those loopholes. The result inevitably is a certain complexity in legislation.
  I suppose that all of us share the wish expressed during our debates by the right hon. and learned Member for St. Helens (Sir H. Shawcross) that our tax law could be simpler and clearer to understand. I am afraid that the fact that the tax net has continually to be repaired inevitably gives it a somewhat

  51
  patchwork effect. It also has the disadvantage of exposing this House to the necessity of considering extremely complicated provisions the practical importance of which is often in inverse ratio to their complexity.
  As one who was in the Chamber during the greater part of our debates, I hope that I may, without impertinence, say that discussion of the many technical Clauses of the Bill seemed to me to amount to a very strong vindication of the Parliamentary process. The fact that extremely complicated provisions were subjected from both sides to shrewd and penetrating analysis is a very fine indication of the way in which the House is able to perform its most difficult duties.
  The great bulk of the provisions with respect to tax machinery are in that part of the Bill, from Clauses 7 to 13, which deals with the reform of the law relating to Purchase Tax. As I said during Second Reading, our Purchase Tax law was put together during the very difficult circumstances of the summer of 1940. I suppose that it is no understatement to say that most people's minds were directed to other topics at that time. It was largely rebuilt in the almost equally difficult circumstances of 1944, and I think that the only surprising feature is that it has not given trouble before.
  In any event, the House can be congratulated on having put this tax on a much more satisfactory legal foundation than it has ever had. Our enactments in that connection have a further advantage. A good deal of the purpose of both Clauses 7 and 9 is to enable us, having cleared up the legal position, to adopt a somewhat freer and perhaps more helpful attitude on the vexed subject of registration for Purchase Tax.
  One of the difficulties has been that hitherto the law on the subject has been so imprecise that it has been necessary to adopt a somewhat restrictive attitude, for which we have been criticised by my hon. Friend the Member for Gillingham (Mr. Burden) and others. We hope that this sounder legal foundation will enable us to move towards some degree of relaxation in this direction.
  As I told the House during the Committee stage, conversations are going on with outside interests in the trades concerned. Though these conversations are
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  not finished, I can tell the House that they are going well. It very much looks as if the voluntary assistance by trade interests outside, which is a necessary reinforcement of our revenue checks if we are to allow registration to be granted and maintained more freely, will be forthcoming. I hope that the result will be that we shall be able to give a considerable easement in the direction which all hon. and right hon. Gentlemen who have experience in the matter know has given rise to a great deal of ill-feeling and difficulty in the past.
  We have also made a good many changes, some substantial and some smaller, in the almost equally difficult subject of the law relating to Estate Duty. Clauses 29 to 31 produce some modification of the rigours of what is called the assets basis of valuation in a number of cases in which it seemed a trifle oppressive that that basis should be applied. I freely admit that a more controversial feature has been the relief given under Clause 28 in respect of certain assets of the family business, the partnership or the individual business.
  I do not want to revive the controversies which marked that part of our discussion of the Bill, but it is worth recording that Estate Duty falls with great severity on the assets of a business of this sort in a way quite different from that in which it falls upon the assets of a great public company. If a shareholder in a great public company dies, his shares may well have to be sold, but the company is largely unaffected. When the main proprietor of one of these businesses dies, it is the fact that the duty can fall—and with great severity—upon the assets of the business. Therefore, my right hon. Friend thought, in view of that and of the fact that the assets basis can operate with severity in certain types of case, that it was right to give certain of these businesses some relief such as that which agricultural land has enjoyed for a considerable time.
  Another change in our Estate Duty law was effected with the support of both sides of the House during the debate on the Report stage. Then the House decided, if not unanimously at any rate nemine contradicente, to accept a proposal embodied in Amendments put down by the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) and my right hon. Friend the

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  Member for Blackburn, West (Mr. Assheton) in favour of raising the exemption limit from Estate Duty from £2,000 to £3,000 and making a consequential reduction in the levels between £3,000 and £4,000.
  Mr. Hugh Dalton: May I intervene to point out a misprint in the Bill which has been circulated? The proper word is "exemptions." That appears when the Clause is read, but in the index the reference is to "exceptions."
  Mr. Boyd-Carpenter: I am obliged to the right hon. Gentleman. I had read the Clause but not the index, perhaps because after the last few months an index has become almost unnecessary to me. I am obliged to the right hon. Gentleman with his eagle eye. I am sure that those concerned will be very glad to make the necessary correction.
  We are all glad that it has been possible to make this adjustment, whatever our views may be on Estate Duty in the higher ranges. I do not want to disturb the calm of the afternoon by reviving controversy on that issue. I think that the House is glad that it has been possible to give relief to the modest fortunes with which this change in the law deals and perhaps to give some psychological encouragement to savings by people of modest income, from the knowledge that their estates will not be subjected to Estate Duty when they are of these levels. It is a healthy thing that, at a time when we have so many difficulties to compete with, and when it is extraordinarly difficult to make concessions involving sacrifice in revenue, we have been able to give, with, as I understand it, the general consent and wish of the House, some relief in this direction and some encouragement of saving to the people concerned.
  A number of other parts of the Bill are worth a valedictory mention—for instance, post-war credits. We have already set in operation the machinery by which the further scheme of repayment can operate. The new forms of application have now been in the post offices and tax offices for exactly a week and the machinery, therefore, which can deal with actual payment after the Bill is law has started to work. I think the House will be glad not only that we have been able to step up the repayment of these credits,
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  which I know gave rise to strong feelings in many cases outside this House, but that we have been able also in the process to clear up perhaps the most exasperating of all the anomalies that used to exist, the anomaly of the family none of whose members lived long enough to reach the age of entitlement, with the result that the payment of the credit was postponed indefinitely.
  Now that we are providing that the credit shall be repaid on reaching the 65th or 60th anniversary of the original holder, we have given some certainty in the matter and, incidentally, given the added advantage of securing that, where those credits are left to a charity, that charity will also be able to claim them when the original owner would have reached those ages. This is a healthy advance which I know will give considerable satisfaction to the half-million or so people outside who will benefit.
  We have taken the opportunity, as the House knows, to deal in Part III of the Bill with some of the useful recommendations in the first Report of Mr. Millard Tucker, whose industry and skill in dealing with these immensely intricate subjects commands the gratitude of his fellow countrymen and of this House.
  We can also take a valedictory look at the permanent debt charge. It lived in such a state of suspended animation that I suppose no one will pay much attention to its passing. It is a change of form rather than of substance, a tidying up of a statutory provision which has become obsolete, but it is worth noting at this stage that we shall no longer have in future Finance Bills a Clause to which we became accustomed in recent years.
  The House will also be glad that we have been able to clear up the confusion which arose on the subject of the application by local authorities for exemption from Entertainments Duty in respect of entertainments which they provide. For some years, as the House knows, local authorities have been treated for this purpose on the same basis as anybody else; that is to say, if on the facts they were entitled to exemption, they got it; but some doubt has arisen as to whether a local authority came within the definition in Section 8 of the Finance Act, 1946, at all, and as a result it was doubtful whether local authorities could in any circumstances obtain these exemptions.

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  The Clause which we put in at one stage of our debates, and which is now Clause 2 of the Bill, secures that, broadly, they will be treated like anybody else. The House will agree that it is right to discriminate neither in favour of nor against local authorities in this respect, but to treat them, for the purpose of applying for exemption from Entertainments Duty, in the same manner as everybody else is treated.
  On the topic of the Entertainments Duty, it is in this sphere that my right hon. Friend has found it possible to make an appreciable concession by way of tax remission. As the House knows, the great weight of the Entertainments Duty falls upon the cinema industry, which yields by far the greater part of the revenue concerned. It is common knowledge that the industry has had difficulties to face, arising from competition both from new forms of entertainment and great technical changes which are taking place within its own sphere. In those circumstances my right hon. Friend thought it right to give them some remission of duty costing about £3 million in the current year and a little over £3½ million in a full year.
  Other adjustments have been made both to the living theatre and to sport. No one who has dealt with these matters will ever expect that such adjustments and reductions will fully satisfy the people concerned, but it is a proper reflection of the care with which we try to deal with these matters that it has been thought reasonable to make small reductions at least in the rates of Entertainments Duty on these activities too.
  The biggest change in the Bill is the change introduced by my right hon. Friend with respect to taxation allowances in industry and the introduction of the investment allowance. When my right hon. Friend announced this during his Budget speech, it was in the character of an innovation. The introduction into our tax system of a tax allowance in respect of an amount in excess of the total amount of depreciation produced a rather conservative reaction from right hon. Gentlemen opposite but as our debates progressed this proposal was paid the agreeable compliment of being pressed from all quarters of the House to be extended into spheres further than
  56
  we had desired to extend it. That is a very wholesome compliment to the soundness and good sense of the proposal of my right hon. Friend.
  More than that, it enables this proposal to go out not simply as a Government proposal passed through this House by a Government majority, but as a proposal which has commanded a good deal of support and favourable comment from many quarters of the House. That is a Rood thing, because it now goes out to the board-rooms of this country, to the thousands, perhaps tens of thousands, of people who make the decisions as to the degree of investment to be undertaken, or indeed as to whether investment is to be undertaken at all, with the background of the treatment which it has had in this House.
  I suppose that in this vital sphere of investment, which this proposal is directly calculated to stimulate, it is impossible completely to isolate the factors which determine the decision whether to invest or not which in the majority of cases, is taken as the result of considering many factors; for instance, the outlook for the business concerned, the outlook for the trade in general to which that business belongs, the general outlook for the country, the atmosphere of confidence that may or may not exist. I imagine that it is fairly rare for any single factor to determine that decision.
  On the other hand, it will now be known, when those decisions are being weighed, that a taxation allowance will be given over and above full depreciation in respect of the assets concerned. I have little doubt that this fact will be given weight by those who make the decision whether to invest, and that it will be a favourable factor in encouraging investment, which is a purpose that the whole House wants to see achieved. We all know how fiercely competitive world markets are becoming, and we all appreciate that, unless British industry is equipped with up-to-date plant to enable it to remain strictly competitive, it will not be possible for this country to compete successfully in the markets of the world. That is why, despite the difficulties about tax concessions which face us in this House, my right hon. Friend has taken the bold decision to introduce this innovation in our tax practice, in order to give a direct stimulus to that

  57
  part of our economy where, perhaps above all, a stimulus is required.
  These matters are not settled by one factor alone, nor are they settled immediately and on the spur of the moment. It would be wrong for that reason to assume that investment in the immediate future will necessarily show spectacular increases. I believe, however, that in this way we shall contribute a great deal to producing an intellectual climate in which there will he a far greater willingness and enterprise in investment and that in this way we shall operate to assist British industry in the problems which face it. In view of the very large amount of depreciation which arises in respect of shipping and the fact that the shipping industry in many ways is one of our vital industries and one which has fierce competition to face, it is a matter of great satisfaction that, as leaders of the industry have acknowledged, shipping will receive some real assistance from this provision.
  While it embodies a great deal of improvement in our tax law and machinery, while it embodies the new device of the investment allowance and embodies changes in the rates of Entertainments Duty and the revision of postwar credits, the Bill is not one of those Bills that we have seen from time to time in the House which provide for large reductions in taxation. As the House knows, the balance of our income and expenditure, the very high level of expenditure which is necessitated by the defence programme and also the balance of our economy, have inhibited any such step this year. Whilst thinking about this at the weekend, I came across a couplet from Dryden which seemed to hear very happily on the situation. It read:
  "Tis easy conduct when exchequers flow,
  But hard the task to manage well the low."
  It is because, in my judgment, the Bill is a good example of that good management that I commend it to the House and hope that the House will give it a Third Reading.
  4.42 p.m.
  Mr. Eric Fletcher: The right hon. Gentleman the Financial Secretary to the Treasury has moved the Third Reading of the Finance Bill with one of those very amiable and agreeable speeches which those of us who have taken part in debates on the Bill are
  58
  accustomed to have from him. I should be remiss if I did not say how much we on these benches appreciate the courtesy and competence and painstaking character of the contributions which he makes to our debates. He has a very happy gift of language and we can always rely upon him, unlike some of his colleagues, to read the right brief on the right Amendment and, generally, to give us the impression of understanding what he is saying.
  Having said that, I do not think that we can share with the right hon. Gentleman his rather smug satisfaction of the contents of the Bill. We regard it, as we regarded the Budget, as being disappointing, dull and unimaginative. One of our difficulties on these benches in criticising the Bill this year has been its dullness and lack of imagination. In addition, I think that we are entitled to complain of the great reluctance on the part of the Chancellor, contrary to custom, to make any concessions to the numerous suggestions that have been put forward from this side of the House.
  In fact—and the Financial Secretary mentioned it—the only notable change that has been made in the Bill since it was introduced is the relief from Estate Duty given to small estates as a result of the Amendment which was placed on the Order Paper by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton). Although the Chancellor has made that single and welcome concession, it was outweighed by his retrograde action in changing, as a result of pressure from his back benches, Clause 33, which deals with aggregation for Estate Duty purposes. The Clause in its original form was a laudable attempt to check evasion, but now, as a result of the changes that have been made, it has been watered down almost out of recognition.
  My hon. and right hon. Friends have, as usual, attempted to improve the Bill in various drafting respects. Although none of the substantial suggestions that have been made by my hon. and right hon. Friends have been accepted, I hope that a number of the very constructive suggestions that have been made throughout our debates will bear fruit in future years. Disappointing though we find the Bill, it does contain a few minor concessions which resulted from suggestions we had urged upon the Chancellor in previous

  59
  years; though in our view those concessions do not go far enough.
  The reduction in the Entertainments Duty paid by the cinema industry, with which, as the House knows, I have some association, is long overdue and barely adequate. On the other hand, the trifling reductions made throughout the remainder of the field of Entertainments Duty are most unsatisfactory, and perpetuate the many anomalies to which we have drawn attention. We think that it is impossible to discriminate in taxation between cricket and other games and sports. We think it high time that all Entertainments Duty on games and sports was swept away. The cinemas stand in a class by themselves, and I do not think that there would be any criticism in the cinema industry if Entertainments Duty on all sports were abolished. In these days, with the spread of B.B.C. television and the unhappy introduction of commercial television, surely it is unfair and socially bad to penalise all outdoor games and sports.
  We are equally disappointed with the niggardly beginning that has been made in the repayment of post-war credits. As the Chancellor well knows, some 10 million people enjoy—if that is the right word—or are entitled to the benefit of post-war credits. Many of them live in very distressing circumstances. All of them were disappointed with the meagre beginning that the Chancellor has made. The Chancellor has chosen to single out for special discrimination bankrupts and their creditors. We think the least the Chancellor should do is either to reduce the age at which the credits are paid, or else repay all the credits by reference to the earliest year in respect of which tax was actually paid.
  Mr. Deputy-Speaker (Sir Charles MacAndrew): I think the hon. Member is speaking about things which are not in the Finance Bill.
  Mr. Fletcher: I was talking about post-war credits, and there is a Clause in the Finance Bill which relates to post-war credits, I was saying that we are disappointed with that Clause, but I was proceeding to pass from that Clause because, as you say, Mr. Deputy-Speaker, it would be out of order for me to deal
  60
  with things which are not actually in the Bill.
  There is a very great deal in the Bill about Purchase Tax. The Financial Secretary took credit to himself for the changes in the law relating to Purchase Tax. We welcome Clause 13 as far as it goes in dealing with the complicated subject of uplift, but we think it would have been very much better if the Government had gone further and given effect to the recommendations put forward by the two ladies who signed the minority report of the Grant Committee.
  I was a little surprised to hear what the Financial Secretary said in regard to the Purchase Tax Clauses. He said they were introducing considerable improvement into the legislation on the subject, which indeed is true but what I thought most notable during our discussions of Part II was the lamentable state into which the whole Purchase Tax law has been allowed to drift. It was more than surprising to find the Financial Secretary, whom we always regarded as the arch-opponent of anything in the nature of retrospective legislation, justifying Clause 9, which is aimed solely at legalising retrospectively the collection by Her Majesty's Customs and Excise of all kinds of payments which have been illegally collected in the last few years. As he blandly told us, these Purchase Tax Clauses give legislative recognition to a number of extra-statutory practices which have been in operation for some time past.
  On that subject I would also remind the House that one of the most pathetic episodes in the Committee stage was the desperate justification which the Solicitor-General gave to the astonishingly vague language now contained in Clause 13. which we had occasion to criticise so severely. The Solicitor-General attempted to justify the use of imprecise and vague language in a statute on the ground that it was necessary to have some measure of flexibility. I thought that a most pitiful exhibition for a Law Officer and really a prostitution of the noble art of drawing legislation in precise and intelligible terms.
  I pass on to the more substantial features of the Finance Bill, the investment allowance and relief from Estate Duty on businesses affected by Section 55 of the Act of 1940. The Chancellor

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  claimed, as the Financial Secretary claimed today, that they are related and that the object in each case is to stimulate investment and give assistance to the private sector of industry. We agree that probably the most serious single feature of our economic situation today is the neglect of investment in the private sector of industry.
  Granted the necessity, as there obviously is, of giving private industry some incentive, we support the investment allowance, but not the relief from Estate Duty. In view of the urgent need to stimulate private industry, we think that the experiment of the investment allowance is certainly one worth trying. We support it because the relief given is coincidental with actual investment. We should have been happier if the rates of investment allowance could have been increased, particularly as regards plant and machinery and industrial building.
  We recognise that the investment allowance has its defects. In a number of cases, it will give relief where investment on re-equipment would have been carried out anyhow. It is inevitably a somewhat clumsy method, and for that reason we should have preferred to introduce a greater selectivity or discrimination in the operation of the allowance. We believe that the difficulties of administration in that field could be overcome.
  As was recognised by the Government throughout the debates, there are inherent possibilities of abuse in the whole system of investment allowance. We had occasion to criticise in considerable detail the safeguards which the Chancellor had put into the Second Schedule. We hope they are adequate. They have been improved as a result of suggestions we made, but we are still doubtful whether they are sufficient to circumvent the ingenuity of those whose chief preoccupation is to devise methods of exploiting loopholes in our fiscal arrangements.
  As the Financial Secretary said, a great part of this Finance Bill contains Clauses which are aimed at checking tax evasion of one kind or another. There are not only Clauses 7, 10, 11 and 12—to which the right hon. Gentleman referred—aimed at stopping loopholes in the Purchase Tax field, but there is also Clause 17, which was inspired by a suggestion made by my
  62
  hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) in our debates last year, which is aimed at stopping the company reconstruction racket. Also, the whole of the complicated machinery in the Second Schedule is designed to check the misuse of the investment allowance.
  I do not want to refer at length to these anti-evasion Clauses—although, as they are in the Bill, that would be in order—but I wish to remind the House that, bulky though the anti-evasion Clauses are, we urged the Chancellor to take additional powers to deal with tax avoidance, both in the Income Tax field and as regards Estate Duty. He preferred not to do so, but to rely on his existing administrative powers. Therefore, we shall watch with interest how those powers are used. While no one wishes to interfere with legitimate expenditure by directors and high executives in carrying out essential functions of their business, whether in this country or abroad, as the Chancellor will appreciate, there is a blatant abuse which clearly exists in connection with expenses allowances and other benefits and amenities enjoyed tax-free. This constitutes, to say the least, a very considerable irritant in our economic life and naturally produces a sense of disharmony and resentment.
  I think it would be fair to say, viewing the Finance Bill as a whole, that it amounts to an admission by the Government that private enterprise is on trial, both as regards its capacity to respond to the needs of our economic development, and also as regards its conception of social responsibility.
  There remains Clause 14, on which I should like to say a word. The Income Tax Clause is most important and is, indeed, central to our whole fiscal system, because some 43 per cent. of our revenue comes from this source. Here again we are disappointed because the Chancellor has not adopted any of the recommendations of the Royal Commission, and we believe that until he does so considerable injustices will be caused to all the smaller Income Tax payers. This results from the distortion of Income Tax liability that has been produced by inflation, and we hope it will not be long before the constructive suggestions made by the Royal Commission, some of which we have urged upon him, will be adopted and put into operation.

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  Speaking of Income Tax reminds me that the Royal Commission has gone a long way to refute the complaint frequently expressed in various quarters that our high level of taxation has a disincentive effect. That may be discounted as a result of this authoritative pronouncement, and we now have an equally important witness, the Chancellor himself who, on Wednesday last, told us:
  " The country is responding with increased production. Things are buoyant in the country. Things are improving."—[OFFICIAL REPORT, 7th July, 1954; Vol. 529, c. 2251.]
  We on this side think that, whatever merits the Finance Bill has, and so far as the Chancellor is able to claim credit, as he does, for the buoyancy of our present financial situation, that is fundamentally because he has pursued the basic lines of fiscal policy that were laid down by successive Labour Chancellors of the Exchequer, my right hon. Friend the Member for Bishop Auckland, the late Sir Stafford Cripps—
  Mr. Cyril Osborne: The cheap money policy?
  Mr. Fletcher:—and my right hon. Friend the Member for Leeds, South (Mr. Gaitskell). While the Finance Bill is an instrument for raising revenue, we believe it is something more. The Chancellor has adopted the thesis which we put into practice and which we had been urging for many years before that, that the Finance Bill should be the recognised instrument for controlling economic and social policy as well as effecting the redistribution of income and social benefits.
  We feel that it is because high taxation enables the Treasury to maintain a high level of social welfare that we are now reaping the fruits in the high standard of production for which the Chancellor claims credit.
  5.4 p.m.
  Mr. R. Fleetwood-Hesketh: I had hoped to say a few words in Committee when Clause 25—it has now become Clause 28—was being discussed. It deals with Estate Duty on family businesses. I refrained from entering into the discussion then because there was a general desire to push on to the other important Clauses in the Bill.
  64
  Nevertheless I am grateful that I have the opportunity of saying a word now, for this Clause has, I know, given a new sense of purpose to many private firms throughout the country. I should also like to say something about the criticism which has been directed against the concession. This criticism appears to have been based mainly on Command Paper 8295, which has been very widely quoted, but the more I think about it the more I feel that the evidence of that White Paper does not point in the direction which has been suggested.
  This issue is complicated by the fact that when concessions of this kind are discussed they are always recommended for a great variety of reasons. For example, when the original agricultural concession was made the main reason advanced was the low yield of agricultural land. Similarly today the Chancellor has told us that this concession is introduced for three independent reasons, to mitigate the effects of Section 55 of the Finance Act, 1940; to encourage people to renew their plant, on an analogy with the investment allowances; and, finally, to help family businesses to survive.
  I feel that the third is the consideration of most lasting importance, and I think it goes a little deeper than some speakers have suggested, because it seems to me that it affects the whole question of the relationship of the individual to the property to which he is legally entitled. I have always held the view that there is an essential distinction between working capital or the tools of one's trade on the one hand, and, on the other, unattached personal wealth, or, as one might put it, the right to command the services of other people in the future. To put it another way, so long as one admits the rights of private property at all, it seems to me preferable that a man's investment income should be drawn from the business in which he is personally engaged rather than it should be derived from an enterprise with which he has no connection.
  I cannot help feeling that this distinction was perhaps better understood in the past than it is today, and I would suggest that, in part at least, it underlay the old distinction between real and personal property and is to be found too in Roman law. But with the great commercial expansion which followed the Revolution of

  65
  1688 when the conception of limited liability came to receive a moral sanction and was widely adopted, this distinction tended to be obscured and, in the end, to be regarded almost as an anachronism. It would be foolish to suggest that that limited liability is inherently wrong, for, after all, our commercial greatness was founded upon it; I merely say that where inheritance is concerned there is an essential difference between unattached wealth, whose dispersal will not affect the management or control of the business which provides the revenue, and working capital, which may upset a complex of human relationships which has taken many years to create and may take as many to replace.
  Yet the whole tendency of our tax law has been to extend the field of the public company. That is particularly true of Section 55. I contend that, in so far as legislation influences the matter at all, that influence should be in the opposite direction. This brings me to Command Paper 8295. As the House very well knows, that Report investigated a large number of cases and showed that in only 1·6 per cent.—the figure is actually 0·7 if investment companies are excluded, and I am inclined to think that they should be excluded—was it necessary to have recourse to the trading assets. In all others there were sufficient non-trading assets to foot the bill. From that it was argued that no concession was necessary.
  I take the opposite view, because it seems to me merely to prove that the proportion of what I have described as the less essential type of wealth to the estate as a whole was greater than had previously been supposed. It simply shows that the tax structure encourages people to hold an inordinately large part of their assets in a liquid and easily marketable form which could more usefully and more appropriately be used in their own businesses, if necessary, right up to the day of their death.
  From what I have said, it will be seen that I would have supported an extension of the concession to the distributive trades. I realise, however, that it would not be within the rules of order if I were to dilate upon that subject. I will only say that I appreciate the difficulties of a practical nature which stand in the way. At the same time, it is plain that the more one widens a class of this kind the greater
  66
  is the risk of abuse. I was grateful, therefore, that the Chancellor undertook to watch this aspect of the matter closely, for large-scale evasion would certainly defeat the object which many of us have in view.
  For the same reasons, I cannot go all the way with my hon. Friend the Member for Hall Green (Mr. Aubrey Jones) who so ably expounded the thesis that, as a matter of general principle, we should not discriminate in direct taxation. I feel that some broad distinction upon the lines I have indicated is necessary if we are to avoid drifting steadily into some kind of managerial society, which I believe would be stony ground for those traditional virtues which the Chancellor so rightly wishes to foster.
  5.12 p.m.
  Mr. J. Grimond: I listened with interest to what has been said by the hon. Member for Southport (Mr. Fleetwood-Hesketh). I am sure that lie will share the anxiety felt by some of us that such a small proportion of British industry should be owned by the people who work in it. I think that the total number of shareholders in public companies is under 3 million, and of course those who own private or family businesses is not very considerable. I entirely agree with the hon. Member. I think it desirable that more people should have some share in the ownership of the company in which they work. I am also glad that some consideration has been shown by him to the possibility of an unjustifiable avoidance of death duties through the operations of the relaxation for family businesses.
  This Finance Bill was always more famous for what is omitted from it than for what is included in it, and therefore when we come to the Third Reading debate and are confined to what is in the Bill we find that the food has been chewed over pretty thoroughly. The atmosphere is even more relaxed than is usual in a Third Reading debate. The Treasury look with a benign eye even on those hon. Members who have been most critical. I think they would even be prepared to be tolerant with boys like the hon. Member for Sowerby (Mr. Houghton) who is frequently able to catch out his masters by knowing more than they do.

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  I was interested in at least two remarks made by the Financial Secretary. He spoke of the continual need to patch up the taxation nets. It is quite clear that the present rate of taxation is so high that every year the pressure to evade—perhaps "avoid" would be a better term—taxation becomes greater and greater. This Bill is designed to cover the largest expenditure that this country has ever experienced in time of peace. Luckily it has fallen on the country at a time when trade is buoyant. Yet the Chancellor has told us that he has no surplus in hand at all. It is a serious matter, in my opinion, that this country has such a large extra expenditure to meet in the future both on capital account and for old-age pensioners and so on, and yet, in a year of really remarkable prosperity, the Chancellor can only just cover the outgoings which he already has to meet.
  In my opinion, the country would be deluding itself were it to suppose that big reductions in taxation were possible. Until the rearmament programme is reduced, I do not see how that can come about. But it is the duty of any Government to try to reduce the administrative costs of central and local government. The Chancellor said something about that in our earlier debates, and it would be interesting to know whether his inquiry as to how that can be done has progressed, and what suggestions he has to offer.
  The other remark by the Financial Secretary which struck me particularly was when he praised the Parliamentary process and spoke well of the general review given to this Bill throughout the Committee and Report stages. I think that is true. On the other hand, I think it is also true that there are several important reports and matters of concern to this country which this House has not been able to debate in full. They include the Millard Tucker Committee's Report, the Interim Reports of the Royal Commission on Taxation and reports on Purchase Tax and so on. They were discussed to some extent during the Committee stage of this Bill; but it is becoming more and more difficult to cover both the detailed financial ground and the planning policy, particularly I think, the broad issues of the investment and trade policy of this country.
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  At the core of this Bill, possibly at the core of our financial position today, is the question of whether we are saving and investing enough. In this Bill there are three provisions which may affect that. The relief which the Chancellor has given to small estates may do something to encourage savings. In passing, as one of the few representatives of the party of which Sir William Harcourt was a member, I would say that I am sure that he would have been delighted to see this. I am not ashamed of the liberal parentage of the death duties. They may be too high today, I do not deny that, but I think they were a justifiable form of taxation. I would compliment the party opposite because the other great form of taxation, Income Tax, was invented by the Tories. The Labour Party nave yet to provide any financial instrument which brings in so much money.
  Mr. Douglas Houghton: It was Income Tax that the Liberals promised to abolish.
  Mr. Grimond: We will draw a veil over that just now but perhaps one day we shall do it.
  There may be some relief to savings by this small concession, and there may be some encouragement to save for investment through the reduction in death duties on family businesses. But, of course the great inducement offered by the Chancellor is the investment allowance, and I welcome that as I think does everyone else. But I must say that as a substitute for a general investment policy I do not see that in itself it is enough.
  We are still devoting more savings to house building than to manufacturing industries. We are devoting about one-third as much to the electrical supply industry as to the whole of manufacturing industry. Out of some £580 million raised in new issues this year, £440 million is accounted for by Government and local authority issues. That may be right or wrong, but it is a matter of great concern to the country that there should be some principle upon which the Government are acting in their investment policy.
  Today a great deal of investment is necessarily done by the Government directly or indirectly. It is all very well to blame the private sector of industry for not investing sufficient, but we have only a limited amount of savings to cover

  69
  Government and private investment, and the Government agencies will always have the priority because they have a Treasury guarantee. If we were prepared to allow private industry to raise money at 3 per cent: interest without regard for profitability, its position would be greatly eased. Until the Government clarify their policy, I do not believe that we shall get an adequate amount of saving or risk investment.
  I still think that the machinery for private savings and for channelling them into productive investment is not entirely adequate. The banks have become too much like saving banks, and, despite the new organisations which have been set up, there is still a need for more machinery to provide small sums of money for really small businesses, small sums of money for risk investment. I should like to correct something which I said on Second Reading. It is not true of course that trust companies invest only in fixed interest stocks. But I think there is need for provision of capital for growing businesses.
  In concluding his Budget speech, the Chancellor of the Exchequer said:
  " It must, then, he a vigilant, poised and confident Britain which turns to face the new financial year—with an economy resilient to absorb whatever shocks and setbacks the fluctuations of world trade may inflict on us, but also alert to reach out for each and ever opportunity for expansion and enterprise which circumstances may offer, and our own initiative may devise."—[OFFICIAL REPORT, 6th April, 1954: Vol. 526, c. 227.]
  They were very fine sentiments.
  Are we vigilant, poised, confident and resilient'? I think, without being jingoistic, we are to an astonishing extent confident, poised, vigilant and resilient. Full employment, the country's ability to obtain contracts in the export market in the face of competition all over the world, and the buoyancy of the revenue, are things we can all be proud of. I also think, however, that the Chancellor of the Exchequer should keep his fingers crossed. There was a moment during our debates when I thought he said he had a song in his heart. I hope he has got rid of that.
  The present situation is one which we should not be ashamed of but there are certain features in it which must cause disquiet. I would not say that the coal industry, the shipbuilding industry or the transport industry as a whole are entirely
  70
  confident. We have been getting an advantage from the terms of trade which we cannot expect indefinitely to continue. We have large sterling liabilities which to some extent have to be set against our improved dollar balances. We know that every year Japanese, German and American competition is growing. More countries are building up their own industries.
  I do not believe that we yet have enough in hand, that our balances are high enough, or that we are investing enough to make sure that we can compete in world markets. Nor am I sure that it is a good thing for this country, even in a time of great prosperity, to keep taxation up to the very limit. I very much hope that by next year at any rate we shall have some of the changes in the financial structure of the country which have been suggested in this year's debates.
  I hope that the Chancellor will make every effort he can to encourage saving, and to encourage saving which will go into productive investment. There is no lack of inventiveness in this country. We beat the world in inventions in a great many fields, but we have not always been able to exploit them in the way we should like. That is partly due, in my view, to lack of capital and perhaps partly to the admittedly disturbed conditions following the war. If we can help to expand world trade and stability on the one hand and provide our industry in this country and throughout the Commonwealth with adequate capital, on the other, we may then live up to the excellent moral maxims which the Chancellor has set before us.
  5.23 p.m.
  Mr. F. J. Erroll: I should like to reinforce from this side of the House what was said by the hon. Member for Islington, East (Mr. E. Fletcher) about the Financial Secretary's lucidity and great capacity for detail. I should not only like to reinforce what the hon. Member said about the prepared briefs, but to refer to those when there could not have been a prepared brief because the Finance Secretary was replying to remarks that had been addressed to him a few moments previously. I have often been greatly satisfied with the lucid and detailed replies which I have received to my own

  71
  suggestions in the course of our consideration of the Finance Bill.
  Having said that, I should like to say that I cannot quite agree with what my right hon. Friend had to say about the Purchase Tax Clauses in the Bill today. I cannot regard them as a great improvement in the machinery of Purchase Tax, because I regard the whole tax as a most unfortunate fiscal weapon. One of these Clauses is designed to amend the valuation of charges on goods because of the dissatisfaction which has arisen from the current practice of the Department, and the remaining Clauses are merely to stop up loopholes or avoid doubt as to the proper method of charging tax.
  This is the clearest evidence that Purchase Tax is not a satisfactory fiscal weapon. It is most unsatisfactory because we find in the Bill that the present high rates and the highly selective method of levying the tax on different articles leads to dissatisfaction and also to considerable ingenuity being devoted to fighting out with the Excise Department whether the tax should properly be applied to a specific article. I hope that we may expect to see, in the near future, some substantial reductions in the rate of Purchase Tax, with a greater level of uniformity in its application, so that the present admittedly serious defects can be eliminated.
  I should like to join in the general praise of investment allowances, representing as they do not only a novel device but an extremely useful one. I must say, however, that the investment allowance is still inadequate for the British overseas mining industry. As I pointed out in the Committee stage of the Bill, the mining industry gets a poor deal out of the changes in the Bill.
  There is one point about investment allowances on which it might be possible to ask for an assurance from the Chancellor, or whoever is to reply to the debate, as to whether, if there are likely to be any changes made in future in the rate of the allowances, the old rate would apply at least in respect of equipment already ordered before the change is brought into effect. A somewhat similar assurance was given in respect of initial allowances, and with that precedent it should be possible to say that, in general, equipment already ordered
  72
  would attract investment allowances at the current rate and not at the rate applicable at the time of delivery. This is a matter of some concern to those with large-scale capital investment programmes which may be running on for three or four years at a stretch.
  A great deal has been said about the importance of the investment allowance to British industry. The allowance applies to the purchase of plant, and the Financial Secretary referred to decisions which will be made in the coming months in hundreds of board rooms throughout the country, which he hoped would be favourably influenced by the introduction of initial allowances. Undoubtedly that will have a favourable effect, but we are all too apt to forget, in discussions in the House, that it is not only new plant which has to be paid for; there is the additional working capital necessary to finance the flow of raw material through the plant itself, which is often as great a problem for companies as finding the money for the plant.
  To give an example from my own experience, a year or two ago, when a particular company took a decision to install a new continuous process as a complete changeover from an old reversing process, the cost of the new plant amounted to about £300,000. The board might well have considered the capital expenditure on the basis of that figure, but the raw materials required for the new plant to be operated efficiently cost, at prices then current, no less than £1 million. Only £300,000 of the total investment of £1,300,000 would qualify for investment allowance. While in a case of that sort the investment allowance would be a help, it would be a relatively small factor when a board was reaching a decision whether or not to go ahead with the new plant. Let us remember the importance of working capital when discussing projects of capital equipment and investment in industry.
  There is no doubt that a much better stimulus to industry than the investment allowance would be a reduction in the standard rate of Income Tax, which, I am sorry to say, is still to be maintained at the same rate according to Clause 14. A reduction would make it possible for firms to retain more of their profits to provide both additional plant and the necessary working capital which more

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  modern plant requires. A reduction would also have the effect of reducing the benefits of extravagance by industry and encouraging the benefits of economy. As long as a firm is making a profit and very nearly half of it is taken away under Clause 14, there is not the same incentive to be efficient and economical in one's operations as if one is being taxed at a lower rate. What is true in that sphere is particularly true in matters of enterprise. If some companies appear to be sluggish, it is because of the effect of Income Tax levied at the present rate.
  I want to quote to the House briefly from the Report of the Mission which visited Middle Eastern countries earlier this year. It was specifically instructed to see how trade in those territories could be developed. The Mission's comments were independent and thoughtful. It said:
  "…there is little incentive to incur the expenditure and run the risks "—
  by British firms—
  "having regard to the fact that any small profit earned is subject to the current heavy taxation."
  The Mission also said:
  "The Mission must also emphasise that the present heavy burden of taxation in the United Kingdom (indeed the whole structure of taxation) provides a strong disincentive to the taking of risks in these markets and that unless this can he further alleviated "—
  it is not alleviated in this Bill—
  " the position of British exports in this competitive market may be more gravely affected…"
  Those are the opinions of a responsible body of men, and I hope the Chancellor will take heed of what they have said when he is getting ready to prepare the Budget for next year.
  If the effects of Clause 14 are serious for companies, they are also serious for individuals. While hon. Members opposite may say that their financial measures in the past have had the effect, for which they take the credit, of bringing about a great redistribution of income, surely the time has now come to consider whether we are perhaps going too far in that direction and losing a great deal of the efficiency of our senior business and industrial executives through the continuation of this levelling-down process.
  I put it to the House merely on a basis of efficiency and of getting the best out
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  of all men at all levels. The worker who is paid by the hour is not, for the most part, paying Income Tax at the standard rate as laid down in Clause 14. Therefore, taxation at the present level does not affect him so greatly. Nor, indeed, is he expected to work outside his working hours.
  However, the industrial executive is paying tax at the full rate, and he is probably paying a good deal of Surtax as well. He comes home in the evening to a higher standard of living—a little higher, but perhaps it is not really high enough to give him the relaxation to do additional thoughtful work in the evening.
  The country can have it either way, whichever way it wants. It can have the senior executive washing up the dishes at night and not doing additional thinking, or it can allow the senior executive to retain enough income in his pocket to hire people to do the chores for him so that he can do his additional thinking in the evening. My view is that it is probably better to allow the better-paid executive to retain more of his income so that he may lead a more relaxed and thoughtful life in the evenings and in his other spare time than is possible at present.
  Mr. Houghton: Has it occurred to the hon. Member that charwomen also have something to think about in the evenings?
  Mr. Erroll: I quite agree. Fortunately, they are able to do it. They have finished their day's work and so they are free to do as they like. The pressure on the modern industrial executive is such that if he is to spend a lot of time on chores there is less time for him to do the amount of work that his position requires. I am merely putting it to the House on the basis of what is more efficient for the country—whether men who have to work at very high pressure should be able to carry on with their brainwork in the evenings or whether they should not. We can have it either way we like. However, personal taxation at this high level for the men who are doing the thinking and planning more efficiently the work of others is surely not in the best interests of the country.
  Earlier speakers have referred to the continuing high rate of Government expenditure, and my hon. Friends and I

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  have rightly on many occasions drawn attention to the great amount of expenditure and the need for considerable economy, but I should like to put it to the Chancellor and the Financial Secretary that some of us realise how very difficult it is to secure the economies which everybody is so anxious to achieve. It is one thing to talk about economies, but it is another thing to bring them about.
  Mr. J. T. Price: The hon. Gentleman is pursuing a valid argument from his own premises, but he and other hon. Members opposite were loudly telling the country at the last General Election that the Conservative Party would "stop up the hole in the purse." The Conservatives have produced no results in that direction up to now, and it seems late to be making speeches on those lines now.
  Mr. Erroll: I do not think the hon. Member will feel like that when he has heard me through to the end of my point. Although it is difficult, it is none the less extremely important to bringing about those economies. Also, it is particularly difficult at a time when everything seems to be going so well to insist in Government Departments on economies which perhaps have not been practised so far.
  Mr. Hugh Gaitskell: On a point of order, Mr. Deputy-Speaker. I have no desire to interrupt the hon. Member, but is it in order on the Third Reading of the Finance Bill to refer to Government expenditure? Will you please give us your Ruling?
  Mr. Deputy-Speaker: It is only in order to refer to what is in the Bill. Perhaps I have been a little lenient.
  Mr. Erroll: I am sorry, Mr. Deputy-Speaker, if I have gone too wide. That means that I shall not be able to answer the point put by the hon. Member for Westhoughton (Mr. Price).
  The taxation of business profits is specifically covered in Clauses 17 and 26. In those Clauses we have an interesting study of the basis of assessment of business profits. In Clause 26 our fellow-sufferers in the Scilly Isles are being given a relief by having the option to be charged on the actual profits of 1954–55 or on the profits of the previous year. Perhaps this
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  is to soften the shock of their first close connection with the Income and Profits Tax system of this country.
  In Clause 17, it has been found necessary to counteract a device for avoiding Income Tax by reconstructing companies, and the details of the Clause are now well-known to hon. Members, but the remedy applied by Clause 17 is not the proper one. The proper remedy is the taxation of businesses on the profits actually made, neither more nor less, and doing away with pretending that the profits of the year of assessment are anything else than profits actually earned. The absurdity of the present position is nowhere more clearly brought out than it is by comparing Clauses 17 and 26.
  For the rest of the Bill, I think we can fairly say that it has provided us with a useful and interesting survey of the country's position today. Some of us would like to have seen more concessions, but, under present circumstances, that hardly seems possible. Let us, nevertheless, wish the Bill well.
  5.42 p.m.
  Mr. Austen Albu: I think hon. Members on this side will forgive hon. Members opposite if their speeches are rather long, because we realise that they are making the speeches they were not allowed by their Whips to make during the Committee stage of the Bill. That is especially clear from the fact that they are reading from briefs which have been provided for them.
  The hon. Member for Altrincham and Sale (Mr. Erroll) represents, in the same way as many of us on this side represent trade unions, the Institute of Directors, and nobody could have spoken better for those whom he represents than the hon. Member. Those of us with some practical experience of the matter, however, find it a little difficult to recognise the picture he was painting of business executives, but no doubt the hon. Gentleman took it all from "Lloyd's Bank Review," and one fully understands that, to make a Third Reading speech, one must get one's information from somewhere.
  What I found very interesting was when the hon. Member veered to the very edge of being in order, because he started off by attacking—what he is perfectly in order in doing—the Purchase Tax, and

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  then went on to attack the levels of Income Tax. I thought the hon. Gentleman was going to follow that by expressing the view, in contradistinction to the hon. Gentleman who is the Chief Liberal Whir, that the present level of taxation is avoidable at the present time, but it appears that after that the hon. Gentleman agreed with the Chief Liberal Whip that the present high level of taxation is inevitable.
  I would point out one other thing, which was also pointed out by the hon. Member. In spite of the very high level of taxation in this country since the end of the war, we have had a very prosperous economy, and we still have a very prosperous economy. The hon. Gentleman appeared to be demanding a very great reduction in the level of taxation, particularly on the higher incomes, but he ought to have known that there is some connection between this taxation, with its re-distributive effect, and the levels of employment and production in the country at the present time.
  The Financial Secretary dealt at some length in his speech with the Clause concerning the Purchase Tax, and I should like to say that I personally welcome his remark about the Government's intention on Purchase Tax registration, following the passage of what is now Clause 7. I think that will be very welcome indeed to a large number of wholesalers, and I hope it means that in future applications for registration will be dealt with generously, because there is at present a good deal of feeling about the way in which the present registration system operates.
  The most revolutionary Clause in the Bill is that providing for the investment allowances, and certainly, with my hon. Friend the Member for Sowerby (Mr. Houghton), I had the shock of discovering that these allowances were actually in excess of the cost of the plant and machinery involved. Nevertheless, realising the importance of increased investment, we have supported this Clause, although we wanted to make it more selective. I do not think I agree with the hon. Member for Altrincham and Sale about the cost of working capital, work in process and so on. What the hon. Gentleman does not seem to understand is that the reason why industry is not investing more today is not a shortage of finance. I am sure that any firm which
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  was able to afford to pay a total cost of £300,000 for plant would have no difficulty in obtaining the necessary finance from the bank in order to finance increases in stocks and work in process.
  The hon. Member went on to say that what would really induce industry and business men to invest would be a substantial reduction of the standard rate of Income Tax. There is absolutely no evidence of this at all. Indeed, if one looks at some countries, where the distribution of income between the wealthy and the poorer classes is much more unjust than it is in this country, the rate of investment is very much lower. The hon. Gentleman referred to some Middle Eastern countries, where, of course, there is an extreme mal-distribution of income, where taxation of the wealthy is very low, and where nobody could pretend that the rate of investment from internal sources is anything like high enough. I suggest that, before the hon. Gentleman proceeds to quote this type of case, we ought to have a good deal more factual evidence about it.
  Finally, if I may introduce a greater note of controversy into this typically somnolent Third Reading debate, I would refer to the main concession granted in the Bill. It was said when the Budget was introduced that it was not an exciting Budget, but that it was a dull one. I think it certainly points the way to future Budgets of the present Administration, if they were to remain in office, because the only parts of the Finance Bill which have received the support of hon. Members opposite, and on which they turned up in the Committee stage in fair strength, are those in which we have discussed concessions granted to family businesses and the Clause on which we discussed tax evasion by aggregation, which led to a further concession, due to pressure from the back benches opposite.
  We welcome the reduction of the Estate Duty at the very lowest level put forward by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), but we noticed an extremely significant feature during the Committee stage in discussing this matter with hon. Members on the other side of the Committee. Hon. Member after hon. Member demanded a much greater concession on Estate Duty, which they said was the worst form of tax that we could have. It was quite clear that

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  they believed in a reduction of taxation on inherited wealth. Even the Chancellor of the Exchequer himself at one point said that he disliked this form of taxation, and made it quite clear that, if he remained Chancellor, he would reverse the present system of taxation on inherited wealth.
  The Chancellor of the Exchequer (Mr. R. A. Butler): I certainly made some observations on the matter, but I gave no such undertaking.
  Mr. Albu: I would not expect the Chancellor to anticipate his Budget speech of next year, or that of the year after, if he is still in office, but I am perfectly justified in drawing attention to the tone of the speech he made on that occasion. I have not got the record here with me, but I do not think there is any doubt at all that, if hon. Members opposite remain in office, they will reverse the present system of the taxation of inherited wealth. They are in favour of inherited wealth, and no doubt they would prefer to see a reduction in the taxation on inherited wealth almost before they see a reduction of Income Tax or of any other form of taxation. That is the impression I got during the Committee.
  Sir Edward Boyle: Surely the hon. Member is exaggerating very much in saying that the Chancellor of the Exchequer and hon. Members on this side wanted to reverse the present system? My right hon. Friend prefaced his remarks by saying that he did not wish to see any very big gaps between rich and poor.
  Mr. Albu: One hon. Gentleman opposite certainly said that this was the worst of all taxes and made it clear that he and his hon. Friends felt very strongly about it. Many of the arguments about family businesses were complete nonsense. An hon. Member who spoke at the beginning of our proceedings today from the Government benches made what I call a thoroughly theoretical and legalistic speech about family businesses. It seemed to bear no relation whatever to the ordinary, practical way in which the thing works out.
  My own view is that, on the whole, a business which has gone on for two or three generations is, in 99 cases out of
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  100, inefficient and badly subject to nepotism. Family businesses suffer more from nepotism than from anything else, as hon. Members who represent Lancashire constituencies will understand.
  In spite of the fact that we made a number of requests to the Chancellor for concessions in the lower ranges of Income Tax, especially for people with large families, we have had no concession at all. I can only repeat what I said in the Committee: I suppose that the Chancellor is holding up his concessions for next year's Budget, which he hopes will take place just before the next General Election.
  5.53 p.m.
  Sir Edward Boyle: Many of us on this side of the House listen with great interest to the hon. Member for Edmonton (Mr. Albu) and take careful note of what he says. Nevertheless, in the last few minutes of his speech today he seemed to me to exaggerate to a rather absurd degree. I can only suppose that he was trying to whip up this debate and to make it more controversial.
  It is not easy on the Third Reading of the Finance Bill to think of many new points about either the Budget or the Bill. I want to make a few comments on two particularly important Clauses, namely, Clause 16, which introduces the investment allowance, and Clause 14, which deals with Income Tax. I sincerely hope that the investment allowance will be given a good run by successive Chancellors of the Exchequer because that is the only way of ensuring that this new tax device does what it is intended to do.
  I remember that when we were discussing the initial allowance last year, the hon. Member for Gloucestershire, South (Mr. Crosland) pointed out, very pertinently as it seemed to me, that a business almost invariably carried out a programme of capital redevelopment by a number of stages, and that while it might be repaying its initial allowance on one item of equipment it was already getting another initial allowance on another item. That seemed a very fair point, and it applies equally to the new investment allowance. We cannot turn these allowances on and off like a tap and expect them to perform their proper function.

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  I quite understand what caused the right hon. Member for Leeds, South (Mr. Gaitskell) when he was Chancellor of the Exchequer to do away with the initial allowances in his 1951 Budget. There are not many votes which I have given in this House which I have regretted, but I have a feeling that we were rather naughty to vote against that Clause in the 1951 Finance Bill. We had a heavy re-armament programme on our hands and room had to be made for it in the economy somehow. It was necessary at that time to clamp down on investment to some extent. But we must hope that our economy will never again be faced with a problem of the kind that faced it in that year. I hope that we shall never again have anything like a sudden re-armament programme of £4,700 million to disrupt all our economic calculations. I hope that it will be possible for successive Chancellors of the Exchequer to give this investment allowance a good run.
  Now I wish to say a word about Clause 14, which is the Income Tax Clause. There are very considerable difficulties in the way of a reduction of Income Tax, although this is obviously greatly needed. In the first place, there is the great weight of Government expenditure on defence and on the social services. I thought that the hon. Member for Gloucestershire, South was a little less fair than he usually is when he twitted us about what we had said in "The Right Road for Britain" and about the Budgets of Sir Stafford Cripps, all of which dated from a period before the re-armament programme. It is only since then that we have had to bear this very heavy extra burden. Furthermore, quite apart from defence expenditure, there is the size of our expenditure on the social services. I remember a speech by my hon. Friend the Member for Ealing, South (Mr. Maude) in which he pointed out that this sort of expenditure was tending always to rise. In general, the size of Government expenditure is the chief difficulty in the way of any considerable reduction of direct taxation.
  There are two other points. My right hon. Friend the Chancellor of the Exchequer cannot afford to reduce taxation in present circumstances if it means a budget deficit above the line. He was
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  able to reduce it by 6d. last year only because he abandoned, and I believe quite rightly, the Cripps policy of having a surplus above the line big enough to cover the deficit below the line. It was only by thus altering the form of our Budget that he was able to afford a large reduction last year. As things are at the moment, it would obviously be too big a risk to have a large Budget deficit above the line.
  Again, a reduction in Income Tax is bound to have a very sharp effect upon the volume of consumption. Any reduction which my right hon. Friend could afford would be likely to affect consumption to a greater degree than savings. I do not believe that it was coincidence that last year, when 6d. was taken off the Income Tax our expenditure on consumption went up by something like £300 million. That would have been a very serious matter if the terms of trade had not been as favourable as they were.
  I have tried to set out some of the difficulties with which my right hon. Friend is faced when considering Income Tax policy. Nonetheless, we ought not to be complacent about a 9s. in the £ level of Income Tax. It is not quite good enough to say that this does not really matter because Income Tax has a redistributive effect. We have heard that argument very often from Opposition Members during our debates.
  Hon. Gentlemen opposite sometimes confuse two slightly different points. It is quite true that since 1939 the total volume of wage incomes has risen pretty sharply in proportion to property incomes. I was reading an essay only this morning by Mr. Dudley Sears on this very point, in which he quotes a number of figures; but that is not quite the same thing as a redistribution between rich and poor. There are many people living on smallish fixed incomes who are very severely hit by the present rate of direct taxation and who get little or no benefit from the Welfare State. We should never forget that category of persons when we are considering Income Tax policy.
  Furthermore, in the days when hon. Members opposite believed firmly in nationalisation, they often pointed out to us that redistributive taxation defeated its own ends when carried beyond a certain point. One of their favourite

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  arguments for the nationalisation of industry was that we could not have redistributive taxation of incomes beyond a certain point, and that it was therefore necessary to nationalise in order to equalise capital ownership.
  Only a day or two ago I was re-reading an essay by Mr. E. F. Schumacher, which I quoted in this House in my maiden speech three years ago. Perhaps I shall not be thought guilty of tedious repetition if I read two or three sentences from it again. Mr. Schumacher says:
  " A high income tax, imposed for the purpose of redistribution, is subject to the law of diminishing returns in more senses than one. It leads to a situation in which every item of expenditure that can be booked over 'expense account' is automatically subsidised by the State at the rate of the standard tax…The more progressive' the scales of taxation, the smaller, at the same time, is the reward obtainable by business men for extra effort and risk-taking. In a free society, the limits of taxation ' deserve the closest study."
  Those words were written not by a supporter of the Government but by an economist who was—and is, so far as I know—a perfectly orthodox Fabian. It is worth considering whether we have not now got so near the limit of redistributive taxation that it is beginning to defeat its own object. In any case, I cannot believe that this question of redistribution can justify as high a rate of tax as 9s. in the £ in peace-time. Any reduction must be financed by orthodox means, but I very much hope that my right hon. Friend the Chancellor will be able to make sufficient cuts in Government expenditure to justify some reduction in Income Tax next year.
  I do not want to end upon a note of complaint, because I think this has been a sound Budget and Finance Bill. The new accretion of reserves since the Budget was announced is itself a tribute to the work of my right hon. Friend. I believe that this Budget and Finance Bill will do a great deal to enable us to meet any economic difficulties which we may encounter during the rest of the year.
  6.2 p.m.
  Mr. Anthony Crosland: In the course of my few remarks, I want to refer to one or two of the points made by the hon. Member for Handsworth (Sir E. Boyle). First, I deny that there is any such thing as
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  an orthodox Fabian. If the hon. Member for Handsworth goes to any Fabian meeting of any kind in these days, he will find a diversity of opinion of such a sharp and almost emotional character that he will not think of referring in such terms to any person present there.
  I am sorry that the Economic Secretary is not here; I dare say he is engaged important business elsewhere. The Chancellor of the Exchequer occasionally refers to my hon. Friend the Member for Stechford (Mr. Roy Jenkins) and myself as the "heavenly twins," and it is sad that we cannot see all three devilish triplets on the Front Bench tonight. The Economic Secretary has taken an active part in our debates and has always been extremely courteous in his replies, which have been very full.
  I want to refer to the question of investment allowances, which has already been mentioned. The Financial Secretary claimed that this was a revolutionary new device. He rather twitted some of my hon. Friends with being taken aback by the revolutionary nature of this device when it was first mentioned in the Budget speech. It is fair to say that many of my hon. Friends wholly, approved of the idea right from the start—whether it was revolutionary or not—and it is also right to say that it is not quite so revolutionary as it might appear. It is a natural growth from the system of initial allowances, and it would have been perfectly possible to have found a rate of initial allowances which would have produced exactly the same monetary effect as the present proposal. It would have been perfectly possible to have found a rate which would have cost the Treasury the same amount this year as the change-over to investment allowances.
  I do not think that such a step would have been a sensible one, however. Although I stick to the view which I have always expressed, that an initial allowance is not just an interest-free loan, the fact that most people in industry consider that it is an interest-free loan is a fact of great psychological importance which itself constitutes a strong objection. I think that the change-over was correct, and I hope that the new system will be extremely successful. Certainly hon. Members on this side of the House think that it is a more desirable approach to the problem of reducing

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  corporate taxation than would be a straight reduction of Income Tax, such as was suggested by the hon. Member for Altrincham and Sale (Mr. Erroll).
  I was glad that the hon. Member for Handsworth pointed out the perfectly true fact that a reduction in the standard rate would be bound to have a large influence on consumption. It is frequently argued that it is a measure designed to increase saving and investment, but the experience of last year has supported the view which most people already held, that the main beneficiaries of a reduction in the standard rate are the consuming public, and, although this may be a very good and agreeable thing from various points of view, it is not likely to have much effect in increasing investment.
  If the hon. Member for Altrincham and Sale is correct, and the profits of industry, after taxation, are insufficient for various purposes, it is perfectly possible to increase them by raising investment allowances to the desired level. If we find this year—although I do not think it is very likely—that investment is being held back simply because it is not sufficiently profitable, this method provides an alternative to a reduction in the standard rate. If necessary, investment allowances could be put up to 40 per cent., or any desired figure, in order to give industry the profitability which it is held to require.
  I was very moved by the hon. Member's picture of the business man and his social habits. He said how necessary it was that business men should spend relaxed and thoughtful evenings, and he conjured up a pathetic picture of a business man longing for an hour off with his Dryden. But I think his picture was a little too colourful. Lots of other people besides business men have to work in the evenings. Professional men, and even Members of Parliament, have to do so, and it is not such an enormous sacrifice for business men that they should occasionally settle down to productive effort even after 5 o'clock in the evening. That does not constitute a special reason for reducing the standard rate of tax.
  My last point on the subject of investment allowances links up with that made by the hon. Member for Orkney and Shetland (Mr. Grimond). We all hope
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  that these investment allowances are going to increase investment in plant, machinery and building—but primarily in manufacturing industry. They are not intended mainly to apply to the public sector, or agriculture, or distribution. But does the Chancellor really hope for a large increase in manufacturing investment in the next two or three years, considering the very heavy claims which are being made by other forms of industry? We read that the housing programme has now reached a rate of 400,000 houses a year, and on Friday last hon. Members were discussing the enormous investment programmes of the fuel and power industries. Most hon. Members regard those programmes as being absolutely justified, but are they going to leave sufficient resources available to allow of an increase in manufacturing investment?
  The Chancellor tells us—and he claims credit for it, which he is entirely justified in doing—that employment is at a record level and that there is very little spare capacity of any kind, but I am wondering whether these investment allowances will produce the required increase in manufacturing investment, bearing in mind the very heavy investment programmes contemplated in other directions. I hope that the Chancellor will make a brief reference to that question.
  The only other point on which I should like to say a word is that on which the hon. Member for Handsworth finished, the general question of redistribution. Personally, I thought that my hon. Friend the Member for Edmonton (Mr. Albu) made a fair and valid point when he drew attention to the enormous increase of interest shown on the other side of the House whenever matters concerning Estate Duty are discussed, and it is true that the concessions the Chancellor has made in amending the Bill have been largely in respect of that duty.
  The hon. Member for Handsworth said that, although he was sympathetic to the idea that we have on this side of the House about the redistribution of income, one nevertheless had to be careful about two things. First, were we really redistributing from rich to poor and not from profits to wages? It is a valid question, but there is no doubt that we are redistributing from rich to poor, because the figures that are often published of the proportions of personal

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  incomes, according to the richest group and the second and third richest groups and so on, show that not merely are we redistributing from profits to wages but also redistributing from the people at the top end of the income scale to the people at the bottom end of the income scale.
  The hon. Gentleman's other question was whether we accepted Dr. Schumacher's view—although I do not see why we should accept his view on anything except possibly on matters of research in the coal industry—that there are limits to taxation. Of course we accept that view. Nobody supposes that we can go on pushing taxation up and up without a ceiling. The argument is whether we have reached those limits of taxation now or have overstepped them.
  It is perfectly consistent for us on this side of the House to agree that there are limits and to say that those limits have not been exceeded. In our view, the present level of taxation on high personal incomes does not overstep those limits we are talking about, and we can achieve this measure of income redistribution without our suffering any loss of production. That is a quite consistent point of view which I hope the Chancellor may be persuaded to bear in mind when framing a future Budget.
  6.12 p.m.
  Major W. J. Anstruther-Gray: I think it was the hon. Member for Orkney and Shetland (Mr. Grimond) who began his speech by saying that this year's Budget and Finance Bill were more notable for what they omitted than for what they contained, and I quite agree that it is impossible this year, as it was last year, to point to a Finance Bill which resulted in everybody's taxation being reduced without anybody's being taxed any more.
  Today, one cannot say that, and I accept the point made by hon. Members opposite that a certain amount of disappointment has been occasioned in the country as a result. However, when one looks around and sees the figures for the last few months since the Budget was announced, and how both the economic and the financial figures are buoyant, I am quite satisfied that the Chancellor made no mistake in the line he decided to adopt, and I am glad to find myself
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  complimenting him once again, as I ventured to do last year.
  The reduction in the cinema tax, which was referred to by the hon. Member for Islington, East (Mr. E. Fletcher), who spoke for the official Opposition today, has been of considerable benefit to an industry that has been hard hit by new competition. It has benefited to the amount of no less than £3½ million in a full year. I like that particularly because that was included last year among the very high priorities the Chancellor promised to devote his attention to when the opportunity should arise, and anything that savours of the keeping of promises is always very welcome. I hope that some of the words the Chancellor said in his Budget speech about old-age pensions may also be fulfilled in due course.
  I welcome the concession on death duty and on family businesses. The hon. Member for Gloucestershire, South (Mr. Crosland) referred with disdain to Government supporters for their interest in death duty. He will not have forgotten that an Amendment was moved by his right hon. Friend on that. I think the provision for family businesses is overdue, and I cannot for a moment accept what the hon. Member for Edmonton (Mr. Albu) suggested, that family businesses are inherently inefficient. I do not think that the facts prove anything of the kind. The concession made to them is, no doubt, a step towards preserving the continuity of middle class life. I wonder, however, whether my right hon. Friend has gone quite far enough in that direction, and I wonder whether his Income Tax policy takes sufficient account of the virtual obliteration of the middle classes which the present level of taxation is bringing about.
  I was reading "Lloyds Bank Review" over the weekend, too, as was the hon. Member for Edmonton and my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), and I would commend a passage in this month's issue, that, I think, is entirely relevant:
  "It has happened before now, in other countries, for the middle classes to be ruined: by inflation or by revolution. The troubles of the British middle class are mild compared with the disasters which, in the course of the twentieth century, have been heaped on the French, and still more on the German bourgeoisie and professionals, playing a major part in producing moral paralysis in France and collective

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  dementia in Germany. Only in Britain, however, have matters been deliberately so arranged that there shall be no revival; no rebuilding, by the efforts, the thrift and enterprise of a new generation, of private competences, no replacement of the victims of special circumstance by successive starting, perhaps, from quite different origins but winning and retaining the rewards of special ability."
  I believe that my right hon. Friend would do right to take account of this general decline in the middle classes today, and I do not see why hon. and right hon. Members opposite should not agree with me in this. After all, the last three Chancellors of the Exchequer of the Labour Party all came from that section of the community, which has made a very full contribution to the public life of the country. It is not only among the politicians that it is and has been found. That section of the community has made a big contribution—and is still capable of so doing, if it is not squeezed out, as I fear it may be—in all the professions and Services, the arts and the law, and to leadership in the management of industry.
  We have many men of integrity and initiative and genius from that section it would be very difficult to replace were we to allow that section of the community to fall under and be eclipsed by present trends, and in supporting the Third Reading of the Bill I commend that consideration to my right hon. Friend.
  6.20 p.m.
  Mr. Roy Jenkins: I am glad that the hon. Member for Berwick and East Lothian (Major Anstruther-Gray), in referring to the social origin of previous Chancellors of the Exchequer, firmly put Eton and Winchester in their places as good middle-class schools.
  In the course of these debates we mostly hear familiar voices and, to some extent, familiar arguments, but we have seen on the benches opposite on this occasion a few new faces, and we are glad to welcome them to our discussions. Hon. Members opposite who take part in the debates on the Finance Bill can be divided into three categories. First of all, there are those like the hon. Member for Handsworth (Sir E. Boyle) and the hon. Member for Scarborough and Whitby (Mr. Spearman), who, I see, is trying to catch your eye, Mr. Speaker, who are deeply interested in these financial questions but go in fear and trembling of
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  their Whips and make no attempt to intervene during the Committee stage.
  Then there are those like the hon. Member for Wimbledon (Mr. Black), who made two appearances in Committee—once to urge the claims of licensed premises to the investment allowance and. on another occasion, to try to see that too much tax avoidance was not knocked out by means of the provisions dealing with life insurance. Such hon. Members make only these brief appearances and then disappear.
  Finally, there are those of whom perhaps the hon. Member for Edinburgh. South (Sir W. Darling) is the most distinguished, who go in some fear of the Whips but, nevertheless, cannot keep away from our debates. They would like to take part in them. To some extent the hon. Member for Kidderminster (Mr. Nabarro) is in that category, and I am sorry that he is not in his place. We often see him during these debates, but to an even greater extent we see the hon. Member for Edinburgh, South, sitting in his place on Clause after Clause. We know how much they would like to intervene, but when they do intervene, because their feelings have been bottled up for so many Clauses, they sometimes make speeches which are not perfectly informed. Nevertheless, we are very glad indeed to have their interventions and their humour. We had an intervention from the hon. Member for Edinburgh, South when he misunderstood a point put forward by my hon. Friend the Member for Edmonton (Mr. Albu).
  Sir William Darling: The trouble was lack of clarity by the hon. Member for Edmonton (Mr. Albu) and no defect of mine.
  Mr. Jenkins: My hon. Friend is not here to answer for himself, so I do not think I should pursue the matter further.
  The hon. Member's friend and colleague, the hon. Member for Kidderminster, without my hon. Friend the Member for Edmonton or anyone else to confuse him, became extremely confused at an earlier stage about the way in which buildings were depreciated and showed himself less well-informed on this matter than we should have expected.
  I am not sure into what category I should put the hon. Member for Altrincham and Sale (Mr. Erroll). Whether he

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  is outside all those categories or not, we certainly enjoyed his speech this afternoon. As my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) said, he painted a most moving picture of the plight of business executives doing the washing up when they could have been enjoying thoughtful and relaxing evenings. I am not quite sure whether the two words always go together; I thought it was possible to have a relaxing evening which was not a thoughtful evening.
  Mr. Erroll: One can think better when one is relaxed.
  Mr. Jenkins: I am sure that applies to the hon. Gentleman and, no doubt, to most of us.
  When he was dealing with the effect of the high rate of Income Tax upon individuals, the hon. Member directed our attention to the report of a mission which went to the Middle East. He should have borne in mind a still more important body which considered these questions of the effect of Income Tax upon incentives, particularly in relation to highly-paid executives—the Royal Commission on Taxation, which reached a conclusion almost diametrically opposite to that which he put forward in his speech.
  The hon. Member also returned to a subject which is a favourite subject of hon. Members opposite. When concessions are being given to industry they are more welcome to hon. Members opposite if they come in the straightforward, unremitted form of a simple reduction in the standard rate of taxation rather than in the form of initial allowance concessions or even investment allowance concessions. I fully agree with my hon. Friend the Member for Edmonton who commented on the Chancellor's significant hint about his attitude in future Budgets to Estate Duty on big estates. I think the Chancellor will find that he has two competitors put forward from the benches behind him for such relaxations as are made, one being where estates pass at death and the other being for a concession in the standard rate of Income Tax.
  But this is not a matter of logic on the part of hon. Members opposite when they apply it to the question of stimulating investment for, however we apply our minds to the matter, it is difficult to believe that a concession based on a cut
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  in the standard rate of Income Tax of a given amount can possibly have an equally stimulating effect upon investment as a concession of the same amount in the form of an investment allowance. After all, with an investment allowance, that amount of money is directly related to the stimulation of investment and accrues to industry only to the extent to which that investment takes place; whereas, whatever assumption we make—whether we make the assumption, with which I rather agree, made by the hon. Member for Handsworth, that a large part of any concession in direct taxation goes into consumption and not into savings; or whether we make the more optimistic assumption—it still remains the case that it can be only a proportion of the money made available by a cut in the standard rate of taxation which goes to investment. With the investment allowance, where we have a given amount to play with, we can be sure that 100 per cent. of it goes to investment, rather than a small proportion.
  If the Chancellor intends to claim as much credit for the investment allowances as did the Financial Secretary earlier today, I hope he will bear in mind that, while these allowances have on the whole received a very good reception from these benches—because, if taxation concessions are to be given to industry, we like them to be directly related to investment—they have in some ways received a more mixed reception from the benches behind him. That was shown by the hon. Member for Altrincham and Sale, who said plainly that he would have preferred a cut in direct taxation, presumably of an equivalent amount. I hope that the Chancellor will bear that in mind and will not put this concession forward too much as a great triumph for Conservative financial policy.
  We have had a dull Budget and this is a dull Finance Bill. After what the Chancellor told us was a year of great recovery, the Budget did not give very much. We hope that next year's Finance Bill will have more in it and will have more important contributions to make to the national economy. I do not know how the Chancellor will bring that about, because he has told us that this year we had a very good year. We certainly hope that next year he will be able to produce a more exciting, and, from our point of view, more desirable, Budget.
  6.29 p.m.
  Mr. Cyril Osborne: The hon. Member for Stechford (Mr. Roy Jenkins) introduced such a pleasant Sunday afternoon atmosphere in the first part of his speech that he reminded me of what Sir Frank Tribe, the Comptroller and Auditor-General, had to say about these debates, speaking last month, as reported in "The Times." He said that the function of the back bencher and the Treasury have completely changed in the last 50 years. Instead of the back benchers protesting to the Treasury about the heavy taxation which is being imposed, the Treasury are now having to resist the demands of back benchers for greater expenditure.
  It seems to me extraordinary that this afternoon we intend to agree to a Finance Bill which will impose greater burdens than this country has ever known in time of peace—and yet some hon. Members regard it as a matter for laughter. I want to protest at the enormous taxes which are being imposed upon the people of this country in time of peace.
  May I refer to two points made by the hon. Member for Edmonton (Mr. Albu)? He said, I think quite rightly—and this ought to be recognised on both sides of the House—that the prosperity of this country in the last 20 years has been to a large extent due to the redistribution of wealth that has taken place. If there is to be mass production of wealth, it has to be matched by mass consumption, and there can be mass consumption of that wealth only if the wealth of the nation is more evenly divided. I should like to assure the hon. Member—if he wants an assurance from this side of the House—that we have no intention whatever of trying to alter the policy of the last 25 years, or the last 50 years, whereby the distribution of the national wealth has been made more even and the gap between the very rich and the very poor has been narrowed. There is no intention whatever of reversing that policy.
  May I also put another point to the hon. Member? He said that hon. Members on this side of the House were more interested in Estate Duty reductions than in any other item in the Finance Bill. I do not think that is quite true. I myself would like a reduction of both Estate Duty and Income Tax. If I were faced with a choice, I would rather tax the
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  dead than tax the living. By taxing the living I think that it is possible to stop production, and I do not think that is possible by taxing the dead.
  This Bill imposes taxation on the people of this country to the extent of £4,533 million, which equals about £12 million a day. No hon. Member has so far said, "I think these burdens are too great." Hon. Members opposite seem to think that taxes are desirable. I hope that the next time we go to the country, they will say. "Put us in power and we will double the taxes on all of you; we think that they are good things."
  As the Chancellor of the Exchequer said in the debeate in Committee on what was then Clause 13, taxes are evils; they are necessary evils, but they are evils. I should like to ask my right hon. Friend this question. Will he on another occasion, if he cannot do it now, reduce these evils and make this country a little more virtuous financially, so that we can live a little more comfortably in it? I would remind the House that this Finance Bill is taking about 32 per cent. of our gross national product. In 1928, when the present Prime Minister was Chancellor of the Exchequer, the figure was only 20 per cent., and in 1913 it was only 7 per cent. of the gross national product. How long can that process continue? Hon. Members on both sides of the House have to face that question.
  In this week's "Economist" there was an article on the situation in Italy, and there was one phrase which I would pass on to my right hon. Friend. It said that there was a danger of the people of Italy becoming subjects instead of citizens. That is where we shall be led, if we are not careful, by the height of taxation which we are imposing on our people. I believe that this is fundamental, and I am sorry that Liberal speakers have not said so, because this is ancient Liberal gospel. I believe that if taxation is as high as is imposed under this Bill, there can be no real personal liberty.
  Mr. Grimond: Perhaps the hon. Gentleman could, on some future occasion, reconcile the two statements which he has made: first, that he wants to continue the process of the last 25 years, which is essential to the setting up of a very expensive Welfare state; and, on the other hand, that he wants to reduce taxation. Short of cutting the armaments

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  programme, how does he think that this country can make a large reduction in taxation without reducing the welfare service?
  Mr. Osborne: The hon. Gentleman says that there is no possibility of a reduction of taxation unless the armaments programme is ended. I would ask my right hon. Friend whether there is any hope that the money saved on armaments would ever be used to reduce direct taxation. But that is taking me away from the point which I want to make. The point which I am putting to the House and to my right hon. Friend is that the more earned income the central Government take from the people of this country, the more they reduce the liberty of the people, and if tyranny is to come in this country it will come through the silent operation of Finance Bills. It is because of this that I feel extremely nervous. There have been no real protests in this House at the immense weight of taxation which we so freely, so glibly and in such a laughable and joking way put on to the shoulders of our constituents.
  I should like to remind the Chancellor of what he himself said during the Committee stage of the Bill. On 15th June he said:
  "In all this controversy as to whether taxation has this or that effect, strange to relate, although I occupy the high post of Chancellor of the Exchequer, I regard taxation as a necessary evil, but an evil."
  He went on to say:
  "…Had there been more money to spare, I do not think that it would have been immoral to reduce taxation…"—[OFFICIAL REPORT, 15th June, 1954; Vol. 528, c. 1816–7.]
  It is on that point that the two sides of the House differ. We on this side agree with the Chancellor that it would not be immoral to reduce taxation, but a very good thing to do so, and the more he could do it the better we would be pleased. There is a cleavage between the two sides of the House on what is included in this Bill. Hon. Members opposite seem to think that taxation is good in itself and the more they can pile it on to private citizens, the better. [HON. MEMBERS: "No."] We take the opposite view. Therefore, I plead with the Chancellor to reduce, in so far as it is possible, not only indirect taxation but also direct taxation, because I still believe, despite what the Royal Commission on
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  Taxation said, that the present rate of taxation does act as a disincentive.
  Finally, I should like to make this point. Under the present Bill, Income Tax is 9s. in the £. When the present Prime Minister was Chancellor of the Exchequer, it was 4s. Surtax today is 10s. in the £; then it was 6s., although the limit was not reached until £30,000. whereas today it is reached at £15,000. The total taxation imposed in this Budget is £4,533 million, whereas when the present Prime Minister was Chancellor it was only £753 million. The direct taxation, under Clause 14, amounts to no less than £2,384 million, as against £406 million.
  Mr. H. Rhodes: Is the hon. Member aware that he is boring us stiff?
  Mr. Osborne: Despite the fact that I am boring the hon. Member stiff, I propose to continue what I have to say. This was once a free House—[An HON. MEMBER: "It is not a tied House."]—and Members were not paid extra to come here. This was where men came to protest against the taxes that were imposed on their constituents. Hon. Members opposite may think it is funny that they are imposing heavy taxes on their constituents; I do not think so, and I am going to say so. I hope that the hon. Member will go back to Lancashire and say that it bored him stiff because some-one was protesting against high taxes.
  Mr. Rhodes: It is the hon. Member's side which is proposing them.
  Mr. Osborne: It is boring the hon. Member stiff because I am protesting against them.
  This is what the Prime Minister said when he was Chancellor of the Exchequer, and I commend it to all sides of the House. He was talking about the desirability of reducing taxes, which then were only a quarter of what they are now. Therefore, if what the Prime Minister said then was true, it is much more true today. Talking about the removal of tax burdens, my right hon. Friend said:
  "That is a course along which we are entitled to proceed hopefully, endeavouring to lighten the burden of taxation "—
  [Interruption.] Hon. Members opposite may laugh at this, but if they think that

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  the possibility of reducing taxation is so ridiculous that in their idea taxation is never to be reduced, I hope that they are never returned to power. The then Chancellor of the Exchequer said—and I hope hon. Members will listen to these words:
  "…and reducing the amount of money at the disposal of the Exchequer as much as we can, and using the shortage of money at the disposal of the Exchequer as a greater reason for enforcing economy on all Departments of the State."—[OFFICIAL REPORT, 27th July, 1928; Vol. 220, c. 1707.]
  That spirit has been lost, and all that we are doing today is jeeringly and cheerfully putting burdens on to our people as though we were doing them a favour. Against that I wish to make my personal protest.
  6.43 p.m.
  Mr. Hugh Gaitskell: I do not propose to follow the hon. Member for Louth (Mr. Osborne) into the mass of contradictions and irrelevancies into which he got himself tangled. The trouble with the hon. Member is that he never understands why we react as we do on this side of the House to what he has to say. If he would study the faces of my hon. Friends a little more, he would be clearer as to the reasons that they object to or criticise what he has to say. I was very glad that my hon. Friend the Member for Ealing. North (Mr. J. Hudson) was not in the House when the hon. Member made his astonishing reference to a "free house." I do not know how much longer we should have been kept had my hon. Friend been present. No doubt, however, Mr. Speaker would have intervened.
  The Third Reading of a Bill is, as we know, heavily circumscribed by the rules of order, and I suppose it is that which generally makes it a rather quiet debate. Certainly, so far as this Bill is concerned, throughout most of the Committee stage we were endeavouring from this side to introduce new elements into the Bill. Having been foiled in that attempt, we now can only discuss what the Government have chosen to allow to remain in the Bill, which, of course, is a more limited field. However, it may also be that the fact that the Bill was thoroughly discussed in Committee has made it rather harder for us to think of new things to say. I was glad that the Financial Secretary paid a deserved tribute to
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  the shrewd and penetrating analysis which the Bill received in Committee from both sides.
  There were moments when we were a little alarmed when the sinister shadow of the Patronage Secretary was seen to be hovering around, when an effort was made to hustle and bustle us along a bit faster. At one point the Chancellor of the Exchequer himself gave up his accustomed calm and became a little irritated, but he regained his temper very quickly and I am glad to say he withstood the pressure coming from the Government Chief Whip, and that we were able to finish the Bill in a reasonable way.
  It is a nice custom that in the Third Reading debates we are allowed to pay each other compliments. I am sure that you will be lenient, Mr. Speaker, so far as the rules of order are concerned, so long as they are compliments. My hon. Friend the Member for Stechford (Mr. Roy Jenkins) has already done very well so far as the back benchers on the Government side are concerned. He put them into their various classes and told them exactly what they are and what they have been doing all these weeks. I propose to make a few friendly comments about the Government Front Bench.
  Mr. Gerald Nabarro: Hear, hear.
  Mr. Gaitskell: I am glad to know that the back benchers on the other side are relieved.
  Almost the whole of the burden of the Bill has been carried by the Chancellor of the Exchequer, the Financial Secretary and the Economic Secretary. They will appreciate that it is no complaint of mine when I say that we sometimes think that it would have been nice to have had some other Minister intervening. There was one point at which we nearly got the Minister of State, Board of Trade, on to his feet, but, unhappily, the Chancellor walked in at that moment and, metaphorically speaking, gagged him. We also hoped that the Joint Under-Secretary of State for Foreign Affairs might have joined in, but he also was kept firmly in his place.
  However, the Solicitor-General has intervened once or twice; and I want at once to come to his defence. My hon. Friend the Member for Islington, East (Mr. E. Fletcher) was perhaps a little

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  critical of the Solicitor-General's custom of reading out the wrong brief to an Amendment. I want to tell the Chancellor of the Exchequer not to discourage his right hon. and learned Friend. It enlivens the proceedings if every now and then the wrong brief is read out. It is true that we shall, as is our duty, point it out, otherwise there would not be any enlivening feature. But let the right hon. and learned Gentleman continue in that course, and I think it will greatly assist the good feeling in the Committee.
  I will say a word or two about those who have borne the burden and heat of the day. I certainly endorse what my hon. Friend the Member for Islington, East said about the Financial Secretary. He was most painstaking, thorough and courteous throughout the proceedings. I am glad to see that he now looks a little better fed than on some occasions during the passage of the Bill. He has relaxed, to use the favourite expression of the hon. Member for Altrincham and Sale (Mr. Erroll). I do not know whether he is thoughtful as well, but probably he is not now because he does not have to speak any more on the Bill.
  The Economic Secretary has also given us very good measure at times. He has had to deal with complicated Amendments. Even if I have not followed everything that he said, it looks as though one ought to be able to understand it when reading HANSARD afterwards. We are sorry that the hon. Gentleman is not with us this afternoon. I trust that he is not ill, but is engaged on important Government business. The Chancellor has been his usual bland and friendly self, and although we certainly have no reason to thank him for making concessions—he has made far too few—he has always rejected our proposals in a pleasant and amiable way. I suppose one cannot expect very much more from any Chancellor of the Exchequer.
  I thank the right hon. Gentleman for the firm fight he has put up against the Leader of the House, who I am glad to see present. We have not seen much of him, but we know very well that he has been active in the background, egging the Chancellor on to go faster all the time. But the Chancellor has been stubborn and has represented the views of the Committee to the right hon. Gentleman,
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  and I am glad to see that the Leader of the House has obviously been foiled in his desires.
  I should like to say a few words about those who have taken part in these proceedings on this side of the House. My hon. Friend the Member for Islington, East and by hon. and learned Friend the Member for Kettering (Mr. Mitchison) have done noble service both in the drafting of many Amendments and in many contributions to our debates. They have a remarkable capacity for speaking with almost no notice at all on any subject, and, at the same time, speaking very much to the point.
  Then there are my hon. Friends the Member for Stechford and the Member for Gloucestershire, South (Mr. Crosland), who have been wrongly referred to as the two Balliol boys. I am not quite sure whether they fell within the category of the middle classes as explained to us by the hon. Member, but they have been a tower of strength to the Opposition. I think they were very reasonable in not making more trouble about the insulting remarks thrown out by the hon. Member for Louth, which might have led to serious controversy between them, since only one of them comes from Balliol and the other one is associated with a college which is known for its fierce hostility to Balliol. It is just as well that we had not the scene that that sort of thing would arouse if it were said in Oxford itself.
  My hon. Friend the Member for Edmonton (Mr. Albu) and my hon. Friend the Member for Sowerby (Mr. Houghton) have also played a very valiant part in these debates. As the hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) said, my hon. Friend the Member for Sowerby is in an unusually strong position; but he is a person who tempers his opposition with mercy and is not too offensive to the Government Front Bench, even though be knows quite a lot about Inland Revenue.
  As for the Opposition Front Bench, I am sorry that my right hon. Friend the Member for Battersea, North (Mr. Jay) is sweltering in the Brazilian jungle—if that is what he is doing—and is not here to enjoy these proceedings. He is a well-known and successful figure in finance debates. But my right hon.

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  Friend the Member for Colne Valley (Mr. Glenvil Hall) has graced our proceedings and made most important contributions.
  I hope that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) will not mind me saying that he has been in particularly good form. He made a number of trenchant and well thought out speeches in excellent English and they were dear and penetrating. He is in the fortunate position of being the only Member on these benches who has extracted a concession from the Government, and we envy him for that. I may perhaps now turn to the Bill, for I observe, Mr. Speaker, that you are looking a little anxiously at me.
  Mr. Speaker: If the right hon. Gentleman has really finished with his compliments there is still time for him to say a few words about the Bill.
  Mr. Gaitskell: I am much obliged to you, Sir, for not intervening until I had finished, because it would have been a great pity had I to leave anyone out. It might have led to a lot of jealousy on both sides.
  Briefly, I will say this about the Bill. There is not a great deal in it to which we take strong exception. In fact, our main criticism is reserved for some of the Estate Duty provisions, and particularly Clause 28, which makes this unnecessary concession to the so-called small businesses. I do not propose to repeat all the arguments, but the answers from the Government side of the House which have been made seem to justify our criticism of their determination to ignore the conclusions of the White Paper on Small Estates. There seems to be no case there at all for what was done.
  We know also of the justifiable indignation on this side of the House at the concession which the Government made in the face of back bench pressure on the question of aggregation I hope that after the debates we have had we will hear no more from anyone on the Government side that this concession was for people of limited means. The Government ought to come clean about it. Let them be frank and say that the people who are to get the benefit are the people with large estates, and by that I mean with estates of over £10,000. That is
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  bound to be the case. One has only to look at the Estate Duty scale to see that it will be these people who will get the benefit of that particular concession.
  There are wider issues involved here which have been referred to in the course of our debates. I endorse what my hon. Friends have said about the interest hon. Members on the Government side have taken in this Estate Duty business. They turned up in force for consideration of the Clause in question. There were far more Government supporters present when that Clause was under discussion than there were for any other Clause in the Bill. They are very interested in the subject. There is no reason why they should be ashamed of it, but that is a fact.
  They protest that they are in favour of the equalitarian tendency, and I dare say that there is not a right hon. or hon. Gentleman on the Government benches who would not say that he was in favour of equality of opportunity. But the plain fact is that so long as wealth is inherited on the scale that it is still inherited today and distributed in such an uneven fashion, then we shall not have genuine equality of opportunity. To cut short my remarks on this, I should just like to commend to hon. Members opposite a book which my right hon. and learned Friend the Member for Bishop Auckland (Mr. Dalton) wrote on this subject many years ago, and which is still the best available book on the subject, "The Inequality of Incomes." I hope they will all read it and understand, as a result of reading it, how hopelessly inconsistent their attitude is on this matter.
  Mr. Erroll: Unfortunately, it is out of print.
  Mr. Dalton: It has not been out of print since it was first published in 1920.
  Mr. Gaitskell: That removes the last possible excuse that hon. Members opposite may have. There is no question of the hon. Member for Altrincham and Sale going to the Library to borrow a copy. He can buy one.
  I come now to Clause 14, which is concerned with Income Tax. We were all most interested by the reference of the hon. Member for Altrincham and Sale to business executives, and I noticed that several hon. Members were

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  touched by the tear-jerking account of the situation in which those people find themselves. I am bound to say, however, that I felt there was a little element of fantasy in his description of what actually is happening and also what he supposes might happen if there were to be large tax concessions.
  A little ludicrous was the idea of business executives with aprons on scrubbing or washing the floors or washing up the plates while longingly thinking of the hours they might be spending sitting in an armchair, not reading Dryden, as was first supposed, but thinking of their businesses. That is what the hon. Member said they otherwise would be doing instead of washing up the plates.
  But I am not so sure that one cannot think about business as one washes up. I do not think that that is their real difficulty. If the hon. Member had argued that they had a lot of intellectual work to do in the evenings, like Members of Parliament, then he would have been advancing a much better argument. I must say that the whole picture seemed to me a little unreal. Anyway, I always understood that the tired businessman usually had other interests.
  I want to say a word or two about investment allowances. I was glad to hear the hon. Member for Orkney and Shetland say that he did not think that the Government were doing enough to regulate investment. He thought it was not going in the right amount in the right direction and I welcome strongly his good Socialistic planning. If he really believes that investment ought to be directed and planned by the Government, as he clearly implied, there is no reason at all why he should not join us in the Lobby more frequently than he does at present.
  The hon. Member for Altrincham and Sale took the view that a straight cut in the standard rate of Income Tax was better than an investment allowance. I think that point has been admirably dealt with already, and I just want to tell the hon. Member that there is no doubt that if stimulation for investment is wanted then it is best done by a direct stimulus.
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  I can assure the hon. Member for Handsworth about our attitude on the matter. He must be aware that we have, in principle, accepted the investment allowance and given it strong support. I was glad to see him looking in our direction with an anxious eye when he spoke about future Chancellors of the Exchequer, and when he hoped that they would have the same views. It is just as well that he should be thinking now about the change of Government which will doubtless come in the near future. I can assure him that, if this comes about, he need have no serious anxieties. Naturally, one cannot commit oneself because one does not know the full circumstances but, in general, we take a favourable view of the investment allowance and we hope that it will do the trick.
  I could not quite follow the Financial Secretary on that point. The right hon. Gentleman seemed to think it surprising that we supported the investment allowance although he was glad that we did so. Surely he will appreciate that we did the same last year. We have been saying that as soon as the immediate pressure for rearmament has eased sufficiently there ought to be special encouragement to investment. Indeed, many hours were spent last year on our part in pleading that the initial allowances should be increased, We are perfectly holiest about this, and when the Government come forward with a proposal of which we approve, we say so. The hon. Gentleman must not think back in terms of the way he used to behave when on the Opposition benches.
  We now come to the end of this Bill. For the most part our proceedings have been orderly and have been conducted in a reasonably friendly manner. Of course, there has been hard-hitting argument in our debates, as there should be. I cannot say that we are particularly pleased with this Bill. We are much more concerned with what is not in it, which I must not mention, than with what is in it. So I will leave it there, and if by any mischance the right hon. Gentleman or one of his colleagues—I do not mean him personally—is Chancellor of the Exchequer next year, I hope we shall have a Bill which is more adequate to meet the needs of the country.
  7.2 p.m.
  The Chancellor of the Exchequer (Mr. R. A. Butler): As the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) has said, we have come to the end of our discussion. I was interested in his prize-giving manner and would recommend the academies in need of a genial outsider to give away the prizes to make application to the right hon. Gentleman. In fact, from the purring sounds around him, which are still continuing, he may feel that his activities today augur well for his future political career. I think he was quite right to name only one book as a prize and so to keep firmly to his side the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), but if all the children have the same book, what a very dull prize-giving it will be.
  I shall not follow the example of the right hon. Gentleman, Mr. Speaker, for fear of your intervening, but he was quite right to pay a tribute to my right hon. Friend the Financial Secretary and to my hon. Friend the Economic Secretary, who have borne the burden of the day for the Government. I am glad that after the end of rationing my right hon. Friend is looking a little fitter than he was.
  I want to pay a tribute to my supporters and thereby to fortify my own position from continuing pressure from the 1922 Committee. I understand that I have several further meetings with them before the end of the Session, so the less I say about my own supporters the better, except that they have taken a very constructive part in our debates, and I only hope that any of them who wished to speak on this occasion may not have been cut out by the exigencies of time.
  I also want to pay a tribute to one section of the population and their work, namely, the local commissioners of Income Tax. These are unpaid public servants who perform a task of great importance in the smooth operation of the taxation system by their help in the administration of Income Tax, and especially in the determination of appeals, in which they are of great help to us. It is in the best British tradition that such unpaid residents in a district should help us, and I do not think it is inappropriate for the Chancellor of the Exchequer from time to time, when we are remembering all those around us, to remember this section of the population.
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  Now I come rather more rapidly than the right hon. Gentleman to the Bill. The arguments of the Opposition have revealed, as they have really acknowledged, that they have nothing to say about it. Indeed, it is a recommendation of the policy of Her Majesty's Government, in introducing a Measure of this kind, that we are able to sustain our case over such a period with such absolute success. As my hon. Friend the Member for Handsworth (Sir E. Boyle) and my hon. and gallant Friend the Member for Berwick and East Lothian (Major Anstruther-Gray) have said, there is nothing, either in the confidence in our financial and economic affairs as seen from the world outside or in the progress of our economy internally which other than justifies the introduction of a Finance Bill of this kind, based on a Budget of the kind we have had to introduce this Session.
  If these were dull, they were certainly successful, and they were the right thing to do for our people, because it is the fundamental aspect of our affairs which most interests the working people of this country, namely, their employment, which now stands at a record level of employed persons in our history: their production, which now stands at a record level in our economic history: and the general outlook for confidence and in sterling which I think have seldom stood higher in our island story. These are, therefore, not bad situations, and it is in this atmosphere that we introduced this Budget, it was to this atmosphere that the Budget was attuned, and it is in the hope that this progress will continue that we pass the Third Reading of the Finance Bill today.
  I should be out of the order if I entered any further into the economic situation, but in answer to the hon. Member for Gloucestershire, South (Mr. Crosland), who has a special, intimate knowledge of our economic affairs, I will only say this about our resources: that with this high level of employment we are now working more up to our resources than we were a few months ago, that since the index of industrial production has risen we shall have to look for further progress to increased productivity, and that this is of the greatest importance to the country at the present time.
  Our exports have risen. In general there are no marked shortages but we are

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  certainly running now up to full load, and therefore it is important for all concerned in passing the Finance Bill today against the background of our economic situation to realise that further productivity, particularly in coal, is of the utmost importance to the future of our economy. In passing this Finance Bill, therefore, we should not sit back with satisfaction. We should be thankful that we are living in a period of comparative prosperity compared with things that we have been through in the past, but we should make further efforts if we are to sustain the advance already made.
  I have only one or two observations to make about the Bill. The first is in answer to the hon. Member for Islington, East (Mr. E. Fletcher) who brought to the concluding stages of the Bill as much clarity and ability as he brought to its intervening stages in Committee. However, the hon. Gentleman fell, like most of his companions on the opposite side of the House, into a real difficulty about concessions. He first said that we had made no concessions and then he said that we had paid attention to representations made in previous years by hon. Gentlemen opposite. In fact, two concessions—the concession to the cinemas, which I think so essential, and the concession on company reconstruction—were the result of cogitating upon points put in previous debates.
  One was an important concession to the point of view of the right hon. Gentleman the Member for Bishop Auckland, and the acceptance of the Amendment of my right hon. Friend the Member for Blackburn, West (Mr. Assheton) was also valuable in the general picture. So we did attempt to listen; we may not have done very much, but if those examples of concessions made this year as a result of previous discussions are to be followed in the future, hon. Members may have a little more hope than they have had in the course of the debates this year.
  I must mention that this Bill does not contain many points referred to in the Report of the Royal Commission, and therefore I have not been able to refer to them in the course of our discussions, but they have all been noted in the debates leading up to this Bill.
  My hon. Friend the Member for Southport (Mr. Fleetwood-Hesketh) made a
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  very valuable intervention in our debates and I felt that he very nearly convinced the right hon. Gentleman opposite on the subject of Command 8295, "Estate Duty and Family Businesses." In any case, even if he did not, he made a good speech. I do not accept the arguments of the hon. Member for Edmonton (Mr. Albu) about 99 per cent. of old traditional businesses now not being practical, and he used the word "nepotism" in association with their management. I think that that is a most exaggerated picture. If a family business is a bad one and the family declines and decays and indulges in nepotism, the business goes to ruin, but it is by no means the case with this country that it owes its greatness to novelty in one generation. It owes its great degree of development and prosperity and most of its originality to the fact that we are in the habit of taking what we can from the traditional past, enriching it in the present and handing it on to the future.
  That is the object of the concessions which I have made, small though they are, in the Estate Duty field. Hon. Members will remember that I promised last year to study Estate Duty and do what I could in a small way, which is precisely what I have been able to do on this occasion.
  My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) dealt with the investment allowances and asked that a warning be given if the rate was going to be altered. My chief answer is that I am certainly not contemplating anything of the sort of alteration that has been done in this field before. I would only remind him that when initial allowances were suspended, warning was given that that would take place and that in the case of ships already ordered or under construction special provisions were made. I cannot do better than say that such a respectable precedent would certainly be considered in the event of any alteration of the rate taking place. But we should look a little further and regard this not as an ephemeral matter but as one which has come to fortify the general system under which we wish to encourage industry.
  There was some degree of novelty in this kind of allowance, but as the Financial Secretary clearly put it, the fact that it has been so widely received and accepted

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  in the House will mean, I trust, that industry will take advantage of it because, as I explained in the Budget, the weakness of our economy last year was the non-improvement of investment in the private sector, particularly manufacturing industry. It is in the national interest that Ministers should not only state what is wrong but—and it is an essential feature of my task at any rate—that they should try to put things right and that people should take advantage of their efforts and thereby play their part in the national improvement. I hope that that will he the case with investment allowances. If so, they then may be able to show some such improvement in the figures as the hon. Member for Orkney and Shetland (Mr. Grimond) illustrated has been shown in the public sector, in coal and elsewhere.
  There has been a certain controversy about taxation—whether it is good or bad. My hon. Friend the Member for Louth (Mr. Osborne) has made quite clear what views I have on the subject and I will not rehearse again the arguments which I have used before. We, of course, are carrying forward what I said in my Budget Speech was our task, namely, that we must attempt so to control Government expenditure that the outlook in respect of taxation can be better on future occasions. But when hon. Members say that we might have done better than we have done, and the hon. Member for Orkney and Shetland says that we have produced only a small surplus and the national account is only just balanced, hon. Members must remember that we are carrying the biggest load in our history in defence and in the social services, and we have special arrangements for food and agriculture which I think are supported broadly by all parties. If we are to carry these burdens one cannot expect Finance Bills which will give us very much more Agreeable concessions than this one gives. The more the public realises this fact the fairer things will be, but we must certainly attempt to tackle this question of taxation, and we are doing our best to tackle the question of expenditure.
  As long as people, both in the House and outside, do not expect wonders, we shall continue to do our best, but there are no miracles in an age when we are carrying a burden of this sort. We should only be thankful that we are seeing to it that we have national security,
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  that we have retained an improved social security, and that we have tried to give a little hope, which I think has been reflected in the atmosphere of our agreeable debate this afternoon.
  Question put, and agreed to.
  Bill accordingly read the Third time, and passed.

  ELECTRICITY REORGANISATION (SCOTLAND) BILL
  As amended, considered.
  ELECTRICITY REORGANISATION (SCOTLAND) BILL

    New Clause.—(RURAL ELECTRIFICATION FUND.)
    Each Board in Scotland shall set up a fund to which it will allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges.—[Mr. Woodburn.]
    Brought up, and read the First time.
    7.17 p.m.
    Mr. A. Woodburn: I beg to move, "That the Clause be read a Second time."
    I suggest that we also discuss with this Clause the Clause—"Provision for rural areas"—which is also in my name and those of some of my hon. Friends. Both have very much the same purpose. My hon. Friend the Member for Central Ayrshire (Mr. Manuel), who has his name to this Clause, is very concerned about the progress that is being made in rural electrification and regrets very much his absence today. I put it to the Secretary of State for Scotland that this is a matter of very great importance in the re-organisation of electricity supplies in Scotland.
    We are all very glad to hear about the progress of the North of Scotland Hydro-Electric Board in connecting farms and isolated areas. It is something to be proud of that in Scotland, with its great extent of isolated countryside, such as in the Highlands, which it is difficult to supply with electricity, the people are having the advantage of modern science and that the building of the new station at Dounreay may make more electricity available in that area. It is also interesting to learn that, although at first it was expected that the Hydro-Electric Board would have to export a great deal of its electricity to the Southern part of Scotland, the continuing and expanding de-demand in the board's own area is using

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    up a very large percentage of the electricity that is being produced. In South-West Scotland probably more progress is being made in the electrification of rural areas than in any other part of the country.
    If we are to make the best use of our labour on the farms as well as in the towns throughout Scotland, we must make the best use of power, which is certainly much more easily carried in the form of electricity than in any other form. We hope, therefore, that the Secretary of State will give us some idea of the progress that is now being made and that it is hoped will be made.
    One of the most regrettable things about the Bill is that the Secretary of State, in assuming the task of the electrification of Scotland, has not given us any ideas of the progress that will be made and what the result of the Bill will be in relation to the subject matter of the new Clause. If a ticket is put up saying, "Under new management," people expect to see some new ideas. So far the Secretary of State has not produced any ideas to justify the Bill. When putting down this Clause, we certainly thought we would offer one idea and the right hon. Gentleman could give his opinions about it. We want to know whether he has any plans for improving the electrification of agricultural areas of Scotland, when extensions are likely to take place, and when Scotland is to get the benefits of electricity outside the great towns.
    We should also like some information about the rationalisation of the charges. I know that some progress has been made about the huge differences between one area and another. In the old days, Edinburgh was supplying electricity for ½d. a unit whilst in Musselburgh, near by, the charge was many times ½d. That kind of distinction between two adjacent areas has been modified to some extent. We are bound to realise that if we make the distribution costs of electricity on the same basis in the country as in the town that constitutes a hidden subsidy, but, nevertheless, it is the same with the Post Office. We must aim at trying to give country areas the benefit of the cheaper rates.
    As far as possible we want to encourage our people to keep on the land. If
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    one thing happening throughout the world today is menacing the future more than another it is that people who ought to be producing food are being driven into the towns and more and more town dwellers are building up a civilisation which may collapse for want of food. If we could take electricity into the country areas to give the people there an opportunity of power for the production of food, we should do something, not only to make it more pleasant to live on the land, but more productive to live on the land and, by giving people an opportunity of earning a living on the land, we should make the inducement to live in towns slightly less.
    Even to a minor degree, such as by extending the facilities for wireless and television in the country cottage, we might be able to provide that extra inducement—an important one. It would give the country people amenities in the evenings which normally they might have to seek in towns. Even in the towns I am satisfied that many people who used to leave their homes to go to cinemas are now resting quietly at home and getting repose looking at television after a hard day's work. I hope that television will become an educative service and not degenerate into producing pictures which merely amuse and in no way instruct or elevate—
    Mr. Speaker: The right hon. Member is certainly getting well away from the new Clause by discussing television.
    Mr. Woodburn: Actually, television facilities would be one of the results of extending electrification to the rural areas, which at the moment is quite impossible owing to lack of electricity. If the Secretary of State will expound his ideas, I hope that among them will be the amenities which arise from electricity by way of producing power for milking and running the farm, and for what I believe to be of no less importance, the provision of entertainment for a man when he has finished work. All that comes from electrification of rural areas, I think that maintaining manpower in the rural areas will be one of the major contributions which electrification can make. The Secretary of State will be the "new management" which is to show Scotland how much better it will work under this Bill. We should like the right hon.

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    Gentleman to open his mind a little to us and show us what he has in mind in regard to these great plans he has when he takes over this task—
    Mr. Speaker: If the Secretary of State attempted to do such a thing I should be compelled to intervene, because the new Clause proposes to
    "set up a fund to which it will allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges."
    Hon. Members cannot enter on the whole question of electrification of the rural areas on the Report stage of the Bill.
    Mr. Woodburn: I beg your pardon, Mr. Speaker, for expanding the debate at this stage. Perhaps the right hon. Gentleman will be able to say whether he is prepared to consider the suggestion made, or offer some hope he has in mind for extending electricity to the rural areas of Scotland. We await the illuminating speech he will make when he replies.
    Captain J. A. L. Duncan: I hope that my right hon. Friend will not advise the House to accept the new Clause, because I do not think it is a very sensible one.
    Mr. John Rankin: On a point of order, Mr. Speaker. I understood that this new Clause required to be seconded, and I was under the impression that you had called me.
    Mr. Speaker: The new Clause does not require a seconder, as it was moved by the right hon. Member for East Stirling-shire (Mr. Woodburn), who is a Privy Councillor.
    Captain Duncan: My opposition is to the words in the new Clause and not to the words used by the right hon. Member for East Stirlingshire (Mr. Woodburn) in moving the Second Reading of the Clause, which are two entirely different things.
    Mr. Woodburn: To save the hon. and gallant Member from getting worried, may I say that if the Secretary of State has better words which could be used, we shall not object to their being used.
    Captain Duncan: What the right hon. Member is trying to do in this new Clause is to ask the Government to put
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    into the Bill provision for allocating sums over and above the ordinary charges—and out of the charges now imposed—to a fund for the extension of rural electrification and the lowering of charges. I am speaking for the North of Scotland Hydro-Electric Board, as I do not know anything about the board in the South.
    Mr. A. C. Manuel: Where does the North come in?
    Captain Duncan: The first words of the new Clause are. "Each board," so presumably one is the North of Scotland Hydro-Electric Board.
    Mr. Woodburn indicated assent.
    Captain Duncan: The right hon. Member nods his head, showing that he is in agreement with me and in disagreement with his hon. Friend the Member for Central Ayrshire (Mr. Manuel).
    This seems the wrong way to finance rural electrification. The Hydro-Electric Board comes to this House from time to time and gets a Bill through authorising a sum of money for capital development. I think that last time the amount was £100 million. As each scheme is brought forward, the Secretary of State certifies that that capital is necessary and it is raised on gilt-edged terms, on the cheapest terms in the market.
    That seems the right way of doing it. In that way the board gets the money on the cheapest possible terms, but by this new Clause it is sought to alter the terms. The income of the board comes only from the consumer. If we add to the consumers' charges provision for the allocation of a special fund, we cannot at the same time lower the charges but, ipso facto, we shall be heightening the charge. To that extent this new Clause does not seem to carry out the wishes of the right hon. Member and his hon. Friends.
    For those reasons I hope that my right hon. Friend will not accept the new Clause. Although the object of extending rural electrification is one which we all have and we all want the charges to be lowered, this seems the wrong way of achieving that object. What we want is to raise the capital on the most favourable terms, as is done under the original Act and successive Acts. We do not want any extra charges on the town or

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    country dweller in order to set aside a fund to reduce charges and for the extension of rural electrification.
    In distribution to the farmer, it seems that the North of Scotland Board has a very sensible arrangement. It asks for a guarantee based on the capital expenditure involved in connecting farms to the mains supply. If I have any criticism to make of the Hydro-Electric Board, it is its failure from time to time to explain the capital costs of making these extensions. There have been complaints from time to time, but when they have been explained—it is the public relations aspect which is weak—it has been perfectly obvious that there was an explanation of cases in which charges were apparently high.
    7.30 p.m.
    Let me take, as an example, the case of a 33,000-volt line crossing a farm. The farmer says, "It is absurd that I should have to pay a guarantee of, say, £100 to bring lighting to my farm when the electricity line is going across it." He does not understand that a 33,000-volt current cannot be brought into his farmhouse; it has to be stepped down to 240 volts. To do that requires at least one transformer, probably two. The cost of this, plus the cost of the high-tension cable, is very heavy.
    In undertaking schemes of development, as it is doing, the North of Scotland Hydro-Electric Board is doing so extremely economically, both to the taxpayers, who have to guarantee the capital, and to individual consumers. These development schemes connecting farm cottages seem to be very reasonable. That is the way in which to extend rural electrification, rather than to embark on what is proposed in this attractive new Clause—attractive in words but totally impracticable in practice.
    Mr. Rankin: The hon. and gallant Member for South Angus (Captain Duncan) has founded his case against this new Clause largely on the performance of the North of Scotland Hydro-Electric Board. I have no complaint to make about that. Time and again, to the considerable mortification of Members opposite, I have cited the things which have been done by that board in extending electricity supplies in Scotland, and in
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    lowering charges. They did not show any particular enthusiasm for the things I said about the work that was done by that board.
    Indeed, as we know, Members sitting on the Front Bench opposite opposed, on one particular occasion very vigorously indeed, a very vital scheme when it was introduced in the House, and to which the hon. and gallant Gentleman referred. However, I do not want to go into those matters—
    Captain Duncan: What scheme?
    An Hon. Member: Tummel-Garry.
    Mr. Rankin: It is one of my earliest recollections in this House, and one of the greatest opponents was the hon. Member who is now Joint Under-Secretary—
    Mr. Speaker: The hon. Member really must direct his remarks to the new Clause which is before the House.
    Mr. Rankin: I have departed from that other matter, but I must draw your attention, Mr. Speaker, to the fact that I was provoked. I am sorry that I succumbed to the temptation which came from the benches opposite.
    Leaving all that aside, I turn to the foundation on which the hon. and gallant Member built his case. In the context of the Bill, this new Clause, to which I subscribe and to which my name is attached, has only one reference so far as interpretation is concerned, namely, to the amalgamation of the South-East and South-West Electricity Boards. In the Second Reading debate I pointed out that the North of Scotland Hydro-Electric Board is not affected by this Measure. Appreciating what that board is doing, and will continue to do, our fear was about the two former boards that are now to become one board. We wanted to try to ensure that the new South of Scotland Board would carry on in the South of Scotland work analogous to that which has been carried on in the North of Scotland.
    We are faced with the fact—and this is really the fear that promotes this new Clause—that one of the areas which is now to be taken over is a deficit area. How are we to finance further electrification and lower charges when the area of

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    one of the boards which is now to constitute the new South of Scotland Board is a deficit area? Last year, the accounts showed that the South-West Scotland Electricity Board had a deficit of more than £100,000. We put forward a new Clause of this character so that the Secretary of State for Scotland will be able to tell us how he proposes to carry on the necessary work which we hope will be carried on when the new board enters on its job.
    I am certain that every one of us wants to see the new board doing well, but if part of its area is a deficit area, how is the board to do well? How is it to promote further schemes of electrification and lower charges when it already has a deficit, and when it is being removed altogether from the scope of the overall aid which would have come naturally from the British Electricity Authority had that area remained a constituent part of the great nationalised scheme which covers the whole of the United Kingdom. The Government are removing the new board from this source of help.
    Captain Duncan: England.
    Mr. Rankin: I am surprised to hear such a narrow nationalist outcry from the hon. and gallant Member for South Angus. If he imports a nationalist attitude into the discussion, the debate will probably become somewhat bitter. That is the last thing that I, for one, would seek to raise on this occasion. We are asking, by means of this new Clause, how the Secretary of State for Scotland will ensure electrical extensions.
    The hon. and gallant Member for South Angus has stated that he does not think that the words are the proper ones to use. We shall not quarrel about the words. All we want is that the idea should be accepted. Is the hon. and gallant Gentleman or any Member on the benches opposite opposed to the idea of extending electrification throughout the South-West and South-East of Scotland? Are they objecting to the lowering of charges to the consumers? I take it that they agree with these things. That being so, I assume that, subject to proper wording, they will support the Clause.
    Why did the hon. and gallant Gentleman go to the trouble of speaking? All he needed to do was to say that he supported us. When he spoke he opposed
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    us. Now he sits nodding his head in agreement with what I am saying. Does he oppose what I am saying? Apparently he cannot make up his mind now. He is in a worse state than ever; he does not know where he is. First, he gets up and opposes the new Clause. He sits down and listens to me for five minutes and then he supports the Clause. Now he does not even know where he is; he does not know whether he is for or against.
    Captain Duncan: Might I interrupt the hon. Gentleman?
    Mr. Rankin: Let me just finish my point. What a terrible pass Toryism in the East of Scotland has come to. It does not know where it is.
    Captain Duncan: It knows exactly where it is. The point of the speeches of the right hon. Member for East Stirlingshire (Mr. Woodburn) and the hon. Member for Tradeston (Mr. Rankin) is that they want to extend rural electrification and to lower charges. Both sides agree on that, but what I do not agree with is the wording of the Clause, and I said so.
    Mr. Rankin: The hon. and gallant Gentleman is easier meat than ever. He agrees with everything but the words. All right, We have no objection—
    Captain Duncan: Well, change them.
    Mr. Rankin:—as my right hon. Friend has already indicated, to handing the Clause over to the Secretary of State's technical experts if he will accompany his supporters and say that he accepts the principle in the Clause. I await a sign from him.
    Captain Duncan: The Secretary of State accepts the principle.
    Mr. Rankin: I do not want to cause any disruption in the Tory Party—it is unnecessary; there is enough already—but the hon. and gallant Gentleman says that the Secretary of State accepts the Clause. The only trouble the hon. and gallant Gentleman has is with the words. I am prepared to leave that matter with the Secretary of State. Will the Secretary of State accept it? Does he accept the principle contained in the proposed Clause, which has the support of at least one hon. and gallant Gentleman opposite?
    However, nobody now knows where the hon. and gallant Gentleman is. First

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    he supports the Clause, then he does not support it, and then he half-supports it. He will have to make up his mind. Perhaps the Secretary of State will accept the principle in the Clause and we can then await the form in which he puts it. What he brings forward will have our support if it embodies the principle in the proposed new Clause.
    7.45 p.m.
    Mr. Niall Macpherson: The hon. Member for Tradeston (Mr. Rankin) invites my right hon. Friend to accept the proposed Clause, and he says that he does not mind whether he accepts the words provided he accepts the idea. The trouble is to know what the idea is.
    The Clause calls upon the Secretary of State to impose a duty upon each board to:
    "…allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges."
    The hon. Member asks how this can be done because one of the two districts which will form the new board made a loss last year.
    Mr. Rankin: I did not say anything of the kind. I drew attention to the fact that one of the areas to be taken over made a loss last year, and I asked the Secretary of State what he was going to do to overcome that fact so that rural electrification might be extended and charges lowered, which, I presume, is his policy.
    Mr. Macpherson: As my hon. and gallant Friend the Member for South Angus (Captain Duncan) pointed out, the implication was that it would be much better if electricity were developed in the South-West of Scotland from profits made in England. Apparently, profits are usually a very bad thing, but if they are made in England and used to develop Scotland the hon. Member for Tradeston does not think quite so evilly of them.
    Mr. Rankin: That is too simple an argument.
    Mr. Macpherson: The first point is surely that, as my hon. and gallant Friend said, the normal way of carrying out development is for the electricity authorities to borrow in order to do so and not to set aside profits for the purpose. I understand that that is what has been done on
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    the whole so far under the British Electricity Authority.
    Mr. Manuel: Surely the hon. Member is not so naïve as he implies when he talks about the setting aside of profits. Obviously, the amount of profits set aside would go towards annual loan charges on a capital sum which would be borrowed. If a certain proportion of profits is being earmarked, we are not saying that is capital expenditure: it could be annual loan charges.
    Mr. Macpherson: That seems to be stretching the wording of the Clause a long way. If one borrows, one has to service the loan. Presumably one would borrow on the basis that the consumption in the areas concerned would sooner or later supply the necessary revenue to service the loan.
    The hon. Member for Tradeston indicated that he did not think all was well in the South-West Scotland area, which made a deficit last year. He asked my right hon. Friend what was happening now. I do so too. My information is that things have not gone too badly in the South-West of Scotland recently. I do not think the hon. Member need worry his head on that score.
    The main point is whether what is proposed is the right way to go about it. The Clause refers to the allocation of a proportion of profits for the extension of rural electrification. I should have thought that that was not the right way to go about it. Also, surely criticism is implied on the two areas for not having proceeded fast enough with rural electrification. However, we know that the South-West of Scotland more or less pioneered this work in the free enterprise days when the local authorities made a very good start.
    The fact is that, in the South-West of Scotland, according to my information, up to the end of this year the number of farms supplied with electricity in proportion to the total number was higher than was the case in any other part of the country. What is more, the South-East of Scotland area is the fourth highest in the country, and a combination of the two may very well provide almost the highest proportion. It really is not worth while telling this new board to do something which is obviously being done so well. If it were necessary in the first

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    place, why did not the Labour Government put it into the original nationalisation Act? Why do they make this proposal now when the South of Scotland Board is doing the job so well, and better than most?
    Mr. Thomas Fraser: If the hon. Gentleman thinks that everything in the 1947 Act was so satisfactory, why on earth does he think we ought to have these 19 Clauses in this Bill? The South-West of Scotland was doing very well.
    Mr. Macpherson: The South-West of Scotland is doing very well already, and that is my argument. I believe that this particular Clause is unnecessary, but it is a very different thing to move from that statement and say that the whole Bill is unnecessary. The better the South of Scotland is doing, the more it should be allowed to go on by itself, and that is what we on this side want to do.
    Miss Margaret Herbison: If the hon. Gentleman says that we are doing so well, and that it is not necessary to have this Bill, why does not somebody on the Government Front Bench tell us why it is necessary to have the Bill at all?
    Mr. Macpherson: The hon. Lady cannot have it both ways.
    Mr. Deputy-Speaker (Sir Rhys Napkin Morris): We are debating the new Clause not the Bill itself.
    Mr. Macpherson: Thank you very much, Mr. Deputy-Speaker. It seems to me that the Opposition, at the moment, are putting forward a Clause which is not necessary. If they feel that the Bill itself is not necessary, why do they want to waste time in adding this new Clause?
    The second point is that they are asking for profits to be set aside in order to lower charges. I do not know what on earth that can possible mean. Does it mean that the charges have to be increased first of all in order to lower them in the following year, or does it mean that the Opposition are not satisfied with the efficiency of the South-West and South-East of Scotland Boards, and think they can get a good deal more economy? I made inquiries about this, and I am told that, in the South-West of Scotland, the number of people employed in relation to revenue, unit consumption and
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    customers is something of the order of half the number in the case of the South of England. It is not much good setting aside profits to lower charges in that respect, and I submit that it is a waste of time of the House to bring forward a new Clause of this description.
    Mr. Manuel: I hope the hon. Member for Dumfries (Mr. N. Macpherson) will forgive me if I do not follow him in the argument he was using against this Clause. It occurred to me that the whole trend of his argument was that, in the past, this work had been done satisfactorily in the area of the South-West of Scotland Electricity Board—and I presume also in the area of the South-Eastern Board—so that he felt that the special provisions for which we are asking in this Clause were unnecessary.
    I agree with him whole-heartedly. My fear is that, because of the break-up of the British Electricity Authority, and because we are now to have the South-West of Scotland Area Board standing on its own feet—and the same applies to the other board—there may be a curbing of initiative, a cramping of their style and a lessening of the work which has been proceeding so satisfactorily since the British Electricity Authority came into being. Accordingly, I accept responsibility for having something to do with this new Clause. I felt that, once the principle was being hammered through the House, presumably because it was argued on the benches opposite, as well as up and down Scotland, this was going to be a great thing for Scotland, we ought to try to show that there were some dangers in it and try to take some steps to provide safeguards against those dangers.
    I hope the Secretary of State will not dismiss this Clause offhand, because there has been some thought behind it, and, while it may appear to the hon. and gallant Member for South Angus (Captain Duncan) and the hon. Member for Dumfries not to have much substance, I think they will both agree on the principle outlined in it—that rural electrification should proceed apace, and that we should have a lowering of charges wherever that is possible. Any farmer in Scotland who wants electricity on his farm will tell those hon. Members that they want it a bit cheaper than it is now. If we agree about the substance of the new Clause, we disagree particularly about some of the

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    gingerbread that has been placed before Tory audiences at garden fetes up and down Scotland at which, if one rolls a penny on a board, one may possibly get 6d. at the end of it. The Front Bench opposite might know something about the luck at the weekend.
    I have made some inquiries, and I have found that the present position is that the South-East of Scotland Board have connected 62 farms in the board's area, and that, since the beginning, 2,615 farms have been connected to the board's supply. That still leaves 3,447 farms without a supply, and I understand that in the future not all of these farmers would be willing to take the supply, though a large number of them would. I am sure that the Secretary of State is keen to see farms operating with the benefit of electricity, and that he will agree that farms today, and especially dairy farms, cannot operate most successfully unless they are provided with the necessary electricity. On the assumption that 85 per cent.—
    Mr. Deputy-Speaker: As I read the new Clause, it deals merely with the duty of setting up a fund.
    Mr. Manuel: May I ask you, Mr. Deputy-Speaker, if I would be out of order in trying to argue why that fund is necessary?
    Mr. Deputy-Speaker: I think that would be out of order, particularly on this new Clause, which provides that each board in Scotland shall set up a fund to which it shall allocate profits. That is what it does, and nothing more.
    Mr. Manuel: How then am I to speak about the lowering of charges if I am not allowed to talk about farms or rural electrification?
    Mr. Deputy-Speaker: I have nothing to do with the drafting of the Clause. I merely say that this new Clause which has been proposed is limited to the terms set out on the Order Paper. I have had nothing to do with its drafting.
    8.0 p.m.
    Mr. T. Fraser: The Clause reads:
    Each Board in Scotland shall set up a fund to which it will allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges.
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    Any argument in favour of rural electrification, and any point showing the need for it or for the lowering of charges, would therefore appear to be valid, and would appear to be the only valid argument in support of the setting up of a fund.
    Mr. Deputy-Speaker: That would not be a valid argument at all or come within the terms of the Clause. The necessity for rural electrification may be what it may; the point does not arise here. We are concerned whether a fund should be set up for that purpose.
    Mr. Fraser: I listened carefully to the speeches made from the Government Benches, and I submit to you, Mr. Deputy-Speaker, that they were miles wide of the point. The hon. Member for Dumfries (Mr. N. Macpherson) talked about what has happened in South-West Scotland under free enterprise, and the hon. and gallant Member for South Angus (Captain Duncan) made a long speech in which he talked about the borrowing powers of the North of Scotland Board. All of that was miles away from the Clause.
    Mr. Deputy-Speaker: That may very well be. We had better get back to the proposed new Clause.
    Mr. Manuel: I am sorry that your Ruling will sadly constrict my argument. I appeal to you Mr. Deputy-Speaker. I have gone to considerable trouble and some difficulty in trying to assess the commitments in the areas of both the boards. I have had communication with them and with the secretaries and chairmen on the work already completed.
    Mr. Deputy-Speaker: The hon. Member must look for a better opportunity. I have nothing to do with the drafting of proposed new Clauses. The one we are discussing is concerned with a fund. It may be that what the hon. Member has to say is very important, but he must find another opportunity.
    Mr. Manuel: I am sorry that the Ruling has been tightened when I got up to speak. Previous speeches in the debate went very much wider than mine; the rules are difficult to adhere to when we get that sort of example. Perhaps I can say that a fund is imperative because the commitments for farms alone in the South-East of Scotland will be £4 million

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    in the future and £5½ million if we take in all other properties. Loan charges, in borrowing at 7 per cent., will be £400,000 per annum.
    Obviously, this all needs thought. I do not think these farms will get their supply. I do not see how the boards will get the money necessary to connect those farms and to repay the annual loan charges. Both the South-East and the South-West Boards will need to be very careful how they allocate their money. Possibly they can steer off other things. I do not know. They may be considering building suites of offices or other things that they would have the right to do, but if the choice is between those necessary things and the extension of rural electrification and lowering of charges, they will have to consider very carefully what to do.
    The record of the South-West Board in rural electrification since it took over is splendid. I agree with the hon. Member for Dumfries that it was a record for Britain, unsurpassed by any other board. The board has covered 75 per cent. of the farms in its area, but there are still other farms to be connected. The total number of farms in the area is 9,720. The board has connected 7,160, leaving 2,560 still without an electricity supply.
    It is estimated that of that number only 1,100 would take a supply and that the remaining farmers would not want it. I am certain that their reason lies in the installation charges, which are much too high. We have had the same definite indication in both board areas from members and chairmen that a proportion of farmers will not take the supply, even when it is offered. That is a deplorable situation.
    Commander C. E. M. Donaldson: Does the hon. Member understand that a large number of farms have their own plant and that is one reason why some farmers will not take a board's supply?
    Mr. Manuel: That may happen in isolated cases and is not as satisfactory as a supply from a board. That is the exception. As a general rule, the 1,100 cases have no supply of any kind. The board in each area has to consider how it can assist. Shall it be by a fund? In what way can it be done? There are 1,100 farms in the South-West area not
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    prepared to take a supply. We all agree with the extension of rural electrification and the lowering of charges, and if a further lowering of charges would bring in a proportion of that 1,100 it is the job of the Secretary of State for Scotland to make some such arrangement.
    The words we have put in our proposed new Clause may not be suitable. If hon. and right hon. Gentlemen on the Government Benches agree that it is laudable to extend rural electrification and to reduce charges to within the compass of farmers and farm workers, I hope they will support us. Let us remember that the cot house should have electricity as well as the farm house, and that the ploughman's wife ought to be able to use an electric iron while the cows ought to be milked by electricity. I hope that hon. Gentlemen will give us some hope that steps will be taken to enable us to reach the ultimate agreed target.
    The Joint Under-Secretary of State for Scotland (Mr. Henderson Stewart): It might be helpful if I now say a word on this subject. We have had a fairish debate. It is clear what is in the mind of the Opposition in putting down the two proposed new Clauses, the second of which has been called.
    I am much obliged to the hon. Member for Central Ayrshire (Mr. Manuel), because he put in the clearest possible language the reasons which moved him in putting down the Clause that we are discussing. He said that he saw dangers in the new set-up, as he called it, and principally that there might be a curbing of activity and a lessening of the work done by either of the two present boards. I am very much obliged to the hon. Member, because I now understand his point. I had some difficulty in appreciating it at first.
    I quite appreciate that these fears may exist in the minds of hon. Members opposite and others, but I should like to say at once that the Clause is really unnecessary, because what it seeks to achieve is already provided for in the various Electricity Acts. I will take the matter step by step. As the House knows, the present Bill takes into account and applies to the south of Scotland, Section 1 (6) of the 1947 Act, which says that:
    "In exercising and performing their functions the Electricity Boards shall, subject to and in accordance with any directions given by the

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    Minister or Secretary of State under this part of this Act…(b) secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity."
    That is precisely what the proposed new Clause seeks to do.
    The only slightly new idea which it mentions is the setting up of a fund. If I may address myself to that question for a moment, I hope that I shall afterwards succeed in persuading the House that the proposed Clause is not necessary. As hon. Members know, these electricity boards have to take many things into account in planning their programmes. It is not a case of making profits out of which they can reduce their charges next year. These boards are not expected to make profits; they are expected to balance outgoings with incomings, so that over the years the two things cancel out. Provisions are laid down to that effect. They are not like private companies, which may aim at making substantial profits in order to establish funds for special jobs. These boards are not constituted in that way they are obliged to meet, so far as they think it wise, the varying requirements of their own areas.
    In the South-East and South-West of Scotland many needs are apparent—including the needs of the towns and of the rural districts—and one has clearly to be balanced against the other. If I understand the argument correctly, the only thing hon. Members opposite really seek is an assurance from the Government that the machinery which is to be set up under the Bill will not allow a falling off in the steady advance of electrification, especially in rural areas, in the South-East and South-West of Scotland. I can give the House the assurance that it is the intention of my right hon. Friend to do his utmost to bring about that advance.
    Mr. Manuel: I am very pleased with the Minister's reply so far. I merely wish to correct a mistake which I made in my speech. I said that in the South-West area 1,100 people would refuse the supply. That is the number who will take it, leaving 1,460 people who will not take it. I should like to know what steps the Government are taking to bring about conditions in which that 1,460 people will take it.
    Mr. Stewart: I was coming to that point later in my speech, but I can reply to it immediately. The hon. Member is referring to the owners or occupiers of farms in South-West Scotland who have intimated to the board that they will not take the supply. As the hon. Member must know, the reason is that some of the people concerned are old people, who are not very worried about a supply of electricity, and financial considerations arise in other cases. We hope that this situation will change, but we cannot force people to accept a supply if they do not want it. I can assure the hon. Member, however, that we shall continue to try to persuade them to do what we all agree is the right thing.
    Mr. William Ross: The chances are that the refusal of one person to take a supply will mean that four or five others in the same area will not be able to get it, even if they want it. The question of charges must be kept very well in mind.
    8.15 p.m.
    Mr. Stewart: That is perfectly right, and I appreciate the point. I think it will help hon. Members on both sides of the House if I refer to the present position in the South-East and South-West of Scotland, and the plans which the boards have in mind and will presumably carry out when they are joined together. I hope that I shall be in order in doing so.
    Mr. Deputy-Speaker: I cannot see how the hon. Member can keep in order if he does so. This is a purely machinery Clause, to set up a fund for a specific purpose. It does not go beyond that.
    Mr. Stewart: I am sorry. I should have been very glad to have met the points raised by hon. Members opposite. It may be that we can get over the difficulty in some other way.
    Mr. Thomas Steele: If the Minister will turn to page 16 of the Bill, he will see that paragraph 11 of the First Schedule says that one of the duties of the South of Scotland Board will be to
    "establish and maintain a general reserve fund."
    It also says that:
    "The South of Scotland Board shall contribute to the general reserve fund such sums

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    at such time as the Board may determine, and the management of the said fund and the application of the moneys comprised therein shall be as the Board may determine."
    It looks as though the Bill provides for the establishment of some fund.
    Mr. Stewart: That is quite true. That is one of the reasons I hoped that the Opposition would not feel it necessary to press this matter to a Division. I have already said that the Bill covers the object of the proposed Clause, and the hon. Member has added to the information which I gave the House by pointing out that a reserve fund must be set up. It seems that we are all agreed that the necessary authority is there.
    I can give the broad assurance—which is all that I am allowed to do—that we intend to push ahead with rural electrification to the utmost of our ability. With that assurance, I hope that the right hon. Gentleman and his hon. Friends will not press this matter to a Division.
    Mr. Ross: Will the hon. Member say a word about charges? There are schemes in the South-East and South-West of Scotland.
    Mr. Stewart: I shall be very pleased to do so, if am I allowed to.
    Mr. Deputy-Speaker: The question of charges does not arise in connection with this proposed new Clause.
    Mr. Woodburn: On a point of order. If one moves the Second Reading of a new Clause—which, I take it, is equivalent to moving the Second Reading of a Bill—is it not legitimate that one should be able to give reasons why a fund is to be set up, and what is to be the purpose of that fund, especially when it is mentioned in the Clause? The proposed Clause says "for the purpose of," and I submit, with respect, that any purpose mentioned in the Clause would be within the realm of the debate.
    Mr. Deputy-Speaker: I am objecting to something very much wider than that. The reason a fund should or should not be set up is obviously in order. The arguments to which I have been objecting are those concerned with rural electrification and charges in general.
    Mr. T. Fraser: My hon. Friend the Member for Kilmarnock (Mr. Ross) asked the Joint Under-Secretary of State
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    whether he would say a word about the lowering of charges, which is specifically dealt with in the new Clause, and the hon. Gentleman, I think, was anxious to do so, but he understood, as I did, Mr. Deputy-Speaker, that you were ruling that he should not do anything of the kind.
    Mr. Deputy-Speaker: If those remarks are related to the fund, well and good.
    Mr. Ross: Surely the point is, Mr. Deputy-Speaker, that the Joint Under-Secretary of State is trying to justify himself in refusing this new Clause. One of the purposes of the fund is to lower charges. He has tried to show us that that is already catered for in the Bill. Is he not entitled to justify that?
    Mr. Deputy-Speaker: The new Clause says:
    " Each Board in Scotland shall set up a fund to which it wilt allocate a reasonable proportion of its profits…for the extension of rural electrification and the lowering of charges."
    Those are the purposes for which it is to be set up, and they include the lowering of charges, but how the charges should be lowered and the subject of the lowering of charges in itself cannot, I think, be discussed. The purpose is to lower charges, but the Clause is not concerned with the charges themselves.
    Mr. T. Fraser: The purpose of setting up the fund is to provide for the extension of rural electrification and for the lowering of charges, and it seems to me, Mr. Deputy-Speaker, that if we are not entitled, on Second Reading of the new Clause, to discuss rural electrification and the lowering of charges, the only thing we can discuss is the setting up of the fund, but then we shall be discussing the setting up of a fund in vacuo, for we shall not be discussing the purposes for which the fund must be used. It would seem to me that if we are not free to discuss the purpose for which the fund is to be set up, the new Clause might as well not have been called at all.
    Mr. Deputy-Speaker: We can discuss the setting up of the fund and its purpose to lower charges, but a general discussion of charges is outside the scope of the new Clause.
    Mr. Manuel: I understand that one area board has annual loan charges at 7 per cent. and that another has loan

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    charges at 6 per cent. What about lowering these charges? Should they not be lowered?
    Mr. Deputy-Speaker: The hon. Member may not speak a second time.
    Mr. Cyril Bence: I should not have intervened tonight had I not heard the most amazing discussion I ever have heard. I did not suppose, when I became a Member of Parliament, that I should witness such a performance as I have witnessed tonight. The Joint Under-Secretary of State gives reasons why he must oppose the proposals in the new Clause, and then it is pointed out by my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) that what we are proposing in the new Clause is already provided for in the Bill. The Joint-Under Secretary of State argues against the proposals and says they are unnecessary. Yet they are already provided for in the Bill. The Government apparently have not read the Bill, for they did not know that the Bill provides for what we are asking should be included in it, though it seems that so long as the Bill provides for what we propose, then what we propose is all right.
    Mr. N. Macpherson: The hon. Gentleman cannot have read the First Schedule, because it sets out what the purposes of the reserve fund are.
    Mr. Bence: My right hon. Friend, when he moved the new Clause, was being quite sincere when he said that he was quite willing to have the wording of the new Clause altered. He was being quite honest when he said he was not satisfied that the wording was altogether right. What he was concerned with was that the authorities should be in a position to create funds to be used for specific purposes, notably for rural electrification.
    The hon. and gallant Gentleman the Member for South Angus (Captain Duncan) pointed out, quite rightly—and I hope I shall keep in order in following him—that large-scale industry does not as a rule carry out capital development out of profits. I agree with him wholeheartedly. That is why I have always, in debates on taxation, disagreed with hon. and right hon. Members opposite that taxation should be lowered, because industrialists could not find the capital
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    for capital development, and that is why I have always said that that argument is "phoney." Now the hon. and gallant Gentleman has admitted it. Major capital development is not carried out from profits at all. It is carried out by floating new capital, and the hon. and gallant Gentleman wants the electricity authorities to do so, too. So does the Secretary of State. The right hon. Gentleman, it is worth noting, thinks that private industry should be permitted to save its profits to plough back. Earlier today we were discussing an investment allowance to encourage it to do so.
    Mr. Deputy-Speaker: The hon. Gentleman said that he hoped he would keep in order. I think that now he is going very far beyond the new Clause.
    Mr. Bence: I am thinking in terms of this fund. I like the idea of a business having a fund that it can apply to the promotion of any new invention or any new techniques that may be developed. I never did like the idea of borrowing a lot of money from bankers and insurance companies, because my parents always told me, "Never keep a monkey on the roof if you can help it." I think that to borrow money from bankers or insurance companies is to invite a monkey on the roof. I have an idea that our nationalised industries and State enterprises and local authorities have always had a lot of monkeys on the roof, and have had them for a very long time.
    When my right hon. Friend moved this new Clause he was anxious to enable the electricity authorities, by the provision of such a fund as this, to undertake capital developments without keeping any monkeys on the roof. The Joint Under-Secretary of State says, "It is all right for private industry to keep monkeys off the roof but not for the nationalised boards; they can borrow money: they can go to the City of London and get plenty of money at 7 per cent." Hon. Members opposite say that the public corporations, the electricity authorities, should not be allowed to make savings out of profits to create funds for capital development. Instead, they must borrow money under a State guarantee. Hon. Members opposite say, "They can pay 7 per cent. by State guarantee, so make them borrow, but if it is a private industry, let it make its profits while it can

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    and plough them back—and give it an incentive to do so." Why not give an incentive to the Scottish Electricity Boards to collect their resources and carry out capital development with them?
    This is a question of carrying out capital development by means of savings accrued from the enterprise rather than by means of the creation of new money. We hear much from hon. Members opposite about inflationary pressure and we all know that the greater part of that pressure arises from the creation of new money. If we are to undertake expensive capital development, surely it is better to undertake it by creating a fund out of current earnings instead of dissipating those earnings through paying dividends or paying 7 per cent. to the moneylenders. It is less inflationary to undertake it out of current charges, because in that way we shall withdraw purchasing power and use it for capital purposes, whereas if we borrow money the whole of that purchasing power, except for 7 per cent. interest, continues to circulate.
    My right hon. Friend's suggestion is eminently suitable for present circumstances. As far as possible, we should carry out capital development through a fund created out of current earnings. We do not want all the electricity expansion to be in the big cities before supply is extended to the more remote parts of the rural areas. My hon. Friend the Member for Central Ayrshire (Mr. Manuel) does not want to see increased capital development within the cities while the rural areas are starved of essential supplies.
    If electricity were carried to the rural areas at a charge within the capacity of agricultural workers and farmers, I do not think they would refuse it. They refuse it only because they know that the charges to be imposed are beyond their means. They cannot earn in their occupations enough to cover the cost of installation.
    I hope the Secretary of State will seriously consider the spirit behind the new Clause and will see whether he can find a form of words to ensure that a reserve fund will be built up and that priority in its use will be given the rural electrification.
    8.30 p.m.
    Mr. David J. Pryde: I cannot understand the stubborn attitude of the Joint Under-Secretary
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    of State, for no one knows better than he what this Clause is calculated to achieve. He knows perfectly well that the South-East Scotland Electricity Board had handed to it the most difficult electrification problem in Scotland, because the South-East of Scotland was an area into which private enterprise had made no attempt to bring electricity.
    Mr. Deputy-Speaker: We are back to the old point; this goes beyond the new Clause.
    Mr. Pryde: I wanted simply to show why we are so insistent on the creation of this fund. We have always had difficulty in getting electrification of the rural areas of the South-East of Scotland. I had to call on the assistance of the National Union of Mineworkers in order to bring pressure to bear—
    Mr. Deputy-Speaker: All this may he true, but it must be raised on another occasion.
    Mr. Pryde: We suggest that the creation of this fund will solve the Secretary of State's problem under the new set-up, because what we need in South-East Scotland is not new administration but cash. I trust the Secretary of State will accept our view.
    Mr. Woodburn: This Clause was moved in order to get some ideas from the Secretary of State on rural electrification. Instead of getting anything from the Secretary of State, we had a lot of impromptu assistance from back benchers opposite, who seemed to be able to explain all about this Clause. But they found that the Joint Under-Secretary and my hon. Friends made their arguments look quite foolish.
    The Joint Under-Secretary of State, far from refuting the necessity for a fund, pointed out that provision already exists for a fund, and my hon. Friends pointed out to the Joint Under-Secretary, for his edification, that the Bill does provide for a fund. In view of the assurance from the Under-Secretary that a fund is provided—
    Mr. Deputy-Speaker: I do not want to interrupt the right hon. Gentleman, but I understand that he moved this Clause. I take it that he is now speaking without the leave of the House.
    Mr. Woodburn: I was going to ask leave to withdraw it.
    Mr. Deputy-Speaker: The right hon. Gentleman cannot make a second speech without the leave of the House.
    Mr. Woodburn: With the leave of the House, I should like to say that the Joint Under-Secretary gave us his assurance, and I think that on the whole we are satisfied, that provision exists in the existing Acts and in this Bill for the provision of a fund, even though some of his hon. Friends object to a fund, and, with this assurance, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    Mr. T. Fraser: On a point of order, Mr. Deputy-Speaker. I think that you ruled that my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) could not speak a second time without the leave of the House. I think I am not wrong in submitting that any hon. Member even a back bencher, who moves a Motion on a new Clause is entitled to reply to the debate.
    Mr. Deputy-Speaker: I believe that the position is that only the mover of a substantive Motion has the right to reply.
    Mr. Woodburn: Is a new Clause not a substantive Motion?
    Mr. Deputy-Speaker: No, I am afraid not.

    Clauses 4 and 5
    The Secretary of State for Scotland (Mr. James Stuart): I beg to move, in page 3, line 14, to leave out Clauses 4 and 5.
    Considerable discussion took place on this Clause during the Committee stage on 12th May, when a number of hon. Members expressed doubt about the wisdom of setting up these two executives. It was feared that in practice we should have three bodies dealing with electricity generation and supply in Southern Scotland, and hon. Members asked also about the extent to which it was proposed to delegate the functions of the Board to these executives.
    At that time, my hon. Friend the Joint Under-Secretary and I endeavoured to reply to these points, and we said that we did not wish to impair the overall responsibility of the board. We pointed out
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    that the Bill expressly provides that the board shall not delegate to the executives functions relating to general financial control or the control of charges. What we thought at that time was that there was something to be said for having two subordinate bodies, one in the east and one in the west, who could, under the general direction of the board, keep the needs of these areas under close review and exercise oversight over local administration.
    Since then, and in view of what was said during the Committee stage and also during the Second Reading of the Bill on 3rd February—especially by my hon. Friend the Member for Dumfries (Mr. N. Macpherson)—I have had further discussions with persons widely experienced in electricity organisation, and, as a result, while I attach no less importance than before to having an administration which would take full account of local needs, the Government are prepared to leave it to the board to advise on the structure which will ensure this. In order to achieve this, I am moving to leave out these two Clauses.
    The result of this, if this Amendment is accepted by the House, as I hope it will be, will be to leave the board free—like the North of Scotland Board and English area boards to which the hon. Member for Cleveland (Mr. Palmer) drew attention during the Committee stage on 12th May, as reported in the OFFICIAL REPORT, column 1354, and further stressed in an interruption reported in column 1358—to consider the best arrangements for keeping in touch with the needs of all parts of their area and to review and modify their organisation from time to time in the light of experience, without the need for formal approval by the Secretary of State. I think that this is the -best course, and I hope that it will be agreeable to hon. Members on both sides.
    I admit that I have to some extent changed my attitude as regards this proposition. That only proves that we have listened to the arguments that were advanced in Committee and have paid attention to them. We have gone into this matter with considerable trouble, and I hope that the House will accept the Amendment and realise that the Government are doing their best to meet the arguments put forward by hon. Members.
    Mr. Woodburn: The Secretary of State might have saved himself a speech by simply saying that he regretted that when this discussion took place in Committee he had not accepted the commonsense put forward by the Committee in regard to the deletion of Clauses 4 and 5. When we put down our original Amendments to leave out the two Clauses, which the right hon. Gentleman resisted so stubbornly, no one on this side had the slightest idea that there would be such obstinate resistance to common sense. Two hours were taken up and much bad blood was occasioned quite unnecessarily in that debate.
    When an Amendment of that kind is put down, the Secretary of State and his advisers have a complete opportunity to consider it before coming to the Committee, Whether the fault is with the draftsmen, the officials or the right hon. Gentleman himself, there seems to be a complete reluctance to make any improvement in a Bill, no matter how well the common sense is argued.
    There were quite a number of my colleagues who argued, not for the sake of sabotaging the Bill, but who pressed on the right hon. Gentleman, since nobody knew what the executives were supposed to do, that the best thing was to leave the board to manage its own business in its own way and to set up executives where it thought it necessary to do so. Tonight, therefore, we can hardly object to the Secretary of State accepting the proposals contained in our original Amendments.
    We were not sure whether our Amendments would be called and, therefore, we had to table an Amendment that we thought had some chance of being called. The Secretary of State having put down our Amendments for us, they are automatically called and, therefore, we are in a position to discuss them. If anybody wants to know the arguments for the Amendment, I refer him to the speeches made by my hon. Friends and myself in Committee, where can be seen the perfect arguments for the Motion that the Secretary of State has now moved. Therefore, we enthusiastically support the moving of our own Amendments.
    Mr. Arthur Palmer: My right hon. Friend has spoken of the two hours that were taken up in discussing
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    Clauses 4 and 5 in Committee. Altogether, 22 columns of the OFFICIAL REPORT were taken up by the discussion of these extraordinary Clauses.
    We told the Secretary of State that to put into the Bill a hard and fast scheme of administration was the worst thing he could do. The suggestion that regional executives should be established by statute was obviously cumbersome. What is more, it was insulting to the men and women who, presumably, would be appointed to the board if the Bill eventually reaches the Statute Book.
    We begged the right hon. Gentleman and his Joint Under-Secretary for an explanation, but they remained stubborn and resistant to all the eloquence of my hon. Friends. The right hon. Gentleman has now recognised in the most practical and forthcoming fashion that we were right, and he cannot do better than we suggested by removing Clauses 4 and 5.
    There are two ways of looking at the Amendment. It is either another demonstration of the clumsy way in which the Measures of the present Administration are all too often put before the House, or, alternatively, it is that the right hon. Gentleman agrees that this is the triumph of the processes of Parliamentary democracy which shows that reason from this side of the House sometimes gets a receptive ear on the other side. I think at this late stage we should take the more kindly view and congratulate the right hon. Gentleman on the good sense he has shown in following the advice we have given.
    8.45 p.m.
    Mr. William Ross: We spent both time and temper over this in Committee, and it is rather strange that at this time of the day the Secretary of State for Scotland should tell us that what he is going to do is to leave the boards free as in England, when we remember what is going to happen in England. It was only on Friday last that it was announced that an inquiry would be set up to go into the whole question of the structure of the supply and administration of electricity in England. It may well be that that will result in the Secretary of State for Scotland being put in a strange position about electricity in Scotland.

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    The fact that the Secretary of State has changed his mind and was compelled to do so by the logic of the argument put by those of us on this side adequately demonstrates the fact that this whole thing springs more from dogma than from logic, and the Secretary of State would do more justice to the needs of the Scottish electricity supply if he did with the whole Bill what he has done in respect of these two Clauses, namely, change his mind and withdraw it.
    Amendment agreed to.
    8.48 p.m.
    Mr. Henderson Stewart: I beg to move, "That the Bill be now read the Third time."
    The main principles of the Bill are now well understood in the House and in the country. It will transfer to the Secretary of State for Scotland the functions now performed by the Minister of Fuel and Power in relation to electricity in Scotland.
    Mr. Ross: He has nothing else to do.
    Mr. Stewart: It will establish a small all-purpose Board in the South of Scotland, which will be responsible for both the generation and distribution of electricity in that part of the country. The North of Scotland Board will remain virtually untouched by the reorganisation, though in many respects its contacts will be with the other Scottish Board and not with B.E.A. It is clear that this Bill is not going to affect in the slightest way the broad workings of the grid. There will still be the interflow of power north and south just as there is now and as there has been. Indeed it may well be that there will be more inter-play in the days to come.
    Mr. C. R. Hobson: Does the hon. Gentleman say that the association between north and south will continue? This is a very important statement to those who oppose the Bill. And can he say in what part of the Bill those assurances are actually to be found, because I well remember the Secretary of State for Scotland resisting very intensely the suggestion put forward from this side of the House that there should be included in the Schedule those Sections of the 1926 Act which make it possible?
    Mr. Stewart: The hon. Member can feel perfectly satisfied that there are provisions in the Bill making it the duty of the one board to work in the closest cooperation with the other, which, of course, is the common-sense way of doing things. Nothing else would make any sense at all.
    We have had an amicable discussion except for that brief period when we were a little at cross-purposes. We are now more or less agreed on the details of the Bill, and such suggestions as have been made tonight and in the past—tor example, as regards rural electrification—have been directed for the most part to amplifying provisions already in the Bill, and to which, therefore, we shall give the closest attention. There is no difference in principle there.
    Mr. Pryde: I hope that the Joint Under-Secretary of State for Scotland is choosing his words carefully because, let me warn him, they are likely to be taken down and used in evidence against him.
    Mr. Stewart: I am not afraid of that, I am using my words with the greatest care, and I stand by those words. I am glad that we have been able to meet the House on the two main issues which for a time seemed to divide us. For example, as regards negotiating machinery, by the amended provisions of the Bill the Central Electricity Authority—as it will now be called—the North of Scotland Board and the South of Scotland Board will have a duty jointly to seek consultation with any organisation—that is to say, trade union—appearing to them to be appropriate, with a view to making joint agreements with that organisation. I am glad that we were able so amicably to come to a common view of that point.
    I am also glad that we were able to achieve accord on the administrative arrangements of the board. The right hon. Gentleman said that we might have come to wisdom earlier in the proceedings. It is always open to the Opposition to say that, but we listened to the debate, we took account of the doubts in the minds of hon. Members on both sides of the House, and my right hon. Friend took the view that it was proper to meet what appeared to be the general view of hon. Members, and therefore he withdrew Clauses 4 and 5.
    In appointing the Members of the new board, my right hon. Friend has already

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    given an assurance that he will bear in mind and act upon the same principles as he has done in the case of the North of Scotland Board. That being so, in the case of this board I am sure that they will set up the right administrative structure for their area.
    These changes have not affected the main purpose of the Bill which, as has been explained from the beginning, is to complete the devolution to Scottish authorities of control of the generation and supply of electricity in Scotland. It is a further step in the Government's policy of "Scottish control of Scottish affairs," and therefore I am glad to be able to move the Third Reading of this Bill with that purpose. It is an example of the kind of decentralisation that is possible within a nationalised industry, and by bringing both the generation and distribution of electricity into the same hands, closer attention can be paid to the needs of the South of Scotland area as a whole.
    In all these matters this Bill can quote the successful precedent of the North of Scotland scheme in which we were all concerned. We have sought to do no more than bring under the control of the Secretary of State the South of Scotland in the same way as the North of Scotland has been for several years. That being so, I have never been able to understand why any Scotsman should resist this Measure, On the contrary, I am glad that, as a result of our useful debates, it is most likely that this Measure, going so far to meet the broad sentiments of our people, will have the accord of this House.
    8.55 p.m.
    Mr. Woodburn: We have listened to a very interesting speech as a kind of forced justification of this Measure, but I am sure that everybody will agree that, after hearing it, nobody knows the reason for introducing the Bill. This is a piece of window-dressing and a gesture to Scottish nationalism, but even the people who believe in Scottish nationalism are not so unintelligent that they do not want to know the reason why something is done. To put a new label on a thing and say, "Under new management of the Secretary of State," will not convince anybody in Scotland that any great change has taken place. Nothing was done in this field without the approval of the Secretary of State during my term of office, and the French have the saying that the more a
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    thing changes the more it remains the same.
    The Joint Under-Secretary of State has not give us one instance of the practical result that will flow from the Bill. I propose to give the hon. Gentleman one which he does not seem to have noticed. It is that under the Bill the South of Scotland Electricity Board will assume the powers now possessed by the Hydro-Electric Board. In the exercise of those powers it will have to take into account a great many activities in connection with the development of the area in which the board works. Many social functions which were exercised by the Hydro-Electric Board are now attributable to the South of Scotland Electricity Board.
    When, as I think he did, the Secretary of State agreed that these powers should be given to the South of Scotland Electricity Board he must have had some purpose in mind, but up to now we have had nothing from the Secretary of State to show the great imaginative purpose of the Bill and the great revolution in the supply of electricity in Scotland which is to result from his dynamic presence as head of the board. The Secretary of State seems so modest that we have not been told anything about it. After all, Scotland wants to be inspired by the Bill and have some of the inspiration that moved the right hon. Gentleman to be so passionate in favour of this new administration.
    One of the criticisms that I have heard is that the Secretary of State took no technical or other expert advice as to whether the organisation was working well or not in Scotland. I gather from what has been announced that the Minister of Fuel and Power in England has now appointed a Commission whose terms of reference are:
    "To inquire into the organisation and efficiency of the electricity supply industry in England and Wales in the light of its working under the Electricity Act, 1947, and to make recommendations."—[OFFICIAL REPORT, 9th July, 1954; Vol. 529, c. 2516.]
    I suggested on Second Reading that if the Secretary of State was going to make changes it would have been sensible to have some body to inquire into the question of whether the existing organisation was working well and what changes were desirable. When we on this side of the House were in office we took into account in all our activities the reports of expert committees.

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    It is obvious that this Bill was introduced simply because of some foolish pledges that were made, without consideration at all, at the General Election, that the party opposite would reorganise and give devolution in the electricity and gas industries and other things. At that time hon. and right hon. Members opposite did not know that Scotland had home rule in the gas industry. They knew so little about these matters that they made many foolish statements. The Bill is one of the results of those statements. This country will be willing to consider practical changes based on commonsense, but no one will suggest that the destruction of road transport and the mere sticking of a new label on Scottish electricity will make any great change in the progress of Scotland.
    As I said on Committee stage, I am satisfied that under this Bill at first Scotland may be able to have cheaper electricity than England and Wales, because we are working with a great many old stations producing cheaply and have a certain amount of hydro-electric power. Between the two we can have a certain amount of cheap electricity, but, as the stations have to be replaced by more expensive modern stations, the position may change.
    So far as we see in the framing of this Bill, the Secretary of State has not made the slightest inquiry into that question. He has not told us anything about the effect of electricity on the future, how it is to meet Scotland's problems and whether we shall be better off or worse off as a result. I hope that in his final speech he will illumine this question by the researches he has made of what will be the result for Scotland following this Bill.
    Under the Bill, Scotland will be in an extremely interesting position. The Secretary of State will be responsible for a great many interesting experimental developments in production of electrical power. Already he is responsible for the production of power by water, coal and steam stations and, under the Bill, he will be responsible for the production by the use of peat. The constituency of the hon. Member for Caithness and Sutherland (Sir D. Robertson) will be the source of a great new power, atomic energy. That
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    is not under the Secretary of State, but under the Ministry of Fuel and Power.
    Mr. Gerald Nabarro: I am sure the right hon. Member would not wish to mislead the House. The atomic energy plants in the North of Scotland have nothing to do with the Ministry of Fuel and Power. They are controlled by the Atomic Energy Authority, Statutory responsibility for which rests with the Lord President of the Council, and the Minister who answers in this House is the Minister of Works.
    Mr. Woodburn: I quite agree with the hon. Member and apologise, but, when electricity is produced by atomic energy, I understand that it will pass under the control of the Minister of Fuel and Power.
    Mr. Nabarro: The electricity produced by nuclear processes will be sold to the North of Scotland Board or the South of Scotland Board and then used through the grid for standard purposes.
    Mr. Woodburn: I thank the hon. Member. In any case, the atomic energy production will not be under the Secretary of State but under the Authority. Production of electricity by wind power will be under the Secretary of State. All these very interesting experimental methods of producing electricity will be the concern of the Secretary of State, and I wish to ask how, under this Bill, he will co-ordinate them and co-ordinate production by atomic energy. If that is to be done under the grid, the position is quite clear—
    Mr. Emrys Hughes: Is my right hon. Friend aware that the Government resisted an Amendment giving power for an advisory council on atomic energy in Scotland?
    Mr. Deputy-Speaker: That does not arise under this Bill.
    Mr. Woodburn: We gather that this Bill gives power to extend rural electrification. It was not possible to discuss that in the debate on new Clauses. I hope the right hon. Gentleman will make reference to that in his reply. Although hon. Members opposite do not seem interested in rural electrification tonight, I think they will be in favour of it when they return to their constituencies. The

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    right hon. Gentleman may give us an idea of what is to be the future of these new developments. A fund can be set up for the development of the purposes of the board.
    Is there contemplation of a long term plan for Scotland in regard to electricity? The hon. Member for Kidderminster (Mr. Nabarro) takes a great interest in the possible shortage of coal in 10 to 15 years' time. Has that been contemplated when framing this Bill? In his new capacity as leader for electricity in Scotland, has the Secretary of State made plans for the future of Scotland in regard to electricity production by these various methods?
    Is the right hon. Gentleman sure that he has in his power under this Bill the capacity to supply the growing industry of Scotland with the necessary electricity to keep the economic life of Scotland flourishing and well? Will he have to import electricity? What, under this Bill, is to be the future of the super-grid? Is that to be developed by stations in these regions or used to import from the coal areas of the North of England? What schemes has the Secretary of State, as the great new designer and planner of electric power in Scotland, to tell us about in regard to the future of Scottish industry and power?
    The House is interested, and this is not a party question at all. It is a question of great importance to Scotland as to what will happen to its interests. I think that all of us on this side of the House have mixed feelings about the Bill. All of us are in favour of the maximum administration of Scottish affairs within Scotland, provided that it will not injure the economic life of Scotland. In many cases a break with England and trying to establish artificial frontiers at the border will bring great economic disadvantages to Scotland.
    Has the Secretary of State satisfied himself that the creation of this break will not be, in the future, to the economic disadvantage of Scotland? Perhaps he will give us some information about that because while it may be all right to wave the flag no one wants to wave a flag over an economic desert. We want the flag to be flying above a prosperous people, and we are entitled to ask the right hon. Gentleman for information about the economic prosperity of
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    Scotland and the possibilities that arise under the Bill, If the right hon. Gentleman will tell us some of these things, he may provide a justification for the Bill.
    As I say, some of my hon. Friends have mixed feelings about this Bill. While we want the general administration of Scotland to be done locally as far as possible, which is common sense, we do not want that to be done foolishly. During the General Election, the Conservative Party made foolish promises. When I was Secretary of State, I asked many of the bodies concerned what more power they could use than they already had. All the bodies I asked said that there was no power that they could get which they had not already got. I could not find people among those who were responsible for excellent administration in these matters who would say that there was any power which they needed that they had not got. Therefore, while theoretically it might have been a great gesture to stick on a new label it seemed to me just humbug for me to have transferred apparent powers when the transfer of any real power was not possible.
    This is a practical matter, not a political one—what is practical and efficient, and what will lead to the best results, not what will lead to the best advertisement, which is a very temporary thing for any political party. We are not approaching this matter in a party spirit at all but on a common-sense basis that electricity is a practical proposition from an industrial point of view and should be administered in the most efficient way.
    I believe that there may be some advantage in what the Bill is doing in combining generation and distribution. It may be that the inquiry will produce similar results in England. That is a matter of opinion, and there are legitimate differences of opinion on both sides of the House. Like every other Bill, this Bill has good bits in it, and we welcome to some extent the gesture in relation to administration in Scotland, but we have never been quite satisfied that there has been any practical reason for the Bill. We think it may prove to be a disadvantage in future, and we wait for the Secretary of State, even at this late hour, to give us some justification for bringing forward this Bill and breaking up the general electricity organisation of this country.
    9.10 p.m.
    Major W. J. Anstruther-Gray: I find myself agreeing with much of what the right hon. Gentleman the Member for East Stirling-shire (Mr. Woodburn) said. However, I thought that in his general approach he was unduly at pains to pour cold water on the Bill. My own attitude towards it is a good deal more optimistic. I intend to support the Third Reading for the same reason as I supported the Second Reading—because I see grounds to hope that, as a result of the Bill, we shall get more electrification, particularly in the rural areas. As my constituency includes some hill areas where electrification is very much needed, I am obviously only too anxious to support anything that will help in that direction.
    I want to ask the Secretary of State whether he can give me some assurances as to how this will come about. I appreciate that I shall no longer be chased off to somebody in England, to the Minister of Fuel and Power, when I am putting a case for electrification in Scotland. I shall have access to the Secretary of State for Scotland, who is at the same time the Minister for agriculture in Scotland. Therefore, if I am basing a case upon the needs of agriculture, it seems to me that I can be confident of receiving more sympathetic treatment and a more sympathetic hearing from the Secretary of State than I should from a Minister not concerned with agriculture.
    I should like an assurance from my right hon. Friend as to how direct his contact with the Scottish Board will be. If I put to my right hon. Friend a scheme which I have in mind at Westruther, where there are 35 premises in the village, 15 farms, 57 farm cottages, two mansion houses and three small cottages all in dire need of electricity—the case has been put time and again but always with disappointment—I want to feel confident that under the Bill my right hon. Friend has power to take action.
    That brings me to the next point, one of capital expenditure. The answer which those of us who pressed for further rural electrification in the past always came up against was that greater allocation of capital expenditure for rural development was required. I want to cite to my right hon. Friend the case of a farm near Coldstream. The reason electrification was not granted was that
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    "…in the present financial year we are dealing with applications made during 1945 and with the capital at our disposal we are not able to deal with any application more recent than that."
    Will my right hon. Friend find himself with greater powers under the Bill for authorising capital expenditure? When listening to the debate on the Gas and Electricity `Borrowing Powers) Bill on Friday, I wondered where Scotland came in. An increase in borrowing powers to the extent of £700 million for electrical development was authorised. I have no doubt whatever that, if so large an increase is to be authorised for England and Wales. Scotland must come in somewhere. I gather that Scotland does not come in under that Bill, so I am asking my right hon. Friend for an assurance that we are going to receive an extra capital sum for electrification in Scotland. I also ask him for an assurance that he will see to it that a proper proportion of that extra sum is devoted to the rural areas for the benefit of agriculture and the farming community.
    9.15 p.m.
    Miss Herbison: The Joint Under-Secretary of State for Scotland made a very short Third Reading speech, and as he spoke I thought what an optimistic fellow we had here; indeed, much more optimistic than Mr. Micawber ever was. He said that he felt that the main principles of this Bill were now accepted, and he went on to say that we were more or less agreed on the details of the Bill. Of course, that is not the case. My right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) has pointed out many details on which we are still in doubt. Indeed, many of us are very much in doubt about the nature of the Bill and what the Government hope it will do for Scotland.
    The hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray) said that he supported the Bill, and then proceeded to put to the Joint Under-Secretary some very important questions which showed indeed that, although he said he supported the Bill with confidence, he is a very simple fellow indeed, for I hope to show, when I come to the question of capital investment, about which the hon. and gallant Gentleman asked questions concerning the supply of electricity to particular

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    farms and areas, that the Secretary of State has no greater authority than he ever had before.
    Major Anstruther-Gray: I am in no doubt whatever that this Bill will do good. My only doubt is how much good it will do.
    Miss Herbison: The hon. and gallant Gentleman now says that he is in no doubt that the Bill will do good, but that what he is not very sure about is the extent of that good. Yet the questions which he has asked concerning his own rural area, which is similar to an area in my own constituency, are the ver), questions that are not answered in this Bill and which have never been answered by any Minister who has taken part in the debates.
    During the Second Reading debate, the Secretary of State for Scotland said:
    "It will certainly provide a closer contact between the new board, or the supplier of electricity, and the people of Scotland, who are the consumers."—[OFFICIAL REPORT, 3rd February, 1954; Vol. 523, c. 375]
    What balderdash there is in that statement. Again, we have never had one sentence either from the Secretary of State or the Joint Under-Secretary in this debate to show us how there will be any closer contact between the Scottish people and the supply of electricity.
    I want to ask the Secretary of State a question on this. Does this mean that the Scottish people, the consumers of electricity—Mrs. Brown, or Mrs. Smith, or Mrs. Mack, or the industrialists—[Interruption.]—or Mrs. Stewart, whether it is spelt Stewart or Stuart, will have to be queueing up at St. Andrew's House to complain that electricity is not being supplied as it should be in their homes? Is that what the Secretary of State means by that statement? If it is not—
    Mr. Hobson: Will my hon. Friend say whether Mrs. Stewart will be getting electricity from Carlisle or Newcastle? Can she give us a guarantee that it will not be so?
    Miss Herbison: My job in this debate is not to give guarantees about anything. I am trying to get guarantees from the Government. A guarantee from this side is not worth anything in this Bill so long as we are in opposition. We are dealing with the Bill and with the statements of the Secretary of State. I want the Secre
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    tary of State to answer my question: Where in the Bill are the provisions for closer liaison than we have at the present time between the ordinary Scottish people and the supplier of electricity? Is this just another bit of window dressing? Does it mean that Mrs. Stewart—spell it either way—or Mrs. Mack will still go to the consumers' councils that we already have? The Secretary of State, having made that statement as an important contribution to the Second Reading debate, ought, at this late stage, to give us a definite reply.
    Listening to the hon. and gallant Member for Berwick and East Lothian both today and on the Second Reading, and to other back benchers on the Government side, one feels that, as a result of the Bill, the Secretary of State will have a marvellous fairy wand, All he will have to do is to wave this fairy wand and huee generating stations will leap up all over Scotland. In their speeches, they have been trying to lead the Scottish people to believe that the Bill will provide much more electricity much more quickly to our Scottish people. Neither the Secretary of State nor the Joint Under-Secretary has made those statements. I hope that the Secretary of State will be quite specific in his answers to his own back benchers and will tell them clearly that there is no provision in the Bill to give a single extra unit of electricity to the Scottish people, or to give them electricity any more quickly or cheaply.
    I ask the Secretary of State also to reply not only to this side but to his own back benchers, and say whether, before he produced the Bill, he had any evidence that the British Electricity Authority had at any time hindered any development in Scotland. It is important that we and the Scottish people should know the answer. All that I hear from the Government side is praise for the British Electricity Authority. If the Bill is necessary, hon. Members must have some reason for criticising the British Electricity Authority for hindering proposed developments in Scotland, but no such reason has been given so far.
    Another point is important to our Scottish people. The Secretary of State and the Tories have been trying to tell them that the Bill gives autonomy to Scotland in the supply and generation of

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    electricity. That is nonsense. It is not only just nonsense but completely dishonest of the Government to suggest that there is a vestige of autonomy given to Scotland under the Bill. [Interruption.] If the hon. Member for Edinburgh, South (Sir W. Darling) has an interruption to make, I wish he would get up and make it.
    Sir William Darling: I was only reminding the hon. Lady that we had local autonomy in Scotland for electricity, and that it was the Government which she supported which took that autonomy away from Edinburgh, Glasgow, and other cities.
    Miss Herbison: I do not object to that; what I object to Ls the fact that hon. Members opposite say that the Bill gives back power to local authorities to generate and distribute electricity. It does nothing of the sort. It is merely a change of wording, or heading. as my right hon. Friend said.
    Will the Secretary of State be good enough to tell us whether the South of Scotland Electricity Board is going to be free to develop capital expenditure as it wishes? That is what the hon. and gallant Member for Berwick and East Lothian wanted to know, but I think we already know the answer. During the Second Reading debate the Joint Under-Secretary of State said:
    "The hon. Member for Central Ayrshire (Mr. Manuel) was worried about the limit of £75 million. This is arrived at by taking first the schemes to which the B.E.A. is already committed in the south of Scotland. and secondly, the schemes that are planned for the future.—[OFFICIAL REPORT, 3rd February, 1954; Vol. 523, c. 488.]
    The answer to hon. Members opposite who believe that the Bill will mean more capital expenditure and capital development plans is that almost the whole of the £75 million is going to be spent on projects which have already been decided, which means that there will be no change in the amount of development that is to take place.
    Scottish people have a right to know that the Bill gives no autonomy to the Secretary of State for Scotland. He will be in the same position as was the Minister of Fuel and Power. If a scheme were put forward by a Scottish electricity board and the Minister of Fuel and Power supported it, he had to make a case to the
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    Treasury. That is exactly what the Secretary of State has to do. Even when the Bill becomes an Act, the power will reside in the same place as it does now—in the Treasury.
    Although the area which I represent is not completely rural, I know that much still needs to be done in the was of rural electrification. It is a very expensive job. It would have been much easier to obtain more rural electrification if we had maintained the existing set-up and—
    Sir W. Darling: Local authorities.
    Miss Herbison: Local authorities had the chance to do something for many, many years, but they failed to electrify these areas. With the best will in the world, they found it impossible to do this job. It is not charity for one great industry, covering the whole of Britain from Land's End to John o'Groats, to help the rural areas, whether they be in Scotland or Wales. It is not charity to expect it to pool its resources and to help. That is what I hoped would happen when electricity was nationalised. This step which the Government are taking will make it impossible. We in Scotland are able in other ways to help our friends in England and Wales. This help is a two-way traffic, for Scotland and Wales can help England when need arises and England can help Scotland and Wales when need arises, and, the word "charity" ought not to be brought into this discussion.
    Will the Bill help my people in North Lanarkshire? Will it help all our Scottish people? It is with those questions in mind that I have examined the Bill. I have no hesitation in saying that, for some of the reasons I have given, the Bill even now as amended, will not help the Scottish people in their desire, first, to have a more stable economy and, secondly, to have the better standard of living that a more stable economy ensures.
    I criticise the Bill first because it does not give the Scottish people greater control over their electricity but is rather an attempt to hoodwink them into thinking that it does. I hope that this debate will make it clear that there is not greater autonomy. I criticise the Bill on the second score that it does nothing to help the economy of Scotland and to help my people to attain a better standard of

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    living. My third criticism of the Bill is, from my point of view, as the representative of many thousands of miners, most important of all. I am glad that the Parliamentary Secretary to the Ministry of Fuel and Power is in his place now that I come to this criticism. The Secretary of State, on Second Reading, said:
    "This is a Bill to make the Secretary of State the Minister responsible for electricity matters in Scotland and to set up in Scotland a new board answerable to him for the generation of electricity in the South of Scotland in the same way as the Hydro-Electric Board is responsible in the North."—[OFFICIAL REPORT. 3rd February, 1954; Vol. 523, c. 369.]
    I have attempted to show that those words were mere eyewash, but the Minister of Fuel and Power and the Parliamentary Secretary know that there is a committee, called the Reorganisation Committee, of the British Electricity Authority that is in continual session, I understand. Did that committee recommend to either the Minister of Fuel and Power or to the Secretary of State the measures proposed by this Bill?
    That is a question which the Secretary of State ought to answer tonight. The question was put to the Joint Under-Secretary of State and he tried to hide behind the fact that it is a committee of officials of the various boards, and that its work is just to advise the British Electricity Authority. What nonsense for the Joint Under-Secretary of State to hide behind that sort of statement. Of course, it is quite true that it is a committee of officials, but if this were as important a Measure as the Secretary of State would have the people of Scotland think it is he ought to have had upon it the advice of a committee that spends all its time dealing with the problems of the reorganisation of electricity. The Secretary of State must tell us whether this Reorganisation Committee made any suggestion to him on these lines.
    Throughout the debate not one reason has been adduced by either Front Bench or back bench speakers opposite to show that this new arrangement for Scotland is being introduced for any technical or economic reasons. There has been no such reason given, no suggestion of cheaper electricity or faster development of electricity supplies—no reason whatever why this proposed reorganisation should be brought about.
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    In the past, the South-West and South-East Electricity Boards in Scotland were under the Minister of Fuel and Power. I have no hesitation, as a Scottish Member, in saying that I still want those boards to be under the Minister of Fuel and Power and not to be under the Secretary of State for Scotland. I will tell the House why. Coal is a very dearly-won raw material, and the winning of it means broken and wasted bodies. I see them every day in my own communities. It is because I feel that this commodity, used so much in electricity, is such a dearly-won commodity; it is because I see those men with scarcely a breath in their bodies, some of them going about in their wheel-chairs as a result of having won this coal in the past—it is because of these things that I do not want a single ounce of coal to be wasted. That is why I am so completely opposed to the decision to join these boards into one board and to place it under the Secretary of State for Scotland and take it away from the Minister of Fuel and Power.
    When we nationalised coal, electricity and gas, I hoped that that would eventually lead to the greatest possible co-ordination of these three industries—a co-ordination which is possible if they are under one Minister. Even then it is no easy job, but how much more difficult, indeed perhaps how impossible, it will be to bring about that close co-ordination, and to make sure that every ton of coal produced is used in the best possible way, if we have this new arrangement. Under the new set-up, such co-ordination will be almost impossible.
    I had hoped that the Minister of Fuel and Power had some plans already in being for this close co-ordination and that he realised from the Ridley Report the importance of using our coal to the best advantage. Electricity is one of the biggest consumers of coal in the country. I understand that it uses 35 million tons a year at present—I am told that it is 36 million tons, so I am not far out—and I believe that in 16 years it will be using 63 million tons.
    Although in the earlier part of my speech I have given reasons why I oppose the Bill, the main reason is that I realise that the reorganisation and co-ordination of these three important industries can best be carried out if they are under one Ministry. It is almost impossible for it

    155
    to be carried out when this part of the industry is hived off, giving no real power to the Secretary of State but being hived off for political window-dressing, irrespective of whether it will benefit our nation and our people.
    9.40 p.m.
    Mr. Nabarro: I rise to congratulate my right hon. Friend on bringing this interesting Measure to its Third Reading, having successfully piloted it through the various stages which have lasted since 3rd February when the Bill had its Second Reading.
    From a political point of view, this Measure honours an election undertaking which—I beg to differ from the right hon. Gentleman the Member for East Stirling-shire (Mr. Woodburn)—was not a foolish pledge, as he called it. I hope to be able to stress once again, in the course of a short speech, that there are very sound economic and technical reasons why the amalgation of the boards in the Lowland areas of Scotland should have been carried through. First, I should like to say that in the 1950 election the Unionist Party in Scotland was quite unequivocal in what it wished to do in regard to electricity generation and distribution. [An HON. MEMBER: "Gas and coal."] I will talk about that another time. I am now talking about electricity. The election manifesto stated:
    "The creation of a single all-purpose authority."
    In fact, instead of creating just a single authority it does retain the North of Scotland Hydro-Electric Board, in accordance with the provisions of the 1943 Act, and in addition creates a single board for the Lowland or Southern areas of Scotland. I was impressed when the Joint Under-Secretary of State for Scotland suggested on an earlier stage of this Bill that it might be a progressive step on the "Right Road" to create ultimately a single authority all of which would have many technical and economic advantages.
    Before this Bill came to the House there were in the South of Scotland four organisations—the South-Eastern Scotland area of the British Electricity Authority, the South-Western area of the 'British Electricity Authority, the South-Eastern Area Board and the South-Western Area Board—to cover less than
    156
    four million people, and those four organisations were concerned with generation and distribution. It is interesting to observe that those four organisations put together in the shape of the South of Scotland Board proposed under this Bill are in terms of population, in terms of electricity generated and in terms of electricity sold, less than the average of one area board in England, which was considered by the party opposite to be an economic unit either for generation or for distribution in the terms of the 1947 Act.
    Mr. Manuel: What about Worcestershire?
    Mr. Nabarro: The problems of Worcestershire are not so parochial in character that they have no similarity anywhere else in the United Kingdom. In fact, what my hon. Friend behind me had to say about the problems of rural electrification in South-Eastern Scotland are exactly the same problems as we have in Worcestershire, Herefordshire, Gloucestershire, and other more remote rural areas of England.
    It is undoubtedly the fact that, for purposes of administration and technical progress, an administrative unit covering four million people and covering installed capacity for electricity purposes of about 1,100 megawatts—as was the case when this Bill was brought to this House—as the combination of two lowland boards is the most convenient and most efficient, both for generation and for distribution purposes.
    It was suggested by the hon. Member for Lanarkshire, North (Miss Herbison) that the proposals in this Bill are going to waste coal. If they were going to waste coal, I would have had a great deal to say about them at an earlier stage. In fact, by close integration of water, steam and other forms of generation the probability is that coal will be saved and not wasted.
    The unique part about Scotland's electricity arrangements today is their diversity. Nowhere in the world is there a country which has such diversity of facilities for electricity generation as Scotland has today. She has thermal power stations based on coal, water power stations based on hydro-electricity, wind-power stations in the North of Scotland, power

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    stations based on peat supplies, she has an atomic power station in course of construction at Dunreay and numerous oil or diesel driven stations—six methods of generating electricity within one country that has just five millions of population. That diversity is not to be found anywhere else in the world.
    The point I make is that the lesser the number of authorities that control that diversity of operations, the more efficient should the operations become and the greater the economy in coal that is achieved. [Interruption.] I am not making the hon. Lady's case, because she said quite clearly that the provisions of the Bill would waste coal. I am saying that they will save coal.
    Miss Herbison: The hon. Member has not proved his contention at all. The important provision against which I spoke through the whole of my speech was the taking away of power from the Minister of Fuel and Power and giving it to the Secretary of State. That was my case, which is the type of case that the hon. Member is making when he says that he would prefer to see everything combined under one authority.
    Mr. Nabarro: Yes: but I am satisfied that by placing them under two authorities instead of under six organisations we are making progress towards the single multi-purpose authority.
    I wish to say a word about the question of capital investment, which has loomed largely during our deliberations upon the Bill, and the allegations which have been made this evening by hon. Members opposite that there may be insufficient capital moneys available to carry out the legitimate desires of Scotland's electricity expansion programme. Under Clause 12 (3), the maximum borrowing powers of the two electricity authorities in Scotland are, respectively, £200 million, as was previously fixed under earlier statute, for the North of Scotland Hydro-Electric Board, and £75 million for the Lowland Board. It is difficult to ascertain how much of that £75 million authorised as the maximum of borrowing powers will have already been expended by the time the Bill came before us this evening for Third Reading.
    As far as I am able to tell, approximately £19 million, correct to the nearest million pounds, was expended in respect
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    of the South-West Scotland Board to 31st March, 1953, and £9 million only in respect of the South-East Scotland Electricity Board, a total of £28 million between the two boards, which are merged together to become the South of Scotland Board. I should like my right hon. Friend when he replies to confirm that the total sum borrowed so far by the two area boards is £28 million. If so, it means that £47 million is still available within the borrowing powers under the Clause to which I have referred, before the maximum and upper limit is reached.
    Mr. Manuel: The hon. Member says that the difference between £28 and £75 million is available to the board. It is only of value to Scotland if we know when the Treasury will authorise it.
    Mr. Nabarro: I looked carefully last Friday to see whether the hon. Member would be present during our debate to give me the benefit of his advice. Fortunately, he was not here. Had he been present, he would quickly have learnt that although borrowing powers and their upper limit are settled by this House—and what we did last Friday was to pass the Second Reading of a Bill to increase the borrowing powers for electricity and gas in England and Wales—once those borrowing powers are settled the nearly autonomous nationalised undertakings may then go to the money market as they deem necessary, for their money.
    In fact, what will happen under this Bill is that £28 million out of the £75 million will have already been spent by the two lowland area boards. Out of the £48 million which remains, we should be able to cover all the capital development requirements for electricity in the South of Scotland for quite a long period ahead, and the actual process of borrowing that money will, of course, be the customary resort to the money market and public issues. I can see no justification whatever for the allegations of hon. Members opposite that the purpose and effect of this Bill will be to restrict sums of money available to my right hon. Friend for the maximum electricity development both in the Highlands and in the Lowlands.
    In conclusion, I regard this measure as an important pointer to what should occur with other branches of the

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    nationalised industries in securing the maximum possible devolution. In the case of Scotland it has a special interest in that the devolutionary movement restores to Edinburgh and to my right hon. Friend full autonomy in electricity generation and distribution in Scotland. In fact, there is only one remaining measure of restriction, which is of a financial character which might be placed on my right hon. Friend, and that measure is applicable to every nationalised industry which raises its money, namely, the Treasury guarantee.
    Other than that Treasury guarantee and the sanction for it, there will be complete autonomy in Scotland and the statements made by the hon. Lady were, therefore, completely misconceived and quite ill-informed. I hope this Bill will have an unopposed Third Reading and that it will swiftly pass through another place, for it will demonstrate to the whole of the United Kingdom that it is just one more unionist election promise which has been faithfully fulfilled.
    9.52 p.m.
    Mr. Palmer: The extraordinary feature about this Bill is the amount of time it has taken. It may have been forgotten by the House that we gave a Second Reading to the Bill in the far-off days of February. It may be that it is so feeble that it has taken nearly six months to crawl from Second Reading to Third Reading. In Committee we on this side laboured very hard in the attempt to put the crooked straight, and we did that in two notable instances. We have thrown out those futile Clauses, 4 and 5, which took up space and added printer's ink to paper without communicating, either good sense or direction to the industry; and we succeeded in amending the Schedule to the Bill in such a way as to preserve the important principle of United Kingdom negotiations for salaries, wages and conditions. [Interruption.] I would say to the hon. Member for Edinburgh that—
    Mr. Ross: Edinburgh. South. My hon. Friend must not include all the Members from Edinburgh with the hon. Member for Edinburgh, South (Sir W. Darling).
    Mr. Palmer: I do not wish to do any injustice to my hon. Friends on this side of the House. In answer to the hon.
    160
    Member for Edinburgh, South (Sir W. Darling), I should like to assure him that the Amendment on collective bargaining machinery was welcomed by the electricity workers of Scotland who did not wish to be divided from the rest of the United Kingdom in the matter of wage and salary negotiations. We did succeed in getting the right hon. Gentleman the Secretary of State to see sense on this point, and the trade unions are grateful that the change was made.
    However, there is always a limit to what even a conscientious Opposition, such as the present one, can do to improve a thoroughly bad Bill. In complete contradiction to the hon. Member for Kidderminster (Mr. Nabarro), I am as convinced as ever I was that to divide the responsibility for the administration of the grid and the super-grid between the British Electricity Authority and the new board is a mistake which will not bring any advantage to electricity supply administration in Scotland or to the consumers.
    We have had the argument that this is the only country in the world where generation and distribution are separated. The answer is simply that this is the only country in the world where geography and natural conditions enable the advantages of a closely-knit, inter-connected system on a nation-wide scale for the generation and bulk transmission to keep down operating costs.
    In any case, if this Bill is so sound from a technical point of view, why is it that the Government at no stage have been able to quote any impartial expert opinion in favour of the change? On the other hand, I have succeeded at varying stages in quoting impartial opinions outside this House against the change. At least the Government might have waited until the new committee of inquiry which they appointed, which we heard all about on Friday, and which is to report on the organisation of the B.E.A. and the electricity boards, had done its work.
    There are still outstanding many points of considerable obscurity. No one has explained if the surplus electricity from the North of Scotland hydro scheme, which is exported, will in future be absorbed entirely by the South of Scotland Board or whether the B.E.A. will take some of it from time to time. We have heard nothing about machinery to
    ***
    161
    be set up for the working together of the British Electricity Authority, the new South of Scotland Board and the North of Scotland Board. We have to remember that in future, unlike the 1947 Act, neither the chairman of the South of Scotland Board nor the chairman of the new authority will sit on the B.E.A. We have heard nothing at all about arrangements for joint United Kingdom electricity activities which of necessity must be carried on.
    As far as the staff of the industry are concerned, it is proposed now to merge in one organisation the two existing area boards and the two existing generating divisions. Will there be staff redundancy? I am sure the staff in the industry are still interested in that point. Is there any preliminary organising committee at work, such as was set up before the B.E.A. was established?
    It would be possible if the hour were not so late to speak at length on the faults of this Bill, but I will spare the House. In my view and in the view of my hon. Friends, this is a mistaken Measure in its basic conception but, should it reach the Statute Book, most of us would wish that those who have to carry out its provisions should succeed in what they have to do. This at least can be said, that the technical men, the administrators and the workpeople in the electricity supply industry of this country have a knack of making the best of legislation. However, here tonight we have a right and duty to say that they should not have been placed in the position where they have to make the best of legislation. I am as convinced as ever that this is a thoroughly had Bill and that it should be rejected.
    10.0 p.m.
    The Secretary of State for Scotland (Mr. James Stuart): The right hon. Member for East Stirlingshire (Mr. Woodburn) asked me several questions, as did other hon. Members, and I will do my best to answer them in a short time. I was asked the reasons for the introduction of this Bill. The whole scope of the Bill and the reasons which prompted us in introducing it will be found in the OFFICIAL REPORT of the debate on Second Reading, if anybody chooses to study it.
    162
    Briefly stated again—and it has been said already by my hon. Friend the Member for Kidderminster (Mr Nabarro)—we believe in the Bill because we believe in decentralisation. Our object in introducing the Bill and in achieving this measure of decentralisation was to obtain closer contact with the consumer, who never seems to be mentioned in these debates, and to see that his needs, which we in Scotland understand best, are attended to as far as possible. [An HON. MEMBER: "How?"] We propose to do that by having an organisation in Scotland, by taking these duties out of the hands of the British Electricity Authority and the Minister of Fuel and Power and having a committee of Scotsmen managing this concern in Scotland. That is the object and that is what we have stated in our policy. That is another reason for introducing and carrying through the Bill, and having promised to do so, it is better than we should carry out our promise.
    Mr. T. Fraser: Will not the right hon. Gentleman agree that the authority with whom the consumer has contact is the distributing authority and not necessarily the generating authority, and that under the existing law the consumer will have contact with the distributing authorities—the area boards—and that the contact will not be changed? Is the Secretary of State hoping that the consumer will not even know that there has been any change?
    Mr. Ross: Are we to take it from that nationalistic promise that all Englishmen who are presently employed in the generating side of electricity in Scotland will have to be sacked?
    Mr. Stuart: No, it does not mean that. The organisation operating in Scotland will look after the interests of Scotland and we shall get the best people that we can obtain to do the work. Anybody who did not obtain the best people possible to organise an industry would be very stupid. We undertook to do this work because we believed it to be in the best interests of industry in Scotland and of the consumer in Scotland whose interest we, at any rate, have at heart. The hon. Lady the Member for Lanarkshire, North (Miss Herbison) should read some of the writings of her hon. Friend the Member for Dundee, East (Mr. G. M. Thomson)

    163
    who said in the June issue of "Scotland":
    "…how to prevent the nationally owned industries becoming over-centralised will be one of the principal problems of political organisations during the years ahead…"
    This is one of the steps to prevent it from becoming over-centralised.
    Miss Herbison: I have no objection whatever and indeed agree fully with the statement which the right hon. Gentleman has just read from the writings of my hon. Friend the Member for Dundee, East. However, I am still waiting to hear—and the right hon. Gentleman has not answered the point in his previous statement—how this Measure will provide closer contact. The right hon. Gentleman has given us some platitudes but no answer at all.
    Mr. Stuart: I have not been allowed to proceed with my argument for very long, but it is perfectly clear that if one has one's organisation established in Scotland it is closer to one if one lives in Scotland than if the organisation is established elsewhere. If the hon. Lady the Member for Lanarkshire, North and the hon. Member for Dundee, East cannot settle their difficulties in this matter, they might invite the chairman of the North of Scotland Electricity Board to join in the discussion, because we all agree that that board works satisfactorily and is in the best interests of Scotland. We are trying to establish in the South of Scotland an organisation set up on exactly the same lines as that in the North of Scotland.
    Mr. Pryde: Does the right hon. Gentleman agree with the hon. Member for Kidderminster when he proposes the elimination of the North of Scotland Board?
    Mr. Stuart: I am not in agreement with my hon. Friend on that, but it is not possible to agree with everyone on everything. On general principles and important matters my hon. Friend does support this Bill.
    My hon. and gallant Friend the Member for Berwick and East Lothian (Major Anstruther-Gray) asked how direct my contact will be with the new board. The answer is that it will be direct and precisely the same as that with the North of Scotland Hydro-Electric Board. I know that contact and set-up both as a Private Member and as a Minister, and I
    164
    can assure my hon. and gallant Friend that it will work. I think that all hon. Members from the North of Scotland will agree that the set-up there has been a success.
    My hon. and gallant Friend and my hon. Friend the Member for Kidderminster asked about capital available for development. Clause 12 of the Bill gives the new board power to borrow £75 million for new development in generation and distribution. It does not cover any expenditure already incurred by the B.E.A. and the area boards, and I believe it to be sufficient to tide over development for the next four years. When the exhaustion of available capital is reached, of course it will be necessary to come to this House to get authority for further capital investment.
    The hon. Member for Cleveland (Mr. Palmer) mentioned methods of disposing of surplus electrical current which he said had not been referred to. There will be no change in the existing practice; it will proceed as at present.
    I assure the House that the object we had in mind in introducing this Bill and proceeding with it was very fully explained on Second Reading on 3rd February. I do not want to go into a lot of repetition. I do not think that at this time of day the House would wish me to do so.
    I must make it quite clear that I never said the B.E.A. had in any way hindered Scotland's development. My words on that subject will be found in column 370 of the OFFICIAL REPORT of the Second Reading debate. I have also stated quite clearly that we believe in this as being in the best interests of the consumer in Scotland. It is a workable set-up, as has been proved by the precedent of the North of Scotland Board, which has been a success. I am confident that this is a popular Measure in Scotland. Therefore I hope that the House will give it an unopposed Third Reading.
    Mr. T. Fraser: The right hon. Gentleman has failed to tell the House of any benefits which will come to Scotland as a result of passing this Bill. Before the Question is put, can he give us an assurance that the people of Scotland, if the Bill becomes law, will have the same kind of service as they got when the Minister of Fuel and Power was responsible in the South of Scotland?
    Mr. Stuart: I can not only assure the hon. Member of that, but we believe that they will get better service.
    Question put, and agreed to.
    Bill accordingly read the Third time, and passed.

  SUMMARY JURISDICTION (SCOTLAND) BILL [Lords]
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]
  10.10 p.m.
  The Chairman: This being a consolidation Bill, it might be for the convenience of the Committee if I put the first 77 Clauses together.
  Clauses 1 to 77 ordered to stand part of the Bill.

  SUMMARY JURISDICTION (SCOTLAND) BILL [Lords]

    Clause 78.—(REPEALS AND SAVINGS.)
    The Lord Advocate (Mr. J. L. Clyde): I beg to move, in page 38, line 37, at the end, to insert:
    (3) Nothing in this Act shall make it unlawful to detain an accused person in custody pending trial otherwise than in prison if such detention would have been lawful prior to the commencement of this Act.
    This is a consolidation Bill, and an error in the drafting of it, which I regret, was made. The purpose of the Amendment is to put that error right. The error consisted of the omission of a provision in one of the Acts that is being repealed. I hope that the Committee will accept the Amendment.
    Mr. Geoffrey Bing: I only wish to say how glad we on this side of the Committee are that such an error has been made, which gives us one of those rare opportunities to hear the Lord Advocate. We only hope that in
    166
    subsequent legislation there will be similar errors which will give us another similar pleasant opportunity.
    Amendment agreed to.
    Clause, as amended, ordered to stand part of the Bill.
    Clause 79 ordered to stand part of the Bill.
    Schedules agreed to.
    Bill reported, with an Amendment; as amended, considered; read the Third time, and passed, with an Amendment.

  ARMY AND AIR EXPENDITURE, 1952–53
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]
  I. Whereas it appears by the Army Appropriation Account for the year ended 31st day of March 1953, that the aggregate Expenditure on Army Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Army Services over the net Expenditure is £6,237,443 6s. 3d. viz.:—

  £

  s.

  d

  Total Surpluses

  8,282,978

  14

  2

  Total Deficits

  2,045,535

  7

  11

  Net Surplus

  £6,237,443

  6

  3

  And Whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:

  (1) the application of the realised surpluses on Vote 2, Subhead F and Vote 8 for Army Services to meet the net deficit of £625,167 11s. 3d. on Vote 11 that would otherwise have been met from issues out of the Consolidated Fund under the Armed Forces (Housing Loans) Act, 1949;

  (2) the application of so much of the remainder of the said total surpluses on certain Grants for Army Services as is necessary to make good the remainder of the said total deficits on other Grants for Army Services.

  Schedule

  No. of Vote

  Army Services, 1952–53 Votes

  DEFICITS

  SURPLUSES

  Excesses of actual over estimated gross Expenditure

  Deficiencies of actual as compared with estimated Receipts

  Surpluses of estimated over actual gross Expenditure

  Surpluses of actual as compared with estimated Receipts

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  1.

  Pay, &c., of the Army

  —

  —

  1,847,165

  1

  2

  613,437

  4

  5

  2.

  Reserve Forces, Territorial Army, Home Guard and Cadet Forces

  —

  342,920

  18

  2

  6,718

  2

  6

  3.

  War Office

  —

  —

  110,582

  6

  8

  6,349

  19

  8

  4.

  Civilians

  —

  —

  206,054

  3

  4

  66,507

  10

  9

  5.

  Movements

  —

  —

  475,746

  19

  8

  102,849

  3

  9

  6.

  Supplies, &c

  —

  —

  1,210,215

  16

  4

  485,656

  4

  9

  7.

  Stores

  —

  448,826

  4

  2

  1,035,035

  0

  10

  —

  8.

  Works, Buildings and Lands

  —

  468,398

  4

  3

  74,780

  11

  5

  9.

  Miscellaneous Effective Services

  —

  4

  4

  1249,546

  10

  11

  —_

  10.

  Non-effective Services

  —

  32,875

  4

  2

  311,148

  4

  9

  —

  11.

  Additional Married Quarters

  —

  1,295,034

  2

  1

  669,866

  10

  10

  —

  —

  Balances Irrecoverable and Claims Abandoned

  105,834

  3

  2

  —

  —

  —

  105,834

  3

  2

  1,939,701

  4

  9

  6,926,679

  16

  11

  1,356,298

  17

  3

  Total Deficits

  Total Surpluses

  £2,045,535 7s. 11d.

  £8,282,978 14s. 2d.

  Net Surplus £6,237,443 6s. 3d.

  Motion made, and Question proposed, "That the application of such sums be sanctioned."—[Mr. Boyd-Carpenter.]
  10.12 p.m.
  Mr. Geoffrey Bing: I think that a grave error of judgment has been committed by the Patronage Secretary. That probably accounts for his absence. His name is down as the mover of this Motion. I do not know how the Motion came to be moved in his absence, but no doubt one of his colleagues was persuaded to act in his place.
  The grave error of judgment was committed in this way. I do not wish to make any criticism of any previous debates that have taken place on this subject, which have been on a somewhat wide nature. It seems to me, looking at the precedents, that it might possibly be argued, probably the Chief Whip might take the same view—I do not know what view you will take, Sir Charles—whether we can discuss this only by way of excess Vote or by virement. It seems to me that it is a matter which should
  under any circumstances be considered by way of virement.
  I say that because, to put it in a mild way, there were revealed in the Report of the Comptroller and Auditor General three grave scandals, each one of which rivals that of Crichel Down.
  Colonel Alan Gomme-Duncan: I am sorry to interrupt the hon. and learned Gentleman, but he used an expression which I am afraid I do not understand. It was "by way of" something or other.
  Mr. Bing: It was "by way of virement." I believe I have used a good English pronunciation for the French word. It is the process by which the Treasury may exchange sums noted for one purpose for sums voted for another. Normally the House takes the view that that is a reasonable procedure and that the thing should go through on the nod, but it ought not to go through on the nod when the matter involves grave standards and a great expenditure of public money,

  169
  sufficient to pay a reasonable increase to the old-age pensioner, which has been squandered by complete failure on the part of the Ministers concerned.
  It is a most extraordinary thing, but I do not see on the Government Front Bench a Minister representing the War Office. There is a junior Minister, the Under-Secretary of State for Air, but there is no senior Minister. After all, Ministers are responsible for these matters. Meetings are continually being held upstairs to consider Crichel Down, but the money involved in that case is only about one-twentieth of the sums squandered in this case. I welcome the Under-Secretary of State for War who has now taken his place on the Government Front Bench.
  To turn to the three matters which, I think, necessitate the House considering this question by way of an Excess Vote, it is quite unfair, Sir Charles, but I should make this speech and that you should be in the position of saying that the Minister really cannot reply to it and cannot deal with the matters in the report of the Comptroller and Auditor General because it has been decided to deal with the matter in this way. Therefore, I want to make an appeal in absentia, as my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) would undoubtedly have done, to the Chief Whip that he might at least reconsider that this Motion should be withdrawn and that there should be introduced in the honest and straight way a Motion for an Excess Vote. In that case, the Minister need not try to cover these things up but could come here and give an honest explanation of why there has been this gross waste of public money.
  I take three examples from the Report of the Comptroller and Auditor General. I will not deal with them in detail; I merely want to make the case why this matter should be dealt with by way of an Excess Vote. In the first place, what we and the Minister are engaged in doing, among other things, is financing the armies of foreign governments. That may be all right in its way, but this House is at least entitled to have some account of how the money has been spent. Not since right hon. Gentlemen opposite came into power have they had the accounts audited. I want to call
  170
  attention to paragraph 22 of the Comptroller and Auditor General's Report on the Appropriation Account for Army Services. The Comptroller and Auditor General is officially employed by this House to carry out just this examination. The Report says:
  "Certified accounts of cash expenditure by the Government of Jordan for the years 1951–52 and 1952–53 have not yet been furnished to the War Office."
  Why not? No answer can be given. We cannot discuss the matter even on this Vote. It would be out of order for the Minister to try to offer any explanation.
  These are large sums of money. If one looks over the page to paragraph 16 one sees that this expenditure, if one takes into account the Foreign Office Grants and Services, amounts in one year to £7,500,000. Over two years, that is £15 million, quite enough to give the old-age pensioners about half of what they deserve. Yet this Government does not even bother to ask the Jordan Government to give an explanation, and the Minister himself puts it down in such a form that he cannot even reply, so that the House cannot even discuss what has happened to £15 million of the taxpayers' money. Surely, that is an argument for withdrawing this procedure and for treating this matter by way of an Excess Vote?
  May I now come to the second, and. in my view, equally serious scandal? The only reason why not so much has been heard about this is that it took place in Wales, and it was therefore very difficult to know the names. What happened was this. In his wisdom, the Secretary of State for Wan—if I may have both your attention, Sir Charles, and that of the Under-Secretary for War, because I am afraid that I might say something which was out of order, or that some observations might escape the Under-Secretary, so that he would not be able to make an effective reply to the debate—
  The Under-Secretary of State for War (Mr. J. R. Hutchison): I know exactly what the hon. Gentleman has in mind.
  Mr. Bing: In that case, I am surprised that he allowed the Motion to be put down in this way, instead of dealing with the matter by Excess Vote, in view of the deplorable scandal which took place in

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  Penrhos. What happened there, according to the Report of the Comptroller and Auditor General, was that the Secretary of State for War in his wisdom decided that there should be a camp there, that there were 118,000 acres available, and so £108,000 of public money was spent on that camp.
  What happened? There was a slight error; somebody had forgotten those noughts. Lord Randolph Churchill disappeared from the Treasury because he forgot the dots—the decimal points—but, of course, the Secretary of State for War not only does that. When he makes an error, he makes it not in decimal points, but in hundreds of thousands of pounds. The right hon. Gentleman thought that there was a large acreage available. If I might refer to what the Comptroller and Auditor General said, in order to show that this matter ought to be discussed in such a form that there should be some reply to it—
  Mr. Leslie Hale: If my hon. and learned Friend will allow me to correct him on an historical point, may I say that Lord Randolph did not forget the dots; he did not understand the dots. What he forgot was Goschen.
  Mr. Bing: Be that as it may, his lack of memory seems very small compared with the lack of comprehension on the part of the Secretary of State for War. What the Comptroller and Auditor General says in paragraph 28 of his Report is this:
  "In a letter to the War Department Land Agent later in November, 1951, the Provincial Land Commissioner of the Ministry referred to discussions which had taken place between representatives of the two departments in November, 1950. He stated that Army requirements for a camp in North Wales had then been put at 120 acres, and no indication had been given that training rights would be required over additional land; but for that omission the proposal to establish a camp at Penrhos would in November, 1950, have been opposed by the Ministry on the ground of interference with food production."
  This took place a long time ago, but, now that this has been revealed, there surely must be some investigation? Why is there this process of covering the whole thing up? Why are we not to have a proper way of dealing with this matter by means of Excess Vote, so that we can discuss in detail each of these cases? The responsibility may rest on my right hon.
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  Friends on this side of the Committee. Perhaps some civil servants should be better equipped to deal with this matter? Perhaps it is our responsibility that such an error occurred in the first place? Perhaps it is the responsibility of right hon. Gentlemen opposite? Whoever is responsible, it is the duty of the Committee to probe this matter and to establish that responsibility wherever it lies, on this side or the other. What is being done at the moment is to have a form of discussion chosen to cover up these things.
  If one looks back to the Resolution of 1879, one sees quite clearly what was in mind; it was some small adjustment. If one looks at the debate in 1947, exactly the same thing appears. It was never intended that this should be a large matter, on which there is an important issue of principle.
  Let me take the third of these cases, which is even more interesting, because it deals with a matter which I am certain hon. Gentlemen on the Government benches do not want discussed that is, the value of private enterprise. They will see that it is a somewhat serious matter. I know that they are interested in what is happening in the Canal Zone. They are always having meetings upstairs to decide what their attitude is to be. What they forget entirely and do not bother to discuss is how the troops in the Canal Zone are treated.
  The Report of the Comptroller and Auditor General shows that, with the connivance of Ministers, the troops are being charged twice as much as they ought to be charged for their food and vegetables. As a result of Egyptian action, what happened is set out in paragraph 31 of the Report. I should have thought that the Under-Secretary would have welcomed an opportunity of explaining this matter, but for some reason he, or the local Army authorities, saw fit to advise the Government in a certain way.
  In the negative, polite and restrained language of the Comptroller and Auditor General we can see what lies behind this. In those controlled and polite expressions, he says:
  "…but local Army authorities accepted advice that political difficulties ruled out direct purchase by the normal method of competitive tender."

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  What a pity that the Secretary of State for War has not an opportunity, because the Chief Whip has ruled him out of the opportunity, of explaining why political difficulties ruled out the acceptance of contracts by direct tender. What was the result? The Comptroller and Auditor General says:
  "A contract for a period of six months from February, 1952, was therefore entered into with the only British firm in the Middle-East considered to have the requisite buying organisation and other facilities necessary to ensure continuity and regularity of supplies."
  This is a very serious matter. On whose authority was this decision come to? I agree that we cannot debate it now, but that is the fault of the Government in choosing this method of putting the thing forward. They have said, "Here is the Comptroller and Auditor General's Report, with all these serious charges and the implications that lie behind them."
  Why did the Army decide in this way and come to this decision? It may have been an entirely innocent transaction, but we ought to have some form of procedure to enable the Under-Secretary of State to get up and defend the Egyptian Army authorities. Why does he put himself in a position to shelter behind the procedure of the House, and to say, "I am very sorry, Sir Charles, but you would rule me out of order if I attempted to justify the peculiar action which was taken."
  What will the ordinary soldier think of this transaction? What happened first of all was that the firm made a net profit of £33,281, according to the Comptroller and Auditor General. How was that profit arrived at? The firm was getting one-ninth of the money paid out to the British soldiers. Does the Under-Secretary think that that is one of the ways to get more people into the Forces? What a pity we cannot discuss it.
  Another method of recruiting would be to cut out the excessive profit of these contractors and to investigate how they came to be appointed. Of course, the Patronage Secretary has chosen a method of debating this matter which precludes the House's examining it. That is why I suggest that we should not proceed further by this method. We should be fair to the Secretary of State for War and give him a chance to reply. You, Sir Charles, would' find yourself in a very awkward position if, after my
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  speech, you felt compelled to rule that he could not deal with these matters, and you may well find yourself in that position. It is surely for the Government to come forward and say, "We will now withdraw this Motion and proceed by means of the Excess Vote procedure." That would be the honest course, and we should be told why they do not propose to proceed in that way.
  10.30 p.m.
  With regard to this contract, in paragraph 32 of the Report the Comptroller and Auditor General, who is a person who weighs his words, says:
  "No precise conclusion could be drawn owing to the absence of details of all the items making up the prices, but it appeared that prices for Canal Zone supplies were appreciably the higher and sometimes…double."
  It may be that these happenings can be entirely justified; we may be doing the contractor an injustice—but why does not the Patronage Secretary see that the House is given the opportunity to discuss the matter? Why was it decided to appoint somebody who not only charged 10 per cent. profit, but double the normal price, according to the Report of the Comptroller and Auditor General?
  Mr. E. Fernyhough: My hon. and learned Friend should not underestimate the position. The Comptroller and Auditor General says "over double."
  Mr. Bing: Yes. "sometimes over double." I am sorry; perhaps I was doing "underjustice" to the ingenuity of the Patronage Secretary, who decided that this matter should not be debated by the House.
  If one looks at the final remarkable words of the Comptroller and Auditor General one finds that he says:
  "My officers have therefore inquired whether the methods of purchase adopted by the contractor had been investigated and whether his suppliers also contracted for the Cyprus Garrison. A reply to these inquiries is awaited."
  For how long must we wait? This is another matter which we could have discussed on the Excess Vote procedure, but which we shall never be able to do now.
  Mr. George Wigg: Surely my hon. and learned Friend has in mind paragraph 33 of the Report, which says that three contracts were made,
  "with no apparent incentive to economical buying"
  Mr. Bing: Exactly. This is only another example of the same sort of thing. I did not want to weary the Committee; I thought I had made the point that an attempt was being made to cover up a most undesirable practice.
  Mr. Wigg: In order to establish his case, my hon. and learned Friend must take the matter a little further. The Comptroller and Auditor General states that the contractor subsequently agreed to a reduction of 7½ per cent. of cost plus profit, and that: "The total value of the four completed contracts is likely to exceed £1,500,000."
  Would he endeavour to find out how much of this, by indirect method, found its way back into the coffers of the Tory Party?
  Mr. Bing: These are all matters which might have been investigated if the honest course had been taken of putting down this matter by way of Excess Vote. That was the proper course to adopt. This is a very serious matter. It is a complete squandering of public money. As my hon. Friend has said, the Report states that:
  "Three subsequent six-monthly contracts let to and completed by the same firm have also been let without competition, virtually on a 'cost plus ' basis…'
  After it was discovered that this firm was charging over double, the Government not only gave it the same contract again, without competition, but also allowed it to charge 7½ per cent. profit.
  Mr. Emrys Hughes: Can my hon. and learned Friend tell me the name of the firm?
  Mr. Bing: That is one of the things that ought to be disclosed to the House, and if there were an Excess Vote there could be a frank and fair statement. To be fair to the firm, it may have been only incompetent.
  Mr. Wigg: The Government?
  Mr. Bing: No, the firm. Perhaps it thought this was the cheapest it could buy these things. It may have been a genuine and honest mistake. It may have thought that the average cost was 4d. when it was in fact only 2d.—or, probably, in the Canal Zone, Is. In fairness to the firm concerned, the Government ought to have a chance to reply, but I am sure, Sir Charles, you would rule the hon. Gentleman out of order if he tried to. It is
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  not the hon. Gentleman's fault that he cannot reply, and I am sorry the Secretary of State is not here. [HON. MEMBERS: "Where is he?"]
  The fact remains that the three subsequent six-monthly contracts were let to the same firm without competition on what was virtually a cost plus basis with no apparent incentive to economy. That is in the Report of the Comptroller and Auditor General. It is not an election pamphlet of the Labour Party to which I am referring, but to this Report issued by an official employed by this House to watch over the expenditure that we vote. The Government bring the matter forward in such a way we cannot discuss the Report made to us by our own official. They do not state what the remuneration is.
  Mr. Niall Macpherson: Would not the hon. and learned Gentleman agree that the normal time to discuss this matter would be when the Public Accounts Committee, to which the Appropriation Accounts are remitted for examination, reports after examination in detail? Would not that be the normal time, rather than now?
  Mr. Stephen Swingler: Would not my hon. and learned Friend agree that it is the responsibility of Parliament to discuss it?
  Mr. Bing: Yes, that is a responsibility of Parliament. The Report of the Public Accounts Committee, which I have studied, seems rather inadequate in dealing with these matters. Now the Government have not provided time in which to discuss the Report. I was suggesting that just such a Report should be discussed and that the Government should find time for discussing it. What I am trying to do is to show to the House the reasons why the matter should be discussed.
  I may be making a very unfair speech. I am relying only on what an official of the House says. He may be entirely wrong. The Government may say, "We are sorry we employed this particular Comptroller and Auditor General. He has misunderstood us altogether. His conclusions are entirely wrong." That would be a permissible case to be made, but the Government cannot make it by dealing with the matter in this way. That is why I think the Government

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  should look at the Report again and, on the basis of what is said in it, should withdraw this Motion and substitute for this another procedure. I am sorry there is not a senior Whip here to appeal to, since the Motion is in the name of the Chief Whip. It would be a better procedure that allowed us to discuss the matter properly. Perhaps when we have dealt with Crichel Down we could come back to this, for, after all, Army matters are of equal importance.
  Mr. Emrys Hughes: Is not my hon. and learned Friend aware that if this came up on the Army Estimates we should not be able to discuss it because the Government use the Guillotine after Vote A?
  Mr. Bing: It is certainly worth considering whether of some £1,000 million voted we could not use some of the money that is being wasted to double the old-age pensions. There ought to be some explanation given the House about this expenditure. Let us consider that the serious allegation of the Comptroller and Auditor General in paragraph 35:
  "From information recently made available to me, it appears that certain unsatisfactory matters have been disclosed by cost examination of the contractor's records in Cyprus. These are being investigated. I understand that future supplies from Cyprus will be obtained directly by the local Army authorities by competitive tender. The remainder of the supplies will, for the time being, be obtained by the original contractor but, to the extent possible, from a less costly source than has been used hitherto."
  What is the costly source used hitherto? Possibly this was how the Guatemalan revolution was financed; they certainly made enough profits to foment a revolution in most places.
  Mr. Hughes: Could my hon. Friend say whether this is the firm which exports potatoes to Ayrshire?
  Mr. Bing: That I do not know; but if they are sold at anything like the price at which they are sold in the N.A.A.F.I., I should have thought the Ayrshire people had little to worry about; but perhaps they have one price in the N.A.A.F.I. and another in Ayrshire.
  The Chief Whip, whose absence we all regret—no doubt it is due to illness or indisposition—has made a great mistake in treating the House in this cavalier and grossly discourteous manner. The Leader of the House and the Chief Whip should be here to explain these serious matters.
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  They are not the only matters. I will not weary the Committee by going through all of them; no doubt other hon. Members will draw attention to other matters in the accounts into which it is equally necessary for the Committee to inquire.
  We should not have to consider them in this way, which rules out discussion altogether, in my opinion. It is for you to rule on that, Sir Charles, but it seems to me to be a most unsatisfactory method. The Government are saying to the House, "We have made an awful mess of the Army accounts, but we will not allow you to discuss them. It is true that the House appointed a Comptroller and Auditor General to make a report, but we will not allow his report to be discussed."
  That is the effect of the procedure being adopted. I hope the Government will seriously consider whether they should proceed in this way. If they choose to proceed in this way, I hope that my hon. Friends will take another opportunity—for this is not an opportunity to pursue the matter fully—to have a full investigation into what has taken place and what is revealed by the Report of the Comptroller and Auditor General.
  Mr. Stephen Swingler: I should like to ask your leave, Sir Charles, to move to report Progress, in view of the speech of my hon. and learned Friend the Member for Hornchurch (Mr. Bing), and in view of the fact neither the Chief Whip, who proposed the Motion, nor the Minister in charge of the War Office—nor, indeed, the Minister in charge of the Air Ministry—are here. I agree that the Minister in charge of the Air Ministry is prevented from being here because of the Prime Minister's choice of a Minister to fill that office, but the Minister in charge of the War Office could be here and the Chief Whip could be here.
  In view of the fact that they have deliberately absented themselves, I beg to move, "That the Chairman do report Progress and ask leave to sit again."
  The Chairman: I am not willing to accept that Motion.
  10.45 p.m.
  Mr. George Wigg: We have heard an extraordinary doctrine from the hon. Member for Dumfries (Mr. N. Macpherson), who took exception to the fact that my hon. and

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  learned Friend the Member for Hornchurch (Mr. Bing) has raised these points. He suggested that more appropriate action would be to deal with them when the accounts come before the House. The hon. Member does not take part in the Service debates, particularly the Army debates. Had he taken part in them, he would have learned during the last 10 years that if there is one subject about which the House must concern itself it is the financial control of the Army.
  I remind the hon. Gentleman—he sits for a Scottish constituency, and he ought to know this if he has any qualification to sit in the House—that it was the conflict between King and Parliament which led to establishment by the House of Commons of control not only of the numbers in the Army but also of the methods of finance. I do not agree with those methods of financial control. I believe that they are archaic and out-of-date and ought to be reviewed, but from an hon. Member opposite—
  The Chairman: I am afraid that the hon. Member for Dudley (Mr. Wigg) has allowed himself to be led astray.
  Mr. Wigg: I am sorry if I have been led astray, Sir Charles, but I thought I was in order in replying to the hon. Member for Dumfries.
  In common with my hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler), I very greatly regret the absence of the Secretary of State for War. He has a great deal to answer for. The Army, as we all know, is in a deplorable condition. Its discipline is slack, recruiting is low, and tonight we have been given by my hon. and learned Friend, in his astonishingly able speech, the fact that, on the basis of this Report, the people in the Canal Zone have been robbed with the connivance of the right hon. Gentleman, who has not even the courage to come here to defend his actions.
  The right hon. Gentleman knew of this Report. It has been in the Vote Office for some time, and there have been plenty of opportunities for him to have repudiated the charges which we make; but he has not. What has he done? He has hidden, as has been his practice on previous occasions, behind the patient and, if I may say so, kindly figure of
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  the Under-Secretary of State, for whom I have sympathy. He has once again to face the fire; to face the music.
  Let me remind the Under-Secretary of State that we gave warning a little more than two years ago, when we had a similar debate to that which we are having tonight; and there is some connection between the two debates in that we are in the same difficulty now because, as my hon. and learned Friend has pointed out, the Resolution of 1879 was never intended for the purpose for which the Government now use it. It was concerned with trifling sums and not the very much larger amounts which appear before us tonight, and about which we complained two years ago. On that occasion, I was allowed to deal with this question of financial control, and the implication of administration through regulations. I did then say that the conditions of control are archaic, out-of-date, cumbersome, and inefficient: and the Under-Secretary agreed with me. He then said:
  "I now come to the point raised by the hon. Member for Dudley (Mr. Wigg) about the archaic form of the accounts. I agree with a great deal of what he said. We may remember that 18 months or two years ago a body of opinion in the country thought the whole system of national accounting was out of date and that, instead of being on a cash basis, it should be on an income and expenditure basis."—[OFFICIAL REPORT, 26th June, 1952; Vol. 502, c. 2577.]
  The Chairman: If I allowed that, I apologise for being negligent, for I ought not to have done so.
  Mr. Wigg: If you say that, Sir Charles, you put me in great difficulty because, since becoming an hon. Member of the House, I have always tried to base my remarks on your rulings. I have considered those rulings, and those of other holders of your office, and I would point out, with respect, that I am not quoting from remarks of my own, but from a speech made by the Under-Secretary, who added:
  "I do not think there is much hope of being able to select one facet or slice of the national accounts for this purpose, but I will take up the question again."—[OFFICIAL REPORT, 26th June, 1952; Vol. 502, c. 2577.]
  In other words, we had the categorical assurance, on behalf of the Government, that the points made in that debate on this particular subject would be looked into and that the form of the accounts would be examined. But two years have

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  gone by. What has been done? I will tell the Committee what has been done—Nothing.
  It is a queer fact that the major measures which have been taken to the advantage of the Army during the life of this Administration have been taken under pressure from these benches and often in the teeth of the resistance of the right hon. Gentleman. Here is another example. The Opposition would be failing in its duty if it did not point out that what we are examining tonight is the culmination of a system of accounts which was tied up with the wars of the 17th century. It has nothing whatever to do with either the finance or the control of discipline of a modern army.
  It is only in times of peace that we have this elaborate and archaic nonsense. As soon as a war comes along, this system of financial control is thrown into the wastepaper basket and we have quite another system of control. In other words, when an army is engaged in mobilisation, during its period of greatest organisational difficulty, it has to switch over from one method of control to another. Can one wonder that the disorganisation which is implicit under even a perfect mobilisation system is much the worse for that?
  The Under-Secretary of State would be serving the interests of the country and certainly of the Armed Forces if he would go so far as to say, "This is, after all, the culmination of the financial control which we have at the moment, which goes on, throughout the Session, and we really cannot do anything about the Motion before the Committee tonight except to ask for its acceptance." But could we not get from the Government an assurance that, assuming they are in office one year from now, they will look into this matter and implement the promise that was made by the hon. Gentleman? I will willingly give way to him—
  The Chairman: I think that the hon. Member is trading on my mistake of two years ago in making that request.
  Mr. Wigg: I do not want to detain the Committee by quoting all the precedents on this point—
  Mr. Emrys Hughes: On a point of order. About the mistake of two years ago, Sir Charles, do I understand that
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  you are ruling yourself out of order retrospectively?
  The Chairman: I am ruling myself out of order, and I apologise. I am very sorry that I was wrong then, but I think am right now.
  Mr. Bing: We on this side never feel that you have given a ruling which we would in any case dispute, and we would like you to appreciate that, Sir Charles, when you approach your ruling of 1952.
  Mr. Wigg: If, as I take it, Sir Charles, your intervention is not jocular but is serious, and you are going back on your ruling of a year ago, there are a variety of rulings that we have had on this subject over the past few years, starting in July, 1948. We then had a ruling from the Chairman of Ways and Means that
  "The hon. 'Member cannot discuss the eventual disposal of the surplus."
  Mr. Hughes: Who was "The hon. Member"?
  Mr. Wigg: My hon. Friend the Member for South Ayrshire (Mr. Emrys. Hughes).
  Mr. Hughes: I thought so.
  Mr. Wigg: The Chairman continued:
  "That question may only be discussed on the Estimates in which that item appears. The only question here is why there is a surplus."—[OFFICIAL REPORT, 2nd July 1948; Vol. 452, c. 2476.]
  So that we have a ruling in 1948 that we can deal only with surpluses. Next, we go on to 1949. On that occasion the Chairman said:
  "I ought to inform the hon. and gallant Gentleman that it is not competent to inquire the reason for a deficit, though he may inquire the reason for a surplus."—[OFFICIAL REPORT, 11th July, 1949; Vol. 467, c. 147.]
  Then, in 1950—
  The Chairman: I have no doubt that these rulings have been given, but at the moment the only question before the Committee is:
  "That the application of such sums be sanctioned."
  There may have been rulings that have been wrong, but the ruling at present is that we can discuss only:
  "That the application of such sums be sanctioned."
  I must ask the hon. Member to confine his remarks to that.
  Mr. Wigg: But with respect, Sir Charles, it puts my hon. Friends and myself in a difficulty if we come to this debate and arm ourselves with the rulings given in 1948, 1949 and 1950, and again in 1952—and I would refer particularly to 1952—and then we are told by you that a mistake was made by you last year and that your ruling on that occasion was wrong. With respect, I hope that in those circumstances you will reconsider your ruling on the Motion of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler), and will accept a Motion to report Progress, because we are placed in a most difficult and almost intolerable position if, in fact, armed as we are with rulings from four debates, we are now told that they are all in the wastepaper basket and that we have to approach the problem from an entirely new angle. I hope, therefore, that you will be kind enough to accept the Motion to report Progress.
  Mr. Swingler: On a point of order. Sir Charles. In view of what my hon. Friend has said, could we now have a clarification of your ruling before we go any further? As I understand it, you have ruled that we can only discuss how the certain sums mentioned in this Motion may be devoted, but surely it is in order, as it has been on previous occasions, to discuss how these sums arise? How are we to discuss this Motion adequately unless we are able to discuss the reasons whereby these sums arise, which we are asked to devote to certain purposes, which means that we must discuss the reasons for the deficits and surpluses?
  The Chairman: The only question before the Committee is that the application of such sums shall be sanctioned; that is to say, the Committee approve the use in this case of a form of accounts setting off deficits on some of the Department Votes against surpluses on other Votes. The Committee has to decide whether this system of accounting shall be followed. If we now decide against it, the only result would be that the Department would have to effect the same result by introducing an Excess Vote. This Committee has no power to debate details of either the deficits or surpluses which arise on the appropriation of accounts, which have now been closed and have been scrutinised by the Public Accounts Committee.
  Mr. R. T. Paget: Further to that point of order, Sir Charles. Surely, if we are to debate whether a surplus shall be applied to a deficit, we have to consider what the deficit is, how it arises, and whether it is proper to write it off in that manner? How can one discuss the question as to whether a surplus should be applied to a deficit with any sense of responsibility for public money unless one considers whether the deficit ought to be written off in this way? If deficits have been improperly incurred, I should have thought—and I put this most respect, fully—that it was a gross offence to the public, whose money this is, to allow the matter simply to be written off without any Estimate being brought before this House or any account given of how this money was wasted. I submit, respectfully—that if the question of setting off surplus and deficit is to be taken at all. it can only be done on the basis of looking at the deficits and seeing if they are proper ones to write off.
  Mr. N. Macpherson: May I direct your attention, Sir Charles, to the fact that the items of which the two hon. Gentlemen opposite have complained have not actually given rise to deficits and that in the total deficit these amounts do not occur?
  The Chairman: That is not the point. The hon. and learned Member for Horn-church made his point perfectly clear and in order. It was that it should not be done in this way but that there should be an Excess Vote, and he stuck to that point pretty accurately. That is all that is before the Committee—whether or not this system of accounts should be adopted. If the Committee does not want it, it will have to come as an Excess Vote.
  11.0 p.m.
  Mr. Hale: May I seek your guidance here, Sir Charles, having heard the hon. Member for Dudley (Mr. Wigg)? I have heard you say that you have come to amend your ruling given in 1952. I have looked carefully through the debate on this topic in 1952, and, so far as I can see, you did not give any ruling of that kind at all. It was the only occasion in history when I addressed the House without any intervention from the Chair.
  The Chairman: I have made my apology for a mistake I did make.
  Mr. Wigg: As I was endeavouring to follow in the steps of the hon. and learned Member for Hornchurch from a rather different angle, I trust that the Under-Secretary will be in order in dealing with the point he made two years ago, when we were discussing exactly the same point. We were then complaining about this particular method of dealing with the matter, and we were saying that there ought to be Excess Votes. We got an assurance from the hon. Gentleman that he agreed with us, and that this particular method, as applied to the Army, was archaic and out of date. He gave the assurance:
  "I will take up the question again".
  The point, which has the support of my hon. Friends, is that if the Government will promise to implement what was said two years ago—very good, let them have their Motion. But surely we ought not to be given an assurance in 1952, and no action then taken by the Government. In 1954 they came down to this Committee and asked us once again to approve a method of balancing—or juggling, if that is the right word—deficits and surpluses, rather than using the method of an Excess Vote. Here my hon. and learned Friend has logic and morality on his side, because he has pointed out that the reason why the Secretary of State for War has not chosen to introduce Excess Votes is because he is afraid of the political implications, once the country understands what is involved.
  If the right hon. Gentleman came to the House and asked for a Supplementary Estimate on the basis of the robbery and overcharging for troops in the Canal Zone, particularly when recruiting is falling, he knows the kind of Press he would get. Therefore, with the connivance, may I say the non-understanding connivance of the Patronage Secretary, as he does not understand a lot of what goes on in the House, this particular method is chosen, which, in my submission and that of my hon. and learned Friend, is an abuse of legislation which was never intended for this purpose.
  I say that this arises from the fact that the financial control of the Army is as out-of-date as the Army Act was when we set about it in 1952. We pleaded with the Government on the Army and ultimately they accepted our point of view, and I am again pleading with them in their own interests. This is a point of view with which I do not think one hon.
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  Gentleman on this side would dissent. The decision then taken was right in the interests of the Army, of the country, and in the interests of the financial control of the House of Commons. I am saying on this vital issue of the financial control of the Army that once again the Government should bow to reason.
  This is not something for which a Conservative Administration is especially responsible. It was carried out under a Labour Administration, and, before that, under a Liberal Administration. It has been in existence for getting on for 100 years, but, in the light of modern conditions, it is shown to be absolutely and completely out of date.
  Mr. Hale: It is obsolete.
  Mr. Wigg: "Obsolete" is the word. The Under-Secretary agrees with us. I am willing to give way to him. He can bring the discussion to a very rapid conclusion. All he has to do is to say that he meant what he said as reported in col. 2587 of the OFFICIAL REPORT for 26th June, 1952.
  Was the Under-Secretary misleading the Committee on that occasion or not? Will he tell the Committee? Did he really mean what he said? Did he mean the Committee to accept his words when he said that he would take up the question again? What has he done during the past two years? Did the Secretary of State for War, with his notorious pig-headed obstinacy, prevent him from doing it? If so, why did not the hon. Gentleman resign? Or can it be that the really effective control of the Army rests not with the Secretary of State for War but with the Minister of Defence? Can it be that the Secretary of State went to the Minister of Defence and that as this was a matter which concerned all three Service Departments—
  The Chairman: The hon. Gentleman is going beyond the Motion now.
  Mr. Wigg: I am coming back to it.
  The Chairman: I hope the hon. Gentleman will come back to it speedily.
  Mr. Wigg: I thought I had not wandered very far from what I said in June, 1952, and I am quite willing to cut short what I have to say if the Under-Secretary will tell the Committee whether he honestly meant what he said on 26th June, 1952, and what has happened since.

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  All I am trying to do is to find out what is the basis of the Government's policy in this matter. In 1952 the Under-Secretary was asking for time. He asked that the Motion should be passed and said that he would then look into the question again. The Opposition accepted what he said. It may well be that some of his hon. Friends would have risen in protest had they known that nothing was going to be done for two years. However, nothing has been done for two years.
  Consequently, I put these questions to the Under-Secretary. Is it that he tried to do it and that the Secretary of State for War stopped him? I then move on from that point and ask whether, if that is the case, the Secretary of State wanted to carry out this reform but, as it affected the Navy and the Air Force and other spending Departments, he had to go to the Minister of Defence. Is it that the Minister of Defence turned it down? If so, why did not the Secretary of State for War resign? I can imagine no greater blessing to the Army than if that action had been taken.
  Or is it that the Minister of Defence wanted to do it and went to the Cabinet and found out that, after all, the Prime Minister when he was soldiering at Omdurman did not have that form of accountancy and what was good enough for the 4th Hussars at Omdurman is good enough for today—
  Colonel Gomme-Duncan: The 4th Hussars were not at Omdurman. The Prime Minister was with the 21st Lancers.
  Mr. Wigg: I would never suggest that what was good enough for the 21st Lancers is good enough for the Black Watch or the 4th Hussars.
  Mr. Bing: Would not my hon. Friend agree that the Prime Minister has changed his regiment as often as he has changed his party?
  Mr. Wigg: I do not know about that, but I have a strong suspicion that the Prime Minister takes a very deep interest in the details of the Army, and it may well be that he vetoed the policies of the Minister of Defence. We all know that the Minister of Defence is in a very weak political position. He certainly cannot protest with any strength against action by the Prime Minister.
  188
  I can understand the Under-Secretary keeping quiet about this if it has been a subject under discussion for the last two years both by the Cabinet and the 1922 Committee. In which case it probably has to get permission of both. Perhaps, Sir Charles, you would now consider the Motion to report Progress. We have had no statement from the Government benches: there is no representative of the Ministry of Defence present, the Secretary of State for War is not here, the Leader of the House is probably having his usual nap, and the Prime Minister is not here.
  Mr. Emrys Hughes: Is not this a question for the Minister of Supply, and he is not here?
  Mr. Wigg: In the circumstances, I would ask you to consider such a Motion.
  The Chairman: I have considered it, but cannot accept it.
  Mr. Hugh Dalton: I think it would be convenient, as you have ruled, Sir Charles, you cannot accept the Motion, if someone could speak on behalf of the Government. I do not know who is in charge. Is it the Financial Secretary to the Treasury, or is it the Under-Secretary of State for War?
  The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): Had the right hon. Gentleman not risen, I should have done so in an endeavour to deal with the point of financial procedure involved, but naturally I gave way to him.
  Mr. Dalton: I am much obliged, and I hope I will not impede the right hon. Gentleman in accepting the proposal I make, which is that the Government should withdraw this Motion on their own initiative. Let us consider it in the light of day when the Press can report the Government's defence of the series of extraordinary statements many of which have been quoted by my hon. and learned Friend the Member for Hornchurch (Mr. Bing) in this remarkable Army Appropriations Account by that very distinguished civil servant, Sir Frank Tribe, now Comptroller and Auditor General. I do not wish to prolong the debate if the Government would indicate that they would be willing to postpone this discussion for a day or two.
  I did not study this paper until this evening when my attention was drawn to

  189
  it, but it does appear to contain a number of extraordinary charges. Whether they are true or not is a matter for the Government spokesman to indicate. They show a considerable lack of financial control, which I am sure the right hon. Gentleman will regret, in many parts of the world. Particular reference has been made to the proposed Territorial Army camp at Trawsfynnydd in the neighbourhood of an airfield at Llanbedr, where I remember spending happy hours at a Fabian summer school in 1909. I regret very much that on this ground, hallowed for me by youthful memories, so much money seems to have been wasted.
  We pass from this to the Canal Zone. It appears—and in this I am anxious to help the Government—that only a few hours ago in another context, but relevant to this matter, the right hon. Gentleman the Chancellor of the Exchequer was explaining, in reply to the debate on the Third Reading of the Finance Bill, his eagerness to reduce needless and unproductive expenditure on defence. This report of the Comptroller and Auditor General is stuffed with scandal about waste of money, nominally on defence, through gross inefficiency, partly by Government Departments, who should be brought to book in this House, and partly by private firms not named, but including the private firm which has been rooking our troops in the Canal Zone and making a profit of 7½ per cent. on the transaction.
  11.15 p.m.
  These matters are too grave to be debated at this hour. I suggest, and I have reason to hope, that the Financial Secretary should postpone it. He will no doubt wish to have the aid of his right hon. Friend the Chancellor, with whom we all sympathise in his desire to do something for the older people. He can do it out of savings which can rightly be made out of this grossly unnecessary defence expenditure, which is not promoting our defence. These matters should be examined in the light of day and under the procedure which it is permissible for us to use of the Excess Vote.
  The present procedure is totally inappropriate to the matters with which we are faced. The proposal, in the name of the Patronage Secretary is, "That the application of such sums be sanctioned," namely, the excess of surpluses over de-
  190
  ficits. As you have indicated, Sir Charles, it is out of order for us to argue that the procedure is inappropriate, and the proper course is for the Government to seek an Excess Vote, in the light of day and at a reasonable time, and not only to defend their actions but to indict the persons indirectly mentioned in this Report who have wasted public money and abused the advantages which the Government have conferred upon them.
  I end as I began, by asking the Financial Secretary, in collaboration with his colleagues, to adjourn this debate so that the whole matter can be considered at a more appropriate hour of the day.
  Mr. Boyd-Carpenter: The right hon. Member for Bishop Auckland (Mr. Dalton) who has filled the office of Chancellor of the Exchequer—[Interruption]. I hope that the right hon. Gentleman will not tempt me by his interruptions to get out of order and into anecdotes of his régime, which he might find embarrassing—has completely misunderstood the procedure with which we are concerned tonight. If he is anxious to discuss anything in the Report of the Comptroller and Auditor General, normal opportunities for so doing exist, whatever procedure we follow on this Motion.
  It would be impertinent on my part to seek to remind the right hon. Gentleman of the facilities which are at the disposal of the Opposition for the discussion of such matters as they may wish to raise. If the right hon. Gentleman and his hon. Friends desire to raise these matters, the Secretary of State for War will no doubt be able to deal with them.
  We are here concerned, under the rulings which you have given, Sir Charles, with a narrow point of financial and accountancy procedure. We are concerned, as I understand it, with this very simple question: The Army Accounts for 1952–53 have shown on some Votes a surplus totalling £8,282,978 14s. 2d.—I ask the Committee to note the "2d." as evidence of the selectivity of the accountancy methods of my right hon. Friend—and there were deficits on other Army Votes of £2,045,533 7s. 11d.
  As I am sure the right hon. Gentleman and other Members will be aware, the Service Estimates are constructed in a somewhat different way from the Civil

  191
  Estimates. They are divided into a number of separate Votes. It so happened that, in the year with which we are dealing, 1952–53, there was a surplus on certain Votes and a deficit on others. What is proposed in the Motion is no more and no less than the application of so much of the surpluses as is required to deal with the deficiencies.
  As to the propriety of that time-honoured procedure and its application in this case, the Committee may be interested to know that the matter was dealt with, in the normal way, provisionally by a Treasury Minute, and came, in the normal way, before the Committee of Public Accounts. That Committee reported—presumably a few days before 25th May, when the Report was ordered by the House to be printed—in these terms:
  "Your Committee have reviewed the exercise by the Treasury, in relation to Army and Air Votes, of their powers under the annual Appropriation Act to sanction provisionally, subject to subsequent confirmation by Parliament, the application of surpluses on any Votes of a Service Department to meet deficits on other Votes of the same Department. They see no reason why Parliament should not sanction the virement temporarily authorised by the Treasury in their Minutes laid before the House in February, 1954."
  I may say that I agree with the right hon. Gentleman the Member for Bishop Auckland about the pronunciation of the somewhat eclectic word "virement."
  Therefore, on the point with which I understand we are concerned—that of the propriety of the accounting procedure involved—we are fortified in the view we have put forward by the Report of the Public Accounts Committee. It is open to this Committee or the House to disregard that Report if it so wishes. On the other hand, I think most hon. Members have a very high regard for that Committee and its servants, and I do not think we should be wise lightly to suggest that that Committee would recommend the sanction of a procedure which was subject to all the objections which hon. Members opposite seem to see in it. At any rate, there we are, proceeding in the normal way for dealing with these Votes, with the recommendation of the Public Accounts Committee in support of our procedure.
  As I understand it, the real objection of the hon. and learned Member for
  192
  Hornchurch (Mr. Bing) to our following this procedure was not that there was any impropriety in doing so—indeed, it is a very obvious procedure to follow—but that by following it we deprived him and his hon. Friends of an opportunity of having a little fun talking about the affairs of the War Office. That, I understand, is really the nub of the hon. and learned Gentleman's objection. He suggested that it would have been better from that point of view had we taken the Excess Vote. I suppose that the hon. and learned Gentleman and the right hon. Member for Bishop Auckland, who supports him, appreciate that if we had put down an Excess Vote for the financial year ending 31st March it would have been taken up by the Guillotine before the end of the last financial year, and would therefore have been no more subject to separate discussion than under the procedure which we are now following.
  Mr. Wigg: The hon. Gentleman is not correct. We had a Supplementary Army Estimate in January, 1953, and these accounts relate to the year 1953–54. Therefore, the Government would have asked for a Supplementary Estimate over a year ago.
  Mr. Boyd-Carpenter: I hope that I am wrong in suspecting that the hon. Gentleman is confusing a Supplementary Estimate with an Excess Vote. It would be most surprising if he—who follows these matters so closely—should do that. We are here concerned not with the question whether or not a Supplementary Estimate could have been detected as being likely to arise during the financial year, 1952–53, but whether we should deal with these surpluses and deficits by the method of a Monk Resolution or the Excess Vote. The point I put was that if we had dealt with it by the method suggested by hon. Members opposite it would have been caught up by the Guillotine at the end of the last financial year, unless it was put down by the Opposition. The question whether this matter should be discussed still rests with the Opposition. They have the means of raising this in all the ways open to discussion.
  Mr. Hale: The right hon. Gentleman knows perfectly well that there has never been a Session in which so many scandalous things have arisen that the

  193
  Opposition have wished to discuss. There are 75 Motions on the Paper for which no time is given by the Government. We were being criticised by the Government the other day for not allowing them time on a Supply Day to discuss Crichel Down, which appears to be a dispute of their own. The right hon. Gentleman knows perfectly well that subject after subject is pressing on our time so that we are able to spare two or three hours only on Supply Days for important subjects, and now he says that when the Government seek to get away with the loss of millions of pounds, some of them by fraud, the Opposition should supply time and put down a Motion.
  Mr. Boyd-Carpenter: I do not accept for a moment the accuracy of the allegations the hon. Gentleman makes. Indeed, we are not concerned with losses. We are concerned overall with surpluses, as he would know if he had followed the Motion. So far as the allegations of fraud are concerned, if he or any of his hon. Friends wish to make allegations of fraud against the Department, let them take an appropriate opportunity to make those charges and face the rebuttal those charges would undoubtedly meet. As to the hon. Gentleman's point about Supply Days, I was under the impression that the Opposition were having some difficulty in finding suitable subjects for Supply Days.
  We are not in any degree diminishing the opportunities of discussing this by the procedure we are following. That is a point that hon. Gentlemen opposite really must meet. Unless they meet it I am afraid they will give my hon. Friends the impression that they are creating a mountain out of a molehill and that these charges are being made on this occasion because, as they themselves know and have said, my hon. Friend cannot answer them—instead of making them on the appropriate opportunity.
  Mr. Wigg: On a point of order. Surely it is an abuse of your ruling, Sir Charles, for the right hon. Gentleman to suggest that we have hidden behind your ruling? That is a suggestion that we know what your ruling would be before we came into the Committee. We were going on the ruling given by your predecessor two years ago. We did not know what your ruling would be till you gave it. Is it not a scandalous thing for the right hon.
  194
  Gentleman to make the suggestion he has?
  Mr. Boyd-Carpenter: I am sorry if the hon. Gentleman—
  Mr. Wigg: I do not mind what the right hon. Gentleman says. I know him.
  The Chairman: I am sure the ruling I have given has been reinforced.
  Mr. Wigg: I am not challenging your ruling, Sir Charles. I accept it. I say it is a scandalous thing for the right hon. Gentleman to say we on this side of the Committee have made allegations knowing they cannot be answered. The hon. Gentleman cannot reply because he has not the guts to reply.
  The Chairman: I hope we shall not shout abuse at each other in this way.
  Mr. Swingler: Sir Charles, was not my hon. and learned Friend the Member for Hornchurch (Mr. Bing) perfectly in order in dealing with the parts of the Report which he did? Would not the hon. Gentleman be in order in dealing with them, too? I do not understand 'how the right hon. Gentleman can state the Government cannot deal with them.
  The Chairman: The hon. and learned Member was in order in giving the reasons why he thought there should have been an Excess Vote, but it would not be in order to go into the details without relating them to the reasons.
  Mr. Fernyhough: I presume that if the Government gave an explanation in answer to my hon. and learned Friend they would be in order?
  The Chairman: In explanation of why there is not an Excess Vote.
  Mr. Dalton: If the Under-Secretary of State for War, whom we are glad to see here, were to rise in his place and seek to make a statement, you would not order him to sit down, Sir Charles.
  11.30 p.m.
  The Chairman: I call any Member who rises in his place, but I do not say that I should let him go on for ever.
  Mr. Boyd-Carpenter: I was reassured by your concluding sentence. Sir Charles.

  195
  By following this procedure we are not shutting out, or seeking for one moment to shut out, the discussion of any point which the Opposition desire to raise. Had we followed the Excess Votes procedure in the last financial year, there would have been the same result. I beg the right hon. Gentleman to appreciate that we are not running away from any challenge which, on an appropriate occasion, the Opposition seek to make. We are concerned to apply the normal procedure established over many years and recommended by the Public Accounts Committee for normally dealing with the surpluses and deficits with which we are concerned.
  I do not think any case has been made out for departing from this practice and for ignoring the report of the Public Accounts Committee. All the matters which hon. Members may desire to raise in the Department of my right hon. Friend the Secretary of State for War are matters which they have ample, but other opportunities to raise.
  Mr. Hale: I propose to follow the narrow line laid down by my hon. and learned Friend the Member for Horn-church (Mr. Bing), but I hope I shall be in order in replying to one or two of the less fortunate observations of the Financial Secretary, whose intervention in the debate was rather less helpful than his interventions normally are.
  When I mentioned the word "fraud," for example, the right hon. Gentleman suggested that this was something which I introduced into the matter instead of the Comptroller and Auditor General having introduced it. If he cares to refer to the detail of the items on pages 42 and 43 of the Report, he will see a whole series of items which can be explained only by fraud or by such gross neglect in the handling of public money as would bring one within the ambit of the criminal law. It is right that we should say this.
  I want to say this by way of exordium before I turn to the more limited scope of my speech. My hon. Friend the Member for Dudley (Mr. Wigg) said that the control of these accounts is a matter of very great importance. It is a fundamental of the constitution that the Army should be subservient to Parliament.
  196
  Every year we pass an Army Act in pursuance of a policy laid down in 1688, because it is part of our constitution that the Army shall be subject to annual Parliamentary control and that its figures shall be subject to annual approval. If not, of course, we have the possibility of Fascism in this country; if not, we have the possibility against which our ancestors sought to guard. It is not a matter to be facetious about. It is not a matter on which the Financial Secretary should say, "Hon. Members want to have their bit of fun," when we raise an issue of this fundamental importance.
  The Financial Secretary is completely wrong about virement. We have had the process since 1879. It was used in dealing with small balances here and small balances there; it was a simple, desirable, useful technique. Those, indeed, were the days, or shortly after the days, when Hume would occupy the House all night debating a lost half-crown. What are we dealing with today? The Financial Secretary said it is not a matter of losses at all but a matter of surpluses—we are dealing with £8 million surplus. But we are dealing with the question of whether that £8 million should be used to balance a whole series of losses and a whole series of matters which come so near to criminal negligence that one has to be restrained in one's language about them.
  I have the greatest respect for the Members of the Front Bench opposite; I have not the slightest doubt that they are very good husbands, that they pay their rates and that they behave with infinitely more respectability than ever I do, but it is unfortunate on a matter of this kind, of vast figures and great detail, with serious allegations being made in the Report against the conduct of Her Majesty's Government, that the whole of the Front Bench should be occupied by a set of bric-a-brac and that no responsible Minister should have been here from the start of the debate.
  The Financial Secretary always tries to be informative, but, if I may say so, he sometimes discloses more than he intends. Tonight he was full of explanations, so I thought, as to why the Under-Secretary of State could not reply and why he, himself, could. That, I think, raises one or two questions of procedure, and one of those is that the least said

  197
  the better. Therefore, the Financial Secretary to the Treasury intervened to say merely that what we suggest is impossible.
  My hon. and learned Friend the Member for Hornchurch approached this matter with his usual reserve and modesty, but he did not call attention to one of the most important aspects; the matter which was passed over quite casually by the Comptroller and Auditor General when he talked about the expenditure of the British section of the Commonwealth Land Forces in Korea. Now this is a classic example of how Army accounts can be handled in such a fashion until no one seems to care. It is a story of a complete lack of control, and even of discipline. Indeed, it is nothing short of amazing that the real charge which we are able to make is that there has been no discipline at all. Nobody, apparently, seems to think that it is his duty to render accounts correctly, or even to render them on time. The Comptroller and Auditor General states that some accounts for a whole area for a whole year have not been produced.
  So far as the forces in Korea are concerned, we find an astounding situation. Through the responsible official in Australia, and the distribution of the various land forces participating in the occupation of Korea, we are told that no cash adjustments were made, but that some were made during the year under review, and that adjustments have since been made in respect of accounts notified as at August, 1953; and that the United Kingdom share amounted to £46,500,000—about 55 per cent.—which is the proportion of the liability we are due to pay to Australia in respect of that year. Maintenance costs reported as at that date are given as £14,900,000. What are those? We just bung in £14,900,000, to which—
  The Chairman: I do not think that the hon. Gentleman is exercising the same ingenuity as his hon. and learned Friend. This speech is out of order.
  Mr. Hale: I am sorry, Sir Charles, but my hon. and learned Friend was not exercising ingenuity. He was speaking of matters of great constitutional importance, and now I am merely trying to put before the Committee, in, I would say with great respect, quite brief detail,
  198
  another aspect of this same constitutional issue. I did not think that my hon. and learned Friend was merely being ingenious.
  The Chairman: I am asking the hon. Gentleman to use sufficient ingenuity to keep within order.
  Mr. Hale: I am sorry, Sir Charles, but I could not hear what you said.
  The Chairman: The hon. Member's remarks are not being related to the Motion before us.
  Mr. Hale: May I then submit that that ruling is not in accordance with the one which you gave a short time ago when you said that it was permissible for hon. Members to call attention to limited items and to question the application, or otherwise, of the principle of virement to this Vote. I have simply called attention to an amount of £14,900,000 which has presumably been overpaid, and in much the same terms as those used by my hon. and learned Friend. He called attention to the preceding item, where we are involved on expenditure on fruit in the Middle East. He called attention to that fact, and to other matters in this Excess Vote.—[Interruption.]
  I do not know how I can make it clearer. I have said it on three occasions. I have dealt with the process and history of virement. I have said—I am open to be challenged by anyone in the Committee—that the process of virement has never been used before in these circumstances. Never before has the process of virement been used for covering up payments of this kind or for stopping a debate upon them. That is a discrimination, Sir Charles, that I am wholly unable to understand.
  My hon. and learned Friend said that we should not use the process of virement because the facts disclosed by the Comptroller and Auditor General in the preceding paragraph involve a loss of £1½ million. I am saying that we should not use the process of virement for this because of the facts disclosed in the next paragraph involving an initial over-payment of £14,900,000, and, I was about to add, substantial payments since, according to the view of the Comptroller and Auditor General. In my opinion, the argument is precisely the same and is based upon precisely the same grounds.

  199
  I hope I shall be in order at least in making one observation about the intervention of the hon. Member for Dumfries.
  The hon. Member made a remarkable intervention. He said that we could not refer to the loss of £93,000 on the camp at Penrhos because we could refer only to surpluses, and he suggested that we should not discuss the matter before we took the vote. He said that we should vote and then try to use our ingenuity in dealing with it after we had made the appropriation. In a democratic House of Commons, which has a constitution, that is the most extraordinary suggestion I have heard made for a long time.
  The Chairman: I have stopped the hon. Member for Dudley (Mr. Wigg) from pursuing that point, and I hope it will not be pursued now.
  Mr, Hale: These are the facts which we have to consider. I am not arguing the point, Sir Charles, or going into details. A whole series of allegations of complete inefficiency is disclosed. How do we deal with them? There was a day in the history of the House when the way of dealing with this would be for the Minister to resign. Labour Ministers have resigned. What has happened? The Secretary of State for War has never come near the House from start to finish of the debate.
  Mr. Wigg: Where is the Under-Secretary?
  Mr. Hale: He is no longer with us.
  The Motion is put down on the Order Paper by the Patronage Secretary. No statement is made to the House. No opportunity is taken at the end of Questions for the Secretary of State for War to come and say that he deeply regrets to have to disclose a grave loss of public money. No Parliamentary opportunity is taken of bringing to the notice of the House the whole of these grave matters. The whole thing is done in a skulking manner, which should be a matter of grave complaint.
  The Financial Secretary tried to suggest that the debate could not continue. We suggested at the earliest stage of this discussion that the Chairman should report Progress and we should take an opportunity of considering the matter.
  200
  My right hon. Friend the Member for Bishop Auckland (Mr. Dalton), a former Chancellor of the Exchequer and a man of the greatest possible experience in these matters, got up at an early stage and suggested that we take an opportunity of discussing this matter in accordance with Parliamentary usage and the dictates of Parliamentary propriety.
  This is not a party matter. A waste of public money, a lack of Parliamentary control and a lack of financial control are matters for both sides of the House. The Prime Minister constantly refers to the House as the "grand inquest of the nation." The hon. Member for Dumfries does not think so. Surely, it is a matter on which Members on both sides should be getting up and saying—
  Mr. N. Macpherson: On a point of order. I understood you to say, Sir Charles, that it was out of order for the hon. Member to make that reference. He has made it a second time. Surely, in that case, it would be in order for me to make a reply.
  The Chairman: I thought that the hon. Member for Oldham, West (Mr. Hale) was just working up for his peroration.
  11.45 p.m.
  Mr. Hale: The last time I addressed the House I was 'paying a great tribute to the hon. Gentleman. He is a little ungrateful. I was merely saying that the hon. Gentleman did not seem to regard this House as the grand inquest of the nation—
  Mr. Macpherson: I do.
  Mr. Hale: I thought he was contemplating not a grand inquest of the nation but an inquest on the constitution, which is a different matter. But, Sir Charles, I hope that one of my hon. Friends will seek to move the Motion to report Progress once again, because it would be a tragic event in the history of the House if we permitted the use of procedure to bury events and to bury facts and figures of this kind, to suppress the use of accountancy and to suppress a frank explanation of grave matters. None of us ought to consent to that. We ought all to welcome the opportunity of bringing to light matters that ought to be brought to light, of providing an investigation into facts which should be investigated, in

  201
  order to maintain the reputation for financial purity which has been one of the treasured possessions of this House for centuries.
  Mr. Edward Heath (Lord Commissioner of the Treasury) rose in his place, and claimed to move,"That the Question be now put."
  Question, "That the Question be now put," put, and agreed to.
  Question, "That the application of such sums be sanctioned," put accordingly, and agreed to.
  II. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March, 1953, that the aggregate Expenditure on Air Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the

  Schedule

  DEFICITS

  SURPLUSES

  No. of Vote

  Air Services, 1952–53 Votes

  Excesses of actual over estimated gross Expenditure

  Deficiencies of actual as compared with estimated Receipts

  Surpluses of estimated over actual gross Expenditure

  Surpluses of actual as compared with estimated Receipts

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  1.

  Pay, &c., of the Air Force

  —

  93,697

  10

  8

  2,809,269

  13

  1

  —

  2.

  Reserve and Auxiliary Services

  —

  91

  14

  0

  34,715

  13

  1

  —

  3.

  Air Ministry

  —

  —

  63,728

  11

  7

  1,704

  5

  3

  4.

  Civilians at Out-stations

  —

  119,108

  2

  10

  204,567

  17

  9

  —

  5.

  Movements

  —

  —

  8,489

  2

  6

  780,127

  15

  8

  6.

  Supplies

  5,317,538

  15

  4

  —

  —

  1,083,353

  3

  9

  7.

  Aircraft and Stores

  —

  —

  12,914,288

  8

  3

  524,968

  19

  7

  8.

  Works and Lands

  —

  1,189,462

  8

  5

  17,874,232

  17

  1

  —

  9.

  Miscellaneous Effective Services

  67,426

  0

  3

  110,767

  13

  8

  —

  —

  10.

  Non-effective Services

  25,777

  10

  6

  —

  —

  146,045

  9

  10

  11.

  Additional Married Quarters

  —

  5,399,897

  1

  2

  484,804

  9

  4

  —

  —

  Balances Irrecoverable and Claims Abandoned

  9,496

  18

  8

  —

  —

  —

  5,420,239

  4

  9

  6,913,024

  11

  7

  34,394,096

  14

  4

  2,536,199

  14

  l

  Total Deficits £12,333,263 16s. 4d.

  Total Surpluses £36,930,296 8s. 5d.

  Net Surplus £24,597,032 12s. 1d.

  Motion made, and Questions proposed, "That the application of such sums be sanctioned."—[Mr. Boyd-Carpenter]
  net surplus of the Exchequer Grants for Air Services over the net expenditure is £24,597,032 12s. 1d., viz.:

  £

  s.

  d.

  Total Surpluses

  36,930,296

  8

  5

  Total Deficits

  12,333,263

  16

  4

  Net Surplus

  £24,597,032

  12

  1

  And whereas the Lords Commissioners of Her Majesty's Treasury have temporarily authorised:

  (1) the application of so much of the realised surplus on Vote 8 for Air Services as is necessary to meet the net deficit of £4,915,092 11s. 10d. on Vote 11 that would otherwise have been met by issues out of the Consolidated Fund under the Armed Forces (Housing Loans) Act, 1949;

  (2) the application of so much, of the remainder of the said total surpluses on certain Grants for Air Services as is necessary to make good the remainder of the said total deficits on other Grants for Air Services.

  Mr. Swingler: I think it is a very regrettable thing if the Government should seek once again to set an example this financial year of gagging the debates on these very large sums of money squandered by Government Departments. The right hon. Gentleman the Financial Secretary seems well contented with the fraud and gross negligence that is detailed in these Reports and seeks to prevent Parliamentary debate upon them by using the Whips department of the Tory Party. It is once again necessary to protest against this procedure, and I want to give four reasons why the Committee should not pass the Vote from the Air Ministry which is now presented to us.
  The first reason is because of the very much larger sums that have been voted to the Air Ministry in recent years, and that, I believe, is a sufficient reason why we should not pass this Motion in the form in which it is put. We have to bear in mind that the Estimates of the Air Ministry that have been presented in recent years, and in particular in this year 1952–53, were not fully debated in the form in which Estimates used to be debated years ago, in the years to which the Financial Secretary has referred. The Financial Secretary ought to know, even if he does not appear to at the moment, that in 1952–53, to which these sums relate, the Estimates of the Air Ministry were subject to the Guillotine, and most of the Votes from which either of these surpluses or deficits arises in this Motion were never discussed by Parliament. They may have been discussed by the Public Accounts Committee, but I maintain that we ought not to pass this Motion.
  In explanation of this Motion, we are presented with these appropriation accounts, and they are entitled:
  "Air Services Appropriation Account of the sums granted by Parliament for Air Services for the year ended 31st March, 1953."
  Every Member of the Committee knows that that is a false statement, and that these grants were never approved by Parliament, only in a purely technical way. They were grants made by the Government; they were presented to Parliament in a "White Book" that probably ran over some 300 pages, of which perhaps the first dozen were discussed by Parliament, then, under the Guillotine procedure introduced in 1948, the rest of the Votes were never debated by Parliament.
  The Deputy-Chairman (Sir Rhys Hopkin Morris): That does not appear to me to arise under this Vote. What arises here is that these sums should not be voted in this form but that an Excess Vote should be brought in to deal with them. That is in order, but to deal with the other point is not.
  Mr. Swingler: I am sorry, Sir Rhys, but I was trying to develop an argument that they should not be voted in this form, and my reason for saying that was precisely because they have not been discussed in any other form.
  If I may put the argument in this form, perhaps you would agree that it is permissible. I would be prepared to agree with the arguments of the Government, that if all these Estimates that may lead in any particular financial year to surpluses or deficits are fully discussed by Parliament as well as by the Public Accounts Committee, this Committee could then perhaps easily accept a Motion in the form in which it is now put—that the surpluses should be devoted to the deficits. But I maintain that this Committee ought not to accept this Motion in this form, which according to you, Sir Rhys, means we are not allowed to discuss the individual items.
  We ought not to accept a resolution which stifles discussion on the individual items. I maintain that that is borne out by the fact that we have had Supplementary Estimates from the Service Departments in recent years when we have had deficits such as are described in the Motion. Last year we had a Supplementary Estimate when the War Office required more money for the pay of the Armed Forces, which permitted Parliament to discuss the question of pay and recruitment in the Armed Forces.
  But the Motion before the Committee is admittedly a piece of constitutional trickery. It is admitted by the Financial Secretary that it has been deliberately devised to stifle Parliamentary discussion. He asserted that the Motion was drawn in such a way that we could not discuss the items in it and that if the Opposition wanted to discuss it, it would have to provide its own Parliamentary time for it. His conception was that the Government should vote itself money and if the Opposition wanted to discuss it, it must provide the time.

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  The Government produce Service Estimates of the money given by the Treasury to the Air Ministry and Guillotine them through Parliament and then, if there is any loss, fraud or negligence, they produce a Motion which cannot be discussed and say, "If the Opposition want to discuss the scandal outlined by the Comptroller and Auditor General, the Opposition must provide the time for it." That is a technique of constitutional trickery. It is combined with the use of the Guillotine to stifle Parliamentary discussion on the Services.
  In 1952–53 hardly any of these Votes of the Air Ministry were discussed by Parliament. The Financial Secretary cannot deny that. All that was discussed by Parliament was Vote A, and that was subject to very stringent Rulings from the Chair. Does anybody on the Treasury Bench deny that none of the Votes to which these surpluses or deficits relate was discussed? They were all guillotined. It must be admitted by the Government that these Estimates, involving millions of pounds, were never scrutinised by Parliament. It may be that they were scrutinised by the Public Accounts Committee, but they were not allowed to be discussed by Members of this Committee.
  We have voted large sums of money to the Air Ministry. Now we are told that enormous surpluses or deficits have arisen. In one case the deficit is over £5 million, and the deficits total more than £12 million. There should be full Parliamentary discussion of these deficits and of the losses, frauds and gross negligence outlined in the Report of the Comptroller and Auditor General, and the Government should provide the Parliamentary time for the discussion. That in itself is sufficient reason for opposing the Motion.
  There is another reason. With the technique of using the Guillotine to stifle Parliamentary discussion of Service Estimates and of producing manoeuvring Motions in this form, there has also grown up the practice of deliberate overestimating in the Service Departments. No one on the Treasury Bench can deny that. Take the Ministries we are discussing now—
  The Deputy-Chairman: That may be correct or not—I do not know—but it is not in order to discuss that on this Vote. The only matter that can be discussed
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  on the Vote is the argument advocating an Excess Vote.
  Mr. Swingler: What I am arguing, Sir Rhys, is that acceptance of the Motion in the form in which it is drawn encourages deliberate over-estimating by the Service Departments and enables the Service Departments to get away with whatever accountancy or estimating they please. That is borne out by the fact that of recent years they have overestimated, and there have been surpluses on a considerable number of Votes. Then we have a Motion of this kind permitting them to transfer those surpluses in whatever way they please without adequate Parliamentary scrutiny.
  12 midnight.
  Therefore, this Motion ought to be analysed into particular deficits and surpluses. When there is a deficit, the Department should bring forward a supplementary Estimate so that there can be full Parliamentary discussion about why this accountancy arises. We cannot be satisfied with accountancy which allows a surplus of £17 million on one Vote, or a deficit of £5,250,000 on another. That is completely incompetent accountancy by the Air Ministry, and this Motion and that affecting the Army Estimates shows they have been deliberately over-estimating their requirements to the Treasury on certain Votes. The total result is a surplus of £24 million, and it is the Treasury who require that, because we have the Chancellor of the Exchequer coming to the Box and saying that he wants to cut the defence Estimates. Here we can see why we cannot cut them, because the Air Ministry has deliberately over-estimated.
  The Deputy-Chairman: The hon. Gentleman is far away from the Motion before the Committee.
  Mr. Swingler: I am sorry, but I understood from your predecessor that we were allowed to develop arguments to show why this Motion should not be accepted in this form. I have tried to show that because these Estimates were not properly debated they are now brought forward. Because of the large sums involved and the need to cut defence expenditure and the incompetent accountancy the Motion should be taken back or rejected and the

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  deficits and surpluses brought forward separately so that Parliament can reassert its financial control over the Air Ministry.
  Mr. Boyd-Carpenter: The procedure with which the Committee is dealing on this Motion is precisely the same as that on the Army Votes. The Committee will not therefore wish me to go through the procedure again. We are again concerned—after the submission of the provisional Treasury Minute to the Public Accounts Committee, and the Committee indicated that they saw no reason why Parliament should not authorise the sums of money set forth in the minute—with the figures on the Order Paper and whether the practice the Committee followed on the previous Motion should be carried out here.
  The hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Mr. Swingler) adopted the same argument as his hon. and learned Friend the Member for Hornchurch (Mr. Bing) developed on the previous Motion. He said that in his opinion this procedure was unsuitable because he would have liked a fuller opportunity than we have had on this Motion for discussing certain aspects of the Air Ministry's Votes. This is not, to use his own phrase, a procedure devised to stifle discussion. It is a procedure which provides for no more or no less discussion than would be provided in instances of Excess Votes which would have been swept up by the spring Guillotine. Therefore there is nothing in that point.
  The hon. Member then sought to introduce the new argument that some means should be devised to debate the merits of this matter more fully, because the Estimates in the original debate had not been fully and adequately discussed.
  I have here the HANSARD reporting the concluding stages of those very 1952–53 Estimates. I discovered that the discussion on them commenced at 3.33 one afternoon and terminated at 12.51 the following morning, without any Motion from my right hon. Friend the Patronage Secretary. I do not know what the hon. Member means by saying that the Estimates were not fully discussed, as there was certainly the opportunity to discuss them. My hon. Friend the Under
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  Secretary, as is usual on these occasions, performed a marathon in seeking to answer a very large number of the questions that had been put to him in the course of the debate.
  Mr. Wigg: I do not want to detract from the compliment that the Financial Secretary has paid to his hon. Friend, but it is less than fair for him to claim as a mark of credit that the Patronage Secretary did not intervene on that occasion. We have come to know the ways of the Patronage Secretary very well. He never shows any generous disposition towards the Committee because, as soon as we get Vote A, he will move to report Progress. The Government have done that before; they have done it consistently. Those of us who have been here since 1945 will know what different treatment we got from our own Front Bench, even when we were criticising our own Ministers. If the Government cut us down in one way we shall seek every opportunity to keep the House or the Committee in order to have the discussion we could have had if the Government had given us half an hour of explanation from the responsible Minister.
  Mr. Boyd-Carpenter: The only objection to what the hon. Gentleman has said is that it is not founded on fact. He seeks to get away from the fact that discussion proceeded in a perfectly normal way so long as was desired, on the very occasion to which the hon. Gentleman referred. That discussion did not in fact terminate on Vote A, because there was a reply to the hon. Member for South Ayrshire (Mr. Emrys Hughes) on the subject of additional married quarters. It is an argument based on a false conclusion of facts for the hon. Member for Newcastle-under-Lyme to say that we should abandon the normal procedure in this case because there was not an opportunity to discuss the original Estimates from which this Motion is derived.
  Mr. Swingler: I cannot accept that statement. In the present Motion there is mention of 11 Votes on the Air Estimates. From his perusal of the discussions, is the Financial Secretary prepared to say that there was full Parliamentary discussion and scrutiny of those 11 Votes, involving many millions of pounds?
  Mr. Boyd-Carpenter: I am not concerned to answer that question. I am concerned to deal with the hon. Gentleman's point that there was no opportunity for discussion. If that opportunity was not taken, I cannot help that. From the speech of the hon. Member for Newcastle-under-Lyme, I thought that he was under the impression that the debate in question had been closured. If he now tells me that he was not under that impression I accept it, but in that case I am bound to say that I cannot really see the relevance of what he was trying to say.
  We are here concerned with applying the normal procedure. We are not denying the House any accustomed or normal opportunity to debate these matters. I have always found my hon. Friends in the Service Departments only too anxious to defend their Departments when opportunities offered. It falls to them to occupy this Box somewhat less frequently than some others of us, but they always seem eager to do so, and I am certain that if the Opposition desire to exercise one or other of their normal rights in the matter my hon. Friend will be prepared to deal with any of the allegations in the Report of the Comptroller and Auditor General or any other allegation that any hon. Member desires to make. That is the normal run of Parliamentary discussion of these matters. But I do say that it is quite wrong, quite unfair, wholly inaccurate and completely outside precedent for the hon. Member for Newcastle-under-Lyme to suggest that this is constitutional trickery—to use his own phrase—or that this Motion, which has been moved for many years and which has received, as a procedure, the approval of the Committee of Public Accounts, means anything more than the normal method of applying such part of the surpluses on some of the Votes as is required to meet the deficits on others.
  How these circumstances arose, and why—whether the Service Departments overestimated or not—are interesting and important questions which, on an appropriate occasion, the House will no doubt wish to debate. My contention is that they really do not arise now. Here we are concerned with moneys that have been spent and surpluses that have arisen. We are concerned not with the why and
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  wherefore of the matter, but with the practical accounting procedure to follow. This is the accounting procedure which the House has followed on previous occasions, and nothing that has been said this evening has convinced me that it is not the appropriate procedure to follow on this occasion also.
  Mr. James Callaghan: I am sure that nothing which has been said will convince the Parliamentary Secretary that this is not the appropriate procedure, because there is no other procedure that could be devised which would give him an easier ride than he has had tonight—and certainly no other that I know which would ask the House of Commons to transfer sums of money from one Vote to another without any of the responsible Ministers—who are not, on this occasion, the Financial Secretary—being present to give the Committee an explanation why this should be done. I do not know why, this year, the Financial Secretary has taken upon himself the rôle of answering all these questions. This is unique in my experience.
  Mr. Boyd-Carpenter: We are concerned here with a certain financial procedure which is initiated by the laying of a Treasury Minute before the Public Accounts Committee. My right hon. Friend the Chancellor is responsible for that Treasury Minute and the procedure which flows from it. It therefore inevitably falls to me to justify the expenditure.
  Mr. Callaghan: We always like to have the Financial Secretary with us on an occasion like this, but I am asking why we should not have had the pleasure of hearing from the Under-Secretary. It is not too late. It would not be without precedent. He has been present previously on discussions of this Vote; so has the Under-Secretary of State for War and so have I, in the past, on discussions of the Navy Vote. I wonder why the Financial Secretary is seizing so many opportunities to speak. Perhaps there is to be a re-shuffle in the Government, and he thinks that this is the best way of showing his diligence and persistence. I hope that he will be rewarded when the reshuffle takes place, because I feel that he deserves a reward for his ingenuity in defending this procedure, to which we take great exception on this occasion.

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  12.15 a.m.
  We have heard the Financial Secretary's opinion on procedure, but that does not influence us one tiny bit. It may be, as the Public Accounts Committee thinks, that it is appropriate for the sums to be transferred in this way, but the question we ask, the question of the flock of back benchers opposite, who, we are told, are going to get the Chancellor to reduce the defence Estimates next year, ought to be asking is why an excess Vote is not provided to enable us to discuss the circumstances in which we have to find another £5 million in respect of oil and fuel. We are being asked to find it even though it may be disguised as a surplus, and the only explanation is that it arises mainly from an increase in Customs duties. If we had an opportunity of discussing this on an Excess Vote, I should certainly ask the Under-Secretary of State for Air, who would then be in a position to reply, why it is that he should have to find £5 million—
  The Deputy-Chairman: The hon. Member began by saying "if." There is not, however, an Excess Vote, and he is going beyond the bounds of order.
  Mr. Callaghan: I will drop the word "if" immediately and say that an Excess Vote should be provided to give us the opportunity of asking why the Secretary of State should need £5 million extra although the Army does not want anything on this account at all. I do not find the same degree of misappropriation by the Air Ministry as by the Army, and I offer the Under-Secretary of State for Air that much comfort, but we should still like to hear from him. On another occasion on 26th June, 1952, the Parliamentary and Financial Secretary said:
  "I am very glad to have this opportunity of answering the various points that have been made. I agree with the Member for Oldham, West (Mr. Hale) that it seems odd—"—[OFFICIAL REPORT, 26th June, 1952; Vol. 502, c. 2556.]
  He went on to deal with some of the odd points. I do not think he satisfied my hon. Friend, but at least we did hear from him.
  Why is there this coyness on the Treasury Bench tonight? Are Ministers frightened of the Patronage Secretary, even though he is not here? His deputy
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  is here, of course. Are the eloquence, acumen and wit of the Financial Secretary to the Treasury such that he can answer for all Ministers? If so, let us get rid of them. We have heard a case for an increase in the salary of Junior Ministers. Let us get rid of these other Ministers and increase the Financial Secretary's salary out of the saving. Let us have another transfer of money.
  We think the Government are treating us with much less than their customary courtesy. I ask the Under-Secretary of State to answer the questions that have been put to him. There may be other questions. It is well known to this Committee that if we cannot at first get a reply we go on till we do. The quickest way to dispose of the business is for the Under-Secretary of State to tell us what this is all about. We have had an example that he will not get up or cannot or has been forbidden to get up.
  I want the Under-Secretary of State for Air to cut the debate short by rising to his feet—this is a perfectly proper request—and giving some answer, apart from the mere procedural answer given by the Financial Secretary. We strongly believe that when sums of this order are at stake an Excess Vote should be provided in order that they may be properly discussed, and it is no answer for the Financial Secretary to tell us that it can be done on the Estimates. Those are the Estimates there are what has gone wrong. That is why we want a second opportunity to debate them. The debate which took place when Votes A, I and XI were discussed may or may not have been satisfactory, but this is the net result and, if the original Estimates proved to be out, it is not improper to ask that the Government should make their case showing why they were wrong and what they propose to put them right.
  They should not hide behind a Treasury Minute which says, "We will hide these deficiencies and ensure that the public gaze does not light upon the losses because we will see whether, by a process of virement, which was originally to be applied to small sums to be transferred between Vote and Vote, we cannot disguise the whole operation and pretend that there is a surplus when on many of the individual Votes there is a deficit."

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  Does the Financial Secretary think that this is the proper way of doing it? If so, why does he think Parliament provided originally for separate Votes of this nature to be set out? This procedure was provided in order that Parliament might have the right to make this scrutiny and in order that Departments and Ministers should not slide behind surpluses here and deficits there in order to present a picture which looks smooth on the surface but which, when you begin to dig into it, reveals the degree to which the Estimates have been wrong.
  The Under-Secretary has had an opportunity to study his brief—and I know that a full and adequate brief is provided on these occasions—and I hope that he will now answer the questions, particularly those in relation to Vote VI. Why is he asking for another £5 million? Why does he think we should be expected to sanction his part of this transaction—a deficiency of actual, as compared with estimated receipts, of £5 million for additional married quarters? I am not asking him to explain it—merely to say why he thinks the Committee ought tonight to agree to transfer some £5 million which should have been spent on additional married quarters, and has not been spent on them, in order to attempt to bolster up a surplus in some other part of his Vote.
  Whatever may be the constitutional position, or the procedural rights and privileges, we think the situation reveals a pretty sorry state of affairs. I wish the Government back benchers, who are said to be seeking to reduce expenditure, would concentrate on the millions of pounds which seem to be thrown away in these surpluses. It is no use the Financial Secretary saying, "We have spent less." It is true that overall less has been spent, but equally it is true—if he will focus his attention on the first item in the Schedule—that over £5 million more has been spent, and some of it is accounted for by fraud and some by negligence and some by losses, all of which are brought out by the Comptroller and Auditor General.
  The Financial Secretary came close to challenging what the Comptroller and Auditor General said on the matter. I hope he will not challenge it, because it is well known that the Comptroller and Auditor General is an independent servant in these matters who probes into
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  them and produces the proper answer. If he heads his column, "Fraud, negligence, loss, balance irrecoverable and written off," I am prepared to stake what he says against anything which may be said by any Financial Secretary to the Treasury at any time in defending his Government, because the Comptroller and Auditor General has nobody to defend. He only wants to get at the truth. and that is the reason why we believe that a much more suitable opportunity should be given to the Committee to probe into this issue.
  I invite the Under-Secretary of State for Air, who has a great reputation for courage, to ignore the Financial Secretary to the Treasury, to forget the Chief Whip, and to get up and tell us, without transgressing the rules of order—
  Mr. Boyd-Carpenter: He cannot.
  Mr. Callaghan: I am sorry to keep the Committee, but the Financial Secretary is really making it impossible for me to sit down. He intervenes from a sedentary position, and, I gather, says that it is impossible for the Under-Secretary to speak while keeping within order.
  The Deputy-Chairman: I think that this is wide of the Motion which is before the Committee.
  Mr. Bing: Surely, Sir Rhys, my hon. Friend is perfectly in order in suggesting that the Under-Secretary could reply by dealing with these various charges by arguing that it is unnecessary to proceed by way of an Excess Vote, and that the matter could be resolved by virement? Therefore, there cannot be any objection to his speaking.
  Mr. Callaghan: I cannot see what is possibly out of order in arguing that a Minister should reply to charges which are made about his own Department.
  The Deputy-Chairman: Perhaps not, but this is developing into an argument by itself.
  Mr. Callaghan: Then, as I cannot ask the Under-Secretary for Air to reply, may I ask what change is being made in our procedure by rulings from the Chair which make it impossible for that to be done?
  The Deputy-Chairman: Whoever replies is not a matter for the Chair.
  Mr. Boyd-Carpenter: Perhaps, Sir Rhys, I might say that your predecessor in the Chair did indicate that the rulings given in 1952, under which my hon. Friends were able to deal to some extent with this matter, were later considered to be too wide and were not, therefore, being followed this year.
  The Deputy-Chairman: I thought that I tried to make that clear in my own intervention; whether the procedure adopted here is the correct one, or whether there should be another form of procedure by way of an Excess Vote.
  Mr. Hale: May I call attention to the ruling of your predecessor who said, quite correctly, that he thought he had erred, having regard to the observations of the Financial Secretary to the Treasury, in his ruling in 1952? I called attention to the actual debate on the Navy Appropriation Account in 1952, to which the Parliamentary Secretary replied, and pointed out that your predecessor had not given any order, and that no order had been given from the Chair from the start to finish of that debate.
  The Deputy-Chairman: It is a matter for the Government as to who should reply.
  Mr. Swingler: Could we have it quite categorically that it would be in order for the Under-Secretary of State for Air to reply?
  The Deputy-Chairman: That is not a point of order; that is not for me to answer.
  Mr. Wigg: The Chairman of Ways and Means has apologised for an incorrect ruling given two years ago. But, prior to 1952, we had debates in the three preceding years, all of which were replied to by the responsible Service Minister, and this is the first occasion we have had the Treasury coming down to "crack the whip." It was a jibe by the Financial Secretary that the Service Minister concerned tonight is unable to reply. With great respect, that clearly is not so. Perhaps it would be for the convenience of the Committee, Sir Rhys, if you would be kind enough to tell us in what way the ruling tonight modifies the doctrine which all of us here have accepted from 1948 onwards.
  12.30 a.m.
  The Deputy-Chairman: The only effect of the ruling tonight is to limit the scope of the debate. As I understand it, that is all that the ruling is concerned with. I am not concerned with who replies to the debate.
  Mr. Callaghan: I am obliged, Sir Rhys. We now see that it is by no ruling of the Chair that the Under-Secretary is unable to reply. He is quite able to reply if he wishes to do so, and the only reason that he does not rise is because of some arrangement made either between the Patronage Secretary and himself or the Financial Secretary and himself. If he denies all that, it is clearly his own disinclination to serve the Committee which prevents him from getting on his feet. He cannot have it every way.
  My hon. Friends will want to keep this debate going in order that we get some service from the Under-Secretary of State for Air and to find out what he has to say within the limits of order, pre-1952 ruling, about these matters. This debate could have been over long ago but for the intervention of the Treasury on this issue, which has in some way prevented, although this is now denied, the Under-Secretaries getting up and making the cases for their Departments that they ought to make, that they traditionally make and that, I have no doubt, they want to make now and are perfectly free to make on the same basis as the pre-1952 ruling from the Chair, which, it was said tonight, went unfortunately a little wide.
  We are now back to the pre-1952 position, in which I myself replied to these debates. My hon. Friend the Member for Aston (Mr. Wyatt) has replied to them, Mr. Aidan Crawley replied to them when he was Under-Secretary of State for Air, and there must be abundant precedents. Why the Government Treasury Bench want to be so obstinate to keep a handful of us here and a great many more of their own supporters is beyond my comprehension. Perhaps the 1922 Committee will have something to say about it in the privacy of its meeting on Thursday. For heaven's sake let us have a reply from the Under-Secretary of State for Air and get away home.
  Sir Herbert Butcher: I do not want to trespass on the time of the Committee except to say that it is right that some tribute from these benches should be paid to the appearance of the hon. Member for Cardiff, South-East (Mr. Callaghan) in air debates. I feel sure that the large number of Members of the Opposition who had the misfortune to leave before he took up the debate will greatly regret that they missed so historic an event. I congratulate the hon. Member on having maintained the whole of his audience for the whole of his speech. He started when he had seven of his supporters here, and he finished with the complete galaxy that is ranged behind him. I feel sure that that will be a tribute both to his skill and to the assiduity of their attendance.
  I just want to express to the hon. Member one word of advice if he will allow me. He is seated next to a very distinguished figure, the right hon. Member for Bishop Auckland (Mr. Dalton), who is a former Chancellor of the Exchequer and who, after two of his colleagues had moved to report Progress in an earlier debate and after he himself had intervened, in some peculiar way did not press the matter to a Division. I hope that the younger and more active leader of the Opposition will have the courage to take the matter to a Division should be so wish.
  Mr. James Simmons: Owing to the action of the Government Front Bench, I am speaking on rather unusual ground. The Army is my particular subject, and I hoped to say something as far as the Army Appropriation is concerned, but the same principle applies to the Air Appropriation Accounts.
  The Financial Secretary has told us that this is an age-long procedure, that what we are making a fuss about has been done year after year and why do we not accept it and let him go home to bed? They told us that about the Army Act. On this occasion we are trying to bring to bear arguments against a phoney manipulation of figures, against juggling with the national finances, against this archaic method of finance, as the Under-Secretary of State for War called it in a previous debate.
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  I am concerned because it is unintelligible, and I am only a simple chap. The lads in the Army and Air Force could not understand the implication of the mass of figures which we have under this system, but if there were a straight Excess Vote, even the rank and file in the Services would understand what was being presented.
  Now we are being told that all these Votes have been discussed already. Yet only one or two Votes were discussed on the original Estimates, and that fact is probably the reason why we are having a debate on this Vote this morning.
  Mr. Swingler: Actually only one Vote was discussed.
  Mr. Simmons: Yes, Vote A was discussed for the Army. If we are to discuss only one and then rush through in Committee 10 Votes without discussion, the Government will have to come back with a surplus on the one side and deficit on the other side, put a bit here and take a bit out there. This is not a serious way in which to carry on the national finances. I have heard it suggested that national lotteries might be run for boosting the national finances. That would be preferable to the put-and-take method we have in this Vote.
  Because we are not told what will be done with this Vote. We are simply asked to give a blank cheque. There is a deficit here, a surplus there. All right, take some of the surplus, wipe out some of the deficit, no questions asked, never mind what caused the deficit. No, we must not ask that. Never mind what caused the surplus. No, we must not ask that. Just keep our mouths shut. There might be too many nasty stories flying about. There might be too many public inquiries demanded by the 1922 Committee if we go into too much detail as to why there is a surplus or a deficit. All we have to do is to wipe out some of the deficit with some of the surplus.
  We suggest that this is the wrong way. We suggest that if there is a deficit there should be an Excess Vote of this House to make it good. Think of what could be done with the deficit of £12 million. We are here dealing with a surplus—
  Mr, Bing: On a point of order, Sir Charles, I think there are fewer than 40 Members present in the Chamber.
  Mr. Gerald Nabarro: Further to that point of order, Sir Charles, I have just counted and there are 47.
  Mr. Callaghan: There are 43.
  Mr. Nabarro: Forty-seven.
  The Chairman: There are 40 Members present.
  Mr. Nabarro: Wrong again.
  Mr. Simmons: I was pointing out that enormous sums of money are involved here—a surplus of £36,930,000 and a deficit of £12,333,000—and we are asked blindly to allow the Government, without them having to come to the House and without discussing how best to deal with these deficits, to do exactly what they like. I would suggest that probably some of this money might go to assist the disabled ex-Service men in whom I am interested, but I cannot say that. I can only give an overall general method of dealing with the problem.
  We have had the short debate on the Army brought to an untimely end. Now the Brigade of Guards has gone, no doubt with their bowler hats to collect salutes, and we are on the Air Force. We shall probably have the Navy later on. But I am going to say that it is a disgrace and a scandal that these matters affecting the Services of this country should be dealt with in this hole-and-corner way at this time of the morning because the Government will not give adequate and proper time to it.
  We have had no discussion for three years on the Army Act; we have had Guillotine discussions on the Service Estimates, and more and more it appears to me that it is the policy of this Government to prevent discussion on the commissions and pay of the men and women of the Services. I believe it is our duty to keep a very keen eye on the way the money is expended, and to see that it really goes for the defence of this country. But if we are to allow this put-and-take method to be pursued, we shall not know what money is being spent. We want to know that the money voted by Parliament for Defence does not go to buy carpets at £572 each. We want to know that the money the House votes for defence does not go to buy second-hand carpets, then to be told by
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  the Comptroller and Auditor General that they could have got new carpets for much less. I know that is in the previous year's Report, but it is the same principle, and that is the whole point. This runs through all the years: these things are going on all the time.
  This Army, Navy, Air Expenditure Committee meets on one occasion to discuss these Votes, and this is the only opportunity we have to consider the Report of the Comptroller and Auditor General. Yet it is brought on at this time of the night, with no major Ministers present. The Patronage Secretary has now come in, no doubt having donned his bowler hat and collected his salutes in Birdcage Walk. The Secretary of State has not been here all night, and with no major Ministers here the Committee is being treated with utter contempt by the Government on this very important question of the fighting Services.
  We are supposed to be proud of our fighting Services, and we are supposed to be determined that we shall give of our best to those who have always given of their best to us. Yet we have been presented with these two Votes. I am discussing this one on the ground that it is the wrong method. I am discussing it at a grave disadvantage because I am an Army man and do not know much about the Royal Air Force, but I say that the same principle applies to the Air Estimates as to the Army Estimates. This House ought not to allow this financial juggling to take place on these Estimates.
  I hope, Sir Charles, that if the Under-Secretary's reply is not satisfactory, and if my right hon. Friends feel it to be necessary, you will accept a Motion to report Progress.
  12.45 a.m.
  Mr. Bing: I do not want to delay the Committee for any great length of time in dealing with these Estimates, but I want again on the Air Estimates to press the argument that I presented to the Committee on the Army Vote. It is even more applicable in the case of the Air Estimates.
  We ought to have these matters separated. We should vote the deficiencies separately, and then have the surpluses put

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  back properly into the general account. There was not a constituency in which hon. Members opposite did not shed tears over the fate of the old-age pensioners. Everything was to go first to the old-age pensioners. Why could we not meet the case of the old-age pensioners? Because the Chancellor had not got £45 million with which to do it. But if one adds together the Army surplus and this very big surplus of £36 million, we have got to £44 million already. The Service Departments over-estimated and said "You cannot give anything to the old-age pensioners because we need the money." Yet they did not need the money. The fate of the old age pensioners has been the battle-cry of hon. Gentlemen) opposite for the last two months. Surely the House ought to debate this matter.
  Mr. Wigg: On a point of order, Sir Charles. Would it not be as well for the hon. Member for Kidderminster (Mr. Nabarro) to get to his feet if he wishes to address the Chair and not carry on a conversation which is interrupting my hon. and learned Friend?
  The Chairman: I could not hear what the hon. and learned Gentleman was saying.
  Mr. Bing: The House ought to look at these matters in a little more detail. The Financial Secretary gave two reasons why the Committee should not deal with the matter now and why it should not be dealt with by way of Excess Vote. He said that the matter could have been dealt with when the Estimates were presented. He also said that the matter should have been looked at by the Public Accounts Committee and only if it suggested there was something particularly important ought the House to deal with it.
  Either one or other of those arguments may be good, but they cannot both be. The Estimates come up in March, and the Public Accounts Committee does not report until the end of May. So it is quite impossible for us to wait for the Report of the Committee to consider whether there should virement. We cannot possibly discuss the matter on the Estimates in March if the Report of the Public Accounts Committee is not to come out until the end of May.
  Possibly the brief was given to the Under-Secretary of State for Air to read
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  and then it was decided that he had better not speak and that the Financial Secretary should speak in extempore fashion. Otherwise I am sure the Financial Secretary would not have made such a gaffe as that.
  Mr. Boyd-Carpenter: Had I used that argument it would have been a gaffe. If the hon. and learned Gentleman had paid attention he would know that I did not state that this was a matter to be left to the Public Accounts Committee. I said that the procedure had been approved by that Committee. I did not say that the investigation of any particular allegations relating to the Service Departments was passed to the Public Accounts Committee, nor would I have said so.
  Mr. Bing: The right hon. Gentleman is not being fair to himself. What he did was to read out the last sentence of the Report, which states that they see no reason why Parliament should not sanction the virement temporarily authorised by the Treasury in their Minutes laid before the House in February, 1954. There are other reasons why this should not be dealt with in the form we are now dealing with it. I do not want to go into great detail, but Vote 8 is one of those on which large surpluses arise. Those surpluses have been set against all sorts of losses, but they ought never, to my mind, to have been set against those losses which arise from policy matters but should be discussed on a different basis. We want to know whether they should be set off against sums of money which include, if one looks at the stocktaking losses, deterioration of cement in the Canal Zone at the time of the abrogation of the 1936 Treaty.
  These matters should not be set against large sums of money which have come to the Treasury on different grounds. If one looks at the Report and explanation with the Vote one sees there is a surplus of £17 million, not an inconsiderable sums these days. The greater part of that is due to new works, additions and alterations each amounting to £10,000 and upwards. All we know is that is due to changes in planned works services, political uncertainties and alterations to the programmes of the United States Air Forces. To set off against a deficiency caused in different

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  ways sums of money which come because of an unexplained change in policy by the United States Air Forces is an entirely inept method of accountancy, and one in which the House should not indulge. We see also that the decision is due mainly to works structural plant being diverted to export and delivery of other plant falling below expectations. That is a separate matter that should have been debated separately, as it is entirely different from particular types of losses.
  When one comes to examine the losses one is struck by the way they differ from last year. For example, cash losses last year amounted to £9,000: this year they were £64,000. We have had no explanation of this: perhaps we shall get one from the Under-Secretary for Air. They are things we ought to be told about. On page 33 we see that damages to two Royal Air Force Training Establishments were assessed at £1,639, but the amount recovered was only £81. If we had an Excess Vote we could examine this matter, but it is extraordinary that only £81 could be recovered. Were there only two people involved in this who could be fined, or what?
  Then there is the huge item:
  "Barrack Damages written off under powers delegated to air-officers Commanding…£17,402."
  We ought to have from the Under-Secretary of State for Air some explanation of this item. It may be possible for him to reply in this debate on these matters, and I hope he will do so. He can demonstrate that these matters need not be dealt with in this way at all.
  Mr. Callaghan: Has my hon. and learned Friend noticed in Paragraph 23 of the Estimates that the Air Ministry have actually given power to commanding officers to write off losses and to raise the ceiling to £500?
  Mr. Bing: Exactly, These matters may not seem very large, but on the Excess Vote procedure we should be in a position to have an explanation why the Ministry give power to write off losses. The cost-of-living is about twice as big under the present Government over what it was before, and perhaps that is the short explanation. If it is, we ought to have it.
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  I do not want to detain the Committee, but I would give one or two more illustrations and show how the matters might be dealt with. Item 34 on page 38 is:
  "Deficiencies of stores revealed at 24 stock-takings at depots at home and abroad."
  They were stock-taking errors. Treasury authority was obtained in each case, to a total of £138,277. This is a large item, which it is proper for us to examine. We cannot go into each case, but on the Excess Vote procedure we could take one or two items so that it would be felt that there was some general control.
  It is only fair to say that this document is more satisfactory than the Army document, even if the sums are larger. The Army document shows a degree of irresponsibility which is fortunately missing in the case of the Royal Air Force. That is all the more reason why Ministers might be allowed to get up and speak. I can understand why it was necessary for the Chief Whip to prohibit the Secretary of State for War, but this does not obtain with the Air Force.
  There may be a very good reason why it is necessary for commanding officers to know that it might be their unit which is picked on by the Committee for examination, and that the responsible Minister may have to answer, as otherwise we cannot have public accountability. If people think there will not be the Chief Whip to get up and say: "I move the Closure" before the Minister can possibly reply, we shall have commanding officers acting in a highly responsible way. I remind the Committee of the gentleman who gave the orders for the bowler hats and the umbrellas. Even in the Air Force it is necessary that officers should feel themselves subject to public scrutiny.
  1.0 a.m.
  It is no use hon. Gentleman thinking they can evade their Parliamentary responsibilities by evading debate, or even by moving the Closure. It is clear that if we do not get the Under-Secretary up on this occasion we shall certainly find an occasion on which we shall have an opportunity for discussion. If we find it, I hope there will be a great many complaints from the 1922 Committee or elsewhere that the time is inconvenient, and that hon. Members are kept back from their holidays or made to sit up all night in order to do so. Here was an

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  occasion when the Government could have withdrawn this Motion and proceeded by way of an Excess Vote, giving the House a day for a discussion of the matter. They have failed to do so, and they must not blame the Opposition if it takes a convenient opportunity to consider the constitutional issues which are raised. I am sure that hon. Members opposite will not mind spending a night out of bed in order that we may have an opportunity of discussing this matter.
  Mr. Heath rose in his place, and claimed to move, "That the Question be now put."
  Question, "That the Question be now put," put, and agreed to.
  Question, "That the application of such sums be sanctioned," put accordingly, and agreed to.
  Resolutions to be reported this day.

  GREENWICH HOSPITAL AND TRAVERS' FOUNDATION
  1.3 a.m.
  The Parliamentary and Financial Secretary to the Admiralty (Commander Allan Noble): I beg to move,
  That the Statement of the Estimated Income and Expenditure of Greenwich Hospital and Travers' Foundation for the year ending on 31st March. 1955, presented to this House on 29th March, be approved.
  It may be convenient to the House—as I understand that the hon. and gallant Member for Hull, East (Commander Pursey) and other hon. Members have something to say—if I reply afterwards to the details that are raised. I understand that that will be in order.
  1.4 a.m.
  Mr. James Callaghan: I beg to move, "That the debate be now adjourned."
  In view of the statement that we have had from the Parliamentary and Financial Secretary to the Admiralty, he clearly anticipates a substantial debate and, indeed, he is not mistaken. He has specifically referred to my hon. and gallant Friend the Member for Hull, East (Commander Pursey), who has come here in order to make a speech upon this issue—as I understand from the Parliamentary and Financial Secretary, who anticipates further speeches. In that case
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  I think it would be appropriate, in view of the lateness of the hour, if we were to adjourn the debate so that we may have the opportunity of hearing the Parliamentary and Financial Secretary on another occasion, together with my hon. and gallant Friend. We are always anxious to hear him, and although the hon. Member for Edinburgh, South (Sir W. Darling) desires to stay here, I am not at all sure that his desire is shared by the rest of his colleagues. As the hon. and gallant Gentleman anticipates a substantial debate, it should take place at an appropriate time when hon. Members are more alert than they are at the present time.
  Mr. Deputy-Speaker (Sir Charles MacAndrew): I cannot accept that Motion.
  1.6 a.m.
  Commander Harry Pursey: I make no apology for addressing the House at this hour of the night, because it is entirely the Government's fault that this Motion is being debated at this hour. I am under no illusion at seeing the galaxy of hon. Members on the other side. I know they are interested in neither what I am going to say nor the subject matter of the Motion. The subjects of this Motion are, among others, pensions for officers and seamen of the Navy and the education of orphans, and no Tory Member has ever before evinced an iota of interest in either of those subjects. They have not come here tonight to speak on behalf of the officers and men or of their widows or their orphans. They are interested only in going home.
  Mr. F. A. Burden: There are more than 100 Members on this side and only six on the hon. and gallant Member's side.
  Commander Pursey: That gives me the introduction for my next point. I shall be quite happy if the remainder of hon. Members opposite provide me with points to talk about, because then I shall be able to give three or four hours' instead of one hour's entertainment.
  There is no question about the importance of this Motion. It appears innocent, but it covers a multitude of sins. We have been discussing millions of pounds. This Motion covers a matter

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  of £4 million. I shall refer to two documents, the Statement of the Estimated Income and Expenditure of the Greenwich Hospital and Travers' Foundation for the year 1954–55 and the Accounts for 1952–53. On page 3 of the Accounts we are told that the total stocks are worth £4,116,881. On page 3 of the first document we are told that the total estimated income is £270,954; on page 6 we are told the total expenditure is £270,890. That means a credit balance of £64, but it is not shown as such. The question is why the income is approximately only £250,000 on £4 million of stocks, which includes valuable property, or a return of only 6 per cent.
  The estates are indicated in general terms—
  "Revenue from estates in the North of England, Revenue from property in Greenwich"
  —which I understand includes the market, which should be a valuable property producing a good income—
  "Revenue from other property, Interest on British Government securities; Interest on Australia stock"
  and other stock. I shall not deal with each item in turn. In addition, there is a Parliamentary grant of £4,000 and then there is a transfer from the Reade Foundation of another £20,000.
  Surely, from all these sources the income ought to be higher than it is. My first question is, has not the time arrived for a complete inquiry as to whether the present means is the best means of making use of this £4 million for the advantage of the widows and orphans of officers and ratings who were lost in the service of the State?
  The next question is, where is money being lost? Obviously money is being lost, and there must be a considerable number of these estates, either in total or individually, which are not paying their way. If that is so, they should be disposed of and the money used to better advantage. Is not this the opportune moment to reconsider the whole of the organisation of Greenwich Hospital, its stocks, income and expenditure? The roots of this organisation go back some three centuries to 1694, the time of William and Mary, and I believe that it may well have had associations with Nell Gwyn.
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  A good place to consider an investigation and reorganisation is obviously at the top. Let us start by considering the director. I understand that the present director is an ex-Admiralty civil servant. If I am wrong, I am ready to sit down in order that the Parliamentary Secretary may correct me. I have no objection to a civil servant as such. I have no objection to the present director as such. I have no intention of mentioning his name. But if the hon. Gentleman looks at page 6 of the Estimates he will find that the director receives a salary of £1,655, alongside which figure there is the letter (a) and the letter means that in addition he receives a pension of £1,195-odd from Navy funds. If my arithmetic is correct, that gives this gentleman a total income of £2,850.
  Mr. John Baird: Shame.
  Commander Pursey: That shows what can be done if one is an ex-civil servant and not a Member of Parliament subject to the strictures of the Conservative Party 1922 Committee.
  I understand that originally the director of Greenwich Hospital was a disabled, retired naval officer. This is a naval charity and, largely, the funds have come from naval sources. They even came from the sixpences of the seamen in the Crimean and Napoleonic Wars. They have been built up from naval sources. I ask this question: why should the director of Greenwich Hospital, which is a naval charity, not be a disabled naval officer who has suffered injury in war in the service of the country and has consequently suffered loss of earning power, instead of being a civil servant who has been employed only in some stone frigate such as the Admiralty? It is not necessary that he should be an admiral: it is not necessary that he should be an executive officer. He could well be one of the supply officers, but, in any case, surely this is eminently a position for a disabled ex-naval officer? After all, it is only a director's job, such as those jobs which are performed by dozens of Tory M.P.s in their spare time so that they can vote down other individuals getting a source of income from elsewhere.
  What are the duties of this officer who receives £1,655 a year? Is it to dole out half-crowns to the widows of officers?

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  Is it to dole out sixpences to the widows of seamen, or even sixpences to disabled seamen? Let hon. Members look at page 4 and see the figure for the education of orphans, pensions to officers, and other matters. Pensions to officers are shown as £13,500; education of children of officers, £5,000. Five thousand pounds! That is the amount spent on the education of these children who have lost their fathers in the service of the State. Here we have £4 millions which ought to be employed in better ways and an income of £250,000. Pensions to widows of seamen and Royal Marines—and there must be thousands of those—total £9,000, and education and maintenance of children of seamen and Royal Marines, £6,600.
  What are the number of pensions, and what are the amounts of the individual pensions? I admit straight away that I have not given notice to the Parliamentary Secretary that I would raise that point, and I will make no complaint if he cannot give the figures tonight, but I do say to him that it is an example of the sort of information we shall want in the future. Previously, the idea has always been that this Vote goes through on the nod; that it need not be put on for discussion at a reasonable hour because there will be no discussion. But there have been occasions when this has not gone through on the nod, and this is obviously one of them. These are only pinches of salt out of £250,000, and it is high time that this whole matter was investigated so that we can see where the money is being spent.
  Let us look at the expenditure for staff. There is the director, whose salary I have already mentioned, and then there is a clerk-in-charge at £1,562, and an accountant at £1,195, two higher clerical officers at £1,523, three clerical officers at £1,567. a temporary clerk, £408, a shorthand-typist, £390, a messenger, £330. and charwoman at £170. The National Insurance contributions total £150, a grand total of £8,950, and this staff is housed at Buckingham Gate in a separate spacious mansion when there ought to be some accommodation found at the Admiralty; or, they could be transferred to Greenwich or to the school at Holbrook, with Which I will deal in a moment.
  There are other details about expenditure on works and funds and the buying
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  and selling of shares. What it amounts to is that there is in this Department a miniature Stock Exchange that is buying and selling stock and houses, and the whole thing going on as if it is Fred Karno's Navy playing Housey-Housey.
  The Admiralty may argue that the main expenditure is on the Royal Hospital School at Holbrook. I happen to know something about that school because, as the House will know from my speeches, although I have not spoken on the subject for three or four years, I was educated at that school when it was at Greenwich, opposite the Royal Naval College. But since it has been moved down to Holbrook, the whole thing has gone completely out of proportion.
  Everyone who knows anything about the school knows that it was the most expensive school ever built in this country. The original plans ran to £1 million. It has a church that cost a fantastic sum. It has a large organ which needs, if it is to be played properly, someone of the capabilities of the organist of Westminster Cathedral. Instead, the only guy who plays it is the schoolmaster, and so he gets up to the dashboard, as though at the dashboard of a bomber aircraft, and switches off all the gadgets and then plays it as a harmonium. The important point about that church is that although the school at Greenwich had accommodation for over 1,000, the present school has accommodation only for something like 600-plus, the reason being that having got those expensive estimates, they did not have the money in the kitty to go through with the full programme.
  So what did they do? They cut out two hostels and the church. Then they got a windfall from Mr. Reade, who was rescued by the Navy in the First War. He had an estate at Holbrook and other money, and he decided to devote the money to Greenwich Hospital. The Admiralty sent a representative to discuss matters with Mr. Reade. More money became available, and they had the option of building the church or the two missing hostels. I need not give the House two guesses as to which they built. Obviously it was the church, which they use only once a week. Up to that time they had used the gymnasium quite well for church and other

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  religious purposes. Obviously, the thing they ought to have done was to have built the two missing hostels.
  At a later date somebody had the bright idea to make a national appeal for an Admiral Jellicoe and Beatty Memorial Fund, with the idea of using the money to build the missing hostels. But the story got round in the Press about this racket and they got no money from the public. That idea failed, and the hostels are still missing.
  However, we now come to the cost of the school. We find that the total cost—it is not too clear which figures are gross and which are net, but I believe I have the right figures—is £149,550. There is another figure that brings up the total to something else, but that, apparently. is carried forward from the previous page. Then there is Estimated Receipts of £4,660, which gives an estimated net expenditure, apparently for the school—this is not well cross-headed—of £144,890.
  Below that is given the average cost per boy. In 1947, when the number of boys borne was 576, the average cost was £183. In 1952, for 641 boys, it was £212, and there is a note which says:
  "It is estimated that the net cost per boy for the year 1954–55 will be £223."
  When we consider what it costs to educate each boy and turn to the expenses of the school, we find first a headmaster with a salary of £1,750 and an allowance of £250 with a letter (a) which reads:
  "With services of gardener and boy at expense of Greenwich Hospital Funds."
  I want to know why a headmaster receiving £1,750 plus £250 allowance, totalling £2,000, should also be given the services of a gardener and boy at the expense of Greenwich Hospital Funds, even though that may have gone on from the year dot.
  Next there is a second master with an official residence and allowance, nine assistant masters, 22 assistant masters, a chief naval instructor with an official residence, four clerical officers, an officer-in-charge of works, a foreman of works, a foreman engineer, a chaplain with a (d) beside his name, so we had better be fair and look up what that means:
  "Receives the full pay and allowances of his rank as Naval Officer."
  There are 11 house matrons, one sister-in-charge, one infirmary sister—
  Mr. Baird: Might I ask my hon. and gallant Friend what the chaplain gets as income?
  Commander Pursey: The chaplain's income is not given here because it is a charge on Navy Votes.
  Mr. Baird: It says £1,100.
  Commander Pursey: There are three assistant nurses. If we reckon up some of these items together, we arrive at 22 assistant masters, and another nine is 31, a second master makes 32, and a headmaster makes 33. With 646 boys it gives an average of about one to 20.
  Mr. Callaghan: That is quite right.
  Commander Pursey: Let me relate that to the national system of education under this Government, with a ban on the building of schools, resulting in the numbers in classes being between 40 and 50. So I am not necessarily arguing everything in the negative. Then we have 11 matrons plus a sister-in-charge and so on, without going into all the details again. What it amounts to is that there is a collection of people here, including Uncle Tom Cobley and all.
  Another point of interest, which is never disclosed by the Admiralty is this. What type of boy is now being entered at this school which was instituted in 1694 with one object and one object only, to educate the orphans of the poorest individuals in the Navy, namely, the seamen of the Navy? At that time the regulations did not include even warrant officers. While the school was at Greenwich—until about 1933—taking a total complement of 1,000, it was taking poor boys. The object was to take them and educate them even if they were slightly below standard. There is no doubt as to what the school produced, because contemporaries of mine have risen on the Active List, two to flag rank and one on the Retired List. Those officers commanded cruisers at sea during the war.
  So there can be no question about the type of individual who was being properly trained at the Royal Hospital School, Greenwich. But, since the school was moved down to Holbrook, the policy of the Admiralty is to take only the cream of the applications, in other words the best guys, with the object of producing the best results, irrespective of the original purpose for which the school was

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  founded. The Parliamentary Secretary replies. All right, if he has some information to the contrary let him state the schools and where the individuals come from.
  The question that follows obviously is: What happens to the boys who are trained in the Royal Hospital School? When the school was at Greenwich the majority went in as seamen boys in the Navy. Those who made good advancement in education entered the clerical branch as writers and ships' stewards, and a certain number, namely, those who were Boreman Foundationers, who instead of being resident were non-resident, coming in during the day, were selected from a higher standard of education, entered as engine room artificers, and a number of those artificers in time won commissions, served as engineer officers, and have risen to the rank of engineer commander.
  Surely one is justified in saying that this sort of information should be in either the Estimates or the Annual Accounts. This idea that because for years these two documents are produced—one the Estimates and two the Accounts—and go through on the nod, and this House approves the Admiralty's dealing with £4 million, and with an income of a quarter of a million pounds, should cease. So far as the Conservative Party is concerned, no one is interested in this question of widows' pensions and allowances, education, or even the pensions paid to officers and seamen. It is time that ceased, and that some of the bare bones of this dead Account and Estimates were clothed in some human points, so that we could get to know something about the object of this organisation, what it is intended to do, and what in fact it does.
  The ground on which this school stands was a free gift. It was 850 acres, and a small part of it is left, but part is used as a home farm. It would be of interest to know more about this home farm; why it is still run as a home farm by the Greenwich Hospital organisation, and what happens to the produce of the farm, because today, with the freeing of meat from control, there ought to be a greater demand for Lord Woolton's real red meat, as announced in his election speech, particularly at a price which the lower income group can afford to pay. Instead of it being used
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  to go anywhere into the kitty, the home farm might be used to some advantage to Greenwich Hospital, or the school, or something else tied up with the Greenwich Hospital organisation, instead of simply for the benefit of the farmer who happens to have been selected to run it.
  Then, as a matter of interest, there is the Reade Foundation, about which there happens to be a footnote at the bottom of page six. It refers to a sum, at present approximately £110,000, to provide income to pay annuities, and a further £100,000 for the purpose of a cumulative investment in accordance with Mr. Reade's will. The income from the Admiralty portion in the current financial year is estimated at £23,200. Provision is being made for £19,000 of this sum to be transferred to Greenwich Hospital Account, and the balance will be transferred to capital account for investment. In the '30s the Select Committee on Estimates went into the whole of these Accounts and produced a very caustic Report. I intend to go on putting down Questions to ventilate some of these points, and so I do not propose to delay the House unduly tonight.
  This is not a speech prepared for the occasion. What I am saying is just an example—although the Government Front Bench have let their rabbit get away—that it is possible to harass the Government in the trenches as was advocated by the Financial Secretary to the Treasury when he was in Opposition. This is an example of a preliminary skirmish over the ground, picking out here and there points which occur to anyone with any idea of facts and figures. I hope that several hon. Members opposite who are interested in the welfare of widows of seamen and the education of orphans will deal with some of these figures, particularly if they have a knowledge of directorships and figures.
  This is simply an example of Don Quixote tilting at some of the many windmills which are available, but I warn the Admiralty and the Government that the Opposition is not going to stand for this procedure any longer. This subject is of sufficient importance for Active Service officers and ratings and ex-Service officers and ratings, particularly disabled ex-Service officers and ratings, to know more about it: to know what pensions are available in what amount and to

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  whom; and to know what fees are available for the education of the orphans of officers and serving men and also ex-serving men. Service and ex-Service officers and ratings have a right to know how the £4 million is administered and why there is not more income than there is. If there are estates which are derelict and should be disposed of, well and good. A comprehensive review should be made of the whole organisation from top to bottom, including the school and whether the best value is being got out of the school by the boys resident there.
  I have stated before that the whole policy of the Minister of Pensions and the country is not to take youngsters at the age of 11 and segregate them in a monastery. We have killed that nonsense at Dartmouth College for cadets after a century. Now it is obvious that it was always boloney to say that we must collect them young to get them into the Navy, particularly when we realise that many of those going to the Royal Hospital School do not go into the Navy.
  There is no doubt that the money which is spent on the school to educate 646 boys would be better spent on arranging for those boys to be at home. It is exceptional for both parents to be dead because the loss occurs mainly through the service of the father in the Navy, particularly in war. It would be better for those boys to be at home with their remaining parents. Incidentally, it would be interesting to know how many of the boys at the school today have both parents alive: I believe that would be so in the majority of cases. However, instead of being segregated in a monastery, the boys should be at home being brought up as normal individuals.
  Why, because a boy has lost his father, should he be segregated in an orphanage like I was from 11 to 15. It is not done for officers' children. They are given a bursary. If an officer's child is entitled to a bursary to go to a school of the choice of his parents, and other means are found to enable that child to mix with his contemporaries and get into the walk of life his parents or guardians decided, why should a seaman's son have his career decided at 11 without any option. If any hon. Gentleman opposite thinks I am wrong, he had better check it
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  up. You have got the information. I have got to seek it. [Interruption.] If the hon. Gentleman wants to intervene, let him stand on his feet.
  Mr. Dudley Williams: I was saying that Mr. Speaker does not have to get up to reply.
  Commander Pursey: Mr. Speaker is able to take care of himself without obnoxious interventions with irrelevancies and nonsense by an individual who does not know the first thing about what I am discussing and has no interest either in the officers, the men, their widows or their orphans. He has got the same information as I have. I have told him where it is. All he needs to do is to go to the Vote Office and get a copy of the Accounts and Estimates. Then he will be able to make a marvellous contribution—preferably standing on his head.
  The Admiralty has the money for the education of the sons of seamen, leading seamen, petty officers, and maybe warrant officers, but they do not use it to the best advantage of the orphans of fathers who have been lost on war service by giving them bursaries for public schools. As for the Royal Hospital School, I suggest the Admiralty should close it down. There are plenty of purposes for which it could be used. It could be used as a hospital: there is accommodation for staffs, and no doubt the Minister of Health would be happy to take it over from the Admiralty.
  It is nothing new to have this subject debated at this hour. I ran a campaign about it when I came into the House in 1945, and my maiden speech was made at 1.5 a.m. At that time the Tory Party were in Opposition, and there was only one member present on these benches. He was the son of an ex-captain of the Royal Hospital School, Greenwich, and suddenly he heard something he thought he knew about. He registered some attention in the debate but did not participate. We have had no contribution from the Tory Party in our debates on this matter, except from the hon. Baronet for Croydon East (Sir H. Williams) who poses as the only individual who has ever taken part in, or has any interest in, this subject. He has always talked nonsense, because it was not until the matter was ventilated by Labour Members when the school was

  237
  transferred from Greenwich to Holbrook that the subject came up for discussion.
  I warn the Admiralty and the Government that we are not satisfied with this business being sandwiched in between bits and pieces at the end of the day when we have discussed several items, some of which are subject to an allocation of time order. There was never any question of several items getting through quickly. The Third Reading of the Finance Bill was timed: there was other important business dealing with the Army and Air Force, which the Government thought they would steam-roller through on the nod. But the days of "on the nod" are finished. The total amount involved is £4 million for the officers, men, widows and orphans of the Navy. It is a matter of supreme importance. The figures should be more publicly known. The officers have their own organisation, and when appeals come to them they know where to recommend them.
  As to education, it is time the idea of segregating the boys ended and the whole organisation were gone through with a small tooth-comb from A to Z and back again, to see whether a more profitable use can be made of the £4 million, whether the best use is being made of investments, and what is going on.
  I assure the Government and the Admiralty that if something is not done about this before next year, and if the business is not put down to be taken at a proper time like other ordinary business of the House, we shall have no hesitation in carrying on an all-night debate on the subject of Greenwich Hospital and Travers' Foundation Accounts.
  1.47 a.m.
  Mr. James Callaghan: I wish to speak for myself and not for the Opposition, and therefore I do not speak from the Despatch Box.
  The pertinacity of my hon. and gallant Friend the Member for Hull, East (Commander Pursey) is well known. He is right to ask the Parliamentary Secretary his policy in relation to the division of the funds between pensions and schools, and the Minister should welcome a question of that nature so that he can give
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  a considered figure. I appeal, however, to my hon. and gallant Friend, on behalf of the boys at the school. We have exposed matters in the past, and they are well known. The Press have helped us, and every year when applications are made they are willing to give us space.
  When the school was started in 1933—I think it was—we said it was built on a grossly extravagant basis which could not be justified on any account. We all know these facts; but that water is under the bridge. The boys are there and the school is going on. It has a corporate existence. I would ask my hon. and gallant Friend what good he thinks he does year after year by raking over these 20-year old scandals, which only redound to the discredit of the boys in the school at the present time? It is a fine school. My hon. and gallant Friend has only a skeleton to base himself on when he makes these criticisms.
  Why does he not accept the invitation constantly extended to him to go down and see the place for himself? They extend it to him now, and I have not the slightest doubt that he would be a welcome visitor. Why does not he go to see what is being done, instead of coming here year after year and making veiled allegations which are quite unsubstantial to those who know the facts and who know that the school is a fine place.
  The headmaster, who has been appointed during the last four years, is one of the best in Britain. The boys are getting a first-class education and the standard is being constantly raised. I do not want these boys to be press-ganged into the Navy. I do not regard it as the job of this House, acting as trustees for these boys, to see that they are required to go into the Navy. Our job is to see that the boys are given the best education they can profit by, and that they develop along the lines most suitable for them.
  This school is in some ways a prototype of a really comprehensive school. Some of its boys can get through the School Certificate examination and pass into Dartmouth at the age of 15, 16, 17, 18, or whatever it may be; the natural vocation of others will be seamen boys in H.M.S. Ganges when they leave, and others will be able to fulfil their talent in ordinary civilian occupations. I beg of my hon. and gallant Friend to let

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  them alone, and let the school get on with its job.
  The mistakes of the past have, to my mind, been largely overtaken and remedied. I have seen the school long since my hon. and gallant Friend has seen it. Whatever criticisms he may have against the Admiralty's administration, or as to the division between the sums allocated for pensions and for education, or whether the director should be a retired civil servant, an Admiralty official or a paymaster-commander, is all beside the point. For heaven's sake let these boys alone and let the school get on with the job which it has done so well during the last few years of trying to build itself up into a place of which any hon. Member of this House, were he to go there, would be as proud as I am.
  1.51 a.m.
  The Parliamentary and Financial Secretary to the Admiralty (Commander Allan Noble): Before I refer to the speech of the hon. and gallant Member for Hull, East (Commander Pursey), I should like to say one or two words about the Estimates in general. As will be seen the affairs of Greenwich Hospital cover a great variety of interests. I think that the hon. Member for Cardiff, South-East (Mr. Callaghan) would agree that watching over those interests is a very interesting part of the job of the Parliamentary and Financial Secretary to the Admiralty. It will be seen from the Estimates this year that we budget for an increase in income for various reasons. There is an anticipated increase in income from our estates in the North of England, at Greenwich and elsewhere, and from our investments. On the other hand, we budget for an increased expenditure for maintaining our various properties as good landlords should. and a considerable increase in the various pensions and benefits that we pay.
  It will also be seen that there is increased expenditure at the Royal Hospital School, Holbrook, and with that I shall deal in a moment. That is, of course, maintained by Greenwich Hospital, and it takes about two-thirds of the total money available.
  We think that one-third on pensions and benefits and two-thirds on the school is just about right. It has been like that for several years. I agree with the
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  hon. and gallant Member that the proportion has to be watched. Some of the increases in expenditure at the school are, quite naturally, like Burnham increases but some are non-recurring, like the repairs to the swimming bath roof, and the organ, of which the hon. and gallant Member told us so vividly. At the same time, we take every opportunity of making every possible economy in the overheads of the school.
  It is doing very well from all points of view, and last year obtained the highest number of General Certificates of Education in its history. I echo the hope of the hon. Member for Cardiff, South-East, that if any hon. Member finds himself near Ipswich he will pay a visit to the school. It is a very fine school, and the more Members of this House know about it the better. They can then take part in these debates as the hon. and gallant Member wants them to do.
  I agree with the hon. and gallant Member that this is a most important subject. As far as I know, it has not been taken on the nod since 1945, at least since I have been in the House. I have spoken in the debates on this subject from that side of the House, and in the last three years' debates from this side. The hon. and gallant Member talked about the hour at which the debate Domes up. Last year it started at 10 o'clock, and the year before that, before 11 o'clock. Had it not been for certain activities in the House tonight it would have come on very much earlier. I fully expected this debate would start much earlier.
  The hon. and gallant Member also referred to the administration of Greenwich Hospital. I think our present administration is good. The Board of Admiralty are the trustees, the Parliamentary and Financial Secretary gives it special attention. The director, who has done extremely well in the past, is a senior civil servant. There is a great deal of business of a very varied sort connected with this enormous sum of £4 million, and we think that somebody with that sort of experience is well fitted for that job.
  I rather imagine the hon. and gallant Member is one of the few old boys who has even tried to abolish his own school. That is exactly what he was trying to do tonight. I ask him to go to look at it now. I should be grateful if he would

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  tell me when he last visited the school. I understand that he has not been there for many years, and yet year after year he makes these accusations.
  Commander Pursey: Both my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and the hon. and gallant Gentleman have said I get up year after year to take part in the debate on this subject. For three if not four years I decided to drop the subject—once the new headmaster was appointed. This year I have developed a theme different from that I dealt with before—the complete reorganisation of the Hospital and Travers' Foundation.
  Commander Noble: I think all the same that the hon. and gallant Member will have a far better knowledge of the school if he will take the trouble to look at it. He talked about the orphanage atmosphere. That is exactly what we try to avoid. He also talked about the monastic atmosphere. He will not find that there. The boys do not have their careers chosen for them. A boy cart take up any career he likes. Some boys go into the Navy—quite a number of them; 53 last year. However, they have gone from Holbrook into every walk of life and profession. There is no compulsion on any boy to enter the Navy.
  As the hon. Member for Cardiff, South-East said, the overheads of this school are expensive. It was built on a very extravagant scale, but, as he also said, we want to give the boys the very best we can. We want no boy who deserves the best not to be able to get it. That is our object. There has been no change of policy during the time of this Government. We are going ahead on the lines followed at Holbrook for some years.
  As to entry, there is no change in that respect either. I quote from the prospectus:
  "Admission to the school is restricted to the sons of officers and men who are serving or have served in the Royal Navy, the Royal Marines or, subject to certain conditions, in the Merchant Marine and the Lifeboat Service. Priority is given to those whose fathers have been killed or died on active service."
  That has always been the rule for entry, and it still remains.
  Mr. Callaghan: Is it the case that boys are still coming from the State primary and junior schools?
  Commander Noble: I was just coming to that. They are coming to Holbrook just after they have left their primary schools. They come to Holbrook from schools all over England, but primarily from the home ports of Portsmouth, Plymouth and Chatham. Boys of the type for which the school was designed are still coming to it. I do not think there can be any criticism on that score.
  The hon. and gallant Member asked about the Home Farm. I took this up with the director the other day and asked why we continued to maintain this farm ourselves and whether it would not be cheaper to get rid of it or to let it to a tenant. I was told that we did better out of it by the present system. It provides the school with vegetables and milk.
  Another question by the hon. and gallant Member was about the Reade fund. We are quite entitled to decide for ourselves how much we should transfer to income and how much to capital account each year.
  We would welcome any questions or inquiries or visits from the hon. and gallant Gentleman. We would welcome any questions about Greenwich Hospital or any inquiries he cares to make about our investments or our estates in the North of England, which I visited last year and which cover a large variety of farms, in both the hills and in the lowlands. They are making a substantial contribution to this country's food production. If the hon. and gallant Gentleman likes to put questions about them or about our property at Greenwich, where we are starting a rebuilding programme, having completed the war damage repairs, he is welcome to do so. He is welcome to ask our tenants whether we are good landlords. On all these things, we are quite satisfied that we should produce a good and proud record.
  2.1 a.m.
  Mr. George Wigg: I do not know much about this school, but I have much sympathy with my hon. and gallant Friend the Member for Hull, East (Commander Pursey). After all, he went to this school, and if he is in revolt against his experiences on the lower deck, he knows that I am in sympathy with him, because I am in revolt against the experiences which I went through in the

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  ranks of the Regular Army. He and I can claim that we have more other rank service than the whole of the Tory Party put together, and because we have shared the same sort of experience, I have sympathy with his point of view. I have expressed this sympathy on other occasions, often when I have not agreed with him.
  What concerns me about Greenwich Hospital is not whether the school is a good school or a bad school but the fact that there is a hangover from the days of long ago. It hangs over not only the Greenwich Hospital but also the Royal Chelsea Hospital, another admirable institution which, like the Greenwich Hospital, so my hon. and gallant Friend suggested, has its origin with Nell Gwyn.
  I recall my hon. and gallant Friend making a speech—perhaps it was his maiden speech—on the Royal Hospital, Chelsea, when he pointed out that Nell Gwyn had an occupation besides selling oranges. It may be that both her occupations led her to establish these two institutions. While the good lady, in addition to selling oranges, may have been actuated by the best of intentions, she left behind a tradition for pensioners of both the Army and the Navy—a tradition of charity.
  The pension which I receive as an other rank is one which I do not receive as a right but as an out-patient of the Royal Hospital, Chelsea. I understand that a naval pensioner, too, does not have a right to a pension but receives it by way of grace and favour as an outpatient of Greenwich Hospital. If the Parliamentary Secretary does a little research, he will find that I am right. We know that there is a Royal Warrant dealing with pensions, but the atmosphere in which the pensions of the Royal Navy and the Army are administered is an atmosphere of charity. I could give example after example, if it were not out of order, about Army pensions, a subject which I know—and naval pensions are granted in the same way. It is a hangover from an admirable charity which may have been satisfactory in days gone by; but today that tradition acts as a brake on Regular Navy and Regular Army recruiting. The quicker it is got rid of, the better.
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  My hon. and gallant Friend may well come down and make suggestions to the House about this school which are not borne out. Equally, I think that the Admiralty would do well to look at this charity to see if it could not divest itself of it. If this is a school which, as we have just been told, is run on the most modern lines for the children of officers and ratings, then why does not the Admiralty hand it over to trustees? Let the Admiralty pass it over, and let the Royal Navy get on with its job. Let there be something more in keeping with the mood of the second half of the 20th Century.
  That, in effect, is what my hon. and gallant Friend is saying. He has protested on other subjects concerned with these Accounts, and if I knew more about this I might find myself in disagreement with him, as I do over his views towards the Ministry of Pensions and National Insurance. But I do hope that what my hon. and gallant Friend has said will not just be dismissed as of no consequence. I do hope that, instead, the mood which prompts him to speak with the lucidity with which he addresses the House will be understood. The Parliamentary Secretary argues about what he believes is past. My hon. and gallant Friend argues about what he believes still survives. It may be that both would be doing a great service to the Royal Navy by getting together and understanding the protests which are made.
  People are not coming forward for the ranks of the Royal Navy as in the past, and the very reluctance which prevents the First Lord of the Admiralty from setting up an inquiry into the Naval Discipline Act is the sort of thing which prompts my hon. and gallant Friend to speak as he does. Let the Admiralty appreciate that this is the second half of the twentieth century, and not the good old days of Nell Gwyn.
  Question put, and agreed to.
  Resolved,
  That the Statement of the Estimated Income and Expenditure of Greenwich Hospital and Travers' Foundation for the year ending on 31st March 1955, presented to this House on 29th March, be approved.

  INDIAN TEXTILE IMPORTS
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. R. Thompson.]
  2.8 a.m.
  Mr. Charles Fletcher-Cooke: Despite the lateness of the hour, and the fact that hon. Members are somewhat fatigued, I wish to raise a matter which is of great moment, not only to my constituents, but, indeed, to the whole of Lancashire, and that is the immense increase in the number and quantity of textiles imported into this country from India. Indian textiles are admitted without quota, and virtually with tariff, and with a preferential advantage over indigenous textiles to the extent of something like 1s. per lb. on the price of their raw material. Last year, 1953, these imports amounted to about 15 million square yards, and in the year before, 1952, the figure was about eight million square yards. This year, they are running at the rate of something like 120 million square yards, an enormous increase and a total almost up to the level of the peak in the exceptional year of 1951.
  It may be said that the textiles that are imported from India do not harm the United Kingdom production because they are largely of an inferior—or, at least, simple—quality, and a great many of them are finished here and are reexported. But there is no obligation to re-export, as there is with many overseas imports, and the present situation, by which the home production has its order books entirely full, is, I am well advised, not likely to last. The manufacturers' order books are at present full, but I have it on very good authority that the current rates of sale of domestically produced cloth are only about 50 per cent. of production capacity. The present condition of full order books, therefore, is not likely to last very long.
  That is the position as regards imports into the United Kingdom from India. What is the reverse of the medal? India puts up a tariff, which has rapidly mounted and now, I believe, amounts to something like a 60 per cent, ad valorem duty against United Kingdom textiles seeking entry into the Indian market. Is
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  there any tariff put up by any member of the Commonwealth against another member of the Commonwealth on any article which is as high as that? It seems to me a complete travesty and negation of Empire trade when one member of the Commonwealth can put up a 60 per cent. ad valorem duty against the products of another member.
  Not only is there that enormous tariff, but there is a savage quota restriction. The result of these measures is that our already small exports to India have dwindled almost to vanishing point. In 1953 only 5 million square yards were admitted, as against 10 million in 1951 and 35 million square yards in 1948, a striking contrast to something like 1,000 million square yards that went annually to India before the war.
  It would, obviously, be better, and I think Lancashire would accept this, if we had no tariffs or quotas either way; but what Lancashire is not prepared to accept is the worst of both worlds, by which India is entitled to impose—and, apparently, can get away with—these savage obstacles to our trade, while Lancashire is exposed to the full rigour of competition from a country whose wage rates are much lower than ours.
  The excuse of the Indians, I assume, is that they have to protect their infant industries. These, of course, are not infant industries in any sense. It must be a very lusty infant if it can export these colossal quantities of goods into foreign and Empire markets, not only into the United Kingdom but into the African Continent in particular, and can make such headway there. It is not the sort of industry that needs protection on the normal basis of infant industries.
  India's second excuse may be balance of payments difficulties. I should like my right hon. Friend the Minister to explain those balance of payments difficulties that entitle India to put up these quota restrictions against us. To what extent has India really restricted its dollar purchases of luxuries? To what extent has the expenditure of dollars on luxuries not been responsible for such balance of payments difficulties as India may have got into? And what about the sterling balances that India has in London still? To what extent do they not deny the balance of payments arguments that are raised?

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  Thirdly, in defence of the present situation we are told that, although this present situation may be very unfortunately deleterious for Lancashire, it is in some way to the general advantage of the United Kingdom. There again Lancashire is entitled to know in some detail what are these general advantages that the rest of the country or other industries get which the textile industry has to pay for, because that is what it amounts to. And although the textile industry is as broadminded as any other, it nevertheless cannot be expected indefinitely to take the rough, especially if these other advantages to other people have never been explicitly explained.
  I shall be brief about this because I know that colleagues of mine who represent other Lancashire seats want to say a word, but we must support what the Cotton Board has advocated in the last few days. We hate to suggest reprisals, because this is an inter-Imperial matter which we like to keep within the family of the Empire, but requests and polite approaches to India have failed. Even representations at the highest level—which is what the Minister of State, Board of Trade, said had taken place in answer to a recent question of mine—do not seem to have produced the answer.
  What the Cotton Board has recommended, to quote the last sentence of its telegram, is this:
  "Having regard to the fact that this Indian competition has become effective largely by reason of artificial measures applied by the Indian Government it is considered imperative that the United Kingdom Government should forthwith apply import licensing to cotton goods from India and thereafter discuss with the Indian Government a long-term policy to give effect to true mutuality of interest."
  Of course there is true mutuality of interest, and there must be, between India and this country, but it can only he mutuality on both sides, and merely by pointing it out to the Indian Government seems to get us nowhere. We have now got to use something more than appeals. We have got to use our bargaining power, and even though that means something of a reversal of our Commonwealth policy, I believe in the, end it will be to the advantage of the Commonwealth, because what is not to the advantage of the Commonwealth is that one member of the family should
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  seek an advantage at the expense of another.
  With that appeal I hope that my right hon. Friend will be able this morning to bring some light and encouragement to the people of Lancashire who are getting very worried at this flood of Indian goods, and are equally worried at the almost total blockage of their own markets in India.
  2.20 a.m.
  Sir John Barlow: Those of us who have the honour to represent Lancashire constituencies know only too well the anxiety which exists throughout the textile area of Lancashire about growing imports of Indian cloth at the present time. My hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) has put the case very well, and I should just like to emphasise what we in Lancashire feel about this. We believe that India is at times taking advantage of her rather privileged position. Indian grey cloth is coming into this country in increasing quantities the size of which give Lancashire considerable cause for anxiety. There is no restriction on such cloth coming into this country, whereas the export of Lancashire cloth to India, as my hon. Friend has pointed out, is very restricted.
  It is of the utmost importance that we should retain our spindles and looms manufacturing at full output. It is utterly wrong, we believe, that Indian cloths, subsidised by cheap raw cotton, should compete against us in this market. It is of equal, or possibly greater importance, that we should preserve the Colonial and Dominion markets to which we have exported such large quantities of textile goods in the past. Already we are feeling very keenly the competition of Indian textiles in, for example, East Africa, a market which we strove very hard to retain, and our Colonial and Dominion markets are diminishing only too rapidly. It is of the utmost importance that the Government should take a strong and firm line with India, to retain both our home and those Colonial and Dominion markets to which we have been traditionally attached.
  2.22 a.m.
  The Minister of State, Board of Trade (Mr. Heathcoat Amory): I am glad my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) has raised this subject,

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  because I am aware that there is a good deal of concern about it in some quarters of the cotton industry. We have heard statements about the possibility of these imports of Indian grey cloth causing unemployment, and I should certainly be very anxious at any signs of a shortage of employment in Lancashire. But I suggest that it is important that we should get this matter in proper perspective. It is our duty to look at all the facts before we reach conclusions, and the facts as I know them do not appear to me to warrant the degree of alarm and despondency, which has been expressed by hon. Members.
  Imports of grey cotton cloth into this country for further processing have been a fairly regular feature of Lancashire's trade since the war, and an important factor in our exports of finished cloth to Africa and elsewhere. Some sections of the cotton industry attach great importance to these imports and, as regards the effects on our export trade, I am inclined to think, rightly. Total imports of grey cloth this year do not seem to be abnormal compared with other years since the war.
  At present, the total imports of grey cloth—and if we import more from one country we seem to import rather less from others—are probably running at about 170 million square yards. That is a considerable increase on last year, when it was something like 76 million, but last year reflected to some extent the 1952 recession. The figure for the current year is really not out of line with the 140 million square yards we imported in 1952, and I would like in that connection to take the figures for some of the earlier years, because it helps to get this matter into proper perspective.
  The total imports for 1951 were 340 million square yards; 1950, 246 million; 1949, 309 million; 1948, 200 million, and 1947, 143 million. In those seven years the imports of grey cloth, mostly for re-export after processing, were between 140 million and 340 million square yards. In only one year—1953—did it fall below 100 million square yards. That is against a total production in this country of about 2,300 million square yards of cotton cloth.
  I may be told that the circumstances have altered and that those were days of inflated demand, but allowing for that,
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  on the facts I do not quite understand the extent of the alarm about the level of imports of grey cloth. My right hon. Friend received a telegram from the Cotton Board Standing Conference which urged the restriction of imports by quota and thereafter discussion with the Indian Government. There are one or two things I should like to say about that.
  One of the basic principles of our commercial policy is that quantitative restrictions should be imposed only for balance of payments reasons. Another basic principle is that we should give free entry whenever possible, or preferential entry, to Commonwealth products. I should like to say very definitely that any departure from those principles would amount to a major alteration of policy which would have repercussions not confined to one commodity or one country.
  I fancy that the motive behind the proposal which has been made to us in the telegram from the Cotton Board is, as has been suggested, that the Indian Government treat our own exports of cotton goods to India unreasonably. I have the greatest sympathy with that view. I believe that the present situation is unreasonable. It is unreasonable that India should accord us a quota of only 121 per cent. and should charge in addition duties varying between 60 and 80 per cent. ad valorem on most of the cotton goods which we send her while we give her imports into this country freedom from duty and quota restriction. I ought to make it clear that India gives us a substantial margin of preference.
  In this respect we are treating India in the same liberal way as we treat imports from other Commonwealth countries, and that policy has been maintained in our trade with Commonwealth countries since 1932. It is justified by the preferences that our exports receive in Commonwealth markets and generally by the reasonable and friendly way that our trade is treated by other Commonwealth Governments.
  I understand and sympathise with India's need to control imports and to use her foreign exchange on imports which will build up her resources. We do not ask India that because she enjoys free entry here we should necessarily enjoy free entry there, but I think we are entitled to ask India that in her import

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  regulations she should pay regard to the importance of our cotton export trade to us and to understand that her cotton export trade is benefiting from the liberal treatment extended to it in the United Kingdom. She should also remember that while our cotton exports to India have shrunk away almost to nothing, her cotton cloth exports here are at present expanding rapidly.
  We are most disappointed with the response that India has made to the representations which we have made to the Indian Government during the past year. I am not unhopeful still that the Indian Government will yet put this matter right. I saw the Acting High Commissioner for India today and urged on him to report to his Government our strong views on the matter and the unfortunate effects that this severe disparity is having. We are also asking our High Commission in Delhi to take the matter up again vigorously.
  My hon. Friend mentioned the advantage that the Indian weaver receives through getting his raw material for a price lower than world prices. That is the effect of the price control now in force in India. We have to remember that the bulk of the Indian production is for domestic consumption, and the object of the price control is to ensure
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  the availability of Indian cloth for the Indian population at the lowest possible prices. This price control does not discriminate between what is consumed at home and what is exported, and is not an export subsidy within the normal meaning of that term.
  My hon. Friend also referred to the Indian balance of payments. Between 1949 and 1952 India suffered severe balance of payments difficulties. In 1953 she did earn a surplus, but any deterioration would be likely to put her in difficulties again. We can admit that India has grounds for imposing quota restrictions against that risk, but, as I have already said, I think it is unreasonable that she should impose severe quota restrictions against our cotton textiles and on top of that should add enormously high duties. I do not off hand know of any other case where there is this severe combination of quota restrictions and high duties.
  I hope that this short debate has served to put this matter into perspective and to show that the Government are seriously concerned at the disparity between our treatment of India's cloth exports and her treatment of ours.
  Question put, and agreed to.
  Adjourned accordingly at Twenty-seven Minutes to Three o'Clock, a.m.