HC Deb 10 March 1954 vol 524 cc2371-90

Considered in Committee [Progress. 1st March.]

[Sir CHARLES MACANDREW in the Chair]

Question again proposed. That, for the purposes of any Act of the present Session to provide for the setting up of an Atomic Energy Authority for the United Kingdom and for other purposes, it is expedient to authorise—

  1. (a) the payment out of moneys provided by Parliament of such sums in respect of the expenses of that Authority as the Lord President of the Council may with the consent of the Treasury determine; and
  2. (b) the payment into the Exchequer, if the Lord President of the Council with the approval of the Treasury so directs, of the whole or any part of the revenues of that Authority for any financial year:

10.24 p.m.

Viscount Hinchingbrooke (Dorset, South)

I am well aware that the House ran a marathon race last night and is likely to run another one tomorrow night, Sir Charles, and I would not go so far as to ask the Committee to indulge even in a three-legged race. I notice that the hon. Member for Islington, East (Mr. E. Fletcher) has an Amendment down to this Money Resolution and, having made my short complaint, I shall retire as one of the legs and leave him to run his particular race with the Government.

The objection that I have to this Money Resolution is that it does not go far enough. The Committee will note that its main purpose is to provide moneys for the Authority out of sums to be devoted by Parliament and to recover moneys from the Authority. That is the sole means by which the Authority is to be allowed to have finance. No other powers are given in the Resolution.

That means that on the Committee stage on Clause 4—if we pass the Resolution in its present form—we shall have no opportunity of discussing the financing of the Authority. The terms of the Resolution are much too narrow to allow that discussion. Therefore the only opportunity that we have is now, and I make no apology for troubling the House with this subject at this late hour. It will be remembered that the Leader of the House caused the Money Resolution of the then New Towns Bill to be delayed on 8th May, 1946, so I do not think that my right hon. Friend will object to my discussing this Resolution now.

As the Minister of Works said in his notable speech on 1st March, over £100 million had been invested already in plant, equipment and machinery, and expenditure was now running at over £50 million a year. He said that Britain must invest boldly and heavily on atomic energy. He said organisation was vital, and that Good organisation, as efficient as we can make it, is the best guarantee that the huge sums which Parliament will be called upon to give will be well spent."—[OFFICIAL REPORT, 1st March, 1954; Vol. 524, c. 864.] None of us objects to spending huge sums on this work.

What we object to is that those sums are taken out of the Estimates and that Parliament year by year, out of the taxpayers' money, have to find the sums which the Government consider necessary. The Financial Resolution should be withdrawn and redrafted so as to enable the Authority to borrow by permission of the Treasury out of the Consolidated Fund for the capital expenditure that is required.

Very little was said about this point during Second Reading of the Bill. The Minister scarcely referred to it and the Leader of the House in winding up used the recommendation of the Waverley Committee, but the Waverley Committee itself did not think that it was the last authority on the subject. Parliament is concerned to save the taxpayers as much as possible, and if it can suggest an alternative it is its duty to do so.

Various suggestions were made on Second Reading as to how the finances of the authority should be handled. My hon. Friend the Member for Kidderminster (Mr. Nabarro) made one—that the Authority should be allowed to borrow by public subscription on the open market. That suggestion is open to a security objection in that the Authority then cease to be in the control of the Government of the day. It would also obtain its money in too large a volume and too soon for its purposes.

The other suggestion was made by my hon. Friend the Member for Heeley (Mr. P. Roberts) who said that amounts devoted to the Atomic Energy Authority should be taken out of the Estimates and put below the line in the Budget accounts. The effect of that, assuming that the Budget remains in balance, or in slight surplus as it is today, would be to lower the figure for ordinary expenditure in the Budget and reduce taxation revenue by the same amount, which is the object of the exercise, at the same time increasing payments below the line and borrowing to meet the difference. That is an ideal solution, because it would put the Atomic Energy Authority on what the City calls a "tap loan" basis. Every time it wanted to borrow money it would go to the Treasury and the Treasury, under the powers given by an appropriate resolution, not the one we are considering now, would be empowered to allow the Authority to borrow on tap as it created its assets. It would take what it wanted at the time it wanted it.

The difficulty about this is embodied in certain words used in the Financial Statement itself. If hon. Members look at that they will see on page 26 a nasty arrow mark against the below-the-line expenditure. They will see at the bottom of the page "Payments for which the Treasury has power to borrow." There is no great authority like Erskine May about below-the-line technique; there is no Standing Order on it. It is a new device, and there is no way of knowing what it means, but this arrow mark is formidable and appears to mean that if the Treasury is not given power to borrow, as I want it to be given here and now power to borrow, these sums cannot be put below the line in the Budget accounts and, therefore, must remain above the line. They must remain inside the Estimates year by year forcing the Chancellor of the Exchequer to put up taxation to an inordinate height.

The doctrine we are now applying under this very narrow Financial Resolution derives from past Treasury practice where, if a loan is given for something which is not immediately earning money, it must be done above the line on the Budget. But the Minister of Works has already said that the Authority is earning something. It is earning £200,000 a year from the sale of isotopes and very soon, we are told by Sir John Cockcroft and others, it will be earning a substantial sum in sales of energy to the Electricity Authority. Why cannot we treat this Authority as the City treats a mine and borrow money on the market? Who knows the subject better than the Minister of Works who, before he held his present position in the Government, was closely associated with mining finance and was so able on the subject? We borrow money for mines 10, 15 or 20 years before deriving a full financial return.

Mr. G. R. Mitchison (Kettering)

May I ask the noble Lord a question which is puzzling me? I have listened to what he said with great interest, but I rather thought the hon. Member for Kidderminster (Mr. Nabarro) said the other night that the Authority should borrow. Is the noble Lord suggesting that the Authority should borrow, that the Treasury should borrow, or that the Authority should borrow with the Treasury guarantee? The last two alternatives would no doubt need some substantial provision in the Money Resolution, but not, I should have thought, the first one.

Viscount Hinchingbrooke

I do not know whether the hon. and learned Member was here, but I did open my speech with a reference to the proposal of my hon. Friend—

Mr. Mitchison

I heard it.

Viscount Hinchingbrooke

I did say that in my view it was open to the objection, a security objection, that if we gave power to the Authority to borrow on the market irrespective of the wishes of the Government it might go roaring ahead on the production of atomic energy which the Government could not control.

Mr. Gerald Nabarro (Kidderminster)

"My noble Friend has referred to me many times. I specifically said on Second Reading that the Authority should be allowed to borrow from the money market, subject to Treasury guarantee, and the analogy is perfectly clear in the case of other nationalised authorities—in particular the expensive one of the North of Scotland Hydro-Electric Board, which is always subject to Treasury guarantee.

Viscount Hinchingbrooke

If my hon. Friend puts it that way it is, perhaps, perfectly feasible. My answer to the hon. Member for Kettering (Mr. Mitchison) is that I would like to do this in exactly the same wav as was done with the new towns. In the New Towns Act, 1946, there are the very words—in Section 12 (3): The Treasury may issue to the Minister out of the Consolidated Fund such sums as are necessary to enable him to make advances to a development corporation under subsection (1) of this section. Subsection 12 (1) reads: For the purpose of enabling a development corporation to defray expenditure properly chargeable to capital account, including the provision of working capital, the Minister may make advances to the corporation repayable over such periods and on such terms as may be approved by the Treasury.

Mr. Mitchisoa

With great respect to the noble Lord, that is an entirely different matter. There is no question of the City there. That is a question of advances from the Treasury.

Viscount Hinchingbrooke

I am not talking about the City, except by way of the mines illustration which I gave. I am talking about the means by which the Authority should be entitled to borrow. I say that the Authority should be entitled to borrow, here and now, under this Financial Resolution, on the same terms as were so generously provided by the hon. Member and his right hon. Friends in 1946. If he complains about the method, his complaint is against the Minister of the day.

I think that I have taken long enough, in view of the lateness of the hour. There is considerable authority, including Professor Pigou, whose work I have here, for the proposition that where the State develops a physical asset, when that physical asset is capable at some time, even if not immediately, of earning a financial return, it is quite proper and legitimate for it to have power to borrow. I trust that even at this late stage my right hon. Friend will look again at this Resolution, because if we pass this Resolution and unless a new Bill is introduced—which may take years—we have passed the point of no financial return, and the wretched taxpayer will be forced to bear the burden.

10.43 p.m.

Mr. James Hudson (Ealing, North)

The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) has developed a case which, if valid, should have been embodied in an Amendment, just as my hon. Friend the Member for Islington, East (Mr. E. Fletcher) has put down an Amendment on another issue. After all, this point of raising money on loan was raised, not only by the hon. Member for Kidderminster (Mr. Nabarro), but by other hon. Members during the Second Reading debate. If that point is to be raised at this stage, it is right that we should have an Amendment which can be properly discussed.

Of course, the noble Lord is right. Enormous sums of money are involved in the general proposal before us. Fifty million pounds has been mentioned, but something very much more than that may be involved. We have to remember that there is not only the question of the money necessary to provide for atomic energy considered as an industrial process, but also for research and development, the provision of buildings and machinery and laboratories and so on in connection with our military enterprises. We are coming to a pass when in peace-time we are asked to consider raising money on loan in order to provide for the security of the country in some future war. Hon. Members might as well propose that the Army, Navy and Air Estimates should be met by loans and that the future should be mortgaged to meet our defence needs.

This House must face the fact that this is a most dangerous expedient. It is true that the Authority will have to consult the Treasury, but it does not seem to be much more than mere consultation. Apart from certain vague promises about an annual report and the possibility of discussing that report in Parliament, this Authority will be entirely free to have powers of embarking upon expenditure amounting to many millions of pounds.

The Tory Party has made many references to the need for care in the spending of public money, and for the Government to bring forward a proposal of this sort whereby the head of this new organisation, at present the Lord President in another place—although we may get a Lord President in this House in the future —is to have full control over the spending of money to such an extent as is envisaged in this Bill, is a disgraceful procedure. It is a procedure which the right hon. Gentleman in his concluding speech on Second Reading made no effort to explain away.

The Chairman

The hon. Member is now a long way from the Money Resolution. The House has already agreed to the principle of the Second Reading.

Mr. Hudson

I bow to your Ruling, Sir Charles, but I thought that we were discussing the raising of money on the Money Resolution. That is what I was discussing. I was trying to make the point that to give that Authority the power to spend money in such a way as is provided in this Bill, whether by means of a loan or by means of some other financial expedient, is not right. We are proposing to raise a vast sum of money and to leave the control of that matter in the hands of a Minister in another place. The Ministry that is to have ultimate responsibility for the spending of this money is one that has no experience of financial matters so far as atomic energy is concerned.

The Chairman

That is the point I was making. That has been agreed to by the House on Second Reading.

Mr. Hudson

Have we agreed we should give power to the Lord President of the Council to raise money to an unlimited extent, to an extent beyond any specified in this House so far, merely on his ipse dixit, and according to his general impression of what may be necessary? I must protest against this scandalous proceeding of handing over such power to a man over whom ultimately we in this Committee will have no effective control.

I bow to you Ruling, Sir Charles, if you say I cannot say anything about that now, but it does seem to me the most ordinary thing to discuss now, for the man to whom this power is to be given has no facilities to decide how the money should be spent, and spent economically. The Ministry of Supply, on the other hand, could consult, as it did, for instance, the engineering industry. It could do that as when it spent, as it did, £650 million in one year helping various engineering firms to carry out a public duty. At the end the Minister of Supply could justify in this Chamber what he had done, and justify it by an improvement in national affairs. Nothing of that sort can be done, or is provided for, here.

A protest must be made against a Minister in another place having power of such a character as this Money Resolution envisages. I may have something to say about the proposal to limit the sum of money if an Amendment to that effect should be called and moved by my hon. Friend the Member for Islington, East, but the proposal about raising loans, made by the noble Lord the Member for Dorset, South should be resisted, for that is totally unacceptable.

10.50 p.m.

Mr. John Arbuthnot (Dover)

It seems to me that the question of whether the money should be raised as provided for in the Money Resolution or whether a loan is required is a question of degree. The question is whether the returns likely to be available from this project are in reasonable business proportions to the amount of capital involved. As I see it, the returns from this project bear little relation from a business point of view to the capital involved, and therefore it would seem that the loan suggested is ruled out of court. For that reason, I feel that it is essential we should raise the money as provided for in the Money Resolution. If eventually atomic energy is made available to the Authority, then further legislation will be required, and that will provide the opportunity of raising money in other ways.

Mr. Eric Fletcher (Islington, East)

I assume that if I take part in this general debate on the Money Resolution it will not preclude me from moving the Amendment which is on the Order Paper in my name.

The Deputy-Chairman (Sir Rhys Hopkin Morris)

I understand that the Amendment is not to be called unless the hon. Member wishes a Division on it.

Mr. G. R. Strauss (Vauxhall)

It does seem to me that an unusual precedent may be created by this Ruling. If it is to be a precedent I accept it, but to say that an Amendment will be called only on the condition that there is a Division, appears to me to be creating a precedent which might have dangerous repercussions.

The Deputy-Chairman

I am not setting a precedent, because the hon. Member can discuss the Amendment on this Motion, and can afterwards call for a Division if he wants.

Mr. Mitchison

Surely these seem to be new rules, because it presupposes that no one can now be persuaded. I would not put our powers of persuasion too high, but it is possible that in the course of the debate some Members opposite might be persuaded that after all we were right, but we could not tell that until we have exercised our powers of persuasion and watched the effect on the faces of Members opposite.

The Deputy-Chairman

I am not depriving the hon. and learned Member of his power of persuasion. He can use it on the Money Resolution.

Mr. Ede (South Shields)

If no Amendment is moved, presumably the Question put will be on the Money Resolution which was read out when the Chairman of Ways and Means was in the Chair, and if that is challenged Members will have to vote against the Money Resolution. Surely, if my hon. Friend is to have an opportunity of having a Division on his Amendment, he must have an opportunity of moving it before you put the main Question. At what stage prior to that will you afford him the opportunity of moving his Amendment? Unless the Amendment is before the Committee it may be difficult to get a reply on this specific limit to the amount suggested by my hon. Friend.

The Deputy-Chairman

If the hon. Gentleman wishes to move the Amendment he can do so at the end of the debate. If he moves it at an earlier stage it narrows the discussion.

Mr. Fletcher

Would I be right in thinking that the appropriate procedure is that we should proceed with our general debate and, after it has taken a certain course and terminated, I then have the right to move my Amendment, if I think it necessary—and if I do move it I have the further right of calling for a Division upon it? May I take it that you are not imposing any conditions upon me Sir Rhys?

The Deputy-Chairman

The hon. Gentleman is restating what I stated at the beginning.

Mr. Fletcher

On the general question I find myself not in entire disagreement with some of the observations of the hon. Member for Dorset, South (Viscount Hinchingbrooke). My whole object in putting down the Amendment was to give the Government an opportunity of clarifying the position and stating their intentions with regard to the financing of the Authority. I am not concerned to argue that it is a good or a bad thing that some of the funds required for the Authority should be obtained by loan or entirely out of revenue—I can quite appreciate that there may be arguments both ways—but I hope it will not be long before we hear something from some Government spokesman as to the Government's intentions.

Very little has been said so far. When the Leader of the House, replying to the Second Reading debate, was asked by the hon. Member for Heeley (Mr. P. Roberts) to give some explanation of the position under this Money Resolution, he said: I cannot give a ruling about a matter of that kind "— that is, a financial matter— for that is not my function."—[OFFICIAL REPORT, 1st March, 1954; Vol. 524, c. 961.] I do not know whose function it is to illuminate this debate upon the finances of the Bill. It rather looks as if it is the Minister of Works, although I am glad to see that the Financial Secretary to the Treasury is also lurking in the distance and will no doubt be able to give us the benefit of his advice. The Minister of Works, no doubt very wisely, said very little about the financial arrangements. He did touch upon them towards the end of his speech on Second Reading, and I hope that if he is going to speak tonight he will clarify something of what he said then.

Curiously enough, one of the reasons which the Minister of Works gave for the setting up of the Authority was that it would enable the House to have more control over the field of atomic energy, but I very much doubt whether that will be the result if this Bill is passed. We know that some £50 million is being spent in the current year, but we have not been told how much is likely to be spent next year, or the year after that. All we can see, from the extraordinary vagueness of this Money Resolution, is that there is no limit whatever upon the expenditure which the Authority may incur.

It has been pointed out that, whereas we spend £50 million, the United States is engaged in a programme costing more than £850 million. It was recognised during the debate that the extent to which nuclear fission, with its vast possibilities of both military and industrial nature, may take us with the advance of science in the next few years knows no bounds; and, in the same way, the financial expenditure which it may be necessary or merely desirable to incur also knows no bounds.

What I object to is that if we pass this Financial Resolution in the form in which it is drafted we give absolutely unlimited power to the Lord President of the Council, in consultation with the Treasury, to commit the nation to an unlimited expenditure. I do not think that there is any precedent—

Mr. Peter Roberts (Sheffield, Heeley)

It is only in one year.

Mr. Fletcher

It is in every single year, and we can have greater expenditure next year, and even greater the year after. The powers given to the Government by this Resolution are unlimited in duration and in amount. Furthermore, I draw the attention of hon. Members to the fact that the powers given to the Authority are also completely unlimited. In considering the financial aspects of the Bill, one must have regard to Clause 2, which gives complete power to produce, use, and dispose of atomic energy. There is no territorial limit. This authority can indulge in research into nuclear fission, and can produce atomic energy, atomic bombs, and industrial plant. It can do that not only in this country but throughout the world. If I am right, I say that before very long it may well be found desirable that big plants, comparable to those now being put up for reactors, will be produced in other parts of the Commonwealth. They may perhaps appear in India, Pakistan, or some of the Colonies. I have no doubt that it is the deliberate policy of the Government not to impose territorial limitations on the functions, and duties, and powers of this Authority.

That being so, it follows that the kind of expenditure with which this Authority may be associated is unlimited in duration and in amount. If we are going to contemplate comparisons with the United States, we may before very long be working to an expenditure which is ten-fold the size of our present estimate. If that is the case, I should think that it would become a financial necessity for us to raise some of that by way of loan rather than out of the annual budget.

We all hope that in a few years' time the state of international affairs will be such as will enable the Atomic Energy Authority to devote a larger part of its resources and future policy to industrial and commercial ends rather than to military ends. We all hope that the day will not be far distant when atomic energy and nuclear fission is used for the purpose of generating electricity. But, if that day is to come, considerable capital expenditure will be incurred. I should have thought that if this is the case, it would not be unreasonable to expect capital expenditure for specific purposes of that kind to be financed out of loan. I do not know whether my hon. Friend would object to that or not, but that is one of the questions on which I hope we shall have some enlightenment as to whether it is or is not possible under this Bill.

We have not yet heard whether the Government agree with the view of the noble Lord that the Authority has no power to borrow. It is not stated. All that is stated is that the Lord President of the Council has unlimited powers to finance this. That seems to me to be wrong in principle and contrary to accepted constitutional doctrine. It is novel to me that unrestricted powers of that kind can be given to any Minister of the Crown to finance a body which is not a Government Department and therefore only indirectly accountable to Parliament. I have put down the Amendment, which we shall reach later, because such an Amendment is essential if proper accountability to Parliament is to be preserved.

I can understand that something will be said about security and I do not belittle the need for that, but it is not open to the Minister of Works to raise that point because he went out of his way in his Second Reading speech to suggest that under this new arrangement the House of Commons would have some greater authority than it has had in the past. I doubt whether that is so.

We know that to date, while research and development of atomic energy have been so ably developed by the Ministry of Supply, about £100 million has been spent. The Minister of Works said: Up till now, hon. Members might have searched all through the Subheads of the Ministry of Supply's Vote in an attempt to find out just how much was being spent. They would have searched in vain, and they were meant to search in vain."—[OFFICIAL REPORT, 1st March, 1954; Vol. 524, c. 861.] I am not sure that I agree with that. When my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) was in office and we started the development of atomic energy, the party opposite were in opposition and I do not know whether they could have probed this matter or not, but I think it was their duty to do so. Today we have a more vigilant Opposition and it is the duty of this Opposition to see that Government Departments do not spend money recklessly and then try to cover it up. That is why it seems to me essential that some limit must be placed on the amount of money which, without coming to Parliament, the Lord President of the Council can provide for this Atomic Energy Authority.

I do not pretend that £20 million is the appropriate figure—it might be more or it might be less—and I reserve what I want to say about my Amendment until we have had some reply from the Government Front Bench about the general object of this Money Resolution.

11.10 p.m.

The Minister of Works (Sir David Eccles)

We have had interesting views on this Money Resolution from hon. Members, but of such different character that I can only hope that I can cover them all in my reply. I must first deal with the suggestion made by the hon. Member for Islington, East (Mr. E. Fletcher), that the Lord President of the Council can spend what he likes without asking for the approval of Parliament The Money Resolution, which I imagine the hon. Member has read, states: (a) the payment out of moneys provided bv Parliament of such sums.… There will be an annual Estimate, of course, and that will be voted or not by the House. Therefore, to suggest that the amount of money to be taken for atomic energy developments is unlimited is quite inaccurate.

Further, I said on Second Reading that I thought that the House should have a better chance of knowing what was spent. It was not possible—and we know the reasons why—for the House to disentangle from the Ministry of Supply Vote how much was being spent. Now that my noble Friend is to have the money put on his Vote, by careful deduction of what is going to the Department of Scientific and Industrial Research it will be possible to see how much he requires for this purpose.

On Second Reading, the whole House wished the project well and there was a general feeling that it was right to press on with the civilian use of atomic energy. In case I did not make it clear on Second Reading, I ought to say that this sum of £50 million is exclusive of expenditure on weapons. This is the amount to be spent on the civilian side of atomic energy. It is of course, a very large sum, but the prize is enormous. If we succeed in developing power reactors that will enable us to generate electricity with a new form of fuel, this sum will seem quite small compared with the prosperity and comfort that we can then bring to our own people and to others

I am asked how the money will be found and controlled. The Money Resolution provides that every year the Lord President of the Council will be voted such sums as the House agrees to, and he will then make it available to the Authority. There is no power to borrow. That was the point made by my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), with which I will deal in a moment. The Authority is treated in the Resolution exactly as if it were a Government Department but with extra latitude from minute Treasury control, as is set out in the White Paper, particularly in paragraph 15.

The reason we think that this form of Treasury control is the best is that the Authority is not earning anything at present and such a large proportion of its outgoings must be covered by the taxpayer. Therefore, we feel that the House will wish to keep this expenditure under the very close control which is exercised by the annual Estimate, by the surrender of balances and by the Comptroller and Auditor General.

The time may come when the sales of fissile material or royalties from patents and designs may bring in a revenue sufficient to meet the running expenses of the Authority. I am sure that that time is some way off, but should it arise then clearly the Government of the day must look at this method of financing again, because the Authority will have changed its character and it will be no longer appropriate to do what is undoubtedly right whilst we are in this stage of development. I do not believe that this system of annual Votes will hamper the Authority in its operations. It has not done so so far and now that we have adopted the recommendations of the Waverley Committee the Authority should be allowed rather more flexibility and discretion in respect of capital expenditure than is usual with a Government department.

It means that if we are embarking on a large project like Dounreay, the Authority will make an estimate of the total cost. It is bound to be a rather difficult estimate to make because there are a number of unknown factors. The Treasury will then agree to the project as a whole and we shall put into the annual Estimate the sum which we shall need to spend in a given financial year. If we get on faster than we expected, we shall have to come to the House for a Supplementary Estimate, as has been done before. That would mean that the Treasury would have to find the money rather sooner than we thought. If, on the other hand, we go slower than we expected, there would be a balance at the end of the year which would be surrendered and revoted.

Although it seems rather cumbrous, 1 do not think that system would in fact hold up the Authority at all. To the best of my knowledge the estimates for these great sums which are being spent on plant and research establishments were got out mainly by the Ministry of Works contracting department and they have been fairly accurate. There has been a small variation but, on the whole, they are fairly accurate. I do not know why we should not go on with small but not tremendous variations.

Mr. Arthur Palmer (Cleveland)

Will the sums voted annually by the House, of which the right hon. Gentleman is speaking, include military and civilian expenditure? There seems to be a great deal of confusion on the subject.

Sir D. Eccles

Because all money spent has to be voted by the House they will be on someone's Vote. I was saying that the figure we have been discussing so far is taken from the Vote on Account and did, in fact, refer only to the civilian portion of the expenditure.

Mr. Strauss

This is very important indeed. The right hon. Gentleman tells us that the Estimates for atomic energy are now to come before the House. He has also told us that expenditure on non-military matters is something like £50 million a year and might rise. It would, therefore, appear that by a simple calculation and deduction the House and the world will be able to know fairly accurately the amount which is being spent by the Atomic Energy Authority on military weapons. If I am wrong, I should be glad if the right hon. Gentleman would correct me, but that seems to be the conclusion from what he has said.

Mr. J. Hudson

A supplementary point arises from what the right hon. Gentleman has said and from what he said to me in answer to an interruption. He said in the Second Reading debate that it would be the business of the new Atomic Authority to decide how much we ought to spend on atomic energy taking the programme as a whole…

Sir D. Eccles

indicated dissent.

Mr. Hudson

I am reading from the speech of the right hon. Gentleman, c. 849. He added: and then, within that total, how much ought to go on military uses and how much on the civilian uses of fissile material. Finally, to clinch the point, he read from Clause 3 (1): that the Lord President is given the specific duty … of securing that, in the conduct of the affairs of the Authority, the proper degrees of importance are attached to the various applications of atomic energy."—[OFFICIAL REPORT, 1st March, 1954; Vol. 524, c. 849.] Surely, when the Lord President attaches this particular degree of importance, he either raises the amount which is to be devoted to atomic energy for industrial purposes or the amount due for military purposes. Does not that follow from that statement?

Sir D. Eccles

I think that the hon. Gentleman is really misreading what I said. The question, of course, refers to the Government deciding on the policy and not the Authority deciding how much we should spend. That is a responsibility which only the Government could discharge. I think the hon. Member is really confused about this. There is no question of the Authority deciding what should be done—that is in the hands of the Government and of no one else.

Mr. J. Hudson

But that is the Lord President's specific duty.

Sir D. Eccles

It is his -duty as a Member of the Government. Therefore, just as now the Government will decide how much. Previously this has been expressed through the Minister of Supply. Now it will be expressed through the Lord President.

On the point raised by the right hon. Member for Vauxhall (Mr. G. R. Strauss), the £50 million covers the production of fissile material. But it will not be possible to know how much is actually being spent on the weapons—that, naturally, has to be kept secret—because it is only a matter of accounting between the Ministry of Supply and the Authority. The right hon. Gentleman will see that it is just a question of book entries made "between one Department and another.

Mr. G. R. Strauss

I think that this is very important. I am not at the moment disagreeing with the policy which the right hon. Gentleman is enunciating, but, in fact, it is not quite accurate to say that this £50 million is devoted entirely to non-military affairs at the moment. It is for the manufacture of fissile materials which are used for both military and non-military purposes. Would that be a more accurate statement?

Sir D. Eccles

Of course, exactly to which use the material is put would affect the issue. I accept the right hon. Gentleman's words, which I think are more accurate.

I come to the main point made—

Mr. E. Fletcher

I am sorry to interrupt, but it is important that this should be cleared up. The Minister has said that perhaps the most important thing is to decide how much is to be spent on military and how much on non-military uses. Will that information be disclosed to Parliament to enable it, if it so desires, to criticise that decision?

Sir D. Eccles

No, I think undoubtedly not. Because if that information were disclosed to Parliament then there would arise exactly the situation which the right hon. Gentleman feared; namely, that the size of the weapon programme would be known throughout the world. No, I should say not.

The really important point raised by my noble Friend was whether some of this money should be raised by loans and not be charged to the annual Vote. There are two points there. First, would the Authority be able to get on better with the work if its money came from loans? For the reasons I have already given, I do not think so. I do not foresee that these capital projects will be held up by the system of annual estimating and grants that we have provided for. When we come to the question of whether it would be in the national interest that we should tax less and borrow more— because that, I think, is really what my noble Friend is suggesting—then the Authority does not seem to be a very suitable body for carrying out that policy, if it should be agreed as a policy, because it has no revenue. Therefore, any borrowing which the Authority did would be a straight Government loan like a Defence Bond, in which the Treasury would stand behind it both for the interest and for the redemption.

We are still in the stage of development work, which does not lend itself to financing out of loans. At Dounreay we shall be more concerned with getting information about the design and behaviour of reactors than with electricity. We hope that we are going to get a reasonable supply of electricity, but the primary object of the plant is to discover how to design such power stations in order that, with such modifications as may seem to be advisable, other people afterwards can put them up at an economic cost. We do not suppose for a moment that the electricity we get from Dounreay will be a paying proposition, because of the experimental work which will be carried on. I do not think that that work is very suitable for loans.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Am I to understand that what the right hon. Gentleman is saying is that if. the experiments are successful, and, as he said in his Second Reading speech, the work of producing electricity is handed over to the North of Scotland Hydro-Electricity Board and the British Electricity Authority, they will be the bodies to raise the money in order to produce the powerful electricity stations of the future?

Sir D. Eccles

That is quite so. Presumably there will be some financial arrangement between the electricity authorities and the Authority. The latter will sell the material and, no doubt, get some royalties.

The real point here is that the Government's expenditure on all types of outlay remains the same. It is a question of whether the proportion which is now covered by taxes is too big or too little, and whether a greater proportion of the Government expenditure should be found by borrowing. That is obviously a point for the Chancellor. It is not one for me.

My noble Friend probably realises that the present Chancellor of the Exchequer has departed quite a long way from financing the under-the-line expenditure out of taxation. He has already got a severe problem there. The surplus which he budgeted for was considerably less than the under-the-line expenditure, and therefore it is reasonable to suppose that the National Debt last year went up. Whether it is advisable to increase the proportion of borrowings is a matter for the Chancellor when he surveys the whole situation.

I should, however, like to say this to my noble Friend whose argument is very interesting. He says that to transfer now from taxes to loans would help the economy. I think that it is a matter of timing. If we had unemployment and idle resources, I should be inclined to agree with my noble Friend, but, in spite of what is happening in the United States of America, our manpower and our savings are now pretty fully employed and our costs are in danger of rising faster than our competitors' costs. In that situation it might be very dangerous to raise more money by loans, because the result might be that prices would rise and that the object which my noble Friend has at heart, and that we all have at heart, of making our life easier, would be defeated by rising prices.

I do not know where the line should be drawn between taxation and borrowing. It is only the Chancellor who can tell that, and I will convey to him the suggestion that my noble Friend has put. The proposal to borrow is a handy weapon that, I think, we should keep in store. Whether it will ever be applicable to the Atomic Energy Authority I do not know. It depends on whether that Authority earns revenue or not.

In the meantime, I am convinced the House wants to press on with this great experiment and would not wish us to confine the expenditure to £20 million, which would rule out Dounreay and several other very important projects. I think that at this stage of this great new industry we shall be all right with the system of finance in the Money Resolution, and that Parliament will have its annual right to say yes or no to the amount of money that is put in the Lord President's Vote. I therefore hope we may have this Financial Resolution.

The Chairman

Does the hon. Member for Islington, East (Mr. E. Fletcher) desire to move his Amendment, in line 4, after "sums" to insert "not exceeding twenty million pounds"?

Mr. E. Fletcher

In view of the statement made by the Minister and the lateness of the hour, I do not desire to move the Amendment, Sir Charles.

Question put, and agreed to.

Resolved: That, for the purposes of any Act of the present Session to provide for the setting up of an Atomic Energy Authority for the United Kingdom and for other purposes, it is expedient to authorise—

  1. (a)the payment out of moneys provided by Parliament of such sums in respect of the expenses of that Authority as the Lord President of the Council may with the consent of the Treasury determine; and
  2. (a)the payment into the Exchequer, if the Lord President of the Council with the approval of the Treasury so directs, of the whole or any part of the revenues of that Authority for any financial year.

Resolution to be reported Tomorrow.