Commons Sitting of 17 December 1963

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  PUBLIC BUILDING AND WORKS

    Building Components (Standardisation)
    Mr. Boydenasked the Minister of Public Building and Works what success his Department has had, as the principal customer of the building industry, in increasing the standardisation of building components.
    The Minister of Public Building and Works (Mr. Geoffrey Rippon):The first step towards standardisation of building components is a generally accepted system of dimensional co-ordination. We are making good progress with this, and the results will be applied to my Ministry's building programmes.
    Mr. Boyden: Is the right hon. Gentleman insisting that contracts stating preferred dimensions should be used in major Government building contracts?
    Mr. Rippon:Yes, that will be the position. We shall use our own preferred dimensions.

    Repairs and Maintenance Costs
    Mr. Boydenasked the Minister of Public Building and Works what progress his Department has made in assessing the cost of repairs and maintenance as a percentage of the total building costs for different methods of construction used in Government contracts.
    The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. Richard Sharples):Figures of maintenance expenditure are available for traditional office buildings and a
    1016
    start has been made with the collection of figures for industrialised buildings.
    Mr. Boyden: Can the hon. Gentleman say when this work began, and what type of special building materials it covers? Secondly, can he say whether he will publish the results of this investigation?
    Mr. Sharples: The collection of this material has been going on for many years. I do not think that it would be possible to publish it, because each case has to be judged separately on its own merits. What the architects do in designing new buildings is to take into account the experience that has been gained.
    Mr. Boyden: But does not the hon. Gentleman recollect that the United Nations, which did a European study of the question, said that, generally speaking, these kinds of statistics were not accurate, and that not enough attention was paid to the subject? If this is not published in a White Paper, or in a similar document, how is the industry to take note of it?
    Mr. Sharples: I repeat that each case must be judged on its individual merits. What we are doing in respect of industrialised building is to collect figures which will be used in designing new buildings of this kind.

    Foreign Office and Home Office Site (Redevelopment)
    Mr. C. Pannellasked the Minister of Public Building and Works when he proposes that work shall start on the new Government buildings in Whitehall to rehouse the Foreign Office and other Departments; and what is the estimated cost.
    Mr. Dribergasked the Minister of Public Building and Works what is the approximate estimated cost of the proposed rebuilding of the Foreign Office block; and if he will secure an estimate related to advanced methods of work study and in consultation with leading industrial designers and decorative artists, of the cost of modernising the interior of the existing building, including in such modernisation the roofing and adaptation of the smaller interior courtyards and the provision of proper air conditioning and heating.
    Mr. Rippon:There is a great deal of preparatory work to be done and it will necessarily be some years before work can start. It is too early to give an estimate of cost.
    Over the last year or two the possibilities of modernisation have been thoroughly investigated, but it is clear that no modernisation scheme would overcome certain defects which are inherent in the present building, such as the height of the rooms on the principal floor and the fenestration of rooms on the upper floors. Several million pounds could therefore be spent on producing accommodation which would still be unsatisfactory in character and insufficient for the needs of the occupants, and would not make the best use of this important site.
    Mr. Pannell: It is obvious from the Minister's reply that his mind seems to be fairly made up about the external structure of the building. Will he bear in mind that the Foreign Office, from the point of view of staff accommodation, is a tawdry slum, which would hardly be tolerated outside? How does he propose to set about this? There will be changes of Government, and such things. Does he propose to set up a Standing Committee of interested Members to plan this modernisation of Whitehall, which may extend through two or three Parliaments?
    Mr. Rippon: I certainly share the hon. Member's views about the working conditions in the Foreign Office. They are very bad indeed. It must also be borne in mind that many of the staff of the Foreign Office are now scattered in about nine separate buildings in the Central London area, where accommodation is perhaps even worse. I did not have in mind the setting up of a Committee of this House, and it would not be for me to do so. I appreciate the need to have regard to the area as a whole when we are making these plans for putting up new buildings.
    Mr. Driberg: Has the right hon. Gentleman considered that although for many of the staff the working conditions are admittedly appalling, some of those conditions could be improved without total demolition and rebuilding? For instance, the windows of which he spoke, under the name "fenestration", could easily be adapted. Has he also con-
    1018
    sidered that the building itself is an extremely interesting example of its period?
    Mr. Rippon: I agree that the building is an extremely interesting example of its period. The Illustrated London News at the time described it as being "essentially Palmerstonian," which is perhaps an adequate description. But it is not of such outstanding architectural importance as to warrant, the expenditure of the very large sums of money which would be necessary to modernise it. Further, having carried out the modernisation, we should be left with a building which was in many ways still unsatisfactory, and we should not be making the best use of this important site.
    Mr. Driberg:Has the right hon. Gentleman considered the possibility of using some of the new Bridge Street block for the Foreign Office?
    Mr. Rippon: Certainly some part of the Bridge Street block will be Government offices, in fact the larger proportion of it.
    Sir J. Duncan:Are not we in danger of making an extremely big mess of Whitehall unless we get the Institution of Chartered Surveyors' building, the new Bridge Street block, the Foreign Office and eventually, probably, the Home Office, in one overall architectural plan? Will my right hon. Friend consider the overall picture, including the premises of the Institution of Chartered Surveyors?
    Mr. Rippon: I will certainly do that. It arises in the Answer which I hope to give to Question No. 12.
    Sir H. Oakshott:Will my right hon. Friend realise that, though one recognises the difficulties and inconvenience of working conditions in the present Foreign Office, this is an argument which can be pushed too far? What, for example, may happen to the Horse Guards—what may happen to the Houses of Parliament—if one talks about inconvenience? Will he realise that those of us who are reluctant to see this building demolished are not necessarily old-fashioned fuddy-duddies?
    Mr. Rippon:I can assure my hon. Friend that I have no present plans to demolish the Houses of Parliament. We did consider how we could carry out a

    1019
    scheme which would be satisfactory. There was a proposal for an additional 40,000 square feet, mainly of attic space, but it was not good enough.
    Mr. Pannell:The Minister will be aware of the very great interest of all hon. Members in this matter. Will he consider two things? One is whether we might have a debate some time after the Christmas Recess and go into the whole question of Government building, the new Bridge Street site and possibly—I am not going to use the word "demolition"—the Foreign Office, and all the proposals concerning Whitehall? In the meantime, will the Minister consider afresh—bearing in mind that his tenure of office may not be long—whether it might be a good idea to set up a long-term Committee of hon. Members of this House so as to have a continuing view of the sort of thing which we have in mind?
    Mr. Rippon:Whether or not there is a debate is not a matter for me. It is a matter which must be dealt with through the usual channels, or by Questions to the Leader of the House. As I have said, I do not think that it is for me to express a view about what Committees the House should establish.
    Sir J. Vaughan-Morganasked the Minister of Public Building and Works whether he will consult the Historic Buildings Council for their views on whether the Foreign Office building, Whitehall, is of outstanding historic or architectural interest.
    Mr. Worsleyasked the Minister of Public Building and Works what discussions he had with the Royal Fine Art Commission before announcing his intention to demolish the Foreign Office building.
    Mr. Rippon: I do not consider it would be appropriate to consult the Historic Buildings Council on this matter but I will, in due course, be seeking the views of the Royal Fine Art Commission on the design.
    Sir J. Vaughan-Morgan:Why does my right hon. Friend decline to take the advice of the Historic Buildings Council when he realises that this is the body to give advice about buildings which it thinks should be preserved? Why does not that apply to him and his acitivities?
    Mr. Rippon:It is not quite correct to say that I decline to accept its advice. The position is that the Historic Buildings Council is set up primarily to advise me on the exercise of my powers under the Historic Buildings and Ancient Monuments Act, 1953, particularly about the making of grants. That does not arise here.
    Mr. Worsley:Is my right hon. Friend aware that my Question asked whether he had discussions with the Royal Fine Art Commission before announcing his decision? Would not it have been better to have had discussions before making this drastic decision? Is he aware that the manner in which he announced it has given the impression, rightly or wrongly, that he is not interested in the architectural value of the buildings under his care?
    Mr. Rippon:I do not agree with the last observation of my hon. Friend. The Royal Fine Art Commission's main function is to inquire into matters referred to it by Government Departments. The proper time to consult the Commission is when there is a design to put before it.
    Sir G. Nicholson:Is not my right hon. Friend running into very heavy weather quite unnecessarily? He referred just now to Palmerston. Is not he imitating Palmerston in his methods? Is he aware that an increasing number of those people who love London and its architectural beauty feel that it is likely to be severely damaged by the hastily pronounced ipsi dixit of Government Departments and that there will be increasing resentment? Is my right hon. Friend aware—he referred to fenestration—that there is such a thing as defenestration and that he should be careful?
    Mr. Rippon:I would rather be compared with Palmerston than some other people who were defenestrated. This will not be done hastily, as I have tried to explain. We have indicated that we think it is necessary to demolish the Foreign Office. There will have to be the appointment of an architect and the preparation of a design. There will come the moment when there will be a design to compare with the existing buildings. It may well be that then the Royal Fine Art Commission will express its view.
    Mr. C. Pannell:Is the Minister seized of the point that it may be that he will not be Minister at that time? Is he laying an obligation upon any Minister of Works to be the arbiter?
    Mr. Rippon:The responsibility has to lie somewhere and it should be with the appropriate Minister of the Crown. He must consult as widely as he thinks fit. There will come a moment when whoever is Minister of Public Building and Works will have to come forward with a design. At that moment the Royal Fine Art Commission should—I think almost certainly will—express its view on the design.
    Mr. K. Robinsonasked the Minister of Public Building and Works by what criteria he intends to select an architect for the redevelopment of the Foreign Office and Home Office site.
    Mr. Rippon: The architect selected must be capable of designing a building which is an original work of art as well as being functionally adequate and in harmony with the surrounding scene. I intend to satisfy myself of his capabilities by discussion and consultation and from the evidence of his previous work.
    Mr. Robinson: Is the Minister aware that on this occasion I agree with him that there is no satisfactory alternative to the demolition and reconstruction on this site, and that at any rate some hon. Members feel that there are contemporary architects who could be trusted to design a building which would at least be as worthy of this important site as the existing Foreign Office? Will the right hon. Gentleman please consider this as part of the comprehensive redevelopment of the western half of Whitehall?
    Mr. Rippon: I am grateful for the first part of the hon. Gentleman's supplementary question. I think that the second part will be answered in the Answer which I give to Question No. 12 and I do not wish to anticipate.
    Mr. C. Pannell:When the Minister selects the architect will he bear in mind the work which the man already has in the pipeline, for surely we do not want someone who probably has £100 million worth of work in the pipeline, a university professorship and the rest, doing this on a sort of part-time basis? Does the right hon. Gentleman
    1022
    appreciate that in appointing this architect he is probably appointing a man for a life's work?
    Mr. Rippon:I do not think that a university professorship in this sphere is necessarily a disqualification, but I do think that one of the factors which I must bear in mind is the kind of work an architect is at present carrying out, as well, of course, as the work he has done in the past.

    Works and Supplies Services
    Mr. C. Pannellasked the Minister of Public Building and Works what progress has been made towards establishing a fully integrated organisation for works and supplies services following the amalgation of the works organisations of the Service Departments and of his Department.
    Mr. Rippon: Since the amalgamation took place on 1st April last, I have prepared a Plan for a fully integrated organisation for works and supplies services and this is now being put into effect as part of a major reorganisation of the new Ministry. I am today publishing a White Paper giving details of this reorganisation. Copies are now available in the Vote Office. In this reorganisation I have had three main objectives. First, to secure a large measure of delegated responsibility to the new integrated regional organisations which I an establishing at home and overseas. Secondly, to maintain a close partnership between administrative and professional staff. Thirdly, to forge close links between works and research and development organisations at all levels.
    Mr. Pannell:The Minister indicated earlier that this was going to happen. We look forward to seeing the White Paper and we reserve our position. When does the right hon. Gentleman expect all this to start?
    Mr. Rippon: I expect the main essentials of the new organisation to be in operation by April, 1964.

    Government Buildings, Whitehall Area (Cleaning)
    Mr. K. Lewisasked the Minister of Public Building and Works whether he will commence a programme of cleaning of the outsides of Government

    1023
    buildings in and around the Whitehall area of London.
    Mr. Rippon: I have had this matter reviewed and I propose that we should clean the stonework of the Banqueting House as a first step.
    Mr. Lewis:Is my right hon. Friend aware that I should certainly not suggest that he should undertake to wash down the buildings which he intends to pull down? Is he aware that the initial step which he has announced will be well received in the country and in London? Can he go a little further as soon as possible because there are a great many buildings—for instance, the National Gallery in Trafalgar Square—standing beside buildings which belong to other Governments and which have been cleaned? Is he aware that the progressive cleaning of Government buildings will help to make London a much more beautiful place?
    Mr. Rippon:I am grateful to my hon. Friend for expressing his view. As I said to my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) on 16th July, the stonework of the National Gallery was last cleaned in 1951 and I do not feel able to give that a very high priority. If we are successful in the case of the Banqueting House I hope that we may be able to consider other buildings. But the problem in London is not so easy as, for example, in Paris.

    Palace of Westminster (State Registered Nurse)
    Mrs. Slaterasked the Minister of Public Building and Works if he will make arrangements for the full-time employment of a state registered nurse in the Palace of Westminster.
    Mr. Sharples: I am bringing this suggestion to the attention of the authorities of the two Houses.
    Mrs. Slater: Does the Parliamentary Secretary realise that in this building and in the other place there are nearly 2,750 people, including hon. Members, workmen and others who are employed here? Is he aware that if anyone is taken ill we depend on the doctors who are Members of this House—and we are grateful to them for the excellent work they do—or the policemen, some of
    1024
    whom are very good? [Hon. Members: "Some?"] They are very good. We have an excellent staff of policemen in this House. [Hon. Members: "All of them."] Yes, all of them. Is the hon. Gentleman aware that we make laws which apply to factories and offices but that someone who is taken ill or has an accident here must be sent to hospital without being given treatment, that is, apart from the treatment given by hon. Members who are doctors and the policemen? Is he not aware that Parliament, which makes the laws of this country, would not tolerate this situation in premises outside? Will he urge his right hon. Friend to see that this whole business is hurried up?
    Mr. Sharples: With respect to the hon. Lady's statement, the appointment of a resident qualified nurse could not take the place of the medical practitioners who are hon. Members of this House and whose services we all appreciate. We must get the matter in perspective. During the last five years the average number of issues per annum from the first-aid box in the room off the Lower Waiting Hall has been 54. Of these, 48 were for Elastoplast and aspirins.

    Staff, Palace of Westminster
    Mr. Pavittasked the Minister of Public Building and Works when he last reviewed the arrangements for accidents and sudden illness suffered by his staff in the Palace of Westminster; and what was the date on which the last improvements were made.
    Mr. Sharples: A thorough examination was made in July of this year; I cannot give a precise date on which improvements were last made, but the arrangements are under constant review and have been up to standard for many years.
    Mr. Pavitt: Is the hon. Gentleman aware that his Answer is totally inadequate and that no major changes in the health arrangements in this House have been made since the beginning of the century, except for the slight alteration made at the suggestion of my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross)? Will he please consult with the other authorities in the House so that we may have an official

    1025
    statement on the state of health arrangements, perhaps with the co-operation of the Minister of Labour and the Factories Industrial Medical Officer? Is he aware that the conditions of health care in this House are inferior to those which prevailed in slum factories in the East End of London in the last century, and what does he propose to do about it?
    Mr. Sharples: The hon. Member's Question relates to the first-aid facilities which are available for the staff of the Ministry of Public Building and Works. Those facilities have been inspected by the Ministry of Labour and are said to be satisfactory. However, I agree that the room which is used for those facilities could be improved and I am looking into the matter to see what can be done.

    Swindon
    Mr. F. Noel-Bakerasked the Minister of Public Building and Works what steps he is taking to encourage Government Departments to locate staff and buildings in Swindon.
    Mr. Rippon: I have ensured that the Departments principally concerned with the dispersal of Government staffs are aware of the local Authority's desire to be considered as a dispersal location.
    Mr. Noel-Baker: What steps have been taken to bring to the attention of private industry, and particularly people who might be able to move their office staff to my constituency, details of the facilities that are available there?
    Mr. Rippon:As the hon. Gentleman knows, there exists the Location of Offices Bureau, and I think that that is helping, along with the hon. Member's own endeavours in bringing to the notice of a wide circle of people the potentialities of his constituency.

    Bridge Street Building (Television and Broadcasting Studio)
    Mr. Donnellyasked the Minister of Public Building and Works whether he will take steps to ensure that in the new Parliamentary block to be provided in Bridge Street provision shall be made for a television and broadcasting studio.
    Mr. Sharples: This is one of the matters on which we shall wish to have the views of the House.
    Mr. Donnelly: Is the Parliamentary Secretary aware that the present system of either taking hon. Members through the traffic at risk to their lives or being interviewed outside the House in the street, as happened during the Profumo debate, is both unsatisfactory and invidious? Should we not take note of this as a simple means of modern communications that should be made available to hon. Members?
    Mr. Sharples: I agree with the hon. Member. The B.B.C. made representations about this and a requirement of this kind was put in Sir William Holford's original brief for Bridge Street as a whole Whether or not the facilities should be included in the new Parliamentary building is a matter for the whole House.
    Mr. C. Pannell:It is hoped to set up an Accommodation Committee as soon as possible after the Christmas Recess. Will the Minister consider referring this matter to that Committee, which will be considering the arrangements for the new Bridge Street site?
    Mr. Sharples: I think that this would be a very appropriate matter for this Committee to consider when you set it up, Mr. Speaker.

    Government Departments, Whitehall Area (Accommodation)
    Mr. Dribergasked the Minister of Public Building and Works if, before proceeding with the demolition of the Foreign Office building, he will set up an inquiry into the present and future requirements of all the Government departments whose offices are situated in or near Whitehall, so that accommodation maybe re-allocated, those departments whose immediate proximity to Parliament and Downing Street is less essential may be rehoused elsewhere, and such of the existing buildings as are of considerable architectural merit may be preserved.
    Mr. Worsleyasked the Minister of Public Building and Works whether he will set up an inquiry into the present and future accommodation of Government departments in the immediate Whitehall area, bearing in mind both the requirements of efficiency and the architectural importance of the group of buildings in this area.
    Mr. Rippon: I do not think that a special inquiry is called for, but I certainly accept that plans for all new building in this area should be related to each other and have regard to the general architectural character of the area. The policy is to house properly in the Whitehall area those staffs who have to be at the centre while dispersing those who can be moved without loss of efficiency.
    Mr. Driberg:While accepting most of what the right hon. Gentleman says in his reply, may I ask him—since it is rather difficult to go into the detailed arguments on this by way of Question and Answer—whether he himself would welcome the debate that was suggested a little earlier by my hon. Friend and, if so, whether he would make representations to his right hon. Friend the Leader of the House with a view to securing that debate? Is he also aware that such a debate would be largely meaningless if the right hon. Gentleman has finally made up his mind about the demolition of the Foreign Office, and will not he wait until after that debate has taken place, to hear the opinions of all hon. Members on all sides?
    Mr. Rippon: The Government have made a firm decision about the future of the Foreign Office, but, of course, it is always open to the House to debate anything which the Government propose and the problem as a whole.
    Mr. Worsley:Does not my right hon. Friend understand that in the opinion of many people this is too big an issue for one man, even himself, to decide and that this affects many of the most historic buildings in this country, buildings which admittedly may be a little out of fashion but which are representative of our greatest period? Would not my right hon. Friend agree that it would be better if a high level inquiry were to look into the whole question and help him to make the right decision?
    Mr. Rippon: I do not think that a high level inquiry would be appropriate. What I believe is necessary is that we should look at this area as a whole. Certainly the proposals should be brought forward not just piecemeal but in relation to the rebuilding of Whitehall as a whole. That we will do at the appropriate stage.

    Public Work (Tenders)
    Mr. Dempseyasked the Minister of Public Building and Works if, in view of the difficulties experienced by firms in Coat bridge and Airdrie in obtaining schedules for public work, he will make a statement on the conditions under which his Department put such work out to tender.
    Mr. Sharples: The Ministry operates a system of selective tendering. We maintain a list of approved contractors and some firms on the list are invited to submit tenders for each job. Thus, over a period of time and so far as the size, nature and location of the required work permits, equal opportunity is given to all firms on the approved list.
    Mr. Dempsey:Is the hon. Gentleman aware that some of his approved contractors in my constituency are experiencing unnecessary difficulty in obtaining schedules from the Department? Will he inform his officers that this is a development and growth area and that it has a consistently high rate of unemployment, so that they might consider minimising the difficulties for reputable firms whose ambition it is to tender for public works in my part of the country?
    Mr. Sharples: If the hon. Member has any evidence of any difficulty having been experienced in obtaining schedules I should be grateful if he would let me have the details.

    Housing (Expenditure)
    Mr. Frank Allaunasked the Minister of Public Building and Works if he will state the proportion of the national product spent on housing today and in 1951.
    Mr. Rippon: The percentages of the gross national product of the United Kingdom spent on housing in 1951 and 1962 were 2·9 and 3·5 respectively.
    Mr. Allaun: Does not this proportion contrast very unfavourably with comparable countries abroad where the proportion is from 6 per cent. to 8 per cent.? Will the Government raise their sights and aim at a target of something like 500,000 houses a year?
    Mr. Rippon:What really matters, as the hon. Member has suggested in his

    1029
    last sentence, is the total number of houses built and that has risen from 202,000 in 1951 to 313,000 in 1962. I find it difficult to make valid comparisons with figures of the "European league". There is no real basis of comparison. In any case, expenditure expressed as a percentage of gross national product is not a very good indication of the amount of accommodation provided.
    Mr. Allaun: Does the right hon. Gentleman know that his figures do not tally with those prepared by the Observer and that I am rather puzzled by his reply because I believe that the figures are actually lower than they were 12 years ago?
    Mr. Rippon: I have no responsibility for figures in the Observer.

    Armed Services, Little Aden (Building Contract)
    Mr. Oramasked the Minister of Public Building and Works if he will state the amount of the highest tender submitted for the major contract to build houses for the armed services at Little Aden.
    Mr. Sharples: No, Sir. It is not customary to disclose details of tenders received.
    Mr. Oram:Is the Parliamentary Secretary sure that these tenders are being looked at with sufficient care to make certain that public money is not being seriously wasted on this project? Should it not be possible to build many more than 314 houses and flats for £2 million, which I think was the lowest tender? Since this comes on top of the scandal revealed by the Estimates Committee in July last in connection with another piece of building in Aden, is there not a case for looking at the whole building and contracting industry in Aden to make sure that public money is not being wasted?
    Mr. Sharples: I have no evidence that public money is being wasted on this. Building costs are high in a remote place like Aden, and the highest tender received for this work was 25 per cent. higher than the lowest, which was accepted.
    Mr. C. Pannell:How can the Parliamentary Secretary say that he has no
    1030
    evidence of high costs in this part of the world? The Estimates Committee looked into the building for the Admiralty and it took the view that costs were high and that there was probably a good deal of exploitation of the public purse. Did not the Parliamentary Secretary ever read or anybody in his Department ever read the Estimates Committee's Report on the building of Admiralty House in Aden, and was the same firm of contractors tied up in this work?
    Mr. Sharples: I said that the cost of building in Aden is high because of the physical difficulties of building there, but I have no evidence at all that there is anything in the suggestion made by the hon. Member for East Ham, South (Mr. Oram).

  OVERSEAS INFORMATION SERVICES

    Broadcasting
    Mr. Mayhewasked the Secretary for Technical Co-operation what is his estimate to the number of radio sets in the world; what proportion of them he estimates to be capable of receiving the British Broadcasting Corporation transmissions; by how much he expects these figures to rise in the next five years; and what action he is taking meanwhile to increase the scale of British Broadcasting Corporation transmissions.
    The Secretary for Technical Co-operation (Mr. Robert Carr): The most recent estimate by the B.B.C. is that there were some 409 million radio receivers in the world in 1962, an increase of roughly 73 per cent. over the previous seven years.
    It is not possible to make any worth while estimate of the proportion of sets capable of receiving B.B.C. transmissions. It is equally impossible to make a worth while estimate of the growth in the number of sets in the next five years.
    There have been some modest increases in the hours of broadcasting in the B.B.C. s external services during the past year. But the most effective way of increasing the B.B.C.'s overseas audience is to make the B.B.C.'s signal much more audible, especially in Asia and

    1031
    Africa. We are, therefore, concentrating on a very substantial improvement in the B.B.C.'s transmitting facilities, both at home and overseas.
    Mr. Mayhew: Does not the suggestion that there are about 20 million new sets a year coming into operation show that the importance and value of overseas broadcasting is growing all the time? Welcome as is the Minister's statement, may I ask whether he is aware that it does not match the opportunity here? Will the right hon. Gentleman take an imaginative look at the problem and increase the amount of broadcasting and the strength of the signals so as to make up some of the ground which we have lost to other countries in recent years?
    Mr. Carr:The first priority, as I said to the hon. Member in the summer, is to make our broadcasts more audible. I have just come back from Asia and I am certain that this is the most important job to get on with. We have increased considerably expenditure on overseas broadcasting in the past few years, and I agree about its importance.

    Low-Priced Book Scheme
    Mr. G. M. Thomsonasked the Secretary for Technical Co-operation what was the expenditure on the low-priced book scheme in 1962–63; and what is the estimated expenditure for 1963–64.
    Mr. R. Carr: The expenditure in 1962–63 was £107,000. The estimated expenditure for 1963–64 is £86,000.
    Mr. Thomson: Is not the Minister ashamed of those figures? Was not the expenditure last year much lower than that originally estimated? Is it not very bad that the figures should be going down? What steps are the Government taking to ensure that the scheme lives up to the kind of target set when it originally gained the consent of the House?
    Mr. Carr: I am not ashamed of the figures. Since the scheme was instituted in 1960, over a million books have been sold to 34 countries. It is proving less expensive than we expected. Expansion of the scheme is also sometimes delayed by the time taken to select the books, and the time taken to get the
    1032
    approval of other countries of the titles selected, but the extension of the scheme to other countries is under consideration.

  TECHNICAL CO-OPERATION

    United Nations (Pledged Contributions)
    Mr. Prenticeasked the Secretary for Technical Co-operation what contributions will be made by this country during 1964 to the United Nations Expanded Programme of Technical Assistance and to the Special Fund; how these contributions compare with those for 1963; and if he will make a statement on the pledging conference at the United Nations which determined the 1964 figures.
    Mr. R. Carr: Subject to Parliamentary approval, Her Majesty's Government have pledged contributions for 1964 to these programmes of 6·25 million dollars to the Special Fund and 3·75 million dollars to the Expanded Programme of Technical Assistance. These are the same as the pledges made for 1963.
    At the recent United Nations pledging conference eighty-seven countries offered 74 million dollars and the United States a further 60 million dollars on the understanding that their contribution would amount to no more than 40 per cent. of the contributions paid.
    Mr. Prentice: Is the right hon. Gentleman aware that this is a very disappointing decision, in that the 1963 totals are already behind the programmes set out in accordance with the United Nations Development Decade? If 1964 does not show an expansion, shall we not get further behind? Does the right hon. Gentleman recall that one of his first actions when he took office was to accept on behalf of the Government a resolution on the programme of the United Nations Development Decade? Cannot the Government take the initiative now to secure a bigger expansion next year?
    Mr. Carr:We took the initiative last year in increasing our contribution by 25 per cent. We are still the second largest contributor to this fund. If our contribution is calculated as a percentage

    1033
    of the gross national product there are only three countries that give a bigger proportion, and not one of those has a bilateral technical assistance programme comparable with ours. One must look at the whole programme of technical assistance.
    Mr. G. M. Thomson: Is there not an obligation on the Government to set standards in this matter? Are the Government now abandoning the targets they accepted for the United Nations Development Decade?
    Mr. Carr: We are setting standards. We are the leaders. There are only three countries making a contribution which is a bigger proportion of the gross national product and, as I have said, not one of those countries has a technical assistance programme of its own which is comparable with ours.

    Ghana (Tax on Pensions)
    Sir E. Erringtonasked the Secretary for Technical Co-operation whether he is aware that Ghana has passed a statute imposing a tax of 7s. in the £sterling upon remittances of those who receive pensions but are not resident in Ghana; and what steps he is taking to ensure that this new departure will not adversely affect ex-colonial pensioners who are resident here.
    Mr. R. Carr:Yes, Sir. I am aware of the action of the Ghana Government With regard to the second part of the Question, as my hon. Friend the Undersecretary of State for Commonwealth Relations and for the Colonies told the House last week, representations have been made to the Ghana Government and we still await their reply.
    Sir E. Errington: Does my right hon. Friend realise that the tax of 7s. in certain cases may be more than is paid in this country by these pensioners? While the financial probity of Ghana is open to the gravest questions, may I ask that something should be done to press this matter hard and that it should not be left to lie where it is?
    Mr. Carr: I can assure the House that I am deeply concerned about the effect which this measure could have on the pensions of British people who served both Ghana and this country very well. I can assure my hon. Friend and
    1034
    the whole House that our representations to the Ghana Government are being taken up in that spirit.
    Mr. Wade:Has the right hon. Gentleman satisfied himself that in the application of this tax no account is taken of allowances which would apply to a tax at the rate of 7s. in the £ in this country, and that therefore this is a straight tax of 7s. on a pension income, however small the pension may be, which is very unfair? Are we not under an obligation to colonial servants to ensure that they do not suffer in this way?
    Mr. Carr: I assure the hon. Member that the point he has made is very much in our mind as one of the potential causes of hardship. I should prefer not to comment on any other matter until we have completed our consultations and representations to the Ghana Government.
    Sir J. Vaughan-Morgan: Will my right hon. Friend use his influence to draw the attention of the Ghana Government also to the fact that this kind of action is a considerable disincentive to those whom they might seek to recruit for future service in that country?
    Mr. Carr: Yes, Sir.
    Mr. G. M. Thomson:Is the right hon. Gentleman aware that the Government will have strong support from this side of the House in making these representations?
    Mr. Carr: I am very glad to hear that.

    Commonwealth Countries (Development Plans)
    Mr. G. M. Thomsonasked the Secretary for Technical Co-operation what help his Department gives in the provision of expert personnel to assist Commonwealth countries in the preparation of their development plans.
    Mr. R. Carr: We have met requests to send experts to the Ghana Planning Commission and the Tanganyika Planning Authority. And many officers supplied under the Overseas Service Aid Scheme contribute to the preparation of of development plans. We are prepared to consider further requests in this field

    1035
    as they arise. We also recommend British experts to the United Nations for supply to Commonwealth Governments under their programmes.

  SCIENCE

    Atomic Energy Authority and Central Electricity Generating Board
    Mr. Wingfield Digbyasked the Lord President of the Council and Minister for Science whether a directive will be issued on the terms on which the Atomic Energy Authority should undertake work for the Central Electricity Generating Board.
    The Lord President of the Council and Minister for Science (Mr. Quintin Hogg):This is a matter for negotiation between the parties. Should differences arise, it will be for the Government to make decisions.
    Mr. Digby:Is my right hon. Friend aware that although I cannot regard this as an entirely satisfactory Answer—[Interruption.]—as 90 per cent. of the work done by the Authority is for the Board, those of us who served with him in the House before are delighted to welcome him back again, and so are many others?
    Mr. Hogg: I should like to thank my hon. Friend for his extremely satisfactory supplementary question.
    Mr. Crossman: May I add our verbal congratulations to the Minister on his return, and also on his following the example set by my hon. Friend the Member for Bristol, South-East (Mr. Benn) in getting back here in the right way? Is the right hon. Gentleman quite sure that the relations between the Atomic Energy Authority and the Central Electricity Generating Board are quite all they should be?
    Mr. Hogg: I should like to thank the hon. Gentleman in particular for his courteous supplementary question and welcome. I would only say that nothing is ever quite all that it should be.

    Cancer Research
    Mr. Oramasked the Lord President of the Council and Minister for Science what sum is provided annually
    1036
    from public funds for cancer research; and how this compares with the 1 per cent. of defence expenditure suggested as a contribution to an international institute under the proposal endorsed by General de Gaulle.
    Mr. D. Griffithsasked the Lord President of the Council and Minister for Science how much money has been made available by Her Majesty's Government, during the financial year 1962–63, for cancer research.
    Mr. Hogg:The French scheme referred to in the first of the two Questions envisaged ½ per cent. and not 1 per cent. of defence expenditure.
    The sum spent specifically on cancer research by the Medical Research Council in 1962–63 was about £750,000. It is expected to rise in the current year to about £950,000. To this must be added relevant research carried on by universities, and at hospitals in the course of treatment of patients. In addition a great deal of basic research which may well throw light on problems of this disease is supported out of public funds. It is not possible to give a realistic estimate of the total cost.
    Mr. Oram:But is not that figure one of the things that is just not what it ought to be. Does it not reveal that far too little money is at present being provided? Secondly, is it not shown that an international institute is very urgently needed, and can we be assured that the Government will play a vigorous part in getting such an institution going?
    Mr. Hogg: As regards the last part of the hon. Member's supplementary question, two very distinguished official scientists are at present discussing the matter, I think in Paris. As regards the first part of his question, the amount of activity on research must depend upon the availability of suitable manpower and promising leads. I have asked the question again and again of those who advise me, but these things are not simply determined by the amount of money devoted to them.
    Mr. Griffiths:Is the Lord President of the Council aware that the Government, and he himself, should be completely ashamed of themselves for giving such a meagre amount? We all congratulate the voluntary bodies on the

    1037
    wonderful assistance given to scientific research into cancer, but does he not think that the Government should provide much more than £¾ million?
    Mr. Hogg: No, Sir.
    Sir C. Osborne:Can my right hon. Friend give an assurance that real research into cancer is in no way hampered by lack of funds?
    Mr. Hogg: As regards the Medical Research Council, certainly.
    Mr. G. Thomas: Is the Lord President of the Council aware that flag days are being held to raise money for cancer research? Does he not think that there is something wrong if we have to raise our funds for research in that way?
    Mr. Hogg: I certainly see nothing wrong in people paying for the relief of human pain and suffering out of their own pockets; on the contrary, I think it highly praiseworthy. As to general policy, I regard the multiplicity of resources for research as of the greatest value to scientific integrity.

    MACHINERY OF GOVERNMENT
    Mr. W. Hamiltonasked the Prime Minister if he will consider the setting up of a committee, similar to the Haldane Committee of 1918, to examine the modern problems of the machinery of Government.
    The Prime Minister (Sir Alec Douglas-Home):I have no grounds for thinking that a committee of this nature is required at the present time. The organisation of Government business is the continuing responsibility of Ministers.
    Mr. Hamilton:Does the Prime Minister recognise that there has been no comprehensive survey of the machinery of Government since the Haldane Committee reported in 1918? Does he not, therefore, think the time very opportune to set up another committee to investigate this matter, particularly as, in discussions and debates, differences of opinion are being expressed on such matters as education, town and country planning, the location of industry, science and the rest? Does
    1038
    not the right hon. Gentleman think that it would now be opportune to set up another committee to follow on with the extremely good work that the Haldane Committee did?
    The Prime Minister: No, Sir. We have just made a great reorganisation in defence which takes place on 1st April, and we are contemplating the reorganisation of education and science. I think that this is enough to go on with.
    Mr. Gresham Cooke:Whilst there is, perhaps, no case for setting up a committee at the moment, will my right hon. Friend bear in mind that there is interest in the improvement of the machinery of Government on this side of the House as well as on the other? Would he consider now whether the promotion of civil servants, from the lowest grade to the top, is really adequate in the age in which we live?
    The Prime Minister:I am very interested in the reorganisation of Government and in the question that my hon. Friend has raised, but my general feeling is that there are enough committees about for the Government to do this work.
    Mr. Grimond:Does not the Prime Minister agree that the very number of committees and Royal Commissions now necessary are themselves some evidence of our need to consider the machinery of Government? To quote just two examples, would he not agree that the need to associate local people with regional development, and the need to find some methods of checking faults in security, should be reconsidered in the machinery of Government as well?
    The Prime Minister: I do not think that I can reconsider the setting up of a committee, but the Government are certainly looking into the reorganisation of the machinery of Government.

    MINISTERS
    Mr. Loughlinasked the Prime Minister if he will make it a condition of accepting Ministerial office in future that the of ice holder undertakes not to apply for nor accept direct Government subsidies other than those paid arising out of welfare services.
    The Prime Minister:So far as I understand the Question, the Answer is "No, Sir". But perhaps the hon. Member would like to let me know what he has in mind.
    Mr. Loughlin:Is the Prime Minister aware of the very invidious position in which Ministers are now placed? Does he know that Ministers of the Crown can, and do, receive large sums of public money—for instance, if they are farmers—as a direct result of policies for which they are responsible? Has it not been a long-established principle of British public life that persons should not receive a pecuniary gain from their public activities, and will he do something about it?
    The Prime Minister:I think that whatever practices are going on they have been going on for a long time—since the 1947 Act, the 1957 Act, and the rest—but if the hon. Gentleman will put down a specific Question, I will try to answer it.
    Mr. Loughlin:If the right hon. Gentleman wants a specific question, I will ask one of him. Will he make clear that a Minister of the Crown who is responsible for initiating policy is in a similar position to that of a member of a local authority who may be a council-house tenant and is not allowed to vote on a matter from which he gets pecuniary advantage?
    The Prime Minister:I should like to see that question on the Order Paper.

    PRIME MINISTER AND PRESIDENT JOHNSON (TALKS)
    Mr. Fernyhoughasked the Prime Minister, if, in his forthcoming talks with the President of the United States of America, he will raise the question of flag discrimination, particularly in relation to the recent grain transaction with the Union of Soviet Socialist Republics.
    Mr. Rankinasked the Prime Minister, if, during his visit to the United States of America, he will discuss with President Johnson the problems created by the granting of independence to British Guiana, in so far as they affect United States interests.
    Mr. Shinwellasked the Prime Minister, what proposals on the mixed-
    1040
    manned surface vessels force he intends to place before the House in preparation for his discussions with President Johnson when he visits the United States of America.
    The Prime Minister:My talks with President Johnson will be confidential.
    Mr. Fernyhough: Does that mean that in his visit to the United States the Prime Minister is not prepared to raise this grave issue concerning British shipping? Is he not aware that since I put this Question down the United States Maritime Board has demanded that British ships should give up to it certain confidential documents? Will he make clear that Her Majesty's Government will back our ship owners in refusing to do this, and will he ask the President how it is that the United States Government allow American ships to trade freely with Communist Russia, Hungary and other Communist countries but blacklist British ships which carry freight to Cuba? Will he ask the President how he can justify it? Furthermore, will he tell him that it is nonsense to continue to co-operate militarily if they are trying to crucify us economically?
    The Prime Minister:The hon. Gentleman will be glad to know that the Minister of Transport has already advised ship owners not to take notice of these documents. That has already been done. I hope that there will be no need, therefore, for me to raise this particular question, as the Minister of Transport has already made our attitude clear.
    Mr. Rankin:Is not the right hon. Gentleman aware that the situation at present in British Guiana is causing a good deal of consternation in America, as I discovered in the late autumn, and does he think that he could talk with President Johnson without having something to say on his method, or the method of his Government, in settling the problem which now presents itself to us in British Guiana? Does he realise that if he would concentrate more on seeking to heal the breach between Dr. Jagan and Mr. Burnham he might solve the problem of independence a little more easily and, at the same time, bring some confidence into the mind of President Johnson?
    The Prime Minister: Perhaps I might remind the hon. Gentleman of what the late President Kennedy said about this:
    "Quite obviously the United States Government is concerned about what happens in this hemisphere and observes matters in this hemisphere closely but I think it is very important that we point out that this is primarily a British matter and we should leave the judgment to them."
    Mr. Shinwell: The right hon. Gentleman seems to be deliberately evading Question No. Q10 on the Order Paper. I am well aware, as all hon. Members are aware, that his discussions with President Johnson have to be confidential. I am not asking about that. I am asking whether, on the subject of the mixed-manned force, which concerns both sides of the House and the country, as well in the matter of defence, he will ascertain the views of the House before he enters into discussion with representatives of the United States? Is he aware that there is now a proposal for a pilot scheme, accepted by the United States, and it looks as though we are committed to it? If we are committed to it, is that not in defiance of the statement which he has made to the House?
    The Prime Minister:May I tell the right hon. Gentleman that we are committed to nothing as yet. The question of a mixed-manned force in general is being discussed both in Washington and in Paris, and there is a proposal that there might be an experiment on an American ship, not a nuclear ship, to try to find out the problems which arise from mixed manning. We have not decided whether to take part in it or not.
    Mr. H. Wilson:On the mixed-manned force, would the right hon. Gentleman agree in the New Year, before his visit to Washington, to make a clear statement in the House on this question and allow the House a chance to debate it? On the other point about British Guiana, while welcoming the reiteration of what President Kennedy said about this being a matter for the British Government and this House, may I ask him to have another look at the whole question? In other words, will he have talks with the Secretary of State rather than with the White House on this, with the intention and purpose of trying to bring in a Commonwealth presence, whether from the
    1042
    West Indies or Canada, to guarantee human rights and the control of the police as a means of bringing about the very necessary reconciliation between Dr. Jagan and Mr. Burnham?
    The Prime Minister:I should like to consider a little further the last proposition which the right hon. Gentleman has made with my right hon. Friend the Commonwealth Secretary. So far as a debate on the mixed-manned force is concerned, there is really, I think, very little to debate as yet because we do not know what the findings of the Washington group or the Paris group will be. But, of course, this is a matter for the usual channels.

    CHEMICAL AND BACTERIOLOGICAL WEAPONS
    Mr. Dalyellasked the Prime Minister whether, as a step towards reaching an agreement on chemical and bacteriological weapons, he will propose to President Johnson and Mr. Khrushchev an exchange of information on this sector of science, between Great Britain, the United States of America and the Union of Soviet Socialist Republics.
    The Prime Minister:Both the American and the Soviet disarmament plans put forward at Geneva contain proposals for the elimination of chemical and biological weapons. I think the best way to proceed is to discuss these matters at Geneva in the context of these two plans.
    Mr. Dalyell: Will the Prime Minister prepare the ground by taking suitable technical advisers?
    The Prime Minister: Did the hon. Gentleman ask whether I would see that there was a technical adviser at Geneva?
    Mr. Dalyell: In the light of the evidence which I sent to the right hon. Gentleman last week, would it not be an opportunity to take scientists in February who are competent to prepare the groundwork on this important question?
    The Prime Minister:We usually have them with us at Geneva. My right hon. Friend, if he goes, or any other Minister there, usually has expert evidence with him. Certainly I will see if this might be done.
    Mr. P. Noel-Baker: Would the Prime Minister consider the possibility of making a proposal to abolish biological warfare preparations in advance of a general agreement and transforming the present research stations into establishments for combatting and abolishing diseases throughout the world?
    The Prime Minister: I should like to discuss the very interesting question raised by the right hon. Gentleman with the Americans, our allies, and other allies to see whether we can make any progress before the actual stages of a disarmament agreement are put into practice. I am not very sure that this is possible. It raises all sorts of security issues for one thing.

    SCOTTISH TRADES UNION CONGRESS
    Mr. W. Hamiltonasked the Prime Minister, if he will seek an early opportunity to meet members of the Scottish Trades Union Congress to discuss problems of the Scottish economy.
    The Prime Minister:There is no lack of Ministerial contact with the Scottish Trades Union Congress. My right hon. Friend the Secretary of State for Scotland holds regular meetings with its Economic Committee. The last was on 15th November; and he is due to meet them again on 20th December, specifically to discuss the Government's recent White Paper on Central Scotland. My right hon. Friend the Minister of Labour also saw members of the Scottish Trades Union Congress on 7th November.
    In the past there have been occasions when my predecessor had useful discussions with the Scottish Trades Union Congress. I am sure that opportunities for similar discussions will occur in the future.
    Mr. Hamilton: Does the right hon. Gentleman recognise that there is increasing recognition in Scotland that he himself is not too well aware of the economic problems of his own country? Is he aware that his predecessor as Prime Minister did see the Scottish T.U.C., and in view of the urgency of the situation and the fact that many trade union members in Scotland are not confident as to the efficacy of the
    1044
    proposals that the right hon. Gentleman has made vis-à-vis the Scottish economy, will he take the initiative himself to meet members of the T.U.C. to discuss these matters?
    The Prime Minister: I think it a little arrogant of the hon. Gentleman to suggest that I do not know about the Scottish economy. I have lived in Scotland all my life and have had a lot of experience of both the agricultural and industrial parts of the country. If the Scottish T.U.C. wishes to see me, as I have indicated in the last part of my Answer, I shall be happy to see it.
    Mr. Hamilton:If the right hon. Gentleman understands the Scottish economy, how does he explain the fact that he did not know that the Hydro-Electric Board had been stopped from any further advance for three years? He made this quite clear during his own by-election campaign.
    The Prime Minister:That is an entirely separate questions. The Hydro-Electric Board was not stopped by Government action, as the hon. Gentleman perfectly well knows; it was halted for the time being because certain objections had been made which had to be heard.
    Mr. K. Lewis:Will my right hon. Friend or those of his colleagues who from time to time meet the Trades Union Congresses of both Scotland and England make clear to them that there is great advantage to be gained from the Congress in either country pressing upon the workpeople the need at the present time, in the interests of the economy of Scotland and of the nation as a whole, that we should keep to a certain amount of wage restraint and that there should be some regard paid to the guiding light of the N.E.D.C. by people engaged in industry on both sides?
    The Prime Minister: What matters most to the wage earner and the salary earner in this country, I think, is that wage increases should be met by productivity.
    Mr. H. Wilson:Yes, but when the Prime Minister says that, does he recognise that the only possible basis on which we can get a fair incomes policy,

    1045
    not just a wage policy, is by having an adequate climate of social justice and Government measures to see that it is carried through?
    The Prime Minister: I think that I will accept that. It is the objective of the Government.

GENEVA DISARMAMENT CONFERENCE
The following Question stood upon the Order Paper:
Mr. A. HendersonQ16. Mr. A. Henderson: To ask the Prime Minister whether he will make a statement on the leadership of the United Kingdom delegation at the resumed Geneva Disarmament Conference on 2nd January.
The Prime Minister (Sir Alec Douglas-Home): With permission, Mr. Speaker, I will now answer Question No. Q16.
My right hon. Friend the Foreign Secretary intends to attend the conference as soon as he can in order to inform himself at first hand of its work.
As far as a meeting of the Foreign Ministers is concerned, that is a matter for decision by all participating countries. If, in any way, I misled hon. Members by my reply on 10th December, I regret it.
Mr. A. Henderson: Are any discussions taking place with the Soviet Government and the United States Government on the desirability of the Geneva conference resuming at Foreign Minister level? Further, does not the right hon. Gentleman agree that a new impetus is necessary to end the present deadlock?
The Prime Minister: As the right hon. and learned Gentleman knows, the conference consists of 18 Governments. It is very difficult to get all the Foreign Ministers of the participants together at one time. It is one of the prime objectives of our foreign policy to achieve a disarmament agreement, and we should, therefore, gladly welcome any form of meeting which will promote that end.
Mr. Henderson:Will the Prime Minister answer the first part of my question? Are any discussions taking place with the Soviet and United States Governments on the desirability of the Foreign Ministers meeting?
The Prime Minister:I have no doubt that discussions are taking place between my right hon. Friend and Mr. Rusk, and I shall be seeing Mr. Rusk myself this week. Whether or not the Foreign Ministers actually meet together in Geneva must be a matter for them to decide.
Mr. Grimond:Does not the Prime Minister feel that he might take an initiative in this matter by suggesting that the Foreign Ministers of the major countries should meet in Geneva?
The Prime Minister: If the Foreign Ministers meet at Geneva, I want them to do something worth while. Timing is all-important.
Mr. Emrys Hughes:Does not the Prime Minister think that this would be a good opportunity to give a warm welcome to Mr. Khrushchev's announcement of a substantial reduction in the war budget of the U.S.S.R.? Can he assure us that there will be some reduction of this country's defence budget?
The Prime Minister:I am very glad to see any reduction in armaments. As I said in Geneva, when I was Foreign Secretary, our great objective is to turn the curve of armaments down. This is being begun, I think, in both the United States and the Soviet Union.
Mr. P. Noel-Baker:If we understood the Prime Minister aright, he said that the Foreign Secretary will, in any case, attend early in the proceedings of the conference whether the other Foreign Ministers come or not. Is the right hon. Gentleman aware that this will be much welcomed on both sides of the House, and will he take it that I join in urging him that he should be very active in persuading other Foreign Ministers to come as soon as possible and to stay as long as possible?
The Prime Minister:I am grateful to the right hon. Gentleman. I did say that my right hon. Friend intends to go to Geneva in any case, whether others are there or not.

QUESTIONS TO MINISTERS
Mr. Speaker: Question No. 66, The Secretary of State for Air.
Sir C. Osborne:On a point of order, Mr. Speaker. May I ask for your

1047
guidance in drawing your attention to the fact that even Prime Minister's Question No. Q6 has not been reached today and that my important Question No. Q8 has been nowhere near reached? Is it possible for you, Sir, through the usual channels, to try to get Questions answered more quickly so that all the Questions to the Prime Minister may be reached?
Mr. Speaker: I have no contact for that purpose with the usual channels. Perhaps I might be allowed to say that it is much appreciated if hon. Members can make their supplementary questions short—[Hon. Members: "Hear, hear."]—and the answers, too. The present problem is to get Question No. 66 answered.

FIRING RANGE, GERMANY (BELGIAN AIRCRAFT)
The following Question stood upon the Order Paper:
Mr. PAGET: To ask the Secretary of State for Air whether he will now make a statement about the circumstances attending the crash of a Belgian transport aircraft on the Sennelager range in Germany on 26th June.
The Secretary of State for Air (Mr. Hugh Fraser):With permission, I will now answer Question No. 66.
The reports of the British and Belgian investigations into the accident to a Belgian C119 transport aircraft at Sennelager range, near Detmold, on 26th June, 1963, in which 38 Belgian Servicemen lost their lives, have now been received and studied.
The aircraft crashed after having been struck by a white phosphorous smoke mortar bomb. It had been flown across the line of fire of an active mortar range at a time when firing by a British Army unit was in progress. The range authorities ordered "cease fire" as soon as the aircraft was seen; but by this time the mortar bombs had been fired and were in the air.
The aircraft had come under the air traffic control of R.A.F. Gutersloh and was preparing to land there. The most careful inquiries have, therefore, been made to establish the circumstances in which it came to be over the range.
1048
This has been a difficult task involving many calculations based sometimes on conflicting data. The results must inevitably fall short of certainty. But the conclusion which has been reached, and which I fully accept, is that the aircraft was under close control by the Gutersloh ground control approach when it flew over the Sennelager range and was hit by a mortar bomb. Responsibility must, therefore, rest with the Royal Air Force.
The air traffic procedures at R.A.F. Gutersloh have been in operation for many years, as has the neighbouring range. Hitherto, their safety had not been doubted. But it has now been shown that safety margins were insufficient. I can assure the House that this has been put right. I have, moreover, given instructions for safety margins at all other R.A.F. stations to be rechecked.
The most careful consideration has been given to the question of individual responsibility. The Commander-in-Chief, Royal Air Force, Germany, has concluded, in the light of all the circumstances, that no individual officer was so blameworthy as to be deserving of punishment. I agree with this view. The system itself, after many years of successful operation, is now seen to have been based on insufficient safety margins. As I have said, these have now been increased.
Her Majesty's Government wish to express again their deep regret for this tragedy and the heavy loss of life. Arrangements have been made to consider urgently claims for compensation from the next of kin.
Mr. Paget: Is the right hon. Gentleman aware that we on this side join with him in a sense of deep sympathy with the victims of this appalling tragedy and in the sense of contrition that we should have been responsible? Is he further aware that this was an accident in which the odds were millions to one against, and is he aware, also, that we are glad that no individual has been made a scapegoat for the tragedy? It would be an appalling thing to place responsibility for it on any one man's shoulders unless he were plainly guilty of a substantial neglect.
Can the right hon. Gentleman assure us that the dependants of the dead will

1049
receive compensation at least as generous as that to which they would be entitled under their own Belgian law?
Mr. Fraser:I thank the hon. and learned Gentleman for what he has said. I am sure that, in so far as these people can be adequately compensated, it will be done.

MAJOR P. R. CORY, RA.S.C.
The Secretary of State for War (Mr. James Ramsden): With your permission, Mr. Speaker, and that of the House, I should like to make a statement.
I am now in a position to inform the House of the outcome of the inquiries undertaken by my noble and learned Friend the Lord Chancellor and myself into the circumstances of the court-martial of Major Cory and the subsequent events up to the hearing of his appeal by the Courts-Martial Appeal Court in April of this year.
As the statement is a long one I will, with permission, circulate it in the Official Report.
In the light of all the circumstances, my Department has decided to make an ex gratia payment of £7,500 to Major Cory. He has already received his pay and allowances for the whole period up to his voluntary retirement on 1st August, 1963.
Mr. Paget: As I understand that there are Questions on this subject down for answer tomorrow, we shall then have the opportunity to put more detailed questions when we have studied the full statement. It will then perhaps be possible to say whether the sum in compensation to which this officer is clearly entitled is properly payable by the taxpayer or whether it should fall on somebody else.
Mr. Ramsden:I am obliged to the hon. and learned Gentleman for his remarks. The idea of making this statement as a result of our inquiries was to enable it to be printed in the Official Report so that the House would have something before it when these Questions fell due for answer tomorrow. I shall seek through you, Mr. Speaker, to make sure that they are answered, even if they are not reached in the normal way.
Mr. Freeth:On behalf of my constituent, Major Cory, I thank my right hon. Friend for his statement. Can he say today how the figure of £7,500 was arrived at?
Mr. Ramsden: It was assessed by an Official Referee of the Supreme Court under the procedure laid down by my right hon. Friend the then Home Secretary in 1957.
Mr. Frank Allaun:While awaiting the publication of the statement tomorrow, could the Secretary of State tell us whether or not he has accepted the vital principle that a soldier, like a civilian, should be allowed bail pending appeal?
Mr. Ramsden:That point is covered, to a certain extent, in the statement. I hope that the hon. Member will read it and will address any further questions he may have to me tomorrow.
Following is the statement:

1. Major P. R. Cory, R.A.S.C, commanded 60 Company, Royal Army Service Corps from its formation in England in July, 1958, until 18th December, 1960. This Company has been from 1958 and still is a unit of 24 Infantry Brigade Group based in Kenya. Throughout his period of command, Major Cory personally operated the fund known as the President of the Regimental Institute's, being non-public monies to be used for the benefit of corporals and lower ranks.

2. The Queen's Regulations prescribe that the accounts of such a fund should be subjected to audit at regular intervals, which, in the case of Major Cory's unit, were three months by virtue of orders issued by the superior headquarters. It was Major Cory's duty as commanding officer to see that this regulation was complied with. Unfortunately, it was not. Efforts were made to secure the production of the accounts of this fund to Brigade Headquarters during 1960 without success, and it must be admitted that there was some laxity of supervision by the headquarters in this respect.

3. Major Cory left the company to return to the United Kingdom on 20th December, 1960. In November of that year he appointed a board of officers to audit the unit funds accounts as part of the handover of the unit to his successor. This board found it could not complete

1051
its task in respect of the President of the Regimental Institutes Fund as the account for the quarter ending 30th September had not been audited. On 15th December two officers of the company, appointed by Major Cory, began the audit of the accounts for the July to September quarter.

4. The two officers who audited the September quarter did not make the prescribed check as to the sum which should have been held as a cash balance on 30th September, 1960, and did not comment adversely on the account or report that it was not in order. The "handover" board started its audit on 30th January, 1961, and on 3rd February found that on the former date there had been a cash deficiency of E.A.S. 1655/58 (£82 15s. 7d.). The existence of this deficiency was confirmed in March by an independent audit board presided over by an officer of the Royal Army Pay Corps. In the course of these audits the accounts were found to be in a very confused state.

5. In early February, 1961, the new holder of the P.R.I. Account wrote to Major Cory, who was then in England, drawing his attention to the cash deficiency which had been discovered and asking him to meet it. Major Cory's reply to this letter sought to explain the deficiency, but was not regarded as satisfactory. Grounds for suspecting that the account had been improperly conducted were revealed in March in the report of the independent audit board; for example, cheques appeared to have been drawn to provide cash for the payment of bills when a sufficient cash balance appeared to have been available for that purpose.

6. Major Cory's return from the United Kingdom was then requested. He returned to Kenya on 6th May, 1961. He was not then asked for an explanation of the alleged deficiency of the accounts. On 16th May he was placed under arrest on a holding charge. It was unfortunate that Major Cory was not asked to furnish an explanation before being arrested. The reason for the omission to do so was the belief that there were already valid grounds for concluding that the account had been operated dishonestly.

7. The investigation and preparation of the case against Major Cory was carried
1052
out under the direction of an officer of the Army Legal Service assisted by the Special Investigation Branch of the Royal Military Police and by the Royal Army Pay Corps. Prior to Major Cory's return, a National Serviceman, Corporal Sleep, was ordered to start on a thorough investigation of the account, which took over four weeks. Corporal Sleep was a qualified chartered accountant and had then had seven years of general accountancy experience. There was then no Royal Army Pay Corps officer with professional qualifications available in the Command. Corporal Sleep, as a chartered accountant, was thought to be the best qualified person available to make the detailed examination of the account.

8. The summary of evidence was be gun on 22nd June and, the evidence of the prosecution witnesses having been taken by 24th June, Major Cory sought and was granted an adjournment to enable him to examine the documents in the case. Some four weeks were taken up with this examination. At the end of it, Major Cory did not offer any explanation of the allegations made against him. He was fully entitled to refrain from doing so. Thus, the summary of evidence was not completed until 19th July, 1961.

9. In the light of conclusions drawn from the results of the investigation of the account by Corporal Sleep and of the other investigations, a charge sheet was prepared containing 16 charges covering a period from 30th November, 1958, to the date of Major Cory's departure for England on 20th December, 1960. The prosecution was ready for trial by 26th July, 1961. At the request of the defence the trial was postponed until 25th September.

10. When the trial started no copies of certain relevant exhibits were avail able for the use of the court and Judge Advocate. The failure to provide copies of the accounts of the President of the Regimental Institutes' Fund must have made it difficult to follow and under stand the opening of the case for the prosecution. Photographs of the accounts were available after the first week of the trial. Before the trial the defence had been offered a copy of the account of the P.R.I. fund but declined it.

1053

11. Between 16th May and 25th September, 1961, Major Cory was at liberty except for seven days following the preferment of the holding charge when he was in open arrest and for three days during the taking of the summary when he was in close arrest.

12. The trial lasted for 43 days. It should have taken far less time. There were a number of factors which accounted for its length. It is not possible to state them in order of importance. Together, they led to a trial of excessive length, such as to constitute a heavy burden on all taking part.

13. Normally, a court-martial sits for six hours or so a day. The average hearing during this trial lasted 4½ hours. Regard must be had to climatic conditions. The Supreme Court of Kenya sits for five hours a day, and it is not unreasonable to expect that a court-martial in Kenya should sit for those hours While sitting for longer hours would have shortened the total length of the trial, it would be wrong to conclude that this was the main cause of the trial taking so long.

14. The greater the number of charges in a charge sheet, the greater is the time likely to be taken in their investigation. It is for those responsible for the preferment of the case to decide how many charges should be preferred. Here, the charges covered a long period of time. It is to be doubted whether at the outset of the case the burden cast on the prosecution and on the defence of being required to deal with so many separate charges, the majority of which required the close examination of figures, was sufficiently appreciated.

15. It cannot be disputed that the trial proceeded at a very slow pace, and some criticism may be made on this account. However, it must be borne in mind that it was incumbent on the court and the Judge Advocate to allow the prosecution to present its case fully and to give the accused every opportunity of testing the case presented by the prosecution and of dealing with it. But that there was some avoidable and unnecessary prolixity it is not possible to deny.

16. Of the 16 charges preferred against Major Cory one was included in the charge sheet as a result of an oversight
1054
and was withdrawn before the case started. On three charges the defence succeeded on a submission that there was no case to answer on the evidence. On five charges the accused was acquitted. He was thus convicted of seven out of the 15 effective charges preferred. All the 15 charges were the subject of the closest examination which occupied a great deal of time.

17. The sixteenth charge alleged forgery, and the prosecution sought to establish that the two signatures on the account indicating that it had been audited were forged. They were purported to t e the signatures of a man by the name of "Futcher" or "Fletcher". The prosecution sought to prove that no such man existed. They relied on an immigration officer to prove that no such man had been in Kenya and on some of Major Cory's fellow officers to show that he was not known in the company. However, it became clear that a man could easily have entered and been in Kenya without the knowledge of the immigration authority. Also, several witnesses, two of them officers in the company testified to having met a man who could have been Futcher. At first sight, therefore, the matter cannot have been sufficiently investigated before this charge was preferred, but enquiries had, in fact, been made by the prosecution, before the trial, of several officers of the company, including one of those who later gave the contrary evidence; all these officers had denied having ever met anyone who might be Futcher.

18. The prosecution was severely criticised by the Courts-Martial Appeal Court for having failed to produce numerous missing documents, mostly supporting books and vouchers for entries in the P.R.I. Account. Many searches were made both before and after the trial for documents alleged to be missing. Major Cory, in his evidence, stated that shortly before he left the company be deposited many of these documents in a letter tray containing a pile of vouchers, letters and other papers in an unmanned room in the company headquarters during the weekend. The searches made both by the prosecution and defence after the trial failed to produce any of these or any other material documents.

1055

19. During the hearing of the appeal by the Courts-Martial Appeal Court, Major Cory produced a document which he said he had found after the trial. This document was a questionnaire completed by the two officers who formed the audit board for the audit of the account for the quarter ending September, 1960, and which purported to show that all the necessary vouchers and supporting books had been produced at that audit. The Courts-Martial Appeal Court reached the conclusion in the light of Major Cory's evidence that this document had not been available at the trial. Information obtained since the hearing of the appeal, both from the prosecution and from the counsel for the defence at the court-martial (neither of whom was available during the hearing before the Courts-Martial Appeal Court), shows that this document was made available by the prosecution to the defence at the trial. It was not put in evidence by the prosecution as it was not admissible in evidence against the accused. It was not put in evidence by the defence, but it was available to be put in if the defence wished to do so.

20. A considerable amount of time was occupied during the trial in argument and evidence about the alleged missing documents.

21. The causes of the excessive length of the trial can be summarised as follows:

(a) the average daily sitting of the court was short;

(b) the number of charges preferred, the majority of which involved separate transaction or a separate series of transactions;

(c) the difficulties which arose as a result of the allegation by the defence that material books and vouchers were missing;

(d) the detailed examination of the accounts over a long period;

(e) undue prolixity; and

(f) the preferment of some charges without sufficient investigation and preparation, and the failure to provide copies of relevant exhibits for the use of the court at the start of the trial.

22. It would seem that the prosecution may not have fully appreciated the difficulties which were bound to arise
1056
both in relation to the question whether material documents were missing and in proving beyond reasonable doubt charges based on accounts, in relation to transactions effected a considerable time ago when the accounts themselves were in a very confused state.

23. The fifteenth charge alleged a general deficiency of E.A.S. 1954,24 (£97 14s. 3d.). The respondents, in the course of the hearing of the appeal, did not seek to sustain the conviction on this charge and the Courts-Martial Appeal Court expressed the view that it should not have been preferred as it appeared to them that it was possible to trace occasions on which, if there was fraudulent conversion, individual sums comprised in this general deficiency had been converted. If the matter had been argued, it could have been shown that the alleged general deficiency consisted of monies which could not be shown to have been misapplied on a particular date.

24. As a result of the evidence given at the trial, Major Cory was convicted on this charge not of fraudulent conversion of E.A.S. 1954.24 (£97 14s. 3d.) but of 928.78 (£46 9s. 0d.) shillings. While it is not uncommon for the amount charged as a general deficiency to be amended in the light of the evidence given, it is regrettable that in estimating the amount of the alleged general deficiency, some amounts were included which could not be substantiated by the evidence.

25. The summing-up was very long and diffuse and in many respects un satisfactory. It was the subject of severe criticism by the Courts-Martial Appeal Court.

26. Major Cory's conviction on five of the seven charges on which he was found guilty was confirmed by the General Officer Commanding East Africa Command and the sentence was reduced from two years' to one year's imprisonment.

27. Advice prior to confirmation was obtained, as the Queen's Regulations require, from the Judge Advocate General's Office.

28. Major Cory later submitted a lengthy petition to the Army Council asking that the convictions should be quashed. This petition was rejected by

1057
the Army Council after receipt of advice from the Judge Advocate General.

29. The Courts-Martial Appeal Court, having decided that the appeal should be allowed on other grounds, did not find it necessary to decide whether the findings of the court-martial were invalidated by reason of the general conduct of the trial and the nature of the summing-up.

30. If it had been necessary for the Courts-Martial Appeal Court to decide whether the summing-up was of so unsatisfactory a nature as to necessitate the non-confirmation of the findings or the quashing of the convictions, it would seem likely, from the general tenor of the judgment in the case, that it would have been held that the summing-up was of such a character that the findings should not have been confirmed and, if the findings had been confirmed, that the convictions should be quashed.

31. Major Cory's legal defence costs before the court-martial amounted to £600, of which £400 came from public funds by way of legal aid. In January, 1962, the War Office granted legal aid to Major Cory in connection with the preparation of his petition to the Army Council and his application to the Courts-Martial Appeal Court. Payments amounting to £56 10s. were made to his London and Nairobi solicitors.

32. The Courts-Martial Appeal Court expressed its concern at the length of the interval between the conclusion of the trial and the hearing of the appeal. The court-martial ended on 24th November, 1961, the findings were confirmed on 20th January, 1962 and sentence was promulgated on 22nd January. The interval between the conclusion of the trial and the confirmation of the findings was mainly taken up in transcribing the proceedings, transmitting them to London and obtaining the advice of the Judge Advocate General's Office. A copy of Major Cory's petition to the Confirming Officer reached the London Office of the Judge Advocate General on 7th December and the transcript of the proceedings became available there on 12th December. A supplemental petition was received on 21st December. Confirmation advice was despatched from London by airmail to Nairobi on 10th January. The task of advising the Con-
1058
firming Officer involved reading the transcript of 1,400 pages, examining individually findings of guilt on seven charges all concerning intricate details of accountancy and dealing with over 60 separate points raised in the petition and supplemental petition. The period of 28 days taken over this task included Christmas. It cannot be considered unreasonably long.

Section 3 of the Courts-Martial Appeal Act, 1951, and rules made under the Act, provide that no appeal lies to the Courts-Martial Appeal Court unless a petition to quash the conviction has first been presented to the Army Council and either 60 days have elapsed from the presentation or the petition has been rejected. Courts-Martial Appeal Rules allow 60 days for the submission of the petition in the case of trial outside the United Kingdom. Major Cory submitted his petition on 22nd March (after 59 days); he was informed by the Army Council of the rejection of the petition on 18th May (57 days later). The petition ran to 29 pages. Advising on it involved a fresh perusal of the 1,400 page transcript. At the time the Judge Advocate-General was also personally engaged in giving advice on nine other petitions.
An application for leave to appeal was lodged by Major Cory's legal representatives of the Courts-Martial Appeal Court on 24th May, 1962. From that date the speed of further progress was in the hands of Major Cory's legal representatives who did not lodge the grounds of appeal until eight months later.
From the end of the trial until the time of promulgation Major Cory remained in Kenya under close arrest but not in prison, and this period counted towards the serving of his sentence. He was imprisoned in the United Kingdom from 22nd January until 24th July, 1962, when he was released, having served his sentence subject to remission for good conduct.
After Major Cory had been released from prison his advisers had their own reasons for wishing to put off the hearing until they had had a great deal more time to prepare the appeal. Legal aid was granted by the Courts-Martial Appeal Court on 26th July. The grounds of appeal were lodged on 25th January, 1963, and on 14th March an application was received on behalf of Major Cory

1059
for leave to call seven witnesses. When the appellant's case was ready for hearing it proved impossible, owing to heavy pressure of work, to constitute a court of three judges to hear the case, which was expected to last a week, until 4th April.
There is no power to suspend a sentence pending the determination of an appeal petition by the Army Council. Nor is there any power to grant bail pending the determination of an appeal to the Courts-Martial Appeal Court. The conferment of these powers would require legislation. There are many practical difficulties in granting bail to service personnel. In this case it would have made little difference if a power to suspend sentence or to grant bail had existed. It is most unlikely that the powers would have been exercised except possibly by the court a few weeks before Major Cory was, in fact, released from prison.
In conclusion, it should be stated that the course of events as revealed in this case was wholly exceptional. The Judge Advocate-General's office and the War Office will make every effort which lies within their power to avoid the recurrence of a similar case in future.

INDONESIA (BRITISH CONTRACTS)
The Minister of State for Foreign Affairs (Mr. Peter Thomas):With your permission, Mr. Speaker, and that of the House, I wish to make a statement.
As the House may be aware, two British companies separately entered into contracts with the Republic of Indonesia in 1959. One was for the supply and services for the installation of a radar system in Indonesia by the Decca Radar Company, and the other for the supply and subsequent servicing of Gannet naval aircraft by the Fairey Aviation Company, now part of the Westland Aircraft Company. These contracts had the approval of Her Majesty's Government.
However, the Indonesian Government are now pursuing a policy of hostility towards Malaysia and this has obliged the Government of Malaysia to request British assistance under the Anglo-Malaysian Defence Agreement in the defence of Malaysian territory.
1060
Under these circumstances, Her Majesty's Government have felt obliged to request both the British companies to suspend work on their present contracts with the Republic of Indonesia. Arrangements are accordingly being made by the companies for the withdrawal of the British technicians in Indonesia engaged on these contracts.
The reasons why this step has been taken have already been explained to the Indonesian Government, who have again been reminded that Her Majesty's Government remain ready to respond to any sincere Indonesian initiative for the resumption of friendly relations.
Her Majesty's Government have given undertakings to both the companies to indemnify them against losses arising from the termination of these contracts. Parliamentary authority for any payments which prove necessary to meet those undertakings will be sought in due course.
Mr. Gordon Walker:Is the Minister aware that, in view of Malaysia's request to us for assistance, this decision of the Government will be welcomed and supported on both sides of the House? Can he assure us that, before it is necessary to come to Parliament for authority to pay the compensation, he will tell us at the earliest opportunity what will have to be paid in compensation to these companies?
Mr. Thomas:The answer to the second part of the right hon. Gentleman's question is "Yes" and I very much welcome the first part.
Mr. Grimond: May I ask the Minister three questions? First, are these the only contracts likely to be affected? Secondly, has there been a deterioration in the situation which means that this must be done now? If not, why was it not done before? Thirdly, what is the position of the technicians? Have they been withdrawn? If they have not been withdrawn, are steps being taken to see that they are safe and whether they can be safely withdrawn, because surely their situation could be most uncomfortable?
Mr. Thomas:They have not been withdrawn, but steps are being taken at this moment to see that arrangements are made for them to leave the country.

1061
In answer to the right hon. Gentleman's question on delay, both these contracts were reviewed in mid-September, but no statutory powers existed to cancel them. Therefore, we have had to request the companies to do so. This was a serious matter, the possible repercussions of which needed careful consideration.
With regard to the right hon. Gentleman's question about other contracts, as far as Her Majesty's Government are aware, no other commercial firms in the United Kingdom now have contracts with the Indonesian armed forces.
Miss Vickers:While appreciating, and regretting, the need for my hon. Friend to make this statement, may I ask him whether thought has been given to getting reconciliation between these two countries through a third Power? Also, is any meeting being held between the Indonesian Government and the British firms in Indonesia to get the position regarding these firms finally cleared up? It has been proposed, I believe, that there should be a committee to discuss this matter.
Mr. Thomas: Her Majesty's Ambassador in Djakarta is continually having interviews with the Indonesia Government about the position of British firms in Indonesia.
If the Indonesian Government would stop their confrontation policy, we should be only too happy to resume the friendliest relations with them. That, indeed, is what we would wish.
Mr. Lee:Could the hon. Gentleman tell us what could be the effect of this policy upon employment? He may remember that my right hon. Friend the Member for Huyton (Mr. H. Wilson) and myself made it clear, in the case of South Africa, that if we were in power we would keep up the contracts so that there should be no unemployment. Is he aware that we see a lining up between the position here and that applying in South Africa's case? Could the hon. Gentleman say whether the Government will take action to ensure that there is no unemployment as a result of this policy?
Mr. Thomas: I made inquiries about this matter this morning. As I said, Her Majesty's Government have agreed to
1062
indemnify the company against losses arising from the termination of the Decca technicians' contract with the company, and I am informed by the Decca Company that, for its part, it fully intends to deal sympathetically with any problem which may arise from the termination of their contracts by reason of the termination of its contract with Indonesia.
With regard to the Westland Aircraft Company, there are only two technicians involved. I am told that no unemployment problem will exist in its factory and that the company can easily assimilate into its staff the two technicians returning from Indonesia.
Mr. H. Wilson:Could the Minister be a little more explicit on what I thought I heard him say about the lack of statutory powers in this matter? Since the Government use powers to control exports to Eastern Europe, for example, and claim that they are now, at any rate, exercising some sort of control, whatever it is, on shipments to South Africa, would the hon. Gentleman say whether they have statutory powers to enforce a total or partial embargo when difficulties of this kind arise? If the powers are limited, is thought being given to the possibility of introducing the necessary legislation?
Mr. Thomas:Apparently, the remaining equipment that was needed to link up the equipment already in Indonesia was not subject to export licensing or any other form of statutory control. The people who were dealing with this Decca equipment were technicians who were installing a lot of equipment which is already there.

NEW MEMBER SWORN
David Colville Anderson, esquire, Q.C., for Dumfries.
BILLS PRESENTED
  ELECTION (WELSH FORMS)
  Bill to authorise the use, in connection with elections in Wales and Monmouthshire, of translations of statutory forms into the Welsh language, presented by Mr. Raymond Gower; read the First time; to be read a Second time upon Friday, 17th January, and to be printed. [Bill 51.]
  NATIONAL HEALTH SERVICE (HOSPITAL BOARDS)
  Bill to make provision for changing the name of Regional Hospital Boards in England and Wales to that of Hospital Board, presented by Mr. Raymond Gower; read the First time; to be read a Second time upon Friday, 17th January, and to be printed. [Bill 52.]
  LIABILITY FOR ANIMALS
  Bill to amend the law relating to liability in respect of animals; and for purposes connected therewith, presented by Mr. Stratton Mills; read the First time; to be read a Second time upon Friday, 17th January, and to be printed. [Bill 53.]
  ADJOURNMENT (CHRISTMAS)

  FEDERATION OF RHODESIA AND NYASALAND (DISSOLUTION)
  3.53 p.m.
  The Secretary of State for Commonwealth Relations and for the Colonies (Mr. Duncan Sandys): I beg to move.
  That the Federation of Rhodesia and Nyasaland (Dissolution) Order in Council, 1963, a draft of which was laid before this House on 10th December, be approved.
  I invite the House to approve this draft Order in Council, which is made under the Rhodesia and Nyasaland Act of last July. Exactly three years ago to this day, the Federal Review Conference in London was indefinitely adjourned. Everyone who attended that conference recognised that the Federation had conferred great economic benefit on all the peoples of all three territories and that it would be a misfortune if this progress was arrested.
  At the same time, everyone realised that the Federation could not survive unless genuine co-operation between Europeans and Africans could be established. Unhappily, that did not come about. In consequence, we had earlier this year to face the hard fact that two out of the three component territories were resolutely determined to withdraw from the Federation. Since there could be no question of holding it together permanently by force, steps had to be taken to bring the Federation to an end in an orderly manner.
  At the Victoria Falls Conference, at which my right hon. Friend the Foreign Secretary presided so successfully, last June, the Governments of the Federation, of the three constituent territories, and Her Majesty's Government agreed to set up joint committees of officials to work out the detailed arrangements for the dissolution of the Federation. These committees worked exceedingly well. Except on one issue, on which the representatives of the Federal Government took a different view, the committees reached complete agreement on all the main questions which are dealt with in the draft Order.
  The settlement set out in the Order has been accepted by the three territorial Governments and by the British Government. Whilst the Federal Government have expressed their agreement

  1065
  with almost everything in the Order, they have withheld their approval of the Order as a whole because certain differences still persist between the Federal Government and the other four Governments. I will refer to these matters later.
  When one considers the wide range of issues to be resolved and their great complexity, the extent of the agreement achieved in this short time is remarkable. I should like to pay a warm tribute to the officials of all five Governments for the skill and efficiency with which they carried through these difficult negotiations. I also wish to express my appreciation of the helpfulness of the other four Governments. I am especially grateful to the Federal Government for placing their information and experience unreservedly at the disposal of the committees. But for this generous co-operation, the orderly dissolution of the Federation would have been infinitely more difficult.
  The draft Order in Council, which is a long and, at first sight, rather formidable document, requires the affirmative approval of both Houses of Parliament. I wish to say straight away that I am sorry that Parliament has not had rather more time to consider it before our debate today. I well understand the views of hon. Members, but I should like to explain the position.
  The decision of the Victoria Falls Conference to fix 31st December as the target date for dissolution set us a very tight timetable, tighter than was recognised at the time. The last reports from the committees in Salisbury were received only a fortnight ago. After that, the legal drafting had to be completed and the Order in Council printed. It was presented to Parliament the day it was received from the printers. In view of the Christmas Recess, any postponement of this debate would have involved delaying the dissolution of the Federation by at least six weeks, which, I am sure, nobody wants.
  It may be convenient if I explain briefly the main provisions of the Order. As I go through it, I will endeavour to deal with as many as possible of the criticisms that have been made. Part I creates the necessary machinery for the dissolution of the Federation. Most of the assets and liabilities of the Federa-
  1066
  tion will either be allocated under the Order between the three successor Governments or will be distributed in accordance with the agreements reached in the last few months. There are, how over, certain assets and liabilities which, for one reason or another, cannot be distributed before the dissolution of the Federation. These are to be transferred to a special authority, to be known as the Liquidating Agency. This will be an executive body whose function wilt be to complete the winding up of the affairs of the Federation on the lines agreed between the Governments.
  Provision is made in the Order for the continuance, with necessary modifications, of the exising laws of federation, subject, of course, to the right of the Legislatures of the three territories to amend them in accordance with their Constitutions. The Order also provides for the temporary continuance of certain Federal courts until they have disposed of the proceedings which are already in train.
  The draft Order makes necessary adaptations in British Acts of Parliament and subordinate legislation where references to the Federation occur, but, in particular, it provides for the adaptation of the British Nationality Act in such manner that all Federal citizens who do not become Southern Rhodesian citizens will receive the citizenship of the United Kingdom and Colonies.
  I come now to the question of the Federal public service. After exhaustive discussion, agreement was reached in September between the Federal Government, the Governments of the three territories and Her Majesty's Government on the arrangements for the future employment, retirement and pensions of all past and present officers of the Federal Government. In the view of Her Majesty's Government these arrangements constitute an equitable settlement which fairly takes account of the complicated factors involved.
  All officials for whom there is no prospect of further employment will, in the first place, be invited to stay on, usually in their existing jobs, for a transitional period up to the end of May next year. This will enable the territories to carry on without interruption the duties which pass to them by the dissolution, and to reorganise the staffing

  1067
  of the services when it is known which officials wish to remain on.
  Those officials who become redundant as a result of the dissolution will be compensated for the abolition of their office. Generally, this will take the form of an addition of one-third of their pension. If, however, an officer is offered continued pensionable employment in his home territory, but does not wish to accept it, he will be entitled to full earned pension, but not to the addition of one-third. It has been suggested that it is unfair to differentiate between officials in this way. But it really does not seem right that an official who is offered continuing employment on comparable terms and declines it should be treated as favourably as the man for whom no job is available.
  In order to provide security for the terminal benefits of the pensions of Federal civil servants in future, it has been agreed between all five Governments concerned that the Federal Pension Fund will be maintained under independent trustees and administered by a new Pension Agency. The three territorial Governments and the British Government will share in making good any deficit in the Pension Fund to the extent necessary to ensure the payment of those benefits, and, as I have already explained, these arrangements have been fully agreed between all five Governments, including the Federal Government, who have throughout been specially mindful of the interests of their officials.
  However, since the announcement of the scheme the Staff Association representing the Federal public servants has continued to claim that the Federal officials should be compensated as though they were members of Her Majesty's Overseas Civil Service. The British Government cannot accept this contention.
  The Federal public service was recruited on a local basis. There was never any question of treating Federal officials as expatriate officers. This was absolutely clear to everyone who entered the Federal service. Those who transferred from the British Colonial Service were fully aware that they were leaving the British Government's service and entering the service of the
  1068
  Federal Government on local terms, based on the assumption that they were serving in their homeland and not serving overseas.
  After considering the representations of the Staff Association, I am satisfied that there is not really any justification for reopening the inter-governmental agreement, and the five Governments including the Federal Government, all share this view. Nevertheless, the Staff Association has put forward certain proposals which, in its opinion, could be adopted without reopening the Agreement. These proposals will be considered in conjunction with the further detailed recommendations, which have now been received from the Inter-Governmental Committee in Salisbury. These deal with the treatment of hardship cases, the currency in which pensions are to be paid, and other related matters.
  I come now to the arrangements for future collaboration between the territorial Governments in the running of common services.
  The great Kariba hydro-electric scheme will continue to be operated and further developed under the joint ownership and control of the Northern and Southern Rhodesian Governments. Part III of the Order provides for the setting up of a higher authority for electric power, composed of two Ministers from each of the territories. It also establishes a new corporation, which will have much the same functions as those of the present Federal Power Board.
  The Commonwealth Development Corporation, which is a major lender to the project, will be represented on the new Corporation. Broadly speaking, general policy and financial control will be exercised by the Governments through the higher authority, while the assets and liabilities of the Federal Power Board will be vested in the new Corporation.
  The Central African Airways Corporation will continue to provide a common service for the whole area under the overall authority of the three territorial Governments. As in the case of the electric power board, there will be a higher authority and a Corporation with similar functions, and, once again, the Commonwealth Development Corporation will be represented.

  1069
  One of the more complicated questions which had to be resolved was that of the future of the Rhodesian railways, which serve Northern and Southern Rhodesia. I am sure that the House welcomed the recent announcement that the Governments of these two territories had agreed to continue the railways as a single undertaking under their joint ownership and control and to share equally the financial responsibility. The Order implements this agreement. Amongst other things, it establishes a Railways Court to help in the settlement of industrial disputes and, in this respect, the two Governments have agreed that there will be no break or change in the employment of existing staff and that the obligations to pensioners will not be affected.
  The three Governments have also agreed to collaborate in agricultural research, including veterinary and tsetse research. This will enable important work now being undertaken by existing Federal research bodies to be continued. The three Governments recognise the importance of maintaining the valuable links with research institutions here in Britain. As evidence of this they have decided that the first chairman of the new research body in Central Africa will be appointed on the nomination of the British Agricultural Research Council.
  Each of the three territories will, in due course, introduce its own currency. All the Governments are, however, agreed on the need for a smooth transition and on the importance of upholding the credit of the present currency. The existing Federal currency will meanwhile be maintained on the level of parity with sterling.
  The Bank of Rhodesia and Nyasaland, the Federal Central Bank, will continue in existence for the time being to manage the Federal currency and to exercise other central bank functions, such as exchange control, until the three territories have set up separate banks of their own to take over these duties. This will be effected not later than 31st December, 1965.
  I come now to the question of the Federal debt which, apart from short-term borrowings, amounts in all to about £246 million. This figure includes the loan for the Kariba hydro-electric
  1070
  project, amounting to £26 million, the liability for which will be shared equally between Northern and Southern Rhodesia. It also includes Federal loans raised for railway purposes, liability for which will also be shared equally between the two territories. It also includes certain territorial loans, amounting to about £90 million, which had been taken over by the Federal Government and which will now revert to the territorial Governments.
  After deducting these loans, we are left with a balance of about £118 million of general funded debt. The three successor Governments have accepted liability for this balance in the following approximate proportions: Southern Rhodesia, 52 per cent.; Northern Rhodesia, 37 per cent.; Nyasaland, close on 11 per cent. These percentages represent the respective share of the Federal assets allocated to each territory. This seems to be the only practical way of apportioning liability.
  The Government of Northern Rhodesia contended that, in calculating its liabilities, account should be taken of the fact that the large revenue derived from Northern Rhodesia in past years had made a net contribution to the other two territories and had in part been used to help finance Federal Government projects which are included among the assets now being distributed. However, I am glad to say that, after further consultations, the Northern Rhodesian Government while maintaining the validity of their contention, decided to accept the settlement agreed by the other Governments. They explained that they had decided to do this because they recognised the difficult situation which would be created by disagreement, and because of their concern to protect the interests of the creditors of the Federation. I wish to express my appreciation to the Government of Northern Rhodesia for the co-operative and responsible attitude which they have adopted in this matter.
  In the case of internal debt, each territory will issue its own stock up to the amount of its share of the liability, and each stockholder will receive certificates from the three Governments in these proportions. It has not yet been decided whether the same procedure will

  1071
  be applied to external debt. The Order provides for the decision on this to be reached among the Governments before dissolution, but, in any case, the division of liability will be in the same proportions.
  These arrangements have been strongly criticised in certain quarters. It has been contended that to apportion the Federal public debt in this way solely among the territories, will necessarily involve injury to the interests of the investor, and that the British Government should, therefore, in some way or another underwrite these liabilities. Two main arguments are advanced in support of this contention. First, it is said that the proposed arrangements radically alter the nature of the backing for the loan. Secondly, it is claimed that since the Federation is being dissolved by the British Parliament, the British Government have a duty to guarantee the Federal debt.
  Those who put forward these arguments start from the assumption that the dissolution of the Federation was an isolated decision of policy by the British Government. That, of course, is quite incorrect. This Order in Council represents no more than a recognition of the fact that the Federation was already breaking up on its own. For some time past it had been clear that the overwhelming majority of the populations of Nyasaland and Rhodesia were firmly opposed to the continuance of the Federation. They had with growing persistence demanded the right to secede. Faced with this mounting opposition in the two Northern Territories, even staunch supporters of the Federation had begun to realise that it could not be held together much longer.
  Thus, the question was not whether the Federation should be maintained, but rather whether it should be dissolved in an orderly manner, or left to fall apart on its own. The only sane course open to us was to face up to the realities of the situation and to bring the Federation to an end in a legal and peaceful manner, with as much agreement as possible. That is what we are doing.
  Another wrong assumption is that, but for the dissolution of the Federation, the
  1072
  credit of the Federal Government would have remained strong and that, therefore, the security offered by the Federation as a whole would have been better than the security which will be offered by the three territories separately. If the stockholders wish to make a fair comparison, they should compare the security offered by the new proposals not with the credit of a federation which was a going concern with an assured future, but rather with the credit of a federation on the verge of disintegration.
  Mr. Robert Jenkins: Rubbish.
  Mr. Sandys: It is perfectly true.
  If we were not in process of winding up the Federation in an orderly way, I have no doubt that the price of Federal stock would be standing a great deal lower today. Moreover, if the Federation had been left to break up without any prior arrangements for the assumption by the three successor States of liability for the Federal debt, the stock could well have become totally unsaleable. That was a prospect which would have faced the investors if we had allowed things to drift on. It seemed to us in the interests of stockholders that the first objective must be to secure from the sucessor Governments full acceptance of future responsibility for the Federal public debt.
  We naturally considered the possibility of joint and several guarantees from the three Governments, but, as the Minister for the Treasury in Southern Rhodesia said in a recent speech, the whole concept of joint and several responsibility is incompatible with the principle of dissolution. He went on to say that no territorial Government could be expected to pledge its own revenues and assets to meet liabilities assumed by other territories. To do so would both weaken its credit worthiness and reduce its ability to borrow in the future. The Northern Rhodesian Government have also made it plain that they would regard joint and several responsibility as a reflection on the credit and good faith of all three territories.
  The territorial Governments have accepted in full their respective shares

  1073
  of the Federal debt, each in proportion to its inheritance of the assets of the Federation, and they have made absolutely clear their determination to maintain their own financial credit by meeting their due obligations.
  It is suggested that although the British Government have no legal obligation to guarantee this stock, they have a moral obligation to do so. Much has been made of the fact that the Bank of England acted as the issuing house for some of these loans. It is argued that this implied official Government backing, but anyone who is familiar with City procedure knows that it is common form for either the Bank of England or the Crown Agents to act in this way for Commonwealth loans raised in London. This has never been held to involve any guarantee by the Government. In any case, it should be pointed out that less than one-seventh of the Federal public debt was issued in London.
  I must also make it clear that when these loans were raised, the prospectuses stated explicitly that they would carry no British Government guarantee. For example, I have with me the prospectus of 6 per cent. stock issued in 1959. It is headed, "Federation of Rhodesia and Nyasaland". In a paragraph headed "Security," it says:
  "The Stock and interest thereon are charged upon and payable out of the general revenues and assets of the Federation of Rhodesia and Nyasaland, which alone are liable in respect of the Stock and the interest thereon. The Consolidated Fund of the United Kingdom and the Commissioners of Her Majesty's Treasury are not directly or indirectly liable or responsible for the payment of the Stock or the interest thereon, or for any matter relating thereto,"
  That could hardly be more explicit. It has also been argued that, because certain loans obtained by the Federal Government from the World Bank were guaranteed by the British Government, similar treatment should be accorded to the rest of the Federal public debt. There is no validity in that argument. It is natural that loans which already carried a British Government guarantee should continue to do so. But there is no reason why loans which were raised without such guarantee should be underpinned by the British Government years later.
  Having explained why the British Government do not recognise that they have an obligation to guarantee the
  1074
  Federal debt, I should like to emphasise that we shall continue to attach great importance to the discharge of their liabilities by the three territorial Governments. As my right hon. Friend the Secretary of State for Foreign Affairs indicated at the Victoria Falls Conference, the British Government, when considering the question of financial aid for these territories, will be prepared to take into account, among other factors, the burden of debt which they have assumed. That is a very important assurance to which insufficient attention has been paid.
  In view of the interest in this subject I have dealt rather more fully with the question of the Federal public debt than with other parts of the Order. My right hon. Friend the Chief Secretary to the Treasury will wind up the debate, and will give any further explanations which may be asked for.
  Mr. Donald Wade: In view of the last remarks of the right hon. Gentleman, about aid, would not it be simpler to say that the British Government will accept responsibility for the Federal debt in view of the fact that the British Government were responsible for setting up the Federation?
  Mr. Sandys:To assume that these new countries, on taking over the responsibilities, are going to fall down on their liabilities, would I think undermine the whole of the credit of the three territories, and is uncalled for. If the hon. Gentleman and other hon. Members study what I have said with regard to our policy of aid to these territories they will see that that was an assurance of some importance.
  It is with sadness that we are putting the official seal on the failure of a noble idea. I still firmly believe that the concept of the Federation was sound and that, however great the difficulties, it was right to try to bring about a true multi-racial partnership in Central Africa. If it had succeeded, it might well have provided an infectious example of inter-racial co-operation which could have had a far-reaching influence elsewhere in Africa and beyond.
  This is not the moment to try to apportion blame for the disappointment of these high hopes. Let us rather, as

  1075
  our final act, express our thanks and sympathy to all those who in public life, or in their private vocations, did their best to make a success of this great enterprise.
  At the same time, let us send our warm good wishes to the Governments and Parliaments of the three territories with whom responsibility for the future now rests. They are to be congratulated on the speed and harmonious manner in which they have agreed on the arrangements set out in this Order, and on their wise decision to maintain and operate together the common services which have been built up over the past years.
  Mr. Stephen Swingler: Throughout his speech the right hon. Gentleman referred to agreements between the Governments concerned, and in the Order there are several references to things being settled by agreement which would be excluded from the purview of the Liquidating Agency, but I understand from an Answer given to me yesterday that there are no formal written agreements at all. When the right hon. Gentleman refers to agreements made, will he tell the House whether he is referring to agreements that are to be made before the date of dissolution itself, or are these agreements never to be committed to a formal text, or are they agreements made between the dissolution committee and one or other of the territorial Governments?
  Mr. Sandys:What I am referring to are the reports of the Inter-Governmental Committees, which were unanimous in accepting the matters to which I referred, and the subsequent acceptance of the recommendations of these committees by all three territorial Governments, who are the successor States in this matter. I think that that makes the position clear.
  The fact that the three territories are to continue these common services and work together in this way is a welcome sign that, notwithstanding the dissolution of the Federation, they recognise the importance of continuing collaboration. In fact, I hope that as time passes these territories, whose interests are so interwoven, will tend gradually of their own will to draw still closer together.
  4.27 p.m.
  Mr. G. M. Thomson: The Secretary of State's speech was delivered in a suitably sombre tone, and it is, of course, the epilogue to one of the most melancholy episodes in the history of Conservative colonial policy. It is an episode that has lasted almost exactly for the duration of post-war Conservative Governments, and it is, perhaps, ironically appropriate that it should come to an end at this time.
  I do not want unduly to look back over my shoulder at the history of the Federation, but I think that we are entitled to do so for a moment or two. The Conservative Party, for one thing, has the enviable habit of completely forgetting things it does not wish to remember. It has a gift for behaving as though embarrassing events had never occurred, or embarrassing Ministers had never served it.
  It is appropriate that we should remind the Government that this Federation in Central Africa, for all its noble ideals, began with a blunder by a Conservative Government, and ends to day in a mess. The blunder did not lie in the idea of federation itself. I agree with the right hon. Gentleman that it was a great concept. I think that everyone with a concern for Africa realises the benefits that could come from a close association of territories whose boundaries were rather artificially drawn in the Imperial times of the past. The right hon. Gentleman has recently returned from Kenya, and we are seeing happening there the kind of things which, in different circumstances, might have been going on in Central Africa.
  The blunder was in believing that a form of federation designed to suit the wishes of the small European minority could be imposed against the wishes of the African majority. From the moment that the Labour Party was persuaded that the consent of the majority of the peoples of the territory could not be obtained, we opposed the scheme. As the right hon. Gentleman will remember, we opposed it in the House when the Bill came before us, but the Conservative Government bulldozed it through Parliament and then proceeded to do the same thing with it in Africa. There were eight years of imposing federation sometimes with force, as in the case

  1077
  of Nyasaland. Then, more recently, there have been four years of disengagement.
  Even when the Government, in recent years, have been doing the right thing, it seems that they have so often done it in the wrong way. They did not reverse their policies frankly nor openly enough, nor decisively enough. This lack of frankness which has characterised Conservative policies toward Central Africa over the last four years still clings like a fog round the final formalities of winding up the Federation contained in the Order before us today.
  It is all very well for the right hon. Gentleman to make the speech he has made today explaining the Order and we are grateful for a great deal of new information about it. But while he complained that the Order, at first sight, is formidable, I should say that, at first sight, it is formidable and, at second sight, it is incomprehensible. It is rather late in the day for the House to make up its mind about the Order simply on the basis of a speech by the Minister. This is an Order which cannot be amended or altered. It was thrust upon us six days ago and there is less than a fortnight before the Federation is due to disappear.
  The House has been presented a fait accompli and so are the bondholders of the Federal debt, Federal civil servants and people whose future is bound up in the arrangements now before us. Over recent months while these vital discussions have gone on in Africa, there has been a conspiracy of silence about these arrangements. This reticence has been unfair, not only to bondholders and civil servants, but also to this House of Commons. The House gave the Government permission to proceed with the negotiations almost five months ago, in July. The right hon. Member for Thirsk and Malton (Mr. Turton) will remember that he showed some reluctance about the proposal that we should allow an Order in Council to be presented during the long Recess with only the power to annul subsequent to the House reassembling.
  In fact, since that date neither he nor any of us has been given very much information about the settlements arrived at. There ought to have been a White Paper setting out these agree-
  1078
  ments in detail so that all involved, including this House, should have had an opportunity to express their views and try to change the contents of this Order before it was finally laid before us.
  We were quite astonished at the answers given in the last day or two, by the Minister in a Written Answer to my hon. Friend the Member for Newcastle-under-Lyne (Mr. Swingler) and in the House of Lords yesterday by the Minister of State, saying that there were no formal written agreements, but indicating, in another place yesterday, that the Government would consider putting in the Library such documents as there were about the arrangements which have been made. It is utterly indefensible for a Government to lay an Order of this importance before the House in the way they are doing and to say, on the eve of laying it, that they are only now prepared to consider giving the information which is essential for arriving at a balanced judgment on the contents of the Order.
  It is this failure to be frank with the House—so much in keeping with the whole history of Conservative dealings with Central Africa—which is our first ground for complaint. For example, there is in the Order the concept of a Liquidating Agency. Despite the speech of the right hon. Gentleman, we are not given a great deal more clarity about some of the points which inevitably arise over the operation of this agency. It is to be in agency consisting of three civil servants from the three territories. It is true that it is to operate in a framework of governmental agreements—about which we know very little indeed—but it will have immense assets to dispose of and will be operating, according to paragraph 5, quite above the law.
  How is this Agency to carry out its duties? It is to consist of three people. What is to be a quorum? Do all three need to be there to conduct business? Are two enough? Is it to take decisions by majority or do they have to be unanimous? There are many important questions about the way in which this Liquids ting Agency—a very unusual concept—is to carry out its operations. We ought to have had a chance to investigate and to question Ministers about this.

  1079
  There are the problems of Federal civil servants, to which the right hon. Gentleman drew attention. On the Second Reading of the Rhodesia and Nyasaland Bill, on 11th July, the Minister's predecessor, the then First Secretary, said, as reported in column 1429 of that day:
  "Hon. Members will, perhaps, agree that this is the main human problem posed by the dissolution of the Federation. I think that we shall be judged by how we solve it. There are no fewer than 35,000 Federal civil servants of a variety of race—African, Asian and European—and their future lies in our hands."—[Official Report, 11th July, 1963; Vol. 680, c. 1429–30.]
  I do not think that any of us who have had representations from the Federal civil servants can feel very happy about the way in which this obligation has been fulfilled.
  There are still too many grave questions outstanding in relation to the settlement of their case. There was a deputation of the Federal Public Service Association to the noble Lord the Minister of State as recently as 20th November. In the minutes of that meeting it is complained that there had not been at any time real discussions between the Federal Public Service Association and Committee A. It is complained that the association met Committee A once only and there was only a hearing with no discussion. When the Association attempted at one stage to ascertain the views of members of the Committee on certain points, the Association was accused of attempting to cross-examine them. As a process of consultation this does not seem a very happy or satisfactory method.
  At the meeting on 20th November a number of important points remained outstanding. There was the question of in what currency pensions should be paid. On that vital matter, after the speech of the right hon. Gentleman this afternoon, we still do not know the answer. There is the question of guaranteeing the pensions. This also, after the meeting on 20th November, was left for further resolution. There was the matter of special payments to civil servants in cases of hardship. The Minister said that Her Majesty's Government were still waiting for the Federal Government's proposals. The Federal Government apparently have reservations about the Order at the moment. Have they
  1080
  come forward with proposals? It is very unfair for civil servants to be left in the air in this way.
  The Federal Public Service Association at that meeting with the Minister of State was concerned about future citizenship rights. The Minister said that he could give the delegation no undertaking about this matter. Yet, on 22nd November, in the context of the Kenya Independence Bill, the Secretary of State gave the House an assurance of a general nature about British citizenship for people from Commonwealth countries. I presume that covered the case of Central African civil servants generally.
  The House would like to know whether these proposals cover the anxieties of these public servants in Central Africa. It seems that the pall of secrecy which hangs over all these operations extends to communications between the Secretary of State and his own Minister of State. It was extremely odd that at that meeting the Minister of State could not give any information about what the Government had in mind on this difficult question of citizenship.
  I do not underestimate the complexities of these negotiations in which five Governments have been involved. I sympathise with what the Minister said today about the time-table with which he was faced, but he was on particularly weak ground in using the exigencies of this time-table to justify not having come to the House of Commons at an earlier stage. The fact that the House of Commons has had so brief a period in which to deal with public business in the last few weeks was due to the action of the Prime Minister in postponing the resumption of the present Session.
  I remember raising in the debate on 24th October, when the Opposition tried to resist this proposal, the very point that by this postponement we were abdicating our responsibilities towards the Federal civil servants in Central Africa and in regard to the many other problems which would be raised by dissolution. I expressed the fear then that one of the results of the postponement of the resumption of Parliament would be that we would have inadequate time to deal with these matters. In the event we have been proved right.

  1081
  I want to raise another aspect of pensions relating to a different group from the Federal public service. I refer to the workers on the Rhodesian railways and to the railway pensioners. I hope that their case will not be forgotten, overshadowed as it is by the larger problems of the bondholders and Federal civil servants themselves. In some ways the problems of the railway pensioners are stronger than those of either the bondholders or the civil servants. Both the bondholders and the civil servants, though one sympathises with their anxieties, volunteered to become either creditors or public servants of the Federation. They did so with some consciousness, presumably, of the risks and uncertainties involved.
  But the railwaymen were employed by the Rhodesian railways before there was a Federation and they are going on being employed by them now that the Federation is being dissolved. We are glad to know that an agreement has been reached between Northern and Southern Rhodesia to continue to run the railways as a joint enterprise. The railway pensioners, like the civil servants, would like to have some British backing for their pension funds, which are largely invested in the railways themselves.
  The Minister mentioned the case of the Treasury guarantees for the World Bank loans. The railway pensioners will be in a particularly unhappy position. The World Bank has made substantial loans to the Rhodesian railways, and these loans are being guaranteed by the Treasury in the light of the agreements that are normal with that kind of loan; but the pension fund money is not to be guaranteed by the Treasury at all. I ask the Secretary of State to have another look at this matter and see whether it is not one of the things which could be reopened.
  The question of the future of the university at Salisbury is not mentioned in the Order. This, in my view, is one of the most important of the joint achievements of the Federation. It is a university which has set good standards of racial harmony. It is a university which has enjoyed the very substantial backing of the British taxpayer. What will happen about the university? Why is there not something about it in the Order? An Answer was given, again to
  1082
  my pertinacious Friend the hon. Member for Newcastle-under-Lyme, to the effect that at the moment it was still under negotiation by the Governments. I hope that when the Chief Secretary to the Treasury speaks he will be able to give us some information about this, because there is concern about this matter on both sides of the House.
  The Minister devoted a great deal of time, as he was bound to do, to the position of the bondholders, both those in this country and those in Central Africa. They feel a very strong sense of grievance against the Government. I thought that the Minister was right in stating the legal position about these bonds. I would not like to say anything which would be held to be a reflection on the future creditworthiness of the independent territories which are now going their own way. I myself do not see why Northern Rhodesia, for instance, should be in any different position from Kenya, about which these doubts have not been expressed. The bondholders have some legitimate sense of grievance against the Government for the way they have handled this and for the bad judgment and miscalculation which they have shown over the whole period of dealing with these problems.
  What the Government propose now, which is not mentioned in the Order and which, significantly, was not mentioned by the Secretary of State—that is, the passing of a substantial part of the Central African Air Force to Southern Rhodesia—will have caused the bondholders to feel some legitimate anxieties. I am astonished that the defence agreement is not mentioned specifically in the Order, apart from provisions about the Service men. I am even more astonished that the right hon. Gentleman did not feel obliged to say something about this to the House this afternoon. The Government have negotiated a defence agreement which will put an added and, in our view, unnecessary burden on the credit structures of the Central African Territories, apart from the other dangers it brings with it.
  The Government's action in handing over most of the most powerful air force in Africa outside the Republic of South Africa to the European minority in Southern Rhodesia will impose a heavy burden on the territory's economy, which is already in difficulties through

  1083
  the break-up of the Federation. It will also, in due course, inject a most unfortunate arms race into the poorest part of Africa.
  It seems to us to be a dangerous and quite wrong arrangement. I cannot, from this Bench, put on record too plainly that we dissent from this. It is curious and disturbing that this break-up of the defence forces is not dealt with openly in the Order. I understand that Southern Rhodesia is to be handed over a great deal more than she originally put into the pool of the Federal armed forces when the Federation was formed. I think that she is to have six squadrons of aircraft, including eight Alouette helicopters, which are powerful instruments for the imposition of unpopular policies of racial supremacy, if it is desired to use them for that purpose. She will also have Canberra bombers.
  I fail to understand the actual processes of coming to this defence agreement. As far as I can find out about them, they are open to considerable objection by hon. Members in relation to the rights of the House of Commons. The then First Secretary, reporting on this on the Second Reading of the Rhodesia and Nyasaland Bill, said this:
  "I therefore summoned a meeting of heads of delegations, outside the conference…and we reached an agreement which the conference endorsed."—[Official Report, 11th July, 1963; Vol. 680, c. 1432–33.]
  The head of the Northern Rhodesian delegation was, I think, the Governor. I think that the Nyasaland representative at that meeting of heads of delegations was also an expatriate civil servant, though I am open to correction on this. I gather that it was an all-European meeting about this crucial matter of the disposition of forces in this area of Central Africa. Not a single African Minister was present.
  In the light of that, it is not surprising that later Mr. Kenneth Kaunda appears to have had second thoughts about the implications of this Agreement, which had been presented to the Victoria Falls Conference very much as a fait accompli, in the same way as this Order is being presented to the House of Commons today. Mr. Kaunda's second thoughts came when there was an announcement from a meeting of
  1084
  officials in Salisbury in October, from which certain details of the break-up emerged. I think that the meeting was in September, but the announcement was finally made publicly in October.
  I ask hon. Members to consider the position in which the Government have put the House. We are being asked to agree to the transfer of arms on the basis of a Press communiqué in Salisbury from a meeting of officials there. This is a matter which ought to have been put properly before the House by ministerial statements so that we had a full chance to consider it and decide our attitudes to it. This is not a minor decision which could possibly be dealt with in this way. It is a decision about weapons which affect the whole balance of military power in Southern Africa. It is a decision which forced us at the United Nations into the position of being in flagrant disregard of a request of the General Assembly not to do precisely this. We had the embarrassment of using the veto at the Security Council on this question, and the humiliation of the vote recorded in the General Assembly, with only South Africa and Portugal supporting the position that we took up.
  My noble Friend the Earl of Listowel raised this question yesterday in another place, and was told by the Government that there were no formal written agreements about this, but that the Minister would report to his right hon. Friend about the possibility of more information being given. It is intolerable that the House of Commons should be treated in this way. We should have these vital agreements laid out before us. There are many important questions about them that remain unanswered, and I hope that the Chief Secretary will try to deal with them.
  Do we have a defence agreement—that is an agreement by Governments? If so, which Governments are involved? Is it purely an agreement between the Southern Rhodesian and the United Kingdom Government? Who is to pay for that part of the forces that goes to Southern Rhodesia? Is there any private understanding between Her Majesty's Government and the Southern Rhodesian Government that we will help them to meet the heavy cost of this heavy arms burden? I am told that some of

  1085
  the aircraft have not been fully paid for. What are the arrangements for meeting the credits involved? The House has a right to know about these matters.
  Although the Government are refusing to give satisfactory guarantees to such people as bondholders, are they giving private assurances to the Southern Rhodesian Government about meeting the cost of these arms? What is the relationship of Her Majesty's Government to the use and control of these arms by the Southern Rhodesian Government in Central Africa? On 10th September, at the United Nations, our Permanent Representative, Sir Patrick Dean, said:
  "Her Majesty's Government will retain control of the use of arms outside frontiers as long as our responsibility in relation to Southern Rhodesia is unchanged."
  We are entitled to know how the Government propose to exercise this control over the use of these arms outside the Southern Rhodesian frontiers. How can they tell the General Assembly, in one breath, that they will continue to exercise control over the use of these arms, and, in the next, say that they cannot do what the Assembly wants them to do in Southern Rhodesia because they have no control over what that country does now?
  An extremely unsatisfactory position has been revealed, not through any overt announcements by the Government but simply by our trying to discover what is going on behind this curtain of reticence in these meetings in Central Africa. I hope that the Chief Secretary will tell us whether the Northern Rhodesian Ministers have agreed the defence aspects of this Order. The Secretary of State said that everybody agreed it except the Federal Government, which had certain reservations. Does this mean that the Northern Rhodesian Cabinet—the African Ministers, and not the officials—have approved the defence agreement as contained implicitly, if not explicitly, in this Order?
  Can the Secretary of State, who is also Secretary of State for Commonwealth Relations, tell us whether there was Commonwealth consultation about this disposal of arms to Southern Rhodesia before the agreement was reached? He, in particular, will per-
  1086
  haps remember the situation that arose, when the Labour Government were in office, over the evacuation of troops from the Suez Canal zone. Then the right hon. Member for Woodford (Sir W. Churchill) and Lord Avon pressed the Labour Government to state whether, before taking this step, there had been Commonwealth consultation. In fact, Lord Attlee was able to assure the Conservative Opposition that there had been such consultation.
  My recollection is that at that time a certain doctrine of defence consultation within the Commonwealth on these defence matters was enunciated and agreed by both sides of the House of Commons. Was consultation carried out in this case? Was there an effort to consult the other Commonwealth countries? Did the Secretary of State consult the Commonwealth Governments of Tanganyika or Uganda, both of whom are vitally concerned in this disposition of defence forces in Central Africa? I will gladly give way to the right hon. Gentleman if he would like to reply.
  What do the Government have in mind in respect of the implications of this defence agreement in the High Commission Territories? Here are the last and in many ways the most difficult of our responsibilities in Southern Africa. These small territories now find themselves sandwiched between two groups of armed forces, both in the hands of European minorities.
  Indeed, the matter is somewhat more complicated and embarrassing than that. Recently, a book was published by the Institute of Race Relations, written by William Gutteridge, a senior lecturer at the Royal Military Academy at Sandhurst. It was entitled Armed Forces in New States. In this interesting volume he said that the majority of officers in the Army and Air Force of Southern Rhodesia have been recruited in Britain or in South Africa. I understand that some attempts have been made to discover what proportion of the Southern Rhodesian officer corps now belongs to a non-Commonwealth country, but so far the information has not been forthcoming.
  What would happen if there was a crisis in relation to the High Commission Territories? Are the Government satis-

  1087
  fied that this arrangement for the disposition of forces in Southern Rhodesia is in the best interests of peaceful progress in Southern Africa? Are they telling the House that they can fulfil their obligations to the High Commission Territories on the basis of this defence agreement with the Southern Rhodesian Government?
  By a coincidence, only a few days ago I was a member of a delegation from both sides of the House of Commons to a conference in Moscow. There we had an interview with Mr. Mikoyan, in the Kremlin. At that interview I sought to persuade him of the advantage of keeping the cold war right out of Africa by reaching a Great Powers agreement to ban any arms traffic to African territories and to allow the new African territories to concentrate not on the arms race but on building up economic welfare.
  Mr. Mikoyan refused to consider this, and I got what I considered to be a rather dusty answer—almost as dusty as some of the answers I get from the Secretary of State. One ground he used for turning it down was that Britain was prepared to go on arming the European minorities in South Africa and Southern Rhodesia. This seems to be the wrong sort of approach to these admittedly very difficult and dangerous problems.
  This situation, and so much else that is disagreeable in Central Africa, would be transformed if the European community in Southern Rhodesia were to come to democratic terms with their own overwhelming African majority. They are at present in a complete cul de sac. They aspire to a form of independence for a racial minority that is now utterly unacceptable to the modern world. This concept is now as abhorrent to the old Commonwealth countries, such as Canada, as it is to the new Afro-Asian Commonwealth.
  If this small group of Europeans in Southern Rhodesia were to obtain their independence by one means or another they would find themselves excluded from the Commonwealth and from the United Nations—[Hon. Members: "Why?"] They would certainly be excluded from the United Nations, and their banned African nationalists would be recognised in many places as the legitimate Govern-
  1088
  ment of their territory. They would be alone in a hostile world, in the unconsoling company of South Africa and Portugal.
  Mr. William Clark: The hon. Member keeps talking about race relations. Does he think that the argument that he is propounding is doing anything to help race relations—his innuendo that any white man, wherever he may be in the world, is automatically against black men? This does not do anything for race relations, and it is about time that he stopped it.
  Mr. Thomson:The hon. Member does me an injustice. I was not arguing that at all.
  What I was arguing, and going on to expand on, was that the only hope of good race relations for the European minority in Southern Rhodesia is for them to come to democratic terms with the majority population in their country. I fully admit that there are Europeans in the European community in Southern Rhodesia who are struggling heroically—because politics are much more dangerous there than they are here—to try to bring this about. But it is the only way in which peaceful progress can still be made in that part of Africa.
  Mr. Victor Goodhew: Surely the hon. Gentleman will agree that it is only because the African nationalists refused to take part in a Constitution initially agreed by them that they are not taking part in the government of Southern Rhodesia today?
  Mr. Thomson:The Constitution that the African nationalists were offered and negotiated by the Secretary of State, offered a vote to 1 per cent. of the majority population of Southern Rhodesia. Although Mr. Joshua Nkomo gave way to considerable pressure from the Secretary of State at that time, he almost immediately changed his mind when he came out of the conference chamber. Certainly there is no way to peaceful progress in Southern Rhodesia on the basis of that kind of unrepresentative form of multiracial representation.
  Mr. Goodhew:Surely this is the sort of start that the African nationalists in Southern Rhodesia would want in

  1089
  order to prove their ability, and that they are capable of responsible government? They have thrown this chance away and decided that they would sooner fight unconstitutionally. Does the hon. Member support that?
  Mr. Thomson:The hon. Gentleman knows as well as I do that the unconstitutional activity in Southern Rhodesia, the kind of activity which would be regarded as perfectly normal and constitutional here, is because of the extremely repressive laws passed by the European minority to defend their own privileges in Southern Rhodesia. I should have thought that even the hon. Member, who knows a great deal about Africa, would have realised by this time that if there is to be progress it is necessary to maintain a pace of political advance very much greater than that which Sir Edgar Whitehead and his colleagues, and Mr. Winston Field, were prepared to concede.
  I ask Her Majesty's Government to state again today that they are still firmly determined not to concede independence to Southern Rhodesia before a democratic constitution is established there. I hope that they are prepared to use their now not inconsiderable bargaining power vigorously to persuade the Southern Rhodesian leaders to make political changes. I do not expect the European leaders in Southern Rhodesia to be able to make these changes overnight, but there is not a great deal of time left in respect of Africa and only if changes start taking place quickly is there any possibility of establishing a real foundation for racial harmony in Southern Rhodesia. Otherwise, the possibilities will become very limited indeed.
  There are many countries in Africa and elsewhere which need our economic assistance and I hope that the Government will tell the Southern Rhodesians quite plainly that so long as they persist in their present undemocratic policies we are bound to give our help, where it is needed, to Governments based on democratic conceptions.
  Mr. Goodhew: Like Ghana?
  Mr. Thomson: We should not use our resources to bolster up a. minority régime in Southern Rhodesia. On the other hand, I think that Britain ought to be generous in her help to Southern
  1090
  Rhodesia, if the Europeans in positions of responsibility there are prepared to see the way in which history is going and to be generous in their own concessions to democracy.
  Today, we are presented with an Order which we have no power to amend or alter. We do not wish to put ourselves in the position of appearing to oppose the dissolution of the Federation by voting against this Order. But, because the Government have put the House of Commons in the position of having to rubber stamp this Order, it does not mean that we consent to the arrangements about defence, or various other arrangements associated with the Order. The Government are ending federation as they began it—in an atmosphere of lack of frankness and a feeling that full information has not been giver, about agreements reached.
  Despite this, I, of course, join with the Secretary of State in his final remarks. We all desire to wish well to the individual territories which must now pursue their own separate destinies. We hope that they will be able to agree in constructive co-operation and that all three territories will be able to establish that democracy and toleration which, tragically, eluded the Federation, but which may yet be possible in these countries in Central Africa.
  5.15 p.m.
  Sir Charles Mott-Radclyffe: I agree with my right hon. Friend the Secretary of State that in some respects this is ratter a sad day for hon. Members of this House when we compare, as did my right hon. Friend, the high hopes which we all entertained when the Federation was first set up with the position in which it is now. I think that it is a cause for considerable regret, though I quite admit that it was inevitable.
  The Federation was a great design, based on economic partnership which, in turn, was based on a multi-racial experiment I would not—I do not suppose that any hon. Member on this side of the House would either—accept the strictures of the hon. Member for Dundee, East (Mr. G. M. Thomson) or his interpretation of history on the part that Conservative Ministers have played over the history of the Federation.
  I do not think that either my right hon. Friend or his predecessors were

  1091
  entirely to blame. When history comes to be written I am not at all certain that a very great part of the blame will not rest on right hon. Gentlemen opposite, the right hon. Member for Llanelly (Mr. J. Griffiths) and his predecessor in office, the right hon. Member for Wake-field (Mr. Creech Jones). I am not at all certain that it was not they who virtually strangled the child at birth.
  We are, of course, in the process of transferring power in Africa. That is inevitable. But I think that it would be quite wrong to deceive ourselves, and, worse still, to try to deceive the public, into believing that in the process of the transferring of power we are creating democracy. We are not. In my view, once the central administrative control in Africa is withdrawn power fragmentates to the tribe or tribes, and that the tribe or tribes, individually or collectively, become what we in our western phraseology call "the party". But they are not the party, in the sense that we have political parties in this country or in western Europe. They are tribal power groups.
  To expect tribal power groups in Africa, however well-meaning their leaders may be—I am not saying that they are not well-meaning—to work on a Westminster system of democratic government—with all its checks and balances—against the background of Africa seems to me to be completely and absolutely absurd. It is to expect the impossible. Certainly, let us transfer power. But do not let us pretend that in Africa we are in any way building up a system of democracy, because that would be a gross form of self-delusion.
  I turn now to certain aspects of this Order. In the past we have had many acrimonious debates about Central Africa and most of the disputes have not been about the goal but about the pace. I wish today to talk about pace in a different context. There are certain aspects of this Order which suggests to me—and I suspect to some of my hon. Friends—an almost indecent haste. I see signs of the bulldozer being at work. My right hon. Friend has said some things about the Federal debt and he has done his best to allay certain fears. He has gone some way towards doing that, but my
  1092
  fears will not be allayed until I hear what the First Secretary has to say when he replies to the debate tonight.
  The fact remains that the public were invited to invest money in the Federation, not in one of three territories but in the Federation as such. A number of prospectuses were issued in London over the names of the Government brokers. The Bank of England accepted payments from investors. I agree that this is not technically guaranteed and I agree that it is not technically sponsored by the British Government. None the less, investments were thought to be good enough to become trustee stock.
  My right hon. Friend and his colleagues have changed the rules in the middle of the game without consulting the creditors. The debtors have ceased to exist. They are split into three, with one bearing 53 per cent., which is Southern Rhodesia, one bearing 37 per cent. Northern Rhodesia, and the other, Nyasaland, a 10 per cent. liability. Thus, the debtors have virtually ceased to exist, but will the creditors be given any power of option? And what happens if they do not opt for one of the three territories?
  Suppose that my right hon. Friend the Secretary of State for the Colonies and his right hon. Friend the First Secretary to the Treasury were not members of the Cabinet, but were distinguished members of City firms—as, indeed, they might no doubt have been had they not gone into politics. Had they been heads of firms in the City of London which had conducted this sort of operation in this sort of way I suspect that their relationship with my right hon. Friend the Home Secretary might well by now have been of a more formal nature. They might have been enjoying what I am told are excellent facilities in some of our open prisons. My right hon. Friend must realise that there is a lot of perfectly genuine disquiet felt about this business, not only about the way this matter has been handled but also surrounding the moral obligation involved.
  Like the hon. Member for Dundee, East I am not at all happy about the position of Federal civil servants and their pensions. Some of them have lost their jobs through no fault of their own and more will lose their jobs. It is exceedingly important that their pensions

  1093
  should be secured. There is an equally strong case for considering the plight of the railway pensioners.
  To be frank, I do not believe that we in this House can brush this off and say, "It will be all right on the night", because sometimes when that is said things are not all right on the night. If certain territories cannot service these debts then the debts will float about. If things float about, sooner or later they sink. At least, that is what I have been brought up to understand. Perhaps my physics are out of date. I seriously ask the First Secretary to deal with this matter fully when he replies to the debate.
  I join with hon. Members in wishing the new territories—Southern Rhodesia, Northern Rhodesia and Nyasaland—prosperity in their independence. However, it is time that one other thing was said from the back benches. I understand that Sir Roy Welensky is about to retire from politics. I do not know whether this is true. If it is, it should be said that he has been not only a controversial figure, but also a great character. He has dedicated his political life to the concept of federation and he has loved Britain and his connection with this country. Less honourable political epitaphs have been written about many less honourable men than he.
  5.15 p.m.
  Mr. James Griffiths: The Secretary of State said that this was a sad occasion for him. The winding up of a federation which, had it succeeded, we would this year be reviewing in accordance with its Constitution—for it was provided that not later than 10 years from the date upon which it was established this House, in association with the Federal and other Governments, would be reviewing the Federation and thinking about its future—is indeed a sad affair, because we must now think about its end; indeed, today we are drafting the instrument by which it will be liquidated.
  I do not intend to speak for long, because much of what can be said was said in the debates 10 years ago, and it can all be read in the Official Report. However, I join with the Secretary of State in saying that I, too, was attracted from the beginning at the concept of a federation in the heart of Africa. Here were three territories close
  1094
  together, Southern Rhodesia, Northern Rhodesia and Nyasaland, and in the heart of this area was one of the few rich veins of wealth in this poor Continent.
  It is indeed a poor Continent; one-fifth of the land mass of the world with a population of only 200 million people, less than half the population of the Indian Continent. It is poor in resources. It will be difficult for all the new Governments who are emerging in Africa to build and sustain viable economies and to satisfy what, after all, is underneath and behind these winds of change—what President Harry Truman once explained as the revolution of expectations for the ordinary people there.
  After independence comes the next stage of building viable economies and raising the standard of life. In this case it must be done against very great difficulties, for these are countries which largely still rely on agriculture at subsistence levels with some cash crops, and many of them do not have very rich resources to face the future.
  What attracted me about Central Africa was that here, in this rich vein, was Nyasaland, the loveliest of the lot and one of the loveliest countries in Africa—the most thickly populated and the poorest. The income per head in Nyasaland is just under £20 per year. On becoming Malawi, independent, it will have its agriculture on which to depend. As far as we know, it will have no other resources. I remember the time when the Colonial Development Corporation found some coal near Lake Nyasa. As far as I know, the coal is still there, but the area is so far removed that these resources cannot be developed.
  Particularly from the economic standpoint—and I will say more about the future later—there is everything to be said for these territories collaborating, and I hope that in a new form a sort of federation will develop. This is particularly important when one thinks of parts of Northern Rhodesia, some parts of Southern Rhodesia and almost the whole of Nyasaland which, even now, must be sustained, even for administration, by Her Majesty's Government.
  I am all for and welcome movements towards political independence. I want such movements to be democratic, and

  1095
  I am indeed disturbed about something that happened in Africa, for I was shocked at the happenings in Ghana this week. If democracy is to be sustained, then it must mean rule by the majority and the will of the people. I was attracted by the idea—I am still attracted by it and still think it a valid one—of these three territories being linked, being linked also with the three territories in East Africa, into one whole federation.
  I was satisfied, however, about one thing. I went to the territories and discussed the matter with the people there. I was satisfied from the beginning, as I am satisfied now, that the Federation would never succeed unless it carried with it the willing consent and co-operation of the people in the territories. I said so in the House and in Central Africa. I said so at the conference, and Lord Malvern, as he now is, said that I had turned the Victoria Falls Conference into a tea-party for the Africans, because I was certain from the beginning that the idea had to carry consent with it.
  This experiment has failed for two reasons. It has failed, first, because it was imposed by the then Secretary of State and the Conservative Government, against the known wishes of the majority of Africans in all three territories. This cannot be denied. We on this side of the House said so at the time. The idea of federation never recovered from that. The second reason for failure is that throughout the ten years there has never been any real attempt to develop the reality of partnership.
  This is my last word about the past. If I were to look back, I would say that there was one point, in particular, which sounded the death-knell of the Federation and for which the Government were responsible. I thought that the Federation had little chance from the beginning because it was imposed, but the death-knell was that the Government said that although they were imposing it against the wishes of the majority of Africans there was a safeguard, and this safeguard was broken. The Africans were safeguarded in the Constitution by the African Affairs Board. Any legislation which bore even
  1096
  the appearance of being discriminatory would have had to go to that Board. The Africans were told by Ministers here and in Central Africa, "This is your guarantee. This Board will ensure that you have fair play."
  What happened? The first time that the Board were asked to pronounce on a matter, it pronounced a certain Bill as being discriminatory and condemned it as such, but the Secretary of State at the time turned the suggestion down and rejected the Board. It was all over from that moment. The Africans had been suspicious all along. Opposition to federation mounted all the time, and the Africans were able to say, "The safeguard which you designed for us has gone." The Government were responsible for both these things. I have said this before. It is all on the record. I agree with the Secretary of State that now there is nothing to do but to take the step which is taken in the Order in Council which we are now discussing.
  I want to reinforce what my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) has said. There is a great deal of feeling and disturbance about the dispersal of the forces between the three territories. I told the Secretary of State the other day that I had just had an opportunity of meeting Africans from all territories which are associated with us in the Commonwealth. There is deep concern about this, just as there is about South Africa. I am sorry that because of another engagement I was not here when the Secretary of State started his speech, but I gather that there was scarcely a reference in it to the dispersal of the forces. This is unfair to the House, for the House would be very unwise to pass the Order without a statement from the Secretary of State on the subject.
  There is deep concern particularly about the position of the Air Force. The idea that we supply arms for defence against external forces and not for internal purposes, as is said about South Africa, is all poppycock. Nobody believes it. After this Order has been approved, in what circumstances can Southern Rhodesia, which is not independent and which is to receive the bulk of the Air Force, be permitted to use that force without the consent of Her Majesty's Government? When the

  1097
  Order has been passed, will there still be a veto in defence matters and in foreign affairs as there is under the existing Constitution?
  I assume that the territories go back to the status quo. Agreements have been arrived at by which Nyasaland and Northern Rhodesia will become independent within the Commonwealth, but Southern Rhodesia will go back to the status which it has enjoyed since 1923 as a self-governing Colony. Under its status as denned in that Constitution, foreign affairs and defence were still the responsibility of Her Majesty's Government. If that is so now, has there been an agreement or an understanding with Southern Rhodesia that the use of these forces for defence is still subject to the approval of Her Majesty's Government? We have had no explanation so far on this point. We ought to have it.
  I had the privilege recently, as did hon. Members on both sides of the House, of meeting representatives of the Federal Civil Service. There is not only deep anxiety but real anger among many of them that they have been unfairly treated This is one of the problems which I assume the Chief Secretary to the Treasury will speak about this evening. Many of these civil servants were persuaded to enter the Federal Civil Service. Many of them were colonial servants in the old Colonial Service, and Her Majesty's Government assisted in persuading them to go from the territorial Service to the Federal Service. They would not have gone without persuasion, and now they are deeply concerned about their position when the Federation is being liquidated. I hope that the Chief Secretary to the Treasury will realise that there is a great depth of feeling among these people that they have been let down. Indeed, one of the features in Africa at the moment is the depth of feeling among Europeans that the present Government have let them down. This is a feeling shared in the Civil Service and in the railway service.
  As for Southern Rhodesia and its future, it would be a grave mistake to think of granting independence to Southern Rhodesia on the basis of its existing Constitution. This would be resented and might be resisted all over Africa. We have made enough mistakes
  1098
  in Central Africa. Do not let us make any more. I therefore urge the Government that they should not grant independence on this basis. It is no good the Europeans in Southern Rhodesia fighting against history. If I may quote the right hon. Member for Bromley (Mr. H. Macmillan), it is no good their fighting against the wind of change.
  Some day, democratic majority rule must come in Southern Rhodesia, and it will be infinitely better for those to whom I refer, and for their children, if that day comes with their co-operation rather than in the face of their hostility. To a generation that has now been born and brought up there, I say that there is no future for them in a country in which the effective rule is in the hands of a minority against which the majority is all the time agitating and plotting.
  There is only a future for them if they come to terms with history, and realise that nothing can stop the movement that is going on in Africa. It is far too powerful to resist; it is idle to resent it. If I were they, I would believe that I was serving the best interests of my country, myself and my children when living in Southern Rhodesia in now pledging myself to work towards the early attainment—I would not put a time to it—of democratic rule.
  When we were discussing Cyprus, I suggested that we might get agreement0to end all that bloodshed if we agreed with the people of Cyprus that at the end of five years, during which time we would co-operate to bring about a peaceful transition, they would get what they wanted. The people got it in less than five years, but only after terrible bloodshed. It is far better now for the good people in Southern Rhodesia to recognise that democratic Government is bound to come, and to accept that fact. This march forward cannot be opposed.
  I am glad to see that the Order provides for a continuation of some of the common services. There is everything to be gained by these three territories co-operating, building common services and, in the end, as I hope, enjoying democratic Government. We may then come back to the concept of a federation, but in a democratic concept which will result in a happier outcome than this one has had.
  5.33 p.m.
  Mr. Patrick Wall: The right hon. Member for Llanelly (Mr. J. Griffiths) spoke repeatedly of democratic Government in Africa but what does he mean? Does he really mean majority Government and one man, one vote? Can he tell me of one State in Africa that has a democratic Government according to our standards? The right hon. Gentleman has fallen into the pit fall mentioned by my hon. Friend the Member for Windsor (Sir C. Mott-Radcliffe); we cannot judge democracy in Africa by our own standards. That is to ask for the impossible—
  Mr. J. Griffiths:I notice with interest that of late we have passed many independence Bills on that basis, but I have not noticed the hon. Member for Haltemprice (Mr. Wall) voting against them.
  Mr. Wall:Because I never expected that there would be our form of democracy in Africa. One can accept the African form of democracy in countries that are homogeneous, but the difficulty is to accept an African form of democracy with quite different standards from our own in territories where there is a fairly sizeable European minority. In Africa, there are not the same standards of justice, public life, local government and so on. I do not blame them for that—they have not the financial support or the trained population to produce the same standards—butit is rather unfair to condemn a large European minority to live under such standards, which is what the right hon. Gentleman does in advocating one man, one vote in the four States of Southern Africa.
  If he really believes in one man, one vote, he must also believe that in the United Nations there should be one State, one vote. That would mean that the General Assembly would have the power to compel its member States to accept majority decisions which, in turn, would mean that this country, and other European countries would be put in the same position vis-á-vis the world as he proposes to put Europeans vis-á-vis African majorities in their own territories, namely in a permanent and powerless minority.
  I agreed with a great deal that was said by the hon. Member for Dundee, East (Mr. G. M. Thomson) when he was
  1100
  talking about the Order in Council, but not when he was talking about defence or the future of Southern Rhodesia. The last four years have shown a very unhappy relationship between Her Majesty's Government and the Government of the Federation, and it is quite clear that Her Majesty's Government wishes to be free of any blame for the failure of the Federation, and have arranged a rapid burial. That indicates a guilty conscience, and may mean unfair treatment of bond holders and the civil servants.
  We are in grave danger of repeating the history of the 'thirties. The end of the Federation has brought the end of the multiracial experiment, and it is quite clear that for some years multi-racialism will have no place in Africa. The Government must now choose between black-ruled Africa and white-ruled Africa. It then has to face up to the problem of Southern Rhodesia. It then has to face the problem of economic sanctions against South Africa, and after that it has to consider military action against South Africa. This is the slippery slope we are now on, and, inevitably, we must face those decisions within, perhaps, the next two years.
  The two main items in this Order deal with the Federal debt and the Federal Civil Service. The Government have a certain responsibility to the Federal stockholders, not only for reasons already-advanced on both sides of the House but also because Her Majesty's Government apparently rejected the Federal Government's suggestion of a conference to discuss the outstanding matters that should have been agreed, and have not been agreed. I understand that there has been agreement by the three Territorial Governments, but without direct Government-to-Government consultation with the Federal Government. I believe that this action will cause damage to the credit of Her Majesty's Government, and the prospect of raising future loans for other Commonwealth territories.
  Let us look at the history of the Federal debt. I take the House back to 1953, when there was the conference to consider the setting up of the Federation. There were discussions here early this year on whether or not countries

  1101
  should have the right to secede from the Federation and, as a result of the discussion, the Government issued a White Paper, Cmd. 1948, in February. In the last page of the White Paper there is an extract of a statement made at the 1953 Conference by the then Commonwealth Secretary, Lord Swinton, who said:
  "At a time when we all want everyone to concentrate on making federation a success and bringing the union into the most real partnership, it would be odd to invite people to look to secession, but there is one absolutely over-riding economic objection to this which rules it out from the very start. The Federation has got to raise loans and to raise them on federal assets and federal securities. Make no mistake about it—if you doubt my words ask any one in the City of London—federation could never raise a penny of money by loan if it was not known whether federation was to continue, and therefore whatever views you take about what I may call the moral side of the thing, there is an economic argument to which there can be no possible answer."
  That is why, when the Constitution of the Federation was drawn up, there was no provision for secession, and, on that basis of federal constitution, four loans were raised in London and one in New York. Secession has now been permitted, and the Federation is breaking up. Either the prospectus issued to the bond holders in 1953 and 1954 was a false one, or Her Majesty's Government bear a very definite and direct responsibility to the bondholders, because history has shown that the Federal experiment has failed.
  We have all felt that there are two objections behind the hasty production of this Order in Council. First, very little publicity has been given to the Federal Government's objection to many of the items we are now discussing. Again I would call the attention of the House to a Command Paper, No. 2093, paragraph 57, where it talks about the Victoria Falls Conference. Talking about the decisions taken there, it states:
  "…the United Kingdom Government should be in a position to complete and enact before the end of December, 1963, the legal instruments necessary to give effect to the decisions agreed upon by the governments who would be given an adequate opportunity of commenting on their proposed provisions."
  I quote the next paragraph from the Federal HANSARD of 10th December this year. The Federal Minister of Finance quoted the paragraph I have just
  1102
  referred to from the White Paper and went on to say this:
  "There are now two vital and significant points in the words I have just read. First, the legal instruments referred to were to give effect to retch agreed decisions only. Secondly, all Governments will be given adequate opportunity to examine and comment on the proposed division of these instruments."
  I understand from further information in the Federal Hansard that a rough draft of this Order in Council was received in Salisbury on 1st December and the Federal Government were asked to make their remarks by the very latest on the 4th December. I understand that on the 2nd December the Federal Government requested Her Majesty's Government to hold a conference in Salisbury to consider matters which are virtually those now in dispute or suggested that they should send Ministers to London to discuss matters with Her Majesty's Government and this suggestion was rejected on the 7th of this month.
  We know how speedily this Order in Council has been produced. It was printed exactly a week ago today. I would refer to a paper which came into my hands this afternoon, the Second Report from the Special Orders Committee of the House of Lords which, referring to this Order, states:
  "The Committee had not time to study the Order in detail before their meeting; and there is not time to enable the Committee to consider at an adjourned meeting whether or not to make a Special Report. Such a Report if made would not be available early enough to be of practical use to the House."
  It goes on to say:
  "The Committee, therefore, report as follows:—That in their opinion the provisions of the Order raise important questions of policy and principle: That the Order is not founded on precedent: That in the opinion of the Committee the Order cannot be passed by the House without special attention."
  The Committee was reporting on the Order which the House is now discussing. It underlines my point that there has been almost indecent speed to get this Order through the House.
  I turn now to the two main matters that are still in dispute. First, there is the Federal stock. The External stock was issued in London, as my right hon. Friend said, through the agency of the Bank of England and the Government Broker. I understand that in the City it is the custom that an agency has

  1103
  continued responsibility throughout the life of the stock. That itself implies some responsibility, certainly a moral responsibility, on the part of Her Majesty's Government.
  I now refer to the local stock. The currency of this stock is Federal currency, which is strong and closely linked with sterling. The new stock now to be given to the stockholders will be in three different currencies. Northern, Southern Rhodesia and Nyasaland, all have different currencies. The payment of interest and principal on the original stock was to be made in Salisbury. I imagine that it will now be made in three different capital cities. Under the original arrangement, stockholders had protection against taxation in at least two of the three territories in which new stockholders will have their holdings, and they had protection against territorial exchange control restrictions and there were no charges on remittance of funds. Now they have to look to three different countries not to impose special taxation or special exchange control restrictions. Therefore the bond holders are far worse off than they were when they originally invested in Federal Stock.
  This Order springs out of a meeting of Committee A, a committee of civil servants, and during one of the meetings of this Committee I understand that the following statement was made. I hope that my right hon. Friend will take the opportunity of telling us that this statement is untrue. I hope that he can go so far as to say that it was not made. It has been talked about a lot in the City and in this House, and I think that he should have the opportunity of denying it categorically. It said that in Committee A representatives of the territorial Government said that their Governments would not accept joint and several liability for the debt and repayment. That my right hon. Friend referred to earlier on. It goes on to say representatives of the British Government stated that their Government would not join in any action designed to preserve the value of the investment. That is a very damaging statement and I would not have referred to it if it had not already been given so much currency in the City and other circles. I hope that my right hon. Friend will be able to deny it.
  1104
  The position now is that if any hon. Member held £100 of Federal stock he would in a few weeks time get £52 Southern Rhodesian stock, £37 Northern Rhodesian stock and £11 Nyasaland stock, and the security of these three separate stocks is quite different, from the original stock. Take the position of Nyasaland, as an example. Obviously, Nyasaland is the least viable of the three territories which made up the Federal partnership. I know that, during the past year Her Majesty's Government have been supporting Nyasaland to the tune of £6 million, and, of course, the Government will have to go on supporting Nyasaland because she is non-viable. Indeed, Nyasaland was originally included in the Federation because she was non-viable. Yet now Nyasaland is being taken out of the Federation and is being saddled with what I understand is a debt of about £15 million for this particular purpose, and that probably the total debt will be as much as £25 million.
  This is unfair to Nyasaland and unfair also to the bondholders. The bondholders tell me that they have had no consultations with the Government about this matter except during the past few days. I hope that my right hon. Friend will appreciate the very great concern, even, I may say, anger, which is felt, in banking, insurance and financial circles, and bear in mind also that not only large corporations but many individuals, many pensions funds and many trustees are personally very concerned about what the House decides to do tonight in approving this Order in Council.
  I come now to certain suggestions for action. I shall not contend that it would be sensible for Her Majesty's Government to guarantee the whole of this stock. Obviously, at this stage, that is impossible and, indeed, it would create a dangerous precedent for the future. Nevertheless, there is certain action which should be taken. First, will my right hon. Friend consider buying out the Nyasaland stock? This would not only be a good service to the bondholders, of course, but it would be a good service to Nyasaland itself. It would be much better to take that action now, removing a millstone from that country's neck, rather than go on giving Nyasaland so many millions of £s to service the stock.

  1105
  I am glad to know that an undertaking has now been given that Her Majesty's Government will do their best to see that the territorial Governments service these loan. I hope this will be published. That was to be the subject of my second suggestion.
  Thirdly, is it possible to allow the holders of locally registered stock to have an option to take their stock payable in the currency of one territory? I appreciate the danger of this, that people might opt for Northern Rhodesia registered stock backed by copper or, possibly, might prefer Southern Rhodesia stock, but at least those companies which operate in only one territory will, quite naturally, wish to take their stock from that territory. It seems reasonable to allow them to do so. I ask my right hon. Friend to consider carefully those three points.
  I fear that, unless further efforts are made, there will be a weakening of confidence in the financial integrity of Her Majesty's Government. Let us not forget that Her Majesty's Government advised people to invest in the Federation as late as July last year. It will be extremely difficult for the new Commonwealth countries to raise loans on the London market unless stockholders are given more assurance than they have had so far, and these Commonwealth countries will, therefore, be pushed back on to public funds. Obviously, they need both Government help from this country and help from private enterprise.
  I come now to the position of the civil servants. I am glad to note from the Federal Hansard that it now seems likely that only 400 Federal civil servants will have no job to go to. At one time, it was estimated that there would be as many as 3,000. However, there are 1,162 who have refused to take jobs in the territories, and this means that, although the 400 will get their earned pension plus the one-third as laid down by the Order in Council, the 1,162 will get only their earned pension. I wonder whether we are living up to the First Secretary's statement, already quoted by the hon. Member for Dundee, East and whether we are really prepared to be judged by our actions and our generosity to these civil servants.
  I will give an example. I take the case of an expatriate civil servant serving in Nyasaland, 38 years of age, with
  1106
  eight years' service, at a salary of £1,500 a year. Under the schemes available now, he will get a pension of £240 a year, plus compensation by lump sum which will vary, I understand, between £5,000 and £6,000, plus repatriation expenses. His Federal opposite number who is being dealt with under this Order in Council will get a pension of £240, plus one-third, which is only £67 a year or, if commuted, a princely lump sum of £406. This latter amount is to be compared with the £5,000 or £6,000 for the expatriate.
  The disparity between the two is far too great, and it really cannot be called fair treatment. One has to consider also that a very large number of African civil servants will be affected. Their pension, under the terms of the Order in Council, will be something like £2 10s. a month. Moreover, in order to absorb Federal civil servants Southern Rhodesia has overloaded herself with white civil servants, and it will be extremely difficult for the African civil servants to get a reasonable ob in Southern Rhodesia.
  I hope, therefore, that we shall hear something about the suggestion which, I believe, emanated from Committee A, that hardship cases should be given special consideration. I want my right hon. Friend to tell us something about that.
  I shall not take up any more time of the House in discussing other points which arise out of the requests put to the Government by the civil servants. We know that people who have not accepted territorial jobs feel that they ought to have some compensation for loss of office as they have had in other territories. My right hon. Friend will know also how strongly the civil servants feel about the security of their pension funds. They would like them to be established in this country and that sterling should be the currency in which the pensions are administered. We know also of their worries about citizenship which have already been referred to.
  There has been a rather unhappy interlude in the relations between the Federal Government and Her Majesty's Government since 1959 or 1960. I do not think that it reflects very much credit on Her Majesty's Government, although, of course, all the faults are

  1107
  far from being theirs. Can we, in this last debate in the House on this subject, have the record closed with dignity and a little generosity? I hope that my right hon. Friend will pay special attention to some of the points which I have made particularly with regard to the Federal bondholders and Federal civil servants.
  5.54 p.m.
  Mr. J. J. Mendelson: The hon. Member for Haltemprice (Mr. Wall) concluded his speech with some references to the position of civil servants in the Federation which is now coming to an end. I begin by agreeing with him in the concern which he feels and the concern which has been reported from the Rhodesias on this subject. Whatever view one may take about the past politics of the people who were responsible for running the Federation, and whatever one might feel about the political future of the countries which are now to be on their own again—here, as the hon. Gentleman will not be surprised to learn, I disagree with the opinions which he expressed—there can be no doubt in the mind of anyone who has recently visited these countries about the deep concern and sense of unfairness felt by many of the civil servants.
  Although the Government may have a fairly clear case on legalistic lines which they could establish in a court or by formal argument, that one cannot treat certain categories of civil servants as though they belonged to another category, it would be much better for them, in the momentous change which is now taking place, to think again and consider not so much in law but in equity the case which the civil servants are putting forward on their own behalf. When I visited Southern Rhodesia and Northern Rhodesia recently, I was quite convinced that this concern was genuine and that it deserved consideration.
  I turn now to the way in which the debate has been prepared and to the kind of information which has been presented to the House. I very much regret that the Secretary of State has not decided to put much more information before the House in advance of the debate. On Friday, 13th December,
  1108
  the Under-Secretary of State for the Colonies said in a Written Answer:
  "The views of the Victoria Falls Conference on the defence forces are set out in Chapter VII of Command 2093. If the hon. Member has in mind the agreement reached on the allocation of the forces at the intergovernmental meeting on defence held in Salisbury in September, I am prepared, if the hon. Member so wishes, to arrange for the publication in HANSARD of the text of the agreed statement by Governments which was issued, following that meeting, on 11th October, 1963."—[Official Report, 13th December, 1963; Vol. 686, c. 130.]
  How absurd—"if the hon. Member so wishes". This is the kind of information and documentation which ought to have been put before the House of Commons not at the wish or request of an individual Member but as essential information in preparation for the debate. The Minister cannot claim that he has been working to a harrassed timetable. This sort of documentation could have been printed and put before the House long before the Order in Council was printed last week.
  This would be a matter of less importance were it not for the fact that we are dealing here with one of the most explosive and serious political problems likely to arise in Central Africa. It was even worse that the Secretary of State, when he addressed the House today, made no reference to the allocation of armaments or, more particularly, to the allocation of sections of the Air Force. I urge the Chief Secretary to the Treasury to use whatever means of communication are at his disposal to let the Secretary of State know that we think that he ought to make a statement today.
  The right hon. Gentleman ought to ask the leave of the House to speak again before the debate ends tonight. He is primarily responsible for the decision, and he ought to make a statement before we make up our minds whether to approve the Order or not. There will be no other opportunity to make a decision on the Order. As is well known, it cannot be amended in any detail. It is the duty of the Secretary of State to take the House further into his confidence.
  I quite understand that the probable reason why the Chief Secretary has been asked to wind up the debate is that many important economic and financial

  1109
  questions are involved. I equally understand that he has probably been asked to wind up the debate because of the problems concerning civil servants to which hon. Members have referred. But this decision is one for which the Secretary of State must take a personal responsibility. The decisive meeting took place under the chairmanship of his predecessor, now the Foreign Secretary, who was in charge of these territories. If the Foreign Secretary had still been in charge of these territories we should have had the right to demand from him a statement on his responsibilities and activities at this conference. Now his successor is in a similar position, and he should tell us what happened in this connection.
  We are dealing with a decision which formed the main topic of discussion in Government circles in Lusaka when I was there in the middle of October. It is well known to the Secretary of State, and it may be known to the Chief Secretary, that in the middle of October the Minister for Local Government, Mr. Kaunda, who is likely to be the future Prime Minister in the Government of Northern Rhodesia, sent a telegram to the Minister who was then responsible for these territories, now the Foreign Secretary, asking for a reconsideration of the allocation of the air force.
  We are, therefore, considering something which is of great concern to the future Prime Minister of Northern Rhodesia and on which he has taken official action. We in the House of Commons are expected to approve of this Order in Council and this allocation without hearing from Her Majesty's Government what their attitude is to this telegram, or to the point of view of Mr. Kaunda, or to future policy concerning this air force. I suggest that this is treating the House of Commons in a fashion in which it should not be treated.
  We are dealing with an allocation of forces, particularly concerning the air force, which was discussed at this private conference, and, as the Minister has made no statement about it, I think it important to introduce some details of it in the debate. One of the problems was that the air force had to be split up and an attempt had to be made by the Governments concerned to reach
  1110
  agreement. I wish to absolve the representative of Northern Rhodesia at this conference from the charge of having acted completely on his own. It was known in Lusaka that he had had consultations with members of the Northern Rhodesian Government, which at present is a coalition Government, and, so that we should not continue the debate on a false basis of fact, I should like to absolve him immediately from any such charge.
  However, it is equally true that, when the discussions were taking place, some of the considerations before the people participating in the conference were of a technical character. One of them was whether some of the particularly advanced planes which were to be reallocated could be used from anywhere but in Southern Rhodesia. There are not the kind of airports in Northern Rhodesia or in the third territory from which some of them could take off and land.
  Superimposed on this was the general political problem that there would be a tremendous shift of power to one of the territories, namely, Southern Rhodesia, if all the most advanced and important types of aircraft were allocated to her. When Mr. Kaunda sent his telegram to London—and we do not know the Government's attitude to it, and we should know it—he was not suggesting, as I understand it, that there should be a reallocation and that some of the particularly advanced planes which were to be allocated to Southern Rhodesia should be allocated to Northern Rhodesia or another territory. He was suggesting something quite different, and we have a right to demand an answer from Her Majesty's Government to this proposal.
  As I understood it, Mr. Kaunda was suggesting that Her Majesty's Government should not hand over these planes to Southern Rhodesia but that they should limit the allocation to Southern Rhodesia to a certain number of planes, mainly transport planes and planes of a similar type, and a good many defence planes and that they should not hand over the planes particularly designed for offensive operations. I understood that he requested that they should be taken over by Her Majesty's Government. Moreover, as has been pointed out by

  1111
  my hon. Friend the Member for Dundee, East, it is a fact that some of these planes have not yet been paid for. It is a fact that it is quite easy for Her Majesty's Government to call a halt and to stop some of these planes being allocated to the Southern Rhodesian Air Force.
  We are dealing with the kind of aircraft which are regarded in expert circles as being of the most powerful kind in existence. For instance, in a recent professional evaluation of the kind of aircraft under discussion it was said:
  "The Hunters are the latest type combining both interception and ground attack roles and these are about the most powerful single-engined aircraft on the African continent. They could, for instance, operate with two external fuel tanks, two heavy bombs and the full ammunition. They could, for instance, fly 500 statute miles, deliver two 1,000-lb. General Purpose bombs and fire 200 rounds of 30 mm. and return ".
  A similar evaluation is given of some of the other planes. It is therefore of great concern to some of the other countries on the African continent, and equally of concern to Northern Rhodesia, that agreement should be reached and that a reallocation should be made which does not worry them as to the future possibilities in case there should be disagreement.
  I propose to say far more than I have said on this point later on hopes for agreement because I have not come back too pessimistic about the possibilities of advance in either Northern Rhodesia or Southern Rhodesia. I think that many Europeans in Southern Rhodesia have in the last two years or so changed their mind on a good many things about the future political possibilities in Southern Rhodesia. Certainly a remarkable improvement has occurred in Northern Rhodesia. I was greatly impressed by the considerable number of European businessmen who said to me in Lusaka that they hoped that there would be excellent co-operation with a future Government under the premiership of Mr. Kaunda. I can see that other hon. Members have had similar experiences and that they agree with this impression.
  This has come about in a comparatively short time, because, as my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) said, there is a realisa-
  1112
  tion that history is moving on and that there are considerable possibilities for people of all colours and races to go on working successfully for themselves, their families and their country in Northern Rhodesia if there is a certain amount of reason and give and take on both sides. However, these same European businessmen have pointed out to me that anyone who finds it quite impossible to live and work under a Government composed largely of Africans will find no place in the new Northern Rhodesia. There are many Europeans who have no such built-in resistance, although there are a number who have.
  These same Europeans pointed out to me that anyone who has been in a job far above his qualifications merely because of advantages of race cannot hope to find a similar position in future merely because of those advantages and that there will be much keener competition for positions than there has been in the past. I see nothing wrong with that, neither could those who put the point to me.
  It is rather amusing now in Lusaka to find a good many businessmen reporting about the kind of social gatherings which they have attended with present and future members of the Government. They seem to work quite happily under the prospect of receiving encouragement as well as direction from an African Government after the next General Election. This is, in part, an answer to the comments which have been made from the benches opposite during this debate—I do not single out any hon. Member in particular—that the system of Westminster cannot be transplanted immediately to African countries. Nobody in his senses has ever suggested doing so. It has to be a process of evolution. One might just as well have said that the system of 1831 could not have been transplanted into the system of 1963. That is obvious and is one of the few points on which historians have always agreed.
  What is happening in Northern Rhodesia today, and is being greeted with approval, I am glad to see, by hon. Members opposite, is the acceptance of the fundamental democratic principle of government and its implementation in co-operation with people, either European or African, who have the know-how and the willingness to

  1113
  work in Northern Rhodesia in the future. That can happen successfully only if the basic democratic principle is first accepted, because no matter what logic one might wish to put forward, no matter what reasons hon. Members opposite might hope to advance which sound logical to them, it is not possible to make a proper start in these countries unless the democratic principle is accepted first.
  I can give examples of that from the rather sad state of affairs—although, here again, not entirely without hope for the future—that I found in Southern Rhodesia. To begin with—
  Mr. Wall: Will the hon. Member define what he means by "democratic principle?" Does he mean one man, one vote?
  Mr. Mendelson: This slogan of "One man, one vote," which is always thrown about as if to create difficulties in debate, originated in the Republic of South Africa, where I met it most frequently. I do not say that the hon. Member for Haltemprice picked it up there, but it is the sort of slogan which is thrown about.
  The question causes me no difficulty and my answer is clear. Yes, we need a franchise which leads to a system of one man, one vote, but it should be possible to work out reasonable stages of reaching that aim. In my conversations recently with Mr. Kaunda in Lusaka, this presented no difficulty. As the hon. Member knows, it has presented no difficulty in recent discussions. We would, however, be foolish to assume that although there might be a number of reserved seats at one election or another, the whole tempo of the development does not clearly lead to one man, one vote and to a democratic system of franchise and government. That is foreseen.
  I remember in talking in Lusaka, in October, to an ex-mayor who looked at the map with me and said, "Not long from now, we shall have a franchise which will be regarded as fully democratic." That is the direction—
  Mr. Deputy-Speaker (Sir William Anstruther-Gray): Order. I am sorry to interrupt the hon. Member, but he seems to be dealing with a future con-
  1114
  stitution. The Order does not deal with any future constitution, although reference in general is perfectly in order during the debate.
  Mr. Mendelson: I will change my direction slightly, Mr. Deputy-Speaker, to be in older, but I was trying to be courteous to an hon. Member who had put a precise question to me which, he thought, might be difficult for me. I wanted to prove that it did not embarrass me.
  Coming to the future of one of the territories in the Federation—Southern Rhodesia—he reason why it is so important that we should have the feeling that things are developing in a direction of partnership was brought home to me by the rather sadder atmosphere—although, again, I repeat, not without hope—in Southern Rhodesia, where the cardinal principle of democracy and general acceptance of it for the future has not yet come about. Several hon. Members opposite have said that all sorts of illegal activities are going on in Southern Rhodesia. They should examine much more carefully the kind of activities which they might have in mind and of which they have seen reports.
  I should like to quote an example, because it is one which I happened to witness, and examples of which one has personal experience are normally more convincing than those which are conveyed by hearsay or report. In Salisbury, there is a ban on political gatherings and only few occasions are permitted for political gathering by the African parties. On Sunday 20th October, the leader of the main African party, Mr. Joshua Nkomo, was to attend a birthday party at the home of one of his supporters. News of the birthday party spread quickly and within an hour and a half, a large gathering had assembled on his route.
  As Mr. Nkomo was about to reach the garden of the house at which the party was to be held, it was estimated by the police that about 15,000 people had assembled. This is not the kind of thing that happens to Members of Parliament or political leaders in this country. We might be gratified if we attended a birthday party in our constituency and a few hundred people gathered to shake hands

  1115
  with us. It was estimated that about 15,000 people had gathered. The police intervened and asked them to disperse. They did so too slowly in the opinion of the police, and so police dogs were set upon the front line of the gathering. This shocked me deeply, and it would shock any hon. Member who might have seen it. It is the sort of thing we see on television that the police in Georgia do. I normally like to feel superior when I see that kind of thing, but I did not feel superior when it was done on 20th October in Salisbury. When one considers the importance of the political future of these territories, it is quite unnecessary that these things should happen.
  Now that the Federation is coming to an end, it should be quite possible for reasonable men to come together to make decisions. The three countries will have to make their own decisions and to work out their own solutions. There are signs that people in Southern Rhodesia are willing to look again at the situation, but there are many—I fear, a majority—who are not prepared to do so. This is where the attitude of Her Majesty's Government becomes so supremely important.
  There are in Southern Rhodesia a number of laws and a police and justice administration which make a mockery of justice and democracy. Not long ago, for example, one of the Africans had given evidence to a sub-committee of the United Nations. He returned home to Southern Rhodesia with the text of his speech in his pocket. At the frontier, he was searched and arrested. The document was taken from him and he was put on trial for having infringed one of the regulations; he had imported a statement which in Southern Rhodesia was regarded as illegal. It was a statement of what he had said in evidence at the United Nations. There was nothing to suggest that he had brought it in for any illegal purpose. For all I know, he might have taken it back to show his wife. At least, a man should be entitled to have in his pocket a copy of a statement which he has made to a committee of the United Nations. The man was arrested and put on trial.
  Those are the sort of considerations that lead me to conclude that what is
  1116
  needed if the break-up of the Federation is not to lead to dangerous situations in Southern Rhodesia is a new start, in which people begin to accept the principle of majority rule and then start discussing with the leaders of the African parties the stages of transition. Quite a number of Europeans in Africa are prepared to accept this principle. Some of them, it is said, have recently had discussions with Mr. Winston Field. It is said that the majority of Mr. Field's supporters in Parliament are bitterly opposed to any such solution. Indeed, a contrast can be seen even between the Prime Minister, Mr. Field, and some of his supporters.
  I took the occasion whilst in Salisbury of reading a number of the HANSARD reports of the Southern Rhodesian Parliament. I found that on one occasion, when an African speaker was making a speech in which he had difficulty with the language, a number of Mr. Winston Field's supporters jeered and laughed at him. That kind of spirit of racialism will not bring the progress that is needed in the country. From what I have heard, I absolve the Prime Minister, Mr. Field, from any such attitude, either in public or in private, but there is a majority of his supporters in Parliament who have a deeply rooted racialist attitude and are not prepared to consider new solutions to old problems.
  On the other hand, however, it should be quite possible for us to use our influence in the right direction, and here I return to a point I have already made and which I repeat. It is that Her Majesty's Government should reconsider the decision on the allocation of the Air Force and insist with the Southern Rhodesian Government on new constitutional talks being initiated with the leaders of the two main parties in Southern Rhodesia. The Rev. Sithole and Mr. Nkomo are both convinced that what is needed is a new get-together to work out an advanced and broader Constitution.
  The Secretary of State should tell the House whether the Government are prepared, in response to Mr. Kaunda's appeal in October, to reconsider the allocation of the Air Force and whether they would not agree that some of it should be taken under the sovereignty of the British Government and not

  1117
  allocated to any other country. That is requested by Mr. Kaunda in his letter in October. Would it not be better to have a cooling off period on this problem before further decisions, perhaps in a few years time?
  Further, Her Majesty's Government should put all possible pressure on the Southern Rhodesian Government to get together the leaders of the majority parties to talk about the democratisation of the country. It is not true to say that the British Government have no serious powers in this respect. They have. I know that it is common in various circles, even including some of the official representatives of Her Majesty's Government in Southern Rhodesia, to shrug their shoulders and say, "There is not much we can do apart from urging them." But that is not the case. Many Europeans in Southern Rhodesia—residents of longstanding—have told me, "We do not want to be isolated; we do not want to follow a policy of adventurism and are opposed to any suggestion of taking independence for ourselves."
  These are European spokesmen who are not politicians but belong to the business, community and to professional groups and who are oposed to a policy of adventurism. They have told me, "We would not allow the Government to have such a policy, but we do want to see that we are not forgotten and that there will be some proposals that will allow us, in some way, to continue to live our lives in the country to which we are accustomed." These are people who would not be without understanding if Her Majesty's Government put pressure on the Southern Rhodesian Government to recognise the necessity to revise the constitution.
  An external as well as an internal problem is involved. My hon. Friend the Member for Dundee (Mr. G. M. Thomson) referred to the possible use of the Air Force allocation to Southern Rhodesia. African leaders outside Southern Rhodesia are very concerned about some of the contacts between members of Mr. Field's Government and Ministers of the Republic of South Africa. Some weeks ago a meeting took place between the Ministers of Justice of the two countries. It is assumed that they discussed a possible tightening up of
  1118
  the control of refugees from South Africa.
  It is said in many circles that one of the policies that a more extreme Government of Southern Rhodesia might pursue in future would be that of military co-operation with South Africa. It is, therefore a matter of gravest concern to African countries all over the Continent—a concern which Her Majesty's Government should not ignore—that these planes are to be allocated to Southern Rhodesia, which will make that county, after South Africa, the most powerful military power on the Continent.
  It is quite clear that this decision presented some difficulties to Her Majesty's Government, but it should be realised that, if there is to be any hope of cooling down the atmosphere, and if it is to be made clear that the Southern Rhodesian Government have no such intention to co-operate with South Africa, they should not at this stage insist on receiving these planes. There are no external enemies that the Government of Southern Rhodesia needs fear and therefore no justification for the size of bomber force involved here. I repeat my request for a statement on this matter.
  My final point concerns the activities of Her Majesty's Government in future in all three Territories after break-up. Out there, many people tell one that they hope that there will be a place for many Europeans even after an African Government has taken over. I know that this is one of the arguments always to be found when we talk about democratic systems in these countries. It is, however, clear that, if the Government of Southern Rhodesia are not urged forward by Her Majesty's Government and do not, within the next few years, proceed to work out a system allowing the majority of the people fully to co-operate in Government and, within a reasonable time, to have the full knowledge that they are the governors of their own country, no one knows what solution might not be attempted by people who find themselves without hope.
  Mr. Field, in a recent speech, referred to this point when he said:
  "I realise that African majority Government will have to come one day but I hope that it will lot be in my lifetime."

  1119
  But in that outlook lies disaster, and it is the essential task of Her Majesty's Government, by their policy and conduct, to make clear to Mr. Field that it is essential to bring about and to work for peaceful changes by peaceful means within the next few years.
  Her Majesty's Government will be abdicating their responsibility if they confine themselves to statements that they will not grant independence to Southern Rhodesia unless and until the Constitution is changed and improved. The must go beyond that and urge the Southern Rhodesian Government to improve their machinery of justice and, in private conversations and by public appeal, to allow a certain amount of reform of the judicial system so that activities now regarded as illegal can become legal.
  Her Majesty's Government must put pressure on the Southern Rhodesian Government to get together the leaders of majority opinion and to take the initiative in calling a new constitutional conference.
  6.28 p.m.
  Colonel Sir Tufton Beamish: I am sure that Her Majesty's Government will have noticed that every hon. Member who has spoken in the debate so far, except, of course, for my right hon. Friend, has protested about the fact that there has been so little time to consider these very important questions.
  I entirely agree with that view. It is most unfortunate that we were not presented with a White Paper in which reasoned arguments were given about these extremely important Commonwealth problems and that this Order was laid a few hours less than a week ago, containing so many policies and views which we have not had a chance adequately to consider.
  In reinforcing that point of view, I point out that the Federal Government, without doubt, have the same opinion. I have been told by several stockholders that they received a letter from the Federal Treasurer, dated 19th November, asking holders of locally-registered Federal stock to reply within one week to a series of very important questions giving views about the allocation of stock.
  The letter says that if no reply is received, it is to be assumed that the
  1120
  stockholders are satisfied with the proposals. I understand that it also apologises that the situation has been rushed in this way. That seems to emphasise that very important events are taking place with undue haste. I support what has been said about that and express the strong hope that it will not happen again.
  I should like to refer to what my right hon. Friend said about the British Government's lack of responsibility for the dissolution of the Federation. We here, in this House, created the Federation, rightly or wrongly. I thought at the time that there was much to be said for it—though I am not being wise after the event when I say that I had serious doubts. There was much to be said for it economically and politically and no one could deny that the Government's motives were the worthiest motives imaginable and were based on their belief that non-racial policies must prevail.
  The idealism of the Government—and that is what it was—was temporarily blown away by the wind of change. I said "temporarily" because I do not agree with everything that my hon. Friend the Member for Haltemprice (Mr. Wall) said about multi-racial questions in these parts of Africa. He took too gloomy and over-simplified a view. I have always been a great believer in these policies, and I was one of the first Members of Parliament to join the Capricorn Society, which was meant to contribute to the peaceful development of a solution to African problems, but which, unhappily, did not contribute nearly as much as many of us had hoped.
  But we must not forget when we are talking about these non-racial problems—and I prefer "non-racial" to "multiracial"—that in Tanganyika for instance, where I was a year ago, between 20,000 and 25,000 Europeans are living and working happily under an African Government to which they have adapted themselves with very little difficulty. I will not say anything now about Kenya, because I might be over-optimistic, but many of my friends in Kenya, among the older settlers and including farmers, feel that they can adapt themselves to an African majority. It is, naturally, very difficult, but we should not take too gloomy a view and we should try to see this

  1121
  change in its historical perspective and try to show patience and sympathy and understanding for the problems of the white man and the black man in these territories.
  It was right to dissolve the Federation. The experiment has failed and we must recognise that, although I like to think that it is only temporarily and that there will be voluntary groupings of African countries with representative Governments for their own mutual benefit. But they will have to come together of their own consent. The Government's mistake was to try to rush matters, although from the worthiest motives, as I have said.
  We created the Federation and we will dissolve it if we pass this Order in Council. We cannot shirk the responsibility which flows from those two actions, nor pretend that we do not have it. Nor can we pretend that we are not responsible for the inevitable side effects of those two actions. My right hon. Friend did less than justice to this aspect of the problem, and I am thinking particularly of the servicing and the eventual repayment of the external and locally registered loans.
  My right hon. Friend made rather too much of the consequences which might flow from the underwriting of these loans by Her Majesty's Government. It was suggested that the credit worthiness of the territories concerned might be seriously impaired if it were made clear that the British Government had underwritten the loans. This is an argument which can be greatly exaggerated. It is well known that Nyasaland, for example, is getting a subvention from the British taxpayer of £6 million this year and that that subvention is likely to be carried forward into future years. It is not too far-fetched to suggest that without that subvention Nyasaland could not conceivably service the loans which are to be transferred to it. In effect, and in practice, we are underwriting that part of the debt which is being transferred to Nyasaland, and I do not see why we should not say so.
  I was extremely glad that my right hon. Friend went as far as he did—although he could have gone further—in expressing the Government's views on this subject. He said that the British Government would continue to attach the
  1122
  greatest importance to the discharge of the financial responsibilities of the territories. That was a very important statement and we ought not to underestimate its significance. Equally important, he said that the Government would take account of the debt burdens of the territories concerned when considering future aid arrangements. I hope that I have correctly paraphrased what he said. That was a very important statement and I warmly welcome it.
  I do not want to make too much of the Bank of England issue of these loans and the fact that the Government brokers underwrote them. Of course they did; they had to, because no one else could have done so. It follows from that that they were issued under British Government auspices. It is also true that institutional investors, banks, insurance companies, trustees and chairmen and others responsible for pension funds, took up these loans without any idea—any more than the Government had—that the Federation would be dissolved little more than a decade later. That was not in the prospectus. It could not have been because nobody knew that it would happen.
  However, it did happen and it is very regrettable that mostly without being consulted, the stockholders now find that their holdings are arbitrarily and compulsorily transferred into territorial stocks. The way in which this has been handled is reprehensible, although it has been largely mitigated by what my right hon. Friend said. Had those who subscribed to these loans known that at any time in the future there would be an arbitrary transfer into the stocks of the three Territories, most of them would not have subscribed. I have spoken to some of the large investors who have told me quite clearly that they would not have subscribed.
  Therefore, it is no good to make a comparison between the security which attaches to the Federal stock today and that which attaches to the territorial stocks to which these holdings are to be transferred. The right thing to do is to ask what these investors had a right to expect of the Federation when they made their investment. It is very important that my right hon. Friend the Chief Secretary should add to what my right hon. Friend said on this subject.

  1123
  I have one or two questions about the servicing of this loan stock and the security which the holders feel that they are entitled to have.
  My right hon. Friend will agree that it is a very important investment principle to be able to match assets and liabilities in like currency. For example, the chairman of a pension fund is bound to want to do that, and the chairman of such a fund in Northern Rhodesia, in the Copper belt, does not want to have foisted on him 11 per cent. of his holding in Nyasaland stock—nor in Southern Rhodesian stock, for that matter. It may not be because he has less confidence in Nyasaland or Southern Rhodesia, but simply that a financial principle is involved. I hope that some means can be found to enable holders to carry out certain switches.
  I amplify that by saying that we should try to find some way in which holders of Federal stock can be enabled to hold stock of the territory of their residence. That would go part of the way towards allaying some of their anxieties. We should not forget that this is not just a matter of the big banks and insurance companies and other large investors. The people who are mainly concerned are those who get pensions from pension funds, thousands of small investors, and so on. It is important that we should not break that financial principle here.
  My next point has been dealt with by the assurance given by my right hon. Friend at the beginning of the debate. I was going to ask the straightforward question whether Her Majesty's Government accepted some continuing interest in the servicing of this loan, and it has been made clear that they do have such an interest. But there is a risk of the non-payment of interest, or the non-payment of redemption sums, due to lack of sterling which could arise, although the territories are in the sterling area. I have heard this view expressed in the City. If the payment of interest, or repayment at the redemption rate, was blocked for any reason, holders of this stock would feel that they had been let down, and they might, in the circumstances, feel that the assurance given by my right hon. Friend would have some application. I hope that I am
  1124
  right in thinking that that may be the case.
  It is also possible that in the years to come there may be some tax differential between the territories. If that turns out to be the case, it would also be inconsistent with what those who originally invested in the stock were led to believe would be the case. In the past, interest payments have been paid without deduction of Income Tax. This is very important indeed for pension funds, for charitable institutions, and so on, and holders would like an assurance that in future payments will be made by all three territories without deduction of Income Tax. To go back to the earlier point associated with that, the possibility of differential taxation between the territories would be inconsistent with what stockholders were originally led to believe would be the case.
  My last point is a comparatively small one, though it is worth mentioning. There may be remittance costs between one territory and another. If there were, this would not seem fair or reasonable to stockholders who had no reason to expect this arbitrary division to be made.
  Those are the points that I wished to raise. I assure my right hon. Friend—although I do not think that he needs any assuring—that very strong views are held about those questions in the City by the institutional investors and by individuals as well. If my right hon. Friend is able to clear up any of these anxieties, it will be a great help indeed.
  6.42 p.m.
  Mr. A. Fenner Brockway: I was a little surprised, but very happy, to find myself in agreement with the broad survey with which the hon. and gallant Member for Lewes (Sir T. Beamish) began his speech. I agree with his criticism of the Government for the utterly inadequate information they gave us before introducing this Order. I agree with his recognition of the historical advance of democracy in Africa, and with his appreciation that European populations in that continent are increasingly feeling that they are able to live under African Governments. I believe that the hon. and gallant Gentleman was accurate in that analysis, and I was glad to hear that he differed from the hon. Member

  1125
  for Haltemprice (Mr. Wall) on those issues, I shall refer later to some of the other matters raised by the hon. Gentleman.
  Today, the curtain is falling on the second act of a drama which I think we all recognise is of momentous importance. It is important to the Europeans in Central Africa. It is important—I mention it because Asia is the territory of my birth—to the Asians in Central Africa, who outnumber the Europeans. It is of profound importance to the whole of the African population. It is of great significance from the point of view of what our relations are to be, not only with the territories in Central Africa, but with the peoples of the whole African continent.
  The first act of this drama took place when the Central African Federation was established. That Federation failed not because of the principle of Federation. The African peoples are devoted to that principle. Those of us who have just returned from East Africa know the hope that exists for the establishment of a Federation between the East African territories.
  When the legislation was introduced in this House for the setting up of the Federation of the Rhodesias and Nyasaland, the attitude of the Labour Opposition was that it would fail because it did not have the support of the great majority of the African people. We have been proved correct in that view, and right hon. Gentlemen on the Front Bench opposite cannot merely say today that they are sad that it has failed. They must recognise the great error in attempting to establish this Federation without the consent and support of the majority populations there. Right hon. Gentlemen have made an extraordinarily tragic mistake in their policy towards Central Africa, which has led to bitter results during the last eight years, and which has made much more difficult the task of constructing future societies in that area.
  I do not want to go over the past in detail, but one of the most shocking events in recent times was what happened in Nyasaland after the Federation was established. The Secretary of State for the Colonies, in a most extraordinary speech, said that a conspiracy had been discovered in Nyasaland; that Dr. Banda and his colleagues planned to
  1126
  murder every European, every Asian, and many Africans. Because of that, a state of emegency was declared and Dr. Banda and other leaders were either exiled or imprisoned
  We then lad the Devlin Report, which showed that the story of that conspiracy was unjustified; that the threat of violence was made by a few individuals; and that Dr. Banda and his party were completely innocent. That was one of the saddest things that happened from the point of view of the reputation of this country, and right hon. Gentlemen opposite who represent the Government cannot male up for that blunder merely by saying today that they are sad. They must accept responsibility for the tragedy which resulted from their policy.
  Today, we come to the second act of the drama, and I wish to say a few words about matters which hon. Gentlemen opposite have raised as though they are the most important issues that we are discussing. Not one back bench speaker opposite has referred to the greatness of the event which is now taking place. The burden of their speeches has been the injustice to bondholders, and the injustice to those who contribute towards loans. I do not wish to minimise that aspect of the matter. I take the view which hon. Gentlemen opposite have expressed, that the Government have a responsibility to the investors in the Federal Fund.
  They established the Federation; they are dissolving the Federation. They encouraged those investments and it is their duty to see that those investments are underwritten. I accept that; but, to devote the whole of one's speech, or the greater part of it, on this historic occasion to these grievances of British investors, indicates an attitude of mind towards these problems which looks at them from the point of the view of the City and not of the great populations concerned.
  A matter on which I agree with hon. Members opposite, and which was first expressed by my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) in the splendid speech he delivered from our Front Bench, is to plead that justice shall be done to our civil servants in this area. When we ask men and women to go to these terri-

  1127
  tories in the service of the British Government and of the Colonial Office, and when their periods of service are ended by a rapidity of events which has not been expected, surely responsibility lies upon the Government to see that they shall not suffer because of the service they have rendered. I hope very much that the Government will listen to the pleas which have been made from both sides of the House. I hope that not merely justice, but even generosity, will be shown to men and women who have served in that way in these territories.
  Having dealt with those two points which, important as they be, are minor points in the whole picture we are now considering, I turn to some of the greater issues. It is not only a matter of Government responsibility for private investments. I suggest to the Government that they have some responsibility for the repayment of the loans which have been contracted under the Federal Government. I recognise that a large part of those loans is now reflected in permanent construction which will be of value to these territories. That is true of the Kariba Dam. It is true of railway construction. But, in addition to loans made for those particular purposes, there are general loans for which this Government ought to assume responsibility.
  I remind the right hon. Gentleman that we now have in Nyasaland, and in Northern Rhodesia, Governments representing movements which were opposed from the beginning to the establishment of this Federation. It was the Government here who established it. Surely those Governments should not be asked to bear the whole weight of the loans which followed that establishment. I understand that the total loans which the Governments of the three territories are asked to bear amount to £269 million. Northern Rhodesia and Nyasaland will be asked to bear £108 million of that cost.
  We should now be thinking of the Governments of the Rhodesias and Nyasaland being engaged in the great task of social and economic construction. If the full weight of these loans is imposed upon them it will make the task of those Governments in their social construction very much more difficult. I hope, therefore, that the Government
  1128
  here will look again at this problem of loans to the separate Governments. I hope they will note that yesterday the Northern Rhodesian Government, still containing certain British officials, raised this matter. I hope something will be done to meet the heavy burdens placed upon them.
  The second point of greater importance is the matter of the supply of the type of armed force which is now going to Southern Rhodesia. I was glad that my hon. Friend the Member for Dundee, East, spoke so strongly on that matter. The whole House listened with great attention to the masterly speech of my hon. Friend the Member for Penistone (Mr. Mendelson), who has just returned from the Rhodesias. I do not think that it would be possible to exaggerate the feeling of anger there is among African communities that the Government of Southern Rhodesia—which we all recognise to be a minority Government of one race, which we all recognise must change in a democratic way in future, which we all recognise must, within a reasonable period, become a Government responsible to a majority of the people of Southern Rhodesia—that that temporary, minority, racial Government should be presented with the type of arms which have been granted to it under the agreement for the dissolution of the Federation. This disturbs many of us as, quite naturally, it disturbs the African populations.
  I say this only in a sentence, Mr. Speaker, because I want to remain in order: this is parallel to the actions of the Government in continuing to supply arms to a minority white Government in the Republic of South Africa. We are now supplying arms to a minority white Government in the territory of Southern Rhodesia.
  Mr. Ronald Bell:Is the implication from what the hon. Member has just said that we should not continue to supply arms to Southern Rhodesia?
  Mr. Brockway:The hon. Member for Buckinghamshire, South (Mr. Ronald Bell) generally listens with acuteness. On this occasion he has not done so. I indicated in my remarks that my particular protest was against the type of arms.
  Mr. Ronald Bell: Not in the hon. Member's last sentence.
  Mr. Brockway: If the hon. Member wishes to pick out one sentence and take it from the context of the preceding statements, he may do that elsewhere, but he will not get away with it in this House. In relation to the character of the arms—which goes far beyond those for defence, which is regarded in Africa as a threat to offence against other peoples—the maintenance of them will be a very serious problem for Southern Rhodesia in the economic construction in which it will be engaged.
  The last point I make, which I want to emphasise as strongly as possible, is that with the curtain coming down on the Federation we should be seeking to contribute policies which will allow the third act of this drama to have a happy ending. The Secretary of State and many hon. Members have just been in Kenya. I think that we were almost stunned by what we saw and learned there. Five years ago there were the atrocities and obscenities of Mau Mau. Five years ago there was an attitude of antagonism, which often reached hatred, between the European and African races. Two years ago the present Prime Minister of independent Kenya was described by the British Governor as a leader of darkness and death. Yet when we were in Kenya last week we found an attitude of cooperation and confidence between the races which we would never have believed possible two or three years ago.
  I was glad to find that Mr. Michael Blundell has paid his tribute to the statesmanship of Mr. Kenyatta since he has become Prime Minister. We found a new confidence, a new trust, and a new hope among the Europeans who were frightened of the coming of a Government who were mostly African in character. We found this also amongst the Asian people. I was at a great meeting of 2,000 Asians the day following independence, where they declared that, in future, their loyalty would not be to India but to Kenya as Kenyans. That atmosphere is now to be found throughout the whole of Kenya.
  It is our duty, as the curtain goes down on this second act, to try to contribute towards a third act in which similar racial co-operation will take
  1130
  place. I believe that this is possible. My plea would be especially to the European community in Southern Rhodesia to take note of what has happened in Kenya, to take note of the new racial co-operation there, to take note of how the views even of Europeans in Kenya have changed, and to recognise that this is the deepest climate of change which is now taking place throughout Africa. I appeal to them to recognise that the Asian and the African, the man of whatever colour or race, has the same potential qualities of human emergence, of human development, of human fulfilment, as they themselves possess.
  I appeal to them to seek, in the spirit of what is now happening in Kenya, to build in Southern Rhodesia and throughout these territories the conditions on which a similar racial co-operation can take place.
  7.3 p.m.
  Mr. William Clark: I agree with other speakers that the story of federation is now coming to a sorry end. I do not intend to re-canvass the history or the faults on either side about the Federation. Suffice it to say that this idealistic plan fell on the rocks of nationalism and independence was demanded for two at least of the territories that have come out of the Federation. It is the British Government's responsibility to determine independence. This responsibility cannot be shirked. On the question of whether it is Northern Rhodesia, or Southern Rhodesia, or Nyasaland the British Government must take a decision, and I hope that each of the territories will be treated in the same fair way.
  Hon. Members speak today in a vacuum, simply because we do not have the information which has gone towards the drafting of the Order. I join those hon. Members who have criticised the Government because this is so. I believe that the facts about the Federation and how it was progressing were known for so many months that the House could have been better informed.
  I want to take up only one aspect on federation and on the Order. That is the financial side. I remind the House that the Prime Minister of the Federation, Sir Roy Welensky, many months

  1131
  ago, warned Parliament and the public generally that the financial implications of any dissolution of the Federation would present great problems to the Government, particularly as to the Federation loan—the bondholders, if you like. Nearly £250 million of the loan was taken over when the Federation was created. Since then there have been internal issues and external issues of Federation loan. The Order endeavours to deal with the whole conglomeration of Federation loan. I understand that the external debt of the Federation, excluding Kariba and the special items mentioned by the Secretary of State, amounts to £55 million. This has been divided as follows: Southern Rhodesia 52 per cent., Northern Rhodesia 37 per cent. and Nyasaland 11 per cent.
  I want to say something about the new investors, by which I mean investors since the Federation was created. I leave out of account for the moment loans taken over when the Federation was started. This answers the criticism of the hon. Member for Eton and Slough (Mr. Brockway). It is extremely important that any financial obligation of this Government is carried out in a way that maintains confidence, otherwise it is pensioners that will suffer if it is found that the value of the fund decreases. I impress upon the Government that these investors invested in a Federation comprised of three territories. They made one investment. They did not make an investment in three territories. It was one territory. This point could be overlooked. I do not think it has been sufficiently emphasised.
  It has been argued that this money is in exactly the same position as money lent to Kenya or any other Commonwealth country. It is not. If a person lends money to Kenya and Kenya gets its independence, the money he has lent to Kenya is still owed by the Kenyan Government. Money lent by a person to the Federation is not owed to him by the Federation. It is owed to him by the three territories.
  Let me take the example of loans taken over by the Federation. It may be that somebody had an investment of £1,000 which was taken over by the Federation. That investor still has
  1132
  £1,000 invested. What is the position now? He has to take so much in Southern Rhodesia, so much in Northern Rhodesia and so much in Nyasaland. Even the orginal investors are not getting a fair crack of the whip. The question of currency, which was referred to by my Friend the hon. Member for Haltemprice (Mr. Wall), again complicates the whole procedure.
  My hon. and gallant Friend the Member for Lewes (Sir T. Beamish) emphasised the concern expressed in the City about this matter. Since it became public knowledge in the last three weeks that these bonds would be split into three, there has been a fall of ten points in practically every external loan of the Federation. I stress that there is virtually no market in these bonds; the price is pseudo. It cannot be for any other reason than that the investor is not happy about taking three pieces of three investments in place of the single investment he formerly had.
  I want to draw the attention of the Chief Secretary to the fact that the Federation stock was trustee security. No doubt the three stocks issued in its stead will remain trustee security. But for how long? Presumably, if any of the territories withdrew from the Commonwealth its stock would cease to be trustee security, and trustees holding that stock would be put in the invidious position of selling the stock, which they did not want in the first place, at a deflated price. I cannot think that this would be anything but disastrous for the eventual price of any of the stock of the three territories.
  Paragraph 12(7) says:
  "The Government of each Territory, to the extent of the liability apportioned to it…shall establish a sinking fund "
  in due course to repay these loans. Let us suppose that a territory does not establish a sinking fund. Who will enforce this provision? Further, sub-paragraph (8) provides that the sinking fund will be divided into the same proportions as I have mentioned before, namely, 52 per cent., 37 per cent. and 11 per cent. What is the extent of the sinking fund now? Could we not use some of its money to repay some of this loan? Some loans have been going on for eight years, although some have been only in force for three years. As

  1133
  there must be a sinking fund, why should not it be used in order to help to repay this investment?
  I want to point out the vital importance of investment for the City of London and also for ordinary investors. In future it will be necessary for Governments of territories for which we now have responsibility to seek to raise money. If, through our action here, we let down investors, what hope shall we have of obtaining any investment in the developing countries of the Commonwealth? Hon. Members on both sides of the House must agree with this. If we kill the confidence of the City, or the ordinary investor, they will not be interested when we want to raise money in developing countries.
  Some play has been made of the fact that this stock was issued under the auspices of the Bank of England and the British Government, and that a loss of confidence would be catastrophic. It has been suggested that the British Government should guarantee the repayment and servicing of the loan, but the argument against this has been that it would create a precedent. But the Newfoundland Act of 1933 did precisely that. The British Government of the day took over the responsibility of Newfoundland's debt and guaranteed its servicing and repayment.
  Another argument has been put forward against the British Government's doing anything to allay the fears of these investors. It is said that if a guarantee, or even half a guarantee, were given it would lower the credit-worthiness of the territory concerned. I do not accept that argument. If it is correct, what are we to say about the machinations of the E.C.G.D.? On payment of a premium, that body will guarantee the payment of something that an industry has supplied. This is no reflection at all on the credit-worthiness of the purchaser. I do not agree that because we have some form of guarantee for the servicing of a debt it necessarily reduces the credit-worthiness of the country concerned.
  In E.C.G.D., various countries have various gradings. I believe that they are graded A, B, C and D. I would like to know under which heading each of these three territories comes. If we accept the fact that the British Government has some sort of responsibility—
  1134
  perhaps not a legal one, but no doubt a moral one—I would have thought that we might be able to work out a formula whereby we could give an E.C.G.D. guarantee to investors in the various stocks. I am sorry that the new unit trust which was set up yesterday—the Crown Agents Unit Trust—is not available for the general public, because I am certain that the holders of Federal stock would be delighted to turn it over to the Crown Agents Unit Trust and receive its units in return. The financial implications behind this Order have constituted a very sorry story, but the British Government must maintain the highest financial integrity if we are to have a continuation of investment in our under-developed Commonwealth territories. The British Government have a very good record, but their colonial policy may turn out to be their Achilles heel.
  I am sorry that the Order is being rushed through in this manner, although I realise the impracticability of voting against it. It is obvious that the ideal of Federation did not come off. If it had, everybody would have been delighted. It has not come off, and we must face the fact that it must be wound up. What I regret is that we are not allowed to move Amendments to Statutory Instruments. I am certain that if we were this debate would have been greatly prolonged by the moving of Amendments certainly by my hon. Friends and no doubt by hon. Members opposite.
  I stress upon my right hon. Friend the Chief Secretary that it is essential to maintain the good financial name of the British Government, and that if a formula could be worked out so that the ordinary investor could feel confident we should be helping relations in the future. We shall not be able to provide this help unless we show that, without any legal responsibility, the British Government are prepared to accept their moral obligations.
  7.18 p.m.
  Mr. R. W. Sorensen: I hope that the hon. Member for Nottingham, South (Mr. W. Clark) will not think me critical or offensive if I say that he seemed to be speaking at the liquidation of an investment company rather than at the discussion of a matter of vital world concern and of deep human inter-

  1135
  est, which includes investment but is of far greater significance.
  I appreciate, as I am sure all my hon. Friends do, the tremendous need to ensure confidence in these three territories, now that they are about to be dismembered from the Federation. I am sure that we all equally recognise—as do the thoughtful people of those territories—that there will be a tremendous need for increased investment from this and other countries in those territories. To that extent I agree with what the hon. Member said.
  I hope that the Government will pay attention to the pleas made by him and by his hon. Friends, and will show that there is no need for lack of confidence in the Government, and that nothing will be done by them to undermine the confidence of investors in those three territories.
  Having said that, may I turn briefly to the deeper underlying human issues to which very little reference was made by the hon. Member for Nottingham, South. That does not mean, I am sure, that the hon. Gentleman is not interested in them, but that he felt this an opportunity to deal with purely technical and financial matters rather than the more human and political matters. Expressions of regret have been frequent on one side of the House about the dissolution of the Federation and this has been so because of the profound disappointment both at the prospect of co-partnership or inter-partnership between various races coming to an end or taking another course and also because, no doubt, the economic prospects of the Federation are likely to be frustrated.
  But we must recognise that while we in this House and in this country may feel profound regret at the passing of the Federation, that is not the mood of the indigenous African peoples. They are pleased, despite the fact that many of them appreciate that it may mean some economic disadvantage to them.
  Why are they pleased? For the same reason that the people of Ireland were pleased to stand on their own feet and, in the end, to form their own republic in their own way, even though it might have had economic disadvantages. They are pleased for the same reason as the people of India were pleased when, des-
  1136
  pite any economic disadvantage, they could stand on their own feet and work out their own salvation. That is why I hope that there will not merely be expressions of gloom but of hope for the future now that the African peoples can start where they wanted to start at the rock bottom and build up their respective countries.
  Inevitably, in the course of time, they will seek some kind of federation. I say that because, obviously, to have the Continent of Africa remain broken up into a number of units would be economically unviable and politically undesirable. At some time there will have to be a closer association of these areas which, after all were formed largely fortuitously. Looking back on the maps of the past we realise that at one time there were no places called Rhodesia and Nyasaland—or, indeed, Nigeria, Kenya or the Congo, or any of the other political and administrative areas. These were made by Europeans for the most part, and in saying that I am not being critical of the Europeans. But before the European cartographers got to work and made certain lines on maps and said that all within this area shall be named so-and-so, there were no specific territorial units at all.
  To the wandering peoples there were areas roughly demarcated, but certainly not specific. Therefore, the time had to come when in Africa there had to be some lining up of the territories and marking out of areas so that it might be said that this or that was a specific territory and not merely an ambiguous one. I am not criticising history, because it is history—it is how things have happened. We have to recognise that it is we Europeans who made the map of Africa and drew the lines which determined whether peoples speaking the same tongue should be under one European flag or another.
  That being so, one can understand the stage having been reached—and not merely in the Rhodesias or Nyasaland—when the successors of the peoples who have lived in Africa for generations say that they want to work out their own salvation. That is what Dr. Banda has said more than once. When it was pointed out to him that to take Nyasaland out of the Federation might mean grave hardship—as indeed it might—economically, and that the people were

  1137
  likely to lose heavily, his reply was, "So what? I want to start to be free and build up my own nation, whether or not it is economically more prosperous than before".
  Is not that something to be appreciated? Is not it a worthy motive and precisely the feeling that we have in this country? We want to work out our own salvation, whatever the Russians or the Americans may say about the respective alleged superiority of their own economic systems. We say "Leave us alone to be free and to decide for ourselves what we shall do". We wish to decide whether to adopt portions of the American or the Russian systems or any other system. It may or may not be to our economic detriment, but that is of small significance compared with the fact that, as dignified human beings, the only way in which we can live is to decide for ourselves.
  That is how I see the mood and outlook of the peoples of the Rhodesias and Nyasaland. They accept that there may be certain economic disadvantages. But, at the same time, they wish to do exactly as we wish to do, to decide for themselves, for good or ill, how they shall live and develop, and in the end how they shall fulfil their destinies. I admit that under the new regimes emerging in many parts of Africa it may well be that disasters may occur. For example, everyone profoundly regrets the continual unhappy turns in the road along which Mr. Nkrumah is marching. There are many who say that, in consequence, freedom should never have been extended to Ghana.
  I ask this simple question. Does anyone propose, because a particular African nation may turn from the path of democracy, that we should withhold freedom from it? Earlier this afternoon the hon. Member for Windsor (Sir C. Mott-Radclyffe) said that the transfer of power did not guarantee democracy. I entirely agree. Of course it does not. But in the days before the power was transferred, was there democracy? Is there democracy, as we understand it, in Southern Rhodesia today? I am not now arguing whether democracy is appropriate. I am arguing a fact.
  Was there democracy, as we know it, and is there democracy now in Southern Rhodesia? Did it exist in other parts of Africa? Of course not. On the con-
  1138
  trary, the argument of many in the past in this House was that the people of Africa were incompetent and unworthy of self-government. Some argued that one day they might move out of that state of incompetence and perhaps, after a long period of time, in the distant future, they might be capable of self-government. But meanwhile, the utmost that we would admit in this House was to agree as a concession to certain measures of infiltration and representation.
  The same could be said of India. There a little representation was given as a kind of sop to satisfy the growing aspirations of the people. That was the argument, that it was as far as we could go at the moment, but later, if there was progress, a little more might be given. As I understand, that is how the Africans regard our attitude today. So we have to face the fact, as a fact of expediency if not of principle, that we cannot reverse the typhoon. It is not merely a wind of change which is blowing through Africa. It is a hurricane, a typhoon. It is irresistible and we have to recognise that and to come to terms with the situation. We can do that in two ways. We may look at it sourly and bitterly with enmity and hostility and do all we can to frustrate the progress of Africa. On the other hand, while being perfectly frank and honest, we can say that we will extend all the co-operation possible.
  I agree, and we all recognise, that when new nations are emerging from servitude, and when many of their peoples are illiterate, mistakes are bound to occur. There are many things which we all sorely regret and which have occurred in many parts of the newly emerging free world. But just as we have had to work out our salvation so they must do the same. Sometimes it may mean that these peoples will depart from democracy, as we know it, for a long time. But I hope and believe—it is an act of faith on my part—that one day they will return, because democracy, as we know it, belongs to the human race. But if takes a long time for people to arrive at that stage and if they depart from it for a time we can all hope that they will return, and we must do all we can to encourage it.
  On Sir Roy Welensky in particular rests a great responsibility. Although

  1139
  I have been critical of him in many respects I have great admiration for him. I know of his life, his background and the fact that at one time he was an ordinary workman like many hon. Members before they entered this House. The position of eminence to which he has risen reveals the potentialities of the ordinary people in his part of the world. If Sir Roy, who was at one time an engine driver, can rise to such eminence, we must accept that similar powers reside in thousands of the ordinary people of his country. I admire Sir Roy because he has developed the latent powers within him not merely for his own good, but as a demonstration of the capacity of the ordinary man.
  I hope that he will have the magnanimity to say, "I have fought against the dissolution of the Federation. I fought for the Federation. I did all in my power to preserve it and I believe in it, but now that it has come to an end I will not be churlish. I will not sneak away and hide in a corner in a sultry, sulky fashion but I will give what capacity I have to this new emerging country." I believe that Sir Roy can say this. He can still be of great help and guidance. We should be prepared to give all the help we can, on the basis of equality and with magnanimity, to the African peoples.
  I have already said that I believe that the African Federation will emerge again in the years to come. It will emerge when, at last, Africans have reached the stage when they realise that the fragmentation of their lands is undesirable from every standpoint. They will realise that a closer association, politically and economically, is to their advantage. That time will be reached when the peoples of other races are prepared to treat them as equals. That time is coming. It has come in other parts of Africa.
  Mr. F. J. P. Lilley: Can the hon. Gentleman say how many Africans were available to do this sort of work in Southern Rhodesia 73 years ago?
  Mr. Sorensen:I get the implication of the hon. Gentleman's question. It is,
  1140
  of course, that 60 to 70 years ago most of the natives were at the crude, rudimentary stage.
  Mr. Cyril Bence: As were the people of many other nations.
  Mr. Sorensen:As my hon. Friend says, the same could be applied to the working class of this country years ago. However, the hon. Member's question was an appropriate one and I will answer him.
  Mr. Lilley:I was in Rhodesia at the time of its sixtieth anniversary. I was satisfied when I was told by the white people in Southern Rhodesia—and I was in that part of the world from 1947 to 1959—that the white people came to Southern Rhodesia led by a Scots gentleman by the name of Andrew Mickle. He led them there from Johannesburg. It took them six weeks to get there by cart, and, even then, butter cost them 6s. a lb. At that time there was not a native to be seen anywhere in the territory. Only wild animals were prevalent.
  Mr. Sorensen: I appreciate what the hon. Gentleman is saying. I hope that he knows that some of us are not altogether ignorant of the histories of these countries. Although we have not had the opportunity to travel as widely as some, mainly because of our lack of finances, we have visited some parts of the world and, just as important, we have read a great deal about them. I have friends in Rhodesia and the hon. Gentleman's argument is familiar to me. His argument is that these people are inherently primitive and limited.
  Mr. Lilley Mr. Lilley indicated dissent.
  Mr. Sorensen:If not, then the capacity they have must be lying dormant, in which case the task at hand is to release that capacity for the good of the country. One way of doing this is to give them responsibility, for until people are given responsibility they do not develop their capacity because nothing is demanded of them.
  I want to see nations free and people stand on their own feet. I have done my modest bit to help liberate the African and Asian peoples not only because they will then, when free, stand on their own feet with dignity but

  1141
  because, at that stage, they can face up to the facts of life. It is too often the case that when people are subservient they blame the governing Power for all the errors, policies and weaknesses they experience. One fact which the African peoples in Rhodesia and Nyasaland will come to realise more and more when they can no longer blame a governing Power is that there is an indigenous problem of poverty facing them and that that problem is not merely due to European exploitation. European exploitation can aggravate the problem, but the actual problem of indigenous poverty is worldwide.
  Until there is a development of technology there cannot be the abundance of wealth that is necessary to develop human life. Only when people stand on their own feet, have to face the facts and so on, will they be able to appreciate the true facts of life and not be liable to blame the power dominating them. I hope that I have in some respects helped to educate the hon. Member for Glasgow, Kelvingrove (Mr. Lilley) on this point, just as he tried to educate me in certain respects.
  I hope that hon. Members will not send out a message of gloom to the peoples of these three areas. On the contrary. Our message should be one of understanding and desire to co-operate. If Sir Roy Welensky and other Europeans in these territories, with all the advantages they have—knowing that Western technology is still at our command—can assure the peoples of Africa as they grow and accept their responsibilities that we will help them on a basis of equality to the utmost of our ability, that assurance will make a tremendous and lasting impression on the African mind.
  7.37 p.m.
  Mr. F. M. Bennett: There was little with which I could quarrel in the remarks of the hon. Member for Leyton (Mr. Sorensen), who obviously spoke with great sincerity about the human problem arising out of what appears, on the face of it, to be a detailed and desiccated Order.
  Sir Roy Welensky made a statement recently in which he said something very similar to the request just made to him by the hon. Member for Leyton.
  1142
  Too little publicity has been given to that statement. I read it. Sir Roy said that he still regretted the downfall of the Federation but that he wished to pay tribute to all concerned in the orderly fashion in which it had come to an end. He went on to make some extremely reasonable remarks. Although I agree that it was right to hope that Sir Roy would do the sort of things urged upon him by the hon. Member for Leyton, it should be made known, in view of the remarks that have been made about Sir Roy—who is a distinguished gentleman—in the past that he has already done exactly what has been asked of him. I hope, therefore, that we in the House of Commons can send him a warm vote of thanks for his efforts in the past, whatever positions he may have taken, and agree that although some controversy has occurred over him in days gone by, he is a great Commonwealth public servant and has done his best, whether or not we have agreed with his policies at various times, to serve his country.
  It had originally been my intention again to raise the whole question of the Federat on, as many hon. Members have done, along with the future of the separate territories. Yet the more I have listened to he debate the more I have become convinced that, as we had a burial service some time ago for the Federation, probably not much more would be done either by regrets or urgings because from now on it will be the people in those territories who will largely shape their own future. Perhaps it is as well to concentrate our thoughts on the more practical aspects of the problems that have arisen.
  Before doing so, I should like to add my one general remark, which is that we are witnessing a very sad occasion, not because a particular Federal form of Government has collapsed but because it is human failings over here and over there, white and African—and I do not seek to apportion blame tonight—which has led to the failure of an experiment in multi-racial and non-racial co-operation in Africa. At a time when the world seems to be moving away from ideologies in favour of conflicts and tensions between people of different colours, any failure of this kind is something which we ought to regret. As history develops I am sure that the

  1143
  collapse of the Federation will be seen as a landmark of failure in the attempts of people of different races to co-operate together. I am not trying to say that hon. Members opposite or Africans or Europeans out there are largely to blame, but this is a recorded fact of the failure of people of different races to work together for a common future.
  In raising tonight once again the question of the Federal debt, which I feel bound to do, it is fair to say first that this is an occasion without precedent. The argument that Colonial Governments' stocks have been issued under the auspices of the Bank of England and that when these countries have become independent we have never made any attempt to make special efforts about their future security does not apply here, because in this case, and in this case alone, we virtually created the instrument that produced the investment and, having produced it as an act of this House we are destroying it as an act of this House. We are telling investors who went into a particular stock, that without their being consulted or their having a choice and whether they like it or not, they are now to have three different stocks. In ordinary private life I assure my right hon. Friend the Secretary of State that one would have a call from the Board of Trade, if nothing more, to inquire how he ran a private firm if that happened.
  This, therefore, is an occasion without precedent as far as I know, but I fully accept the Government's assurances. I more than fully accept them, because I cannot see any possibility other than the Government adopting the attitude which they have adopted in this case—that they cannot guarantee the future of these stocks. Although the matter is without precedent, to guarantee the stock would be tantamount not to underwriting it but writing down the stocks in question and to insult grossly the countries concerned and make it more unlikely that they would meet their obligations. It seems to me that the Government have already gone some way to try to face a situation which is without precedent.
  I ought to try to convince both sides of the House on this point. I have
  1144
  taken the trouble to go back to the Report of the Central Africa Conference, 1963. Page 9 of that White Paper contains a paragraph which I think is worth re-reading. It says:
  "It was then that there would emerge the question whether any territory would be saddled with too heavy a debt burden, since it would be seen exactly what responsibilities would fall to it."
  I do not quite understand the English of the last part of that sentence, but perhaps I am not up to understanding White Papers. The paragraph went on:
  "At that stage it would be for consideration between governments what means might be adopted to lighten the burden. The question whether the United Kingdom Government could and should help would have to be considered in the light of their general policies on overseas aid towards countries which showed need for assistance in the development of their economies. It would be in accordance with these policies for the United Kingdom Government to consider the need of a Commonwealth territory, within the limits of their resources and the calls upon them in the light of such territory's economic position as a whole—including of course its debt burden."
  It seems to me, therefore, that Her Majesty's Government went a fairly long way towards accepting that there was a special problem as long as last July.
  Until HANSARD appears tomorrow, it is difficult to recall exactly what the Secretary of State said today. I therefore quote merely from my recollection. He reminded us of this undertaking at that time and he went on to say that the present Foreign Secretary, when considering the question of financial aid for these territories, would be prepared to take into account among other factors the burden of debt which they had assumed. It seems to me that not enough attention has been paid to that. Short of a guarantee it seems to me to show quite clearly to investors, big or little, that the Government are cognisant of a special problem here and will keep an eye on it, that they will try to make sure that these debts are met in the future and will keep the matter in the forefront of their minds when it comes to giving financial aid from this country to individual territories.
  I hope that the Chief Secretary to the Treasury when he winds up the debate will help me and others a little more by spelling out even more exactly

  1145
  what this means. This is not just a matter of City interests being protected but a matter which will affect the future of people investing from now on in the emergent territories. We want London to go on being the centre for private finance for other countries. If it is thought in this country or, even more important, in the United States and elsewhere that people can be deluded into investing in one form of security and then find themselves saddled with another and the impression is created that Her Majesty's Government will not prove helpful in the matter it will be difficult to raise loans again on the London market, because in this as in so many other matters "once bitten, twice shy". It should also be remembered that this is not just a matter for large banks and insurance companies. Although it is not possible to find out the shareholdings exactly, the stocks are held by a large number of individuals and institutions, including pension funds.
  It is important, therefore, that the Government should not let it be thought that they do not share the concern expressed on both sides of the House and in another place about the importance attached to the stability given to these securities by the auspices under which they were raised not being impugned in the future. I hope, therefore, that the Chief Secretary will realise how seriously we regard this and that he will say even more clearly exactly what the Government's attitude is to the problem. I am fairly satisfied, from the excerpts that I have read and what I understand from the Secretary of State, that all is well and that we cannot expect much more, but it would be beneficial to those outside the House if it were made abundantly clear that my interpretation of the moral obligation of Her Majesty's Government is correct.
  7.48 p.m.
  Sir John Barlow: Reference has been made in several quarters this evening to Sir Roy Welensky. Many of those in the House who know him would not wish this occasion to pass without saying that we have looked upon him as a great robust Commonwealth statesman. He has contributed much to that part of Africa in the past and we all hope that he will have a great contribution to make in
  1146
  the future, Men with such a gift of leadership are only too rare nowadays and some of us feel that perhaps in future, after a little change and a rest, he may contribute a great deal to that part of the world to which he has already contributed so much.
  Reference has also been made to the large number of speeches made from this side of the House about the Federal debt or the Rhodesian bonds. There is a very strong feeling in many quarters about the way in which this problem has been dealt with. When I first heard about it I largely agreed with much of the criticism which has been heard from this side of the House today.
  The more I reflect on it, however, the less I agree with the back-bench criticism from this side of the Chamber. So many people suppose that because the Bank of England arranges for the issue of a loan, and because the Government broker may underwrite it and handle it, the loan starts life almost under a halo and that, while not definitely guaranteed by the Government, it is their special child and should be guarded by them. There is no such guarantee for this kind of loan. Many people suppose that because it is a trustee stock it is virtually a Government guaranteed stock, but that is a very different thing indeed.
  Much has been said about its being a Federation loan originally and then, the Federation having been broken up, people being given a proportion of Northern Rhodesia, Southern Rhodesia and Nyasaland loan. If a federation does break up its debts have to be dealt with in some way, and this may be a good way of dealing with them. If we think of a corporation loan in this country made by a town that either increases or diminishes in size, we see a slight similarity between that position and the breaking up of the Federation. I have not gone deeply into this subject, but I can well imagine that, in the past, corporation loans in this country have suffered a fate rather similar to this one. The fact that the value of these loans has diminished to about £70 per cent.—that is a reduction of about 10 points in recent weeks—does not mean that the Government should make that reduction good in any way.

  1147
  The Government have some responsibility here, and cannot shirk it, but the Government should not adopt responsibilities greater than they really have. It is important that confidence should be maintained in the raising of this kind of loan. I suppose that London is the world centre for such loans, but some of these loans have come from New York and, perhaps, from other places, and if the British Government do not treat this situation reasonably investors here and abroad will lose confidence in our overseas loans. That will be deplorable, and none of us wants it. At the same time, I do not think that the Government should take on undue responsibilities for which they have not originally contracted.
  Very few people outside the large institutions could, until the last few days, have said whether this was a Government-guaranteed loan or not. Even many normal investors could not, because they very likely would not have looked at the prospectus to see whether or not it contained those vital words. While the Government have some responsibility, I do not think that they have as much responsibility as many of my hon. Friends would seek to urge upon them, and, while we must keep confidence in this market for future loans, it would be very unwise to go as far as some of my hon. Friends have pressed the Government to go today.
  I do not propose to go into the wider question of the breaking up of the Federation. It is, in some ways, very unfortunate. It started with tremendous possibilities, but things have not worked out as we had hoped. Many of us on this side know the country, from frequent visits. We have friends who have settled there, who have taken all they had to develop the country, and make their lives there. This has been a very sad and difficult time for them, but I hope that in the months and years to come they will be able to reorientate themselves, and continue to develop their ranches and their farms and their life in that country, and help their neighbours to develop likewise.
  7.55 p.m.
  Sir Frank Soskice: We come to the end of a debate which might, to a listener, seem to be centred
  1148
  on the rather dry text of a lengthy Order. It would be utterly unreal so to consider it. This is not just another instance of delegated legislation. This Order, 51 pages in length, marks something that is almost a turning point in the history of Central Africa. It clears out of the way an encumbrance to the further march of three territories—Southern Rhodesia, Northern Rhodesia and Nyasaland—that were encompassed within the framework of the Federation. I want to underline that at the outset, as it has been underlined by many other speakers today.
  "I-told-you-so" speeches are particularly irritating to those who are told, but it would be unrealistic to try to look at this Order without bearing in mind the background, which is that we are at the end of a monumental piece of folly which lies to the discredit of this Government. We are not discussing the principle of federation. Federation can, and, in future, in Africa no doubt will, bring enormous benefits to the federated countries, but we are now witnessing the consequences of the Government's folly in forcing federation on an unwilling African sentiment in the three territories, buttressing it with the African Affairs Board, designed to protect African interests in that very unnatural structure that the Government built up, and then, having buttressed it by that Board, deliberately undermining the Board's authority.
  I thought that my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) very pithily and exactly summarised what the Government had done; they disregarded African opinion at the outset, and then undermined African confidence in the one thing that was inserted in the framework of the Federation to try to conciliate African confidence, by undermining the African Affairs Board. The Secretary of State comes here today, in effect, to ask the House to help him pick up the bits of this firmament that have fallen round him and his colleagues.
  I do not want, because so many speakers have done it so admirably, to speak of the trends of African advance, but I want to join in a word of protest from these benches by saying that it does not really help the prospects for the future to make the kind of speeches, denigrating the new African countries,

  1149
  that some hon. Members opposite have made. Let us have confidence in those countries, extend to them our good will and give them our help, and not use such phrases as "they will sink down into a Kind of tribal fragmentation"—or whatever the phrase is that was used in that context. That does not do the least good. These are countries full of hope and aspiration, which have won independence. They will, no doubt, make mistakes; Ghana has made a big mistake, and I do not suppose that any hon. Member, whatever else he may think, would seek for a moment to try to whitewash that. Other African countries can, and will, make mistakes, but they have a great future before them. In this kind of debate, let us underline the prospects and not just pour gloom on the possibilities.
  Having said that, I want to make a serious complaint against the Secretary of State. He knows perfectly well that we have to support him when he asks us to affirm this Order. He knows that, because he realises perfectly that we and every one in this House—though I am not so sure about another place—must regard it as an over-riding public interest that we should at long last put to sleep this foundering structure of the Federation. That is what we are doing tonight by giving the Secretary of State, in effect, a blank cheque when we affirm this Order. My complaint against him, his colleagues and the Chief Secretary is that they have kept us almost completely in the dark up to this debate as to what they were proposing to do in the Order and the solutions that they were proposing to suggest to the House.
  The Order was laid before Parliament on 10th December, eleven days ago. It sets up an agency—a liquidating agency—which has, so far as I can understand, almost at its discretion, to liquidate an enormous mass of assets. It sets out no terms of guidance, or reference, which are to be followed by that agency. It deals with ex-civil servants. It does not apparently deal with the armed forces, but it does in substance deal with them. One of the grounds of my complaint against the Secretary of State is that when we study this Order it does not in any place deal with the air force which is appurtenant to the Federation. One may say confidently that it certainly does not—
  1150
  unless one is a purist and has a particularly legalistic mind and fastens upon paragraph 10(2) where one sees the words:
  "Movable property of the Federation including currency, notes, coin, bonds, securities, money in any bank and other funds shall, unless otherwise provided by this Order or allocated to the Government of the Territory by agreement made before the dissolution of the Federation, vest on the dissolution in the Liquidating Agency."
  I am puzzled by the expression, "movable property of the Federation". I understand that it is the intention of the Government that the expression "movable property" shall include the aircraft forming part of the Air Force. I should have thought that any ordinary person when he reads the expression "movable property" would think of a grandfather's clock, a dining room table or a perambulator. No doubt an aircraft is movable and it moves very fast.
  The Chief Secretary to the Treasury and Paymaster General (Mr. John Boyd-Carpenter): It is not much use if it does not.
  Sir F. Soskice: I quite agree. I can think of lots of things, such as the human genius and the flight of thought which are useless if they do not move about agitatedly and alight on one place after another. But I would hardly regard this as movable property.
  We discover further, when we examine critically and suspiciously the text of this Order, that the expression "movable property" is to cover Canberra bomber aircraft, Hawker Hunter fighter aircraft and other aircraft, and, I suppose, helicopters as well, which form part of the Air Force of the Federation. It is very easy to call an aeroplane an aeroplane. It would have been a little more candid, and my hon. Friend who made an admirable speech at the outset of this debate accused the Secretary of State of lack of candour. I do not mean in a dishonest sense—everybody knows that the Secretary of State is a man of respectability and integrity—but I charge him with intellectual dishonesty.
  When formulating the Order he could have put us on the alert to the fact that we were considering in its terms the Federation Air Force, and he could

  1151
  have avoided disguising the Air Force and aircraft that go to make it up by such an anodyne expression as "movable property". Most of us come to this debate not thinking that movable property conceals such things as aircraft. But what do we really know, with regard to the arrangements with which we are confronted when we consider the terms of the Order? We know roughly the history of what has taken place. There was the Victoria Falls Conference which reported in July of this year. Two committees were set up under it. I think that they continued their work until September this year. The Second Reading and remaining stages of the Dissolution Bill took place, again in July this year. What on earth has been happening since?
  We know that there has apparently been a working committee dealing with the question of the allocation of the Armed Forces and the Air Force. Has it reported? I should like to know. The Chief Secretary is always a conscientious and courteous Minister, and I have no doubt that he has studied his brief with his usual thoroughness that we all associate with him. Has that committee reported? I can only think that it has. All that we have been able to discover is that apparently an Answer was given by the Secretary of State, dated 21st November last, in answer to a right hon. Friend of mine on this side of the House, and he gave certain dispositions which were intended. I should like to ask on what considerations has the conclusion been arrived at that the Canberra and the Hawker Hunter aircraft are to go to Southern Rhodesia, and that all the rest—transport aircraft—which is only a comparatively small segment of the Air Force, is to go to Northern Rhodesia and, I think, nothing to Nyasaland.
  Surely, on any view, if one has regard to the prospects of collaboration, mutual confidence and a growing "working together" on the part of these Territories, it would seem, at any rate unexplained, without the considerations that must have actuated this decision, a major political blunder to take the bomber and fighter aircraft and to allocate them, which I understand means two-thirds at least of the Air Force, to Southern Rhodesia. We do not know
  1152
  why it was done. The Secretary of State has not told us why it was done. I do not know whether the Chief Secretary will be able to tell us what were the considerations in the minds of Ministers who arrived at this decision.
  All we know is that we are confronted with the alternative of voting against this Order and so deferring bringing to an end the Central African Federation, or voting for it and swallowing hook, line and sinker these somewhat disastrous proposals with regard to the Air Force. I shall not join in an attack on Southern Rhodesia. Southern Rhodesia, as my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) said in opening the debate, must realise that, in due course, it has to move towards representative government. It is a question of time. The pace has enormously accelerated in recent years, but can one really consider anything more likely to aggravate feeling, increase bitterness and retard co-operation between the three territories than for the white minority in Southern Rhodesia to be given these fighter and bomber aircraft which went up to make the Federation?
  Mr. Wall: Is it not a fact that the three territorial Governments concerned have agreed to this allocation? So why worry?
  Sir F. Soskice: I have made such study as I have been able to of this history and I answer the hon. Member's question by saying that I have read the Federal Hansard of 16th October, 1963, which contains a record of a speech by Mr. Barrow, the Minister of Defence, and in the course of that speech he said:
  "…the working Committee reported to the Governments. Its report was unanimous and the Governments concerned have accepted that Report. They have done so publicly."
  I have searched for a record of that public assent. I cannot find it. I do not know whether the hon. Gentleman can enlighten my ignorance about it. All I know is that the next day after that speech, on 17thOctober, 1963, I read that Mr. Kenneth Kaunda held a Press conference at which he said that he entirely dissociated himself from the view that Britain should give fighter and bomber aircraft to Southern Rhodesia.
  Have they agreed or have they not? Why cannot we be told? Why was there

  1153
  not a White Paper to enlighten us on this question as to whether there was any agreement, an agreement between what members of the Government, and whether African opinion was properly represented? No doubt, Southern Rhodesia would have been very ready to agree to such a satisfactory arrangement from its point of view and, no doubt, Southern Rhodesia agreed. Clearly, Mr. Kenneth Kaunda did not agree. I do not know whether he had changed his mind. He may have been party to some agreement before, but, by 17th October, he is reported as being in violent disagreement with this proposal.
  Mr. Ronald Bell:First, the right hon. and learned Gentleman said that Mr. Kaunda dissociated himself from that agreement. That is rather different from being in violent disagreement. Also, is there not an inference that apparently, apart from that dissociation, he would have been involved in a concurrence?
  Sir F. Soskice: I belong to the same profession as the hon. Gentleman, and I know exactly the sort of questions that I can expect from him. I will read out the note which I made, and he will see what I made of it in my speech. This is my note:
  "Mr. Kaunda held a Press Conference. He said Britain should not give fighter and bomber aircraft to Southern Rhodesia but should take over the Federal Air Force herself entirely and allow Northern Rhodesia and Southern Rhodesia each to build up its own Air Force from scratch."
  That seems to me to justify the comment which I made, that he was dissociating himself, and I should have thought that the adjective "violent" was not, in the circumstances, wholly extravagant to describe that expression of opinion.
  I return to the point I was making. Incidentally, I am delighted to do so in the presence of the new Member, the right hon. and learned Member for St. Marylebone (Mr. Hogg), who I am glad to see present. He is not quite so new really; I remember him very well from earlier times. I put it as a ground of serious complaint against the Secretary of State that he has brought us here without information. He could have given us full information quite easily. He could have published a White Paper, and we could have come here intellectually equipped
  1154
  to discuss and pronounce upon the subject in full knowledge of the relevant circumstances. I lay that at the door of the right hon. Gentleman as a matter of serious complaint. He has treated us with discourtesy. He and his colleagues having already, shall I say, botched up the history which we are now considering, it was his duty, at long last, as an act of deathbed repentance, to try to be on his best behaviour when asking us to approve the Order. But he has not been.
  One could go on for a long time discussing the content of the Order. I wish simply to put certain questions to the Chief Secretary, to which, I know, he will address himself. I do not wish to join in on one side or the other of the controversy about whether investors had bargained to have the credit of the British Government behind their investment when investing in Federal redeemable loan stock as listed in the Schedule to the Order. I picture to myself the elderly lady sitting in Bournemouth in a hotel designed for retired persons and asking herself what she has got for the £200 which she invested, say, back in 1956. She has got twice 52·120 per cent. of Southern Rhodesia stock, after what is described in the Order as a period of demonetisation in Southern Rhodesian currency, which may move up or down. She will be surprised and gratified to learn, if she has worked out the sum, that she has twice 37·127 per cent. of Northern Rhodesia stock, again after demonetisation in Northern Rhodesian currency, which may be quite different from Southern Rhodesian currency. Then, at long last her final solace will be to find that she has twice 10·753 per cent. of Nyasaland stock.
  It may all be excellent stock, but whether that unfortunate lady thought that that was what she would get when she put down her £200 three or four years ago, whether she has the dimmest idea of what it means, or, indeed, whether she has the Einstein capacity to work out the arithmetical result of her investment, I really do not know.
  I put this question to the Chief Secretary. Who on earth thought up those fractions, and on what basis were they worked out? Was anybody consulted? I gathered from the hon. Member for Nottingham, South (Mr. W. Clark) that

  1155
  very few people, if anyone, had been consulted. Who was consulted among the bondholders before it was proposed to divide the holdings into these quite extraordinary percentage sub-divisions? Were the three decimal places, which make the thing all the more difficult, really essential? I suppose that there must have been a great deal of consultation and working out. We could have had a White Paper about it so that we could consider the matter and pass some sort of judgment on it. Hon. Members on both sides have differed about whether the Government pledged their credit or not, and I do not say one way or the other, but I put this also to the discredit of the Government as another case in which we are completely uninformed about what took place.
  I make exactly the same criticism with regard to the Liquidating Agency. By reference to Sections 3, 4, 5, 6 and 7, we find that the Liquidating Agency is a quite formidable body. It has the task, put in three lines, of winding up
  "the affairs of the Federation and, subject to the provisions of this Order, disposing of its assets and liabilities".
  Nowhere in the Order can one find the principle upon which it is to do it. It is left to the untramelled judgment of the Liquidating Agency, subject to this, that in Section 6(2,a), it is to apportion and distribute those assets
  "as may be agreed between the Governments of the Territories".
  Has there been any agreement on the basis of distribution? If so, when was it arrived at? All we know is that the Victoria Falls Conference resulted in the setting up of Committees A and B. We know also that they worked throughout the summer. The Secretary of State tells us that they reported about a fortnight ago. What are the terms of their reports? If they reported a fortnight ago, it is wholly misleading, if their report is to be followed, to define the terms of reference of the Liquidating Agency as being
  "to apportion and distribute"
  the assets of the Federation
  "as may be agreed between the Governments of the Territories".
  Either agreement has been worked out, in which case we should have been informed of it and those words are completely inaccurate to describe the situation, or no agreement has yet been worked
  1156
  out and we are being asked by the Secretary of State to give him a blank cheque to do what he likes, in effect, with this Order. There is no agreement, as far as I know, on how the assets are to be distributed, and no agreement with regard to the fractions. At least, we have not been told.
  I say again, therefore—I apologise if I am guilty of tautology—that we are brought here in almost complete ignorance of what has gone on behind the scenes, and we are called upon to vote for the Order, because, as the right hon. Gentleman knows, if we do not vote for it we prolong the existence of the Federation.
  I turn now to one other subject. I have seen a note of the meeting which took place, I think, on 20th November this year, between the association which represents the civil servants of the Federation and the Duke of Devonshire, the Minister of State. My hon. Friend the Member for Dundee, East read a passage from those minutes which shows that, so far as that association is concerned, it has had next to no opportunity of putting forward its further views or supplementing its case by questions and such pressure as can be adduced in argument to either Committee A or Committee B. The civil servants' association complains of many of the decisions taken, and also that a number of matters are left open and undecided. Attention was called to them by my hon. Friend the Member for Dundee, East. May I ask for answers on behalf of the civil servants? When I say that, I do not mean that I am instructed to speak for them, but I speak out of sympathy for them because I assume that they would, naturally, like to know the answers.
  First, what constitutes hardship? We have had no answer to that so far. These people are left wondering. What is the hardship machinery? All that we can find is paragraph 38 of the Second Schedule, which tells us nothing. It does not say who is to decide whether there is hardship in the case of any individual civil servant, what is to be regarded as hardship, which persons are to decide it and how the matter is to be brought before them. The next question is: in what currency is their pension to be paid? That was referred to by my hon. Friend the Member for

  1157
  Dundee, East and I should like an answer to it, although I speak simply in order to pick up the threads of the questioning to which we should like to subject the Government.
  What puzzles me and what I should like the Chief Secretary to enlighten us about is this. If one turns to section 26 in order to find out the provisions with regard to the appointment of the trustees for the pension fund and in whom the pension is to vest one finds what seems to be a most extraordinary position, and I hope that the Chief Secretary will give us some information about it. The original trustees are to be appointed by the Governments of the United Kingdom, the Federation, Southern Rhodesia, Northern Rhodesia and Nyasaland jointly. Under paragraph 5 of the same section,
  "The Governments of the Territories may at any time jointly appoint new trustees of the Fund."
  If the British Government are to be in at the beginning and have the responsibility of appointing the first trustees, why should they not remain under that responsibility? Why should they wash their hands of it and become wholly divorced from the situation?
  My hon. Friend the Member for Dundee, East read out the rather moving and touching remarks made by the present Foreign Secretary when he was speaking about the importance of this human element with regard to the civil service content with which the Order had to deal and he said that he and his colleagues would be judged or condemned by the manner with which they disposed of the human problem. I call that to the attention of the Chief Secretary.
  I wish to ask the Chief Secretary why in paragraph 27 there is selected for the purpose of a kind of disciplinary authority which is to decide when pensions are to be paid, discontinued, suspended or forfeited under the provisions of Section 30(1) of the Order, the Chief Pensions Officer of Southern Rhodesia?
  Section 27 reads:
  "There is hereby established a Central African Pension Agency (hereinafter referred to as 'the Pension Agency') which shall consist of the officer for the time being performing the functions of Pensions Officer of the Government of Southern Rhodesia".
  1158
  Here we have some kind of disciplinary agency which is to have jurisdiction under Section 30 to award or to decide on forfeitures of pension. I should like to know the thinking behind the decision to embody in Section 27 a requirement that
  "the officer for the time being performing the functions of Pensions Officer of the Government of Southern Rhodesia"
  and not of any other territory should be the officer suitable for the purpose of exercising that apparently disciplinary jurisdiction. The Chief Secretary will know without my reminding him that there can be a particularly unpleasant and sinister connotation in that arrangement, and I should like him to deal with it
  I have asked a number of questions and I notice that there has been a considerable amount of colloquy between the Official Box and the Chief Secretary. If he would like me to go on talking while he nourishes himself with the necessary information, I will do so, but it seems to me from the whispering which has been going on and the emphasis with which it has been pumped into his ear that he must be ready to answer now. I will accordingly resume my seat in the knowledge that I will receive the help which the House always gets from the Chief Secretary.
  8.27 p.m.
  The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter):I am obliged to the right hon. and learned Member for Newport (Sir F. Soskice) for his concluding observations. He asked a number of detailed questions on the Order. As I knew that he wanted answers to them, I have done my best to obtain them for him.
  May I begin by agreeing with the first half of the right hon. and learned Member's opening sentence? I agree with him entirely that the Order is a great deal more than a lengthy collection of technical provisions. As he said, it marks a turning point in history. However, I differ from him—and I do not want to spend time reviving old controversies, but I must challenge what he said—when he referred to the initiation of the Federation as a Conservative mistake. I do not so see it. I see it as a daring experiment in trying to bring about in

  1159
  Central Africa a new political structure embodying many races and giving very considerable opportunities for economic advance.
  Although, tonight, we are dealing with its winding up, which is for me a very sad occasion, the fact remains that remarkable economic progress was made in the three territories during the Federation's lifetime which in some measure, I think, gave justification to the high hopes of those who were concerned with founding it. Whether one says, "I told you so" or not, the failure of at any rate some of those hopes gives no pleasure to any hon. Member.
  My duty, as I see it, in intervening in this debate is to deal predominantly with the financial issues which have occupied a good deal of the House's time today. I begin by referring to a number of the points raised by the right hon. and learned Member for Newport. He spent a certain amount of time, as did one or two of his hon. Friends, in discussing the disposal of the armed forces of the Federation. He made a remark which, I hope, will be noted in those columns of the public Press that note these things—that there is no difficulty in calling an aeroplane an aeroplane. There is, however, difficulty when the Order is not dealing with aeroplanes, because the division of the armed forces of the Federation was dealt with by an agreement between the territories made at the end of September.
  The Liquidating Agency, on the other hand, is concerned with the distribution of assets upon which agreement was not reached before dissolution. That also answers the complaint of one or two hon. Members against my right hon. Friend that in his opening speech he did not refer to the break-up and distribution of the Federal armed forces. He did not do so for the very good reason that they are not dealt with in the Order. They were dealt with—I hope that having said that, I am not going straight out of order, but I hope that this will be helpful to the House—in a conference at the end of September and a public communiqué, of which I have a copy, was issued to the Press in Salisbury on 11th October dealing in some detail with the matter. I need only add that this resulted from
  1160
  an agreement between the territorial Governments.
  Although it is true, as the right hon. and learned Gentleman and one other hon. Member said, that Mr. Kaunda subsequently expressed disquiet about certain aspects of these arrangements, that does not detract from the fact that this distribution is based upon an agreement between the Governments concerned. I understand that it is not dealt with in tonight's Order.
  Mr. Mendelson:Would it not be the duty of the Secretary of State, and now of the Chief Secretary, in replying, to give us information on the attitude of Her Majesty's Government to the point of view expressed by Mr. Kaunda?
  Mr. Boyd-Carpenter: No, I do not think so. This is not dealt with in the Order. It results from an agreement made some months ago and I do not think that I am called upon to comment upon the observations of a distinguished African statesman.
  Mr. G. M. Thomson: Does the right hon. Gentleman recall that the former First Secretary, in the debate on Second Reading, gave his right hon. Friend the Member for Thirsk and Malton (Mr. Turton) assurances that all the major questions of sharing the assets of the Federation would be brought before the House for affirmative procedure by the House? We certainly took that assurance to mean that we would be informed about the arrangements for the sharing out of the defence provisions and that we would have an opportunity to discuss them. Is this not a clear breach of an undertaking given by the former First Secretary?
  Mr. Boyd-Carpenter:I do not think so. This distribution resulted, I understand, from an agreement between the Governments concerned. I cannot see that there is anything inconsistent with what my right hon. Friend said in what has happened. I do not take the point against the right hon. and learned Member for Newport and his hon. Friends that he did not have this particularly in mind, because I sympathise with him in the difficulty in which, to some extent, we are all placed owing to the shortage of time which we have to deal with this matter.

  1161
  I should like, however, to say a word about that and the reason for it. To go back to the Victoria Falls Conference, the target which was set was to complete the dissolution of the Federation by the end of this year. If that target is to be achieved, it is necessary for the House to pass the Order before we adjourn for the Christmas Recess. It is important that that target should be maintained.
  Whatever views one takes, whether one takes the view of the right hon. and learned Gentleman that the Federation should never have been created or the view, held by many of my right hon. and hon. Friends and myself, that this was a fine experiment well worth making, one thing upon which, I should have thought, we could all agree was that having decided on dissolution, no good purpose is served by dragging out the process. Inevitably, new policies and developments must be to some extent inhibited while one Government is coming to the end of its days and new ones have not yet taken over.
  It must, surely, be in the interests of all three territories of the present Federation that the decision having been taken, we should not allow the complications of our own parliamentary timetable further to delay it and, in particular, to delay it beyond the target. I say for myself and, I am sure, for my right hon. Friend that we very much regret causing inconvenience to the House or to the right hon. and learned Gentleman. We like—Iam sure that it is the right way to treat the House—to make sure that the facts and details are as fully as possible before the House when considering these matters. I add my regrets to those of my right hon. Friend, but the really inescapable problems of the timetable and the true interests of the territories which we are all trying to serve tonight are best met by seeking to adhere to the target date.
  Mr. J. Griffiths: The right hon. Gentleman will appreciate that the question of distribution of the armed forces has caused concern not only in the territories, but elsewhere in Africa. Was there any consultation with African countries of the Commonwealth, or with other Commonwealth countries, before this was decided?
  Mr. Boyd-Carpenter: This distribution was not effected by Her Majesty's Government in the United Kingdom but by agreement of the territories concerned. That is the basis of it. I think that the right hon. Gentleman is really asking us to interfere in a matter between the territories.
  Mr. G. M. Thomson:The right hon. Gentleman is quite wrong about this. The division of the armed forces was an agreement between Her Majesty's Government in the United Kingdom and the Government of Southern Rhodesia with, it is said, the associated agreement of the other territories. Her Majesty's Government are directly involved in this. May we now have an answer to my question as to whether, in the normal way of Commonwealth consultations about changes in defence arrangements, there was prior consultation with Commonwealth countries on this distribution, particularly with those in Africa?
  Mr. Boyd-Carpenter:The hon. Gentleman is getting the matter on the wrong basis. This was an agreement between the territories concerned and it lies outside the Order, which deals with the inheritance of the assets of the Federation. I think that this House will accept that the views of those concerned with the inheritance of the assets of the Federation are the ones by which we should be guided. This really is not the kind of change in defence arrangements about which Commonwealth consultations generally take place.
  The right hon. and learned Gentleman asked a number of questions about public service pensioners. He asked whether the Federal Public Service Asosciation had had opportunities to put its point of view. I understand that it did, and that it put it in some detail to Committee A during discussions in Salisbury.
  The right hon. and learned Gentleman also asked why the Pension Agency is in Salisbury and suggested that it is a disciplinary body. I understand that it is not a disciplinary body but simply a paying agency which, for convenience, is placed in the town which, after all, was the Federal capital.
  The right hon. and learned Gentleman asked many questions about the Liquidating Agency which appears in the

  1163
  Order. I think that it may help if I explain that the Agency is the servant of the three successor Governments. It consists, for ordinary working purposes, of the Permanent Secretaries of the three Treasuries, acting by agreement on behalf of their Governments. I hope that the right hon. and learned Gentleman is now reassured about it.
  I want to come now to one or two broader aspects. I want, first, to take issue with my hon. and gallant Friend the Member for Lewes (Sir T. Beamish). This dissolution was not the result of a policy decision by Her Majesty's Government. It is, in truth and in fact, the result of a decision by two of the territories that they wished to leave the Federation. Legally, of course, United Kingdom legislation is necessary, but the substantive decision was taken in Africa. Our concern throughout these anxious months has been to secure that the decision takes effect in an orderly fashion, with a proper transitional period, and that in the process neither the economies of the territories nor the interests of individuals are damaged.
  I think that hon. Members on both sides of the House would wish me to pay tribute in this respect to the untiring efforts of my right hon. Friend the Foreign Secretary. The way in which he handled the apparently insoluble problems involved in the dissolution of the Federation made a major contribution to this incredibly difficult operation's being conducted as successfully and as smoothly as it looks like being. During these months we have concentrated our efforts on trying to build the foundations of inter-territorial co-operation. The co-operation between the two Rhodesias on the great Kariba scheme, co-operation on the railways and co-operation of all three territories in an air corporation are all fruits of this hard work. So are the steps already taken for the orderly setting up of central banks and the resettlement of the Federal public service and the handing of the Federal public debt.
  There again, I think that I would carry the House with me in paying tribute to two gentlemen who have taken part in these discussions. Sir George Curtis, the Chairman of Committee A, whose infinite patience in sorting out these
  1164
  complicated issues played a great part in bringing them to solution, and Mr. Norman Ritchie, a London accountant who went out to preside over one of the very difficult sub-committees.
  The right hon. and learned Gentleman asked on what principle the liabilities were distributed. The principle applied has been that the liabilities should be distributed in the same way as the assets. That is to say, where there are specific physical assets in a territory which on dissolution go to that territory, then the liability incurred in respect of the creation of those assets is attached to that territory. Where we are concerned not with specific assets, the same proportion in which the investment generally has taken place has been applied in the distribution of the liabilities. It is that which leads to the admittedly rather complicated figures to two places of decimals to which the right hon. and learned Gentleman very amusingly referred. I think that the House will think that it is a fair principle that liabilities should follow assets.
  I now come to the Federal public servants. As the hon. Member for Dundee, East said, there are about 35,000, predominantly Asian and African, and I am glad to say that it appears to be clear that at least 34,000 of them are likely to enter the service of the territories. The terms of transition have been devised to cover three categories—those who enter the service of the territories, those for whom, and I am glad to say that they seem likely to be very few, places in the service of the territories cannot be found, and those for whom places can be found, but who do not wish to avail themselves of them.
  The terms which have been worked out—and the Federal Public Service Association has been heard on this matter—are fair and reasonable. However, the right hon. and learned Gentleman and other hon. Members, including some of my hon. Friends, referred to hard cases and to hardship cases. I can tell the House what the position in respect of them now is. Discussions among the Governments are going on and, if agreement can be reached, we think that it would be appropriate to set up a Commissioner to consider individual cases of hardship

  1165
  and to advise on the making of lump sum payments which could be financed out of the dissolution costs. Whether this is attainable depends, of course, on the agreement of the other Governments, but in our view it would be a reasonable method of handling the matter.
  I should add that the pension entitlements of retired public servants have been improved by a concession by which their pensions will be calculated on their last year of service and not, as is normal, on the last three years. That is perhaps more significant than it sounds on first hearing, because very recently there has been a substantial increase in the pay of Federal public servants and that increase will now be reflected in the pension arrangements which are secured under the scheme. Subject to the hard cases which we are discussing, I do not think that that is an unreasonable settlement.
  The hon. Member for Dundee, East (Mr. G. M. Thomson) asked about the University at Salisbury. It is a very interesting and impressive university. Its future must depend on whether or not it is possible to get inter-territorial use for it. To get the other territories concerned in sending students there is plainly a matter for negotiation between the three territorial Governments when they are in position.
  I come now to the issue on which a great part of the debate has turned, that of Federal stock. I wholly share the view of my hon. Friend the Member for Nottingham, South (Mr. W. Clark) that this matter, like all our dealings, should be conducted on the basis of the highest financial integrity. I am sure that it is in our interests to maintain that, and the House will never hear a Treasury Minister utter any views to the contrary. It is essential to our own interests as the greatest financial centre in the world, and it is essential, too, as several hon. Members have said, from the point of view of future financing of Commonwealth development.
  I hope to show that what is proposed is consistent, and consistent only, with the highest financial integrity. I take great exception to any suggestion to the contrary, and I fully share the view of my hon. Friends of the crucial importance of maintaining, sustaining, and improving confidence in the London
  1166
  market and in the financial dealings of Her Majesty's Government.
  My hon. Friend the Member for Windsor (Sir C. Mott-Radclyffe), I hope light-heartedly, referred to the possibility that if my right hon. Friend the Secretary of State for the Colonies and I were in the commercial sphere we might find ourselves in an open prison. I am obliged to my hon. Friend for small mercies. I understand from my right hon. Friend the Home Secretary that open prisons are places to which misdemeanants of the highest character are allotted.
  I should like to go into the issue a little more fully. I think that it is important to get clear the position of these stocks issued either by the territories before federation, or by the Federation itself during its life. In a number of speeches a good deal of emphasis was laid on the fact that some of the stocks were raised in London, and that in many cases the help of the Government broker, of the Bank of England, or of the Crown Agent for the Colonies, was invoked. That is the general basis on which Colonial stocks generally are raised, and have been raised, and it is no doubt very helpful to the Commonwealth territories concerned to have skilled technical assistance in the placing of their loans.
  Though it has been suggested outside, I was glad to note that no hon. Member today suggested that that practice or procedure of itself constituted, in the strict sense, a British Government guarantee. Indeed, my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) made it clear that it did nothing of the sort. I want to get this absolutely clear by quoting from the prospectus of the 6 per cent. Stock, 1978–1981. Paragraph 6 says:
  "The stock and interest thereon are charged upon and payable out of the general revenue and assets of the Federation of Rhodesia and Nyasaland, which alone are liable in respect of the Stock and the interest thereon. The Consolidated Fund of the United Kingdom and the Commissioners of Her Majesty's Treasury are not directly or indirectly liable or responsible for the payment of the Stock or of the interest thereon, or for any matter relating thereto."
  Therefore, those outside who have alleged that this procedure involves some form of British Government guarantee, plainly cannot have had their attention

  1167
  drawn to the blunt and explicit terms of the prospectus. I hope that I do not need to say to the House that this necessary exposition of the legal position does not amount to any attempt to disinterest ourselves in the future of the stock or those who have invested in it. I shall say something more about that before I finish. I think it fair to us, in view of the allegations made outside, to get that aspect of the matter clearly on the record.
  There is no legal guarantee, but the argument has been adduced that the dissolution by this Order of the Federation gives the stockholders a less good security than they otherwise would have had and that therefore Her Majesty's Government should in one way or another come to their assistance. The argument is that the three territories are not of themselves separately as good a security as was the Federation. That, perhaps, is arguable, although I do not want—I do not think anyone wants—to say anything in this House which could endanger in any way the credit standing of any of the territories. It is probably very doubtfully true in respect of the very prosperous territories of Northern and Southern Rhodesia. Nyasaland is a special case if taken by itself, but, as I shall make clear, Her Majesty's Government recognise special responsibility for helping that territory.
  My right hon. Friend the Secretary of State said in his speech that on this argument of a less good security it was not fair to make a comparison between the Federation as it was and the territories as they will be, but that the fair comparison in assessing the responsibility of Her Majesty's Government was between the Federation as it would be if we were not putting this Order forward and the territories as they will be if we do. Although one of my hon. Friends indicated, in his habitually vigorous way, dissent from that proposition, I think that there is a great deal to be said for it. The House has only to envisage what would be the position of the Federation if we were not taking this action, the Federation two of whose members have declared their desire to depart from it.
  It is, of course, the fact that constitutional changes can be thought, rightly
  1168
  or wrongly—I express no opinion on that—to cause stockholders to feel that the value of their security has changed. There is nothing peculiar to the Federation of Rhodesia and Nyasaland in that fact. Although I do not want to labour the point, that is reflected by the prices at which other colonial stocks, issued by countries which have recently become self-governing or are proceeding to self-government, now stand.
  The point has been made forcibly in this House today that this case is distinguishable from those because in the other cases it is a transfer of liability from a Government controlled from Whitehall to an independent Government but still the same Government in the strict sense, and that here the process is admittedly more complicated in that we are transferring the liability from one Government to three.
  That is a perfectly fair point to make and I accept from my hon. Friends that it introduces an element of distinction. The question is: how big an element of distinction does it introduce? The general principle is that those who invest in colonial stocks—and, of course, get from that investment a bigger return on their money than if they invested in the stocks of the United Kingdom Government—contemplate when they do so the possibility of constitutional change which may improve or may diminish the value of their security. That is inherent in the type of stock.
  The question here is whether the additional factor of three separate successor Governments involves a difference, not merely of degree—I think it does—but of kind and principle between that transition and the other transitions which are taking place throughout the Commonwealth today. It is fair to say, because reference has been made to the stock market, that the stock market does not appear to think that that distinction is very profound. Indeed, the leading Federal stock today stands at a yield slightly lower than that of the comparable stocks of several East African Governments. This is significant. I accept that it involves for the shareholder, particularly the small shareholder, very particular detailed problems and that, therefore, that should be a matter of very special concern to us.

  1169
  I will deal in passing with the example which my hon. Friend the Member for Nottingham, South quoted from the Newfoundland case. As I see it, that case cuts against his argument rather than in favour of it. It is true that in the 1930s we gave a guarantee of Newfoundland Government stock, but the circumstances, of that guarantee were that we were taking over the Government of Newfoundland. We were, in fact, assuming responsibility, very necessarily in the light of the situation then developing, for the affairs of that country. In those circumstances, as we were taking over the finances of Newfoundland, it was reasonable that, as stockholders would be exposed to the results of our administration, good or bad, we should guarantee the stock. It does not seem to me to be an example where, as here, we are passing from one Government to three.
  The practical point that troubles people is the future prospects of these territories. There, I think that we can help. We have come to an understanding with Northern Rhodesia and Southern Rhodesia in identical terms and, as this has not so far been published in this country, as I understand, I should like to take this opportunity of giving it to the House. We have stated this:
  "Her Majesty's Government will be ready to enter into discussions as soon as may be conveniently possible with the specific object of establishing, in the light of the nature and extent of the financial burdens assumed by"—
  then either "Southern Rhodesia" or "Northern Rhodesia" in accordance with which text one is using—
  "and the resources available to meet them, the reasonable needs of the territory and the means whereby the burdens might be lightened, including British aid where necessary in accordance with Mr. Butler's undertaking in paragraph 27 of the Victoria Falls Report."
  I should like to add a word about Nyasaland which, as I said a moment or two ago, is in a special position. We had, previously to what I have said about our arrangement with the Rhodesias, reached a similar understanding with Nyasaland. Discussions have, in fact, been in train for some time about this latter territory's financial position. These discussions have not yet been concluded, but I can tell the House that we have in mind the provision of a substantial amount of aid to Nyasaland
  1170
  for some years to come, both in balancing her budget as well as for capital development.
  I would like in this connection to pay a short tribute to the manner in which the Nyasaland Government are assuming their responsibilities. I had the pleasure of seeing Dr. Banda in London a few weeks ago, and I was very much impressed by his appreciation of the need of his country to attract capital for investment for development and of the kind of conditions which would help to that effect. I was glad, as I am sure the House was, to see the extremely responsible speech which he made to his own people on his return to that country.
  Mr. G. M. Thomson:I thank the Chief Secretary for giving the House this very important information. I welcome the announcement, in particular, about Nyasaland. However, I must ask him whether he is aware that there will be concern on this side of the House about financial arrangements in regard to Southern Rhodesia that are not associated with an attempt to persuade the Southern Rhodesians to have a more liberal Constitution. Would he therefore undertake that any arrangements that are being discussed with the Southern Rhodesians are fully announced to the House so that we have an opportunity to discuss the implications?
  Mr. Boyd-Carpenter: I am not sure that in this context the concept of aid with strings is a particularly attractive one. What I am dealing with concerns, in terms of the break-up of the Federation and all the financial consequences, the attitude which we propose to adopt towards the constituent territories. It would be wrong for me to allow myself to be led by the hon. Member into quite different issues which do not arise on this Order and which—as the hon. Member may himself feel, on reflection—might well be far from serving the ends that he has in mind.
  On the question of the stock, a good deal of alarm was caused by a circular which was sent to stockholders by the Federal Ministry of Finance in Salisbury last month. It was sent to individual stockholders. Apparently it was not published, and it was certainly not con-

  1171
  veyed to us. It contains one statement, which has been quoted. On page 2, in paragraph 5, it says that
  "the representatives of the British Government have stated that their Government will not join in any action designed to preserve the value of the investment."
  I do not know for what reason or purpose that statement has been made. It is not true—and its lack of truth is demonstrated not merely by words, but by deeds, by the great care which this Government have taken, and by the hard work they have done, through their officers, during many weary weeks, to secure a proper settlement of the issue of the debt and of the stockholders' position. I take this opportunity of disavowing as firmly as I can the truth of that statement.
  I want to add a word about our attitude. I see no reason to doubt the intention and determination of the territories—if only in their own interests—to honour their obligations to the stockholders. It will clearly be of the utmost importance to each of the territories to build up its own credit standing. The physical assets on which the credit of the Federation has rested—the mines, the farms, and so on—will still be there.
  With this in mind, I would not feel justified in giving any sort of assurance which might appear to single out the Central African Governments, and to imply that here is any reason for supposing that they are lacking in the will or the capacity to meet the debt obligations which they have now accepted, or that their credit needs some special measure of reinforcement by Her Majesty's Government. The territorial Governments might understandably resent being singled out as the target for any such statement, and the stockholders might, on reflection, feel that a Government statement of this kind was not really in their own best interests.
  Her Majesty's Government are, however, fully mindful of the interests of British overseas investors generally. No Department, naturally, is more conscious of the importance of these investments than the Treasury, which has to keep a constant watch on all matters affecting our balance of payments, to which the holdings of the stocks are relevant.
  1172
  As practical evidence of the Government's concern, we sent out a senior Treasury official to take part, over a period of several months, in discussions in Salisbury on arrangements for the dissolution of the Federation. One of his main objects was to do his best, together with the representatives of the other Governments concerned, to see that a clear understanding was reached over the apportionment of future responsibility for the Federal Public Debt.
  The British Government are always concerned to see that British overseas investors throughout the world receive fair treatment, and it is our policy, should the need arise, to support with our best endeavours British investors' legitimate claims. Our ability to do so should not be under-rated.
  Moreover, as was stated at the Victoria Falls Conference—the Report of which was published as a White Paper, Cmnd. 2093—the basis of apportionment of the Federal debt does not prejudge consideration at a later stage of the capacity of the three territories to carry the burden. As I have said, understandings have been reached with the Territorial Governments to enter into discussion about the economic position of each of them as a whole, including, of course, its debt burden.
  I think that in those circumstances there may well be some reassurance to those who have been, justifiably and understandably—Imake no complaint of it—worried by a change of this, in some ways, unprecedented nature. In passing from that I would add one final word. As I said at the beginning, this is a sad occasion, a formal burial of high hopes nourished ten years ago. But yet, as I have tried to say, the Federation has served some considerable purpose. It has seen great economic progress. It has seen the average income of its population, European and African, rise, that of the African from a very low level and, by proportion, by a higher amount than the European. It has seen the national income of the territories rise. It has seen great progress.
  We have tried to the best of our endeavour to secure that the necessary changes took place with the minimum interference to that process of development. As a result the three territories go forward to being separate territories,

  1173
  not badly equipped for their task, and conscious, as I hope they are, of the warm and continuing friendship of the Government and people of this country. We wish them well.
  Question put and agreed to.
  Resolved,
  That the Federation of Rhodesia and Nyasaland (Dissolution) Order in Council 1963, a draft of which was laid before this House on 10th December, be approved.

  BUILDING SOCIETIES (SPECIAL ADVANCES)
  9.3 p.m.
  The Economic Secretary to the Treasury (Mr. Maurice Macmillan): I beg to move,
  That the Building Societies (Special Advances) Order 1963, a draft of which was laid before this House on 19th November, be approved.
  The Building Societies Order to which this Motion refers does nothing except alter the sum mentioned in Section 1 of the Building Societies Act, 1960, from £5,000 to £7,000. When the Building Societies Act was introduced, its most important object was, as the then Chancellor of the Exchequer put it at that time,
  "to ensure that building societies concentrate their main efforts on their traditional and proper business, which is advancing money on the security of owner-occupied property."—[Official Report, 20th June, 1960; Vol. 625, c. 35.]
  The legal definition of "owner-occupier" presented some difficulty, and so this objective was achieved, at least in part, by the stipulation that the advances which a building society made to companies, as distinct from individuals, together with advances which it made of amounts over £5,000, should be classed together as "special advances." The special advances were restricted to a minimum in any one year, of 10 per cent. of the society's total advances. That is to say, advances to companies plus advances for the sale to individuals of houses involving loans of over £5,000 were lumped together for the purposes of this restriction.
  At the time it was accepted that £5,000 represented the maximum advance which would normally be
  1174
  required by the owner-occupier for whom the Bill was intended. But provision was made for varying this figure at a later date should this be necessary, and it is this provision which is the basis of the Order before the House.
  After about three years' experience of the working of the 1960 Act, the suggestion was made by the building societies that the figure of £5,000 should be increased. There are certain valid grounds for this contention. Since 1960, there has been some increase in demand for the more expensive type of house and, in general, house prices have risen in that period. One of the main drawbacks of the £5,000 limit as it operates now is not so much that building societies are finding the ceiling of 10 per cent. of total advances a serious limitation, but rather that they tend to regard advances of over £5,000 as in some way undesirable. This is because we have always regarded it as useful to have a "special advance" category prescribed by law. This draws a line in the eyes of the public and the building society movement between what is and what is not the proper business of building societies.
  Mr. G. R. Mitchison: Would the hon. Gentleman refer me to the part of the Act which lays down a ceiling, as he calls it, of £5,000?
  Mr. Macmillan:If the hon. and learned Gentleman is referring to the limit of 10 per cent. of total advances, the part to which he can refer is Section 1(1,b) of the 1960 Act and Section 21 (1,b) of the 1962 Act. The provision for raising this figure is in the Building Societies Act, 1960, Section 1(8) and the Building Societies Act, 1962, Section 21(4). That covers both the original figure and the provision for raising it.
  Advances for the more expensive houses have been felt to be rather at one with the advances made to companies and for more speculative purposes. This has somewhat inhibited the building societies from using their special advances to the full within the 10 per cent. limit, which they would otherwise be able to do. Taking these various factors into account and granted, as I think the House will accept, that it is not desirable to make very frequent changes in this limit, it was decided that once a change was made it

  1175
  would be appropriate to raise the figure from £5,000 to £7,000.
  This does not imply any alteration in the overall limitation of special advances to 10 per cent. of building societies' total advances. The House need not fear that by raising this figure we shall divert funds from would-be purchasers of smaller houses to those purchasing the more expensive types. The building societies are, in fact, not short of funds. Many of them have already got room within their ration of special advances to make money available for the purchase of more expensive houses. For the reasons I have touched upon, and since they are not being used to the full, I do not think that it is right to force the societies to use their special advance allowance on owner-occupied property in this way.
  On a purely factual point, the raising of the limit of special advances to £7,000 will in no way affect the ability of building societies to lend to housing societies which are receiving finance from the Housing Corporation set up under the new Housing Bill. Advances to housing societies are not to count as special advances, and a separate ceiling of 15 per cent. of a building society's total advances is being instituted for them. I believe, therefore, that the Order fulfils the intentions of the 1960 Act and I commend it to hon. Members accordingly.
  9.15 p.m.
  Mr. G. R. Mitchison: I am far from convinced that the Order is necessary, or, indeed, advisable. We had better get clear, first, what the £5,000, to be changed to £7,000, really is. It is not a ceiling beyond which the building societies may not go. It simply relates to what are called—and I refer to the 1962 Act—special advances.
  These special advances were introduced and certain provisions were made about them in the1960 Act as a result of the Jasper scandal and the difficulties into which the State Building Society got itself. When they were introduced they contained, as they still contain, provisions with which we are not directly concerned about advances to bodies corporate, but they also contained a provision that an advance of a sum exceeding £5,000 should be a special advance. That provision is now in Sec-
  1176
  tion 21 of the 1962 Act, and that Section is entirely occupied with defining a special advance.
  Section 22 gives the penal provisions, because there is a penalty attached, relating to these special advances. There is no prohibition on making advances beyond £7,000. As far as I can see, there is no prohibition on making special advances to an amount exceeding 10 per cent. of the society's funds, and there is a passage in Section 22 which clearly contemplates special advances amounting to 25 per cent. What happens is that when the special advances amount to more than 10 per cent. of the total advances, the making of further special advances is restricted, and beyond 25 per cent. it is prohibited. These are the penal sanctions in connection with which special advances were defined.
  It is, therefore, quite incorrect to say that the building societies are at present forbidden to make advances of over £5,000 or to make special advances amounting to more than 10 per cent. of their advances in a year. But it is true to say that if these special advances exceed 10 per cent. provision is made in the Bill for bringing down the proportion during the course of the years to 10 per cent., and when they get as high as 25 per cent. the society must stop making special advances. This, too, is in the Section.
  Mr. Graham Page: The hon. and learned Member has missed one point which he should have brought out in the figures. It is that whenever the special advances have reached 10 per cent. the society is restricted to 2½ per cent. in special advances for the next 12 months.
  Mr. Mitchison: The hon. Member will find from HANSARD tomorrow that I did not miss it. I did not mention 2½ per cent., but I said that the special advances were restricted to 10 per cent. and that they were gradually brought back to 10 per cent., and that beyond 25 percent. they were prohibited. The Act is clear, although, with respect, I do not entirely agree with the Economic Secretary's exposition of it. Be that as it may, there is no disputing that that is the effect of the Act.
  Turning from that to what happened in this case, when the figure of £5,000 was introduced in 1960 it was, as I

  1177
  think the hon. Gentleman explained, the figure suggested by the building societies themselves. There is no doubt about that; it was stated in the Standing Committee at the time, and the Government agreed to it. The question is: is that now the right figure? The hon. Gentleman relies, in effect, on more demand for expensive houses, increased cost of houses, and so on. He admitted that the primary business of the building societies is not to lend on more expensive houses but to lend what is required on less expensive houses. That has traditionally been their business.
  I do not know whether or not they have been inhibited; the only thing we have is the Report of the Registrar of Friendly Societies relating to 53 large societies which have between them about 5/6ths of the advances of the whole building society movement. Their special advances were only 1·8 per cent. of the total in 1962. Two of them made no special advances at all, 20 made special advances representing 1 per cent. or less of their totals, whilst only two advanced more than 6·2 per cent. of their totals in this way. The Chief Registrar points out, in relation not only to these societies, but to all the societies concerned, that out of the total amount they could have used in making special advances, only about 20 per cent. was used for this purpose.
  It is an extraordinary proposition to be told now that they were inhibited from using the remaining four-fifths of what they could have used—I am taking the 10 per cent. as a kind of limit for this purpose, and I say no more—and are not to be inhibited if the amount is increased. I do not understand that argument in the least, and I do not appreciate the need for increasing the amount unless there is to be some pressure of some sort on the building society, or the building societies themselves, to go beyond their traditional business and embark on something quite different.
  There is some support for this. The price of houses has increased. The Building Societies' Gazette, in a special autumn issue, described the rise in prices all over the country under the heading, "House Prices Rise Again." The figures given, for instance, by the Co-operative Permanent Society indicated that prices for existing houses have risen by over
  1178
  50 per cent. in the London region in the last four and a half years, and by an average of only 25 per cent. in the North of England. These very sharp rises in four and a half years are not rises in building costs; they are due to the increased price of land, to the scarcity of houses in the London area, and to the complete failure of the Government to meet the London housing problem—a problem that London shares with other large towns.
  Therefore, if that is the practical reason for this Order, all I can say to the hon. Gentleman is that it is very largely, if not entirely, the Government's fault that this position exists. At any rate, they have done nothing about it. However, assuming that it does exist, what is the purpose behind this increase? As I see it, it cannot be any purpose to enable the societies to fulfil their ordinary functions. We see to what extent the increase was not needed in the last year, and that is the relevant year for this purpose.
  Again, I refer to the Building Societies' Gazette, in which there is a remarkable article in the issue of December, 1963, written by an anonymous author who might perhaps find more agreement with his arguments on the opposite side of the Chamber than he is likely to find on this. The article is headed, "Modernising building societies". That, of course, is the election cry. We all remember the Prime Minister's exhortation to the assembled Conservatives that everything they do in the course of the next few months must be directed to winning the election. They are to tell us that the right body to modernise the country is the Conservative Party; whether or not the country will believe that, is another matter.
  The article states that building societies
  "…most respond to the greater freedom in respect of special advances. It is no secret that although the Building Societies Association had put to the Registrar the need to raise the level to £10,000"—
  not the £7,000 we now have—
  "very few societies were deeply interested."
  The author then refers to the figures I have just given from the Chief Registrar's Report, and continues:
  "…some societies, particularly in the North, are unwilling to do this kind of business;"—

  1179
  That is to say, advances on expensive houses:
  "They regard their duty as that of providing mortgages on smaller houses for working men and the lower middle class."
  And a very laudable ambition, too.
  So far, I find nothing in the article to quarrel with. Now we come to the outlook:
  "…but this is not the image to project in a modernised Britain. The image should be that any man, whatever his income, can turn to a building society for a reasonable loan on a reasonable property."
  The author then gives instances.
  When the building societies gave their evidence in 1958 to the Radcliffe Committee on the Working of the Monetary System, they expressly disclaimed any wish to make advances on these more expensive houses. They said, rightly, in my opinion, that in that kind of case the borrower should go elsewhere. There are other resources open to the borrower. He can, for instance, get a bank advance if he wishes. One has in mind, I suppose, people of the type contemplated here, the doctor, the lawyer, the young businessman, the young scientist—who, I read,
  "is prepared to pay, perhaps, £10,000 for a house and who is as much entitled to be assisted towards owner-occupation as any other man."
  That may be, but there is no particular case for giving the building societies special powers to do it, unless, of course, they are getting so much money in that they can and should use it under this extension.
  What is the position in this respect? We had an excellent comment this morning from the chairman of the Woolwich Equitable Building Society, one of the very largest societies. He pointed out that plenty of money was coming into the Woolwich Equitable and he hinted in no uncertain terms that, if plenty of money was coming in, the opportunity could be taken to reduce the interest charged to borrowers. Of course, the two things go together. The interest to borrowers and the interest given to lenders go hand in hand, and the difference between them represents the expenses of the building society.
  That is the way in which the societies do business and have done for a long time. No one disputes the importance
  1180
  of it for a moment. But, if an additional sum of money is to have the effect suggested by the chairman of the Woolwich Equitable, is not that much preferable to using this change for the purpose of securing more advances for people who are prepared to spend £10,000 on a house?
  It is far from clear that this extension, if granted, will do anything to lead a few building societies—not many—to start a type of business for which they are not particularly fitted and that the general effect will not be to prevent the lowering of interest. As I understand it, the argument of the chairman of the Woolwich Equitable was this: "We are being offered at a given rate more money than we really require to carry on our proper business. Consequently, the moment has come to lower the rate to both borrowers and lenders and in that way to check the amount of money which is coming in." This must have been behind the attitude of the Halifax Building Society, which, a short time ago, on its own, voluntarily reduced its rates below those of the other building societies. When it did so, there were intimations from other building societies, including the Alliance, a very large one, that they were thinking of doing the same.
  In the present state of the housing problem, it is very much better that the building societies should keep to the type of business that they have always carried on, that they should do it at the very lowest possible rates of interest, and that they should reduce those rates rather than keep them up and embark on a kind of business which they expressly disclaimed in their evidence to the Radcliffe Commission in 1958.
  I hope that I have made the point clear. It is a substantial one. One now asks oneself: Are we to oppose the Order? I feel some difficulty about this. The Order represents a very indirect approach. It is to raise a limit which, as I have said, does not really prevent building societies from making larger advances, so that, whether the Order is passed or not, they will be as much at liberty tomorrow as they are today to make advances of £10,000 or £20,000 if they choose. As far as I know, there is nothing to prevent their doing so, although, at the end of the year, they

  1181
  have to count up the total and see how it matches the rest of their advances. Therefore, from that point of view, this is a somewhat minor matter.
  It is right, nevertheless, that the point should be raised, for two reasons. First, it shows very clearly the extraordinary sharpness of the housing problem in London and the way in which prices have risen and this sort of change has been forced on building societies and on the Government. Secondly, it makes quite clear that, while only a very few societies are concerned, there is a danger if they choose to prefer making advances on expensive property and not doing what I believe is the real alternative, that is, lowering their rates of interest and getting less money in as a result, confining their business to that which is undertaken in the North of England now and which was the original business of building societies.
  I hope that the Government will give full answers to these questions, explaining far more clearly, if I may say so, than was done at the beginning of the debate the reason why they want this change to be made.
  9.33 p.m.
  Mr. Graham Page: The hon. and learned Member for Kettering (Mr. Mitchison) was absolutely wrong when he suggested that the Order is unnecessary and that there is something improper about it. He will, perhaps, expect me to say that, since I am a director of a building society. In fact, the Order will be extremely beneficial to those who need and desire to borrow from building societies.
  The hon. and learned Gentleman was wrong in taking the 1962 figures as a criterion. At the end of 1962, money began to flow fairly freely into the building societies, enabling them to lend it out again. Up to that time the demand for loans on mortgage exceeded the amount of money coming into the building societies. Therefore, the societies felt that the right thing to do was to carry out what the hon. and learned Member called their traditional duty, namely, that of lending to the more modest borrower. But during 1963 they have had sufficient money to meet, also, the demand of the borrower who wished to borrow up to £5,000, £6,000 or £7,000.
  I could not follow the hon. and learned Member's argument when he seemed to
  1182
  imply that lending that amount to one borrower was outside the duty of building societies and that there was something improper in the lending business of building societies if they went above a certain figure. The figure of £5,000 which was put in the 1960 Act was not intended as a boundary between what was proper and what was not proper to lend. As my hon. Friend the Economic Secretary said, it was a boundary between lending to the owner-occupier at that time and any other form of lending. It was a way of describing the limit of the lending to the then owner-occupier.
  There is a now a market for the building societies to lend, quite properly, sums up to £7,000, as mentioned in this Order, to the class of man described in the article which the hon. and learned Member read out—the professional man or the high executive who wants, rightly, to purchase a house of that sort of price. Why should he not have the services of the building society? Why should he be excluded from going to a building society and receiving the same service as the man buying a quite modestly priced house?
  Mr. Mitchison: Is he excluded at present? Would he be any more excluded by this Order?
  Mr. Page: He is excluded to this extent, that if the building society to which he applies has already made a large number of advances—that is to say, up to 10 per cent. of its total outstanding advances it cannot advance him the money.
  The hon. and learned Member took some figures from the Registrar of Friendly Societies' Report of 1962 to show, as be thought, that this special advance facility was not being used by the building societies even in 1962. I have explained, I think, that in 1962 the building societies did not have in their coffers as much in funds as they have had during 1963. Therefore, they were not making special advances to any very considerable extent. If the hon. and learned Member looks carefully at the figures in this Report he will see that 96 building societies were precluded in 1962 from lending up to 10 per cent.; they were down to the 2½ per cent. limit. Therefore, in 1961 they had already gone up to their limit. In 1961 money was fairly short for the building societies and

  1183
  the demand was certainly far greater than they could meet. The figure of 96 building societies represents one in seven. One in seven used up their quota as long ago as 1961. I think that the statistics for this year would show very many more building societies have gone up to their 10 per cent. limit in making special advances. It will be very beneficial to those who wish to borrow if the limit is raised from £5,000 to £7,000.
  There is one way in which I believe it will be particularly beneficial. Under Section 23 of the Building Societies Act, 1962, the building societies which have gone up to their limit in making special advances and which then wish to lend money on houses deliberately constructed to let, can apply to the Registrar of Friendly Societies for leave to make a special advance. A building society is reluctant to take those special measures, going to the Registrar of Building Societies to make special application for a particular kind of advance.
  Mr. Mitchison: The hon. Member is not quite right. They do not have to apply for leave to make a special advance. They have to apply for leave to have the advance which they propose to make not counted as a special advance. It is clear that a society has to give the advance if the facts are right.
  Mr. Page: There is no dispute between the hon. and learned Member and myself. He puts it in different words from mine. If a building society has used up its quota of special advances and it then wants to make an advance of over £5,000 to somebody who is building houses deliberately to let, it has to ask the Registrar of Friendly Societies for special leave to do so.
  Building societies have not done that in the past. It is a special application and they are not very inclined to make special applications to the Registrar. With the raising of the limit under the Order, they will be freer to make those loans to people who are building houses or blocks of flats to let. This is what, I should think, the Government wish to encourage. We shall find that the Order has a side result in allowing more advances to those who are building houses to let.
  1184
  On the whole, the hon. and learned Member for Kettering has taken the wrong basis for his criticisms by using the year 1962. The position has altered considerably since the end of that year and I am sure we shall find that the raising of the limit to £7,000 by the Order will be beneficial to those who seek advances from the building societies.
  9.43 p.m.
  Mr. W. T. Rodgers: Like my hon. and learned Friend the Member for Kettering (Mr. Mitchison), I am notably unenthusiastic when confronted by the Order. I welcome the opportunity of looking at it and considering the proposal to raise the limit to £7,000 in the light also of the alternatives which are available to building societies to use the funds which are now flowing in. I was interested to hear the Economic Secretary to the Treasury say that the funds were flowing in rapidly and that there was no shortage of them. The question arises, however, whether, if this money is available, it should now be spent in the way proposed by those who wish the limit to be raised.
  Sometimes we treat building societies as if they were charitable institutions and as if their managers were in them for love and not for money. When we consider an order of this sort, we should look a little more closely at the alternatives which are open to them in the light of desirable public policy.
  The arguments of my hon. and learned Friend the Member for Kettering were very convincing. It is important to stress that there is no great enthusiasm within the building societies themselves for the raising of the limit. As my hon. and learned Friend said, this is a view which has been stated in the Building Societies' Gazette. Perhaps I might also quote from an article which appeared in the Financial Times on 13th July this year, which said that
  "Smaller societies—and a few of the larger ones, who feel their social purpose better served by financing two smaller houses than one large one—do not support this move."
  In a way, the crux of the matter is whether we can afford a priority in the expenditure of building society funds to the extent which we would anticipate if tonight's Order is implemented

  1185
  or whether we feel that the building societies might be able to use their funds in a rather different way.
  I should make it clear that there is, of course, no objection in principle to a man earning £2,000, £3,000 or £4,000 a year being able to buy a higher-priced house from a building society. The objection to the Order is not in any sense an objection to that right being enjoyed by those who are, perhaps, moving into higher income brackets. During discussion of the 1960 Act it was pointed out that a £5,000 house is something which a man earning £1,750 a year might reasonably expect to buy. We should be realistic and acknowledge that this is not really a very high figure. We do not object to the Order on these grounds and should not be represented as doing so.
  Nevertheless, I think that there is reason to believe that increasing the limit to £7,000 will have the effect of diverting money from first requirements and discouraging or not encouraging building societies to use their existing powers more effectively.
  Here again I refer to the Building Societies Association and the remarks of its chairman, Mr. John Dunham, at its annual conference this year. Talking about the role of the building societies, he said that he thought they were in a position to consider the liberalisation of lending policy and hoped that they were not so conservative-minded on such questions as housing design and building techniques as they were supposed to be.
  However, I think that a number of us would feel that they are still very conservative-minded and have not liberalised their policies either in the way hoped for by leaders of some of the larger societies or, for that matter, in the way hoped for by the Minister of Housing and Local Government. He has asked for liberalisation, but there is an absence of evidence that it has taken place. I cannot see that raising the limit in this way will in any sense encourage liberalisation, which I think we agree to be a proper object of public policy towards building societies.
  My hon. and learned Friend referred to the desirability of building societies mainly concerning themselves with
  1186
  traditional business. I fully understand what he meant. I am sure that he did not mean that they should continue broadly in their traditional way, however, for they have traditionally been conservative and cautious, which has not been in the best interests of the community or of the great majority of people who have been seeking housing advances.
  I shall give one or two examples of the priorities which building societies might reasonably consider as alternatives to the spending of funds up to the limit of £7,000. There is, first, the question of lending on older properties. There is still an absence of evidence that they actively seek to lend their money in this way.
  Secondly, there is lending policy towards unusual property, whether terraced house, flat, maisonette or house of unusual design and construction using, for example, industrialised building techniques. In the light of the hopes expressed by the Minister of Housing and Local Government and the Minister of Public Building and Works, I expected that the Government, through their interest in building societies, would seek mainly to ensure that they were prepared to lend on unusual buildings. It has traditionally been the view of building societies that they would not lend on flat-roofed houses. It this was the case in the past, might they not show the same reluctance now towards new designs? I understand that this has been the experience in the United States.
  Mr. Graham Page:Can the hon. Gentleman quote any building society which is at present refusing advances on any of the modern industrialised forms of building?
  Mr. Rodgers:No. I could not give an example, but I think that it is common knowledge that the purchaser who wishes to get an advance—
  Mr. Graham Page: But it is not true.
  Mr. Rodgers: It is the view taken, for example, in the report of the Consumers' Association and published in Which? in April, 1961. The Building Societies Association took the view that that was a very fair report.
  Mr. Graham Page: In 1961.
  Mr. Rodgers:I would like to believe that there had been a radical change in policy in the last two and a half years, but if there has it has been a much more rapid change than any which occurred in the previous twenty-five years.
  Apart from the character of the property upon which building societies might be encouraged to lend, there is another respect in which help might be given. The figures of the Co-operative Permanent Building Society have been mentioned and are common currency. It is very interesting that more than half the borrowers from this society are still required to find a deposit of £400 or more. In present circumstances, a young couple having to find £400, plus legal charges and all the oncoming costs of moving into a house, have to accumulate a considerable sum in a very few years while living in very difficult housing conditions. I do not think that the needs of public policy are met by placing such an obligation on young people and not facilitating their purchase of houses.
  If we are considering the more expensive houses, there is another respect in which the Government's policy might be more imaginative. It is common knowledge that houses in the centre of London in a very dilapidated state can be bought for, say, £3,000 but made very acceptable by the expenditure of another £2,000. Unless it has changed in the last two and a half years, the present policy of building societies is to refuse the likely purchaser of such property if he has limited capital and asks for a mortgage of 50 or 60 per cent., or even 95 per cent., of the cost of the house plus its modernisation and reconstruction. The building societies are prepared to lend only a percentage of the valuation or purchase price, whichever is the lower.
  These properties, which may be in the higher ranges, are available only to those who have a large capital sum, perhaps as much as £4,000. There is everything to be said for encouraging a new approach to lending for property of this kind when the prospective purchaser has only a small capital sum available. It may be said that the building societies are able to do this and that some do, but we must face the hard fact that in areas where there is a great shortage of
  1188
  accommodation, houses which come on the market are quickly bought.
  Perhaps I might be allowed to refer to a leading article in the Guardian of 25th April, 1963. Under the headline "Broader minds on Mortgages" the article said:
  "It is not unusual for a house buyer to apply for a mortgage…on the understanding that the society is currently lending at, say, 90 per cent.…Having paid his survey fee and waited several weeks for something to happen, the buyer discovers that the Society values the house at only two-thirds of the price he is prepared to pay."
  He is therefore back on square one. He loses his house, and he has to start all over again. Whatever is the policy of societies, the truth is that they are not enthusiastic enough in searching out purposes for which to lend, except in the most conservative fashion, and for that reason advances are often not made to the people who need them most.
  My hon. and learned Friend the Member for Kettering also referred to the great difference between the Metropolitan problem and that in, say, the North. This is most important when we are considering priorities for the use of the funds which are available to building societies, and considering whether one priority is that of raising this figure from £5,000 to £7,000. I should have thought that it was wholly in accord with the Government's policy to help to make money most freely available in areas like the North-East where we want to modernise and improve property which is selling at quite a low price, and where we want to create facilities which will encourage people to stay up there and not move to the South.
  If that is the case, it seems extraordinarily perverse to make it easier for people living in London and the South-East to buy houses, and, by definition—because there is a limit to the funds available—in the long run to make less money available to societies in other parts of the country to lend to people buying smaller and cheaper houses.
  Building societies are unusual institutions, and I am among those who believe that they perform a most useful function. I am buying my house through a member of the Building Societies Association, one of the most imaginative and go-ahead ones, but it seems that the Association has not done a notable service either to

  1189
  the building societies movement, or to the many people which it claims to serve, by urging on the Government, through the Registrar, the raising of this figure from £5,000 to £7,000.
  I am comforted only by the belief that the Association was in two minds on this, as on many other things at the present time. But if it was in two minds, if the pressure from the Association was not strong, it seems wrong that the Government have wasted the time of the House by bringing in this Order this evening instead of giving us time to encourage building societies to fulfil a public policy in a better way than they are doing now.
  9.59 p.m.
  Sir Anthony Hurd: I want to say a word of welcome for the action which the Government are promoting by this Order. I am a director of a building society which operates mainly in London and the southern counties. We consider that there is no good reason now to check the ordinary business of our society, or of any other society, on this £5,000 limit.
  We are operating and serving the house-buying public in an area where house prices and land prices have risen. We are finding that more people today are prepared to invest in the future by way of buying their houses. Often they are houses which will cost considerably more than we imagine those people would have faced a few years ago. I have in mind an instance which came to me only last night when a man drove me to Paddington Station. I asked him where he lived and he said, "In Wood Green". He said he was very busy because he was doing up his house. I asked what kind of house he had, and he said, "I bought it for £3,500, but by the time I have finished the bathroom upstairs it will be worth £7,000." That happens to be the very figure that we are considering.
  I should be perfectly happy, as a Member of Parliament and also as one with a little knowledge of building societies, to see the figure £10,000 instead of £7,000. I do not think that would have any ill-effect on the work of the building societies or on the services they render to the public. I ask my hon. Friend the Economic Secretary to what extent the Treasury consulted the Building Societies Association in reaching the conclusion we find in this Order.
  1190
  We have had some rather sinister reflections from the Opposition about the attitude of conservatism of building societies. We are not as "stuffy" as all that. Only a month ago the board of my society were looking at some, to me, very original designs for houses which where being put up on an estate and deciding whether we would offer generally to finance their purchase. We agreed that so long as they were sound structurally and approved by the Ministry of Housing and Local Government, we certainly would do so.
  These will be quite expensive houses which will not be bought entirely by well-to-do people retiring on dividends, but by up-and-coming business and professional people. These, surely, are the people we want to encourage. They have to live in this part of the country where their jobs are and where they earn their bread and butter. We have to encourage building societies to help these people to live the kind of life they want to live. If they are prepared to make sacrifices of other things in order to own their houses, that is what we should do. I am certain that we shall find more and more of this better type of house in the better areas will go up to the £7,000 limit mentioned in this Order.
  Most societies have not been inhibited from making special advances until this last year, as my hon. Friend the Member for Crosby (Mr. Graham Page) truly said. We have found in recent months that we have to keep a watch on the special allowances with a limit set at £5,000. Otherwise, we would be standing in the way of some families who want to own better homes. If that is the way they want to spend their money, God bless them; there are worse ways of spending one's earnings.
  The action we are talking about is timely. I think that we could very well go further by raising the limit to £10,000. The societies are fairly responsible about the way in which they lend their money and they will not do foolish things even if the limit is raised to £10,000. I am sure that what has been said about the North and some parts of the Midlands is perfectly right, but conditions are different in the South. We have to im-

  1191
  prove conditions in the South. This action will help us to do our job rather better, and more fully, than we have been able to do it this last year.
  The action that we are taking tonight will not stop any society from lending on the smaller or the old house which needs money spent on it. We are quite prepared to do that, and we are doing it all the time. This Order will ensure that everyone will be able to turn to a building society to get the help needed to own a home. It will be a better home than that to which they could aspire ten or twelve years ago.
  10.5 p.m.
  Mr. Cyril Bence: The assumption some hon. Members have made is that raising the borrowing limit from £5,000 to £7,000 shows that in the last few years rising incomes have led to the situation in which people will increasingly buy better houses.
  I do not look at it in that light. During the twelve years I have been in the House, nearly every Session I have seen all sorts of draft Statutory Instruments introduced raising the level of subsidies and grants and raising the ceilings of financing operations to cover ever-increasing costs. I regard this Order, which raises to £7,000 the limit over which advances are treated as special advances, as another Order designed to cover the further increasing costs of housing to the consumer.
  I deplore this progression in our society of raising financing ceilings to match ever-increasing costs instead of us pursuing the more difficult, and in my view, the more worthwhile, task of discovering what we can do as a Parliament to reduce costs and make homes cheaper. That would be a far more useful exercise than bringing in draft Statutory Orders to enable us to keep up with the financing of ever-increasing costs.
  I am a member of a building society, not a director. There has been a good deal of talk tonight about building societies being institutions for lending money to people who wish to buy their own houses. I have taken advantage of this facility. As a member of a building society I never forget that building
  1192
  societies are a great national institution and recipients of people's savings. They have to act in accordance with that responsibility.
  If, as my hon. Friend the Member for Stockton-on-Tees (Mr. W. T. Rogers) said, there is a conservatism and caution in the building society approach to new designs and techniques, it is because as the custodians of the savings of millions of ordinary working people they have to be cautious in how they use those savings. They are competitors with unit trusts, the National Savings institution, municipal banks and trustee savings banks.
  We all know of cases in our constituencies in municipal building when building contractors have submitted designs and tenders which have been accepted and blocks of houses have been erected. After two or three years the floors have sunk or the draughts in the chimneys have not worked. All sorts of difficulties have arisen. Local authorities have been put to tremendous expense in rectifying faulty structures.
  A building society is in such a position as the institution between the lender and the borrower that it cannot afford to finance a new design unless it has been thoroughly tested. I would be thoroughly cautious about levelling charges against an institution which is the recipient of the savings of ordinary people, because it is ordinary people like myself who put their savings into a building society.
  We cannot afford to go into the equity market and on the Stock Exchange. We put our savings into trustee savings banks and building societies. This has been the habit of the working classes for centuries. It is this habit that has made the country strong. I am glad that the building societies exercise a certain amount of caution, thus assuring their depositors that the money they save through building societies will be properly used. I say that in support of the argument that building societies should be cautious in the way that they use their financial resources.
  The hon. Member for Crosby (Mr. Graham Page) said that this increase from £5,000 to £7,000 would be an advantage to building societies. In certain areas, as a short-term measure, this

  1193
  may be of benefit, but when we speak of institutions we must remember that we are speaking not of inanimate or inorganic things, but of collections of individuals functioning together. I do not believe that the increase in the cost of providing ourselves with homes is beneficial to anybody. It is an unfortunate symptom, not only in our own industrial society, but in every industrial society, that a young married couple find it easier to buy all the gadgets of our modern civilisation than they do to possess themselves of a home. It is one of the most extraordinary features of our modern society that engineers should be able to provide all these gadgets for people with the most modest of incomes, and that men with good salaries are finding it increasingly difficult to get homes.
  My hon. Friend the Member for Stockton-on-Tees said that people with incomes of £2,000 a year might be prepared to pay £7,000 for a house. That may be so, but most people I know, whatever their incomes may be, are always searching around—and some have been doing it for years—to see if they can get a house at the lowest possible price. They do not fix a figure that they are prepared to pay; they try to get a house at the lowest price.
  I know of a professional couple who have been looking for a house in London, and the lowest price they have been asked for a six-roomed house in the area in which they want to live was £11,000, Ten years ago they could probably have bought it for £5,000 or £6,000. Why we should try to chase these ever-rising prices, I do not know. It is time for the State to take action to stop these cumulative increases, year after year.
  I do not know when the process will stop. If it carries on for another twenty or thirty years at the same rate, goodness knows what people will be paying for all sorts of products. Somewhere, this must stop. The Minister of Housing and Local Government told us the week before last that penal taxation would be imposed upon high land values. But that will not help the person who wants to buy a home. What is the use of telling a man who has to pay £7,000 for a new house that the man who has received that price will be taxed at 50 per cent.?
  1194
  I am very worried about this. These increases go on year after year. We have had an increased grant for our fishing fleet, because it cannot meet its obligations to the White Fish Authority, or its interest payments. Now we have this Order. The price of land and houses is going up and up, and the building societies want to raise their limits. In another two or three years' time I wonder whether the limit of £7,000 will be raised to £10,000, simply because the price of land has continued to rise.
  If this is what our people are to be faced with in future I do not know how those in our lower professional classes—our young scientific workers and doctors—will be able to house themselves through their own financial resources.
  My hon. Friend mentioned that it would be far better if interest rates were to fail. Building societies have competitors for public money and if the societies, wish to lend they have to pay interest to their investors to match that paid by other institutions. I sometimes wonder why the building societies need such palatial offices in which to do their business. Some of them seem very expensive. I cannot accept—I do not think that I ever shall—that the function of a building society should be to build blocks of flats to let.
  The hon. Member for Crosby said that societies should build houses. I think that the function of a building society should be to provide home-seekers with a mortgage so that they may acquire a house for their own habitation. Building societies should not finance property speculators or investors, who should obtain their finance through public trustee companies through solicitors or from the bunks, but not from building societies. I hope that we shall not open the door any wider to enable building societies to function as the general financial institutions of the speculative building industry.
  I hope that building societies will be regarded as great national institutions designed to enable people with modest incomes to acquire modest houses. The vast majority of borrowers from building societies do not wish to buy big houses for which they may have to pay £7,000 or £10,000. Most of them would be delighted if they could get a six-room or eight-room house for £5,000. It

  1195
  is not a question of securing better houses, but meeting increasing costs. It is a sickening fact that each decade young people are faced with the necessity to pay ever-increasing prices for furniture, clothes and houses. Prices keep rising and the House of Commons, instead of trying to do something to stop that, brings in Orders which are designed to raise the limits of assistance to meet rising costs. More often than not the costs are increased by the big landowners, property owners and property developers.
  10.18 p.m.
  Sir Cyril Black: I think that hon. Members know that I am a director of a building society. I wish to say a few words of welcome for this Order. I do not think it correct to suggest, as has been suggested, that there is any substantial division of opinion among building societies about this Order. I am not aware of any division about it in the Council of the Building Societies Association. My view is that the movement as a whole, and those connected with it, welcome wholeheartedly the comparatively small change in the existing position which will be made if this Order is approved.
  There are two compelling reasons for accepting the Order and I wish to confine myself to the narrow points raised by the Order rather than to deal with a number of other matters which seem to me rather wide of the point which we are considering, but which have been mentioned by other hon. Members. If £5,000 was the right limit at the time when that limit was fixed, it is reasonable, in present circumstances, to look at the figure again to see, as was envisaged when the Building Societies Act was passed, whether present circum-
  1196
  stances justify an alteration in the figure. If £5,000 was right then I suggest that £7,000 cannot be wrong now. The latter figure is about right.
  It has been suggested that the Government might have been more adventurous and increased it to an even higher ceiling. There may come a time when the figure will need to be reconsidered, but at the moment £7,000 is about as good a figure as could be found and, I believe, is one which will be generally supported by the building societies.
  The second reason why I support the Order is that if it were the case that building societies were now short of funds and the raising of this limit might have the effect of syphoning off money that would otherwise be available for loans on cheaper houses—and might, therefore, penalise the purchasers of cheaper houses—it would be unwise to raise the limit. I do not believe that either now or in the future, as we can foresee it, there is any real danger of that happening.
  The building societies have, during the last 12 months, been attracting adequate funds by way of shares and deposits. They are able to take care of all the demands of the public for loans on smaller and cheaper houses and it will not operate to the detriment of purchasers of these houses if this comparatively small change is made and the limit is raised for special advances from £5,000 to £7,000.
  This is a modest and reasonable proposal that should, without question, be accepted by the House. After all, anything that is reasonable and opens a little wider the door to home ownership is something that hon. Members should encourage and favour. The Order is a small step in that direction and for that reason I welcome it.
  10.23 p.m.
  Mr. B. T. Parkin: The hon. and greatly experienced Member for Wimbledon (Sir C. Black) began his speech by saying that there was no division of opinion in the building societies about the desirability of the Order. That may be true, but there is a division in the building societies about something much more important; but I will come to that later.
  I am grateful to the hon. Member for saying, with such confidence and authority, that a figure of £5,000 which was appropriate 12 months ago—on 19th July, 1962, when Her Majesty signified her assent to the Measure—should now go up by 40 per cent. because of the exactions perpetuated on those seeking a home in the London area.
  Sir C. Black:I am sure that the hon. Gentleman does not wish to misrepresent me. I said no such thing. I said that now that the building societies had much more adequate funds available than was the case a year ago they could, without detriment to loans on smaller houses, deal with the comparatively small addition to their applications that would be brought about by raising the limit. That is an entirely different thing.
  Mr. Parkin: I will deal with that aspect of the hon. Gentleman's remarks later, but I was not unaware of what had happened and I wanted to get the matter into perspective.
  I had tonight been looking forward, particularly since the debate on the previous Order ended earlier than was expected, to an exciting and stimulating survey by the Economic Secretary of the whole sphere in which building societies operate and the influence they have on the national economy.
  After all, the Economic Secretary is a very interesting person in himself to be handling this Order. As an individual he is well-known and respected for his forward-looking and questioning, adventurous ideas on wider ways within the Conservative philosophy of spreading the ownership of property and of equity among the community. As a constituency Member for Halifax he will long be remembered as a faithful supporter generally, whatever they say, of what the Halifax Building Society
  1198
  has chosen to do. That society, of course, is a rebel society as well as being the great giant of them all.
  It is interesting that in his latest manifestation as a Minister and as a poacher turned gamekeeper, or a rebel turned orthodox, he has to turn the Treasury spotlight on what has happened to what were once new and exciting devices and has to give us an opportunity, which we must seize when we can, to see whether any of these devices which started off so admirably and idealistically have been twisted by ignoble men for unworthy purposes.
  It is a strange coincidence that this Order should be based upon an Act of Parliament which had to be passed because of investigations into the Jasper-Lintang-Murray-State Building Society affair. I will come to that in a moment, beause I have certain questions to ask about later developments in that sort of field, and particularly about the use of certain building societies. I do not propose to name them, but they must be known to the Treasury. I should like to know whether further legislation is contemplated, or whether it is possible to cope with them within the existing machinery.
  We must first of all, however, look for the missing figure. My disappointment at this absence from the Government From Bench of a representative of the Ministry of Housing and Local Government is to some extent palliated by the thought that perhaps the Economic Secretary, with the leave of the House, will be able to speak again and answer some of the questions I have put to him. I have been waiting to see how late the Parliamentary Secretary to the Ministry of Housing will be. He has not turned up yet. My heart leapt at one time when I saw the Solicitor-General come into the House for a moment and I thought that we would have an interesting reply.
  The reason why the hon. Member for Crosby (Mr. Graham Page) fidgeted so much when my hon. Friend the Member for Stockton-on-Tees (Mr. W. T. Rodgers) was talking about this subject is that the building societies are bursting with money at present. They cannot bear the thought of any more money

  1199
  coming in. If an executive director of a building society sees somebody coming down the road who might make a deposit he tells the girl to pull the blind down and he rushes down the road screaming. He would not know what to do with the money. This is precisely why these big giants are rebelling. They do not want the money. There will be an increasing flood of funk money—trustee money—coming into the building societies from people who do not know what is to happen to the country in the future. They intend to wait and see how things work out and in the meantime put their money on short-term deposit with the building societies.
  The Economic Secretary was bound to come here and talk about it, but his manner was a little bit too masculine, too casual in the way he brushed the matter off. There was no problem about these special advances for the housing associations at all. There were special regulations to provide for 15 per cent. in special advances for them.
  I believe that behind all this casual brushing aside by the Economic Secretary and behind the pointed absence of the Ministry of Housing and Local Government from the debate lies the secret of this quarrel in the building societies, this anxiety and this Order, which will not make much difference one way or the other. What the building societies have to do is to face up to the pressure from the Government which is already gently beginning to be exercised.
  The Minister of Housing and Local Government has put into the first Clause of his new Bill the great showpiece of the Housing Corporation. It will be responsible for an enormous number of houses. The Government will put up £100 million, which sounds a great deal of money. But the building societies have been quietly told that they have to double that and cough up £200 million in support of it.
  Mr. Deputy-Speaker (Sir W. Anstruther-Gray):I am sorry to interrupt the hon. Member, but the Order seems to be concerned with raising the figure of £5,000 to £7,000. The hon. Gentleman seems to be going further than that.
  Mr. Parkin:I am afraid that you have been deceived too, Mr. Deputy-Speaker. That was the intention of the Order, and that was the intention of the Economic Secretary's speech. Joking apart, perhaps you will allow me to submit that within the scope of this debate one is entitled to advance a reason why the Order should not be passed.
  The reason I advance why this Order to increase the limit from £5,000 to £7,000 should not be passed is that it is irrelevant to the present situation, that the crisis in the building societies has been caused by the Government themselves and that the Economic Secretary ought to have said a great deal more about the pressure being put on the building societies from another direction as well as referring in the most casual way to the fact that at the moment they have ample funds available for this apparently very trivial increase in the number of loans that they make.
  In order to restore your confidence in my capacity to remain in order, Mr. Deputy-Speaker, perhaps I may go back to examining the effect that this could have on the resources of building societies. One piece of arithmetic is fairly simple. It will reduce the number of loans that can be made to the £5,000 borrower by two-sevenths, because for every seven loans of £5,000 made one can make only five of £7,000. When the time comes, as soon it must because of this looming threat of the demand for the housing associations, the smaller societies will perhaps be tempted administratively to make a smaller number of deals, because it may be easier to keep the accounts. I find that sum simple.
  What I do not find so easy, not being an expert—the benches opposite are stiff with directors of building societies who will help me if I go very far wrong—is to estimate what this means in numbers of deals for societies of different sizes. From the Report of the Registrar of Friendly Societies I find that the amount advanced last year by all the societies was about £600 million and that the balance due at the end of the year was no more than £3,000 million, which seems to indicate that the average advance is repaid in five years.

  1201
  Now, of course, that cannot be a very useful calculation, because this money, this £7,000 instead of £5,000, would be tied up for a very long time. I do not think it is right to deduce from the fact that the total amount due is only six times the advances made in a year. These must refer to sales of the same house to another person. That is what building societies are for, to facilitate early ownership of a house and transfer when one moves from it to another house. So the money must be tied up in particular houses, however many times the borrower or owner changes, over a period of twenty years over which the repayments are made.
  If we look at the figure of £7,000 here we very soon find what a tremendous difference this would make to the activities of a small society. Even the big societies, the giants with £100 million—the Alliance was one of those; I do not know what the Woolwich is—only do somewhere between seven and ten deals a day. One can work it back from this £100 million of assets. If payment back is over 20 years there will be an average advance of £3,000, and that means 30,000 deals, but they remain for 20 years. This can be worked out. That is about the number of deals which a building society does, going by the Registrar's figures.
  But to come back to the small society which has only £500,000. The smallest recorded one was £500,000 upwards. Then we get to the point where they seem to be doing only about seven or eight deals in a year at this rate. So it is quite clear that small societies are very sensitive to a slight change of this kind, an increase of 40 per cent., means a great deal of difference to the number of deals which they can carry out.
  I hope the Economic Secretary will say that he personally and the Government are prepared to do any small thing they can to encourage the small society, because we have got to the unfortunate stage now where the little local society, bearing the name of the locality, run by half a dozen local, well known and respected people, borrowing money from people who know the people who are going to reborrow it, has been swallowed by these great giants, which have to be considered every time the Treasury
  1202
  makes any plans about investment, because this in so enormous a factor now.
  I would like to insist that we cannot leave this Order tonight which makes so great a difference to a small society but so little difference to a big society without looking at the problem of keeping the rates of interest down. At the moment there are many societies which would very willingly put them down—very willingly—because they want to deter people from coming in and putting too much money with them at the present time. Whatever the reason for keeping them up, whether it be this Order, whether it be the proposals in the mind of the Minister of Housing and Local Government for housing corporations, the price to be paid is to be paid by the small, legitimate owner-occupier who uses a building society. A difference of 1 per cent. on a £5,000 loan means £1 a week in interest rates out of the pockets of the young married couple at the time that they can least afford it and when they have the maximum amount on mortgage. That is part of the pulling down of their standard of living. If it is true that the anxiety to keep rates up at present—
  Mr. Deputy-Speaker: I am reluctant to interrupt the hon. Member again, but I do not see rates of interest mentioned in this Order.
  Mr. Parkin: They may not be mentioned in the Order but they have been mentioned by the Minister. It is said that there is plenty of money available and that rates of interest will not go up as a result of this Order. It was said, "It must not be thought that this little Order will put up the rates of interest". But what prevents them from going down? They could come down in present circumstances if there were not some deep-seated, forward-looking reason why they should be kept up.
  If that is so, it is a reason why we should resist the Order or have an explanation from the Minister. He told us that there will be special relief as to 15 per cent. of the total resources in connection with special advances to housing societies. This must be relevant because it was in his brief. He did not tell us what these total resources were, but we can calculate for ourselves. The total advances, according to the

  1203
  Registrar's Report, were £2,500 million, and 15 per cent. of that is £125 million, which is a great deal less than the £200 million which the Minister is asking building societies to provide for housing societies. At £5,000 a house—it is not likely to be less because of the sort of person who will acquire a house from a housing society—it provides only 25,000 houses in total over the whole operation of money which will be tied up for 20 years.
  This is a very poor bargain for an increase in the rates of interest to be paid by every legitimate owner-occupier who applies to any building society in the country for a loan to buy his own house. I hope that we shall be given an explanation. Although my Parliamentary procedure may be a bit shaky I do not think my arithmetic is.
  I will move to a question which I hope I shall be allowed to ask the Economic Secretary. This Order has arisen on a provision in an Act passed as recently as 1960 to deal with an abuse of building societies. Is the Minister satisfied that this Act gives him sufficient powers or does he feel that he is in an undignified position in having to come to the House late at night for a fiddling little Amendment of this kind?
  Mr. Deputy-Speaker:I very much hope that the Minister, replying, will not go so far a field from this Order as to answer the question that the hon. Member is putting to him. I hope that the hon. Member will keep strictly to what is in the Order we are now debating.
  Mr. Parkin:I am obliged to you, Mr. Deputy-Speaker, for your consideration, which I know to be genuine, and helpful to me. But the Order alters the sum prescribed under Section 1 of the Building Societies Act, 1960, and Section 21 of the Building Societies Act, 1962, which was a consolidation Measure. But altered from what? Altered from a figure fixed when this House was debating the results of the Murray-State Building Society—Jasper-Lintang scandals, and we are now being asked to alter one of the devices that was inserted then to prevent malpractices.
  I hoped that it would still be possible to discuss whether those devices have been successful in the task for which they
  1204
  were invented. If they have not been successful, we ought not to continue them. We should not have our time wasted tonight in discussing whether they should be used for some other purpose, or whether it is necessary to go through this charade of the form of an Order in connection with a device that is not working. I submit that there are very good reasons for a re-examination of the law relating to building societies even so soon after an inquiry by a distinguished lawyer—
  Mr. Deputy-Speaker: Order. I am sorry to interrupt the hon. Member again and again, but surely this Order is, in fact, concerned with raising a figure—the increase happens to be from £5,000 to £7,000—and not going back to all these other points that the hon. Member is now bringing up.
  Mr. Mitchison:On a point of order, Mr. Deputy-Speaker. Is not my hon. Friend justified in pointing out that the figure in question was part of a Section designed to deal with the position that arose out of what I will call the "Jasper frauds"; and to inquire whether the change that is being made by altering the figure in that Section results from the previous figure proving to be insufficient for the main purpose of the Section.
  Mr. Deputy-Speaker: If the hon. Member were to do so in those terms, I think that he would find that his speech would be much more acceptable to the Chair.
  Mr. Parkin:I see the hon. Member for Paddington, South (Mr. R Allan), who could display a more felicitous command of language in this connection; so much has happened in his constituency in this disastrous history. This Lintang scandal did not end with the passing of the Act of 1960, and this device that building societies should not lend more than £5,000 without creating a special advance was no problem to those who were manipulating a building society, which I shall not name, because it is under new management, and is making strenuous efforts to pull itself up by the boot straps—which is another good reason for not mentioning it. Another reason is that there are two others about which I am not sure, and may have to mention in due course.
  The device itself did not help. It was still possible for people to inflate the

  1205
  prices of houses—and that, at least, Mr. Deputy-Speaker, you have allowed to be in order, because my hon. and learned Friend the Member for Kettering (Mr. Mitchison) made it the main basis of his argument that this Order would increase the price of houses.
  If people sell houses in fraudulent circumstances and take their profit by pushing up prices, it is not how much an individual has that fixes the price of a house. It is how much somebody can promise to lend him. The devices used in the Borough of Paddington were a building society plus a second mortgage issued by the member who was introducing the purchaser to the building society. That had a disastrous effect on the prices of houses.
  Each of the previous speakers has raised the question of what effect the Order will have on the prices of houses. The hon. Member for Paddington, South and I can certainly join together in agreeing that these financial "fiddles", through the use of building societies, which have not been sufficiently chained by the previous Order and cannot be chained by the present Order, have had the disastrous effect of pushing up prices of houses, as a result of which there is inflation and the creation of money which did not previously exist. The man who merely takes a profit on a house pays back that profit—he can afford to do so—if he sells a bad house for a high price. He can well afford to invest part of that profit in a building society, which is good security. Repossession is always possible if payment is not made and he can exact not only repayment of capital, but a handsome rate of interest, too.
  This is a fascinating story which the Treasury should investigate. I should not have to ask these questions tonight. The Economic Secretary should have said at the outset, "I will not weary the House with details, because we are engaged in a thorough investigation of the Rachman scandals", out of which the Treasury inadvertently lost millions from Income Tax. It will still have to be done sooner or later, and the company business and the building societies—
  Dr. Alan Glyn: On a point of order. Is it in order, Mr. Deputy-Speaker, for an hon. Member to dis-
  1206
  cuss the Rachman scandal, which has no connection with the matter which we are discussing?
  Mr. Parkin:I am not labouring the point—
  Mr. Deputy-Speaker: I am bound to say that the intervention of the hon. Member for Clapham (Dr. Alan Glyn) was entirely correct. I was reluctant to interrupt the hon. Member for Paddington, North (Mr. Parkin) more often than I had already done, but I hope that he will try to come back to what we are debating.
  Mr. Parkin:Thank you, Mr. Deputy-Speaker. I do not want to have to argue this either now or at any other time in this House by the laborious system of innuendo or spelling out little bits of a story one at a time. I am making the case that there is a story to be told and that the Treasury should be finding it out and looking again to see whether the Act has any validity in the present circumstances. If it has not and if it is not, as I believe, effective in checking the evils that it was intended to check—I shall not recite them now—the Treasury should tell us that it is preparing fresh legislation.
  Mr. Deputy-Speaker:Order. I hope that the hon. Member will not abuse his position. We are considering one perfectly simple Order and he is not entitled to go further than that.
  Mr. Parkin:I was merely saying that I would not develop that, Mr. Deputy-Speaker, but that the Economic Secretary should tell us that he was going through all that in different circumstances and would in due course deal with it and that this was merely a passing formality which he felt obliged to bring before the House while those further investigations into the operation of the Act took place. He ought to have mentioned it, because that was the object of the Act.
  10.55 p.m.
  Dr. Alan Glyn: So far as I can see, this Order has one effect and one effect only. It raises the limit from £5,000 to £7,000, which means that in normal circumstances it is possible to borrow an extra £2,000. I would have thought that that was a very short point which needed little debating, except to

  1207
  say that nowadays it would encourage people wanting to buy houses in the £5,000 to £6,000 range to do so. Many of the subjects which have been raised tonight are quite outside the scope of the Order.
  I hope that the House will approve the Order which will make it possible for many people in these circumstances, with the normal machinery of the building societies, to buy their own houses. There are now many people in present circumstances who want to buy their own houses in the £5,000 to £6,000 range, and the Order is a better method than special advances for helping people to do so and will regularise the present position.
  10.56 p.m.
  Mr. Maurice Macmillan:By leave of the House; I am prepared to see some sort of conflict and conspiracy, but I have to disappoint the hon. Member for Paddington, North (Mr. Parkin) of the comprehensive survey of the finances of building societies and a property-owning democracy which he hoped that I would give him. But I am happy to tell him that the conflict which he thought might exist between the Economic Secretary and the hon. Member for Halifax (Mr. M. Macmillan) is in his imagination, as was the greater part of his argument about conspiracy and crisis and difficulties arising from this comparatively simple little Order. I was not quite sure whether to be flattered by his imputations of subtlety, or merely to fear that he might think that I might have as tortuous a mind as his.
  I do not want to labour the point, but building society mortgage rates are not controlled by the Government. They are not even fully controlled by the Building Societies Association, as the hon. Gentleman well knows. The greater part of his argument which was relevant to the Order was based on the fallacious assumption that it was mandatory and that it would put a burden on building societies which they would not be able to sustain. In fact, it liberates some of them to take action which they cannot now take. His argument made sense only on the assumption that the Order had a significant effect on the capacity of the smallest societies to act independently of the Association and the larger societies.
  1208
  I should fall into the same difficulty of getting out of order if I followed the rest of his argument or attempted to deal with any of the imputations and innuendoes which he made in the course of it. If he examines it carefully in HANSARD tomorrow, he will find that even on his own reasoning the raising of the figure is likely to make the provisions more rather than less effective. I do not want to go into it. It is a complex argument based on the fact that raising the figure from £5,000 to £7,000, if it has any effect on the prices of houses, is apt to reduce that of those below the £5,000 level.
  I admire the immense skill with which the hon. and learned Member for Kettering (Mr. Mitchison), aided and abetted by the hon. Member for Dunbartonshire, East (Mr.Bence), managed to extract the maximum amount of controversy and party political advantage from an innocuous Order. It is my task to commend the Order to the House rather than join in argument about the merits of the taxation of land value and the theories of Henry George, which I thought the hon. Member was raising at one time. However, I was glad that the hon. and learned Member went into detail about the 10 per cent. annual limit on special advances. It was a rather academic point, as his second point showed when he said that the amount of special advances made was only 2 per cent. over the whole building societies movement. Even that is, I think, slightly irrelevant, because the point that I was trying to make was that the vast majority of building societies concentrate on financing owner-occupation. There are a few who prefer to make advances on commercial property, and the 10 per cent. requirement was a necessary curb on their activities.
  The hon. Member for Paddington, North was apparently calling into question the 10 per cent. requirement and not the effect of raising the limit of special advances from £5,000 to £7,000, which was really almost entirely irrelevant to his point. Whatever the hon. Gentleman feels about it, it is useful to have a special advance category, and if the hon. Gentleman has cases in mind I wish that he would let us know of them. It is useful to have a special advance category prescribed by law, because, in

  1209
  the eyes of the building society movement, this draws a line between what is and what is not their proper business. I do not think that there is a great deal of difference of opinion in the House about what is the proper business of the building societies, and all that the Order seeks to do is to extend the definition of a normal owner-occupier from one who borrows £5,000 for a house to one who borrows £7,000.
  I was a little confused by the argument—though I was glad that it was not put forward seriously—that it is all right for building societies to deal with working class and lower middle class houses but it is not all right for them to deal with middle class houses. I thought that my hon. Friend the Member for Crosby (Mr. Graham Page) refuted that argument completely. It is the view of a large proportion of building societies that they should help the whole community with house purchase. They take the view that they should help all owner-occupiers and not just the poorer sections of the community, and it is up to the individual building society to decide on its own lending policy in this respect.
  I do not think that the Government should attempt to steer them one way or the other, and here I should like to re-assure my hon. Friend the Member for Newbury (Sir A. Hurd) that there was full consultation with the building societies movement before this Order was brought before the House. As my hon. Friend the Member for Wimbledon (Sir C. Black) pointed out, there was no basic disagreement. I think that at different times various ideas were put forward as to the figure to be adopted, but broadly speaking the figure of £7,000 was regarded as high enough to be an effective definition of a genuine owner-occupier, and low enough not to divert funds. To put it higher would have weakened the definition to some extent, and to put it lower would have inhibited the free choice of building societies in different parts of the country.
  The fifth and major argument put forward by the hon. and learned Member for Kettering, and later taken up by other hon. Members, was that this would cause some diversion of building society resources from their proper
  1210
  function, which again rather begged the question of what is their proper function. But even accepting that there would be a diversion of their resources into other less worthy channels, that is, making larger advances on more expensive houses, I find the argument difficult to follow, because, as far as I can see, the main piece of evidence brought forward was that building societies already could lend money on these more expensive houses but did not do so. I find it hard to deduce that when they can do so without making special advances they will suddenly devote the greater part of their resources to such property. It seems a complete non sequitur, I think that my hon. Friends dealt with that argument, and I think it improbable that the building societies will divert their money from smaller houses for the less well off sections of the community. My hon. Friend the Member for Wimbledon made this clear.
  As to the effect of this increase on prices, I suppose it could be argued that to the extent that it pushes up a little the price of a fairly expensive house—for example, a house in the £7,000 plus bracket—it will have an equal and opposite effect on the price of a house in the slightly less expensive bracket—that is, £7,000 minus. I never much care for arguments which seem to me to owe slightly more to physics than to economics for their strength; but in so far as prices will be affected, that is the most likely result. I think that the effect will be marginal in the extreme.
  This really alters the boundary which was used in the 1960 and 1962 Acts to define the genuineness of the owner-occupier definition. As this point was raised, I should point out that the 1960 figures had to be repeated in the 1962 Act without Amendment, because we had not the power to do otherwise. The 1962 Act was passed under the special consolidation procedure of the House and no innovations could be made. That is why this question was not even debated or considered before.
  The hon. Member for Stockton-on-Tees (Mr. W. T. Rodgers) departed slightly from some of the arguments

  1211
  advanced by the hon. and learned Member for Kettering. Again, I must decline to answer him on the general question of building society policy. This is not my responsibility, nor that of the Treasury, nor that of the Government. I do not think some points the hon. Gentleman raised would be affected by the Order. It is not the function of the Government to select the priorities of building societies for them. As to the question of the regional priority, I do not think that it would be right to distort building society legislation to give some special treatment to different areas. Indeed, I do not think it is possible under the terms of the 1960 Act. As far as I recollect, there is no provision for raising the limit in a discriminatory fashion. It would be better for the problems of the North-East to be dealt with in a different way. I am not trying to minimise the problems there. I am merely saying that an Order of this nature, even if it were possible to make a distinction for certain parts of the country, is not the right way of doing it.
  The building societies themselves have a regional flavour. We are not trying to impose on societies in one part of the country activities which are suitable for those in another part of the country. We are merely enabling the second class of society to undertake them if they wish to. My hon. Friend the Member for Wimbledon, with his expert knowledge, pointed this out.
  It is a comparatively small point. My belief is that the Order will fulfil a useful function. The hon. and learned Member for Kettering and some of his Friends appeared to have a slightly selective view of when the Building Societies Association's activities are good or bad. Perhaps this is natural in the circumstances. However, the Order has the approval of the Association, and building societies in general agree with the Order.
  If I may end with one party point, which I make in return for the many which have been made by hon. Mem-
  1212
  bers opposite, it is at least arguable that the fact that this change is needed does not reflect so much the specific housing problem and all the various troubles we have about prices as the rising standard of living, meaning that more people than before are beginning to buy their own homes and more people can buy the homes to which the Order refers. Therefore, I commend the Order to the House, for that among other reasons.
  Question put and agreed to.
  Resolved,
  That the Building Societies (Special Advances) Order 1963, a draft of which was laid before this House on 19th November, be approved.

  JAMAICA (GIFT OF A SPEAKER'S CHAIR) AND TRINIDAD AND TOBAGO (GIFT OF BOOKCASE AND GAVEL)
  11.10 p.m.
  The Lord Privy Seal (Mr. Selwyn Lloyd): I beg to move,
  That Sir Kenneth Thompson, Miss Joan Vickers, Mr. Shinwell and Mr. Charles Royle have leave of absence to present, on behalf of this House, a Speaker's Chair to the House of Representatives and a bookcase and gavel to the House of Representatives of Trinidad and Tobago.
  The House may wish to know that the composition of the delegation to perform these pleasant tasks has been arranged in consultation with you, Mr. Speaker, and that the delegation will be accompanied by Mr. A. C. Marples, the Clerk of Standing Committees.
  Mr. G. R. Mitchison: I rise only to say that in this matter the Leader of the House is speaking for the whole House, including my hon. and right hon. Friends.
  Question put and agreed to.
  Resolved,
  That Sir Kenneth Thompson, Miss Joan Vickers, Mr. Shinwell and Mr. Charles Royle have leave of absence to present, on behalf of this House, a Speaker's Chair to the House of Representatives of Jamaica and a bookcase and gavel to the House of Representatives of Trinidad and Tobago.

  COURT OF CRIMINAL APPEAL (ANTHONY SMITH)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Finlay.]
  11.12 p.m.
  Mr. Arthur Lewis: First, Mr. Speaker, I thank you for your kindness in selecting this matter for the Adjournment debate; secondly, I apologise for the fact that I have a very bad cold. If it were not for the fact that this is an individual constituent's case I would rather have been in bed at this hour. The Solicitor-General, whom I am pleased to see is here to answer on behalf of the Lord Chancellor's Department, is fully au fait with the details of the case, because we have had a considerable correspondence about it, and I will not bore him by going into intimate details. I will quickly run over the position in order to get the facts on the record. I want to make it clear that I make no criticism of the legal or judicial actions which have been taken.
  Briefly, the position is that I have a constituent who was sentenced to three years' imprisonment. This prisoner sought leave to appeal against sentence on 24th June. The case was heard by a single judge on 31st July, and leave to appeal was refused. He then appealed against this decision, and this appeal was heard on 11th October by the Lord Chief Justice, Mr. Justice Ashworth and Mr. Justice Inchcliffe. Again, leave to appeal was turned down.
  I would not attempt in any way to comment upon that decision, and that is not the point I wish to raise. My complaint lies with the Registrar's Department, which comes under the Lord Chancellor's control, in that, in both instances, neither the prisoner nor his parents—and nor, indeed, his legal advisers—were informed when these cases were to be heard. That is wrong and bad, although I agree unreservedly that the learned judges who heard this appeal and gave their verdicts would be the first to quote the old maxim which I know the legal profession often uses—that justice should not only be done but should be seen to be done. In this instance, the court
  1214
  officials knew the parents' address and could have written and notified them. However, the parents were not notified.
  Unfortunately, the prisoner is somewhat mentally backward. I do not mean any disrespect to his parents, but they are probably not quite as well versed in legal procedure as are some people. At this point in the story, a friend of the parents interceded on behalf of the prisoner and the parents. This friend telephoned the Registrar-General's office. He claims that he has evidence to show that on at least 17 occasions he telephoned that office to ask when the case would be heard. He claims that on each occasion he was told that he would be informed of the date; that he had no need to worry. I have with me a list of 17 dates on which he states that he telephoned. I will not weary the House with the actual details, particularly since the Solicitor-General has this information. Even in the week when the case was to be heard he telephoned and was told—having had to wait for a long time while the relevant papers were found, although I make no complaint on that score—not to worry, that he should not trouble himself and that it would not be heard that week but the following week.
  The next the friend heard was that the prisoner had been informed that the case had been heard, settled and resolved—and that the decision was against the prisoner. When I took this matter up with the Lord Chancellor he seemed to think that because legally the parents would not have had the right to have been heard, there was nothing to worry about and there was nothing for them to be concerned about.
  That is not the right approach. Even if the parents could not have been heard and even if they did not wish to say anything, they should have had the opportunity of being present at the hearing. I am not saying that this is so, but had they been present they may have felt that the learned judges—and I say this meaning no disrespect, for I am merely citing an example—may not have done their job properly. I appreciate that that would not have been the case, but the parents might have felt that way and, obviously, they would have felt happier had they been at the hearing.

  1215
  I put a Question to the Home Secretary on this general question when, earlier this month. I asked him
  "…whether…he will introduce legislation to ensure that the parents or legal advisers of prisoners are notified of the time and date of the hearing of prisoners' appeals, and are permitted to be present at such hearings."
  The right hon. Gentleman gave me a typically Ministerial Answer, that
  "Hearings before the Court of Criminal Appeal are open to any member of the public."—[Official Report, 9th December, 1963; Vol. 686, c. 42.]:
  I appreciate that, but unless they know when the case in which they are interested is coming up it is no good telling Mrs. Smith or Mrs. Brown, "You can go to the Court of Criminal Appeal any time you like and listen, but you will not be notified when the case in which you are interested is coming up." In such circumstances the interested party must attend the court every day for every hearing in the hope of being present when the relevant case is considered.
  I am suggesting that some system should be evolved whereby the Registrar, his Department or someone else should tell the next of kin—in the case I am raising it would have been the father and mother of the prisoner—when the appeal is to be heard so that they may have the opportunity of being present to at least witness what is going on.
  I do not disagree when the Lord Chancellor says that the judges would not have decided the case any differently if the parents or a legal adviser had been there. It would not have made the slightest difference in that respect, but the parents would have felt much happier and more contented in the knowledge that they were present. I do not wish to be out of order, but the same would apply if the parents were now in the Public Gallery listening to this debate. They would feel that their case was being put and being dealt with fairly.
  I ask that in future when cases of this kind are heard the Registrar's Department should go out of its way by telephone, telegram, registered letter or express letter, or by the more lengthy process of notification by letter, according to what the circumstances require, to notify Mrs. Smith or Mrs Brown when
  1216
  the husband's or son's case is due to be heard. It might well be that the Lord Chancellor's Department would say that it could not guarantee that the case would be heard on the date notified, but the communication could be framed accordingly to allow for an approximate date of hearing.
  I know that nothing can be done now in this case, but I should like to see a better procedure established for the future. Notification is not now incumbent upon the Registrar's Department. There is no obligation to give information in response to a telephone call. When it is given it is out of kindness and courtesy. There is no obligation even to give a detailed reply to a letter. I ask the Solicitor-General to ensure that in future some system is introduced whereby a standard form of letter is sent out notifying an appellant or the next of kin when a case is due or approximately due for hearing so that those concerned or their legal representative may be present.
  I know that the question of clemency is a matter for the Home Secretary, but I would ask the Solicitor-General to request his right hon. Friend to consider clemency in this case. I make no comment, adverse or otherwise, on the sentence but this boy is mentally retarded. Unfortunately, he was born during the blitz. A bomb which fell outside the home when the mother was pregnant seriously affected the child. He and his parents feel that he has been made to suffer three times. When the case was due to be heard, he was kept in custody for nine weeks while those associated with him were let out on bail, and he feel she was unfairly treated. When leave to appeal was refused without him or his parents being present he thought he was unfairly treated. Again, when his appeal against refusal to grant permission to appeal was heard, he and his parents and his legal advisers were not informed and were not present, and he feels that he has had a raw deal.
  I feel that the case can be looked at from the point of view of clemency. Perhaps the Solicitor-General will whisper in the ear of the Home Secretary and ask him to see the parents and talk about it and see whether something can be done. If he would, he will be doing a good job for the boy and the parents.

  1217
  If he could get the general position dealt with, it would be helpful to others who may be in this unfortunate position.
  11.26 p.m.
  The Solicitor-General (Sir Peter Rawlinson):The House is indebted to the hon. Member for West Ham, North (Mr. A. Lewis), who, despite his cold, has come here and given the House a very clear and vigorous exposition about the incident, which arose from what I completely accept was a most unfortunate misunderstanding. I will deal with that first, and then with the request which the hon. Gentleman directed to me.
  The position was, and the substance of the hon. Gentleman's complaint is, that the parents of Anthony Smith lost—I use the word advisedly—their opportunity to address the Court of Criminal Appeal on behalf of their son when his application for leave to appeal against sentence was being heard. First, he himself was informed of the application. I have no record, and am not advised, of his having any legal advisers at all.
  Mr. Lewis: The day before.
  The Solicitor-General:It may be that it was the day before, but in these circumstances he himself gets the information that his application is coming on.
  I turn to the important matter with regard to the parents. I want to make it clear that I do not dispute that the parents lost the opportunity. But it must be realised, as the hon. Gentleman appreciates, under the Statute setting up the Court of Criminal Appeal, that they have no legal right to be heard in such circumstances. Indeed, again under the Statute, the applicant himself has no legal right to be present when an application in such circumstances for leave is heard. But, as a general rule, if the parents of an applicant of the age particularly of this young man are present in court and wish to address the court on his behalf, the court is very willing to hear what they have to say. That appears to be the practice. No doubt if Mr. and Mrs. Smith had been present in court on this occasion and had sought the leave of the court to address it, their request
  1218
  would have been very sympathetically considered.
  I want to make it clear—I do not think the hon. Gentleman and I are in any disagreement about this—that if the Criminal Appeal Office, the Registrar's office, had received a direct request from the parents for information about the date of the hearing, they would have received a written notification in advance.
  I come now to the misunderstanding, because the unhappy truth is that, whatever else it was that the Criminal Appeal Office received, there is a conflict of evidence about the number of telephone calls which Mr. Leonard made and their precise content. What was never received was a direct and personal request by or on behalf of the parents of Anthony Smith. This certainly was a great pity. As Mr. Leonard, the gentleman who telephoned, himself wrote to the hon. Gentleman and the hon. Gentleman in his turn passed on to my noble and learned Friend, the officers of the Criminal Appeal Office throughout showed every courtesy and every willingness to help. Indeed, the misunderstanding which arose was the direct result of their willingness to help, because they were under the clear impression that what they were being asked to do was to expedite the hearing of Smith's application for leave to appeal. It now appears that this was not so—because as an applicant for leave to appeal Smith enjoyed all the privileges of a person in that position in the way of visits by his parents to which he would not be entitled as an ordinary prisoner—and that the parents were anxious apparently to prolong the period during which he was specially treated and they could have more opportunities to visit him.
  But the true position is that the parents were anxious to attend the hearing of this application, and Mr. Leonard, the gentleman who did telephone, was acting on their behalf. The hon. Gentleman has suggested that with great courtesy, but with proper vigour, that there was some neglect or slip on the part of the staff of the Criminal Appeal Office, but this I cannot fully accept. That there was misunderstanding I certainly do, but the staff never appreciated that Mr. Smith's patents wished to attend the hearing, and all they understood was that

  1219
  the person on the telephone wanted the appeal to come on quickly. In fact they were under no duty—this is another point made by the hon. Gentleman—in the Criminal Appeal Office to inform them of the date which had been fixed for it, but no one is more sorry that this misunderstanding should have occurred than the responsible officers of the Criminal Appeal Office, to whom Mr. Leonard has paid his tribute, and they regret equally the conflict of evidence which has arisen.
  To take one example, they simply do not recollect the large number of telephone calls which Mr. Leonard claims to have made, but it is fair to observe that in the Criminal Appeal Office, as the hon. Gentleman can imagine, they do receive a very large number of telephone calls every week.
  The hon. Gentleman has accepted the perfect propriety of the judicial proceedings which took place, and this was, as he said, an appeal against sentence only, and the court had before them when hearing the appeal, a long letter which had been written by the parents of Smith and which was asking for clemency, and neither my noble and learned Friend nor the court nor I know whether the parents have anything to add to what in fact was set out in the letter. The question whether in these circumstances the matter can be reopened is not one, as the hon. Gentleman appreciates, for the Government but for the court, but it is open to the parents to take the matter up with the court, and if they so wish to write to the Registrar of the Court of Criminal Appeal at the Royal Courts of Justice.
  So far as the past of this case is concerned, a very thorough inquiry has been held. Every single member of the staff has been asked about it, and my noble and learned Friend is wholly satisfied that the source of this misfortune was this misunderstanding.
  The staff of the Criminal Appeal Office will continue to do, as they have done in the past, all they can to help, and if the parents of an appellant wish
  1220
  to attend the hearing of the appeal and the Registrar is notified in writing, they are informed of the date of the appeal. They need no special permission to attend the court, which is open to the public, of course, but the Registrar usually arranges in such circumstances for them to be admitted to the body of the court instead of the gallery.
  Mr. Lewis:If I may interrupt the hon. and learned Gentleman, for the first time, I think, may I ask, if that is the case, as there are many of these people who do not understand the procedure, could they not be notified in any case that they could attend? Because it is not generally known.
  The Solicitor-General: The position is that if persons write saying they wish to be there, then they get information as to when the appeal will be heard, and that they can come. This case has shown that misunderstandings may arise from telephoned inquiries, and in future if an inquiry is made about a case which is not listed for hearing, the inquirer will be asked to put his request into writing. I think that this will prove a more accurate and safer method of proceeding. It is hoped in future to avoid misunderstandings of the kind which occurred in this case.
  In reply to the last part of the matter which the hon. Member raised, I will certainly undertake to draw my right hon. Friend's attention to it, although perhaps it does not arise from these proceedings. I will certainly pass on his request.
  Mr. Lewis: May I thank the Solicitor-General for his remarks and hope that he will be able to do something to put right what appears to be a grievance through misunderstandings, whichever way they may have been caused. I thank him very sincerely for the way in which he has dealt with the matter.
  Question put and agreed to.
  Adjourned accordingly at twenty-four minutes to Twelve o'clock.