Commons Sitting of 28 May 1963

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MARINE SOCIETY BILL [Lords]
Read the Third time and passed, without Amendment.

MEDWAY CONSERVANCY BILL
[Queen's Consent, on behalf of the Crown, signified]
Bill read the Third time and passed.

SALVATION ARMY BILL
As amended, considered; to be read the Third time.
PIER AND HARBOUR PROVISIONAL ORDER (BEMBRIDGE HARBOUR) BILL
  PIER AND HARBOUR PROVISIONAL ORDER (GLOUCESTER HARBOUR) BILL
    PIER AND HARBOUR PROVISIONAL ORDER (YARMOUTH (ISLE OF WIGHT)) BILL
    Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  SCIENCE

    U.S.-Financed Research
    Mr. Dalyellasked the Parliamentary Secretary for Science what is the monetary value of the scientific research, carried out in the United Kingdom, financed directly or indirectly by funds from the United States Public Health Department vote.
    The Parliamentary Secretary for Science (Mr. Denzil Freeth): A figure of 1,521,140 dollars equivalent to £543,000, has been published by the United States Public Health Service as the expenditure
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    by its National Institutes of Health on research projects in the United Kingdom in their fiscal year 1962.
    Mr. Dalyell: In the light of these considerable figures does not the Minister think that the remarks of his noble Friend in another place about American scientists were somewhat ungracious? Is the Parliamentary Secretary aware that the Americans are getting rather tired of financing European research and might well, for understandable reasons, divert their funds elsewhere?
    Mr. Freeth: The answer to the first part of the supplementary question is "No, Sir". In answer to the second part, it shows the recognition of the value of research done in this country and the esteem in which our research workers are held by the Americans that they wish to finance work here.

    Research, Scotland
    Mr. Benceasked the Parliamentary Secretary for Science (1) what percentage of the Government expenditure of £100 millions on support for private industrial research has been paid to industrial undertakings located in Scotland;
    (2) what percentage of the total Government expenditure on scientific and technical research in 1961–2 was spent in Scotland.
    Mr. Denzil Freeth: The Advisory Council on Scientific Policy estimated total Government expenditure in 1961–62 on research and development in the United Kingdom at £385 million, including £177 million on research and development carried out in private industry. The proportions of this spent in Scotland are not known.
    Mr. Bence: There are tables of statistics in the Advisory Council's Report which show the proportion of expenditure on development in Scotland. Why cannot we have these figures separated here?
    Mr. Freeth: Although I agree that it would be statistically feasible, I am advised that it would not be statistically significant because of the difficulties of disentangling the research undertaken by Scottish subsidiaries of English firms and

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    vice versa and, in particular, because of research sub-contracted across the Border.
    Mr. Bence: I referred clearly in the Question to "industrial establishments located in Scotland". Surely we can have the figures for research and development financed at plants, by whoever they are owned, located in Scotland?
    Mr. Freeth: As I have said, I do not believe that these would be statistically significant figures.

    Building Research Station
    Mr. Boydenasked the Parliamentary Secretary for Science, in view of the need for increased productivity in the building industry, what additional contributions his Department is making to the work of the Building Research Station.
    Mr. Denzil Freeth: In 1964–65 the non-industrial staff of this station will be increased by approximately 6 per cent. in order to increase those activities which contribute most directly to greater productivity.
    Mr. Boyden: In view of the major importance of the industry and the relatively low contribution from the industry itself to research, does the Parliamentary Secretary think this is adequate? Can he give an assurance that all the resources that are necessary will be devoted to cold weather research and that this particular difficulty will not hold up the building industry?
    Mr. Freeth: With regard to the first part of the supplementary question, money and manpower resources available for Government civil research are not unlimited and have to be divided amongst the various research stations, all of which are doing work of national importance. The hon. Gentleman will have seen the proposal made by my right hon. Friend the Minister of Public Building and Works for the establishment of a building research and information association.
    With regard to the second part of the supplementary question, if the hon. Gentleman cares to table a detailed Question to me I will willingly give him or send to him details of the research into insulation which has taken place at the Building Research Station.
    Mr. Wainwright: Will the Parliamentary Secretary give greater consideration to research into the traditional type of building, especially for private houses and houses built by local authorities, so that the rate of building these houses can be speeded up?
    Mr. Freeth: A considerable amount of research is going on at the Building Research Station. If any hon. Members would like to go there and see what is being done, I will gladly do my best to arrange visits.

    Meat Research
    6. Mr. Wolrige-Gordonasked the Parliamentary Secretary for Science whether the Director of the Meat Research Institute has now completed the drafting of his research programme.
    Mr. Buckasked the Parliamentary Secretary for Science what progress has been made in connection with the Meat Research Institute.
    Mr. Denzil Freeth: Plans for the building and for the organisation and staffing of the Institute are now under detailed study by the Agricultural Research Council. The Director's proposals for the research programme will be progressively developed in the light of the progress of research at the Low Temperature Research Station and other factors.
    Mr. Wolrige-Gordon: I thank my hon. Friend for that reply. Have any decisions yet been taken about sub-stations for this research institute?
    Mr. Freeth: No, Sir.

    Post-graduate Students (Facilities)
    Mr. Dalyellasked the Parliamentary Secretary for Science how many full-time university and college of advanced technology post-graduate students make use of the facilities at the Mechanical Engineering Research Laboratory, East Kilbride, the Radar Research Establishment at Malvern and the Royal Aircraft Establishment at Farnborough
    Mr. Denzil Freeth: Although the facilities available at the National Engineering Laboratory have been made widely known, they have not yet been used by post-graduate students. I am glad to

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    say that arrangements for closer co-operation between the Laboratory and the Royal College of Science and Technology at Glasgow are at present under discussion.
    The position at the other two stations is a matter for my right hon. Friend the Minister of Aviation.
    Mr. Dalyell: What plans do the various Government Departments concerned—the hon. Gentleman's Office and the Ministry of Aviation—have for bringing together students to make fuller use of this highly sophisticated and expensive equipment?
    Mr. Freeth: Certain universities permit post-graduates to spend part of their Ph.D courses away from the university at institutes where the particular nature of their work makes this desirable. I would hope that we might have an expansion of this type of activity, and doubtless this is one of the matters that the Robbins Committee will be considering.

    Aldermaston Atomic Weapons Research Establishment
    Mr. Crossmanasked the Parliamentary Secretary for Science whether, in view of the uncertainty among the staff, he will now make a further statement about the employment situation at the Aldermaston Atomic Weapons Research Establishment after March, 1964, and about his arrangements for dealing with the redundancy in the event of a reduction of work.
    Mr. Denzil Freeth: I regret I can at present add nothing to my statement of 19th March.
    Mr. Crossman: Surely the hon. Gentleman is aware of the undesirability of such large staffs being in a state of continual uncertainty, because it demoralises them? Cannot he at least give us the assurance that the team will be held together and not be disbanded?
    Mr. Freeth: I have said that it is very unlikely that there will be any redundancy of scientists. With regard to the other staff at Aldermaston, it has been said that the question of redundancy cannot be ruled out after March, 1964. The staff have been told that by the autumn of this year it should be possible to give a more precise indication of staffing
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    arrangements thereafter. I am afraid that at present I cannot add anything to my earlier statement.
    Mr. Crossman: Is not the hon. Gentleman at least able to give us the assurance that we are not concerned only about redundancy but about the breaking up of staff? Is not that something where his advance planning could at least ensure that where a large staff is built up it will be retained as a unit?
    Mr. Freeth: When the plans are fully made for the position after March, 1964, a statement will be made.

    Low Temperature Research Station, Cambridge
    Mr. Skeffingtonasked the Parliamentary Secretary for Science what changes are proposed for the Low Temperature Research Station at Cambridge.
    Mr. Denzil Freeth: As already announced, the Agricultural Research Council proposes to continue the work of this station at two new institutions, the Meat Research Institute near Bristol, and the Food Research Institute at Norwich, when the premises in Cambridge have to be vacated.
    Mr. Skeffington: Would the Parliamentary Secretary be able to say what is to happen to the staff now working at the Ditton Laboratory? Can he confirm or deny the suggestion that those working at the John Innes Horticultural Institute are also to go to Cambridge? If that is the case, what will happen to the new building which has recently been erected at Hertford?
    Mr. Freeth: With regard to the Ditton Laboratory, some of the work will be transferred to Norwich in due course and the staff concerned have been told. With regard to the John Innes Institute, this is a separate institute and it is unlikely to be moved to Cambridge.

    National Economic Development Council (Report)
    Mr. Skeffingtonasked the Parliamentary Secretary for Science what action it is proposed to take in respect of paragraphs 6 to 14 of the report of the National Economic Development Council, "Conditions favourable to Faster Growth."
    Mr. Denzil Freeth: The growing effort of the Department of Scientific and Industrial Research in the field of industrial research, and the Government's expansion programme in the fields of technical and higher education are all directed to the objectives referred to by the Council. The matters discussed in paragraphs 11–13 are to be further considered by the Council itself.
    Mr. Skeffington: In view of the highly significant section of the Report to which reference is made in the Question, does not the Parliamentary Secretary think that he ought to be a little more specific, or are we to take the paragraphs in the Report as so much window-dressing?
    Mr. Freeth: No. These are very important paragraphs which we are certainly considering. They really demand an intensification of effort rather than the establishment of some new path. These matters are now being discussed. I am informed that the Council itself will discuss this section of the Report again.
    Mr. Lubbock: Will the Parliamentary Secretary say something about the specific recommendation to extend the use of civil development contracts to industry?
    Mr. Freeth: We are in favour of this and I hope that, following the hon. Member's Question, we will receive even more applications from industry for D.S.I.R. support in this field.
    Dr. Bray: Will the Parliamentary Secretary read this part of the Report again, because it says specifically that Government and industry should work together, with the implication that they are not yet doing so in partnership in new fields of research? The Minister must be aware that the present effort to solve this immensely important problem is totally inadequate.
    Mr. Freeth: I fully agree that Government and industry should be in partnership in the research fields. We are already in very close touch with industry through the research associations and also through the industrialists who give up their time to help on D.S.I.R. committees and on the Council.
    Dr. Bray: On a point of order. In view of the extremely unsatisfactory nature of the Parliamentary Secretary's
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    reply, I give notice that I shall seek to raise this matter on the Adjournment.

    Research Projects (Qualified Staff)
    Mr. Boydenasked the Parliamentary Secretary for Science in what scientific fields desirable research projects are being currently impeded by shortages of qualified staff.
    Mr. Denzil Freeth: It is not possible to distinguish clearly difficulties arising out of shortage from those, which often occur, of finding high-class research workers with the right interests and aptitudes for particular projects. Among the fields in which the research councils report delay from these causes are engineering, genetics, soil physics and animal diseases.
    Mr. Boyden: What is the hon. Gentleman's Office doing about the particular delayed projects?
    Mr. Freeth: The essential thing is the production of more scientists. As the hon. Gentleman knows, the Government are having very great success in this field.
    Mr. Boyden: Especially in America, I take it.

    Geological Research
    Mr. Swinglerasked the Parliamentary Secretary for Science how many persons are at present occupied in official geological research; what steps he is taking to extend this research; and if he will consult the Minister of Transport about ways and means of achieving the most effective employment of geologists on the planning of roads.
    Mr. Denzil Freeth: Five hundred and eighteen persons are employed on geological research by the research councils, an increase of 23 per cent. in the last five years.
    The advice of geologists in the Geological Survey and in the Road Research Laboratory is available to my right hon. Friend and his agents.
    Mr. Swingler: Is the Parliamentary Secretary aware that there is obviously considerable room for improvement, both in research and in its application? If he has any doubts about this, would he enter into consultation with his right hon. Friend the Minister of Transport about

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    the amount of wastage and inefficiency that have occurred in the construction of the M.6 motorway, as a result obviously of a failure to employ sufficiently qualified geologists to do the initial work?
    Mr. Freeth: I think we must remember that not only is geology important but that pedology is equally important, and a great deal of research is going on in both these fields.

    National Chemical Laboratory (Site)
    Sir H. Legge-Bourkeasked the Parliamentary Secretary for Science whether a new site for the National Chemical Laboratory has yet been chosen; and what criteria have been used in making the choice.
    Mr. Denzil Freeth: I refer my hon. Friend to my reply to my hon. Friend the Member for Darlington (Mr. BourneArton) and the hon. Member for West Lothian (Mr. Dalyell) on 19th March, 1963.
    Sir H. Legge-Bourke: Will this decision be influenced by the proximity that the eventual site will have to the National Physical Laboratory? I know that many members of the National Chemical Laboratory staff would like to feel that they could be at fairly close hand.
    Mr. Freeth: I agree with my hon. Friend that it would be an ideal solution to have a new National Chemical Laboratory building within easy reach of the National Physical Laboratory building at Teddington. This appears to be unlikely to be achieved because of the difficulty of finding a suitable site in the near vicinity. However, we certainly place very great importance upon there being close contact between the working of the National Chemical Laboratory and the National Physical Laboratory, wherever either may be situated.
    Mr. Ross: Is the Minister aware that this is just the kind of laboratory that should be sited in Scotland where we want to promote the very industries that we expect will develop from the work of this laboratory?
    Mr. Freeth: I note the hon. Gentleman's intervention.
    Dr. Bray: Will the Parliamentary Secretary note the desirability of locating this laboratory near an existing centre of the chemical industry, in view of the great importance of securing a rapid transfer of views from the scientists to the industrialists?
    Mr. Freeth: I note the hon. Gentleman's suggestion as well, but of course it will not be possible to put it in both the North-East and Scotland.
    Sir H. Legge-Bourke: Is my hon. Friend now prepared to answer a little more clearly the second part of my Question, regarding the criteria which are being borne in mind?
    Mr. Freeth: The technical requirements must have an overriding influence. My noble Friend has for some years asked research councils to take the claims of areas of high unemployment into consideration, but I think that the technical requirements must have an overriding part in the decision.

    Building Projects (Manpower)
    Sir H. Legge-Bourkeasked the Parliamentary Secretary for Science what changes will result from the completion of various defence building projects relating to scientific research and development, with particular reference to the manpower involved and conditions of employment.
    Mr. Denzil Freeth: The reduction in the capital building programme of the Atomic Energy Authority, which is largely due to completion of civil projects, has been accelerated to some extent by further decline in building work for defence purposes. Most of the consequential reduction in staff in the Authority's engineering group is being dealt with by not replacing wastage and by redeployment, but there may be some redundancy. My noble Friend is responsible for no other defence projects.
    Sir H. Legge-Bourke: Will my hon. Friend give an assurance that as much warning as possible will be given to the men concerned? Is it a fact that they are already being warned of their discharge, before an actual decision or date has been arrived at?
    Mr. Freeth: Regarding the first part of my hon. Friend's supplementary question, we are doing our best to give as much warning as possible. Where it appears likely that there will be redundancy within any given category, we try to warn the men who may be concerned so that, if they wish to, they can start looking for another job and have the maximum amount of time in which to do so.

    Scottish Research Laboratories Mutual Assistance Scheme
    Mr. Willisasked the Parliamentary Secretary for Science to what extent a survey has been made of the results of the work of the Scottish Research Laboratories Mutual Assistance Scheme.
    Mr. Denzil Freeth: In the last year, the Scottish Research Laboratories Mutual Assistance Scheme has dealt with 230 inquiries: of these 85 came from industrial laboratories, 65 from universities and technical colleges, 63 from Government laboratories and there were 17 others. Over half these inquiries were given precise answers.
    Mr. Willis: Is the Parliamentary Secretary aware that a year ago we were told that the Government would try to make a survey of the final results of the work of this scheme? Could he say something about that?
    Mr. Freeth: We do not regard it as a scheme which has a once-for-all existence, but as something which will continue and be of immense value to industry. It is very important to remember that whatever the figure of the number of inquiries that go through D.S.I.R.'s headquarters in Edinburgh, many more inquiries are dealt with by people using the handbook and dealing direct with people who may have the facility they require.
    Mr. Willis: The hon. Gentleman is missing my point. We were promised a year ago that a proper survey would be made in order to find out the effectiveness of this work. What, if anything, has been done about that?
    Mr. Freeth: Perhaps the hon. Member would care to put down a detailed Question on that point. I do not myself recall making a promise of a published survey.

    D.S.I.R. Staff (Scotland)
    Mr. McInnesasked the Parliamentary Secretary for Science the number of scientific staff employed by the Department of Scientific and Industrial Research at the latest convenient date; and what proportion of these was employed in Scotland.
    Mr. Denzil Freeth: The number of scientific staff employed by the Department of Scientific and Industrial Research on 1st May, 1963, was 3,536, 13 per cent. of whom were employed in Scotland.
    Mr. McInnes: Is the Parliamentary Secretary aware that Scotland produces almost 20 per cent. of the total number of scientists and technologists in this country, yet only 13 per cent. of them find posts available in Scotland? Is he aware that his reply indicates that some action will have to be taken if employment is to be found for these people in Scotland?
    Mr. Freeth: Our present plans for the D.S.I.R. include some expansion in the total staff. Scotland will share in this expansion.
    Mr. W. Hamilton: Can the hon. Gentleman say what proportion of this staff is in London and if there is any necessity for them to be in London? Is this not an example of the way in which the Government could set a lead and disperse them?
    Mr. Freeth: The only people who are in London are at the D.S.I.R. headquarters, and they have to be there. If the hon. Member wishes to put down a Question about the Laboratory of the Government Chemist or the Tropical Products Institute, I will be glad to answer it.

    Agricultural Research Council Staff (Scotland)
    Mr. Gourlayasked the Parliamentary Secretary for Science the number of scientific staff employed under the oversight of the Agricultural Research Council at the latest convenient date; and what proportion of these was employed in Scotland.
    Mr. Denzil Freeth: On 1st October, 1962 the total, including experimental and scientific assistant classes, was 2,770,

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    of whom about a quarter were employed in Scotland.
    Mr. Gourlay: While we appreciate that there is a large percentage of research workers in this field in Scotland, may I ask whether the Parliamentary Secretary would agree that the excellent work which these gentlemen do could be extended into other forms of research? Will he undertake to expand the service?
    Mr. Freeth: I cannot guarantee to have a major expansion at any particular station in answer to a general Question of this nature, but if the hon. Member feels that there is a station under the scientific oversight of the Agricultural Research Council in Scotland which needs to be increased I will gladly answer a Question.

    Nature Conservancy Staff (Scotland)
    Mr. Hannanasked the Parliamentary Secretary for Science the number of scientific staff employed by Nature Conservancy at the latest convenient date; and what proportion of these was employed in Scotland.
    Mr. Denzil Freeth: The total number of scientific staff employed by the Nature Conservancy on 1st April, 1963, was 135, of whom about one-fifth were employed in Scotland.
    Mr. Hannan: Is the hon. Gentleman aware that there is not a single residential nature and field study centre in Scotland, although there are seven such centres south of the Border? Is he further aware that there is not one local nature reserve trust in Scotland, although every county in England has one? Will he consult his right hon. Friend the Secretary of State for Scotland on this matter to see if some improvement can be made?
    Mr. Freeth: We are dealing with the Nature Conservancy and I think that the hon. Member is confusing that with a number of voluntary bodies. The Nature Conservancy has 14 staff employed at the headquarters in Edinburgh, six at the Speyside Research Station, two employed on research on grey seals, and four on grouse and moorland ecology.
    Sir C. Osborne: Is not one-fifth in Scotland more than Scotland's fair share? [HON. MEMBERS: "Oh."]

    D.S.I.R. Development Contracts (Scotland)
    20. Mr. Bennettasked the Parliamentary Secretary for Science the value of Department for Scientific and Industrial Research development contracts placed at present with private industry; and what proportion of these contracts has been placed in Scotland.
    Mr. Denzil Freeth: Three development contracts have so far been placed by the Department of Scientific and Industrial Research having a total value of £593,000; one of these, for £57,000, has been placed in Scotland.
    Mr. Bennett: Is the Parliamentary Secretary satisfied with the proportion of contracts being placed with private industry in Scotland? If not, is he prepared to take such action as may lead to an increase in the number of contracts being placed?
    Mr. Freeth: My noble Friend and I are not satisfied with the rate at which applications have been coming in. I hope that more will come in and that everything that can be done to publicise development contracts will be done, to the benefit of the nation, including Scotland. My noble Friend has recently been having discussions with industrialists over this very question.

    Grant-Aided Research Organisations (Scotland)
    Mr. Milanasked the Parliamentary Secretary for Science the number of grant-aided research organisations now enjoying full membership of the Government scheme; and how many of these organisations are Scottish based.
    Mr. Denzil Freeth: Fifty-two. One of the research associations is centred in Scotland and three others have branch laboratories or use structure testing rig there. The liaison services provided by all the associations enable them to assist their members in Scotland.
    Mr. Millan: Is the hon. Gentleman aware that there is a great deal of evidence to show that industry in Scotland does not use research facilities to the extent it should? Would the Parliamentary Secretary say what special steps his Department takes to bring to

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    the attention of industrialists in Scotland and other areas of high unemployment the necessity of using the facilities afforded by research associations and Government laboratories?
    Mr. Freeth: Both the D.S.I.R. and the Office of my noble Friend publicise the work of the research associations; and there is later on the Order Paper a Question about the special liaison grants, which has this particular aspect of their work in mind.
    Sir H. Legge-Bourke: Would not my hon Friend agree that this attempt to wave the flag of the Cross of St. Andrew so strongly in science may lead, if it were to be implemented, to action which is highly unscientific? Would he do his best to instil into the minds of hon. Members who represent Scottish constituencies the fact that it is possible that information gained and research work done in England can be made available in Scotland, too?
    Mr. Freeth: I have never myself regarded the Border as an impenetrable barrier to the dissemination of information.

    D.S.I.R. and Grant-Aided Research Organisations (Conferences)
    Mr. Lawsonasked the Parliamentary Secretary for Science what major conferences between representatives of the Department for Scientific and Industrial Research and grant-aided research organisations have been held since the conference of April, 1961; and what representation from Scotland there has been at those conferences.
    Mr. Denzil Freeth: There have been no major conferences between representatives of the Department of Scientific and Industrial Research and the grant-aided research associations since the conference in April, 1961.
    Mr. Lawson: Is not that a great pity? These conferences were high-lighted in the last Report of the Department and, from the information then given, seemed to be exceedingly valuable. Will the hon. Gentleman see to it that other conferences are held speedily—and that Scotland is adequately represented at them?
    Mr. Freeth: As to the last part of the hon. Gentleman's supplementary question, attendance at such conferences has in the past normally been restricted to chairmen and directors of research associations. That would cover the point about the particular persons who might attend. With regard to the first part, I do not think that one wants to have these conferences too often; there is a great deal of follow-up work to be done. I would remind the hon. Gentleman that an unofficial committee of directors of research associations meets about three times a year, whose morn-hers, if they feel it desirable, invite members of the headquarters staff of the D.S.I.R. to attend.
    Mr. Lawson: Would the Parliamentary Secretary bear in mind that it is two years since such a conference was held? As these conferences were considered in the Report to be of such value, something might have been done in the meantime.
    Mr. Freeth: A great deal has.

    D.S.I.R. (Assistance to Industry Scheme)
    Mr. J. Robertsonasked the Parliamentary Secretary for Science how much was spent during 1961–62 in grants under the Department for Scientific and Industrial Research special assistance to industry scheme; and what part of those grants went to industries in Scotland.
    Mr. Denzil Freeth: £59,675. All the grants were made to research associations, membership of which is open to Scottish firms.
    Mr. Robertson: Is the Parliamentary Secretary aware that many hon. Members believe that the Department is doing a very good job of work in administering the scheme? Would he agree that this is a good example of some of the advantages of public enterprise, and would he encourage the Department to extend its activities in this regard, with particular reference to Scotland?
    Mr. Freeth: I am grateful to the hon. Member—and I know that the D.S.I.R. will be—for the kind words in the first part of his supplementary question. As for the second part, I think that Scottish members of research associations have

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    benefited generally from the increased liaison activities that have been made possible.

    National Lending Library for Science and Technology
    Mr. Rossasked the Parliamentary Secretary for Science the average number of books and scientific papers on loan per month from the National Lending Library for Science and Technology; and what proportion of current lending is to borrowers in Scotland.
    Mr. Denzil Freeth: The average number of publications lent by the National Lending Library for Science and Technology is now 11,900 per month; of these, about 4·5 per cent. are lent to borrowers in Scotland.
    Mr. Ross: Is the Parliamentary Secretary aware that this is an invaluable service, making available in the original language, or translation, knowledge of scientific development all over the world? Is he satisfied that its use is developing as much as he would like, and can he really be satisfied that our universities, our students, and those in industry and elsewhere are making the best possible use of this service?
    Mr. Freeth: Like the hon. Gentleman, I could not be more keen on trying to get this Library more widely used, and I hope that this will occur as people learn more about the facilities it can offer.
    Mr. Ross: Is it not up to the Minister, having made the Library available, to publicise as much as possible in the right quarters the fact that it exists, and the range and nature of the publications made available by it?
    Mr. Freeth: I think that my noble Friend does that, and has done since the day he opened it.

    Industrial Machine Design
    Mr. Dempseyasked the Parliamentary Secretary for Science what the Department of Scientific and Industrial Research is doing to develop more extensive research into the field of industrial machine design, with a view to countering foreign competition.
    Mr. Denzil Freeth: The Department has increased its research work at the
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    National Engineering Laboratory, its support of research associations and grants to university graduates and research workers, as well as instituting development contracts. Last July, it set up the Feilden Committee on engineering design.
    Mr. Dempsey: Is the Minister aware that the Department is not doing sufficient to stop the flooding of our workshops by German machines, some of which I inspected in Coatbridge only a few weeks ago? Does he realise that we have the material and the ingenuity, but not the design? Is it not time that we faced this situation realistically by competing in industrial design with foreign competitors?
    Mr. Freeth: I agree that our industrial design position is not all it might be. It is for that reason that the D.S.I.R., at the instigation of my noble Friend, set up the Feilden Committee, whose Report we hope to have soon. I would remind the hon. Gentleman of the grant of £140,000 made recently by the D.S.I.R. to the Institute for Advanced Studies in Engineering Sciences at Birmingham University for research into an interdisciplinary approach to the machine design problem. We are doing quite a lot.
    Sir C. Osborne: Why is Scotland such a backward country?
    Miss Herbison: Is the Minister aware that this Question applies to the whole of Britain? Is the hon. Gentleman really satisfied that sufficient research is being made into industrial design? Is he also satisfied that the machine tool industry in Britain—which includes England—is doing enough research into machine tools? Has he not had complaints time and time again from hon. Members who visit our factories, and find that the plant is made in Western Germany, made in Japan, made in Italy—the factories of a nation that once led the world in machine tool making?
    Mr. Freeth: I fully agree that Britain includes both Scotland and England—
    Mr. Bence: And Wales.
    Mr. Freeth: —and Wales. While one has to recognise that one cannot expect every single variety of machine tool to be made in this country, I agree with the

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    hon. Lady that research in the machine tool industry has not in the past been all that could be desired. The hon. Lady will remember that the Machine Tool Research Association was recently set up because of representations by the D.S.I.R. to the industry, and enjoys specially favourable grant terms.
    Mr. Woodnutt: Would not my hon. Friend agree that the British machine tool industry is increasing its exports every year; and that if hon. Members go round foreign factories they will find many with British machine tools and plant?
    Mr. Freeth: I fully agree with my hon. Friend. We have a very fine industry, but the fact remains that an enormous amount of research has to be undertaken, if we are to continue to be ahead and build on the excellent record that the industry has hitherto had.

    Fast Breeder Reactor Power Station
    Mr. J. H. Osbornasked the Parliamentary Secretary for Science what progress has been made with the fast breeder reactor power station.
    Mr. Denzil Freeth: The power of the experimental fast reactor at Dounreay was raised from 30 MW to 35 MW (thermal) during the last operating period. The Atomic Energy Authority informs me that it hopes shortly to raise the power still further.
    Mr. Osborn: Can my hon. Friend indicate when we can expect a commercial power station on this basis?
    Mr. Freeth: I think that it will be necessary to build a prototype power-producing reactor that is large enough to demonstrate that the engineering and scientific problems have been successfully overcome. The Authority is investigating the feasibility of this, and will doubtless ask Her Majesty's Government to authorise the building of such a station when it has its plan ready.
    Mr. Ross: Will the Parliamentary Secretary explain to his hon. Friend the Member for Louth (Sir C. Osborne) that when Scotland gets the oportunity, as at Dounreay, it can make a very good job of these things?
    Mr. Speaker: It is not the job of the Minister to give explanations to one of his hon. Friends.

    Atomic Energy Authority (Exports)
    Mr. J. H. Osbornasked the Parliamentary Secretary for Science what were the nature and value of the products exported by the Atomic Energy Authority last year.
    Mr. Denzil Freeth: During the last financial year, the Authority exported fuel elements and uranium worth£4¾ million, and isotopes worth£4¾ million, making £5½ million in all.
    Mr. Osborn: Has my hon. Friend any information whether this figure, and the range of products, is likely to increase?
    Mr. Freeth: I have every hope that it will increase, and I have been most impressed by the effort that the Authority is putting into its salesmanship.
    Mr. Snow: What information is at the disposal of our commercial counsellors on the availaible exportable potential?
    Mr. Freeth: If the hon. Gentleman is referring to commercial counsellors in embassies abroad—
    Mr. Snow: Yes.
    Mr. Freeth: —to the best of my knowledge and belief, they have full information, but if the hon. Gentleman has come across a case where he feels that information is deficient, I should be most grateful to him if he would let me know.
    Sir H. Legge-Bourke: Is my hon. Friend the Parliamentary Secretary satisfied that the price we are obtaining for the uranium we are exporting compares satisfactorily with the price we have been paying for uranium from Canada?
    Mr. Freeth: I think we have to remember that if we are to export fuel elements, we must in our costs reflect the current world price of uranium, irrespective of any price we may happen to have paid.

    Atomic Energy Authority and Euratom
    Mr. Skeetasked the Parliamentary Secretary for Science what are the relations between his Department and

    1111
    the Atomic Energy Authority and Euratom; and if he will give a report on recent discussions.
    Mr. Denzil Freeth: My noble Friend and the Chairman of the Atomic Energy Authority are members of the United Kingdom/Euratom Continuing Committee, set up under the Agreement for Co-operation of 1959. The President of the Commission and one of the Commissioners are the Euratom members. A successful meeting of this Committee was recently held at Ispra, near Milan, at which a number of possibilities for furthering co-operation were considered and remitted to the standing Joint Working Group of officials for further examination.
    Mr. Skeet: In view of the preeminence of England and Scotland in the use of atomic energy for peaceful purposes, what precisely has Euratom to contribute to the United Kingdom in nuclear technology? Will my hon. Friend indicate from his consultations on atomic energy what is the break-even point for nuclear power in Europe?
    Mr. Freeth: I should like to have notice of the last part of that supplementary question, because the calculations which Europeans make are ones for which, naturally, I am not responsible. As for the first part, I think that there are many fields where cooperation can be fruitful and where Euratom research may be able to help us, just as our research might be able to help them. I think that we may have an exchange of information on fast reactor developments and on the reprocessing in the United Kingdom of irradiated fuel from Euratom countries and co-operation, particularly in biology and in safety standards.
    Mr. Skeet: Apart from this reactor, in what way has Euratom contributed to our knowledge?
    Mr. Freeth: If my hon. Friend would like to put a specific Question about the benefits obtained from co-operation hitherto, I would willingly answer it. At a recent meeting of the United Kingdom Euratom Continuing Committee, at which I was present, it was obvious that there were fields where co-operation could be mutually advantageous.

    European Nuclear Energy Agency
    Mr. Skeetasked the Parliamentary Secretary for Science what contacts at present exist between his Department and the European Nuclear Energy Agency; and what are the prospects for the development of further joint projects.
    Mr. Denzil Freeth: The United Kingdom representative on the Steering Committee for Nuclear Energy of the Organisation for Economic Co-operation and Development is the head of my noble Friend's Office. The Atomic Energy Authority is participating in two of the three joint projects set up under the European Nuclear Energy Agency. Proposals for three new joint projects are now being studied but it is not possible to say what the outcome will be.
    Mr. Skeet: Would not my hon. Friend consider the European Agency, the International Agency and Euratom to overlap substantially, and is it profitable to belong to all three? Would my hon. Friend also give us some idea about our financial commitments to the European agency?
    Mr. Freeth: I think that it is useful to belong to all three. Both the European Nuclear Energy Agency and the International Agency cover different groups of countries and do not have the same aims. As for the last part of the supplementary question, if my hon. Friend would agree to putting down a detailed Question I would give him any figures at my disposal.

    Motor Vehicle Drivers (Visual Defects)
    Mr. Gresham Cookeasked the Parliamentary Secretary for Science what research is being carried out into the visual defects of drivers of vehicles and the effect on road safety.
    Mr. Denzil Freeth: A small amount of research in this field is in progress in independent institutions. Although no Government laboratory is currently engaged in such research the position is at present under review.
    Mr. Gresham Cooke: Is my hon. Friend aware that a number of responsible organisations are coming more and

    1113
    more to the conclusion that certain visual defects, such as tunnel vision and narrowness of vision, are having effects on road safety? Is he aware that a sample survey of drivers the other day revealed that 25 per cent. of them had some visual defect or other? Would my hon. Friend agree that further research is required to discover whether statistics show that these defects have the effect on road safety that is believed?
    Mr. Freeth: My noble Friend will discuss the research possibilities with my right hon. Friend the Minister of Transport. After that it may be possible to discover whether there are any openings where fruitful work might be done.

    Atomic Energy Authority (Redundancy Provisions)
    Sir A. Hurdasked the Parliamentary Secretary for Science if he will now state the terms of the redundancy provisions to be offered by the Atomic Energy Authority to staff with professional qualifications.
    Mr. Denzil Freeth: I am sending my hon. Friend a copy of the document which sets out the scheme in detail.
    Sir A. Hurd: Is my hon. Friend, who shares the representation of Aldermaston with me, reasonably satisfied that these redundancy terms are fair and reasonable? Is he satisfied that when there are vacancies for professional staff and others at Harwell and other atomic stations these are offered first to those who are no longer required at Aldermaston? There seems to be some doubt about this.
    Mr. Freeth: In answer to the first part of my hon. Friend's supplementary question, I believe that the terms are very reasonable and that with one minor reservation they have been accepted by the staff side. On the second part of the question, we look upon the Authority as one employer and we do our best by redeployment to prevent redundancy occurring.

    CAITHNESS, SUTHERLAND AND ROSS-SHIRE (AFFORESTATION)
    Sir D. Robertsonasked the Prime Minister if, in the national interest, he will consider using the land, transport
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    and labour resources of Caithness, Sutherland and Ross-shire for increased afforestation, and for the integrated milling of wood pulp and paper.
    The Prime Minister (Mr. Harold Macmillan): It is the Government's policy to increase afforestation through the Forestry Commission and to encourage wood-using industries.
    The mill at Fort William towards which the Government are contributing loan capital of about £8 million to £10 million and which will cost some £19 million to £20 million in all as well as other existing wood-using industries, should for some time to come provide an outlet for wood grown in Caithness, Sutherland and Ross and Cromarty. But the Commission is always seeking suitable land to extend its operations.
    Sir D. Robertson: Is the Prime Minister aware that the greatest obstacle to afforestation in these three counties is the unwillingness of the sporting landlords to grow trees themselves or to permit the Forestry Commission to grow them? Is he also aware that I spent a fortnight in the constituency, coming back on Sunday, and I met all the forestry officials, who were unanimous in this view? In view of this neglect, may I ask the Prime Minister to deal with this as a matter of national urgency?
    The Prime Minister: The Forestry Commission is always looking for opportunities to extend its forests, but it is important to balance this with the proper outlets.
    Mr. Grimond: Can the Prime Minister say whether the Forestry Commission is satisfied with the amount of land it has and, if not, whether the Government will take steps to assist the Commission? Secondly, can the right hon. Gentleman say whether, with a view to improving transport and providing more employment in the Highlands, he will set up a Highlands development authority?
    The Prime Minister: The second part of the question is entirely different, and perhaps the right hon. Gentleman will put it on the Order Paper. As for the first part, nobody is ever satisfied, but I think that good progress is being made.

    LORD PRIVY SEAL (SPEECH)
    Mr. Stonehouseasked the Prime Minister if the public speech of the Lord Privy Seal to the Consultative Assembly of the Council of Europe on 7th May concerning the breakdown of the negotiations for Britain's entry to the European Economic Community represents the policy of Her Majesty's Government.
    The Prime Minister: Yes, Sir.
    Mr. Stonehouse: Does not the Prime Minister agree that this extraordinary speech, in which the Minister responsible for the negotiations for Britain to join the Common Market confirmed that Britain could not join a Europe which was protectionist, showed that the terms which we were being asked to accept were humiliating, and that this is a complete vindication of those of us who opposed Britain going in on these terms? Does not this confirm that Britain cannot re-apply to join, and is not the right hon. Gentleman aware that the almost complete acceptance of these humiliating terms has done irreparable harm to the Commonwealth and to Britain's standing in Europe and the world?
    The Prime Minister: No, Sir, all these deductions are quite false.

    NUCLEAR TESTS
    Mr. A. Hendersonasked the Prime Minister (1) whether he will propose to President Kennedy and Mr. Khrushchev the publication of their recent exchange of letters;
    (2) whether he will now state the new proposals to be put to the Geneva Conference on nuclear tests with a view to ending the present deadlock.
    Mr. Dribergasked the Prime Minister if, in view of the readiness of the United States Government, as now revealed by the publication of the testimony given on 26th February before the Senate Armed Services Committee by the Director of Defense Research and Engineering at the Pentagon, to accept only six on-site inspections after disturbances possibly caused by nuclear tests, he will make a new approach to Mr. Khrushchev and President Kennedy in an endeavour to secure a test-ban agreement.
    Mr. M. Footasked the Prime Minister if he will make a statement on the latest British proposals for securing an agreement banning nuclear tests.
    Mr. Frank Allaunasked the Prime Minister if he will now indicate the nature of the reply received by himself and Mr. Kennedy to their letter to Mr. Khrushchev regarding the stopping of nuclear test explosions; and what policy Her Majesty's Government will now adopt in order to reach an agreement.
    The Prime Minister: As my right hon. Friend the First Secretary told the House on 23rd May, President Kennedy and are still considering what our next step should be in the light of Mr. Khrushchev's reply to our communication. Our correspondence with Mr. Khrushchev was confidential, so that it would be inappropriate for me to say anything more at this stage.
    Mr. Henderson: In view of the fact that it is now estimated that there are 20 countries which soon will be able to manufacture their own nuclear weapons, does not the whole problem become one of considerable urgency? Would the Prime Minister consider in his consultations with President Kennedy the desirability of renewing the offer made some time ago to Mr. Khrushchev for immediate banning of all atmospheric and sea-water tests pending the solution of the problem of underground tests? If Mr. Khrushchev refuses, would the right hon. Gentleman consider consulting President Kennedy on the making of a unilateral moratorium on the part of the two countries in respect of these tests?
    The Prime Minister: I have great sympathy, of course, with the right hon. and learned Gentleman, as he knows. We would be ready at any time—we have made it quite clear—to agree to a general ban on atmospheric tests. That has not been acceptable so far to the Soviet Government. Therefore, we are still pressing on with the hope of getting a total ban. I hope within a very few days to agree with the President on the reply which we are making to Mr. Khrushchev, and I think that it would be better to leave it there for the moment.
    Mr. Driberg: With regard to the testimony referred to in Question No. Q5, may

    1117
    I ask the right hon. Gentleman whether he would agree that this statement, made under conditions of secrecy by a senior expert adviser to the United States Administration, represents one step forward on the American side? Would the right hon. Gentleman do his best to take advantage of this slightly increased flexibility?
    The Prime Minister: Yes, Sir. I am sure that we would try to find every possible means to reach an agreement, but I hope that the hon. Gentleman will not press me. Within a day or two I hope to agree to the reply we propose to make and I hope that that will lead to some forward step.
    Mr. M. Foot: Does the Prime Minister agree with the statement made by the Foreign Secretary in Ottawa last week that the United States at present possesses a very great superiority in nuclear weapons and nuclear strength over all other Powers? Does the right hon. Gentleman not think that a Power in such a position has a special obligation to make concessions to try to secure a general test ban agreement, and does he not think that that would justify the British Government m putting forward proposals of this nature to try to secure agreement?
    The Prime Minister: I think that the course I have been pursuing for the past three months is the one most likely to lead to some settlement. It is quite easy to make a unilateral statement, but that does not necessarily lead to the result we want. I hope very much that the procedure upon which we are about to engage will be the most fruitful.
    Mr. Frank Allaun: Since the differences are manifestly so small, what is really preventing agreement? Is it that neither the American nor the Russian Government genuinely want it and that our Government will not give an independent lead?
    The Prime Minister: No, Sir; that is a quite wrong account of the situation. There are two problems still to be resolved, both the number of inspections and their character.
    Mr. Longden: Will my right hon. Friend in the meantime make clearer to the world in general, since some American senators and a lot of people in this country
    1118
    do not seem to understand, that for very many months now the British and the Americans have offered to ban all tests everywhere, except underground, without any verification whatever?
    The Prime Minister: Yes, Sir. That has always been our position. I am glad that this has been brought out. The Soviet Government are not ready to agree to a partial ban and, therefore, we are still trying to get a total ban.
    Mr. H. Wilson: It is understandable that these discussions must for the moment continue most helpfully on a confidential basis, but is the Prime Minister in a position to say whether the reply from Mr. Khrushchev showed that he was to any extent forthcoming about suggestions for a high-level meeting between Heads of Government to discuss the final differences which still stand in the way of a test ban agreement?
    The Prime Minister: I think that I ought not to answer that question. We have made a number of proposals, and in the light of Mr. Khrushchev's reply, we are hoping to make an answer which may take up at least one of them. Then we shall, perhaps, make a little progress.

    HIGH-ALTITUDE NUCLEAR EXPLOSIONS
    Mr. Dribergasked the Prime Minister what comments or assurances he has received from the United States Administration in response to the views, warnings, and recommendations contained in the report made to Her Majesty's Government on the effects of high-altitude nuclear explosions on scientific experiments.
    The Prime Minister: The United States Government appreciate that scientists may well wish to put forward views on experiments that may have possible harmful effects. They have on a number of occasions declared their willingness, subject to defence considerations, to take account of these views. One such statement of American policy is annexed to the working party's report.
    Mr. Driberg: Does that reply mean that the Prime Minister has now received a firm assurance from Washington that there will be consultation with scientists

    1119
    internationally, including such scientists as Sir Bernard Lovell, before there are any more of these high-altitude tests?
    The Prime Minister: No, Sir, I should not go so far as that; but the United States Government are quite aware of our position and, subject to the overriding needs of security, I am quite confident that they will take all these matters into consideration.
    Mr. M. Foot: In view of the very startling statement made in this report of British scientists, have the Government specifically asked the American Government for an assurance that they would not embark on such tests without consultations with us?
    The Prime Minister: No, Sir. I should not try, and I should not lend myself to trying, to prevent something if it is really of great national security importance.

    FOREIGN SECRETARY (SPEECH)
    Mr. Emrys Hughesasked the Prime Minister whether the public speech by the Foreign Secretary at Ottawa on 21st May on the subject of an independent nuclear deterrent represents the policy of Her Majesty's Government.
    The Prime Minister: Yes, Sir.
    Mr. Hughes: Since the Foreign Secretary said that Britain intended to be strong enough and rich enough to support an independent nuclear deterrent plus conventional forces, will the Prime Minister tell us whether the Government think that they can possibly do this without a tremendous strain on the British economy? Further, will he say whether the Government still adhere to their policy that they are prepared to go into a nuclear war without the support of America and without the support of the N.A.T.O. countries?
    The Prime Minister: We debated all these matters at length in a two-day debate, and I think that they are much better dealt with in that way than by Question and Answer.
    Mr. Biggs-Davison: Does not the Opposition's policy in this respect rule
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    out any question of the independent lead for which they have been asking in the series of Questions just passed, and would it not, in fact, face the people of this country with a choice between defeat or dependence?
    The Prime Minister: Yes, Sir.
    Mr. Healey: Is the Prime Minister aware that that speech of the noble Lord specifically rejected the argument used by the Prime Minister and the Minister of Defence, when we debated this matter in the House, that we could not trust our allies in this respect? Would not the Government be wise to publish the real reason for their nuclear deterrent policy, namely, the desperate but ill-founded hope that it may prove a useful instrument for catching votes?
    The Prime Minister: No, Sir; it is based upon what we believe to be our national duty.
    Mr. Shinwell: Did not the Foreign Secretary welcome the concept of a mixed-manned nuclear force which would be under general control, not necessarily under British control? Does not that dispose of the concept of the British independent deterrent?
    The Prime Minister: No, Sir, no more than it disposes of the concept of an American independent deterrent.
    Mr. H. Wilson: Has the Prime Minister seen in a Sunday newspaper the long list of quotations showing that, on the subject of the noble Lord's speech, the Government speak with one voice when talking to their allies but with another voice for political purposes at home? Since the right hon. Gentleman and the noble Lord claim to have an independent deterrent, which is to be manufactured in America anyway, will he say whether he thinks that President Kennedy thinks that we have got an independent British deterrent?
    The Prime Minister: Yes, Sir; it was that arrangement which I made with him at Nassau.
    Mr. C. Pannell: On a point of order, Mr. Speaker. The hon. Member for Chigwell (Mr. Biggs-Davison) asked the Prime Minister to comment upon the Opposition's policy as though he were

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    responsible for it. Is it not a rule of the House that Ministers may answer only for malters within their own responsibility, not the responsibility of others?
    Mr. Speaker: It is extremely tedious to ask people to interpret other people's views or thoughts, but it wastes a lot of time to pull up all questions which are out of order.

    SCOTTISH TRADES UNIONCONGRESS (LETTER)
    Mr. W. Hamiltonasked the Prime Minister what was the nature of his reply to the letter sent to him last week by the Scottish Trades Union Congress concerning the employment situation in Scotland.
    Mr. Rossasked the Prime Minister if he will make a statement on the representations made to him last week by the Scottish Trades Union Congress concerning the serious economic situation in Scotland.
    The Prime Minister: In its letter the Scottish Trades Union Congress referred principally to the importance to the Scottish economy of stimulating activity in shipbuilding. My right hon. Friend the Minister of Transport is making a statement on this subject tomorrow, and I shall be replying to the Scottish Trades Union Congress letter shortly thereafter.
    Mr. Hamilton: Was not the letter more generalised than that? Did it not refer to the fact that jobs were not being created sufficiently quickly enough to take up the slack in the Scottish economy? Does not the Prime Minister know that, even after the winter is over, there are more than 100,000 still unemployed in Scotland and only 11,000 vacancies? Is it not this which concerned the Scottish T.U.C.? Cannot the Prime Minister match with deeds the fine words he has given to the Scottish T.U.C. in recent months?
    The Prime Minister: As everyone knows, the very large series of measures which we have instituted—I shall not trouble the House by reviewing them again—has made a very great contribution, which, as the months go by, will, I believe, help to solve the short-term problem. This is dealing rather with the longer-term problem.
    Mr. Ross: Is the Prime Minister aware that what he calls the large series of measures was described very temperately by the Scottish Trades Union Congress as a modicum of minor measures? Is he aware, also, that the day following that letter, the position was absolutely clarified by the publication of the unemployment figures showing that in mid-May there were over 103,000 unemployed in Scotland? Does the right hon. Gentleman recall that, just last week, he announced that the areas which pioneered the first Industrial Revolution would participate fully in the next industrial revolution? When does he propose to make a start in Scotland?
    The Prime Minister: Very large measures have been started, and, as everyone knows, the prospects are good.

    THE GAMBIA (ELECTIONS)
    The following Question stood upon the Order Paper:
    79. Mrs. WHITE: To ask the Secretary of State for the Colonies why he advised the use of an Order in Council whose object is to set aside the judgment of the West Africa Court of Appeal, which declared elections in certain constituencies in Gambia to be invalid; and whether, in view of the nature of such a precedent, he will now reconsider his statement published on 21st May and authorise the holding of fresh elections in the constituencies concerned.
    The Secretary of State for Commonwealth Relations and Secretary of State for the Colonies (Mr. Duncan Sandys): With permission, I will now answer Question No. 79.
    In order to explain my decision, I must give the House the facts which lie behind it.
    The Gambia is made up of two areas, the Protectorate and the Colony. It has a House of Representatives, three-quarters of whose members represent the Protectorate and one-quarter the Colony. The difficulty which has arisen relates to the register of voters in the Protectorate. The Colony has a separate register, the validity of which is not in question.
    The first register of voters in the Protectorate was compiled in 1959, but it was subsequently found to be very faulty.

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    This was largely due to the fact that the names had originally been written down in Arabic script and then transliterated into Roman script, in the course of which a large number of names became so corrupted as to be unidentifiable.
    It was, therefore, decided in 1961 to compile an entirely fresh register; and an amending law was introduced, the purpose of which was to substitute the new 1961 register for the defective 1959 register. This law was passed with the support of both Government and Opposition parties.
    In 1962, a General Election, held on this new register, resulted in the defeat of the United Party Government. Although it was their Government which had introduced the amending law in 1961, and, although they had never questioned the validity of the register before or during the election, one of their defeated candidates decided afterwards to challenge it in the courts. While the High Court upheld the validity of the new register, the Court of Appeal later reversed this decision, owing to the imprecise drafting of one phrase in the law of 1961. This ruling, of course, at once called in question all the elections in the Protectorate.
    Obviously, something had to be done to clear up this confused situation. I considered two possible courses of action. The first was to instruct the Governor to dissolve the House of Representatives and hold fresh elections. But since nobody can seriously recommend reverting to the faulty register of 1959, and since the court has declared the 1961 register to be invalid, it would be necessary before dissolution to compile a new register and that might take a considerable time.
    Meanwhile, all the Protectorate members might be unseated and in the absence of any legally valid register, it would be impossible to hold any by-elections. The House of Representatives might thus have been reduced to seven Colony members and four Chiefs' Representatives and it would obviously be improper to leave this wholly unrepresentative rump to determine how the new register should be compiled.
    The alternative course was to correct retrospectively the single defective phrase in the law of 1961 so as to give it the effect which both parties had clearly intended,
    1124
    and thereby validate the 1961 register and the elections held on it.
    Although I dislike as much as most hon. Members retrospective legislation, I decided that, in all the circumstances, it would be best to adopt this second course. I would, naturally, have preferred that the necessary amendment to the law of 1961 should be made by the Gambia House of Representatives itself. But, since the validity of the elections of three-quarters of its members is in doubt, the validity of any law it might pass would be in doubt, also. Thus, it seemed that the only sure method was to proceed by Order in Council. I shall, therefore, shortly be submitting a draft Order to Her Majesty for this purpose.
    I hope that the House will agree that, in view of the complex legal and constitutional tangle with which I was faced, the course that I have decided upon is fair and reasonable.
    Mrs. White: I thank the right hon. Gentleman for his most detailed reply which itself shows that there are serious constitutional issues at stake here. Would not he agree that it is, in general terms, and I should have thought even in this particular instance, extremely serious to set aside a ruling of a court by administrative action in a part of the world in which we are at least trying to show how important it is to maintain the rule of law?
    Mr. Sandys: We are not setting aside a decision of the court. What we are doing is to pass legislation—something which very often happens—which has been shown to be necessary by a decision of the court. [Interruption.] It is all very well for the right hon. Member for Belper (Mr. G. Brown) to say that this is setting aside the law. This is not the first time that elections which have been shown to be invalid have been validated. It has happened in this House of Commons within the memory of those sitting here, and there is nothing improper in that.
    Mr. Strachey: Would not the Secretary of State agree that it is vitally important that we should not even appear to play fast and loose with the Constitution of this Colony? [Laughter.] Hon. Members opposite may think this a joke, but, after all, constitutional development in Africa is fairly important. The only

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    possible way of putting this position right is to prepare a new register and hold new elections at the very earliest opportunity. This is the only urgent operation which can be undertaken. Otherwise, we shall be setting the very worst possible example to all the new independent states of Africa.
    Mr. Sandys: I do not think that the right hon. Gentleman can have heard my statement. I pointed out that I considered the very possibility which he suggests, which is dissolution after the compilation of a new register. But the question is: who is to compile the new register? We could have elections under the 1959 register, which would be hopeless; and I think that everyone agrees with that. If we are to have a new register, a new law is required. That new law will have to be passed by somebody. The only people who could pass that law would, I have no doubt, after a very short time be a rump of seven Colony members, and the Protectorate would be totally unrepresented except by Chiefs' representatives. That would raise the most serious objections and accusations of gerrymandering, and all sorts of things.
    It is, therefore, quite impossible to leave the present House of Representatives, whose very existence is in doubt, to pass a law setting up a new register. For that reason, it seemed to me that the only proper course was, by Order in Council, to validate what both parties thought that they had done in the law which they passed in 1961. It is only a very minor flaw in the drafting of that law which has raised all this difficulty.
    Mr. Healey: Is the right hon. Gentleman aware that the argument which he has just used was precisely that which is used in the West Nigerian Parliament to justify setting aside by retrospective legislation the decision by the Judicial Committee of the Privy Council yesterday? I am sure that many right hon. and hon. Members on both sides of the House will agree that it is a most dangerous precedent to set for the whole juridical system of the Commonwealth that decisions of a court of appeal should be set aside on a matter of this importance by retrospective legislation.
    Mr. Sandys: I have explained that that is not what we are doing.
    Mr. G. Brown: That is exactly what the Government are doing.
    Mr. Sandys: Nobody has so far suggested to me any practical course by which we can correct the situation other than by Order in Council. As for the question of validating legislation, I have already pointed out that this honourable House has itself done it in circumstances far less difficult than those with which I am now confronted.
    Mr. Paget: If the Minister can use the procedure of Order in Council to reverse a constitutional decision of the constitutional court, why cannot he use that same procedure to set up a new register? Would it not be a far less mischievous thing to do?
    Mr. Sandys: I have no reason to suppose, and nobody has seriously suggested, that the register—
    Mrs. White: It was suggested in the court.
    Mr. Sandys: Let us be quite frank. In countries which are in the early stages of democratic development, where people are not accustomed to registering as voters, it is inevitable that we do not get the same degree of accuracy as in a country such as the United Kingdom. I have, however, no reason to suppose that any new register would produce any more accurate result than the present register, nor have I any reason to suppose that the results of the 1962 election did not correctly reflect the opinion of the people of the Gambia.
    Mrs. White: Is not the Secretary of State aware that complaints were made in the court that, for example, six prospective candidates acted as registration officers, that due notice was not given, that there was a very limited time for objections, and that there were various other complaints about the register on which the last election was held? As my hon. and learned Friend the Member for Northampton (Mr. Paget) has suggested, if the Minister can use an Order in Council for one thing, surely he can use it to re-establish the proper processes of democracy.
    Mr. Sandys: It is worth remembering that the people who are complaining about all this are the party who were the Government when the register was

    1127
    introduced and were responsible for administering the law.
    Mr. Strachey: If the Secretary of State says that the existing register is quite all right or, at least, no worse than any future one, what is the objection to holding new elections on it? The right hon. Gentleman is saying that no new register would be any better than the present one. Therefore, why not hold elections on it?
    Mr. Sandys: In that case, what is the need to hold new elections?
    Mr. Renton: Is my right hon. Friend aware that even in countries in an advanced state of development constitutionally like our own, when the courts draw attention to a defect of the law they may well be following that defect of the law because they have to; and the courts having drawn attention to the defect, it is then the duty of the legislature to cure it? Is that not all that is being done by my right hon. Friend in this case?
    Mr. Sandys: Yes. Perhaps the House should know that the difficulty arose over the phrase in the 1961 law which defined the register of voters which that law purported to validate. Although it was clearly the intention of both parties in the Gambia legislature—the law was passed without opposition, without a vote—to validate the 1961 register, the Court of Appeal has ruled that the phrase as drafted must, by a strict legal interpretation, be read as applying to the validation of the 1959 register, which would make complete nonsense.

ADJOURNMENT (WHITSUNTIDE)
Motion made, and Question proposed,
That this House, at its rising on Friday, do adjourn till Monday, 17th June.—[Mr. Iain Macleod.]
3.45 p.m.
Mr. Leslie Hale: I gave notice on Friday, Mr. Speaker, that I would raise a point of procedure arising out of this Adjournment Motion. On the other hand, I appreciate that we have before us three days of discussion of the Finance Bill and I have no desire to delay that. In the circumstances, I will do no more than state briefly the problem that arises.
The problem is that eight or nine Bills which received the unanimous assent of the House to their introduction, and three of which stand in my name, have been consistently objected to from the other side, usually by one or two hon. Members only on the benches opposite, who come for the purpose, every month in the case of my Bills since the beginning of the Session.
I introduced three Measures which received the unanimous assent of the House. All of them are virtually one-Clause Measures to deal with one small item of social reform. The first was designed to give disabled applicants for pensions the right to a rehearing on new evidence being obtained. I quoted in that connection a grave case, which I have now abandoned politically and am taking to the courts, so I can make no further comment upon that. The second Measure was intended to give a new definition to the definition of byssinosis, which affects my constituents, and the third was to correct an anomaly in the administration of unemployment benefit. Nobody criticised those Measures on their introduction.
Month after month, on Fridays, since then, however, the word "Object" has been called. I do not often pass compliments to the party opposite, but it is right and fair and generous to say that the Whips have recently had the greatest possible difficulty in obtaining any genuine Tory Member to object. On the last two occasions, the hon. Member for Tottenham (Mr. A. Brown), who was elected by Labour votes, was prevailed upon to say that he was now against

1129
these small social reforms. On the last occasion, we had the spectacle which, I think, has never happened before, of a Government Whip objecting from the Front Bench, because he was doubtful whether his last supporter, elected with Labour votes, could be relied upon to go through this again.
I have never disputed that it is fair to object to a Bill which has not had time for discussion. The only point I wish to make is that if the Government continue to deprive us of time for discussion of these matters, they should not ask us to adjourn for 15 days when the provision of a single day or two days would provide ample time for discussing a series of Measures, including the Bill introduced by my lion. Friend the Member for Eton and Slough (Mr. Brockway) the principles of which have been before the House for years and which has a great deal of support on the other side.
We have important business to do and I do not wish to delay it. I content myself with putting this objection on the record, bringing it to the attention of the Leader of the House and asking what steps he intends to take to prevent what is becoming a public scandal.
3.48 p.m.
The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod): I should like to reply to the point made by the hon. Member for Oldham, West (Mr. Hale). It has always struck me as being a particularly difficult one to which to find an answer. Naturally, the hon. Member is concerned with the Bills—in this case, there are three of them—with which his name is associated and which, although they would have, no doubt, a wider impact, deal with a constituent or a case in which he has been interested for some time. That is understandable. There are, however, many other hon. Members, on both sides, who also have Private Members' Bills in which they are particularly interested. I calculate that this Session there have been 40 such Bills. 26 of which have been introduced from this side and 14 from hon. Members of Her Majesty's Opposition.
I should like to make one or two points and then come to the only solution which I can think of. First, a Ten Minutes Rule Bill, as we call it colloquially, is not a Bill at all. It is a Motion for leave to bring in a Bill.
1130
Naturally, the Bill has not been studied and, therefore, one judges on the impact that the presenter of the Bill makes to the House.
It cannot be assumed that because one listens in silence or without controversy to what is said—the hon. Member for Oldham, West will understand that I am not talking about his Bills, but about the general point confronting me as Leader of the House—and because leave is given to bring in a Bill, the House will necessarily be anxious to pursue that Bill in detail on Second Reading or subsequent stages.
The second point is that there are very many hon. Members who feel—and I think that this would be felt on both sides of the House—that where matters of considerable importance are involved, which is often true of Private Members' Bills, it is not right, necessarily anyway, that these Bills should be given a Second Reading on the nod unless there has been some examination by the House of the matters, in some cases of deep principle, which they choose to put before the House.
I just take that by way of introduction—that there are at least 40 Bills concerning both sides of the House. Perhaps I should add as well that objections do not by any means come only from the Government benches. There are a number of Bills, which hon. Members can find if they study the Public Bill list, which have been introduced by hon. Members on this side of the House and which have been at some stages, according to our system, objected to, usually at 4 o'clock on a Friday, by hon. Members of the Opposition. This is a problem which concerns us all as Members of the House of Commons, and it is not just one-sided.
Mr. H. Hynd: As one who is usually here on Fridays, may I assure the right hon. Gentleman, if he does not know it, that there is nothing like the same automatic shout of "Object" from this side of the House as there is from the Government side when the Bills come before us on Fridays?
Mr. Macleod: The hon. Gentleman will, I dare say, have studied the exchange which took place last Friday, as I did, and I recommend him to read

1131
the list of Bills, many of which have not been able to obtain a Second Reading.
So we have the position that a number of Bills have been introduced by Motion to bring in a Bill but they have not been examined on Second Reading, and, as we all know, at this stage of the Session and from now onwards their only chance of obtaining further discussion would be to get a Second Reading on the nod. A number of hon. Members feel that it is not right that Second Readings on the nod should be given except in cases where there is no conceivable argument about the principle, or, indeed, perhaps the details of the Bill.
The practical suggestion that I think I can make to the hon. Member is as follows. I have, of course, given some attention to this problem before, because it has been raised in the House by the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) as well as by the hon. Member for Oldham, West. We have a Select Committee on Procedure, and it might be appropriate, in due course, to ask that Committee if it would consider this point. I am bound to say that I can put that forward only entirely without commitment, because I think that it would be wrong to have a stream of Bills flowing through the House on the nod, as it were, on Second Reading at four o'clock on Friday, for we should certainly gum up all the channels, usual and otherwise, that we have at the later stages to deal with these Bills.
But I take note, not without sympathy, of the point which the hon. Member has put to me, and if there be a solution—which, frankly I doubt—I think that it is along the lines that I have suggested.
Mr. Edward Short (Newcastle-upon-Tyne, Central): Before the right hon. Gentleman sits down, would he tell the House whether he has carried out the consultations which he promised to have a few weeks ago about my Bill—Public Service Vehicles (Travel Concessions) Act, 1955 (Amendment) Bill—and whether he is aware that this Bill is urgently required by local authorities throughout the country? Is he aware that I have a letter here from my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock), in
1132
which her town clerk informs her that the Bill is urgently required in Liverpool as is it in Edinburgh, Birmingham, Newcastle and throughout the whole country?
Mr. L. M. Lever: And Manchester.
Mr. Short: Is the right hon. Gentleman aware that my Bill has been objected to by the hon. Member for Exeter (Mr. Dudley Williams) and many of his other hon. Friends week after week? Will he say whether he has carried out the consultations through the usual channels which he promised?
Mr. Macleod: Yes, Sir; I have. I think that I am right in saying that as we are on a Motion for the Adjournment it would probably be wrong for me to reply in detail now, but if any further reply is required from me on this and other points that hon. Members wish to raise, perhaps I could, by leave of the House, reply at the end of the discussion.
Mr. Frederick Lee: Would not the right hon. Gentleman think it wrong to ask the House to go into Recess for two weeks until he has taken the opportunity of correcting a most misleading statement that he made at Leicester on 5th April, namely,
"I am confident of a Conservative victory at the next General Election just as I are sure that Leicester City will win the Cup, and I am a good tipster."
Would the right hon. Gentleman care to comment on that?
3.54 p.m.
Mr. Richard Marsh: Without wishing to prolong this discussion, because there are other issues to be considered, I should like to turn briefly to a matter which, to hon. Members, is now becoming a major problem.
There are really two problems. There are hon. Members on both sides who would not wish to see legislation of importance and complexity pass on the nod. There are other issues with which hon. Members may disagree, so they object. The problem to which many of us take objection is concerned with a small number of back benchers from the other side of the House who arrive here on a Friday for no other reason than to object without any idea of what the Bill is to which they are objecting. To be

1133
perfectly fair to the hon. Member for Exeter (Mr. Dudley Williams), many of us believe that he is the worst offender.
I would suggest that one way out of this would be to maintain the present procedure for objecting, but to have the hon. Member making the objection stand in his place and have his name recorded in the OFFICIAL REPORT so that people could know what type of legislation was being deliberately obstructed by hon. Members who, at the moment, are able to hide behind their anonymity.
Mr. Dudley Williams: I have never disguised my dislike of legislation going through this House without proper consideration. I have without doubt objected on many occasions to Bills going through on the nod at four o'clock on Fridays, but that has not necessarily meant that I objected to the principle behind the Bill. In many cases I have subsequently extended the scope of the Bill or proposed extension of the scope of the Bill. It is quite wrong to say that I persistently object to every Bill that comes before us on Fridays. All hon. Members know that I regularly attend the House on Fridays, which is more than a great many hon. Members opposite can say, and I do it to ensure that proper legislation is passed through the House of Commons.
Mr. Walter Monslow: The hon. Member for Exeter (Mr. Dudley Williams) takes immeasurable pride in coming to the House on Fridays. So do many of us. But the fact is that he has made it his special theme to object to any Bill which comes before us on Fridays.
Mr. Dudley Williams rose—
Mr. Speaker: Order. No doubt hon. Members can argue that we ought not to go into Recess because we ought to discuss a Bill, but we cannot have a debate on our procedure.
3.59 p.m.
Mr. Arthur Lewis: You will no doubt recollect, Mr. Speaker, that I raised this issue on Friday last, and that led to my hon. Friend the Member for Oldham, West (Mr. Hale) putting forward this matter. In discussion with my hon. Friend the Member for Greenwich (Mr. Marsh) I put to him the view that we do not object to hon.
1134
Members on either side of the House rising in their places and objecting to the principle of a Bill or any other matter, but what we do object to is the fact that hon. Members come here to object to Bills and are obviously not anxious to have it known that they are objecting because some of these Bills are of great import. They slide in and then slide out and hope that no one will have noticed. [Interruption.] You will appreciate, Mr. Speaker, that I could not do that if I wanted to.
Mr. Speaker: Order. I do not want to interrupt this gliding process, but whether hon. Members glide in or no, and whether or no they shout "Object" when seated, concealed or standing up, I do not follow the bearing on the question of whether we adjourn until Monday, 17th June.
Mr. Lewis: I am continuing the debate which has taken place, Sir. Every hon. Member who has spoken so far has put the same or similar points. I suggest that we should not adjourn for this long period unless the Leader of the House assures us that the Select Committee on Procedure will discuss the various matters which have been raised, including whether or not an amendment of Standing Orders is necessary so that objecting hon. Members have to stand up.
We should also be assured that if hon. Members, by arrangement with the Government through the usual channels, have the opportunity of taking part in Ballots for Private Members' Bills, they will at least be guaranteed that Ministers of the Crown and the Whips will not object to those Bills. We want an assurance, before we adjourn, that the very limited rights of back benchers will be maintained. Already, back benchers do not get very many rights in this place, and if their Bills are to be objected to by the Whips and by Ministers I suggest that this makes a farce of our procedure of balloting.
Will the right hon. Gentleman also see that the Select Committee looks into this matter in such a way that it can be laid down that no Minister, or anyone acting on behalf of the Government, shall take part in objections to these Bills? Certainly, if a back bencher objects, he should at least stand in his place and have his name recorded.
4.2 p.m.
Mr. Iain Macleod: I will, by leave of the House, reply briefly to the points raised by hon. Members. The hon. Member for Newton (Mr. Lee) is quite right. I made a prophecy that Leicester would win the Cup. This was some time before the final. I was speaking in Manchester last Saturday and I did fairly well there.
The hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) raised a point of detail. I have looked into that and, indeed, have read through the discussions that have taken place—in which he has played a leading part—since the Act of 1955. I came to the conclusion that it would be wrong to select this one Private Member's Bill from the total of 40 in this Session. I recognise, of course, that there is considerable interest in that Bill, which many people wish to see on the Statute Book. But that applies, as he will be fair enough to recognise, to many of the other Bills in which hon. Members are interested.
Mrs. E. M. Braddock: Did the right hon. Gentleman look at this matter in relation to the difficulties that have arisen where old people have had to move out of an area in which they were allowed free passes on the buses into areas where they could not have them? Most of them are being moved out of their old neighbourhoods because of overcrowding or other reasons. The old people who have been put in this position are very annoyed about the loss of their passes.
Mr. Macleod: I did look into this matter. It is true that wherever one draws a line in matters of travel concessions there are bound to be cases which are thought to be hard and which fall just the wrong side of whatever definition one chooses to make.
As the hon. Member for West Ham, North (Mr. A. Lewis) has said, all hon. Members have raised the same or similar points. I would like to reinforce something I said earlier. The hon. Gentleman said that private Members' rights were being denied to them because they were being denied a Second Reading of their Bills on the nod at four o'clock on Friday afternoons. But he must follow the logic of that argument through. If Second Readings were given on the nod on Fridays, then the rights of all other
1136
hon. Members who would have wished to make speeches, and perhaps criticise the principles involved, would thereby be taken away from them.
I can assure the hon. Gentleman that this is not as simple a point as perhaps may appear at first sight. But if there is to be any change in procedure, the Select Committee on Procedure is the right body to look at it. I undertake that we will have discussions through the usual channels to see whether it is appropriate to refer this matter.
Mr. J. Grimond: Would not the right hon. Gentleman agree that, if the matter is to be referred to the Select Committee, it is very desirable that what is referred is rather closely defined? If we simply discuss how private Members may get through their Bills more easily, this would lay open the whole of Parliamentary procedure. If we are to discuss initially the question, raised by the hon. Member for Oldham, West (Mr. Hale), whether the House should adjourn for 10 days or a fortnight at Whit-sun, this, again, is a very large matter.
On the other hand, we could simply discuss whether private Members should have their names reported when they should "Object". It is better to have the thing put in a definite form before the Committee.
Mr. Macleod: The right hon. Gentleman is, like myself, a member of the Select Committee on Procedure, and I agree very much with what he has said. This is a more complicated problem than appears, and we would have to try to define very clearly the road we wish to travel, if we want to embark on the journey at all. In this sort of solution lies the only possibility of an answer, if there is one, to this problem.
4.7 p.m.
Mr. E. Shinwell: The right hon. Gentleman seems very much concerned with the rights of back benchers. So are we all—I mean those of us on the back benches. Has it occurred to him that the Whitsun break, which is intended to enable hon. Members to escape from the House for a while, should apply only to members of the Government and the Opposition Front Bench? This would leave back benchers free to deal with all the Bills which we

1137
have had no time to tackle. That would be a simple solution.
I can never understand why Leaders of the House, and particularly the right hon. Gentleman, always seem to embark on disertations which lead to complicated situations. I believe in a simple approach. After all, that follows from the repeated assertion that back benchers have rights. The fact is that they have no rights at all. When, for example, a back bencher rises in his place, he has to search for Mr. Speaker's eye, but that never applies to speakers on the Front Benches.
Sir Gerald Nabarro: Nor to the right hon. Gentleman as a Privy Councillor.
Mr. Shinwell: In saying that, I am by no means being disrespectful to Mr. Speaker or even to the occupants of both Front Benches, but when all is said and done, referring this matter to the Select Committee on Procedure is a lot of nonsense. Indeed, the right hon. Gentleman admitted that. He said that he did not believe that it would be a solution.
I first came to this House forty-one years ago, and I recall many matters being referred to the Select Committee on Procedure in recent years—yet our procedure today is precisely the same as it was forty-one years ago. There has been no change. There is an old French proverb concerning such a situation, but I cannot pronounce it accurately, so I will leave it to other hon. Members. The fact is that the Government should give time for these matters—and that includes not only Bills, but innumerable Motions on the Order Paper. They relate to vital matters of national and international concern, and deserve as much respect as some of the Bills presented from time to time by hon. Members, though I have no objection to these Bills.
It seems to me that the Government have either to find time to enable some of these Motions or Bills to be presented—
Sir John Langford-Holt: You never gave any time.
Mr. Shinwell: If it were left to me, I would give everybody time. I am all for dispensing justice. Anyone who wants time can have it, any amount of it, and in the right places—the right institutions.
1138
But we are not discussing that and the hon. Member must not provoke me.
So what are the alternatives? Either we send this to the Select Committee on Procedure and nothing useful will be done and nothing fruitful will result, or the Government must find time. We have debated this matter often. We now have once a month, I think, an opportunity of discussing Private Members' Motions and Private Members' Bills. On Fridays, we can discuss these Bills. They seldom really come to anything, however desirable the contents of these Bills are.
For example, the Bill presented by my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short), in which my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock) is very much interested, is a Bill of vital importance of a domestic character concerning human relationships and human needs. But we cannot get it through.
The Government should find time. They could if they wanted to, but, in fact, they do not agree with the contents of these Bills. Why does not the right hon. Gentleman, who is an honest man, get up and say quite definitely that the Government dislike these Bills and, therefore, no time will be provided for debating them and getting them through the House?
As I have said, there is a simple solution. Let the Government go away. We can do without them for a week or a fortnight. The Leader of the House may be required, but apart from him the rest could go. One or two could be selected from the Opposition Front Bench; even one would do. I will not suggest who it should be, but back benchers could come in if they like, particularly those who have been appearing to argue against the Adjournment of the House for the next couple of weeks. They could come in every day if they liked, even Saturdays and Sundays if they wished. They can also have me here if they want me.
Hon. Members may think that I am dealing with this in a spirit of levity—not at all. I have heard these sort of debates over and over again. On the eve of every Adjournment we have this type of debate. Back benchers complain that they have no time to present their ideas to the House and if they do present them they

1139
are not adequately debated and nothing of consequence happens. I do not care whether we say it, or the other side say it, or which respective Government or successive Governments do it. They have done it ever since I can remember and they will go on doing it for many years to come. Unless the back benchers rise in their wrath the Government will fail to act. If hon. Members will support me in the Lobby, I will vote against the Adjournment.
Mr. A. Lewis: Mr. Speaker. You will recollect that when I spoke a moment or two ago you stopped me, for what reason at that time I do not know because hon. Members who spoke before and after me did so in almost identical terms. None of them mentioned why the House should not adjourn—
Mr. Speaker: Is the hon. Gentleman rising to a point of order, or what is he doing? I cannot call him again on this question.
Mr. Lewis: I want to know, Mr. Speaker, why I and all those who have been taking part in this debate were pulled up, and why I was alleged to have wandered from the Motion when I was, in fact, the only one to refer to the Motion.
Mr. Speaker: I am not sure that the right hon. Gentleman would not have been pulled up had not the hon. Gentleman arrived at the Chair and I therefore had to ask him to let me listen to the right hon. Gentleman. This is not a hardship special to the hon. Gentleman. I did not follow why the question of someone rising to object or sitting down to object had much bearing on how long we went away for the Recess.
Question put and agreed to.
Resolved,
That this House, at its rising on Friday, do adjourn until Monday, 17th June.

PUBLIC HEALTH ACT 1961 (AMENDMENT)
4.17 p.m.
Mr. Julian Snow: I beg to move,
That leave be given to bring in a Bill to amend section 41 of the Public Health Act 1961.
I hope that the right hon. Gentleman the Leader of the House will accept that I have been listening to this debate with some fascination because I now wish to ask the House to give me leave to bring in a Bill to provide for the Amendment of Section 41 of the Public Health Act, 1961, to make compensation, now payable by local authorities to persons ordered to stay away from work because they are suspected of being carriers of disease, chargeable to the National Insurance Fund.
If the charging to that fund does not commend itself to the Government, I should be very happy to listen to suggestions if the Government would provide, in due course, the necessary Money Resolution, because, on advice that I have received from the Public Bill Office, I understand that a private Member cannot suggest a charge on central funds. The existing liability on local authorities under this Section was not discussed really at all at any stage in either House during the course of the Bill through Parliament. I suggest that to localise the liability in this way, in other words, to make local authorities chargeable for the compensation payable to people, is not logical for two reasons.
First, the man's place of residence may be, and usually is, very far from his place of work, yet it may be at the place of work that the damage may be done if he is a carrier of disease. This may apply when the person concerned lives in one local authority area and works in another. Yet under the existing provisions of the Act the charge is payable by the local authority where the man resides.
Secondly, supposing a man works in a food factory—this is the danger of the position—the product of that factory may have been contaminated and disseminated and marketed all over the nation. But the official exclusion from work is authorised either by the Section

1141
I have referred to, Section 41 of the Public Health Act, 1961, or the Public Health Infectious Diseases Regulations of 1953. Indeed, such may be the reluctance of local authorities to attract the financial liability of having to pay compensation that ingenious advisers of local authorities can draw on certain alternative measures, such as encouraging the person that is suspected, to "go sick," thereby attracting sickness benefit, although, of course, after a time general practitioners object to that. Also, they may have to seek other employment.
Thirdly, pressure can be brought on an employer either to dismiss or to suspend such suspected persons. Fourthly, that by dismissing a person from his employment this provides justification for the payment of unemployment benefit.
If poisoning can be traceable to a factory, it will be appreciated that a substantial number of people may be involved, and if people have to be laid off for this reason it may take time for them to receive the necessary clearance test. The Ministry of Health has accepted that this is possible, namely, that small local authorities may have to meet substantial compensation bills, because it is not just a question of unemployment benefit, or sickness benefit, but of compensation for the man's earnings, and, while not in any way attributing a wrong attitude on the part of local authorities, I suggest that there is a risk of a lack of energy by local authorities in using these powers if they feel that they will attract a substantial bill.
I have knowledge of a case in Staffordshire where action was delayed for some time when other means were sought to deal with the trouble and thus not attract this sort of charge. This case related to a big bakery; I think that I am also justified in reminding the House, although this is in respect of another country, of the Zermatt case. In this case, there was just a suspicion that there was a reluctance on the part of the health authorities to bring this matter into the open because of the effect on the tourist trade. It was tourism in Zermatt, but
1142
there may be an equivalent consideration in England, and the lesson to be learned is that everything should be done to encourage local authorities to use Section 41, but to make the charge a charge eventually payable from some sort of central fund.
I am advised that the Ministry of Health has suggested to local authorities that they should use their powers under Section 41 in a circumspect way. In other words, it is rather as though the Ministry is conniving with local authorities to use these other persuasion methods to which I have referred, and, incidentally, in the end, they can conceivably use Section 149 of the Public Health Act, 1936, which can result in a fine being imposed on somebody who stays at work if known to be a carrier of disease.
If hon. Members will read the section on notifiable diseases in the 1961 Report of the Chief Medical Officer of Health, they will realise the importance of encouraging in every possible way suspected carriers to stay away from work and the need to encourage local authorities to use the powers of Section 41. If one considers enteric fevers including typhoid, there were 97 cases in 1961. With regard to food poisoning, there were 22 fatal cases in which the human factor was one of the major considerations. The Report also contains details about a butcher who was found to be an excreter of paratyphoid; a man who was potentially capable of contaminating a lot of food.
In all these circumstances, I suggest that this is a justifiable charge on central funds.
Question put and agreed to.
Bill ordered to be brought in by Mr. Snow, Dr. Broughton, Mr. Harold Davies, Sir B. Janner, Mr. Neal, and Dr. Stross.

PUBLIC HEALTH Act 1961 (AMENDMENT)
Bill to amend Section 41 of the Public Health Act, 1961, presented accordingly and read the First time; to be read a Second time upon Friday, 21st June, and to be printed. [Bill 118.]
ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress, 23rd May].
  [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]
  4.25 p.m.
  The Chairman: In calling the hon. Member for Cardiff, South-East (Mr. Callaghan) to move the new Clause "Purchase tax; exemption of goods hitherto chargeable at 10 per cent." I should tell the Committee that it will be possible also to discuss new Clause, "Purchase tax; reduction of rate of 25 per cent.", and new Clause, "Purchase tax: 15 per cent. rate reduced to 5 per cent.". If desired, a separate Division may be taken on the new Clause, "Purchase tax: 15 per cent, rate reduced to 5 per cent."

  FINANCE BILL

    New Clause.—(PURCHASE TAX: EXEMPTION OF GOODS HITHERTO CHARGEABLE AT 10 PER CENT.)
    Subject to any order of the Treasury made after the passing of this Act under section 39 of the Purchase Tax Act 1963, all goods hitherto chargeable to purchase tax at the rate of 10 per cent. shall be exempt from purchase tax; and accordingly Part I of Schedule 1 to that Act shall be amended by substituting for the words "10 per cent.", wherever they occur, the word "exempt".—[Mr. Callaghan.]
    Brought up, and read the First time.
    Mr. James Callaghan: I beg to move, That the Clause be read a Second time.
    The effect of the new Clause is to reduce the Purchase Tax on goods which are chargeable at 10 per cent. to nil, and thus to exempt from Purchase Tax that list of commodities. The effect of the other new Clauses is similar, except that they would not exempt from Purchase Tax certain of the commodities, but would reduce the Purchase Tax on them.
    There can be no doubt that we all feel that every time we go into a shop prices are going up, and that the £ is not going as far as it used to. This has been a consistent experience since the end of the war, but it is not one of which we have heard a great deal during the
    1144
    last two or three years. In fact, prices are still going up much too fast, and, in many households, this is causing real hardship, especially to elderly people and those on fixed incomes. The increased prices are hitting the groups of people who can least afford them. We are suffering again from a creeping price inflation, and the housewife is the first to feel, it. It is for this reason that we have moved to exempt from Purchase Tax a number of items which most clearly and immediately affect the home.
    If I were asked why this is important, and why this new Clause has been tabled, I would refer to the increases which have taken place. Since January, 1962, there has been an increase in the Retail Price Index of about 4 per cent., or a little more. This is too much. It ought to be less, and, indeed, it would be, if it were not for the actions of the Government, or, in some cases, their failure to act.
    For example, the increase in the price of sugar is a clear case where the Government have failed to act in time. Three months ago everyone knew that the price of sugar was going up, but the Government failed to take the necessary action which we are told they are to take this week. The price of bread is going up. We are promised that the price of meat is to go up. Over a wide range of food items there has undoubtedly been a substantial increase in price during the last eighteen months. We believe that a reduction in Purchase Tax, which is within the Government's control, would make a substantial contribution towards offsetting this increase.
    Mr. Raymond Gower: I am surprised that the hon. Gentleman should make such a sweeping statement about sugar. The price has gone up in many other countries, so presumably the Governments in these other countries have been equally negligent?
    Mr. Callaghan: The hon. Gentleman should pursue his researches further. Thanks to the Labour Government, we devised a Commonwealth Sugar Agreement which has enabled us to purchase our sugar at a lower price than that paid by the rest of the world. If the Government had taken their opportunities they could have reduced the price of sugar at an earlier date, when we knew that the

    1145
    Russians had bought the Cuban sugar crop. This fact was brought to my notice three months ago.
    If it was brought to my notice, I am sure that the Government must have known about it. I do not know why they did not take action earlier. But this is merely illustrative, and I should be out of order were I to proceed too far. I am sure that hon. Gentlemen do not wish to discuss rising prices, although this Clause indicates a way in which rising prices and the effect on the housewife and households could be offset.
    4.30 p.m.
    My second point is that it is the Government's own actions which have forced up the cost of living. Their action in increasing Purchase Tax twelve months ago; their action in connection with the Rent Act; their action in connection with rates; their failure to act in the case of food, has resulted in the housewife having to endure a higher cost of living than she has ever had to endure before in the history of this country. In our view, therefore, it is very desirable that the Government should take what action is within their power to reduce the cost of living in the spheres for which they are responsible. It is upon that that we hinge our case.
    I said earlier that it was the action of the Government which had put up the cost of living from the raising of the Purchase Tax last year. There were many items which were charged at the rate of 5 per cent. and upon which the tax was increased subsequently to 10 per cent. They include men's suits, women's dresses, shoes, boots, gloves, handkerchiefs, scarves, cushions, pillows, mattresses, domestic furniture, chairs, tables, beds, wardrobes, office furniture, garden furniture—all these were charged at the rate of 5 per cent. a year ago and that was increased in the Budget to 10 per cent. That action had a substantial effect on the cost-of-living index.
    If any hon. Gentleman doubts this, I invite him to examine the cost-of-living index in respect of the items which I have mentioned. He will see how the index was stationary in respect of these items for a number of years and started to move up when the Purchase Tax was increased a year ago. This was foreseen by hon. Members on both sides of the Committee. If hon. Gentlemen refresh their memories
    1146
    by reading the debates of last year they will see how supporters of the Government prophesied that as a result of increasing Purchase Tax the cost of living would go up.
    They commented on other aspects, too. They were certainly right. We were told that it was necessary that this should be done. But we must rub into the Government the fact that they are responsible for a substantial part of the increase in the cost of living. When buying any of these items every housewife may say, "Thanks to the Government of the day, the prices are higher than otherwise they would have been."
    We propose to exempt these items from Purchase Tax and so reduce the financial burden on the housewife. The amount collected in Purchase Tax has gone up over the years in which the Government have been in office. About ten years ago it started at about £300 million. It is now over £500 million. This amount is being collected out of the consumers' pockets. I have no doubt that the Government will be putting it up again. But not before the election—after the election, if some hon. Gentlemen opposite have their way.
    We had a long discussion a year ago in which a substantial case was made by hon. Members opposite for increasing all the ranges of Purchase Tax to 16⅔ per cent. The Government will probably shy away from that before the General Election. But I have no doubt that if those who are advocating a flat-rate Purchase Tax had their way, and if the country should be so unfortunate as to return this Government again, we shall see further moves in this direction once the General Election is over.
    Sir Gerald Nabarro: Will the hon. Gentleman give way?
    Mr. Callaghan: No. Therefore, I warn the Committee—
    Sir G. Nabarro: The hon. Gentleman has no guts.
    Mr. Callaghan:—that if the Government are returned we can look forward to further increases in the Purchase Tax and, therefore, to further increases in the cost of living.
    The hon. Member for Kidderminster (Sir G. Nabarro) says that I have no

    1147
    guts. On the contrary, I know better than to give way to the hon. Gentleman who is so loud-mouthed that he will make any irrelevant interjection. Let him wait and make his speech when the time comes.
    Sir G. Nabarro: I shall not give way to the hon. Gentleman.
    Mr. Callaghan: I can assure the hon. Gentleman that I shall not attempt to intervene.
    Sir G. Nabarro: Good.
    Mr. Callaghan: I would not bother with him.
    There is no doubt that there is a substantial lobby in the Conservative party in favour of putting up prices through an increase in Purchase Tax. This should be clearly understood. I hope that we shall have a clear answer from the Government about what is their policy in this matter. A year ago the Financial Secretary, who was then the Economic Secretary, told us that the increase in Purchase Tax was a deliberate measure of Government policy, putting it up from 5 per cent. to 10 per cent., and represented
    "only part of the general reform…"—[OFFICIAL REPORT, 16th May, 1962; Vol. 659, c. 1441.]
    By that the hon. Gentleman meant reducing the Purchase Tax at the top and increasing it at the bottom of the scale.
    Sir G. Nabarro: Hear hear,
    Mr. Callaghan: I wish to ask the Chief Secretary what has happened to the next instalment of the general reform which we were promised, because that was only the first part. We were told that. But we have not seen any further steps this year. Has the new Chancellor lost interest in the whole idea of reforming Purchase Tax? Does he believe that there is nothing further to be done? Have the Government changed their mind over this, as over so many other issues? What are we to think about it?
    Speaking of changing their mind, I do not know whether any of my hon. Friends have read the reports of last year's debate. If they have they may well remember with amusement—and hon.
    1148
    Members opposite will remember with chagrin—that we moved Amendments then to reduce Purchase Tax by about £100 million. That was the amount we were told by the Government Front Bench would be involved. At that time the Financial Secretary told us that the only conceivable case for a reduction of this size was that
    "the Opposition had given up all hope of tackling the question of inflation".—[OFFICIAL REPORT, 16th May, 1962; Vol. 659, c. 1447.]
    This was in May. In October and November the Government reduced Purchase Tax to the extent of about £100 million by reducing the tax on motor cars and perfumery. So we have the measure of the priorities of the Government. Purchase Tax is put up on furniture, on suits and on dresses and it is reduced on perfumery. In the interval the Government explain that to do so would be to give up any hope of tackling inflation. Not only do they change their mind, but they are dishonest in explaining the reason for doing so.
    It is incredible that a Government should so alter their own economic policy and still have no sense of shame. Having told us between the summer and autumn, that to reduce Purchase Tax would be giving up any hope of tackling inflation in the autumn they propose exactly the same amount of reduction that we had proposed three months earlier. Therefore, we should like to hear from the Chief Secretary whether there are further instalments of the general reform to come, or whether the statement of the Financial Secretary last year was a misquotation. Was it part of the general reform or not?
    Last year, the Government were warned of the effect on employment of an increase in Purchase Tax. They were warned by hon. Members on both sides of the Committee. They shrugged off these difficulties. But is there any hon. Gentleman who represents a constituency in which furniture is made, or clothing manufactured, or where boots and shoes are made, who has not been told by his constituents that there are difficulties in the factories which have been added to as a result of the Purchase Tax increases?
    If the representations made to me are any guide, many manufacturers have found that this increase from 5 per cent.

    1149
    to 10 per cent. has made a substantial difference. In fact, the increase was a little over 5 per cent. to a little over 10 per cent., because of the effect of the regulator. They have found those increased difficulties regarding employment and there is already a substantial amount of unemployment in industry which needs taking up and the position improving.
    I said that it was the Government's responsibility, and so it is in a number of these fields. If we look at prices since the new index was introduced, we see that in men's clothing price rises have been of the order of 5 per cent., women's clothing of 3 per cent., and boots and shoes of 6 per cent. All these are directly the responsibility of the Government. The cost of housing, whether it be in rent or rates, has shown an increase since January, 1962, of over 6 per cent. In food prices generally, since January, 1962, the increase has been over 6 per cent.—between 6 per cent. and 7 per cent. Most of these things are within the control of the Government.
    The Government have an incredible habit of allowing one section of their policy to fight against another. It is astonishing that the Chancellor of the Exchequer should go to Sheffield to address the Cutlers' Feast on 23rd May and tell us that the annual increase in incomes, that is to say, in wages, salaries, profits and dividends, should not exceed 3 per cent. to 3½; per cent. and that rises in real wages are based on rising living standards. Of course, he was right, but we are not having rising living standards at the moment and have not had them in the last couple of years.
    There have been falling living standards. In so far as the Chancellor succeeds in keeping increases in wages down to 3½ per cent. and in so far as the increase in prices of food is 6 per cent., in housing 6 per cent., in men's clothing over 5 per cent., in books, newspapers and periodicals 4 per cent. and boots and shoes 6 per cent., he is undercutting the standard of living of the people.
    The standard of living of the average working-class household today is not going up. Unless there is more than one income coming into the household, it is going down. The Amalgamated Union of Building Trade Workers made
    1150
    a very interesting investigation into this subject. It produced a memorandum which has been, or will be, sent to the Chancellor, showing the effect on the budgets of members of that union caused by the increase in retail prices. It showed, what we might expect, that the three largest items in the ordinary budgets of those members are food, the cost of housing in rent and rates and the cost of clothing and footwear. For not one of those items has the cost of living since January, 1962, not gone up by more than 6 per cent.
    Yet the Chancellor told them that they can have an increase of only 3 per cent. to 3½per cent. Are the Government setting out deliberately to reduce the standard of living of these groups to solve the Government's economic problems? The Committee is entitled to know the Government's views on these matters. This memorandum concerns a group of workers, over 1 million, part of whose increases in wage rates is determined by a sliding scale based on increases in the Retail Price Index. They have made their analysis showing that of all the increases in basic rates in the building trades since the war at least 30 per cent. can be accounted for by increases in the Retail Price Index.
    If the Government are concerned about an incomes policy they should make a really substantial contribution by themselves working for a reduction in the cost of living instead of putting it up. Where the Government by their actions put it up, it seems not only absurd, but also to have no logic, because they are responsible for so much of the increase in the retail price increases over the last twelve months.
    4.45 p.m.
    I have no doubt that much of the ridiculous increase which took place last year was in anticipation of our early entry into the Common Market. The Government put it up from 5 per cent. to 10 per cent. because they thought that one way of easing ourselves into a general flat-rate sales tax spread over the whole range of consumer commodities. What the public were saved from as a result of the failure to get into the Common Market, whatever other merits that had, was a substantial increase in prices which would have been brought about partially by this attempt to adjust

    1151
    the Purchase Tax and to squeeze it both upwards and downwards.
    I am not persuaded that this is the right way to tackle the problem. If they want to reform the Purchase Tax they should do so on a different basis. What I and my hon. Friends are utterly opposed to is any general conversion of the Purchase Tax into a sales tax covering the necessities of life by which every brick which goes into a new house and every loaf of bread which is bought pushes up the cost of living of the people of the country.
    Such a system would, of course, reduce the price of perfumery. The Government did that last year. It would also reduce the price of a Rolls-Royce, or other car, but it would increase the cost of living of the ordinary wage-earning family. For that reason I am strongly opposed to it. I hope that we shall hear from the Government whether this is a first instalment of the policy and, if so, whether they intend to go further.
    It is time that we brought this creeping towards inflation to an end. The Government have not only allowed it to go on too long, but have encouraged it and at times initiated increases. They themselves are responsible for a great deal of the difficulties in which housewives find themselves. A housewife should know when she goes to a shop and finds that prices have gone up that she can thank the Government for a financial and fiscal policy which has resulted in her having to pay higher prices. In turn, they result in increases in wages over a considerable section of the economy. The Government are fighting against their own policy on incomes to keep wages on a stable level and this is having an effect on unemployment. It has undoubtedly increased unemployment in some areas.
    For all these reasons there is a substantial case now for reducing Purchase Tax on these essential commodities. Then the housewife may know that it is not as a direct result of Government action that her bills have gone up.
    Sir G. Nabarro: The hon. Member far Cardiff, South-East (Mr. Callaghan) would not show me the courtesy of allowing me a single intervention in his speech. I shall reciprocate in kind, notwithstanding that we are in Committee
    1152
    on the Finance Bill and it is customary, or has been during the modest thirteen years that I have been in this House, for hon. Members to give way to one another in Committee. However, I will now permit no interventions from the hon. Member, in any circumstances.
    Mr. A. V. Hilton: Get on with it.
    Sir G. Nabarro: Having dealt with the hon. Member's discourtesy, I propose to get on with it.
    The three new Clauses we are debating would, if accepted, result in a substantial reduction of indirect taxation. It is an extraordinary thing that a shadow Chancellor of the Exchequer can make a speech for 20 minutes advocating very large reductions in indirect taxation without having the perspicacity or intelligence to tell the Committee what the total cost of the concessions would be. I propose to do it for him. The hon. Gentleman accused my hon. Friends of dishonesty. I thought that his speech was not dishonest; it was disingenuous and naive. He deliberately omitted to tell the Com-tee the huge cost of what he was proposing.
    The first of the new Clauses proposes the abolition of the 10 per cent. rate of Purchase Tax. The estimated revenue of the 10 per cent. rate of Purchase Tax in the current year 1963–64 is £170 million. Thus, the hon. Member proposes by his first new Clause to reduce indirect taxation by £170 million this year.
    The second new Clause which we are discussing, to reduce the 25 per cent. rate of Purchase Tax to 20 per cent., would cost the Treasury £64 million in the current year. The reason is that the revenue estimated from the 25 per cent. rate of Purchase Tax in 1963–64 is £320 million. If the rate were reduced from 25 per cent. to 20 per cent., and assuming that the overall national purchases of goods covered by this rate remained the same, the abatement of the 25 per cent. rate in this context would be a sum of £64 million. The first new Clause would cost £170 million and the second would cost £64 million.
    The proposal in the third new Clause which we are discussing is to reduce the 15 per cent. rate of Purchase Tax to 5 per cent. The revenue from the 15 per cent. rate in the year 1963–64 is £55 million, and it therefore follows by simple

    1153
    arithmetical processes that the cost of reducing that rate to 5 per cent. would be £37 mililon. Summarising, the first of the three new Clauses would cost £170 million, the second would cost £64, and the third would cost £37 million—a total, as an aggregation of the three proposals, of £271 million. The hon. Member for Cardiff, South-East is not very good at arithmetic. He need not go to Nuffield College at week-ends. It would be much better if he went to a secondary school evening class to learn to use a slide rule. He could then carry out the simple calculations which I have given to the Committee.
    Mr. Dan Jones: One does not need a slide rule for that.
    Sir G. Nabarro: The hon. Member for Cardiff, South-East would need a slide rule because he has not the mental capacity to work it out otherwise. Mine are the correct figures. Evidently the hon. Member has not taken the trouble to obtain a copy of my right hon. Friend's answer to my Question No. 64, which was answered today. It will be printed in HANSARD tomorrow and it gives all these figures.
    It states that the yield on Purchase Tax in the current year is £170 million from the 10 per cent. Rate, £55 million from the 15 per cent. rate and £320 million from the 25 per cent. rate, making a total of £545 million. These figures have been published today for the first time, but they were available to the hon. Member for Burnley (Mr. D. Jones) on the letter rack and, failing that, as he knew that my Question was on the Order Paper, I would gratuitously have furnished him with a photocopy of my figures, on application.
    The hon. Member for Cardiff, South-East not only accused my right hon. Friends of dishonesty, but made a further blunder. Not having done his homework, he said that the yield of Purchase Tax had risen year by year. The tendency has certainly been upwards, a reflection of the enormous increase in the consumption of durable and other goods subject to Purchase Tax, during the eleven years of Conservative administration. As an aside, I remind the hon. Member, who talked about the current price of sugar and how the Labour Government, prior to 1951, negotiated a Commonwealth Sugar Agreement, that, notwithstanding
    1154
    that agreement, the housewives of Britain were doomed under his Administration to a 2 oz sugar ration per week. That was the cost not only of a Labour Government, but of keeping prices down to an artificially low level.
    The increasing yield of Purchase Tax in eleven years is a reflection of the enormous improvement in living standards in this country during the last eleven years of Conservative administration. Let me give one example at random. My right hon. Friend the First Secretary to the Treasury will confirm my figures readily. Today, there are 12½ million television sets in use. When the Conservative Government came into power in 1951 there were 1 million television sets in use.
    Mr. Hilton: What about the number of people on National Assistance?
    Sir G. Nabanro: National Assistance is not dealt with in the new Clause. I will deal with it in a debate on the subject and will then knock the hon. Member over the fence for six, as usual.
    The point which I am making is that whereas, eleven years ago, there were 1 million television sets, today there are 12½ million. The average cost of a television set, including Purchase Tax, has been £63 and 11½million additional television sets have been bought in those eleven years. Not only have they provided lively entertainment, leisure and happiness in the homes of the people, but they have been largely responsible for building up year by year the Chancellor's revenue from Purchase Tax.
    I remind the Committee that in 1959 the Purchase Tax on a television set, as on a radio set, as on a motor car, as on a gramophone, as on a disc, as on perfumery and toilet waters, was 60 per cent. As a result of the Conservative Government's actions during the last four years, that rate of 60 per cent. first came down to 50 per cent., then to 45 per cent. and now to 25 per cent.; and the 25 per cent. rate of Purchase Tax on a motor car compares with the 100 per cent. rate during part of the period of years of the Labour Government, after the last war.
    The big reduction of tax has been a very substantial advantage to the ordinary buyer of goods for which he has worked, and which he wishes to provide

    1155
    for his family to enjoy. Moreover, it has contributed to keeping down prices for these goods on the export markets.
    Mr. Douglas Jay: Does the hon. Member mean that Purchase Tax was 100 per cent. on motor cars? It was never higher than 66⅔per cent.
    Mr. Arthur Lewis: The hon. Member for Kidderminster (Sir G. Nabarro) is always wrong.
    Sir G. Nabarro: The hon. Member for West Ham, North (Mr. A. Lewis) would be wise to listen to my figures rather than to those of the Co-op. At least mine are accurate, whereas those of the Co-op are Socialist propaganda. He would be wiser to listen to mine. The 100 per cent. rate of Purchase Tax was applicable at the tail end of the war, and for most of the period of the Labour Government it was 66⅔ per cent. The plain fact of the matter is that it is now 25 per cent.
    It is all very well for the hon. Member for Cardiff, South-East to point out that the 5 per cent. rate has been doubled to 10 per cent. To try to give emphasis to the point, he read a long list of consumer articles, including mattresses and pillow cases. He would have been wiser had he stuck to the Purchase Tax terminology and simply stated that furniture and clothes were the two categories which were raised from 5 per cent to 10 per cent. last year by the Chancellor of the Exchequer who, in addition, put confectionery and soft drinks on a new special rate of 15 per cent.
    I was the strongest possible supporter of the Chancellor's decision last year to double to 10 per cent. the rate of 5 per cent. on clothing and furniture. I was his strongest possible supporter in putting sweets, confectionery and soft drinks on a 15 per cent. rate of Purchase Tax. I asked him to do just that in my speeches on Purchase Tax in the Budget debates of 1961, all in pursuit of an important principle.
    5.0 p.m.
    The hon. Member for Cardiff, South-East talked about substantial support on the Conservative benches for a flat rate of tax. I am the culprit in that regard. I have advocated every year for the last ten years that Purchase Tax should be placed
    1156
    on a uniform rate, non-discriminatory in character, because when there is a superabundance of consumer goods of every kind and description, from motor cars to clothes, to furniture, to cameras, to floor coverings, to a huge range of consumer goods, there is, in my philosophy, no such thing as a luxury. Neither is any article more essential than any other article.
    It is fatuous to say that clothes are an essential of life and, therefore, should be free of Purchase Tax when the rich can buy a Saville Row suit at 60 guineas and the poor put up with a suit at 10 guineas. Luxuries are to be found in every bracket of consumer goods. There is expensive luxury furniture, as there is cheap furniture. Everybody in the Committee knows that it is virtually impossible to draw a dividing line for taxation purposes between a luxury article in a particular Purchase Tax category and a non-luxury article. It would be an impossible proposition for officers of Customs and Excise to be required to tax, for example, pottery up to a certain level of price at one rate and over that level of price at another rate. It would lead to endless complications, incongruities and anomalies and would worsen, by a great deal, in my opinion, the vicious difficulties that we already fall into by having only three Purchase Tax rates.
    Mr. A. E. Oram: Would the hon. Gentleman, in advancing the theory that it is difficult to distinguish between luxuries and necessities, at least agree that there are some items which enter more into the purchasing of poorer families and others which enter more into the purchasing of richer families and that it helps the poorer families if the tax on the goods that they buy is kept low?
    Sir G. Nabarro: No, I do not accept that proposition at all, for a variety of reasons. I will deal with most of them, I hope, in the remainder of my speech.
    My reason for saying that in times of abundance there is no such thing as a luxury is simply that all manufactured goods, in my philosophy, contribute to two important things. The first is the employment of our people, because they are manufactured goods. The second is the building up of our export trade, because all classes and kinds of manufactured goods are exported in one way or another, practically without exception.

    1157
    In that set of circumstances it is, to my mind, nonsense to try to discriminate, article by article, on grounds of essentiality or otherwise to the consuming public. This is a sharp division of fiscal philosophy between Socialists and Conservatives—Conservatives of my type. I am perfectly well aware of the arguments of right hon. and hon. Members opposite in this matter of Purchase Tax. As I have argued publicly elsewhere and in this Chamber for ten years with them, they would try to segregate groups of goods which they consider are essential to the life of the community and they would try to remove Purchase Tax from them. Other goods they would try to segregate elsewhere and say that they are luxurious in character and should carry a high rate of Purchase Tax.
    I believe that this is a totally wrong fiscal policy, and that good progress has been made by my right hon. and hon. Friends towards a single flat rate of Purchase Tax. It is to that that I wish now to apply myself for a few moments.
    When this Purchase Tax campaign of mine started—
    Mrs. Harriet Slater: Of whose?
    Sir G. Nabarro: Of mine. I happened to start it with my first 100 Purchase Tax Questions in 1958.
    Mrs. Slater: It was started a long time before that.
    Sir G. Nabarro: Yes. It was started in a desultory and slapdash fashion by the hon. Lady, but she never really got down to the details of it. She never really learned what Purchase Tax was all about. She imagined that it was confined to pottery, but there are other things as well, such as carpets. They are all important. When the Purchase Tax campaign of mine started in 1958 the top level was 90 per cent. The bottom level was 5 per cent. There were seven rates of Purchase Tax in all.
    We now have a situation, after various changes in 1958, 1959, 1961 and 1963, whereby, instead of seven rates, there are only three rates. The top rate, instead of being 90 per cent. is only 25 per cent. The bottom rate, instead of being 5 per cent., is 10 per cent. There is one intermediary rate put in at 15 per cent.,
    1158
    but it applies only to the very narrow group of sweets, confectionery and soft drinks.
    As I have explained earlier, on this basis of 25 per cent., 15 per cent. and 10 per cent., the total yield of Purchase Tax this year is £545 million. It compares with last year's yield of £571 million. So, actually, a reduction of £26 million is proposed in Purchase Tax over the whole field this year, as compared with last year. If the flat rate that I recommend of 16⅔ per cent. were initiated, the Chancellor's yield would be not very different. His yield would be £558 million were all articles currently subject to Purchase Tax standardised at 16⅔ per cent., or 2d. in the 1s. The yield would then be £558 million compared with his estimated yield on the three-rate current basis this year of £545 million. That is a difference of only slightly over 2 per cent. in order to eliminate discrimination altogether.
    I hope that this steady process under a Conservative Government of compressing Purchase Tax rates towards the desirable goal, as I understand it, of a single and flat rate, non-discriminatory, a uniform rate of Purchase Tax of 16⅔ per cent., or 2d. in the Is., will be pursued by this Chancellor later this year and next year as well, until we arrive at the goal of a single flat rate. I am not dogmatic about the 16⅔ per cent. rate. If the Chancellor can afford it, let him make it a 15 per cent rate.
    I am not alone in these thoughts, either. I will read to the Committee a recommendation from the National Institute Economic Review No. 23, February, 1963, which used these words as a means of injecting further purchasing power into the economy:
    "there may be special social reasons for not concentrating so much of the tax reductions these,"
    By "these" is meant tobacco, spirits and beer.
    It continues:
    "An alternative would be to consolidate all Purchase Tax rates at 10 per cent. This would release just over £200 million."
    In other words, if there were a single Purchase Tax rate of 10 per cent. instead of my proposed l6⅔ per cent. the yield from Purchase Tax would not be £558 million, but would be approximately £350 million.

    1159
    Again, the National Economic Development Council, in its publication "Conditions Favourable to Faster Growth", 1963, had these words to say about Purchase Tax, in paragraph 168:
    "The coverage could be widened and its incidence made more uniform. The Purchase Tax has considerable advantages over the value-added tax in ease of collection, since it is collected at one stage and not several."
    There is a powerful body of thought in the country today which believes in nondiscrimination in Purchase Tax.
    The hon. Member for Cardiff, South-East seems to think that a uniform rate of Purchase Tax is a sales tax. He displays his ignorance of taxation matters, for the sales tax as operated in the United States, on a wide basis, is a retail tax collected over the counter on retail sales. The tax at source as in Germany, is a turnover tax and is another alternative method of doing much the same thing. In Britain, we operate Purchase Tax at the wholesale level, the principal operational advantage being that we have only 160,000 collection points by that method instead of 680,000, which we would have with a retail or sales tax, over the counter.
    As I say, a retail tax over the counter is a sales tax. I have never wanted that. I do not particularly want a turnover tax. Unless we have an added-value tax I want it to be continued as a tax at the wholesale level; but that is not a sales tax, I dislike having to repeat myself, but I must remind the hon. Member for Cardiff, South-East—because he is in a muddle—that it is not a sales tax. I am saying that the tax should be levied at the wholesale level, but at a single, uniform and non-discriminatory rate, as low as possible.
    I would be content with it being 16⅔ per cent., or 2d. in the shilling, in the immediate future because that would be easy to operate. It would mean that those articles which are at present charged at 25 per cent.—motor cars, radios, television sets, cosmetics, cameras, gramophones and discs—would all come down from 25 per cent. to 16⅔ per cent. It would mean that the articles charged at 15 per cent.—sweets, confectionery and soft drinks—would go up from 15 per cent. to 16⅔ per cent. which is only a marginal increase. It would also mean that the whole of furniture, clothes, floor
    1160
    coverings, including carpets—and I represent Kidderminster—and pottery, glass and everything on the 10 per cent. level would go up to 16⅔ per cent.
    If this were done we would have a simple, non-discriminatory system of indirect taxation. It would be equivalent to the continental systems. Such a system would require very little change if and when there were, in the future, an association—economic, political or otherwise—with Western Europe. I strongly believe that this is, as a broad philosophical and fiscal proposition, very important to the future of both manufacturers and consumers in this country.
    I hope that my right hon. Friend will emphatically reject the spurious proposition of the shadow Chancellor of the Exchequer, who did not even have the guts or courage to tell the Committee that the cost of the three propositions he was supporting would be £271 million this year, or £2 million more than the whole of the Chancellor's P.A.Y.E. and Income Tax concessions of £269 million. This shows that the hon. Member for Cardiff, South-East does not want tax reductions this year of £269 million—which he has already voted through—but total tax reductions of £540 million.
    The hon. Member has not the courage to tell the Committee that that is what he is proposing. He did not go to Nuffield College, Oxford, last weekend. He has not done his homework. His arithmetic is very poor and I hope that his propositions will be treated with the contempt they deserve, and that the new Clause will be voted down.
    5.15 p.m.
    Mr. J. Grimond: The discussion of the proposed new Clauses gives the Committee an opportunity of probing the Government's mind on two points. The first is whether the Government are satisfied with the general results of this year's Budget. In that Budget, in the coming year, they will, compared with last year, give a considerable stimulus to the economy and, naturally, they hope to have a response from it, to take up the under-employment of both men and machines and generally to increase productivity and overall production.
    We are entitled to ask if they consider that the stimulus in the Budget is and

    1161
    will be sufficient. Will they be releasing enough purchasing power really to start the economy on an upward cycle? It is extremely important, when considering this point, that the Government should take firm and sufficient measures—and such measures are likely to be much more effective if they are given out with decision and not dribbled out in the coming months.
    We have had an indication from the First Secretary that later in the summer the Government might be prepared to use the regulators to increase purchasing power. I believe that this way of attempting to solve the nation's problems would be a psychological and economic mistake. If they are discovering that they are not getting an adequate response from the economy, the Government should take this opportunity of reducing some of the indirect taxes we are discussing.
    There are signs from economists and industry that the Government have not restored sufficient confidence by the proposed releases of purchasing power. Here again is an opportunity for them, if they feel that it is necessary to give an added incentive, to take action, because industry will respond above all if it is thought that markets will be found for their goods. Whatever is done by way of investment allowances and so on, it is essential to bear this in mind. Thus the first question I wish to discuss is whether or not the Government consider that the measures taken in the Budget will be sufficient, for I believe that, to date, the response generally to the Budget has been disappointing.
    My second point leads me to follow up some of the questions asked by the hon. Member for Cardiff, South-East (Mr. Callaghan) regarding the Government's general policy towards Purchase Tax. This form of taxation has undergone considerable changes over the years. Lord Amory, when Chancellor of the Exchequer, turned down the idea of a Sales Tax. He said at the time that it had been examined and had been found to be impracticable, undesirable or both. I understand that that, among other possibilities as an alternative to Purchase Tax, is being considered again.
    Last year there was an effort, of which I approved, to reduce the number of rates of Purchase Tax and to make the
    1162
    whole structure more rational. Nevertheless, an extra rate of 15 per cent. was brought in on sweets and soft drinks. Are the Government now saying that they will not formulate any policy or take any steps to alter the present structure of Purchase Tax until the Committee which has been set up to consider this matter has reported? This matter is of vital importance to the economy, because Purchase Tax must be looked upon not merely as a method of raising revenue, although that is important, but also on its effect on consumers and industry.
    It is high time that the Government concluded their investigations into the various forms of indirect taxation and informed the country of their conclusion. I would like to know when the Committee of which I spoke is expected to report and whether we are likely to have to wait until, say, next year's Budget for action on its recommendations.
    The hon. Member for Cardiff, South-East pointed out certain objections to either a single rate of Purchase Tax, a sales tax or an added-value tax. I do not deny that his objections have force in that there might be an increase in the cost of living for certain people and that there is a case for a sumptuary type of tax. But I would urge certain counter arguments, particularly in favour of an added-value tax. They are well known, but I think that they are worth placing on record again in view of the proposed new Clauses we are discussing.
    It is generally considered that this would enable us to give some assistance to exports; an important matter on which we are all agreed. It is very often argued that if we give assistance to exports other countries will do the same, but most other countries have already gone considerably further than we have in giving this assistance. I am not convinced that this country should hold back because of possible retaliation—retaliation has, in most cases, already been taken.
    Although I appreciate that an added-value tax might be more difficult to collect, it is, at least, likely that many stages of production would be prepared to absorb the tax and not to pass it on. To that extent, the results feared by the hon. Member for Cardiff, South-East might be less than expected. This form

    1163
    of tax would give an incentive to the efficient industry, and if it were combined with alterations in other forms of taxation it might make a considerable difference to the efficient industry that was using its materials, machinery and men to the best advantage, as against the less efficient industry that was being extravagant with comparatively scarce sources of production.
    I hope that the Government have this type of taxation very much in mind. I hope, too, that they will remember that if it were to appear that there were certain valid objections to the tax, those objections might be met by concessions in other directions. I am not by any means putting the objections entirely aside. The committee set up by the Government will no doubt consider them very carefully, but this Committee on the Finance Bill should direct its mind particularly to the effect of taxation on efficiency, and to seeing whether we cannot so reform our system of Purchase Tax as to make it a positive encouragement to the efficient firm, and not a disincentive.
    Many of the newer industries, the efficient industries of the type we want to encourage—indeed, the type of industries quoted by the hon. Member for Cardiff, South-East in his speech, I think, on the Budget, when he drew attention to an article by Professor Barna—are exactly the type that an added-value tax might encourage to some extent. That is to say, they are concerned, not so much with the basic necessities, as they are generally called, but with, if not exactly sumptuary goods, goods that are well above the level of basic necessities. This would seem an argument for the tax.
    Whatever we may feel about the operations of Purchase Tax, we cannot wait indefinitely for a clear indication of the Government's mind, and a clear indication, also, that they will pursue a more consistent policy than has been the case over the last two or three years.
    Mr. Peter Walker: One of the advantages that the right hon. Gentleman the Leader of the Liberal Party enjoys when he speaks about the proposals of his party is that if we want to compare them with his party's performance we have to go back for a long time. This is not an advantage shared
    1164
    by the hon. Member for Cardiff, South-East (Mr. Callaghan). Whilst I welcome the hon. Gentleman's return from Washington and his attendance here—because, if I may say so, I find his contributions both cogent and interesting—I found his argument today rather below his usual performance. He tended to try to concentrate on making a party political point that does not really stand very much examination from his own point of view.
    The theme of his argument was that because there had been a rise in the cost of living it was the duty of the Government to reduce Purchase Tax in order to make some amends for that rise. I would remind him that, for example, in November, 1947—and 1947 was not a good year for falls in the cost of living but one in which it rose—the Labour Government doubled many items of Purchase Tax, including those on the lower levels, from 16⅔ per cent. to 33⅓ per cent.
    During the period of office of the Labour Government from 1945 to 1951, the cost of living rose virtually every year, but there was no compensating reduction in Purchase Tax. Indeed, during that period, the tax was definitely increased—[Interruption.] In 1946, it increased. In 1947, it increased. In 1951 it was increased, and when the Labour Government went out of office the rates of Purchase Tax were 33⅓ per cent., 66⅔ per cent. and 100 per cent. Those have all been substantially reduced—
    Mr. D. Jones: It is not quite fair of the hon. Member for Worcester (Mr. Walker) regularly to trot out this hoary tale. The position of the country at that time was vastly different from its position today.
    The Temporary Chairman (Mr. F. Blackburn): I hoped that the hon. Member for Worcester (Mr. Walker) would work round to 1963.
    Mr. Walker: With respect, Mr. Blackburn, the argument was that it was correct to reduce Purchase Tax to meet the rise in the cost of living, and I was merely pointing out that the opposite course was pursued when the party opposite was in power. Under this Government, some form of reduction in Purchase Tax has taken place almost every year on many basic household items. Carpets,

    1165
    floor coverings, furniture and clothing have had the tax substantially reduced.
    I want to make a specific point concerning a product that would come under the new Clause 26, because it is affected by the Purchase Tax level of 15 per cent. imposed on soft drinks and sweets. One of the most important facets of British horticulture is the soft fruit industry, and the section that produces blackcurrants has been very seriously affected by the imposition of this 15 per cent. tax. This section sells the bulk of its production to factories making blackcurrant syrup. I ask my right hon. Friend very carefully to consider the effects this tax has had on this section of British horticulture. During the past year, purchases of its production have been reduced by about 25 per cent.—and this was a growth section of British horticulture.
    I know that in the past my right hon. and learned Friend the Member for the Wirral (Mr. Selwyn Lloyd), when he was Chancellor of the Exchequer, gave very careful consideration to the problems of our horticultural industry and made certain concessions to it, but, having undertaken considerable capital expenditure in preparing to increase the total acreage for the production of blackcurrants, the industry finds that the imposition of this tax has resulted in a serious decline in sales. Whereas, last year, the prices increased for almost every commodity under the heading of soft fruits, prices for blackcurrants came down because of surplus supplies. I ask my right hon. Friend to give very careful consideration to this problem.
    Mr. Donald Chapman: The hon. Member for Kidderminster (Sir G. Nabarro) referred to the customs of the House, but, first he must know that the custom on an occasion like this is to put down as many new Clauses as possible in order to have, for example, a wide discussion on Purchase Tax. We are not committed to them all, or to them all at once. This is an attempt by the Opposition, quite rightly, to stage a full-scale debate on Purchase Tax. To add up the figures, as the hen Gentleman did, and to pretend to make a point of it, will only be laughed at by anyone who knows Parliamentary procedure.
    1166
    Secondly, although the hon. Gentleman treats us to a good deal of knowledge in such matters, and to a robust presentation of his case, it might be a good thing for him to use a little less personal offensiveness. Most of us are tempted entirely to disregard, or to write down, what he says because of the offensive tone he continually adopts. I wish that after his eleven years here the hon. Member had learned a little better.
    5.30 p.m.
    I want to speak about the effect of the new Clause which proposes to reduce the 25 per cent. rate of Purchase Tax on motor cars. This gives me an opportunity which I have seized on previous occasions to talk about the effect of Purchase Tax on an industry which is making no mean contribution to our export drive and, indeed, to our livelihood as a whole. The industry is now exporting to the tune of £600 million worth of production a year, which is a considerable slice of our total. We have been pleading for years—and I was glad then to have the hon. Member for Kidderminster on our side—for a reduction of Purchase Tax on motor cars to that with the strength of a big and expanding home market behind it the industry could make a vigorous effort in the export trade.
    I want to look at what has happened in recent years. When I made these pleas for the reduction of Purchase Tax on motor cars in the late 1950s, in speech after speech, year after year, I pointed to the dangerous trends which were facing us and to the dangers of Government policy as it was afflicting the motor industry at that time. I was saying then that here we were in the early 1950s, the undoubted world leaders in the production of motor cars. Even in the middle 1950s we were well ahead and there was no reason to believe that, given a vigorous effort, we could not stay well ahead. But if we look at the later years of the 1950s, as I said at that time, the danger which was creeping up on us—owing to Government policy, particularly on Purchase Tax—was that Germany was catching up and passing us; that France, which had started miles behind us, was beginning to be a notable competitor; and that Italy, from having been an also-ran, was beginning at last to challenge us very strongly throughout the world.

    1167
    I made plea after plea that Government policy should not show this prevarication on Purchase Tax which should be brought down to a level comparable with that of our main competitors in Europe so that our industry could say, "We can go ahead now and see whether we can beat our competitors." I made these pleas year after year, giving precise figures for the growth in production and exports among our competitors.
    If we now bring these figures up-to-date, it will be seen that nothing illustrates more vividly or epitomises more clearly the failure of the Government's "stop-go" policies over the last few years. This is also what is brought out in the desperate possibilities for the industry in the future. This is the legacy of policies in the 1950s.
    After giving this word of warning year after year, I should, then, like to note now where we have landed ourselves in 1963, as a result of those policies of the 1950s. The latest figures are for the complete year 1962. We were then producing about 1·2 million cars and exporting 500,000. But what happened to our competitors compared with only a few years previously? Germany, from being level-pegging with us, produced last year nearly twice as many motor cars as we did. She knocked us for six in world markets, and was selling double the number of cars that we sold in those markets. To our shame France, which was not a desperately important competitor in the middle 1950s, was ahead of us for the first time last year, producing 1·3 million compared with our 1·2 million and selling nearly as many as we did in the export market. Italy, from being of no importance and no challenge to us in world markets in the middle 1950s, was producing in 1962, 877,000 or more than two-thirds of our total production and selling abroad more than half as many as we sold.
    These figures are important not only because of the totals reached but because they show the progress in our industry compared with the industries of our competitors. Year after year, given suitable economic conditions, including a coherent policy on Purchase Tax with it reduction to realistic levels over the home market, our competitors were not showing the
    1168
    swings shown in our production, the dropping back and the lurches forward, and worries every year as to what the figures would bring. They were showing a steady, gentle growth based upon the coherent economic policies of their Governments.
    Mr. Gower rose—
    Mr. Chapman: I am in the middle of this argument. I will give way later.
    While our industry was in danger of dropping back and was going through a very bad period, production in France went up steadily—from 600,000 to 700,000, then to 950,000, to 1,080,000 to 1,100,000 and finally to 1,340,000. This was the steady progress of an ordered economy, compared with the stop-go policies and the incoherence and largely reactionary policies on Purchase Tax from which our industry suffered.
    One year our industry was told that if Purchase Tax on motor cars was reduced it would cause inflation and release too much purchasing power. The next year the industry was told, "We have got into difficulties in the export market and if we reduce Purchase Tax we shall have too many cars sold on the home market."
    We never got anywhere until we had one big break-through last year and the rate of Purchase Tax was reduced to 25 per cent. All honour to the Government that they reached that stage, but hon. Members should consider how late all this is. It is done at a time when Germany is producing and selling twice as many cars, when France is way ahead of us, and Italy has nearly caught us up. In terms of population and industrial concentration we ought to be equal in production and exports with France and Germany. There is no good reason why we should have been beaten in this way.
    Is it too late? We never had the momentum in the 1950s. Can we now capture enough momentum to begin to catch up with those who have a head start on us? This year things are going reasonably well and perhaps we shall produce 1·4 million or even 1·5 million cars. On present figures we should sell over 600,000 cars in the export market, compared with 500,000 last year. But we shall have to work very fast now to catch up with those who have this head start and this developed momentum. We shall have to continue this pressure for the

    1169
    reduction of Purchase Tax because we have such a leeway to make up. We are just at the highest level of Purchase Tax compared with our competitors. I think that one other competitor has a Purchase Tax level of 24 per cent., whereas some of the others have a tax of 19 per cent. and even 12 per cent. Those of us who represent constituencies where these things are matters of life and death must continue to insist that the time has come for a further reduction in the tax to help to make up for the lean years when our industry was so afflicted by what the Government did.
    Much though I am happy to pay tribute to the reduction last year. I hope that the Chief Secretary will not take it that any of us are entirely satisfied. No doubt, he would reply that no one is ever entirely satisfied, so I will say, let him not even expect that many of us will be very satisfied. There is a good deal still to be done to help the industry forward now that, his Government have let it fall so far behind some of our main competitors. We shall be returning to this subject year after year to press our case yet again.
    Mr. Gower: It may be desirable, as the hon. Member for Birmingham, Northfield (Mr. Chapman) said, that there should be greater continuity in the level of Purchase Tax, particularly as it affects the motor industry, but the hon. Gentleman exaggerated his case by speaking of the sensational increase during the early 1950s in production in Germany, Italy and France. That increase was not due either solely or largely to the incidence of Purchase Tax. The hon. Gentleman distorts the picture when he chooses to ignore the fact that those countries were countries which received a great deal of financial aid and new equipment immediately after the war, in many cases brand new factories, and were able to build up their production. When he spoke favourably of our ascendancy in 1950, he forgot that we were ascendant then because we had no competitors.
    Mr. Chapman: The hon. Gentleman has got it entirely wrong. I did not begin my figures in 1950 deliberately for this reason. I started in 1955 and 1956 and spoke of the momentum since then. I did not once refer to the early 1950s.
    Mr. Gower: I accept that correction. Reluctantly, in the end, the hon. Gentle-
    1170
    man admitted that there had been some improvement. He should know that one of the stops to which he referred has, during the past twelve months, occurred in the continental motor industry, too. For instance, when I was in Italy recently I found that during the past year or so German exports to Italy had taken a steep dive, while British exports to Italy had taken a steep rise. This has not occurred since the last Purchase Tax change. It happened before then.
    In his opening remarks, the hon. Gentleman said that these new Clauses were merely intended to explore the position and not in any way to commit the Opposition to support of any reductions of Purchase Tax. But this was not the case put by his hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), who introduced the new Clauses, making clear that the main motive was to reduce the cost of living. They were not exploratory at all, according to him. I presume that the hon. Member for Cardiff, South-East wanted the Government to accept these new clauses and he wanted them to reduce the Purchase Tax levels. If so, he went about it in a strange way, and his case was less than persuasive and less than objective.
    The hon. Member for Cardiff, South-East chose to concentrate on certain aspects of the cost of living, making no comment at all upon the standard of living. He commented only on the desirability of reducing the Purchase Tax and took no account of other reductions in other forms of taxation which have taken place in the last six months or so. One has to consider these proposals in the light of those reductions and consider what effect the reductions have had or are likely to have.
    I do not wish to do him an injustice, but I was not clear whether the right hon. Member for Orkney and Shetland (Mr. Grimond) was warmly in favour of these proposed reductions or firmly opposed to them. On the other hand, I have the firm impression that the hon. Member for Cardiff, South-East was very firmly in favour.
    What steps have been taken so far? The hon. Member for Northfield referred obliquely to one of them. There were the Purchase Tax reductions towards the end of last year. Also, there was the announcement in February by the

    1171
    Minister of Pensions and National Insurance of considerable increases in several benefits under the National Insurance Scheme, including retirement pensions, and, of course, lots of other things, too. In the Budget there was the announcement of considerable changes in direct taxation and Income Tax allowances and the announcement of special assistance to the development districts.
    5.45 p.m.
    Some of these measures cannot yet have taken effect. Many of the benefits of the National Insurance changes are to apply for the first time this month.
    Mrs. Slater: And the increased charges.
    Mr. Gower: I accept that, but the benefits also will take effect only this month. The benefit of the Income Tax changes will not take effect for a month or two and, therefore, can have had no influence yet.
    Mr. James Dempsey: Negligible.
    Mr. Gower: The hon. Gentleman may say that, but they cost in toto £269 million, so they cannot be negligible.
    Mr. Dempsey: Does the hon. Gentleman realise that the change in Income Tax applied, for instance, to a head teacher in Scotland produces an average of 2s. a week, which is already more than offset by increased National Insurance contributions, apart from all the other increased charges?
    The Temporary Chairman: May we deal with the Purchase Tax?
    Mr. Gower: I was relating my argument to the Purchase Tax, Mr. Blackburn. I said that one could not consider the virtue or value of these new Clauses without taking into account all these other things. I hope that you will not regard that as outside the terms of the new Clauses.
    It would be most unreasonable at this time to call for further reductions in tax by the very large amounts proposed in the new Clauses. It was notable—my hon. Friend the Member for Kidderminster (Sir G. Nabarro) made this very fair comment—that the hon. Member
    1172
    for Cardiff, South-East did not refer at all to the cost of the new Clauses. To add to the £269 million, which the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) seems to think is very small, another sum of about £270 million for these Amendments, on top of all the other items to which I have referred, is surely out of the question now. All these things could lead to what we do not desire, an excessive release of purchasing power in the autumn.
    I submit that on those grounds it would be better at this stage to see to what extent the other concessions will take effect. The right hon. Member for Orkney and Shetland thought that these changes had shown themselves already to be inadequate. I respectfully submit to him that it is too early yet to arrive at any such conclusion. It would be much wiser on balance, to wait. Hon. Members opposite may say, "If you do not do this now. you have lost your power to act". They are wrong. My right hon. Friend still retains the regulator which he can use to effect some of the desirable aims implicit in the new Clauses if conditions are favourable. We should take time to assess the effect of the concessions made already. The changes proposed in the Finance Bill are very considerable.
    There has already been a more than promising upturn in production. Despite some criticisms, there is an encouraging trend in exports. It would be most unwise at this stage to imperil the important changes which have been made and the encouraging trends which can be seen. My right hon. Friend has in reserve the power of the regulator and, if the changes which have already taken place show themselves to be inadequate, he can use that additional power. On those grounds, I urge that the new Clauses should be rejected.
    Mr. Victor Yates (Birmingham, Lady-wood): It seemed to me that the hon. Member for Barry (Mr. Gower) was terribly confused about this matter. He entirely ignored the fact that the action of the Chancellor of the Exchequer in reducing the tax on motor cars had led to an increase in the sale of motor cars. This is an argument which has been used in the past by the hon. Member for Kidderminster (Sir G. Nabarro). I am

    1173
    sorry that he is not in his place. His argument against my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was that my hon. Friend had not stated what the cost of this proposal would be.
    The hon. Member for Kidderminster has from time to time asked my hon. Friends and myself to support him in his demand for reductions in Purchase Tax. We have even had communications from the Society of Motor Manufacturers and Traders asking us to support the hon. Member. The measures which the hon. Gentleman proposed would have cost millions of pounds, but that did not alter the argument used by the motor car manufacturers, which I think was very legitimate. It was that if the tax were reduced it would lead to an increase in sales and, therefore, to an increase in Exchequer funds.
    What I cannot understand is that the Chancellor of the Exchequer has made no concessions in respect of Purchase Tax in the Budget. If we can point to the fact that there is unemployment as the result of the imposition of Purchase Tax, that should be very carefully considered by the Government. I am very sorry that all the arguments which we have advanced on behalf of the motor car and bicycle industries have fallen on deaf ears. The tax on bicycles has led to the closure of at least six bicycle factories. Yet there is a wide market for bicycles. Where we can show that the imposition of this tax is adding to the unemployment difficulties, the Chancellor of the Exchequer should examine what we say very carefully.
    My hon. Friend the Member for Cardiff, South-East referred to the effect of Purchase Tax on the cost of living. Increases in the cost of living restrict the demand for goods and services. If we restrict the demand for goods and services, the number of people in employment declines. I do not know that the result of a reduction in tax would be that worked out by the hon. Member for Kidderminster. I do not know how he worked out his figures. But if it can be shown that a reduction in tax leads to an increase in employment, there is a lot to be said for it.
    I do not apologise for again referring to the tax on confectionery. I think
    1174
    that it was regrettable that this 15 per cent. tax should have been imposed a year ago. It is argued that there should be no discrimination, but I would certainly discriminate against a tax on the food of the people. I think that it was a calamitous action on the part of the previous Chancellor of the Exchequer when he taxed soft drinks, ice cream, lollipops, sweets, and so on. He also included chocolate biscuits, which form an essential part of the housewives' shopping. It is extremely difficult to discriminate between this type and other types of biscuit. If the Chancellor of the Exchequer had put a tax on every item of food, there would have been a greater outcry than there was.
    In imposing this tax on confectionery, the Government included chocolate biscuits, a commodity which is made up of flour, fats, and so on. It is not made up of the same things as sweets. There is discrimination between the ordinary sweet biscuit and the chocolate biscuit. Chocolate biscuits, like ordinary sweet biscuits, are supplied by grocers. Seventy-six per cent. of them are sold in food shops, whereas the smaller single chocolate biscuit is sold as confectionery in confectioners' shops. Sweet biscuits are tax free. If a biscuit has chocolate on one side of it, it is tax-free. If it has chocolate in the middle as a sandwich, it is tax-free. Only if it is wholly covered with chocolate is there a tax on it.
    I understand that in 1961 the output of biscuits was 480,000 tons, of which 40,000 tons were chocolate biscuits. The firm of Cadbury decided to take a factory in Moreton, in Cheshire, a development area, for the sole purpose of producing chocolate biscuits. It took the production of chocolate biscuits from Bournville, Birmingham, to Moreton, only to be told after it had got the factory going very well that a tax was to be put on chocolate biscuits.
    The figures show very clearly that as a result of putting this tax on chocolate biscuits employment in the Moreton factory which on 1st April, 1962, stood at 2,940—a very important contribution to employment on Merseyside—went down as at 1st April, 1963, to 2,454, a drop of practically 500 in a development area. There was a reduction of 20 per cent. in employment among women and 11 per cent. among men.

    1175
    There is no sense or reason in asking a firm to take a factory in an area of unemployment and, when it gets there, impose a tax which brings down employment by 500 in a year. It is neither right nor fair. I think that this matter should be examined very carefully. I hope the Government have looked into it.
    6.0 p.m.
    I want to give one other case. I wrote to the chairman of the directors of United Biscuits, who told the annual meeting of shareholders that this tax had had a serious effect upon the biscuit industry. In reply, Sir Peter Macdonald informed me that in the firm of Crawford's there had been a reduction of, I think, 30 per cent. in a year, and he said that this instance could be multiplied in a number of industries. A number of industries have shown a reduction in employment because of this tax.
    I suppose that there has been a reduction also in the confectionery trade, although not to the same extent. I understand that the figure is more like 3 per cent. It is not quite as serious as the effect which the tax has had on the housewife in her choice of food.
    Why should the chocolate biscuit be classed as sweets or confectionery when chocolate biscuits can be included in tins of mixed biscuits which are sold as sweet biscuits? This is unfair discrimination. I want the Chancellor to remove this discrimination and to make a big contribution to the employment situation by doing so.
    Mr. D. Jones: I support the new Clauses because of the effect they would have on the cotton textile industry, which is an important industry in Lancashire and certainly in my constituency of Burnley. First, however, I hope that I may be forgiven in joining my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) and taking exception to the manner of the right hon. Member for Kidderminster (Sir G. Nabarro).
    Mr. J. T. Price: He is not right hon. yet.
    Mr. Jones: I stand corrected. Nevertheless, my point remains, and I shall be brief.
    1176
    I do not mind a good slamming in debate, nor do I mind the offensiveness with which the hon. Member treats the Committee. I object that he should treat the House of Commons as though he were on the stage at the Old Vic and we were nothing but an admiring or critical audience. Having said that, I will deal with our proposals, which, I hope, will influence the Minister in accepting the new Clause.
    I repeat that my interest is confined to the cotton textile industry, but once again I might, perhaps, be permitted to refer to the amount of money that the hon. Member for Kidderminster said was involved in the new Clauses. He gave a figure of £271 million. I do not quarrel with his analysis or his arithmetic—I should like to accept it. I point out, however, that the £271 million to which the hon. Member objects is far less than the amount that Her Majesty's Government are preparing to spend in trying to convince the world that we are an independent nuclear Power. That should be noted not only by the hon. Member for Kidderminster but by the whole Committee and the Government.
    While I do not want to go into all the points relating to the cotton textile industry, I will mention at least certain salient points. This industry has suffered hard at the hands of the Government. We know that there was a tremendous reorganisation in 1959. We know that Ministers assured the cotton textile industry that given co-operation, there was a period of stability and prosperity ahead. It is not strictly relevant to my argument that those views were expressed in the pre-election period. The point is that those statements were made and have been repeated. For that reason, the Government are under a moral obligation to the industry, which they could show by accepting the new Clause.
    I should like to draw attention to the number of people who are entitled to have some new glad rags at least once a year. This appears to be a source of merriment to the Chief Secretary to the Treasury, but I dare say that his good lady and his daughter—
    The Chief Secretary to the Treasury and Paymaster-General (Mr. Boyd-Carpenter): I am sorry. I was amused by an interjection from one of the hon.

    1177
    Member's hon. Friends below the Gangway. If the hon. Member had heard it, he, too, would have been amused.
    Mr. Jones: I accept the Minister's explanation. The wives, daughters and sons of Ministers would undoubtedly claim for themselves that elementary right. I have figures, in which the Committee might be interested, showing that there are 5,821,000 old-age pensioners, 2,046,000 people on National Assistance, 553,000 unemployed, 1,196,000 absent from work because of sickness and 64,000 absent from work because of injury—I notice your look of bewilderment, Mr. Blackburn—making a total of 7,737,000 people who would benefit from the new Clause.
    The Temporary Chairman: I thank the hon. Member for resolving my bewilderment.
    Mr. Jones: I saw that you were puzzled, Mr. Blackburn, and, perhaps, rightly. Nevertheless, I want the Committee to appreciate that there are 7,737,000 people who, it could be claimed, are leading sub-standard lives.
    The person who is away from work because of sickness, accident or unemployment has his income reduced by about two-thirds. I am arguing that if the Clause were accepted such persons would have an opportunity to adorn themselves far better than they can today. Some old-age pensioners have told me that they have not bought a new garment for themselves in ten years. That strikes me as distinctly unfair. If the position were altered, it would represent a great contribution to an industry which has been very hardly treated by the Government.
    I want now to deal with certain observations made by the industry. There is 10 per cent. Purchase Tax on all cotton textile handkerchiefs but none on paper handkerchiefs. This is a further discrimination to which the industry objects. Notwithstanding that in 1959 Ministers said—and it has been repeated since—that the industry would quickly have an up—turn, I am reliably informed that the industry, which really expected an upturn in September, 1962, is still waiting in vain. The industry—in order to keep myself in order, I repeat that it would very much helped by the Clause—is ticking over on its present very unsatisfactory level because many mills are making
    1178
    a loss and choose to do that rather than go out of business. I ask the Government seriously to consider the Clause in relation to an industry to which the Government certainly owe something.
    Before I close I want to refer briefly to an observation made by the President of the Board of Trade in our last debate about the cotton textile industry:
    I look forward to co-operating with the Co on Board in future and to discussing with it the industry's plans for the future as soon as it is able to do so."—[OFFICIAL REPORT, 28th June, 1962; Vol. 661, c. 1386.]
    I am in a position to say that the Cotton Board and the trade unions would very much support the new Clause for the reasons which I have given, and I hope that it will be a very seriously considered for the purposes which I have outlined. It is the kind of co-operation that would be appreciated.
    Mr. A. V. Hilton: During the discussions on the Finance Bill I have often wondered why there is any need to have a Tory Chancellor of the Exchequer or anybody else on the Treasury Bench. To listen to the hon. Member for Kidderminster (Sir G. Nabarro). He created the impression in the Committee this afternoon that he alone is responsible for the Government's policy with regard to Purchase Tax and that it was his idea that Purchase Tax on furniture, clothing, shoes and other things should be increased a year ago and that 15 per cent. Purchase Tax should be imposed on soft drinks.
    6.15 p.m.
    But the hon. Member is so obsessed with his own importance and his own words that, as he admitted this afternoon, he is unable to distinguish between essential and luxury goods. I suggest to him that there is a vast difference between the real necessities of old-age pensioners and other large groups in the country who desperately need a new suit, a new pair of boots or new furniture and those of persons requiring perfume or even a Rolls Royce. However, it is obvious that the hon. Member is not alone in his view that there is no difference between necessities and luxuries, and that is shown by the empty benches on the other side of the Committee. I am pleased to see that my hon. Friends are at least interested in the important matters that we are discussing and are present in large numbers.

    1179
    There are two matters to which I want specifically to refer. One is the tax on soft drinks, which includes blackcurrant juice.
    Sir G. Nabarro: Ribena.
    Mr. Hilton: As the hon. Member says, blackcurrant juice is another name for Ribena. In my constituency agriculture is the most important industry, and for many years many large and small farmers have grown many acres of blackcurrants, and that crop represents the main income of the holding in many instances. The imposition of 15 per cent. Purchase Tax on soft drinks, which covers blackcurrant juice, has meant that the blackcurrant growing side of the horticultural industry has been very badly affected. As was mentioned by the hon. Member for Worcester (Mr. Walker), sales have gone down by 25 per cent. It is a serious matter for those who have been growing the important blackcurrant crop in recent years. Not only has the crop been a very useful source of revenue for farmers, but blackcurrant juice is a very valuable substance for children suffering from the usual ailments and for people with colds.
    I hope that the Minister will take note of this plea in spite of the fact that he has the support of his hon. Friend the Member for Kidderminster on imposing the tax on blackcurrant juice, and I trust that he will reduce that tax on this and on all soft drinks.
    Sir G. Nabarro: I am very much in sympathy with what the hon. Member has said. It was an accident that Ribena was taxed. Ribena is not a soft drink. It is a preparation principally for the use of infants and should not be regarded as a soft drink. For that reason the Purchase Tax on it should be removed.
    Mr. Hilton: A moment ago the hon. Member for Kidderminster admitted that he, and he alone, was responsible for the tax on Ribena. Now he says it was an accident. I should like this cleared up one way or the other.
    Sir G. Nabarro: Then I will tell the hon. Member.
    Mr. Hilton: I agree with the hon. Member when he says that the tax should be knocked off now. I am pleased that
    1180
    I now have his support. It is injurious to people in my constituency and in the County of Norfolk as a whole and in other areas where this crop is grown, and to the people who benefit by consuming it.
    Sir G. Nabarro: Will the hon. Gentleman permit me—
    Mr. Hilton: I would remind the hon. Member that he was reluctant to give way to someone else. I heard him say that he refused to give way. However, unlike him, I will give way.
    Sir G. Nabarro: I was merely reciprocating to the hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan). My constituency grows far more blackcurrants than does that of the hon. Member for Norfolk, South-West (Mr. Hilton). In the Dee Valley and the Vale of Evesham it is the centre of this branch of the horticulture industry. It is an accident that Ribena has been taxed at all. It is a mistake in classification. Ribena is not a soft drink but a preparation for children alone. The hon. Member does not drink it and nor do I. We drink ale. That is a different matter.
    Mr. Hilton: I do not drink ale or Ribena. I drink orange squash, which also carries a 15 per cent. Purchase Tax. I hope that the hon. Member's constituents will remember at the General Election, which he says is coming in October, that it was he who imposed this iniquitous tax on blackcurrant juice. But I agree with him that it should never have been imposed and that it would be in the best interests of very many people in this country if it were removed.
    My hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) referred to the effect of Purchase Tax on bicycle manufacture. I want to refer to bicycles in another context. My constituency is completely rural. Some of the railway lines in Norfolk have already been taken from us. Dr. Beeching has certain proposals for the county, and if these are carried through, as we have every reason to believe that they will be quite soon, many more people in rural Norfolk will be deprived of public transport.
    The main means of transport for the majority of people there is the bicycle. But the existing Purchase Tax on these

    1181
    machines means hardship for these people, the majority of whom are on the bottom rung of the wages ladder. Not long ago, I put a Question to the Chancellor about this, and I think he said that to remove the tax from bicycles altogether would lose him £1¼ million a year. This is really a very modest sum, and if it is correct, I am sure that the Committee will agree that this would neither make nor break the economy. It would hardly affect the Chancellor at all, but it would be a blessing to very many people. I hope that the right hon. Gentleman will look sympathetically at the problems of the many people in rural areas all over the country who have to rely on bicycles. If he cannot agree to removing the tax altogether, I hope that he will at least sympathetically consider its reduction.
    Mrs. Harriet Slater: This debate has covered a number of subjects, ranging from chocolate biscuits—on which my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) put so strong a case—to bicycles, textiles, horticulture and general items under the Purchase Tax. I want to put the case from the point of view of the ordinary person affected by the large variety of items subject to Purchase Tax.
    The hon. Member for Barry (Mr. Gower) said, in support of leaving things as they are, that we must weigh against Purchase Tax all the benefits which the Government have given to us in return. But I suggest that large numbers of people paying Purchase Tax on many necessities are not benefiting by one brass farthing. This can be seen when these benefits are weighed against the terrific increase in the cost of necessities.
    Let us examine some of the items. Everyone has to wear clothes. This week the old-age pensioners will get an increase in benefit. That can be whittled away by having to buy a new coat or a new dress or new shoes. They may need new household commodities, such as pillow cases, blankets, sheets and curtains, in order to make their homes look presentable. They may want wallpaper to make their living rooms look a little better. But on all these things they must pay Purchase Tax.
    Surely some of them are entitled to some new furniture occasionally. Their rocking chairs, mattresses and other
    1182
    articles of furniture all need replacing or repairing from time to time. But they will have to pay Purchase Tax. It is the same situation when we consider new floor coverings, new tiles and new cutlery. All these things affect ordinary people.
    When the hon. Member for Kidderminster (Sir G. Nabarro) talks about Purchase Tax, he is very fond of referring to a 60-guinea suit. I am thinking of the person who can afford to pay at the most only 10 guineas for a suit. I think of the persons who can afford only the bare necessities of life, who must seek out the cheapest possible shops. It is they who are carrying the heaviest burden. Yet these are the very people to whom the Government, at the election, will say, "Look what a marvellous job we have done for you."
    The Government say that they need the £271 millon involved in Purchase Tax. Admittedly, they would not want to lose that sum, but if I had to choose between various items, I would not cut Purchase Tax on expensive items but on those which matter most to ordinary people.
    My hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) spoke of the effect of Purchase Tax on the motor car industry. I appreciate that. I have just bought a new car, so I myself have benefited from the cut in Purchase Tax on cars. But if I had to choose between paying more Purchase Tax on a new car and the Purchase Tax on necessities for old people, the man earning less than £10 a week, and the woman with a large family, I would willingly pay more Purchase Tax on the car.
    Do not let the Government have their tongues in their cheek at the next election. Let them remember that they have not dealt justly with the ordinary consumer. They have maintained Purchase Tax an goods from which they could have removed it if they had had the will to do so. It is no good telling us that the standard of living has increased. We must judge them on the fact that if increases in wages or benefits are offset by increased taxation, the standard of living of these ordinary people does not go up one iota.

    1183
    I am also interested in pottery. The industry is not doing so well as it was a few years ago. Fewer people are employed in our area, because plants other than pottery factories have been forced to move to Northern Ireland and places like that. It means an awful lot whether the tax is kept on good china or good earthenware, and the home market might be considerably benefited by at least a reduction of Purchase Tax.
    6.30 p.m.
    Another item is musical instruments. We have spoken about this time and time again. After all, we are entitled to a little culture in this country as well as having to work hard. To keep the tax on musical instruments is not good enough. The schools have never had it so good. They are doing a tremendous job in increasing the standard of culture in music and the appreciation of music. Yet when people want to buy a new violin, or a new recorder, or a new piano, they have to pay Purchase Tax. These are things from which the Minister might consider taking the tax.
    The same applies to articles like trophies. The schools are doing a tremendous job in encouraging high standards both academically and physically. Yet when a school wants to buy a trophy—a cup or a bowl—or get some one generous enough to buy it, Purchase Tax has to be paid. I believe that shields are exempt, though I have never understood why there should be a distinction.
    I ask the Minister to look at the question of Purchase Tax on clothing, furniture and essential commodities in the home, and to realise that if the Government mean what they say and are really concerned to give the shopper a fair deal, they should take Purchase Tax off these items which the ordinary person has to buy.
    Mr. Brian O'Malley: I support the new Clause because I believe that it would help that section of the community which most needs help. I refer to that section of the community which is not paying Income Tax at all. I particularly have regard to the desperate plight—it is a desperate plight—of the old-age pensioners. Their situation has been alleviated somewhat by the increases which, I think, come into effect this week,
    1184
    but nevertheless, their position is still extremely difficult.
    We heard earlier this afternoon the hon. Member for Kidderminster (Sir G. Nabarro) saying, when talking about television sets, wireless sets, foodstuffs, shoes, clothing, carpets and so on, that one thing was not more important than another. I would tell him that my parents are old-age pensioners. I have practical experience and knowledge of this, and I wonder whether he has? Does he realise the difficulty of old-age pensioners when they want to buy a new carpet, or curtains or a new coat? I wonder whether he realises as fully as he should the difficulties of the poorer section of his own constituents, and particularly those of the family man with a very small income who finds the utmost difficulty in furnishing his house and in buying those things which are at the 10 per cent. rate. I think that the remarks we heard from the hon. Member for Kidderminster—I do not want to spend a great deal of time on them, but I feel bound to make some comments—were on the surface, facile, extremely superficial and inaccurate generalisations on sugar, television and all kinds of things.
    In fact, the hon. Member for Kidderminster has the capacity, if it is something that is worth having, of making the economic problems of this country appear so simple that he can deal with them when practically no one else can. One sympathises and understands perhaps why the Government for lack of a Borgia has no alternative but to promote him to put him out of their way. I do not think that I need spend any more time on the facile generalisations and nonsense that we have heard from the hon. Member for Kidderminster.
    Sir G. Nabarro rose—
    Mr. O'Malley: I shall not give way for a moment, because I have not yet come to my important point. We are told that the Chancellor has decided, and I think rightly, although at a very late stage, that the economy needs stimulation. I would agree with him on that. He has looked at the overall economic situation and has come to a certain decision about how much he considers should be pumped into the economy to get what he describes as expansion without inflation. One feels, however, that he has neglected to consider sufficiently the large number

    1185
    of human problems which arise. I suggest that we have to consider these human problems when we are taking economic decisions. We have to look at the problems of the people who are very heavily affected by the 10 per cent., 15 per cent. and 25 per cent. Purchase Tax on all kinds of necessities.
    I shall not say a great deal about protective clothing, because I understand that one of my hon. Friends intends to discuss it in more detail at a later stage. I realise that in the collieries and in the steel industries in and around my constituency the National Coal Board and the steel companies have done, and are doing, a great deal to try to solve the problem of accidents and to make their industries safer. However, we still have a situation, which is important particularly to many of the small firms, where the 10 per cent. Purchase Tax on protective clothing perhaps militates, even though marginally, against the standards of safety and the lowering of the accident rate which is desired by all hon. Members.
    The main point that I wish to raise is on the question of musical instruments to which my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) referred. We all realise that music is of importance educationally, and is vital to the cultural life of the community. The case for the abolition of Purchase Tax on musical instruments, which, in my opinion, is overwhelming, has long been argued in this Chamber and elsewhere. I would not wish to bore the Committee by going into the history of it. The Purchase Tax on musical instruments is 25 per cent. on the wholesale price, and this means that the purchaser has to pay an added one-seventh on the retail price. However, we observe that pianos, organs—and presumably that includes electric organs, but if I am wrong I hope I shall be corrected—and musical stands are the exception to this 25 per cent. Purchase Tax.
    I should like first to examine some of the anomalies which have arisen as a result of the present Purchase Tax rates on musical instruments. The parent who wishes to have his child trained as a pianist pays no Purchase Tax when he buys a piano. I agree that this is a good thing. On the other hand, the parent who wishes to have his child taught to play a violin, or a cello, or a trumpet,
    1186
    or a clarinet, has to pay 25 per cent. Purchase Tax.
    Next let us look at this from the point of view of the professional musician, and by this I mean the musician who receives payment of £100 or more per year. He may be employed part-time or full-time in a dance hall. The trumpeter, the violinist, the saxophonist, the clarinetist, and the trombonist have to pay tax on their instruments, yet the pianist pays no tax on his piano. The individual musician has to pay 25 per cent. tax on his instrument, but the breweries, the large dance hall companies, and the owners of public houses do not have to pay tax on the electric organs they buy and which constitute a great threat to employment in the musical profession.
    The second anomaly arises in connection with music stands. As a result of a ridiculous decision by the Board of Trade that music stands equal bandstands and that bandstands are another form of building, as a building is not subject to Purchase Tax, music stands are no subject to it either. One would have expected the Government to say something which made sense, and when I was a trade unionist in the Musicians' Union I had on a number of occasions to put forward this peculiar reason for there being no tax on music stands.
    When, in 1940, because of the difficulties caused by the war the question of Purchase Tax was considered, the then Chancellor of the Exchequer proposed a Purchase Tax on books. There was a tremendous outcry, the argument being that books constituted part of the cultural pattern of the country and therefore should not be subjected to Purchase Tax or to tax of any kind. The Chancellor of the Exchequer yielded to that pressure. The result is that musical instruments are the only items concerned with culture which are subject to Purchase Tax. In fact, with the exception of Japan, and to a lesser extent the United States which imposes a small tax on musical instruments, we are the only country in the world which taxes musical instruments. And even in Japan educational authorities and youth associations can claim in rebate from the Government the full amount of tax paid on musical instruments.
    next consider the position of the professional musician in relation to the

    1187
    imposition of this 25 per cent. Purchase Tax. When I talk about a professional musician, I mean the person who earns money working either part-time or full-time in the musical profession. The saxophone, the violin, and the various other musical instruments which are subject to this tax are the tools of a musician's trade. No other craftsmen or professional men have to pay Purchase Tax on the tools of their trade. The Purchase Tax on musical instruments is high because these tools of a man's trade are expensive. For example, the trumpet which the average musician might purchase in London today costs between £50 and £100. I am speaking of the average musician, buying the average instrument, and not the expensive instrument which some people like to use. If a saxophonist wished to buy a Selmer tenor saxophone, it would cost him £140. Of this figure, one-seventh is represented by Purchase Tax.
    Mr. J. T. Price: I am following my hon. Friend's argument with interest and sympathy. I support the new Clause fox the general relief of tax on musical instruments, but does not my hon. Friend think that there is a case for doubling the Purchase Tax on saxophones?
    Mr. O'Malley: A saxophone played well produces a very pleasant sound, and I am sorry that my hon. Friend has not learned to appreciate it.
    6.45 p.m.
    Many people think that professional musicians are highly paid. Some are, but many of them are not, and having to buy an instrument costing £100 or more imposes a severe burden on them. I have employed many musicians during the last eight to ten years. They perform a useful public service. They work for perhaps three or four nights a week throughout the year, and are extremely busy throughout the winter season. They do not turn out until one or two o'clock in the morning for pleasure, although I agree that they get satisfaction from their work. If one does not get satisfaction from a job, one should not do it. Nevertheless, these musicians who do a job during the day, as I was doing before I came to this House—
    Mr. Wilfred Proudfoot: The hon. Gentleman said that he had
    1188
    an interest in this. Can he tell me whether a band gets an investment allowance on new instruments? It also occurs to me to ask what is the expected life of a saxophone?
    Mr. O'Malley: I shall deal with that in a moment.
    The musicians who work out several nights a week get some satisfaction from their work, but it is hard work to turn out until one and two o'clock in the morning. Their total income is about £300 to £350, a year and having to pay 25 per cent. Purchase Tax on their instruments is a heavy burden.
    Turning to the question asked by the hon. Member for Cleveland (Mr. Proud-foot) about Income Tax—
    Sir G. Nabarro: My hon. Friend asked about investment allowances.
    Mr. O'Malley: I think I am right in saying that the hon. Member for Cleveland asked whether, when a musician buys a new instrument to replace one which has worn out, he gets an allowance for it.
    Mr. Proudfoot: If an owner provided his band with new instruments, would he receive an investment allowance for them?
    Mr. O'Malley: No. Band leaders do not buy musical instruments for their players. The members buy their own instruments and claim Income Tax refund for the replacement of their instruments. The point is that this does not help the situation. If one is to get even a 7s. 9d. in the £ rebate on £30 or £40 eight, ten or twelve months afterwards, it does not help with the purchase of these expensive instruments.
    I think it relevant to a discussion on Purchase Tax on musical instruments to refer to the importance of music generally in society. It has a great deal to do with the cultural pattern of the country. Many people derive a great deal of enjoyment from music. There is a problem which will become increasingly difficult to solve in the future arising from the increased amount of leisure time resulting from automation and the use of modern industrial processes. As has been apparent in the first 60 years of this century, because of the kind of society in which we live, we are becoming increasingly a nation of passive listeners

    1189
    rather than active performers. When television programmes are abused, as sometimes they are, it is true that television is becoming the comic strip substitute for reading and a soporific alternative to performance. If people had the opportunity to acquire a musical training they would be more able to enjoy the kind of music to which they listen.
    Some people maintain that the standard of popular music is lower than is desirable. Perhaps it is lower than almost anyone would desire. One reason is that far too few children are being trained to play musical instruments because education authorities cannot afford to buy the instruments. I was recently at a school where that kind of situation prevails and even there the situation is not so bad as in other places. In the United States there are far more school orchestras than exist in this country. According to statistics—I find this hard to believe, perhaps because of the kind of society we have in this country—one in six of the pupils in the United States plays a musical instrument.
    This morning I was speaking on the telephone with a representative of Boosey & Hawkes, and he told me that 75 per cent. of the clarinets which his firm sells, the cheaper clarinets, are bought by young people between the ages of 10 and 15. I suggest that the 25 per cent. Purchase Tax on musical instruments is a drain on the future progress of culture in this country. We find a situation in which local authorities are handicapped by the imposition of Purchase Tax on musical instruments, and not sufficient numbers of young people are coming into the musical profession.
    I come from a colliery area and it is a fact that the brass bands, a feature of these areas for a long time, are now declining. Mining communities derived a great deal of pleasure from the performances given by such bands, but now the bands are going out of existence because of the Purchase Tax imposed on the instruments. By means of the Arts Council the Government hand out money for the promotion of interest in and the development of knowledge and understanding of the fine arts. But, with the other hand, the Government are taking back the money in the form of Purchase Tax.
    1190
    I support the new Clauses. I regard a reduction from 25 per cent. to 20 per cent. in Purchase Tax as at least a step in the right direction and something which may enable us to keep a flourishing music industry in this country. If we could get rid of Purchase Tax, or reduce it, that would alleviate the difficulties facing the music profession in 1963.
    Mr. J. T. Price: I hope that I may be expressing the feelings of all hon. Members if I say how much we enjoyed the speech of the hon. Member for Rotherham (Mr. O'Malley). He is a recent recruit to our counsels, although this was not his maiden speech, and we appreciated the lucid and well-informed manner in which he spoke.
    I do not wish to refer to the matters which are usually dealt with in Purchase Tax debates, but rather to deal generally with the implications of what it is sought to achieve by introducing these Amendments. It would be a strange sort of discussion on the Finance Bill if we did not at some time have a debate on Purchase Tax. On such occasions as this hon. Members, quite rightly, take the opportunity to refer to matters which affect the employment of their constituents, and we appreciate the reason for the special emphasis placed by my hon. Friends the Members for Birmingham, Northfield (Mr. Chapman) and Birmingham, Lady-wood (Mr. V. Yates) on the motor car industry and the chocolate making industry.
    If I wished to raise a constituency matter, I think I should be entitled to refer to the textile industry, because I represent a part of Lancashire where that industry has been largely destroyed by the foolish and stupid policy of the Government. But this is hardly the occasion on which to discuss that in detail. Unfortunately, some of the textile mills where formerly constituents of mine earned their livelihood now stand stark and empty. There is no one to make use of them for other purposes, and on a siutable occasion I shall deal at greater length with that situation.
    We are glad to see the Chief Secretary of the Treasury again in the Committee. I wish to put it to the right hon. Gentleman that there was a time when the Government defended the existence of present Purchase Tax rates and even an

    1191
    increase in them. The right hon. Gentleman will recall that his right hon. Friend the present Minister of Education, when he was at the Treasury, maintained that the purpose of the Government in retaining Purchase Tax at its present high rates was not in order to produce revenue for the Treasury, but to mop up surplus purchasing power. This became known as "Boyle's Law". When I went to school, Boyle's Law was something entirely different and related to physics, but in this Committee "Boyle's Law" relates especially to the former Financial Secretary to the Treasury, who is now the Minister of Education. The right hon. Gentleman then argued most tenaciously and with great skill and erudition, and with all the other qualities for which we give him credit, that Purchase Tax was imposed in order to mop up the surplus purchasing power.
    Mr. Chapman: Was not the "Boyle's Law" to which my hon. Friend refers that by increasing prices you brought prices down? That was what it became.
    7.0 p.m.
    Mr. Price: I do not want to be deflected into that branch of metaphysics. I want to keep on the straight and narrow path. I think that the general purpose was as I have stated it.
    This Government have had periods of blowing hot and blowing cold, of turning the tap on and turning it off, of stop start and go. All these things have been heavily criticised even by such reputable newspapers as The Times. Now we are told that in 1963 as we get nearer and nearer to a General Election, inflation has been brought under control by the wise policies of the last Chancellor of the Exchequer, who got the sack for those policies. Today we must reverse the engines and put more purchasing power into the economy. We are to have a period of expansion which we on these benches have been arguing for for many years. The Government have changed their pictures like a local cinema changes its programme twice a week.
    This does not square with opposition to the new Clause. I am concerned, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) is concerned, with the domestic economy of ordinary people. I am not so much concerned with the academic high-falutin' arguments
    1192
    of politicians. I make no apology for batting on my own wicket. In parts of my constituency 6 per cent. of the electorate are unemployed as a result of the collapse of the cotton industry, the removal of industry from the district, the closure of coal mines and other industrial decay which has not been dealt with. If first-aid is to be brought to those who are suffering unemployment because of the wrong policies of this Government, I agree that long-term policies are needed to redistribute industry. We have argued tenaciously for that, but in the short-term what hits the ordinary person, particularly the unemployed, the old and those on low incomes, is the ever-rising cost of living.
    I am very much honoured by the fact that the Minister of Education has now come to listen to our debate. We are always pleased to see him. As I look round the Chamber tonight and compare the present situation with that in the House last night, I think it is a commentary on the way in which our affairs are conducted that when we are discussing bread and butter problems, the standard of living of the people reflected in cost of living and difficulties of meeting weekly housekeeping bills, practically all the Government benches are empty. Yet last night when we were discussing the fate of a remote African chief the House was packed. I do not complain that the House was so full then because we were discussing questions of great importance and human decency. Nevertheless the subject tonight is something which affects ordinary people's housekeeping accounts.
    Hon. Members opposite seem to regard it as a matter of little account which comes up year after year. No doubt when the Division bells ring Members on the Government side will come in and vote whichever way the Government wish. It is all right for the hon. Member for Kidderminster (Sir G. Nabarro), who has recently left the Chamber—
    Sir Kenneth Pickthorn: Another one gone.
    Mr. Callaghan: The hon. Member for Carlton (Sir K. Pickthorn) is alive.
    Mr. Price: I am very glad to have the interest of the hon. Member for Carlton (Sir K. Pickthorn).
    Sir K. Pickthorn: The hon. Member for Westhoughton (Mr. J. T. Price) is anxious for us to get on with the bread and butter matters, but he still has not got on the road there. The most definite thing he has said so far is that there are not so many on the back benches as there should be. I called attention to the fact that he has just lost one more.
    Mr. Price: I am very much obliged to the hon. Member. It all adds to the joy of battle and I very much appreciate it.
    On the merits of my statement that this is a matter of vital importance to ordinary people, the hon. Member for Kidderminster, who has recently left the Chamber, has argued blandly, naively and ignorantly that there is no distinction in the minds of most people because we are in the Welfare State and many are doing well from expense accounts and so on. He has suggested that they cannot tell the difference between ordinary necessities of life and luxuries. He should tell that to a young couple who want to get married and are faced with the problem of buying a house on a mortgage at 6 per cent. interest plus, the hire-purchase charges for furnishing the Purchase Tax at 10 per cent. We have not always had Purchase Tax on furniture at 10 per cent.
    Mr. Walker: It was 33⅓ per cent.
    Mr. Price: That was when our Government were restoring the foundations of the country after the most devastating war in history. With great respect to the hon. Member for Worcester (Mr. Walker), who is usually very fair-minded, he does not know much about it except what he has read in books, but some of us here now lived through those days and know what the situation was.
    This 10 per cent. is an important addition to the cost of living not only on necessities of life but on the capital goods which many people need to start a home. We are suggesting by this Clause that it should be removed from those goods. No one opposite would deny that for many years, with all the difficulties economic and otherwise, when clothing and textiles had to be strictly controlled by quality and price controls we did not have Purchase Tax at 10 per cent. on clothing. That has been introduced recently. I claim that the cost of clothing, particularly men's and children's clothing, is disgracefully high at present.
    1194
    Since many people cannot provide out of current income the payment necessary for such items as furniture and clothing, they are compelled to go into heavy debt by hire-purchase transactions to which 10 per cent. is added, making anything up to another 10 per cent. on the transaction. It is quite unreal to say in debates of this kind that if this new Clause were agreed to it would cost £170 million. I am prepared to accept that figure, but only about a fortnight ago I had some exchanges with the Chancellor of the Exchequer about business expenses allowed under Schedule E under existing legislation. There was a gasp of astonishment when the Chancellor revieled, what was not generally known, that last year they amounted to £263 million. Those business expenses were often based on bogus claims. It is wrong for any hon. Member to suggest that £170 million for this proposal would break the camel's back. If it is socially desirable to give this concession, the right hon. Gentleman and his right hon. Friends ought seriously to consider it.
    From time to time we have heard statements from the Government Front Bench, from those in charge of Government policy, that they cannot deal adequately with the economic control of the country's affairs unless they have an incomes policy. They have set up machinery to that end. They have set up the National Economic Development Council, which in many ways is an excellent body, and they have set up the National Incomes Commission, which we on this side of the Committee have not seen fit to support, for various reasons with which hon. Members are familiar.
    Where is the sense of trying to enforce a policy which will limit the rise in wages to 3½ per cent. when, as a result of increased interest charges, Purchase Tax and higher rent, there is a much bigger rise in the cost of living than 3½ per cent.? I believe that there is a difference of at least 3 per cent. between the amount to which the Government seek to limit wages, 3½ per cent., and the 6 or 7 per cent. rise in the cost of articles in common daily use. People find prices increasing every time they go into a shop.
    Ingenious arguments are produced with all the polemics which all hon. Members can use if they are so minded, but the fact remains that if the cost of living

    1195
    rises more than do wages, there is a reduction in the standard of living. I was surprised earlier to hear hon. Members opposite intervene, perhaps in complete ignorance of the fact that we were discussing not the cast of living but the standard of living. The standard of living is being eroded for millions of people in this country, although many fortunate people are doing very well out of the system. Those who are taking this stand—and some of them are represented on the Conservative benches—are concerned not so much with wages and salaries as with having an unlimited expense account to which they can charge everything.
    As long as the Government claim that we are in a period of expansion they should bear in mind that the easiest way to provide more purchasing power is to release some of it by relief of Purchase Tax. That is what we are asking. I hope that the Minister will at least give us the courtesy of a considered reply instead of the platitudes which we have had in previous years. In the past we have had all sorts of platitudes, and then they ring the bell and get all their available supporters in the Lobby to vote us down.
    Mr. Denys Bullard: I hope that the hon. Member for West-houghton (Mr. J. T. Price) will not be offended by the fact that I have just come into the Chamber, but I have been on the Committee of the Water Resources Bill otherwise I would have not troubled this Committee at this late hour. I have a new Clause on the Order Paper dealing with the Purchase Tax on blackcurrant juice. I understand that it is not being called, and I thought it proper to take this opportunity to ask my right hon. Friend to give the matter very earnest consideration, for reasons which I will very shortly advance.
    The blackcurrant industry is very important for the horticulturists in this country, being second in size to the strawberry industry. After a very depressed period, during which the acreage declined rapidly in the late 1950s, it has been staging a considerable recovery, and the figure has risen to 16,000 acres, compared with the original 16,800 acres in 1950. It has climbed back to a relatively large scale of fruit growing.
    1196
    7.15 p.m.
    Now, as a result of the Purchase Tax imposed last year, there is a definite turn for the worse, so much so that the sale of blackcurrant concentrated syrups since the imposition of the 15 per cent. Purchase Tax has declined by 25 per cent. below the figure of 1961. This has led to a drop in the average price of blackcurrants from 168s. a cwt. on the contract to 161s. a cwt. This is at a time when, in general, the price of soft fruit is rising.
    It is desirable that the industry should not suffer from the trade cycle which it has experienced in the past. Bushes take a long time to grow. When there is a depressed feeling in the industry, it leads to the grubbing up of bushes until plantations decrease in size to a point at which supplies become inadequate for the market, and a return then sets in and we have the type of cycle which affects other sides of agriculture and which is liable to occur with blackcurrants.
    I plead with my right hon. Friend to see whether anything can be done about this, because this appears to be the kind of cycle into which we are liable to move with blackcurrant growing. The blackcurrant syrup industry is an important outlet for the fresh fruit trade and the Purchase Tax, which I should like to see removed altogether, is a very serious matter for blackcurrant growers. In Norfolk we grow a great acreage of the crop, and my growers have asked me to plead with my right hon. Friend to do what he can to exempt this very nutritious juice from the incidence of Purchase Tax and so prevent the recurrence of the troubles into which the industry is liable to sink if this Purchase Tax continues.
    Mr. Norman Dodds: I hope that I shall persuade the Minister to be in a sympathetic mood by making my contribution in less than five minutes, by being to the point and by putting the case without too much detail. I support the new Clauses and in doing so I wish to make a particular plea for the footwear industry.
    Various aspects of the footwear industry have been mentioned by my hon. Friends, but I want to draw to the Minister's attention—if he does not already know, and I think he does—that the footwear industry is passing through a

    1197
    very bad time. Despite what the hon. Member for Barry (Mr. Gower) said, there is no sign that the industry is moving out of the doldrums. Many people, the private trade as well as the co-operative trade, feel that the introduction of the Purchase Tax has had a serious effect on the industry and that if it were removed the industry would have a much better future than appears likely.
    I said that private trade as well as co-operative trade was having a very bad time because there came into the footwear industry one of Britain's most successful business men, Mr. Clore. He has recently had to admit that the industry in which he is so prominent has had a very bad time, and there appears to be no sign that the boot and shoe trade will get out of this situation.
    May I also put the human problem? Boot-and-shoe factories are to be found in many parts of Britain, and the amount of redundancy and short-time working in them is particularly severe for men and women who have given a life-time to the industry. It is a sad state of affairs when they have to go out of it because of redundancy and to try to find work in other areas.
    The Treasury must have information about the severe redundancy and unemployment in the footwear industry. If there were any sign that there was likely to be an improvement, I should not be making a special plea for the industry. There are plans in hand to close a number of footwear factories. I ask the Minister to be particularly sympathetic. I hope that he will have some message tonight that will indicate to those working in the industry that there is some recognition in the Treasury and on the Government Front Bench of the human problems involved, which many believe have been made much worse because of the Purchase Tax.
    It could be argued that we cannot continue to have an industry which obviously needs some retraction—in other words, that people are not walking as much as they used to and therefore not so many boots and shoes are required. If this is so, it is all the more reason why Purchase Tax should be removed. It is not a reason why it should be continued.
    One or two of my hon. Friends have mentioned old-age pensioners, who above
    1198
    all need good footwear. They now find it very difficult—and the way things are going they will find it even more difficult—to maintain their footwear in a state which will prevent them having wet feet. Mention has not been made of the fact that the average child is now bigger, and that means that he has bigger feet. Many schoolchildren aged about 14 have feet as big as adult feet. Millions of people are not paying Income Tax and for many families it is difficult, and in some cases impossible, to acquire proper shoes.
    I ask the Minister to bear in mind the fact that good footwear is essential for young people. Many people are now homebound largely because in the past they did not have good footwear. Bad footwear can cripple people. It is vital that good footwear should be available to young people as well as to the elderly.
    I therefore ask the Minister to give some indication that the problem is understood by the Treasury. We hope that the Treasury is at least sympathetic. Better still, if there is to be some easement of the problems of the footwear industry, which the Treasury could easily bring about, it should abolish altogether the Purchase Tax—not on luxuries, but on essentials used by everyone. I hope that the Government will be sympathetic if for no other reason than that there is a likelihood of a General Election in the not-too-distant future and it would be helpful, for whatever purpose, if Purchase Tax were removed.
    Mr. Cyril Bence: I wish to be brief. I make no apology for raising three specific cases of Purchase Tax affecting small industries in my constituency. The first is the Singer sewing machine industry. The sewing machine is a piece of essential capital equipment for the young housewife and, added to the other problems of the young couple about to marry—buying a house, getting a home together—the tax on a sewing machine is unjustified in a modern society.
    Secondly, the Purchase Tax on soft drinks is unjustifiable, even on blackcurrant juice and orange juice. It is unjustifiable and stupid to put Purchase Tax on a form of refreshment which should be encouraged in the motoring age.

    1199
    I come to the case with which I am principally concerned. I have had sent to me from the Gymnastic Equipment Manufacturers Association its correspondence with the Treasury over the last ten years. To escape the wrath of right hon. and hon. Members, I have no intention of reading this correspondence between the Association and the Treasury which has lasted ten years. Right hon. and hon. Members will be delighted to hear that the pattern has been the same for ten years. There has been very little change. In every letter successive Chancellors of the Exchequer have expressed great sympathy for the manufacturers of gymnasium equipment but have unfortunately not seen their way clear to reduce or abolish the Purchase Tax. This is quite in keeping with tradition. One cannot expect tradition to change in ten years.
    The Purchase Tax of 25 per cent. on gymnasium equipment comes under Group 20—toys—and there are extraordinary anomalies. The manufacturers tell me in this correspondence that 95 per cent. of the equipment they manufacture is sold to agencies of the State—education, the Forces and institutes of further education. Parallel bars, vaulting horses, ets., are all paid for by grant from the Treasury. The Purchase Tax of 25 per cent. goes back to the Treasury. All over the country clerks are working out the Purchase Tax at the wholesale stage in order to tell the Treasury the amount of Purchase Tax it must collect on the product. This is nonsense. If 95 per cent. of the product is bought by the State, the State obviously gains no revenue from the Purchase Tax. It pays it.
    Under Group 20, swings, slides and roundabouts are excluded if they are not mechanically operated. Parallel bars, vaulting horses, vaulting boxes and vaulting saddles used in gymnasiums are taxed at 25 per cent. Swings and roundabouts hand manipulated are not taxed. This is absurd. These are exemptions from the tax. I could hardly believe this when it was pointed out to me. This shows how a Member of Parliament should follow in almost his every waking hour what is going on in Departments of State. The anomalies and stupidities perpetrated by bureaucracy would shock the people.
    1200
    Hon. Members will be interested to learn that—
    "Boats and other vessels large enough to carry human beings, and accessories for such boats and vessels"
    are exempt. A small bracket to fasten the side or the saddle on to a vaulting box is chargeable at 25 per cent. A factory makes brackets for catamarans and small boats. Brackets are made in the same process. If the brackets go on boats, they are exempt. Brackets for fastening sides and tops to vaulting boxes are taxed at 25 per cent.
    This is nonsense. When this was pointed out to me in the Gymnasium Equipment Engineering Company in my constituency, I wondered whether I was in a madhouse. It reminded me of Bernard Shaw's essay, "The Political Madhouse in America and Nearer Home", written before the war.
    7.30 p.m.
    Gliders large enough to carry human beings are exempt, while high parallel bars and adjustable parallel bars used for exercising one's muscles and ingenuity are taxed at the 25 per cent. rate. If one can afford to buy a glider and be towed by an aeroplane—and get the exercise of manipulating the craft in the air—one does not pay Purchase Tax. If one buys a set of parallel bars to exercise one's muscles and ingenuity one pays at the 25 per cent. rate.
    For the Government to permit such an anomaly to continue is making the whole taxation system look ridiculous in the eyes of the community. Having listened for most of the afternoon to the debate, I have come to the conclusion that the sooner Purchase Tax is abolished the better. It might be worth while our going over to a turnover or other form of taxation, for the present system is absurd.
    Each year when we discuss the Finance Bill we discover further anomalies in our Purchase Tax arrangements. As each year passes the system becomes more and more crazy. I hope that the proposed new Clauses will be accepted so that we can progressively get rid of Purchase Tax altogether. Every day millions of people are buying goods which are subject to Purchase Tax—soft drinks, boots and shoes and the rest—and the present system does not take into account

    1201
    the incomes of those least able to afford to pay the tax.
    Mr. John Wells: I support the plea of my hon. Friend the Member for King's Lynn (Mr. Bullard) regarding blackcurrant juice. I had a most unsatisfactory Answer from the Economic Secretary last Thursday on this very point, when my hon. Friend used the phrase:
    "It is good to see that sales are recovering somewhat…".—[OFFICIAL REPORT, 23rd May, 1963; Vol. 678, c. 622.]
    The sales of blackcurrant and other juices may be recovering somewhat, but that is only due to the massive advertising campaign which has been undertaken by the natural fruit juice companies, but the harm done to this industry and the fruit growing community is indeed great.
    My hon. Friend the Member for King's Lynn put forward some cogent arguments, and while I have no doubt that we shall not receive a long reply on this point from the Chief Secretary tonight, I hope that my right hon. Friend will remember that the signatories to the proposed new Clause, entitled "Purchase Tax: exemption for blackcurrant syrup", represent almost every horticultural constituency in the country. This is a nation-wide problem, and I am glad that the hon. Member for Dunbartonshire, East (Mr. Bence) has echoed this both in his remarks about the fruit juice industry today and at Question Time last week. I hope that the Government will reconsider this matter in the near future.
    Mr. Oram: One after another of my hon. Friends have built up a devastating case in favour of the new Clauses. If it were not for the fact that we are used to exhibitions of stone-walling from the Dispatch Box, I would hope that when the Chief Secretary replies he would be able to make the shortest reply of all time and simply say "I agree" or "I submit", whichever he chooses.
    My hon. Friends and I welcomed certain features in the Budget as soon as it was introduced. One glaring omission from it was the lack of any concessions in the present Purchase Tax arrangements. It seems, therefore, that the virtues of the previous year's Budget are only virtues in that they reverse the trend of the previous year's Budget. The new Clauses we are discussing give the Government an opportunity to reverse two of the major
    1202
    errors committed by the Chancellor's predecessor. I refer, first, to the doubling of the Purchase Tax on furniture and clothing, and, secondly, to the introduction of Purchase Tax at the 15 per cent. rate on a wide range of confectionery and soft drinks.
    My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) rightly based his case largely on the effects of the increased rate on the cost of living. My hon. Friend gave instances from the cost-of-living index to show how the prices of clothing, furniture and many other items have taken an upward leap as a direct result of the Government's Purchase Tax moves last year. While my hon. Friend gave specific instances, I wish to concentrate on the breadth of the application of Purchase Tax on clothing and furniture.
    Considering the weights in the cost-of-living index which apply to clothing and furniture, one finds that more than 100 points are applicable to these items from the range of 1,000 points in the weighting system. So the doubling of the tax was applied on one tenth of consumer expenditure. It was a flagrant act, deliberately designed to increase the cost of living at a time when everyone—Government, manufacturers, distributors, and so on—should have been concerned to do everything possible to reduce it.
    Reference has been made to the possible intention of the Government regarding an alternative or alteration to the Purchase Tax structure. We are entitled to know more than we have been told about the Government's strategic intentions in this direction. I say "strategic" intentions because we have discussed the "tactical" side of this matter. Are the comments of the Chancellor's predecessor about the intention to take further steps to reform the whole structure of Purchase Tax still applicable? The hon. Member for Kidderminster (Sir G. Nabarro), in his usual self-confident way, claimed credit for having set the Government on what he regards as the right road in this matter. I agree with him that last year there was more than one hint to the effect that the Government intended to introduce one or other of the Continental systems, no doubt with a view to our entering the Common Market. That situation has changed. Have the Government changed

    1203
    their attitude in this matter? Do they now intend to bring about what seemed to be their intention last year; that is, one rate of indirect taxation, or are we to continue with the system we have and its accompanying series of Purchase Tax rates?
    I am strongly opposed to what the hon. Member for Kidderminster called the important principle of one rate of Purchase Tax. The hon. Member said that he could not distinguish between luxuries and necessities and that, therefore, all consumer expenditure should be subjected to the one rate. Last year, like many of my hon. Friends, I was most uneasy about the extension of Purchase Tax to food and drink, commodities that had up to then been recognised by both sides as being inappropriate for indirect taxation. That was a step in the wrong direction and indicated the Government's intentions to spread the Purchase Tax net much more widely than hitherto. We ought to be told whether the Government intend to go further in that direction or to accept the policies suggested in the new Clauses.
    The idea of one rate Purchase Tax, of not attempting to differentiate between necessary and less necessary goods, is all very well if, at the same time, we are moving to a situation in which incomes are more nearly equal. If there is equality of incomes we can have a one-rate Purchase Tax, but if, as is the case, the gap between rich and poor is widened, there is every reason to ensure that the poorer families do not pay increased amounts of Purchase Tax.
    Constituency points have been made on all sides in this debate. Hon. Members from the textile areas, such as my hon. Friends the Members for Burnley (Mr. D. Jones) and Westhoughton (Mr. J. T. Price); those concerned with the manufacture of biscuits, as was my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates), others concerned with the difficulties facing the footwear trade, and with unemployment in the furniture trade, have made their cases, and I want to speak of one special case that has been already mentioned.
    The soft drinks industry illustrates the unfortunate effect that last year's taxation
    1204
    has had on the development of an industry. Soft drink production has gone down, as it has in other countries where this commodity has been taxed. I believe that production went down by nearly 30 per cent. in the third quarter of last year, and by about 15 per cent. in the fourth quarter. I hope that the Chief Secretary will not blame the weather for that because, if he casts his mind back, he will know that last year was as bad as the year before it—and this year looks like being the same. The right hon. Gentleman may not have the figure, but I should like to know whether the expectations of revenue from this tax and similar taxes have been fulfilled, or whether the slump in production has falsified the Chancellor's hopes.
    By accepting these new Clauses the right hon. Gentleman the Chief Secretary has the opportunity to do three important things. First, he can make a very considerable contribution to reducing the cost of living—and, by reducing the tax on clothing and furniture in particular, he can give aid to many people who are in great need of it. Secondly, he can stimulate the economy in areas of special unemployment-the furniture industry and others have been mentioned—and the Government should be very much concerned with that aspect. Thirdly, he can make a considerable contribution to greater social justice in the tax structure. For those three reasons, I hope that the right hon. Gentleman will give a reasonable and very favourable reply.
    7.45 p.m.
    Mr. Boyd-Carpenter: When I last took part in a Purchase Tax debate in relation to the Finance Bill, as Financial Secretary, we had the procedure, which some hon. Members will recall only too well, of what was colloquially called the "Dutch auction." That was an experience that those of us who have been through it would never wish to repeat. I must say that this debate today indicates how very much better is the Committee's present method of dealing with this very complicated subject.
    We are debating new Clauses relating to the main rates of Purchase Tax, and the individual points affecting different commodities come into our discussion,

    1205
    not as being themselves the subject matter of Amendment but as being, I understand, Sir Robert, in a Ruling given by one of your predecessors, illustrative of the arguments in favour of the new Clauses. That has the advantage that one can listen, as I have listened to this debate, and my right hon. Friend and I and our associates can subsequently read in HANSARD what hon. Members have said, and give it, as we certainly shall, the fullest consideration, without prejudice to handling the debate itself as being on the main rates.
    I can probably best serve the Committee, without unduly prolonging our proceedings, and we have a good deal of further business, by first replying-and I hope that the Committee will excuse brevity; it generally does—to some, but not all of the individual points raised, but subject to the general assurance I have already given that what has been said will be very carefully considered by my right hon. Friend during the course of the year.
    The right hon. Member for Orkney and Shetland (Mr. Grimond) asked—and here I must tread warily, because I might lack his adroitness in treading the outer perimeter of the rules of order-about the added—value tax, and the Richardson inquiry. I cannot tell the right hon. Gentleman when that inquiry is likely to be completed. My right hon. Friend the Chancellor said in his Budget speech that it would be carried out urgently. As I am sure the right hon. Gentleman knows, this is an immensely complex subject, and I cannot yet foresee when we shall receive the report. I will come at another point to the right hon. Gentleman's question about the way in which my right hon. Friend's general measures are working out.
    The hon. Member for Erith and Crayford (Mr. Dodds) most persuasively said that he thought that his remarks would gain force by their brevity. I noted what he said about footwear, and particularly about footwear suitable for young children. He will be aware that there is already an exemption in respect of footwear suitable for young children.
    My hon. Friends the Members for Worcester (Mr. Walker) and King's Lynn (Mr. Bullard), and one or two other hon. Members, touched on the application of the tax to blackcurrant
    1206
    juice, or cordials, beverages, etc., made from it. We shall certainly watch the development of this industry, and hon. Members are quite right when they say that for one reason or another there has been some falling off in demand for the juice.
    I cannot say very much more, for another reason. Two of the manufacturers have challenged the Purchase Tax classification and have claimed that this should not be treated as a beverage but as having medicinal properties. This is a highly complicated issue which they are discussing at the moment with the Customs. I should ill serve the Committee if I should seek to take it into the quite hideous complexities of that subject, but I will certainly note the general tone of the speeches.
    Mr. Hilton: Will the right hon. Gentleman also bear in mind the valuable point made by the hon. Member for Kidderminster (Sir G. Nabarro) that this tax was put on blackcurrant juice by mistake or by accident?
    Mr. Boyd-Carpenter: I do not think that I need assure the hon. Member that I always pay special attention to everything that my hon. Friend the Member for Kidderminster (Sir G. Nabarro) says.
    Mr. Dodds: The right hon. Gentleman did not take up the paint I made about children's footwear when I stressed that some 14-year-old children take adult-size shoes. Can the right hon. Gentleman say whether these would be exempt from Purchase Tax?
    Mr. Boyd-Carpenter: I thought that I dealt with that point by expressly saying that the exemption related to young children. It is fair to say that in his speech the hon. Member, although no doubt he knew it, did not indicate that this exemption existed.
    The hon. Member for Birmingham, Ladywood (Mr. V. Yates) raised the next question about chocolate biscuits about which, if I may say so, he appeared to be extremely excited. This is a quite complicated problem which my hon. Friend the Economic Secretary has already discussed with representatives of the trade. The problem, briefly, is that there is a kind of chocolate biscuit sold in sweet shops which is very close to chocolate bars, with a different filling. There is

    1207
    also a type of chocolate biscuit which one buys at grocery shops and which to all intents and purposes is a biscuit. The difficulty, as so often with this tax, is to get the definition right. If we can find a definition with which the trade agrees and which we think workable, I think that we shall be able to make some progress, but I do not dispute that the hon. Member for Ladywood has made a point.
    Then we had what one of his hon. Friends described as the musical interlude by the hon. Member for Rotherham (Mr. O'Malley) who made, as I agree with the hon. Member for Westhoughton (Mr. J. T. Price), a most agreeable speech and who recalled to us affectionate memories of his predecessor as Member for Rotherham for many years. The hon. Member was not quite right in his reference to the practice of other countries. I understand that musical instruments are charged under a general turnover tax in Germany and Italy and under the T.V.A. system in France. The hon. Member also referred by way of contrast to the exemption given to pianos. This was given some years ago because of the then desperate condition of the manufacturing industry.
    The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) referred to the reduction some months ago of the tax on motor cars, and I was very glad to hear that she had benefited from it. The hon. Lady said that she would have far preferred the changes to have been made in respect of other articles chargeable with Purchase Tax which she felt were borne by old people, but it is pertinent to remember in this connection that the tax on motor cars, before my right hon. Friend reduced it, was 45 per cent. as opposed to 10 per cent. on the articles with which the hon. Lady was concerned. It should be remembered also that in connection with the tax on motor cars there is the question of employment in a very large and important industry. The hon. Member for Birmingham, Northfield (Mr. Chapman) represents a great many workers in that industry. I am sure that it was extremely important in the interest of both employment and the economy to give that relief.
    I come now to one or two of the general problems, or the major issues.
    1208
    My hon. Friend the Member for Kidderminster made a valid point when he drew attention to the fact that the hon. Member for Cardiff, South-East (Mr. Callaghan), who moved the new Clause, at no stage in the course of his agreeable speech referred to the cost. I thought that the rebuke which my hon. Friend, in his inimitable manner, applied to the hon. Member was fair, because when we are dealing with new Clauses, which are not trifling but substantial in their financial effect, the Committee is entitled to have from a Shadow Chancellor of the Exchequer some indication of the cost of the remission.
    My hon. Friend the Member for Kidderminster, in his calculation of the cost, got the figures very nearly right but I had better give the cost to the Committee now. The new Clause giving exemption to goods hitherto chargeable at 10 per cent. would cost £170 million. The new Clause to reduce Purchase Tax from 25 per cent. to 20 per cent. would cost £60 million, and the new Clause to reduce the 15 per cent. rate to 5 per cent. would cost £36 million, making a total cost of £266 million. This is a major factor, and whatever arguments may be adduced, however entertainingly, about the anomalies and irrelevancies of the tax, the Committee cannot responsibly adopt proposals for major changes of this sort and, indeed, the abolition of the 10 per cent. tax, without facing the fact that this would make a major change in the whole pattern of the Budget.
    The hon. Member for Cardiff, South-East may say that that is right, because he thinks that my right hon. Friend ought to have gone further in releases of purchasing power. I come here to what the right hon. Member for Orkney and Shetland said about this. We argue that my right hon. Friends judgment about the amount of additional purchasing power required is proving to have been fully justified. The economy, in our view, is developing well. It is noteworthy in this connection, first, that the big infusion of purchasing power from the bulk of the increase in National Insurance benefits and retirement and widow's pension begins to operate only this week and that the large infusion in respect of Income Tax concessions does not begin to operate until the beginning of July. Given these various factors, we are fully satisfied with the

    1209
    way the economy is responding to my right hon. Friend's proposals.
    Mr. Douglas Jay: Is the right hon. Gentleman aware that there is also a First Secretary in this Government, and that the First Secretary has recently expressed the opinion that further expansionist measures would probably be necessary? How are we to know which of these two Ministers is right?
    Mr. Boyd-Carpenter: I do not know whether the right hon. Gentleman was in the House when the First Secretary answered a Question on this very point last Thursday and he pointed out that he had said nothing of the sort that the right hon. Gentleman alleges. If the right hon. Gentleman had thought that my right hon. Friend had said it, he could have been present and could have asked a supplementary question, but I do not think that he did.
    This proposal, involving a forgoing of revenue of this sort, would have doubled the release of purchasing power proposed in the Budget. Therefore, in putting this forward, the hon. Member for Cardiff, South-East must either say that he would be virtually doubling the release of purchasing power or that these proposals for reduction in Purchase Tax ought to be substituted for the other main steps taken in reducing Income Tax. Which is the view of the Opposition?
    8.0 p.m.
    Mr. Callaghan: I am a little influenced in my approach to this matter by the fact that exactly the same arguments were advanced from the Front Bench last year when I moved to incorporate concessions amounting to £100 million and was told that this would be grossly inflationary, but, six months later, the changes were made. So I really dismiss that argument because we do not know what the Government will say next. As to the rest, I have moved only the new Clause to abolish the 10 per cent. rate. That would make a difference of £170 million. If the right hon. Gentleman wants to know what off-setting I should do, I can tell him of one thing straight away, the Stamp Duty, a present to the Stock Exchange of £25 million, with no benefit whatever.
    Mr. Boyd-Carpenter: Without going into the merits of the Stamp Duty—I think
    1210
    that I should get into trouble if I did—I can only say that £25 million even from the hon. Gentleman is a very poor off-set for £170 million. The fact that the hon. Gentleman has avoided answering my question about whether he would substitute this for the Income Tax concessions will enable all hon. Members to form their own view.
    Taking the debate generally, the hon. Member for Cardiff, South-East and several hon. Members seriously exaggerated the effects of the Purchase Tax on the cost of living. The hon. Member for Cardiff, South-East, went into this at some length. He said that the Purchase Tax was putting up the cost of living, making substantial increases. I pass over, because it has already been dealt with, the fact that his own Government did not regard reductions in the Purchase Tax as a means of dealing with the cost of living, even though, when they left office, their lowest rate was 33⅓ per cent., which is higher than the highest rate maintained this year, 25 per cent. As a pure matter of fact, the Purchase Tax does not have any very substantial effect on the cost of living.
    The effect of the first new Clause, the one to abolish the 10 per cent. rate, would be to take 0·75—three-quarters of a point—off the Index of Retail Prices, at a cost of £170 million. To abolish the Purchase Tax as a whole, going even further than hon. Members opposite, would make only a reduction of 1·8 in the index. I think that that puts the matter in proportion. It is not my purpose to argue that it has no effect that would obviously be nonsense—but it is right that the Committee should have the figures so that it can put in proportion the hon. Gentleman's views, expressed at considerable length, about the effect that a reduction of Purchase Tax would have in making a serious impact on the cost of living.
    Mr. G. R. Mitchison: My hon. Friend referred also to the effect on employment. May we hear what the Government have to say about that? In Kettering, we are very conscious of the boot and shoe trade.
    Mr. Boyd-Carpenter: I am obliged to the hon. and learned Gentleman. That brings me to what I had intended to be my next point. The first point in relation to employment is that the Purchase Tax

    1211
    at the relatively moderate rates now imposed is, quite obviously, a much less serious adverse factor on employment than it was at the time of which, no doubt, the hon. and learned Gentleman is thinking, when the rates were a great deal higher. It is one of the advantages of the flattening of the rates of Purchase Tax to the three we have at present, 25 per cent., 15 per cent., and 10 per cent., that one avoids the distortions of the economy and, therefore, the effects on employment which high rates of Purchase Tax have, with extremely difficult marginal cases in which, perhaps, a question of definition may make an enormous difference, depending on whether an article attracts a high or more moderate rate of tax.
    Mr. Mitchison: I am sorry to correct the right hon. Gentleman, but there was no Purchase Tax on boots and shoes. The rate was so flat that it did not exist until the First Secretary of State put it on after the 1955 election.
    Mr. Boyd-Carpenter: I am sorry to correct the hon. and learned Gentleman. He asked a question about employment generally.
    Mr. Mitchison: No.
    Mr. Boyd-Carpenter: He added, perhaps superfluously—we all know that he is a very good constituency Member—a reference to the boot and shoe trade, but he put it as a general question and I am answering it as a general question.
    This brings me to the question of the shape of the Purchase Tax, to which several hon. Members have referred. The three rates which we have now, all moderate and without a very great disparity between them, form a tax which, in our view, it a better and more efficient tax and one more conducive to the vigour of the economy than a Purchase Tax with a large number of rates and a wide spread between them, partly for the reason I have given already to the hon. and learned Member for Kettering (Mr. Mitchison).
    I know that there is a clash, almost a doctrinal clash, between hon. and right hon. Gentlemen opposite and ourselves on this subject. I have no wish to stir up that clash, but it is a fact that they tend to believe in a wide spread of rates with a very high rate of tax on what they regard as luxuries. Those who advocate
    1212
    this must remember two things. First, the effect on the economy and employment. Nothing is a luxury to the people who earn their living making it. I say that in reply, partly, to the hon. Member who earlier interjected a reference to Rolls-Royce. Second, it is, in these days, increasingly difficult to define objectively what is a luxury.
    Mr. D. Jones: We do not find that difficulty.
    Mr. Boyd-Carpenter: It used to be said that a motor car was a luxury. I do not know whether this is argued now that a motor car is a necessary tool of trade of the commercial traveller, the journalist, the country doctor and so on. A cynic once said that a luxury was something one happens not to like oneself. In fact, it is a very difficult problem and it is not one for the handling of which, I feel, taxation is a particularly useful and effective instrument.
    Our view is that the present shape of the Purchase Tax is an enormous improvement on what we have had hitherto. I should be quite wrong if I were to respond to the temptation to speculate about the future. It is my purpose to commend to the Committee the tax as it now stands and to point out that, although there are individual points of difficulty—there always are individual points of difficulty in this tax, as I from my previous term at the Treasury, know and as other hon. Members know—it is a tax which produces a revenue of £545 million in a full year. We have this tax. We think it is in better shape than before. I am quite sure that it would be wrong to make the radical changes proposed in the new Clauses. To do so would seriously damage the whole pattern of my right hon. Friend's Budget, as I have explained. No argument has been produced to show that to do so would help the economy. In my view, it would hinder it. While we shall, of course, study with the greatest care, as we always have done, the points at which the shoe may be pinching, the points at which there may be a real case for improving the tax, I put it to the Committee that it would be wrong to make the sweeping changes which the new Clauses would make and I ask the Committee to reject them.
    Mr. Neil McBride:
    The right hon. Gentleman spoke about

    1213
    the Chancellor's measures to promote the vigour of the economy. Has he considered that what he is saying is at variance with the article in the centre page of today's Financial Times, particularly the first paragraph? If he has studied that article, will the right hon. Gentleman give his view of the last sentence of that paragraph?
    Mr. Boyd-Carpenter: Owing to my attendance on the Committee in this
    debate, I have not had the intellectual pleasure, which I usually enjoy at an earlier hour of the day, of reading that admirable paper. So far as it differs from what I have said, I think that it must be wrong.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 175, Noes 230.

    Division No. 126.]

    AYES

    [8.9 p.m.

    Ainsley, William

    Hannan, William

    Oram, A. E.

    Albu, Austen

    Harper, Joseph

    Oswald, Thomas

    Allaun, Frank (Salford, E.)

    Hart, Mrs. Judith

    Padley, W. E.

    Allen, Scholefield (Crewe)

    Henderson, Rt. Hn. Arthur(RwlyRegis)

    Pannell, Charles (Leeds, W.)

    Awbery, Stan (Bristol, Central)

    Herbison, Miss Margaret

    Pargiter, G. A.

    Bacon, Miss Alice

    Hill, J. (Midlothian)

    Parkin, B. T.

    Baird, John

    Hilton, A. V.

    Paton, John

    Beaney, Alan

    Holman, Percy

    Pavitt, Laurence

    Bence, Cyril

    Houghton, Douglas

    Pearson, Arthur (Pontypridd)

    Bennett, J. (Glasgow, Bridgeton)

    Howell, Charles A. (Perry Barr)

    Pentland, Norman

    Benson, Sir George

    Howell, Denis (Small Heath)

    Popplewell, Ernest

    Blyton, William

    Hoy, James H.

    Prentice, R. E.

    Boardman, H.

    Hughes, Cledwyn (Anglesey)

    Price, J. T. (Westhoughton)

    Bowden, Rt. Hn. H. W. (Leics, S.W.)

    Hughes, Hector (Aberdeen, N.)

    Probert, Arthur

    Bowles, Frank

    Hunter, A. E.

    Pursey, Cmdr. Harry

    Braddock, Mrs. E. M.

    Hynd, H. (Accrington)

    Randall, Harry

    Bradley, Tom

    Hynd, John (Attercliffe)

    Rankin, John

    Bray, Dr. Jeremy

    Irvine, A. J. (Edge Hill)

    Redhead, E. C.

    Broughton, Dr. A. D. D.

    Irving, Sydney (Dartford)

    Reynolds, G. W.

    Butler, Herbert (Hackney, C.)

    Janner, Sir Barnett

    Rhodes, H.

    Butler, Mrs. Joyce (Wood Green)

    Jay, Rt. Hon. Douglas

    Roberts, Albert (Normanton)

    Callaghan, James

    Jeger, George

    Robertson, John (Paisley)

    Carmichael, Neil

    Jenkins, Roy (Stechford)

    Rogers, G. H. R. (Kensington, N.)

    Chapman, Donald

    Jones, Dan (Burnley)

    Ross, William

    Collick, Percy

    Jones, Elwyn (West Ham, S.)

    Short, Edward

    Corbet, Mrs. Freda

    Jones, J. Idwal (Wrexham)

    Silverman, Julius (Acton)

    Craddock, George (Bradford, S.)

    Jones, T. W. (Merioneth)

    Silvennan, Sydney (Nelson)

    Cronin, John

    Kelley, Richard

    Skeffington, Arthur

    Crosland, Anthony

    Kenyon, Clifford

    Slater, Mrs. Harriet (Stoke, N.)

    Cullen, Mrs. Alice

    Key, Rt. Hon. C. W.

    Slater, Joseph (Sedgefield)

    Dalyell, Tam

    Lawson, George

    Small, William

    Darling, George

    Ledger, Ron

    Smith, Ellis (Stoke, S.)

    Davies, G. Elfed (Rhondda, E.)

    Lee, Frederick (Newton)

    Snow, Julian

    Davies, Harold (Leek)

    Lee, Miss Jennie (Cannock)

    Soskice, Rt. Hon. Sir Frank

    Davies, Ifor (Gower)

    Lever, L. M, (Ardwick)

    Spriggs, Leslie

    Deer, George

    Lewis, Arthur (West Ham, N.)

    Stewart, Michael (Fulham)

    Delargy, Hugh

    Mabon, Dr. J. Dickson

    Stones, William

    Dempsey, James

    McBride, N.

    Strachey, Rt. Hon. John

    Diamond, John

    McCann, John

    Swingler, Stephen

    Dodds, Norman

    MacDermot, Niall

    Taverne, D.

    Duffy, A. E. P.

    McInnes, James

    Thomas, Iorwerth (Rhondda, W.)

    Edwards, Rt. Hon. Ness (Caerphilly)

    McKay, John (Wallsend)

    Thompson, Dr. Alan (Dunfermilne)

    Edwards, Robert (Bilston)

    McLeavy, Frank

    Thornton, Ernest

    Fernyhough, E.

    MacPherson, Malcolm (Stirling)

    Tomney, Frank

    Finch, Harold

    Mahon, Simon

    Wainwright, Edwin

    Fitch, Alan

    Mallalieu, J.P.W. (Huddersfield, E.)

    Warbey, William

    Fletcher, Eric

    Mapp, Charles

    Watkins, Tudor

    Foot, Dingle (Ipswich)

    Mason, Roy

    Wilkins, W. A.

    Foot, Michael (Ebbw Vale)

    Mayhew, Christopher

    Williams, D. J. (Neath)

    Forman, J. C.

    Mendelson, J. J.

    Williams, Ll. (Abertiltery)

    Fraser, Thomas (Hamilton)

    Millan, Bruce

    Williams, W. R. (Openshaw)

    Galpern, Sir Myer

    Milne, Edward

    Williams, W. T. (Warrington)

    George, LadyMeganLloyd(Crmrthn)

    Mitchison, G. R.

    Willis, E. G. (Edinburgh, E.)

    Ginsburg, David

    Monslow, Walter

    Winterbottom, R. E.

    Gourlay, Harry

    Morris, John

    Woof, Robert

    Griffiths, David (Rother Valley)

    Moyle, Arthur

    Yates, Victor (Ladywood)

    Griffiths, W. (Exchange)

    Neal, Harold

    Zilliacus, K.

    Hale, Leslie (Oldham, W)

    Oliver, G. H.

    Hamilton, William (West Fife)

    O'Malley, B. K.

    TELLERS FOR THE AYES:

    Mr. Whitlock and Mr. Grey.

    NOES

    Agnew, Sir Peter

    Ashton, Sir Hubert

    Balniel, Lord

    Allason, James

    Atkins, Humphrey

    Barber, Anthony

    Arbuthnot, John

    Awdry, Daniel (Chippenham)

    Barlow, Sir John

    Barter, John

    Harrison, Brian (Maldon)

    Pannell, Norman (Kirkdale)

    Batsford, Brian

    Harrison, Col. Sir Harwood (Eye)

    Pearson, Frank (Clitheroe)

    Baxter, Sir Beverley (Southgate)

    Harvey, John (Walthamstow, E.)

    Peel, John

    Beamlah, Col. Sir Tufton

    Harris Anderson, Miss

    Pickthorn, Sir Kenneth

    Bell, Ronald

    Hastings, Stephen

    Pilkington, Sir Richard

    Berkeley, Humphry

    Heald, Rt. Hon. Sir Lionel

    Pitt, Dame Edith

    Bidgood, John C.

    Henderson, John (Cathcart)

    Pott, Percivall

    Biflen, John

    Hendry, Forbes

    Price, David (Eastleigh)

    Bishop, F. P.

    Hiley, Joseph

    Profumo, Rt. Hon. John

    Bossom, Hon. Olive

    Hill, J. E. B. (S. Norfolk)

    Proudfoot, Wilfred

    Bourne-Arton, A.

    Hirst, Geoffrey

    Quenneil, Miss J. M.

    Box, Donald

    Hobson, Sir John

    Rawlinson, Sir Peter

    Boyd-Carpenter, Rt. Hon. John

    Hocking, Philip N.

    Redmayne, Rt. Hon. Martin

    Braine, Bernard

    Holland, Philip

    Rees, Hugh

    Brewis, John

    Hollingworth, John

    Rees-Davies, W. R.

    Bromley Davenport, Lt.-Col. Sir Walter

    Hopkins, Alan

    Renton, Rt. Hon. David

    Brooke, Rt. Hon. Henry

    Hornsby-Smith, Rt. Hon. Dame P.

    Ridley, Hon. Nicholas

    Brooman-White, R.

    Howard, Hon. G. R. (St. Ives)

    Roberts, Sir Peter (Heeley)

    Brown, Alan (Tottenham)

    Howard, John (Southampton, Test)

    Robinson, Rt. Hn. Sir R. (B'pool, S.)

    Buck, Antony

    Hughes Hallett, Vice-Admiral John

    Roots, William

    Bullard, Denys

    Hughes-Young, Michael

    Ropner, Col. Sir Leonard

    Bullus, Wing Commander Eric

    Hurd, Sir Anthony

    Russell, Ronald

    Burden, F. A.

    Hutchison, Michael Clark

    St. Clair, M.

    Butcher, Sir Herbert

    Iremonger, T. L.

    Scott-Hopkins, James

    Campbell, Gordon (Moray & Nairn)

    Irvine, Bryant Godman (Rye)

    Sharples, Richard

    Carr, Robert (Mitcham)

    James, David

    Shaw, M.

    Cary, Sir Robert

    Jenkins, Robert (Dulwich)

    Skeet, T. H. H.

    Chataway, Christopher

    Johnson, Or. Donald (Carlisle)

    Smith, Dudley (Br'ntf'd & Chiswick)

    Chichester-Clark, R.

    Jones, Arthur (Northants, S.)

    Smithers, Peter

    Clark, Henry (Antrim, N.)

    Kerby, Capt. Henry

    Smyth, Rt. Hon. Brig. Sir John

    Clark, William (Nottingham, S.)

    Kerr, Sir Hamilton

    Spearman, Sir Alexander

    Cooke, Robert

    Kershaw, Anthony

    Stanley, Hon. Richard

    Cooper, A. E.

    Kimball, Marcus

    Stodart, J. A.

    Cooper-Key, Sir Neill

    Lagden, Godfrey

    Stoddart-Scott, Col. Sir Malcolm

    Cordesux, Lt.-Col. J. K.

    Langford-Holt, Sir John

    Studholme, Sir Henry

    Cotfield, F. V.

    Leather, Sir Edwin

    Summers, Sir Spencer

    Coulson, Michael

    Leavey, J. A.

    Talbot, John E.

    Courtney, Cdr. Anthony

    Leburn, Gilmour

    Tapsell, Peter

    Crawley, Aidan

    Legge-Bourke, Sir Harry

    Taylor, Sir Charles (Eastbourne)

    Critchley, Julian

    Lewis, Kenneth (Rutland)

    Taylor, Edwin (Bolton, E.)

    Curran, Charles

    Lilley, F. J. P.

    Taylor, Frank (M'ch'et'r, Moss Side)

    Currie, G. B. H.

    Linstead, Sir Hugh

    Teeling, Sir William

    d'Avigdor-Goldsmid, Sir Henry

    Litchfield, Capt. John

    Temple, John M.

    de Ferranti, Basil

    Loveys, Walter H.

    Thatcher, Mrs. Margaret

    Donaldson, Cmdr. C. E. M.

    Lucas-Tooth, Sir Hugh

    Thompson, Sir Richard (Croydon, S.)

    Drayson, G. B.

    McLaren, Martin

    Thornton-Kemsley, Sir Colin

    du Cann, Edward

    Macleod, Rt. Hn. Iain (Enfield, W.)

    Tiley, Arthur (Bradford, W.)

    Eden, Sir John

    McMaster, Stanley R.

    Touche, Rt. Hon. Sir Gordon

    Elliot, Capt. Walter (Carshalton)

    Macpherson, Rt. Hn. Niall(Dumfries)

    Turner, Colin

    Eillot, R.W. (Newc'tle-upon-Tyne, N.)

    Maddan, Martin

    Turton, Rt. Hon. R. H.

    Emmet, Hon. Mrs. Evelyn

    Maitland, Sir John

    Tweedsmuir, Lady

    Farey-Jones, F. W.

    Markham, Major Sir Frank

    van Straubenzee, W. R.

    Farr, John

    Marshall, Douglas

    Vane, W. M. F.

    Fell, Anthony

    Marten, Nell

    Vaughan-Morgan, Rt. Hon. Sir John

    Finlay, Graeme

    Mathew, Robert (Honiton)

    Vickers, Miss Joan

    Fletcher-Cooke, Charles

    Matthews, Gordon (Meriden)

    Vosper, Rt. Hon. Dennis

    Forrest, George

    Maudling, Rt. Hon. Reginald

    Walder, David

    Fraser, Ian (Plymouth, Button)

    Mawby, Ray

    Walker, Peter

    Freeth, Denzil

    Maxwell-Hyslop, R. J.

    Walker-Smith, Rt. Hon. Sir Derek

    Gammans, Lady

    Maydon, Lt.-Cmdr. S. L. C.

    Wall, Patrick

    Gardner, Edward

    Mills, Stratton

    Ward, Dame Irene

    Gibson-Watt, David

    Miscampbell, Norman

    Webster, David

    Gilmour, Ian (Norfolk, Central)

    Montgomery, Fergus

    Wells, John (Maidstone)

    Gilmour, Sir John (East Fife)

    Morgan, William

    Whitelaw, William

    Glyn, Dr. Alan (Clapham)

    Nabarro, Sir Gerald

    Williams, Dudley (Exeter)

    Glyn, Sir Richard (Dorset, N.)

    Neave, Airey

    Williams, Paul (Sunderland, S.)

    Goodhew, Victor

    Wilson, Geoffrey (Truro)

    Gower, Raymond

    Nicholls, Sir Harmar

    Wise, A. R.

    Grant-Ferris, R.

    Nicholson, Sir Godfrey

    Wolrige-Gordon, Patrick

    Gresham Cooke, .

    Oakshott, Sir Hendrie

    Woodhouse, C. M.

    Grosvenor, Lt. -Col. R. G.

    Orr, Capt. L. P. S.

    Woodnutt, Mark

    Gurden, Harold

    Osborn, John (Hallam)

    Woollam, John

    Hamilton, Michael (Wellingborough)

    Osborne, Sir Cyril (Louth)

    Harris, Frederic (Croydon, N.W.)

    Page, Graham (Crosby)

    TELLERS FOR THE NOES:

    Harris, Reader (Heston)

    Page, John (Harrow, West)

    Mr. Pym and Mr. MacArthur.

    New Clause.—(RELIEF FROM DUTY ON HEAVY OILS USED AS FUEL FOR CERTAIN HACKNEY CARRIAGES.)
    (1) Subject to the provisions of this section, section 3 of the Finance Act 1961 (relief from duty on heavy oils used by horticultural producers) shall apply in relation to heavy oils
    1216
    used by the applicant as mentioned in the next following subsection as that section applies in relation to heavy oils used by the applicant as mentioned in subsection (2) of that section.

    (2) The owner or hirer under any contract of a hackney carriage having seating capacity for twenty or more persons shall be entitled to

    1217
    repayment under the foregoing subsection in respect of oils used by him as fuel for that hackney carriage.

    (3) For the purposes of this section subsection (5) of the said section 3 (which provides for the furnishing of information to the Commissioners of Customs and Excise) shall have effect as if references to the production of horticultural produce by the applicant were references to the transport business of the applicant and as if the word "plant" includes vehicles.

    (4) In this section "hackney carriage" has the same meaning as in the Vehicles (Excise) Act 1949; and in relation to the phrase "fuel for that hackney carriage" section 7(1) of the Finance Act 1959 (which, as amended by section 9(2) of the Finance Act 1960, states the circumstances in which heavy oils are to be treated as used as fuel for a vehicle) shall apply for the purposes of this section as it applies for the purposes stated in that subsection (1).—[Mr. Mitchison.]

    Brought up, and read the First time.
    Mr. Mitchison: I beg to move, That the Clause be read a Second time.
    The Temporary Chairman (Sir Samuel Storey): The following new Clauses are also selected for discussion: "Reduction of duty on heavy oils", "Fuel oils, gas oils and kerosene: rebate", "Heavy oils: rebate" and "Abolition of duty in heavy oils". The first of these can, if desired, be taken to a Division.
    Mr. Mitchison: The new Clause which I am moving is a good deal narrower in scope than some of the other Clauses which will be discussed with it. As far as I can make out, no such thing as an omnibus or bus is mentioned in any statute. It is camouflaged as a hackney carriage. The Amendment refers to derv for buses, but derv does not exist in the Statute Book either, nor, curiously enough, does diesel oil.
    The intention and effect of the Clause is to allow buses operating anywhere to get their derv free of Customs duty. They would get it, it is intended, by a rebate in the same way that the Finance Act, 1961, allowed relief from duty in the form of a rebate on heavy oils used by horticultural producers. Without going into the matter in detail, Section 3 of the 1961 Act provided machinery for the purpose and, no doubt, it has been operated since then.
    Until 1961, we used to bring this or a similar proposal forward and were told that it was administratively impossible. Now that the Government have managed
    1218
    to do it for horticultural producers, there should be no insuperable objection to doing the same thing for buses. It is in that spirit that we seek by the new Clause to apply the horticultural producers machinery to the case of buses. I hope that this will not be another instance of an agricultural tractor getting a rebate only when at sea; I do not think that it is. I always doubted the truth of that accusation. What matters is the substantial point which we are trying to raise, and that is whether the 2s. 9d. per gallon duty on buses should be continued.
    The curious position about these heavy oils is that there are rebates, but they do not apply to what in some books is called road fuel—that is, fuel for a mechanically-propelled vehicle on the road. There are exceptions to the rule which I need not go into. This part of the Customs and Excise legislation and corresponding machinery is fairly complicated. The exceptions are curious and devious, and the processes of administration are much the same. The substantial point is simply the one about derv for buses.
    This matter came up in Committee on the 1959 Finance Bill, and the then Chancellor, now Lord Amory, recognised the existence of a problem. He pointed out what he called difficulties of principle, but a fair conclusion from what he said is that it was on difficulties of administration that he finally rejected a proposal from the Government side for derv for buses, but only outside built-up areas. That would make matters a great deal more complicated, and I appreciate the difficulties which that proposal involved.
    On 15th June, 1959, the then Mr. Amory said:
    "For the reasons I have given, realising all too clearly the problem which exists, particularly in the rural areas—whose case my hon. Friends have argued with such moderation this evening"—
    we can, of course, expect their support tonight—
    "I must say that I cannot see a solution by way of either of the proposals put forward."
    The proposals were the rural bus one from the benches opposite and a more general one from this side of the Committee.
    "Although I share the anxieties expressed by hon. Members and agree that we must

    1219
    somehow find a solution to the problem, I must advise the Committee not to accept the new Clause."—[OFFICIAL REPORT, 15th June, 1959; Vol. 607, c. 171.]
    That was in 1959. It was at about the same time that the Jack Committee was set up to consider this problem of rural transport. It was
    "to review present trends in rural bus services and in particular to enquire into the adequacy of those services; to consider possible methods of ensuring adequate services in future; and to make recommendations."
    As was said at the time, that Committee was set up only after prolonged pressure. Having been appointed in September, 1959, it made a fairly prompt Report. Ever since then, hon. Members on both sides have pressed the Government to say what they propose to do about it.
    Having set up a Committee to investigate the question, the Government have now considered the Report of their own Committee, I suppose, insufficient or unsatisfactory—although they will never say so—and are conducting an inquiry of their own into the whole question. The Ministry of Transport is having what one might call a high old time investigating what happens in buses all over the country. It is a busy Ministry, particularly nowadays. Buses have come to assume an importance that they did not have even in 1959.
    Let us see what conclusions the Jack Committee reached. The Committee examined the question of removing the fuel tax as a possible solution and finally rejected it. I want, none the less, to refer to one or two things that were said, and particularly to two dissenting Reports that were given on this point and which are printed at the end of the full Report, and especially to one from Mr. H. R. Nicholas, who was one of the members of the Committee and is well known to all of us on this side, at least, and, I imagine, to most hon. Members opposite.
    The solution that the Committee finally reached was that a subsidy would be required. It indicated in paragraph 123 of its Report that that subsidy might entail an initial cost of about £1 million a year, with the prospect of an annual increase over the next few years. I certainly would not regard that as an understatement of what was required. Perhaps that is the reason why the
    1220
    Government have done nothing about it for so long.
    8.30 p.m.
    When the Committee was considering the fuel tax, it asked for some evidence from groups of bus undertakings. One was called the Public Transport Association, another was Tillings and another was Scottish Omnibuses. These three groups stated their losses on unremunerative rural mileage and then stated the costs of the fuel tax, and the conclusion which the Committee drew—I think it must be correct on the figures—was that the cost of the removal of the fuel tax would be more than the actual loss on unremunerative rural mileage. That was one of the reasons—I think the substantial reason—for its rejecting that solution. It then considered various other forms of doing the same thing, with which I will not trouble the Committee, because the Report has been published.
    But Mr. Nicholas, in his dissenting Report, came to a different conclusion. In paragraph 14 on page 54, he said:
    "In my view there is a strong case for an immediate and complete fuel tax remission generally for the industry for many reasons. One is that it would enable operators of stage services to continue the system of cross-subsidisation…"
    I need not go on with that paragraph. It went into the matter in a little more detail.
    Cross-subsidisation means, in plain English, the use of a remunerative service to carry an unremunerative one. I live in a rather remote part of Scotland where what would be by itself the unremunerative provision of our electricity supply by the North of Scotland Hydro-electric Board is done because its system of providing electricity has other more remunerative parts and the two things are taken together. That is done in many industries, particularly public ones, but also in others. Cross-subsidisation is, therefore, a very important point when we are considering the position of rural services, and it has a considerable bearing on present circumstances.
    Before dealing with that subject, I would add a word or two more from Mr. Nicholas's Report:
    "The eventual sum involved in a subsidy would inevitably be much greater than that envisaged in Chapter 10 of the main Report."

    1221
    That is the part that I read out just now.
    "If the principle of a subsidy is sound there appears to be no reason why it should be restrictive in its application to unremunerative rural services only."
    That was his criticism of the Committee's conclusions.
    Finally, he said—this is what appealed to me—that, in effect, it really would be ridiculous to subsidise a service of this character at one end and tax it at the other. His phrase was:
    "a 'from one pocket to the other' transaction."
    I agree with that. Therefore, looking at the Jack Committee Report, which found a very great many advantages in this type of arrangement, I still prefer Mr. Nicholas's Report, and I think the time has come for the Government to consider whether this should not be done. That is the intention of the Clause.
    I say that I think the time has come for a certain reason. Rural bus services have not been improving. Within my knowledge they have been getting rather worse, if anything. There is a constant tendency on the part of a commercial bus company to give up cross-subsidisation unless it is driven to it by the licensing authorities and to drop unremunerative services. The company is out to make a profit, and it is not particularly concerned with the social consequences of what is done. Therefore, it naturally drops unremunerative services, one by one, quietly. That has been happening. Whether I am right or wrong about that, it is clear that there is considerable pressure to that end.
    What is happening at the moment is that the Beeching Report and the views of the Minister of Transport about it will involve a further burden on our bus services—additional services and such wild ventures as the removal of a seat or two in order to accommodate a perambulator. This was one of the devices we had to consider in a debate the other day. Seriously, perambulators or no perambulators, our bus services will be very hard put to it if they are to meet the social needs consequent on any attempt to implement the Beeching Report.
    I am not going into the matter in detail, but it is obvious that if one says that a great many of the railways do not
    1222
    pay and, therefore, shuts them down and relies on bus services to meet the gap one has caused, one will not get very much out of the bus services that do not pay. The effect of this tax is to increase the bus services that do not pay. If one could remove it, one would reduce the number of unremunerative services and thus brighten the whole picture. This is not just a question of balancing one service against another. It is getting the undertakings as a whole to perform their social obligations—obligations consequent, after all, on Government actions.
    It may be said, "Your Clause does not say anything about all this". I think that is a fair criticism, but there are limits to what one can do in the Finance Bill. It seems to me that the time has come for the Government to accept, in principle if they like, that they cannot go on getting this additional duty on derv for buses without damaging, or increasing the damage already done, to the bus services in the country.
    In talking of rural bus services, I do not mean to exclude other bus services, but I do see the particular importance of those in rural areas, whether they be local or long distance. It is, indeed, impractical to try to limit the effect to one category or another. If we try to do it by using a built-up area as a criterion, as hon. Members opposite suggest, one may get the ridiculous position of bus services running alternately through built-up and rural areas. We will have to go the whole hog.
    I can see no real objection to this at all. I cannot see that the administrative difficulties, although I would be quite prepared to agree that they exist, are insuperable in view of what has been done since Mr. Amory, as he then was, made the observation I referred to. What was a critical problem in 1959 has not only continued to be one but is a great deal worse, and at the moment it threatens to be even more serious and of even wider social effects than it was in those days. It really is an important matter, as Lord Amory recognised even at that time.
    I am not here to argue the case for a further reduction of duties on fuel generally. That is not the purpose of my Clause. The case will no doubt be argued by those hon. Gentlemen who have put

    1223
    down new Clauses accordingly and which are being discussed with this one. It is an entirely different matter. It is different for one outstanding reason—that the moment one considers a fuel tax simply as a matter of fuel, whether one is considering this, that or the other type of heavy oil, one inevitably has to consider other fuels and obviously among these is coal.
    The days when motor cars or motor buses were driven by steam generated by coal are past, and in practice derv accounts for 90 per cent. of the fuel used by buses. That is why only one derv has a substantial case today. When one comes to reducing taxation on other fuel, one is on a different and very much broader question.
    The best estimate I can make is that something like a loss of £30 million a year would be involved to the National Coal Board, allowing for diminution of gross revenue and some savings of costs, if the new Clasues proposing to reduce the fuel tax as a whole were accepted by this Committee. I say no more about that than that, given conditions in the north of England, Scotland and elsewhere, and given the state of the coal industry at the moment, it would be madness to attract the social dislocation that would be involved by the more sweeping proposals in the other Clauses we are considering with mine. This is not the moment, with mines closing all over the country, and with grave unemployment in and near the coalfields, to do anything of the sort.
    But that does not arise on the Clause that I am moving, and on this Clause I say with confidence that the case that has existed for many years, that has been recognised on both sides of the Committee, that was recognised by the Chancellor of the Exchequer in 1959, has not only continued but has grown, and now it must be met if anything is to be done to implement the Beeching proposals or any part of them.
    Mr. T. H. H. Skeet: Sir Samuel, you have been good enough to call for discussion of the two new Clauses in my name, one dealing with rebate of duty on fuel oils, gas oils and kerosene, and the other with lubricants, and the right hon. Member for Kettering
    1224
    (Mr. Mitchison) has indicated that the coal industry requires a certain degree of protection. I think that we on this side of the Committee, as well as hon. and right hon. Gentlemen opposite, will appreciate that the arguments in favour of the coal industry have been put before the Committee on many former occasions.
    Mr. Neville Chamberlain said this:
    "I have received very strong representations from the coal industry, supported by the gas and electricity supply industries, and by the railway companies that in the interests of British coal and allied industries, I should review what they regard as an anomalous position".—[OFFICIAL REPORT, 25th April, 1933; Vol. 277, c. 52.]
    Starting from that, a duty of 1d. per gallon was placed on heavy oils. Rather curiously, with the passage of time, there have been repercussions, and when we come to another Chancellor of the Exchequer, Mr. Hugh Dalton, he stated
    "These arrangements will…I hope…result in conversions from coal to oil to the maximum extent possible."—[OFFICIAL REPORT, 1st August, 1946 Vol. 426, c. 238.]
    He removed the ld. per gallon from heavy oils and gas oils. Industry was persuaded by the Chancellor of the Exchequer at that time to go over to oil. Now it has been told by subsequent Chancellors of the Exchequer that it is to be penalised for doing so.
    My right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) on 17th April, 1961 said:
    "…I consider that for revenue reasons heavy oils should now bear some duty. I propose, therefore, to reinstate the duty, at the rate of 2d. a gallon on heavy oils at present free of duty…".—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 819–9.]
    I think that is perfectly consistent with what my right hon. Friend the Minister of Power at the opening of the B.P. terminal at Angle Bay, as reported in The Times on 21st April, 1961, said:
    "Some have suggested that it is naive to suppose its purpose was to raise revenue and not to give protection to coal. I emphatically deny this…because I am convinced that coal is in no need of such protection."
    There seems to be some Ministerial confusion about it. On the one hand, we have the recognition from the Chancellor that industry should convert from coal to oil because of the difficulties experienced at the time.
    In a fairly recent Budget it was indicated and confirmed by the Minister of

    1225
    Power that the coal industry was in no need of protection. That is not the end of the story, because in my right hon. Friend the Chancellor's recent Budget he said:
    "I have to decide whether the quick reductions in the costs of certain industries which would result from the removal of the duty would outweigh both the immediate damage to the coal industry and the risk of disrupting and even preventing the long-term recovery of the full competitive position of the industry…I have, therefore, decided that the time is not ripe to reduce the duty"—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 486,]
    8.45 p.m.
    I find it difficult to reconcile this with the statement by the Chancellor of the Exchequer when he was Paymaster-General. During the fuel and power debate in this House on 4th May, 1959, he said:
    "I should have thought that a duty designed for the protection of coal would probably also be contrary to our international obligations."—[OFFICIAL REPORT, 4th May, 1959; Vol. 605, c. 55.]
    My right hon. Friend said in the first place that he wanted it for the protection of the coal industry; a previous Chancellor of the Exchequer, my right hon. and learned Friend the Member for Wirrall said that it was not necessary but he wanted it for revenue purposes; and my right hon. Friend the Chancellor of the Exchequer said in 1959 that it was probably contrary to our inter-national obligations.
    On this basis hon. Members may wonder how an industry can plan ahead if it finds that its fuel policy is changed almost overnight, that distortions are introduced from different angles, and that we are pursuing a policy in this country which has already been rejected in Western Europe. I should have thought that in 1960 there would have been a turning point when the Report of the Robinson Committee was published, which indicated that what Europe required was
    "a plentiful supply of low cost energy with freedom of choice to the consumer…
    These views received broad acceptance by the Government, and my right hon. Friend the Chancellor of the Exchequer said:
    "Our aim must be a cheap and abundant supply of fuel. Our policy is to obtain it by proper freedom of choice for the user and competition between suppliers…"—
    1226
    [OFFICIAL REPORT, 4th May, 1959; Vol. 605, c. 45.]
    This would seem economic sense, but what do we find in this Budget? We find that my right hon. Friend is refusing to allow proper freedom of choice or competition between suppliers, and my right hon. Friend's views were supported by the Ridley Committee when it said:
    "…the right policy…is to leave the pattern of fuel use to be determined by the consumers own choice between competing services."
    The position is that while Europe is going over to a liberal fuel policy, Her Majesty's Government are moving further and further towards protection, and while European industry is having its costs thrust down to compete effectively abroad, our fuel prices are being chained more and more to high cost coal with the result that we have imbalance.
    Mr. Chapman: It is not high cost coal.
    Mr. Skeet: It is compared with the cost of coal in Europe and some of the coal exported from Virginia in the United States to Europe. That is why at one stage the Minister of Power would not allow the steel industry of Wales to import Virginia coal.
    Having paid lip-service to what is known as a liberal fuel policy, what has happened here? Industry has had considerable increments added to its fuel bill. For example, the steel industry has had between £6½ million and £7 million added to its fuel bill. The engineering industry, on which we depend for exports, has had £2¼ million added to its bill. Food processing has had £22½ million added. These figures are significant if one tots them up. The textile industry, which is going through a difficult phase, has had about £2 million added to its bill, and a number of other industries, like the ceramics and pottery industries, have had £1 million added. I could enumerate a number of other industries which have suffered this severe affliction.
    It is extraordinary that when a clear line of policy has been laid down in Western Europe, where it appears that they are on the right lines trying to get their costs down, we should either be adding to or keeping these high costs which are an embarrassment to industry, at a time indeed when rates are rising substantially through re-rating, and when

    1227
    the prices of electricity and gas have risen considerably.
    I wonder whether the Committee would care to consider some of the technical advantages to be derived from the use of oil? Not only is it cleaner to use and store, but on a calorific basis there is less sulphur content than there is in solid fuel. Therefore, I think that one of the factors which my right hon. Friend should take into account is that if he is trying to clean the air of Britain this is one way in which to do it. If, on the other hand, he is going along with the present policy—
    Mr. R. E. Winterbottom rose—
    Mr. Skeet: If the hon. Member will please wait until I have finished my sentence—of shoring up the markets in the hope that by assisting one part of the economy he will vastly strengthen the other, he will find that this policy will not act in the way he wants.
    Mr. Winterbottom: Just to get the record straight, I wish to point out to the hon. Member for Willesden, East (Mr. Skeet) that his statement about electricity is the best understatement I have come across for some time. Taking the area which I represent, the increase budgeted profits for electricity for the next five years range to something like a f14 million increase on a former budget of £18 million. The estimated profit is about 360 per cent. In other words, electricity is helping to price some industries—particularly those connected with the steel industry—out of the market.
    Mr. Skeet: The hon. Member should bear in mind that if the suggestion which I put forward of halving the duty, or the suggestion regarding the removal of the tax, is adopted, the electricity industry will benefit. Its tax bill each year from this levy is about £13 million. It is a factor, therefore, from which the electricity industry would benefit. That is, of course, the total bill for fuel oil duty.
    If we consider the relative tax position in Europe and compare the situation in the countries of the Six and the United Kingdom we find that in Western Germany the tax is 2·8d. per imperial
    1228
    gallon. We can say, therefore, that Western Germany is top of the league. We come second with a figure of 2d. There are a few other countries like Belgium, 1·8d.; Italy, 1·7d. and the Netherlands, 1·1d., with France at the bottom with a figure of (Ad. Therefore, from the angle of the tax on fuel oil we are virtually right at the top of the league for the European cup. We have not got into the Common Market. But we have to compete with the Common Market countries and taxwise we are well and truly up against it.
    Mr. Denis Howell: And it is the fourth division.
    Mr. Skeet: It may be the fourth division.
    For what are we considering this special privilege? For an industry which accounts for at least 70 per cent. of the total energy requirements of the United Kingdom against the oil industry which accounts for only 29 per cent. The total hydro-carbon tax works out at about £590 million. The fuel oil tax works out at something like £60 million. Who foots the bill? Industry, to the extent of 86 per cent.
    I wish to point out to the Committee that this would total less than 1 per cent. of the total tax receipts of the Government. Yet in some industries it has an impact on increased fuel costs of about 25 per cent. Surely this makes economic nonsense. One quotation which I have here from industry relates to Associated Portland Cement:
    "This time last year I foretold the damaging effect that the hydro-carbon oil duty would have on our export trade. Events have, unfortunately, borne this out as our exports fell by one third equivalent to some 300,000 tons. We had no alternative but to withdraw from many of our old traditional markets because the oil duty turned a profit, already only marginal, into a loss."
    How long can we expect these things to continue?
    The duty of about £4 million on kerosene is a little hard on two sections of the economy. In the United Kingdom there are about 13 million oil heaters. People who have them have to pay this tax. Would it not be right to assist those on lower incomes to utilise those devices by reducing this duty? Kerosene is also used for vapourising and there are about 150,000 tractors in the United

    1229
    Kingdom. Are we to say that the duty should not be removed to their advantage?
    Perhaps the Chancellor may address his mind also to the important aspect of lubricants. This tax is exceedingly high, and I think that my right hon. Friend could well afford to release approximately £3 million in this respect. Where is the competition with the coal industry in lubricants? The coal industry itself uses lubricants and has a tax bill on this account. If, on the other hand, the tax is for revenue purposes and not for the protection of the coal industry, then it should be recognised that industry has not been doing quite so well in recent years and the amount of lubricants which has been consumed has fallen quite significantly. Therefore, an advantage should be conceded.
    Where we have a fuel which enters into the cost of production it should not be taxed. Where industry in Europe has access to cheap fuels such as natural gas, an abundant supply of liquid fuel and also a large quantity of American coal, we should do something to secure the position of British industry. After all, it is British industry which is largely responsible for the exports of this country.
    It may be a happy circumstance if we could export a little coal, but that is purely marginal. Are we to say that industry must carry the heavy burden because the coal industry cannot keep its own house in order? [HON. MEMBERS: "Nonsense."] I sympathise with anyone who has to face being rendered redundant, but this is a charge which should be put on the nation as a whole and not on a particular section of industry. I think that many hon. Members will agree with that sentiment.
    I have asked, quite modestly, that this tax should be halved. Some of my hon. Friends have suggested that it should be deleted entirely this year. The Government should consider on what ground they continue the tax. A couple of years ago it was said to be for revenue purposes. This year it appears to be for the protection of the coal industry. It seems that they are rather confused. It is up to the Chancellor to clarify these matters.
    Mr. Donald Wade: It is generally recognised that the closing down of bus services, particularly
    1230
    in rural areas, is a serious matter and one has to take into account the social consequences. On these grounds, there is a case for relief from the duty on heavy oils so far as it affects bus services, but I do not think one can limit this question to derv for buses. As the hon. Member for Willesden, East (Mr. Skeet) has pointed out, this fuel tax has very serious implications for industry.
    You, Sir Samuel, have been good enough to indicate that in this debate we can discuss the Liberal new Clause—"Reduction of Duty on Heavy Oils". The object of that Clause is to increase the rebate, or in other words to cancel the increase of 2d. a gallon which was imposed in 1961. Like the hon. Member for Willesden, East, I am rather puzzled by the change of attitude which has been adopted by way of justification for the tax. From what the right hon. and learned Member for the Wirral (Mr. Selwyn Lloyd) pointed out when he was Chancellor in 1961, it is quite clear that the tax was for revenue purposes. He said:
    "…I consider that for revenue reasons heavy oils should now bear some duty."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 818–19.]
    9.0 p.m.
    The ground has obviously been changed, and the Government's view is now very different. The Chancellor's observation has already been quoted, and I need not quote him again at length. But, in his Budget speech on 3rd April, he said:
    "Against this background I considered whether do reduce the duty on fuel oil. I have been pressed to remove this duty to lower industrial costs. I cannot consider this solely from a revenue point of view…"—[OFFICIAL REPORT, 3rd April, 1963; Vol. 674, c. 485.]
    He gave his reasons far not removing this burden and referred to the problems of the Coal Board. One cannot ignore that aspect. I fully appreciate the Coal Board's problems, and I will refer to them in a few minutes, but we must consider industry as a whole, and it cannot be denied that the duty on heavy oil has been passed on to the consumer probably in all relevant products. This affects both home industry and the export trade, and a wide range of industries. The public utilities are prominent among them.

    1231
    Electricity generation alone absorbed 5,700,000 tons of gas, diesel and fuel oil last year. A further 2,800,000 tons was absorbed in the iron and steel industry, while miscellaneous engineering industries together accounted for well over 1,900,000 tons. I could give other examples of important consumers. Reference has been made to cement, and there is also the fishing industry.
    Among those who have turned increasingly to oil fuels over recent years are those employing central heating. Last year more than 2,600,000 tons of gas, diesel and fuel oil, as well as considerable quantities of burning oil, were utilised in central heating installations, and the users of the heavier oils included schools, medical and welfare establishments.
    But it is among the industrial users of oil that the effect of the new duty has been most far-reaching. I hope that the Chancellor is aware that much plant is designed to operate on fuel oil because it offers certain natural advantages by comparison with solid fuel. For example, it has a higher calorific value, ease of handling, convenience of storage and cleanliness in use. The relatively low price of fuel oil, in particular, has been an important factor to firms whose competitive ability depends largely on keeping down their manufacturing costs. That is the essence of the case. We must consider the vital importance of the competitive element in manufacturing costs, because this is essential if we are to compete overseas, particularly against some Western European countries.
    The Chancellor recognised this, but he came to the wrong conclusion. The industries which are heavy users of fuel oil include cement, steel and parts of the chemical industry. In effect they are being penalised, and the result has been a blow at the export competitiveness of a significant sector of British industry.
    I will give an illustration in connection with cement, which has already been referred to. Exports of cement have been particularly adversely affected. The tax of 2d. a gallon increased cement-making costs by 8s. per ton, or about 12½per cent., at oil-fired works, which is the case in all the major United Kingdom export-
    1232
    ing works. I have some figures here which bear this out.
    The effect on the exports of British cement is clearly brought out by the following figures from the Trade and Navigation Accounts, which I have here. I shall not give a great many details. I will give a summary. In 1960 the value of the exports was £7,115,306. In 1961 —hon. Members should remember that the fuel tax which I am discussing was increased in April, 1961—the figure fell to £5,300,908. In 1962 it fell to £3,124,526. I do not think it can be denied that in industries such as this the fuel tax has had a serious effect on our exports.
    Mr. Mitchison: Is not the fall to which the hon. Gentleman refers at any rate connected with the increasing practice of that particular outfit to manufacture more cement abroad?
    Mr. Wade: Yes, but I do not think one can get away from the fact, both from the quotations we have had from the hon. Member for Willesden, East (Mr. Skeet) and those which I have given, that this tax must have had an adverse effect on the competitiveness of the cement industry.
    I will give one last quotation. It is from an article in the Guardian of 15th March, 1963, which sums the matter up in this way:
    "Probably no single step could do more to reassure the world that Britain is really intent on achieving faster economic growth than a clear and unequivocal positive answer to the question: 'Does Britain want cheap fuel?' "
    The Government have come down on what I regard as the wrong side, namely, they prefer to keep fuel prices in this country artificially high.
    As I said at the beginning of my brief speech, I am aware of the problems of the coal industry. I believe that Lord Robens is doing a good job. I do not want him to be handicapped in his task. However, if the choice has to be made, I would prefer some form of subsidising temporarily to help the coal industry to carry out its reorganisation rather than impose this very serious burden on the remainder of industry.
    Mr. Frank McLeavy: Will the hon. Gentleman tell the Commitee the amount of tax per gallon for industrial use?
    Mr. Wade: If I might ask the hon. Gentleman a question, does he mean over the whole country?
    Mr. McLeavy: Yes.
    Mr. Wade: The amount I propose as a reduction is 2d. per gallon.
    Mr. McLeavy: I do not think the hon. Gentleman has understood me. He is arguing that the fuel oil tax imposes an extremely heavy burden on industry. Will he tell us for our guidance precisely what the tax is per gallon for industrial use?
    Mr. Wade: I think it is 2·2d. I would have to check that.
    I think that the Chancellor of the Exchequer made a fair point when he said that he has to take into account the problems of the coal industry, but, if the choice has to be made, it would be better for industry as a whole to face this squarely and provide some kind of subsidy over a period of years rather than continue this fuel tax which, I repeat, is a serious impostion on industry. It is for that reason that I advocate this reduction in duty.
    Sir Hugh Linstead: In this short debate on the proposed new Clause two points have been adduced which must have been in my right hon. Friend's mind when he made his Budget announcement. The first is the revenue aspect of the duty—which amounts to about £55 million a year—and the second is the impact on the coal industry; and however much one desires to see the abolition of the duty, one must recognise that at the very time when the coal industry is turning the corner—is getting its head above water, to mix metaphors—is probably not the most fruitful time at which to encourage the further development of the use of a competitive fuel.
    While these two points must have been in my right hon. Friend's mind, there is a third point which is of importance to him and to industry as a whole—the value of a reduction of fuel oil tax as a general incentive to industry, in reducing both the costs of production and of distribution. Although I appreciate why this year my right hon. Friend does not propose to make a change, I hope that the possibility of using a reduction of this tax as a means of stimulating industry—as a type of regulator to be used at this parti-
    1234
    cular period of time as an incentive—will not be overlooked by my right hon. Friend in his calculations for next year's budget.
    Mr. Skeet: My hon. Friend referred to the coal industry being in the process of "turning the corner". Realising that it has been doing that for the last thirty years, is he suggesting that the Chancellor should take the sort of action he is describing next year or the year after that? When does he consider that this tax should be remitted?
    Sir H. Linstead: I was hoping that it would be next year, but it is important that industry should not be left any longer than is absolutely necessary in a state of uncertainty.
    Mr. Skeet: Hear, hear.
    Sir H. LinsteadIndustry can work subject to almost any conditions provided that it can be reasonably certain of what those conditions will be. It cannot work satisfactorily on the basis of uncertainty. The sooner we get a clear statement from my right hon. Friend on his intentions the clearer the road will be for industry.
    Of the representations that have come my way, some of the most interesting have come from the glass industry. I have no financial interest in this industry, but it would seem that it is very representative of a fuel-using type of industry; and a few figures representing the effects of the oil tax on it are worth considering by my right hon. Friend and worth having on the record. There can be no doubt that, for the glass industry, oil is far and away the most efficient fuel it can use. It is also extremely valuable from the clean air point of view, particularly with the increasing number of smokeless zones. Both the Government and the nation fully support the clean air policy, but some sections of industry may be considerably prejudiced if they are not permitted to use coal and yet are discouraged from using oil by the present tax.
    It is important when my right hon. Friend considers the effects of the tax on the coal industry for him to remember that a large number of the most efficient industries and firms have already changed over to oil. He is not protecting the coal industry by maintaining the tax on

    1235
    fuel oil because no one will change back from fuel oil to coal firing.
    It is interesting to note that, although the glass industry carries 2½ per cent. of the £55 million tax, it employs only one-third of I per cent. of our total labour force, and has only half of I per cent. of our total industrial turnover. It is, therefore, bearing a very much higher proportion of the cost of the tax than are some of our other industries, and can put forward many very strong commercial and economic arguments why this burden on it should be lightened. It is one of a number of highly-modernised industries that are battling to compete with foreign imports and at the same time increase exports. It has succeeded in effecting a very substantial reduction in the ratio of imports to exports. Its exports now stand as £22½8 million, and are still rising.
    9.15 p.m.
    West German oil prices—and the West Germans are substantial competitors of our own glass industry—are 28 per cent. below our prices; Belgium, 21 per cent.; Holland, 25 per cent.; Sweden, 40 per cent., and Italy 7 per cent. Somehow or other, our own industry has to keep up its rate of increase of exports in the face of competing oil prices like that. I believe that we must put the efficiency of our industries, and their ability to succeed in a highly competitive export market, very much higher than my right hon. Friend has seemed to be prepared to do—at any rate, in relation to this tax.
    Most of our industry is very responsive to Treasury policy, and I believe that this tax represents an extremely valuable regulator of industrial policy. If my right hon. Friend really wants a reduction in costs at home and expansion in a highly competitive world, he has in this tax a very valuable instrument. I hope that he will be able to tell us tonight that he is satisfied that the coal industry no longer requires the kind of support he indicated in his Budget speech he thinks it still needs, that in his next Budget—let us assume that he will be Chancellor next year—he will find it possible to use the remission of this tax as an encouragement both to productivity and to more economical distribution.
    Mr. McLeavy: If the Chancellor had unlimited money to dispose of in this
    1236
    Budget, it would have been well had he undertaken a general review of the whole question of the taxation of fuel oil as used in industry and in public transport. One outstanding thing about this tax is its serious effect on the transport industry. While, in happier financial circumstances, I would be anxious to support hon. Members who have spoken of the need for relieving industry, I am not satisfied that the incidence of fuel oil taxation on industry generally is at present such a serious hindrance as some hon. Members have stated.
    I want, in the main, to confine myself to the tax as it affects road passenger transport vehicles. I have spoken in the House for many years on this subject. I was one of a delegation from both sides who had an interview with the noble Lord, Lord Amory, about fuel oil taxation as it affected passenger transport. I am quite satisfied that Lord Amory accepted the very strong case which we put forward for immediate relief, but he found some difficulty, possibly because of Treasury opposition, in being able to help us. He appeared on television and said that he was sorry that in that Budget he was unable to give some relief to the passenger transport service. In view of what Lord Amory said, it was rather astonishing that when the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) brought in his regulator and put a 10 per cent. surcharge on a certain group of articles petrol tax was included and, in consequence, went up from 2s. 6d. to 2s. 9d. a gallon.
    The right hon. and learned Gentleman then made out a case that, while the passenger transport industry was not entirely satisfied about the increased charge, nevertheless it accepted his implied statement that this increase of 3d. per gallon was merely temporary and would disappear when the 10 per cent. surcharge was removed. To our astonishment, when he removed the surcharge on the other commodities in this group he excluded the fuel oil and consolidated the 3d. into what is now known as the fuel oil tax of 2s. 9d.
    It was astonishing that when the matter was raised with the Chancellor, the then Financial Secretary to the Treasury, in defending the retention of the extra 3d. on fuel oil, said that the

    1237
    Treasury could not afford to lose the revenue. The transport industry and other sections of industry which were affected by the 3d. increase regarded this action by the then Chancellor of the Exchequer as nothing short of sharp practice. They said so, and they were very resentful that having accepted a temporary increase because of the economic conditions which the Chancellor described to Parliament the right hon. and learned Gentleman then, took the opportunity of consolidating it in fuel oil taxation itself. It was a disgraceful thing to do, which did not reflect credit on the right hon. and learned Gentleman.
    There is no other section of industry which has a stronger case for the abolition of the tax than the road passenger transport service. The undertakings have to provide a public service, in the early morning, during the day and in the evening, whether it pays or not, and they have to set against the unremunerative routes the more profitable routes which they run.
    I remember very well that the Traffic Commissioners, who have a good deal of influence and control over road passenger transport, were extremely anxious to press municipal and private bus undertakers to provide unremunerative services in the countryside and elsewhere, setting them off against the more profitable routes in the towns. It is to the credit of bus undertakers generally that they tried to meet the wishes of the Traffic Commissioners throughout the country in providing these services.
    The situation is now much changed. The bus undertakings, municipal or privately owned, are not now able to carry the amount of unremunerative services which they were carrying some years ago. It is simply the reduced volume of traffic which has caused the difficulty. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) referred to the Jack Committee. Let us be clear about the Jack Committee. It was set up to consider one section of the passenger transport industry, the rural bus services. Hon. Members on both sides who take a close interest in our bus services know how shamefully the Government have, for many years, neglected the rural bus services. Time and time again, we on this side of the Committee
    1238
    and hon. Member opposite representing rural constituencies have raised the matter with the Minister. Promises have been made. We have been put off from month to month, until, today, nothing is being done effectively for the countryside although its services are dwindling day by day.
    The Chancellor must, therefore, consider the passenger transport industry as a very special case. We cannot compare our bus services with an ordinary commercial service such as road haulage. The road haulier is in an infinitely better position. He is able to decide whether he will take a load from A to Z, and he decides whether it is profitable for him to carry it over that particular distance. It is done on the basis of profitability. But the bus undertakings have to run a schedule of services and have to provide a service for the community at times when the number of passengers does not warrant running bus services at all. The traffic commissioners have been most emphatic in pressing the bus undertakings to provide the maximum number of services.
    9.30 p.m.
    The bus undertakings feel that the Government have not been fair to the industry. They have not accepted the case put before them and have not realised the serious situation of the industry. It is very difficult to get staff for the bus services because wages and conditions of employment commensurate with those in other industries are not provided. That is why, apart from the heavy burden of the fuel oil tax, many services are having to be curtailed. This is a very serious matter. The Chancellor of the Exchequer should make up his mind about the municipal transport undertakings.
    When this matter was raised on a previous occasion, all sorts of arguments were put forward as to why it was not possible to give relief to the bus undertakings. I have no hesitation in saying that unless special relief is given, and given quickly, the bus services in the rural areas and townships will be serious handicapped by financial difficulties. The Minister of Transport proposes to cut train services and to close unremunerative stations and to rely on substituting bus services. How on earth will he get the staff to do that when the bus undertakings cannot get it?

    1239
    Unless the Government are prepared to recognise the financial difficulties of the industry and to give it a fair deal, it will not be able to provide the service which the nation requires.
    I urge the Chancellor of the Exchequer to consider the financial difficulties which are arising mainly because of the heavy fuel oil tax. If the tax were abolished in respect of the road passenger transport industry, it would enable it to restore many of the services in the rural areas and to provide a better service not only in the rural areas but elsewhere.
    No industry has served the nation so well and no industry has been dealt with so shamefully by the Government over the past few years as the road passenger transport industry. As one who has spent a lifetime in the passenger transport service, I apply for common sense and justice. My hon. and learned Friend the Member for Kettering, knowing the financial limitations of the Chancellor of the Exchequer, has made a reasoned case why there should be special treatment for the transport industry. Failure to give justice to the industry will strike a blow at one of the most public-spirited industries that this country has.
    Mr. John E. Talbot: As sometimes happens in dealing with the Finance Bill, we are discussing two rather different matters at the same time. We are discussing the proposal of the hon. and learned Member for Kettering (Mr. Mitchison) related solely to passenger transport, but we are discussing also other new Clauses, in particular those of my hon. Friend the Member for Willesden, East (Mr. Skeet), which seek in varying degrees to give wider relief from this tax.
    I am concerned on a constituency basis in both respects. I live in the country and am dependent sometimes on a country bus service. It is getting worse and worse and I have continual complaints from constituents that they do not have the services that they had. I am concerned that this process will continue and I believe that this tax is a major part of such a process. What is the good of applying the Beeching principle to the railways when perhaps, we will have to do the same thing to road transport, whose costs have been inflated by this unnecessary tax? To that extent, I support the hon. and learned Member for Kettering and I hope
    1240
    that my right hon. Friend the Chancellor of the Exchequer will have something to say which might make that support waver.
    On the second issue, I, too, like my hon. Friend the Member for Putney (Sir H. Linstead), am concerned in the glass trade. I am very interested in it. I have no money in it, but many of my constituents work in it and I speak from personal experience of seeing the working of the glass trade in Brierley Hill. The manufacture of cut glass is a craft industry and is dependent in great degree on the skill of the individual. Mass production methods are not easy to apply. This industry is feeling the impact of the tax with peculiar vigour. I am told that something like 10 per cent. of its costs is accounted for by fuel, which is a high proportion.
    I will not go over the figures again, but I believe and am fully satisfied that it would be not only in the interests of the glass trade in particular, but of industry in general, for something to be done at an early date to relieve the burden of this tax, which seems to have universal unpopularity on all sides of the Committee and does far more damage in relation to the income that it yields than anything else on the Statute Book.
    Mr. Edwin Wainwright: I did not intend to intervene in this debate until the hon. Member for Willesden, East (Mr. Skeet) made such an attack on the Coal Board. I am sorry that the hon. Member is not in his place.
    Sir G. Nabarro: I am.
    Mr. Wainwright: Once more, the hon. Member for Kidderminster (Sir G. Nabarro) interjects in his complacent manner. He does not even stand up to make his comments.
    Statements have been made by the hon. Member for Willesden, East that on every occasion when hon. Members opposite want to denigrate the Coal Board because it is a nationalised industry, they attempt to do so.
    Sir G. Nabarro: Certainly not.
    Mr. Wainwright: I fully remember when coal was in short supply and it had to be imported from the United States of America at £2 or £3 a ton more than the cost of our own coal. Private

    1241
    industry did not have to pay that difference in the price, but was allowed to have coal supplied to it at home prices, resulting in the fact that the Coal Board had to pay about £70 million to help private enterprise to have cheap fuel.
    I cannot remember reading in the OFFICIAL REPORT of that time that any hon. Members opposite who were then in the House said that private industry should pay the difference in price between home coal and imported coal. They were content that private industry should have the benefit, and for the sake of the nation at that time. Also, there was not a great deal of criticism from the N.U.M. on the issue. We wanted our production rates to rise. If the tax on fuel oil imposes a burden on private industry, hon. Members opposite ought to realise that a heavy burden was placed on the coal mining industry when coal had to be imported. There were other factors which the National Coal Board had to stand which private enterprise never stood and never would be responsible for in the days when it ruined the industry. We have no proof that private enterprise could run the industry as it is being run today.
    It seems that at present we are reaching saturation point in taking fuel oil from crude oil. The proportion is about fifty-fifty. The process of refining crude oil to obtain the petrol that we require means that fuel oil is being left. Not many years ago it was left in abundance, but even today it is sold mostly at a lower price than crude oil. Consequently, it looks as if the oil industry is to a certain extent subsidising fuel oil.
    Are we certain that this type of fuel can be guaranteed to this country in the years to come? Would it be wise to run down the coal mining industry to such an extent that 50 per cent. of our power needs would have to be imported? Regardless of my connection with the coal mining industry, I believe it would be a great mistake for us to do so. If we did that, I feel sure that in years to come we should be criticised for such action by whatever Government there was at the time. Who can vouch that oil will be allowed into our country at the present price? Who will vouch that the price of oil will not jump
    1242
    tremendously in the near future? Does not the oil come from an area which is very unstable politically? Could not any action taken in those countries gravely affect our fuel oil supplies?
    If we were dependent upon oil to the extent that some hon. Gentlemen opposite would like us to be, there would be a cry of "spilt milk" from them. They would want to blame someone else for the action they had taken. I am certain that to take such action would be a grave injustice to our nation and to the people who work in it. I do not believe that hon. Members opposite are bothered about the social consequences of a rundown of the coal mining industry.
    Sir G. Nabarro: Drivel.
    9.45 p.m.
    Mr. Wainwright: It may be that if the hon. Gentleman were to say what was in his mind I could describe it as drivel. He likes to interject from a position from which he is not entitled to interject. If he cares to stand up and say what he wants to say, I will be glad to give way.
    Sir G. Nabarro: I do not think that it would be appropriate, in the middle of this Committee stage, for me to make a dissertation upon the Tory Party's policy for coal. The hon. Member represents, I understand, the Dearne Valley, in Yorkshire. I shall be addressing the summer school of the National Union of Mineworkers at Bingley, Yorkshire, in July, and I invite him to listen to my discourse on that occasion, which will be entitled, "A Tory M.P. looks at the future of coal". That is the proper answer now to the hon. Member.
    Mr. Wainwright: I occasionally waste my time in listening to the hon. Gentleman in this place and I do not propose to go to a summer school in order to listen to him in the summer. Despite his bombast, if he is fair and just, honest and sincere, he will find a responsive audience but I must warn him that after he has spoken they will be convinced that what he has said was drivel. I want now to return to the subject of oil.
    Sir G. Nabarro: Hear, hear.
    Mr. Wainwright: I could spend quite a few minutes relating what has been accomplished in the coal industry since

    1243
    the National Coal Board took over. I could describe to the Committee the price paid by the miners in deaths, injuries and a great many other things to the old private owners. But I shall not dwell on these things tonight. I want instead to warn the Committee about the area where most of our oil comes from and about what kind of oil it will be in years to come.
    Our present oil supplies come mainly from the Middle East. It is heavy, crude oil. There are limited supplies of it in the Middle East—more limited than the supplies of coal in this country. And remember that one can stop oil from flowing and then quickly start up production again, but that if one stops a pit it takes a long time to put it back into production.
    Another important factor is that the oil from the Sahara, a new source, is lighter oil than that found elsewhere in the Middle East. The result is that there will be less percentage for fuel oils after refining. Therefore, fuel oil could easily be in short supply. If it is in short supply, prices will rise.
    The more we depend upon oil, the greater could be the adverse effec on our industry. I hope that the Government do not take notice of what many of their supporters have been saying on this issue. Let the Chancellor accept the Clause moved by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). I hope that the Government will appreciate that we have been putting our views in all sincerity, because we believe that the nation would be put in a dangerous position if it had to depend too much on a source of power from such a dangerous area as the Middle East.
    Mr. Geoffrey Wilson: I do not want to enter into the coal-oil war between by hon. Friend the Member for Kidderminster (Sir G. Nabarro) and the hon. Member for Dearne Valley (Mr. Wainwright). I agree with the hon. Member for Bradford, East (Mr. McLeavy), who indicated that he thought that the most important of the Clauses before us was the one dealing with derv, which is very much heavier taxed. The hon. and learned Member for Kettering (Mr. Mitchison) referred to the Jack Committee and pointed out that it referred to this problem, and in one
    1244
    section of its Report observed that the bus industry for many years—this Report was written in 1961—had been complaining of the excessively high tax on the bus industry, which, of course, has since been increased.
    Both the hon. Member for Bradford, East and the hon. and learned Member for Kettering referred to the Jack Committee, and the hon. and learned Member for Kettering pointed out that although the Committee turned down the sugggestion that a reduction in fuel tax would be a particular help to the rural bus industry, the minority report of Mr. Nicholas did so. There was also another minority report by Mr. James of the same Committee which sets out the reasons more clearly. But neither hon. Members referred to the fact that the Jack Committee's principal reasons for turning down the reduction of the fuel tax as a means of helping rural buses was that it would be too sweeping and would apply to the whole of the bus industry and not only to the rural buses. If we are to try to help the rural buses by taxation I would much prefer to revert to the new Clause which we, on this side of the House, attempted to put in in 1959 to which the hon. and learned Member for Kettering referred. That was to make an exception for derv outside the built-up areas on the ground that a similar sort of exception had been made for motor fishing vessels. But that Clause is not before the Committee and we cannot discuss it.
    In so far as a rejection of this Clause would cause a rural bus service to be adversely affected by the Beeching Report, I think that both the hon. Members who have spoken and some hon. Members on this side of the Committee also have not observed that that really does not arise because Clause 4 of the Transport Act, 1962, preserves for the Railways Board the agreements arising under the Railway Road Transport Acts, 1928, under which the Railways Board could call upon a bus company to run an alternative service to a closed railway service and could if the bus service refused to undertake it on the ground of expense give it a subsidy for doing so. Thus the fact that the bus company might find such a service rather expensive and one which upset its cross-subsidisation arrangements would not

    1245
    really arise, and I do not think that that was a good point.
    The suggestion was made on this side of the Committee that my right hon. Friend should give some indication that the fuel tax on derv would be looked at in due course. We appreciate what he said in his Budget statement about this matter, and I thought that I detected then a slight glimmer of hope that he would be able to do it. I do not know whether a general reduction on fuel tax would he possible at the present time. I should have thought that that might be doubtful, and I do not know whether that would be the full solution of the problem that has been mentioned.
    The Chancellor of the Exchequer (Mr. Reginald Maudling): The debate has really fallen into two different sections. Because we are discussing the broad question of hydrocarbon oil duties, I think that it is right to start by pointing out that, as my hon. Friend the Member for Willesden, East (Mr. Skeet) said, these duties raise nearly £600 million a year in revenue. They are extremely important duties from the point of view of the Exchequer, and one must safeguard their integrity with some care.
    The points made in the course of the discussion fall under two heads: those raised by the hon. and learned Member for Kettering (Mr. Mitchison) in opening the discussion and the hon. Member for Bradford, East (Mr. McLeavy) and others about bus services and the duty on the fuel that they consume, and those raised by my hon. Friend the Member for Willesden, East, the hon. Member for Huddersfield, West (Mr. Wade), my hon. Friend the Member for Putney (Sir H. Linstead) and others on the duty on heavy oil used in industry. Finally, I think that two of my hon. Friends, the Member for Brierley Hill (Mr. Talbot) and the Member for Truro (Mr. G. Wilson) mentioned both subjects in the course of their speeches.
    Perhaps I might start by discussing the point about the heavy fuel oil used in industry. The actual amount of duty collected as a result of this tax is in the neighbourhood of £60 million, and to abolish it would, I think, involve too large a sum to be contemplated. The alternative, as some hon. Members have suggested, would be to halve this duty, at a cost of £30 million. This was a
    1246
    possibility which I considered with care. In fact, at the beginning of my study of the Budget proposals this was one which I might describe as one of the most vigorous runners. It seemed a good possibility.
    Strong reasons for reducing this tax have been adduced by many hon. Members in this debate, although I think possibly the arguments have occasionally been a little overdone. The hon. Member for Huddersfield, West, for example, referred to the change in the export position of the cement industry, and I agree that there has been a big change. He said that the new duty would cost about 8s. a ton, but I am told that in the last two years the export price of cement has risen not by 8s., but by 48s., a ton, so it may be that the cost of the fuel oil duty is not necessarily a major factor in this matter.
    The fuel oil duty is a serious one for certain industries. Glass was referred to by my hon. Friend the Member for Brierley Hill and by my hon. Friend the Member for Putney. The iron and steel industries, to which reference has been made, are also substantial users of fuel oil. Cement is another example, as are certain chemicals. There is a wide range of industries which consume heavy oil in substantial quantities and whose costs are affected by the tax. Clearly, there would be considerable advantage in reducing the tax or halving it this year, and I felt that on revenue grounds this was a possibility.
    As has been said, when this duty was imposed it was made quite clear by my predecessor that it was imposed as a source of additional revenue. Therefore, my first reaction in looking at it this year when there was an opportunity to make tax deductions, was that here was an opportunity, on revenue grounds, to reduce the duty. I would not have abolished it, because £60 million is too much, but there was a case on revenue grounds for reducing the duty by half, at a cost of £30 million.
    I then had to consider the effect on the coal industry, and I think that we must be realistic about this. We depend on the coal industry—end will do so for many years to come—for a preponderant part of our industrial energy, and therefore the progress of the coal industry is important to industry as a whole, and

    1247
    possibly more important to industry as a whole than anything else. I felt that it was important to look at the stage actually reached in the progress of the coal industry.
    In the last year or so it has been making substantial progress. Productivity has been rising. I think that the figure that Lord Robens quotes is 8 per cent. per year. He is hoping to get a big increase in exports this year. The streamlining of the industry and the reduction in the labour force has been taking place with remarkable smoothness, and it would be a great pity to disturb that.
    10.0 p.m.
    Finally, I was encouraged by what Lord Robens had been saying about beginning the long trek of bringing down coal prices. It would be an immense value to industry if a start could be made to bring down coal prices. I have been explaining to the Committee as clearly as I can the sequence of the arguments which I followed. Against that background, I had to look at the effect of cutting the fuel duty this year. It would have had a considerable effect on the coal industry and its financial position at a time when it is at last struggling out of the red into the black. It would be a great pity if there were a setback to the industry extending to £20 million or £30 million competitively. I attach the greatest importance to all the nationalised industries showing a proper return on their capital. I believe that the coal industry is in sight of doing so, and the effect of driving it back into the red—the effect on the morale of the industry, which I consider of the greatest importance, and on those engaged in the industry—would have been very serious. In the long run it would have been worse for fuel costs as a whole than a reduction in the fuel oil duty.
    It has been suggested that the alternative would be to subsidise the industry. I think that this would be quite wrong, and I should not like to start on that process. If the nationalised industry can go on, as at the moment, earning a profit in competition on the present basis of protection, they should be encouraged to do so.
    I therefore came to the conclusion that this year was not the time to make a reduction in the duty.
    1248>
    Because this year is not the time it does not mean that I regard this as by any means a permanent and proper level of protection. It is not. It is one which I wish to reduce as soon as possible. My sole concern is the course of the coal industry, and the progress achieved, and the possibility of a setback to the morale and progress of the industry at this critical stage.
    Mr. Skeet: The Chancellor has indicated that he is against giving a subsidy. But does not he appreciate that industry is being made to give a subsidy to the coal industry, and is not that rather an unfair burden?
    Mr. Maudling: I do not think so. One could say that of any tariff which is imposed. My hon. Friend the Member for Willesden, East will find that most countries which have indigenous fuel resources protect them to a certain degree. As I say, this was an extremely hard decision to reach, and one which I reached with the greatest reluctance. There are obvious advantages to be gained from cutting the duty. But, after long consideration, and balancing the arguments, I decided against making any change this year—I emphasise "this year". No one would be happier than I should be if on a future occasion, and as soon as possible, I were able to make a reduction.
    Mr. Eric Lubbock: The Chancellor has talked about "this year" several times with great emphasis. To what extent would existing users of coal-fired equipment have changed to oil firing had he made this reduction in this year's Budget? The right hon. Gentleman must have made some estimate of the effect on the relative positions of the industry.
    Mr. Maudling: It is hard to say. The loss to the coal industry might have been something like £20 million in a full year. That is about the best estimate I can make.
    Sir Derek Walker-Smith: In order to get the picture clear, will my right hon. Friend say whether the position is this? Two years ago the then Treasury Minister made expressly clear that this was purely a

    1249
    revenue duty and disclaimed any protectionist intent. My right hon. Friend has now used the word "tariff", which is, of course, a word appropriate only to a protective duty and not to a revenue duty. Are we now to understand that it is retained for its protectionist and not for its revenue aspect, and it is by that that it will be judged in future?
    Mr. Maudling: I think absolutely and clearly I should answer "Yes" to that. It was imposed as a revenue duty. From purely revenue considerations I would have felt justified this year in making the reduction, but I had to take into account the effect on the coal industry and I am looking at the effect on this industry at this moment.
    Sir G. Nabarro: I claim an interest in this matter only because I was the only Tory to vote with my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) against this tax originally. What has caused this change of attitude at the Treasury? Surely there should be some continuity of policy at the Treasury? My right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), when he was Chancellor, proclaimed over and over again when I attacked the imposition of this duty and voted against it on 16th May, 1961—with a Liberal as a Teller to help me—"This is not in any circumstances a protective measure for coal." Now my right hon. Friend says that it is a protective measure for coal. I want some assurance that between this year and next he is not going to turn another somersault.
    Mr. Bence: He will not be there.
    Sir G. Nabarro: He will be there all right. There is only one other possibility—that I shall be there in his place. I am trying to get from my right hon. Friend an assurance that we are to have some continuity in fuel policy and that he is not going to turn another somersault.
    Mr. Maudling: The prospect of my hon. Friend the Member for Kidderminster (Sir G. Nabarro) standing at this Box as Chancellor of the Exchequer and carrying out all the proposals he has
    1250
    made in the last few years almost makes me wish to give way to him.
    I have done my best. One must look at this sort of matter in the light of the purely practical consideration of what the effect in this year will be of making a reduction of this kind, which I readily accept would be extremely valuable, and I thought that on balance this year was not the time to do it.
    Turning to the point about the duty on fuel used in buses, the cost of that proposal in a full year would be about £31 million, but it would go much wider than that. It would be very difficult to draw the line at that particular point. This is always the trouble with this type of problem, that we have two forms of fuel used, petrol and diesel. It is very difficult to maintain the duty on one and not on the other. In the past the main problem was to preserve the position of petrol duty. Secondly, if one started to do something for road passenger transport it would be very difficult indeed to prevent it spreading to other forms of transport. Road haulage and other forms of transport could make a good case for it. The hon. Member for Huddersfield, West, pointed out how difficult it would be to limit this merely to derv for buses.
    Mention was made of the effect of the Beeching Report on the bus situation. My hon. Friend the Member for Truro made an apposite point on that and disposed of a great deal of the argument. I do not think that the closure of a number of railway lines which at present compete with bus companies should make it harder for those bus companies to continue their services. If one of two competing services is closed down, that puts the other service in a better position.
    In general, with the hydrocarbon oil duty, as with so many other things laid before the Committee, clearly a reduction would be welcome and any Chancellor welcomes anything that everyone welcomes; but I could not accept a new Clause of this kind, which would cost £31 million in a full year. I am convinced that if the proposal were accepted it would lead to even further concessions and to a reduction in heavy oil duties as a whole. Therefore, I must recommend the Committee to reject these proposals.
    The Committee divided: Ayes 161, Noes 205.

    Division No. 127.]

    AYES

    [10.10 p.m.

    Alnsley, William

    Grimond, Rt. Hon. J.

    Oswald, Thomas

    Allaun, Frank (Salford E.)

    Hale, Leslie (Oldham, W.)

    Padley, W. E.

    Awbery, Stan (Bristol, Central)

    Hamilton, William (West Fife)

    Pannell, Charles (Leeds, W.)

    Bacon, Miss Alice

    Hannan, William

    Parkin, B. T.

    Heaney, Alan

    Harper, Joseph

    Pearson, Arthur (Pontypridd)

    Bence, Cyril

    Hart, Mrs. Judith

    Pentland, Norman

    Bennett, J. (Glasgow, Bridgeton)

    Henderson,Rt. Hn. Arthur (RwlyRegle)

    Popplewelf, Ernest

    Benson, Sir George

    Herbison, Miss Margaret

    Price, J. T. (Westhoughton)

    Blyton, William

    Hill, J. (Midlothian)

    Probert, Arthur

    Boardman, H.

    Hilton, A. V.

    Pursey, Cmdr. Harry

    Bowden, Rt. Hn. H. W.(Leics, S.W.)

    Holman, Percy

    Redhead, E. C.

    Bowen, Roderic (Cardigan)

    Houghton, Douglas

    Reynolds, C. W.

    Bowles, Frank

    Howell, Denis (Small Heath)

    Rhodes, H.

    Braddock, Mrs. E. M.

    Hoy, James H.

    Roberts, Albert (Normanton)

    Bradley, Tom

    Hughes, Cledwyn (Anglesey)

    Robertson, John (Paisley)

    Bray, Dr. Jeremy

    Hunter, A. E.

    Rogers, G. H. R. (Kensington, N.)

    Broughton, Dr. A. D. D.

    Hynd, John (Attercfife)

    Ross, William

    Butler, Herbert (Hackney, C.)

    Irvine, A. J. (Edge Hill)

    Short, Edward

    Butler, Mrs. Joyce (Wood Green)

    Irving, Sydney (Dartford)

    Silverman, Julius (Aston)

    Callaghan, James

    Janner, Sir Barnett

    Carmichael, Neil

    Jay, Rt. Hon. Douglas

    Silverman, Sydney (Nelson)

    Collick, Percy

    Jeger, George

    Skeffington, Arthur

    Corbet, Mrs. Freda

    Jenkins, Roy (Stechford)

    Slater, Mrs. Harriet (Stoke, N.)

    Craddock George (Bradford, S.)

    Jones, Dan (Burnley)

    Slater, Joseph (Sedgefield)

    Cronin, John

    Jones, Elwyn (West Ham, S.)

    Small, William

    Crosland, Anthony

    Jones, J. Idwal (Wrexham)

    Smith, Ellis (Stoke, S.)

    Cullen, Mrs. Alice

    Jones, T. W. (Merioneth)

    Soskice, Rt. Hon. Sir Frank

    Dalyell, Tam

    Kelley, Richard

    Spriggs, Leslie

    Davies, G. Vied (Rhondda, E.)

    Kenyon, Clifford

    Stewart, Michael (Fulham)

    Davies, Harold (Leek)

    Lawson, George

    Stones, William

    Davies, Ifor (Gower)

    Ledger, Ron

    Strachey, Rt. Hon. John

    Deer, George

    Lee, Frederick (Newton)

    Swingler, Stephen

    Delargy, Hugh

    Lee, Miss Jennie (Cannock)

    Taverns, D.

    Dempsey, James

    Lever, L. M. (Ardwick)

    Thomas, George (Cardiff, W.)

    Diamond, John

    Lewis, Arthur (West Ham, N.)

    Thomas, Iorwerth (Rhondda, W.)

    Dodds, Norman

    Lubbock, Eric

    Thompson, Dr. Alan (Dunfermline)

    Duffy, A. E. P.

    Mabon, Dr. J. Dickson

    Thornton, Ernest

    Edwards, Rt. Hon. Ness (Caerphilly)

    McBride, N.

    Tomney, Frank

    Edwards, Robert (Billston)

    MacDermot, Niall

    Wainwright, Edwin

    Edwards, Walter (Stepney)

    McInnes, James

    Warbey, William

    Fernyhough, E.

    McKay, John (Wallsend)

    Watkins, Tudor

    Finch, Harold

    Mackie, John (Enfield, East)

    Whitlock, William

    Fitch, Alan

    MacPherson, Malcolm (Stirling)

    Wigg, George

    Fletcher, Eric

    Mallaliu, J.P.W. (Huddersfield, E,)

    Wilkins, W. A.

    Foot, Dingle (Ipswich)

    Mapp, Charles

    Williams, LI. (Abertillery)

    Foot, Michael (Ebbw Vale)

    Mason, Roy

    Williams, W. R. (Openshaw)

    Forman, J. C.

    Mayhew, Christopher

    Willis, E. G. (Edinburgh, E.)

    Mendelson, J. J.

    Fraser, Thomas (Hamilton)

    Millan, Bruce

    Winterbottom, R. E.

    Galpern, Sir Myer

    Milne, Edward

    Woof, Robert

    George, Lady MeganLloyd (Crmrthn)

    Mitchison G. R.

    Yates, Victor (Ladywood)

    Ginsburg, David

    Morris, John

    Zilliacue, K.

    Gourlay, Harry

    Grey, Charles

    Oliver, G. H.

    TELLERS FOR THE AYES.

    Griffiths, David (Rother Valley)

    O'Malley, B. K.

    Mr. Charles A. Howell and

    Griffiths, W. (Exchange)

    Oram, A. E.

    Mr. McCann.

    NOES

    Agnew, Sir Peter

    Brooke, Rt. Hon. Henry

    Crawley, Aldan

    Allason, James

    Brooman-White, R.

    Critchley, Jullian

    Arbuthnot, John

    Brown, Alan (Tottenham)

    Currie, G. B. H.

    Ashton, Sir Hubert

    Buck, Antony

    d'Avlgdor-Goldsmid, Sir Henry

    Atkins, Humphrey

    Bullard, Denys

    de Ferranti, Basil

    Awdry, Daniel (Chippenham)

    Butcher, Sir Herbert

    Donaldson, Cmdr. C. E. M.

    Barber, Anthony

    Campbell, Gordon (Moray & Nairn)

    Drayson, G. B.

    Barlow, Sir John

    Carr, Compton (Barons Court)

    du Cann, Edward

    Barter, John

    Carr, Robert (Mitcham)

    Eden, Sir John

    Batsford, Brian

    Cary, Sir Robert

    Elliot, Capt. Walter (Carahalton)

    Bennett, Dr. Reginald (Goa & Fhm)

    Chataway, Christopher

    Elliott, R. W,(Newc'tle-upon-Tyne, N.)

    Berkeley, Humphry

    Chichester-Clark, R.

    Emmet, Hon. Mrs. Evelyn

    Bidgood, John C.

    Clark, Henry (Antrim, N.)

    Farr, John

    Biffen, John

    Clark, William (Nottingham, S.)

    Fell, Anthony

    Birch, Rt. Hon. Nigel

    Cooke, Robert

    Finlay, Graeme

    Bishop, F. P.

    Cooper-Key, Sir Neill

    Fletcher-Cooke, Charles

    Bossom, Hon. Clive

    Cordeaux, Lt.-Col. J. K.

    Freeth, Denzil

    Bourne-Aston, A.

    Corfield, F. V.

    Galbraith, Hon. T. G. D.

    Box, Donald

    Coulson, Michael

    Gammons, Lady

    Brewis, John

    Courtney, Cdr. Anthony

    Gibson-Watt, David

    Gilmour, Ian (Norfolk, Central)

    Litchfield, Capt. John

    Roots, William

    Gilmour, Sir John (East Fife)

    Loveys, Walter H.

    Ropner, Col. Sir Leonard

    Glyn, Dr. Alan (Clapham)

    Lucas-Tooth, Sir Hugh

    Russell, Ronald

    Glyn, Sir Richard (Dorset, N.)

    MacArthur, Ian

    Scott-Hopkins, James

    Goodhew, Victor

    McLaren, Martin

    Sharples, Richard

    Gower, Raymond

    Maclean, SirFitzroy(Bute & N. Ayre)

    Shaw, M.

    Grant-Ferris, R.

    Macleod, Rt. Hn. Iain (Enfield, W.)

    Shepherd, William

    Gresham Cooke, R.

    McMaster, Stanley R.

    Smith, Dudley (Br'ntf'd & Chiswick)

    Grosvenor, Lt.-Col. R. G.

    Macphereon, Rt. Hn. Niall(Dumfries)

    Smithers, Peter

    Gurden, Harold

    Maddan, Martin

    Smyth, Rt. Hon. Brig. Sir John

    Hamilton, Michael (Wellingborough)

    Markham, Major Sir Frank

    Spearman, Sir Alexander

    Harris, Frederic (Croydon, N.W.)

    Marten, Neil

    Stodart, J. A.

    Harrison, Col. Sir Harwood (Eye)

    Matthews, Gordon (Meriden)

    Stoddart-Scott, Col. Sir Malcolm

    Harvey, Sir Arthur Vere (Macclesf'd)

    Maudling, Rt. Hon. Reginald

    Studholme, Sir Henry

    Harvey, John (Walthamstow, E.)

    Mawby, Ray

    Summers, Sir Spencer

    Harvie Anderson, Miss

    Maxwell-Hyslop, R. J.

    Talbot, John E.

    Hastings, Stephen

    Maydon, Lt.-Cmdr. S. L. C.

    Topsell, Peter

    Heald, Rt. Hon. Sir Lionel

    Mills, Stratton

    Taylor, Edwin (Bolton, E.)

    Henderson, John (Cathcart)

    Miscampbell, Norman

    Taylor, Frank (M'ch'et'r, Moss Side)

    Hendry, Forbes

    Montgomery, Fergus

    Teeling, Sir William

    Hiley, Joseph

    Morgan, William

    Temple, John M.

    Hill, Mrs. Eveline (Wythenehawe)

    Nabarro, Sir Gerald

    Thatcher, Mrs. Margaret

    Hill, J. E. B. (S. Norfolk)

    Heave, Airey

    Thompson, Sir Richard (Croydon, S.)

    Hirst, Geoffrey

    Nicholls, Sir Harmar

    Thornton-Kemsley, Sir Colin

    Hobson, Sir John

    Orr, Capt. L. P. S.

    Tiley, Arthur (Bradford, W.)

    Hocking, Philip N.

    Osborn, John (Hallam)

    Touche, Rt. Hon. Sir Gordon

    Holland, Philip

    Osborne, Sir Cyril (Louth)

    Turner, Colin

    Hollingworth, John

    Page, Graham (Crosby)

    Turton, At. Hon. R. H.

    Hopkins, Alan

    Page, John (Harrow, West)

    Tweedsmuir, Lady

    Hornsby-Smith, Rt, Hon. Dame P.

    Pannell, Norman (Kirkdale)

    van Straubenzee, W. R.

    Howard, John (Southampton, Test)

    Partridge, E.

    Vaughan-Morgan, At. Hon. Sir John

    Hughes-Young, Michael

    Pearson, Frank (Clitheroe)

    Vickers, Miss Joan

    Hutchison, Michael Clark

    Peel, John

    Vesper, Rt. Hon. Dennis

    Iremonger, T. L.

    Pickthorn, Sir Kenneth

    Waider, David

    Irvine, Bryant Godman (Rye)

    Pilkington, Sir Richard

    Walker, Peter

    James, David

    Pitt, Dame Edith

    Walker-Smith, Rt. Hon. Sir Derek

    Jenkins, Robert (Dulwich)

    Pott, Percivall

    Wall, Patrick

    Johnson, Dr. Donald (Carlisle)

    Price, David (Eastleigh)

    Ward, Dame Irene

    Johnson Smith, Geoffrey

    Prior-Palmer, Brig. Sir Otho

    Webster, David

    Jones, Arthur (Northants, S.

    Wells, John (Maidstone)

    Profumo, Rt. Hon. John

    Whitelaw, William

    Kahorry, Sir Donald

    Proudfoot, Wilfred

    Williams, Dudley (Exeter)

    Kerr, Sir Hamilton

    Quennell, Miss J. M.

    Williams, Paul (Sunderland, S.)

    Kershaw, Anthony

    Rawlineon, Sir Peter

    Wilson, Geoffrey (Truro)

    Langford-Holt, Sir John

    Redmayne, Rt. Hon. Martin

    Wise, A. R.

    Leavey, J. A.

    Rees, Hugh

    Wolrige-Gordon, Patrick

    Legge-Bourke, Sir Harry

    Renton, Rt. Hon, David

    Woollam, John

    Lewis, Kenneth (Rutland)

    Ridley, Hon. Nicholas

    Lilley, F. J. P.

    Roberts, Sir Peter (Heeley)

    TELLERS FOR THE NOES;

    Linstead, Sir Hugh

    Robinson, Rt. Hn. Sir. (B'pool, S.)

    Mr. Ian Fraser and Mr. Pym.

    New Clause.—(INCOME TAX: ALLOWANCES ON COMMERCIAL BUILDINGS IN DEVELOPMENT DISTRICTS.)
    (1) Chapter I of Part X of the Income Tax Act 1952 (which relates to capital allowances for industrial buildings and structures) shall apply to capital expenditure incurred after the passing of this Act on the construction of a commercial building in a development district as it applies to the construction of an industrial building.

    (2) In this section a "commercial building" means a building constructed and to be occupied as a retail shop, showroom, hotel or office or for any purpose ancillary to the purposes of a retail shop, showroom, hotel or office; and section 38 (5) of this Act shall apply for the purposes of this section as it applies for the purposes of that section.-[Mr. Houghton.]

    Brought up, and read the First time.
    Mr. Douglas Houghton: I beg to move, That the Clause be read a Second time.
    While the Government are considering whether or not they should resign, following the result of the last Division, I hope that the Committee will note subsection (1) of the proposed new Clause, which states:
    (1) Chapter 1 of Part X of the Income Tax Act 1952 (which relates to capital allowances for industrial buildings and structures) shall apply to capital expenditure incurred after the passing of this Act on the construction of a commercial building in a development district as it applies to the construction of an industrial building.
    Subsection (2) defines a "commercial building".
    The new Clause does not raise the wider issue of whether the capital allowances for industrial buildings shall apply to commercial buildings generally. It deals solely with capital expenditure on new buildings and new constructions after the passing of the Bill—and only in local employment areas.
    As the Committee knows, the Tucker Committee of 1951 recommended that the capital allowances granted to industrial buildings should be extended to commercial buildings generally. Hon. Members will recall that on pages 67 and 68 of the Tucker Report there were set out that Committee's arguments in favour of that recommendation. That recommendation was further considered by the Radcliffe Commission four years
    1256
    later, and in paragraphs 379 onwards of that Commission's Report is confirmed the recommendation made by the Tucker Committee. The Radcliffe Commission was also of the opinion that the capital allowances granted to industrial buildings should also apply to commercial buildings.
    Nothing has been done about the recommendation of the Tucker Committee, as approved by the Radcliffe Commission. In the new Clause we are not proposing the wider application of the recommendation of these two important and authoritative bodies. We feel, however, that since special steps are being taken to encourage new industries to go to the local employment areas, it would add to the encouragement if we were to extend to commercial buildings the allowances given for new industrial buildings.
    In the development areas, as they used to be called—"local employment districts" as they are now called—one of the important factors has bean the diversity of industry; the widening of the scope of employment for different types of people. Hon. Members will remember why it was that the Ministry of Pensions and National Insurance went to Newcastle and why an important branch of the Inland Revenue went to Cardiff. It was because there was a need for the diversity of local employment, which was then dangerously and heavily concentrated on particular industries—mostly heavy industries.
    The transfer to Newcastle and Cardiff of substantial branches of public administration offered employment to many thousands of people for whom work in heavy industries was scarcely suitable. I am thinking of women and girls, disabled persons and others with a bent for office, clerical or commercial work, as distinct from industrial skills. Part of the policy of the Government now is to encourage development and administration to move from the south-east, especially London, to elsewhere. The Government are setting an example in that respect by transferring substantial branches of the public administration, in one case to Durham and in another to Chesterfield.
    Some commercial undertakings that have their offices out of the centre of London, but not very far away from London, should be encouraged to move

    1257
    quite a distance from this area and, if possible, induced to go to the local employment districts, where commercial expansion could well take place alongside industrial expansion. At the present time, the capital allowances—both initial allowance and annual depreciation—granted to industrial buildings are withheld from commercial buildings—shops, and offices of all kinds. The only non-industrial building that qualifies for an industrial building capital allowance is, apparently, a sports pavilion run by a firm as part of its welfare services for its employees. I do not, of course, quarrel with that, but it rather looks as though the administrative block of an industrial concern would be excluded from the allowances for an industrial building.
    The representations that have been made to the Chancellor by various bodies have pressed upon him the need to extend the industrial buildings allowance to commercial buildings generally—which, I must make clear, once again, we are not proposing to do. This new Clause is very narrowly drawn, and has a specific purpose. I hope that I have satisfied the Financial Secretary that to have commercial development alongside industrial development would be a healthy combination in the areas that we now wish to help. There is no reason why industrial concerns and commercial undertakings should not send their administrative branches into these areas.
    At the present time, as the Committee knows, if a shopkeeper, for example, puts in a new shop front, he cannot get any capital allowance on that expenditure; only when he replaces the shop front can he get any set-off against his taxable profits—and only then if he can show that what he has done is a replacement and not an improvement. These are considerable handicaps to the development of commercial enterprise—and I do not think only of office development in this connection, but of the distributive trades as well.
    We think ours is a very reasonable proposal and one which, when linked with what the Chancellor is proposing to do for the local employment areas, would provide a mare comprehensive remedy than the remedies contained in the Bill. I stress that the capital allowances for industrial buildings are very different from
    1258
    the capital allowances for industrial plant and machinery. They are very much more modest. It seems that, as a general proposition, commercial buildings should qualify for some measure of depreciation, and this is argued at some length in both of the Reports to which I have drawn attention. In the narrow way in which we have drawn this proposal, it would apply to local employment areas only.
    The hour is late, and I do not wish to develop the matter more fully because other hon. Members may wish to speak. Above all, we shall be interested to have the reply of the Financial Secretary. Here there seems to be an opportunity to improve the Chancellor's proposals, and to add these additional inducements to the remedies far local distress and stagnation which it is one of the immediate objects of the Finance Bill to provide.
    10.30 p.m.
    The Financial Secretary to the Treasury (Mr. Anthony Barber): As the hon. Member for Sowerby (Mr. Houghton) pointed out, the purpose of the Clause is to extend the scope of the capital allowances provisions in the chapter of the 1952 Act referred to in the new Clause. The consequence would be to grant investment allowances of 15 per cent. of the cost, initial allowances of 5 per cent., and annual allowances of 4 per cent. for capital expenditure on commercial buildings incurred after the passing of the Bill where the buildings are erected in development districts. Commercial buildings would mean retail shops, showrooms, hotels and offices, and premises kept for ancillary purposes, and so on.
    I would remind the Committee from the outset that capital allowances were limited in 1945 to industrial buildings, that is buildings in use for the purposes of traders in certain defined classes. These are productive, manufacturing and processing industries and certain other types of major undertakings. Commercial buildings were excluded from the relief as a matter of deliberate policy, because the intention was to encourage the expansion and modernisation of the premises of productive industry.
    The hon. Member for Sowerby made the scope of the new Clause quite clear. He pointed out that he was not here

    1259
    concerned with a general extension of capital allowances for all commercial buildings. I frankly admit that I agree with him that any form of discriminatory taxation in favour of areas of high and persistent unemployment, such as the development districts and Northern Ireland, has a certain superficial attraction, but I hope that the Committee will agree with me that the more one examines this proposal the less attractive it becomes. I think that it is now accepted by virtually the whole Committee that in order to tackle the problem of the development districts discriminatory taxation is justified. Indeed, my right hon. Friend's proposals, to which the hon. Member for Sowerby referred, for free depreciation in these districts has been almost universally applauded.
    Several hon. Members opposite have contended that what my right hon. Friend proposes in the Bill for these districts is somewhat analogous to their proposals in previous years, but what matters most is not the apportionment of credit but the achievement of results. It will be obvious to anyone that when my right hon. Friend was working out his proposals for giving some measure of tax advantage to the development districts he considered at that time not only the allowances in respect of plant and machinery but also allowances for industrial buildings and the position of commercial buildings. For reasons with which the Committee is now very familiar, because we have gone over the ground several times in the past few weeks, my right hon. Friend came down in favour of free depreciation limited to plant and machinery, a proposal, I remind the Committee, which in a few years' time will cost about £45 million a year.
    The first point to bear in mind about the proposal in the new Clause is that it would create a quite remarkable distinction between commercial buildings in development districts and commercial buildings elsewhere. As I understand, the hon. Member for Sowerby was saying that this was just what the Opposition wanted, because this would provide the incentive for people to set up offices and shops and make extensions in the areas and consequently improve the tone of the areas
    1260
    and provide employment. But, in all seriousness, I ask the Committee to bear this in mind. Although my right hon. Friend has made a general improvement in the capital allowances for industrial buildings as distinct from commercial buildings, with which the new Clause deals, the Bill does not include any differentiation at all between capital allowances for industrial buildings in development districts and industrial buildings elsewhere.
    One of the principal reasons, of course, is that the Board of Trade already provides capital grants to cover these cases. But, this being so, the capital allowances for industrial buildings being the same both within development districts and outside—a principle which is not challenged by the new Clause—one must ask whether it would really be right to make such a remarkable distinction as is proposed here for commercial buildings. The result would be that a shop and office building in a development district would not merely qualify for annual allowances of 4 per cent., as has been requested by several hon. Members seeking these allowances for commercial buildings generally, but also in the development districts would qualify for 5 per cent. initial allowance and 15 per cent. investment allowance. That means allowances amounting in all to 24 per cent, of the cost of the commercial building in the first year. But similar buildings outside a development district would qualify for no relief at all—not a penny.
    It is one thing to argue that shops and offices generally should receive annual allowances at the same rate as, say, industrial buildings or even that they should all be eligible for initial allowance and investment allowance, but to make available all three allowances for a block of shops and offices within a development district as distinct from a similar building just outside, which would qualify for nothing at all, seems to me to be going too far.
    Mr. Houghton: The hon. Gentleman is making very heavy weather of maintaining the principle of universality for these reliefs or of avoiding a distinction between the development districts and other districts; but he must bear in mind that his right hon. Friend has already breached the principle when

    1261
    providing for free depreciation within the development districts and for no such thing outside.
    Mr. Barber: I thought that I had made clear at the outset that my right hon. Friend had accepted that, in his view, in order to deal with the problem in the development districts and Northern Ireland, there must be some degree of tax discrimination. I said that this had been generally welcomed by the Committee and outside also. But, obviously, one can carry this to the most extraordinary lengths. There must be some lengths beyond which one would not wish to go. All I was pointing out was that it seems very odd to say that that there should be be this quite remarkable discrimination—the allowance in respect of shops and offices of annual allowance, investment allowance and initial allowance, but no allowances at all outside, there being no such discrimination proposed for industrial buildings which, after all, are of more importance in the development districts, I suggest, than commercial buildings.
    I should have understood the hon. Gentleman's proposal better if it were suggested that there should also be some preferential tax treatment for industrial buildings as well, but this is not suggested.
    The hon. Gentleman spoke of the importance of commercial development in these districts. I agree that this is a matter of great importance. As my right hon. Friend said in a previous debate, on the Budget or since, it is important in the development districts not only to improve productive capacity but also to try to improve the general tone of the area. But the Committee will bear in mind that the 25 per cent. capital grant which is administered by the Board of Trade is available in proper cases for the construction of commercial buildings as well as industrial buildings in a development district, assuming always, of course, that the project is of a type worthy of assisttance when judged by the criterion of providing employment. This was one of the main objectives which the hon. Member mentioned in talking of the Government Departments which had been moved to development districts.
    The Committee will, I hope, take the view that my right hon. Friend was right to concentrate what tax relief is
    1262
    available for the purpose of providing incentive to modernise productive industry, both by doubling the annual allowances for industrial buildings throughout the whole country and by the new scheme of free depreciation for plant and machinery within the development districts, to which the hon. Member referred.
    The cost of the new Clause, I am told, would be about £24 million in a full year. If that amount of additional taxation relief were to be made available to development districts and to Northern Ireland, I should have thought that there were other candidates rather than shops, offices, showrooms and the like which should have priority, quite apart from the extraordinary disparity of treatment, which is important, which would result as between industrial and commercial buildings.
    Having pointed out all these facts briefly and followed, I hope, the good example of the hon. Member for Sowerby in keeping my observations brief, I must tell the Committee that I regret that I cannot advise hon. Members to accept the new Clause.
    Dr. J. Dickson Mabon: The Financial Secretary has advanced two arguments, quite apart from his lengthy introduction, which amounted to no argument at all. To take them in the reverse order, the hon. Gentleman's second argument was the question of priority, that the new Clause would cost about £25 million and that this money could be spent in better ways. That is, possibly, an attractive argument, but the fact is that the Government are not spending this or any particular £25 million in this or in any other way.
    We already have indications from the Government about what they intend to spend for the Local Employment Act and other Measures which have been discussed. For example, the money for the Local Employment Act has fallen from £45 million in the last year to about £25 million in the present year. We are told that there are various reasons for that, including the fact that no big developments are taking place this year comparable with those which last year's Estimates covered.
    We have also had the provision by the Chancellor in connection with Clause 38 of the Bill which is directly and

    1263
    deliberately aimed at helping the development districts. Therefore, the argument that the £25 million which the Clause would cost could be spent in a better way is a false one, because the Government are not proposing to spend £25 million in another way apart from the Clause.
    The hon. Gentleman's first argument concerned differentiation. Its basis was that there is no differentiation for buildings under Clause 38 because this is dealt with, I presume, through B.O.T.A.C. and the Local Employment Act in grants for buildings. If I am wrong, I should like to know. I tried to interrupt the hon. Gentleman to get this clear.
    Mr. Barber: I am sorry if I did not give way. I did not intend to be discourteous, but I was developing an argument. The point is that the extraordinary distinction which would arise would be between the treatment of allowances for commercial buildings within and without a development district as contrasted with the present tax treatment—in other words, the provision of capital allowances—in respect of industrial buildings where there is no distinction as between a building within a development district and one outside. It was not a B.O.T.A.C. point.
    Dr. Mabon: Nevertheless, when one considers how these things are operated through B.O.T.A.C. in relation to giving assistance in development districts, I do not see why this is not considered a particularly good point, even in discrimination.
    The Financial Secretary argued, for example, that if there was a good case for a certain project of a commercial nature attracting jobs to an area, it would get proper treatment through the B.O.T.A.C. organisation and, ultimately, the sanction of the Treasury. I cannot think of any large-scale commercial project which has been approved by the Government under the Local Employment Act. I am open to correction, and perhaps the information might be given to me, but most of the job-providing projects which have been approved by the Government in the last three years have, I think, all been of an industrial character. I cannot think of a substantial commercial development which has been approved.
    1264
    10.45 p.m.
    Since the Financial Secretary has underlined this, the point that I am making is that this is the very kind of thing that has to be brought into the development districts. Quite apart from the prestige value of many of the projects—someone has used the phrase that it raises the tone of the district, which is true—it attracts into the district industry, and also offers to the people employment of an entirely different kind. For instance. they may be able to go to work with clean clothes and come home again clean, which is rather different from what happens in the development districts where the occupations have of necessity involved a great deal of dirt and uncleanness. This raises the tone of the district and offers job opportunities to many youngsters which they would not otherwise get. Therefore, it is important to attract this sort of thing into the development districts.
    If this is the wrong way to do it, why do not the Government suggest some other way in which commercial projects of this kind can come to the areas? There is also the point that by the very nature of industry as distinct from commercial establishments there are advantages in giving free depreciation for plant and machinery. The plant and machinery of commercial enterprises bear little comparison with the plant and machinery involved in industrial enterprises. One of the main incentives in attracting commerce ought to be the provision of relief for the construction of the building itself. If the Financial Secretary can tell me that these commercial projects have been encouraged to the full through B.O.T.A.C. I shall rest content.
    But I am dissatisfied from the point of view that my constituency now tops the United Kingdom unemployment poll. We feel that not enough is done to bring down the high unemployment levels in the areas which are affected not only when there is stagnation and restriction in the economy but also when there is expansion. We still have chronic unemployment, and we think that more ought to be done by the Government.
    Last year the Government resisted what is, in effect, Clause 38 with all kinds of arguments which seemed strong at the time, but they have retreated from them now. We have had two rather feeble

    1265
    arguments to resist it tonight. Are we to take it that if we have to vote on this Clause tonight, next year the Chancellor might look at another argument and then introduce the Clause and be greeted with cries of "Brilliant" by his supporters-who will probably vote against the Clause tonight?
    I urge the Chancellor to give further consideration to the Clause. These things are important in development districts. The commercial side of development has been neglected, and I plead with the Government to think about it again.
    Mr. Graham PageWhen one has a Royal Commission Report on one's side, it is usual in Finance Bill debates to quote it. The hon. Member for Sowerby (Mr. Houghton) made the best of it. When one cannot find a quotation in any Royal Commission Report, one forgets all about it. But there are two Reports in support of the Clause—the Tucker and Radcliffe Reports—and the Clause is very modest when compared with the recommendations of both Reports.
    The Clause applies only to commercial buildings within development districts and seeks to extend to commercial buildings the benefits which industrial buildings receive. Some parts of development districts are quite inappropriate for industrial development. There are the older residential areas of development districts which are admirable for office development but quite inappropriate for industrial development. I have some such areas in my own constituency on Merseyside. The Government are doing something to help there.
    Inquiries are being made for sites for Government offices within that older residential area in my constituency. But I am not sure this is quite fair. If the Government are to do commercial development there, it may prevent private enterprise from doing it, when private enterprise might do it if it had even slight encouragement. Industrial firms are having encouragement for their developments there.
    When there is an industrial development in a development district, it can be successful only if commercial development follows, particularly retail shops and the type of distributive service which industrial development requires. Again I turn to Merseyside as an example. Ford's
    1266
    development at Halewood has necessitated any number of commercial developments to go along with it, particularly retail shops.
    What happens when there is no allowance for building new shops is that old shops are patched up. This is not a wise policy. If retail shops were having the benefit of an allowance, particularly in development districts, so that commercial development could accompany industrial development, we would have a better type of development, certainly in shopping areas. After all. it is in development districts that urban renewal is so very essential.
    It is just this type of town-again I speak of Liverpool and Merseyside—where urban development is so necessary and where we do need to encourage the commercial enterprises as well as the industrial. My hon. Friend said that the policy when capital allowances were introduced for industrial development was to encourage the expansion and modernisation of productive industry. But can one really make a distinction, particularly for a development district, between productive and distributive industry? I do not think that such a distinction is real.
    The policy now, at least within the development districts, should be to expand and modernise both productive and distributive industries and give all encouragement to it, I think it right that at present there should be discrimination between areas and that this encouragement could be applied only to development districts, because I do not believe we can be successful with industrial development in these districts unless we also encourage commercial development as well. This Clause may go too far in the allowances which it seeks to give, but that could be rectified at a later stage. Something on these lines should be seriously considered by my right hon. Friend.
    Mr. Ernest Fernyhough: I reinforce the plea by the hon. Member for Crosby (Mr. Graham Page). I cannot believe that the Financial Secretary, before he made his speech, had consulted the Lord President of the Council. Lord Hailsham is the overseer, as it were, of the North-East and after his "Cook's tour" of the area he concluded that it required a face-lift. He did not confine

    1267
    that to industrial buildings. He said that because it was an old industrial centre the whole of the social furniture needed renewing, and that included the whole of the commercial furniture. A Clause of this kind would make that a possibility.
    We who represent the North-East are often told that the reason we cannot attract new industries to the area is not because the businessman will not come there, but that his wife finds the shops so dowdy and nothing like so attractive as those in Oxford Street and Bond Street. At the cost of £24 million, accepting the figures given by the Economic Secretary, this is an opportunity which the Government could grasp. They could kill two birds with one stone-not only attract new industries but make it much easier for the wives of businessmen, so far reluctant to go to Liverpool, to Scotland or the North-East, to go there because the social furniture, the commercial buildings and the shops could become equivalent with those in other parts of the country.
    I do not want to detain the Committee because I understand that some hon. Members want to catch trains. I hope that the Economic Secretary will consult with the Lord President of the Council and ask him if he does not think that this new Clause would be a good thing for the North-East. If in private conversations with the Economic Secretary, the Lord President is to live up to the public utterances he has made in the North-East, there is no doubt that the Economic Secretary would have to consider and grant this modest concession.
    Mr. Barber: I can answer the hon. Member for Jarrow (Mr. Fernyhough) straight away. Of course, anyone who has in mind the interests of the development districts and of Northern Ireland—I mention that because we are not only concerned with development districts in England and Wales and Scotland—would be attracted by any action we in this Committee might take to improve the general position in those districts and in Northern Ireland. The only point I tried to make in answer to the hon. Member for Greenock (Dr. Dickson Mabon) in saying that one should consider how best one might spend the money available was how best to provide whatever taxation
    1268
    relief is available for those districts, and I do not think it follows that this is the best way to do it. I should have thought it very doubtful whether this was the most sensible way. There is an argument for saying that one can use to greater advantage taxation relief of £24 million by providing a differential in the industrial buildings allowance or even in providing greater incentive to industry to move to these areas.
    My hon. Friend the Member for Crosby (Mr. Graham Page) was beginning to touch on somewhat wider ground. He thought that we should extend the allowance for industrial buildings to commercial buildings generally, which would be a very expensive affair. I am not sure that I go with him the whole way in suggesting that the Tucker Committee and the Royal Commission would have approved of this new Clause because it is of more limited application. From my reading of the Tucker Report and the Royal Commission's Report, I should doubt very much whether they would approve of the discrimination as proposed in this new Clause. The Tucker Committee said:
    "A tax which refuses to give an allowance for the depreciation of all business premises is not limiting itself to a tax on income, but is encroaching on capital."
    The Committee was saying that on business principles a deduction ought to be allowed in computing profits for the loss in value of business premises through normal depreciation. While that argument can be adduced in favour of some sort of annual allowance, there is very little case for the investment allowance and initial allowance suggested in this new Clause.
    I have been over the grounds why my right hon. Friend could not accept the new Clause and I do not want f0 go over them again. I hope that the Committee will forgive me for not speaking a t greater length on the new Clause.
    11.0 p.m.
    Mr. John Diamond: I am sure that the Committee will forgive the Financial Secretary and that it will forgive me if I speak briefly, because I am conscious of the fact that a number of my hon. Friends are anxious to demonstrate their views about the lack of understanding by the Government of the needs of development districts. It was true that

    1269
    in 1951 and in 1955, when these two Reports were made, the development areas had not established themselves as solid areas of unemployment such as we have seen in Northern Ireland. It is true that in 1951 we had not had a Conservative Government for very long. We were, therefore, at the start of a period during which the Northern Ireland unemployment figures have averaged between 6 per cent. and 8 per cent. year after year.
    But now we have reached a situation in which it is impossible to demonstrate that we must give preference to industry in those areas to the exclusion of commercial buildings. The commercial buildings also provide employment, and it is not possible for us to say that those areas do not need the benefit which would come from the Clause.
    The Financial Secretary's reply to the arguments of my hon. Friends was totally inadequate. He has given no attention whatever to the need for giving a new and fresh look at the needs of
    development districts. He has tried to put us off with arguments about the comparison between industrial buildings and commercial buildings. If we start with industrial buildings which have considerable advantages outside development districts, we need not give them comparatively increased advantages within development districts. When we are dealing with commercial buildings which have no tax advantages outside development districts, they will have comparatively larger advantages if we give them anything at all within development districts. The hon. Member's argument would lead to our giving nothing at all to help commercial buildings being installed in development districts, and we wish to register our very strong protest against that attitude.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes, 118, Noes 175.

    Division No. 128.]

    AYES

    [11.3 p.m.

    Alnsley, William

    Griffiths, David (Rather Valley)

    Oram, A. E.

    Allaun, Frank (Salford, E.)

    Grimond, Rt. Hon. J.

    Oswald, Thomas

    Awbery, Stan (Bristol, Central)

    Hannan, William

    Pentland, Norman

    Beaney, Alan

    Harper, Joseph

    Popplewell, Ernest

    Bennett, J. (Glasgow, Bridgeton)

    Hart, Mrs. Judith

    Price, J. T. (Weethoughton)

    Benson, Sir George

    Herbison, Miss Margaret

    Probert, Arthur

    Blyton, William

    Hill, J. (Midlothian)

    Redhead, E. C.

    Bowden, Rt. Hn. H. W. (Loics, S.W.)

    Hilton, A. V.

    Reynolds, G. W.

    Braddock, Mrs. E. M.

    Holman, Percy

    Roberts, Albert (Normanton)

    Bradley, Tom

    Houghton, Douglas

    Robertson, John (Paisley)

    Bray, Dr. Jeremy

    Howell, Denis (Small Heath)

    Rogers, G. H. R. (Kensington, N.)

    Broughton, Dr. A. D. D.

    Hoy, James H.

    Ross, William

    Brown, Rt. Hon. George (Belper)

    Hughes, Cledwyn (Anglesey)

    Short, Edward

    Butler, Mrs. Joyce (Wood Green)

    Hunter, A. E.

    Slater, Mrs. Harriet (Stoke, N.)

    Callaghan, James

    Hynd, John (Attercllffe)

    Slater, Joseph (Sedgefield)

    Corbet, Mrs. Freda

    Irvine, A. J. (Edge Hill)

    Small, William

    Craddock, George (Bradford, S.)

    Irving, Sydney (Dartford)

    Soskice, Rt. Hon. Sir Frank

    Cronin, John

    Janner, Sir Barnett

    Spriggs, Leslie

    Crosland, Anthony

    Jay, Rt. Hon. Douglas

    Stewart, Michael (Fulham)

    Cullen, Mrs. Alice

    Jenkins, Roy (Stechford)

    Stones, William

    Dalyell, Tam

    Jones, Dan (Burnley)

    Swingler, Stephen

    Davies, G. Elfed (Rhondda, E.)

    Jones, Elwyn (West Ham, S.)

    Taverne, D.

    Davies, Ifor (Gower)

    Jones, J. Idwal (Wrexham)

    Thomas, George (Cardiff, W.

    Delargy, Hugh

    Jonee, T. W. (Merioneth)

    Thomas, Iorwerth (Rhondda, W.)

    Dempsey, James

    Kelley, Richard

    Thompson, Dr. Alan (Dunfermline)

    Diamond, John

    Lawson, George

    Thornton, Ernest

    Dodds, Norman

    Lever, L. M. (Ardwick)

    Tomney, Frank

    Duffy, A. E. P.

    Lewis, Arthur (West Ham, N.)

    Wainwright, Edwin

    Mabon, Dr. J. Dickson

    Watkins, Tudor

    Edwards, Robert (Boston)

    McBride, N.

    Whitlock, William

    Fernyhough, E.

    MacDermot, Niall

    wigg, George

    Finch, Harold

    McInnes, James

    Wilkins, W. A.

    Fitch, Alan

    Mackie, John (Enfield, East)

    Wililame, Ll. (Abertillery)

    Foot, Dingle (Ipswich)

    MacPherson, Malcolm (Stirling)

    Willis, E. G. (Edinburgh, E.)

    Forman, J. C.

    Mason, Roy

    Winterbottom, R. E.

    Fraser, Thomas (Hamilton)

    Mayhew, Christopher

    Woof, Robert

    Galpern, Sir Myer

    Millan, Bruce

    Yates, Victor (Ladywood)

    George, Lady MeganLloyd (Crmrthn)

    Milne, Edward

    Ginsburg, David

    Mitchison, G. R.

    TELLERS FOR THE AYES:

    Gourlay, Harry

    Morris, John

    Mr. Charles A. Howell and

    Grey, Charles

    O'Malley, B. K.

    Mr. McCann.

    NOES

    Agnew, Sir Peter

    Ashton, Sir Hubert

    Barber, Anthony

    Allason, James

    Atkins, Humphrey

    Barter, John

    Arbuthnot, John

    Awdry, Daniel (Ghippenham)

    Batsford, Brian

    Bennett, F. M (Torquay)

    Hastings, Stephen

    Pym, Francis

    Bennett, Dr. Reginald (Gos & Finn)

    Heald, Rt. Hon. Sir Lionel

    Quennell, Miss J. M.

    Berkeley, Humphry

    Hendry, Forbes

    Rawlinson, Sir Peter

    Biffen, John

    Hiley, Joseph

    Redmayne, Rt. Hon. Martin

    Biggs-Davison, John

    Hill, Mrs. Eveline (Wythenshawe)

    Rees, Hugh

    Bishop, F. P.

    Hill, J. E. B. (S. Norfolk)

    Rees-Davies, W. R.

    Bourne-Arlon, A.

    Hirst, Geoffrey

    Renton, Rt. Hon. David

    Box, Donald

    Hobson, Sir John

    Ridley, Hon. Nicholas

    Boyle, Rt. Hon. Sir Edward

    Hocking, Philip N.

    Ridsdale, Julian

    Brewis, John

    Holland, Phillip

    Roberts, Sir Peter (Heeley)

    Brootnan-White, R.

    Hollingworth, John

    Robinson, Rt. Hn. Sir R. (B'pool, S.)

    Brown, Alan (Tottenham)

    Hopkins, Alan

    Roots, William

    Buck, Antony

    Hornsby-Smith, Rt. Hon. Dame P.

    Ropner, Col. Sir Leonard

    Bullard, Denys

    Howard, John (Southampton, Test)

    Russell, Ronald

    Campbell, Gordon (Moray & Nairn)

    Hughes-Young, Michael

    St. Clair, M.

    Carr, Compton (Barons Court)

    Hutchison, Michael Clark

    Scott-Hopkins, James

    Carr, Robert (Mitcham)

    Iremonger, T. L.

    Sharpies, Richard

    Chataway, Christopher

    Irvine, Bryant Godman (Rye)

    Shaw, M.

    Chichester-Clark, R.

    James, David

    Shepherd, William

    Clark, Henry (Antrim, N.)

    Johnson Smith, Geoffrey

    Skeet, T H. H.

    Clark, William (Nottingham, S.)

    Jones, Arthur (Northants, S.)

    Smith, Dudley (Br'nthd & Chiswick)

    Clarke, Brig. Terence(Portsmth, W.)

    Kaberry, Sir Donald

    Smithers, Peter

    Cooke, Robert

    Kerr, Sir Hamilton

    Stanley, Hon. Richard

    Corfield, F. V.

    Kershaw, Anthony

    Stodart, J. A.

    Coulson, Michael

    Langford-Holt, Sir John

    Stoddart-Scott, Col. Sir Malcolm

    Courtney, Cdr. Anthony

    Leavey, J. A.

    Studholme, Sir Henry

    Crawley, Aldan

    Legge-Bourke, Sir Harry

    Summers, Sir Spencer

    Currie, G. B. H.

    Lewis, Kenneth (Rutland)

    Tapsell, Peter

    d'Avigdor-Goldimld, Sir Henry

    Lilley, F. J. P.

    Teeling, Sir William

    de Ferranti, Basil

    Litchfield, Capt. John

    Temple, John M.

    Donaldson, Cmdr. C. E. M.

    Loveys, Walter H.

    Thompson, Sir Richard (Croydon, S.)

    Drayson, G. B.

    Lucas-Tooth, Sir Hugh

    Tiley, Arthur (Bradford, W.)

    du Cann, Edward

    MacArthur, Ian

    Touche, Rt. Hon. Sir Gordon

    Elliot, Capt. Welter (Carshalton)

    McLaren, Martin

    Turner, Colin

    Macleod, Rt. Hn. Iain (Enfield, W.)

    Turton, Rt. Hon. R. H.

    Emery, Peter

    Maddan, Martin

    van Straubenzee, W. R.

    Farr, John

    Markham, Major Sir Frank

    Vaughan-Morgan, Rt. Hon. Sir John

    Finlay, Graeme

    Marten, Neil

    Vickers, Miss Joan

    Fletcher-Cooke, Charles

    Matthews, Gordon (Meriden)

    Vesper, Rt. Hon. Dennis

    Galbraith, Hon. T. G. D.

    Maudling, Rt. Hon. Reginald

    Walder, David

    Gammons, Lady

    Mawby, Ray

    Walker, Peter

    Gibson-Watt, David

    Maxwell-Hyslop, R. J.

    Walker-Smith, Rt. Hon. Sir Derek

    Gilmour, Ian (Norfolk, Central)

    Maydon, Lt.-Cmdr. S. L. C.

    Wall, Patrick

    Gilmour, Sir John (East Fife)

    Mills, Stratton

    Ward, Dame Irene

    Glyn, Dr. Alan (Clapham)

    Miscampbell, Norman

    Webster, David

    Glyn, Sir Richard (Dorset, N.)

    Montgomery, Fergus

    Wells, John (Maidstone)

    Goodhew, Victor

    Morgan, William

    Whitelaw, William

    Gower, Raymond

    Nabarro, Sir Gerald

    Williams, Dudley (Exeter)

    Grant-Ferris, R.

    Osborn, John (Hallam)

    Williams, Paul (Sunderland, S.)

    Gresham-Cooke, R.

    Partridge, E.

    Wilson, Geoffrey (Truro)

    Grosvenor, Lt.-Col. R. G.

    Pearson, Frank (Clitheroe)

    Wise, A. R.

    Gurden, Harold

    Pilkington, Sir Richard

    Wolrige-Gordon, Patrick

    Hamilton, Michael (Wellingborough)

    Pitt, Dame Edith

    Woollam, John

    Harris, Reader (Heaton)

    Pott, Percivall

    Harrison, Col. Sir Harwood (Eye)

    Price, David (Eastleigh)

    TELLERS FOR THE NOES:

    Harvey, John (Walthamstow, E.)

    Profumo, Rt. Hon. John

    Mr. Peel and Mr. Ian Fraser.

    Harvie Anderson, Miss

    Proudfoot, Wilfred

    To report Progress and ask leave to sit again.—[Mr. Maudling.]
    Committee report Progress; to sit again Tomorrow.

  LINCOLNSHIRE RIVER BOARD (GRANT)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hughes-Young.]
  11.12 p.m.
  Mr. Dick Taverne: I wish to raise the matter of the refusal of the Ministry of Agriculture, Fisheries and Food to grant aid to the Lincolnshire River Board of £12,918 for work on the
  1272
  Witham Improvement Scheme. This is a serious matter to the River Board and I will begin by explaining to the House the background to this matter.
  This is part of a large scheme, the total of which involves the expenditure of more than £1 million. The part of the scheme with which the debate is concerned is that for improvements to the Sincil Dyke, involving the expenditure of about £½ million. Before the work could start on this scheme there was a considerable delay and the River Board had to wait for the transfer of responsibilities from the British Waterways; but at the first opportunity, in late 1961, tenders for this scheme were invited by the Board. Tenders were

  1273
  received in March, 1962, and the successful tender, after the necessary inquiry as to costs, was sent to the Ministry's regional engineer on 12th April, 1962.
  On 25th May, one-and-a-half months later, the regional engineer wrote to the River Board asking for certain information and raised certain queries about costs. Promptly, on 29th May, an answer was received from the River Board giving him all the information he required—and, of course, he had had time to consider the figures for about one-and-a-half months. Then nothing happened. The Board became disturbed about the delay. The clerk spoke to officials of the Ministry on several occasions, and pointed out that the matter was extremely urgent because he feared that if there were continued delays prices might go up, since a fixed price had been tendered. The clerk was told by the officials of the Ministry that, irrespective of the size of the contract-which was, as I have said, for about £½ million—the Board would have to wait its turn.
  In the middle of July the Board became so disturbed at the delay that a special delegation went to the Ministry. The Board was told, as the clerk had been told, in a letter which followed that visit to the Ministry, that it was hoped to deal with the matter soon. Not until 7th August, nearly four months after the successful tender had been transmitted to the Ministry, was approval finally granted.
  By that time, what the Board feared would happen had, in fact, happened. The contractor told the Board, "I could not take advantage of the fixed prices which were offered to me when the tender was submitted. I have now to do the work in two winters and one summer instead of being able to do it in two summers and one winter. Winter work necessarily involves further costs, because of delays caused by the weather, uncertainties, and so on, and I am afraid that I cannot stick to the contract price." In effect, the contractor said, "I want £15,000 more for the work than I estimated."
  The matter was gone into in great detail, negotiations ensued, and finally, after negotiations, the Board agreed that a fair and suitable price for the extra work occasioned by the Ministry's delay was a further sum of £12,918, which is
  1274
  the amount for which grant aid was subsequently refused. This was felt, after elaborate inquiries, to be the cheapest possible way of getting this extremely important scheme carried through.
  As soon as possible, on 27th August, the full facts were passed to the regional engineer, who was told, as was the Ministry, how extremely urgent the matter was. The contractor also added that he would be able to stick to this further additional price only if the new work was started on 17th September. It was on 6th September—11 days before the work was due to start—at the last possible date, that the Board told the contractor, "Yes, you may carry on with the contract. We accept this offer."
  When the Ministry heard of this, it at once tried to get the Board to order the contractor from the site, or to prevent him from getting on to it, but it was too late—the contract had been concluded, and the Board had no option because, had there been further delay, the costs would have risen once again, the progress of the work, which is extremely important and urgent, would have been prejudiced, the ratepayers would have been asked to contribute more and, because grant aid for a larger sum would have been involved, the taxpayer would have been prejudiced.
  The Ministry told the Board, "You have broken our regulations. You had not been granted approval before entering into the contract—therefore, no grant aid." Not unnaturally, the Board was somewhat incensed at this, and the explanations from the Ministry have been two. First of all, the explanations given for the delay have been that there was originally a discrepancy between the figure of nearly £½ million put forward in the early part of last year and the original figure of some £300,000 which had been mentioned in 1959. The Ministry said, quite rightly, that a big sum was involved, hence the delay.
  To that, there are two answers. The first is that the old figure of nearly £300,000—which was, as it turned out, quite an erroneous one—had been before the Ministry for a long time and, at its request, a report had been made by consulting engineers, a long time before the later figure was put forward, which made it quite clear that the other figure was too low and could not be

  1275
  supported. Further, as the Ministry itself admitted, and pointed out in a letter of May, 1962, costs had gone up.
  The second answer to the Ministry's explanation is: does it really take the Ministry of Agriculture four months to reconcile a discrepancy in the figures? If this was a big contract, as it was, did not that fact make it all the more urgent to see that it was dealt with quickly so that no further increase in costs was involved? Did it, and should it, take the Ministry four months to consider the tender which was put forward? If that is the normal practice of the Department, it is high time that the Department was seriously examined with a view to overhaul. The Ministry knew that the matter was urgent, but it replied that the Board must wait its turn. If this means that everyone who puts forward a tender to the Ministry has to wait a period of four months, this is a very disturbing state of affairs. In my view, there was no excuse whatever for such a long delay.
  The second explanation given by the Ministry, not of the delay but of the refusal, has been that, according to the Ministry, the Lincolnshire River Board has a bad record and had been warned on 12 previous occasions of breaches of the regulations. That was the Minister's answer to a Question which I put to him. There are two answers to that explanation.
  First, I hope that the Minister will carefully consider these cases of warnings about breaches of regulations. I have examined 12 incidents which have been reported to me by the River Board on which this may have been based. Only one of them was a case where work on a scheme was started before approval was given. This was work to the extent of some £500, an occasion in 1957. Two of the 12 are admittedly breaches of the regulations by the Board for which the Board can offer no excuse and in which it was at fault. They were in 1953 and 1957.
  Of the other nine cases, three were only minor and very technical, three were cases in which the circumstances changed owing to conditions which were quite unforeseeable by and beyond the control of the Board and where the Board's explanation was accepted by the
  1276
  Ministry and in which grant aid was duly given. The other three were cases in which there were variations by the Board which resulted in considerable saving.
  The Board's record is not bad and perhaps the Minister can tell me whether there have not been minor breaches by other river boards of the same kind, because I suspect that minor breaches of this kind and variations of this kind are cases in which not only the Lincolnshire River Board is at fault.
  The second answer is much more important. Even if there were technical breaches of the regulations by the Board in the past, does that justify delay by the Ministry? Does that mean that the Ministry can delay as long as it wishes? Does it justify delay to such an extent that an extra burden is imposed on the ratepayers and the taxpayers—for it is not only people in Lincolnshire who have to be considered, but all the taxpayers who contribute to grant aid?
  The Ministry is under a duty to assist the river boards and under a duty to keep down costs and under a duty to act to prevent contracts from being delayed and prices rising as a result of delay. There is no question whatever but that the extra cost which was incurred on this occasion, this sum of nearly £13,000, was due to delay. This was a scheme which had to be pressed on, a scheme of great importance to my constituents and not only to people in Lincoln but to farmers and people in Lincolnshire generally, and it was a matter in which, as I have said, the Board had no choice.
  Does the Ministry say that if there have been breaches in the past, one has to disregard the extra costs involved irrespective of the delay and abide by the strict letter of the regulations, even if the cost goes up by £10,000, £20,000 or £30,000? Was the Ministry to have no regard to the postponement of the scheme involved? Was the Board simply to wait its turn, as it was told, and, when it became impatient, to be told that it had a bad record? Whatever the record of the Board may have been, and it does not admit that it has anything in the sense of a bad record—there are a few technical breaches and only two serious breaches—its case was still entitled to be treated on its merits on this occasion.

  1277
  Even if there were previous breaches, the Ministry was still at fault.
  This was an important scheme to prevent flooding, from which many of my constituents have suffered badly. The sum which now has to be met by the Board, and, therefore, by the ratepayers, is not a negligible sum. The total which they will have to meet on which otherwise aid would have been granted is a sum which is more than the total collected, for instance, annually from income from angling fees.
  I regard this as a sorry story which throws a bad light on the operations of the Ministry. I would much rather defend the civil servants than attack them, as a body which is working for the community as a whole. I have often explained to my constituents the inevitable delays which must result in correspondence with the Ministry. One cannot expect a very large Department to answer all queries overnight.
  I should like to be able to point to the Civil Service and to show it to be quite as effective as, and in many cases even more effective than, private firms. But it is this kind of delay and technical interpretation of the rules which sometimes gives a bad name to the operations of the Civil Service, which leads to the exasperation of the public and leads to talk of bureaucratic red tape which we cannot afford in a case like this.
  I realise, of course, that the Minister must always defend the work of his Department, but I hope that when he has finished defending it he will give this case a more than routine examination and will ask some very searching questions of his Department. I hope and trust that if he does so he will realise where the fault lies and will then review the decision he has taken which has placed this extra burden on the rate-payers of the Board, and I hope that in future the Civil Service will proceed without unnecessary delay.
  11.27 p.m.
  The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Scott-Hopkins): I am grateful that the hon. Member for Lincoln (Mr. Taverne) has presented his case in such a clear manner. I regret one or two of the final remarks he made concerning the Civil Service. I would point out that the decisions taken in this case stem from
  1278
  our decisions alone. The civil servants have been carrying out the instructions given to them to the best of their ability and, in my view, have done so extremely well. Perhaps the hon. Gentleman has not been briefed as well as he might have been by the River Board as to the events concerning this case.
  It might be to advantage if I talked for a moment about the conditions of grant. Here we have gone to a lot of trouble to ensure that river boards are fully aware of the conditions that must be observed before expenditure on drainage works is eligible for grant-aid, and the importance of care in estimating costs. The hon. Gentleman made a fair point about this.
  We issue a Memorandum of Grant Conditions, several copies of which were sent to all boards the last time it was revised in 1955. Very often boards are reminded in correspondence of the need to observe these conditions. The two conditions that are particularly applicable to the case we are discussing tonight are those dealing with the variation of works already approved and the acceptance of contracts.
  With the permission of the House I will very quickly give two quotations from this memorandum. The first quotation is under the heading "Variation of Works as Approved" and the important sentences here are as follows:
  "All works must be carried out in accordance with the description and drawings as approved for the purpose of grant-aid. Any variation of the scheme must be submitted through the Regional Engineer for the Ministry's prior approval."
  A little later in the same paragraph is the sentence:
  "If any variation is made without prior approval, the Ministry reserves the right to withhold or reduce the grant and to require the board to refund any advances of grant which may have been made."
  My second quotation is from a later paragraph dealing with contract tenders, and in this case I think it is sufficient if I read just one sentence, namely:
  "In no circumstances should a tender be accepted without the Ministry's prior approval."
  Perhaps I may make one further observation before turning to the Lincolnshire River Board and this particular case. Our procedure for approving proposals for drainage improvements usually entails

  1279
  our considering a first estimate of the cost of the works in relation to the objects they are intended to secure. This is the estimate which the hon. Gentleman was mentioning in this case. We have to consider whether a scheme is worth while. In doing this, we obviously are very dependent on the closeness of the estimate that a board can produce.
  If a board makes a serious mistake and underestimates the cost of some works which, at that estimated cost, are clearly justified by the benefits they produce, we may later find ourselves in the position of having approved, at least in principle, a scheme costing much more than the first estimate and at this new price not necessarily justified by the benefits which will accrue from that increased expenditure. We take what steps we can to verify the estimates that are sent to us, but in the last resort we cannot duplicate all that a board does and must accept its findings at their face value.
  The hon. Member made a point about cases over which the Lincolnshire River Board had had trouble in the past with my Ministry. I do not want to single out this Board for an unfair shale: of criticism. I would agree with the hon. Member when he mentions that there are other boards which also have had difficulties in the past, but it is fair to say that the Lincolnshire River Board has had more warnings than any other board over the difficulties and the mistakes which I have just mentioned.
  I have taken the trouble to go through the past five years' record of the Board—not back to 1953 as the hon. Member did—and I have identified 12 instances of warning letters to the Board, urging it to estimate more carefully and closely, or warning it against varying approved works without prior approval. To be fair, however, none of the instances I have seen related to the acceptance of a tender without prior approval. If the hon. Member wishes, I will give him later a complete list of cases where the Board has transgressed the regulations and has spent more than it ought to have done.
  I will give the hon. Member two instances now which are not minor infringements, as he said. They are quite important, particularly in relation to the sum involved. In 1959, works on the
  1280
  Tetney Sluice resulted in excess expenditure of £3,211, over and above the approved sum of £6,000. We warned the Board in the strongest terms of the need to estimate more closely and get prior approval to variations. The Board had committed both offences in this case. Nevertheless, we grant-aided the excess. In 1961 the Ministry refused grant on £192—a small sum, but the principle is the same. It was spent on work not approved in advance.
  Mr. Taverne: Is it not a fact that the sum of about £3,000 in the case of the Tetney Sluice was expenditure which the Ministry admitted was caused by additional works which were variations as a result inevitably of weather conditions and the collapse of the old doors? Was not this accepted later as an explanation by the Ministry?
  Mr. Scott-Hopkins: I said that we accepted it, and indeed paid grant on this excess expenditure, but I must make the point again that the Board did not consult us before it spent this money and that there was no excuse for that. When the Board explained the reasons to us we grant-aided that scheme.
  As recently as May, 1962, we had to consider unauthorised works on the Upper Bain Improvement Scheme. Here the Board had been given approval to £50,000 but did extra work costing over £18,000 without our prior approval. All these cases are instances—and there are 12 ranging from small to big—where the principle has been breached and the Board has not kept the conditions of grant.
  As to the present scheme and the events leading up to it, what I have to say does not entirely agree with what the hon. Member said. The whole scheme, of which the work under discussion is only a part, is the improvement of the River Witham and its tributaries in the City of Lincoln and a large area of agricultural land nearby. Sincil Dyke, to which the hon. Gentleman referred, is one of the two channels carrying the Witham through the City of Lincoln.
  When this scheme was put to the Ministry for approval for grant-aid, in 1959—the hon. Gentleman gave the date correctly—it was estimated that the whole cost would be over £1 million, of

  1281
  which the Board estimated that £308,000 would he for the improvement of the Sincil Dyke part of it. In March, 1962, the Board obtained tenders, having left its estimate unrevised, for the work on Sincil Dyke, and on 12th April, 1962, it asked the Ministry to approve acceptance of a particular tender. It was then found that the tender price was £497,805. It had risen by £189,805. I have stressed the importance of close estimating in these matters, but there was a difference of over £189,000 between the estimate and the tender price. This is an important point because river board schemes of this kind attract grant of about 80 per cent., which means that approximately £800,000 of taxpayer's money is involved in this case.
  Here we had an estimate that was exceeded at tender by almost two-thirds, an enormous amount. Not unnaturally, at this point the Ministry asked the Board for an explanation of the increase. We were extremely anxious about the vast difference between the two figures. At the end of May, 1962, the Board replied to the effect that there was no explanation of the difference, as the original estimate was obviously wrong. Almost as an afterthought. the Board then said that the total estimate for the Sincil Dyke part of the work should be increased still further to £548,867.
  It is hardly to be wondered that at that stage the Ministry found it essential to examine the new estimate very closely and to re-examine the whole worth-whiteness of the scheme, since the original estimate of £300,000 had gone to something over £500,000, a quite enormous increase. In June, 1962, the Board told the Ministry that it was worried about delay in approving the tender and it warned us then that the price might rise if work did not begin shortly.
  In July, the Ministry received a deputation which came to press on us the need to take an urgent decision. At this meeting, once again, we had a further surprise from the Board, which disclosed that the estimate could be reduced now—quite suddenly, out of the blue—by £48,000 because this was for work for a private company which would pay that sum to the Board for what was done. This was further evidence that the Board really had some difficulty in getting anything like accuracy in its estimating, and doubt was thrown on the estimate for the
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  whole scheme. Later in July, the Board again warned us that the contractors might not be able to keep to their price.
  On 7th August, the Ministry told the Board by telephone that it could accept the tender, and we confirmed this on 10th August. On 27th August, the Board said that the contractors wanted either to delay beginning the scheme until March, 1963, thereby, presumably, increasing the cost, or to increase their tender by £13,000 because—this was a point made by the hon. Gentleman—delay in accepting it had meant that they would have to work through two winters and one summer instead of two summers and one winter.
  We understood that a decision on this would have to be taken by 16th September or otherwise the contractor would withdraw his tender altogether. While we were still considering this further increase—an additional increase on the £300,000 which had already gone up and up-we learned on 12th September by telephone that the Board had already accepted the tender. We discovered later that the Board had accepted the tender on 7th September, knowing that the Ministry was still considering the request to increase the tender price by £13,000, a matter for which the Board had sought approval only the week before.
  The hon. Gentleman can hardly maintain that the Ministry has in this case been dilatory in trying to meet the Board's constantly varying estimates and tenders. He has said that delay costs money. The reason for the delay has been the inaccuracies of the Lincolnshire River Board, its constantly varying estimates, going up and up, suddenly dropping by £48,000, and then going up again and that right at the last moment. Then there was this final broach. It was a contravention of the conditions of grant and placed the Ministry in a difficult position. I say frankly to the hon. Member that this was a case that we could not judge in isolation. Therefore, after the most careful consideration, we felt that we had no choice but to take the action which we did.
  As the hon. Member knows, because I have written to him, since we took the decision I have looked hard, long and earnestly at the matter to see the rights and wrongs of the case. I have gone a long way back into the matter in response

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  to appeals by the hon. Member and by the River Board. I feel bound to conclude, however, that the decision not to grant-aid the final excess of £13,000 on the Sincil Dyke section of the scheme must stand.
  I point out to the hon. Member that this £13,000 is likely to be less than about
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  1 per cent. of the total cost of the River Witham Improvement Scheme. I regret that the decision has had to be taken in this way, but I cannot find any justification for changing the decision which I have given.
  Question put and agreed to.
  Adjourned accordingly at nineteen minutes to Twelve o'clock.