Commons Sitting of 14 April 1964

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

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

  ISLE OF WIGHT RIVER AND WATER AUTHORITY BILL
  Read the Third time and passed.
  SAINT JOHN'S CHURCH, SMITH SQUARE BILL [Lords]
  Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  POST OFFICE

    Savings Accounts (Withdrawals)
    Mr. Gresham Cookeasked the Postmaster-General whether he will arrange for the limit on weekly withdrawals from Post Office savings accounts to be raised from £10 to £20 so as to allow wages paid by cheque to be more easily encashed, and for deposits to be withdrawable in less than eight days where a cheque from a depositor's employer has been paid in.
    The Postmaster-General (Mr. Reginald Bevins): To raise the limit for withdrawals on demand would greatly increase the amount of losses by fraud. As regards the second part of the Question, since the purpose of the Post Office Savings Bank is to provide for savings and not for current-account business, I am sorry could not justify the elaborate special procedures which would be required to enable deposits by cheque to be cashed more quickly.
    Mr. Gresham Cooke: Should not the Post Office be more willing today to help in the payment of wages by cheque? Should not it be quite possible to make an arrangement with a local firm which is using this method of paying wages so that the cheques can be encashed through the Post Office and more than £10 can be drawn out at any one time?
    Mr. Bevins: We have looked at that possibility, but it is not possible within the framework of the Post Office Savings Bank. It would, of course require Post Office Giro and, as my hon. Friend has explained on more than one occasion, we do not think that a venture of that sort would be self-supporting. As regards frauds, there is no doubt that if the limit were to be raised frauds would increase. Our losses last year amounted to about £130,000.

    Cable Ships (Refitting)
    Commander Keransasked the Postmaster-General what is his policy regarding the refitting of cable ships; and how much work of this nature has been undertaken in the North-East in the last three years.
    The Assistant Postmaster-General (Mr. Ray Mawby): Cable ships have an annual refit, the work being undertaken by firms familiar with their specialised structure and equipment. Two of the four Post Office cable ships—"Monarch" and "Ariel"—have had their annual refits done in the North-East, in each of the last three years.
    Commander Kerans: While thanking my hon. Friend for that reply and appreciating the technical difficulties involved in the refitting of cable ships, would he not contemplate channelling more of this work to the North-East, especially to Grey (Tees) Limited in my constituency, where unemployment is still 6 per cent.? Will my hon. Friend look at the matter again?
    Mr. Mawby: We have, as I said, four cable ships and at the moment these ships each go to an area of relatively high unemployment. In fact, the other two ships, "Iris" and "Alert", are refitted on the River Clyde. I think that this is a fair balance for the four ships which we own.

    Post Office Savings Bank (Head Office Transfer)
    Mr. Boxasked the Postmaster-General whether he is satisfied that the removal of the head office of the Post Office Savings Bank to Glasgow will not mean that all the money deposited is deemed to be located in Scotland, and that if anyone subsequently dies leaving money in the Post Office Savings Bank and probate or letters of administration are obtained in England or Wales, the grant will not have to be revealed in the Scottish court before the money can be distributed; and whether he will make a statement.
    Mr. Bevins: I am advised that there is no reason why the removal of the principal administrative office of the Bank to Glasgow should have the result which my hon. Friend suggests. At present the Bank pays out the deposits of a deceased person to a personal representative producing a grant issued in any part of the United Kingdom without requiring any grant to be resealed and it will continue to do so after the move to Glasgow.
    Mr. Box: Is my right hon. Friend aware that his reply will be received with great relief by trustees, executors, and legal advisers throughout England, and not least by those Welsh investors who do not relish the thought of having their savings in the hands of a country like Scotland—[HON. MEMBERS: "Oh"]—which is so backward that it does not recognise the legal existence of Wales? Will he give the widest possible publicity to his reply so that investors may not be discouraged from increasing their savings in the future?
    Mr. Bevins: The answer to my hon. Friend is, generally speaking, yes, although I must confess that I have inordinate difficulty in understanding what this is all about.
    Mr. Randallasked the Postmaster-General if he will publish in the OFFICIAL REPORT the factors which conditioned his approach to, and his breakdown of, the merits and demerits of Glasgow, Liverpool and Tees-side as places put on the short list for the dispersal of the Post Office Savings Bank from London, as given to the staff side of the Post Office Departmental Whitley Council.
    Mr. Bevins: The main factors were: a sizeable location right away from London with high unemployment, an adequate supply of local staff, good housing and educational facilities, and adequate communications with other parts of the country.
    Mr. Randall: Would not the right hon. Gentleman agree that the operational requirements did favour Tees-side, and can he explain why it was that at the joint discussions with the staff side, at which the national factor was introduced, he completely ignored the views of the staff side? Does he not regard this as imperilling staff consultation, particularly in the field of Whitleyism, which has gone on for so many years without any great difficulties?
    Mr. Bevins: I agree, as I have said to the hon. Gentleman before, that Tees-side offered many advantages both to the staff and to the Bank, and I agree that Glasgow did have disadvantages in some respects, but the really decisive factor here was the high level of unemployment in Glasgow at 5·2 per cent. as compared with 3·9 per cent. on Tees-side, and the 5·2 per cent. represented a far greater number of people.
    Mr. Fernyhoughasked the Postmaster-General what further representations he has now received from interested parties about his decision to transfer the Post Office Savings Bank to Glasgow in preference to Tees-side.
    Mr. Bevins: I would refer the hon. Member to my Answer to the hon. Member for Middlesbrough, West (Dr. Bray) on 7th April. I have also had representations from hon. Members and others on behalf of certain local authorities which are disappointed with the choice of Glasgow, and also on behalf of a few individual members of the Savings Bank staff.
    Mr. Fernyhough: Does not the Postmaster-General think that it is very undesirable what has happened in this case should happen in the future? Is it not wrong that high hopes should be built up in a locality that a service of this kind will be stationed there and those high hopes should then be disappointed? Would he not agree that, in addition to a long list of reasons which he has given this afternoon for the Post Office

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    Savings Bank going to Glasgow in preference to Tees-side, there is one more outstanding reason, and that is that there are more marginal seats in Glasgow than there are on Tees-side?
    Mr. Bevins: It is, of course, perfectly understandable that there should be disappointment on Tees-side, and, indeed, in other parts of the country, but not at any time did I give any indication that I or my colleagues in the Government had come down in favour of Tees-side. I can certainly disabuse the hon. Gentleman's mind about the decision being a political one. If one thinks in terms of marginal seats, the Post Office Savings Bank would have gone to Liverpool.
    Mr. Baxter: Is the right hon. Gentleman aware that the people of Scotland, and particularly the people of Glasgow, are very well satisfied with his decision? May I on behalf of them congratulate him on having had the courage of his convictions and done something sensible and wise in Scotland?
    Mr. Fernyhoughasked the Postmaster-General what assessment he made of the cost of transferring the Post Office Savings Bank to Glasgow and to Tees-side respectively.
    Mr. Bevins: None, Sir. Any difference in the relative costs would not really be a material factor.

    Satellite Communications
    Mr. Masonasked the Postmaster-General if he will make a statement on the discussions that have taken place between his Department and the American Satellite Communication Corporation regarding the development of a global satellite communication system, specifying the British commitment in this proposed venture.
    Mr. Bevins: I assume that the hon. Member is referring to last week's discussions between representatives of the European, United States and Canadian Governments. This was an exchange of view on the many problems involved in the creation of a world system of satellite communications. Good progress has been made. We have as yet made no commitments, but if we can secure acceptance of conditions as indicated in
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    my reply of 26th February to the hon. Member, the United Kingdom would be willing to provide up to £15 millions towards the capital cost of a world system.
    Mr. Mason: Can the right hon. Gentleman inform the House what we have offered during the course of these discussions, other than facilities for ground stations; to what extent he thinks that British industry will benefit from entry into this venture; whether the Russian interest, which was shown last week, is really serious, and to what extent it may affect our interests?
    Mr. Bevins: The principles to which the United Kingdom has been working in this field art, first of all, to take a positive part in the design of the system when it comes, to share in its ownership, to play a full part in the management of the system, and finally, to have the opportunity, as the system is expanded, to provide satellites, launchers and any other equipment which may be necessary. As regards the Russians, they have not, as the hon. Gentleman knows, taken part in these recent discussions with the Americans. Frankly, I am not aware of their interest.
    Sir J. Eden: Can my right hon. Friend give an assurance to the House that, even assuming we have a successful agreement with the American Satellite Communication Corporation, in the subsequent phase of this development British industry will have a substantial part to play in this important development?
    Mr. Bevins: Yes. I think it is only fair to say that in the initial stages the system is bound to be largely of American construction, but we are determined that a way must be left open to British industry to supply material to the system as soon as it is able to do so.

    Postmen (Wages)
    Mr. Holtasked the Postmaster-General what would be the weekly extra cost to his Department of meeting the wage demands of the postmen over and above what he has already offered them; and what estimate he has made of the probable cost to the Post Office of the threatened one-day token strike and fortnight's ban on overtime.
    Mr. Bevins: The Union of Post Office Workers has made no specific claim on behalf of postmen, although they clearly hope for more than 4 per cent. this year. As to the second part of the Question, the effects of strike action are too unpredictable for me to estimate how much it would cost the Post Office. I am hoping anyway that such action can be avoided.
    Mr. Holtasked the Postmaster-General, in view of the rejection by the postmen of the terms of a solution to the dispute proposed by the Chancellor of the Exchequer, and bearing in mind the need to maintain the good labour relations in the Post Office service, if he will now agree to accept the postmen's request for an interim rise and an inquiry into their wage level in relation to other comparable occupations.
    Mr. Bevins: As the House knows, my right hon. Friend the Chancellor of the Exchequer and I made a further proposal to the union yesterday. We have discussed it with it this morning. We are very much hoping that the union will accept this proposal.
    Mr. Holt: Is the Postmaster-General aware that everyone will be relieved if the Government's initiative results in a peaceful settlement of this dispute? In that event, may I ask why the Government did not agree to this inquiry right at the beginning? Is the right hon. Gentleman aware that the Government have gained no credit from the way in which they have handled this dispute with an essentially peaceable body of men?
    Mr. Bevins: I do not think that the hon. Gentleman's appreciation of the situation is anything like accurate. I think that the House will agree with me that, certainly at this stage, it would be most unwise to add to what I have said.

    Bala Office, Merioneth
    Mr. T. W. Jonesasked the Postmaster-General whether he will install a stamp cancelling machine at Bala, Merioneth, Post Office.
    Mr. Mawby: No, Sir.
    Mr. Jones: While thanking the hon. Gentleman for that very exhaustive reply, may I ask him whether he will take into account that all prepaid mail
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    posted at Bala is sent to Corwen to be stamped, so that the figures which he has received from the local offices are incorrect?
    Mr. Mawby: Of course, the pre-paid mail obviously does not have to be dealt with by a cancelling machine because the cancellation has already been done. In fact, the amount of posted correspondence would not justify installing a machine in this case.
    Mr. T. W. Jonesasked the Postmaster-General whether he will upgrade the present post office of Bala, Merioneth, and give it Crown Office status.
    Mr. Mawby: No, Sir. The existing office is providing adequate service and we should not be justified in making this change.

    Special Stamp Issues (Opening of Forth Road Bridge)
    Sir T. Mooreasked the Postmaster-General if he will make a special stamp issue to mark the opening of the Forth Road Bridge later this year.
    Mr. Mawby: Yes, Sir. My right hon. Friend has decided that the opening of this bridge will constitute a current event of outstanding national importance fully warranting a special stamp issue. The denominations will be 3d. and 6d. The date of issue will be announced later.
    Sir T. Moore: While warmly thanking my hon. Friend for that welcome though, I admit, somewhat unexpected reply, may I ask whether he is aware that this decision will cause universal satisfaction throughout Scotland?
    Mr. W. Hamilton: Will the hon. Gentleman agree that the proceeds from these issues of stamps should go towards making the bridge toll-free?
    Mr. Mawby: There is one major consideration which would prevent that, and that is that the Post Office can do with the money.

  TELEPHONE SERVICE

    Telephone Calls
    Dr. Brayasked the Postmaster-General what proportion of dialled telephone calls fail to connect first time.
    Mr. Bevins: Excluding failures due to number engaged, no reply, or misdialling, the present average figure for local and trunk calls combined, is just over 3 per cent.
    Dr. Bray: Is the Minister aware that there is a widespread public feeling that this is perhaps higher than it should be? Will he take steps to obtain some international comparisons so that we can see how well we are doing in this respect?
    Mr. Bevins: I can tell the hon. Gentleman and the House that there has been a very substantial improvement during the last few months, and I am absolutely confident that this improvement will continue.
    Sir L. Ropner: How does my right hon. Friend account for the fact that on dialling Darlington 2811 this morning I got a quite different number in Newcastle?

    Telephone Exchanges (Dialling Facilities)
    Mr. Doughtyasked the Postmaster-General when the facilities at telephone exchanges where dialling from London is only possible to the local exchange will be extended so that the exchange and number can be dialled; and what are the exchanges in the South-Western area within 20 miles of London where the facilities are at present so limited.
    Mr. Mawby: The facilities will be extended progressively over the next few years as the exchanges concerned are converted from manual to automatic working. Most of the conversions will be completed by the end of 1966, and the remainder by 1970. I will, with permission, circulate in the OFFICIAL REPORT the names of the exchanges concerned in the South-West Telephone Area of London.
    Mr. Doughty: May we take it that all the conversions to dialling will be completed by 1970, irrespective of whether the exchanges are manual or partly manual and partly automatic?
    Mr. Mawby: Yes, that is our aim. Those exchanges which still have to be changed over are fairly new manual exchanges, but they will all be completed by 1970.
    The names of the exchanges are:

    Ashtead.

    Ewell.

    Bookham.

    Franklin.

    Burgh Heath

    Merstham.

    Downland.

    Molesey.

    Elmbridge.

    Redhill.

    Emberbrook.

    Sanderstead.

    Epsom.

    Wallington.

    Applications
    Sir M. Galpernasked the Postmaster-General how many applications for telephone installations were outstanding at the last convenient date; and the average waiting period in England and Wales and in Scotland.
    Mr. Mawby: Leaving aside orders under inquiry or being met, there were 44,000 applications outstanding in the United Kingdom on 31st March, 1964.
    The composition of the waiting list is constantly changing, and I am sorry that we cannot give a reliable average waiting time.
    Sir M. Galpern: I am sorry that the hon. Gentleman cannot state the relative waiting period as between Scotland and England and Wales, although I believe that the waiting period in Scotland is much longer. Can he indicate whether the Postmaster-General still adheres to his assurance that the backlog of orders for telephone installations will have been met by 1966?
    Mr. Mawby: That is our aim and I see no reason why we should not fulfil it. As to the waiting list, I know of no major difference between Scotland and England. The figure represents about 0·79 per cent. of the total number of working lines, but, as I have said, we hope to clear the whole lot by an early date.
    Sir H. Harrison: Would my hon. Friend not agree that this is a rather negative Question, since it does not show the number of installations which have been completed in recent years?
    Mr. Mawby: It has been a major problem that we have had to cater for ever-increasing demands for telephones and, at the same time, try to reduce the waiting lists. We have made terrific strides, taking into account the additional demand, which is still continuing.

    Subscribers' Accounts
    Sir M. Galpernasked the Postmaster-General how many telephone subscribers questioned the accuracy of their accounts during each of the years 1959, 1960, 1961, 1962 and 1963; and in how many cases the complaints were found to be justified in each of these years.
    Mr. Mawby: I am sorry the information is not available.
    Sir M. Galpern: Naturally, I am very much disappointed with the reply that the hon. Gentleman has given. On the basis of the number of complaints which I have received in my constituency, may I ask whether the hon. Gentleman agrees that complaints concerning accounts represent a high percentage of the complaints from telephone subscribers, who blame the system which is used in the exchanges for the recording of calls as being the prime cause of the discrepancy between what they claim to be the amounts incurred by them and the amount demanded by the Post Office?
    Mr. Mawby: The major difficulty is that most of the queries which are made concerning the accuracy of accounts are made by telephone and it would be difficult to keep a record of them. The question of deciding whether complaints are justifiable cannot be established as, very often, subscribers are given the benefit of the doubt in the interests of good relations. Obviously, the recording system is not perfect, but we hope that we can get a system which will accurately record calls as well as keep a check on people who consistently complain, so that we have an accurate record of the number of calls over a period.

    Kiosks
    Mr. Randallasked the Postmaster-General if the committee studying the economics of Post Office telephone kiosks has yet reported; and if he will make a statement.
    Mr. Mawby: The study to which my right hon. Friend referred in his reply to the hon. Member for Barnsley (Mr. Mason) on 18th November is being made in the ordinary course of Departmental work. We do not expect its full results to be available until later this year.
    Mr. Randall: I am much obliged to the hon. Gentleman, but could he give the assurance that the motive behind the study is not to reduce the number of telephone kiosks in the rural areas?
    Mr. Mawby: The motive of the study is to try to categorise kiosks properly so that we can know just exactly what the income from kiosks is compared with the social responsibilities which we have, but there is no basic intention of reducing the number of rural kiosks.

    East Dunbartonshire
    Mr. Benceasked the Postmaster-General how many applications for telephone installations are outstanding in Clydebank, Bearsden, Milngavie, Kirkintilloch and the new town of Cumbernau1d.
    Mr. Mawby: Leaving aside orders under inquiry or in course of being met, the numbers of applications outstanding, on 31st March, in the five places mentioned by the hon. Member were 1, 32, nil, 49 and 52.
    Mr. Bence: In thanking the hon. Gentleman for the letter which I received from him about the situation in Cumbernauld, may I point out that there is a very serious situation there? There are 49 applicants, and some have been waiting a very long time for their telephones. Furthermore, is he also aware of the difficulty about kiosks? Will he please speed up the process and get into contact with the New Town Development Corporation to see whether the difficulties with the contractors can be resolved?
    Mr. Mawby: As I explained to the hon. Gentleman, in this case we are installing a temporary exchange to try to overcome the immediate problems, and we shall certainly keep moving as fast as we can

  WIRELESS AND TELEVISION

    Colour Television
    Mr. Dudley Smithasked the Postmaster-General if he will now state the system to be adopted by Great Britain for a colour television service.
    Mr. Masonasked the Postmaster-General if he has completed his study of the Television Advisory Committee's Report on Colour Television; and if he will now make a statement on the colour system to be adopted and when it is likely to be introduced.
    Mr. Bevins: The Television Advisory Committee, which includes representatives of the B.B.C., I.T.A. and the radio industry, has recommended the introduction of a regular colour television service in 1967. It has also advised me that, in view of the desirability of avoiding a unilateral decision which might adversely affect the export of colour components to Europe and the easy exchange of colour programmes, a final decision on the system to be employed should not be taken until the C.C.I.R. meeting to be held in April, 1965, but that if that meeting fails to agree on a common system the United Kingdom should adopt the system of its choice.
    I have considered this advice in the knowledge that the B.B.C. and the radio industry now take the view that a colour service could not in any case begin to operate until the end of 1966 or the beginning of 1967 even if a decision were to be taken now. If the decision is not taken until April 1965, it will still be possible to begin a colour service early in 1967, and on this clear understanding, I have decided to accept the advice of the Television Advisory Committee.
    Mr. Smith: Is my right hon. Friend aware that while there may well be a case for waiting for a unified European system, nevertheless the announcement which he has just made will be received with keen disappointment by some of our leading manufacturers, who have for some time been geared to go ahead? Does not my right hon. Friend think that in this case there is a good reason for Britain showing the lead to the rest of Europe? Does not this also mean that colour television will be long delayed in starting in this country?
    Mr. Bevins: The trouble is that if this country were to take a unilateral decision at this point in time, as we could do if we thought it wise, we would be in danger of being out of step with all the nations of Western Europe, which undoubtedly would be damaging to the radio industry of this country. I should add that both the B.B.C. and the Indus-
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    try, having taken a realistic look at the problem, do not feel that we could get either the transmission equipment or the receivers into operation much earlier than the end of 1966.
    Mr. Mason: If we went ahead now with the development of N.T.S.C., which seems to be the colour system most favoured in this country, and the European countries went ahead later with either P.A.L. or S.E.C.A.M., exactly what would be the obstacles in our way? How would we be handicapped? Secondly, has the right hon. Gentleman any idea whether, when the Committee meets again in 1965, there will be any better prospect of success in getting European compatibility?
    Mr. Bevins: If we adopted, say, the American system now and the French, Germans and other Europeans adopt a different system in 12 months' time, the British radio industry would be under the handicap of not being able to export colour components to Europe and the B.B.C. and the I.T.A. would find it more difficult than otherwise would be the case to exchange programmes with European countries. I think that the prospect of getting agreement at next year's meeting is fairly good. I should like to emphasise that the Post Office pressed strongly for a decision at the meeting a couple of months ago.
    Sir R. Cary: May I ask my right hon. Friend whether the B.B.C. accepts his decision and whether he is saying that it will be technically impossible for the Corporation to initiate this service until 1967?
    Mr. Bevins: Yes. The B.B.C. and the I.T.A. are represented on the Television Advisory Committee and the report of this Committee was both unanimous and unequivocal.
    Dr. King: Is it not true that whatever decision the Postmaster-General takes today, neither the B.B.C. nor I.T.A. could mount colour television before 1967? Having said that, is it not important that the right hon. Gentleman makes his decision fairly quickly?
    Mr. Bevins: Yes. What the hon. Member has said in the opening part of his supplementary question is perfectly true, as it is in the second part also.
    Sir Ian Orr-Ewingasked the Postmaster-General what is his estimate of the increase in cost of a television licence which would be required to cover the cost of colour television broadcasts when they are approved.
    Mr. Bevins: An estimate in this form would be inappropriate. The B.B.C.'s finances are considered as a whole from time to time; and colour television is unlikely to start, as I have said, before 1967. Even then the cost will depend on the number of hours of colour television that can be mounted, both at the start, and progressively.
    Sir Ian Orr-Ewing: Would my right hon. Friend not agree that colour television services are likely to cost three times as much as the black and white system and that broadcasting costs will also be very high, and is it not a little unfair to elderly people, when the cost of the licence is already rather heavy, that they should have to bear the cost of colour television which they will never wish to have or be able to buy?
    Mr. Bevins: Well, no doubt there is something in what my hon. Friend says, but I think it is the wish of the House and the country that we should embark upon colour television at the right moment.
    Mr. Robert Cooke: Does not the information about costs bear out the fact that my right hon. Friend's decision for caution in this matter is right?
    Mr. Mason: Yes, but is the right hon. Gentleman aware, on the question of the licence, that having given the B.B.C. the right to go ahead and develop B.B.C.2 he now appears to be stiffing this development by severely restricting its broadcasting hours, and that this is really more or less a political expedient in order to avoid a licence increase? Excluding commercial advertising, is the right hon. Gentleman giving any consideration at all to financing the B.B.C. or broadcasting or television development without necessarily increasing the licence fees?
    Mr. Bevins: This Question refers to colour television. It has nothing at all to do with B.B.C. financing or B.B.C.2.

    Party Political Broadcasts
    Sir Ian Orr-Ewingasked the Postmaster-General if he will give a direction to the British Broadcasting Corporation under Section 14(4) of the Licence and Agreement to refrain from transmitting on sound party political broadcasts between the time signal and the regular time for news bulletins.
    Mr. Bevins: The arrangements for party political broadcasts are agreed between the leading political parties and the broadcasting authorities. The sound broadcasts my hon. Friend has in mind form part of these arrangements.
    Sir Ian Orr-Ewing: Would my right hon. Friend not agree that the newspapers and the broadcasting authorities did a wonderful job in drawing the nation's attention to the elections for the county councils and the Greater London Council? For everyone who believes in democracy likes to see a high poll. On the other hand, is he aware that when one switches on at seven o'clock to listen to the news it is slightly aggravating to have to listen to a party political broadcast by the Deputy Leader of the Opposition? Is not news bulletin timing more or less sacrosanct? Why should it be gerrymandered in this way?
    Mr. Bevins: A great deal depends upon one's politics, I suppose; but the position here is that in agreement with the B.B.C. and the I.T.A. the major political parties fix the timing of these broadcasts, and my responsibility is limited simply to requiring the broadcasting authorities to refrain from going beyond those agreed arrangements.

    Scotland
    Mr. Benceasked the Postmaster-General when a third television programme will be made available to Scottish viewers.
    Mr. Bevins: The B.B.C. tells me that it hopes to start transmitting its new television programme in Central Scotland by about the end of next year.
    Mr. Bence: While I am pleased to hear that the B.B.C., and not the advertising companies, is to transmit the third programme, may I ask the right hon. Gentleman whether he can give an

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    assurance that when the third programme is introduced into Scotland, the whole of Scotland will be able to receive television programmes just as well as the central belt can?
    Mr. Bevins: The B.B.C. tells me that it hopes to open a high-powered u.h.f. station in North-East Scotland towards the end of 1966, but it is not quite ready with its plans for other Scottish stations. As soon as it is, I will let the hon. Gentleman know.

    Radio "Caroline"
    Mr. Liptonasked the Postmaster-General what action he has taken to dissuade advertisers from making use of Radio "Caroline"
    Mr. Bevins: On three occasions during the past two years I have invited the attention of the principal advertising associations to reports of plans to establish broadcasting stations on ships—not "Caroline" specifically—outside territorial waters and I have sought their co-operation in dissuading their members from supporting such ventures. The answers they have given me have been encouraging.
    Mr. Lipton: Is the right hon. Gentleman aware that doubts are being expressed about the truthfulness of the statement which he made in the House last week? [HON. MEMBERS: "Oh"] Wait a minute. Will the right hon. Gentleman state specifically which representative organisations of advertisers have given him an assurance that they will tell their members not to broadcast on Radio "Caroline", and will he also say on what date he received those assurances? Will he make it quite clear whether or not the Advertising Association, the Incorporated Society of British Advertisers Ltd. and the Institute of Practitioners in Advertising are among the associations which have given him the assurance which he claims they have given?
    Mr. Bevins: There are three advertising associations with which the Post Office has been in contact over this matter—the Advertising Association, the Incorporated Society of British Advertisers Ltd. and the Institute of Practitioners in Advertising. The third organisation has, at our request, on three occasions circulated its members ex-
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    pressing the Post Office point of view on advertising on pirate radio stations. I have no reason at all to suppose that any leading advertisers in this country will support that venture.
    Mr. B. Harrison: Will my right hon. Friend do nothing to deprive the people of East Anglia of the first decent radio programme they have had for a long time?
    Mr. Mason: Is the Postmaster-General now able to reveal to the House the steps that he intends to take to discourage the permanent establishment of these pirate radio ships around our shores?
    Mr. Bevins: We are still examining the possibilities of legislation and are making a technical examination of the possibilities of jamming, although I shall have to proceed cautiously there.
    Mr. Thorpe: Will the right hon. Gentleman use all his endeavours to see that no ex-Cabinet Ministers take time on this service to broadcast their views of their former colleagues or the methods by which they were sacked?
    Captain Litchfield: I understand that this vessel now has no flag or registration. What is the position regarding liability for seizure or other deterrent action on the high seas?
    Mr. Bevins: My understanding is that the Panamanian Government have withdrawn the ship's registration, which creates a number of very practical difficulties.
    Mr. Lipton: In view of the very unsatisfactory nature of the right hon. Gentleman's reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest possible opportunity.

  LOCAL GOVERNMENT

    Buildings of Architectural or Historic Interest
    Mr. Ridleyasked the Minister of Housing and Local Government and Minister for Welsh Affairs how many buildings in the rural districts of Herefordshire, Staffordshire, Warwickshire, Leicestershire and Shropshire have

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    been provisionally listed, and how many have been statutorily listed, as of special architectural or historic interest.
    The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield): I will, with permission, circulate the figures in the OFFICIAL REPORT.
    Following are the figures:

    Rural districts in

    Numbers of buildings

    On Provisional lists

    On statutory lists

    Herefordshire

    1,121

    743

    Staffordshire

    1,029

    493

    Warwickshire

    1,397

    642

    Leicestershire

    791

    283

    Shropshire

    859

    763

    Green Belt
    Mrs. Butlerasked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will send a circular to local planning authorities encouraging them to follow a policy of improving and enhancing land of negligible amenity value in green belts.
    The Minister of Housing and Local Government and Minister for Welsh Affairs (Sir Keith Joseph): There is no need for further guidance. The point was made in the booklet "The Green Belts", which was sent to local authorities in 1962.
    Mrs. Butler: Does not the right hon. Gentleman realise that the Government's green belt policy is directly leading to deterioration of green belt land because owners of scruffy land can make a good case for its being used for building, with a consequent phenomenal increase in value? Is he aware that one Middlesex farmer is using his land for car-breaking and that such practices will increase unless the right hon. Gentleman takes positive action?
    Sir K. Joseph: I have no reason to think that the example quoted by the hon. Lady is a normal practice leading to planning approval. There is specific guidance on page 28 of the booklet I mentioned encouraging local authorities in the way she desires.
    Mr. Doughty: Is my right hon. Friend aware that the booklet appears to be used as a ground for saying that the green belt must be reduced? Will he give a further assurance that nothing, of the sort is meant by it?
    Sir K. Joseph: My hon. and learned Friend is thinking of another booklet, about which he has a Question down later.

    Public Inquiry, Cheltenham
    Mr. Ridleyasked the Minister of Housing and Local Government and Minister for Welsh Affairs when he expects to make his decision on the report of his inspector on the public inquiry into the future status of Cheltenham.
    Sir K. Joseph: The public local inquiry into objections to the Local Government Commission's proposals for Cheltenham was held only last month and I have not yet received the inspector's report. I cannot yet say when I will be ready to take a decision.
    Mr. Ridley: Will my right hon. Friend at least assure us that when he receives the inspector's report he will read it himself?
    Sir K. Joseph: I do not think I need give any such assurance, even to my hon. Friend. I always read these reports.

    Sculthorpe Air Base, Norfolk
    Mr. Hiltonasked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will consider including the Sculthorpe Air Base, Norfolk, which will soon be vacated by the United States Air Force, in his proposals for new towns, in connection with his plans for the future of south-east England.
    Sir K. Joseph: I have asked the local planning authorities for their views on the proposals in the South-East Study, and I shall consider any suggestions that they put forward for expansion at places not named in the Study. I understand, however, that my right hon. Friend the Minister of Defence for the Royal Air Force has not yet reached any decision on the future use of the airfield at Sculthorpe.
    Mr. Hilton: Is the right hon. Gentleman aware that there are 600 civilians employed at the base while the number of farm workers in the area continues to decline and there is no alternative employment? Is he further aware that it is considered likely that this base, with houses, buildings and installations valued at about £80 million, could form the basis of a new town and bring much-needed new industry into the area? Will he give careful consideration, in consultation with his colleagues concerned, to this very valuable site?
    Sir K. Joseph: Subject to the decision of my right hon. Friend the Minister for Defence for the Royal Air Force, all these will be considerations for the local planning authority to take into account in the consultations I am having with them.

  HOUSING

    Flats (Sound Insulation)
    Mr. Gresham Cookeasked the Minister of Housing and Local Government and Minister for Welsh Affairs what action he is taking to improve standards of sound insulation in the construction of flat dwellings in the new housing programme; and to what extent these standards have been approved by the professional organisations concerned with sound insulation.
    Mr. Corfield: Sound insulation is one of the matters covered by the building regulations which my right hon. Friend the Minister of Public Building and Works will be making later this year. The various professional bodies concerned have been consulted.
    Mr. Gresham Cooke: As these new building regulations are to be published, will my hon. Friend give special attention to the question of noise in modern flats? Is he aware that there is a great deal of disquiet about the flimsy nature of these modern buildings, with noise issuing from one room to another? Will he also take into account the question of blocks of flats built near airports?
    Mr. Corfield: I am satisfied that the proposals will be very important and practical advances on the present position.

  NUCLEAR POWER PROGRAMME
  Mr. Albuasked the Prime Minister when he will announce the conclusions of the Government on the future of the Nuclear Power Programme, arising out of their studies of the Report of the Powell Committee.
  Mr. Wingfield Digbyasked the Prime Minister whether he will now make a statement on the Powell Report.
  The Prime Minister (Sir Alec Douglas-Home): A White Paper will be published tomorrow.
  Mr. Albu: Is there any reason why the right hon. Gentleman should not give today the information for which we have been waiting several months? How much longer is the industry to be kept waiting in a state of insecurity about its future? Will he confirm the now very active reports that an American company is willing to supply nuclear power stations to this country at a price equivalent to that of a conventional power station?
  The Prime Minister: It would be as well if the hon. Gentleman, and all of us, had a look at the White Paper tomorrow. There is no desire to slow things down, but the conclusion of the White Paper and the Committee is that there are a number of advanced reactors which are an improvement on anything we have had before. Before a final choice is made a little more experimentation is needed.

  NUCLEAR WEAPONS
  Mr. P. Noel-Bakerasked the Prime Minister on what occasions and in what form Mr. Khrushchev has given him information regarding the attitude of the Soviet Government in regard to the abandonment of its forward programme for the construction of nuclear weapons and delivery vehicles if the Western Governments agree to a programme of early and general disarmament.
  The Prime Minister: I have received no information of this kind from Mr. Khrushchev.
  Mr. Noel-Baker: What did the right hon. Gentleman mean when he said to the right hon. Member for Orkney and Shetland (Mr. Grimond):
  "…if the right hon. Gentleman really thinks that the Russians will give up their nuclear programme, he had better go and talk to Mr. Khrushchev."—[OFFICIAL REPORT, 17th March, 1964; Vol. 691, c. 1181.]
  Has not Mr. Khrushchev been proposing all-round nuclear disarmament under control for the last ten years?
  The Prime Minister: The Russian Government put forward certain proposals for a total disarmament scheme. Every item of those proposals and every stage would have to be completed, according to them, before we could even begin. This has really been one of the troubles.
  Mr. Noel-Baker: In his reply to the right hon. Member for Orkney and Shetland, was the Prime Minister using Mr. Khrushchev as an excuse for going on with our nuclear Polaris programme for the next ten years? If not, will he now say that we will give it up if President Johnson's "freeze" is applied?
  The Prime Minister: No, Sir. What I have said time and time again is that I want to see an international disarmament scheme. When we see it, we can decide what to do with our own nuclear weapons, but we must see it before we and the Americans and, indeed, the Russians can decide. The best place to do that is at the Geneva Conference.
  Sir C. Osborne: On the question of general disarmament, has my right hon. Friend received any communications from Moscow indicating whether the attacks by China on the Soviet Union will affect the Soviet position generally on disarmament and, understandably, make it impossible for the Russians to go on with it?
  The Prime Minister: I have before now called attention to the fact that I think that the Chinese attitude towards the Soviet Union is one of the calculations in the minds of the Russians in considering how far they can take disarmament.
  Mr. Grimond: The right hon. Gentleman has indicated to the right hon. Member for Derby, South (Mr. P. Noel-Baker) that there are certain unsatisfactory
  232
  features about the Russian proposals to date. Can he now say whether Her Majesty's Government have made counter-suggestions to the Russians and how the matter stands today?
  The Prime Minister: We have put forward a plan in great detail. One of the difficulties is that stage one of the Russian plan contains so much, including the abandonment of all bases—which would mean, for instance, that no missiles could be situated in the N.A.T.O. area except the United States. This is one of the problems we have to get over.
  Mr. Noel-Baker: In his last answer to me, was the Prime Minister indicating that he was withdrawing the statement by the Minister of Defence that in all circumstances we should go on with our Polaris programme, whatever else might happen?
  The Prime Minister: Certainly we should go on with our Polaris programme; that is so. We shall not arrive at an international disarmament scheme in the foreseeable future.

  CROWN PRIVILEGE
  Mr. D. Footasked the Prime Minister whether Her Majesty's Government have now considered the implications of the judgments in the Court of Appeal in the case of Merricks and Another v. Nott-Bower and Others; and whether he will now introduce legislation to amend the law regarding claims for Crown privilege.
  The Prime Minister: The law and practice governing the exclusion of evidence in judicial proceedings in the public interest were reviewed in 1956, when the Government came to the conclusion that no amending legislation was necessary. The judgments in the case mentioned in the hon. and learned Member's Question have been carefully studied, but they raise no new issues that were not fully considered in 1956 and the Government remain of the view that there is no need for legislation on this topic.
  Mr. Foot: Does not the right hon. Gentleman appreciate the view that was expressed by all three Lords Justices in the Court of Appeal, namely, that information vital to the proper administration of justice was being withheld not

  233
  because the national security was involved, but simply for the convenience of the Department? In those circumstances, will not the right hon. Gentleman reconsider the proposal which has been made from time to time, not only by judges but by the Bar Council, to bring the law in England into line with the law in Scotland?
  The Prime Minister: The rule under which the Government operates is the rule laid down by the courts themselves in a decision—as the hon. and learned Gentleman no doubt knows—in the House of Lords by Lord Simon in 1942; so that we are operating under a judgment of the courts. The practice in Scotland is not really very different—the practice—from that in England. It is perfectly true that Scottish judges have the right to ask for documents. In fact, they have done so only twice in a hundred years.

  SHIPS (NUCLEAR PROPULSION)
  Dr. Dickson Mabonasked the Prime Minister whether he will authorise the construction of a nuclear-powered fleet replenishment tanker or other naval surface vessel in a shipyard in the United Kingdom.
  The Prime Minister: I would refer the hon. Member to the replies I gave to Questions on this subject on 9th April.
  Dr. Mabon: Is the Prime Minister aware that not a year ago his predecessor gave a promise which still remains unfulfilled? Is he aware that the Government have spent eight years in committee on this subject and that in the interval four of our rivals have decided on the system which they will use in these ships? Can he give some assurance that the Government will come to a definite decision by Whitsun?
  The Prime Minister: I should not like to put an actual time limit on this. We shall come to a decision as quickly as possible. This is another situation in which there are various reactors available and the question is to decide between them. I do not know which are the countries the hon. Member referred to, but at least one, Japan, has not yet taken a decision.
  Commander Courtney: Can my right hon. Friend assure the House that this important matter will not be delayed by reason of the reluctance of any Department?
  The Prime Minister: No, Sir. We shall not have any unnecessary delay. We shall take a decision as soon as possible. But I want the decision, when taken, to be the right one.
  Mr. Awbery rose—
  Hon. Members: Order.
  Mr. SpeakerThe hon. Gentleman must remove his headdress.
  Mr. Awbery: I was quite aware, Mr. Speaker, that it was necessary for me to raise my hat when I addressed you. I was waiting for you to call me before I raised my hat.
  I now wish to ask the Prime Minister whether he is aware that four years ago hon. Members of this House were invited to an exhibition in Whitehall of nuclear-powered marine engines? Is he aware that we were then promised that within two years we should have nuclear-powered ships at sea? May I ask why this long delay has taken place?
  The Prime Minister: The long delay has taken place because there are a number of generators and ways of generating this power which had to be considered very carefully before one could be put into a ship. That is the reason why there has been a delay—because we wanted to get the answer right.

  GOVERNMENT ANNOUNCEMENTS
  Mr. Pavittasked the Prime Minister by what criteria he judges whether announcements of Government policy should be given to the House of Commons in the first instance, before being released either to the Press or via television.
  The Prime Minister: I would refer the hon. Member to the reply I gave to the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) on 12th December.
  Mr. Pavitt: Would it not be more consistent with the dignity and prestige of the House of Commons had the right hon. Gentleman made his announcement about a General Election in this place? Would not it have been helpful to the Prime Minister in his endeavours to become a good House of Commons man had he taken that action?
  The Prime Minister: No, Sir. I did my best and consulted all the precedents there were. I think that I took the right decision.
  Mr. Ridley: Is not it up to the Leader of the House to make available some day when we may hear what is the Opposition policy for a change?

  SCOTLAND
  Mr. Hector Hughesasked the Prime Minister if he will take steps to stop the drift of trade, industry, commerce, employment and population south from Scotland by appointing a Minister whose sole task will be to deal with and solve this problem.
  The Prime Minister: No, Sir. I have the greatest confidence in my right hon. Friends the Secretary of State for Industry, Trade and Regional Development and the Secretary of State for Scotland, who are collaborating closely in the discharge of this task.
  Mr. Hughes: Does not the Prime Minister realise that Government policy has long suffered from the view that the north-east of Britain ends at the River Tweed; that the north-east of Scotland does not exist and that the Ministers he has mentioned do not rectify that view? Will he therefore appoint a Minister whose sole duty will be to look after trade, commerce and employment in the north-east of Scotland?
  The Prime Minister: I think I said to the hon. and learned Gentleman the other day that we are having a survey made of the Borders, of North-East Scotland and of the Highlands. We are already pursuing our regional policy so far as Central Scotland is concerned, and I do not think he can say that we have neglected matters north of the Tweed.

  COURTS OF INQUIRY (REPORTS)
  Mr. M. Footasked the Prime Minister whether he will appoint an inquiry to consider the proper timing of the publication of reports of courts of inquiry set up by various Government Departments.
  The Prime Minister: No, Sir. I do not think an inquiry is necessary.
  Mr. Foot: The Prime Minister says he does not think that an inquiry is necessary. Can he suggest any reason, other than that of the political convenience of the Government, why a recent report of a court of inquiry into busmen's wages which the Government received at the end of February is not yet published?
  The Prime Minister: Yes, I can give a perfectly good reason. That report was signed on the evening of Friday 28th February, but the secretary, at the request of the committee, had to check and rearrange statistical tables and charts and prepare a corrected copy. This was not at the request of the Government but at the request of the committee. There were twenty statistical tables of great complexity which had to be reprinted. If the hon. Member wishes to know, the report will be in his hands tomorrow.
  Mr. Foot: Is it not very apparent from the fact that the Prime Minister had available the details about this report—out of all the reports which might have been discussed—that he and his Government have very guilty consciences about it? Does he really mean to tell the House that it took more than six weeks for these statistical tables to be prepared? Would not it have been perfectly possible for the Government to have produced this report last week? Seeing that the court of inquiry did recommend a considerable increase in the wages of busmen, might that not have had a beneficial effect on the in industrial situation?
  The Prime Minister: I had no reason whatever to delay this report. In fact, for the information of the hon. Member, I may say that we gave it priority procedure. It was purely a matter of reprinting the tables, which were extremely technical.

  MEMBERS' AND MINISTERS' SALARIES
  Mr. Shinwellasked the Prime Minister when the Report by the Committee on Members of Parliament and Ministers' remuneration will be presented to the Government.
  The Prime Minister: The Committee has been asked to report as soon as possible after the General Election, as I indicated in my statement to the House on 19th December.
  Mr. Shinwell: Was not that decision taken before the right hon. Gentleman decided to defer the General Election for another six months? Has not he a responsibility on his shoulders, in view of that decision? Does not he consider that there ought to be an interim report? Can he explain why it is that high-ranking officials have a greater increase in their already over-inflated salaries, and the chairmen of nationalised boards have actually had increases of £2,500 a year, which is far in excess of the salaries and expenses paid to Members of Parliament and Ministers also? Does not he consider that in the circumstances there should be an interim report, and perhaps an interim arrangement to provide for at least a 3 percent. increase since the granting of the last increase to Members of Parliament?
  The Prime Minister: I think the matters the right hon. Member has raised in the last part of his question are very relevant matters. No doubt they will be considered by the Committee when it makes its recommendation. The proposal we put forward, with agreement on both sides of the House, was that this should be decided after the General Election. There was no question then of delaying this decision because of the date, because all parties felt it was undesirable that these things should be thrown backwards and forwards across the Floor of the House before a General Election took place.
  Mr. H. Wilson: But other undesirable things have happened since that time. When the statement was made by the right hon. Gentleman with, as he said, the agreement of all parties, no one imagined—of all I am sure, the right hon. Gentleman—that the election was to be deferred a further six months. Therefore, in view—[Interruption.] The
  238
  bravery of hon. Members opposite is not matched in the country by their noise in this House. Would the right hon. Gentleman, without commitment, at any rate agree to some further discussions in the light of the situation arising since last Thursday?
  The Prime Minister: I am always willing, as the right hon. Member knows, to talk about these matters with him, but I hope we shall not vary our decisions. If the right hon. Member had banked everything on 19th March and then 17th June, it is not really my fault.
  Mr. Shinwell: Would not the Prime Minister, in fairness to hon. Members and also to Ministers of the Crown, give this matter further consideration and, if he cares to, enable hon. Members to decide on a free vote of the House whether there ought to be some new arrangement to provide at any rate some increase in the salaries and emoluments of all concerned?
  The Prime Minister: I quite agree—and I was very much impressed by what the right hon. Member told me when we had discussions about this matter before—that there are very hard cases in this House and there is a case for an increase in salary. That I accept, but I think the best chance of getting it is to do this after a General Election, not before.

BALLOT FOR NOTICES OF MOTIONS
  Juvenile Delinquency and Hooliganism
  Mr. Gurden: I beg to give notice that on Monday, 27th April, I shall call attention to the measures to combat juvenile delinquency and hooliganism, and move a Resolution.
  Housing for the Elderly
  Mr. Hocking: I beg to give notice that on Monday, 27th April, I shall call attention to the provision of housing for the elderly, particularly in redevelopment areas, and move a Resolution.
  Government Reorganisation in Wales
  Sir K. Thompson: I beg to give notice that on Monday, 27th April, I shall call attention to Government reorganisation in Wales, and move a Resolution.
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee.
  [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

BUDGET STATEMENT
3.35 p.m.
The Chancellor of the Exchequer (Mr. Reginald Maudling): I described the theme of last year's Budget as expansion without inflation, expansion at a rate that can be sustained, and I said that its purpose was to do the Government's part in achieving the 4 percent. growth rate that we had already accepted as our target in the National Economic Development Council. This year I have the same theme and the same purpose.
The economy has developed in the last 12 months much as I then anticipated. Although last year's Budget was described as timid and cautious, it has been followed by an expansion at the annual rate of at least 5 percent. in total production and a fall of over 150,000 in unemployment. Trade is buoyant; business confidence is high; investment in industry is gathering pace. There is no room for doubt about the vigour and scale of expansion.
The task this year is to ensure that this expansion continues at a rate that can be sustained without inflation. We have been eating into the reserve of capacity and, in the process, we have achieved the rate of growth to which I have just referred. Before 1964 is out, this reserve will have been brought fully into use and we must, therefore, aim, in the course of this year, to set the economy on the rate of expansion which can be maintained through the regular growth of productive capacity.
As the Progress Report of the National Economic Development Council said:
"Output cannot continue to increase indefinitely at the present high rate since this depends to a considerable extent on the bringing into use of under-employed resources and is more than the average rate required to achieve the growth programme during the rest of the period to 1966".
In other words, the purpose of this Budget is to achieve a smooth transition from the recent exceptionally rapid rate
240
of growth to the long-term growth rate of 4 per cent.
This, then, will be my main theme. Before I turn to it I want to repeat the procedure I adopted last year, which proved convenient to the Committee, by dealing, first, with a number of incidental matters, including certain tax changes which must be dealt with now, but which are extraneous to the main economic argument.

BUDGET STATEMENT
  MINOR AND INCIDENTAL ITEMS
  There are three changes to be made this year which have already been foreshadowed.
  MINOR AND INCIDENTAL ITEMS

    ABOLITION OF EXCISE PREFERENCE FOR INDIGENOUS OILS
    First, we have agreed, as part of the obligations to our partners in the European Free Trade Association, to abolish the present arrangements by which a lower duty is charged on indigenous light oils than on similar imported oils. Consequently, the House was informed on 26th March, 1962, that the Government intended to withdraw this preference not later than 1964.
    I propose, therefore, to level up the duty which at present is 1s. 6d. a gallon on indigenous light oils, to the 2s. 9d. rate applicable to imports from E.F.T.A. and other countries. This change will take effect from 1st January next. It will bring in an additional revenue of £1¾ million in this financial year and £7½, million in a full year.

    E.F.T.A. IMPORT DUTIES
    By the abolition of the Excise preference on light oils we have fulfilled the most important outstanding obligation under the E.F.T.A. Convention, but there are other Customs duties which still contain a very small margin of protection and which must, therefore, be dealt with by the end of this year. I therefore propose to complete the process begun in 1962. I will not weary the Committee by reciting the new rates at length—they are set out in the Financial Statement. The revenue cost of these reductions is negligible.

    TELEVISION ADVERTISEMENT DUTY
    Thirdly, the Finance Bill will provide for the repeal of the Television

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    Advertisement Duty at midnight of 29th July, that is, on the eve of the introduction of the additional rental payments to be made by the independent television programme contractors under Section 7 of the Television Act, 1963, as has been announced. These changes will result in a net increase in revenue of £4 million this year, and £7 million in a full year.

    INDUSTRIAL OILS RELIEF
    Next, the Committee will recall that last year I acknowledged the strong case for giving relief from the hydrocarbon oil duty in respect of light oils used as raw materials, as solvents or for similar purposes, in industrial processes. As a result of subsequent discussions between the Customs and Excise Department and the industries concerned, a scheme for administering this relief has now been drawn up which can be put into effect from 1st September.
    This scheme is being extended to cover also heavy oils used as ingredients in the manufacture of other articles. The scheme is expected to give relief from duty to the extent of approximately £10 million in a full year; the cost this year should not exceed £5½ million. It will represent a useful reduction in costs for a number of industries using oil in the manufacture of their products.

    RELIEF FOR LIGHT OILS BURNT IN FURNACES
    I propose, also from the same date, to give some further assistance to industry in an experimental field concerned with the use of oils as fuel in industrial furnaces. Recent technical developments suggest that a certain light petroleum distillate, akin to motor spirit, could be used as a specialised industrial fuel in large furnaces such as those operated in steel works. To encourage the technical research necessary to explore the potentialities of this fuel, and to see whether it can contribute to the efficiency and modernisation of heavy industries, I propose that on light distillate used in this manner the duty should be reduced from 2s. 9d. per gallon to the level applying to fuel oils. The present rate of duty virtually inhibits the use of light distillate for this
    242
    purpose and the reduction in duty can, therefore, be made at negligible cost to the Exchequer.

    DUTY-FREE TOBACCO AND SPIRITS FOR SALE ON SHIPS AND AIRCRAFT
    I propose to amend the Customs and Excise Act, 1952, to enable the Customs to permit reasonable quantities of duty-free stores for sale on board ships and aircraft as well as for use. The quantity at present permitted has to be restricted to that appropriate for consumption of the voyage or flight, and this is sometimes less than what passengers would like to buy and take with them. In this respect, ships and aircraft operating from the United Kingdom have often been at a disadvantage against their competitor: on the same routes. My proposals Mill remedy this.

    SUGAR IN IMPORTED AND EXPORTED FOODSTUFFS
    I come to a proposal about the sugar duties. I also propose to include in the Finance Bill a clause changing the present arrangements for distribution payments on imports of foodstuffs containing sugar, and he reclaiming of distribution payments on exports of these goods. The present arrangements are operating to discourage exports and, at the same time, give an unnecessary subsidy to imports.
    The provisions of the Sugar Act, 1956, secure that exporters of sugar composites pay the world price for the refined sugar incorporated in their products. So long as the world price was below the internal price, this arrangement assisted exporters to offer competitive prices; but when, as recently, the world price is higher than the internal price, it has had the reverse effect.
    I therefore propose to include a Clause enabling the Minister of Agriculture to determine that distribution payments on sugar used in the production of composites for export should not be reclaimed. In simple language, the effect of this is to live the export manufacturer his refined sugar at the internal price when this is below the world price. This is, generally speaking, the situation in the countries with which our manufacturers have to compete. At the same time, I would propose to enable the Minister, if he thinks it appropriate, to suspend distribution payments on imported composites.

    MUTUAL TRADING
    I now turn to measures in the field of direct taxation.
    First, I propose that surpluses derived by companies from mutual trading should be taxed. This was intended to be the effect of a Section in the Finance Act, 1933, which was found by the courts to have, in part, missed its aim. The Royal Commission under Lord Radcliffe thought that the original intention should be restored. The matter is of greater importance now than it was when the Royal Commission reported because a recent legal decision has opened up the possibilities of abusing the present position for purposes of tax avoidance and this is already being exploited.
    I estimate the yield from this proposal at about £5 million in a full year and £3 million this year. The position of the ordinary co-operative society, which has been liable to tax since 1933, will not be affected. More important than the immediate yield is the safeguarding of the revenue against future avoidance.

    LEASES AT ARTIFICIAL RENTS
    The second measure relates to a new and serious form of tax avoidance, involving the use of leasing devices. One device is for a trader who owns business premises to lease them for a long period to a dealing concern in consideration of a premium which is not taxable, and to take a lease back from the dealer. In the first few years of the lease-back he pays excessive rent sufficient to recoup the dealer for the premium. The rent is deductible by the trader for tax purposes but, although the rent constitutes a trading receipt of the dealer, he is able to set against it the countervailing diminution in value of the lease, so that little tax is payable. The revenue suffers a loss. The lease can be determined prematurely and the device repeated with the same property.
    Another device is for new plant to be leased to a trader with rent loaded into the early years sufficient to cover the capital cost of the plant. The rent for the later years of the lease is trifling, so that when the high rents have been paid and allowed for tax purposes the trader
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    is in possession of the right to use the plant for the rest of the lease at little cost. He can sell this right for a nontaxable capital sum; or if the sale is to a dealer can carry out a lease-back transaction similar to that which I have described for buildings.
    These schemes are being promoted by people seeking to induce traders to adopt them, and the potential loss of revenue is very great. The countermeasures I shall bring forward in the Finance Bill will vary with different types of transaction. They will be designed to stop a profit being made out of tax by avoidance schemes, but will not penalise normal leasing arrangements. They will operate as regards transactions entered into after today.

    MINOR DIRECT TAX RELIEFS
    Next in these matters, which I referred to as being extraneous to the main theme, but right to deal with at this stage, I come to two relieving provisions that have been put forward as desirable reforms by representatives of industry and commerce.
    The first concerns cases where a company transfers part of its business to an associated company and, under existing law, two assessments to Income Tax may be made for a period after the change in respect of the profits of the transferred part. I propose to remedy this anomaly by providing, in effect, that the two parts of the original business should be treated as separate businesses, each continuing to be chargeable on the normal preceding year basis despite the change. The complaints which we have had of double assessment will thus be removed.
    The second provision represents a small modification of the rules governing relief for double taxation. It will secure that a United Kingdom company which controls 25 per cent. or more of the voting power in an overseas company from which it receives dividends will be able to claim unilateral double tax relief in respect of the tax on the profits out of which the dividend came. I shall make it possible for it to do this without—as at present—having to show that its holding in the overseas company was the maximum permitted by the relevant overseas law or practice.

    STAMP DUTY ON CONTRACTS OF EMPLOYMENT
    I have one small Stamp Duty proposal. Under the Contracts of Employment Act, 1963, which comes into effect in July, an employer is required to give each of his employees a written statement of the main terms of his employment, and I am advised that in certain circumstances the statement would be liable to Stamp Duty as an agreement. The duty would only be 6d., but I do not think that these statements should be liable to any duty. I propose, therefore, that all employment agreements should be exempted from Stamp Duty.
    NATIONAL DEBT MATTERS
    I intend to include provision in the Finance Bill for two small National Debt matters: first, for payments to be made from the Consolidated Fund to Trustee Savings Banks for the management expenses of their Government stock departments; and, secondly, to allow certain provisions of existing National Debt legislation to be applied to United Kingdom Government stocks held on the Bank of Ireland's Register in Dublin.

    INVALID VEHICLES
    My final proposal in this field of minor items relates to invalid vehicles. During the Finance Bill debates last year I listened with great interest to suggestions which had been made for additional relief from vehicle Excise duty of vehicles used by invalids.
    I have since considered this question and come to the conclusion that arrangements could be made to issue exempt vehicle Excise licences to invalids for vehicles which have been adapted by the Health Departments, but which do not qualify for exemption under the law as it stands. The Finance Bill will contain a provision to give effect to this proposal, and I feel sure that the Committee generally will welcome it.

  BETTING
  I come now to a subject which has aroused a good deal of discussion: betting and gaming. The Committee will have seen the information published earlier this year as a result of the Customs' inquiry into gaming. I think that
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  the whole picture is now a good deal clearer. What does emerge is that gambling as a source of taxation is nothing like as fruitful as it is commonly supposed to be. The total turnover on betting and gaming is, of course, many hundreds of millions of pounds; no one knows exactly how many.
  But this is not the potential field of taxation. The field is to be measured not by the gross turnover, but by what is quite a different thing, the net amount actually spent by the gambling public, which is in the region of £100 million to £150 million a year. We are already drawing in taxation from certain forms of betting, that is, the football pools and dog race courses, about £33 million, which is already a fairly high percentage of the total spent on gambling.
  I have considered at length the possibility of a tax on betting generally. The most satisfactory way of covering those kinds of betting at present untaxed would appear to be a tax on stakes which at, say, 21½ per cent., or 6d. in the £ of all money staked, should, in a full year, yield about £10 or £12 million.
  But the difficulties are formidable. There is no doubt that the opportunities for evasion would be very considerable, and I share the concern of those who fear that the effect might be to drive betting once again into illegal channels. I have, moreover, seen reports of the difficulties which the Horserace Betting Levy Board say that it is encountering in raising its levy. For these reasons I conclude that the time is not yet ripe to introduce a general betting tax.
  There are, on the other hand, some changes that to my mind can and should be made. I pointed out to the Committee last year the unfairness of some features of the present system. The greater part of the current revenue from betting comes from the football pools. They claim, and, I think, with justice, that they are being subjected to competition of an unfair character from certain forms of coupon betting which are free from any taxation, while they, the pools, are paying a duty as high as 33 per cent. The fact is, moreover, that, as a result no doubt to a large extent of this competition, the revenue from football pools has declined sharply, and large sums for the Exchequer are now at risk.
  I have, therefore, decided to extend the scope of the Pool Betting Duty to cover other forms of coupon betting. The most common form of this, of course, is betting at fixed odds—usually high fixed odds—on football results, done through coupons which are almost indistinguishable from coupons used for the purposes of the football pools themselves.
  I also propose to close a loophole in the existing law through which some forms of pool betting are escaping the full incidence of the duty. The changes mean that I can reduce the duty, which will in future apply to both pool betting and other coupon betting, from 33 per cent. to 25 per cent.
  At the same time, I propose to deal with another anomaly, namely, the taxation of betting on greyhounds, which is at present unfairly heavy. I intend to do this by cutting the duty on the greyhound totalisators from 10 per cent. to 5 per cent. and correspondingly halving the bookmakers licence duties. In this case, also, there is clear evidence that the weight of duty has become penal.
  After making these changes, which will apply from 3rd August next, I should gain an additional £2½ million this year from the taxation of betting. The effect of the changes, therefore, will be to protect the important revenue at present drawn from football pools, to eliminate or reduce some serious anomalies, and to produce a modest additional benefit to the Exchequer. I consider that this represents the sum of what should be done this year in this particular field of taxation.
  The net effect of all the minor changes that I have mentioned, together with the betting tax changes, is to increase revenue receipts in 1964–65 by just under £6 million.

  TAX REFORM AND SIMPLIFICATION
  I turn now to two questions of tax reform to which I referred last year.
  First, the basis of company taxation. The Committee will recall that my predecessor, in his Budget speech of 1961, said that he intended to have the idea of a single corporation tax further examined. This examination was duly carried out, and in the following year
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  my right hon. and learned Friend said that a scheme had been framed which he had asked the Inland Revenue to discuss confidentially with outside technical experts. But, as I told the Committee last year, these discussions led to the advice from outside bodies that the schemes which had been considered for the amalgamation of Income Tax and Profits Tax on companies were not satisfactory.
  I then announced, last year, that the Inland Revenue was examining with these outside experts the possibility of placing the taxation of company profits for income tax on an accounts basis, as is already the case for profits tax. Discussions on this matter have now been completed and most of those who have discussed the matter with the Inland Revenue are, in principle, in favour of the scheme that has been devised. But they urged that there should be more time for consideration of the details and implications of the legislation that would be required than is normally available between publication of a Finance Bill and the Committee stage debates. Moreover, the cost to the Revenue of any such change would be heavy in the initial stages.
  I do not, therefore, propose legislation this year, but I shall publish a White Paper explaining the new scheme, accompanied with a draft of the main provisions that would be needed to bring it into effect. This course will enable fuller consideration to be given to the merits and complexities of the scheme.
  Last year, I referred to the suggestion that we should adopt a value-added tax on the continental model as a substitute for Purchase Tax or Profits Tax. I said that while I was not myself convinced by the arguments which had been put forward in support of this suggestion, there were many people who took a different view. I therefore decided to ask Mr. Gordon Richardson to conduct an inquiry into the practical effects of such a change. Mr. Richardson was assisted by Sir Donald MacDougall and Sir Henry Benson in this task, and, as the Committee knows, their Report was published on 11th March.
  I would like to take this opportunity to express my gratitude to Mr. Richardson and his colleagues for their comprehensive and carefully reasoned Report.

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  They have succeeded in clarifying the complex issues involved, and our thanks are certainly due to them.
  The conclusions that emerged from their inquiries and analysis are, first, that, in the circumstances in this country, the Purchase Tax is superior, as a method of taxation, to the value-added turnover tax, and that there is no advantage either to exports or to the economy generally in switching over from Purchase Tax to a value-added tax; and, secondly, that to replace the Profits Tax by a value-added turnover tax would on balance probably be harmful to the development of the economy. These conclusions seem to me to carry conviction.
  It is, as I have said, as a method of taxation that the Purchase Tax has advantages over the value-added tax. In reaching this conclusion we are not thereby making a judgment as to the scope of the Purchase Tax.
  The Richardson Report also throws considerable light on a problem of taxation policy that is widely discussed, namely, the possibility of extending the field at present covered by indirect taxation by including some goods now exempt from tax, and by including services. The difficulties involved are formidable. Goods that escape the tax man's net are usually permitted to do so by this Committee for pretty good reasons.
  Table 4, on page 32 of the Report, shows that of goods at present untaxed not less than four-fifths are food and fuel. In the field of services there are several large items such as postal services, rail transport or insurance which few people, I imagine, would regard as suitable objects for taxation.
  As the Report says:
  "Taxation of services would present special problems owing to their diverse range and to the large number of businesses in some of the service trades".
  Nevertheless, looking at the future trend of public expenditure and the pattern of consumer spending, I think that there is substance in the argument that at some time the basis of indirect taxation will have to be widened. But for the reasons I have given I do not regard it as a possibility for this year. We must continue to apply our minds to these
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  questions; but it would be misleading to suggest that there is any simple solution.

  REFORM OF THE EXCHEQUER ACCOUNTS
  The Committee will recall that last May we published a White Paper on the Reform of the Exchequer Accounts. This was intended as a basis for informed discussion rather than as a set of specific proposals for the revision of the accounts. Since then we have continued the study of this problem. This study has profited by the discussion stimulated by the White Paper and by the comments we have received.
  This is a complex and difficult problem. No analysis of the transactions of the Government can satisfy all the purposes for which figures are needed. I do not think that we are yet ready to make firm proposals for a revision of the Exchequer accounts. But it may be useful to carry forward a year the figures which we published in last year's White Paper, and I am considering the publication of a further White Paper which would do this and indicate the lines of our further thinking.

  EXCHEQUER OUT-TURN 1963–64
  I turn to the Exchequer out-turn for 1963–64, and the Exchequer prospects for 1964–55. The main details of the out-turn are shown in the first three tables of the Blue Paper.
  Total revenue last year was £6,890 million; that is, £51 million above the estimate. Expenditure above the line came out at £6,817 million, £112 million less than the Budget estimate. The result above the line was a surplus of £73 million compared with a forecast deficit of £90 million. Net payments below the line, at £551 million, were £46 million less than expected. Thus, the overall deficit was £478 million—209 million less than I forecast last year. In terms of demand on the economy the difference was much less. Departments were spending rather more than they received in Exchequer issues to the extent of about £20 million by being able to draw on their balances.
  Some of the shortfalls in lending below the line—£7 million in lending to the private sector and £47 million in lending to public corporations—were the result not of less investment than expected, but of a different way of financing it, while not all of the shortfall of £14 million in loans to overseas Governments meant reduced real demand on our economy.
  On the other side of the account much of the higher revenue was due to a circumstance which is unlikely to have had much effect on consumer spending: the yield of taxes on capital was up by £31 million because valuation for death duties, and so on, reflected high Stock Exchange prices. For these reasons, a substantial part of the divergence between the Exchequer out-turn and the forecast, though significant from the financial point of view, did not represent any reduction in the stimulus which it was intended to give to the economy.

  EXCHEQUER PROSPECTS, 1964–65
  I now turn to the Exchequer figures for the coming year on the basis of the present tax rates.
  On this basis, Inland Revenue duties are estimated at £4,035 million, and Customs and Excise duties at £2,860 million. Motor vehicle duties are expected to contribute £180 million, and other revenue £277 million. Total revenue, on the basis of existing taxation, is, therefore, estimated at £7,352 million, which represents an increase of £462 million over last year's receipts.
  On the expenditure side, Consolidated Fund services are expected to cost £839 million, an increase of £49 million on last year's estimate. Of this increase, £35 million represents the extra cost of servicing the National Debt and £15 million is the increase in Northern Ireland's share of the revenue.
  Total Supply expenditure, as published in the Estimates already presented, is estimated at £6,549 million. This is an increase of £410 million, or 6·7 per cent., over last year's Budget estimate. The details are set out in the Financial Secretary's Memorandum, which we are continuing to improve and to develop. The biggest absolute increase is that of £161
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  million in the Defence budget: this is equivalent to nearly 9 per cent., including something over 3 per cent. for higher pay and prices.
  The next biggest absolute increase is that of £93 million in non-specific grants to local authorities—the general grant, of which about 80 per cent. is for education, and the rate deficiency grants: the increase here is equivalent to about 10 per cent. of local authority rate income. The hospitals provision is up by £59 million, or about 11 per cent. The provision for universities and colleges of advanced technology is up by £34 million, or about 25 per cent.: the increase in the Vote for the universities alone is bigger than this entire Vote was 10 years ago. The Estimates for the roads are up by £32 million, or nearly 20 per cent.
  These are the biggest increases. On the other side there has been a reduction of £44 million for agricultural support, due to the strengthening of market prices, and the saving of £29 million on the grants to the British Railways Board.
  Total expenditure above the line in 1964–65 is estimated at £7,388 million. The estimate for total revenue being, as I have said, £7,352 million, there would be, on the basis of existing tax rates, a deficit of £36 million above the line. This compares with an estimated deficit of £90 million and a realised surplus of £73 million for last year.
  The figures I have just quoted do not include the cost of developments which have taken place since the Estimates for 1964–65 were framed. First, the results of the Agricultural Price Review, which were announced on 18th March, will add about £7 million net to the cost of agricultural support by the Exchequer in 1964–65, and £4 million to the cost of welfare and school milk; and there will be additional expenditure of about £4 million on the hill sheep subsidy.
  Secondly, agreements on Civil Service pay reached on the Civil Service National Whitley Council in February and March will cost an additional £17 million or so this year.
  Thirdly, approximately £7 million will be needed to implement the salary recommendations of the National Incomes Commission for academic staff in universities and the colleges of advanced technology.
  Fourthly, there will be additional expenditure in 1964–65 on the fifth Polaris submarine, though the amount cannot be precisely estimated at this stage.
  These additional items of expenditure must all be borne in mind. So, too, must the possibility that there may be further unforeseen additions to expenditure, as well as savings, during the year. Any necessary Supplementary Estimates will be presented to the House in due course.
  The Estimates for receipts and payments below the line have been published in the recent White Paper—Cmnd. 2295. Net payments are expected to be £858 million, an increase of £307 million on last year's out-turn.
  Here, I must call attention to a major change from last year. This arises from the new arrangements for lending to local authorities under the recent Public Works Loans Act. The effect on the Budget estimates as presented is to add about £165 million to the below the line deficit. As I have said, this is estimated for the coming year at £858 million; but on last year's basis it would have been roughly £700 million. This transfer of local authority borrowing from the market to the Exchequer does not affect the economy or the economic judgment upon which tax changes are based, as the addition to Exchequer borrowing is counterbalanced by an equal reduction in local authority calls on the market.
  The effect of all this is that, at present tax rates, the prospective overall deficit, or net borrowing requirement, including the £165 million additional borrowing on behalf of the local authorities, would be £894 million. Those are the figures for last year and the estimates and revenue and expenditure for the coming year which set the framework for the main part of my Budget statement.

  MAIN THEME: DEVELOPMENT OF THE ECONOMY
  I turn now to the main part of my statement. This will take the form of a review of the general state of the economy and an explanation of the reasoning by which I have arrived at the proposals that I intend to lay before the Committee this afternoon.
  MAIN THEME: DEVELOPMENT OF THE ECONOMY

    PROGRESS IN THE PAST YEAR
    As I said earlier, the past year has seen great economic progress. Production has risen by about 5 per cent. overall and by about 8 per cent. in manufacturing industry. The expansion has been broadly based, extending from consumer goods to steel where the latest figures show an increase of 20 per cent. over a year ago. Production, investment and exports are all now reaching record levels.
    The number of people wholly unemployed has fallen since last April from 570,000 to 415,000, that is by more than 150,000; and, as an even more significant indication of the way things are moving, notified vacancies for adults have riser from 138,000 to 202,000 in the same period. Prices remained relatively stable with the retail price index rising by less than 2 per cent. in a year when import prices rose by 5 per cent. or more and prices in the European Economic Community rose by about 6 per cent.
    Exports rose during 1963 by 10 per cent. and imports by 13 per cent. by value. In 1963, we had a current account surplus of £120 million, but by the early months of this year we had begun to show some deficit. In so far as this arises from increased imports, it is neither surprising nor undesirable. I have, indeed, foreshadowed on many occasions that this would happen. It is the inevitable result of economic expansion, particularly of stockbuilding, and it is reasonable to remember that imports of raw material and semi-manufactures precede the production on which future exports will be based.
    In my Budget statement last year, I outlined the measures we were taking to strengthen the economy and to provide, so far as it is in the power of Government to do so, the basis for a long-term growth rate of 4 per cent. I emphasised, first, the need on both human and economic grounds for making a more even use of our manpower resources, and I announced two very important new measures to encourage still further the economic development of the less prosperous parts of the country.
    First, new standard grants under the Local Employment Act for buildings

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    and plant and machinery. Secondly—and this was an entirely new departure—the system of free depreciation. These measures have existed for the best part of a year and the Government have been making every effort to bring home to industry the very large financial benefits which they can confer. It is still too early to assess their full effect; indeed, this is only now beginning to emerge. But the facts are immensely encouraging.
    Applications at 2,660 for all forms of assistance under the Local Employment Act over the past year were seven times as many as in 1962–63. Most of them were for the new standard grants and two-thirds of these were for Central Scotland and North-East England. A strong flow of applications for these grants has existed throughout the year at an average rate of 40 to 50 a week and recently this rate has risen markedly.
    In 1963–64, 435 projects were approved for assistance estimated to provide nearly 37,000 additional jobs. Of these, 16,000 were in Central Scotland and over 12,000 in North-East England. Moreover, as I have said, the flow of applications for standard grants still continues and a large number of them now under consideration will bring further work to these areas.
    Over the last 12 months we have also gone ahead with the measures I then outlined for training workers in new skills. We now have the Industrial Training Act and my right hon. Friend the Minister of Labour is about to set up the new Central Training Council and Training Boards for the first four industries, including engineering and construction, which cover about half of the industrial apprentices in the country. We are pushing on with the planned expansion in Government training centres and we expect the programme, which provides for 18 new centres, to be substantially complete by the end of the year.
    The strengthening of our industrial base has continued in both the public and private sectors. We indicated in last November's White Paper on Public Investment that targets of financial performance had been agreed for all the major nationalised industries in the fuel field, and also for the Post Office, British European Airways and London Transport.
    This provision of a firm framework of financial obligations has proved its worth for the efficient management of these public bodies. In particular, it sharpens their attitude to costs and reduces the danger of misdirection of capital resources which is inevitably present in operations of this scale. In the fuel industry I would point in particular to gas, where new production techniques are being developed which will cut costs substantially, and sales are booming.
    So far as coal is concerned, major technical developments have aided the industry in its uphill struggle to offset, by rising productivity, the inevitable tendency of costs to increase, and thus to keep the Coal Board in surplus.
    On the railways, Dr. Beeching's courageous policies are producing results. As I said just now, the sum needed to finance the British Railways deficit this year is £29 million less than the provision made last year which has, incidentally, been underspent by £18 million. These are important gains for the Exchequer and the taxpayer just as the modernisation of the railway
    system is an immense gain to the strength of the whole economy.
    Mr. Harold Davies rose—
    The Chairman: Order. The hon. Member for Leek (Mr. Harold Davies) knows that if the right hon. Gentleman who is addressing the Committee does not give way the hon. Member may not remain on his feet.
    Mr. Maudling: I am sorry not to give way, but I am trying to develop a consecutive argument and we will have plenty of time to study this point.
    Turning to the private sector, in the construction industries, which are a key sector of the economy, output has risen fairly steadily since building controls ended in 1954, both because the labour force has increased and because output per head has improved. These industries are likely to be heavily loaded again this year and may have difficulty in meeting all demands. To deal with the increase in demand, productivity will have to be increased, since in conditions of full employment there is no prospect of large additions to the labour force.
    The Government are co-operating with the construction industries in the development of measures designed to

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    achieve this rise in output, particularly in such important fields as the introduction of new methods of construction, standardisation of components, training and research and development. I am sure that the National Building Agency, established by my right hon. Friend the Minister of Public Building and Works, will contribute significantly to securing the increased productivity which we need.
    There are now signs of a substantial increase in the level of investment in manufacturing industry. The Committee will recall the very great improvements made last year in the system of capital allowances. I doubt whether, even now, the advantages available for new investment are fully appreciated. Quite apart from special concessions for firms operating in development districts, the general benefits are very striking. For example, a company investing in a computer gets 60 per cent. of the cost allowed against profits in the first year and over 100 per cent. in the first five. At the end of the day a company will have received tax relief of very nearly 70 per cent. of the total cost of that computer, or nearly £175,000 in tax relief on art outlay of £250,000.
    Much emphasis is now placed, and rightly placed, on the importance of encouraging investment in advanced and often, therefore, expensive modern machinery and equipment. The figures I have just quoted show how effectively we have already provided such encouragement. I know of no country in the world that gives so great a tax incentive to the installation of modern equipment, and I believe that if it should be true that businessmen are, in any cases, still reluctant to buy the most modern machinery we must look beyond the tax system for the reasons.
    Greater enterprise now brings greater rewards. No longer can it be said that the weight of taxation on industry here is greater than that on our industrial rivals. If our industry is to thrive it is right that enterprise and efficiency should be rewarded by higher profits. But the other side of the coin is to ensure that inefficiency and lack of enterprise suffer the appropriate penalty. Here the most effective means is the stimulation of competition. The measures recently announced and introduced by my right
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    hon. Friend the Secretary of State for Industry and Trade, designed to sweep away barriers to competition throughout the economy, are a vital and central part of the total picture.

    PROSPECTS FOR THE COMING YEAR
    In the coming year all the major components of demand should be increasing or, in simpler language, the demand for British goods should continue to rise vigorously, with all that this means for employment and prosperity.
    Mr. Harold Davies: Would the Chancellor give way this time?
    Mr. Maudling: No.
    Mr. Davies: On a point of fact.
    Mr. Maudling: No. There will be plenty of opportunity for several days to debate anything I say this afternoon.
    Mr. Davies: It is a misinterpretation of the Chancellor's own document. He would not know, because he has not read the damned thing.
    Mr. MaudlingReading and understanding do not always march together.
    As I have said, in the coming year all the components of demand will be expanding vigorously. To begin with exports, there is no doubt that the opportunity is there for another substantial increase this year in British exports. The American economy should be expanding well under the influence of their tax cut. A good rate of growth is likely to continue in most of Western Europe and, with higher commodity prices, demand from the primary producers, w ho are so important to our exports, should again be higher. There seems every reason to believe, therefore, that the business will be there on an increasing scale if we go out and seize it. There is also good reason to believe that our exporters are rising to their opportunities.
    My right hon. Friend the Secretary of State for Industry, Trade and Regional Development will be elaborating on this theme tomorrow. But I can say here and now that, as the March trade figures will show, the trend of exports is still encouragingly upwards—a heartening achievement. Even greater successes will be needed if we are to attain all our

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    aims, but current progress shows that it can be done.
    On the side of internal demand, there has been the turn-round in investment expenditure by manufacturing industry and all the indications are that there will be a vigorous growth this year. In the public sector the expansion that is already well under way is certain to continue.
    Then there is investment in stocks, which has risen rapidly in recent months after running at a relatively low level for a considerable time. Stock-to-turnover ratios are still comparatively low and we must be prepared to see stock-building continuing at a high rate and, indeed, probably increasing further.
    With all these forces making for expansion of the activity of the economy, real personal income—or spending power, in simpler terms—must be expected to go on rising strongly and this will be reflected in the actual growth of consumer expenditure.
    The outlook for demand as a whole is a continued expansion at a high rate which, although somewhat lower than in recent months, when it has been about 6 per cent., would still be very high and substantially greater than 4 per cent. per annum.
    I turn now to the external position. The prospect for exports, as I have already shown, is encouraging. There should be a substantial increase. The prospect for imports, also, is that they will be considerably higher in 1964 than in 1963. This is the inevitable effect of a higher rate of activity.
    It is difficult to make any exact prediction, partly because of the uncertainty of import prices—which have already risen substantially—but also because it is difficult to be sure how far recent substantial imports have already reflected the initial stock-building phase of our expansion. The level and extent of stock-building is notoriously the most volatile and unpredictable element in our economy.
    While, therefore, we have already seen the effects of the first spurt in stock-building, there can be no certainty about what will follow. But in so far as we are paying for imports that are necessary for economic expansion, we are, as I have repeatedly said, entitled to regard this as a proper subject for financing
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    through the use of our external credit, so long—and this condition must never be overlooked—as our domestic economy remains sound.
    Here, I want to say a word about imports of manufactures, as much attention has been given to this recently. They have, of course, risen rapidly recently in relative terms although in absolute terms they are less important than the bulk imports of food, fuel and materials. There are some people who argue that we should place controls upon the imports of manufactured goods—about two-thirds of which, by the way, are machinery for industry—on the ground that we can make them for ourselves.
    I do not object to import controls on doctrinal grounds, but on grounds of practical policy. Certainly, there could be occasions where their use would be justified and permissible under international agreements, that is, if we should be facing severe balance of payments difficulties which could not be dealt with in better ways. But we must always remember that as a country that lives by the export of manufactured goods our interest lies in the greatest worldwide freedom of trade in them. We cannot expect to export machinery and consumer goods if we are not prepared to import them.
    There are three further difficulties about a policy of import controls on manufactures. First, in the case of machinery, where trade is becoming increasingly worldwide and specialisation more extensive, we should be denying to our manufacturers access to some of the best and most modern machinery. Secondly, by protecting our own industries against external competition we should be missing opportunities of stimulating them to greater efficiency. Thirdly, our policies for helping the under-developed countries will be frustrated if we are not prepared to accept from them as the years go by progressively increased imports of manufactures.
    There is only one effective answer to growing imports of manufactures: to produce more and more efficiently ourselves in competition with imports and to expand our exports.
    On the capital account this year, we cannot look for a continuance of the comparatively low rate of net outflow

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    we have had in the past few years. Overseas investment by the oil industry, for example, is likely to increase this year. But we are all the time building up our stock of overseas assets. We are net creditors on assets and liabilities of most types, and there is a substantial excess of assets over liabilities in the higher-yielding categories.
    As a result, we have a net income from overseas by way of interest, profits and dividends of £340 million a year. While, therefore, the outflow of long-term capital may add to our short-term problems, we must remember that it is strengthening the current account in the future, though there are, of course, limits to what we can or should do, even in this field of useful and profitable activity.
    To sum up the external prospects for the coming year, the combination of an increased capital outflow with a deterioration in the current account will mean a worsening of the overall balance of payments this year. Provided that it is temporary, this should give rise neither to alarm nor dismay, and it would be very foolish of anyone to proclaim that it shou1d. It is the predictable accompaniment of a vigorous rate of growth which all of us are committed to seek. We have very large first and second line reserves and other borrowing facilities which can be mobilised to deal with a position of temporary imbalance or with movements of short-term funds. In addition to the gold and dollar reserves, there is the Government's dollar portfolio which has averaged around 1 billion dollars in value. Short-term assistance from other central banks is available, as we saw a year ago, and we have the 500 million dollar swap agreement with the U.S.A. Our standby arrangement with the International Monetary Fund enables us to draw quickly 1 billion dollars from that source and our total drawing rights amount to nearly 2½ billion dollars.
    These are strong defences. I hope, moreover, that the work of the Group of Ten, in which the United Kingdom is playing a full part, and the coming meeting of the International Monetary Fund this autumn, will further strengthen the international liquidity system, with benefit to the position of sterling along with the other major currencies.
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    We cannot, however, be confident that the worsening in our overall balance will be temporary unless we keep control of our own costs and particularly of our export pi ices. It is manifest from the figures that I have given, and from the studies published, for example, by the N.E.D.C., that the key to all our success is a vigorous increase of exports and that this depends upon keeping our costs competitive. We have recently benefited from increases in costs suffered by some of our competitors particularly on the Continent, but we cannot, and should not, rely on this process continuing; it will not. In Germany, in France and in Japan vigorous measures have been taken to keep the situation under control; while in the United States, still our most formidable industrial rival, the level of costs has been kept quite remarkably stable for several years now.
    It cannot be too often repeated that the level of costs is a matter within our own control. It is fair to say that British manufacturers have, in general, access to raw materials on terms at least as favourable as our competitors. It is what we add ourselves that will make the difference between success and failure in our export efforts.
    This year, we have encouraging prospects of price stability in basic industries. The National Economic Development Office has recently announced that price increases this year are unlikely for a number of key products, namely, coal, oil, steel, cement and chemicals. Indeed, I understand that it is likely that the National Coal Board will shortly he making a reduction of 2s. 6d. per ton in the price of coking coal supplied to the steel industry. As I said earlier, out policy in setting financial targets is bearing fruit.
    It is encouraging that the Board feels able to make this reduction, despite the difficult task with which it is faced in continuing fully to pay its way, for the industry has a stern struggle on its hands, and feels the current pressure of prices of supplies and other components in its costs. This reduction in the price of coking coal should yield benefits beyond the steel industry itself, and I regard it as a useful contribution towards keeping our industrial costs competitive. This prospect of stability in some of the basic products gives us a

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    foundation on which to work. Our success will depend more than anything else on the trend of incomes.

    INCOMES POLICY
    The level of incomes from employment and from investment is by far the most important element affecting costs and prices. The total effect upon costs of the level of incomes is about four times that of the level of import prices. It is a fact from which there is no escape that if we wish to achieve steady and sustained economic growth we must between us agree upon an effective incomes policy. As I said last year, acceptance of the 4 per cent. target involves acceptance of the 3 to 3½ per cent, figure for incomes generally.
    There are those who argue that it is futile to seek agreement on an incomes policy because the level of incomes will always be settled by the laws of supply and demand alone. With respect to them, I believe that this is a logical fallacy. It is true that wages, for example, are settled by a balance between the amount demanded and the amount the employer is able and willing to pay. To this extent the general level of demand in the economy is important, because, as we have seen in the past, an excessive level of demand leads to labour shortages, large increases in money wage rates and wage drift on a large scale.
    But in seeking agreement on an incomes policy we are not attempting to supersede supply and demand in this sense, but rather to moderate the forces which affect this balance. One thing, to my mind, is quite certain, namely, that if all of us are determined to extract from the market the maximum possible for ourselves the result must either be inflation or Government policies designed to restrict demand and therefore curtail expansion. It is just not possible to provide a level of demand adequate for vigorous expansion without, at the same time, providing opportunities to raise employment incomes and profit margins at the expense of continuously rising costs, that is to say, at the expense of the consumer and the balance of payments.
    Surely, all the experience of the last 20 years in this country and overseas shows that if wage and salary levels
    264
    and profit margins are always to be pushed to the limit that can be achieved by the sheer force of trade unions or unlimited opportunism of management, then I say again that the result must be a choice between inflation or Government policies designed to curtail inflation at the cost of growth.
    It is not surprising that progress in dealing with these problems is difficult, for they are complex and full of emotion and often of prejudice. Most of the other Western democracies are trying to find their way forward towards incomes policy as we are and they are encountering the same difficulties. The main problem, of course, is how to translate unexceptionable general principles into effective practice. I am glad that that is accepted, because it is the basis of Government policy. [HON. MEMBERS: "Hear, hear."] How, in the case of employment incomes, to provide for the exceptional cases without letting the exception become the rule; how to ensure in the case of profits that the maximum encouragement is given to enterprise and efficiency within a total of profit incomes that is consistent with a fair incomes policy.
    These are the practical problems which we must tackle. I have no doubt myself that the best way of approaching success will be through N.E.D.C. and N.I.C. These two bodies really complement one another. N.E.D.C. is the best forum in which Government, management and unions can together discuss these and other vital questions of economic principle. N.I.C. is a body explicitly designed to deal fairly with the exceptional case, as its recent report on university salaries clearly shows, while making it clear that the exception must not become the rule.
    I am, frankly, disappointed that we have not yet made more progress. This is not because failure to do so is a setback for the Government, as is sometimes said, but because it is a setback to the hopes and prospects of the entire country. I intend to persevere, because in my judgment a solution to this problem would bring economic benefits to our people that would dwarf anything else that we could achieve. No one benefits from failure to agree on an incomes policy: indeed, everyone loses. If, and only if, unions and management

    265
    can join with the Government in a combined approach to the problem shall we have a chance to seize the great opportunities of the 1960s for securing a sustained and continuing increase in real output and, therefore, in real incomes and real prosperity.
    Mr. Marcus Lipton: Will there be half a crown extra on the bottle of liquid which the right hon. Gentleman is pouring himself?

  BASIS OF BUDGET PROPOSALS
  Mr. Maudling: It is against this general background that I wish to set out the basis of my Budget proposals. This basis must clearly be twofold: the level of public expenditure and the pressure of demand. I put the level of public expenditure first deliberately, because I believe that in recent times we have been a little apt to concentrate on the modern concept of using the Budget to regulate the pressure of demand while forgetting that far and away the largest factor in determining the amount of revenue to be raised is the accepted level of public expenditure.
  The final Budget judgment, of course, depends upon the pressure of demand. It is this factor that determines the extent to which the Government should in any financial year seek to cover its outgoings out of revenue. But the first factor is the magnitude of those outgoings, which determines the level at which the balance is struck.

  BASIS OF BUDGET PROPOSALS

    PUBLIC EXPENDITURE
    The White Paper on Public Expenditure up to 1967–68, published last December, represents an important new step forward in public policy. It was based on the concept put forward by the Plowden Committee of careful forward budgeting of public expenditure, a concept which, I think, has now been generally accepted. I start from the programme as set out in the White Paper, because it is the scale of that programme that is the first determining factor in this year's Budget proposals.
    The programme is a very ambitious one, involving great expansion in virtually every fie1d. For example, annual public expenditure on roads is calculated to increase by £110 million between 1963–64 and 1967–68; on housing and
    266
    environmental services by £180 million; on education by £310 million; on health and welfare by £140 million; and on benefits a ad assistance by £360 million.
    The prospective increase over the same period in total public expenditure, which. of course, includes local government as well as central Government, and the investment of nationalised industries, is put at a pout £1,900 million at 1963 prices, an increase of 17½ per cent.
    It is, I believe, generally accepted that this programme is the most ambitious that can reasonably be attempted, and that any attempt to carry out a greater expansion of publicly financed services would be economically unsound and indeed self-defeating. It will certainly involve, even on the most favourable possible estimates of the growth of gross national product, a continuing increase in the proportion taken by public authorities.
    The adjustments of taxation which may be necessary from time to time to deal with short-term developments—in current jargon, the conjuncture—will have to be made against a background of rising expenditure and, therefore, of rising revenue requirements. I am convinced that our programme is right, and that it is in line with the needs and conditions of the present day. But I must, at t le same time, emphasise again today its implications for the public as taxpayers, as well as the benefits that it is designed to provide for the public.
    It is also right to stress that, ambitious though this programme is, it is no more than a continuation and extension of what we have actually achieved in the last five years. From 1959–60 to 1963–64, the increase in public expenditure was very much the same, when account is taken of pay and price changes as the increase now contemplated for the period to 1967–68.
    For education, the share of the gross national product has increased from 4 per cent. in 1959 to nearly 5 per cent.; and in 1952 it was only 3 per cent. For housing, the number under construction at the end of 1963 was 382,000: in 1952 the output was 240,000. Annual expenditure in real terms on roads has increased since 1959 by 40 per cent. In all these fields—and in benefits and assistance, the field with the biggest increases in expenditure, both in the past and in the next four years—very rapid

    267
    progress has been made, and will continue to be made as our plans unfo1d.
    The next phase of development outlined in the White Paper will be a very substantial one, but it is certainly within our capacity on the record of past accomplishment. What is equally certain is that to try to do more would be to go beyond our capacity and endanger the progress that can be made.

    THE PRESSURE OF DEMAND
    Against this background of public expenditure I have to consider the pressure of demand in the coming 12 months. The rate of growth of real output in recent months of around 6 per cent. has been possible while we have been taking up slack in the economy, but, clearly, it cannot continue indefinitely. We must aim at transition to a growth rate which can be sustained of something like 4 per cent.
    As I said earlier, in the coming months demand seems likely to be rising at substantially more than 4 per cent. and, therefore, something must be done to reduce its growth. Looking at the problem in terms of the Budget accounts, the figures I have given the Committee show that at current rates of taxation the growing level of public expenditure is likely to produce a deficit this year of about £36 million above the line and £894 million overall.
    If we are to effect the transition to 4 per cent. and to avoid the danger of what the economists call "overheating" the economy, then I must seek to finance a larger proportion of this public expenditure out of taxation; in other words, I must do something to reduce this prospective deficit.
    My decision as to the size of the change I must make is clearly a matter of judgment, not of exact calculation. Most of the figures on which I have to work in order to analyse our economic situation are, from their nature, estimates and not precise computations. The level of stock-building, for example, is extremely difficult to predict. At the moment it is high, and likely to continue high; but it is impossible to put an exact figure on the trend of stock-building later this year.
    The level of savings is just as fundamental. If anything were to disturb
    268
    the willingness to save, either in the longer or the shorter term, the balance of the economy would suffer. A fall by 1 per cent. in the proportion of personal income saved would mean an increase in demand in 1964–65 of over £200 million. I shall shortly have some proposals to make in respect of savings.
    I must also remember that further increases in Government expenditure would upset my calculation, and the trend of incomes, whose importance for our external balance I have just stressed, is difficult to predict with any certainty. I must emphasise the importance of these factors for our policy decisions. If incomes rise so fast as to imperil our external balance; if Government expenditure is not properly and carefully controlled; or if anything should happen to undermine the trend of savings, then in each case our situation would be made very much more difficult and more drastic remedies would be required. The level of taxation necessary to maintain stability depends very much on maintaining a rational attitude to public expenditure, to incomes policy and to the encouragement of savings.
    To sum up, the considerations I have to weigh in reaching my conclusion are these. On the one hand, there is the growing level of public expenditure which, as I have explained to the Committee, means that, even with the natural buoyancy of the revenue, we must look forward to an above the line deficit next year of £36 million. There is also the fact that our current rate of expansion is one that cannot continue indefinitely without leading to the familiar difficulties internally and externally. On the other hand, it is important not to overlook the natural corrective factors that may come into play or the danger of checking expansion rather than moderating it. This, as I have said, must be a matter of judgment. It cannot be a matter of exact calculation.
    This year, as last, I have studied the advice offered to me from many distinguished independent sources. Last year, I thought that they were advising me to reduce taxation more than was needed. This year, I am inclined to think they are doing the opposite. Just as, last year, it was not necessary to provide a stimulus to the economy of the order of £400 million, as some people suggested, so, this year, I do not believe

    269
    it to be necessary to increase taxation by the figures that have, in many quarters, been put forward.
    The best judgment I can make is that if taxation is increased in this Budget by the equivalent of about £100 million, thus converting the above-the-line deficit of about £36 million into an above the line surplus of about £70 million, I should be doing enough to steady the economy without going so far as to give a definite check to expansion. The effect of tax changes on this scale should be to moderate the present rate of expansion, and to make it possible for real growth to continue at the rate we all wish to see.

    SAVINGS
    Before explaining how I intend to raise the additional revenue, I wish to tell the Committee how I propose to encourage savings.
    I propose to increase the limit on holdings of the current issue of National Savings Certificates from £300 to £600, and the limit on holdings of Premium Bonds from £800 to £1,000.
    I also propose to introduce this year a new bond, called the National Development Bond. This will take the place of Defence Bonds. The new bond will come on sale on 15th May: it will have a life of five years, will carry a rate of interest of 5 per cent. per annum and a bonus on maturity of £2 per cent., and will be encashable at par on one month's notice. Holders of Defence Bonds maturing on 1st July, to whom a conversion offer of 4½ per cent. Defence Bonds has recently been made, will be given an opportunity to convert into the new bonds if they prefer. I am sure—and I know the views of the National Savings Movement on this—that this new bond is in line with current needs, and I have every confidence that it will prove an attractive security with a wide appeal.
    In addition, I believe that it should be possible to offer through the National Savings Movement some form of contractual savings scheme which would give an incentive for sustained saving over a period of years. In consultation with the leaders of the National Savings Movement, I am putting in hand a detailed study of this idea aimed at devising a practical and workable scheme.
    In these ways, I aim to encourage the National Savings Movement in its very valuable work. The increase in the total amount standing invested in National Savings last year was again over £300 million, and for the first time the total passed £8,000 million. This impressive figure is a tribute to the efforts of the many voluntary workers in the movement, and to the leadership of that almost legendary figure, Lord Mackintosh, and of Mr. Archer, the able and devoted Chairman of the Scottish Savings Committee.

  MAJOR TAX CHANGES

    DIRECT OR INDIRECT
    In deciding how to raise the additional £100 million of revenue—
    Mr. Jobn Rankin: Come on.
    Mr. Maudling: I am coming on. Hon. Members are very impatient today. I do not know why.
    First, I had to weigh the arguments as between direct and indirect taxation. I have come to the quite clear conclusion that in present circumstances I should not increase direct taxation. At the present time our need is for more productive effort and a growing rate of investment on the one hand, and for some restraint on consumption on the other. It seemed to me, therefore, that the classic arguments this year apply for choosing Customs and Excise duties rather than putting up Income Tax or, in other words, for levying tax at the point where money is spent, rather than deducting it where it is earned.
    Moreover, direct taxation does not operate so quickly or effectively to limit demand. To raise £100 million by Income Tax could mean increasing the standard rate by 6d. Of the extra revenue this would bring in, one-third would be borne by companies; much of this would not fall to be paid until next January and it would be likely to lead to a reduction in companies' savings. 'To achieve the same economic effect, therefore, I would have to raise substantially more than £100 million in additional Income Tax. For these reasons, I have decided to look to indirect taxation for the necessary additional revenue.
    Broadly speaking, the choice is between an increase spread across the

    271
    board and increases at a rather higher rate concentrated in certain sectors. The use of the Regulator, as the Committee is aware, at 10 per cent. brings in about £200 million. It would be possible to bring in about £100 million by a 5 per cent. increase across the board. I have decided, however, that this would not be the right way to proceed. [HON. MEMBERS: "Oh."] No doubt, all those hon. Members in favour of doing so will point it out in Committee.
    There are several reasons for this. For example, an increase of 5 per cent. in Purchase Tax rates would create practical difficulties—we know of those practical difficulties, and I very much regret the absence of my hon. Friend the Member for Kidderminster (Sir G. Nabarro), for reasons I also regret—but the strongest argument seems to me that the regulator is designed to deal with short-term situations; and what we are facing now is not a short-term problem, but the long-term growth of public expenditure which calls for higher levels of revenue on a more permanent basis.

    INDIRECT TAX INCREASES
    I have, therefore, decided to raise the additional money by increasing the duties on tobacco and alcoholic drinks by amounts broadly equivalent to 10 per cent.
    At the same time, I propose to ask the Committee to renew the regulator power in a more flexible form which will allow one or more of the four major blocks of indirect taxation—that is tobacco, alcohol, oil and Purchase Tax—to be excluded from its use. This will mean, for example, that if it should be necessary to use the regulator at some period in the future it would not necessarily involve a further imposition on the tobacco or alcohol duties.
    I propose to increase the duties on tobacco leaf by 6s. 6d. per lb. This will mean an increase of 4d. in the price of a packet of 20 cigarettes selling for 4s. or more, and 3d. a packet for the now popular filters and smaller brands selling for under 4s. The exact amount of the increase, 6s. 6d. per lb., is 2d. per lb. less than the exact equivalent of the price increases. There are precedents on previous occasions for allowing some margin of relief to the trade at times
    272
    when increases in duty have seemed likely to lead to exceptional difficulties in the trade. This happened, for example, in 1947 and 1956, and I think that is justified again on this occasion.
    It is very difficult to predict what will be the effect of this further increase coming on top of recent scientific reports on the effect of cigarette smoking on health. This makes it difficult to estimate the yield we can expect from this increase. On a strictly mathematical basis, it would be over £80 million. Indeed, I have seen some commentators assuming that an increase of this order could be expected; but we must make some allowance for the fall in consumption that is likely to result and the best estimate that I can make is that this increase should yield £55 million in a full year and £53 million in the current year.
    For the other half of the money I require, I intend to increase by a similar proportion of about 10 per cent. the duties on alcoholic drinks. This will mean, in practice, 1d. a pint on beer, 3d. a bottle on light wines and British wines, 6d. on heavy wines and 3s. a bottle on spirits. Consumption has been buoyant recently, particularly in the case of wines and spirits, where it has gone up by 12 per cent. comparing the last financial year with 1962–63. I think that it is reasonable to look to this source for additional revenue which I estimate, in a full year, at £29 million from beer, £17 million from spirits and £2¾ million from wines, a total of nearly £49 million. The corresponding figure for 1964–65 is £44½ million.
    All these duty changes will operate from tomorrow.

  SUMMARY
  These, then, are my major proposals for financing the cost involved in the great extension of the public services. They should be seen alongside my earlier proposals, for encouraging savings, for reforming the taxation of betting, for safeguarding the revenue and for assisting industry and commerce in various ways to increase efficiency and reduce costs.
  The total effect of the changes in taxation which I have announced will be to increase revenue receipts by £103 million in 1964–65 and, therefore, to change the above-the-line deficit of £36 million into

  273
  a surplus of £67 million. The net borrowing requirement will be reduced from £894 million to £791 million. If we disregard the extra £165 million to be raised on behalf of the local authorities, which I referred to earlier, the estimated net borrowing requirement becomes £626 million as compared with the £687 million for which I budgeted last year.

  CONCLUSION
  Public expenditure this year, current and capital, will be rising fast. This is necessary to pay for the houses, the schools, the universities and colleges, the hospitals that as a country we want and as a Parliament we have approved. It is necessary, also, to finance the rapidly growing capital expenditure on the basic public services that are essential to the health and vigour of our economy.
  The money cannot be found from the natural growth of revenue alone, substantial as that will be. To leave tax rates as they are would mean increasing the proportion of public expenditure to be financed by borrowing, and I do not believe that any responsible person would recommend such a course with our economy already so fully employed and prospects for demand so vigorous. I have settled the amount I require in extra revenue, and the means of raising it, with the avowed purpose of avoiding any setback to our economic progress, to the growing level of production, exports and investment.
  To sum up, the purpose of this Budget is to maintain expansion without inflation.

  Description of spirits

  Excise duty

  Customs duties

  Full rate

  Common-wealth rate

  Convention rate

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  1. British spirits (per proof gallon)

  12

  17

  6

  —

  —

  —

  2. Imported spirits other than perfumed spirits—

  (a) not comprised below in this paragraph (per proof gallon)

  —

  13

  0

  0

  12

  17

  6

  12

  17

  6

  (b) liqueurs, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is net to be tested (per gallon)

  —

  17

  11

  0

  17

  7

  6

  17

  7

  6

  each of the above rates of duty being, in the case of spirits not warehoused or warehoused for less than 3 years, increased by 1s. 6d. per proof gallon or, for spirits within paragraph 2(b) of this Table, by 2s. 0d. per gallon.

  Expansion now is heartening and vigorous. The possibilities are great and the prospects exciting. To realise them we must avoid the danger of pushing ahead just that marginal amount too fast. The Budget is designed to finance the growth of the public services on an ambitious scale without it inflation. I submit it now to the judgment of this Committee. All I ask is that those who will criticise will make their alternative proposals crystal clear, for on this the country will be entitled to know and to judge.

  CONCLUSION

    1. SPIRITS (EXCISE AND CUSTOMS)
    Motion made,
    That—

    (a) as from 15th April 1964 the duties of excise chargeable on spirits, and the duties of customs chargeable on spirits other than perfumed Spirits, shall respectively be at the rates shown in the Table below;

    (b) in relation to spirits on which duty is so chargeable, section 4(1) of the Finance Act 1918 (reduction of duty for spirits used in medical preparations) shall apply so that the reduced duties are charged at the rate of 14s. 9d. pen proof gallon or, in the case of spirits within paragraph 2(b) of the said Table, at the rate of 20s. 0d. per gallon;

    (c) the ditties in this Resolution shall be instead of those at the rates shown in Schedule I to the Finance Act 1962 and section 2(2) of the Finance Act 1962 (references to preferential rates) shall apply accordingly;

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.
    In the Table above "Commonwealth" indicates goods qualifying for Commonwealth preference under section 2 of the Import Duties Act 1958, "Convention" indicates goods of Convention area origin within the meaning of the European Free Trade Association Act 1960 and "Full" indicates other goods.—[Mr. Maudling.]
    The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 90 (Ways and Means Motions and Resolutions).
    Question agreed to.
    The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

    2. BEER (EXCISE AND CUSTOMS)
    Motion made, and Question,
    That—
    (a) as from 15th April 1964 the duties of excise and customs chargeable on beer shall respectively be at the rates shown in the Table below, and drawback shall be allowed in respect of duties charged under this Resolution at the rates so shown;

    TABLE: BEER (RATES OF CUSTOMS AND EXCISE DUTIES AND DRAWBACKS)

    Excise rates (per 36 gallons)

    Customs rates (per 36 gallons)

    Full

    Commonwealth

    Convention

    £

    s.

    d.

    £

    s.

    d.

    £

    s.

    d.

    £

    s.

    d.

    1. Duty

    …

    …

    7

    7

    0

    8

    7

    2

    7

    7

    2

    7

    7

    2

    2. Drawback

    …

    …

    7

    7

    2

    8

    7

    2

    7

    7

    2

    7

    7

    2

    each of the above rates of duty and drawback being, in the case of beer of an original gravity exceeding 1030 degrees, increased by 7s. 3½. for each addition degree.

    As respects beer the worts whereof before fermentation were of a specific gravity of less than 1030 degrees,—
    (a) the excise drawback shall not exceed by more than twopence for every 36 gallons the amount of duty which is shown to the satisfaction of the Commissioners to have been paid;
    (b) the amount of customs drawback allowabie shall not exceed the amount of
    (b) the duties and drawbacks in this Resolution shall be instead of those at the rates set out in Schedule 2 to the Finance Act 1962, and instead of the customs duty and the drawbacks charged and allowed in respect of beer under section 2 of the Finance Act 1933 and section 3(3) of the Finance Act 1957 (duty on hops and additional duty of customs in respect of beer);
    (c) as from 15th April 1964 black beer the worts whereof before fermentation were of a specific gravity of 1200 degrees or more shall not be charged with duty under section 1 of the Finance Act 1959 or with the duties in this Resolution, and—

    (i) except for the purpose of drawback of the duties charged before that date, the expression "beer" in the customs and excise Acts shall not include such black beer;

    (ii) all references in those Acts to black beer shall be omitted; and

    (iii) section 2 of the Finance Act 1930 (duty on imported black beer) shall cease to have effect;

    (d) this Resolution does not affect drawback in respect of beer on which duty was paid under the law replaced by this Resolution;
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.
    duty which is shown to the satisfaction of the Commissioners to have been paid.
    In the Table above "Commonwealth" indicates goods qualifying for Commonwealth preference under section 2 of the Import Duties Act 1958, "Convention" indicates goods of Convention area origin within the meaning of the European Free Trade Association Act 1960 and "Full" indicates other goods.—[Mr. Maudling.]
    put and agreed to.

    3. WINE (CUSTOMS)
    Motion nude, and Question,
    That—
    (a) as from 15th April, 1964, the duties of customs chargeable on wine, including lees of wine, shall be at the rates shown in the Table blow;
    (b) the duties in this Resolution shall be instead of those at the rate shown in Table 1 in Schedule 3 to the Finance Act, 1962, and

    TABLE: RATES OF CUSTOMS DUTY ON WINE

    Description of wine

    Rates of duty (per gallon)

    Full

    Commonwealth

    £

    s.

    d.

    £

    s.

    d.

    Light wine:—

    Still—

    not in bottle

    …

    …

    …

    …

    …

    …

    15

    6

    13

    6

    in bottle

    …

    …

    …

    …

    …

    …

    18

    0

    15

    0

    Sparkling

    …

    …

    …

    …

    …

    …

    1

    8

    0

    1

    6

    0

    Other wine:—

    Still—

    not in bottle

    …

    …

    …

    …

    …

    …

    1

    10

    6

    1

    0

    6

    in bottle

    …

    …

    …

    …

    …

    …

    1

    13

    0

    1

    2

    0

    Sparkling

    …

    …

    …

    …

    …

    …

    2

    3

    0

    1

    13

    0

    together, in the case of wine exceeding 42 degrees proof spirit, with an addition for each additional degree or fraction of a degree of

    2

    6

    1

    8

    In the Table above "Commonwealth" indicates goods qualifying for Commonwealth preference under Section 2 of the Import Duties Act, 1958, and "Full" indicates other goods.—[Mr. Maudling.]
    put and agreed to.

    4. BRITISH WINE (EXCISE)
    Motion made, and Question,
    That as from 15th April, 1964, the duty of excise chargeable on British wine shall be at the rates shown in the Table below, instead of at the rates shown in Table II in Schedule 3 to the Finance Act, 1962;
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

    TABLE: RATES OF EXCISE DUTY ON BRITISH WINE

    Description of British wine

    Rate of duty (per gallon)

    s.

    d.

    Still

    13

    0

    Sparkling

    19

    0

    —[Mr. Maudling.]

    put and agreed to.
    shall, in the case of the rates for light wine which qualifies for Commonwealth preference, be subject to the proviso to Section 4(1) of the Finance Act, 1958, as in the case of those at the rates set out in the said Table 1;
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

    5. TOBACCO (CUSTOMS AND EXCISE)
    Motion made, and Question,
    That—

    (a) as from 15th April, 1964, the duties of customs and excise chargeable on tobacco shall respectively be at the rates shown in Table 1 and Table 2 below, and that drawback shall be allowed in respect of duties charged under this Resolution at the rates shown in Table 3 below;

    (b) the said duties shall be subject to subsections (2) and (3) of section 8 of the Finance Act, 1919, and in those subsections "preferential rate" shall mean the Commonwealth rates of customs duty under Table 1 below;

    (c) the duties and drawbacks in this Resolution; hall be instead of those at the rates set out in Schedule 4 to the Finance Act, 1962;

    (d) this Resolution does not affect drawback in respect of tobacco on which duty was paid under the law replaced by this Resolution;

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

    TABLE 1

    Customs

    Rates of duty per pound

    Full

    Common-wealth

    Convention

    £

    s.

    d.

    £

    s.

    d.

    £

    s.

    d.

    TOBACCO

    1. Unmanufactured:

    Containing 10 per cent, or more by weight of moisture

    3

    17

    4½

    3

    15

    10

    3

    17

    4½

    Other

    3

    18

    4½

    3

    16

    8

    3

    18

    4½

    2. Manufactured, viz.

    Cigars

    4

    6

    3

    4

    3

    3½

    4

    3

    3½

    Cigarettes

    4

    2

    10½

    4

    0

    6

    3

    18

    6

    Cavendish or negrohead:

    Manufactured in bond

    3

    19

    10½

    3

    17

    11

    3

    19

    10½

    Other

    4

    1

    10½

    3

    19

    7½

    3

    19

    7½

    Other

    4

    0

    1½

    3

    18

    2

    3

    17

    4½

    3. Snuff and snuff work (including tobacco dust or powder and ground tobacco)

    4

    0

    7½

    3

    18

    7

    3

    18

    4½

    TABLE 2

    Excise

    Rates of duty per pound

    TOBACCO

    £

    s.

    d.

    1. Unmanufactured:

    Containing 10 per cent. or more by weight of moisture

    3

    15

    8

    Other

    3

    16

    6

    2. Manufactured:

    Cavendish or negrohead manufactured in bond

    3

    17

    11

    TABLE 3

    Description of Tobacco

    Rates of drawback (per pound)

    In respect of tobacco on which customs duty at the full or Convention rate has been paid

    In respect of tobacco on which customs duty at the Commonwealth rate or excise duty has been paid

    £

    s.

    d.

    £

    s.

    d.

    Cigars

    …

    …

    …

    4

    1

    8½

    4

    0

    2

    Cigarettes

    …

    …

    …

    3

    18

    4½

    3

    16

    10

    Cut, roll, cake or other manufactured tobacco

    …

    …

    …

    3

    18

    1½

    3

    16

    7

    Snuff (not being offal snuff)

    …

    …

    …

    3

    18

    7½

    3

    17

    1

    Stalks and tobacco refuse

    …

    …

    …

    3

    17

    7½

    3

    16

    1

    In the Tables above "Commonwealth" indicates goods qualifying for Commonwealth preference under section 2 of the Import Duties Act 1958. "Convention" indicates goods of Convention area origin within the meaning of
    280
    the European Free Trade Association Act 1960 and "Full" indicates other goods.—[Mr. Maudling.]
    put and agreed to.

    6. HYDROCARBON OILS ETC. (EXCISE DUTY AND ALLOWANCES)
    Motion made, and Question,
    That—

    (a) the rate of excise duty on hydrocarbon oils produced in the United Kingdom shall be increased so as to equal the rate at which the customs duty on hydrocarbon oils is for the time being chargeable, and the provisions of section 3 of the Finance Act 1950 fixing by reference to the rate of that excise duty the rate of the excise duty on petrol substitutes shall have effect accordingly; and

    (b) allowances under section 206 of the Customs and Excise Act 1952 on hydrocarbon oils delivered to a refinery and used therein shall cease to be payable.—[Mr. Maudling.]

    put and agreed to.

    7. POOL BETTING DUTY
    Motion made, and Question,
    That, as regards bets made at any time by reference to events taking place on or after 3rd August, 1964,—

    (a) provision may be made for extending the amount on which the pool betting duty chargeable on any bets is to be computed so as to include amounts additional to the stake money, where any expenses or profits of persons concerned with or benefiting from the promotion of the betting are not provided for out of the stake money;

    (b) provision may be made for extending the pool betting duty to certain bets at fixed odds.—[Mr. Maudling.]

    put and agreed to.

    8. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES
    Motion made, and Question,
    That the period after which orders under section 9 of the Finance Act 1961 may not be made or continue in force shall be extended until the end of August 1965, and that such orders may apply to some duties, drawbacks, rebates, allowances or other payments within the said section 9 without applying to others.—[Mr. Maudling.]
    put and agreed to.

    9. INCOME TAX (CHARGE AND RATES FOR 1964–65
    Motion made, and Question,
    That income tax for the year 1964–65 shall be charged at the standard rate of 7s. 9d. in the pound, and, in the case of an individual whose total income exceeds £2,000, at such higher rates in respect of the excess as Parliament may hereafter determine;
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
    put and agreed to.

    10. INCOME TAX (SURTAX RATES FOR 1963–64)
    Motion made, and Question,
    That income tax for the year 1963–64 shall be charged, in the case of an individual whose total income exceeded £2,000, at the same higher rate in respect of the excess as were charged for the year 1962–63;
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]
    put and agreed to.

    11. INCOME TAX (MUTUAL TRADING)
    Motion made, and Question,
    That further provision shall be made for charging income tax in the case of bodies corporate carrying on a business which consists in whole or in part of mutual transactions between persons having dealings with the body corporate—[Mr. Maudling.]
    put and agreed to.

    12. INCOME TAX (TRANSACTIONS INVOLV- ING PAYMENTS FOR PROPERTY OR RIGHTS)
    Motion made, and Question,
    That, where transactions are carried out which involve payments in respect of any description of property or rights (whether payments by way of rent, or payments for the hiring of assets, or payments of any other description, and whether or not consisting of or comprising instalments of, or payments towards, a put chase price), charges to Income tax may be imposed, including restrictions on the cases in which, and the extent to which, the payments are allowable as deductions in computing income or profits or gains or losses, or relief is allowable in respect of the payments.—[Mr. Maudling.]
    put and agreed to.

    13. PROFITS TAX (MISCELLANEOUS CHARGES)
    Motion made, and Question,
    That it is expedient to authorise charges to the profits tax which arise from provisions for that tax corresponding with amendments of the law relating to income tax or are incidental to or consequential on such amendments.—[Mr. Maudling.]
    put and agreed to.

    14. INCIDENTAL AND CONSEQUENTIAL CHARGES
    Motion made, and Question,
    That it is expedient to authorise any incidental or consequential charges to any duty or tax which may arise from provisions designed in general to afford relief from taxation.—[Mr. Maudling.]
    put and agreed to.

    15. AMENDMENT OF THE LAW
    Motion made, and Question proposed,
    That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies.—[Mr. Maudling.]
    5.7 p.m.
    Mr. Harold Wilson: By long custom it is the duty of the Leader of the Opposition to express congratulations to the Chancellor of the Exchequer for the time being on the clarity and lucidity and, less frequently, on the brevity of his speech, whatever may be thought about the merits of the proposals.
    This is an agreeable courtesy and, as I was happy to be able to say with all sincerity last year, I say again this year that this is no empty one. I think that the order in which the right hon. Gentleman presented his speech, and his proposals, following very largely the line which he set last year, is one which is convenient to the Committee, though I hope that he will not mind my saying that compared with last year there seemed to be rather long periods of padding in certain parts of his speech, parts which were almost repetitious and showing, in oratorical terms, a marked inflationary tendency.
    It seems to me from studying the right hon. Gentleman's speech that this year we have far too many words chasing far too few ideas. It is not a reflection on the manner in which the right hon. Gentleman spoke to say that the whole impression which, at any rate, I had from his speech is that it was a tired Budget, but I am sure that I am speaking for the whole Committee when I express our sympathy to the right hon. Gentleman for the circumstances in which he had to prepare his Budget.
    To be left almost until Budget eve while the Prime Minister's native hue of resolution was being sicklied o'er by the pale cast of his second thoughts produced a situation which, I think, no previous Chancellor has ever had to face. Now, of course, the best that the Chan-
    284
    cellor has been able to produce, however eloquently delivered, is no more than a lame duck budget from a lame duck Government. I got the impression from the right hon. Gentleman that he seemed to lack confidence in his own proposals during at least the last three-quarters of an hour of his speech. I also had the impression that he did not think that this Budget would last the year out, anyway.
    It is not only the problem of timing which the right hon. Gentleman has had to face. He must be very well aware that the Government's time-honoured electoral cycle has gone badly wrong. This is the pre-election budget and it was never intended to be. Carefully following the 1955 and 1959 timetable, we had, of course, the four-yearly pre-election Budget hand-out last year. We had also last year the painfully contrived pre-election boom following the years of stagnation, and it was all nicely set for an election last autumn. Then, in a fit of absentmindedness, the party opposite forgot to have the election.
    So, instead of the critical strains which the Tory freedom boom usually produces after an election, we are now getting the warning signs, and the right hon. Gentleman, this year, even before the election—the timing is no fault of his we understand that—has had to start putting on brakes which in previous periods were put on successively by the Foreign Secretary, whose expression during parts of this afternoon's Budget speech was even more inscrutable than usual, and, of course, by the Leader of the House in 1961, who also managed to produce, for him, a quite inscrutable expression as we went on.
    We have now a situation, therefore, in which the right hon. Gentleman has had to take some action, and he is in the position of having to sweat it out for another six months. The way in which the usual election cycle has gone wrong is illustrated by the fact that whereas, in the last pre-election Budget, in 1959, the Chancellor took 2d. off beer, in this one he has put 1d. On—to say nothing of the 4d. on cigarettes. Last time, of course, the increase in the tax on cigarettes waited until 1960, when the election was out of the way.
    As the Committee knows, our full and considered comments on the Chancellor's

    285
    economic proposals and his tax changes will be made tomorrow by my hon. Friend the Minister for Cardiff, South-East (Mr. Callaghan). I think that he has an easy task. However, for a moment or two, I wish to offer a few first thoughts not so much on the Chancellor's tax changes as on the general strategy which he put forward in his speech.
    I must say frankly to the Committee—it was obvious that this would have to happen—that in terms of the economic problems which the country faces, this is an irrelevant Budget.
    Mr. Maudling: The right hon. Gentleman has said this before.
    Mr. Wilson: Yes, I said it on Saturday. It was obvious that it would be. The Chancellor has followed many predictions.
    Nothing that the Chancellor has done, or can do, in a Keynesian disinflationary sense—as he said, there will be a lot of arguments in the learned journals about whether he has done too much or done enough—nothing that he can do in this disinflationary sense of taking off a little of the surplus purchasing power can have the slightest effect on the country's immediate problem, on the import gap, for example., unless there is a marked fall in cigarette smoking, though I do not think that that was the aim of what he has proposed. It will have no effect on the industrial shortcomings which lie at the heart of our nagging balance of payments situation. It will certainly have no effect whatever on the measures necessary to secure an incomes policy, an incomes policy about which the Chancellor spoke a lot this afternoon, in a setting in which Government actions in 1961 and 1962 have destroyed trust in the Government.
    Nothing that the Chancellor said today, I felt, had any bearing on the problems of the "two nations" economy, where we now have the situation that the Chancellor has to try to restrain the overheating which he sees in the South at a time when large areas in the North are still in the chill grip of his predecessor's freeze.
    These issues and others will be developed by my hon. Friend tomorrow. The one point on which I wish to dwell
    286
    for a minute or two is one on which the Chancellor himself, rightly, spent quite a long time namely, the balance of payments problem. Not the least of the Chancellor's problems—I hope that I have managed to convey the sympathy which we feel for him—is the schizophrenic character of the Administration of which he is a member. For example, we have the Chancellor's quite serious speech today, and we have the Prime Minister's economic pronouncements from time to time.
    While the Chancellor is struggling with the incubus of 12 drifting years and the worsening balance of payments situation, which he frankly admitted—[Laughter.] There is really nothing to laugh about in the figures which the Chancellor gave. While he is doing that, his right hon. Friend, the happy wanderer, is going round the country blithely telling all whom he meets that the economy has seldom, if ever, been so good, seldom, if ever, been so strong.
    Usually, of course, we do not get these claims until the election is on, and we usually have to wait until the votes are counted before we get the truth against which to check the claims. In September, 1959, the then Prime Minister said:
    "Today, the British economy is sounder than at any time since the First World War… Our balance of payments is strong".
    In the event we had a balance of payments surplus on current account for 1959 as a whole of a bare £51 million, the worst for many years.
    This time, we have started to get the figures before the election and the Prime Minister's never-stronger economy—he must have had the figures before he made the speech—ran a balance of payments surplus on current account in the last quarter of last year of just £3 million. That was our balance of payments surplus on current account in the last quarter of last year, £3 million, to balance all our commitments in terms of Government expenditure abroad, overseas aid and overseas investment.
    Today, the Chancellor tells us, if I heard him aright, that in the period since then, the first quarter of this year, our balance of payments surplus on current account has now disappeared and has moved into deficit. The Chancellor will be the first to agree that the balance of

    287
    payments figures are themselves incomplete. There is always, inevitably, the so-called balancing item of figures which cannot be identified which has the habit of turning sweet in a good year and sour in a bad one.
    This balancing item in 1962 was favourable and, I think, showed a positive figure of plus £86 million. In 1963, it was in deficit, showing a negative figure of minus £129 million. When the Prime Minister sets off on tour again, perhaps he will spend a little time directing himself to this problem of both the current account deficit, of which we have heard from the Chancellor, and of the balancing item which we should like to hear more about.
    When I said that the right hon. Gentleman's Budget was irrelevant, what I meant was that it can do nothing of itself to put these facts right from the standpoint of our balance of payments. We all, I hope, will agree that in the strength of sterling and our balance of payments, the factor which over the past 12 years has brought every boom grinding to a standstill, the really determinant factor is the volume of our exports and the volume of our imports. We shall deal with this not by monetary methods, not in the main by budgetary methods, but by industrial policy, a policy of—
    Mr. A. E. Cooper: Nationalisation.
    Mr. Wilson: I do not wish to take the time of the Committee trying to compete with the eloquent tributes of the Chancellor this afternoon to the success of our nationalised industries. What is required—and I think that the whole Committee must agree with this—is a policy from the Government of the day to expand those industries which can make a big impact on exports—an industrial policy not just a policy of financial loans—and also to expand industries no less important which can save imports. We have repeatedly stressed this and made clear that we are thinking not in protectionist terms—I agreed with what the right hon. Gentleman said on that point—but in terms of the measures necessary to encourage the creation of efficient competitive industries instead of having to rely so much on importing from overseas, at a high cost to our balance of payments,
    288
    goods which we are quite capable of making for ourselves on a competitive and economic basis.
    The problem here, as the Chancellor of the Exchequer recognised, is the problem of manufactured goods. In 1953, our import of manufactured goods was £650 million. In 1963, it was £1,568 million. There was, therefore, an increase of well over £900 million in our imports of manufactured goods. Some of those are probably inevitable—we require them for one reason or another—but I cannot believe that this is something that this country can do nothing about. Over those 10 years, our exports of manufactured goods rose by 62 per cent. Our imports of manufactured goods rose by 141 per cent. Within that total, while imports of semi-manufactured goods, about which we should be able to do something ourselves, rose by 99 per cent., imports of finished manufactures rose by 234 per cent.
    That was why I was glad to see—and I am sorry that the Chancellor did not refer to this—that in the N.E.D.C. Report of March this year there is the statement that
    "The Council intends to study the development of imports, especially manufactures, to identify cases where important and rapid increases are taking place. This may help to reveal whether there are possibilities of producing in this country on a competitive basis goods of a type now being imported in substantial quantities."
    This is fine, but why has it taken 12½ years? Why have we had to increase our imports by £1,000 million before someone in the Government began to think that it would be a good idea to look at this menacing problem?
    We are all familiar with the fact that in machine tools, in respect of which we led the world not long ago, we are importing more and more of the sophisticated products. The figures—and I am sure that the Chancellor has studied them—show that the ratio between value and weight of exports is very different from the ratio between value and weight of imports, because the value per ton of imported machine tools is very much higher than that of exported machine tools.
    We led the world in computers at the end of the war. We have fallen behind, and we are now one of the biggest importers of these products.
    Sir Ian Orr-Ewing rose—
    Mr. Wilson: The hon. Gentleman has a whole week in which to catch your eye, Sir Herbert. I have promised not to keep the Committee long.
    In the case of reactors for power programmes, on which the Government are still dithering on our failure to produce after all this time reactors for marine propulsion, it looks as though a jerk needs to be given to some elements in British industry, whether by the methods mentioned by the right hon. Gentleman, by expansion of research and development contracts, or by some other method.
    Finally, the other big field in which the Chancellor has made no proposal whatsoever—he has done nothing about the export-import balance—is one about which he talks a lot. I refer to an incomes policy. When hon. Members opposite say, "Where do we stand on this", they know perfectly well that at our party conference last year we got the virtually unanimous support of the trade union movement on an incomes policy, which the right hon. Gentleman has never been able to get. There is a reason for this. It is that two years ago, under the economic régime of the Leader of the House, the Government, as employers, wantonly broke collective agreements and wantonly set aside arbitration agreements to which they were a party. That is why I, for one, find it a little nauseating to hear the Chancellor and other Ministers preaching about the sanctity of arbitration agreements.
    Earlier this year, the Chancellor put forward some interesting ideas on an incomes policy through the N.E.D.C. I think that they were his ideas; certainly, the N.E.D.C. put them forward. They have been flatly rejected, so far as dividends and profits and prices are concerned, by the Federation of British Industries. Since the right hon. Gentleman made an incomes policy the centre of his speech today, I should like to give the Committee the figures. They cover the 12 years up to the end of 1962.
    Total income from wages and salaries rose by 101·5 per cent. That is, they slightly more than doubled in monetary terms. Over the same period, total income from ordinary dividends rose by 156·8 per cent. Total income from rents,
    290
    which are a direct result of Government policy, rose by 172½ per cent. The right hon. Gentleman's appeal for restraint this afternoon contained an element of hypocrasy because the Government themselves are responsible for this. Meanwhile, for those able to draw on capital as well as have unearned income, the value of ordinary shares, taking 1954 to 1962 rose by 161·2 per cent.
    This is our first reaction to the Budget. We have expressed our sympathy to the Chancellor. He has mentioned a number of small tax changes, one or two of which we welcome, such as the one in respect of light hydrocarbon oil. I remember moving, three years ago, a new Clause and the right hon. Gentleman and the Leader of the House trooping through the Division Lobby against it after having advanced all the powerful arguments as to why the duty on light hydrocarbon oils could not be abolished.
    Mr. Cooper: And the Labour Government rejected it when they were in power.
    Mr. Wilson: The right hon. Gentleman rejected it three years ago. But that was three years further from an election than we are at present.
    The same is true of the social expenditure figures which the Chancellor gave today. He quoted the figures of university building. What was it, a 25 per cent. increase in a single year? Yet it is two years a go this month since the Leader of the House told us that we could not afford the few million pounds necessary for university expansion. We heard from the right hon. Gentleman today about the problems in the building industry and the heavy load placed on it. We agree with his diagnosis. What we have not yet heard from the Government—and I hope that we shall—is some explanation for this.
    Why is it that two or three years ago, when the programmes were just as urgently needed as today and the building industry was working below capacity and there was unemployment and underemployment, the Government, of which the Prime Minister, the Leader of the House and the Chancellor were all prominent members, were not able to expand the programme when there would have been no problem of overloading the industry?

    291
    The answer lies in the whole conduct of the Government's economic affairs. Their policies follow not a programme of national need, but an electoral cycle related to their hopes of retaining power. Nothing that we have heard in this Budget convinces us that they have any proposals to put forward to deal with a situation which they have created.
    Many years ago Lloyd George said that a tired nation is a Tory nation. We have had this afternoon a tired Budget, a Tory Budget, and it is quite clear that the Budget which will be required is one which will dynamise the economy in a way which this Government have not done.
    5.30 p.m.
    Mr. Dudley Smith: For my sins over the past few months I have had occasion to do researches into the speeches of the right hon. Gentleman the Leader of the Opposition. I must say, having heard him today, that I thought he fell well below standard. He referred to my right hon. Friend's Budget as being "irrelevant and tired". With great respect to the right hon. Gentleman, because he has, on occasion, regaled us with his amusing speeches, I am quite certain that his effort today was certainly tired and irrelevant.
    I believe that, fundamentally, this is a good Budget. It is a sound Budget. It may not be a sensational Budget and it may not be one which will perhaps intrigue a vast number of people. However, it does, I believe, underline the very sound state of the economy at the present time. Hardly ever before has a Chancellor been offered so much advice by the Press—the national Press and the technical Press—or received such consistent calls to reduce purchasing power. I am very glad indeed that my right hon. Friend ignored a good many of these suggestions and did not think it necessary to increase direct taxation as had been suggested.
    I am sure that the majority of people are looking forward to a continuing sound economy and growth and are grateful to my right hon. Friend that he has not increased direct taxation. One of the most realistic statements which I have heard in assessing the country's growth and capabilities is the fact that
    292
    we can as a nation look forward to a sustained growth in the period that lies ahead. I hope that everybody who will have grouses—and undoubtedly people will have, tonight and tomorrow—about the increased cost of cigarettes and spirits, will read exactly what my right hon. Friend said in his remarks about the general state of the economy and over the massive and welcome expansion of public expenditure which is going on at present.
    I am particularly gratified that my right hon. Friend did not find it necessary to increase the petrol tax at the present time—I think that there is even a good case for a reduction in the fuel tax—because any increase in it would have contributed directly to a rise in the cost of living. If I may say so with respect, I think that my right hon. Friend was very wise not to include this in the field of increased indirect taxation. There is obviously a very good case for London Transport and other bus undertakings to be granted a reduction in fuel tax. I believe that this matter will be referred to in the report which we may be receiving tomorrow with regard to pay and conditions on London Transport.
    I see in today's Financial Times that this would save London Transport something like £4·7 million a year and other bus undertakings some £25 million a year. This must be a consideration of great consequence, when we have to consider wage increases for busmen and also fare increases to finance those wage increases.
    The need to encourage saving is, of course, a paramount one and I am sure that we are all pleased that the Chancellor in his admirable speech underlined this aspect. I welcome the proposals he made today for encouraging saving. I believe that the basis and the strength of the country lie in the question of whether or not we are a saving nation. I am sure that there is a real place in the system for the National Development Bonds which my right hon. Friend announced, and I am sure they will be a very great success. I think also that other sectors of saving need examination.
    I am impressed by arguments put forward recently for raising the Surtax level for unearned income from £2,000 to

    293
    £3,000 a year. Obviously, this is not worth while for some, but it is important for others who may have made provision for their retirement, who have been thrifty and who have saved. I think that their case could bear examination, even if it is a minority one. I hope that when a Conservative Government is returned in the autumn the Chancellor of the Exchequer will give this matter further consideration. It seems unfair in some respects that whereas the earned income allowance for Surtax went up to £5,000 a year—very rightly, too—the unearned income allowance should remain as low as £2,000.
    My right hon. Friend the Chancellor referred to gambling and said that this source of taxation was nothing like as fruitful as it was supposed to be. But gambling is now a major industry. Thousands of pounds change hands every day, and I am not convinced by my right hon. Friend's argument that this is not necessarily a field which could be taxed to advantage. One of the arguments against a betting tax is that it is the same money which is in circulation and that therefore it is difficult to levy a tax. But I should have thought that a tax on winnings was fair and justifiable, at least on social grounds. A good deal of spare money is devoted to this pursuit.
    Vast numbers of bookmakers are making enormous profits. Some of this money is escaping the Profits Tax net, and I hope that my right hon. Friend, or his successors, will look at this matter and bring it within the ken of ordinary taxation. Surely, we might also have a special tax on betting shops because of the profits made by them.
    I support the Budget; I think that it is a particularly fine one in all the circumstances. One other criticism I have to make—I have made several criticisms, but they are minor ones because, as I say, I support this Budget—is on the question of the cost of education and whether or not it should be financed by the central Government or by the local authorities. I know that a current review is going on at present over the relation between national and local expenditure. My right hon. Friend made no mention today about the possible transfer of education costs, and I hoped that he
    294
    might have done so. Certainly he gave some very salutary figures. They are welcome, of course, because we all support the massive expansion in education, but I am certain that, overall, it is vital that we should have a move towards education costs now borne by the local authorities being transferred to the national Exchequer. That is really very important indeed when the figures are running as high as they are at present, and it is important, too, that there should not be a disproportion in spending on local services.
    I can foresee the day when so much will be spent on education by local authorities that other services may well suffer. We all pay national taxes according to our abilities, but local taxation by way of rates depends on the house in which live. As a consequence, there are cases of inequality and many of these inequalities are growing. I hope that in due course we shall not only have an extra portion of education costs being borne nationally by the Exchequer but that we shall also have a review of the whole rates system to see whether or not a form of local Income Tax would not be better and more fair for the population than the present one of raising local revenue by rating.
    Education costs will continue to soar and the stage will soon be reached, in the next decade or so, when we shall be spending £200 million a year on it. Such a sum cannot be financed to the same extent as at present by the local authorities. The whole system of rating definitely needs examination and if we do not do something about it I am certain that in due course all of us who pay rates will find this item, after food and housing costs, to be the largest item of our personal expenditure.
    Mr. Arthur Lewis: While I support the general principle which the hon. Member is putting forward, may I ask him to explain why, when we have put such a proposal forward from this side of the Committee, he has voted against us and in support of the Government?
    Mr. Smith: This point has been raised a number of times in previous debates on rating and I do not particularly want to go into the matter now. I support a review of the whole subject.

    295
    I have made no secret about it and have made many speeches about it. My views are well known in the House. But I do not believe that there is an easy panacea, and that is one reason why I want a wide-scale inquiry into the whole subject, possibly with the status of a Royal Commission. I refuse to believe that with someone of the status of a Robbins or a Trend in charge of an inquiry, we could not produce proposals for a better system of rating than that at present in operation. The basis of the current system dates back over 300 years. In an age of modernisation, to which both sides of the Committee subscribe, something ought to be done about the whole question of the out-of-date concept of rates.
    But I do not wish to stray too far from the Budget. I think that it deserves exactly the opposite description to that given by the Leader of the Opposition, who said that it was an irrelevant Budget. The underlying position is that the economy is buoyant. My right hon. Friend was both realistic and down to earth in his assessment. Most important of all is the incomes policy which he outlined; that which is proposed is the most important of all such policies and will remain the most important of those put forward in the debate over the next few days. The remarks which the Chancellor made about an incomes policy should be read by every employer and every trade union leader, because breaches in the policy of wages and incomes are, as he said, not just a setback for the Government but a setback for the entire country. This must be realised and said time and time again in every sector of industry and employment.
    This is a good and sensible Budget. It underlines the fundamental strength and resilience of the economy and it is well in keeping with the advances made by this Government over the course of the last 12 years.
    5.43 p.m.
    Lieut-Colonel Sir Walter Bromley-Davenport: I want to make a special appeal to the Chancellor to help, if he can, a certain section of the community in certain circumstances by giving them tax relief in respect of
    296
    travelling expenses to and from their work. I refer to that section of the community who might be called the voluntary-compulsory commuters.
    I am well aware that this point has been raised before, and I am equally aware that it is quite impossible for any Government to allow everyone in the country tax relief in this respect, but I wonder whether certain exceptions could be made to certain people who have been very hard hit through no fault of their own. I refer to those people who have had to leave their homes in the towns, where they lived near their work, and have had to move to county areas where new homes have been made available for them.
    For those who go to live in a new town there are no problems of transport to and from their employment, because new industries are created so there is no hardship. Indeed, they are better off. In my constituency the situation is very different. The wage earner has had to move with his family from, say, Manchester to a new home some distance from his employment, and instead of the happy situation which existed before with no transport problems, he finds himself some way from the station. He has to get to the train somehow in all weathers. If there is no bus he has to go on his feet. Once he gets into the clutches of British Railways he is faced with heavy and constantly rising fares.
    May I give just one example from my constituency? He has to pay 7s. for a return ticket from Alderley Edge to Manchester if he travels before 9.30 a.m. Of course he gets a reduction for a five-day ticket which costs. I believe, 24s. But when he arrives in Manchester he may find that the station is some distance from his place of employment. This means more buses and, once again, ever-rising fares. All this bears very heavily on the weekly wage, and it all has to be met out of taxed income. No doubt he can ask for a rise in wages, and no doubt he will get it, but this, again, increases the cost of the end-product, and it is one of the many factors causing a further rise in the cost of living. Any increase in wages is taxed even further, and this adds to the scale of any taxes which the wage earner already has to pay. It is a vicious circle.

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    The time factor in travelling these distances and the acute discomforts of the journey add to the general frustration. I know how difficult it is for the Chancellor in this case to grant tax reliefs to certain sections of the community and not to others, but the hardship is real, and I hope that the Chancellor will find some way to help in these cases, even though the help be only of a temporary nature, where whole families have been moved considerable distances from their work through no fault of their own.
    I am not referring to the commuter who chooses and prefers to live some distance from his work. I am referring to the commuter who has to leave his original home and has nowhere else to go. It is Hobson's choice. The situation is likely to get worse in my constituency. May I give two examples? The first is what was once the village of Hand-forth. The population in 1951 was 2,358. Today it is 7,500, half of whom are overspill. If Manchester succeeds in meeting its voracious demands for more building sites, the population will rise from what was once 2,358 to over 22,500. Let me give another example, Wilmslow, next door. The population of that urban district is 24,500, but again if the voracious demands of Manchester are met, it will rise to 48,500. This means many thousands more commuters living some distance from their work and all demanding more wages to meet the extra cost of their travel.
    May I suggest a solution. Where huge numbers of overspill have to be exported, would it not be better to build a new town for them with its own industries? Possibly my right hon. Friend could consult the Minister of Housing and Local Government in this matter. If such a policy were followed there would be two advantages. First of all, many thousands of wage earners would no longer be faced with expensive and uncomfortable journeys to their employment. Secondly, the character of existing towns would not be destroyed, as it will be if the policy of over swamping them with large populations is continued. Would not the original policy of in-filling, with limited numbers on existing sites, be far better for everybody? I hope that my right hon Friend
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    will find some answer to the problems which will please all sections of the community.
    5.50 p.m.
    Mr. Tam Dalyell: It is fortunate that the Minister of State, Board of Trade is on the Government Front Bench because it is to him that I wish to address my remarks. The Chancellor, I thought with some justification, told us in his Budget speech of the help which the Budget gives to Central Scotland and to the north-east of England and that 40 or 50 applications were coming in each week from firms wanting grants or loans in aid in areas in the north-east of England and in Central Scotland. However, this is not quite as satisfactory as it seems.
    If I could have the attention of the Minister of State, I would tell him of two events which were announced concurrently in the Scottish Press on Friday. One was an announcement to the effect that the British Motor Corporation at Bathgate had gone, and was going, on short time, so that men were being laid off for two days, because of the shortage of components coming up from the English motor accessories manufacture's in Birmingham. The other item of news was that a small Scottish component manufacturing firm by the name of Sharman McLean, Limited, had been forced to close its doors for the want of a Board of Trade grant. These two items of news appeared not only in the same week but on the same day.
    It is our impression that there are considerable difficulties surrounding the B.O.T.A.C. machinery, and it is these which I take this opportunity to raise, and perhaps, to put the matter in focus, to give a concrete example—
    Mr. A. Lewis: I am obliged to my hon. Friend for giving way. This is such a good speech that it is worthy of being listened to by a larger number of hon. Members, so may I draw your attention, Sir Herbert, to the fact that there are not 40 Members present?
    Notice taken that 40 Members were not present;
    Committee counted, and, 40 Members being present—
    5.53 p.m.
    Mr. Dalyell: To continue my illustration, which I believe has application widely outside Scotland, I must admit first of all that I have no proof whatsoever that since May, 1963, the Board of Trade made any concrete offer to this firm of machine tool manufacturers and motor car component manufacturers, Sharman McLean, Limited. I must be frank and say that there is nothing in writing to prove that any concrete offer was made, but like so many other firms—and I think this has a general application—this firm was given the impression by Board of Trade officials that it had every reason to expect substantial grants or loans, and my quarrel with the Board of Trade is concentrated on the fact that, although this started back in May, 1963, after months and months of asking, and of filling up of forms, and of interviews and questionnaires, after all this time had elapsed, it was not until March, 1964, that this firm got any definite answer that it would not get the grant for which it had asked.
    Perhaps it is no concern of this Committee or of the House that the directors of Sharman McLean, Limited, complain that they have lost some £30,000; it is perhaps no concern of politicians, although one may be sorry for them personally, and one may be sympathetic towards them; but where I think they have a strong case is this, that they argue that it is inconceivable that they would ever have gone to this scheduled area in Scotland had they not been given a very strong feeling at least, that their application for a grant would be looked at favourably.
    What I say to the Minister of State is that far too often—and I have given one concrete example, and one of his hon. Friends raised a similar case not so long ago—false impressions are given to the effect that firms starting off will get some help which, in the eventuality, never materialises. So I say that if the policy of helping areas of unemployment through the machinery of B.O.T.A.C. loans is to be continued then something far more definitive must be given to prospective firms at the beginning, before they start up.
    I now come to the broader question as it affects Scotland.
    The Minister of State, Board of Trade (Mr. Edward du Cann): As the hon. Member knows, I shall not be replying to the debate during this evening, and so I shall not have an opportunity at any stage of the Budget debate to answer his question. I rise only to say two things very shortly. The first is that, as he knows, these grants and loans are, so to speak, trammelled by legislation, and the Board of Trade is in the hands of the Advisory Committee. That is the first point. The second point is that I have noted the general remarks he is making, and I will see that at the earliest possible opportunity he has a full report on his case, with the details of which, as he said, I am not immediately familiar.
    Mr. Dalyell: I do not expect the Minister of State to reply in detail to what is an illustrative case, illustrating, I believe, more general problems.
    I think it would be wrong of me not to say that I have had every courtesy from the civil servants involved, and also that, having taken the—I believe, rather unorthodox—step of ringing up, in a moment of desperation, the chairman of B.O.T.A.C., Mr. Slimmings, he was extremely courteous on the telephone, and as informative as possible, and I have no complaint against him.
    I raise the general question of the rules under which B.O.T.A.C. operates. Mr. Slimmings, in the course of very friendly conversation, made it plain to me that he had to act as the representative of an anonymous body, that its decisions were anonymous, and that he had to respect a certain confidentiality, without which, it is argued, B.O.T.A.C. members think they could not operate.
    Are we quite certain that this confidentiality is necessary? If it is argued that confidentiality is necessary, I think we should like to know why. Many of us believe that where public money is invested, in such a situation, the public should know, within reason, how it is spent—not, perhaps, in minute detail; but, at any rate, we should know something of the details of the firm on which it is spent. Indeed, those who apply to B.O.T.A.C. have told me that they would be prepared to lay open a good deal of information about their firms, on the understanding that they would get such grants and loans.

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    This is not an easy matter. As I said, far be it from me to criticise personally the senior civil servants I interviewed at the Board of Trade or the chairman or members of B.O.T.A.C. At the same time, let us pose to ourselves the fundamental question: is this the way that we want to carry out development? Look what happened in this instance. For three years now we have been crying out for ancillary industries to the motor industry to be brought in to support Linwood and B.M.C. Then along came a firm. I do not say that it was a highly reputable, established firm. Perhaps not. Perhaps there were many questions to be put against it. But, granted that there may have been questions to put against Sharman McLean, Limited, are B.O.T.A.C. loans merely to be given to firms which are so safe that they would have access to the capital market anyway?
    This is a fundamental question. Are B.O.T.A.C. loans designed, as all of us have believed, to help firms willing to take risks? How are the risks to be defined? If B.O.T.A.C. is to stick rigidly to a banker's criterion, should it have the power to appoint an accountant of its own choosing to the board of a firm, about which it cannot make up its mind?
    Thirty men losing their jobs may not be a national issue, but what is far more serious is the reaction among all the potential employers who might well have come to Scotland or the north-east of England. They might look at the situation and say "Sharman McLean has failed. Shall we do any better?" It is singularly unfortunate that one of the pioneer motor industry ancillary firms has come to grief in this way.
    I think it is not the fault of individuals. I think it is the fault of a system which in the initial stages is far too ambiguous. I would have hoped that in the Budget the Chancellor would have been able to outline a scheme by which firms wishing to come to such areas as the North-East or south-west of England and the south-west of Scotland would be able to know where they stood from the beginning.
    6.2 p.m.
    Mr. A. E. Cooper: I hope that the hon. Member for West Lothian (Mr. Dalyell) will acquit me of any discourtesy if I do not comment
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    on his speech which was obviously of a constituency content. I want to address myself to the larger issues outlined in my right hon. Friend's Budget. First of all, I congratulate my right hon. Friend the Chancellor of the Exchequer. Those of us who have been in the House for a number of years know perfectly well what an ordeal it must be to present a Budget, no matter whether it is a good one or a bad one. To have to stand up for an hour and a half and outline the country's economic position in a way which will make some sense not only to hon. Members but to the country is an ordeal.
    What my right hon. Friend had to say with regard to savings was first-class. Personally, I should have liked him to go a little further. I have long held the view that the more one can save the less becomes the necessity for taxation in periods of, let us say, an inflationary tendency. However, what my right hon. Friend has done today in this connection can only be for good.
    My right hon. Friend's concessions with regard to light oils represent a reform which many of us on both sides of the Committee—I say this frankly—have been advocating for very many years. Certainly it is has happened every year in the 14 years that I have been a Member of the House. When I intervened while the right hon. Member for Huyton (Mr. H. Wilson) was speaking, I was saying nothing but the truth—that the Labour Government opposed year after year any repeal of the light hydrocarbon oil duty. Let us not be mealy mouthed about it. Both Governments have done the same thing. Now it has been found possible to make some concessions. This can only be helpful to industry and can only help also our national balance of payments, because we shall now be able to produce, as the result of these concessions, many things which are at present being imported in substantial quantities from the Continent.
    With regard to my right hon. Friend's proposals on gambling, I could have hoped that he would have gone further. I realise the complexities of the problem. I am not as an individual able to put forward any proposal which I think could really be a solution to this very difficult problem. Nevertheless, we are

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    faced with the fact that about £1,000 million a year is being spent on gambling, and a very small proportion of that accrues to the Exchequer. We ought to find some way of getting a bigger slice of the cake.
    I am glad to see here the hon. Member for West Ham, North (Mr. A. Lewis), who has played an important part over the years in trying to get some concessions for greyhound racing. I am sure that all of us who are interested in greyhound racing will appreciate the crumb which the Chancellor has given us. We wish he could have done more, but at least he has moved in a direction which can only be helpful to the sport.
    Dr. Alan Thompson: The hon. Member expresses doubt about what more could be done. I suggest that fruit machines, which are mechanical devices, would lend themselves fairly easily to taxation. They make large profits, about £50 per machine per week. They might certainly be a source of making money for the Revenue, on which point I thoroughly agree with the hon. Member.
    Mr. Cooper: I agree with the hon. Gentleman, but the problem with which I as an individual am faced is that I do not know how much is put into the machines in a week or month and how much is won by the people who pop their sixpences in. I should have thought that to try to tax one-armed bandits was a very difficult operation. Nevertheless, I should have thought that there would have been some way in which the Exchequer could have derived a bigger sum from gambling, which is now one of our major industries. I believe that a Departmental Committee has been reviewing the matter for the past two years, and I should have thought that an interim report might have been given to the House before now.
    I now want to talk about the Leader of the Opposition and one or two of the things which he has said this afternoon and in recent weeks. What a pathetic speech we heard from him!
    Mr. Dan Jones>: The hon. Member says that as a matter of opinion.
    Mr. Cooper: The right hon. Gentleman's speech was written and prepared
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    long before the Chancellor made his speech. The right hon. Gentleman indicated two days ago that, no matter what the Chancellor of the Exchequer said today, what he said would be irrelevant. The right hon. Member for Huyton stood up today with a speech prepared and written days ago.
    Mr. A. Lewis: I suppose the hon. Member sat down and wrote his just now.
    Mr. Cooper: The hon. Gentleman is so right.
    When it comes to personal abuse the right hon. Gentleman the Leader of the Opposition has no peer in this country. When it comes to constructive common sense his knowledge of public affairs is abysmal. I honestly believe that, if I showed him a factory he would not know what it was, and that, if I sat him behind a desk for a month and told him to get on with the day-to-day business of industry with which we are faced, he would sink without trace.
    I hope sincerely that the B.B.C. and the I.T.A. will continue to give the right hon. Gentleman all the opportunities for television broadcasting that he wants, because he is our greatest ally. Never was there a man who talked so much economic nonsense as the right hon. Gentleman. What did he say last week in the Labour Party's political broadcast?
    The right hon. Gentleman was putting forward the usual grandiose schemes of the Labour Party. He was explaining how it would increase pensions, reduce taxation and do away with National Health Service charges. Someone had the temerity to ask him how it would pay for these things. He said that this programme would cost a lot of money, but that if the Tories had not depressed productivity in the past few years we would have had £3,000 million to £4,000 million in extra revenue from which all these things could have been paid for. What utter nonsense. Let me give the right hon. Gentleman and Members opposite—
    Mr. Harold Davies: A lesson in economics.
    Mr. Cooper: —an A B C of economics.
    The hon. Gentleman the Member for Leek (Mr. Harold Davies) may not like

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    it, but it is a fact that the fulcrum of the economic progress and development of our country depends entirely on our export trade and our ability in exports. Nothing else matters.
    Mr. Harold Davies: It is axiomatic.
    Mr. Cooper: I am glad to hear the hon. Member say so.
    It must follow that what we have to do is to provide the opportunities and facilities by which industry can prosper and in which we can have competitive facilities to sell our goods abroad. But simply to have a consumer boom in this country in no way helps us to sell our goods abroad. [HON. MEMBERS: "Hear, hear."] The amount of support I am getting from hon. Members opposite is astonishing. They really have not been thinking in these terms for the last few years.
    Mr. Leslie Hale: The hon. Member is expressing views which appear to be intelligible and clear. We accept them. Indeed, we have always agreed with them. I hope that he will go on to say that the inevitable result of this argument is a decrease of taxation. Will he enumerate the heads of taxation which he would propose to decrease?
    Mr. Cooper: The hon. Member for Oldham, West (Mr. Hale) is sometimes what was once said by the noble Lord, Lord Salisbury, about my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod)—too clever by half. He says that I am expressing for the first time views with which he agrees, then he goes on to say that they are views with which he has always agreed when I have expressed them. This is not the first time in this House that I have expressed these views. I have said these things over and over again for the last 14 years.
    Mr. Hale: Not in my presence.
    Mr. Cooper: I am sorry that the hon. Gentleman has not thought it worth while listening to me on previous occasions, but I have been saying these things for years. Now we agree that exports are vital, that this is the fulcrum of the economy and that unless we can get an expansion in exports there is
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    nothing more that can be done in this country.
    The pay pause which was introduced by my right hon. and learned Friend the present Leader of the House when he was Chancellor of the Exchequer had the two simultaneous objectives of introducing an incomes policy and damping down demand within the country. Those were two essential parts of the policy. Neither of these things was intended to have or had any effect upon our ability to sell goods abroad. There were no restrictions upon manufacturers in selling their goods overseas. Why did we not sell more? Why did we not increase exports by £100 million, or £300 million, or £500 million a year? There are a number of reasons.
    Mr. Archie Manuel: We did during the Labour Government.
    Mr. Cooper: I do not think that the hon. Gentleman should pursue that line.
    As I was saying, there are a number of reasons why we have not achieved this increase in exports. First, simply to have goods available on time at the right place and in the right quality and at the right price is not necessarily all one needs in order to sell in an export market. Many countries have import quotas and licensing because of balance of payment problems. I remember the hon. Member for Oldham, West making a speech several years ago when Australia imposed restrictions on textile goods because it had a balance of payments problem. That sort of thing happens all over the world and it is no use denying it.
    The world does not owe us a living. All these countries have their own internal problems. The Commonwealth, particularly the coloured part, if I might use that phrase, requires thousands of millions of pound worth of goods which this country can make and deliver on time. But these countries cannot pay for the goods. They have not the resources. It is no use us here merely stepping up or domestic demand, which itself would mean imposing upon ourselves obligations for imports which we could not match by a consequent level of exports.
    Hon. Members opposite have agreed with me that exports are the nub of

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    our problem. What we must do is so order our economy that we have a sufficient and continuously expanding volume of trade in the export markets.
    Mr. D. Jones: The hon. Gentleman says, rightly, that exports are the nub of our problem. He has also pointed out that our exports to coloured people—to use his own phrase—are very limited. Is he aware of the exports of Germany, Japan and Italy to the West Coast of Africa?
    Mr. Cooper: I was going to deal with that in the other two parts of the triangle I am putting forward.
    Mr. Hale: I appreciate what the hon. Gentleman is saying. One of the deprivations of this exacting life is that I have never had the intense felicity of reading my old speeches. I speak from memory, but I made this speech in 1947 in rather depressing circumstances and, as it happens, with some advice from my hon. Friend the Member for Leek (Mr. Harold Davies), who has an extraordinary habit of being correct although he expresses himself with such vehemence that his friends are not always sure of his correctitude.
    Mr. Cooper: I am not sure what that intervention was intended to convey to me or to the Committee. If the hon. Gentleman is amused by it, why should I spoil his fun?
    We have talked about the necessity of being able to provide for exports. Let us now talk about wages—
    Mr. Manuel rose—
    Mr. Cooper:—dividends and profits.
    Mr. Manuel: The hon. Gentleman promised to give way.
    Mr. Cooper: I have been very fair so far about giving way to other hon. Members, but I will give way to the hon. Gentleman.
    Mr. Manuel: I appreciate that. When talking of exports, and referring to the period when the Labour Government were in office from 1945 to 1951, the hon. Member will, I am sure, recall vividly—as most leading economists do—that because of the imposition by Sir Stafford Cripps of controls, and especially because of the availability of cheap
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    steel, we boosted the export of cars substantially, and pushed up employment in this country, at a time when industry was going through what would have been a very bad period had not those controls been imposed. I hope that the hon. Member will appreciate that and will give credit where it is due.
    Mr. Cooper: There are times when we have to live in what might be called a siege economy. Those conditions might be expected immediately after a major world war. That I concede. But it is a long time since the end of the Second World War and we ought now to be operating a system in which the market is allowed to take its chance. If we are good and efficient, we shall sell our goods. If we are inefficient, we shall fail to do so. I repeat that the world does not owe us a living. We have to earn our own living. No other country will give us what I have described before in the House as soup kitchen subventions to make sure that we have a decent life. We have to work hard at earning our own living, and so order our economy as to make sure that we do earn our living.
    Having established that exports really determine the prosperity of the country, let us analyse it a little further and relate it to the policies of the Opposition in respect of wages, dividends and profits. Although wages are, obviously, a very important part of the cost of manufactures, they are not all that important. It depends entirely on the kind of industry in which one is working. In some industries, particularly steel, there is a high degree of automation and the actual labour cost proportionate to the unit of output is low. In a barber's shop the labour cost is high and is reflected in the cost to the customer. We have to find a happy medium.
    The Government are trying, and management is trying, to introduce a national incomes policy and to persuade people to understand that they cannot take more out of the economy than they put in. What does the Labour Party say in answer to this? It agrees that there must be some sort of policy for wages, but argues that this may be possible, and the co-operation of the trade unions secured, only if we are prepared

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    to impose an incomes policy on dividends and profits. As a street corner proposition, that may have some emotional appeal, but I hope that hon. Members are rather more sophisticated and prepared to examine the matter in greater detail.
    Let us consider dividends. I take no account whatever of the figures put forward today by the right hon. Member for Huyton of the percentage increase of dividends in relation to wages and the like. These things have no relationship one with the other. Wherever there is an increase in wages probably only a small percentage is chargeable at the full standard rate of tax. Any increase in dividends or, indeed, any dividends at all, are probably taxed wholly at the 7s. 9d. rate and the probability is that a great deal goes in Surtax as well.
    Mr. A. Lewis indicated dissent.
    Mr. Cooper: It is no use the hon. Member for West Ham, North (Mr. A. Lewis) wagging his head. If he has an argument contrary to mine, let him interrupt me.
    Mr. Lewis: It depends on the Income Tax category of the recipient. If the recipient is in the non-taxable class, he can reclaim the taxation which is paid and, in effect, has a tax-free dividend. It depends on who is drawing the dividend.
    Mr. Cooper: The hon. Gentleman is quite right, but I know of few people drawing dividends on share investments who are not also paying Income Tax. If they are not paying tax, they have been "fiddling" somewhere. The great proportion of people who receive dividends pay the full standard rate of tax.
    The important thing which the hon. Gentleman and his hon. Friends forget is that the Welfare State has to be paid for, directly or indirectly. These are facts which hon. Gentlemen opposite may not like, but which have to be faced.
    Mr. Hale: Give the figures. The Chancellor gave them.
    Mr. Cooper: If we reduce the dividend to such an extent that it becomes what hon. Gentlemen opposite might think acceptable to trade unions—
    Mr. Hale: The hon. Member is talking nonsense.
    Mr. Cooper: —there will be a considerable deficit which will have—
    Mr. Hale rose—
    The Temporary Chairman (Sir Herbert Butcher): Order. The hon. Member for Oldham, West (Mr. Hale) knows very well that is the hon. Member for Ilford, South (Mr Cooper) does not give way, he is not entitled to remain on his feet.
    Mr. Hale: I appreciate that, Sir Herbert. The hon. Member for Ilford, South (Mr Cooper) has been generous in giving way, and I do not criticise him. But he is making statements which are clearly misleading. I rose, quite humbly—and I did not remain standing for long, Sir Herbert—to try to catch his eye and to make an intervention. I hope that it will be respectful of me if I say that your somewhat premature intervention deprived him of the felicity of seeing that I was about to intervene.
    Mr. Cooper: I think that I have been a Member of this House long enough for hon. Gentlemen opposite to know perfectly well that I give way probably more readily than any other hon. Member on this side of the House. I have given way a lot tonight, so now may I be permitted to carry on with what I wish to say? That will be of benefit to everyone, because I shall sit down all the sooner.
    Mr. Hale: I shall have to leave.
    Mr. Cooper: That is, of course, my loss, but it will I suggest, be to the benefit of the House, if I may say so.
    Let us get away from dividends and shareholders and discuss the profits of companies. If there are present hon. Gentlemen on either side of the House who have any responsibility for the running of a business, they will know perfectly well that at the beginning of a business year it is virtually impossible to determine what the profits will be at the end of the year. All sorts of situations might arise which could determine the profitability of a company.
    Restrictions might be imposed, for example, by Australia—as did happen—which could have a serious effect on industry in Lancashire and other parts of this country. We could have problems arising in India which could have

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    this effect. Otherwise, we could have an absolutely free run, everything going first-class, and make a big profit.
    Generally, the net profitability before taxation of the really big companies of the country is in the 8 per cent. to 12 per cent. brackets. We have to remember that within those brackets is the profit upon which tax is paid and which comes to the Chancellor of the Exchequer. That is an enormous sum of money which goes towards the maintenance of the Welfare State. If, by legislative action, we force industry to reduce its profit margins to, say, half that, the difference can only be met by taxation.
    Are right hon. and hon. Members opposite honest enough to say that they are prepared to do that? They know perfectly well that they cannot. Why, then, do they talk of an incomes policy which embraces these two factors which contribute so much to the Welfare State and without which they would be forced to increase taxation?0
    I see one or two hon. Members opposite who represent constituencies in Scotland, the north-east and the west of England, where there are certain unemployment problems at this time. For some months they have been saying that these problems arise from Government policy, but in fact that is not true. What has happened—and this is where hon. Members opposite carry a very heavy responsibility—is that the Labour Party has no longer any sort of control over its paymasters, the trade unions, and the T.U.C. has no control over individual unions. We have lost millions upon millions of pounds worth of orders in the north-east and north-west of Scotland for shipbuilding. Why? It is because we have not been able, during the last few years, to deliver ships on time. Nor have we been able to quote the right prices. Why? It is because of unofficial strikes one after the other, because of the activities of "Ted" Hill and the Boilermakers' Union.
    Several Hon. Members rose—
    The Deputy-Chairman (Sir Robert Grimston): Order. To whom does the hon. Member for Ilford, South (Mr. Cooper) wish to give way
    Mr. Cooper: So many hon. Members opposite wish to interrupt that I do not
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    mind to which of them I give way, Sir Robert.
    Mr. Edward Milne: I have listened with considerable interest to the speech the hon. Member for Ilford, South (Mr. Cooper) has been making. I have listened with considerable interest on the previous occasions when he has made the same sort of speech. When he talks about shipbuilding orders being lost because of the attitude of trade unions on the North-East Coast and in Scotland he is talking nonsense. From the last available figures we find that 82 per cent. of all the shipbuilding orders which came to Britain came to the north-east of England. If we are to have a basis of facts in considering this matter, let the hon. Member take the basis of the figures available from the Chancellor of the Exchequer.
    Mr. Cooper: It is the hon. Member for Blyth (Mr. Milne) who is talking nonsense, because all the time that the shipyards on the Clyde and in the north-east of England have been virtually empty shipyards in Amsterdam and other ports on the Continent have been full of British ships. That was because they could not get the work done here in the time and at the price at which it could be done on the Continent. It is no use hon. Members opposite blinking their eyes to these facts. They are the facts of life. Until the paymasters of the Labour Party, the trade unions, face these facts, we shall not solve the country's problems.
    Having said what I had to say, which, I hope, was not too controversial, I should like to say one or two things which I had hoped my right hon. Friend would include in his Budget statement today. Civil Service and Armed Forces pensions have been the Cinderella of our pensions system for far too long. The House ought to take cognisance of the problems and difficulties which affect pensioners in this category. I hope that when the Finance Bill comes forward we shall have an opportunity of discussing this matter in greater detail.
    One of my hon. Friends has referred to rates. Rates have now become a problem similar to the old one which has now been resolved, the duty on light hydrocarbon oils. We talk about rates, but Governments of all parties dismiss the subject as something with which we

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    can deal on another occasion. I tell the Parliamentary Secretary to the Board of Trade, who is on the Front Bench, representing the Chancellor, that the problem of rates is one of the serious domestic problems facing the country. We in Parliament cannot throw it aside lightly. We have to do something about it during the next year or two, or we shall find the development of our social services, especially the education service, grinding to a halt because money will not be available from the ordinary ratepayer to finance those services.
    There must be some new method of assessing a local rate. I disagree entirely with my hon. Friend the Member for Brentford and Chiswick (Mr. Dudley Smith) on the question of local income tax. I should have thought that the arguments against that were absolutely overwhelming. In much the same way the arguments about local purchase tax are overwhelming. There is only one way in which this problem can be tackled. That is to take away from local authorities the financing of one part of whatever it may be in local expenditure.
    No one would say that this is an exciting Budget. There was never any intention on the part of my right hon. Friend that it should be an exciting Budget. No one can say that it is an electioneering Budget—
    Mr. Rankin: That will come later.
    Mr. Cooper: —although hon. Members opposite thought that that might be the idea. We have come to regard the annual Budget as a sort of Christmas Day distribution when Santa Claus gives something to everybody. That is not the purpose of the Budget. The Budget is simply a means whereby the economy of the country is regulated so that we can proceed on orderly lines to give us the necessary expansion. To use the Chancellor's phrase, to have expansion without inflation. We have got the expansion. It is going along very steadily; in fact, some economists think that we are going along rather too fast.
    The opportunities for us to increase our exports at this time are immense. My appeal is that labour—I do not mean the Labour Party, but labour and management—should not be too greedy. We should try, each and every one of
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    us, to take out of our effort and our work a due proportion of that which we earn. If we can be prepared to work as a team I believe that the future prosperity of the country will be far greater than anything any of us could have dreamed of. But if any one section tries to take more than it is earning we shall fail, and we shall fail dismally; and if we fail the failure will not fall upon one section of the community, but on all of us. Through the policies initiated by my right hon. and learned Friend the present Leader of the House, we have great opportunities. Let us not fail now.
    6.40 p.m.
    Mr. Robert Woof: In following the hon. Member for Ilford, South (Mr. Cooper), I wish only to make one or two remarks on the aspects of economic and material interests, as the spectacle which presents itself at the present time is one which awaits the restatement of economic faith.
    I suppose that during an election year, if anyone were to ask an ordinary voter what he was aiming at he would probably say that he wanted security in the means of his livelihood, prosperity, protection front the miseries and tragedies of unemployment, the welfare of his children, good housing and good education.
    Certain assumptions are, however, essential for the success of economic and social problems. They must be solved in accordance with the stage of development which the country has reached. I believe, therefore, that where freedom of speech, freedom of combination, together with political freedom and voting power, have been secured, the use of the political weapon is by far the best course and, in the long run, the most effective.
    Political action is also a continuous education and training for administrative affairs, but no knowledge, no learning, however great, can keep us straight if we get things wrong. It will not seem curious that all the wants, desires and ambitions of people are bound up with the things that they see around them. There is a thirst for material things which is an aspect that we must regard as being characteristic of modern times.
    It is to all outward appearances a striving in the changing economic conflict,

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    in which the future is no longer destined to resemble the past. Even the best of people will come to the conclusion that, as in politics, movements have always been towards political rights, so in economics it is now a movement toward equality in economic opportunity.
    Congratulations have been offered to the Chancellor of the Exchequer on the way in which he presented the Budget. The kind of Budget which the right hon. Gentleman has presented comes as no great surprise. In his 1963 Budget, he stated that his aim was economic expansion without inflation. Today he said that the task this year is to ensure that expansion continues at a rate which can be sustained without inflation. If, as the Chancellor says, he hopes to achieve a regular growth of productive capacity in a smooth transition, the method applied will be a crucial test of the good faith of the Government in their modernisation plans envisaged for the North-East.
    As we comprehend the nature of the great changes going on around us, the first matter of importance which attracted my attention in the Chancellor's speech was to hear him say that the incentives and allowances given in the last Budget to industry in development areas will continue. In some ways I welcome the Chancellor's statement, because there are many interesting reasons in which many striking features of the current economic outlook are closely associated with the Government's regional planning proposals.
    If we take, for example, the Government's plan for the South-East, it may be readily understood as a future picture of enlargement, but concern must be shown when the existing overcrowding in the South-East is already creating acute housing, transport and land problems. In the process, it is accepted that large population increases in the South-East are inevitable. The aim may well be to break the vicious circle in the most crowded and congested parts, particularly in the London conurbation, which has been experiencing the fastest population growth of any part of the country.
    Those of us who live in the North-East, however, are chiefly concerned about the high level of emigration of people to the South because of the failure
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    to create sufficient jobs where they live. There are still 50,000 unemployed and only 8,000 vacancies in the North-East. It is clear that the problems of the South are of a different kind from those of the North-East, but it is clearly in the national interest that they should be dealt with effectively. The nature of the deep dividing line between the North and the South compels us to view the situation not so much from what has happened in the past but as to the future in which our position has become primarily related.
    To obtain a definite view of the nature of the position towards which we are drifting, emigration during the past 12 years has been brought about through grinding pressure to seek alternative employment elsewhere. This applies particularly in the mining industry and areas, where nothing remains of productive activity but an obscure remembrance.
    In passing, it is of interest to note that Coal Board chiefs have now decided that the run-down of manpower in some areas has gone too fast and too far. There is nothing strange in that. It is what we have expected as a consequence of Government policy and in large measure hundreds of bona fide miners have been forced to give up their livelihood in the mines and to take up other work to avoid redundancy.
    Reverting to emigration, I suppose that there comes a time in the life of most individuals to better themselves. Perplexed by so many uncertainties, actuated by genuine motives and in pursuit of their natural inclinations, they try not to be idle or useless in trying to find a place in the categories of life. Straining every nerve to prevent themselves from being thrown on to the employment exchange, they lean to emigration as a course of finding the variety and character of their needs.
    To give a broader picture of the population movement, between 1951 and 1961 no fewer than 80,000 people left the North-East. Recently the outflow has increased to an estimated 12,000 a year, including 4,000 male workers every year. We have had a White Paper recently on the North-East which sets out a programme for regional development—and, incidentally it has emerged from the long

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    silence of any action from the Government to reverse progressive deterioration.
    The Report accepts, however, that employment in the mining industry will continue to fall for many years to come. Redundancy is now runnuing at a rate of 6,000 a year and it is expected that within the next five years between 15,000 and 30,000 men will probably become redundant. While it is true that most displaced miners have been transferred to other coalfields, this is not the only thing that matters. Foremost in importance is the fact that large communities have come into prominence founded on past industrial activity, and by the process of integration they have developed into definite and coherent communities. Such populations have become fixed, which explains why the need for industrial readjustment is continuing to press with ever increasing weight.
    It is in these circumstances that, in spite of the perceptible movement of the population southward, the population in the North-East still continues to grow to a medium density. We believe that immigration is a result of badly co-ordinated division of labour, and looking at the matter in its purely economic aspect, we are reminded that when the Secretary of State for Industry, Trade and Regional Development took over the responsibility for the region he said that continuity was essential to the success of the Hailsham Plan. This we understood to mean continuity of expansion, which involves continuity of capital investment.
    We hope in the circumstances that the pledge which the Government gave to modernise the North-East will continue, as on no account must the Government give more favourable concessions for industrial expansion in the South as against that of the North-East. No one who engages in such serious study can resist the conclusion that we are face to face with crucial problems that are more far reaching in extent than anything that we have ever encountered before. The facts upon which we rely are facts of common observation and, according to the interpretation of the Government's proposals to modernise the North-East, involving intensive development of trunk roads, motorways and new towns financed by the Exchequer, picture a condition that
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    such development alone may easily prove insufficient without new industries to provide work and to maintain the population.
    I agree that the public investment programme is not a narrow one. It is quite an extensive one. But there are other operations which are essential to enable local authorities to emerge with success to a higher level of improvement. They involve expenditure so heavy that local authorities cannot, in effect, sustain it. If there is to be real planning which involves the transformation of old industrial areas into a more fundamental basis to raise the standard of environment to attract industry, then the local authorities' spending would have to be greatly increased, and a still heavier but den will be put on the ratepayers.
    As the hon. Member for Ilford, South stated, the problem of rates is always of high public interest among domestic ratepayers. I believe that there is nothing more controversial that is likely to upset an earnest councillor's endeavour than being approached on the question of increased rates, but from a personal point of view, particularly during a pre-election period, I think that things would be helped to be more clear if people understood and remembered that the rate burden has been brought about by the Government, by transferring the cost from the taxpayer to the ratepayer—that is, from the Treasury to the local authorities.
    It is well known that throughout the past year tears have been expressed, justifiably, about the consequences of the 1963 valuations. Each and every one of us—hon. Members on both sides—has had experience of the outcome which has Seen so strongly expressed by industry, householders and by local government representatives. After making every possible allowance for necessary adjustments, it remains evident that local authorities have not got the resources, and to prevent them being put at financial disadvantage, because the cost of raising loans has become so crippling, it is essential that additional financial assistance be given to them.
    This calls for adequate recognition. It is obvious that there can be no economic salvation without including grants or interest-free loans and a reduction in

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    interest rates to relieve the pressure on the rates. All sorts of circumstances, foreseeable and unforeseeable, might affect in one way or another the standard of life in the North-East. The way in which economic life is organised can result in a degree of instability and insecurity, but, nevertheless, ardour and endurance will continue. There should be no necessity to leave great parts of our productive apparatus idle, but the real test is whether the Government are prepared to make the North-East a workable and worth-while reality. The Government must show in more convincing detail how they intend to organise the North-East on productive lines. If they include the method and the organisation for the systematic take-off into the country's modernisation and industrialisation, then so much the better, but to steer the right course I am very much afraid that the Government will need more prodding in this direction.
    As the General Election approaches, the antics of the Tory propagandists become more and more remarkable. There is no doubt that the Government want to further their class aims, helping landlords and property speculators, giving financial sharks more millions of pounds every year from high interest loans. The pushing of stocks, the reshuffling of shares, becomes more and more the essential occupation of many of the top layer of society, but when the livelihood of so many people is dominated by reverberating economic worries, fears and frustrations, the job to be done can be effectively tackled only when we evoke constructive impulses which will bring about a major change which can provide with elementary dignity the means of work. As a consequence, we must have a Government who will put people's needs before the criteria of Conservatism.
    6.57 p.m.
    Mr. John Biffen: I hope that the hon. Member for Blaydon (Mr. Woof) will forgive me if I do not follow the main course of his remarks, which concerned the North-East. He is the hon. Member for a constituency in the North-East, and very naturally he has an acute constituency interest in the welfare of the area. None the less, I must dissent from the closing passage of his remarks. I cannot think it is par-
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    ticularly helpful to represent those of us whose political leanings lead us to be Tories as protectors of and spokesmen for share pushers and financial sharks, any more than it is particularly desirable that one should represent supporters of the Labour Party as being those who wish to cover up unofficial strikes and wildcat trade unionists. So perhaps we can agree to have a tolerable difference of opinion on that.
    There is something rather charming about the first evening of the Budget debate. I gather that years ago it was the practice for the Committee to adjourn shortly after the conclusion of the Chancellor's speech. It is now a good thing that the fairly good natured amateurs, amongst whom I count myself, get a chance to speak on the first evening before the professionals, who in any case read all about it in tomorrow's papers, take their turn. [Interruption.] Perhaps the hon. Member for Leek (Mr. Harold Davies) considers himself to be a fully fledged professional financial expert. I am prepared to accept his description. I certainly withdraw any suggestion that he is one of the Rood natured amateurs in this debate, if that suggestion offends him.
    If we think of ourselves as good natured amateurs, we must not be too disheartened by all this, because the Chancellor is subject to an enormous amount of highly professional advice every year. It is just as well to recall some of the advice which he has been offered this year. The Spectator, which I agree is not a citadel of orthodoxy—
    Mr. A. Lewis: Where is the editor?
    Mr. Biffen: We will make do with the proprietor on this occasion. [Interruption.] The hon. Member for West Ham, North (Mr. A. Lewis) is an expert on strikes; I accept that.
    Mr. Lewis: Being an expert, I made the remark that the right hon. Member for Enfield, West (Mr. Iain Macleod), now the editor of the Spectator, has been conspicuous by his absence ever since he left office, as is the case with almost every Minister. The hon. Member has spoken about unofficial strikes. If he wants to be fair he should talk about those who strike day in and day out on full pay, who used to be, and ought to be, sitting on those benches.
    Mr. Biffen: If the hon. Gentleman were able to use his good offices as a conciliation officer, I would have no wish to stand in his way.
    If I may revert to possibly a more relevant matter, namely, the advice given to the Chancellor, Mr. Davenport in the Spectator said that the Chancellor should, in fact, not make any net addition to taxation. At the other end of the range, the advice in today's Financial Times by Professor Paish was that the Chancellor should add to it by £300 million. The only conclusion that one can draw from past experience on this is that Chancellors are well advised not to take too much notice of the professional advisers; and certainly that was true last year when the National Institute of Economic and Social Research suggested the most considerable tax remissions, which had they, in fact, been acted upon would, I think, have created very serious inflationary difficulties during the current year.
    The other point with which I would conclude on this particular set of observations is that one needs to be clothed pretty much with humility when approaching economic problems, and therefore. I cannot accept the strictures of the Leader of the Opposition that one manages to contrive booms. I do not think that the weapons of economic management are so expert that one can contrive booms. Indeed, when the hon. Member for Cardiff, South-East (Mr. Callaghan) comes to speak later, I hope that he will be able to expand a little on the article that he has written in today's Financial Times in which, for example, he made reference to the accurate instruments for economic measurement. The sentence which I would like to quote is
    "I do not see how the poor man"—
    that is my right hon. Friend the Chancellor—
    "can make an accurate judgment when he does not possess accurate instruments."
    I know that it is a point widely felt that one would like to see more accurate weapons in the hands of the Treasury, but I would be very interested, when the hon. Gentleman speaks later in the debate, if he would give us a little more information about what he believes to be the more accurate instruments that he could devise were he Chancellor.
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    The question which we shall obviously have to ask ourselves is whether the increase in the Budget is about right. And I must confess that I would not know whether it was roughly right or wrong as this is a matter far beyond my competence. I am quite certain that my right hon. Friend the Chancellor was correct to represent it as a payment for the social services. I think this was a correct representation of why the amount of tax had to be increased, rather than using it as some part of an argument for regulating the pace of the economy. I think that one of the things which extends across the Floor of the Committee and unites us in many of our attitudes—this is where I differ from the peroration of the hon. Member for Blaydon—is that we have all to a substantial extent accepted the strictures on modern organised industrial society contained in Galbraith's The Affluent Society, and we are anxious that private affluence shall not exclude expenditure on public works and services.
    Therefore, when I look at the Budget statement, particularly on the expenditure side, I accept freely the necessity for the considerable amount of expenditure which is allocated to the social services, roads, hospitals and education; and if the Leader of the Opposition referred rather contemptuously to this as being a Tory Budget, one is perfectly entitled to make the comment that it is a Budget which envisages spending, in the Galbraithian sense, on a scale never precedented before in this country. I think that it is a responsible Budget in that sense.
    Not only do I think that we should think in the Galbraithian sense about public expenditure generally but possibly a little more also about private expenditure, in the home and so on, and I wonder whether one should not much more seriously encourage the attitude that, with rising levels of income, one should also promote greater priority for private spending upon housing and pensions. Those are the two that I pick out in particular because I believe that there are quite serious limitations on the amount that the State can spend if taxation is to be restrained to a reasonable level, certainly a reasonable level on industry consistent with the

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    very serious international challenges that it has to meet.
    This is the occasion, particularly on the first day of the debate, when one should try to put forward ideas without necessarily having worked out the answers. One is coming up to a General Election, and a new Parliament, whoever wins, must see the beginning of a considerable amount of new thinking upon aspects of economic and social policies, and I think that private provision on housing and insurance should be encouraged rather than further dependence upon public provision. I now turn to the method of raising the money.
    Mr. Denis Howell: I have followed the hon. Member's very interesting speech with care. In respect of housing, would the hon. Gentleman like to tell us how he would encourage greater spending in the private sector, and at the expense of whom? At the moment the situation, as I see it, is that the only limiting factor regarding private spending in housing is governed mostly by land prices and in fact the people coming on to the public sector, the local authorities, are unable to buy houses even if they want to. What proposal has the hon. Gentleman to make?
    Mr. Biffen: The hon. Member for Birmingham, Small Heath (Mr. Denis Howell) knows that he is raising a tremendous subject, but if I can deal with it in passing I think that this touches very much on the relationship between central and local government. I should like to see the rent rebate scheme adopted by the Labour majority in Birmingham made mandatory throughout the country.
    The other point that I should like to deal with in this Budget is whether or not the method of raising the money is the one which is generally acceptable. I think that it is. The Chancellor was confronted with the major choice, either of raising the additional £60 million or £70 million at the point of earning or spending, and I am delighted that he has decided to raise it at the point of spending because I believe that the whole trend towards a more energetic and aggressive approach to the economy and to selling must spring from lower direct taxation.
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    I join with my hon. Friend the Member for Brentford and Chiswick (Mr. Dudley Smith) in welcoming the move to encourage saving with the new National Development Bond. None the less, this is not a particularly imaginative Budget; it is basically a standstill Budget. It is not necessarily the worse for that. One would be very naïve if one did not admit that there were limiting political factors in this situation; but, leaving that aside, there are also undoubtedly inhibiting economic factors, and I am prepared to accept that at this point of time it is not desirable to have any larger increase in taxation than has been envisaged by the Government. I think that one may well be right that this is not the time for scaling down the level of public expenditure.
    There is nothing particularly wrong with a standstill Budget. One would, obviously, be depriving oneself considerably if one did not speculate about possible future changes in taxation, particularly in view of what has happened to the economy in the last 12 months. The conclusions drawn in the Economic Survey, 1963, which was published just before the Budget, should be read in conjunction with an article which appeared some time ago in the Sunday Times. That article was written by an American consultant, a Mr. Allen, and concerned the general state of British industry. It was a critical article, and while I welcomed some of the criticism I thought that some of it was a little unfair.
    What has been most alarming about the last 12 months has been the disappointing trend in investment, despite the generous investment allowances. Thus we have still been running up against shortages of labour in key parts of the country, particularly the Midlands and the South-East, and I suspect that it is widely held on both sides of the Committee that our economic difficulties are as likely to develop from an inflationary bid for labour by labour-hungry managements as from any other factor in the economy.
    I still consider it worthwhile, therefore, to refloat the idea of having a payroll tax. It could be considered as an alternative to Profits Tax. I would not claim to be completely sold on this idea, and many people might argue that

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    other taxes should be substituted for a payroll tax. However, sooner or later, we must move towards a social security tax. The present system, based on what is increasingly difficult to maintain as a contributory basis, is bound to be superseded by some sort of major reform in social security. The result will be that the cost of labour to manufacturing industry will be increased, but I do not believe that that will be an altogether had thing. As long as we have the right atmosphere for retraining and if the old ideas about redundancy and unemployment are removed and other measures are taken to encourage mobility of labour, I do not believe that the higher price charged for labour will result in disadvantages for manufacturing industry.
    Indeed, if we are to expand production along the lines suggested by the N.E.D.C. and similar organisations it is essential that management should take steps to eliminate unnecessary employment. In this connection, we must consider the general theme of the Budget. Last year we had to have expansion without inflation. Clearly, inflation is a real danger and I suppose that at present the biggest opportunity my right hon. Friend has to hold off inflation is to try to phase capital spending so that the total demand on our resources in the next nine months or so does not become intolerably high.
    It is obvious that there is only a limited rôle for administrative decisions in the sphere of Government and local authority public spending. I suppose that, from the point of view of private industrial investment, one of the consequences of holding the General Election in the autumn rather than in, say, June is that private investment may be delayed a few months in a number of cases where managements consider that it should wait for the outcome of the election before making any investment decisions. I do not consider that that will be a particularly harmful factor.
    A number of weeks remain in this Parliament and I hope that one day will be spent on debating the N.E.D.C. That body more or less slid into being without very much scrutiny by Parliament. Although Sir Robert Shone has talked about a new economic morality, the
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    N.E.D.C. is not in business for exhortation but for power. It would be well, therefore, for Parliament to have the opportunity to examine the circumstances of how the Council will exercise its power and its relationship with Parliament.
    The rôle, of the N.E.D.C. has never been satisfactorily spelled out for me. I have certain doubts about its use and considerable interest in what sort of relationship it will have with both the Treasury and Parliament. It is somewhat frustrating for hon. Members to be prohibited from asking Questions about the Council's activities, and it is worth remembering the very first sentence in my right hon. Friend's speech today to see how important this matter is.
    Mr. Harold Davies: I agree with the hon. Member.
    Mr. Biffen: I can assure the hon. Member that if there is any similarity between our views it will cause greater embarrassment to his party than mine.
    I am emphasising the fact that a debate devoted solely to the N.E.D.C. would give hon. Members the opportunity to hear, within the whole context of planning, an explanation from the Leader of the Opposition about his theme of "ruthless discrimination ". It would be fascinating to know more about what the Leader of the Opposition has in mind. The hon. Member for Blaydon spoke about the equality of economic opportunity, although I believe that to be a lot of rubbish. There is no such thing as equality of economic opportunity. There certainly would not be any if there was ruthless discrimination from the centre.
    There is every reason why there should be debates on subjects like the N.E.D.C. Hon. Members could thrash out the fundamental differences that exist on these subjects, and with a General Election in the offing that would be a welcome opportunity. It is wrong to think that the electorate has the time and inclination to study every subtlety of difference that exists between hon. Members and parties. They should be told the basic points of difference that everything is brought to light.
    The more one debates these things the more one can develop the sort of point made by the Leader of the Opposition

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    earlier about the import saving propensities of British industry and, presumably, of British agriculture. I hope that the Leader of the Opposition will put up his right hon. Friend the Member for Battersea, North (Mr. Jay) to develop that theme. What does that right hon. Member consider to be the import saving potential of British agriculture? I would particularly like the Leader of the Opposition to explain how his import saving programme could have any consequence and relevance to the problems which are likely to confront this country in the coming year. If it is not specific but arbitrary and of a protective nature, it must refer to long-term developments, and if the developments are long-term they are not very relevant to this year's problems. However, we haw:, many days ahead of us, not only to debate the Budget proposals but to debate other subjects in the weeks thereafter—
    Dr. Jeremy Bray: Does not the hon. Member think it very extraordinary that the Government should have published this very interesting White Paper on Public Expenditure in 1963–64 and 1967–68 but have so far denied the House an opportunity to debate it?
    Mr. Biffen: The time of the House is not entirely at the disposal of the Government—the Opposition have their Supply days—but if the hon. Gentleman wants any discussion on financial matters I will welcome it, because the more the nation is able to judge the opposing economic policies—and the opposing means for paying for the promises—the more I can look forward to the autumn with every confidence.
    7.21 p.m.
    Mr. Ron Ledger: There are two points in the Chancellor's proposals to which I want to refer, because I have been associated in some way with a campaign relating to them. I apologise to the hon. Member for Oswestry (Mr. Biffen), because I shall not refer to his speech, though I found it rather more interesting than that of the hon. Member for Ilford, South (Mr. Cooper), whose remarks about my right hon. Friend the Leader of the Opposition were, I thought, rather offensive.
    It is always possible to predict what the Tories will do—normally, it will be
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    virtually nothing—and the only way in which today's speech by the hon. Member for Ilford, South differed from his speech on the same occasion last year was that last year he said that he was making it for the thirteenth time and today he said that he was doing so on the fourteenth occasion. I myself have now heard that speech eight times, and I have come to the conclusion that the hon. Member starts to speak too soon and sits down far too late. I think that his speech was totally unnecessary, and as irrelevant as the Budget speech.
    My right hon. Friend the Leader of the Opposition said that the Budget was irrelevant, and I confess to finding it very confusing. If the economy is as strong as the Chancellor, the Prime Minister and all the hon. Members opposite have said, it seems strange that it is necessary to add 1d. to the price of a pint of beer and 4d. to the cost of a packet of cigarettes. On the other hand, if the economy faces the kind of dangers of which we have been told by a number of economists, if we have problems of the location of industry, of the trade gap, and a number of others, to add 1d. to the pint of beer or 4d. to a packet of cigarettes is irrelevant.
    How do those proposals help us to get more industry to the North-East or to provide greater security for the workers? How will people in the world's backward areas feel more confident that Britain will be prepared to give help where it is needed when we, in these circumstances, find that the only answer to our problems is 1d. on the price of a pint of beer and 4d. on a packet of cigarettes?
    The hon. Member for Oswestry praised savings, and was pleased that his right hon. Friend had done something to encourage them, but I do not quite see the point. We know from experience that when a 1d. is added to the cost of beer, and 2d. or 4d. is put on cigarettes, consumption certainly does not go down. People do something about it, but they go on buying—in fact, expenditure on these things goes up. If expenditure on these items is to increase by virtue of the Government's action, how are we to find the money for savings?
    Mr. Biffen: I dispute violently what the hon. Member says. He will recall

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    that after the 1961 Budget a great many of his colleagues put down Questions, and generally harried the Chancellor to abolish the tax on soft drinks, saying that it had had very harmful effects on that industry.
    Mr. Ledger: I was not aware that it was proposed to do anything about soft drinks in this Budget. I was discussing beer and cigarettes, which come into a very different category—as the hon. Member and the Chancellor of the Exchequer know very well. They are taxed as they are because the Chancellor knows that people will make sacrifices to buy them.
    I am not an economist—any more than is the hon. Member for Ilford, South, who, judging by the inaccuracies in his speech, is an even worse economist than I am—and I would not like to pursue these points, but they are very confusing. I am sure that they will confuse many people outside who, on the one hand, have been given the impression that our economy is very strong, and will, therefore, ask themselves why it is necessary to do these silly little things, while, on the other, it is obvious that if we are faced with these dangers and have these tremendous tasks to carry out, this is certainly not the right way to deal with them.
    Although it is dangerous to do so in an election year, I have to congratulate the Chancellor on what he has done about light hydrocarbon oils. When, in last year's Budget debate, I asked for some relief of duty, the right hon. Gentleman said that discussions would take place, and he has told us today that some reliefs will be given from 1st September. That will cause some satisfaction in my constituency, where we have a large factory employing a large number of people making polishes, and so on, in which these oils are used. Year by year the complaint has been made that they have not been able to compete with imported polishes because of this duty. This relief will help to ease our employment problems.
    The Chancellor proposes to reduce the greyhound totalisator tax from 10 per cent. to 5 per cent. I have been associated with my hon. Friend the Member for West Ham, North (Mr. A. Lewis), who has led a campaign for the abolition of this tax. We have argued that
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    its was unfair in comparison with horse racing, where there is no such tax. We have also argued that it was endangering the greyhound racing industry, that there was a falling-off in attendances and that security of jobs in the industry was being undermined.
    That being the case, I should like to know what arguments influenced the Chancellor to reduce the tax from 10 per cent. to 5 per cent. that could not quite equally have let him abolish the tax altogether? He has merely said that he will do this, but he did not develop the case at all. Again, my constituency is affected by it, because we have t stadium there, and, while we are grateful enough for this reduction, we should like to know why the tax has not been completely abolished.
    I sympathise with the Chancellor in regard to betting and gaming. Some hon. Members opposite have said that he should have done something in that direction, but I imagine that the turnover is often greatly exaggerated. Many of the bets going across the counter must be of 6d., 1s., and the like—hundreds and thousands of them—and it is difficult to imagine a way of collecting tax on what are often just the few pence that are won. I do not think that the time is yet right for a general tax on besting and gaming. We have some crumbs of hope from the Chancellor, but not many. People in my constituency will be pleased about the two matters I have mentioned, but there is nothing in the Budget that will be of any great benefit to the country generally.
    7.30 p.m.
    Mr. Ian Gilmour: I shall try to be as brief as was the hon. Member for Romford (Mr. Ledger) in his interesting, and admirably succinct speech. I am surprised that he saw a contradiction between my right hon. Friend the Chancellor saying that the economy is strong and his raising taxation on cigarettes, beer and spirits. Surely there is no contradiction necessarily between a strong economy and an increase in taxation. Indeed, we have often to increase taxation when the economy is strong and reduce it when it is not strong. I should have thought that this had been fairly orthodox economics now since the days of Keynes.

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    The right hon. Gentleman the Leader of the Opposition produced the late President Kennedy's quotation from Lloyd George about a tired nation being a Tory nation. If we look at the figures of the country's economic performance, the tremendous rise in the gross national product, and the great increase in national income we can only conclude that the nation's tiredness is a particularly agreeable and stimulating form of fatigue; and that we can do with a great deal more of it, because at present our prosperity is unparalleled.
    The same applies to the remark of the Leader of the Opposition about the 12 drifting years, which he seemed to deduce from the fact that every now and again we run into balance of payments difficulties. While, of course, balance of payments difficulties are distressing and inconvenient, this does not mean that the years have been drifting. The United States, after all, has several times lately run into balance of payments difficulties but I doubt whether the right hon. Gentleman would suggest that the American economy has lately been drifting.
    As I understood him, the right hon. Gentleman did not take exception to the general shape of the Chancellor's Budget, which is surprising in a way in view of an article by his hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), who seems lately to have been rather prolific journalistically since this is a different one from that referred to by my hon. Friend the Member for Oswestry (Mr. Biffen). This article was in the Sunday Citizen, in which, if I understand it aright, the hon. Member was outlining what he would do.
    The hon. Member did not say that the Chancellor should do these things. He said that he could do them. I take it that he meant that he ought to do them. Amongst them were not only the removal of prescription charges, but the repayment of £300 million of post-war credits, tax exemptions for the elderly, and various other matters. If the hon. Member did these things within the sort of shape of my right hon. Friend's Budget, this, surely, would produce a quite alarming increase in taxation. The article was called "A provocative political
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    opinion". It certainly seemed to provoke the Leader of the Opposition, who made such detailed comments upon the Budget today that one concluded that he was not taking any chances with his hon. Friend going his own way tomorrow.
    My right hon. Friend the Chancellor of the Exchequer produced most impressive figures, about developments in the North-East and other areas. Like the hon. Member for Blaydon (Mr. Woof), we all welcome this very much. Not only does unemployment in those areas produce great hardship for the people of the areas, but it is also extremely bad for the economy as a whole since to reduce unemployment to a reasonably acceptable level in those areas one has to reduce it to a possibly inflationary level in London and the Midlands. Therefore, these regional measures which were produced by my right hon. Friend last year have been successful and are very important to the economy as a whole and not merely for the regions concerned.
    I was very pleased that my right hon. Friend resisted the argument for a betting tax, not only on the economic grounds that he produced but on social grounds. The reason for the reform in the betting law was that it was an unenforceable law and that it turned honest men into criminals. I am against gesture laws, which make gestures at people but cannot be enforced. My right hon. Friend the present Foreign Secretary did something to get rid of some of these laws, but there are still some around which ought to be abolished. If we brought in a general gambling tax we would be withdrawing the entire benefit of the reform which was introduced by the Foreign Secretary. Therefore, on social grounds, a general gambling tax is highly undesirable.
    I regret—a minor point for the country as a whole, but a major one for my constituency and other horticultural constituencies—that the Chancellor did not see his way to abolish the tax on blackcurrants which, apparently, are extremely good for all sorts of people. The tax has a very bad effect on the growing and the sale of blackcurants.
    I am sorry that my right hon. Friend did not say a little more about an incomes policy. I think that what the

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    Leader of the House and the present Chancellor of the Exchequer have done over the last three years towards producing an incomes policy is perhaps the most important development that has taken place in the last few years. We are moving towards it, but so far its achievement has been denied us. Something must be done to overcome the arguments used by the trade unions that they are being asked to do everything while nothing is being done about profit and other incomes.
    There are, obviously, great difficulties about anything to do with profits. I should have thought that a more effective capital gains tax would have been the simplest and best move to show good will towards the trade unions and to show that sacrifices are being demanded from everybody and not merely from them. Nevertheless, in spite of all this, I think that in the circumstances this is an admirable Budget and I am very pleased that my right hon. Friend has resisted any pressure to damp down expansion. I congratulate him.
    7.37 p.m.
    Mr. Harold Davies: I listened with interest to the speech of the hon. Member for Norfolk, Central (Mr. Ian Gilmour) and also to that of the hon. Member for Oswestry (Mr. Biffen), who said that he was a neighbour of mine, because here was a completely different attitude towards the trade unions and an incomes policy compared with that ridiculous and idiotic speech that we had about the trade union movement in relation to shipbuilding, strikes, and the losing of export trade from the hon. Member for Ilford, South (Mr. Cooper).
    We have heard that speech every year for 14 years. It has always been the same. It has always been full of such old platitudes as that the world does not owe Britain a living. We learned in Form 1 that we have to export to live, yet the Committee is reduced to listening for 60 minutes to that terrible reiteration of platitudes without once getting down to any of the fundamental points which we are now facing in Britain.
    The hon. Member for Norfolk, Central at least paid a certain tribute to the British trade union movement. If we car, lift ourselves above the level of fighting blindly to win the next
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    General Election we must agree that one of the facts about the British trade union movement is that it is the most responsible trade union movement in the wor1d. Some of us have seen the American trade union movement at work. I remember how in Detroit when the automobile industry was on strike we saw the excesses of the American trade union movement in a country which is noted as the acme of private enterprise and capitalism. Things happened there which one would never see within the democratic British trade union movement.
    On both sides of the Committee, it should be realised that per head of population we lose proportionately fewer days through strikes than does any other country in the wor1d. If we had a better preventive health service, we might well increase our wealth many more times than some people consider possible, because we lose about 25 or 30 times more working days through ill health and the common cold than we lose through strikes.
    I come now to a few comments on the Budget itself. I shall not take a long time because I know that other hon. Members wish to speak. I shall not speak for 60 minutes but only for 10 or 11, if I am not interrupted, and make a few points en passant.
    Politics is àbout power. We on this side of the Committee are fighting for power. We are justified in trying to get into power. There is nothing evil or wrong in that, any more than there is in the party opposite wanting to keep itself in power. But the fact is that this Budget has been prepared by a Government who no longer have the confidence of the British people. It is a Budget which has given the Chancellor of the Exchequer tremendous problems. Originally, he thought that there would be a General Election in June, Obviously, the Prime Minister did, too, to judge by the amount of money he is spending on advertising in the marginal constituency of Leek, taking full-page advertisements in the local newspapers. Week after week, every time; I open my local farming papers and local newspapers, I am confronted with a full-page picture of Sir Alec. There he is each week, like the Mickey Mouse of British politics. The

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    Tories are spending hundreds and hundreds of £s, and, obviously, the Prime Minister thought that the General Election should be in June.
    The Chancellor was caught with it. What could he do? What was the purpose of the Budget? It was to put the nation into third gear. We are running in top gear economically or, to use the terms of atomic energy now fashionable, the economy is overheating like an atomic reactor. The trouble with energy from an atomic reactor is that it costs so much, as energy does under the capitalist system. The Chancellor says that the economy is overheated today and we must bring the temperature down.
    How does he set about it? He adds 4d. to the tax on a packet of cigarettes. The most under-privileged in our society, the old-age pensioners, if they are 60 or 70 years of age, will not worry very much about dying of cancer of the lung. They know the comfort of tobacco. Once again, millions of old-age pensioners will suffer as a result of what the Chancellor has done. My first question to the Chancellor is this. What will he do to take a little of the burden off the millions of old-age pensioners who enjoy the comfort of an ounce or two of tobacco or 20 or 30 cigarettes a week? After they have given their energies and health to the nation, are they to bear this burden resulting from Tory mismanagement of the economy over the past 12 years? Is something to be done to reinstate for old-age pensioners the cheap tobacco scheme?
    I leave aside the tax on alcoholic drinks. The tobacco tax will not affect me because—I feel a great moral uplift about this—since Lent, for about eight weeks now, I have given up smoking, and now I think that I shall have to give it up altogether. I see my hon. Friend the Member for Sowerby (Mr. Houghton) on the Front Bench looking at me a bit "uppity". Perhaps he objects because I shall not make much of a contribution to the Tory reinstatement of the economy. But, seriously, I hope that the Tory Government will, in putting through this increase of taxation on tobacco, do something about the position of old-age pensioners.
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    How does the Chancellor expect his Budget to help exports? This may be elementary, but we have to face the fact that the entire world is now industrialising itself. This is the problem of the acquisitive society, the struggle for markets all over the wor1d. We can see it everywhere. Some of us who have just come back from the Far East have seen what is happening in Hong Kong, Malaysia and the whole of South-East Asia, where people are clamouring for machines to produce the textiles which we now produce and even to produce agricultural implements and things of that kind. The world cannot carry on with the old idea of the acquisitive society. No matter how perfect the Government are—this applies to both Labour and Conservative—this will be the big problem of the next 25 years as the modern technical world develops, the problem of how to buy and sell goods and how to live if we just try to take in each other's washing. The problem will grow in the age of automation. Those who suggest that it will not have not studied the subject.
    It is right, therefore, that any constructive Government, with the advice of the trade union movement, should be looking towards an income policy. This is not a new idea to this side of the Committee. We have for a long time asked for the advice of the trade union movement and have considered the matter. We did it when we were in power and we have done it since. We are always willing to consider some kind of constructive incomes policy, provided that there is a square deal, as the hon. Member for Norfolk, Central suggested, in the most constructive speech so far from the benches opposite, for both sides of industry, management and labour, and all the other interests concerned.
    Another trouble is that no Conservative Government have the courage to tackle the wolfish rapacity now afflicting society through the rise in land values. This is one of the greatest evils. Hon. Members opposite cannot talk about getting a decent economy in this country if they are prepared to allow land prices to soar, with all the inevitable consequences for young married couples and others who are struggling to buy their homes. Other countries which have Conservative Governments have applied a system of taxing land values and taking

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    the increase, which should belong to the community, into local government finance or the coffers of the central Government. This could be done to enable young people who want to buy their houses not to have to suffer the rapacity of uncontrolled land values in the mid-twenieth century. It is a sin against mankind, a sin against society
    Why is not something done? It could be done. Proper measures would help to lower the cost of our commodities and help in the struggle for export markets. But is there anything in the Budget to help our export trade? Is there any new, scintillating Tory idea? Not one.
    Some of us have been campaigning for about 20 years now for trade with China, Eastern Europe and the Soviet Union. The party opposite, blinded by its doctrinaire Tory outlook, has allowed Western Germany and Sweden to outpace us. I know what I am talking about because I have travelled in these countries and seen the situation in China and the U.S.S.R., where we are being beaten in the race by the West Germans—not the East Germans—and by the Swedes. For instance, in the ballbearing industry in China, the Tory Government, because of their doctrinaire prejudice, prevented us having a constructive spread of trade.
    I do not wish to make an absurd statement, and I should qualify what I am saying. I do not claim that East-West trade by itself would solve all our economic problems. But we should get into the markets. Our products are good. We can do a fine job, prepare the ground and keep the markets for the future. It is magnificent to see that at last some British firms, irrespective of past Government prejudice, are moving in. Not so long ago, of course, some of us were called Communists for trying to get East-West trade developed.
    What about the under-privileged parts of the world? I cannot say anything in detail about it now because we are in the process of investigating what is done and what can be done, but the Department of Technical Co-operation is doing an excellent job, although it is limited. As has been said, in Africa and in other parts of the world there is a revolution of expectation, but the under-privileged peoples cannot buy because they have nothing at present to pay with. Why
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    could not this Government find a method of giving them long-term credit, 30 years' or 40 years' credit?
    When I opened my analysis of the Budget today, almost the first thing I see, in expenditure below the line, is that between this year and last year there is an increase of £4 million in the cost of married quarters for our Armed Forces over seas. Where are these married quartets? They are in Cyprus and Aden, where our troops and their wives are in danger. The whole policy on married quarters should be looked into.
    I am not suggesting that we should not have a constructive defence policy, but it is proposed to make £2½ million out of taxing betting, which will increase the tendency for people to cheat. Here is a case in which £4 million could be found by the implementation of a wise policy to deal with married quarters overseas.
    I find on page 9 of my Budget analysis that the total defence budget is £161 million more this year than last year.
    Mr. A. Lewis: What about the money paid to Ferranti?
    Mr. Davies: Let me finish the 64,000 dollar point. The party opposite has wasted about £1,000 million on projects which have yielded no results, and one of them concerns the firm just mentioned by my hon. Friend.
    To those of us who read the Economist and the Financial Times there is nothing strange about this. The Economist suggested that all the Chancellor should do was to make a cut of £200 million in Government expenditure. Instead of that, he has gone about half way. The Economist went further last week and said, "We hope that he does not increase Income Tax because if the Labour Party comes into power we shall suffer." This is the anti-patriotic attitude of some sections of the financial Press. Like the patty oposite, they are putting their interest; before those of the nation. We have had this flibbertigibbet Budget, but what was needed was a breath of fresh air. The country wants to know exactly where it stands. This is a transition Budget which has not helped exports.
    One thing which the Chancellor could have done was to have the courage to create a pool of about £60 million to £100 million in the Treasury or

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    Board of Trade so that long-term loans could go to Africa, South-East Asia and the underprivileged areas to subsidise their buying of consumer goods in a transition period.
    What is the purpose of a Budget? The party opposite look at a Budget from a nineteenth century concept, in spite of the fact that they have produced this White Paper, "Government Expenditure Below the Line". The first party which discussed the problem of above the line and below the line expenditure was the Labour Party which introduced a new type of Budget about 1945. We started to use the Budget not merely as an instrument of collective income but as an instrument for trying to balance our economy.
    To be fair to the Chancellor of the Exchequer, we could not have expected a Budget which would have led to a lot of romantic speeches or romantic articles in the newspapers. It is a Budget which must face the reality of 12 years of Tory rule. It is a Budget which shows that the Government have not the courage to face some of the worst evils in our society. One is the racket in land values. Secondly, the Government have not had the courage to face the issue of how they will finance credit and to devise a better system of export guarantees to the underprivileged areas which cannot afford to pay for exports. Thirdly, the Chancellor has put up the price of tobacco. The Government have not the courage to give a little recompense to the old-age pensioner and to those who want the comfort and succour of tobacco.
    Last but not least, I turn to consider the poor widows and their earned income allowance. The way in which the widow has been treated is disgusting. This is a country which, while talking about being rich, still leaves the widow, who has to earn and, perhaps, to keep children at school, in a worse position than any other widow in Europe.
    I hope that when we on this side have the opportunity we will divide on the tobacco issue as it affects the old-age pensioner and will draw the attention of the Chancellor of the Exchequer to the fact that he has done nothing for the widow. The Chancellor has done nothing constructive like the idea that I
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    put forward to create a pool of about £100 million for export guarantees so that the courageous exporter can export to the under-privileged areas which need our manufactures and consumer goods.
    7.55 p.m.
    Mr. Stanley R. McMaster: I do not intend to keep the Committee long. I hope that I will be a little more accurate in my estimate about the time that I shall take than was the hon. Member for Leek (Mr. Harold Davies).
    The hon. Member has proposed many things. Some of them such as support for exports, seemed to have some sound judgment behind them. He suggested that we should not increase the tax on tobacco. I follow his reasoning. My right hon. Friend's proposal will, of course, be particularly hard on pensioners. The only problem which I have in my mind is how the hon. Member and his party would pay for the improvements which he suggests should be made. Does he suggest that the pots and pans Purchase Tax should be increased? Does he suggest that the standard rate of taxation should be increased?
    Mr. Harold Davies: I have made three suggestions. I have referred to the increase of £161 million in the defence budget. We could have made some savings on that—probably at least £750,000—which would have subsidised cheaper tobacco for old-age pensioners. I have suggested that some savings might be made in the £9 million spent on married quarters for our troops in Cyprus and other places overseas.
    Mr. McMaster: We can argue about whether it is possible to make a further cut in the 7 per cent. of the gross national product which we spend on defence, but I do not expect that many of the hon. Member's colleagues would agree that savings could be made in this way to any substantial extent.
    I therefore feel that the Opposition are faced with a problem. Now that we are approaching a General Election, they should make clear how they intend to finance their proposals for improving the roads, hospitals, schools, scientific education and the hundred and one other things which they suggest should be done and, at the same time, to reduce the tax on tobacco and beer and spirits.

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    I should like to say a few things about Northern Ireland. I was a little concerned that my right hon. Friend the Chancellor referred specifically to Scotland and the North-East, but did not think it right to mention the position in Northern Ireland. He referred in some detail to the number of jobs created in the past year. I think that he said that the number was 37,000, of which 16,000 had gone to Scotland.
    Mr. John Rankin: The Chancellor did not say that 16,000 had gone to Scotland. He said that 16,000 were proposed for Scotland.
    Mr. McMaster: I will settle for that, because I should be very content if we in Northern Ireland could match a figure such as that, whether proposed or in fact.
    As the Committee well knows, we have an unemployment rate in Northern Ireland which is greater even than that in Scotland and the North-East Coast. It is double that in Scotland and the North-East-7½ per cent. This shows an improvement over the past year of about 2 per cent. However, last year was not really a representative year because of the very hard winter. We still have unemployed in Northern Ireland between 35,000 and 40,000 men and women who would be glad of the same attention which Scotland and the North-East are apparently receiving.
    Mr. Charles Loughlin: Get off your knees and do something.
    Mr. McMaster: My right hon. Friend the Chancellor painted a picture of a booming economy. He was, of course, right. Those who represent constituencies in London and the South-East realise how prosperous this part of the country is. I ask my right hon. and hon. Friends on the Treasury Bench to give further sympathetic consideration to the proposals which are being put forward by my colleagues who represent Northern Ireland in the House of Commons and also by the Government of Northern Ireland.
    I listened carefully to the proposals made today by my right hon. Friend the Chancellor of the Exchequer. One which I should have liked to see included in his recommendations was a reduction, even if slight, in the standard
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    rate of Income Tax—say 3d.—to bring it down to the easier figure of 7s. 6d. in the £. This would have helped the economy.
    My right hon. Friend paid much attention to the reed in the economy for all workpeople to increase productivity. There is no better incentive to an increase in productivity, for people to work harder and, perhaps, even occasionally to work longer hours, than the fundamental one of receiving more for it. Therefore, I should have liked to have seen a reduction in the standard rate of Income Tax. This might well have been met from the rise in the national income.
    Some good White Papers have been published daring recent days and weeks and reference has already been made to the one which gives comparisons of public expenditure over a period of four or five years. It points out that the gross national product and the proportion which is spent on public expenditure is estimated to increase by 17½ per cent. during the four years from the current year.
    An increase such as is forecast in the gross national product means an increase in total income. In Table 1 in the White to Paper, published a few clays ago, entitled "Preliminary Estimates of National Income and Balance of Payments 1963", we see how the factor incomes in the gross national product have been rising steadily over the six years from 1958 to 1963, from £20,000 million to £26,358 million. With the gross national product rising, with productivity rising as it is, with incomes rising and, therefore, with the return from taxation rising at the same rate, without any increase in the duty on tobacco or spirits, the Budget is bound to yield the extra revenue which is required to meet some of the extra charges which the Government have announced by way of public expenditure in the coming year.
    Together with the recommendations proposed by my right hon. Friend the Chancellor for increasing the taxation on spirits, beer, wines and tobacco, I should have liked, therefore, to have seen a small reduction in the standard rate of Income Tax. This would have done something else besides acting as an incentive to increased productivity. It

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    would have helped to keep incomes down.
    I should like the Committee to consider this point. My right hon. Friend spent part of his speech in stressing the necessity of keeping down incomes if we are to remain competitive. What better way is there of relieving pressure on incomes than reducing the standard rate of Income Tax? If the standard rate is reduced, one is, therefore, left with a higher proportion of one's income either to save or to spend. Therefore, the pressure for an increase in income to meet increased private commitments cannot be as great.
    It might be argued that to reduce taxation would mean pressure on production and tend to increase consumption at home, and that the resulting demand must be met either by diverting potential exports or by increasing imports. But another goal for which my right hon. Friend the Chancellor appealed was increased saving. How better to get increased saving than by reducing the standard rate of Income Tax and providing the wherewithal for it?
    I should like my right hon. Friend to consider this idea for the future. Nothing more can be done about it in the current year, but I hope that when he presents his Budget next year he will pay attention to this and see whether he can find his way to reduce the standard rate of Income Tax, for the three reasons which I should like to repeat. The first is the great incentive which increased earnings give: that is, net earnings after tax. The second is to help to keep down incomes and to keep the country competitive. The employer does not need to pay more in wages. The price which he charges for his goods does not reflect the reduction in Income Tax. The third reason is to help to boost savings. All these are desirable aims.
    My hon. Friend the Member for Oswestry (Mr. Biffen) mentioned the payroll tax. This was something in which I was particularly concerned when it was introduced three years ago as one of the regulators. The Chancellor of the Exchequer at the time agreed that Northern Ireland should be exempted from this tax; he accepted a series of
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    Amendments which my colleagues and I put down.
    My hon. Friend the Member for Oswestry suggested that the payroll tax might well be introduced and used to encourage increased mechanisation in industry. I should like to see it introduced not only for the same reason, but also as it would give scope to my right hon. Friend to distinguish between areas of over-employment, such as the southeast of England, and areas of under full employment, such as Scotland, the North-East Coast and Northern Ireland. Relief from such a tax could be given in areas where the rate of unemployment remained dramatically higher than in the rest of the country.
    I should like to see measures such as that designed to assist industrial expansion in an area like my constituency, where we have experienced heavy redundancy in shipbuilding. Since I came into the House of Commons, 13,000 men have been laid off in about three years, the work force being reduced from 26,000 to just over 11,000. This is the position in one small constituency. There has been a threat to the aircraft industry, but, fortunately, the redundancy as yet is small.
    I have seen a big reduction also in the linen industry. At the same time, there has been a continuous movement away from agriculture in Northern Ireland, which means that no matter how fast we go forward we seem simply to stay where we are. Since 1945, we have managed to introduce 168 new industries in Northern Ireland, which employ one-fifth of our working force. Where we would have been without these new industries I hate to think.
    Nevertheless, we still have the heavy rate of 7½ per cent. unemployment. With the reorganisation and modernisation which has taken place in our shipyards so that we can now compete much more efficiently with the yards of Sweden, Germany, France, Italy and Japan, it seems to me that if we could take these extra measures we could once and for all reduce the unemployment rate in Northern Ireland to something much more closely approximating to the national average.
    Whether the measures are taken by way of a payroll tax or some other form of tax remission, I should like to see

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    a tax remission which is related directly to the percentage by which the unemployment figure in an area or region exceeds the national average. I should like to see a tax remission related directly to the excess amount of unemployment in the area, so that as unemployment fell in the area, its contribution towards defence and other national needs would rise.
    In Northern Ireland, our contribution is very much below what it would be if we were assessed per capita for defence, the Foreign Service, the Commonwealth Service, the upkeep of the Government and the Royal family, and other things the cost of which falls on the country as a whole. They have been assessed in a recent report as being approximately £50 million, and our own payments from Northern Ireland is more like million, so we fall rather short on that. However, if unemployment fell in Northern Ireland, that would keep down the figures of the big payments which must be paid from the Treasury to keep the benefits in Northern Ireland equal with those in the rest of the United Kingdom, equal benefits from the National Health Service and so on.
    For these payments we in Northern Ireland are, of course, extremely grateful, but we should much prefer to work, and much prefer to see the benefits cut because fewer people were out of work. Then the percentage of the insured population at work would rise and the drawing on the National Exchequer would proportionately decrease. Therefore, as I say, I should like to see a tax remission to encourage industry to go to Northern Ireland, and related closely to the high unemployment figure, so that as the unemployment figure came down the amount of the remission would fall also till we were on a par with the United Kingdom and contributing equally and we were much less a burden ourselves on the gross national product or total tax revenue of the United Kingdom as a whole.
    There are some statistics which might help in this. I saw one figure mentioned in a letter to The Times today. I feel it would be a help if statistics could be gathered together by the Government relating to the cost of living in each region. I know from my own experience that one can live very much
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    better on £700 or £800 or £1,000 or £1,500 per annum in Northern Ireland than one can in the south-east of England with such an income. Trade union members quite reasonably argue that the workers employed in different parts of the country should not suffer because they happen to be employed in Scotland, the north-east of England or Northern Ireland at lower wage rates or salaries. That is not quite realistic, because the cost of living is lower perhaps there than in the south-east of England.
    As I say, it is possible to have a much better life on one's income in Northern Ireland than on the same income in the south-east of England. I know it from experience. I have done it.
    Mr. D. Jones: The hon. Member would not say that to the trade union movement.
    Mr. McMaster: I should be sorry if I could not, but I think that it would help if we had accurate statistics of the cost of living in the different regions, because it varies from one part of the country to another.
    This, perhaps, does not apply to my part of the country as to Scotland and the North-Fast Coast, but wages paid in Northern Ireland are 15 per cent. or, in some cases, 20 per cent. lower than here. That does not apply to the basic wage rates; it does not mean they differ, for they are the same. But more employers in Northern Ireland than elsewhere pay only the basic rates. It would help those areas if they could have full employment, because the standard of living would rise and they could get all the things which this modern, expansionist, growing society and growing economy of ours can offer.
    Unfortunately, like the hon. Member for Leek, I have taken a little longer than I anticipated, but I should like my right hon. and hon. Friends on the Front Bench, the Chancellor in particular, to consider these points, which are very vital to us in Northern Ireland. Those of us who represent Northern Ireland do not get a chance to speak in many debates because so many of our affairs are regulated from Stormont. We do not say much here about hospitals and houses. Treasury affairs, however, are

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    controlled from Whitehall and the House of Commons—and that is probably why I am here. I was, therefore, particularly anxious to take part in this debate.
    I should like my right hon. Friend to consider whether there possibly could be some remission of tax, or whether to make increased public expenditure on the items I have mentioned, roads and schools, and whether defence contracts could be directed to Northern Ireland as a matter of Government policy, so that we ourselves would be able to pay our own way, and stand free and equal, and see an end to the terrible unemployment figure which I have referred to, and which was as high in the past 12 months as 11 per cent.—far too high to be tolerated.
    8.16 p.m.
    Mr. Arthur Lewis: I should like, first, to say to the hon. Member for Belfast, East (Mr. McMaster) that I am sure that every Member on this side of the Committee—I cannot speak for the two opposite: I emphasise two—feels sorry for him and sympathises very much with him and with the people of Northern Ireland. It is for that reason that over the years we have consistently brought forward progressive measures which would have assisted the people of Northern Ireland. My only regret is that when it came to voting the hon. Member never voted with us on those occasions.
    It is all very well for him to make the remark he did about my right hon. Friend the Leader of the Opposition, saying that he was talking about how he would do this, that and the other. The question is: how would he pay for it? Surely he should himself realise that if, as he said, unemployment on the average is 7 per cent. in Northern Ireland and in some parts of it as much as 11 per cent., then, if all those workers were only working and producing, that would give to us a lot of revenue and a lot of wealth which we are not now getting. We have all those workers in Scotland and the North-East as well who are now unemployed or under-employed, and if they were getting on with the job, and producing the exports which, it is said, we very urgently need—and, of course, we do—then not only would those workers be happier, more con-
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    tented, but there would be a great deal more revenue, and, of course, the general wealth of the country, and the standard of living, of those people particularly, as well as those of the rest of the country, would be improved.
    I do not know what this Budget is. I heard my right hon. Friend the Leader of the Opposition say that it was irrelevant. That is certainly the case. The hon. Member for Ilford, South (Mr. Cooper) said it was uninteresting. Certainly, it must be uninteresting so far as he personally is concerned, because he made his speech and we have not seen him since. For that matter, we have seen hardly any hon. Gentlemen opposite, certainly not the hon. Gentlemen who have taken part in the debate, once they have made their speeches. So it must be an uninteresting Budget.
    I think that it is a more or less empty Budget, because it seems to be to have emptied the Chamber. Since the Chancellor made his speech there have not been more I think, than five Members at any time on the benches opposite, and on average, I think, there have been about two and a half. It is certainly an uninteresting Budget, and, as I say, an empty Budget.
    I suppose that the Press will call it the "beer and baccy" Budget. Really, this is shocking, that it should be, as it will be, those least able to afford these increases who will have to feel the pinch hardest. The majority of our old-age pensioners are those who have worked for 40 or 50 years and have helped to build up the wealth of the country and our national resources, and who have retired, many of them, on very meagre pensions which have not kept up with the cost of living, particularly if one takes into account the increase in rents. Perhaps one of the two main things which the average old-age pensioner looks forward to is his beer and baccy. His beer and "baccy" is probably the only thing—with, perhaps, an occasional picture show, or an occasional visit to his old folk's club. Now a packet of cigarettes will increase in price by 4d. and there will be an equivalent increase in tobacco and, of course, an increase in the price of beer.
    Surely the Chancellor could find some means of helping old-age pensioners. I do not agree with the reintroduction of

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    tobacco tokens, but I see no reason why these people should not have an increase in their basic pension before the General Election. I am sure that there would be no opposition to that. We are told that the Conservative Party is in favour of helping old-age pensioners, and so is the Labour Party, and I understand that the Liberals who are absent at the moment, are with us in spirit on this point. That being so, why cannot an increase in the old-age pension be given before the General Election? The Government's reaction to this will prove to the old-age pensioners whether the Conservative Party is sincere. Let the Chancellor test the House by proposing an increase and see whether there would be any opposition. I am sure there would not.
    So far, I have complained and attacked the Budget. I now want to congratulate the Chancellor. I congratulate him on abolishing the tax on light hydrocarbon oils, because that will help a number of industries, including some in my constituency. I also pay tribute to him, in part—I think that it was the Economic Secretary that I saw about this matter—for what he has done with regard to the greyhound totalisator tax. I have been interviewing Chancellors of the Exchequer and Financial Secretaries of both parties over the last 17 years on this matter.
    But I do not think that the Chancellor has gone far enough, although I pay him a sincere tribute. I do not think that he has been fair. If he recognises, as he obviously does, that while a 10 per cent. tax on greyhound racecourse totalisators has been in operation for 17 years, but no tax has been paid by horse racing totalisators, and he now reduces the 10 per cent. tax to 5 per cent., surely it is fair for me to ask him why greyhound racing should bear a 5 per cent. tax while horse racing still pays nothing.
    I am not suggesting to the Chancellor of the Exchequer that he should tax horse racing. If I did I should have my right hon. Friend the Member for South Shields (Mr. Ede) after me, and I do not want that. But if the Chancellor cannot see why horse racing should be taxed, why should greyhound racing be? I hope that by this time next year, when the right hon. Gentle-
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    man will not be there, I shall be able to have a go at a Labour Chancellor. I shall tell him exactly what I am now saying.
    The hon. Member for Ilford, South made his annual speech and went away. This was It is fourteenth. I really read his speed- before I came to the Chamber, because I read his thirteenth speech. That was the same as his fourteenth speech, and the fourteenth speech was the same as his first. The hon. Gentleman always brings the speech up 10 date by adding the date of the current Budget.
    The hon. Member talked about exports, cost, wages, prices and profits, and explained how necessary it was for us to have exports. He said that we could not live without them. I thought that it must be Sir Stafford Cripps talking. It was Sir Stafford Cripps who put us into the export market with great success after the war. He was called "Misery Cripps", "Austerity Cripps" and "Export Cripps" by hon. Gentlemen opposite, and it was they who attacked the Labour Government when we brought about an export-minded attitude among our workers.
    The hon Member said that the increased costs of our exports were due almost entirely to wages. He then corrected himself and said that he believed in an incomes policy, but he added that the important thing was to deal with wages. It is true that our exports have increased, but it is also true that they have gone down as a percentage of world exports compared with the other major importing countries of Europe. The costs of the exports have gone up due not to wage increases, but mainly to the direct financial policy of the Government.
    After all, who has been deliberately increasing the cost of living over the years? It is none other than the Government. Who was it who increased both private and local authority rents? Who was it who increased interest rates? Who was it who made it more difficult for local authorities to build houses? Incidentally, the Chancellor said something about 300,000 houses and wanting to help housing, but he did not go into the fact that those who are in most urgent need, those desiring council

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    houses because they cannot afford to purchase private ones, find that two-thirds fewer council houses are now being built than in 1953.
    One has only to look at the cost of houses. I will not go into the iniquities of the Rent Act and how rents have been doubled and trebled. For a long time I have been trying to get the Minister of Housing and Local Government to tell me the facts, which I already knew, about how interest rates have gone up and the effect on my local council. After a good deal of jockeying about with Questions, I have received some information. In 1951–52, on average a council house in my constituency involved a payment of 8s. 8d. a week from the rates in interest on the money which the council had to borrow to build the houses. Today, the figure is 31s. 4d., an increase of almost 400 per cent. No wonder my council has put the rates up, and that other councils have to do the same.
    The hon. Member for Brentford and Chiswick (Mr. Dudley Smith) spoke about rate increases. He should have remained in the Chamber and listened to the speeches. The Government must bear a large amount of responsibility for rate increases. I have quoted housing. The same can be said, of course, about borrowing for schools and other public services provided by the local authorities.
    Mr. Dudley Smith: Would not the hon. Gentleman agree that the reason for the large rises in rates all over the country is the massive expansion of services to which we all subscribe?
    Mr. Lewis: I have just explained one case—I can quote others—of where interest charges and various other aspects of Government policy have forced up the rates. After all, the local authority is basically no different in handling its finances from the ordinary private individual. For instance, if the cost of meat goes up then it must pay more on behalf of its old people's homes. The cost of meat has risen three times since the present Government took office and this increase has been reflected in the amounts that must be paid by the local authorities.
    Again, if a local authority has to pay more tax on the fuel for its refuse col-
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    lection vehicles, the money must be found by the ratepayer. But all these increases are the direct responsibility of the Government. It is their actions which are causing so much more difficulties for the local authorities.
    Mr. Robert Cooke: Will not the hon. Gentleman concede that quite a lot of the increases in local authority rates are due to the fact that local authority services have expanded beyond all belief in recent years?
    Mr. Lewis: No. I do not agree, for several reasons. One is that the Treasury has shifted a lot of the burden on to the local authorities—the block grant is one example and education is another. The Treasury have dodged the extra responsibility by passing the cost to the local authorities. The hon. Member and his hon. Friends have supported the Government over the years in doing so.
    Several Hon. Members rose—
    Mr. Lewis: I was commenting earlier on the scarcity of hon. Members opposite. Now I am being asked to give way three times. Indeed, there are now six hon. Members on the back benches opposite.
    Mr. McMaster: Would not the hon. Gentleman agree that one of the major factors in increasing rates is the increases in the wages bills?
    Mr. Lewis: I am glad that the hon. Gentleman spoke. I will give him an example to try to make this clear.
    A railway worker in my constituency earns £10 a week. He occupies a private house and the rent is increased from £1 to £3 a week. Then his "missus", as he calls her, tells him that she must have more money for the housekeeping, since the rent has gone up so much. He points out to her that he has to pay more now for his beer and tobacco, while National Insurance contributions have also risen. She counters that the cost of meat has gone up again, among other things. All these things have, in fact, gone up directly through the financial activities of the Government.
    What happens in the end? She tells her husband that he should go to his union and say that he wants an increase in wages. The union takes up the case

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    and in time—usually a long time—he gets an increase. But it is normally about nine months in arrears. In fact, he never catches up. In any case, he does not get an increase of £3 a week. If he is lucky he may get 30s.
    The hon. Member for Belfast, East (Mr. McMaster) laughs. I will quote him another case. It is that of a dear woman in my constituency. She is now a widow and, unfortunately, one of her children is spastic. Everything has to be done for him. She is a secretary, but cannot go to work because she must look after her spastic chi1d. She tried to see whether she could get some assistance. While I was dealing with the case the landlord of her decontrolled house gave her, without the option, notice to quit. She went into a one-room flat with her children at a rent of £5 10s. a week As I have explained, she is, of necessity, unemployed.
    This lady asked me if the landlord was able to do such a thing and I explained to her that the Rent Act gave him power to do so. Now she goes to the National Assistance which gives her the £5 10s. a week for her rent. The landlord gets that money. National Insurance contributions have gone up and although we have not succeeded in getting the figures from the Government we would still like to know how many millions of pounds are going into the pockets of landlords through the National Assistance Board. And then the party opposite attacks subsidies! They are the inflationary things for which the Government are responsible and for which hon. Members opposite are responsible because they have supported the Government.
    Mr. McMaster: The hon. Gentleman asked why I laughed at his story. When I go to visit people in council houses I am amazed how—if what he says is true—on the wages which these people get they are able to have televisions of a better type than I can afford.
    Mr. Lewis: The hon. Member says that these people have better television sets than he can afford. I would not know about that. But I assume that they work to earn the money for which they pay for the televisions outright or on what we call the "never-never". While the hon. Member for Belfast, East is gibing, may I ask where are those hon.
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    Members opposite who used to have Ministerial jobs—the right hon. Member for Enfie1d. West (Mr. Iain Macleod) and the former Minister of Defence, the right hon. Member for Woking (Mr. Watkinson)? Where is the editor of the Spectator? I assume that he earns his money.
    Some of the working-class people to whom I am referring get more money than others, but the average working-class man, particularly if he is in a lower income group, does not know from one week to another what is likely to happen to his income. It is true that those who receive higher wages can and do save, but I am more concerned with those who receive lower incomes. One hon. Member spoke of 3d. off the Income Tax and I should like that to happen. We should all like it, because we should all benefit. Why not go one better and Lake "five bob" off? But that would not help about one-third of my constituents whose incomes are below the taxable level. There are railway workers in my constituency who do not get sufficient to make it necessary for them to pay tax. It is not true that these people have a lot of money to play with.
    It may be true that workers in the motor car industry, such as those who work at Ford's for long hours on piecework, and who receive bonuses, have a lot of money. But there are people in London, as well as in Northern Ireland and in Scotland, who do not receive a fabulous income and I say that these increases in the tax on beer and cigarettes are penal. The only enjoyment for these people is a packet of cigarettes or a pint of beer, although some of my hon. Friends might argue that it would be better for them not to smoke or drink.
    The present speculation in land has a psychological as well as an immoral effect. The hon. Member for Ilford, South, spoke about stocks and shares and interest and tried to gloss over the facts. But working-class men deeply resent the fact that there must be a committee of inquiry in respect of their wages, if they happen to be postmen, before they can have even a few more shillings a week. Nurses have found that the Government have turned down the recommendations of a committee of inquiry. Railway workers and transport workers have waited 12 months for a committee to report and then have not received any more money.

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    This is deeply resented. Even more, they resent the fact that speculators, "spivs" and property millionaires are making thousands of pounds, which is tax-free, and are pushing up the cost of land and making houses worth £3,000, £4,000 or £5,000 when, in fact, they were built for £70 or £80.
    If the Chancellor had brought in something by which those people's takings could be taxed, a cry would have gone up from the workers. They would have said, "This is a really good Government." If he had said that every profit over a certain amount would be taxed 100 per cent., or if he had confiscated some of these immoral speculations that would have helped to bring down the cost of living and could have provided more housing. But we cannot expect such things from this Government.
    Fortunately, we have not long to wait. We have six months at the most, and then we shall have a change. The pity is that it cannot come sooner. That is not our fault, but it is due to someone who should be here now, but who is absent because he has a co1d. I hope that when the election comes my hon. Friends in Scotland will see that right hon. and hon. Members opposite do not get a chance to be returned even in places such as Kinross.
    8.42 p.m.
    Mr. Eric Johnson: I hope that the hon. Member for West Ham, North (Mr. A. Lewis) will excuse me if I do not follow closely on what he has said, although there are one or two matters on which I do not entirely agree with him. He said that this was an uninteresting and an empty Budget. I do not think it any worse for that. I do not expect Budgets always to produce violent and widespread changes nor that the House of Commons should be perpetually engaged in churning out new legislation. I think that the Budget is rather better for being somewhat limited in its scope.
    The hon. Member had some discussion with my hon. Friend the Member for Belfast, East (Mr. McMaster) on the subject of taxable income and pointed out that a very large number of people were not getting an income on which they had to pay tax. It is not unfair to point out
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    that when the party opposite was in power that rate of income would certainly have been bearing tax. The number of people now liable to Income Tax has been very greatly reduced since the Conservative Party came into power. I think that is incontrovertible.
    Mr. Cyril Bence: The hon. Member should be fair about this. Allowing for the change in the value of money, the value of such incomes would have been twice what it is today.
    Mr. Johnson: I am afraid I cannot agree. The amount earned in industry has increased very much more than the cost of living has increased. Here I disagree with the hon. Member for West Ham, North, who said that the cost of living had gone up more than the retirement pension had gone up. That is quite contrary to all published statistics.
    Mr. A. Lewis: What I said was that for old-age pensioners particularly food and the sort of things they buy—I mentioned beer and "baccy"—are about the only things which have gone up in price. It is no good telling an old-age pensioner whose beer, "baccy" and rent have all gone up that he can get some luxury items cheaper than he could before. Purchase Tax on fur coats may have been halved, but the old-age pensioner does not buy a fur coat very often.
    Mr. Johnson: If the hon. Member looks up in HANSARD tomorrow what he said in his speech he will see that he said that the pension had gone up less than the cost of living had gone up. So far as I am aware, fur coats are not included in the cost of living index. The hon. Member may have a fur coat and he may be able to prove that I am wrong.
    Mr. McMaster rose—
    Mr. Rankin: On a point of order. Like many hon. Members, I have been sitting here for a long while. One or two hon. Members have spoken at considerable length. One of them has intervened already three times and has made two speeches in those three interventions. Is it fair that he should continue to intervene, in view of the number of hon. Members

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    still sitting on both sides of the Committee who want to contribute to the debate?
    The Temporary Chairman (Mr. Malcolm MacPherson): It makes for better debate, whatever the answer about fairness, if interventions are restricted to cases in which they are really necessary.
    Mr. McMaster: May I refer my hon. Friend to the figures and point out that he is supported by the Report of the Commissioners of Inland Revenue? refer to page 76. Summarised, it shows that persons with incomes of over £2,000 a year, representing less than 5 per cent. of the taxpayers, are paying 40 per cent. of the total tax paid in this country.
    Mr. Johnson: Perhaps I may get back to what I began to say, and then the hon. Member for Glasgow, Govan (Mr. Rankin) will have his opportunity. I intend to be very brief.
    I believe that it is not necessary to have an elaborate Budget. This is a good Budget because it meets the need of the moment. It has done what I think it is right for the Chancellor to do—relate increased taxation to expenditure. It may be an out-of-date idea, but I wish that Chancellors would confine themselves to it; I wish that Chancellors would tell us what they have to spend and how they will raise the money and leave it there, rather than go into all these economic theories, telling everybody how to run their affairs.
    My right hon. Friend has related increased taxation in this case to increased expenditure. He has told us that the Government intend to adhere to the programme which they have set out for 1964–67. He said that if we want more houses and more schools, better education and more hospitals, which we all want, then as a nation we have to produce a larger contribution towards it in the form of taxation. Set out in that way it is something which is generally acceptable to most people. If it is put like that, they realise that if they want these things—and we all want them—they must be prepared to pay for them. That is something which everybody understands much better than they understand talk about the danger of
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    inflation. That is why I like the Budget, which is a plain, straightforward Budget in that sense.
    The question was, what to tax? I know that I shall get into trouble with the Labour Party when I say that I think that my right hon. Friend is right to confine himself to increased taxes on alcoholic drink and tobacco. If he had not chosen those, there were alternatives He could have increased Purchase Tax, but nobody would have benefited from that. Indeed, more people would have been hurt by it. The pensioner would have suffered just as much from an increase in Purchase Tax. I do not think that it would have been right to increase Income Tax, because it has a direct effect on the cost of production. The tax on oil might have been considered, but that, too, would have affected the cost of production. My right hon. Friend was right in his decision.
    I do not think that Chancellors since the war have been successful in planning our economy and avoiding these ups and downs, although it is true that since the Tory Party came into power we have not had the violent ups and downs to which we were subject when the Labour Party was in power. It happened in 1947, again when the Labour Government had to increase taxation, and when the had to be devalued. That did not happen under the Tory Party. In the last Budget produced by the Labour Government every form of taxation was inceased. None of it did any good. The Labour Gcvernment got into a worse and worse mess every time.
    Hon. Members: There was a war on.
    Mr. Johnson: There was not a war on for most of the time when the Labour Party was in power.
    Hon. Members: What about the Korean wax?
    Mr. Johnson: There was not a war on in 1947 and 1949. However, that is history.
    I turn to something which is possibly rather less controversial. I am glad that my right hon. Friend has resisted any temptation to try to impose a general tax on betting. His reasons for doing this were absolutely sound. It would undoubtedly have led to a greatly in-

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    creased amount of illegal betting. Parliament in its wisdom, having made cash betting legal, passed another Bill imposing a levy on bookmakers as a contribution towards horse racing. There would have been no sense whatever, that Act having been passed, in reducing the amount available in that way by taxing betting.
    There are some forms of gambling which I would gladly see taxed—for instance, the large gaming houses which are flourishing in every large town. That would be an extremely difficult thing to do, but I hope that a way will be found.
    I know that the hon. Member for West Ham, North and I are on common ground in welcoming the reduction in the tax on dog racing. I have always felt that that is long overdue. I wish it could have been reduced even further, but perhaps that can come in the future. [Interruption.] The hon. Gentleman makes a comparison with horse racing, but, to be fair, the cost of running and providing horse racing is infinitely greater than providing greyhound racing. The hon. Member said that he did not want to tax horse racing. He would not only have got into trouble with some of his hon. Friends if he had made that proposal; he would certainly have got into trouble with me.
    I wish my right hon. Friend had considered starting a State lottery. I welcome his proposals for increased saving. Everybody would agree that that is tremendously important. I believe that a State lottery is possibly the most painless way of extracting money from anybody. State lotteries produce very large yields in other countries. I do not think anybody could reasonably say that it is a wicked thing to do here when we have made betting legal. The Government themselves are about the only ones who are on a certainty on football pools, but no one else is. We might as well consider introducing a State lottery.
    I believe that the Chancellor is right not to impose any form of taxation which would increase the cost to industry. The nation wants the programme we have set before it. I do not think that it will for one moment begrudge the extra £100 million which is being
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    asked. I would go so far as to say that that will be made perfectly evident in the autumn when the country rejects the grandiose schemes for which the Labour Party asks a blank cheque and gives the Tory Party, as I think it will, a renewed mandate to carry out the programme on which we have already made considerable progress.
    8.55 p.m.
    Dr. Horace King: I enjoyed the peroration of the hon. Member for Manchester, Blackley (Mr. E. Johnson) getting ready for the October election. I am not surprised that he has forgotten the Korean war, probably because he was so busy, like every Tory in the country at that time, promising that if the Tory Party was returned it would reduce the cost of living, when during the last 12 years it has doubled it. If he imagines that the country is behind the Government he cannot have read the Greater London election results of last week.
    Perhaps the one thing that the whole Committee will agree about is that nobody will call it an election Budget. The truth is that the Government have lost all opportunities for manœuvring. They are hanging on until the British Constitution turns them out at the end of October or the beginning of November. There was a time when before an election they could introduce a pre-election Budget to help them win, and after the election introduce in November the real Budget. They cannot do this now. They are on the way out and nothing but an international crisis can save them. Nobody in this country of any political party would want an international crisis even for the doubtful opportunity of hanging on to power. Therefore, I believe that this is an honest Budget; it is a Tory Budget and it is a bad Budget.
    It is bad because it does nothing, in my opinion, to cope with two injustices, two hardships in Britain today. I do not intend to go into the question whether the Chancellor has made a successful balance between checking inflation, on the one hand, and creating deflation on the other. I leave that to the economists. If successive Budgets of this Government have been stop-and-go Budgets, with stop after the election

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    and go just before the election, then this is a very little stop Budget.
    So little is the effect of the Chancellor's new proposals that my right hon. Friend the Leader of the Opposition was no doubt right when he called them irrelevant. In spite of what takes place in this Budget, most of the social programme the country is now embarked upon—embarked upon in this last year of death-bed repentance of Toryism—will go on whether we amend, alter or modify this Budget. It will go on despite the moans of those who write to The Times trying to resuscitate the old shibboleths of the Tory Party when they are really advocating nineteenth century laissez-faire.
    What interests me was the Chancellor's talk this afternoon about the need for a national incomes policy. It is a truism that unless growth in incomes is matched by growth in production, prices must rise; and if prices rise because of wages or profit increases, as my hon. Friend the Member for West Ham, North (Mr. A. Lewis) so graphically pointed out in one of his illustrations, the rise will absorb most of the increases that the factory workers, or shareholders, or managers, or civil servants, or local government workers have obtained for themselves.
    At the same time, any rise in prices penalises savagely those who live on fixed incomes, and those groups which are not strongly organised enough to get wage increases to compensate for the increase in the cost of living. The real victims of an unregulated war by powerful groups to increase incomes will be the 5 million to 10 million worthy British citizens, with probably the hardest hit of them all the 1½ million old-age pensioners, who are on fixed or nearly fixed incomes and unable to better themselves in the struggle for increased increments. It is a simple fact, therefore, that Britain must move towards an honest incomes and increases in incomes policy. This Government, however, can do nothing about that because they have not only tolerated but have also helped to create a set of circumstances in which those who are getting the biggest income increases are those who are doing the least to earn them.
    I sit on a county council which has recently been buying land for policemen's houses. We have been paying just over
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    £1,000 for the site of each house. At the present rate of interest someone therefore will have to pay 25s. a week rent for the land on which we are building each house—before a single brick has been placed on it. We are buying land for schools in Hampshire for between £3,500 and £7,000 an acre—and this is for a school site not in the towns of Hampshire but in the countryside.
    As I have said in a previous debate, when we buy land for schools we pay a price for the playing field that is the notional price placed on the land by the valuer as if it were to be used for the building of houses. In the County of Hampshire there is land in Farnborough which was priced in 1956 at under £20,000. This year it has been sold for £250,000. Southampton is buying land for a new housing development on the outskirts of the town. We are having to pay between £1¼ million and £1½ million for the land alone, and that will have to be met by those who live in the houses which we shall build there.
    The scandal of the land racket stinks to high heaven. The defence, according to the "Gospel of Enoch"—supported I noted, by the Chancellor in his speech this afternoon—is that we must obey the sacred laws of supply and demand when it comes to purchasing land. The supply of land is a matter for the Creator. God gave the land to the people. No political party can add or take away from the land in this country, although I hope that some day we will take over some of the waste land on our coastlines and make it usable, as the people of Holland are doing with land reclaimed from the sea. But the demand for land is a social demand that is created by social purposes and needs. The landowner is doing nothing to make his land more profitable. Indeed, if he cultivates it and works hard to make it yield it is fax less profitable to him than bad land which happens to be needed for house, hospital or school building.
    While this Government are saying to workmen and managers—and even to some shareholders—in the sort of speech we heard from the Chancellor today, "Work hard. Work more productively. Use your brawn and brain, technology and financial skill to solve our balance of payments problems." they are also saying, "As the national

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    income grows by 4 per cent. you can have your salary or wages increased by about 4 per cent.; that is, unless you happen to be a special case, when we might concede to your having an increase of 6 or 7 per cent.". On the other hand, to the landowers, the Government say what Bukharin said to the Kulaks in Russia some years ago; "Enrichissez vous"—in other words, "Get rich quick. Make your pile. Britain needs your land. You have Britain over a barrel. Squeeze the last drop of profit you can out of Britain's need to build houses, schools and hospitals".
    And this is not a 3 or 4 per cent. annual increase in income for the landowner. He can get 100 per cent., 500 per cent., perhaps 1,000 per cent. in some cases. It means that at present the biggest rewards of a Tory society are going not to those who work but to those who own—to property owners and shareholders, particularly landowners.
    I agree with my hon. Friend the Member for West Ham, North that if this were a good Budget it would be doing something about the land racket. The trouble is that the Government are the party of the property and landowners. The Government were heavily financed by them at the last General Election, just as they will be in the October election. They cannot begin to stop the racket in land when that very racket was started by laws which this Government introduced into Parliament and which made it possible. The landowners have not had to threaten to strike to secure an increase in their wages; the Government have handed out income increases to them on a scale compared with which the demands of the most militant Communist shop steward are mere chicken feed.
    Dear money, higher rates of interest—these things make me wish that in the Shakspeare commemoration stamps that will be issued at the end of this month the Government had taken the trouble of showing at least one more Shakspearean character—Shylock. This country has been a moneylenders' paradise during the last few years.
    I do not like the proposals to increase indirect taxation—I have opposed indirect taxes whenever they have appeared
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    in a Budget—but, at the moment, I have a little doubt about reconciling my fundamental opposition to indirect taxation with the possibility that the higher Tobacco Duty may be a disincentive to smoking. If it should prove so, the nation's health will undoubtedly gain. I doubt, however, whether it will prove so.
    Like many other people, I have consistently given up smoking every time a Chancellor has announced in his Budget an increase in the duty. I doubt whether the disincentive will last for more than a few days or a few weeks. In any case, the people who will be hit hardest by the new Tobacco Duty will be the old folk, for whom, in any case, this cannot be a disincentive and who, if they are to have lung cancer have it already, and will comfortably and rightly go on smoking to the end of their days, if they can afford it.
    We have to tackle the problem of cigarette smoking amongst our youngsters much more vigorously than we have done, but it must be done positively. It must be done by incentives rather than by disincentives, and much more must be done by education. I certainly doubt whether the disincentive effect of the higher rate of duty will be of much relevance to this grave problem.
    The virtue of direct taxation is that one pays according to one's capacity to pay. The injustice of indirect taxation is that tomorrow the richest millionaire in the country and the poorest old-age pensioner will each pay an extra 2d. for his ten cigarettes and an extra 1d. for his glass of beer. The Chancellor has told us that the aim is to take £100 million of spending capacity out of the people's pockets. If that aim is a good one—and I have said that I am not an economist—it seems to me wrong that we should take money only out of the pockets of smokers and drinkers and leave teetotallers and non-smokers to continue to have more money than the Chancellor thinks they should have this year. But it seems to me to be wickedly wrong not to take a little more of the spending money from the richer people and leave the poorest with the little money they now have. The simple fact is that this Budget is making a cut tomorrow in the income of old-age pensioners who smoke and drink an average of, perhaps, 2s. a week. It

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    is a poll-tax which will bear most heavily on the poorest citizens.
    The Chancellor has said that we need to reform the system of taxation. I believe that we need to reform it radically. Hon. Gentlemen echoed me when I said a few days ago that the tax that cries out for radical reform is the rating system, and the Budget could have done something about that. To those of us who campaign for a reform of the rating system the ominous and bad thing about the Budget is that it assumes that grants to local authorities will be on the same proportionate scale as they were last year, when both sides of the Committee are agreed that in one way or another we must lift some of the inequitable burden from the ratepayer and put it more fairly on the shoulders of the taxpayer.
    I also believe that a wise Chancellor would hesitate before increasing indirect taxes, especially when he does it, as the Chancellor says he is doing it, to avoid increasing direct taxation. It would be much fairer and would achieve the same object that he has in mind if the right hon. Gentleman said, "We need to take £100 million. Let us honestly take it by direct taxation." The plausible case for indirect taxation is that usually nobody notices it. The consumer is not aware of it when he pays Purchase Tax. He is not aware, for example, that we are the only nation that puts a tax on music, to our cultural shame. He is not aware of the tax on the hundred and one things that he buys week by week.
    Now, although this may be generally true after a time, when indirect taxation is increased, as this Budget will increase it tomorrow, people will be certainly aware of it tomorrow night. I believe that the Government are at a low ebb and that many Tory workmen—and, unfortunately, there are still many of them who have stuck firm to this Government of land and property owners during the last 12 years—will receive their last shock tomorrow and that when the General Election comes in October they will be with us in returning a Labour Government.
    9.12 p.m.
    Mr. R. M. Bingham: The hon. Member for Southampton, Itchen (Dr. King) has been
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    very short in his remarks and, having regard to the number of his supporters who intend to follow him in the debate, I shall try to be the same. The hon. Member said that this was an honest Budget, a Tory Budget and a bad Budget. I agree with him that it is an honest Budget and a Tory Budget, but I think that it is a good Budget. He said that it was bad for two reasons. He put it that the wrong people were taking money out of the economy and that the right people were not being enabled to take it out. He dealt with the question of land prices which has been referred to by every Opposition speaker that I have heard in the debate. I noticed that the hon. Member did not refer in detail to his cure for the problem of land prices. No doubt if he had done so he would have referred to the nationalisation of land.
    Dr. King: Will the hon. and learned Member read the party's programme?
    Mr. Bingham: I only said that the hon. Member did not refer to it and that if he had he would no doubt have referred to some form of nationalisation of land. All hon. Members recognise that the problem of land prices is intractable. [HON. MEMBERS: "Nonsense."] I agree with the hon. Member for Itchen when he says that we cannot wholly apply the law of supply and demand to land. I agree for the very reason that he gave. There is not an inexhaustible supply of land. One piece of land is not like any other piece of land. This is fundamental. In addition, of course, there is the fact that the very incidence of town and country planning produces an artificiality in the use of land which accentuates the difficulties and imbalances of supply and demand.
    However, having said that—I agree with the hon. Member for Itchen about it—I am convinced, speaking from this side of the Committee, that the nationalisation of land or the scheme which I have read for a land commission, which, in effect, is a form of nationalisation of undeveloped land, would accentuate the problem just as surely as the propositions put forward by the Labour Government in 1945 for development value did exactly the same.
    The hon. Gentleman gave as his other reason for not liking the Budget that he did not approve the idea of

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    indirect taxation to produce the £100 million which the Chancellor mentioned. In the circumstances, it is fair to ask him, or any hon. Member who is to follow him, exactly what proposals the Opposition would put forward.
    Mr. E. G. Willis: We are discussing the Government's Budget.
    Mr. Bingham: I hear noises about this being the Government's Budget. It is, of course.
    Mr. Bence: That is what we are debating.
    The Temporary Chairman: Order. The Committee would progress better with a little less intervention by hon. Members who remain seated.
    Mr. Bingham: This is the Government's Budget. Obviously, it is a Budget about which people can make criticisms. The only point I am making is that destructive criticism is seldom of any value and that one wants constructive criticism. Constructive criticism takes the form of saying, "We do not like this method of raising the £100 million and these are our exact alternative proposals for raising the money". I should like to hear categorically from some hon. Member opposite exactly what tax they would put on to raise the £100 million.
    Mr. Bence: A capital gains tax.
    Mr. Bingham: That is one answer, a capital gains tax.
    Dr. King: The simple answer is that we can take it out of Income Tax and we can take it by a tax on land values. I mentioned both.
    Mr. Bingham: I am glad to have that answer. I have not read about a tax on land values in the Labour Party's policy, but I leave that point. The proposal about Income Tax is a solid proposal which I have now heard enunciated.
    Mr. Willis: So is a tax on land values.
    Mr. Bingham: The only other points I make in this short speech are these. I have said that I regard the Budget as a good one, but I think that it poses one or two questions which, in the long term,
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    must be answered by the party in power. The point of the Budget, the really dominant, overshadowing factor, is the constantly rising trend of public expenditure. There is no doubt about that. This Budget, as my hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) said, puts into balance the essential economic fact that, if we increase public expenditure, the money has to be found. Here is the dilemma. [Interruption.] I hear an interruption, "Is that right?"—that one has to find the money—
    Mr. A. Lewis: I said, "Ferranti".
    Mr. Bingham: The dilemma is—
    The Temporary Chairman: Order. We are having too much interruption by hon. Members who are seated. It is better and more courteous to stand if an hon. Member wishes to intervene.
    Mr. Lewis: I apologise, Mr. MacPherson. Perhaps I should have said it clearly. I stand up now and say that Ferranti gives an example.
    Mr. Bingham: The point I was putting is that everyone wants the benefits of public expenditure but the more people have to pay for it themselves the less they want it. That is only natural and common sense.
    What I want to pose is this, because it is the long-term problem on public expenditure: are we sure that we are getting full value for the public money that we are spending? I have an uneasy feeling that that may not be the case. When I say "public expenditure", I mean the whole range of public expenditure. I have an uneasy feeling that in some ranges of the public services overheads and administrative costs have, possibly, become too high.
    Mr. Bence: Such as?
    Mr. Bingham: I do not want to mention any, because this is a natural tendency in any organisation which does not have to account on a strict commercial balance sheet. That is fundamentally the reason why I dislike nationalisation so much. It contains a built-in element of inefficiency because it has no commercial balance sheet.
    However, over and above that, we have not heard much in recent months

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    of the inevitable operation of Parkinson's Law. If public services grow up and the majority of them do not account on strict commercial balance sheets, the operation of Parkinson's Law, in one form or another, is almost inevitable. That is a problem which, I am sure, is worrying my constituents, and I think that it is probably worrying many constituents in other parts of the Country.
    The other aspect of the problem is this—and the hon. Member for Itchen mentioned it. Public expenditure increases. As long as we get full value for money we hope that as the country expands and prosperity increases public expenditure, for which we get full value, will rise commensurately. But most items of public expenditure—education, housing and matters like that—contain an element of contribution from ratepayers. I agree with the hon. Member for ltchen that, although we should consider the taxpayers' problems in meeting increasing public expenditure, we must consider more meeting the ratepayers' problems.
    Mr. Neil McBride: I am glad that the hon. and learned Member has mentioned the problems of the ratepayers. Will he say something about the high interest rates? Tomorrow morning, in HANSARD, he will see a Written Answer from the Minister for Welsh Affairs to the effect that there has been an astronomical rise in interest rates—
    The Temporary Chairman: Order. Since the hon. Member has committed the mistake more than once, I should draw his attention to the fact that he is using the wrong form of address. He should always address the Chair and not the hon. and learned Member.
    Mr. Bingham: I did not intend to say anything about interest rates because they do not come within the compass of my remarks. I think that it was the hon. Member for West Ham, North (Mr. A. Lewis) who said that interest rates were too high. He also said that local authorities are like any ordinary person. Putting those two questions together, I can only give my answer. This is an answer in the form of a rhetorical question which does not seek an answer by way of interruption. Would anyone
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    who wants interest rates on the basis that I have put want an interest rate based on a Bank Rate of 2 per cent.? The answer is, no, because it would create inflation. I did not intend to deal with interest rates except to say that. If anybody wants to answer, perhaps he will have a chance of speaking presently.
    Provided that value is given for public expenditure I do not think that the taxpayer, and with more reservation I do not think that the ratepayer in the long run, provided that certain adjustments can be made in the rating system, will begrudge the money. I am not certain at the moment that value is wholly being given. I do not want to single out any form of public service, because the whole point is that when one has a public service, whether a nationalised industry, a Government service or some other form of public service like a board, there is no commercial accounting or balance sheet and the scope for Parkinson's Law to operate is enormous. There should be, sooner or later—I hope sooner—an enquiry into the whole scope of the value given for public expenditure and the methods by which the operation of what I call Parkinson's Law can be controlled.
    Questions of tax reform have been mentioned. I would have hoped that in this Budget room could have been found for measures of tax reform on a more imaginative scale. It is time that the assimilation of Surtax and Income Tax into one uniform personal tax was tackled. I do not know of any other country which has our system. There are other methods by which the collection of Schedule D tax in particular could be improved, and certainly the amount of accountancy for individual taxpayers who pay tax under that schedule could be reduced. In his Budget speech, my right hon. Friend the Chancellor of the Exchequer mentioned the assimilation of Profits Tax and Income Tax for corporations. The task for doing the same for individuals is just as urgent and should be undertaken very shortly.
    9.28 p.m.
    Mr. John Rankin: In the days when the right hon. Member for Woodford (Sir W. Churchill) accused the Tory Party of being the

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    party which held the open hand at the public Exchequer and the open door at the public house, he also advocated not only the nationalisation of the railways but also the nationalisation of the land. It seems to me rather strange that the Tories, through their mouthpiece the hon. and learned Member for Liverpool, Garston (Mr. Bingham), should find that so distasteful.
    The hon. and learned Member knows, as I do, that when a people decide that they will own their own land, they will do it. He knows that none of the horrors that he tried to predicate as a result of that action would ensue; that good things would happen and, perhaps, many of the evils which arise today in the building of houses, the opening of roads, schools and all those other needs about whose cost the hon. and learned Member lamented, would disappear. I do not want to spend further time upon the hon. and learned Member. I have been here for quite a long time, though it seems an even longer time than, in fact, it is. I want to try to be concise.
    During my tenure of this seat in the House of Commons, I have listened to many descriptions of the Budget, some of them kindly and some of them not quite so kind. To me, this is an appalling and a heartless Budget, and one which is absolutely without vision. I say heartless because today the Chancellor told us that he hoped, in the financial year on which we have now entered, to raise £7,000 million of revenue, and he is to raise part of that revenue from the old-age pensioners. They are to play their part, and yet not once during his speech did he give them a kindly word. He did not say anything that he might have had in mind to alleviate the further distress which his act today will cause them. He did not even make a promise to them. He did not even mention them. I thought that was one of the most heartless acts which I have ever seen from a Chancellor of the Exchequer since I became a Member of the House 18 years ago.
    This is a Budget which shows no vision, because at this moment in the world we are seeking to bind peoples
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    more closely together. We are hearing that profession from time to time, and not only from the Prime Minister; we were hearing it this afternoon; we hear it from the Foreign Secretary. We hear them say that they are attempting to bring about understanding with other peoples; to bring them closer together, to let them realise that they are part and parcel of a great, common community. Yet all the Chancellor could talk about was a cut-throat economy within this country.
    I agree that as things are we have got to compete with other countries, but he gave us no vision of something better than that what we see going on just now in the world outside. I thought he might have told us that he was thinking on special lines when he spoke about the need for increased exports. I can remember an occasion when, like many of my colleagues on this side of the Committee, I advocated increased trade with Russian and with China. Now we are beginning to see a kindlier attitude towards Russia, not, I fear, merely because we want increased trade, but because we think that there is deep-seated dissension between Russia and China and that if we become more ready to trade with Russia that will help her and we shall be able to widen the split. It is purely a political matter, or, at least, it is influenced by political motives.
    I want to give an example. I remember addressing to a former President of the Board of Trade, who is now in another place, Lord Eccles, one Question out of a series which I had been putting about increasing trade with China. He said to me afterwards, not across the Floor of the House, in explanation of his Answer, in which he turned down my suggestion, that, after all, if we did increase our trade with China, then, to meet any deficit, China would have to go to Russia for a loan. Two months afterwards I was in Hong Kong, and there, by accident, I became the guest of an English gentleman who was financial adviser in Hong Kong to the Chinese Government and their agent for the State Bank of Hong Kong.
    We happened, in the course of our conversation, to get on to this talk about trade with China. I spoke about the difficulties put to me by the President

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    of the Board of Trade, and this gentleman said, "What nonsense! At the moment, China's sterling balance, held in the Hong Kong Chinese State Bank, is £150 million. If we did not use that to increase trade between China and ourselves, other nations would, and in due course it will disappear." We cannot stop external trade nor stop balances accumulating in sterling outside this country. If we will not use our sterling because of political dislike of certain countries, it will be used by other nations; some of them in Europe.
    That same year I was at the College of Iron and Steel, in Peking, and there saw an instrument, manufactured in Western Germany, which was on the embargo list. Although Germany was supposed not to be exporting this strategic material to China, I and a colleague of mine saw it there. It is unfortunate that the Chancellor of the Exchequer did not take a wider view in the interests of this country when he talked about exports.
    Captain Walter Elliot: I do not know whether the hon. Gentleman was present when the Leader of the Opposition spoke after my right hon. Friend the Chancellor of the Exchequer, but the right hon. Member for Huyton (Mr. H. Wilson) seemed to think it was scandalous because our imports had risen so considerably in the last 10 years and much of them were textiles from developing countries. I agree with the line which the hon. Gentleman is taking. Would he disagree with his right hon. Friend?
    Mr. Rankin: I am sorry that I did not hear what my right hon. Friend the Member for Huyton (Mr. H. Wilson) said. Not having heard what he said, and being unable, without disrespect, to accept the word of the hon. and gallant Gentleman the Member for Carshalton (Captain Elliot) as final, I must wait until I see the OFFICIAL REPORT in the morning. I shall be surprised if my right hon. Friend said anything with which I would disagree, because I know his mind on these issues better than any hon. Member opposite.
    The Chancellor said that he wanted to establish a progressive and efficient economy. I wonder whether he means what I mean by "economy". When I
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    think of the economy of the nation I do not confine it to London and South East England. To me, it takes in every part of the United Kingdom, including Northern Ireland. We want a healthy economy in all parts of the United Kingdom. Let me exemplify what I mean by that.
    I take Scotland as my example. On 16th March last the Board of Trade said that the unemployed in Scotland totalled 88,450—the highest in any part of the United Kingdom and only 12,000 below the highest figure we in Scotland have ever reached. There were 13,595 vacancies. Is it any wonder that there is a continuing drift of people away from Scotland when vacancies number 13,000 and persons looking for jobs number over 88,000? This represents a totally unbalanced economy.
    Today, the Chancellor said that from the development now promised in Central Scotland 16,000 jobs might emanate. Once again, we are getting the old pipeline dream. We are promised more jobs from development which is to take place in Central Scotland. But the Chancellor himself says that only 16,000 jobs will be created. We have been hearing promises of development throughout the lifetime of this Parliament, but, despite those promises, Scotland still has the highest number of persons unemployed of any part of the United Kingdom.
    But supposing that these various developments expected by the Chancellor do take place in Central Scotland. The result will be a drift from the North and South of Scotland, where depopulation already exists to an alarming degree. People will tend to come to the central part unless there is compensating development in the Highlands and in the South of Scotland.
    Mr. Dudley Smith: The hon. Member must be fair. We admit that there is a problem, but a great effort is being made to relieve the pressure on southeast England and the latest programme to be introduced is a very realistic one.
    Mr. Rankin: This "realism" has been with us throughout this Parliament. The greatest piece of "realism" was the promise by the right hon. Member for Bromley (Mr. H. Macmillan), on the eve of the 1959 General Election,

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    to build two Cunarders on Clydeside. That was probably the greatest piece of "realism" thrust upon us on the eve of that election. We have still to see a Cunarder.
    Mr. A. Lewis: There is another election in October.
    Mr. Rankin: They cannot use the Cunarder again.
    Mr. Lewis: They will think of something else.
    Mr. Rankin: If we are to gain an efficient and progressive economy we cannot just develop one part of Scotland and leave the Highlands in the state they have been in since this Government took office.
    I hope that the Government will note what is happening at Dounreay. The experimental reactor was installed there and created in that part of Caithness a new outlook among the people, for it led to old industries expanding and to new industries coming in. It stabilised and is now beginning to increase what was formerly a falling population. I hope, therefore, that, when the Government come to consider the location of the permanent fast reactor, they will not go anywhere else than Dounreay.
    I turn now to a matter which closely affects my own constituency. The subject was referred to in a most aggravating way by the hon. Member for Ilford, South (Mr. Cooper). Having made his annual speech—it is always in the same terminology—the hon. Member has disappeared from the Chamber. He referred to the shipping and shipbuilding industries. He made some very provocative statements and blamed the state of the shipbuilding industry particularly on certain persons associated with the trade unions. I have looked up some figures which I wish to quote to the House.
    In 1913, 30 per cent. of world shipping sailed under the British flag. In 1961, the latest date for which figures are available, the figure was 14 per cent. The amount of world tonnage sailing under the British flag in 1913 was 40 per cent. In 1961, it had fallen to 14 per cent. During those 48 years—and we can subtract six years of the war
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    —a Labour Government were in control for only nine years. For the long period of 33 years the future of the shipping and shipbuilding industries was in the hands of members of the party opposite. If blame is to be attached to anyone, it is not trade unionists, or the men who work in the industries, but members of the party opposite. They had the opportunity to shape the future of those industries, but sat passively and watched them decline.
    Captain W. Elliot: I am sorry to interrupt the hon. Gentleman again, but I am sure that he wishes to be fair in this serious question. The question which my hon. Friend the Member for Ilford, South (Mr. Cooper) was asking—I do not know whether the hon. Member can give the answer—was why is it that a large number of ships are being built and repaired in foreign shipyards for the shipowners of this country?
    Mr. Rankin: When the hon. Member for Ilford, South was interrupted while making the allegations to which I have referred he shifted from the shipbuilding industry to ship repairing. He used that as his excuse and refused to face the facts which I am presenting to the Committee now, in his absence.
    Captain W. Elliot rose—
    Mr. Rankin: I cannot give way again, I must get on with my speech.
    I gave the number of ships and the world tonnage which sailed under the British flag. The change in those figures affected shipbuilding, and particularly people in my constituency. We used to have three shipbuilding yards all busily employed; now we have two. We had 10,000 men engaged in the industry in Govan when the Tories came into power in 1951. Last July, the number engaged on building ships had been reduced to 5,000. This has also affected exports. The Chancellor wants exports to be increased. In 1956, we exported in ships and boats from Britain £93·8 million worth. In 1962, that had been reduced to £32·4 million; a most alarming reduction.
    It has affected manpower. In 1958, there were 302,000 persons engaged in the industry in the United Kingdom. In 1962 the number had been reduced to

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    251,000. Because of this the Government had to jump in to help. This is where we cannot vision the future as the Tories do. We cannot act as individuals or individual units or industries within the nation. As a nation, we cannot act individually in the wor1d. That is why I said the Chancellor's speech lacked vision. The Government were compelled to step in and to offer a loan of £80 million, but that is an insufficient approach to the problem.
    There is only one policy which can now be applied if we are to have a lasting solution. It is the policy I advocated in the House in 1958. We have to turn to the idea of scrapping and building. We have to fix an age for a ship beyond which it will no longer be used. We then scrap it and build a new one to meet the demands of today. When we scrap I hope that we shall not allow to happen what is happening now. Shipowners who are getting part of the £80 million loan are now advertising in the Sunday Press the ships which are being discarded, for sale to other nations. That should be stopped.
    It is no use saying that there are too many ships on the seas and then adding to our own difficulties. When a firm is given assistance from the loan it ought not to be allowed to add to the world supply of ships by selling to another country a vessel it has displaced. It ought to sell the vessel to be turned into steel in Britain. We need that because of the development of the use of steel in building houses and in other work.
    My hon. Friend the Member for Burnley (Mr. D. Jones) is seeking to make a contribution to the debate. Therefore, I shall leave one or two things I should like to mention to be said at a later date. I emphasise that if shipbuilding is to revive it cannot be done in the old fashion. It needs assistance, and that can come only from the nation and the Government which represents the nation.
    I am certain that if the industry had the backing of the Government it would go on showing, as it is beginning to show, that the shipbuilders and shipowners have an interest not merely in their own profits but in the well-being of the country and of the men they employ in the industry. As long as
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    they do that, I am certain that we on this side of the Committee will help them to help themselves when we come to power this autumn.
    9.55 p.m.
    Mr. Robert Cooke: Before I begin my remarks I would say that certain hon. Members who thought that they might have the opportunity to catch your eye, Sir Robert, and who have not had that opportunity, will be able later to deploy their remarks at greater length and under much more favourable circumstances than would have been the case in the very few moments which are available now and for which I will detain the Committee.
    Mr. James H. Hoy: The hon. Member has not been present for the debate.
    Mr. Cooke: I have been in and out of the Chamber throughout the whole debate.
    Mr. Hoy: Nothing of the kind.
    Mr. Cooke: I heard the whole of the speech of my right hon. Friend the Chancellor and of the hon. Member for West Ham, North (Mr. A. Lewis), who spoke so eloquently about greyhound tracks. I heard the greater part of the speech of the hon. Member for Glasgow, Govan (Mr. Rankin). Indeed, I have heard the greater part of a large number of his speeches on many occasions, many with great pleasure and interest. I remember an occasion on which I was speaking at about this time in the day. I sat down before the hour set for the conclusion of the debate, and the hon. Member rose in his place and then detained the House for 45 minutes on the next day before either Front Bench speaker could get at the subject. However, I assure the Committee that I have no wish to detain it on this occasion for an unduly long time or, for that matter, for 45 minutes at the beginning of the proceedings tomorrow.
    In the few moments which remain I may be able to answer some of the points raised by the hon. Member for Govan. He said, broadly, that the Government had not done a great deal for Scotland. I cannot concur in that view. I have been a Member of the House for more than seven years, and in the whole of the first three years my mornings were

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    taken up with attendance at the Scottish Grand Committee, where the hon. Member for Govan and other hon. Members had much to say about the Government's policy for Scotland. There was even an occasion on which, the Committee having sat all night for the third time in three or four weeks, I was forced myself to give tongue.
    I do not think that the hon. Member is fair to the Government in suggesting that nothing has been done for Scotland in all that time. In spite of the strictures which he and his hon. Friends delivered at the Government's programme, I cannot believe that none of the Bills passed in all those years has done good in Scotland. I remember a Measure dealing with shipping in the Highlands and Islands which was a classic example of the Government supporting a service in a manner which would be of considerable use. I see that I am perhaps incurring your displeasure, Sir Robert, for straying from the main thread of the argument, and I will come back to it, but the hon. Member for Govan made those allegations and, in all fairness, they ought to be answered.
    The hon. Member referred, in passing, to the Cunarders and said that the Government's financial policy in that respect had not been carried out. Surely what the Government did on that occasion was to make available certain funds to a company which intended to make a great effort to produce one of these ships as a successor to one of the very successful ships which it had had in the past. For sheer economic reasons the company found that it could not go ahead with the scheme and that some alternative was preferable.
    Supposing that the company were right, I should like to ask the hon. Member—he need not reply now but perhaps would do so on a future occasion—what he would have done if any of these great ships had been produced and then had been found to be completely uneconomic. Later in his speech he said that ships which were uneconomic should be scrapped. If I follow his argument correctly—I think he will find that this is so if he reads his speech in HANSARD—he will see that that is what he advocated. He made much play of a suggestion of the production of some enormous ship
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    which almost the next day, according to his way of thinking, would have had to be scrapped.
    But I come back to the main subject of today's debate.
    It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
    Report of Resolutions to be received Tomorrow.
    Committee also report Progress; to sit again Tomorrow.

HEAVY LORRIES (CASUALTIES)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. MacArthur.]
10.1 p.m.
Mr. Graham Page: I desire to call attention tonight to the road casualties caused by heavy vehicles. I will refer to them as lorries, as perhaps they are better known by that term. A few weeks ago a lorry out of control careered down Highgate Hill, ran across a crowded pavement, killed two pedestrians, and crashed through the wall of a bank. The lorry was overloaded by more than 3½ tons. Part of the braking system was misplaced, and had been so for some considerable time. The driver changed down only after he had applied the brakes and found that nothing happened. The driver had started work with the lorry owners only on the previous day.
These facts highlight some of the points which I would like to make. But this is only one of very many similar accidents which happen every day throughout the country, accidents causing death due to mechanical or human failure of the lorry or its driver. What further disasters could have happened in that case had the lorry been loaded, as it ploughed across a crowded pavement, with some dangerous substance such as oil, petrol, gas, acid or even red-hot steel ingots, which sometimes travel by lorry, do not bear thinking about.
It is fair to say immediately that for milage travelled lorries are involved in fewer accidents than other vehicles, but a lorry, on average, travels about 20,000 miles a year, whereas the private car

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travels, on average, about 8,000 miles a year. So, per lorry, the accident rate is probably the worst for all types of vehicle. For fatal accidents alone the involvement rate for lorries is noticeably higher than for private cars or light commercial vehicles.
Accidents to lorries happen not merely by reason of careless driving. Of course, careless driving is the cause of accidents to many vehicles. In the case of lorries, however, other factors are involved—factors which are easier to eradicate, perhaps, provided that one is determined to do so and that the problem is tackled vigorously.
I would divide these factors into six categories: first, mechanical defects, and, in particular, defects in the braking system; second, mechanical inefficiency; third, dangerous loading; fourth, human lack of experience and skill; fifth, physical strain; sixth, speed. I will deal with each factor separately.
In the case of mechanical defects, the Ministry's qualified engineers, who spot-check lorries on the road, in one year took off the road immediately one out of every 11 lorries they stopped. That number of lorries was forbidden to go another yard on the road because they were a danger to life and limb. The figures for the north-western area, which are of particular interest to me because my constituency is in that part of the country, show that out of 6,682 vehicles stopped for spot checks, 1,055 were taken off the road at once. That means that three out of every 20 were murder vehicles. Of the rest, two out of three stopped were served with delayed prohibition notices.
These figures are terrifying. I do not believe that the public realise the incredible fact that lorries, which travel pehaps three, four or even five times as far every year as private cars, are not subject to any test except spot checking.
On my second point, not only defects in accepted construction cause accidents in which lorries are involved, but I believe that the construction itself is, in many cases, inefficient. Can we afford to have on our roads vehicles which, even in the best conditions, take perhaps three times as far to pull up as an ordinary car? I am told that articulated vehicles take even further to stop, frequently as far as 100 yards at 40 m.p.h. Coupled with
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this, it must be remembered that these vehicles often travel nose to tail at speeds faster than the vision-and-braking distances safely permit. Is it any wonder that "concertina" accidents take place on the motorways? I do not believe that the public realise that although standards of braking are laid down by the Ministry for private cars, no such standards are laid down for lorries.
My third point concerns loading. Regulations about dangerous loads—such as petrol, acids, gases and explosives—are, I submit, wholly inadequate. I appreciate that they do not come under my hon. Friend's Department, but under the Home Office. Nevertheless, my hon. Friend has power to make regulations and I hope that he will agree that adequate ones should be made for the protection of the public against dangerous loads. Apart from the intrinsically dangerous loads, there is almost a complete absence of control over the security of loading and the possibility of overloading; and, of course, too many heavy loads go by road when they should go by rail.
I turn to the human element. It is astonishing to think that there is no assurance that a driver of, say, a 24-ton lorry has had a moment's experience, let alone instruction, in the skills of lorry driving. He can take a test on a Mini-car and slip straight into the cab of a 24-ton lorry. It is a question of luck whether he knows anything about the skills of lorry driving, which are quite different from the skills required to drive an ordinary car. It is easy, for example, to fade the brakes by starting off down a hill too quickly, ending up by bringing death to innocent passers-by or drivers in the path of a runaway lorry.
My fifth point concerns physical strain. There are too many of what are called "cowboy" drivers on our roads. These are the "day and night merchants" who deliberately break the law concerning the hours of driving. They know that they should drive for only 11 hours out of every 24, yet they do the Liverpool-London Liverpool trip—these "up and downers", as they are called—in a day, that is, more than 400 miles at a stretch. They flog their lorries along the motorways, with the result that the condition of those vehicles, the physical strain on the drivers, and the speed at which they travel all add up to murder on our roads.

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I do not consider that 8,500 prosecutions a year for failing to keep records hit the right people. Too many of them are against the small, local C licensed vans. The real danger lies in the "cowboy" drivers and, indeed, in the owners of the tramp lorries, who are too greedy financially, and who are prepared to flog themselves and their lorries just to earn a little more money.
My last point is the speed limit. The limit for lorries over 3 tons unladen weight was increased from 20 miles per hour to 30 m.p.h. in 1957. In a couple of years, personal injury accidents in which lorries were involved had increased by nearly 50 per cent. It was the utmost folly then to increase that speed limit from 30 m.p.h. to 40 m.p.h.—a folly matched only by the absence of a speed limit on motorways.
Coming back to my six points, what are we to do about each of them? First, on mechanical defects, tests for lorries should be provided in the same way as they are provided for private cars. It is quite incredible that we should go on allowing lorries to go on the road, and merely be spot checked, without the proper annual tests. I know that there is difficulty in providing for such tests, but we really should make that provision right away.
Secondly, there is mechanical inefficiency. I would hope that my right hon. Friend the Minister could set up a special investigation, by the Road Research Laboratory or a special committee, into braking systems in particular. We need a wholly new approach to the braking system on lorries. There are new systems, such as those used with the big civil engineering projects in Australia where normal braking systems on the very heavy vehicles used there would have been quite useless. There are systems of exhaust baffling, gearbox locking, and so on, all of which need careful investigation, because, as I say, we need a new outlook towards the braking system of the lorry.
The solution of the dangerous-loads problem is realistic regulations to protect the public from the dangers from explosives, gases, acids and the like, carried on the public highway. Also, I would hope that my right hon. Friend
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the Minister could increase his overworked and undermanned examination staff. There are too few of these men on the roads to carry out proper examination, and I would hope that he could soon put into operation the plating system that would expose the overloading of lorries.
As to human skill, we must restore the pre-war heavy-vehicle licence, and make it compulsory for the lorry driver to hold it. My right hon. Friend has the power to do that under Section 192 of the Road Traffic Act, 1960. I hope that he will soon restore that form of licence, and see that every lorry driver holds it, so that the public has some assurance that the driver has experience of driving lorries.
The physical strain that I mentioned among those driving over 400 miles a day should be dealt with by an increase in the Ministry's examining staff who can stop these lorries and examine their records. But it also needs more police co-operation, such as the three-county patrols used on the M.6. If there were more of those on the M.1, then I am sure that some of these dangers on the road would be detected.
Finally, I would hope that my right hon. Friend, now having seen the accidents that are being caused by the lorries, would have restored the 30 m.p.h. speed limit for heavy vehicles, and would also have imposed a 50 m.p.h. speed limit on heavy vehicles on motorways.
These steps really must be taken at once in order to stop the increasing terror to other road users from too many badly-constructed, badly-maintained and badly-driven lorries.
10.15 p.m.
Mr. Philip Noel-Baker: I intervene for a moment only because I know that the Parliamentary Secretary to the Ministry of Transport would like the rest of the time to reply. I am grateful to him for allowing me a few moments. I am most indebted to the hon. Member for Crosby (Mr. Graham Page) for his powerful speech. I look forward to studying it tomorrow in HANSARD and I shall do my best to ensure that the horrifying facts which he has revealed are made known widely throughout the country.

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In January this year, on the day of the concertina accidents on the M.1 and the A.1, I had a most horrifying experience south of Scotch Corner. I drove about 10 miles on the A.1. It was twilight and fog was beginning to close in. An hour later there were 40 accidents within a mile just north of Doncaster. Lorries were passing me at 60 m.p.h. and 70 m.p.h. My windscreen was covered with mud at every moment. I retreated from the A.1 at the first road I could find which took me by the old kind of motor road to the city of York where I prudently spent the night. I felt that I had come out of a madhouse when I left the road, and it was the lorries that were making it so. I should like to know how many of the horrifying abuses revealed by the hon. Member for Crosby apply to the vehicles and services of British Road Services. I know that the B.R.S. never paid its drivers for the number of journeys done, which is the main root of existing evils. I hope that the Parliamentary Secretary can tell us.
The only remedy is to put a great deal of this heavy traffic back on to the railway. I have frequently called to the attention of the House the heavy coal lorry, steel lorry and other heavy vehicle traffic through my constituency of Derby. It amounts to hundreds per hour, or four, five and six per minute carrying 10 tons. Only this morning I was informed that Dr. Beeching is proposing to close seven or eight coal distribution rail depôts in Derby with the result that 50,000 tons of coal will now have to be distributed through Derby by road instead of by rail. These facts alarm me very greatly, and I hope that the Minister will do something effective to put them right.
10.17 p.m.
The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): To answer one point raised by the hon. Member for Derby, South (Mr. P. Noel-Baker) I cannot tell him without notice the number of accidents suffered by B.R.S. vehicles or drivers, but I will look into the matter and will write to him.
I should like to thank my hon. Friend the Member for Crosby (Mr. Graham Page) for raising this subject tonight. He has fought hard for many years for road safety. We do not always agree
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with all his proposals, but I have no doubt that he does a very valuable public service in helping to keep this problem before Parliament.
It is right that all of us, Government legislature and public, should be compelled to pause and think of the shameful toll of accidents on our roads and it is good that we should frequently discuss ways and means of reducing them. As long as my hon. Friend is in the House so much at least is ensured, but having said that I am bound to add that there is a tendency in the public mind to look upon heavy vehicles as a source of particular danger because they appear to be large and menacing on the roads and because some of the accidents in which they are involved are so spectacular. While, therefore, I have no wish to play down the importance of improving the safety of heavy goods vehicles I ought, in fairness, to set the matter in its correct perspective.
The fact is that heavy goods vehicles as a whole have an accident record which compares favourably with that of other classes of vehicles. Heavy goods vehicles are usually regarded as those of over 3 tons unladen weight. There are about one-third of a million of these on the roads. Our figures do not allow us at present to calculate the accident rates per mile travelled for goods vehicles of over 3 tons as distinct from vehicles of over 1½ tons unladen weight.
We do know, however, that in 1963 there were 12,000 vehicles of 1½ to 3 tons and about 19,000 vehicles of over 3 tons which were involved in accidents causing injury. Taken together, these classes of vehicle accounted for 8 per cent. of all the motor vehicles involved in accidents during the year. Taking into account the mileage covered by goods vehicles, which is much greater than that of other vehicles, it can be calculated that goods vehicles over 1½ tons have a lower accident rate mile for mile than any other class of vehicle. I think that my hon. Friend recognised this.
There are also figures to show how the accident rate has varied from year to year. Before 1963, it was decreasing. Last year, the trend was reversed and the rate increased by 7 per cent. We cannot fully explain this increase, although it seems clear that it was

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caused partly by the severe weather early in the year, which, of course, hit the goods vehicles very hard because they had to keep essential supplies moving. However, that is not the whole explanation as there has been a general increase in accidents involving not only goods vehicles but private cars and other classes of vehicle as well.
The accident figures do not at the moment support the suggestion often made, and made by my hon. Friend, that the raising of authorised speed limits has been an important factor. However, the authorised speed and the speed at which heavy vehicles are sometimes driven are two very different things. No one can deny that excessive speed is dangerous, particularly with heavily laden vehicles and particularly on narrow and winding roads. I have noted what my hon. Friend had to say about the importance of strict enforcement of the speed regulations, and I shall draw the attention of my right hon. Friend the Home Secretary to his observations.
My hon. Friend is, of course, right to urge that the whole problem of improving the safety of heavy vehicles needs to be tackled. I wish now to refer briefly to some of the ways in which we are going about it. First, there are several ways in which we are encouraging an improvement in the standards of drivers of heavy goods vehicles. It has been suggested, and my hon. Friend suggested it this evening, that the pre-war special licence should be reintroduced, together with a special test. We rather doubt whether a once-for-all official test of this character would add much of value to the existing ordinary driving test. At the very most, it would ensure that a man who passed had a minimum standard of skill on the particular kind of vehicle on which he was tested. But this is seldom in doubt with the professional driver. It would not be easy to evolve a test to cover the handling of a vehicle in bad visibility or in an emergency. Besides that, no test can ensure good behaviour on the road afterwards.
There are in existence various schemes to foster the interest of drivers in developing their skill and maintaining a safe driving record. Many drivers are
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entered by their employers in one or other of three special competitions designed to promote a better standard of driving.
The largest competition is the National Safe Driving Competition which is organised by the Royal Society for the Prevention of Accidents. This is open to drivers of all types of commercial vehicles, and awards are made according to the extent to which entrants have maintained their records free of accidents and free of driving convictions. About 200,000 drivers participate annually, most of whom are goods vehicle drivers.
There is a similar competition organised by the Road Operators' Safety Council, which attracts about 80,000 entrants annually. There is also a more specialised event called the "Lorry Driver of the Year Competition", open to drivers of the heavier vehicles. The competitors not only have to have a good record but they are also required to undergo practical tests of both driving skill and knowledge of the Highway Code.
We believe that these competitions can and do make an important contribution to the general standard of driving among professional lorry drivers. Yet there are always the black sheep who can be caught only by strict enforcement of the traffic laws. The new "totting-up" procedure should prove an invaluable weapon against the persistent offender and make it impossible for him to be protected against the consequences of his actions by having his fines paid for him by his employer—a practice which, I say in passing, I regard as contrary to the public interest.
I turn now to the enforcement of the regulations governing the hours worked by drivers of long-distance lorries. The licensing authorities devote a great deal of attention to this subject and they have about 140 staff engaged on enforcing these regulations and, as was mentioned in td in the House only the other day, over 12,000 convictions were obtained last year for breaches of the law.
It is sometimes suggested that we ought to put more enforcement staff at the disposal of licensing authorities for this work. The numbers have increased from time to time and, broadly speaking, they have kept pace with the

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increase in the number of goods vehicles on the roads. Whatever further increases may be made, we must be realistic and accept that it will never be possible to check a high proportion of vehicles. At best enforcement can aim only at providing a deterrent to the breaking of the law.
We are at present reviewing our methods of enforcement, because we think that new methods may prove more effective than a mere increase in the number of enforcement officers.
I turn now to overloading. There is reason to think that overloaded goods vehicles are involved in many accidents. There are regulations governing maximum loads, but they are designed primarily to protect road surfaces and bridges from damage. They are not adequate to ensure that no vehicle is loaded beyond its safe carrying capacity. To deal with this problem, a Departmental Committee has been set up to consider ways and means of developing a scheme whereby a maximum permitted weight would be assigned to every goods vehicle.
This is likely to entail the application to them of standards of minimum power-weight ratio, and of braking efficiency, and possibly of other standards. Application of these standards will certainly make for increased safety. Because of the difficulty of applying them fairly to existing vehicles, it may take a little while to develop a comprehensive scheme. Nevertheless, we are satisfied that a workable scheme can be developed, and we shall press ahead as rapidly as possible.
I should like next to say something about the question of vehicle maintenance and the methods of inspection which we use to see that heavy lorries are mechanically safe. For many years examiners have inspected vehicles, either at organised roadside checks in conjunction with the police, or when vehicles have been parked stationary by the roadside, or even in the premises where they are maintained. As my hon Friend the Member for Crosby knows, when a vehicle is found on inspection to be defective the vehicle examiner can issue a notice prohibiting its use.
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As my hon. Friend pointed out, a disturbingly high proportion of lorries fail in this test. We do not consider, however, that casual inspections of this kind are sufficient. The annual inspection scheme for private cars also embraces light goods vehicles up to 30 cwt. We intend to introduce a comparable scheme to cover heavy goods vehicles as soon as possible. Unfortunately, it is not practical just to extend the existing scheme to include these vehicles. There are few commercial garages which have the heavy equipment necessary for dealing with them. Moreover, the majority of garage mechanics deal only with private cars or light goods vehicles. Nevertheless, we are determined to make arrangements for their regular inspection. But, in view of the difficult problems which have to be solved, the introduction of a scheme for this purpose will still take some time.
Braking is a difficult problem. This was a problem to which my hon. Friend the Member for Crosby particularly referred. The Construction and Use Regulations require that heavy motor vehicles should be equipped with an efficient braking system to meet conditions specified with some precision. The brakes must at all times be maintained in good and efficient working order and be properly adjusted. For vehicles which are subject to the annual statutory test, the standards of efficiency required are clearly laid down. But for reasons which I have just given these tests cannot, at any rate yet, be extended to heavy lorris. We have recently circulated revised proposals for weights and dimensions of vehicles, and these are now being considered by the interests concerned.
My right hon. Friend has decided that these new higher weights should be permitted only in new vehicles which can comply with the stopping distances laid down for cars and goods vehicles up to 30 cwt. unladen weight—that is, those subject to the annual test. In addition, these vehicles will have to show a plate showing the maximum gross weight recommended by the manufacturer. That is a step in the right direction.
I hope that I have shown that we are very much alive to the need to improve the safety of heavy goods vehicles and that we are taking realistic measures to this end. I should also like to remind

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the House that some important aspects of this problem are being considered by the Committee under Lord Geddes which is at present examining the fundamental basis of the goods vehicle licensing system. Control over the safety of goods vehicles has historically been closely bound up with carriers' licensing, and, although I do not know how far Lord Geddes' Committee will look into the detailed points raised tonight, we may expect it to make an important contribution on this subject.
It remains, however, a fundamental and inescapable truth that any measures by the Government, or the other bodies concerned with accident prevention, cannot of themselves prevent accidents. This is the responsibility of all concerned—
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of employers, mechanics and drivers—and the greatest single contribution to a reduction in the toll of the roads would be a wider realisation of this fact.
Mr. Graham Page: The Committee on standards which my hon. and gallant friend mentioned is extremely useful, but may I ask him whether he would consider setting up a research committee on this question, particularly on the braking and steering systems of heavy vehicles?
The Question having been proposed at Ten o'clock and the debate having continued for half and hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock