Commons Sitting of 10 June 1964

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

    Merchant Ships, Indian Ocean (Escort)
    Commander Courtneyasked the Secretary of State for Defence whether he is satisfied that sufficient warships are available to provide escorts for Commonwealth merchant ships sailing in convoy in the Indian Ocean, should this become necessary as a result of a deteriorating political situation; and if he will make a statement.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. John Hay): There are many possible contingencies of varying degrees of likelihood in this vast area. Of course we plan to deal with them to the best of our ability and resources, in concert with our allies and in accordance with our general defence policy and strategy. It would, however, not be in the public interest to disclose our detailed plans for dealing with the different threats.
    Commander Courtney: Will my hon. Friend accept two propositions following that partly unsatisfactory Answer? Is it not necessary from now on that a convoy should be accompanied by an aircraft carrier if it is to be defended against a threat by surface craft carrying surface-to-surface guided missiles? Secondly, with our present forces in the area, is it not very difficult indeed to protect a convoy from the threat of nuclear submarines?
    Mr. Hay: I should have thought that the probability of convoy is limited mainly to conditions of general war. The naval resources we have in the area east of
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    Suez have been steadily increased in recent years and, of course, we keep under constant review the need for any further reinforcement. My hon. Friend will not expect me to comment on his two propositions nor to tell him what we have in mind against any possible threat.
    Mr. Willis: Is the hon. Gentleman aware that a great many people think that our naval forces east of Suez are quite inadequate to meet the responsibilities which are ours and that the fact that the United States has decided to have a naval presence in the area now would appear to make that quite clear?
    Mr. Hay: I think it unlikely that any of our possible adversaries in the area share the hon. Member's view.

    New Aircraft Carrier
    Mr. McMasterasked the Secretary of State for Defence when tenders are to be submitted for the construction of a new aircraft carrier.
    Mr. Wingfield Digbyasked the Secretary of State for Defence when it is now intended to lay down the new aircraft carrier; and when it is planned that she will join the fleet.
    Miss Vickersasked the Secretary of State for Defence whether he will make a statement on the progress of the new aircraft carrier.
    Mr. Croninasked the Secretary of State for Defence if he will make a statement on his programme for constructing and equipping the new aircraft carrier.
    Mr. Hay: Detailed design work, research and development are in progress. We hope to be in a position to invite tenders for the construction of the new carrier in the spring of 1966. It is too early to forecast the date of the keel-laying, but our aim is to have the new carrier fully operational in 1973.
    Mr. Digby: Is my hon. Friend aware that there have been rumours in the Press of some delay? Can he give a categorical assurance that this aircraft carrier will reach the Fleet as planned, on the date planned, which obviously he cannot disclose?
    Mr. Hay: I cannot add to my Answer. Our aim is to have the carrier fully operational by 1973, and everything is now going very well to plan.
    Mr. McMaster: Is my hon. Friend aware of the rundown in our shipbuilding industry which has been taking place over the last four or five years and of the importance, from the point of view of maintaining continuity of employment in our shipyards, that the keel should be laid as soon as possible?
    Mr. Hay: From all accounts I thought that the position of the British shipbuilding industry was improving substantially Certainly we cannot improve upon the programme which I have mentioned, be-caused a great deal of detailed work has to be done before we can go out to tender.
    Mr. Cronin: Bearing in mind that this carrier is to be equipped with American Phantom aircraft and that already £150 million worth of orders for American equipment have been requested for the Polaris submarine, can the hon. Gentleman assure the House that all the other equipment for this new carrier will be of British make?
    Mr. Hay: I do not know. I should like to see that question on the Order Paper. There will be a number of items of equipment which might be of American or other foreign manufacture, or employing American or other ideas, but I should like to see that question on the Order Paper before giving a detailed and categorical answer to it.
    Sir J. Maitland: Does not the anxiety expressed in these and the first Question on the Order Paper indicate how right the Government were to have a new aircraft carrier and to emphasise the importance of increasing this programme?
    Mr. Hay: I take note of what my hon. Friend says. I think that we have the right programme.

    Fast Patrol Boats (Surface-to-Surface Missiles)
    Mr. Wingfield Digbyasked the Secretary of State for Defence what consideration he has given to a programme of fast patrol boats armed with surface-to-surface missiles; and what decision he has reached.
    Mr. Hay: The need for craft of this type is under constant review by the Navy Department, but at present we have no plans to build any.
    Mr. Digby: Is my hon. Friend aware that others seem to be relying increasingly on these craft, which have considerable range and fire power? Will he continue to keep this under constant review as it may well be a cheap answer to some of our problems?
    Mr. Hay: Yes, Sir. As my Answer said, we are keeping this under constant review, but at the moment we have no immediate plans for these craft.
    Mr. Willis: Are we to assume from the hon. Gentleman's Answer that this is one of the sacrifices which we have to make in order that the Government may proceed with the Polaris programme?
    Mr. Hay: No, Sir. As usual, the hon. Gentleman is wildly wrong.

    Construction Programme
    Mr. Willisasked the Secretary of State for Defence to what extent the placing of orders for new ship construction is being delayed by the shortages in certain categories of naval skilled manpower.
    Mr. Hay: None, Sir.
    Mr. Willis: Are we to understand from that that the Admiralty never considers whether it will be able to man a ship before building it? Is not the hon. Gentleman aware that cruisers are at present laid up because we do not have the manpower and that in February 60 commissioned ships lacked the necessary skilled manpower and that we are now to absorb about 1,000 skilled men into the Polaris programme? Does he mean to say that this makes no difference to the Admiralty's consideration of ship construction?
    Mr. Hay: I suggest the hon. Gentleman looks again at his Question. He wanted to know whether the placing of orders for new ship construction was being delayed by present shortages in certain categories of manpower. It takes a good many months and even years to build a ship and we are planning for the crews to be there when the ships are built.
    Mr. Willis: Would it not be better to plan for the crews to be there for the ships already built?
    Mr. Hay: The point is that they are there.
    Mr. Willisasked the Secretary of State for Defence what naval construction programmes are being held up because of the Polaris programme.
    Mr. Croninasked the Secretary of State for Defence what modifications he envisages in naval construction programmes in order to facilitate the construction and equipping of the Polaris submarines.
    Mr. Hay: The only construction programme which is suffering, or which I expect to suffer, significant delay because of Polaris is that of the nuclear hunter-killer submarines. As my predecessor informed the hon. Member on 10th April last year, there will be some shortfall in hunter-killer numbers round about 1970 but it should be possible to make that up by 1975.
    Mr. Willis: Is the hon. Gentleman aware that, as has already been stated two or three times this afternoon, there is a widespread feeling that our Forces are far too thinly scattered over far too wide an area and that naval construction programmes are diminishing, which many people attribute to the Polaris submarine? Are we to assume from the fact that he has said that there are no significant delays, except in the hunter-killer programme, that this is in fact true?
    Mr. Hay: The Answer means what it says. The effect of the Polaris programme upon the conventional Navy is comparatively small and I made that perfectly clear in my speeches on the Navy Estimates earlier this year. The only programme which is being delayed—and we have never made any secret of this—is the nuclear hunter-killer programme. The rest are going along in the normal way.
    Mr. Cronin: Is there not a strong body of senior naval opinion which has grave misgivings about the delay in the hunter-killer construction programme, particularly bearing in mind the political uncertainties of the delivery from manufacturers of the missile with which the
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    Polaris submarine is equipped, remembering that it is manufactured completely in the United States?
    Mr. Hay: The only opinion on these matters which I have heard is one which is extremely anxious about the future position of this country if the Opposition were ever able to implement their threat to abandon the Polaris programme.
    Captain Litchfield: Has any estimate been made of the cost and of the strategic implications of the unhappy event of the policy of the party opposite to abandon the Polaris programme ever being implemented?
    Mr. Hay: It would probably cost at least £100 million—probably much more—and it would enormously dislocate our training programme and the damage which might be done to Anglo-American relations is incalculable.
    Mr. Paget: Is not the truth of the matter that the Navy does not want and never has wanted the Polaris submarine, which has been foisted on it, and that all its anxiety is that the ships it wants are being held up for a ship which it does not want?
    Mr. Hay: No, Sir. That is diametrically opposite to the truth.

    Mixed-Manned Force
    Mr. Frank Allaunasked the Secretary of State for Defence what is the present policy of Her Majesty's Government in relation to firing control of nuclear missiles from mixed-manned vessels in view of current American policy that there will be no special rôle played by American officers in firing decisions; and, in view of the difficulties that are now becoming apparent particularly in regard to the exercise of control of nuclear missiles by West German officers, if he will give an assurance that he will oppose the future development of a mixed-manned force.
    The Secretary of State for Defence (Mr. Peter Thorneycroft): All these matters are the subject of discussion in the Paris Working Group. No decisions have yet been reached there and Her Majesty's Government remain uncommitted to the M.L.F. project. It is, however, our assumption that an American veto would apply.
    Mr. Allaun: Yes, but how does the Minister interpret the recent statement of the United States Administration
    "that there will be no special rôle in firing decisions by an American officer on board any ship"?
    Does that mean that in certain circumstances a German or other officer could himself order the firing of a nuclear missile? Is that the Government's policy?
    Mr. Thorneycroft: It is not for me to answer for statements made by the American administration, but the quotation which the hon. Gentleman has read would be consistent with everybody having a veto.

    Recruiting Office, Holborn
    Mr. Holtasked the Secretary of State for Defence what is the estimated total annual cost to his Department of maintaining the naval recruiting office in State House, Holborn.
    Mr. Hay: About £51,000 per annum of which £43,950 consists of salaries and wages of the 37 Naval and civilian staff. The cost of the Directorate of Naval Recruiting and Naval Careers Service, which is part of the Navy Department Headquarters, also accommodated in State House, is not included in these figures.
    Mr. Holt: Will the Minister say what portion of this staff is responsible for the mere 168 recruits which the centre has so far obtained? In view of the fact that the rent of this accommodation is £12,750 a year, does not it appear that there is a great deal of extravagance? Might not the Navy consider doing its recruiting rather more cheaply?
    Mr. Hay: Perhaps I should have made clear to the hon. Gentleman in my reply on 13th May last that the rent of £12,750 a year is the rent of all the accommodation in State House occupied by the Navy Department and not just that part occupied by the recruiting side of it. There are a number of organisations situated in State House. We found that in the first six months of operation we had approximately 10 times as many recruits, and well over 200 times as many applications and inquiries as in the comparable six-month period last year
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    before we actually occupied this new building, so that I think we are doing jolly well.

  MINISTRY OF DEFENCE

    Strategic Jet Transport Aircraft
    Mr. McMasterasked the Secretary of State for Defence whether he will now formulate a requirement for a strategic jet transport aircraft to meet the needs of Her Majesty's forces after 1970.
    Mr. Thorneycroft: Requirements in this field are already fully provided for until the mid-seventies. Requirements for the latter half of the seventies have not yet been submitted for my approval. I am, however, in the early stages of considering with my right hon. Friend the Minister of Aviation what kind of strategic aircraft we might need beyond the next decade.
    Mr. McMaster: Is my right hon. Friend aware that the Minister of Aviation told me last week that, in certain cases, it takes up to 10 years between the formulation of a requirement and the plane coming into service? Is my right hon. Friend satisfied that we have enough transport aircraft now on order to meet our requirements in the mid-1970s and beyond?
    Mr. Thorneycroft: We have aircraft planned or on order for the mid-1970s, but we are considering various possibilities beyond that period.
    Mr. Cronin: Is it not the case that 13 years of Conservative Government have not produced for Transport Command a single strategic freighter, if one excludes the limited cargo-carrying capacity of passenger aircraft? Is the Government's death-bed repentance to be effective?
    Mr. Thorneycroft: The Belfast is surely a strategic freighter.
    Mr. McMaster: Is my right hon. Friend aware that the Belfast was successfully demonstrated at Northolt today and that three will be flying by the Farnborough Air Show?
    Mr. Mulley: Is the right hon. Gentleman satisfied with the very modest

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    planned development of Transport Command ever the next 10 years and that the increasing need for flexibility and mobility will be met by this development?
    Mr. Thorneycroft: The development is not modest. It includes the Belfast, the VC. 10 and the OR.351. This is a vast and necessarily expensive programme that is well in train.

    British Forces (Overseas Duties)
    Mr. Brockwayasked the Secretary of State for Defence what British Forces are now engaged on overseas duties in Western Germany, Malta, Cyprus, Southern Arabia, Malaysia and British Guiana.
    Mr. Thorneycroft: About 130,000.
    Mr. Brockway: Is not this a great strain on our resources? Would it not be desirable to concentrate on trying to find democratic political solutions to the problems which involve the use of these troops and, where it is necessary to quench bush fires, to make that an extended responsibility of the United Nations?
    Mr. Thorneycroft: It is about 35 per cent. of our Forces, and I think that most hon. Members will agree that they are doing their job extremely well.
    Sir J. Eden: Is it not a fact that British Forces could not be so widely dispersed in carrying out peace-keeping operations if we did not possess in this country independent means to defend the homeland against the threat of nuclear attack?
    Mr. Thorneycroft: Certainly the most damaging blow which could be delivered to our defences would be to remove the capacity to defend ourselves.
    Mr. E. L. Mallalieu: Would not the right hon. Gentleman agree that our Forces are stretched at the moment and that it would be very much better for him to meet that criticism rather than to try to shelter behind these British Forces whenever he is criticised?
    Mr. Thorneycroft: I would have thought that the events of the past few months had demonstrated beyond contradiction that we were meeting it and meeting it adequately.

    Yemen
    Mr. Hector Hughesasked the Secretary of State for Defence, how many British troops are now operating in the Yemen; to which units they belong; and what is the number and nature of the casualties they have sustained.
    Mr. Thorneycroft: None, Sir.

    Cyprus
    Mr. Hector Hughesasked the Secretary of State for Defence, how many British troops are now operating in Cyprus; to which units they belong; and what is the number and nature of the casualties they have sustained.
    Mr. Thorneycroft: The strength of the British Army in Cyprus is today about 5,800, of which about 1,900 are part of the United Nations Force. The major units in this element consist of 1st Bn. Inniskillings, 26 Medium Regiment and two squadrons of the Life Guards.
    The remaining 3,900, of which the major units are 3rd Bn. Green Jackets, 1st B. Glosters, and 33 Field Squadron, Royal Engineers are the normal Cyprus garrison.
    Since the present emergency began in December, 1963, British casualties have been one killed and eight wounded.
    Mr. Hughes: While thanking the right hon. Gentleman for that detailed reply, may I ask him to say how long it is expected that those British troops will remain there, and if the answer be until their objective be attained, will he define what his long-term and short-term objectives are in this instance?
    Mr. Thorneycroft: Not, I think, in answer to this Question.

    N.A.T.O. (Nuclear Proposals)
    Mr. Mulleyasked the Secretary of State for Defence if he will publish details of the modified multilateral nuclear force proposals which have been submitted for study within the North Atlantic Treaty Organisation.
    Mr. Thorneycroft: Proceedings in the Paris Working Group are of course confidential but I can say that work on the British ideas is continuing. Essentially we have suggested that consideration should be given to the mix-manning

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    of airborne and land-based nuclear weapons as part of the general examination of the MLF project.
    Mr. Mulley: I appreciate that these discussions may be confidential, but is not the right hon. Gentleman aware that the so-called British proposals have been widely discussed in the Press in this and other countries? Can he explain how that comes to be? Does he not think that, in these circumstances, an authoritative statement of Government policy to this House should be made in order to correct any misapprehensions? Secondly, will he confirm or deny that the proposals we put forward include some measure of mixed-manned surface ships carrying nuclear missiles?
    Mr. Thorneycroft: The statement I have made is entirely authoritative, and I have no objection to discussion of it in this House or in the Press. All that we have suggested is that, in addition to considering the mixed-manning of surface ships to which a great deal of attention is being paid, it would be sensible to consider the possibility of mixed-manning some of the weapon systems that people were going to buy anyway, and this may achieve their political objectives much cheaper than any other method.
    Sir J. Eden: Can my right hon. Friend confirm that in the consideration of a mixed-manned force, we are offering the suggestion that the British V-bomber force could well form a basis for something of this kind?
    Mr. Thorneycroft: We certainly consider that aircraft, either existing or planned, could be incorporated in a system of this nature.

    Helicopters
    Commander Courtneyasked the Secretary of State for Defence what differences exist between the Royal Navy and Royal Air Force staff requirements for the Wessex Mark V and the Wessex Mark II helicopters, respectively; and whether it is intended to standardise on a single type of helicopter for use by all services in the commando-carrying rôle.
    Mr. Thorneycroft: For practical purposes the two helicopters are the same except that the Mark V is equipped to
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    operate from ships in the assault or antisubmarine rôle. In other rôles they can be, and are, operated side by side.
    Commander Courtney: Is my right hon.Friend aware that Wessex Mark II helicopters often have to land on naval commando aircraft carriers but that at the same time there may be slight difficulties about their being struck below and that they cannot be properly maintained on the flight decks of the carriers?
    Mr. Thorneycroft: I will examine the point that my hon. and gallant Friend has made. So far as I know, there is no difficulty in operating these helicopters, cither off the ship or the land. Anyone who has had the opportunity of seeing what is going on in Borneo would know that they are, in fact, operating in the same rôles and side by side and very well together.
    Mr. G. R. Howard: Would my right hon. Friend, while looking at that point, agree that where we have a Mark V helicopter which has a folding tail unit and can therefore be struck down below, this is obviously far better, because the type of helicopter required for commando-carrying and for the Air Force is exactly the same, and it might be difficult to do rotor tolerance maintenance on the flight deck? Will my right hon. Friend have a serious look at this to see if we cannot standardise these two types?
    Mr. Thorneycroft: That is a perfectly good point and I am all in favour of standardising between the Royal Navy and the Royal Air Force. I do not think that anyone would suggest that we should try to modify all the existing ones, but the point I am making is that they are, in fact, operating in the same rôles at the present time. I will bear these points in mind.

    Military Operations, Aden Peninsula
    Mr. Emrys Hughesasked the Secretary of State for Defence what is now the weekly cost of military operations in Aden and the Aden Peninsula.
    Mr. Thorneycroft: It is impossible to give a meaningful figure for the cost of operations of this sort conducted by standing forces.
    Mr. Hughes: Does that mean that we are spending money in such a way that even the Minister does not understand how much is being spent? Can he tell us whether the cost of this miniature Suez is being paid by the taxpayer? Cannot he make arrangements to send the bill to the sheikhs and the oil interests?
    Mr. Thorneycroft: The British taxpayer pays substantial sums for maintaining the defence forces of this country, and they are conducting themselves in a proper way.
    Mr. Biggs-Davison: Will my right hon. Friend make it clear that the financial cost is modest, considering the sterling and British strategic interests involved?
    Mr. Thorneycroft: That raises wider questions. It is clearly worth while to maintain defence forces and defence equipment adequate to protect this country.
    Mr. Oram: In view of the desperate need for economic aid in this area, can the right hon. Gentleman indicate how the figure for which he was asked in this Question compares with the amount of aid that is being provided for this area?
    Mr. Thorneycroft: There is certainly a need for economic aid in this and similar areas, but if one asked the local inhabitants what was needed at the present moment, they would certainly say that the first requirement was defence.
    Mr. Hughes: In view of the unsatisfactory nature of that reply, I give notice that I shall raise this matter again at the earliest opportunity.

    Civilian Population, South Arabia (Food Stocks)
    Mr. Frank Allaunasked the Secretary of State for Defence what actions are being taken by the military forces in Southern Arabia affecting the civilian population's food supplies.
    Mr. Warbeyasked the Secretary of State for Defence for what reasons he authorised the burning of food stocks in Radfan villages and the expulsion of the tribesmen and their families from their lands just prior to the sowing season.
    Mr. Thorneycroft: We are dealing with rebels, armed, equipped and incited from the Yemen. We can and do use military action in certain areas, but in others it is better to deny the area to them. It is inevitable that crops should suffer and food stocks be destroyed in the process of excluding the rebels from their settled areas. We shall, of course, ensure that when these people submit to authority, they will not go short of food.
    Mr. Allaun: But is not that an admission that the food and livestock of very poor people are being deliberately destroyed, and that they are being prevented from sowing the next crop? Did the Minister himself approve this instruction, and is he proud of it?
    Mr. Thorneycroft: I think that the hon. Gentleman should recognise where the blame for all this fairly and squarely lies. It is upon the enemies of the South Arabian Federation who are putting these rebels into this area armed, equipped, and with instructions to bring about its destruction.
    Mr. Clive Bossom: Would not my right hon. Friend agree that this is the most humane method of dealing with the situation, because villagers are not killed? Is it not a fact that they are warned by leaflet beforehand?
    Mr. Thorneycroft: Yes, they are warned by leaflet.
    Mr. Brockway: The right hon. Gentleman spoke of the defence of Southern Arabia. Is he aware that the Radfan tribe was in rebellion against the sheikhdoms which were oppressing them long before the question of the South Arabian Federation ever arose?
    Mr. Thorneycroft: I am sure that we should not interpret the hon. Gentleman's question as support of the Radfan tribe in this matter.

    Conventional Ground Forces
    Mr. Shinwellasked the Secretary of State for Defence what his plans are for the build-up of conventional ground forces to enable them to protect British interests overseas.
    Mr. Thorneycroft: Events in recent months have demonstrated that our conventional ground forces are fully capable

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    of protecting British interests overseas already. No build-up is planned beyond making good marginal deficiencies in the Army by normal recruiting, which is going well.
    Mr. Shinwell: May I take it from the right hon. Gentleman's reply that it is not the intention of the Government to reintroduce conscription, no matter what conditions prevail?
    Mr. Thorneycroft: "No matter what conditions prevail" is rather a wide term. We have no intention of introducing conscription in the conditions which prevail, and which will, as far as we can see, continue to prevail for the foreseeable future.
    Mr. Shinwell: Will the right hon. Gentleman produce the evidence which was the basis of the allegation in his speech recently in the Rutherglen by-election that the Labour Opposition intended, when they formed the Government—as, of course, they will do in the course of the next few months—to reintroduce conscription?
    Mr. Thorneycroft: It is not for me to defend the Labour Party. It is true that if a policy of really substantial increases in our conventional strength were to be argued it could be supported only by the reintroduction of conscription.
    Mr. P. Williams: Can my right hon. Friend say whether there has been any shift of thinking in the policy of the Defence Department in relation to the recruitment of Gurkha troops. I suspect that many hon. Members on both sides of the House would like to see this increased. Will my right hon. Friend confirm that should there be an abandonment of the independent nuclear deterrent by anyone who thought that possible, this would inevitably mean conscription and not just "perhaps"?
    Mr. Thorneycroft: I have already said that I can imagine nothing more damaging to this country than the abandonment of the deterrent. The Gurkhas are doing a magnificent job, and I cannot foresee circumstances in which we shall be able to do without them, at any rate in the immediately foreseeable future.
    Mr. Ross: Will the right hon. Gentleman give us an assurance that our
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    defence, under his guidance, will be much more effective than was his speech at Rutherglen?

    Dartmoor (Gas and Explosives)
    Mr. Haymanasked the Secretary of State for Defence whether he is aware of public anxiety at the discovery by a walker on Dartmoor of a half-buried war-time dump of poison gas canisters and explosives; what record was kept of the dumping of such dangerous material at the time of its disposal; and if he will give an assurance that similar dumps do not exist in other parts of the Dartmoor National Park.
    The Minister of Defence for the Army (Mr. James Ramsden): Yes, Sir. It has always been the practice of the Defence Department to dispose of unwanted material of this nature by dumping it out at sea. This dump was an unauthorised one of which no record exists. The material was probably buried by a unit during the war, but there is no means so long after the event of establishing who was responsible. I have no reason to believe that any other unauthorised dumps exist on Dartmoor.
    Mr. Hayman: Does not the Minister agree that this is a shocking example of the carelessness which the military authorities sometimes exhibit when taking advantage of their privilege to use Dartmoor? Will he take into account that the local people and others who use Dartmoor are very alarmed about this occurrence, and will he see that no such thing ever happens again?
    Mr. Ramsden: Of course, this is a matter for concern, but we do not even know who it was who buried the stuff in this dump in the first place. It may not even have been a British unit. In any event, it was buried outside that part of Dartmoor which is in use for military training. I appreciate the point which the hon. Gentleman has made. I hope that not only hon. Members of this House but everyone else who sees suspicious objects will promptly report their suspicions to the military authorities.
    Sir A. V. Harvey: Is not it a possibility that the right hon. Member for Bassetlaw (Mr. Bellenger) may have been responsible for this dumping immediately after the war?
    Mr. Paget: Is it not unlikely that this was buried by a Secretary of State? Surely the Minister is taking this very casually? Is not it the case that it would be only a question of time before poison gas contained in a canister would escape? Is not that a terrifying situation and is not it inadequate just to be satisfied by saying, "We have not been able to find out who may have buried this"? It is a major scandal which really wants looking into.
    Mr. Ramsden: I am not taking this lightly at all. Obviously this is a serious matter. We check all military sites and training areas for material which may be dangerous to the public before we vacate them, and we erect notices warning about the dangers in training areas still in use. This dump was found on common land outside the area of Dartmoor which we use for training.
    Mr. Lipton: Why did the right hon. Gentleman suggest in one of his replies to a supplementary question that it might have been a non-British unit which dumped this stuff? Was there anything about the markings on this dumped stuff which indicated that it might have come from some non-British unit?
    Mr. Ramsden: The stuff was British, but there were many units in this country during the war and we just do not know who was responsible for burying these gas containers where they were found.
    Mr. Huymanasked the Secretary of State for Defence whether he is aware that, in spite of recent undertakings by Service Departments that stricter measures would be taken to clear live ammunition and other litter and to mitigate damage by Service activities in the Dartmoor National Park, there have been a number of cases in the last few months of unexploded missiles, litter dumps and damage; and if, in the national interest, he will now seek an alternative training area of less recreational use and value than the Dartmoor National Park.
    Mr. Ramsden: I have nothing to add to my Answer of 25th March.
    Mr. Hayman: Then may I ask the Minister to take account of the fact that I have in my hand a photograph of a large explosive bomb which was found at Beardown on 18th May, and that I have also another photograph? Is he aware
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    that on 19th April a sack of missiles was found at Lydford Tor by boys on an adventure training expedition? Is he further aware that I have other examples which I will send to him? Will he take this matter seriously and ask the Army Council to consider the possibility of other places than Dartmoor being used for training troops?
    Mr. Ramsden: Apart from the containers, which were the subject of the hon. Gentleman's first Question, all the misiles recently reported were expended—burnt-out shells or parts of shells—and completely harmless. We keep a constant check on the possible presence of dangerous missiles on Dartmoor. I am afraid that it is essential for us to continue to retain Dartmoor as a training area. It is close to where the Strategic Reserve and the Royal Marines are concentrated. If the Army is to be properly trained it is necessary for it to exercise on Dartmoor.
    Sir H. Studholme: May I ask whether my right hon. Friend does not think that it would be a good thing if before making such sensational statements the hon. Member for Falmouth and Camborne (Mr. Hayman) took a little more trouble to ascertain what are the true facts?
    Mr. Speaker: A question asking the Minister to express a view on what is a matter of opinion is, on that account, out of order.

    Trooping
    Mr. Goodhewasked the Secretary of State for Defence what has been the estimated annual saving on the Defence Vote to the change from sea to air trooping.
    Mr. Thorneycroft: Currently the saving is estimated as something over £10 million a year.
    Mr. Goodhew: Is my right hon. Friend aware that his reply will give great satisfaction to hon. Members on both sides of the House? In view of the very heavy demands made on R.A.F. Transport Command in recent months, will he convey to all ranks the congratulations of this House on the efficiency with which these duties have been carried out, and also on the outstanding safety record of Transport Command which excels even that of commercial airlines?
    Mr. Thorneycroft: Yes, Sir.
    Mr. Mulley: While wishing to join in the congratulations offered to Transport Command, may I ask if there would not be a possibility for further savings if Transport Command were more fully utilised in trooping as distinct from independent air trooping contracts, and would it not also be advantageous if the Air Corporations were able to tender for this trooping work?
    Mr. Thorneycroft: I think that there was an increase in trooping by Transport Command this year, and I think the figure is a satisfactory one. It is a matter for debate as to what further advance can be made, but the whole House will agree with my hon. Friend the Member for St. Albans (Mr. Goodhew) that it has satisfactorily carried out its work.
    Sir J. Eden: Can my right hon. Friend say when the carrying capacity of Transport Command will be further increased by the delivery of VC.10s?
    Mr. Thorneycroft: In 1966.
    Mr. Lubbock: Is the Secretary of State satisfied, in the light of recent experience and commitments arising simultaneously in different parts of the world, that orders for aircraft placed on behalf of Transport Command are adequate?
    Mr. Thorneycroft: Yes, Sir, and I think that the smooth efficiency with which recent operations have been carried out has demonstrated that our plans were well laid.

  ROYAL AIR FORCE

    Personnel, Cyprus (Families)
    Mr. Mulleyasked the Secretary of State for Defence if he will make a statement about the plans for married families of officers and other ranks of the Royal Air Force who have been unable, since December, to join their husbands in Cyprus; when he expects that they will be permitted to go; and what steps he is taking to reduce the hardships involved in the meantime.
    The Minister of Defence for the Royal Air Force (Mr. Hugh Fraser): Because of the uncertain situation in Cyprus, we
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    have not felt able to allow any large flow of families to the island. We have, however, authorised a small controlled movement, starting this month. Provided the situation does not worsen, families will be able to go to Cyprus approximately six months after the husband's posting. If there are any cases of special hardship among the families who are waiting in this country I will see what can be done to help.
    Mr. Mulley: While appreciating the very difficult circumstances with which our Forces and their families have had to contend in Cyprus, I am sure that the House will welcome the decision to restart the flow of families to Cyprus. What is being done in the many cases where families have had to quit their existing married quarters, many of them having no alternative place to go to in this country? Is the Royal Air Force able to assist in these cases?
    Mr. Fraser: We are doing all we can to assist. In special cases of hardship we are moving families to other Air Force stations where they can find accommodation, but if any hon. Member raises any special case of hardship, I shall be very pleased to see what I can do.
    Mr. Dance: I have recently returned from a visit to the Royal Air Force in Germany where I saw how much is being done to accommodate families out there. Will my hon. Friend confirm that it is the Government's policy where it is humanly possible to keep families together?
    Mr. Fraser: Yes, Sir. The announcement which I have just made shows that this is our policy.
    Sir A. V. Harvey: Is my hon. Friend aware that there are cases of extreme hardship when a man is posted to Cyprus and his family has to vacate its married quarters in Britain? Can something be done with the Army, now that we have combined Services, to interchange married quarters and to alleviate the dreadful hardship which is inflicted on these families?
    Mr. Fraser: I thank my hon. Friend for his suggestion. I will certainly look into any means by which we can alleviate the problem, but we are doing all we can.

    Overseas Stations (Fuel Oil)
    Mr. Jegerasked the Secretary of State for Defence what action has been taken to prevent frauds involving fuel oil at Royal Air Force stations abroad, in view of the Fourth Report from the Committee of Public Accounts which states that over a period of four years only about two-thirds of the fuel paid for was actually delivered; and what estimate he has made of the financial loss caused by the inadequate control and laxity of administration.
    Mr. H. Fraser: Particulars of the way the fraud operated and of the relevant failures in administration have been sent to all commanding officers and officials concerned with fuel. The consumption of fuel oil in heating installations is now recorded at all R.A.F. stations so that the quantities ordered can be checked. As the House will be aware the loss at the station which was the subject of the Committee's Report is estimated at £30,000.
    Mr. Jeger: Is not this Report a scandalous exposure of inefficiency on the part of the Ministry? Can the Minister explain how these frauds could have gone undetected for the period of four years revealed in this Report and why orders for this fuel oil should have been 50 per cent. in excess of actual consumption? Were no records kept? Was there no control or check at the Ministry? Was not the inefficiency going down to the bottom right from the top?
    Mr. Fraser: No, Sir. I think that having looked at this case with care, I should say that the instructions were themselves adequate although not properly carried out. Those concerned have been reprimanded or punished in instances where the fraud actually took place.
    Mr. Loughlin: Could the Minister tell us how many people were involved in this fraud and what precisely he means when he says that they were punished? Were any prosecutions undertaken?
    Mr. Fraser: Yes, Sir. I think that there were five persons involved who were punished. One was sent to prison for one year and discharged with ignominy, and higher up in the scale
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    were officers who for laxity were reprimanded and have had serious adverse reports.
    Mr. Dance: In view of the way in which this Question has been framed, which rather insinuates that this practice is very widespread, can the Minister tell us how many stations were actually involved?
    Mr. Fraser: One station was involved and we are also investigating a similar type of fraud at another station. Beyond that, we have no evidence whatsoever of this type of fraud being carried out.

    Parachute Exercises
    Mr. Hiltonasked the Secretary of State for Defence what instructions have been given in order to prevent a repetition of the two serious mishaps which have taken place during parachute exercises in Norfolk during the past two years.
    Mr. H. Fraser: A detailed examination is now being made of the safety criteria of all dropping zones. I have given instructions that the Bridgham Heath dropping zone is not to be used until this examination is complete.
    Mr. Hilton: I am grateful for that reply, but is the Minister aware that during an exercise just over a year ago paratroops were dropped straddling the main railway line when a train was coming along? Fortunately nobody was seriously injured, although some were slightly injured. Is he also aware that a few weeks ago a cargo of about five tons of dummy ammunition was dropped on a railway track in front of an oncoming train, which was fortunately stopped just before reaching the ammunition, and, further, that on neither occasion had consultations taken place between British Railways and those responsible for the exercise? Does he not agree that if we are to prevent derailment and perhaps serious incidents it is essential at least that consultations should take place between his Department and British Railways before these exercises are held?
    Mr. Fraser: I am looking into this matter. For the meantime I can give the hon. Member at least the assurance that there will be no droppings in this area.

    Air Base, Sculthorpe
    Mr. Hiltonasked the Secretary of State for Defence when United States Air Force personnel will vacate the air base at Sculthorpe, Norfolk; and what is to be the future use of this site.
    Mr. H. Fraser: The United States Air Force will finally vacate the station on 30th June, 1964, when it will be returned to the Royal Air Force. A possible Service requirement is still being considered.
    Mr. Hilton: We have had similar replies to this on a number of occasions and have been told that an announcement will shortly be made about the further use of this important site. [HON. MEMBERS: "Question."] Wait for it and you will get the question.
    Mr. Speaker: Order. This is Question Time, and not the time for making a statement. It is not the importance of the question that matters; it is the fact that it is a question.
    Mr. Hilton: Is the Minister aware that this is a very valuable site, and that it employs hundreds of civilians who have no prospects of any alternative work in the area? Will he see that immediate consultations are held between the various Government Departments, to make sure that this site is put to the best possible use in order to provide alternative employment for the civilians who work there?
    Mr. Fraser: Yes. Consultations are going on at the moment and, as I said, I hope to be able to give a reply to the House shortly.

    Greenham Common
    Sir A. Hurdasked the Secretary of State for Defence whether a decision has now been reached on the use to which the installations at Greenham Common are to be put when the United States Air Force hand over this base at the end of this month.
    Mr. H. Fraser: There is no Service requirement for the installations at Greenham Common but the possibility of other Government use is still being considered, and I am in touch with the Minister of Housing and Local Government.
    Sir A. Hard: Can my right hon. Friend say whether this means that the premises are now on offer to the Ministry of Housing and Local Government and would then, presumably, be turned over to the local housing authorities for use?
    Mr. Fraser: The local housing authorities and local planning authorities are being consulted.

  BRITISH ARMY

    Former Royal Ordnance Factory Site, Swynnerton
    Mr. Swinglerasked the Secretary of State for Defence what progress is being made in the consultations between his Department and the local planning authority about the future of the site at Swynnerton.
    The Under-Secretary of State for Defence for the Army (Mr. Peter Kirk): I understand that the Staffordshire County Council is considering a proposal to send a delegation to my right hon. Friend the Minister of Housing and Local Government to discuss the future of the site at Swynnerton.
    Mr. Swingler: Is the hon. Gentleman aware that we are now approaching the seventh anniversary of the Government's announcement of the closure of the factory at Swynnerton, when the dialogue about these 700 acres began? Is it the case that we are now to go round and round the circus again, from Department to Department? Would it not be quicker to set up a Royal Commission?
    Mr. Kirk: I am as disappointed as the hon. Gentleman, but the latest delay is caused by the county council and it does not tie in with the assurance by the county council which the hon. Gentleman gave me the last time he questioned me on this matter.

    Pontefract Barracks
    Mr. Harperasked the Secretary of State for Defence if he has yet reached his decision on the future use of Pontefract Barracks; and what his plans are regarding the barracks sports field.
    Mr. Ramsden: It is necessary to retain Pontefract Barracks for the time

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    being but I will consider sympathetically any application by local bodies to use the sports field.
    Mr. Harper: While thanking the Minister for that reply, may I ask him how long is "for the time being"? It is more than 14 months since these barracks were vacated. Does not the Minister think that it is time that they were utilised for other purposes? For example, with slight modification—as the services are there—they could be used as a teacher-training college, or for the proposed scheme of the West Riding County Council as a college for sixth formers. In view of the shortage of playing fields in the Pontefract area, will the Minister give an undertaking that this playing field will not fall into the hands of the greedy speculative builder?
    Mr. Ramsden: I can assure the hon. Gentleman and the House that we shall not keep any barracks that we do not need for longer than we must, but the future of these barracks is tied up with the possible future moves of Army units, and it is not possible for me to say at the moment when they could be disposed of.
    I appreciate that there is a shortage of sports fields, and I think that this sports field has already been offered to the local authority, but if any further discussions which I could arrange would help, I would certainly be glad to cooperate.

    Royal Engineers (Bridges)
    Mr. W. Hamiltonasked the Secretary of State for Defence (1) whether he will arrange for the Royal Engineers to build a bridge across the River Ouse at Selby, in the West Riding of Yorkshire, as part of their practical training;
    (2) whether he will arrange for the Royal Engineers to build a bridge across the River Ure in Yorkshire for the use of the Royal Air Force personnel at Linton-on-Ouse, in view of the fact that such personnel must at the present time use the toll bridge at Aldwark.
    Mr. Ramsden: No, Sir.
    Mr. Hamilton: Can the right hon. Gentleman explain why he condones
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    the building of a bridge by Royal Engineers on a private estate, and yet he refuses to allow them to cut into monopolies which are getting tens of thousands of pounds tax-free income from the toll bridges in the areas that I have mentioned?
    Mr. Ramsden: The hon. Gentleman has got it wrong. The bridge on the private estate, about which I gave the House a satisfactory answer the other day, was not built by the Royal Engineers. The Royal Engineers welcome opportunities to carry out civil engineering projects when these provide good training, but this project is not suitable.
    On the general question, the hon. Gentleman and his hon. Friends tried to persuade the House the other day of the desirability of the principle of nationalisation without compensation. My hon. Friends successfully resisted this, and we shall continue to resist it with success.
    Sir L. Ropner: Will my right hon. Friend give me an assurance that he will make certain that his reply this afternoon is brought to the attention of the Minister of Transport, and will he point out at the same time that he himself is not able to solve the problem, and indeed the scandal, of Selby Toll Bridge?
    Mr. Ramsden: My hon. and gallant Friend is right as regards the Selby Bridge. Even if this were considered desirable training for the Royal Engineers, a bridge of that kind with a swinging span would be beyond their resources in a training exercise.
    Mr. Hamilton: If the Minister refuses to consider the building of a bridge at Selby, will he consider the other one? Is he not aware that the R.A.F. personnel at Linton-on-Ouse are spending shillings per week out of their inadequate wages in tolls which are tax-free to the owners?
    Mr. Ramsden: The position of the R.A.F. personnel who use this bridge—one end of which is in my constituency—is that if they are on duty, under the Act they are exempt from the tolls. When they are not on duty, they are in the same position as other civilians using the bridge. I am not sure that some

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    of the tolls paid in the past need have been paid, and this is being examined by my right hon. Friend.
    Mr. Jegerasked the Secretary of State for Defence whether he will arrange for the Royal Engineers to exercise their practical training by building a bridge at Thorne, near Doncaster, to assist the traffic which at present uses a one-way swing bridge.
    Mr. Ramsden: No. Sir.
    Mr. Jeger: Will the right hon. Gentleman explain why this bridge could not be built as a practical exercise? Is he aware that there is room for it and need for it and that the men who built it would be extremely popular in the neighbourhood? Is he aware that it might assist his recruiting drive?
    Mr. Ramsden: Because of the planned operational commitments of the Sappers, it would not be possible for any of their units to take on a major construction project of this kind at the present time. It would be quite a major project, I understand, because the bridge would have to be above the level of barge traffic and therefore would require a high span.

    Overseas Deaths (United Kingdom Burial)
    Mr. McKayasked the Secretary of State for Defence (1) if he is aware that an 18-year-old Royal Army Service Corps driver, Leslie Chambers, was killed on duty in Cyprus on 8th May, 1964, and that, at the request of his parents, the body was brought to Wallsend, that the Army authorities refused financial help, and that the cost to the parents was £350, causing an appeal to be made to local people; if he is satisfied with the present situation regarding this matter; and, in view of these facts and the consequence that many people are unable to afford the expense of having the bodies of relatives in the Services who are killed abroad brought to this country for burial, what proposals he has to assist such people;
    (2) in view of the facts that the relatives of Servicemen killed overseas in peacetime have to bear the expense of bringing the body to the United Kingdom for burial, that the cost may be £300
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    to £350 and that this amount is beyond the means of many families, if he will appoint a committee of inquiry on this subject to recommend, on the basis of the joint liability of the Service Departments and the relatives for the cost involved, what percentage should be paid by each, and to consider whether transport costs should be borne by the Services.
    Mr. Ramsden: I am aware of the tragic death of Driver Chambers, and I should like to express my sympathy to his parents in their sad loss.
    I would refer the hon. Member to the statement made in the House by the then Secretary of State for War on 14th March, 1963. We have examined this matter with the greatest care and sympathy. We do bring back the bodies of deceased soldiers from North-West Europe if the next-of-kin so wish, or we fly out two relatives to attend the funeral. Outside North-West Europe, however, practical difficulties prevent our introducing such arrangements. Although what the hon. Member wants might be possible to do in certain cases, we could not be sure of being able to do it for all cases, and cases of failure would cause intense disappointment and sorrow. We ought to treat all cases alike, or added distress will be caused to some next-of-kin. I am sure, therefore, that it is right to have a rule and to stick to it.
    Mr. McKay: It is a long time since this matter was considered. After all is said and done, it does not matter what the subject may be—with time all viewpoints change. The question is a matter of importance for people in general, and this policy is rather bad in their opinion, because it makes a distinction on the question of the circumstances in which families can have the bodies of their relatives brought home for burial. The fact that it costs £350 to do this is rather a restrictive qualification, despite the freedom to do so, which applies only to a small section of the community whose members have incomes which enable them to accumulate a little bit of money for emergencies. There are millions of people who cannot accumulate money to such an extent as to pay to have the bodies of their relatives brought home. The policy in itself is limited. I am asking whether the time has not arrived for this matter to be investigated, so

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    that people can have the privilege of bringing the bodies of their relatives home irrespective of their incomes. I am making a plea that this question should be examined.
    Mr. Ramsden: We all sympathise with the hon. Member's concern about these cases. The matter was gone into by the three Services fully and sympathetically only just over a year ago. It was concluded that the present arrangements ought to stand, because to extend them would be to run the risk—because of the practical difficulties of repatriation to which I have referred—of being unfair in giving different treatment as between one case and another. I therefore felt that on the basis of that examination we should stand by the existing rules.
    Mr. Kershaw: In cases where it is clearly impossible to bring a body back to this country, will my right hon. Friend consider flying out the relatives later to view the grave of the soldier concerned?
    Mr. Ramsden: I will certainly consider that, but that question was also examined in the context of the last review, and visits of relatives were found to be a possible policy to sustain only in North-West Europe.
    Mr. Bellenger: Although we can understand some of the arguments which the Minister has advanced, does not he think that the cost is very excessive for a parent who wants to meet the expense of bringing home the body of a relative? Surely the military forces could meet a case of this kind for much less than £350?
    Mr. Ramsden: The difficulty is that military transport is not always available within the prerequisite time bracket. If as the Question suggests it came to a contribution towards the cost, part from us and part from the next of kin, we should run into difficulty because some next of kin might not be able to afford any of the cost. We have gone into this matter with immense care and I see no possibility of making progress from the present position.

BRITISH ARMY (RECRUITING)
The following Question stood upon the Order Paper:
Mr. PAGET: To ask the Secretary of State for Defence, if he will make a statement on Army recruiting.
The Minister of Defence for the Army (Mr. James Ramsden): With permission, I will now answer Question Number 46.
The improvement in recruiting to which I referred in my Estimates speech this year has been maintained. In the first four months of 1964 some 7,500 adults were recruited, an improvement of 18 per cent. over the same period in 1963, in addition, the scheme for the enlistment of young men aged 17–17½ has been a success.
Including some 460 of these young soldiers, and despite the increase run-out with which we have had to contend, the other rank strength of the Army rose by 2,307 during the first four months of this year. The strength of 153,806 at the end of April represents a shortage of less than four per cent. of our "other rank" target of 160,000.
Mr. Paget: Is the right hon. Gentleman aware that we welcome these very satisfactory figures? Is there anything to account for this increase at a time when employment in other directions has gone up other than the fact that recruiting always seems to go up very sharply when the Forces are engaged on active service?
Mr. Ramsden: I think that there may be various causes for this improvement, notably the way in which the Army has successfully tackled its far-flung commitments in recent months and the favourable Press coverage which its activities in this regard have achieved. The initial effect of the Army Youth Teams has been good, and the introduction of the Young Soldier Scheme has gone well.
As to what the hon. and learned Member said about employment, there has never been any discernible relationship between employment and recruiting. Some of our best results in the peak year two years ago came from areas where figures of employment were among the highest in the country.
Mr. Kershaw: Do not these figures give the lie to the Cassandras who said that recruiting would never go up? Nevertheless, will my right hon. Friend not relax his efforts to get the full number of soldiers which we require?
Mr. Ramsden: The figures I gave were for the first four months. Since then, on the "hot" figures the trend seems to be maintained. My hon. Friend can be assured that all the way through the Army this is our prime objective, and we shall not relax our efforts.
Miss Vickers: Can my right hon. Friend say whether recruiting of women for the Army is also going well?
Mr. Ramsden: I should prefer notice before giving a full reply, but I am by no means dissatisfied with the way in which the figures are going.
Mr. P. Williams: Can my right hon. Friend say whether these figures include Gurkha recruitment? Whether they do or not, can he give an undertaking that there will be no unnecessary or artificial limit to Gurkha recruitment, but that this will be pressed on with as quickly as possible?
Mr. Ramsden: My right hon. Friend replied to the last part of that supplementary question earlier. These figures do not include Gurkhas. There is no problem at present about recruiting Gurkhas to maintain the present strength of the Gurkha Brigade.

MANCHESTER CORPORATION AND LAKELAND WATER
Mr. Ellis Smith: I want to raise a point of order. It would not be in order for me to make any comment at this stage on what I want to raise. I want to ask Mr. Speaker a number of questions. Firstly, will he make a study of columns 775 to 780 of the OFFICIAL REPORT of another place, published today, dealing with the Manchester Corporation and Lakeland water? Will Mr. Speaker, in making his study of those columns, first consider whether the authorities in another place were in order in allowing this matter even to be put on the Order Paper?
Secondly, will Mr. Speaker, when studying this matter have regard to the special
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Parliamentary procedure which is now laid down for the guidance of both Houses of Parliament? Will Mr. Speaker also consider whether the authorities of another place in allowing this matter to appear on the Order Paper were not prejudging the constitutional public inquiry which usually takes place on matters of this kind? Will Mr. Speaker, when considering this, consider the passing of the Water Resources Act and the responsebilities of Government Departments for dealing with this matter? Finally, will Mr. Speaker consider the observations made by Lord Morrison in particular?
Mr. Speaker: I do not quite understand, with due respect to the hon. Member, where I come into this at all. It does not seem to be suggested that there is any point of order which arises now. In the circumstances, I shall give myself the great pleasure of studying what the hon. Member has said and, if there should be anything I can do to help him in any way without impropriety I will do it, but at the moment I find the matter a little obscure.
Mr. Ellis Smith: Thank you, Mr. Speaker. Further to that point of order, when Mr. Speaker has studied this, he will find that in a number of Acts of Parliament other people have certain rights. I understand that it is Mr. Speaker's duty to defend the elected Members of this House and to see that they are helped.
Mr. Speaker: I am an enthusiast for defending the rights of hon. Members of this House.

MOTOR VEHICLE DESIGN AND ROAD PRICING
The Minister of Transport (Mr. Ernest Marples): Mr. Speaker, with your permission and that of the House, I wish to make a statement.
In Traffic in Towns, Professor Buchanan drew attention to the tremendous impact of the motor vehicle on our way of life. I wish to announce two further developments.
First, the future of the motor vehicle. We all accept that it has come to stay, but just as the towns of the future must be rebuilt to come to terms with the motor vehicle, so the motor vehicle must

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be designed to come to terms with those towns. For example, can we not design vehicles whose size, power and manœuvreability make them more suitable for town use? And can we not reduce such things as noise and fumes? There are many aspects of design to be studied.
After consultation with the Society of Motor Manufacturers and Traders, I am arranging for a study to be made of future trends in design. The study will follow the same pattern as that of Traffic in Towns, and the bulk of the work will be done by a Working Group, which will include engineers from the motor industry and my Ministry and representatives from research organisations. They will work under the general direction of a high-level Steering Group, with Sir Harold Roxbee Cox as Chairman. I will circulate in the OFFICIAL REPORT the names of the other members, and its terms of reference.
Second, Buchanan and Crowther demonstrated that, no matter on what scale we rebuild, our largest cities cannot physically accommodate all the traffic that will want to use them. In the shorter term, comprehensive and effective parking policies will ease our problem. But, in the longer run, as Buchanan and Crowther demonstrated, wider measures of restraint of traffic may be unavoidable. No country has yet solved this problem. It is more difficult for us than for most, because we are a small, densely-populated country.
As one step, we commissioned an independent study on the technical feasibility of road pricing. The report of the panel under the chairmanship of Dr. Smeed of the Road Research Laboratory will be on sale to the public tomorrow, and advance copies are now available at the Vote Office. I am grateful to the members of the panel for their work, which shows that a system under which road users pay directly for the use they make of congested roads is technically feasible. But no one can yet say whether such a system would be desirable. We need to know a good deal more about the much more important social, town planning, economic and administrative issues. We are now examining the need for further studies of these wide-ranging problems.
Mr. Strauss: Is not the Minister's first proposal another example of his setting up groups to study problems on which he could, and should, have taken action a long time ago? Is the problem of noise and fumes from motor vehicles a new one to him? Does he not recollect that hon. Members on all sides have been pressing him on these matters for years past? Can he be rather more explicit about what he has in mind when talking about the size and power of vehicles? Has he in mind cars smaller than the minis, and more powerful, or what is he thinking of? Is he not aware that the motor manufacturers are constantly studying these matters?
Secondly, is it not the fact that the right hon. Gentleman received the Smeed Report in the autumn of last year? Is that not an extraordinary important Report that may alter the whole pattern of motoring in this country? Why, although the Minister has been pressed ever since December last to publish the Smeed Report, has he not done so before now?
Finally, why does he say that he is only now examining the further studies of the problems raised in the Smeed Report? Is he not aware that, in view of the urgency of the matter, he should have set up those studies the moment he received that Report?
Mr. Marples: Perhaps I may answer the first part of the right hon. Gentleman's supplementary question first. The question of the design of vehicles was really brought to a head by the Buchanan Report. Both Crowther and Buchanan demonstrated that in our largest cities it would not be possible to accommodate the motor car as it now exists so that everyone could use it all the time in any way he liked. Having said that, it occurred to us that there might be something that the motor car industry and we could do to redesign, reshape and look at future trends of the design of the motor car, so that perhaps more people could travel in smaller motor cars, suitably powered, rather than having a few people in big cars. That is one example.
The right hon. Gentleman says that it is the motor industry's business, and that is so. The question of design has to be reconciled with the rebuilding of our

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towns, and if we are to rebuild our towns, and deliberately set out to build them so as to come to terms with the motor car, the motor industry should make some contribution to providing suitable vehicles for these towns. We have on the Steering Group the chairman of Fords, the chairman of B.M.C. and the chairman of Jaguars, so the motor industry is well represented in this study.
In regard to the second part of the right hon. Gentleman's question, the Smeed Report was published as soon as possible, which was as soon as we could get the printing done.
Mr. Hocking: Is my right hon. Friend aware that some aspects of his statement will once again give the impression that the Government are anti-motorist in their outlook? Would it not be better if the Government pursued a road policy that was matched with the production of the motor-car industry?
Mr. Marples: I hope that that impression is not widely held by the general public, and that my hon. Friend's question will not foster that sort of spirit, because it is accepted in all major civilised countries that roads, and roads alone, cannot solve the problems of increasing traffic; and that just to build roads without any conception of how to regulate city traffic is too narrow an approach. We have to rebuild our great cities, we have to build roads, and I think that we have to adapt the motor car, or at any rate inform ourselves of every technical possibility, so that we can live with the motor car and not die with it.
Mr. M. Foot: Why does not the Minister leave it to private profit to solve this problem? Why does he make proposals—admittedly at a very distant date—for interfering with private enterprise?
Mr. Marples: As the responsibility falls on me as Minister, I am taking it myself.
Mr. Webster: Is my right hon. Friend aware that the two-tier method of a study group such as Buchanan, with a steering group and a working group, was most effective in getting a pattern for changing the design of cities to meet the motor
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car and the design of the motor car to meet the city? Can my right hon. Friend give not only the names of some of those on the Steering Group but the names of some of the designers who will be in the Working Group?
Mr. Marples: As I have said, I will circulate the information in the OFFICIAL REPORT. The Chairman of the Steering Group will be Sir Harold Roxbee Cox and the members will be Sir Geoffrey Crowther, Mr. A. C. Durie, Professor Hugh Ford, Mr. G. W. Harriman, Sir Patrick Hennessy, Sir William Lyons, and Mr. K. C. Turner.
Mr. Lubbock: The Minister referred in his statement to the question of eliminating noise and fumes. Is he not aware that this problem is fundamentally one of finding a different means of propulsion to replace the internal combustion engine? How does he think that this Committee will be able to solve this problem? Does he not think that this is more a matter for his right hon. and learned Friend the Secretary of State for Education and Science, who should be putting more money into the British invention of the fuel cell?
Secondly, on the question of the negative measures the right hon. Gentleman has taken to approach the problem of driving in towns, could we not have some contribution that would help the motorist by giving him some incentive not to use his car in the centres of our large towns? Would not the Minister look again at the idea, which I have put to him several times, of conducting social benefit studies of car parking at the periphery of our large cities, so that the motorist has some disincentive to bring his car into the middle of towns?
Mr. Marples: The question of public transport was adequately covered by the Buchanan Report, and will be completed when we have finished our comprehensive traffic land-use surveys, which have already started in all the major conurbations.
There are two ways of tackling the problem of noise and fumes. The first is enforcement, in which case we want an instrument that will measure both noise and smoke adequately. So far, we have not got it, but I am now taking

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the positive step of getting into partnership the designers of motor cars to see whether we can tackle the matter from that end as well.
Sir J. Maitland: Can my right hon. Friend give the assurance that the export trade will be taken into account in any consideration of design into which the Government may enter?
Mr. Marples: I think that the composition of the Steering Group, with the chairmen of three big motor-car firms included, will ensure that that is taken into account. But the point is that Buchanan was a best seller abroad, and if Buchanan on the reshaping of our cities was a best seller abroad it may be that if we can find an answer to the design of the motor car it could well be a best seller also.
Mr. Manuel: Does not the right hon. Gentleman think it deplorable that while he is still investigating traffic trends in our large cities and into seaside resorts at holiday periods he should, before formulating policy, be agreeing to rail closures? Could he not envisage dealing with all the traffic needs of the whole country by various methods of transport before deciding on the closure of one particular means?
Mr. Marples: That is done before any closure takes place. That question is taken into account.
Sir J. Duncan: Will my right hon. Friend include in the study of motor-car design the study of commercial vehicle design and trailers?
Mr. Marples: Yes. This inquiry is not solely into the motor car as such, but into every motor vehicle that goes on the road.
Several Hon. Members rose—
Mr. Speaker: Order. We cannot debate this now.
Following is the information:
The terms of reference of the Steering Group are:
"To advise the Minister of Transport on future trends in the design of power driven road vehicles with particular reference to their use in towns."
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The membership of the Steering Group is:

Sir Harold Roxbee Cox, Chairman.

Sir Geoffrey Crowther.

Mr. A. C. Durie.

Professor Hugh Ford, D.Sc.

Mr. G. W. Harriman, C.B.E.

Sir Patrick Hennessy.

Sir William Lyons.

Mr. K. C. Turner.

The Secretary of the Steering Group and of the Working Group is Mr. J. W. Furness of the Ministry of Transport.

UGANDA (GIFT OF A MACE)
Mr. Renton: Mr. Speaker, the House resolved before Whitsun that a delegation should visit Uganda to present a Mace to the National Assembly. The delegation consisted of the right hon. Gentleman the Member for Clackmannan and East Stirlingshire (Mr. Woodburn), my hon. Friend the Member for Hitchin (Mr. Maddan), and the hon. Member for Rotherham (Mr. O'Malley) and myself. We were accompanied by Mr. Mackenzie, the Principal Clerk of Public Bills.
I have to report to the House that we discharged that most agreeable duty on 26th May, when your delegation was invited within the Bar of the National Assembly at the start of that day's business.
After the Speaker had warmly welcomed us, speeches were made by me and by the right hon. Member for East Stirlingshire, which were greeted with friendly exuberance. I then presented the Mace on behalf of this House and it was placed on the Table of the National Assembly. On the Motion of the Prime Minister of Uganda, seconded by the Leader of the Opposition, it was then unanimously resolved
"that this House accepts with thanks the generous gift of a Mace from the United Kingdom House of Commons to mark Uganda's attainment of Independence in October, 1962, to serve as a visible symbol of the ties between this Legislature and the British Parliament at Westminster and to be a constant reminder of the high ideals of Parliamentary Government and the democratic principles for which this Assembly stands."
I trust, Mr. Speaker, that in accordance with precedent you will require this Resolution to be recorded in the Journal.
Your delegation received a most friendly welcome from the President, Parliamentarians and people of Uganda,

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and their Government gave us most generous and delightful hospitality during our five days in that lovely country, which included a visit to Murchison National Park, past which flow the Victoria Nile and the Albert Nile, where we saw a wonderful array of wild life in its natural splendour.
I am sure that the House will join members of the delegation in wishing happiness and prosperity to the people of Uganda. May their Mace and ours remain in use for ever as symbols of Parliamentary democracy.
Mr. Speaker: I will cause the Resolution to be recorded in the manner suggested by the right hon. and learned Gentleman.

SOUTH AFRICA (TRIAL)
Mr. Fenner Brockway: I apologise for delaying the House longer, but I think that it will be agreed that the subject which I want to raise is important. I wish to ask your leave, Mr. Speaker, to move the Adjournment of the House under Standing Order No. 9 to consider a definite matter of urgent public importance, namely,
"to enable the Government to state how they are implementing the Resolution adopted yesterday by the Security Council of the United Nations that all States should exercise their influence on the South African Government to grant an amnesty to the defendants of the Rivonia trial where judgments are due to be given tomorrow."
I hope that you will allow me in three sentences to submit, with respect, the reasons why this Motion should be accepted.
First, it is clearly a definite matter. The trial is now proceeding and the judgments are due to be announced tomorrow.
Secondly, it is urgent because under the sabotage law if the prisoners are found guilty only death sentences can be given, and influence must be exerted at once if it is to be effective.
Thirdly, it is of public importance. People throughout the world have been deeply moved. A petition has been signed on behalf of 160 million people in all parts of the earth. The Government are directly involved because the Security Council yesterday asked them
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to exert their influence. This Parliament is involved because one of the prisoners who may be sentenced to death holds a British passport.
For these reasons, I urge that you accept this Motion.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House under Standing Order No. 9 in order to discuss a definite matter of urgent public importance, namely,
"to enable the Government to state how they are implementing the Resolution adopted yesterday by the Security Council of the United Nations that all States should exercise their influence on the South African Government to grant an amnesty to the defendants of the Rivonia trial where judgments are due to be given tomorrow."
I am greatly obliged to the hon. Gentleman, who gave me prior warning of the substance of this so that I could look a little at authority. I am afraid that it does not enable me to accede to his application. I cannot conceive this matter to be within the Standing Order.
Mr. Brockway: May I submit to you, Sir, that this is an urgent matter for the House in that the Government were asked yesterday by the Security Council to use their influence, that we are at the last point where that influence can be exerted, and that the House ought to have a statement on how far they are fulfilling that instruction of the Security Council?
Mr. Speaker: Whether we ought to have the statement or ought not to have it is not a matter for me, or one on which it would be proper for me to pronounce. I have to consider only whether this situation is one which represents a sudden emergency arising in home or foreign affairs. That is the principle on which I have to go. I am afraid that having now looked at the authorities, I do not think that this is so. I am sorry about this.
Mr. Thorpe: As the hon. Member for Eton and Slough (Mr. Brockway) has indicated, the verdicts in this trial will be arrived at tomorrow. The indications are that sentences will be passed on the nine accused on Friday and it might well be that at that stage you would take the view that there is greater urgency than there is at present. On Friday the House is in this difficulty—if I am correct—that

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it is impossible to adjourn the House under Standing Order No. 9 on a Friday. In this difficulty, therefore, would it be possible to ask whether the Government will make a statement on Friday, in any event, so as to assist the House which is otherwise debarred from taking any action at all, apart possibly from a Private Notice Question on Friday?
Mr. Speaker: The question which the hon. Member addresses to me does not give rise to a point of order for me. What he has said will be recorded and it has been heard. That is the limit of what I can say about it.
Mr. Taverne: Could you not consider, Mr. Speaker, that these are exceptional circumstances, exceptionally urgent since the Resolution was passed only yesterday and since the British Government are possibly the Government who have the greatest effect and the greatest influence on South Africa and since the time for the granting of an amnesty would be preferably before sentence is delivered, which would be tomorrow? There would, therefore, be no similar circumstances for inquiry into what the Government are doing now and what pressures they are bringing to bear at the moment.
Mr. Speaker: I am sorry, but I have considered this matter and I cannot alter my decision. I have reached a firm conclusion.

BILL PRESENTED
  REFRESHMENT HOUSES
  Bill for the better regulation of refreshment houses within the meaning of the Refreshment Houses Act 1860, presented by Mr. Brooke; supported by Sir K. Joseph, Mr. Woodhouse, and Miss Pike; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 159.]

FAIR WAGES CLAUSE
3.58 p.m.
Mr. Julius Silverman: I beg to move,
That leave be given to bring in a Bill to provide that industrial courts, when dealing with the operation of the Fair Wages Clause in Government contracts, shall consider any discrimination against trades unionists.
In short, the Bill will provide an amendment of Section 8 of the Industrial Courts Act, 1919, in order to provide for an extension of the definition of trades disputes to include this point. The Bill to some extent follows the ground of the Friendly Societies (Membership of Trade Unions) Bill, which was introduced by my hon. Friend the Member for Gloucester (Mr. Diamond) last Wednesday. It is aimed at the same targets, but by a different route. As my hon. Friend has therefore set out the background, it will not be necessary for me to deal with the matter at any great length, or detain the House for any time from the pleasures and delights of the Finance Bill and the new Clauses it is anxious to discuss.
My hon. Friend mentioned last week the activities of an employer-promoted organisation called the Foremen and Staff Mutual Benefit Society. This society is registered as a friendly society. It is available for any supervisory staff who are employed by the firms operating this organisation, and it provides for certain benefits to be paid as a friendly society towards its members.
I and my colleagues have no objection to these friendly society activities. If employers wish to organise a friendly society or a benefit scheme for their members, either out of sheer altruism or even because of their desire to obtain the loyalty of their employees, my colleagues and I have no objection. What we object to is a pernicious clause which provides that any member who, after admission to the society, joins a trade union—
"shall immediately resign from the Society"
and
"shall cease to have any claim on the funds of the Society either by way of benefits or return of contributions or premium or any part thereof or otherwise."
In short, either a trade unionist is debarred from joining the scheme or, if

455
a man becomes a trade unionist, he is expelled from the scheme and is denied any benefits, even the return of his own contributions.
I do not know what the ostensible justification is. I can only assume, since no other explanation is offered, that it is baldly a scheme to penalise, and therefore discourage, trade unionists, and that it is intended to be so by certain old-fashioned employers who wish to regard their supervisory staff as an extension of the employer's arm rather than as independent workers with their own rights of negotiation. My colleagues and I regard this as a complete anachronism. We believe that it should be brought to an end. In this I hope that I shall have the sympathy of hon. Members on both sides of the House.
Indeed, as my hon. Friend the Member for Gloucester mentioned last week, a communication was sent to the Prime Minister by the secretary of the Association of Supervisory Staffs, Executives and Technicians—here I must declare an interest, because this is a trade union of which I am a member, as is my hon. Friend the Member for Gloucester—complaining about the position and asking what can be done about this. The secretary received an extremely sympathetic reply from the Prime Minister, who, however, suggested that he thought that this matter could be dealt with under Clause 4 of the Fair Wages Resolution.
Unfortunately, this is not so. Clause 4 of the Fair Wages Resolution, as it exists at the moment, provides that recognition of trade unions is one of the matters that comes under the Resolution and can be dealt with by an industrial court or a court of inquiry, but it does not go further and prevent this penalisa-
456
tion of trade unions, which obviously has the same effect as non-recognition, and is intended to have that effect.
Therefore, I hope that the House will provide me and my hon. Friend the Member for Gloucester with the facility to introduce our respective Measures. My proposed Bill would provide that the industrial courts and courts of inquiry shall, under the terms of the Industrial Courts Act, as it is proposed to be amended by my proposed Bill, extend to any discrimination against trade unions. This is obviously the more necessary since there has recently been some litigation in the courts to prevent the industrial courts from fulfilling that function, and even their rights and powers under Clause 4 have been questioned. It is all the more important that these should be not merely extended but should be also clarified.
I hope that, after my very short explanation of the purpose of the Bill, the House will provide the facility for me to introduce this Measure.
Question put and agreed to.
Bill ordered to be brought in by Mr. J. Silverman, Mr. Diamond, Mr. Malcolm MacMillan, Mr. Rankin, Mr. Parkin, Mr. H. Butler, Mr. Ledger, Mr. Stonehouse, and Mr. Swingler.

FAIR WAGES CLAUSE
Bill to provide that industrial courts, when dealing with the operation of the Fair Wages Clause in Government contracts, shall consider any discrimination against trades unionists, presented accordingly and read the First time; to be read a Second time upon Friday, 26th June, and to be printed. [Bill 160.]
ORDERS OF THE DAY

  FINANCE BILL
  Further considered in Committee [Progress, 9th June].
  [Sir ROBERT GRIMSTON in the Chair]

  FINANCE BILL

    New Clause.—(RELIEF FROM DUTY ON HEAVY OILS USED AS FUEL FOR CERTAIN HACKNEY CARRIAGES.)
    (1) Subject to the provisions of this section, section 3 of the Finance Act 1961 (relief from duty on heavy oils used by horticultural producers) shall apply in relation to heavy oils used by the applicant as mentioned in the next following subsection as that section applies in relation to heavy oils used by the applicant as mentioned in subsection (2) of that section.
    (2) The owner or hirer under any contract of a hackney carriage having seating capacity for twenty or more persons shall be entitled to repayment under the foregoing subsection in respect of oils used by him as fuel for that hackney carriage.
    (3) For the purposes of this section subsection (5) of the said section 3 (which provides for the furnishing of information to the Commissioners of Customs and Excise) shall have effect as if references to the production of horticultural produce by the applicant were references to the transport business of the applicant and as if the word "plant" includes vehicles.
    (4) In this section "hackney carriage" has the same meaning as in the Vehicles (Excise) Act 1949; and in relation to the phrase "fuel for that hackney carriage" section 7(1) of the Finance Act 1959 (which, as amended by section 9(2) of the Finance Act 1960, states the circumstances in which heavy oils are to be treated as used as fuel for a vehicle) shall apply for the purposes of this section as it applies for the purposes stated in that sub-section (1).—[Mr. McLeavy.]
    Brought up, and read the First time.
    4.6 p.m.
    Mr. Frank McLeavy: I beg to move, That the Clause be read a Second time.
    The Deputy-Chairman: With this new Clause can be discussed also the new Clause 19—"Fuel oils, gas oils and kerosene: rebate."—the new Clause 36—"Rebates on heavy oils used for purposes other than propulsion."—and the new Clause 38—"Abolition of duty on heavy oils."
    Mr. McLeavy: The case for the exemption of buses from the fuel oil duty is unanswerable. The tax cannot be
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    justified on rational grounds. When we raised the matter on last year's Finance Bill, the Chancellor of the Exchequer was so obsessed with a desire to reduce the industrial oil tax from 2d. a gallon to 1d. a gallon that he was unable even to consider a reduction of the 2s. 9d. a gallon tax paid by the workers travelling to and from their employment. This is how the Tory mind appears to work.
    This policy of soaking the workers with heavy taxation has brought about a situation on the buses which is resulting in higher travelling costs and reduced services. The Chancellor claims that he is anxious to avoid an increase in wages, which would endanger the country's economy. Yet he well knows that ever-increasing travelling costs incurred by the workers spark off further demands for wage increases. I wonder if he is aware that the cost of weekly travel to and from work for the ordinary working man is a big item of expenditure out of his weekly wage packet.
    On the broad issue of the part the buses must play in solving the congestion on the roads the Minister of Transport said this:
    "Our large cities cannot survive on the basis of 'one man one car' commuting: the answer must be public transport in one form or another. … In present circumstances we are in no position to ignore the benefits which an efficient bus system can give in tackling the urban traffic problem."
    The Buchanan Report, referring to road congestion, stated:
    "Given a different financial policy, travel by public transport could be made relatively cheap, and this may prove to be the key to the problem".
    There followed the recent Report of the Committee of Inquiry to Review the Pay and Conditions of Employment of the Drivers and Conductors of the London Transport Board's Road Services. That Committee was appointed jointly by the Minister of: Labour and National Insurance and the Minister of Transport. I draw the attention of hon. Members to what that Committee stated in paragraph 58 of its Report:
    "There is, however, one financial charge at present laid on the London bus service, in common with all others, which we would raise for separate consideration. At present the Board pays fuel oil tax to the extent of some £4·7 million a year—more than its target surplus. We recognise that, like all other taxes, the fuel oil tax has its advantages as

    459
    well as its disadvantages, and must be considered in its place in the structure of public finance as a whole."
    I stress the concluding part of that paragraph:
    "But we would point out that when the maintenance of bus services in towns has been accepted as an essential part of public policy to meet a growing threat of congestion, a tax that adds so much to the cost of just those services becomes increasingly anomalous."
    Despite the views expressed by the Minister of Transport, the Buchanan Report and that Committee of Inquiry, the Chancellor is unmoved. It is regrettable that he is absent from this debate. It shows a lack of understanding of the serious problems raised by the proposed new Clause.
    We must spend vast sums on improving our road system, yet the Chancellor refuses to spend so little on improving the nation's bus services, which are regarded at all levels as something which play an important part in solving the congestion on our roads. It shows that the Chancellor is out of touch with the nation's transport difficulties.
    The main problems of the bus undertakings can be said to be service, manpower and finance. The service which the buses render to the travelling public is unique. Buses are licensed by the traffic commissioners to carry out a scheduled daily service. This involves the runnning of services which are unprofitable during most of the day and, in the rural areas, are entirely unprofitable, depending on the subsidy received from the urban sections of the particular undertaking.
    The general pattern of service has always been to provide, both in the urban and rural areas, reasonable facilities of transport according to the needs of the people. The decline of services in the past few years is causing unreasonable difficulty and hardship to the travelling public, and if this trend is allowed to continue we shall have progressively decreasing services.
    Buses represent a vital part of our industrial and national life. They are essential to industry for the transportation of its workers and they are essential to the housewife for her daily shopping. They also provide the only means for millions of people to make social contacts. Great resentment is growing on all sides because of the shortage of buses,
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    the infrequency of services and so on. The worker is finding it increasingly difficult to travel by bus to and from his employment and the housewife finds that her shopping time is greatly increased because of the lack of adequate bus services. In some rural areas there are few, sometimes no, bus services.
    4.15 p.m.
    The shortage of bus drivers and conductors is presenting a serious problem to the industry. The training of both drivers and conductors is a costly item and often they are recruited and trained only to leave the industry within a short while because other industries offer better wages and conditions. Before the war employment on the buses represented a well-paid job and the men employed in the industry were the best obtainable. Although today we see at every hand that the standard has been lowered, it is not possible to find sufficient staff to provide an adequate public service.
    On the financial side, the amount of money involved in this remission of the fuel oil tax on buses is about £30 million a year. To make this concession would represent a major contribution towards improving urban and rural bus services and would bring about some stability in the industry. The duty comes second only to the item of wages. In mileage costs it represents charges varying from 3½d. to 5d. per mile. It is an artificial addition of 20 per cent. to running costs, it is a super luxury tax which is placed upon the travelling public, and it is an indirect tax upon the industry itself.
    Lord Amory, when Chancellor of the Exchequer, was impressed during the latter part of his term of office by the case which my hon. Friends put forward for a reduction in this duty on buses. He expressed regret—I believe he was sincere—that he could not then reduce them. Then we had the "little Budget" brought in by the present Leader of the House when he succeeded as Chancellor of the Exchequer. It placed a temporary 10 per cent. tax on a range of goods which included fuel oil. It was regarded as a temporary increase —the Chancellor at that time made it very clear to the House—to meet a difficult financial situation. It put an extra 3d. per gallon on fuel oil, making the total tax 2s. 9d. per gallon. But when

    461
    the emergency was over and the Chancellor found that he could take off the extra 10 per cent. tax, he decided, presumably on the advice of the Treasury, not to withdraw the 10 per cent. additional tax on fuel oil.
    Frankly, the motor industry generally and the motorists were resentful that the Chancellor should have done something which they felt at the time was unreasonable and unjust. The tax of 3d. per gallon on petrol, imposed along with other items to meet a temporary financial emergency, was deliberately retained because of the dead hand of the Treasury. I cannot be too strong in my condemnation of the decision of the Chancellor at that time, which we in the motor industry generally felt was a breach of faith and ought never to have been taken.
    We have had a statement this afternoon by the Minister of Transport about the setting up of a Committee to go further into the question of congestion on the roads. It is high time the Government realised that their policy of taxing road passenger transport means that it is incapable of providing the right kind of service and the wages and conditions of employment for its staff which will retain the men it has and attract to it men from other sections of industry. Today we are losing our staff and are in a very critical position. But the Chancellor is not interested. He is not even here this afternoon to listen to the debate.
    I want to make it perfectly clear—I want the country to understand this—that the difficulty about our road transport is not created by the staff. It is created by the policy of the Government, who are determined to tax it out of existence. Take the rural services. We have had debate after debate about the rural services, and we have had the Minister of Transport making plausible speeches and setting up committees to examine this, that and the other, but we have had no action. Meanwhile, in many cases a rural transport service is nonexistent; in other cases it is so remote that it is not really a service at all. It is high time people in the rural areas knew precisely why they are not getting an adequate transport service.
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    In the more profitable days of the bus undertaking it was possible for the more prosperous sections in the urban areas to offset the loss on the rural services. I had a lot to do with it. I was very proud that the bus industry had a sense of social responsibility. We were very proud that, through the financial success of our urban services, we were able to extend our services in the rural areas, providing for the rural community services at the expense of the urban services. Frankly, it is no good the Minister talking about minibuses, about using the Post Office mail for the purpose of helping to subsidise a rural service, and all that kind of nonsense. If we want a rural service, we must relieve the bus industry of the heavy taxation imposed on it, and the traffic commissioner, although he has not the direct power, has tremendous power of influence and persuasion, and it should be his job to ensure, as he did in the past, that the undertakings are restored in some of the rural areas where they have been discontinued because of the industry's financial position.
    Hon. Members opposite who represent rural areas have been bluffed time and time again. They have often joined with me in complaining about the lack of rural bus services, but they know very well in their hearts that the Minister has been merely bluffing them all along the line. I realise from the fact that the Chancellor is not here that we shall have a refusal by the Government to meet this case. It is a scandal that the Chancellor should not be here. When we have discussed this subject previously we have always had the courtesy of the attendance of the Chancellor. This shows the contempt in which this matters is regarded by the Chancellor.
    I ask hon. Members who are determined that we must in all circumstances have an improved service in the urban and rural areas to join us and vote for the new Clause when we go into the Division Lobby. I believe that it provides one of the solutions to a very serious problem. If the Chancellor is not prepared to accept it—this is his last chance to do it—when the Labour Government come into power in a few months' time they will at long last give justice to the travelling public.
    4.30 p.m.
    Mr. T. H. H. Skeet: I thought that I had an opportunity of convincing the Chancellor of the Exchequer last year of the desirability of cutting the fuel oil duty from 2d. to 1d. a gallon. Apparently on that occasion I was a little too sanguine, but I hope for better results on this occasion.
    Listening to the hon. Member for Bradford, East (Mr. McLeavy), I must say that I agree with him in one respect, and that is that a temporary tax is inclined to become permanent. To mention one example, Purchase Tax which was imposed in 1940 is still with us today. The hon. Member was sanguine enough to express the belief that in October there was likely to be a change of Government. On that point I must disagree with him. Even if he feels that he is right in that assumption, I would say that no Labour Government are likely to alter the fuel tax. The total duty on oil amounts to £590 million and this is equivalent to or exceeds the total royalties which are paid to the producing Governments in the Middle East.
    I am particularly concerned with new Clause No. 19 which is concerned with "Fuel oils, gas oils and kerosene: rebate". I wish to point out that 89 per cent. of the tax of approximately between £61 million and £67 million is borne by industry itself, the balance being borne partly by the domestic consumer and partly by agriculture. It should be borne in mind that while the sum of approximately £67 million represents barely 1 per cent. of the total receipts of the Chancellor of the Exchequer, it represents as high as 25 per cent. or 30 per cent. of the fuel bills of a number of industries.
    Therefore, if we are trying to secure a fuel policy which will work in the industrial climate today, this is a golden opportunity to reduce this tax. What would it cost my right hon. Friend?—about £32 million. I agree that last year was more propitious than this year because he has not got all this money to give away. He said on the last occasion that the purpose of the tax was to protect the coal industry. We have learned with considerable interest that Lord Robens has persuaded the Chancellor of the Exchequer, or vice versa,
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    to make a concession of 2s. 6d. a ton on coking coal. The Committee should, however, recognise that in 1960 coking coal went up 8s. 11d. a ton. If it is to come down in September by 2s. 6d. a ton, that means that it will still be up by 6s. 5d. in 1964.
    Unfortunately, the steel and metallurgical industry finds that the additional cost per ton of finished steel has gone up by 7s. 6d. because of the imposition of this tax in 1961. Therefore, if my calculations are right, it means something like 13s. 11d. per ton on the price of steel. That is due to the high cost of coal on the one hand, and taxation which has been levied by the Chancellor himself on the other.
    The argument which was advanced last year and, I think, on earlier occasions was that the coal industry is in need of protection. I do not think any member of the Committee would consider that the National Coal Board was a tender flower which required a little assistance. If one considers the N.C.B. in a European context, it is the third largest industrial combine in the whole of Europe with net sales totalling 2,489 million dollars. This is a gigantic undertaking which is further protected in this country, as nobody can import coal and sell it. The Steel Company of Wales found that out some time ago. The National Coal Board, with a certain degree of consultation with Parliament, has the right to charge what it likes, and private consumers will find when they return from their holidays later this year that the price of coal will have gone up by 7s. 6d. a ton. Therefore, one either takes one's coal or one leaves it.
    I do not think that I should simply indicate the size of the industry as we find it in Europe. My right hon. Friend the Member for Bridlington (Mr. Wood), when he was Minister of Power, mentioned on 21st April, 1961, that
    "coal is in no need of such protection"
    as had been outlined by the Chancellor of the Exchequer a little earlier. One only has to read the Annual Report of the National Coal Board and take into account some of the utterances of Lord Robens. He said this:
    "The National Coal Board is well on the way to being able to offer the British industrialist fuel as cheap as or cheaper than the fuel offered to any of his competitors abroad."

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    That is what he is recorded as saying in New York in the Financial Times of 19th September, 1963. He went on to say:
    "Despite the recent attractiveness of heavy fuel oil among consumers, coal can compete with any other fuel on its price, quality and service."
    The more he extols the coal industry, the more the Chancellor must be prepared to accede to the reasonable request that if he is not prepared to eliminate the duty it should at least be prepared to halve it.
    However, those are not all the remarks of Lord Robens. Take another example. Lord Robens, speaking to the Federation of Co-operative Coal Managers' Associations Conference at Llandudno, is reported in the Financial Times of 3rd June, 1964 as follows:
    "Lord Robens … claimed a big lead for solid fuel systems in the growing domestic central heating market … solid fuel is winning as much new business as all other fuels put together."
    The National Coal Board would appear to be in rather a prosperous situation.
    What we have to argue about is whether it is desirable in the interests of the Board and not necessarily in the interests of the revenue that this levy should be continued. I maintain, and I think reasonably, that a tax on energy is a tax on our economic prosperity. Its principal effect is on industry which is engaged in the export market. All of us will appreciate some of the remarks of the Robinson Committee's Report which stated that the right fuel policy for a country like the United Kingdom and elsewhere is an ample supply of low-cost energy with freedom of choice available to the consumer, and also that where distortions appear in the economy they should be compensated or eliminated. In addition, there should be the right to look at the various sources of energy and the consumer should make his choice.
    In fact, this has been the policy of Her Majesty's Government. My right hon. Friend the Minister of Power indicated in a speech in London on 19th February, 1964:
    "Within the broad framework of Government policy, we believe that the fuel industries should be free to compete, and the consumer be free to choose. This, I am convinced, is the best means of ensuring efficiency and
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    economy and of avoiding the kind of rigidity and waste that results from over-centralised decision-making."
    If there is to be freedom of choice, it can only be on the basis that one can go out into the open market and buy fuels at reasonable prices. But if a tax is put on one at the expense of another so as to bring them both up to about parity, it means that the consumer no longer has a freedom of choice.
    Therefore, one of the difficulties that we experience is that while the Government may be prepared to pay lip service to European policy which has been ordained as sensible, when it comes to action we are faced with the Treasury decision that, in the last year at least, this tax must be continued. The Chancellor of the Exchequer had this to say in 1959:
    "Our aim must be a. cheap and abundant supply of fuel. Our policy is to obtain it by proper freedom of choice for the user and competition between suppliers …"—[OFFICIAL REPORT, 4th May, 1959; Vol. 605. c. 45.]
    Where is the competition between suppliers if, by taxation, we bring them all up to parity? These matters are worth considering.
    May I mention one or two reasons why I think the tax should be halved. First, it is a discriminatory levy. In many industries, the fuel bill represents a very high percentage of total costs. In the electricity supply industry the fuel cost is as high as 50 per cent.; in the cement industry, 33 per cent.; in the steel and metallurgical industries, 20 per cent.; in the glass and ceramic industry, about 10 per cent.; in general engineering, taking fuel costs both direct and indirect, the proportion may be as high as 8 per cent.; and in the chemical industry it is 7 per cent.
    The effect on industry of what the Chancellor is doing is that, if the fuel content in one's costs is low, one is not hit hard by this imposition, but if, on the other hand, the fuel content is high, one is hit extremely hard by a levy brought in in 1961 and still maintained today.
    There is this further factor. Industry likes to have an opportunity of taking advantage of stability of prices. In the oil industry, there has been this stability, but the coal industry has not maintained

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    stability of prices. We have been reading recently about whether the miners will accept the new terms offered by Lord Robens. If they are accepted, the costs of coal production will go up by £6 million, and it is hoped to absorb this increase in increased productivity. If productivitiy does not rise as high at it did last year, then, unless more export orders are obtained, the price of coal may well go up again. Therefore, an element of instability comes into the question and industrialists may be further affected.
    There is also a problem in investment. Certain industries are concerned about this because they have their oil appliances which they must use, and pay the tax. Looking at it in another way, they are concerned with temperature control and technological adjustments. If they use fuel oil, they have to pay the tax. If they do not want to go ahead with technological advances, they must resign themselves to the decision to go in for some other source of fuel.
    I make an earnest plea to the Chancellor of the Exchequer and the Economic Secretary to do something about this tax. If he can find ways and means to accommodate the £32 million or so involved, he would make a great concession.
    Mr. Eric Lubbock: In using his figure of £32 million, is the hon. Gentleman assuming that none of this revenue is returned to the Exchequer through increased Profits Tax and Income Tax on the companies which at present pay the fuel tax?
    Mr. Skeet: No. I am concerned about the total of £67 million which comes from the tax and, if there is to be a remission bringing it down to 1d. per gallon instead of 2d., one can think in terms of roughly half that figure.
    Mr. Lubbock: The hon. Gentleman has not quite got my point. If the costs of these industries are reduced, they will make bigger profits, and, accordingly, some of the loss to the Exchequer will be made up by increased Profits Tax and Income Tax.
    Mr. Skeet: I see what the hon. Gentleman means. Industry may well make additional profits On the other hand, we are very anxious to encourage British
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    industry to be more competitive internationally. Companies may well wish to reduce prices to their buyers, in which case they will obtain more orders, bringing more foreign exchange to Britain, though not necessarily adding to their profits. In this connection, I mention what happened to cement manufacturing. As a result of this very tax, the cement industry was driven from the export market. I have no doubt that most hon. Members would be only too glad to see the cement industry get back into the European market, although, of course, there is the problem that, once one has been excluded from certain markets, it may be very difficult and costly to get back again.
    I do not wish to detain the Committee much longer. I have stressed several important points and have a little more to say in conclusion. Moreover, I am, unfortunately, suffering from laryngitis this afternoon.
    Mr. Cyril Bence: It is a good job the hon. Gentleman is not in perfect health.
    Mr. Skeet: I did not speak last night, and as I saw that these Clauses would be coming up for consideration today, I took the advantage of a few hours' rest in the hope that, with some of the good medicine which the country provides, I should soon be right again.
    I hope that we can persuade my hon. Friend the Economic Secretary to realise that it is most important at this juncture to consider all the arguments on this matter very seriously. It would be, I suggest, an act of the greatest discourtesy to his own country if he were to continue this tax in existence for as long as we have had the Purchase Tax, for example. If the coal industry, for which it was imposed, must be assisted, I am perfectly prepared to consider at some other stage whether it might be assisted by some form of subsidy. This is what is done in certain European countries, for example, in France. If that were to be the method, it would not be an imposition on the ceramic and glass industry, on building contractors, on the steel and metallurgical industries and on all the others with which I am concerned and which are prominent in the export trade on which this country so much depends.
    4.45 p.m.
    Mr. Arthur Holt: I am very glad to support what has been said by the hon. Member for Willesden, East (Mr. Skeet) and the hon. Member for Bradford, East (Mr. McLeavy). The new Clause No. 38 put down by my right hon. and hon. Friends and myself goes further than new Clause No. 19 to which the hon. Member for Willesden, East was speaking, but this whole series of new Clauses deals, in one way or another, with a tax which we all agree, I am sure, has a most undesirable effect (a) on our public transport system and (b) on industrial costs. Whatever they do or do not do about these new Clauses, the Government must seriously study this tax and endeavour to find another way of raising the money. It is having an extremely bad effect at present. Following the sentiments expressed by the hon. Member for Willesden, East, I shall now adduce arguments in support of our new Clause, endeavouring not to repeat what the hon. Gentleman has already said in covering the subject very thoroughly.
    Last year, The Times commented that it was one of the great disappointments of the 1963 Budget that the duty on heavy oils had not been removed. There has been a difference of view expressed by the Government, and it would be useful to know today what reason they now hold for continuing the duty. As the hon. Gentleman the Member for Willesden, East reminded us, the Leader of the House, then the Chancellor of the Exchequer, said when he introduced the tax that he was doing it for revenue purposes and denied, as the Minister of Power also emphatically denied at the time, that it was being introduced in any way as a method of protecting the coal industry.
    In his Budget Statement in 1963, the present Chancellor said:
    "I have been pressed to remove this duty to lower industrial costs. I cannot consider this solely from a revenue point of view, but must take into account the widest long term economic interests. To remove the duty now would change the terms of competition against coal and in favour of oil."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 485.]
    Although only 2d. a gallon, this duty has a real impact, not a marginal one, on the costs of many industries. In electricity generation alone about 5·7
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    million tons of this oil are used per year. The iron and steel industry uses 2·8 million tons and the engineering industries are using 1·9 million tons a year. Two other important consumers, cement and fishing, each use about 700,000 tons a year. In addition, it is being widely used in central heating, which again is rather in conflict—this is something of which we are very much aware in my part of the world—with the Government's policy of encouraging smokeless zones. It is estimated that central heating systems are using about 2·6 million tons of fuel oil.
    Fuel oil is being used in such places as hospitals, schools, welfare establishments, offices, catering establishments and homes, and I think that it is essential that some basic decisions on fuel policy should be made and adhered to. Having judged the relative merits of one type of fuel or another, difficulties are caused when decisions are turned upside down by a sudden change in Government policy which slaps a tax on the fuel which appeared to industrialists the best and most economical for them to use. Many people who have decided to burn oil must be put in this difficulty. Perhaps in their case it was just marginally the most economic, and then a fuel tax is imposed and they wonder whether they took the right decision.
    The hon. Member for Willesden, East referred to the troubles of the cement industry. In 1960, the cement industry's exports were worth £7·1 million. In 1961, its exports were reduced to £5·3 million—the tax was put on in the middle of the year—and in 1962 they were down to £3·1 million. This is a clear indication of the incidence of this tax, which in the case of the cement industry is, I believe, estimated to be about 8s. per ton, or about 12½ per cent., at their oil-fired works.
    The tax operates to a lesser extent on other industries. Perhaps I may refer to its effect on the textile and leather industries, which are a matter of interest in my constituency. In 1963, the cost of this duty to those industries was estimated to be £1·8 million. The cost to the engineering industry, which also provides extensive employment in my constituency, was estimated at £4·6 million in 1963. The hon. Member for Willesden, East said that the total cost

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    of the tax to industry, commerce and home users was £61 million. The figure which I have is £55·7 million. I should be glad to compare figures with him to see whether my figure is wrong. However, I understand that this is an estimated figure. It is not very dissimilar from the one which the hon. Member gave. It is an extremely large sum for industry to bear. If it is suggested that for a matter of two or three years, until some further reorganisation takes place, protection of the coal industry should continue, it would surely be far better to do this by a direct subsidy for some of its activities rather than by putting this fantastic extra cost on industry which has to earn our exports.
    I hope that the Economic Secretary will not give us a negative answer. If he does, I hope that he will make it clear beyond doubt on what grounds the Government insist on continuing this tax and how they can urge industry to make greater efforts to improve the export trade, which I understand is causing even the Treasury some concern, when this kind of gratuitous increase in costs is placed by the Treasury on the cost of many industries which at the moment are endeavouring to increase our export trade.
    Mr. T. L. Iremonger: I want to direct the Committee's attention to new Clause No. 36—"Rebates on heavy oils used for purposes other than propulsion"—which reads:
    Section 6(1) of the Finance Act 1959 (which requires that heavy oils used as fuel for vehicles must be unrebated whether or not they are used to propel the vehicle) shall not apply when the engine which normally propels a vehicle is being used for purposes other than propulsion, provided that the supply of the oil to that engine exclusively for such other purposes is regulated by a mechanical device approved by the Chancellor of the Exchequer, and rebates shall be allowed on heavy oils so used.
    The object of this new Clause is to allow rebate on fuel for vehicles when the engine using that fuel is not propelling the vehicle but is performing some other function—for example, when the engine is rotating the drum of a mobile concrete mixer and the vehicle itself is stationary.
    The immediate objection which might be taken is that owners of vehicles whose engines are used for both purposes—propulsion and industrial—might be tempted
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    to use rebated fuel for propulsion and so evade the tax due. However, the new Clause refers to a mechanical device which makes it impossible for the engine to draw on the rebated fuel tank unless the vehicle is immobilised and stationary. The British Ready Mixed Concrete Association has perfected such a device, and I think that my hon. Friend the Economic Secretary will agree with me that it is technically satisfactory for the purpose of safeguarding the Revenue provided that it is not tampered with.
    Subject to this safeguard, it is, on the face of it, obviously both logical and desirable that fuel used for purposes other than propulsion should be allowed rebate. It is logical because the principle, if one were to elevate it by such a term, is that the tax is levied on transport fuel used on public highways, and transport on public highways is identified, for convenience, with licensing of the vehicle. For example, tractors which do not go on the public highway are not licensed and use rebated fuel. This is, really, not so much a principle as a device of administrative convenience, but even if we accept that there is a principle which has some intrinsic merit it still would not be breached by my new Clause.
    It is desirable that this rebate should be allowed because it would be for industrial and productive processes which are more economical and more efficient. It provides encouragement to investment at home, and it would also provide encouragement to exports because it would promote the development of concrete-mixing machinery, which is greatly in demand and which this country is well qualified to produce. My hon. Friend the Member for Sevenoaks (Mr. J. Rodgers), who hopes to catch your eye, Mr. Thomas, speaking as he will be from his great experience as Parliamentary Secretary to the Board of Trade, will wish to impress upon my hon. Friend the Economic Secretary the importance of the export aspect of the case.
    5.0 p.m.
    My hon. Friend the Economic Secretary will be aware of the British technological progress which has been made in mobile concrete mixers over the past three or four years. Machines are—
    Mr. Arthur Lewis: The hon. Member has made a long statement—
    The Temporary Chairman (Mr. George Thomas): Order. If the hon. Member for Ilford, North (Mr. Iremonger) does not give; way, the hon. Member for West Ham, North (Mr. A. Lewis) must resume his seat.
    Mr. Lewis: He started to give way.
    Mr. Iremonger: I started to give way, but when I saw that it was the hon. Member for West Ham, North (Mr. A. Lewis), I thought better of it.
    Mr. Lewis: On a point of order. Is it in order, Mr. Thomas, for an hon. Member to suggest that the Chair might call an hon. Member who is not even present or attending the Committee? The hon. Member for Ilford, North (Mr. Iremonger) suggested that his hon. Friend the Member for Sevenoaks (Mr. J. Rodgers) might catch your eye. How can you call him when he has not put in an appearance?
    The Temporary Chairman: That is hardly a point of order, although it is remarkable what can be done.
    Mr. Iremonger: I was saying that my hon. Friend the Economic Secretary will be aware of the technological progress which has been made in mobile concrete mixers over the past three or four years. Machines are now in service in which the drum is rotated hydrostatically through fluid power supplied from hydraulic pumps interposed on the main engine and gearbox of the vehicle. This is a great improvement in efficiency and economy over the old method which makes those who use it eligible for rebated fuel and which involved a separate engine to drive the drum.
    It seems to me quite wrong that those who have perfected these developments should be handicapped in exploiting them by virtue of the fact that others who operate these drums by uneconomic and superfluous separate motors can run these second motors on rebated fuel. This is to put a premium on industrial efficiency in the interests of bureaucratic convenience.
    Admittedly, the rebated fuel would, strictly speaking, be used in propulsion engines in licensed vehicles, but I cannot accept that any principle that matters is involved. Let the distinction of principle, if one wants to make one, be not whether
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    the vehicle is licensed and the engine is the same engine as that used for propulsion on the public highway, but whether the engine is actually used for propulsion at the time when the rebated fuel is consumed. If there is any principle, it is evidently not sacrosanct, because it is already breached in the case of fairground operators, mobile cranes, road rollers, roadmaking machinery and mowing machines.
    I am not convinced that my hon. Friend the Economic Secretary can sensibly resist the new Clause on grounds of any valid or important taxation principle. He may feel that it should be resisted on the ground that there would be difficulty in policing the device and safeguarding the revenue. To be fair to my hon. Friend, he may say that if this concession is allowed, the owners of thousands of Landrovers which are fitted with power take-offs will install the approved device and then tamper with it and take the family to the seaside on tax rebated fuel. I think that that fear is highly exaggerated because, in the first place, those with secondary separate motors are already now entitled to rebated fuel for them and they can perfectly well fiddle the fuel if they are minded to do so. Secondly, however, in the matter of policing, the Excise officers would have a pretty good guide in sniffing out offenders simply by considering the amounts of rebated fuel claimed for allegedly dual-purpose engines. If large claims are made, it will be obvious that they are from the people upon whom a check should be made to see whether the device has been tampered with.
    What I and my hon. Friends who support new Clause No. 36 are asking my hon. Friend the Economic Secretary is that he and his Department should take cognisance of technological progress and adapt the administration of the Excise to it. I do not under-estimate the awkwardness of doing so, but I suggest that the virtues of flexibility are greater than the merits of regarding the existing procedure or principle as something handed down from on high and inscribed on tablets of stone.
    I therefore ask my hon. Friend sympathetically to consider the new Clause, if only because of the acknowledged practicability of the device upon which

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    it is based, and to put his Department to the task of thinking out afresh the principles and the expedients involved, not from the defensive point of view of standing pat on the status quo, but in a genuine effort to meet the plea which I have made to him.
    Mr. Anthony Wedgwood Benn: Even if the Government do not concede the new Clauses, it will be a memorable debate, Mr. Thomas, for the Ruling which you have given from the Chair, which I noted: "That is hardly a point of order, but it is amazing what can be done." If that could be inscribed in the next edition of Erskine May, it would commend itself to back benchers on all sides of the House.
    We are having two debates on these new Clauses, and they are quite separate one from another. One is the debate on fuel policy, with which some of the Clauses deal, and the other is the debate on transport policy on new Clause No. 9 introduced by my hon. Friend the Member for Bradford, East (Mr. McLeavy). I wish to confine myself to his new Clause. I was interested in one of the implications of New Clause No. 36, that if a vehicle is stationary there should be a rebate on the fuel which is used, because with congestion rising at its present rate this might have implications for the Treasury if rebate devices started ticking away as soon as a road vehicle was held up in a traffic jam.
    The case underlying new Clause No. 9 is not in itself a case against the present level of revenue from the fuel tax. Indeed, it is strongly arguable that the transport revenue drawn through the fuel tax and in other ways is not excessive when one considers the cost of the roads, repairs to them, policing and the accidents and congestion which follow from road use, when one takes into account the fact of supply and demand for scarce urban land which is required for roads and when one takes into consideration the multiplier factor—that is to say, as incomes rise, the demand for transport rises too. It is a well-known fact that when a family's income rises above a certain point, its use of the roads rises even more rapidly. Finally, there is the fact that transport is legitimately taxable like any other activity.
    The key question of transport policy to be considered by the Committee is
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    whether, in the light of our present developments in transport, it makes sense to put any barrier whatever, in the form of fuel tax, against the further development, strengthening and extension of public transport. This is the key to the whole argument. The case for the rural areas is a separate one, and I shall refer to it presently.
    We have a situation of growing congestion in our cities. The Minister of Transport, although I am m many ways a critic of his, certainly has tackled the problem of urban congestion with rather greater zest than his predecessors. He is, coming along with his parking meters and increased prices for them and he is examining the necessity even for a congestion tax, so that people who bring their vehicles into the centre of our cities may have to pay more. The inevitable consequence of this process, if the present production of the motor industry continues, is that there will come a point when it simply will not be practicable to permit everybody with his own vehicle to come freely into our cities. That is a matter not of policy but of fact. It cannot be done physically.
    It is no good simply taking a negative approach to this question. I have always been on the side of tthe Minister of Transport when he has been combating the more ignorant members of the pure motor lobby who think that the motorist should be allowed absolutely free choice, because it is not a matter for the Minister of Transport alone but embraces the scarcity of land and the urban planning problems which are involved. However, if we are to try to deal with this problem, then there has got to be official encouragement not only by the Minister of Transport but also by the Chancellor of the Exchequer for a further development and strengthening of public transport, and particularly buses.
    If we look at the position of bus companies now operating in our major cities, we find that it is becoming increasingly difficult for the drivers of the vehicles and the planners of the timetables to get effective services because of the difficulty they are having in coping with the increasing volume of private motor traffic. Wages and conditions have not kept up with those outside, and so there is a staffing problem as well. It is apparent in many cities, and there is in some places

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    and actual decline of effectual services. On top of that a heavy burden of tax has to be borne by the buses, which are, by any measurement of operative efficiency we like to make, much more efficient than privately-owned motor cars. If we take the extreme cases, it may be 500 times as efficient on the sq. ft. basis. Officials who represent the bus interests have limited themselves to a claim of 54 to 1, but even this is sufficiently great a difference to justify special consideration for their case.
    Of course, if we did remit fuel tax on buses it would open up a series of policy choices, and it does not follow, if we make such provision, that we are automatically committed to follow any one of the choices which are available. One point which was made by my hon. Friend was that it would make, or it might make, possible a reduction in fares. That certainly is one of the alternatives which would be opened up, and if fares could be reduced it would be of benefit to those who have to travel to and from their work by bus. A second alternative would be one which makes possible the offer of better wages and conditions for those who work in the bus industry. Unless these men are available in sufficient numbers the bus services will suffer increasingly in the future.
    The third alternative choice opened up, which I think may be the most important of all, though it is hard to compare them, is the possibility of further investment in new equipment so that the public transport services can meet the much more sophisticated needs of the travelling public when they consider making their choice as to the means by which they will enter the city in the mornings and leave it in the evenings.
    I recall a story about Lord Curzon who, it is said, had never travelled by bus, and a friend of his persuaded him one day to try the bus. The following day he met Lord Curzon and he asked him, "How did you get on?" Lord Curzon replied, "It was no good." His friend asked, "Why not?" Lord Curzon said, "Well, I got on the bus and I said 'Carlton House Terrace' but the man would not take me there." That was his approach to the bus as a rather bigger private vehicle.
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    However, the fact is that if the commuters in our large cities increasingly use private transport, one of the reasons is because of the convenience. It offers a greater degree of comfort and convenience than that which they can get on our existing bus services. It is no good simply limiting oneself to attempts to stop this process—by the Minister of Transport or anyone else—by means of applying niggling restrictions and higher prices. The public transport services must be prepared to offer a greater degree of comfort and convenience than are now made available. Certainly one effect of a reduction of fuel tax would be to speed up the development of more sophisticated bus services in our cities.
    As for the rural areas, I must say I listened with some incredulity to the hon. Member for Willesden, East (Mr. Skeet) who was talking about the sacred right of freedom of choice. When we apply that to the people who live in the rural areas it was interesting to hear him speak about freedom of choice being an essential part of the Government's policy. What does that mean to a man who saw Dr. Beeching come along and say, "We are taking away your railway" when the local bus company, which then provides the only service open to him, has to pay a fuel tax which makes it increasingly difficult for it to operate in that area? Of course, in some areas there simply are not rural bus services available, and it is really no good, as was shown by a recent survey, for the Minister to say that most people do not use the public transport in rural areas when, in fact, there is no public transport to meet their needs.
    5.15 p.m.
    The case for remission of the fuel tax is that inadequacy of rural bus services is one of the factors which encourages people to go into the towns and so increase the congestion in the towns. The case for remission of fuel tax in the rural areas can be made more briefly than that for remission of tax in the urban areas, but it is none the less important.
    The fact is that this new Clause has to be looked at not as a minor niggling Amendment of the Government's Finance Bill but as something which has to be seen in the context of a major shift in transport policy, and this is a shift to public transport. If we say it like this

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    it sounds commonplace; we have talked about it so much. In terms of better public transport, everyone will agree and say that of course we want better bus services and it sounds like a truism. But it may be seen also as a blinding flash of light, illuminating many other problems as well, depending on how deeply people have thought about the significance of this. The simple truth is that our towns and cities were constructed in a period when the motor car had not been dreamed of, and the question is how it is going to be possible to plan the movement of people on the basis of private ownership of vehicles by everybody.
    A major shift has to be made from private ownership of vehicles to the increased renting of vehicles. When we say "renting vehicles" we think in terms of hiring a car, and that is one aspect of the matter, but another is hiring a bus. When a man boards a bus he hires that bus and rents that bus in exactly the same way—though not with the same control over the route which it follows as Lord Curzon hoped for. But he is in a sense renting that vehicle, and the advantages of renting a vehicle as an objective of policy over the next few years are legion.
    First of all, we can get a greater variety of use. A man's need for a vehicle varies from day to day. A single person entering or leaving the city, to and from his work, wants one comfortable seat from home to work and back. A man taking his children on holidays needs a different type of transport, and so on and so forth. Only by making available rented vehicles, including buses, express buses, standee buses and so on, can we meet this need.
    Another thing, among the wider issues we have to consider, is the effect of the fuel tax on safety and maintenance. If we want to make good use of roads and reduce road casualties we are bound to see the great advantage there is in centralised maintenance, which can only be done when vehicles are rented. Buses are safer on the roads than are privately-owned cars. A third advantage is, of course, more economical use of road space. There is nothing more wasteful of our limited road space than the fact that vehicles are parked on the highway. Rented vehicles are much less often out
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    of use than privately-owned vehicles. For these reasons, I think we have got sooner or later to face the necessity of getting Government policy, not only transport but fiscal policy, working side by side to achieve this major shift, if we are to meet our transport needs.
    It will be a massive psychological shift which has to be made, because people are wedded to their own private vehicles. If they have them, they love them. If they do not have them they lust after them. I am a private car owner, as most Members of the Committee are, although I try to resist the urge to worship by polishing on Sundays. Of course, it is the right of every man to have transportation. On the other hand, if we are to solve this long-term problem of transportation and preserve reasonable stands of amenity in urban life there must be a shift in this direction, towards better public transport. It is no good the Minister looking at it purely from a Treasury point of view. If he does then he really is engaged in direct policy combat with his colleague the Minister of Transport, who is trying by all the means at his disposal to stem the flood but who knows in his own heart that he will be as unsuccessful as King Canute.
    If the Minister resists this new Clause he will just be putting one more decision into the pigeonhole waiting to be tackled later on. This matter cannot be left as it is. For while it is left as it is we cannot have the public transport service that we need, and while the public transport services are starved then increasingly we shall be faced with the unplanned onrush of the private motor vehicle.
    For this reason, I very much hope that in his reply the Minister will not just confined himself to the narrow financial point but will try to have some useful comments to make on the wider items of policy to which I have tried to refer.
    Mr. Geoffrey Johnson Smith: I wish to speak in support of my hon. Friend the Member for Ilford, North (Mr. Iremonger). This is not because I do not support the wider arguments in the question of fuel policy as employed by the hon. Member for Bristol, South-East (Mr. Benn) and by my hon. Friend the Member for Willesden, East (Mr. Skeet).

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    I think that this is a miserable tax on heavy oil, and I only regret that the Government did not take the opportunity of abolishing it last year. I do not propose to go over the ground which has been covered so well by hon. Members on both sides of the Committee, except to say that I would like to support many of the arguments that have been put forward. My contribution to the debate will be a brief comment in support of my hon. Friend the Member for Ilford, North. I hope that the fact that only two of us in the Committee have referred to this Clause will not give the impression that hon. Members on both sides of the Committee do not attach some importance to new Clause 36. I do not believe that for one moment.
    The tax is an anomaly. My hon. Friend the Economic Secretary, must admit this. The Clause does not strike at the basic principle of this wretched tax. We as realists know that it is not really in this year for the Chancellor of the Exchequer to come to the House and suggest in his Budget speech that the tax should be abolished. We recognise that, and there is no intention on our part to embarrass the Economic Secretary this afternoon, but, to my mind, there are two reasons why my hon. Friend should look with some favour on new Clause 36.
    One reason is the argument put forward by my hon. Friend, namely, that it is unreasonable in this day and age when we spend so much of our time exhorting industry to invest in new plant and techniques and to apply the products of research to find that it should be penalised as it is in this respect, Secondly, as hon. Members on both sides have said, it increases the costs in both housing and industrial building matters. We all know that there is a huge construction programme in both these fields.
    However small the assistance that can be given to help reduce the cost of the provision of school building programmes, house building programmes and offices, or whatever it is, cannot but be welcome. The Economic Secretary rejects our arguments. In other words, he is doing exactly the opposite; he is ensuring that those who seek to see that costs are reduced are not helped but hindered by this miserable tax. Therefore, I hope that when he replies, just
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    because this does not strike at the wider aspects of the debate and, the very important arguments that have been put forward this afternoon, he will not altogether forget that though this is a small point it is, nevertheless, an important one. Perhaps as the matter does not strike at the basic principle this is an occasion when he might at least give encouragement to those of us who hope that the basic principle will be tackled one day, that when it comes it will not cost the Treasury anything worth speaking of, that common sense can prevail and that he can give us hope for the future.
    Mr. Neil McBride: I hope that the hon. Member for Ilford, North (Mr. Iremonger) will forgive me if I do not follow him into the field of concrete mixing. While one is glad to see the Economic Secretary to the Treasury looking so resilient after his rough handling last night, one is regretful of the fact that he is not flanked by the Chancellor of the Exchequer and the Minister of Transport, whose interests in the matter are coincidental. It seems to me that the country will draw the conclusion that it is a matter of secondary importance.
    The new Clause was moved in a very able manner by my hon. Friend the Member for Bradford, East (Mr. McLeavy). Everyone in the country is aware that the imposition of this tax has been causing great concern for some time. It seems to me that we in the Labour Party and on this side of the Committee are acting as advocates, or agents, for bus companies which are suffering from the maladministration of the taxation system in the country. It would seem that we are being asked to save many of those operators from their friends on the benches opposite.
    Speaking to the Public Transport Association in May, 1962, Mr. R. J. Ellery, its chairman, said:
    "I remember that at the annual dinner last November I likened this surcharge to Peel's tax; that, too, was introduced as a temporary measure. Looking back, it seems to me that my analogy was not unfair. What is the Government thinking about? Surely they do not want to see a further withdrawal of bus services priced out of the market by fuel tax."

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    Nevertheless, with that in mind, there is no denial of the fact that the imposition of this tax of 2s. 9d. per gallon on fuel oil used in hackney carriages, such as public service vehicles, penalises operators and pushes up fares and thereby increases the cost of living and militates against the granting of concessionary fares to old-age pensioners. In my opinion, the abolition of this tax would help the low wage earner who, because of the necessity of local authorities having to build beyond the boundaries of, and in many cases on, the perimeter of their areas, has to travel quite a distance to work and is thereby involved in considerable extra expense due to the cost of bus fares forced up by the imposition of this tax on fuel oils.
    I come now to a constituency point, because I believe that it is an hon. Member's primary duty to help the people who elect him. The effects of this tax are felt particularly in Swansea, which is a town large in area, where many fine housing estates have been erected by the borough council. Despite great care in land buying, the Swansea council has had to construct these estates in places which are very desirable indeed but which are inevitably some distance from the centre of the town and involve travel to and from work by my constituents.
    It follows, therefore, that the matter of bus fares in a situation such as I have described is of extreme importance to the people involved, particularly as there has been held recently a traffic commissioners court to consider applications for fare increases by the bus operators who provide the passenger bus service in Swansea. The effect of this tax on heavy oils used as fuel on passenger service vehicles is that the running costs are forced up by 20 per cent. and no one can doubt, least of all this Government, that this percentage makes all the difference to the economic viability of many bus companies. Indeed, when one considers this it seems to me that this tax inflicts a form of apartheid on many people by confining them to their own immediate areas because of the cost of bus fares made higher by the tax. Indeed, on 31st May, fares went up in Swansea, and the chairman of the traffic commissioners court said that this increase was undesirable from the passengers
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    point of view, but inevitable. This occurred despite objections by 50 local authorities in South Wales to the applications for increasing the fares.
    It may be that hon. Members opposite would adduce the argument that relief in tax would be absorbed in wage increases. That might or might not be true, but it would certainly mean static or reduced fares which would be of considerable advantage to those I represent. It is a singular fact that the Tories have always opposed remission of this tax. A logical question which arises is whether they think it an easy revenue to raise. The removal of the tax would be seen as a hope by the fare-paying public of fares being held back from their upward spiral and possibly an indication of a downward trend.
    5.30 p.m.
    A downward trend of fares would certainly be welcomed by short distance passengers, who always bear the brunt of fare increases. The Economic Secretary will be aware of the feelings of the deputation from the Joint Fuel Tax Committee which saw him on 18th February. Many of these gentlemen hold political views akin to his and their comments were forcible in the extreme. I understand that the deputation made the hon. Member aware of the bitter feeling as they protested against what was described as a huge artificial addition to costs holding back the industry's efficiency.
    Furthermore, the deputation spoke in strong terms of this tax disability in the maintenance of unremunerative services, particularly in rural areas, which are of great importance in a country like Wales. I quote from the notes of the meeting:
    "… fuel tax relief would be merely a once for all relief. This argument had not been raised by the Treasury but had appeared originally in the majority report of the Jack Committee. In fact, of course, relief would be reflected not just temporarily in the year in which it was given but permanently in a permanently lower level of fares."
    In other words, there would always be one twist less in the inflationary spiral.
    Mr. R. W. Birch, chairman of the company operating in Swansea, told its annual meeting earlier this year:
    "The industry has tried, year in, year out, to secure the removal or at least a substantial reduction of this ill-conceived tax of 300 per cent. on the basic cost of our fuel, and once again the Chancellor of the Exchequer has

    485
    completely ignored us in his Budget. I can see no sense in this harsh special taxation of a public service which is vital to the community."
    The social effects will be further emphasised, if the tax is retained, by the effects of the Beeching axe. Bus services and fares, with railway lines being closed, become even more a matter of importance. They become of supreme importance. Then again, social effects are involved even in the question of balancing a visit to relatives against the cost of the fares.
    The retention of this penal fuel tax is one of the greatest among the many blunders committed by the Government. It may be argued by hon. Members opposite that the position is not desperate but many of them have slender majorities and the electors have a singularly retentive memory. There is no case for the retention of this penal tax. It adds tremendously to the cost of living. It means a considerable burden for the wage-earner with a family because of the cost of travelling to and from work. Equally important, as some of my constituents have complained, there is the high cost in bus fares of sending children to school. Parents in Swansea have made urgent representations about fare reductions.
    The Government have promised much in this election year. I am not using any election gimmick in this. I am representing my constituents, as I should. From time to time we hear of the amputation of this tax and I put it to the Economic Secretary that it should now be removed. Last year, the Chancellor said that he was not worrying too much about the total cost entailed in remission. The urgency of the situation defines the necessity for this Clause, which I hope hon. Members will support.
    Mr. R. E. Prentice: The Committee seems to be in a rather curious position in that we are having two debates in one. One is a debate on fuel policy and the other on transport policy. It is, perhaps, significant that all the speeches on fuel policy have come from hon. Members opposite on an issue in which private vested interests are paramount and in which the public interest is only affected to a fairly small degree, whereas all the speeches on the
    486
    transport issue are coming from this side of the Committee, and in transport it is the private interest that is of smaller account and the public interest that is of real significance.
    I support the Clause with particular enthusiasm, partly as a member of the Transport and General Workers' Union—and I pay tribute to my fellow union member, the hon. Member for Bradford, East (Mr. McLeavy), to whom I now pay tribute for his efforts over many years in trying to get this anomaly removed—and partly as an hon. Member with a constituency interest. Both the borough council of East Ham and the local chamber of commerce have written to me on this problem urging removal of the tax. I think they represent a great body of public opinion on the issue, and I am sure that many hon. Members will have had similar approaches from representative bodies.
    It is a paradox that, on the very day that the Minister of Transport made a statement about traffic problems, the Economic Secretary should be sitting here presumably to put up the stock Treasury excuses for not meeting the proposal in this Clause. I am not a great fan of the Minister of Transport, but at least he brings into his pronouncements some sense of urgency about the serious social problems we face because of traffic congestion. We face problems which will become almost intolerable in ten years' time when, we are told, there will be twice as many vehicles on the roads.
    It is against that background that the Government should have regarded the Clause. Many of the answers we shall need to the problems of living with the car will be complex, but the contribution offered by the Clause is simple. The proposal has been made many times in this Committee, and was reinforced by the recent Report of the Committee, presided over by Professor Phelps Brown, which looked into the question of the pay and conditions of those working for London Transport. I have three brief comments on that.
    First, we should not tolerate a situation in which the burdens of the bus companies are put more and more on the shoulders of those who work for them. In the last fifteen years or

    487
    so, the relative position of bus drivers and conductors has declined. In the 1930s, the busmen were among the best paid of manual workers. They have become the victims of a financial situation in the bus industry which is in large part due to the fact that the Government have failed to take steps they might have taken for the industry. These employees have thus seen their conditions falling further and further behind those of other workers.
    It is well known—and this was brought out in the Report of the Phelps Brown Committee—that busmen in the London area regularly have to work very long hours of overtime in order to take home an average wage. We should be against excessive overtime for anyone, but it is particularly unreasonable in the case of a bus driver who is responsible for the lives of his passengers in the modern traffic congestion of a city like London, and it is something with which we should be concerned.
    Sir William Taylor: On a point of order. What has this to do with the new Clause?
    The Temporary Chairman: I think that the hon. Member for East Ham, North (Mr. Prentice) will take steps, if possible, to relate it to the new Clause.
    Mr. Prentice: I would have thought that it was perfectly clear that the purpose of the new Clause was to relieve the desperate financial position of the bus industry. I was reminding the Committee that because of this desperate position a number of unfortunate circumstances have developed, including the fact that busmen have had a pretty raw deal and have themselves been subsidising transport for the rest of us. If this subsidy has to be made, it should fall on the taxpayers as a whole and not on a group of people who give good service to the community.
    I was about to say that this is self-defeating in that staff starts leaving the industry, so that bus schedules cannot be maintained, thus adding another twist to the spiral of the industry's serious condition. Secondly, there is clearly a limit to which the problems of the bus industry can be relieved by increases in fares. Increases in fares are a hardship to those
    488
    with low incomes, particularly pensioners, and again are self-defeating in the sense that as fares go up people become more and more reluctant to make journeys by bus.
    A couple of weeks ago, I had a conversation with an elderly woman in my constituency who told me of a journey which she made once a week to a meeting of her co-operative guild. She travels by bus, having to make a change, so that she makes four bus journeys to go to the guild and back home. With a bus fare of 3d., that costs her 1s., but with a fare of 4d. the cost has become 1s. 4d. She is over 80 years of age, but she has concluded that she will have to walk one way every time she goes to a guild meeting or, if the weather is too bad, miss the guild meeting. When we allow increases in fares without doing anything about it in terms of public policy, that is precisely the sort of result which occurs.
    The third point is inherent in this difficulty. It is that bus companies should not have to continue to try to surmount their financial predicament by a further closing of routes. This case was made by my hon. Friend the Member for Bristol, South-East (Mr. Benn), but we should have a statement from the Government about their view of the effect which all this has on the bus industry itself. The Economic Secretary should tell us to what extent anyone in the Government is making an assessment of the social costs of traffic congestion. If we are making a proposal which will cost the Treasury a certain amount of money, we are also making a proposal which will lead to a saving of costs in terms of traffic congestion. This is the sort of situation which should be costed by the Government in the way that the Victoria tube extension was costed—in terms of the social cost as well as the balance sheet.
    All these arguments make the case for the new Clause overwhelming. If we get a stock Treasury reply again today, it will be further evidence of the Government's failure to deal with the major social problems of our time.
    5.45 p.m.
    Mr. Emlyn Hooson: I entirely support the case for the abolition of the fuel oil tax in its entirety, but I wish to confine my remarks to

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    new Clause No. 9. For the life of me I cannot elevate the matters which we have been discussing to the status of principles. The Treasury traditionally—and the tradition is fully maintained—adopts the attitude, "What we have, we hold". If the Treasury has its hands on money, however obtained, it is extremely reluctant to give it up, and this is true of the Treasury whichever party is in power, and we may as well face it. Nevertheless, it is one of the traditional weaknesses of the Treasury—and the weakness has been manifest in the debate today so far—that it is reluctant to appreciate the social and economic consequences of pursuing the policy of "What we have we hold".
    I entirely support new Clause No. 9. Fuel oil tax for buses costs 2s. 9d. a gallon which, I am told, amounts to about 17 per cent. of bus running costs, or about 12½ per cent. of total costs, including capital depreciation. In other words, the fuel oil tax makes a substantial increase in the cost of public transport and in particular has two harmful effects. First, it makes many more bus routes uneconomic than would otherwise be the case. Secondly, it makes the whole structure of fares higher than it would otherwise be and therefore drives people away from buses to other forms of transport. This is obviously very harmful, especially in the light of two Reports, the Beeching and Buchanan Reports.
    The Beeching Report especially affects my constituency, for, as hon. Members know, I represent an entirely rural constituency where the railways have largely been cut off because of the effects of the Beeching Report. I do not want to go into that Report's merits or demerits today, save to emphasise that it makes it much more essential to have many alternative rural bus services. The position, which was adequately described in the Jack Report of 1961, is therefore aggravated. The Jack Report emphasised that the cutting of rural bus services was already having serious social consequences which should be reversed by an element of subsidy, but from the Government we have had neither subsidy, nor any tax concession which would make it more economic to run rural bus services.
    490
    The odd thing about the Government is that they are the most urban-minded Government in history. Yet they derive a great deal, of their strength from rural areas and I accept that there are many hon. Members opposite who are concerned about the countryside, but they do very little about it. Although they derive much of their strength from the countryside, they are for ever favouring urban as opposed to country areas. Indeed, they are more responsible for the depopulation of our countryside than any Government in history. They are making the countryside a countryside in which only Conservatives can afford to live.
    To talk of choice of transport in my constituency is ridiculous. There is no choice. One can use the local bus, if it can afford to run, or have a car, or walk. Many bus operators are unable to operate bus services because they are uneconomic, but many of them are marginally uneconomic. If there were a tax concession at this time, these services might be economic. Yet there is no element of concession.
    My constituency is part of the Mid-Wales area and it is odd that this area has the lowest average earnings of any part of the United Kingdom and at the same time the highest number of cars per head of the population. The reason is that if one is to get around at all one has to have a car, however dilapidated it may be. I know that hon. Members opposite do not appreciate the intense hardship caused to rural dwellers, old-age pensioners, youngsters in their teens and other people unable to afford cars, simply because public transport services just do not exist. If hon. Members opposite want to know why they are losing strength in the rural areas, it is because they are totally ignoring the plight of these people.
    Mr. F. A. Burden: The hon. and learned Gentleman is saying that if the fuel tax were abolished, the buses would be able to run to such an extent that there would be adequate services and it would no longer be necessary for people to buy cars. However, it is my experience that the bus companies say that if the whole of the tax were removed, it would make no difference to fares.
    Mr. Hooson: Not at all. I am not making that argument. I am saying that there are certain bus services in the rural

    491
    areas which are marginally uneconomic. A concession on the fuel tax would enable them to be economic. As I see it, there are certain people in rural areas, as in urban areas, who will never be able to afford cars, but nevertheless must be transported. The sole test here is whether it is in the public interest generally that the concession proposed by this new Clause should be granted.
    I have referred so far only to the rural areas, but I should like to turn to the other side of the coin—the Buchanan Report—which emphasises the catastrophic effects which would result if more and more people poured into cities in cars, especially if carrying only one person, and the Report calls for a means to halt congestion and improve public transport services. I would remind the Economic Secretary of paragraph 457 of the Buchanan Report, which states:
    "But, given a different financial policy travel by public transport could be made relatively cheap, and this may prove to be the key to the problem in the long run."
    That was the point made by the hon. Member for Bristol, South-East (Mr. Benn).
    Last week, there came the Phelps Brown Report on the pay of drivers and conductors of London Transport, which was concluded in February, 1964, and this puts the case even more strongly and draws specific attention to the fuel tax. Paragraph 58 states:
    "… when the maintenance of bus services in towns has been accepted as an essential part of public policy to meet a growing threat of congestion, a tax that adds so much to the cost of just those services becomes increasingly anomalous."
    It was pointed out that the fuel tax cost London Transport £4·7 million per annum, or more than its total target of operating surplus. The cost of removing the tax on buses throughout the country would be approximately £31 million per annum.
    Now I want to deal very shortly with the kind of traditional objection put up by the Government to the type of proposal encompassed in this Clause. It is argued sometimes that removing the fuel tax would be anomalous if petrol tax on the buses did not go, too, but the operators are not calling for this, nor is the Clause. It is pointed out that 90 per cent. of the buses already use diesel fuel, and that even if all the rest went over to diesel as
    492
    a result of taking away the tax, only another £3 million would be lost to the Revenue. From an administrative point of view, it is much easier to take off the heavy fuel tax than to have a differential in the petrol tax between cars and buses.
    Another argument which has been heard before is that it might be awkward to have a differential fuel tax between commercial vehicles and buses. But in Ireland they do precisely this, and the fuel tax there is 1s. per gallon less on buses than on ordinary commercial vehicles.
    The Jack Report did not come out in favour of removing the fuel tax but favoured direct subsidies to the uneconomic rural bus services, but one of the difficulties cited was the belief that it would be difficult to separate a fuel tax cut for rural services alone from city services. But now that we have had the Buchanan Report on top of the Jack Report there is a different type of thinking which has shown that the essential need is to improve city as well as rural public transport, giving public transport a much stronger economic position. There is, therefore, an overwhelming case for taking off the fuel tax right across the board. It seems obvious that before giving subsidies we should stop taking money away from operators by way of tax.
    The third argument is that it is sometimes said that this would be unfair competitive discrimination in favour of buses against other transport. I would remind the Economic Secretary that railways pay only 2d. a gallon on diesel fuel, and that the whole idea is to make public transport more economic as opposed to private cars.
    Eventually, it all comes down to the question of money. Last year, the Chancellor, in justifying the continuation of this tax, said that it was not the cost but the need to protect coal which forced him to maintain the general fuel tax, that is, to maintain the balance, as it were, in favour of home coal production against imported fuel. I would remind the Economic Secretary that no coal is used in buses and therefore in reply to this Clause it is impossible for him to resort to the argument used by the Chancellor last year. I think that an overwhelming case has been made out for this Clause.
    Mr. Archie Manuel: I am glad to support this new Clause, so ably moved by my hon. Friend the Member for Bradford, East (Mr. McLeavy). Many points have been covered in speeches from both sides of the Committee. I want to say a word about rural bus services. I think that today we must all have been struck, especially hon. Members opposite, by the fact that we had the Minister of Transport presenting a picture to us of the chaos now existing in large towns and city centres, and that he is now setting up another double-barrelled working party, as if the problem was not illustrated enough and that we do not use our eyes to see what is happening.
    The remit, in part, is to consider the design and shape of cars for the future that would be allowed into our larger cities. This is merely staving off the evil day. I think that most of us who have thought about this problem are convinced that, sooner or later, due to the number of cars coming on to the home market and the strenuous efforts being made by manufacturers to keep up sales, and whether we like it or not, not even new design and smaller cars will solve the problem but that we shall need to make arrangements on the perimeters of our larger cities and seaside resorts during the summer holiday months for car parking facilities. Public service transport will have to be used by nearly everyone to get into cities and allow the freedom of movement that is becoming almost impossible in many areas.
    This being so, one would have thought that the Government would now be turning their attention to the iniquity of this penal tax on heavy fuel oil. The position is that, willy-nilly, freedom of choice is being removed from the people in the rural areas because in many cases railway transport is being removed completely, or passenger trains are being withdrawn and stations closed thus making it impossible for many people to use the railways, and the much vaunted freedom of choice about which we hear so much from the other side of the Committee is disappearing.
    6.0 p.m.
    For many years local authorities in my constituency have made representa-
    494
    tions to me about this tax. Each year they hopefully pass resolutions which they then send to hon. Members and ask them to use what influence they have to try to get this tax removed. The position has been aggravated in my constituency by the railway closures which have taken place. I am thinking particularly of the closure of the railway services between Beith and Glasgow, and between Kilmarnock and my constituency, and the closure of Kilbirnie Station next month will mean that people in the area will have to use the local bus services to get to the other station at Glengarnock.
    It may be that Dr. Beeching and those who advise him, and also the Minister of Transport, think that no particular hardship is involved in using bus services in rural areas, but I know that if train services are withdrawn great hardship is suffered by elderly people, by old-age pensioners and by mothers with families when they go out to do their shopping.

  ROYAL ASSENT
  6.2 p.m.
  Whereupon The GENTLEMAN-USHER OF THE BLACK ROD being come with a Message, The CHAIRMAN left the Chair.
  Mr. SPEAKER resumed the Chair.
  Message to attend the Lords Commissioners;
  The House went:—and, having returned;
  Mr. SPEAKER reported the Royal Assent to:

  1. Elections (Welsh Forms) Act, 1964.

  2. National Health Service (Hospital Boards) Act, 1964.

  3. Burgh Police (Amendment) (Scotland) Act, 1964.

  4. Criminal Procedure (Right of Reply) Act, 1964.

  5. Pharmacy and Poisons (Amendment) Act, 1964.

  6. Dangerous Drugs Act, 1964.

  7. Income Tax Management Act, 1964.

  8. Emergency Powers Act, 1964.

  9. Protection of Animals (Anaesthetics) Act, 1964.

  495

  10. Harbours Act, 1964.

  11. Succession (Scotland) Act, 1964.

  12. Administration of Justice Act, 1964.

  13. Criminal Appeal Act, 1964.

  14. Nurses Act, 1964.

  15. Road Traffic Act, 1964.

  16. Malawi Independence Act, 1964.

  17. Merchant Shipping Act, 1964.

  18. Police Act, 1964.

  19. Macduff Harbour Order Confirmation Act, 1964.

  20. Chichester Rural District Council Act, 1964.

  21. Life Association of Scotland Limited Act, 1964.

  22. Chapel Street Congregation Church (Southport) Burial Ground Act, 1964.

  23. Harwich Harbour Act, 1964.

  24. Cheshire Brine Pumping (Compensation for Subsidence) Act, 1964.

  25. Newcastle-under-Lyme Corporation Act, 1964.

  26. Stafford Corporation Act, 1964.

  27. Saint John's Church, Smith Square Act, 1964.

  28. Barry Corporation Act, 1964.

  29. Elim Church Moor Lane Bolton Burial Ground Act, 1964.

  30. British Railways Act, 1964.

  31. Tees Conservancy Act, 1964.

  32. Preston Corporation Act, 1964.

  And to the following Measure passed tinder the provision of the Church of England Assembly (Powers) Act, 1919:
  Clergy (Ordination and Miscellaneous Provisions) Measure, 1964.

  FINANCE BILL
  Again considered in Committee.
  [Mr. GEORGE THOMAS in the Chair]
  Question again proposed, That the Clause be read a Second time.
  6.18 p.m.
  Mr. Manuel: When we were interrupted because of a message from another place, I was referring to the hardships
  496
  experienced by some elderly people because of rail closures and the need to use bus services in the rural areas. There no longer exists a choice of transport when weather is bad or when a rail journey would be more convenient.
  We must remember that in many rural areas the buses run infrequently and the vehicles used may not be of a suitable standard. The imposition of this heavy fuel tax means that small bus operators in the rural areas have to charge higher fares. This is an on-cost on low wage earners and will be used as a reason for asking for an increase in wages during the wage negotiations which take place between trade unions and employing bodies.
  British Railways subsidise many bus services which run at a loss and require to be subsidised. Surely the Government should take a much broader view of the whole economic situation and calculate the cost of the subsidy needed to keep the buses running. Other forms of transport such as the MacBrayne steamer service, which operates on the West Coast of Scotland, receive a large Government subsidy, and the Government would be easing themselves of a proportion of this burden if the duty were abolished. Perhaps the Economic Secretary can tell the Committee whether there are figures available indicating the Government subsidy to transport services.
  In many areas buses, which have to be used because the rail services have been closed, are not suitable vehicles. Mothers who have to take their children in perambulators cannot travel on these buses. People going on holiday, who have to take a bus to a point where they can board a train, find that there is not proper accommodation on the bus for their heavy luggage. Does not the Economic Secretary think that bus companies, especially the smaller operators, should have the help which would result from relief from this tax so that they may be able to provide more suitable vehicles to cope with the conditions which have arisen because of rail closures?
  I hope that the Economic Secretary will be forthcoming in his reply and that we shall not be told, as we were last year, that the Government admit that we have a case but that because of some aspect of their fuel policy in relation to coal this case cannot be considered. The

  497
  problem should be given proper consideration this year because the people in the rural areas deserve the utmost consideration from this Government. Their loyalty to the Conservative Party has been severely strained and they deserve some return. The Economic Secretary should give some indication that this iniquitous tax will be removed.
  The Economic Secretary to the Treasury (Mr. Maurice Macmillan): We have had an interesting debate on fuel and transport policy from the general point of view and, to some extent, from a constituency viewpoint. These proposed Clauses may be divided in their intention into three categories. Clause No. 38 and Clause No. 19 deal with the heavy oil duty of 2d. a gallon which was imposed in the 1961 Budget. One proposes that the duty should be abolished and the other that it should be halved. Clause No. 36 would exempt from the duty dual-purpose engines when they are not used for propulsion and Clause No. 9 would enable buses to use tax-free fuel.
  I hope that the hon. Member for Bradford, East (Mr. McLeavy), whose great expertise in these matters we all recognise, will not think it discourteous if I deal first with the other Clauses, because I think that it may be convenient for the Committee if I deal separately with the question of the heavy oil duty and with the specialised points raised by my hon. Friend the Member for Ilford, North (Mr. Iremonger) and then, last, with Clause No. 9 to which the greater part of the debate has been devoted.
  I think that I should correct a misapprehension of the hon. and learned Member for Montgomery (Mr. Hooson) that the heavy oil duty has something to do with buses. It is true that although the heavy oil duty was introduced originally as a revenue duty it is being continued as an element of protection for the coal industry. The total yield from this duty in this year will be about £67½ million.
  My hon. Friend the Member for Willes den, East (Mr. Skeet) suggested that it was easier to halve this duty this year than it would have been last year. In some ways I am delighted that my hon. Friend has recovered from his attack of laryngitis but in other ways I am glad that he has not fully recovered. He said
  498
  that the National Coal Board did not need protection because it was not weak. I admit that with great pleasure. We all know the magnificent job which Lord Robens has done. The Coal Board does need protection, not because it is weak but because at this stage it is still necessary to afford it protection in order to achieve a balanced fuel policy. The protection is necessary not only because of the present position but because of the future position of the National Coal Board. My hon. Friends made great play with Lord Robens's statement. But the time when an industry may reach the stage where it does not need further protection is not necessarily the time at which such protection should be withdrawn.
  6.30 p.m.
  Mr. Skeet: I appreciate the point that a certain amount of protection may be required, but is my hon. Friend prepared to state to the Committee when he feels that this protection should be withdrawn? Will that be in two years, three years, four years, or in an unlimited time?
  Mr. Macmillan: I welcome the confidence—which I share—of my hon. Friend that it will be the present Chancellor who makes this decision, but I very much regret that I cannot commit him in advance to doing so. The Chancellor announced in his Budget Statement last year that the decisive consideration leading to his decision not to reduce the heavy oil duty was the long-term competitive power of the coal industry. I think that the concessions on the price of coking coal which the National Coal Board feels able to make should not give my hon. Friend the Member for Willesden, East any reason for pessimism. I suggest, however, that a year in which the Chancellor is raising extra taxation is not a year in which a duty of this nature can be easily removed, such as last year when the Chancellor was able to make a tax concession.
  There is a point I wish to refer to now and to return to later. My hon. Friend made an appeal that our fiscal policy should keep in line with technological advance. Part of his appeal was that we should transfer as a burden to the taxpayer the cost of protecting the coal industry from other industries which now bear it. But I think other

  499
  parts of the Finance Bill, particularly the concession on light oil, are at least a sign that we are very much aware of the fiscal implications of technological development. I must therefore tell my hon. Friend and the Member for Bolton, West (Mr. Holt) that we do not feel able to accept this new Clause this afternoon.
  In linking his remarks on the new Clause with the road fuel tax, the hon. Member for Bolton, West almost made a part of my argument for me. He implied that all these duties should be reconsidered. That again is something which I do not feel reasonable to expect from the Chancellor in a year in which he is seeking extra taxation. The hon. Member quoted some figures and asked me for confirmation of them. The burden of the fuel oil duty on manufacturing industry at the moment is £32 million, on electricity generation it is £11½ million, and on the rest—railways, agriculture, commercial and industrial heating, domestic heating and the usual miscellaneous items—it is £24 million.
  So on manufacturing industry the direct burden as it concerns exports is not so great as may seem at first sight. I also remind the hon. Member that some of the difficulties in regard to exports for cement manufacturers are caused by the successes of their subsidiaries manufacturing within the European market. While we all welcome those successes, we must recognise that they make it to some extent harder for their parent companies to compete abroad.
  I have only one further point to make in rejecting this Clause. That is about the cost of heavy oil and industrial costs compared with those overseas. There is evidence that the present level of selling prices of heavy oil in the United Kingdom is comparable with equivalent levels in Europe. Of course, it is also true that the element of extra cost represented by the duty applies to the difficulties which have been quoted by my hon. Friend the Member for Willesden, East and the hon. Member for Bolton, West, but these points can be made about any specific item of cost which one might like to select.
  I turn to the somewhat more specialised appeal of my hon. Friend the Member for Ilford, North. He knows
  500
  that we have studied this problem with a great deal of care and a certain amount of sympathy simply for the reason that there is a real and genuine difficulty in enabling the tax system both to be fair as between taxpayers, and also conducive to increased technical efficiency.
  I say to my hon. Friend the Member for Holborn and St. Paneras, South (Mr. G. Johnson Smith) that there is a genuine conflict of interest between reduction in costs and trying to maintain equity between taxpayers. I cannot agree with him that any distortion of the tax system is justifiable provided it reduces costs. This tax is not in fact an anomaly. What hon. Members have asked is that we should create an anomaly within the tax system for the benefit of a particular class of vehicle. That may not always be something on which we should turn our backs, but in this case it would be a change of principle. We are being asked to create a new class for tax purposes of hybrid vehicles which sometimes use un-rebated fuel and sometimes use rebated fuel on the road.
  The present distinctions are quite clear and easy to enforce and to police. They are easy for industry and users as a whole to recognise. They are that vehicles licensed for the roads use un-rebated fuel. Some vehicles have exceptions made for them. They are largely those concerned with road construction and certain agricultural vehicles, which are using rebated fuel at all times. We are being asked to create a third class of special vehicles which sometimes will use rebated fuel and sometimes unrebated fuel. One hon. Member suggested how difficult this might be in connection with traffic jams on the road as even engines designed to drive vehicles along the road operate for long periods while stationary.
  It is not only for administrative convenience that I must refuse the new Clause, but to prevent erosion of the duty and for the perfectly genuine reason of the difficulty of drawing a distinction in favour of a category of dual-purpose vehicles using unrebated and rebated fuel in the same engine. Then the difficulty becomes even greater.
  Fairground operators are in a totally different class. They are not allowed to

  501
  use rebated fuel carried in a tank on the vehicle. They have to provide a separate tank which is brought to the site separately from the vehicle used on the road. Secondly, they have to immobilise the vehicle by what we might call semi-dismantling the connection between the engine and the wheels before they are allowed to use rebated fuel.
  Dr. Horace King: I am sure the hon. Gentleman wants to be fair to the ready-mixed concrete industry, to which the Treasury has previously given concessions. People in that industry are not asking for a special class of vehicle to be taxed but they say that on their vehicles there are two kinds of use of the engine, one to propel the vehicle and one to act, as it were, as a factory operating while it goes along the road. They have proved that these two things can be separated. All they are asking is that the fuel which is not used for propulsion should be rebated fuel. That seems fair and would not create an anomaly.
  Mr. Macmillan: I am inclined to agree that the industry is asking that concrete mixers should be allowed to use the engine that drives the vehicles along the road for driving the concrete mixer when stationary and, for that purpose, to use rebated fuel in a separate tank, though using the same engine. The difficulty is that the industry is asking in effect that a new class of vehicle be created. Those in the industry are concerned, quite rightly, only with having one vehicle in that class—concrete mixers—but, unfortunately, the Customs and Excise, and the Government generally, cannot in equity discriminate in the tax system between concrete mixers and other vehicles that can operate in the same way.
  There are technical difficulties. I accept that, provided that the device is not tampered with with equal ingenuity as its invention undoubtedly required, the device now perfected does prevent the vehicle from being driven along the road on rebated fuel, but it is dependent on the method of driving the concrete mixer being static and hydraulically controlled. I do not think that we could limit the concession to those using that method. That would be hard on users of other types of drive, certainly vehicles that had a powered cable, and
  502
  it would be hard to resist, in honesty, those with vehicles that could drive along the road and use their engines for rebated purposes, so to speak, when stationary for a power take-off, and yet allow it for vehicles that used their engines on top of themselves. It is, therefore valid to argue that it would be difficult to police if applied to all those who could claim any equal justification with concrete mixers
  However, this is one of the problems that are constantly exercising Her Majesty's Customs and Excise. They arise, too, though I would be out of order to do more than quote an example now, over Purchase Tax. An example is a method of heating a room which, if built in, is tax-free as part of the house, but which, if used in some of the new techniques of prefabrication becomes an appliance or apparatus, and subject to Purchase Tax
  It is a difficult and real problem to make sure that the later and more highly developed methods of building, or of mixing concrete, or anything else are not penalised by the tax system. It is a problem of which the Customs and Excise is very well aware, and which it is constantly studying. Again, I would quote as evidence, if evidence be needed, the fact that it is a purely technological consideration that has led us to give a concession on light fuel oil for certain types of furnace. It is clear that, as time goes on, matters of this sort will have to be constantly in our minds.
  I turn to the last of this group of new Clauses, and I am sure the Committee will accept that, like the ecclesiastical profession, we have taken the matter in reverse order of importance. I must be blunt to be fair, and say that, as many have surmised, it is no part of my case to accept this new Clause, but I say at once that it is no part of my argument to say that the bus industry does not have special problems. The Government accept, and have accepted in repeated public utterances that it has.
  My difficulty here is that we have really had a debate on transport policy. It has been suggested that I should answer in terms not merely within the narrow confine of this new Clause, but my difficulty is that the very arguments that have been put forward that this is part of a wider transport policy consideration are the reasons why I feel

  503
  that I must refuse to accept this Clause. It deals only in a partial way with what everyone admits is a much wider problem.
  The hon. Member for Bristol, South-East (Mr. Benn) dealt with this point but, if I have taken his argument correctly, it was basically that whatever else will have to be done in regard to the problems of public transport in the future, and problems of congestion in our towns, and difficulties of rural transportation, it will have to include the removal of the tax on bus fuel. To that extent, the hon. Gentleman seemed to anticipate my argument, but I will later try to answer that point, as well as other points.
  6.45 p.m.
  Mr. E. L. Mallalieu: Would not the Economic Secretary agree that that is precisely what the Government are doing—treating the whole transport system in a piecemeal manner? Is not that just what Dr. Beeching is doing?
  Mr. Macmillan: If the hon. and learned Gentleman had been present earlier this afternoon, and had listened to the statement of my right hon. Friend the Minister of Transport, he would know that this is not at all the case.
  Mr. Benn: I do not wish to make too much point of the fact that no Ministry of Transport representative is present, but the hon. Gentleman himself recognises that this is a central part of transport planning. Does the Ministry of Transport agree that this tax, which limits the operations of bus companies, is right?
  Mr. Macmillan: That matter does not arise, but if the hon. Member will let me develop my argument I will do my best to answer him.
  I do not try to argue that the bus industry does not have special problems, but I do argue that it has not yet been established that financial assistance from the Exchequer—particularly by way of relief from duty—is the right answer. It has been suggested that a direct subsidy is the answer to the industry's problems, but even among the expert committees, many of which have been referred to, there has been disagreement on that subject.
  504
  The hon. Member for Swansea, East (Mr. McBride) said that this amounted to a 300 per cent. duty, and another hon. Member referred to it as representing 20 per cent. on running costs. With respect, those are slightly tendentious figures. The hon. Member for Bradford, East quoted a figure of 3½d. to 5d. per vehicle mile. Our figure, in absolute terms, is more likely to be between 3d. and 3½d. per vehicle mile. I do not pretend to the hon. Gentleman's expertise, but at least we do overlap in the middle. The duty represents only one-quarter of a point in the retail price index.
  Another hon. Member said that the railways are exempt, but this tax deals exclusively with road transport, and it is not fair to quote this, as, I think, the hon. and learned Member for Montgomery did, as a special exemption from duty. It really is not that. It is a duty that applies to all road transport, and the new Clause seeks special treatment for the bus industry on the ground that it needs some sort of subsidy.
  Mr. McLeavy: I should not like the hon. Gentleman to misrepresent the purpose of the industry. We are not asking for a subsidy but for the removal of a tax which should never have been imposed. To suggest that we are asking for a subsidy is to misrepresent the position.
  Mr. Macmillan: We may be arguing about a form of words but I would have said that if a tax which applied to all vehicles using the roads is removed from one class of vehicle it amounts at least to a subsidy for that class.
  Mr. Manuel: No.
  Mr. Macmillan: The hon. Member may say "No", but it is.
  Mr. Benn: Could the hon. Gentleman deal with this point? The case does not rest on the plea that the bus companies need this in their own interest but that it is Government policy and Ministry of Transport policy to encourage greater use of public transport. It is the national interest that is being put forward here.
  Mr. Macmillan: I take the hon. Member's point, which was also mentioned by the hon. Member for Bradford, East. I have said that I accepted that rural transport and crowding in towns were special problems.

  505
  This duty on fuel oil makes an important contribution to the Exchequer and I must tell the hon. and learned Member for Montgomery that he, as so often happens with his party, is rather out of date in assuming that the maintenance of the duty as applied to buses is part of the Treasury brief. It was dropped some time ago. The duty is spread widely and evenly over personal consumption as a whole and the fact that the bus companies have to pay duty is no more anomalous than that they have to pay other taxes and contributions towards the total of public expenditure. It is because this duty is readily identifiable that hon. Members have given such emphasis to it, but it would have been equally arguable that buses should be exempted from other taxes, local and national. My argument is that abolition of the duty by itself does not provide the means to tackle this problem.
  Once it is conceded that certain undertakings have this inherent right to be excused this form of taxation there could be a large number of almost equally good claims when looked at from the point of transport policy as a whole. To give the industry relief from duty does not deal with the problem where it is most pressing. Relief on this duty would be indiscriminate and it would be bound to go equally to the more specialised services run by the bus companies, because it is impracticable to differentiate between buses being used for different purposes on different days by the same companies.
  Mr. Manuel: Is it not correct to say that the duty should be considered, as other taxes are considered, when we remember that it was brought in as a temporary expedient?
  Mr. Macmillan: The hon. Member is getting a little confused. This duty has been in existence for a long time.
  Mr. Manuel: I agree.
  Mr. Macmillan: It was imposed for the first time in 1935 when the development of the diesel engine began to erode the revenue from the use of the petrol engine. It was not brought in as a temporary measure but to prevent people escaping the petrol duty by converting to diesel engines. It is the reverse side of the argument, which the hon. and learned Member for Montgomery failed to make,
  506
  that they are now to be treated on equal terms.
  A blanket scheme of the nature proposed by hon. Members opposite is unsatisfactory, and although the argument for relief was concerned particularly with the rural bus services it must be applied to all the services. The Government have accepted the problems of the industry and particularly the problem of crowding in towns. They have accepted the Buchanan Report. I again suggest that it is not only the cost but also the inconvenience of buses and of public transport as a whole that is causing difficulties. In towns people use cars because the buses become inconvenient, and then conditions become worse on the buses and they consequently become more inconvenient because of the further excess of cars. The hon. Member for Bristol, South-East put that argument by implication.
  This is also a problem which must be tackled at both ends of the scales, as my right hon. Friend the Minister of Transport implied when he accepted the Buchanan Report. I do not altogether agree with all that the hon. Member for Bristol, South-East said about transport policy. Even today the Minister of Transport said that he is studying the problem as a whole. Meanwhile I suggest to the Committee that this partial relief through a rebate of the fuel oil duty is not the way to deal with the problem. The hon. Member for Swansea, East said that this duty was an artificial addition to costs, but that is an argument which can be applied to every tax in the sense that it is imposed rather than being inherent in the nature of the operation itself.
  Mr. McBride: Would the hon. Gentleman say that it was not an artificial addition when one considers the way in which this high increased cost factor impinges on the promotion of passenger resistance to further fare increases?
  Mr. Macmillan: All sorts of additional costs, including National Health contributions, are artificial but I would not say that they should be removed from a particular industry for that reason. It is a false analogy to say that an industry which is in difficulties can best be

  507
  relieved by removing the tax on its fuel, which it shares with every other user of the fuel. It is no more logical than saying that companies which need to be encouraged to export should be excused from paying National Health contributions on behalf of their employees. The proposal made by hon. Gentlemen opposite is to try to assist bus companies as a whole by excusing them from paying one duty, rather than by applying more general methods to the whole transport problem in order to assist them.
  7.0 p.m.
  In conclusion, I should like to refer to the expertise of the hon. Member for Bradford, East. While we can agree with him that a great deal needs to be done to help transport in general, and while we can agree also with the hon. Member for Bristol, South-East that the affluent society that has been created by 13 years of Tory rule has brought a large number of problems in its train, I suggest that this is not the way to solve one of them.
  Mr. John Diamond: I am sure the Committee will feel that as we have now had approximately three hours' debate on this group of Clauses—and a most excellent debate it has been, in which I have been privileged to listen to every word that has been said on both sides of the Committee—we have now reached the time when we might come to a conclusion.
  Mr. A. Lewis: Before my hon. Friend leaves that point, will he also deal with the fact that at least one hon. Member has been sitting here the whole afternoon, that he has never left the Chamber and has seen other hon. Members come in, be called, make their speeches, go out again and never come back. Before the Question is put, I at least will try to catch the eye of the Chair.
  Mr. Diamond: I am sure no one intends to cast any aspersions on the way in which the Chair has chosen speaker after speaker. I gathered from one hon. Member opposite that he hoped that a Member who has not appeared in the Chamber at all would catch the eye of the Chairman, and that he has not succeeded in so doing. Beyond that, I am
  508
  sure that no criticism was intended by my hon. Friend's comments.
  I think that I represent the general feeling of the Committee when I say that having regard to the fact that we have spent approximately three hours on one proposed new Clause we would wish to deal with a number of other new Clauses, and that if we go on at the same rate, it will be in the late hours of Friday when we come to the end of today's business. Having regard to those factors, I feel that perhaps I am representing the views of the Committee when I say that we now ought to reach a conclusion on this Clause.
  If I speak shortly it is not that we do not regard the Clause as of fundamental importance but merely that the arguments have been put so well by my hon. Friends, particularly on new Clause 9, that all I need do is summarise the points in the shortest possible way. I draw attention to the fact that there has been all-party support for the arguments on this new Clause. These arguments have stemmed from committees which examined the matter, and all the conclusions of the committees have been accepted. I refer shortly to the Buchanan Committee which said that buses in urban areas should be helped, to the Jack Committee which said that buses in rural areas should be helped, and to the Phelps Brown Committee which said that bus drivers have had a very raw deal. The combination of those points is such that we should now help the buses, as we are trying to do under new Clause 9. All the arguments are in favour of so doing. The arguments of safety, maintenance, peak road traffic, common use, 50 per cent. greater efficiency than using private cars—all those arguments are in favour of it.
  The Economic Secretary said that we are dealing with the problem in a partial way. He fails to recognise the fundamental importance of helping the transport system on to a sensible road. He fails to realise that what he has said cannot be supported at all. He said that the removal of the duty is not the right answer. We are simply saying—and I hope my hon. Friends and, indeed, those on the other side of the Committee who support us will carry their support into the Division Lobby—that the imposition of the duty, having regard

  509
  to all these circumstances, must be the wrong answer and we must, therefore, press for this Clause.
  Mr. A. Lewis: I thank you, Sir William, for calling me because I thought that probably I could not be seen in this corner of the Chamber. I should hate to think that my shadow had diminished to the extent that I could not be observed. As you will know, Sir William, I was in the Chamber before you vacated the Chair and Mr. Thomas took your place. I have not left the Chamber during the whole of the afternoon. I therefore felt that it was right to make a few comments, particularly in view of the fact that when the hon. Member for Ilford, North (Mr. Iremonger) was on his feet he asked Mr. Thomas to take note of the fact that his hon. Friend the member for Sevenoaks (Mr. J. Rodgers) would hope to catch the Chairman's eye, when the hon. Member for Sevenoaks had never been in the Chamber at all.
  The Chairman (Sir William Anstruther Gray): Order. I think it would be better if the hon. Member were to apply himself to the proposed new Clause that we are now debating.
  Mr. Lewis: Yes, Sir William. I was going on to deal with new Clauses 9, 36 and 38 which are being taken together in the light of the continued absence of hon. Members opposite. They make speeches here and in the country; they make promises, and then when it comes to implementing those promises they are conspicuous by their absence.
  The Economic Secretary has made no reference at all to the fact that one of the things that this fuel tax does is to increase the cost of living. It creates an inflationary spiral, it helps to increase wages and helps to depreciate the standard of living of the lower-paid workers. During yesterday's debate the Treasury Bench shed crocodile tears about old-age pensioners and those on limited incomes, whom, they said, they wanted to help. If these Clauses were accepted, the bus companies would be able to reduce their running costs, and possibly reduce their fares. That obviously would help old-age pensioners who use buses. It might also help the bus companies to institute a conces-
  510
  sionary fare system for old-age pensioners, which hon. Members opposite have voted against in the House. There is no point in the hon. Member for Gillingham (Mr. Burden) coming into the Chamber for a moment, laughing and sneering at one of my hon. Friends who said that not everyone has got a car. The hon. Member said "Almost everyone has", but, of course, old-age pensioners do not have cars.
  By accepting these new Clauses and by attempting at least to implement the promises that they have made over the years, the Government could commence to reduce the cost of living. They could reduce the fuel tax, which would help not only the bus industry but industry as a whole. The cement, brick and building industries have to pay this tax. Local authorities engaged in house building and school building have to pay large sums to building contractors. If those contractors could reduce their prices as a result of the abolition of this fuel tax, the local authorities' charges would be less. They would save money, and that would lead to a reduction in rates. That is another subject about which the Treasury Bench have shed crocodile rears.
  Sir W. Taylor: On a point of order, Sir William. Is it in order, in the context of this new Clause, to raise the subject of local rates?
  Mr. Lewis: Further to that point of order, Sir William. I am suggesting that acceptance of these new Clauses would bring about a reduction of the expenditure which local authorities have to meet. Instead of paying the tax, they would be able to save, and, therefore, having more money available, would no longer have to levy such high rates. Surely, even the hon. Member for Bradford, North can follow that. I was explaining that the Treasury Bench and the Tories generally have been shedding crocodile tears about local rates and saying that they would like them to be reduced. Here is a way to do something about it. As a result of the abolition of this fuel duty, local authorities would directly save enormous sums.
  One of the reasons why I am speaking is that my own local authority has asked me to put its view to the Com-

  511
  mittee. It supports these new Clauses because their adoption would mean an enormous saving for local authorities, which, in its turn, would enable them to reduce local rates. This applies in my own local authority area. It can and should apply to that which is temporarily represented by the hon. Member for Bradford, North. I was trying to explain to him that if he and his right hon. Friends would only fulfil the promises and pledges which they have made and which the Tories have made generally, local authorities would be able to bring down their rates and the cost of living would be reduced.
  I hope that the hon. Gentleman will listen to what I am saying. Otherwise, he may try to interject again and ask what the relevance of it is. Perhaps he has read in HANSARD or the newspapers that the Chancellor yesterday gave an answer to my hon. Friend the Member for Accrington (Mr. H. Hynd), who had very wisely and properly asked to what extent the Chancellor had implemented his promise to increase the purchasing power of the £. The right hon. Gentleman replied that the £ was worth 20s. in October, 1951, and had depreciated by April, 1964, to 13s. 6d.
  Perhaps you are wondering, Sir William, what this has got to do with the new Clause?
  The Chairman: The hon. Gentleman has spoken the words which were on the tip of my tongue.
  Mr. Lewis: I was about to explain, Sir William, that if the New Clauses were adopted, with the resulting reduction of industrial costs, there would be a reduction in the cost of living. With a reduction in the cost of living, of course, we should find that the purchasing power of the £ would go up. Instead of being 13s. 6d., it might begin to go back to 13s. 7d. or to 14s.
  The Chairman: The hon. Gentleman is stretching to the limit what is connected with the new Clauses which we are debating.
  Mr. Lewis: That would be the last thing I should wish to do, Sir William. I thought that you were about to suggest that I was streching Tory policy to make it appear that the Government really wanted the £ to be worth something. That I should not do. I am quite seriously putting the point that, if these four new Clauses were accepted and the fuel duty were abolished, there would be a great beneficial saving in various ways. According to the Minister's own figures, £32 million is attributable to the passenger bus service, £24 million to manufacturing industry and £11½ million to industry generally. There are some millions of pounds. If that amount could be remitted, those industries with which we are concerned, for instance, cement manufacturing and brick manufacturing, could charge so much less for their products.
  7.15 p.m.
  It is relevant to point out to the Chancellor that there is here a way of implementing at least one of his promises, that he would reduce the cost of living and make the £ worth something. I should not expect him to put it back to 20s., but I should like to see it start on the way back to something worth having. If he were to make a start on that, he would find that it would help him personally. It might even help to save his own seat, just as it would help to save the Economic Secretary's seat at the next election. When he replied, the Economic Secretary told us what he would do if he were holding the same office later. It is quite certain that his Government will not be there, but it is almost certain that he will not be there personally.
  Question put, That the Clause be read a Second time:—
  The Committee divided: Ayes 166, Noes 200.

  Division No. 104.]

  AYES

  [7.17 p.m.

  Abse, Leo

  Bennett, J. (Glasgow, Bridgeton)

  Chapman, Donald

  Ainsley, William

  Benson, Sir George

  Collick, Percy

  Allen, Scholefield (Crewe)

  Blackburn, F.

  Corbet, Mrs. Freda

  Awbery, Stan (Bristol, Central)

  Blyton, William

  Craddock, George (Bradford, S.)

  Bacon, Miss Alice

  Boston, T.

  Crosland, Anthony

  Barnett, Guy

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

  Crossman, R. H. S.

  Baxter, William (Stirlingshire, W.)

  Bowen, Roderic (Cardigan)

  Cullen, Mrs. Alice

  Beaney, Alan

  Bradley, Tom

  Dalyell, Tam

  Bence, Cyril

  Brockway, A. Fenner

  Davies, G. Elfed (Rhondda, E.)

  Benn, Anthony Wedgwood

  Carmichael, Neil

  Deer, George

  Delargy, Hugh

  Kenyon, Clifford

  Probert, Arthur

  Dempsey, James

  Key, Rt. Hon. C. W.

  Pursey, Cmdr. Harry

  Diamond, John

  King, Dr. Horace

  Randall, Harry

  Dodds, Norman

  Lawson, George

  Rankin, John

  Doig, Peter

  Lee, Frederick (Newton)

  Redhead, E. C.

  Donnelly, Desmond

  Lee, Miss Jennie (Cannock)

  Rees, Merlyn (Leeds, S.)

  Duffy, A. E. P. (Colne Valley)

  Lever, L. M. (Ardwick)

  Rhodes, H.

  Edelman, Maurice

  Lewis, Arthur (West Ham, N.)

  Roberts, Albert (Normanton)

  Edwards, Rt. Hon. Ness (Caerphilly)

  Loughlin, Charles

  Robertson, John (Paisley)

  Edwards, Robert (Bilston)

  Lubbock, Eric

  Robinson, Kenneth (St. Pancras, N.)

  Edwards, Walter (Stepney)

  Mabon, Dr. J. Dickson

  Rodgers, W T. (Stockton)

  Evans, Albert

  McBride, N.

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

  Fernyhough, E.

  MacColl, James

  Ross, William

  Finch, Harold

  MacDermot, Niall

  Shinwell Rt. Hon. E.

  Fitch, Alan

  Molnnes, James

  Short, Edward

  Fletcher, Eric

  McKay, John (Wallsend)

  Silkin, John

  Foot, Dingle (Ipswich)

  MacKenzie, J. G.

  Silverman, Julius (Aston)

  Fraser, Thomas (Hamilton)

  McLeavy, Frank

  Skeffington, Arthur

  Galpern, Sir Myer

  MacPherson, Malcolm

  Slater, Mrs. Harriet (Stoke, N.)

  Ginsburg, David

  Mallalieu, E. L. (Brigg)

  Slater, Joseph (Sedgefield)

  Gordon Walker, Rt. Hon. P. C.

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

  Small, William

  Gourlay, Harry

  Manuel, Archie

  Smith, Ellis (Stoke, S.)

  Griffiths, David (Rother Valley)

  Mapp, Charles

  Snow, Julian

  Griffiths, Rt. Hon. James (Llanelly)

  Mason, Roy

  Sorensen, R. W,

  Grimond, Rt. Hon. J.

  Meilish, R. J.

  Spriggs, Leslie

  Gunter, Ray

  Millan, Bruce

  Stones, William

  Hamilton, William (West Fife)

  Milne, Edward

  Symonds, J. B.

  Harper, Joseph

  Mitchison, G. R.

  Taylor, Bernard (Mansfield)

  Monslow, Walter

  Thomas, Iorwerth (Rhondda, W.)

  Henderson, Rt. Hn. Arthur (RwlyRegis)

  Moody, A. S.

  Thompson, Dr. Alan (Dunfermline)

  Herbison, Miss Margaret

  Morris, John (Aberavon)

  Thornton, Ernest

  Hilton, A. V.

  Moyle, Arthur

  Wade, Donald

  Holman, Percy

  Mulley, Frederick

  Wainwright, Edwin

  Holt, Arthur

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Hooson, H. E.

  Oliver, G. H.

  Warbey, William

  Houghton, Douglas

  O'Malley, B. K.

  Weitzman, David

  Hoy, James H.

  Oram, A. E.

  Wells, William (Walsall, N.)

  Hughes, Cledwyn (Anglesey)

  Oswald, Thomas

  Whitlock, William

  Hynd, John (Attercliffe)

  Owen, Will

  Wilkins, W. A.

  Janner, Sir Barnett

  Paget, R. T.

  Willey, Frederick

  Jay, Rt. Hon. Douglas

  Pannen, Charles (Leeds, W.)

  Williams, W. T. (Warrington)

  Jeger, George

  Pargiter, G. A.

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

  Jones, Dan (Burnley)

  Parker, John

  Woodburn, Rt. Hon. A.

  Jones, Elwyn (West Ham, S.)

  Pavitt, Laurence

  Woof, Robert

  Jones, J. Idwal (Wrexham)

  Pearson, Arthur (Pontypridd)

  Jones, T. W. (Merioneth)

  Pentland, Norman

  TELLERS FOR THE AYES:

  Kelley, Richard

  Prentice, R. E.

  Mr. Ifor Davies and Mr. Grey.

  NOES

  Agnew, Sir Peter

  Cooke, Robert

  Harrison, Col. Sir Harwood (Eye)

  Allason, James

  Costain, A. P.

  Harvey, Sir Arthur Vere (Macclesf'd)

  Atkins, Humphrey

  Coulson, Michael

  Harvey, John (Walthamstow, E.)

  Awdry, Daniel (Chippenham)

  Critchley, Julian

  Henderson, John (Cathcart)

  Barlow, Sir John

  Cunningham, Sir Knox

  Hiley, Joseph

  Barter, John

  Dalkeith, Earl of

  Hill, Mrs. Eveline (Wythenshawe)

  Batsford, Brian

  Dance, James

  Hirst, Geoffrey

  Bell, Ronald

  Deedes, Rt. Hon. W. F.

  Hobson, Rt. Hon. Sir John

  Berkeley, Humphry

  Donaldson, Cmdr. C. E. M.

  Holland, Philip

  Bevins, Rt. Hon. Reginald

  Doughty, Charles

  Hollingworth, John

  >Biffen, John

  Eden, Sir John

  Hope, Rt. Hon. Lord John

  Bingham, R. M.

  Elliot, Capt. Walter (Carshalton)

  Hornby, R. P.

  Birch, Rt. Hon. Nigel

  Emmet, Hon. Mrs. Evelyn

  Hornsby Smith, Rt. Hon. Dame P.

  Bishop, Sir Patrick

  Farey-Jones, F. W.

  Howard, John (Southampton, Test)

  Black, Sir Cyril

  Farr, John

  Hughes Hallett, Vice-Admiral John

  Bourne-Arton, A.

  Fisher, Nigel

  Hughes-Young, Michael

  Box, Donald

  Fletcher-Cooke, Charles

  Hutchison Michael Clark

  Boyd-Carpenter, Rt Hon. John

  Fraser, Ian (Plymouth, Sutton)

  Iremonger, T. L.

  Boyle, Rt. Hon. Sir Edward

  Gammans, Lady

  Irvine, Bryant Godman (Rye)

  Braine, Bernard

  Gardner, Edward

  James, David

  Brewis, John

  Gibson-Watt, David

  Johnson, Erie (Blackley)

  Brown, Alan (Tottenham)

  Giles, Rear-Admiral Morgan

  Johnson Smith, Geoffrey

  Browne, Percy (Torrington)

  Gilmour, Ian (Norfolk, Central)

  Jones, Rt. Hn. Aubrey (Hall Green)

  Bryan, Paul

  Gilmour, Sir John (East Fife)

  Kerans, Cdr. J. S.

  Buck, Antony

  Glover, Sir Douglas

  Kerby, Capt. Henry

  Bullard, Denys

  Kerr, Sir Hamilton

  Bullus, Wing Commander Eric

  Glyn, Dr. Alan (Clapham)

  Kershaw, Anthony

  Burden, F. A.

  Goodhart, Phlilp

  Kimball, Marcus

  Butler, Rt. Hn. R. A. (Saffron Walden)

  Goodhew, Victor

  Kirk, Peter

  Carr, Compton (Barons Court)

  Gower, Raymond

  Langford-Holt, Sir John

  Chichester-Clark, R.

  Green, Alan

  Leavey, J. A.

  Clark, Henry (Antrim, N.)

  Griffiths, Eldon (Bury St. Edmunds)

  Legge-Bourke, Sir Harry

  Clark, William (Nottingham, S.)

  Hamilton, Michael (Wellingborough)

  Lewis, Kenneth (Rutland)

  Clarke, Brig. Terence (Portsmth, W.)

  Harris, Frederic (Croydon, N. W.)

  Lilley, F. J. P.

  Cole, Norman

  Harris, Reader (Heston)

  Linstead, Sir Hugh

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  515

  Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfied)

  Osborne, Sir Cyril (Louth)

  Studholme, Sir Henry

  Lloyd, Rt. Hon. Selwyn (Wirral)

  Page, Graham (Crosby)

  Summer, Sir Spencer

  Longden, Gilbert

  Partridge, E.

  Tapsell, Peter

  Loveys, Walter H.

  Pearson, Frank (Clitheroe)

  Taylor, Sir Charles (Eastbourne)

  Lucas-Tooth, Sir Hugh

  Percival, Ian

  Taylor, Edwin (Bolton, E.)

  McAdden, Sir Stephen

  Pickthorn, Sir Kenneth

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

  MacArthur, Ian

  Pitt, Dame Edith

  Taylor, Sir William (Bradford, N.)

  Maclay, Rt. Hon. John

  Pounder, Rafton

  Teeling, Sir William

  Maclean, SirFitzroy (Bute&N. Ayrs)

  Powell, Rt. Hon. Enoch

  Temple, John M.

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

  Price, H. A. (Lewisham, W.)

  Thatcher, Mrs. Margaret

  McMaster, Stanley R.

  Prior, J. M. L.

  Thomas, Sir Leslie (Canterbury)

  Macmillan, Maurice (Halifax)

  Prior-Palmer, Brig. Sir Otho

  Thompson, Sir Richard (Croydon, S.)

  Maddan, Martin

  Proudfoot, Wilfred

  Turner, Colin

  Maginnis, John E.

  Pym, Francis

  Turton, Rt. Hon. R. H.

  Maitland, Sir John

  Redmayne, Rt. Hon. Martin

  van Straubenzee, W. R.

  Markham, Major Sir Frank

  Rees-Davies, W. R. (Isle of Thanet)

  Vaughan-Morgan, Rt. Hon. Sir John

  Marshall, Sir Douglas

  Renton, Rt. Hon. David

  Vickers, Miss Joan

  Mathew, Robert (Honlton)

  Roberts, Sir Peter (Heeley)

  Walder, David

  Matthews, Gordon (Meriden)

  Roots, William

  Walker, Peter

  Maude, Angus (Stratford-on-Avon)

  Ropner, Col. Sir Leonard

  Walker-Smith, Rt. Hon. Sir Derek

  Maudling, Rt. Hon. Reginald

  Sharples, Richard

  Ward, Dame Irene

  Mawby, Ray

  Shaw, M.

  Webster, David

  Maxwell-Hyslop, R. J.

  Shepherd, William

  Wells, John (Maidstone)

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

  Skeet, T. H. H.

  Whitelaw, William

  Mills, Stratton

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

  Williams, Paul (Sunderland, S.)

  Montgomery, Fergus

  Smyth, Rt. Hon. Brig. Sir John

  Wills, Sir Gerald (Bridgwater)

  More, Jasper (Ludlow)

  Soames, Rt. Hon. Christopher

  Wilson, Geoffrey (Truro)

  Morrison, Charlas (Devizes)

  Spearman, Sir Alexander

  Wise, A. R.

  Mott-Radelyffe, Sir Charles

  Stainton, Keith

  Wolrige-Gordon, Patrick

  Neave, Airey

  Stevens, Geoffrey

  Worsley, Marcus

  Nicholson, Sir Godfrey

  Steward, Harold (Stockport, S.)

  Nugent, Rt. Hon. Sir Richard

  Stoddart-Scott, Col. Sir Malcolm

  Osborn, John (Hallam)

  Storey, Sir Samuel

  TELLERS FOR THE NOES:

  Mr. McLaren and Mr. Hugh Rees.

  FINANCE BILL

    New Clause.—(INCOME TAX: ALLOWANCES ON COMMERCIAL BUILDINGS IN DEVELOPMENT DISTRICTS.)
    (1) Chapter I of Part X of the Income Tax Act 1952 (which relates to capital allowances for industrial buildings and structures) shall apply to capital expenditure incurred after the passing of this Act on the construction of a commercial building in a development district as it applies to the construction of an industrial building.
    (2) In this section a "commercial building" means a building constructed and to be occupied as a retail shop, showroom, hotel or office or for any purpose ancillary to the purposes of a retail shop, showroom, hotel or office; and section 38(5) of this Act shall apply for the purposes of this section as it applies for the purposes of that section.—[Mr. Millan.]
    Brought up, and read the First time.
    Mr. Bruce Millan: I beg to move, That the Clause be read a Second time.
    The purpose of this proposed new Clause is to give Income Tax capital allowances to commercial buildings which are built in development districts. I am not sure that it is always appreciated that, in normal circumstances, no capital allowances are allowed for anything other than industrial buildings. That means, in effect, that there are no capital allowances for shops, showrooms, hotel accommodation, office accommodation and the rest. This is one of the
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    peculiarities of very considerable standing of our Income Tax law.
    I do not wish on this occasion to argue the merits and demerits of the present situation, but I think that it is significant that both the Tucker Committee on the Taxation of Trading Profits, which reported in April, 1951, and the Royal Commission on the Taxation of Profits, which reported in 1955, came to the conclusion that this was an anomaly and that capital allowances should be given for commercial buildings as well as for industrial buildings. The new Clause does not go as far as that. As I say, there are obviously arguments on both sides when one is dealing with the general consideration. My own frank opinion is that it would be difficult to justify the rather considerable expense which would be involved in extending the whole range of capital allowances to non-industrial buildings.
    We are concerned in this new Clause with an argument, not about the general principle but about whether it would be desirable to make these capital allowances available for commercial development—shop development, office development and the rest—in scheduled development districts.
    Last year, a similar new Clause to this was discussed and turned down by

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    the Government. Many new Clauses of this sort are produced year after year and they are just as regularly turned down by the Government. I hope, however, that the arguments which the Government deploy this evening will not be confined simply to the arguments used last year. This, unfortunately, has been our experience on a number of other new Clauses which we have already discussed, but there have in this case been certain developments in the Government's thinking—rather tardy developments. They are now accepting things which we have pressed on them for a number of years, but, nevertheless, there have been these developments in the Government's thinking about office development over the last year in particular.
    There was a time when the Government poured scorn on any suggestion from this side of the Committee that, when one considered the dispersal of employment and the imbalance of employment opportunities in different parts of the country, office development was extremely important—in some ways just as important as industrial development. It is certainly becoming increasingly important as a higher percentage of the employed population become employed, not in production but in distribution and commerce.
    7.30 p.m.
    There was a time when the Government did not accept that argument and pretended that office development was, relatively speaking, completely unimportant. We on this side, for example, have urged that there should have been similar regulations concerning office development as already exist regarding industrial development certificates. That is another argument which is not covered directly by the new Clause, but it is consistent with the argument that we have previously used in putting forward the new Clause tonight.
    Over the past year, the Government have recognised the need to disperse office development, quite apart from other commercial development. We have had, for example, the Flemming Report on dispersal of Government offices. We have had the establishment of the Location of Offices Bureau and we have had the first major fruit of Government office
    518
    dispersal in their decision to transfer the Post Office Savings Bank to Glasgow. The Government have moved considerably from what was their position for so many years. Most important, however, we have had the publication of the South-East Study, a section of which, dealing with the London office problem, is a more eloquent condemnation of Government policy concerning offices than anything ever offered from this side of the Committee in any of our debates on the distribution of industry problem.
    The South-East Study gives figures, which I am not sure were ever published before in such detail, of the tremendous scale of the London office problem. I refer in particular to paragraph 9, on page 38, m a section headed "London employment and the office problem". The problem is now so great that a complete chapter in the South-East Study is devoted to it. Paragraph 9 on page 38 shows that
    "The war damage losses in the central area were quickly made up and by mid-1962 there was nearly 115 million square feet of office floor space in central London compared with the pre-war figure of 87 million square feet."
    The Study goes on to point out that there was at that time another 18 million sq. ft. under construction or for which planning permission had been received, and not only that, but that there were still office sites which were ripe for development. It concludes:
    "At a generous estimate "—
    despite all the tremendous development which had taken place up to the publication of the South-East Study—
    "of 150 square feet of floor space per office worker this means an extra 170,000 office jobs still to come."
    That is a conservative estimate of what is likely to happen over the next few years in the London area. It is not a problem only for the London area, because the South-East also is to some extent involved in the problem. The growth of office development in London is one of the major factors in the continuing attraction of London and the South-East area for industry and for population from other parts of the country.
    The new Clause would give certain financial incentives to developers who wish to develop office and other commercial premises out of the overcrowded areas of London and the South-East and in the development districts. I am con-

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    vinced that this kind of incentive would be a considerable attraction to development in the development districts and a considerable disincentive to development in London and the South-East.
    If we on this side had a completely free hand in the kind of new Clauses that we were able to move to the Finance Bill, and if it were possible for us to move new Clauses which had the effect of imposing a tax on office development in London and the South-East, doing it that way rather than giving special allowances for office development in the development districts, I would at least consider that that should be seriously examined. Naturally, I do not commit any of my hon. Friends whose names appear to the new Clause to that view. It is, however, my own view about the matter. But we are not able to do that, and it seems to me that the kind of proposals which we are making in the new Clause are an acceptable alternative.
    Last year, when the Government spokesman replied—I think that it was the present Minister of Health, who was then Economic Secretary to the Treasury—he produced an argument which was astounding even for a Treasury reply to Finance Bill debates. The argument was that it would be a bad thing to introduce discrimination. That was in 1963, in a debate on the Budget in which the Chancellor had introduced free depreciation for development districts. If that is not discrimination, I do not know what is. Only a year ago, however, the Government were arguing that the proposal which is contained in the new Clause would introduce an undesirable element of discrimination. I cannot believe that that is a serious argument and I credit the Chief Secretary to the Treasury with rather more subtlety of mind than to expect him to use a similar argument in refuting the new Clause this year. I do not believe that that is a serious argument or that the Treasury would accept it as a serious one.
    The other Government argument, which is more serious, is that this kind of discrimination is not required because we already give certain advantages to industry and to other private developers wishing to develop in the development districts. In particular, we had last year's
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    new arrangements for free depreciation and standard grants. In the first place, however, free depreciation applies exclusively to plant and machinery. Therefore, it does not affect building development, not even industrial development. Therefore, it is completely irrelevant to consideration of the new Clause. In the second place, standard grants are much more important from the point of view of industrial building than from the viewpoint of commercial and office building. That is because the standard grants which are payable under the Local Employment Act are subject to the condition that the expenditure of the money in question has to be justified in relation to the number of new jobs which are provided.
    It may be that large sums of Government money have been paid out in standard grants for commercial development. I simply do not know. The Board of Trade's annual reports on the operation of the Local Employment Act make no distinction between industrial and commercial building. In any event, the standard grants, which replace the previous building grants, have operated only for the last year. If the Government use the argument that the standard grants are an incentive to commercial development in the development districts, I hope that we will get figures from the Chief Secretary tonight showing the actual sums which have been paid out by way of standard building grants for commercial as distinct from industrial development. My suspicion, which is borne out by the experience that one has about individual applications for grants under the Local Employment Act, is that that Act deals much more with industrial than with commercial buildings. That is not a good reason in itself for rejecting the new Clause.
    We shall probably be told that the cost of the new Clause would be too much. We were told last year that if it were accepted as it stood the cost would be something like £24 million a year. I want just to put this point to the Chief Secretary. I do not know what figure he will quote tonight. It may well be the figure for this particular new Clause, but certainly I am myself, and I think my hon. Friends are, too, very much more concerned with getting the principle of discrimination applied here

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    than with the actual level of discrimination. At the present time we have investment allowances, for example, of 15 per cent. for industrial buildings, and we have, I think, an initial allowance of 5 per cent. and annual allowances of 4 per cent. It may be that it would be too much to give that scale of allowances for a new Clause of this sort, but I would be very much more concerned to have the Government accept the principle of making this discrimination than to have them accept a particular scale of allowances which are payable at the present time. I hope, therefore, that the Chief Secretary will not think that the figure he will quote of cost is the one which we on this side of the Commiltee would necessarily accept, because it is the principle of the thing with which we are very much more concerned.
    It does seem to me that this is a new Clause which does deserve serious consideration, and I hope the Government, even if they are not able to accept it in the terms in which it is now, will make sympathetic noises towards it, and give some indication that they may be willing to consider the principle of it. The fact is that despite everything which is being done by the Local Employment Act and by previous legislation there is still a tremendous imbalance of employment opportunity in different parts of the country. This is brought out every time the unemployment figures are published. This is particularly serious, of course, for certain sections of the employed population, particularly serious for young people leaving school.
    One of the most serious aspects of this is that in Scotland, in Glasgow, in other parts of the country which are development districts, there is imbalance of employment opportunity in offices and commercial employment. The imbalance is not just an imbalance in industry. In fact, as our economy develops and productive industry becomes more modernised and demands proportionately fewer workers, office and commercial development becomes more important in terms of employment. Unless, therefore, something really radical is done to stop this drift to the South, and this continuing increase in office and commercial development in London and the South-East, the imbalance of employment opportunities and the difficulty of solving unemployment problems in Scotland
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    and the North-East of England will continue unabated and will indeed grow worse over the years.
    From that point of view, and for the other reasons I have already adduced, I hope very much that the Committee will be able to accept this new Clause.
    Mr. Graham Page: I have the honour to represent a constituency which is in a development district but which is almost wholly commercial or residential and has, generally speaking, no industry in it at all. So I am particularly interested in this new Clause, because in my constituency we have the land, we have the space to develop for accommodating offices, and if we are to try to attract the offices of the big commercial firms and the offices of Government Departments we have got to have the improvement of the shops, the hotel accommodation, the showrooms, the storage and so on. Therefore, I believe that if capital allowances were granted for commercial development in such areas as this it would be just the right encouragement to cause the drift of employment not to the South or the South-East, as is happening now, but, in my case, to the North-West, to Mersey-side, where this type of job is badly needed.
    When capital allowances were first introduced—I think it was as long ago as 1945—they were introduced as a matter of policy. It was a policy decision, as I understand it, that capital allowances were to encourage the modernisation, expansion and re-equipment of our productive and manufacturing industries. Well, a policy decision is needed now—as the hon. Member for Glasgow, Craigton (Mr. Millan) said—to stop the drift to the South-East.
    For what is happening, for example, in the North-West and on Merseyside? We have been tremendously successful in resuscitating industry there. Fords, Vauxhall, others who have come to that district, have increased the number of industrial jobs very successfully by taking advantage of capital allowances for industry. But this is putting employment out of balance. We cannot have industrial expansion without three things happening—first, without creating a demand for more and better office space, more and better shops, showrooms, and

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    hotels. These naturally follow from industrial expansion. Secondly, we cannot have industrial expansion without bringing in commercial firms additional to the industrial firms.
    7.45 p.m.
    I do not mean just the office side of the industrial firms which come, but I mean additional commercial firms which provide employment for other members of the family. All the working members of the family cannot take industrial jobs. We have this anomaly at times, that we create more industrial jobs in an area but the percentage of unemployment there remains the same, because we are bringing in other members of the family who are not industrial workers. Thirdly, we cannot have industrial expansion without making the rebuilding of the town centres even more urgent than it is without the introduction of industry into the area. Therefore, commercial development is necessary in the development districts to stop the drift out of those districts as well as to provide for the drift into those districts brought about by industrial expansion there.
    Whether an allowance for commercial property at all is justified I would have thought is beyond question, whether it is in development districts or elsewhere. The Committee on the Taxation of Trading Profits recommended it in 1951; the Royal Commission on the Taxation of Profits and Income recommended it in 1955; and surely, had those Committees been sitting and recommending now, their recommendations would have been even stronger.
    Both offices and shops are faced at the present time with the Offices, Shops and Railway Premises Act. When they try to carry out the terms of that Act, I think that in the majority of cases in the older towns they will be able to do so only by rebuilding office premises and shop premises. The old ones cannot be patched up and yet there is, of course, a very great temptation to patch up the old buildings, the old offices, the old shops, with our tax laws as they are at present. The tax laws encourage patching up rather than rebuilding, particularly so in the development districts.
    Modern offices need more and more space for the men and machines which are being introduced into the offices. It
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    is not true to say that by introducing automation and machines into office work we need less space. Indeed, we need more space for introducing the machinery into the offices, and we are usually creating more jobs, eventually, by doing so. It is quite right that it should be so. The modern office needs more space and modern shops need more display and storage room for the variety of articles they sell. Again, under the Offices, Shops and Railway Premises Act there will be need for considerable rebuilding to make premises of the fireproof standard that the law now requires.
    The result of patching instead of rebuilding is a loss in taxation, I suggest, because when one is spending money in patching one can put a lot of that expenditure down to repairs and so avoid tax on that part at any rate. Furthermore, an old building will still be expensive to maintain in future if one is merely patching it, and one can set that maintenance against taxable income. Thus there is loss of taxation in the encouragement of patching rather than rebuilding. Incidentally, it is also a loss to local authorities because they do not get the increased rateable values of new buildings. Everything points, therefore, to encouraging new commercial building in development districts.
    In constituencies like mine, we get no benefit out of being in a development district because we get none of the allowances granted to industry. Yet obviously it must be a right policy to increase employment in that part of the district where office development is the right thing and not to make those who can take office employment travel many miles to other parts of the district in order to find jobs.
    The hon. Member for Craigton referred to the cost in loss of tax revenue. We must first take into account the loss of revenue in patching instead of rebuilding, but, apart from that, my right hon. Friend the Minister of Health, who was Financial Secretary at the time, said last year, in dealing with capital allowances for commercial property over the whole country, that the loss of revenue would rise to no less than £172 million a year. That seemed to me to be a rather shocking figure until I discovered later that it referred to the figure which would be reached in 25 years.

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    However, that point was not revealed in the course of the debate then, when we were led to believe that we were asking for a loss of revenue totalling £172 million a year.
    It is not right to take this 25 years ahead. Many things may happen before then and it is my contention anyway that to grant capital allowances in this way would increase production and, therefore, indirectly increase revenue. The figure for the first year for capital allowances for commercial development all over the country and not just in development districts would only be about £20 million I am not sure where the hon. Member for Craigton got his figure of £24 million. Perhaps that is the figure for 25 years hence.
    I do not know the figure for development districts alone. I should have to guess at a proportion of the £20 million. It might be a quarter of the commercial development of the country or even a half—£5 million or £10 million in the first year. It is a very small amount that we are talking about, but it is an important amount.
    I do not think that we can set this against other kinds of priorities. In last year's debate we were told that we must think of priorities. It is wrong, when talking of a loss of revenue of this sort through such a relief, to set it against possible reliefs to widows and disabled persons and others. They are very deserving, but when considering priorities they are a wrong comparison with a relief of a commercial kind—what I would call a productive rather than a social relief. After all, such a relief to commercial enterprise would increase the gross national product and thus increase the revenue.
    For these reasons I am sure that it is right to encourage the creation of employment in development districts. Great progress has been made with industrial jobs in these places, but now we want to get the balance right and attract commercial jobs there as well
    Mr. A. E. Oram: My principal reason for hoping that the Committee will accept the Clause is the same as that advanced by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and by the hon. Member for Crosby (Mr. Graham Page). I
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    believe it to be an essential additional weapon in the fight to encourage employment possibilities in development districts. Certain welcome steps were taken in last year's Budget. I believe this proposal to be in the same character and that it should be added to the instruments created then.
    The Clause would also represent an important breach in a wall of prejudice which I believe exists, certainly in the Treasury and several quarters of this House—a prejudice against distributive and commercial operations in comparison with manufacturing or productive operations judged from the point of view of public or social usefulness. At the moment, we enjoy capital allowances worked in such a way as to perpetuate the myth that factories are good, necessary and productive but that the distributive process is wasteful, unproductive and, at best, a rather necessary evil.
    My hon. Friend hoped that the Chief Secretary would not deploy exactly the same arguments as employed by the then Financial Secretary last year. My hon. Friend said that he relied on the greater subtlety of the Chief Secretary's mind. I admire subtlety, but I am less confident than my hon. Friend that we shall not have the same arguments trotted out again by the Government.
    One of the main arguments used last year was that it would be wrong to differentiate so sharply, as it were, between commercial undertakings in development districts and others outside them. Like my hon. Friend, I do not believe that to be an argument that can be sustained. If there is anything in that case, then it is just as wrong and illogical to attempt to differentiate between commercial buildings and industrial buildings in development districts.
    I believe it to be an economic myth that manpower and resources used in distributing goods are less usefully employed than manpower and resources used in a factory, yet under our present taxation advantages are given to industrial buildings as against commercial and distributive buildings.
    Let us take a pair of shoes as an example. That pair of shoes is of no use to a consumer all the time that it remains behind the factory door. A pair of shoes is of use only when in the customer's home. I can see no reason for giving a

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    tax advantage to the owner of a factory who wants to modernise his factory and withholding that tax advantage from a shopkeeper who wants to modernise the shop in which the shoes are sold.
    8.0 p.m.
    At the moment, the tax perpetuates a fallacy which, as we were reminded by the hon. Member for Crosby, dates back to the 1945 situation, when the then Chancellor of the Exchequer, Sir John Anderson, said:
    "It is productive or creative industry that provides in the main industrial employment and is the foundation of our national prosperity. It is the production of things and the export of things rather than the distribution at home of things that matter most in this connection."—[OFFICIAL REPORT, 14th March, 1945; Vol. 409, c. 259.]
    I believe that that was a fallacy then and that it is a fallacy now and that the tax advantage which was based on that argument in 1945 was wrong then and is wrong now.
    The most which can be argued in favour of it is that mentioned by the hon. Member for Crosby—that of priorities. In 1945, it was possible to argue that the first priority was the rehabilitation of factories rather than shops and that the tax advantage should therefore be given to factories as against shops But, nearly 20 years later, that argument no longer holds good. We should take this opportunity of removing this disadvantage from which commercial premises suffer. What cannot be argued is that there is some logical distinction between commercial and industrial premises, as is the present position which continues to be maintained by the Government.
    I therefore support the new Clause, not as going all the way which I would wish, but as an important step in the right direction. No doubt we shall be hearing about the enormous cost of giving this concession over the whole range of commercial buildings and the danger if this move is extended. I was interested to hear the hon. Member for Crosby say that it was possible that we had been misled about the extent to which there would be financial difficulties, and I shall be interested to hear the Treasury's reply. The Government would be well advised to accept the new Clause as at least a step in the right direction.
    Mr. Stanley R. McMaster: I, too, welcome the new Clause and I strongly agree with the hon. Member for Glasgow, Craigton (Mr. Millan), my hon. Friend the Member for Crosby (Mr. Graham Page) and the hon. Member for East Ham, South (Mr. Oram) that this is a matter to which the Government should give particular attention. As a representative from an area of particularly high unemployment in Northern Ireland, I am sure that if my right hon. Friend the Chief Secretary were to reconsider this matter, that would give great encouragement to the expansion of shops and offices in Northern Ireland, which would help to meet our unemployment problem.
    It is undoubtedly true that, as the prosperity of a country increases, there is a tendency to move more and more from secondary employment into tertiary employment, just as a hundred years ago people moved from primary production on the land, producing raw materials and food, into secondary employment. This is the mark of a civilised society and it is being accelerated by the growing use of automation and automatic methods of production in factories. With this trend, if we are to maintain high employment in the United Kingdom and to meet the special problems of areas such as the North-East, Scotland and Northern Ireland, we must encourage an even more rapid development of offices, whether they are used as shops, banks or insurance houses, or for any other purpose, including hotels. The people employed in these buildings make up an ever-growing proportion of the country's working population.
    Because of the anomalies of the present Income Tax Acts, which distinguish between shops and offices and factories, we have a situation in which the anomaly is most noticed when a factory has office premises attached to it. If a factory is rebuilt, or if a new factory is built, and some of the buildings are used partly for production and partly for offices, there then arises the problem about what investment allowances or Income Tax allowances can be given on the office or any portion of the premises. I know from complaints from my constituents that this can give rise to difficult tax problems. If the Clause were

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    accepted, at least that anomaly could be overcome.
    The other commercial premises I have mentioned, insurance offices and the banks, all contribute to the wealth and prosperity of the country, providing services for the people not only of this country but abroad, services which add to our exports. We call them "invisible exports", but they nevertheless help our balance of trade.
    I therefore support the idea behind the Clause. It would help us in Northern Ireland., and I ask my right hon. Friend to consider a basic change of Government policy along these lines, a change involving the use of Income Tax to encourage employment in development districts in a more positive way than it has been used before.
    Two or three years ago, when the regulators were being debated, I introduced an Amendment to exclude Northern Ireland. I hoped in this way to use the tax system to encourage the creation of employment in areas affected by high unemployment. Here we have another way in which our Income Tax laws can be used deliberately and positively to help such areas. For a short period, less tax would be gathered from these areas, but one would hope that the policy being successful would rapidly lead to full employment in the areas, so that the need for the differentiation would disappear. The gross national product would increase, the taxable income of the areas would also increase and the country as a whole would benefit from the Government's foresight.
    I should like to ask my right hon. Friend to consider this idea between now and Report. The wording of the Clause would not be acceptable to me because it does not make a particular mention of Northern Ireland, but if the Government accepted the idea, it could be redrafted. I do not necessarily want my hon. Friend to give a reply tonight, but I should like him to consider these matters with a view to dealing with them at some later stage.
    Mr. James Dempsey: Any effort aimed at attracting employment to the development areas is worth supporting, and this new Clause has that as one of its objects. The Minister's indication that the Government are prepared to associate themselves with the principle of the new
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    Clause would be welcomed on both sides of the Committee. If he considers the problem in the development areas, the right hon. Gentleman will appreciate the very deep moving reasons why hon. Members from these parts of the United Kingdom support new Clauses of this nature.
    I represent a Scottish constituency which always has a hard core of unemployment. In reply to a Question recently, the Minister of Labour said that 5·2 per cent. of the insurable population of my constituency were unemployed. Nearly 10,000 people in Lanarkshire are unemployed. The right hon. Gentleman will appreciate why I would support a new Clause offering financial inducements to commerce and the establishment of offices and administrative premises.
    We are very happy at the moment to have the electronics, heavy steel and other industries coming into the area, but we need a similar development of commercial enterprises. The obvious aim of all wise economic planning is to attempt to have balanced enterprise, balanced Industries and balanced employment opportunities. In this respect we are rather sadly wanting, because, apart from the restrictive services for the needs of ordinary shopping, there is no spectacular provision of this type of enterprise in my part or many other parts of Lanarkshire.
    I have a great deal of sympathy with the hon. Member for Belfast, East (Mr. McMaster) in this matter. We have in Scotland school leavers who are interested in commercialised development, in office studies, in accountancy, in the development and control of stocks and finances and in the wider field of administration, but there is very little opportunity for them to employ those talents because of the lack of this type of employment development in our localities. If this new Clause can help to obviate this, then in my view it is well worth while supporting it.
    It is always remarkable to me that when we study the ordinary day-to-day commodities supplied by retail shops in provincial towns we find that if one wishes to place orders with a company one has to do so by writing to its headquarters in the Midlands, London or the South of England. I know of one par-

    531
    ticular commodity for which there is one of the largest sales in the shops, yet one has to write to the headquarters in the Midlands to discuss the purchase of this commodity, the price, the sale of it and the conditions under which it may be displayed.
    The Temporary Chairman (Sir John Arbuthnot): Will the hon. Gentleman relate what he is saying to the new Clause which deals with Income Tax allowance on commercial buildings?
    Mr. Dempsey: That is just what I am doing. We sell these goods and commodities in my part of the country, but in order to deal with this type of problem we are required to make representations to someone in the Midlands or the South of England. The purpose of this new Clause is to give that type of proprietor a financial inducement to establish his administrative headquarters in places like North Lanarkshire which is a development area. If we can attract commercial developments of this nature, then we certainly can provide a much wider scope of employment and opportunity for our people.
    This may seem unimportant to the Minister or the Government, but just a year ago we received the shocking news that in North Lanarkshire at this particular time, which is the school leaving period in Scotland, there were 33 school leavers for every job. That is a disgraceful state of affairs when we know that in the Midlands there are five jobs for every school leaver. This position could be very well reversed were these opportunities, which are provided for commercial undertakings in the Midlands, transferred to places like North Lanarkshire and other development areas within Scotland. I am making a plea not only for my constituency but for Scotland in general.
    For years we have been agitating against the deep-rooted tradition, almost a symbolism of suspicion, about establishing commercial enterprises in Scotland. I feel that the movement of the Post Office, for example, has helped to break down this prejudice against central administration providing commercial buildings and employment in Scotland for the administration of enterprises throughout the United Kingdom. It is
    532
    for that reason that I am supporting this new Clause, because I believe if we can succeed in doing that we shall help to redress the serious unemployment problem which exists in those parts of the country.
    8.15 p.m.
    I speak as an ex-shop assistant. On many occasions when I want to deal with a single patented article I find that the commercial headquarters are in the Midlands. It seems to me that there is no reason why all these buildings should be concentrated in the Midlands or in London. They do not have an exclusive monopoly, for example, of efficiency in administration. We can quite easily say that in Scotland we have the material, the brains, the tradition, the skill and the organisation to play our part in the commercial enterprise development of the nation. All we ask is to be given the opportunity. That opportunity could be provided if there was a more equitable distribution of the commercial empires which are established in the South and if not only Scotland but the other development areas in the country were given their share.
    There is no need for me to say that I represent a constituency which would welcome such commercial buildings coming into its midst. We should be very happy to see that because it would certainly help to reduce the present unemployment figures in my constituency. If there is one effective way of inducing commercial buildings or commercial enterprise to come to development areas like mine and other parts of Scotland, it is by financial inducement, and that is the intent of this new Clause.
    We have read, for example, that industry has been induced to provide employment in the development areas. But the distributive trades provide employment. Office provision provides employment. It provides employment for clerks, costing clerks and sales control staff. It can provide an abundance of opportunities for jobs in the development areas. That is why a financial inducement of this nature could, in my view, help to achieve that balanced type of employment for which we strive. What I do not understand is the argument of the Chancellor that this form of tax allowance would mean a deficit and that

    533
    we should require to find some alternative source of revenue to meet it.
    If by spending this money we can induce people to build new offices in our area, to bring in large retail administrative enterprises and to put up large fashion shops with magnificent showrooms and arcades as embellishments, we shall put to work thousands of people who at the moment are unemployed. They would thus be in a position to pay Income Tax, instead of having to rely on the State for benefits and other forms of subsistence, and there would not be the severe loss of revenue to which reference has been made by hon. Members on both sides of the Committee.
    Many sites are available in my constituency, and nothing would be finer than to see office accommodation rising on them. Such buildings would not only grace the town, but would give it an additional civic pride. Further, they would help the local rating authority, which at the moment is overburdened, by providing more revenue by way of rates. It is because the provision of such facilities would enable us to look forward to more jobs, to more money from the rates, to greater civic development and to a diminution of unemployment that I ask the Minister to accept the principle of the new Clause.
    Mr. E. G. Willis: I wish to make one or two points in this debate which began with the excellent speech of my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) who covered the ground very well indeed. All that we can hope to do is to supplement what he said.
    I start from the fact that I believe in discrimination if we are to distribute employment throughout the country in the way in which we feel it should be distributed. The Government have gone some way towards accepting that principle. It has taken a long time to persuade them to accept the principle wholeheartedly. In the last year or two they have done so in relation to industry, but not with regard to other forms of employment.
    As has been said, these other forms of employment are becoming increasingly important. My hon. Friend the Member for Coatbridge and Airdrie
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    (Mr. Dempsey) pointed out that we need office employment in Scotland. I have been interested in this subject for some time, and on one occasion I introduced a Private Member's Bill dealing with the matter. We need much more than we are getting. We need to provide varying kinds of employment, not only because of the present unemployment situation, but because we are losing office employment.
    Offhand I can think of two firms in Scotland which have been taken over. One firm employed quite a large staff, the other a slightly smaller number, and all those people transferred to the South. That is what happens every time a business in Scotland is taken over, or there is an amalgamation. The worst feature of the present situation is that the best jobs are always moved south, with the result that the opportunities available in the area for ambitious people are reduced, and they in turn have to move south to look for the better jobs. We need a far greater proportion of the increased office employment than we are getting at the moment, and anything that will help to provide that has my support.
    I think that we ought to provide new shops in development districts. One of the curses of development districts is that the shops are situated in older properties. There is nothing wrong with the shops themselves, but they simply do not attract people. We hear a lot of talk about the amenities of industrial districts, about the attractions of those districts, and about the fact that wives do not like to go to certain areas. One reason for that is that many of these service amenities need refurbishing. We need new shops, and better display rooms in these areas. We need to make them attractive to industrialists. Part of the difficulty of attracting industry to these areas is that they are not always attractive to people who have not lived there all their lives. We ought to do all that we can to make these areas attractive, and I think that the new Clause would help us to do that.
    Nobody has referred to the part played by hotels in the development districts. No matter what we do, the tourist industry will probably be the most important industry in at least half the area of

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    Scotland, and hotels are essential amenities for such an industry. We need modern hotels in these areas. I do not think that a new hotel has been built in Edinburgh for many years, and that is true of many parts of Scotland. The hotels there are old and have many of the inconveniences which one associates with hotels built at the end of the Victorian era. Many hoteliers in Edinburgh have tried to modernise their hotels, and have done so successfully, but this is an expensive and difficult business in the Highlands. If we want to develop the tourist industry in Scotland, we must provide not only hotels, but a vast number of other amenities; in many cases amenities of a commercial nature. There is a report in the Scottish Press today of what one person intends to do. It gives an indication of the kind of things that ought to be done, and the Clause would help in that direction.
    Reference has been made to cost, I do not intend to discuss this at any length, but it seems to me that the essential point is that the cost element must be weighed against the number of additional jobs that are likely to be provided, and also against the social purposes that it achieves. At one time, under the Local Employment Act, it cost £1,000 to provide one new job. I think that it now costs about £500 per new job. If that is what we are prepared to pay for jobs in industry, surely we ought to be prepared to pay for jobs in other forms of employment. The cost, whether it be a few millions as suggested by the hon. Member for Crosby (Mr. Graham Page), or the figure suggested by one of my hon. Friends, has to be measured against the number of job opportunities that it creates, against the social purposes that it serves, and also against the side effects of making areas more attractive for the industrialists whom we wish to bring to those areas.
    There has been a lot of discussion about the move of the Post Office Savings Bank to Glasgow. The lack of amenities has been mentioned as one of the reasons for not making this move. But this is not true of Glasgow. There are some industrial areas of which it may be true, however, and we must try to get over the difficulties there.
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    I hope that I have not taken too long. I have tried to confine my remarks to points which have not been made, and which I think are of importance. The Clause is very important for development districts, whether in Scotland or elsewhere, because we need to provide this kind of employment and development there if we are to be successful in properly distributing industry and employment.
    8.30 p.m.
    Mr. Bence: I want to make a point which has not so far been made, except as an aside, by the hon. Member for Belfast, East (Mr. McMaster) and one of his hon. Friends, and also by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey). The point concerns commercial premises as related to industrial properties. In the older parts of the country it is upsetting to come across excellent industrial plant which is not serviced by adequate commercial premises. There are many such areas in Scotland, the North-East and Northern Ireland. One can go to excellent manufacturing units in these areas, but if one wants to see really efficient display and handling by technically efficient sales forces one has to go to London.
    I know of a big plant in the Midlands around which potential buyers have been shown, but its best display centre is in London. That is quite wrong. When we try to induce manufacturers to go to development districts we ought also to provide some inducement for adequate commercial and display centres to go with them, together with a technically efficient sales force, so that the potential buyer can get all his information and make his contacts there, rather than having to go to London.
    Anyone who visits Glasgow, Edinburgh or Aberdeen is struck by the excellent commercial properties which have been built in the last century. I defy anyone to deny that Glasgow and Edinburgh, in particular, can boast of shopping and display premises, dealing with every kind of manufactured article, equal to anything in London, with the exception of some of the bigger stores in Regent Street. But most of those properties were built in the last century. Owing to the high cost of capital construction and the heavy unemployment

    537
    in these areas it is very doubtful whether, in the creation of new amenities and properties, the fine architecture of the last century will be repeated, unless we provide the same inducement for commercial as for industrial properties.
    Some of the new factories which have been built in these areas are magnificent buildings. That is because we have provided inducements for their building. But it is also important to have good commercial premises, especially hotels. Hon. Members on both sides of the Committee accept the need for discrimination. We should extend that discrimination in this direction, so that more commercial properties are provided in our development districts, to which buyers from all over the world can come and examine the various products in the sort of environment that one would expect in this modern age.
    Time and time again we receive complaints about the insularity of the British. We produce goods excellently, but we are rotten salesmen. Time and again we have been told that we cannot compete with the Germans and with other nations in displaying and selling our products. In these development districts we have a chance to increase the number of premises and showrooms attached to our modern industrial plant, thereby encouraging manufacturers to display their products better and to sell them more efficiently, and so enabling us to compete with the rest of the world.
    The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter): In the course of the debate there has been general agreement about the value of diversification of employment in the development areas. I was particularly interested in what the hon. Member for Glasgow, Craigton (Mr. Millan) said in that context about the dispersal of the work of Government Departments from Central London. I join issue with him, however, when he suggests that this is a new development in our policy.
    It is true that last year we took an additional initiative, in the appointment of Sir Gilbert Fleming to undertake a review of the whole work of the Central Government machine and to advise us on what could usefully and without loss of efficiency be moved from London,
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    but our action in doing so followed a whole series of measures to this effect, and I would not like to leave the Committee under the impression that the initiative, with which I was concerned last year, was a completely new aspect of Government policy. It amounted to an intensification of it, as I think the hon. Member would agree, and should not be allowed to reflect upon the action already taken in the last eight or ten years in that direction.
    I want to pick up the remarks made by the hon. Member for Edinburgh, East (Mr. Willis). He reiterated three or four times the argument that the best jobs go south. I do not know whether or not that is true. What is true is that many Scotsmen come south and take the best jobs in England.
    Mr. Williis: That is the only way they can get the jobs.
    Mr. Boyd-Carpenter: I am sure that the Committee will agree that that is a great advantage to this country. We need not look further than this House to find extremely good examples of that fact.
    The new Clause would mean a radical change in the present pattern of capital allowances. The proposal contained in the Clause, which was clearly explained by the hon. Member for Craigton, is to apply to commercial buildings in development areas the allowances which at present apply to industrial buildings throughout the country. At present there is no discrimination between development areas and the rest of the country in respect of buildings; the discrimination which my right hon. Friend introduced last year in respect of free depreciation relates to plant and machinery situated in development areas.
    To extend this to buildings would have a curious effect on the pattern of the allowances. The Clause would leave the position in respect of industrial buildings exactly as it is now, with the same allowances being made inside and outside development areas: but, in respect of commercial buildings, whereas there would continue to be no allowances of this kind outside development areas, they would be introduced in development areas. We should get a situation which was the same inside and out for industrial buildings, but there would be very

    539
    striking discrimination in respect of commercial buildings because there would be allowances inside and no allowances at all outside.
    The fact that it would distort the system is not, obviously, a conclusive reason why the Committee should reject the proposal, but I think it is a reason why we should seek to test it very sharply and clearly. The proposal goes a very long way. I thought that I read into the speech of the hon. Member for Craigton some doubt whether it did not go too far. It would apply not only to annual allowances, which over the years have been urged in respect of commercial buildings, but also to initial and investment allowances. In the first year it would come to an allowance of 24 per cent. There has been some discussion about the cost. In the first year, for reasons which I think are obvious to the Committee, the cost would be negligible, but over a period of four or five years—here I reply to the question put by one hon. Member as to the time the cost would take to develop—from the negligible figure of the first year it would rise to the substantial figure of £37 million a year. That is so substantial a figure that I think we should look somewhat critically into the question whether it would be likely to achieve the result about which I think one or two hon. Members were somewhat over-optimistic.
    Mr. McMaster: I feel that my right hon. Friend is dwelling a little too much on technicalities. Surely we could have commercial buildings throughout the country treated in the same way as industrial buildings. The free depreciation measures introduced last year could apply to development districts in respect of commercial buildings. That would be quite easy, and would meet the last point raised. It would also achieve the purposes of this proposition.
    Mr. Boyd-Carpenter: It might be quite easy, but it is not the proposal before the Committee, and I must tell my hon. Friend that obviously it would be enormously more expensive than the proposal which is before the Committee.
    I hope that my hon. Friend will not feel that I am dwelling on technicalities, except from the point of view that any
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    change in the system of Income Tax allowances involves technicalities. It might be said that the whole system is one of technicalities, and the Committee cannot judge the merits of a proposal of this kind without having in mind the effect of what my hon. Friend calls the technicalities of such a change.
    I hope that my hon. Friend will not think me discourteous if at this stage I do not—I might be doubtfully in order if I did—proceed to deal with the proposition which he put but confine myself to the proposition in the new Clause. I would say to my hon. Friend that his own proposal struck me—though I hesitate to make a calculation off the cuff—as one which would cost very large sums indeed. For that reason alone it is one about which I would hesitate to make even what one hon. Member called "sympathetic noises".
    The hon. Member for East Ham, South (Mr. Oram) said that there was a kind of prejudice against commerce and commercial processes compared with industry and industrial processes. If there is any prejudice, I certainly do not share it. I often think that in this country we do not sufficiently appreciate, for example, the vast contribution made to our well-being and balance of payments by the operations conducted in offices in the City of London, so that the hon. Member does not need to convert me. On the other hand, when we come to the issue of Income Tax allowances, it is quite plain that the case for applying them to commercial property is very different from the case for applying them to industrial buildings, and still more, perhaps, to industrial plant. There are differences of subject matter.
    Generally speaking, commercial property has a longer life than industrial property. In many cases, far from diminishing in value over the years its value appreciates. Taking the country as a whole and looking at the issue broadly, these initial and investment allowances are, of course, a specific incentive to the provision of additional plant and factories. Looking at the country as a whole, I do not think there is the same reason to give an incentive for additional offices, to take the example of what would be the major recipient of the benefits of this new Clause—
    Mr. Oram: If the right hon. Gentleman thinks, not in terms of offices but of shops, is it not the case that over the last decade we have virtually passed through a revolution in shopping? The suggestion that shops have a long life and appreciate in value does not necessarily square with the fact that radical changes have had to be made by commercial operators in shopping.
    8.45 p.m.
    Mr. Boyd-Carpenter: The hon. Member is perhaps giving me my other point. I do not think, looking round the country, that there is a need to provide additional incentive to stimulate the provision of shop premises. Investment in that direction has been very high in recent years, largely for the reason to which he referred, the great improvements in the methods of distribution which have been taking place.
    The question arises as to whether we would achieve objects proportionate to the cost, as the proposers of this Clause suggest, by applying this system to the development areas. Frankly, I very much doubt it. The hon. Member for Craigton referred to the Location of Offices Bureau and the work it does. It is very clear that, although it is having considerable success in its first objective of securing dispersal of offices from the centre of London, it has had the experience that a great many of those offices, for practical reasons which have nothing to do with building costs, are not able to move more than perhaps 50 or 60 miles from central London. I do not think those reasons would be altered in the slightest by the introduction of this allowance or that they would be induced to go to the development areas.
    The main recipients of this additional benefit would be the people who will build commercial premises in the development areas anyway. I very much doubt whether in those circumstances a change of this sort, not only with the distortion of the system of tax allowance it would involve but with the not inconsiderable expenditure to which I have referred, would be justified.
    Mr. McMaster: I am very much obliged to my right hon. Friend for giving way twice to me, but one thing
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    he has left out, which was mentioned by hon. Members on both sides of the Committee, is hotels. Does he not consider that there is a need, in particular in the development areas such as those in Scotland and Northern Ireland, for new hotels, and the cost of providing them is prohibitive? There is a great similarity in running hotels and running industry. There is a good case for the allowance to be extended to hotels.
    Mr. Boyd-Carpenter: If my hon. Friend is right about that—and I am by no means certain that he is—this new Clause is an enormous steam hammer to crack a nut of rather limited size. On the subject of hotels, I thought the hon. Member for Edinburgh, East was rather unfair to the magnificent hotel accommodation of Edinburgh.
    Mr. Willis: I raised the question of hoteliers in Edinburgh. In relation to the Edinburgh Festival and tourism generally, they have done a magnificent job. What I said was that there has not been a new hotel built in Edinburgh since the end of the war. There may be one in the next few months. Most of the good job which has been done by the hoteliers has been done in a period which had a great many inconveniences.
    Mr. Boyd-Carpenter: The hon. Member has perhaps been very fair to the hoteliers of Edinburgh. I think they are extremely good—
    Mr. Willis: So do I, and I want to help them.
    Mr. Boyd-Carpenter:—but if the hon. Member accepts that, the argument that we have to introduce a special allowance to provide adequate hotel accommodation in Edinburgh is so much the weaker.
    Mr. Willis: I should have thought it was stronger.
    Mr. Boyd-Carpenter: I therefore do not think that this general Clause is the right method of dealing with this problem.
    The Committee may then ask what I think is the right method of dealing with the problem, and in this respect I think that the proper and much more selective instrument is the one that has already been referred to—the standard grant from the Board of Trade. I can confirm that the Board of Trade has full authority to

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    make this grant in respect of commercial buildings on the same criteria as to the provision of employment as in respect of industrial property. This is an instrument which can deal with the difficult individual case—it may be the sort of case that my hon. Friend the Member for Belfast, East (Mr. McMaster) has in mind—far more selectively and, I think, far more efficiently than a tax change over the whole range of commercial buildings in the development areas.
    I understand from the Board of Trade that not only has it the power, but that it has used the power. The Department will go further, and say that when, for example, an industrial development is taking place, it takes into account in respect of grant, the amount of employment provided in the administrative and other offices associated with the industrial development.
    It seems to me that from the point of view of the diversification of employment in the development areas, other methods than those we have been discussing are really more appropriate, and I must say to the Committee that I am extremely sceptical as to the amount of extra commercial building we would get by applying the provisions of this Clause to the development areas.
    Mr. Millan: The Chief Secretary will remember that I asked whether he could give figures for Board of Trade standard grants to commercial premises. He has now mentioned administrative buildings associated with industrial developments, but that is rather a different thing. I was thinking of specifically commercial developments, office employment, provision of hotel accommodation, and so on. I said that I thought that any assistance, if any, that has been given in Scotland, for example, must have been very small. If the right hon. Gentleman has figures to refute that idea, perhaps he will let the Committee have them.
    Mr. Boyd-Carpenter: No, I do not have the figures. What I have just given is the information that I was given by the Board of Trade in response to an inquiry I put to that Department after hearing the hon. Gentleman's question. I was anxious to give him such information as I could, but in the time available—perhaps not unconnected with the
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    hour of the evening—that is all the information I could obtain.
    Coming back to the issue, I am extremely sceptical whether there would be any additional commercial building as a result of this proposal. What is clear is that a building that was to take place in any case, and those who were undertaking it, would benefit. That seems to me a somewhat doubtful direction in which to apply a substantial additional sum of public money. It does not seem to me to amount to sufficient grounds to alter the carefully considered arrangements in respect of Income Tax allowances that at present subsist. In those circumstances, although I am very far from differing with hon. Members opposite in their objectives, I cannot advise the Committee to accept the new Clause.
    Mr. Douglas Houghton: The verdict of the Committee on this new Clause will rest on an economic assessment, because we are not dealing with tax concessions in conventional form. If I may comment at once on the Chief Secretary's estimate of cost, I would say to him that the cost to the Exchequer in taxation reliefs will be strictly in ratio to the amount of development that takes place in consequence of the inducement offered.
    Mr. Boyd-Carpenter: I think that the hon. Gentleman is under a misunderstanding there. Under this proposal, development that was to take place in any case, and not as a consequence of the inducement offered, would benefit equally with new development.
    Mr. Houghton: I fully understand that, but that is the case in all investment allowances for industrial building, for plant and machinery and, indeed, in the use of the additional encouragement of free depreciation. All these things in some degree will go towards development, re-equipment and replacement which would have taken place anyhow. Therefore there is no distinction in that particular respect between this proposal and the investment allowances now in operation. I therefore can only say that in general the cost to the Exchequer would be in strict proportion to the amount of development that took place.
    All that the right hon. Gentleman is shaking his head about is how much

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    of that development would have taken place anyhow. He does not know and I do not know, but what we both know is that the cost to the Exchequer would be related to the amount of development in these areas. If a certain amount of development did not take place it would not cost the Exchequer as much as the right hon. Gentleman estimates. If it did take place one could assume that desirable results would flow in the provision of employment, the giving of a better balance to the activities of these areas, and in making their future more assured. This is the purpose of the new Clause.
    This is not a fiscal Clause in a strict sense at all. Its purpose is to provide jobs not only in the short term but also in the long term. The ultimate purpose of all the steps which the Government have taken, and this would be an additional one, in regard to the development districts is to retrieve the position which lamentably has been allowed to go on for some time, with the drift and deterioration in these areas. The purpose would be to restore them to their earlier prosperity, to re-invigorate them, to introduce new industries, and to provide a firm base for their economic, social and municipal future.
    Would the Clause help towards that end? If it would, it is worth while considering even though it might be regarded as costly to the Exchequer. Many things are costly to the Exchequer, but if the social or economic purpose is achieved the cost can be easily borne because the results will well repay the money which the Revenue is asked to give up.
    The right hon. Gentleman also mentioned the length of life of commercial buildings as compared with industrial buildings. I know that it has been thought in the past that commercial buildings have a longer life. Industrial buildings, and more especially industrial plant, become out of date. They do not properly accommodate new techniques and new machinery. They often have to be pulled about or pulled down and fresh factories have to be put up.
    I think that commercial buildings will find themselves under similar stress in the future, because in many cases new techniques of commercial activity and new types of operations will require
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    different kinds of accommodation. Moreover, I believe that we shall have much more replacement of obsolete buildings of all kinds. I do not think that we shall go on building offices which will last for the next 100 years. I believe that in this country, as in the United States, we shall be building, pulling down, and rebuilding after periods of decades and we shall not have, as in the past, buildings lasting far too long, outliving their usefulness and in many cases providing office slums which should have been demolished and replaced long since. I think that the contrast which the right hon. Gentleman has drawn between the length of life of industrial buildings and of commercial buildings is likely to diminish.
    9.0 p.m.
    The main purpose of this Clause is to get people to go to the development districts with their offices and commercial activities, and provide jobs and ancillary services for an increased population. The right hon. Gentleman drew attention to the fact that the location of offices organisation is finding difficulty in persuading people to go far afield. They go 25, 30 or 50 miles from London but for good reasons, so the right hon. Gentleman says, they are not induced to go further. We want to induce them to go further. We want to break down their resistance to going further. If that resistance could be broken down, many of them would find that the inconveniences of being further away from London would be much smaller than they feared.
    Let us concede to the Government that they are providing striking examples of long-distance dispersal of Government staffs already. The first computer centre for the Inland Revenue will be in Scotland. Work has been shifted in bulk from London to Liverpool, Bootle, Bradford and Manchester, and other areas are receiving depots, so to speak, for work which hitherto has been done in London.
    I should like to refer to the case of the London-Provincial tax office which is doing a substantial proportion of London Pay-As-You-Earn. Provision has been made for the taxpayer to telephone this office from London at the price of a London call, which gives him the con-

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    venience of an office round the corner so far as telephone communication is concerned. He can have a consultation with his local office by the transfer of papers to the London office for this purpose. This is how the Inland Revenue can overcome difficulties which probably would cause many industrial firms to hesitate about undertaking a longdistance move of that kind. We want to encourage this sort of thing, and the Clause is designed to do it.
    The right hon. Gentleman says that this is not the best way of doing it. What is the other way? The other way is for the Board of Trade to carry on with its work under the Local Employment Acts. We want to reinforce all existing inducements and provisions. The need is desperate, especially in Scotland and Northern Ireland. These inducements that we seek to provide in the new Clause would be additional to those already existing, and would provide inducements to those who may not, for various reasons, qualify for a grant from the Board of Trade. In that sense, I should have thought that the right hon. Gentleman would have welcomed the new Clause.
    The discrimination involved here has already been conceded in principle last year. It is true, as the right hon. Gentleman says, that investment allowances in the development districts for commercial buildings would be higher—indeed, they would be the only places
    where there were investment allowances for commercial buildings—whereas for industrial premises the investment allowances would be uniform throughout the country.
    One form of discrimination is not necessarily bad because it differs from another. Many of the arguments of the right hon. Gentleman were being used two years ago, when we were pressing for discriminatory tax reliefs in the development districts and when the Chancellor of the Exchequer was turning them down. We urged free depreciation upon the Chancellor. Two years ago he found all the reasons in the world for refusing it. We voted on it and lost on it. The following year the Chancellor introduced free depreciation. If the Government could hope for another year of life, which of course they cannot, I am sure that this or a similar Clause would make its appearance in the Finance Bill next year. As it is, the right hon. Gentleman is leaving it to us to remedy his own deficiencies, his own lack of judgment and his own lack of imagination. I hope that my hon. and right hon. Friends will support the new Clause because it represents really what the right hon. Gentleman should be doing. We shall be looking at this matter very carefully this time next year.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 156, Noes 205.

    Division No. 105.]

    AYES

    [9.5 p.m.

    Ainsley, William

    Davies, G. Elfed (Rhondda, E.)

    Hamilton, William (West Fife)

    Allen, Scholefield (Crewe)

    Davies, Ifor (Gower)

    Harper, Joseph

    Awbery, Stan (Bristol, Central)

    Deer, George

    Hayman, F. H.

    Bacon, Miss Alice

    Delargy, Hugh

    Herbison, Miss Margaret

    Barnett, Guy

    Dempsey, James

    Hill, J. (Midlothian)

    Baxter, William (Stirlingshire, W.)

    Diamond, John

    Hilton, A. V.

    Beaney, Alan

    Dodds, Norman

    Holman, Percy

    Bellenger, Rt. Hon. F. J.

    Doig, Peter

    Holt, Arthur

    Bence, Cyril

    Duffy, A. E. P. (Colne Valley)

    Hooson, H. E.

    Benn, Anthony Wedgwood

    Edwards, Rt. Hon. Ness (Caerphilly)

    Houghton, Douglas

    Bennett, J. (Glasgow, Bridgeton)

    Edwards, Robert (Bilston)

    Hoy, James H.

    Benson, Sir George

    Edwards, Walter (Stepney)

    Hughes, Cledwyn (Anglesey)

    Blackburn, F.

    Evans, Albert

    Hynd, John (Attercliffe)

    Blyton, William

    Fernyhough, E.

    Janner, Sir Barnett

    Boston, T.

    Jay, Rt. Hon. Douglas

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

    Finch, Harold

    Jeger, George

    Bowen, Roderic (Cardigan)

    Fletcher, Eric

    Jones, Dan (Burnley)

    Brockway, A. Fenner

    Forman, J. C.

    Jones, Elwyn (West Ham, S.)

    Callaghan, James

    Fraser, Thomas (Hamilton)

    Jones, J. Idwal (Wrexham)

    Carmichael, Neil

    Galpern, Sir Myer

    Kelley, Richard

    Collick, Percy

    George, LadyMeganLloyd (Crmrthn)

    Kenyon, Clifford

    Corbet, Mrs. Freda

    Ginsburg, David

    King, Dr. Horace

    Craddock, George (Bradford, S.)

    Gordon Walker, Rt. Hon. P. C.

    Lawson, George

    Cronin, John

    Gourlay, Harry

    Lee, Frederick (Newton)

    Cullen, Mrs. Alice

    Griffiths, David (Rother Valley)

    Lever, L. M. (Ardwick)

    Dalyell, Tam

    Griffiths, W. (Exchange)

    Lewis, Arthur (West Ham, N.)

    Darling, George

    Grimond, Rt. Hon. J.

    Loughlin, Charles

    Lubbock, Eric

    Owen, Will

    Snow, Julian

    Mabon, Dr. J. Dickson

    Pannell, Charles (Leeds, W.)

    Sorensen, R. W.

    McBride, N.

    Pargiter, G. A.

    Spriggs, Leslie

    MacColl, James

    Pavitt, Laurence

    Stones, William

    MacDermot, Niall

    Pearson, Arthur (Pontypridd)

    Symonds, J. B.

    Mclnnes, James

    Pentland, Norman

    Taylor, Bernard (Mansfield)

    McKay, John (Wallsend)

    Popplewell, Ernest

    Thomas, Iorwerth (Rhondda, W.)

    MacKenzie, J. G.

    Prentice, R. E.

    Thompson, Dr. Alan (Dunfermline)

    McLeavy, Frank

    Probert, Arthur

    Thornton, Ernest

    MacPherson, Malcolm

    Pursey, Cmdr. Harry

    Timmons, John

    Mallalieu, E. L. (Brigg)

    Randall, Harry

    Wade, Donald

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

    Rankin, John

    Wainwright, Edwin

    Manuel, Archie

    Redhead, E. C.

    Warboy, William

    Mapp, Charles

    Rees, Merlyn (Leeds, S.)

    Weitzman, David

    Mason, Roy

    Rhodes, H.

    Wells, William (Walsall, N.)

    Millan, Bruce

    Roberts, Albert (Normanton)

    Whitlock, William

    Milne, Edward

    Robertson, John (Paisley)

    Wilkins, W. A.

    Mitchison, G. R.

    Robinson, Kenneth (St. Pancras, N.)

    Willey, Frederick

    Monslow, Walter

    Rodgers, W. T. (Stockton)

    Williams, W. T. (Warrington)

    Moody, A. S.

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

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

    Morris, Charles (Openshaw)

    Ross, William

    Winterbottom, R. E.

    Morris, John (Aberavon)

    Shinwell, Rt. Hon. E.

    Woodburn, Rt. Hon. A.

    Mulley, Frederick

    Silkin, John

    Noel-Baker, Rt. Hn. Philip (Derby, S.)

    Slater, Mrs. Harriet (Stoke, N.)

    TELLERS FOR THE AYES:

    O'Malley, B. K.

    Slater, Joseph (Sedgefield)

    Mr. Charles A. Howell and

    Oram, A. E.

    Small, William

    Mr. Grey.

    Oswald, Thomas

    Smith, Ellis (Stoke, S.)

    NOES

    Agnew, Sir Peter

    Farr, John

    Kerr, Sir Hamilton

    Allason, James

    Fisher, Nigel

    Kershaw, Anthony

    Anderson, D. C.

    Fletcher-Cooke, Charles

    Kimball, Marcus

    Atkins, Humphrey

    Fraser, Ian (Plymouth, Sutton)

    Kirk, Peter

    Awdry, Daniel (Chippenham)

    Galbraith, Hon. T. G. D.

    Langford-Holt, Sir John

    Barlow, Sir John

    Gammans, Lady

    Leavey, J. A.

    Barter, John

    Gardner, Edward

    Lewis, Kenneth (Rutland)

    Batsford, Brian

    Gibson-Watt, David

    Lilley, F. J. P.

    Berkeley, Humphry

    Giles, Rear-Admiral Morgan

    Linstead, Sir Hugh

    Bevins, Rt. Hon. Reginald

    Gilmour, Ian (Norfolk, Central)

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Biffen, John

    Gilmour, Sir John (East Fife)

    Longoen, Gilbert

    Biggs-Davison, John

    Glover, Sir Douglas

    Loveys, Walter H.

    Bingham, R. M.

    Glyn, Dr. Alan (Clapham)

    Lucas-Tooth, Sir Hugh

    Bishop, Sir Patrick

    Goodhart, Philip

    MacArthur, Ian

    Black, Sir Cyril

    Goodhew, Victor

    McLaren, Martin

    Bourne-Arton, A.

    Gower, Raymond

    Maclay, Rt. Hon. John

    Box, Donald

    Creen, Alan

    Maclean, SirFitzroy (Bute&N. Ayrs.)

    Boyd-Carpenter, Rt. Hon. John

    Griffiths, Eldon (Bury St. Edmunds)

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

    Boyle, Rt. Hon. Sir Edward

    Gurden, Harold

    Macmillan, Maurice (Halifax)

    Braine, Bernard

    Hamilton, Michael (Wellingborough)

    Maginnis, John E.

    Brewis, John

    Harris, Frederic (Croydon, N. W.)

    Maitland, Sir John

    Bromley-Davenport, Lt.-Col. SirWalter

    Harris, Reader (Heston)

    Markham, Major Sir Frank

    Brown, Alan (Tottenham)

    Harrison, Brian (Maldon)

    Marshall, Sir Douglas

    Browne, Percy (Torrington)

    Harrison, Col. Sir Harwood (Eye)

    Mathew, Robert (Honiton)

    Bryan, Paul

    Harvey, John (Walthamstow, E.)

    Matthews, Gordon (Meriden)

    Buck, Antony

    Hastings, Stephen

    Maude, Angus (Stratford-on-Avon)

    Bullard, Denys

    Hay, John

    Maudling, Rt. Hon. Reginald

    Bullus, Wing Commander Eric

    Heald, Rt. Hon. Sir Lionel

    Maxwell-Hyslop, R. J.

    Burden, F. A.

    Henderson, John (Cathcart)

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

    Campbell, Gordon

    Hendry, Forbes

    Mills, Stratton

    Carr, Compton (Barons Court)

    Hiley, Joseph

    Montgomery, Fergus

    Chataway, Christopher

    Hill, Mrs. Eveline (Wythenshawe)

    Morrison, Charles (Devizes)

    Chichester-Clark, R.

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

    Neave, Airey

    Clark, Henry (Antrim, N.)

    Hirst, Geoffrey

    Nugent, Rt. Hon. Sir Richard

    Clark, William (Nottingham, S.)

    Hobson, Rt. Hon. Sir John

    Orr-Ewing, Sir Ian (Hendon, North)

    Clarke, Brig. Terence (Portsmth, W.)

    Holland, Philip

    Osborn, John (Hallam)

    Cole, Norman

    Hollingworth, John

    Osborne, Sir Cyril (Louth)

    Cooke, Robert

    Hope, Rt. Hon. Lord John

    Partridge, E.

    Cooper, A. E.

    Hopkins, Alan

    Pearson, Frank (Clitheroe)

    Cooper-Key, Sir Neill

    Hornby, R. P.

    Percival, Ian

    Costain, A. P.

    Hornsby-Smith, Rt. Hon. Dame P.

    Pickthorn, Sir Kenneth

    Coulson, Michael

    Howard, John (Southampton, Test)

    Pitman, Sir James

    Courtney, Cdr. Anthony

    Hughes Hallett, Vice-Admiral John

    Pounder, Rafton

    Critchley, Julian

    Hulbert, Sir Norman

    Powell, Rt. Hon. J. Enoch

    Curran, Charles

    Hutchison, Michael Clark

    Prior, J. M. L.

    Dalkeith, Earl of

    Iremonger, T. L.

    Proudfoot, Wilfred

    Dance, James

    Irvine, Bryant Godman (Rye)

    Pym, Francis

    Deedes, Rt. Hon. W. F.

    James, David

    Redmayne, Rt. Hon. Martin

    Digby, Simon Wingfield

    Jennings, J. C.

    Rees-Davies, W. R. (Isle of Thanet)

    Donaldson, Cmdr. C. E. M.

    Johnson, Eric (Blackley)

    Renton, Rt. Hon. David

    Doughty, Charles

    Johnson Smith, Geoffrey

    Rippon, Rt. Hon. Geoffrey

    du Cann, Edward

    Jones, Rt. Hn. Aubrey (Hall Green)

    Roots, William

    Duncan, Sir James

    Kerans, Cdr. J. S.

    Ropner, Col. Sir Leonard

    Emmet, Hon. Mrs. Evelyn

    Kerby, Capt. Henry

    Seymour, Leslie

    Farey-Jones, F. W.

    550

    551

    Sharples, Richard

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

    Walker, Peter

    Shaw, M.

    Teeling, Sir William

    Walker-Smith, Rt. Hon. Sir Derek

    Skeet, T. H. H.

    Temple, John M.

    Wall, Patrick

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

    Thatcher, Mrs. Margaret

    Ward, Dame Irene

    Spearman, Sir Alexander

    Thomas, Sir Leslie (Canterbury)

    Wells, John (Maidstone)

    Stainton, Keith

    Thompson, Sir Richard (Croydon, S.)

    Whitelaw, William

    Stevens, Geoffrey

    Thornton-Kemsley, Sir Colin

    Williams, Dudley (Exeter)

    Steward, Harold (Stockport, S.)

    Touche, Rt. Hon. Sir Gordon

    Williams, Paul (Sunderland, S.)

    Stoddart-Scott, Col. Sir Malcolm

    Turner, Colin

    Wills, Sir Gerald (Bridgwater)

    Storey, Sir Samuel

    Turton, Rt. Hon. R. H.

    Wilson, Geoffrey (Truro)

    Studholme, Sir Henry

    Tweedsmuir, Lady

    Wise, A. R.

    Summers, Sir Spencer

    van Straubenzee, W. R.

    Worsley, Marcus

    Talbot, John E.

    Vane, W. M. F.

    Tapsell, Peter

    Vaughan-Morgan, Rt. Hon. Sir John

    TELLERS FOR THE NOES:

    Taylor, Edwin (Bolton, E.)

    Walder, David

    Mr. Hugh Rees and Mr. More.

    New Clause.—(INFORMATION AS TO EXEMPT TOLLS.)
    (1) The following provisions of this section shall have effect to provide information for determining whether, and to what manner and to what extent, it is expedient to impose taxation in respect of exempt tolls.
    (2) Any person who in the year ending with July 1964 was entitled to receive or did receive (whether by an agent or servant or otherwise) exempt tolls from the public or from any other person or persons shall before the end of August 1964 notify that fact to the Commissioners.
    (3) Any person required to give a notification under the last foregoing subsection and any officer, agent or servant of such a person shall within such time and in such form as the Commissioners may require furnish the Commissioners with such information as to exempt tolls as the Commissioners may by notice in writing require; and, without prejudice to the generality of the foregoing, such information may include—

    (a) any information which could have been required to determine an assessment of tolls to income tax or profits tax, if those tolls had not been exempt;

    (b) any information as to the value for the purposes of estate duty of a right to levy tolls, if those tolls had not been exempt; and

    (c) any information as to the grounds upon which exemption may be claimed for tolls, together with copies of private or local Acts or other documents showing those grounds.

    (4) The Commissioners, if satisfied in any case that there is good reason why anything required to be done by or under the foregoing provisions of this section cannot, or may not, be done within the time limited by or under these provisions, shall extend the time by such period as appears to them to be required.
    (5) Any person who fails to give the notification required by subsection (2) of this section, or to comply with any other requirement of the foregoing provisions of this section, shall be liable to a penalty of one hundred pounds, and if after conviction of a failure to furnish any particulars or information, or to produce any documents, the failure continues the person shall be liable to a further penalty of ten pounds for each day on which it so continues.
    (6) In this section the words "exempt tolls' mean tolls payable by the public or by any
    552
    group of the public in respect of the use of a highway, bridge or ferry, being tolls which, but for some private or local Act or some particular statutory or other exemption, would to chargeable to income tax, profits tax or (as a capital asset) to estate duty and which, by reason of such an Act or exemption are not so chargeable; and the words "tolls", "exempt" and "exemption" shall be construed accordingly.—[Mr. W. Hamilton.]
    Brought up, and read the First time.
    9.15 p.m.
    Mr. William Hamilton: I beg to move, That the Clause be read a Second time.
    I want, first, to pay tribute to my hon. and learned Friend the Member for Kettering (Mr. Mitchison) for the drafting of this new Clause. He was helped considerably by the Government draftsmen in drafting Section 2 of the Finance Act, 1963, relating to gambling. This is no gamble that I am talking about tonight; this is a sure winner. I am seeking to help the Economic Secretary to protect the Revenue—an unusual occupation.
    Our sole purpose in putting down the new Clause is, first, to ascertain the extent of this scandal; secondly, to get the information on which action by the Government can be based, and, thirdly, to ascertain the Government's intentions about how they propose to deal with the problem. Acceptance of the new Clause would not in any way tie the Government's hand for future action. The only result would be to ascertain much more accurate facts about the ownership of these bridges, the income derived from them, the reasons for the tax exemption, and so on.
    Altogether, there are five of these bridges. As far as I could ascertain their ownership, I gave details in the House on 12th May when I sought leave to introduce a Bill. Those facts, as I thought they were, were based upon

    553
    information supplied to me by the Minister of Transport in answer to a Question on 15th April this year. In that Answer, the Minister of Transport named the five bridges and their owners.
    In the case of the Aldwark bridge, in Yorkshire, the Minister of Transport named Yorkshire Farmers Ltd. as the owners. I do not know where he got that information. In my innocence, I assumed that it was correct. It may be that I should have known better. In fact, the bridge was sold by Yorkshire Farmers Ltd. two years before.
    In a recent debate, I mentioned the conditions of work of the toll-keeper, a Mrs. Wright. I pointed out that she was given a wage of £3 a week and a tied cottage for collecting the tolls. I have since had a letter from Mrs. Wright saying that that was not quite accurate. She got £3 a week, but the owners of the bridge deducted £2 of it for the rent of the cottage. Mrs. Wright states:
    "I am the Mrs. Wright whom you mentioned as gatekeeper at the Aldwark Bridge toll gate. I notice you say my wage was £3 a week and cottage. This detail is wrong. I got £3 a week but I had to pay back £2 a week rent for the cottage to Yorkshire Farmers Ltd. This was for a working hour week of 105, 7 o'clock in the morning till 10 p.m., seven days in the week."
    That is Mrs. Wright. She also tells me that the bridge—here I must be careful and simply say what she says—was sold two years ago to Messrs. Montagu Burton. That is all I wish to say for the moment about Aldwark bridge. I will return to it later.
    I now turn to the owners of the Swinford bridge, in Berkshire. I asked the Minister of Transport who the owner was and he told me that it was the Earl of Abingdon. Again, I assumed that that was accurate information. It was a repetition of the Answer to a Question given by the same Minister on 23rd February, 1962, at c. 86 in Written Answers. That was also in line with the original Act of 1767, which, after laying down the scale of the tolls, states:
    "The monies to be received as aforesaid … and all other monies to be received by authority of this Act are hereby vested in the said Earl of Abingdon, his heirs and assigns."
    It goes on to say:
    "the said bridge then built shall be and is hereby vested in the said Earl of Abingdon, his heirs and assigns for ever."
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    On the basis of that evidence it was reasonable to assume that the Minister of Transport was really with it in this instance, but on Thursday, 21st May, a letter appeared in The Times from the Earl of Abingdon, and this is what he said:
    "As far as I am aware I do not benefit in any way from the Swinford tolls. I should be very interested to know from where Mr. Hamilton obtained his information, because if it is correct someone owes me quite a lot of money!"
    His letter continued:
    "No doubt after two years' research into the subject Mr. Hamilton has all the answers."
    Well, I accept fully what the present Earl says. What I want to know is, where has the bridge gone?
    Mr. Bence: The money.
    Mr. Hamilton: Somebody from the Press told me that the present Commander Percy, who is chairman of the Selby Bridge Company, has got his finger in the Swinford bridge pie, too. I do not know whether it is true, and I do not think the hon. Gentleman opposite either knows or cares. The Earl is not quite right: I have not got all the answers, and neither has anyone else, certainly not the Minister of Transport-that is quite clear. Nor the Treasury.
    For example, neither the Whitchurch Toll Bridge Company nor the Selby Bridge Company is required to be registered under the terms of the Registration of Business Names Act, 1916, since their names are those of bodies incorporated by Private Acts of Parliament 200 years ago. The Whitney Bridge Trust is, I think, being inquired into by the Treasury, according to an Answer given to me on Thursday, 30th April, 1964. They have been considering this for 200 years or so and they are now making a move. So the ownership of some of the juiciest plums of the property-owning democracy in which we live is shrouded in this feudalistic murk.
    Mr. Geoffrey Wilson: Will the hon. Member allow me?
    Mr. Hamilton: No. I will not. The hon. Gentleman can make a speech round about midnight.
    The mystery of the ownership of these bridges is matched by an almost equally

    555
    deep mystery as to the size of the income derived from them and the number of Shareholders receiving it. A figure of £70,000 as tax-free income from the Selby bridge was quoted by the hon. Member for Howden (Mr. Bryan) who denied me the privilege of introducing a Bill to deal with the question. He was the man who quoted £70,000 a year tax-free for the Selby bridge. However, I have simply repeated that figure, but in an article in the Yorkshire Post on 28th April this year, entitled "Selby's Bridge of Sighs"—it should be the Golden Gate—Commander James Percy, the chairman of the Selby Bridge Company, said that after paying wages, running costs and repairs the annual net tax-free income is well below £35,000. [HON. MEMBERS: "Shame."] There are over 30 shareholders. He added, rather sorrowfully, that his share of the swag is not sufficient for him to live on. Perhaps a Grace-and-Favour house would just make the difference. If he had a tax-free toll bridge and a rent-free house he might be able to live like the parasite he evidently is.
    I now turn back to the Swinford bridge. The Parliamentary Secretary to the Ministry of Aviation—although he is in the Government he is on my side in this—said in the debate two years ago that the income from this bridge was £6,000 gross and net slightly less. His speech then was quite remarkably entertaining and informed. He pointed out the strong monopolistic tendencies of the Tory Party even in those far off days. The Swinford bridge Act states:
    "If any person or persons, from and after the passing of this Act, shall for gain or reward convey any person or persons, or any carriage or cattle, over the said River Thames or Isis within two miles of the said ferry or intended bridge … every such person shall, for every such offence, forfeit to the said Earl of Abingdon his heirs and assigns, the sum of 40 shillings."
    This was a nice little tax-free local monopoly created for some person or persons now unknown 200 years ago and nothing is being done by the Government, who are behaving like a muscle-bound constipated tortoise. I have a very interesting letter from a Mrs. Reynolds who uses the bridge. She writes:
    "I live in the village of Eynsham, which is under one mile from the Swinford Toll
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    Bridge and, being the owner of a small moped, I have to pay 4d. per day to cross it to go to work in Oxford. In twelve months I shall have contributed the sum of £5 2s. 8d. to the owner of the bridge (tax free) which is a staggering amount considering that my road fund licence is £1 per year.
    On top of which the Toll Bridge I mention affords only just enough room for a small car to pass if a bus is coming in the opposite direction and on more than one occasion when I have been a passenger on the bus I have known it have to mount the minute pavement in order to let a lorry pass.
    My sister and her husband live on the Berkshire side of the bridge and they work at Witney so they are relieved of £26 per year as they own a car, the amount stated being double the road tax …"
    Now I come to Aldwark bridge, in Yorkshire, which is the only bridge for which I have been able to get any definite figures. That was due to the diligence of our Library staff and not to the Government. The Library staff got me a wonderful document issued when the bridge was being sold. I quoted some figures from it on 12th May. In this brochure it is stated that in the six years 1956 to 1961 the net income went up from £1,848 to £2,016, plus about £250 a year from the Yorkshire farmers who guaranteed that sum to the new owner for three years when the purchase was completed.
    The maintenance costs of the bridge are quoted in the document, which shows that they had gone down from £169 in 1956 to £115 in 1961, so there is very little going out in maintenance and in wages for the toll-keeper I have already mentioned.
    9.30 p.m.
    What have the Government been doing about this all this time? They have prattled about modernising Britain; they presume to support an incomes policy which is fair to everybody; they protest their anxiety to deal with monopolies; the Prime Minister has preached that he will give the people the facts. And that is all we want in this new Clause—some facts. Here is a case where the facts are concealed, where a few anonymous people enjoy substantial incomes, untaxed and undeserved incomes, from statutory monopolies created 200 years ago, and where the continued existence of these antiquated elements in our transport system makes nonsense of the Government's pretence about modernisation.

    557
    The Financial Secretary to the Treasury invited me to go and talk to him about six weeks ago and I thought, again in my innocence—"Stupid Willie"—that I was going to get somewhere. In effect, the hon. Gentleman said, "We have decided to do nothing". I do not think that that is unfair. He said in effect that the greatest problem was the compensation problem. Of course, he was simply echoing what the Minister of Transport had said in the debate on 16th March, 1962, when he asked:
    "… how much compensation would an hon. Member expect if he had a tax-free income of £15,000 a year?"—[OFFICIAL REPORT, 16th March, 1962; Vol. 655, c. 1726.]
    The Chief Secretary said in answer to a supplementary question of mine on the same point:
    "… I would ask the hon. Member to reflect whether he really thinks that we shall help to achieve an incomes policy by suggesting that it is self-evident that a Government should unilaterally break a bargain even though it was made many years ago."—[OFFICIAL REPORT, 7th April, 1964; Vol. 692, c. 780.]
    On that particular point, I want to say that the first Act dealing with these bridges was the Swinford Bridge Act, 1767.
    There was a General Election in 1768, one of the most corrupt General Elections in our whole history. The buying and selling of seats—nothing like it has been seen until Kinross and West Perthshire. Before Parliament was dissolved, the Oxford Corporation at that time tried to sell its two seats to the two sitting Members on condition that they paid the city's debts of nearly £6,000. The M.P.s brought the case before the House, and the Mayor of Oxford and the aldermen were committed to Newgate Gaol. They were later reprimanded at the Bar on bended knees by the Speaker. But even while they were in prison they started negotiations for the sale of their borough to the Duke of Marlborough and the Earl of Abingdon. It is legislation passed by that kind of Parliament which the Chief Secretary says that we must not touch.
    On 5th May this year, in answer to a supplementary question by my hon. Friend the Member for Motherwell (Mr. Lawson) about the location of the new Royal Mint, the Minister said:
    "I think a promissory note 250 years old may perhaps be thought to have lapsed …"—[OFFICIAL REPORT, 5th May, 1964, Vol. 694, c. 1096.]
    558
    He was referring to the Treaty of Union between Scotland and England, which promised Scotland the right to continue to mint coins. Section 16 of that Treaty says:
    "… a Mint shall be continued in Scotland under the same Rules as the Mint of England."
    I wish that the Chief Secretary was present, because I want to ask him on which leg he stands. Does he think that legislation passed 250 years ago is sacrosanct but that a Treaty entered into between two countries is not? He cannot have it both ways.
    The House has the right, and indeed the duty, to repeal and modernise ancient statutes, the more especially when they result, as in this case, in anachronisms and gross injustice as between one taxpayer and another.
    A comparatively simple way of dealing with the matter is to repeal all these old Acts, or to insert in the Finance Bill a provision that the proceeds of the tolls shall be taxable. That would substantially reduce the claim for compensation. Local authorities could then compulsorily acquire under the 1930 Act, and they, I hope, would get rid of the toll altogether.
    I want, finally, to quote from the Daily Mirror of 23rd April, 1964, It said:
    "Two years ago, in the Commons, Transport Minister Ernest Marples admitted these ancient rights were an 'anachronism', but thought it would be difficult to unscramble them. He also confessed that the Government could not afford the compensation costs of taking over these tax-free snips.
    This pathetic inability to deal with tax-free toll incomes must make intriguing reading for old-age pensioners and other needy citizens.
    If a £3 7s. 6d. a week pensioner earns more than £5 a week his pension is reduced. The Government finds no difficulty in doing this or in assessing him for Income Tax.
    Yet the owners of a toll bridge believed to be making more than £1,300 a week are not required to pay tax on any of it. Ancient rights are all very well, but this is ridiculous. How on earth can any Government permit it?"
    I ask the hon. Gentleman to get up and defend it, or, if he cannot, to tell us what he is going to do about it.
    Colonel Sir Leonard Ropner: I am indebted to an hon. Member opposite for telling me only a few minutes ago that this new Clause was being proposed tonight. I plead guilty

    559
    to the offence of not having studied the Notice Paper carefully, but I am glad to have the opportunity of saying something after what was said by the hon. Member for Fife, West (Mr. W. Hamilton).
    I suppose that no one has fought harder for the freeing of toll bridges than I have fought for the freeing of Selby toll bridge. It has been a 30 years' fight, and it was a 30 years' fight by my predecessor.
    I thought that the hon. Member for Fife, West missed a considerable opportunity of presenting a case in favour of the abolition of these rights which have been conferred on the bridge owners by Acts of Parliament of many years ago. It was a pity that he merely introduced personalities—the Lord of this and the Marquess of that. That does not matter: the question posed in the Clause is one of principle. There is considerable difficulty in determining whether or not the rights conferred by Act of Parliament—in whatever Parliament—up to 250 years ago still have any validity. The hon. Member's speech was a silly speech, instead of being a genuine contribution to the solving of this difficult problem.
    Mr. Norman Dodds: Let us have the facts.
    Sir L. Ropner: There may well be different views about the matter, not only among Members on each side of the Committee but among members of the same party.
    It is not true to say that the present owners of these toll rights are the same owners, or the heirs of the owners, that were given the rights 100 or 200 years ago or more. I would remind the Committee that I have fought more than anybody else for the abolition of these tolls. Selby toll bridge was bought only a short time before World War II. There is no question of its owners having enjoyed these rights for hundreds of years; it is a question of men who, in their wisdom, as it turned out—or in their folly, as it might have been—bought the bridge and the rights that went with it, namely, a tax-free income. The new owners have bought a statutory monopoly which extends some miles down the river, but they have also become part of a bargain which entitles
    560
    them, as a matter of right, to expect to receive a tax-free income.
    It seems to me that the feeling of the majority of hon. Members opposite is that in these days it is wrong that anybody should enjoy a tax-free income, no matter whether it be of £5 or of £50,000. I take the opposite view. I think that men, women or companies who have paid an agreed sum for these rights, in the belief that Parliament will not abrogate an ancient Statute, have a right to believe that Parliament will stick to its words. In spite of my hostility to the existence of the Selby toll bridge, I believe that the owners should continue to be entitled to the income which attaches to it, and the rights to which they bought only a short time ago.
    I am glad to have been able to say this tonight, because, as I have already reminded the hon. Member for Fife, West, there is a matter of considerable principle underlying his proposal. The more important principle is that we should maintain a statutory bargain entered into as many years ago as we like, but which, in the great majority of cases of which I know—certainly in the case of Selby bridge—was entered into only 10 or 20 years ago. I think that the maintenance of that principle is of more importance than the belief or opinion held by others that in these days it is wrong for anyone to enjoy a tax-free income.
    9.45 p.m.
    I propose, if I am permitted to do so in a discussion on this Clause, to say a word particularly about the bridge referred to by the hon. Member for Fife, West more than once. I have had no contact—except on one occasion many years ago—with the owners of Selby toll bridge. I think that I met the owner once. I have kept at a distance for obvious reasons. I have forgotten his name. In these cases of statutory rights—they are statutory rights conferred by Parliament—the proper thing to do is to buy out the right at whatever is its worth. We must get rid of these anachronisms, these toll bridges, but I see no reason at all why the monopoly should not be bought for a fair market value, taking into consideration any rights which have been offered to the owner.
    Mr. J. Grimond: I am sure that the Committee will

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    be interested to know that the hon. and gallant Member for Barkston Ash (Sir L. Ropner) is in favour of abolishing this monopoly. I think that the Committee might have been disappointed to hear that he has been trying to do so—he and his predecessor—for 60 years without success. Surely that is some justification for the proposal of the hon. Member for Fife, West (Mr. W. Hamilton) because there is no assurance that if the hon. and gallant Member went on for another 60 years he would be successful.
    I cannot help feeling that the Government are now not going to be able to defend this matter much longer, when it becomes common knowledge. When I first read of the allegations made by the hon. Member for Fife, West—I knew nothing about this until I read them—I must say that I could not believe them. I thought that, to put it politely, there must be some error, or that it was a fairy story—that for 200 years someone had been entitled to an income, which might be £35,000 a year or £70,000 a year free of tax and also, I am told, free of death duty. However I found there was no denial and, as I understand it, the hon. Member is asking for further information, which seems to be a reasonable request.
    I should like to go further and ask what other monopolies there may be which have been bought and sold on the open market. They must be very agreeable things to hold. We are at the moment asking for information. I agree with the hon. and gallant Member for Barkston Ash that it may be extremely unfair simply to remove this monopoly without any compensation, but I am not entirely convinced by the argument that, because this has yielded an enormous amount of money for a very long time, that is a reason for making the compensation large.
    I should like to know how much this bridge company paid for the right. The hon. and gallant Member said that the right was bought just before the war. Does anyone ever see the company's accounts? Do the Government, even now, know who benefits? There have been innumerable similar monopolies which have been abolished. The history of the eighteenth century is full of records of such monopolies. It is not long
    562
    since Parliament abolished the hereditary right of the descendants of Nelson to draw an annual salary. Compensation was paid in that case, and I am not saying that this right should be abolished without compensation being paid. History is littered with examples of such monopolies having been abolished. Therefore, why should not this right be abolished?
    I understand that the Government are making a great deal of their extreme probity—that the Government always keep their promises, and that it would be wholly wrong to go back on a promise made by this very distinguished Parliament of so long ago—but what about post-war credits? Have the Government kept their promises about them? Of course they have not. There are many other ways in which the Government have not kept their promises.
    What sort of compensation do the Government think might be payable? Perhaps a solution would be found in building another bridge. [HON. MEMBERS: "Where?"] I do not know where; but anywhere will be cheaper; it will be cheaper to divert the river. Almost anything would be cheaper.
    I agree with the hon. and gallant Member for Barkston Ash that it is curious that this monopoly should go on and after 30, or 60 years of effort nothing is done to right it. We should be given information about how much the company paid for the bridge, what its earnings are, does anyone see the accounts, what similar steps have been taken previously to buy it out? It is incredible that after all this time we are bound to maintain this monopoly on this bridge. If the worst came to the worst, we could send engineers there to build another bridge.
    I believe the hon. Member for Fife, West has made it impossible for this thing to go on. By all means pay some compensation—I would not suggest the full capitalised rate on £70,000 a year, but there should be some compensation. I do not believe any Government can defend leaving this matter in such a position that it can go on for another 30 years simply because from this monopoly granted so many years ago many people have had a great deal of enjoyment. I am not a strict egalitarian, and I have no

    563
    desire to prevent people having big wins on racehorses or at bingo, but this has been a long winning spell.
    Mr. Airey Neave: The hon. Member for Fife, West (Mr. W. Hamilton) mentioned the Swinford toll bridge, which affects my constituency and also that of my hon. Friend the Parliamentary Secretary to the Ministry of Aviation. I hope that in answering this debate my hon. Friend the Financial Secretary to the Treasury will give some answer to the requests of the Committee for a reasonable formula to deal with this problem.
    Swinford toll bridge has been a headache to myself and to my predecessor for a very long time. The complaints about it are very similar to those to which the hon. Member for Fife, West referred. I hope the Financial Secretary, whatever he thinks about the new Clause and whether or not it takes the matter very much further, will tell us something about the root problem, and if he can find a reasonable way of getting rid of this anomaly. It is an anomaly which is extremely annoying to the public and to Members of Parliament who have the misfortune to have such toll bridges in their constituencies.
    I was glad that the hon. Member for Fife, West amended the remarks he made about the Earl of Abingdon. He is correctly described as the Earl of Lindsay and Abingdon. The Earl did not in fact inherit the bridge in question. Who now has the bridge I should very much like to know. I should like to support the hon. Member in his request for information as to who now owns the bridge and obtains revenue from it. It is not the Earl of Abingdon, and I am very glad that the hon. Member withdrew the point he made about that.
    Mr. G. Wilson: I endeavoured to intervene in the speech of the hon. Member for Fife, West (Mr. W. Hamilton) because I have a slight personal knowledge of one of these bridges, Witney bridge. That is because my eldest daughter inherited an 11th share in that bridge. I may say that she had no income from it.
    A point which the hon. Member and the right hon. Member for Orkney and Shetland (Mr. Grimond) forget is that
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    these bridges were set up on the condition that the owners should maintain them. The figures thrown about the Committee as to the large sums of money received in tolls are not the amounts received by the owners of the bridges after deduction of expenses for maintenance. This bridge was damaged in floods some four or five years ago, and the owners have received no income from it for some years.
    Mr. Lubbock: Will the hon. Member agree that if the owners of the bridge have received no income they will require no compensation?
    Mr. Wilson: I do not say that we should wipe out compensation, because the owners of the bridge have been maintaining a facility that has been used by the public and which would otherwise have to be maintained by the county authority.
    By the beginning of the war negotiations were almost completed for the local authority, the road authority, to take over this bridge. In that case, it would have been maintained as a free bridge many years ago, and the local authority, not the owners, would have had to pay for maintenance and repairs. I therefore think that there is a case for compensation, but I understand that in this case there was a dispute as to the amount, and there was some arbitration.
    Mr. Diamond: I am grateful to the hon. Member for giving way, as I am anxious to follow his argument completely. Is he making the case, which I am sure would be received with much sympathy from both sides of the Committee, that the present owners should receive compensation for continuing to own the bridge?
    Mr. Wilson: No. My first point was that in the figures mentioned it had been assumed that all the money was going into the owners' pockets, and I said that that was not so in the case of which I knew, as the costs of maintenance were heavy, and very little had been received. I said that I knew of no excessive cost of maintenance, but the fact remained that the owners were relieving the road authority of the cost of the maintenance of the bridge. I said that as the owners had been relieving the county, they were entitled to some

    565
    compensation when the matter was settled.
    I think that these ancient toll bridges should be got rid of, but it is not fair for the hon. Member for Fife, West to build a picture of some sort of roguery and chicanery. The fact is that these people have performed a service in attending to the bridges, and some compensation should be paid to them.
    Mr. George Jeger: My hon. Friend the Member for Fife, West (Mr. W. Hamilton) has performed a public service in calling attention to this matter. Quite apart from the matter of his subject, he should be congratulated on his delivery. The hon. and gallant Member for Barkston Ash (Sir L. Ropner), who has battled very bravely against the Selby toll—and I must give him full credit for doing that—during the whole period of his membership of the House, has failed in his efforts during those 30 years, but he knows, because he has used the bridge quite a lot—as I do—that it is not merely the Statute that established the bridge that is old-fashioned and an anachronism; the bridge itself is an anachronism.
    I have travelled frequently over it, and I have travelled frequently under it, along the Ouse. I recommend that anyone who thinks that this is a modern bridge, capable of bearing modern traffic, should take a trip along the Ouse and look at the bridge both when it is closed and when it is open to river traffic. They will be horrified at the amount of loose boards and timber that are visible. There used to be a phrase about a "Heath Robinson contraption"—the Selby toll bridge fits in very well with that description.
    If the bridge itself is an anachronism, does it not tie up with the other anachronisms that the Minister of Transport has been trying to deal with—rather slowly—by building motorways, main roads and trunk roads and, in so doing, destroying the homes, the farms and the land of people who thought they had the perpetuity. They had the freehold but people found that their houses were taken away from them, quite rightly, in the public interest. They were assessed at a fair rate of compensation and after a public inquiry compulsory purchase orders were established under
    566
    which houses, land, farms, and so on could be taken away for the public good, to make public highways.
    10.0 p.m.
    My experience of this bridge leads me to the conclusion that this is a case where the needs of the public highway should come first, and the needs of the general public should come first in using a new bridge to take the place of the present Selby toll bridge, and the present bridge should be abolished. I am not sure whether the bridge could be condemned. I understand that it is subjected to inspection not only by the owner's own engineers but by the Ministry of Transport engineers. But surely it is in a state where it should be replaced by a more modern bridge free from tolls. I think that there would be no difficulty about that.
    The difficulties appear to arise about the basis of compensation. I admit that the difficulties would be considerable at the present time but they could be eliminated by the Government's acceptance of the new Clause. I should like to explain one difficulty to the Committee. I have said that I have used this bridge occasionally, since it is very near my constituency. A number of my constituents use it and I sometimes discuss it with them.
    They tell me of the problem they have, They have to pay the toll to go over the bridge and there are attendants who collect the toll, which is 9d. if one is in a car. One does not always receive a ticket for the 9d. One has a ticket if one asks for it but otherwise the 9d. is taken without a ticket. Here is the problem: should one always ask for a ticket, which would mean that the audited receipts from the toll bridge would be augmented and therefore the compensation would be augmented, or should one not ask for a ticket, in which case the official receipts of the toll bridge would be lower and the possible compensation that would be claimed would be lower too?
    The Clause seeks to make the facts ascertainable. The owners of the bridge would know the correct income which they ought to receive. The Government would know exactly what that income should be. Proper records would be kept and when the time came for

    567
    compensation, whether because a new bridge was to be built, and consequently the value of the old bridge would depreciate, or whether it was taken over by a compulsory purchase order, we should have the facts before us. At the inquiry which would be necessary before the compulsory purchase order was made the full facts would be available. I therefore recommend the Committee to accept the Clause which has been put forward so admirably by my hon. Friend the Member for Fife, West.
    Dr. King: I do not propose to detain the Committee for more than one minute. I would remind the Financial Secretary that in Committee yesterday the Government refused to allow a few pounds to be earned free of Income Tax by 100 per cent. disabled men. I would ask the hon. Gentleman to bear in mind that last night he refused to give a small tax-free concession to men who had lost both legs, before he defends a system which still gives a hundreds of pounds tax-free concession because a corrupt Parliament in the eighteenth century voted this privilege in days when no Income Tax was levied at all. Now the defence put forward by his hon. Friends is that that commitment by that Parliament should last for all time. I hope that the hon. Gentleman will consider this seriously.
    The Financial Secretary to the Treasury (Mr. Alan Green): We have had an interesting debate on what I accept at once to be a very irritating subject indeed. I am bound to tell the hon. Member for Fife, West (Mr. W. Hamilton), whose interest and tenacity in pursuit of the subject I recognise, that I found the presentation of the case by his hon. Friend the Member for Goole (Mr. Jeger) infinitely more persuasive than the opening presentation.
    I say that for one good reason. It is perfectly true that the hon. Member for Fife, West came to see me, as I think he will acknowledge, at my invitation, so that we could seek to find some basis on which this, I repeat irritating, problem might be satisfactorily approached. I explained to him, as I must explain to the Committee tonight, although the hon. Member for Goole has been very fair about this and so
    568
    has my hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner), that the obvious difficulty is compensation. This, of course, is the difficulty.
    To do him justice, the hon. Member for Fife, West disclaimed any desire to compensate. He takes a very extreme view of this. I can quite understand why it is his view that there should be no compensation whatsoever. I take it that that is not the view of most hon. Members opposite. If that were the view of most hon. Members opposite, clearly they would not need this Clause. The only reason for the Clause is to seek better information upon which to determine the basis of compensation. There cannot be any other reason for it. In fact, this was the reason given by the hon. Member for Goole.
    Mr. G. R. Mitchison: Has the hon. Gentleman considered the first three lines of the proposed new Clause which gives the reasons for it?
    Mr. Green: Certainly. It says:
    "The following provisions of this section shall have effect to provide information for determining whether, and to what manner and to what extent, it is expedient to impose taxation in respect of exempt tolls."
    Is the hon. and learned Gentleman saying that the idea is not to provide compensation?
    Mr. Mitchison: I am not saying anything about compensation. I am telling the hon. Gentleman what this Clause is for. This is a Finance Bill.
    Mr. Green: I am glad the hon. and learned Gentleman has noticed the fact. But this does not alter the fact—and hon. Members on both sides of the Committee have been accepting it throughout the debate—that the underlying problem here is compensation. [Interruption.] I hope hon. Members will kindly listen. I do not think the hon. and learned Gentleman can see where his intervention is leading him. If we are going to impose taxation on something that by legislation is at present tax free, and do it without compensation, then why not come clean about it and say that we do not intend to compensate? In fact, hon. Members opposite clearly mean to compensate.
    Mr. A. Woodburn: Is the hon. Gentleman

    569
    aware that during the war there were accumulations of many millions of pounds worth of whisky which was not subject to taxation, but a law was passed by this House which made it subject to taxation and the people concerned had to find many millions of pounds in taxes?
    Mr. Green: That is not really relevant to what I was saying. It is proposed here, according to the intention of the Clause as it has been explained, to impose a tax. [HON. MEMBERS: "Hear, hear."] That is what is said in the opening three lines, but the underlying problem is quite clear. I do not think that we ought to split hairs about it any more. The underlying problem is compensation, and I want to say a word about that.
    The hon. Member for Fife, West states plainly that his personal opinion—I am not saying that this is necessarily the opinion of the Opposition generally—is that this business has gone on quite long enough and there ought to be no compensation. That is a perfectly straightforward attitude. I do not believe that it is, in fact, the opinion of the Committee. The problem is, how much compensation, and how to arrive at it? This is a very real problem, as I shall show.
    The hon. Member for Goole, properly I think, drew attention to the fact that at least the one bridge about which he has personal knowledge looks as though it is an anachronism in fact as well as in law. I do not know the bridge myself, but I do not mind accepting that it is. This being the case, it is perfectly obvious that a bridge to replace it will at some date, which I cannot name but which I should imagine to be not in the very distant future, be likely to be built.
    If one starts now to negotiate compensation with the owners of the bridge—I shall say a word or two in fairness to them in a few minutes—it is not easy to negotiate the right sum in compensation to do the justice and fairness which, I think, most of the Committee would wish to do, because one would be negotiating to buy out what may or may not be a rapidly depreciating asset or an asset depreciating, in the case of other bridges, a lot more slowly, perhaps.
    If we pass the Clause, it will give power, which is not at present possessed, to acquire information covering the period July, 1963 to July, 1964. I
    570
    imagine that that date was put in to avoid any appearance of retrospection, and very properly, too. In the case of a diminishing or wasting asset, which I believe all these bridges to be, it would not be possible to base fair compensation on one year's results. The Clause, therefore, would fail of its underlying purpose, and one would have to wait a considerable time before getting the trend of net income upon which compensation could be based. This is a strictly practical problem, not a doctrinaire one at all.
    Moreover, I suggest to the Committee that the new Clause is in any case unnecessary. If the plan of campaign advanced by the Opposition, for example, were followed, all they would have to do, or all that any Government would have to do, would be to announce an intention to legislate to repeal the relevant Acts which govern these particular operations. An announcement of intention to legislate might—I desire to consider this further—put one in the position to conduct a negotiation with the existing owners in which fair compensation could be arrived at. But this is the only practical method I can see for disposing of what is an anachronism and an irritation to a great many people.
    If we are to dispose of these anachronisms, of these survivals from distant ages, it must be done on a basis that is fair to those who bought these things in good faith, in one case mentioned, for instance, only a few years ago. We have a duty to maintain that good faith. I do not think that anybody would dispute this.
    Mr. Niall MacDermot: When the hon. Gentleman says "in good faith", does he mean on the assumption that Parliament would never repeal the Acts?
    10.15 p.m.
    Mr. Green: That is the only assumption that I can make. People do buy and sell on the basis of the existing law. This is something which I am sure the hon. and learned Member desires particularly to sustain because of his own profession. I have not the faintest shadow of doubt that he is with me on that.
    Mr. Mitchison: Does that apply to steel shares?
    Mr. Green: It is the Opposition who have proposals about buying steel shares, not me.
    This is very important. We should find a basis which is fair to the present owners. I must warn the Committee that this will not be easy, since the true value of these assets is not easy to determine because of their probably very limited life and certainly because of their diminishing value. This is a practical matter.
    I do not want the opposite to happen, which could easily happen, namely, that the Exchequer would pay more for these assets than they were worth and that the Revenue would make a jolly bad bargain. This is a real danger. Hon. Members opposite had some experience of this when they were in Government, according to their own leading spokesmen. The difficulty of determining what the assets of the railways, for example, were worth was complained about by the late Lord Dalton after the transaction had been achieved. He complained of buying a poor bag of assets. We must learn from experience, whichever side has it. It is difficult to establish the fair and proper compensation—fair to the Revenue as well as to the owners.
    This is the simple practical problem. Personally, I desire to solve it if I can. I do not believe that this new Clause would help in doing that because, in my view, it would build up extra time while the trends of value of these bridges were established under its operation. If the new Clause were accepted and we had to establish those trends, we should take even more time to solve what is a very difficult, although small problem, than otherwise would be the case. It is on these strictly practical grounds that I advise the Committee that the new Clause is not helpful or necessary.
    Mr. Mitchison: This has been the most illuminating debate that we have had. It was well and truly started by my hon. Friend the Member for Fife, West (Mr. W. Hamilton), whose activity in this matter has, on any view of it, been in the public interest. I should have thought that one could not have made a better speech on a subject as absurd and ridiculous as this one. No one can really pretend that stuff about contracts made 200 years ago by a
    572
    Private Act or statutory protection given to ensure tax-free income for two or three centuries when the taxes in question did not exist at the time can possibly be the right test for what is to be done now. I must call the Financial Secretary back to attend to the new Clause on the Notice Paper. He hardly mentioned it.
    For 200 years, including the last 12 years of Tory Government, a number of people have been getting away with a tax-free income on grounds which cannot conceivably appeal to anybody with the remotest common sense or with the remotest idea of what is fair or of what the public interest is in a matter of this sort.
    All we are asking the Government to do is to find out the facts. It is obvious that they do not know them. One had only to listen, first, to my hon. Friend the Member for Fife, West and then to the Government reply. Surely, it is about time they found out. Do they seriously defend the proposition that they are entitled to go on year after year leaving this not very large but still reasonably fertile field of taxation untouched, or that they are entitled, as one of my hon. Friends rightly pointed out, to look closely at the taxation of 100 per cent. disabled men or of the ordinary worker who gets a P.A.Y.E. deduction and, at the same time, to shut their eyes deliberately to what we are considering tonight?
    Before this debate, I wondered what on earth any Tory—even a Tory—could say in defence of this extraordinary blindness of those who are supposed to be the custodians of the public revenue and who are supposed also to maintain some sort of equity between one group of taxpayers and another. I did not think that they could say anything. They have not said much, but they have uttered something. The way they have got out of it is simply to talk about something else.
    I say again to the Financial Secretary and to the Committee that we are not discussing compensation. For 200 years, these people have got away with this peculiar piece of property. For 12 years, successive modern Tory Governments have left them completely free of taxes of any sort, either income or Estate

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    Duty. Now all that we are asking is that the matter should be investigated for the purpose specified in the Clause of
    "determing whether, and to what manner and to what extent, it is expedient to impose taxation".
    Do the Government and the party opposite seriously say that that inquiry should not be made? If so, for what reason? Do they think that these people are entitled to go on like this? I am not talking about taking over the bridges, but am keeping to the Clause, which is simply a question of whether these people are entitled to enjoy a tax-free income in perpetuity. Look at the 30 years' effort of the hon. and gallant Member for Barkston Ash (Sir L. Ropner) and the previous 30
    years of his predecessor. During all that time, they were getting a tax-free income. I am not concerned on the Clause with whether these bridges should be taken over. That is not a question which could conceivably be raised in a Finance Bill Strictly speaking, I doubt whether much of the Financial Secretary's speech was in order. It had remarkably little connection with either the Clause or the Bill.
    I ask the Government once more to say, if they will not accept the Clause, what is their reason for declining to get the information for which it asked.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 141. Noes 191.

    Division No. 106.]

    AYES

    [10.23 p.m.

    Ainsley, William

    Griffiths, David (Rother Valley)

    Mulley, Frederick

    Allen, Scholefield (Crewe)

    Griffiths, W. (Exchange)

    Noel-Baker, Rt. Hn. Philip (Derby, S.)

    Awbery, Stan (Bristol, Central)

    Grimond, Rt. Hon. J.

    O'Malley, B. K.

    Bacon, Miss Alice

    Hamilton, William (West Fife)

    Oram, A. E.

    Barnett, Guy

    Harper, Joseph

    Oswald, Thomas

    Baxter, William (Stirlingshire, W.)

    Hayman, F. H.

    Owen, Will

    Beaney, Alan

    Herbison, Miss Margaret

    Pannell, Thomas (Leeds, W.)

    Bellenger, Rt. Hon. F. J.

    Hill, J. (Midlothian)

    Pavitt, Laurence

    Bence, Cyril

    Hilton, A. V.

    Pearson, Arthur (Pontypridd)

    Benn, Anthony Wedgwood

    Holman, Percy

    Pentland, Norman

    Bennett, J, (Glasgow, Bridgeton)

    Holt, Arthur

    Popplewell, Ernest

    Blackburn, F.

    Hooson, H. E.

    Prentice, R. E.

    Blyton, William

    Houghton, Douglas

    Probert, Arthur

    Boston, T.

    Hoy, James H.

    Pursey, Cmdr. Harry

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

    Hughes, Cledwyn (Anglesey)

    Rankin, John

    Bowen, Roderic (Cardigan)

    Hynd, John (Attercliffe)

    Redhead, E. C.

    Brockway, A. Fenner

    Janner, Sir Barnett

    Rees, Merlyn (Leeds, S.)

    Callaghan, James

    Jay, Rt. Hon. Douglas

    Rhodes, H.

    Carmichacl, Neil

    Jeger, George

    Roberts, Albert (Normanton)

    Collick, Percy

    Jones, Dan (Burnley)

    Robertson, John (Paisley)

    Corbet, Mrs. Freda

    Jones, Elwyn (West Ham, S.)

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

    Craddock, George (Bradford, S.)

    Jones, J. Idwal (Wrexham)

    Ross, William

    Cronin, John

    Jones, T. W. (Merioneth)

    Silkin, John

    Crossman, R. H. S.

    Kelley, Richard

    Slater, Mrs. Harriet (Stoke, N.)

    Cullen, Mrs. Alice

    King, Dr. Horace

    Slater, Joseph (Sedgefield)

    Dalyell, Tam

    Lawson, George

    Small, William

    Davies, G. Elfed (Rhondda, E.)

    Lee, Frederick (Newton)

    Smith, Ellis (Stoke, S.)

    Davies, Ifor (Gower)

    Lever, L. M. (Ardwick)

    Sorensen, R. W.

    Deer, George

    Lewis, Arthur (West Ham, N.)

    Spriggs, Leslie

    Delargy, Hugh

    Loughlin, Charles

    Stones, William

    Diamond, John

    Lubbock, Eric

    Symonds, J. B.

    Dodds, Norman

    Mabon, Dr. J. Dickson

    Taylor, Bernard (Mansfield)

    Doig, Peter

    McBride, N.

    Thomas, Iorwerth (Rhondda, W.)

    Duffy, A. E. P. (Colne Valley)

    MacColl, James

    Thompson, Dr. Alan (Dunfermline)

    Edwards, Rt. Hon. Ness (Caerphilly)

    MacDermot, Niall

    Thornton, Ernest

    Edwards, Walter (Stepney)

    Mclnnes, James

    Wade, Donald

    Evans, Albert

    McKay, John (Wallsend)

    Wainwright, Edwin

    Fernyhough, E.

    MacKenzie, J. G.

    Weitzman, David

    Finch, Harold

    MacPherson, Malcolm

    Wells, William (Walsall, N.)

    Foot, Dingle (Ipswich)

    Mallalieu, E. L. (Brigg)

    Whitlock, William

    Forman, J. C.

    Manuel, Archie

    Wilkins, W. A.

    Fraser, Thomas (Hamilton)

    Mapp, Charles

    Willey, Frederick

    Galpern, Sir Myer

    Mason, Roy

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

    George, LadyMeganLloyd (Crmrthn)

    Millan, Bruce

    Winterbottom, R. E.

    Ginsburg, David

    Milne, Edward

    Woodburn, Rt. Hon. A.

    Cordon Walker, Rt. Hon. P. C.

    Mitchison, G. R.

    Gourlay, Harry

    Morris, Charles (Openshaw)

    TELLERS FOR THE AYES:

    Grey, Charles

    Morris, John (Aberavon)

    Mr. Charles A. Howell and

    Dr. Broughton.

    NOES

    Agnew, Sir Peter

    Green, Alan

    Neave, Airey

    Allason, James

    Griffiths, Eldon (Bury St. Edmunds)

    Nugent, Rt. Hon. Sir Richard

    Anderson, D. C.

    Gurden, Harold

    Orr-Ewing, Sir Ian (Hendon, North)

    Atkins, Humphrey

    Hamilton, Michael (Wellingborough)

    Osborn, John (Hallam)

    Barlow, Sir John

    Harris, Reader (Heston)

    Osborne, Sir Cyril (Louth)

    Barter, John

    Harrison, Col. Sir Harwood (Eye)

    Page, Graham (Crosby)

    Batsford, Brian

    Harvey, John (Walthamstow, E.)

    Partridge, E.

    Berkeley, Humphry

    Hastings, Stephen

    Pearson, Frank (Clitheroe)

    Biffen, John

    Heald, Rt. Hon. Sir Lionel

    Percival, Ian

    Biggs-Davison, John

    Henderson, John (Cathcart)

    Pickthorn, Sir Kenneth

    Bingham, R. M.

    Hendry, Forbes

    Pitman, Sir James

    Birch, Rt. Hon. Nigel

    Hiley, Joseph

    Pounder, Rafton

    Bishop, Sir Patrick

    Hill, Mrs. Eveline (Wythenshawe)

    Prior, J. M. L.

    Black, Sir Cyril

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

    Proudfoot, Wilfred

    Bourne-Arton, A.

    Hirst, Geoffrey

    Pym, Francis

    Box, Donald

    Hobson, Rt. Hon. Sir John

    Redmayne, Rt. Hon. Martin

    Boyd-Carpenter, Rt. Hon. John

    Holland, Philip

    Rees-Davies, W. R. (Isle of Thanet)

    Brewis, John

    Hollingworth, John

    Renton, Rt. Hon. David

    Bromley-Davenport, Lt.-Col. SirWalter

    Hope, Rt. Hon. Lord John

    Rippon, Rt. Hon. Geoffrey

    Brown, Alan (Tottenham)

    Hopkins, Alan

    Roots, William

    Bryan, Paul

    Hornby, R. P.

    Ropner, Col. Sir Leonard

    Bullard, Denys

    Hornsby-Smith, Rt. Hon. Dame P.

    Scott-Hopkins, James

    Bullus, Wing Commander Eric

    Howard, John (Southampton, Test)

    Seymour, Leslie

    Campbell, Gordon

    Hughes Hallett, Vice-Admiral John

    Shaw, M.

    Carr, Compton (Barons Court)

    Hughes-Young, Michael

    Shepherd, William

    Chataway, Christopher

    Hulbert, Sir Norman

    Skeet, T. H. H.

    Chichester-Clark, R.

    Hutchison, Michael Clark

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

    Clark, Henry (Antrim, N.)

    Iremonger, T. L.

    Spearman, Sir Alexander

    Clark, William (Nottingham, S.)

    Irvine, Bryant Godman (Rye)

    Stainton, Keith

    Clarke, Brig. Terence (Portsmth, W.)

    Johnson, Eric (Blackley)

    Stevens, Geoffrey

    Cole, Norman

    Johnson Smith, Geoffrey

    Steward, Harold (Stockport, S.)

    Cooke, Robert

    Jones, Rt. Hn. Aubrey (Hall Green)

    Stoddart-Scott, Col. Sir Malcolm

    Cooper-Key, Sir Neill

    Kaberry, Sir Donald

    Storey, Sir Samuel

    Corfield, F. V.

    Kerans, Cdr. J. S.

    Studholrne, Sir Henry

    Coulson, Michael

    Kerr, Sir Hamilton

    Summers, Sir Spencer

    Courtney, Cdr. Anthony

    Kirk, Peter

    Talbot, John E.

    Critchley, Julian

    Langford-Holt, Sir John

    Tapsell, Peter

    Curran, Charles

    Leavey, J. A.

    Taylor, Edwin (Bolton, E.)

    Dalkeith, Earl of

    Lewis, Kenneth (Rutland)

    Taylor, Sir William (Bradford, N.)

    Dance, James

    Lilley, F. J. P.

    Teeling, Sir William

    Deedes, Rt. Hon. W. F.

    Linstead, Sir Hugh

    Temple, John M.

    Digby, Simon Wingfield

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Thatcher, Mrs. Margaret

    Donaldson, Cmdr. C. E. M.

    Longden, Gilbert

    Thomas, Sir Leslie (Canterbury)

    Doughty, Charles

    Loveys, Walter H.

    Thompson, Sir Richard (Croydon, S.)

    Douglas-Home, Rt. Hon. Sir Alec

    Lucas-Tooth, Sir Hugh

    Touche, Rt. Hon. Sir Gordon

    du Cann, Edward

    MacArthur, Ian

    Turner, Colin

    Duncan, Sir James

    Maclay, Rt. Hon. John

    Turton, Rt. Hon. R. H.

    Elliot, Capt. Walter (Carahalton)

    Maclean, SirFitzroy (Bute&N. Ayrs)

    Tweedsmuir, Lady

    Emmett, Hon. Mrs. Evelyn

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

    van Straubenzee, W. R.

    Farr, John

    McMaster, Stanley R.

    Vaughan-Morgan, Rt. Hon. Sir John

    Finlay, Graeme

    Macmillan, Maurice (Halifax)

    Walder, David

    Fisher, Nigel

    Maginnis, John E.

    Walker, Peter

    Fletcher-Cooke, Charles

    Maitland, Sir John

    Walker-Smith, Rt. Hon. Sir Derek

    Fraser, Ian (Plymouth, Sutton)

    Markham, Major Sir Frank

    Wall, Patrick

    Galbraith, Hon. T. G. D.

    Mathew, Robert (Honiton)

    Ward, Dame Irene

    Gammans, Lady

    Matthews, Gordon (Meriden)

    Wells, John (Maidstone)

    Gardner, Edward

    Maude, Angus (Stratford-on-Avon)

    Whitelaw, William

    Gibson-Watt, David

    Maudling, Rt. Hon. Reginald

    Williams, Dudley (Exeter)

    Giles, Rear-Admiral Morgan

    Mawby, Ray

    Williams, Paul (Sunderland, S.)

    Gilmour, Ian (Norfolk, Central)

    Maxwell-Hyslop, R. J.

    Wills, Sir Gerald (Bridgwater)

    Gilmour, Sir John (East Fife)

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

    Wilson, Geoffrey (Truro)

    Glover, Sir Douglas

    Mills, Stratton

    Worsley, Marcus

    Glyn, Dr. Alan (Clapham)

    Montgomery, Fergus

    Goodhew, Victor

    More, Jasper (Ludlow)

    TELLERS FOR THE NOES:

    Gower, Raymond

    Morrison, Charles (Devizes)

    Mr. McLaren and Mr. Hugh Rees.

    New Clause.—(EXTENSION OF RELIEF UNDER SECTION 9 OF FINANCE ACT 1956.)
    (1) Section 9(1) and (2) of the Finance Act 1956 (which provides relief from income tax on certain savings bank interest), shall, subject to the provisions of the next following subsection, apply in respect of dividends on shares of a society registered under the Industrial and Provident Societies Acts 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland) 1893 to 1955, and in respect of interest on deposits with such a society or with a registered friendly society, as they apply in respect of interest on deposits with the Post Office savings bank.
    (2) Where by virtue of the last foregoing subsection the amount of surtax payable by an individual would exceed the sum of—

    (a) the amount of surtax which would have been payable by him, if that subsection had not been passed, and

    (b) the amount of relief, if any, to which he is entitled by virtue of that subsection,

    that excess shall be disregarded for all the purposes of the Income Tax Acts.—[Mrs. Slater.]
    Brought up, and read the First time.
    10.33 p.m.
    Mrs. Harriet Slater: I beg to move, That the Clause be read a Second time.
    The Chairman: It will also be possible to discuss at the same time the following new Clauses: Clause No. 13:
    (1) As from the beginning of August 1964, and in relation to any trade or business carried on by a society registered under the Industrial and Provident Societies Acts 1893 to 1961, or under the Industrial and Provident Societies Acts (Northern Ireland) 1893 to 1955, the rate at which the profits tax is to be charged shall be three per cent.
    (2) This section shall have effect notwithstanding any enactment to the contrary whether in this Act or elsewhere.
    Clause No. 14:
    (1) Profits tax shall not be chargeable for any period after 31st March, 1964, for the profits arising from the business of any building society.
    (2) For the purposes of this section the expression "building society" has the meaning attributed to it in section 445 (building societies) of the Income Tax Act 1952.
    Clause No. 26:
    (1) Income tax and profits tax shall not be chargeable for any period after the 31st March 1964 upon the profits arising from the business of any building society.
    (2) Nothing in this section shall hinder the making of arrangements under section 445
    578
    (building societies) of the Income Tax Act 1952; but any such arrangements shall be consonant with and subject to the last foregoing subsection of this section.
    (3) For the purposes of this section the expression "building society" has the meaning attributed to it in the said section 445.
    and Clause No. 28:
    (1) Section 9(1) and (2) of the Finance Act 1956 (which provides relief from income tax on certain savings bank interest), shall, subject to the provisions of the next following subsection, apply in respect of dividends or interest on shares and deposits of a building society within the meaning of section 445 of the Income Tax Act 1952 as they apply in respect of interest on deposits with the Post Office Savings Bank.
    (2) Where by virtue of the last foregoing subsection the amount of surtax payable by an individual would exceed the sum of—

    (a) the amount of surtax which would have been payable by him, if that subsection had not been passed, and

    (b) the amount of relief, if any, to which he is entitled by virtue of that subsection,

    that excess shall be disregarded for all the purposes of the Income Tax Acts.
    Mrs. Slater: I am glad that we shall be able to discuss these other Clauses at the same time, Sir William. Since we are doing so, I find myself in rather strange company. This issue has now become a hardy annual. Each year we raise it and each year we get no response from the Government, just as we get no response on so many other things. Just as last night they denied help to widows and other people, so they have so far denied justice to co-operative societies in this case. One is forced to the conclusion that it is pure political prejudice that compels the Government to go on saying "No".
    The first of these new Clauses deals with the small saver. In 1956 Income Tax concessions were made to people who saved money in the Post Office Savings Bank or in a trustee savings bank. The first £15 of interest earned on savings was exempt from tax. The Co-operative movement has always encouraged small savings. The dividends earned by members is very often invested in share capital. The 5s. or 10s.—or in the old days 1s.—invested in the Penny Bank has enabled members to build up nest eggs for rainy days, and, however strange it may sound, when I had saved my first £100 of share capital in the

    579
    co-operative society, I thought that I had almost reached the millennium; I felt that I was a rich woman. I know that people who have saved money in this way have been able to buy many things which they would not otherwise have been able to do.
    The Co-operative movement differs from large companies in many respects. By Statute a person is limited to £1,000 share capital, and to £50 in the Penny Bank, but because a man and wife are taxed separately they are allowed to have more than £1,200 in the Post Office Savings Bank or a trustee savings bank and still be exempt from paying tax on the interest. In the Co-operative movement all the interest on share capital and on money in the Penny Bank is eligible for tax.
    The Co-operative movement has about £300 million in savings, of which about £255 million is in share capital. It has always encouraged the small saver. It is a movement of thrift, and I do not think that anyone can deny that it has done a lot of good for its members. In the days of the early strikes, the help that it gave to miners and others saved them from dire poverty and starvation.
    The small saver in the Co-operative movement is compelled to pay tax on the interest that he earns on his savings. The result is that some people withdraw their savings and invest them in other forms of saving, such as the Post Office and the trustee savings bank.
    There is another way in which the Government discriminate against the small saver in the Co-operative movement. If he replies for a supplementary pension, there is a great difference between the amount that he is allowed to have in savings, and the amount that a person is allowed to have in the Post Office or in the trustee savings bank at the time when he applies for a similar pension. Because of politial prejudice, those poor souls who apply for National Assistance are faced with the difficulty that if they have savings in the Cooperative movement they receive a smaller amount than they would do if they had money in the Post Office.
    The Co-operative movement invests much of its shareholding capital in Government, local authority and public
    580
    body stocks. The latest figures show that about 34 per cent. of its shareholding capital is invested in such securities. More than 13 million people belong to the movement, and between them they have saved a large sum of money.
    New Clause No. 13 deals with Profits Tax. Its object is to restore the position which existed before the 1958 Act, when the rate of tax on cooperative societies was raised from 3 per cent. to 10 per cent. From 1947 to 1958 the co-operative societies had been assessed for Profits Tax as though they made no distribution of profits to shareholders; in fact, the money they paid to their shareholders took the form of dividends on purchases. Co-operative societies do not distribute their surpluses as limited liability companies distribute theirs. Co-operative societies seek not to maximise the profits for their shareholders but rather to act in the interest of the consumers who purchase from them.
    Co-operative society shares remain at par and are not subject to fluctuations on the stock exchange, or even to the wangles which go on in some companies, whereby shareholders get three shares for two and four shares for three, and therefore build up their shareholding. The effect of the tax falls on the ordinary shareholders in limited liability companies, whereas in the Co-operative movement the effect of the extra Profits Tax falls on its own co-operative membership, and therefore on the purchasing members. Companies are paying about half the pre-1958 tax whereas, because of this discrimination, co-operative societies are paying five times more then they did pre-1958.
    I hope that the Government will realise that the people concerned are citizens of this country who, because of their desire to help themselves ever since the Co-operative movement was started, ought to have justice meted out to them.
    Mr. Donald Wade: I want to refer to the two new Clauses, Nos. 26 and 28, which you have indicated, Mr. Chairman, may be discussed with the Clause the Second Reading of which has been moved. Both the new Clauses to which I am referring relate to the taxation of building societies. This is a subject in which

    581
    the Economic Secretary may have some interest There is not much new to say about the first of the Clauses, but it is none the less important. It provides for the relief of building societies surpluses from Income Tax and Profits Tax. The surplus is the difference between the amount which the building society receives from its borrowers and the amounts it has to pay to investors, and the tax in respect of them.
    Some hon Members consider that the tax relief for which I am asking should not apply to the profits on special advances. I would have no objection to the omission of special advances from the provisions of the Clause. The amount of tax involved in special advances is small as compared with the total, and I would have no quarrel with their omission.
    Year after year we have discussed the subject of the taxation of building society surpluses. One of the arguments put before us by the Government is that a building society resembles a commercial undertaking rather than a body concerned with savings. I find it difficult to accept that view. I take the view that building societies should be regarded primarily as part of the savings movement. But whatever view one takes as to the category in which building societies should be placed, the practical point is that the amount of tax extracted from them indirectly affects a large number of home buyers. I suggest that the subject should be approached from that angle.
    10.45 p.m.
    As I have said on previous occasions, the surplus is not profit in the strict sense of the word. There are several provisions which have to be observed in investing these surpluses, and there are, of course, no equity shareholders in a building society and no ordinary shareholders to whom any part of these surpluses could be paid. The only persons who can benefit by the relief of taxation on a building society are those buying their homes through the society.
    We are faced with these simple questions. Is home ownership socially desirable? Should it be encouraged? If so, can it be encouraged by any tax reforms which would not create any embarrassing precedents and would not
    582
    be unfair to those who have rented accommodation? I believe it is in the interests of the country as a whole that home ownership should be extended and encouraged, but mere pious expressions of good will are not enough. We should remember that those who are buying their own homes, or who are anxious to do so, have a great many frustrating experiences to contend with.
    Prices are continually going up. I shall read some short passages from the May issue of Building Society Affairs:
    "The upward trend in the price of new houses continues, the provisional figure for the March quarter of 1964 having risen by three points. Since the index was started in 1956 the price of new houses has risen by almost 47 per cent.
    The index covers the whole of Great Britain. Similar indices for particular regions, e.g., the London area, would therefore show marked variations from the figures quoted."
    The most marked increases are in the London and south-east area. But it is not only the price of houses which is rising. The cost of travel to and from work is continually going up and in most cases rates are going up also. Any reduction in the interest payable on building society mortgages would therefore provide a welcome relief.
    The question is, what can be done? In deciding the amount of interest to charge the; building societies have little room for manœuvre. They are in competition with the National Savings Movement and cannot ignore the comparatively high interest rates which the Government offer in order to obtain National Savings. The rate of interest charged by building societies is therefore very largely determined by Government policy. It would seem that there is no logical reason for adding to these difficulties by taxing building society surpluses. The first of the two new Clauses I am discussing is to grant relief from Profits Tax and Income Tax on the surpluses. I do not think any new precedent would be involved because we would be reverting to a state of affairs which existed about 30 years ago. It might be argued that it would be illogical to discontinue the Profits Tax and to retain Income Tax on these surpluses since the two go together. This Clause provides for the abolition of both forms of tax on the surpluses.

    583
    The second Clause is a new one. It is intended to provide relief from tax on the first £15 of interest on moneys invested in a building society. This would put building societies in a similar position to the Post Office Savings Bank. There is a certain amount of misunderstanding as to the way in which building societies suffer tax as far as investors are concerned. For the record I point out that those who invest in building societies are not at present relieved from any tax.
    They receive their interest free of any deduction of tax—because the tax that would be payable has been accounted for by the building societies to the Treasury by way of composite rate—but account is taken of the fact that some of the investors in building societies have incomes below the level of Income Tax liability. The Treasury does not lose. The composite rate is calculated by reference to the total amount the Exchequer would receive if each individual investor had to pay Income Tax direct.
    As I said last year, the Exchequer gets its full pound of flesh and, at the same time, there are considerable administrative savings. Therefore, if relief were granted on the first £15 of interest it would alter the composite rate and reduce the total amount that building societies would have to pay to the Exchequer. This, in turn, would benefit the building society movement, and help both those who invest in building societies and those who borrow from them. The combined effect of these two proposals would be a useful contribution.
    This is the last opportunity the Government will have before the General Election to take some practical steps to help home buyers, and I hope that the arguments that have been deployed on the subject year after year will at last bear fruit.
    Mr. Maurice Macmillan: This is a familiar argument, and we have discussed these matters on many previous occasions. As my predecessor said last year, we have been discussing five separate propositions that have certain common threads running through them. First, let me get one thing clear. The Government and hon. Members on this side of the Committee are in no way prejudiced, as the hon.
    584
    Lady the Member for Stoke-on-Trent, North (Mrs. Slater) alleged, against cooperative societies for political or, indeed, for any other reasons. That came out in last year's debate perhaps rather more clearly than it has done on this occasion. I should like to pay my tribute to the work that the co-operative societies do in encouraging small savings and assisting thrift. As the Committee may know, that general proposition has been very dear to me for quite some time.
    The new Clauses propose to extend to building societies and co-operative societies the provisions of Section 9 of the Finance Act, 1956. That provision was directed very particularly at institutions lending to the Government directly at a statutory 2½per cent., and aimed entirely at the small saver. It was designed with this specific purpose in mind, and it did not include trusts or corporate bodies. It was, as has been recalled from time to time, introduced by the right hon. Gentleman the Member for Bromley (Mr. Harold Macmillan), who made that point very clear in 1956, and I think that it has been repeated from this side on several occasions.
    Perhaps it is that repetition that has led to the charge of a certain rigidity in the point of view of the Government and the Treasury in this matter. I do not think that it is a fair charge, because this is not only a question of helping the small saver, but of maintaining a particular purpose which was, as I have said, direct lending to the Government.
    These various new Clauses would not cost very much in themselves but they would undoubtedly lead to pressures—as we have had—to exempt from Income Tax the first £15 of all small savers' dividends and interest, which would amount to the considerable sum of something in excess of £40 million.
    It has been claimed that the co-operative societies and friendly societies are in a position of special need in the sense that they have faced over the years certain difficulties, which I think one must admit is true, but I suggest to the Committee that many of these difficulties come from trading competition rather than from being treated in an unfair way by the Government.
    As far as the extension of relief under Section 9 of the Finance Act, 1956, is

    585
    concerned, I would point out to the Committee that in the case of friendly societies the total amounts remaining invested at the end of 1952 were some £216 million, which increased at the end of 1962 to some £264 millon, an increase of 22 per cent. The comparable increase in National Savings Certificates, which are privileged in this way, was only 19 per cent., whereas by comparison the amount in the Post Office Savings Bank was minus 3 per cent., so that friendly societies, as compared with the privileged Post Office Savings Bank and National Savings Certificates, have fared rather better over the years. Of course, building societies have fared a great deal better, the amounts remaining invested at the end of 1962 being 162 per cent. more than in 1952.
    Mr. Oram: I wonder if the Economic Secretary happens to have separate figures in respect of agricultural cooperative societies. Can he say how they have fared in comparison with the categories to which he has referred? I know that they are particularly concerned about the difficulties in respect of savings and Profits Tax, which make it difficult for them to accumulate funds which they need for their operations. Since some of my hon. Friends are among those who are keen supporters of agricultural cooperative societies, I wonder if the hon. Gentleman has that information to give the Committee.
    Mr. Macmillan: I am afraid that I have not with me tonight the breakdown into the separate categories of cooperative societies. I have only the broad overall figures, but I will certainly look the information up for the hon. Gentleman and get in touch with him.
    Concerning the point about extending the relief to the first £15 of dividends, I think that the considerations that obtained in previous debates must be adhered to now. This special relief was designed to apply to institutions lending direct to the Government at the statutory rate of interest. The Committee will remember that this privilege was extended to any body which could meet these conditions, but it was only, in fact, the Birmingham Municipal Bank which found itself able to do so.
    Mr. Charles Loughlin: The Economic Secretary promised
    586
    my hon. Friend some figures, but unless he gets them reasonably quickly they will not influence in any way the deliberations of the Committee tonight. We can, if we desire, keep the debate going until the hon. Gentleman gets the figures and can then have an Adjournment a little later so that the information which he acquires can be of use to us. Could he possibly get the figures in the usual way now?
    Mr. Macmillan: I could not possibly get the figures tonight. I can assure the hon. Gentleman that they do not make the slightest difference to my argument which is that this concession is entirely for the narrow purpose that I have mentioned and is a criterion which the agricultural co-operative societies do not, in fact, meet. I merely gave overall figures to show that, as compared with other institutions, co-operative societies and friendly societies as a whole do not suffer unduly because of not having this privilege extended to them. The details do not in any way affect that argument one way or the other.
    11.0 p.m.
    The second group of Clauses exempts building societies from Profits Tax and Income Tax. The building society record is undoubtedly magnificent. I do not think that it will be argued that they have suffered over the years, considering that on 31st March this year the combined assets of the societies totalled £4,500 million. The case for continuing Profits Tax on building societies, cooperative societies, and so on, rests on the fact that they earn a surplus which, although it is not distributed, is in the nature of a trading surplus. This was the point made quite clearly by the Royal Commission when it decided in 1958, and the Government accepted the recommendation, that in the case of building societies, share interest as well as loan interest could be deducted in computing profits. These were liable to a flat rate of Profits Tax, although there was a differential between Profits Tax on distributed and undistributed profits.
    I do not think that the effect on home ownership of these tax concessions on Income Tax and Profits Tax, or on Profits Tax alone, is as great as all that. The effect on the mortgage rates, according to the Building Societies' Association

    587
    would be only about ½ per cent. if it was all passed on, but the Association also said that the societies would intend to use half the reduction to increase their reserves. Therefore the overall effect, allowing for tax relief, would be about ¼ per cent., or about 3s. 8d. on a net monthly payment for a £2,000 house over 20 years.
    The hon. Member who introduced into his argument the fact that the cost of houses was rising was rather arguing against himself, because clearly the easier terms for mortgage repayments will tend to put up rather than reduce the price of housing. As to his reference to the competition to the building societies of money from Government sources, the gross redemption yields of building societies are now running at about 5.7 per cent., which is only bettered among Government-financed savings institutions by the eleventh issue of Savings Certificates which run at about 6.2 per cent. if they are held full time, and of course they are limited to £600 in all.
    The next part of the argument was attached mostly to the relief of Profits Tax on co-operative societies as opposed to building societies. The argument here again is very similar. It is that co-operative societies are trading institutions and that to relieve them from Profits Tax would put them in an unfair competitive position vis-à-vis other traders. It is true that the share dividend is different in kind, as the hon. Lady the Member for Stoke-on-Trent, North pointed out, from dividend paid by ordinary companies, but that distinction is already met by Section 26 of the Finance Act, 1958, in that dividends paid by the societies are allowed as a deduction in computing their taxable profits whereas dividends paid by ordinary companies are not. There is a clear distinction which is already recognised by the law.
    Whether or not the schemes for relief from Profits Tax in relation to cooperative societies would act as an incentive to increase the rate of dividend on shareholdings, it is certain that the rate of dividend is low and I think it is fair to say that there is no difference in kind between the building societies and co-operative societies in this matter of dividends. They are both in their own
    588
    way trading, and they are both in then-own way earning a surplus. The fact that their surpluses are applied differently from those of normal trading companies is already recognised by the law, and therefore the surplus on which they are taxed is more in the nature of the reserves of an ordinary trading company than of its distributed profits.
    The case is that there is a greater need for encouragement of thrift and saving. I think no one in the Committee would deny this. On the other hand, it is worth reminding the Committee that the growth of savings over the last 10 or 12 years has been very great indeed. Taking separately what one might call the Government saving institutions—National Savings Certificates, Post Office Savings, Defence and Premium Bonds and Trustee Savings Banks, which are lending direct to the Government—in the years 1952–62 deposits went up by some 27 per cent. and all the other thrift institutions lumped together went up by some 66 per cent., including private pensions funds. Total savings are now running at the rate of nearly £2,000 million a year and represent something over 10 per cent. of personal disposable income.
    One cannot deny that the policies of this Government have encouraged savings, and I do not think that one can argue that the Government have discriminated unfairly against building societies or co-operative societies in their rôle in encouraging the smaller people in thrift and saving.
    Mr. Mitchison: It is getting late and one is rather tempted to go further into this matter than perhaps circumstances render suitable.
    My quarrel with the Government is not so much that they have not accepted one or other of these proposed Clauses, as that this is indeed a hardy annual, as my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) said in a very clear and forceful speech, and the Government have not really considered what lies behind it and the substantial reasons which exist for some change.
    May I start with the sum of £15? There is one unsatisfactory feature about the £15. This is supposed to be an inducement to people to lend their money to institutions which lend direct to the Government. But it is no inducement at

    589
    all to a tax-exempt man. It is no advantage to him. It is only an inducement to someone who has to pay taxes. If, for instance—and I am not suggesting that this is necessarily the right way of doing it—instead of giving that inducement, the Government were to allow an extra ½ per cent. interest, that would operate much more fairly as between the tax-exempt depositor and the tax-paying depositor. I do not say that that is necessarily the right method, but I am pointing out tht the present situation is not altogether satisfactory.
    I have never really understood the reason for this very curious line. It is a very clear line, but what is the reason for it? Surely, what any Chancellor of the Exchequer ought to consider is the promotion of savings, and, if he is to consider that, he will have to let in other bodies beyond those which lend directly and immediately to the Government. Comparatively few people realise that, if they put money into the Trustee Savings Bank, all they are doing in the ordinary branch of the bank is to lend money to a local branch of the Exchequer, which takes a small commission, I think, under this Bill for doing the job for the Government. One is not lending to anyone else at all.
    That is not the position as regards co-operative societies and building societies but they, equally, are a real channel for savings. Incidentally, I do not view an increase of 27 per cent. over 10 years as anything satisfactory. The Economic Secretary is a little bit of a poacher turned gamekeeper. In his poaching career, he used to encourage people to invest in shares. I have not the figures with me, but I imagine he will probably be able to confirm that investments in shares, unit trusts and the rest have gone up a good deal more than that, and, of course, there has been a fair amount of money diverted from one form of saving to another because of the difference.
    From that point of view, therefore, and taking, as I believe is right, the encouragement of saving as the important consideration, if one is to deal with the type of depositor we all have in mind in this connection, one ought to consider much more carefully than the Government have ever attempted to do the position of the ordinary channels
    590
    of saving for such people through the co-operative societies and the building societies.
    I recognise at once that what I have been saying about the £15 also applies to building societies, but that is a point which is, perhaps, a little remote today. There is no doubt that, if the right criterion is the encouragement of—I do net particularly like the expression—working-class saving, then the right thing to do is to give these advantages not merely to the direct lenders, as it were, the Trustee Savings Banks and the rest, but also to any group of bodies which are predominantly—I do not say exclusively—used for working-class savings. I do not think that it would cover the case of small depositors in an ordinary joint stock bank because a joint stock bank has many other functions, and one must have regard to the functions of the body in question. It would, however, cover both the cooperative societies and the building societies.
    I say again that the more one hears about it the more one is inclined to draw two conclusions about it. One is that this really is rather a difficult question. It is by no means necessarily the case that the particular remedies which we are proposing in these Clauses are the right ones. Moreover, it is a changing question. When we considered, a short time ago, what is now the Protection of Depositors Act, we had to consider numbers of new methods of saving which had cropped up in comparatively recent years and which had their effect one way or another on the type of saving we are considering tonight.
    I return to what I said at the beginning. My real quarrel with the Government is that, having had a hardy annual coming up year by year, which has been supported with a great deal of force and clarity by my hon. Friends and which has had some support, at least as regards building societies, from the Government's own supporters, they have never really applied their minds to what it is they want to do and whether their present provisions are the best method of doing it. It is because of that feeling that I hope that the Committee will divide on these Clauses as a matter of principle.

    591
    To turn to the other two points, I think I am right in saying that my hon. Friends have not put down any Amendments about Income Tax either in relation to building societies or in relation to co-operative societies. However, they have put down Amendments about Profits Tax although, of course, Profits Tax is really rather an absurdity. It is not defended any longer as a tax on profit and, in fact, if one presses the Government on the point one gets the answer that it has become something much wider.
    11.15 p.m.
    If that is the position, is there a real case for levying a general tax—which it is—on these particular firms and institutions? If one considers the co-operative societies one finds that the Chancellor is always fair, but he must recognise that the co-operative societies do have difficulties in raising capital. That is something, perhaps, inherent in their form and character as trading organisations, but I cannot agree that the difficulty arises from trading difficulties.
    I should have thought that they were not the people to pay this tax, and we suggest a compromise. Whereas they used to pay 3 per cent. when two rates existed for distributed and undistributed profits, we always thought that when a change was made which had clearly very little concern with their position, the rate shot up as a consequence. Here again, I do not feel particularly wedded to this or that remedy, but I should like to know what is the right thing to do. I would have hoped that the Government would have taken time over the
    years which it has had to treat this hardy annual with more respect. I have wondered why it was there year after year.
    So far as the building societies are concerned, the point is broadly the same. It is true that Profits Tax has changed in relation to them and it would have made a very small difference. Yet in the building society payments, a very small difference might make a very large practical difference to all the people concerned. Those people have had a rough time as a result of the Government's changes in financial policy and the changes in interest rates payable on mortgages. I do not want to develop that point at this hour of the night, but I must say that I find it difficult to see why they should be charged with Profits Tax. I may be told that this matter was before the Royal Commission, but the Royal Commission was considering taxation alone, whereas the Chancellor has a much wider duty including the promotion of savings and he is right to say that on both sides of the Committee we have always taken that view.
    We are not satisfied with the Government's answer, and it is quite fair to give them one dig in the ribs at the end. We are particularly dissatisfied with the attitude of the Government over this kind of thing and people who get profit from tolls and have not to pay any tax. I hope that the Committee will support the first of these Clauses.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 100, Noes 150.

    Division No. 107.]

    AYES

    [11.19 p.m.

    Ainsley, William

    Davies, Ifor (Gower)

    Hayman, F. H.

    Awbery, Stan (Bristol, Central)

    Delargy, Hugh

    Herbison, Miss Margaret

    Barnett, Guy

    Diamond, John

    Hill, J. (Midlothian)

    Baxter, William (Stirlingshire, W.)

    Dodds, Norman

    Holman, Percy

    Bence, Cyril

    Duffy, A. E. P. (Colne Valley)

    Holt, Arthur

    Benn, Anthony Wedgwood

    Edwards, Rt. Hon. Ness (Caerphilly)

    Hooson, H. E.

    Bennett, J. (Glasgow, Bridgeton)

    Evans, Albert

    Houghton, Douglas

    Blackburn, F.

    Fernyhough, E.

    Hoy, James H.

    Blyton, William

    Finch, Harold

    Hughes, Cledwyn (Anglesey)

    Boston, T.

    Foot, Dingle (Ipswich)

    Hynd, John (Attercliffe)

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

    Fraser, Thomas (Hamilton)

    Janner, Sir Barnett

    Bowen, Roderic (Cardigan)

    Galpern, Sir Myer

    Jeger, George

    Callaghan, James

    George, Lady MeganLloyd (Crmrthn)

    Jones, Elwyn (West Ham, S.)

    Carmichael, Neil

    Gordon Walker, Rt. Hon. P. C.

    Jones, J. Idwal (Wrexham)

    Craddock, George (Bradford, S.)

    Gourlay, Harry

    Jones, T. W. (Merioneth)

    Cronin, John

    Grey, Charles

    King, Dr. Horace

    Crossman, R. H. S.

    Griffiths, W. (Exchange)

    Lawson, George

    Cullen, Mrs. Alice

    Grimond, Rt. Hon. J.

    Lever, L. M. (Ardwick)

    Dalyell, Tam

    Hamilton, William (West Fife)

    Loughlin, Charles

    Davies, G. Elfed (Rhondda, E.)

    Harper, Joseph

    Lubbock, Eric

    Mabon, Dr. J. Dickson

    Pavitt, Laurence

    Spriggs, Leslie

    McBride, N.

    Pentland, Norman

    Taylor, Bernard (Mansfield)

    MacColl, James

    Popplewell, Ernest

    Thompson, Dr. Alan (Dunfermline)

    MacDermot, Niall

    Probert, Arthur

    Wade, Donald

    Mclnnes, James

    Redhead, E. C.

    Wainwright, Edwin

    MacKenzie, J. G.

    Rees, Merlyn (Leeds, S.)

    Whitlock, William

    Manuel, Archie

    Rhodes, H.

    Wilkins, W. A.

    Mapp, Charles

    Roberts, Albert (Normanton)

    Willis, E. C. (Edinburgh, E.)

    Millan, Bruce

    Robertson, John (Paisley)

    Winterbottom, R. E.

    Milne, Edward

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

    Woodburn, Rt. Hon. A.

    Mitchison, G. R.

    Ross, William

    Morris, Charles (Openshaw)

    Silkin, John

    TELLERS FOR THE AYES:

    Morris, John (Aberavon)

    Slater, Mrs. Harriet (Stoke, N.)

    Mr. Charles A. Howell and

    O'Malley, B. K.

    Slater, Joseph (Sedgefield)

    Dr. Broughton.

    Oram, A. E.

    Small, William

    NOES

    Agnew, Sir Peter

    Green, Alan

    Neave, Airey

    Allason, James

    Griffiths, Eldon (Bury St. Edmunds)

    Osborn, John (Hallam)

    Anderson, D. C.

    Gurden, Harold

    Page, Graham (Crosby)

    Atkins, Humphrey

    Hamilton, Michael (Wellingborough)

    Partridge, E.

    Awdry, Daniel (Chippenham)

    Harrison, Col. Sir Harwood (Eye)

    Pearson, Frank (Clitheroe)

    Barter, John

    Harvey, John (Walthamstow, E.)

    Percival, Ian

    Batsford, Brian

    Heald, Rt. Hon. Sir Lionel

    Pounder, Rafton

    Berkeley, Humphry

    Hendry, Forbes

    Powell, Rt. Hon. J. Enoch

    Biffen, John

    Hiley, Joseph

    Prior, J. M. L.

    Biggs-Davison, John

    Hill, Mrs. Eveline (Wythenshawe)

    Proudfoot, Wilfred

    Bingham, R. M.

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

    Pym, Francis

    Birch, Rt. Hon. Nigel

    Hirst, Geoffrey

    Redmayne, Rt. Hon. Martin

    Bishop, Sir Patrick

    Hobson, Rt. Hon. Sir John

    Rees-Davies, W. R. (Isle of Thanet)

    Black, Sir Cyril

    Holland, Philip

    Renton, Rt. Hon. David

    Bourne-Arton, A.

    Hollingworth, John

    Roberts, Sir Peter (Heeley)

    Box, Donald

    Hope, Rt. Hon. Lord John

    Shaw, M.

    Boyd-Carpenter, Rt. Hon. John

    Hopkins, Alan

    Shepherd, William

    Boyle, Rt. Hon. Sir Edward

    Hornsby-Smith., Rt. Hon. Dame P.

    Skeet, T. H. H.

    Brewis, John

    Howard, John (Southampton, Test)

    Smith, Dudley (Br'ntf'rd & Chiswlok)

    Brown, Alan (Tottenham)

    Hughes-Young, Michael

    Stainton, Keith

    Bryan, Paul

    Hulbert, Sir Norman

    Steward, Harold (Stockport, S.)

    Buck, Antony

    Iremonger, T. L.

    Stoddart-Scott, Col. Sir Malcolm

    Bullard, Denys

    Irvine, Byrant Godman (Rye)

    Storey, Sir Samuel

    Carr, Compton (Barons Court)

    Johnson, Eric (Blackley)

    Studholme, Sir Henry

    Chataway, Christopher

    Johnson Smith, Geoffrey

    Summers, Sir Spencer

    Chichester-Clark, R.

    Jones, Rt. Hon. Aubrey (Hall Green)

    Talbot, John E.

    Clark, Henry (Antrim, N.)

    Kaberry, Sir Donald

    Tapsell, Peter

    Clark, William (Nottingham, S.)

    Kerr, Sir Hamilton

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

    Clarke, Brig. Terence (Portsmth, W.)

    Kirk, Peter

    Taylor, Sir William (Bradford, N.)

    Cooke, Robert

    Langford-Holt, Sir John

    Teeling, Sir William

    Corfield, F. V.

    Leavey, J. A.

    Temple, John M.

    Courtney, Cdr. Anthony

    Lewis, Kenneth (Rutland)

    Thomas, Sir Leslie (Canterbury)

    Curran, Charles

    Lilley, F. J. P.

    Thompson, Sir Richard (Croydon, S.)

    Dalkeith, Earl of

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Touche, Rt. Hon. Sir Gordon

    Doughty, Charles

    Longden, Gilbert

    Turner, Colin

    Douglas-Home, Rt. Hon. Sir Alec

    Loveys, Walter H.

    Turton, Rt. Hon. R. H.

    du Cann, Edward

    Lucas-Tooth, Sir Hugh

    van Straubenzee, W. R.

    Elliot, Capt. Walter (Carshalton)

    MacArthur, Ian

    Vaughan-Morgan, Rt. Hon. Sir John

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

    McLaren, Martin

    Walder, David

    Farr, John

    McMaster, Stanley R.

    Walker, Peter

    Fisher, Nigel

    Macmillan, Maurice (Halifax)

    Walker-Smith, Rt. Hon. Sir Derek

    Fletcher-Cooke, Charles

    Maginnis, John E.

    Ward, Dame Irene

    Fraser, Ian (Plymouth, Sutton)

    Mathew, Robert (Honiton)

    Wells, John (Maidstone)

    Gammans, Lady

    Matthews, Gordon (Merlden)

    Whitelaw, William

    Gibson-Watt, David

    Maude, Angus (Stratford-on-Avon)

    Williams, Dudley (Exeter)

    Giles, Rear-Admiral Morgan

    Maudlins, Rt. Hon. Reginald

    Williams, Paul (Sunderland, S.)

    Gilmour, Ian (Norfolk, Central)

    Maxwell-Hyslop, R. J.

    Wilson, Geoffrey (Truro)

    Gilmour, Sir John (East Fife)

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

    Worsley, Marcus

    Glover, Sir Douglas

    Mills, Stratton

    Goodhew, Victor

    More, Jasper (Ludlow)

    TELLERS FOR THE NOES:

    Gower, Raymond

    Morrison, Charles (Devizes)

    Mr. Finlay and Mr. Hugh Rees.

    New Clause.—(PROFITS ON FORCED CONVERSION OF INVESTMENTS.)
    Section 434 (2) of the Income Tax Act 1952 shall be amended by the addition of the following paragraph—
    "(d) any exchange of securities effected in pursuance of a scheme of reconstruction or amalgamation under section 208 or 209 of the Companies Act 1948".—[Sir J. Barlow.]
    Brought up, and read the first time.
    Sir John Barlow: I beg to move, That the Clause be read a Second time.
    It is known that finance companies deal normally in shares and stocks of all kinds, and these may be wholly or partly in all kinds of securities. When there is a take-over bid or reconstruction and the company does not voluntarily sell the securities it technically

    595
    makes a paper profit. In such a case, as I say, there has been no sale whatsoever, but, as the law stands at present, this paper profit is subject to tax, although it is virtually forced on the company, whether it wishes it or not, by the reconstruction or take-over bid, as the case may be.
    Such a profit is ignored for the purpose of the capital gains tax passed last year. I consider that that is the right approach to this type of paper profit, and the Government have already recognised this inequality in connection with paper gains on the conversion of their own securities. I would suggest that my new Clause remedies this present inequality, and I hope that the Government will see fit to accept it.
    11.30 p.m.
    Mr. Green: My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) has raised a specialised point. It is really a technicality but nevertheless interesting. I cannot accept the Clause for what I hope will be a reason that will appeal to him. It is not true that an exchange of securities or a take-over or merger is necessarily a forced conversion.
    This would be so even where Section 209 is applied, because there are cases when these shares are taken up and, in the case of 10 per cent., force majeure, as it were, can be applied in the perfect knowledge that this will, or can be, applied. Therefore, these are cases where it is a voluntary action and not a forced action.
    I suggest to my hon. Friend, therefore, that it is not true, as the rubric and the Clause suggest, that these are necessarily forced conversions. Perhaps he would like to talk to me about this so that I can examine with him any particular case he has in mind rather than make this rather general provision which the Clause would secure.
    Mr. Mitchison: My only comment is that I wonder how that talk will compare with the one about tax-free tolls.
    Sir J. Barlow: My hon. Friend the Financial Secretary has said that these are not necessarily forced profits but it is true to say that in almost all cases of reconstruction or take-overs they are virtually forced profits in that the taking over company usually gets the requisite percentage—75 or 90 per cent., whatever it may be—for the purpose and the smaller shareholders have to accept what is offered to them. In that case it is forced.
    However, since my hon. Friend has offered to discuss this matter sympathetically with me I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    Motion made, and Question proposed, That the Chairman do report Progress and ask leave to sit again.—[Mr. Maudling.]
    Mr. James Callaghan: I acknowledge the civilised way in which the Government have behaved on this occasion. It seems to me that we really are discussing these matters at the best time of day, although I think that the arguments from one side of the Committee on the whole have been superior to those from the other side.
    The Chancellor of the Exchequer (Mr. Reginald Maudling): Hear, hear.
    Mr. Callaghan: I put it in a suitably neutral form. Nevertheless, I feel that such arguments as the Government can advance are best advanced during the early hours of our sittings and not during late ones. The way in which we have conducted the Bill in the sense of trying to finish at about this time of day is best conducive to the disposal of the business. As far as we are concerned, we shall endeavour to pursue that course in order to try to get the day's business through at a reasonable time.
    Question put and agreed to.
    Committee report Progress; to sit again Tomorrow.

  CRAMLINGTON AND KILLING-WORTH, NORTHUMBERLAND
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]
  11.35 p.m.
  Mr. Edward Milne: One of the most refreshing features arising from the problem of North-East unemployment and the attraction of industry to the region has been the efforts of local authorities to set in motion far-sighted schemes to revive the economy and to secure full employment at an early date. Long before the Government had realised, the extent of the problem on their hands, and prior to the appointment of the then Lord Hailsham as the Minister responsible for the North-East, Northumberland County Council, in conjunction with other local authorities in the county, was getting down to the task of attracting industrialists northwards.
  Since then many firms which have established themselves there have found that all the good things said about Northumberland and about Northumbrians are correct, and those who have come are the strongest advocates for bringing others to share what Northumberland and the North-East has to offer.
  Although we welcome the improving position of the last eight to twelve months, we must not lose sight of the fact that it is possible to take too optimistic a view of the employment prospects in the North-East. As the Parliamentary Secretary knows, during 1955 and 1956, and into 1957, our unemployment figures were about the national average. Even with the improved position of recent months, our figures are too far ahead of those for the Midlands and the South to engender any thoughts of complacency.
  The Government's White Paper on the North-East said that the decline in the labour requirements of the region's traditional heavy industries would be offset by the growth of employment in the newer manufacturing industries which could be expected to grow in the region as fast as elsewhere. The growth rate in the North-East will have to exceed considerably the growth rate elsewhere if we are to get within striking distance
  598
  of full employment in the near future, and, as the hon. Gentleman knows, it was with that aim in view that Northumberland County Council fostered the projects of the new towns of Killingworth and Cramlington, which ultimately, would reach populations of 17,000 and 48,000 to 50,000 respectively.
  The concentration of new development at the growth points of Killingworth and Cramlington was solidly based on a detailed assessment of the needs of the area, and provides a framework for a tremendous spring forward in all aspects of development. It also ensures that action by many individual bodies and authorities is directed towards a common objective. It is possibly symbolic that since then a pit heap at Killingworth has disappeared to provide a fine site for the headquarters of a regional gas board.
  Since September 1958, when Cramlington was considered a suitable place for expansion, a similar decision was taken in regard to Killingworth, much solid work has been done, and much has been achieved. At both places large areas of land have been prepared for development. Extensive industrial estates have been laid out, and the industrial land taken up at Killingworth will provide jobs for 1,500 people. The firms which are developing the first section of the Cramlington Industrial Estate, which is much larger than Killingworth, will provide work for several thousand people, leading to wider and greater expansion.
  When these decisions were taken and it was decided to build these two new towns, there was no question of the Government doing the job, and the Northumberland County Council had no alternative but to go it alone. We are not engaging in controversy in this debate, but I think that that is the real answer to Government spokesmen who sometimes complain that the North-East is not, and was not, doing enough for itself.
  The local authorities in Northumberland were engaged in the battle to attract industry while the Government were still making up their mind whether or not the problem existed. The wisdom of the council's decision was proved when the White Paper on the North-East virtually adopted for the whole of the North-East the type of policy and programme that the Northumberland County Council had

  599
  been putting into operation for several years before. In the proposal to establish a new town at Washington, it sets out to do for South Tyneside and North-East Durham what had already been set in motion at Killingworth and Cramlington for the area north of the Tyne and Northumberland.
  Following the issue of the Hailsham Plan, a meeting convened by the Newcastle City Council was attended by about 66 local authorities and a resolution was passed, the full contents of which do not concern us in this debate, but two extracts from which are worthy of note. The resolution declared its concern
  "that no firm promise of financial assistance is given as this is essential to relieve the inevitable financial pressure on the ratepayers who will have to bear the cost of implementing most of the proposals in the report."
  It also declared
  "its opinion that the Government should consult representative organisations (including local authorities) before making major decisions fundamentally affecting the prosperity of the Region."
  The following day a sub-committee met the Secretary of State for Industry, Trade and Regional Development and impressed upon him the necessity for putting forward these suggestions in relation to the need for assistance to be provided in the industrial area north of the River Blyth, and for the Cramlington and Killingworth new towns to be treated on a similar or comparable basis to that of new towns elsewhere in the North-East.
  At this late hour, and with the restricted time available, I do not intend to go into details on the necessity for the extension of financial assistance. Briefly, the substance of our claim on behalf of the areas which form the subject matter of tonight's debate is that while the county council does not doubt its ability, financially and otherwise, to go ahead and to complete the project commenced so courageously in advance of Government planning in this matter, it nevertheless feels that there is no justification for the new towns at Killing-worth and Cramlington being treated less favourably than are new towns elsewhere.
  Although we appreciate that within the framework numerous schemes have been put into operation and set in motion in the development of
  600
  North-East industry, we would ask the Parliamentary Secretary and the Ministry to look closely at the matter, because Killingworth and Cramlington are the growth points for expansion in Northumberland, and their success, and the speed with which it is achieved—and I have already indicated that there is no doubt of their completion and putting into effect by the county council—will be all the greater if the maximum assistance, financial or otherwise, is put behind them in relation to these projects.
  11.45 p.m.
  The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield): First, may I say to the hon. Member for Blyth (Mr. Milne) that of course we very much welcome the laudable initiative of Northumberland in this as in other directions. The difficulty with which we are faced, however, is that Northumberland having gone ahead in the light of the existing legislation in regard to the grant of Government assistance is now coming to the Government and asking what the Government can do to help it financially. This puts us into the position of confirming that we can help only within the terms of existing legislation.
  I can assure the hon. Member that we have combed the Town Development Act with a view in every instance to finding good ground for helping Northumberland in these projects, but we are limited by the legislation. He will know that the county is sending a delegation to meet my right hon. Friend next week when, without doubt, we shall be able to thrash out the problems in rather more detail and more satisfactorily than we can across the Floor of the House. I can assure the hon. Member that we start with every sympathy for Northumberland's problems and every wish to help, but the difficulty, for instance, as far as housing subsidies are concerned is that under the Town Development Act, the only Act which is relevant, we can pay subsidies only where there is an exporting authority and an exporting authority for this purpose must be a congested area. It is a prerequisite of the subsidy to know where the people are to come from. We have made it clear to Northumberland that we shall look at

  601
  the scheme as it progresses and see if there is any chance of extending any grants available on the ground that it has drawn from other areas and so on, but Northumberland will want to know where it stands in advance and that is a difficulty for which I do not see means to overcome.
  Another problem which arises is that Killingworth is probably not a suitable place for a new town within the concept of the New Towns Act. We would not select an area as close to the conurbation it has to serve for a new town, and of course it is on a relatively small scale. Cramlington is in a different category. Naturally I cannot give an undertaking here and now that we would make it a new town but nevertheless I understand that Northumberland is rather loth to hand over development of Cramlington to a new town corporation. I understand that this is in part due to the fact that the enterprise of Cramlington was conceived as a joint one between the county, the local authority and a consortium of local builders who own the bulk of the land scheduled for residential development and as a shopping centre. Quite apart from Northumberland's own interest in running its own show, it feels a certain obligation to that consortium.
  Those are definite obstacles to taking the project under the umbrella of the New Towns Act which the hon. Member's suggestion implies. We are therefore left with the Town Development Act which has very considerable limitations for this purpose. Probably the main difficulty which faces Northumberland is the fact that embarking on any project of this sort one is bound to have a period at the beginning of the enterprise when a great deal of money is outstanding with practically no return for some years. Of course under the New Towns Act a corporation can borrow to meet these deficits.
  A local authority, whether it be a county council or a district council, is very much more limited in that regard, although the hon. Gentleman will be aware that last Session we passed the Local Government (Financial Provisions) Act, 1963, which goes some way to help, in that it enables local authorities to borrow and to defer the repay-
  602
  ment of interest. In other words, they borrow a bigger sum in order to cover the payment of interest in the first few years when there is no return.
  I fully appreciate that even those provisions may not entirely deal with Northumberland's problems, but I do not think that I can usefully say very much more now in view of the meeting that has been arranged. I can assure the hon. Member that my right hon. Friend and I are both very anxious to encourage these developments and to help Northumberland in every way possible but, as hon. Members will know, we are as much bound by the existing legislation as anyone else and we shall have to discuss the problem against the background of what we are empowered to do.
  If it comes to considering seriously whether Cramlington should be made a new town, Northumberland, too, will have to look at it in the light of what sacrifice it will have to make in giving up something in which it naturally takes a pride and for which it would like to continue as developing authority. If it is not possible, I am sure that Northumberland would consider whether the value of the scheme is not sufficiently great to make it worth while giving up its own immediate control to a new town corporation. That, of course, is the only way in which we can operate a new town under the Act, and the only way in which a new town can get the benefits of that Act.
  I can assure the hon. Member that we are very m ach aware of the problem and want to help. We have been through the Town Development Act, and through such other Acts as might be relevant, always with a view to finding means by which we might help. We have come, admittedly, to some sort of impasse, but, as I have said, the county council will be discussing the matter with my right hon. Friend. I hope that as a result of the discussion we shall be clearer about where possibly the county council may be able to meet us, and thereby help us to get over some of the problems that at present prevent us from helping or to be able to make other suggestions for the future. We are anxious to help.
  Question put and agreed to.
  Adjourned accordingly at seven minutes to Twelve o'clock.