Commons Sitting of 11 November 1964

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

    Costs
    Mr. William Hamiltonasked the Minister of Transport whether, in order to establish the true basic costs of all forms of transport, he will initiate a full inquiry into the problem, meanwhile preventing any further railway closures.
    The Minister of Transport (Mr. Tom Fraser): I am now considering what further work might be done on costs of various forms of transport. On rail closures, I would refer my hon. Friend to my statement of 4th November, in which I made clear my intention to avoid any action which might prejudice the railways' possible contribution to our future plans.

    Disqualified Drivers
    Mr. Arthur Lewisasked the Minister of Transport whether he is aware of the growing practice of drivers driving vehicles on the road whilst disqualified; and whether he will seek to amend the Road Traffic Act, 1962, to ensure that the offence of driving while disqualified should be subject to liability of arrest without warrant.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): There is at present no evidence of an increase in the proportion of people driving while disqualified. However, in view of the seriousness of this offence, we are watching the situation carefully. The power of arrest without warrant does not seem to be appropriate in this sort of case.
    Mr. Lewis: Will my hon. Friend take this matter up with the Police Federation, which has evidence that this offence
    994
    is on the increase? The police claim that it is a bit stupid that when they pull a person up for this offence there is nothing to stop him then driving off, even whilst disqualified. Surely the police should have power to arrest when they are satisfied that someone is driving whilst disqualified?
    Mr. Swingler: This matter was considered by the Traffic Committee of the Central Conference of Chief Constables as recently as October, 1963. After discussion, the Committee decided to reject the idea, and not to recommend that this power should be granted. In this type of case it is obvious that it is not immediately provable that someone is driving whilst disqualified. Some evidence has to be sought for the purpose. Therefore, it is very different from the power to arrest without warrant in, for example, the case of dangerous driving.
    Mr. Lewis: Is my hon. Friend aware that there have been cases where the police have pulled up a driver and have seen that the licence was stamped with his disqualification but that there was nothing to prevent that man driving off again in the same vehicle? Surely the police should have power to stop a man driving off when they know that he is disqualified? They have no such power at the moment.
    Mr. Swingler: It would be dangerous to widen the power to arrest without warrant. It is a matter which needs to be considered very carefully indeed. We should need a good deal of evidence that this power was necessary. It has been considered by the chief constables, who decided not to recommend it. If my hon. Friend has further evidence on the subject, we should be glad if he would submit it. It would be considered by my Department and the Home Office.

    Retirement Pensioners (Concessionary Fares)
    Mr. Dempseyasked the Minister of Transport if he will give a general direction, in the public interest, to the Transport Holding Company to operate concessionary fares for retirement pensioners during the off-peak hours; and if he will make a statement.
    Mr. Swingler: No, Sir. We do not consider this a suitable subject for a direction.
    Mr. Dempsey: Is my hon. Friend aware that operators will not entertain this request because they claim that the Government hold more than 50 per cent. interest in the Transport Holding Company? Until such time as they get some direction, they will not entertain applications. Will he bear in mind that scores of thousands of old folk are now housed on the perimeters of townships and that bus fares have trebled in the past 10 years? It is very costly for these old people to travel to town centres. Will my hon. Friend do something to help these needy people?
    Mr. Swingler: Apart from sympathising with what my hon. Friend has said, we are not proposing to direct any kind of operators to grant this concession. We are proposing to bring forward legislation to enable operators to grant the concession if they wish to do so where they are municipal undertakings. Other operators already have the power to make the concession, if they wish to do so, so they are in the position of the municipal undertakings that can make the concessions. Therefore, we do not believe that this is a subject on which we should give directions to any bus operators.
    Mr. Powell: Surely the private operators are not in the same position as municipal operators will be to charge the loss upon the rates? This difficulty and difference remains.
    Mr. Swingler: I agree with the right hon. Gentleman that the difference does remain. It is one of the advantages of the municipal undertakings that they are able to exercise this power. We want them to have the freedom to choose whether they should make the concession. The point is that we are not deciding whether the concession should be made. In cases where it is possible, we are leaving it to those who are running the operation to make the decision in the interests of the people.

    Transport and Planning, London
    Mrs. Joyce Butlerasked the Minister of Transport if he will appoint a commission to examine every aspect of London's transport problem and make recommendations designed to provide a comfortable, integrated transport service with fares at reasonable rates.
    Mr. Tom Fraser: I do not consider that a new commission is needed, at any rate at this moment. Those responsible for transport and planning in London—the London County Council, my Ministry, the Ministry of Housing and Local Government, the British Railways and London Transport Boards—are already working together in the London Transportation Study to draw up comprehensive proposals based on the findings of the London Traffic Survey.
    Mrs. Butler: I thank my right hon. Friend for that reply, but, in view of the urgency of relieving the utter misery of travel in the whole London area, will he see what he can do to speed up the study and the making of firm proposals? In particular, having regard to the hardship which constant increases in fares are causing—there have been 13 rail fare increases in the region in the past 10 years—will he ask his inquiry to pay particular attention to the avoidance of constant fare increases when it makes its recommendation?
    Mr. Fraser: I shall do what I can to ensure that there is no unnecessary delay. In other words, I shall do my best to speed up the study which is now taking place. But I am told that the development of a comprehensive transportation plan may take a little time.

  RAILWAYS

    Proposed Closures
    Mr. William Hamiltonasked the Minister of Transport whether he will give an assurance that no main lines in Scotland will be closed before a full and comprehensive examination of all the transport needs of the country is completed.
    Mr. Hector Hughesasked the Minister of Transport if he is aware of the effect of the policy of railway closures on the people of Scotland by depriving them of intercommunication for religious, social and business purposes; if he will state his plans regarding this policy; and if he will take urgent steps to change this policy.
    Mr. Loughlinasked the Minister of Transport if he will give a general direction, in the public interest, to the

    997
    British Railways Board to defer all closures of railway stations until there is further clarification of Her Majesty's Government's policy in respect of such closures.
    Mr. Tom Fraser: I have nothing to add to the comprehensive statement I made on 4th November.
    Mr. Hughes: Does my right hon. Friend realise that owing to the closures which have already been inflicted on Aberdeen and north-east Scotland this area has suffered great damage? Is he taking any steps, has he planned any steps, to provide compensation for the damage being suffered?
    Mr. Fraser: As I made clear last week, I have no power to go back on what my predecessor decided with regard to closure proposals. In reply to what, I gather, was the second part of the supplementary question by my hon. and learned Friend, I have no power to make any compensatory payment to an individual who may think that he has been injured as a result of closures.
    Mr. Loughlin: Is the Minister able to say whether he is in a position to seek new powers to deal with closures that took place prior to the statement which he made in this House, and will he let us know at what stage he will present alternative transport arrangements to those which have been made, some of which are derisory? Will he tell me what he has done in respect of representations I made to him in connection with alternative transport for certain areas in my constituency?
    Mr. Fraser: As I made clear last week, I have power to vary the conditions my predecessor attached. I am willing to look at any further representations which may be made to me in favour of varying the conditions. If my hon. Friend would look to see whether he has a case for varying them, I shall be obliged. With regard to the time when I may be able to have a look at some of these services already withdrawn, I can say no more than that I am, of course, applying my mind to the problem of the economic and social development plans in different parts of the country and the transport needs ensuing from those plans but those plans will take a little while.
    Mr. Powell: Does the reply of the Minister to Question No. 2 mean that all main line closures in Scotland are to rank as major closures and will therefore await the production of a Scottish transport plan?
    Mr. Fraser: No, Sir.
    Mr. Gresham Cooke: Will the Minister bear in mind that there is no need for any special inquiry into all the transport problems and that he has the benefit of the advice of the Nationalised Transport Advisory Council and the forthcoming Report of the Geddes Committee? Will he further say that it is the intention of Her Majesty's Government to continue to try to get the railways on to a paying basis?
    Mr. Fraser: I think I made clear last week that I do not consider it enough to try to get the railways on a paying basis.
    Mr. Powell: As the right hon. Gentleman is clearly unwilling to give his hon. Friend the Member for Fife, West (Mr. William Hamilton) the assurance which is asked for in Question No. 2, may I ask him to take some early opportunity to indicate which are the major closures covered by his statement so that there may be an end to uncertainty?
    Mr. Fraser: I made clear what I had in mind by major closures. A major closure is, surely, one which I think will prejudice the working out of adequate and proper transport plans for areas in which there are to be changes in the future as a result of the regional and national plans to be worked out. It is not possible for me to say now which are the major proposals. I could not in any case produce a list without having proposals made to me by the railways Board.
    Mr. Wingfield Digbyasked the Minister of Transport what general direction he has issued to the Railways Board with regard to further proposals by them for closures of railway lines and/or stations.
    Mr. Tom Fraser: None, Sir.
    Mr. Digby: Is the Minister aware that what is needed is less uncertainty and not more uncertainty? His statement last week was extremely vague when he spoke about arrangements. What

    999
    we want is a cut and dried directive to show exactly what he is asking the Railways Board to do.
    Mr. Fraser: If uncertainty exists in the hon. Gentleman's mind, I do not think that any such uncertainty exists in the mind of the Railways Board. The Board knows perfectly well what I want. We discussed these matters before I made my statement last week. I do not think that there is more uncertainty than there was before. As a matter of fact, with regard to a great many lines I shall ensure that there will be no uncertainty in the public mind at all, because the proposals will be put to me and I will make up my mind without putting the public to any uncertainty.
    Sir D. Walker-Smith: Would the Minister at any rate achieve certainty on this point? He has said that he has power to vary the conditions attached to closures. As conditions attach, amongst other matters, to the time at which a closure can take effect, is it not clear that within that context he is able in varying a condition as to time to postpone indefinitely, or almost indefinitely if he so desires, the closure in any particularly deserving case, such as the Buntingford-St. Margaret's line?
    Mr. Fraser: In all the cases I have seen the conditions attached to the closures are the conditions about the provision of alternative services. As and when alternative services are provided, the Railways Board is then free, when a consent has been given, to carry on with the closures.
    Mr. Manuel: Is my right hon. Friend satisfied that enough trade union consultation takes place before any major closure? Does he appreciate that a closure of line or a massive withdrawal of passenger services can mean the closure of depôts, either locomotive depôts or railway workshops? Is my right hon. Friend satisfied that there is this consultation so that representations affecting staff and rehousing of staff can take place?
    Mr. Fraser: Machinery exists for this consultation, and I have had no evidence from the railway unions that they are dissatisfied with that machinery.
    Mr. Bessellasked the Minister of Transport if he will seek information from the Railways Board about the proposed closure of Doublebois goods station; and if he will make the information public.
    Mr. Tom Fraser: No, Sir.
    Mr. Bessell: Is the Minister aware that this station supplies goods to 400 small farmers, that its closure will considerably increase their costs and, furthermore, that an undertaking was given by the District Manager of Western Region not to effect closure before 7th December and that if evidence were produced showing that a substantial increase in goods was transported from the station the matter would be reconsidered, and that such evidence is available?
    Mr. Fraser: When the 1962 Act was passed, Parliament decided that the Minister would have no responsibility for the withdrawal of freight services. That was a matter entirely for the Railways Board. Without an amendment of the law, I do not have power to do what the hon. Member is asking me to do.
    Mr. Danceasked the Minister of Transport if he will make a policy statement on the proposed withdrawal of passenger services to which objections have been made with particular reference to services between Birmingham New Street and Redditch and between Birmingham New Street and Worcester.
    Mr. Peter Thomasasked the Minister of Transport if he will make a statement on proposed withdrawals of railway passenger services and closure of stations to which objections have been made, with particular reference to the proposed closure of the railway stations at Deganwy, Conway, Penmaenmawr and Llanfairfechan.
    Mr. Tom Fraser: Where, as in these cases, passenger closure proposals were published before this Government took office, I propose to consider them in the normal way after they have been through the statutory procedure.
    Mr. Dance: Will the Minister apply the same sympathy and sensible approach to this type of closure—namely, for a passenger service which serves a large conurbation area—as did his predecessor my right hon. Friend the Member for

    1001
    Wallasey (Mr. Marples)? Will he give an assurance that what is to happen will be made known fairly soon, to relieve the anxiety in the minds of many of my constituents?
    Mr. Fraser: I will certainly consider this proposed closure very sympathetically, as the hon. Member has asked me to do, as and when I have all the facts put before me. When I have all the facts, including the report of the transport users' consultative committee, I will, of course, make a decision as speedily as I can.
    Mr. Powell: Are we to take it from the Minister's reply to Question No. 16 that the proposal to suspend these services is not, in his view, a major closure?
    Mr. Fraser: My statement last week about major closures was a statement that could be applicable only to closures proposed after I made the statement. The proposals for these closures were made before I made the statement.
    Several Hon. Members rose—
    Mr. Speaker: Mr. Snow.
    Mr. Dance: On a point of order. I give notice that I will raise this matter—
    Mr. Speaker: Order. I do not accept the notice. I called the hon. Member for Lichfield and Tamworth (Mr. Snow).
    Mr. Snow: Is my right hon. Friend now in possession of information which, apparently, was not in the possession of Dr. Beeching—namely, concerning the economic developments of the West Midlands which affect several constituencies in the matter of the overspill agreement—and in his review of these cases which are still open for reconsideration will he take into account the traffic which has developed since the original proposals were made?
    Mr. Fraser: The development of new communities and any large increase in population which is seen to lie immediately ahead, or to lie ahead at all, is a matter that I would very much want to take into account when reaching a decision.
    Mr. Webster: Will either of these cases be involved in a regional plan? If so, how long will the plan take?
    Mr. Fraser: I do not know what the hon. Member is trying to get at. I have made it clear that I shall not wait until the regional plans are fully worked out before I reach decisions—of course not; but I shall have regard to the possible economic and social developments before I reach a decision. I should have thought that that is what all reasonable Members, in all parts of the House, would wish me to do.
    Mr. Owenasked the Minister of Transport if he is aware of the proposal to close the rail services between Newbiggin by the Sea, Blyth, and Newcastle in the county of Northumberland; when he announced his decision; and whether he will make a statement on Government policy.
    Mr. Swingler: The decision to close this service was announced on 30th July and the service was withdrawn on 2nd November. On the matter of policy, I have nothing to add to the Minister's statement on 4th November.
    Mr. Owen: Will my hon. Friend consider the economic and social implications of this programme? Is he aware that the local authorities seeking representation are most anxious that their point of view and the information at their disposal on this matter shall be adequately considered? Will my hon. Friend be willing to re-examine that matter?
    Mr. Swingler: Certainly. My hon. Friend will be well aware that the Minister cannot revoke consents which were given by his predecessor, but if my hon. Friend or those whom he represents have any concrete evidence to give us on the subject of transport planning in this area or on the alternatives which have been proposed, we shall be glad to receive it.
    Mr. Popplewell: May I take it from that answer that this is one of those areas in which the lines will not be taken up immediately but will await further consideration by the Ministry?
    Mr. Swingler: Yes, Sir. This is certainly an area where there will be some reconsideration. Consent has been given to the closure and the service has been withdrawn, but this line will come under the terms of the Minister's statement on

    1003
    4th November with regard to the retention of the track and things of that kind and will be considered in future in relation to any regional plans that are made.
    Mr. Mathewasked the Minister of Transport what decision he has come to about the future of the Sidmouth Junction to Sidmouth and the Axminster to Seaton railway branch lines, and the Tipton St. John railway station; and if he will make a statement about the future of railway services in east Devon.
    Mr. Swingler: We have not yet reached any decision on the proposals for this area. Reports from the transport users' consultative committees have not yet been received. So far as East Devon is concerned, I have nothing to add to the general statement of policy made by my right hon. Friend on 4th November.
    Mr. Mathew: I thank the hon. Gentleman for that information, but can he tell us when a south-western regional transport plan can be expected? In view of his right hon. Friend's explanation today that his assurance in his statement on 4th November about major closures refers only to future closures, can the hon. Gentleman say whether in the case of East Devon, where closures have been proposed and objections have been made, it is true to say that no change has been made by the Minister's statement? Is it not also true that the speeches made by Labour Party speakers during the election, saying that the Labour Party would save the local lines, were misleading?
    Mr. Swingler: In these cases the statutory procedure is already well advanced and therefore there is nothing that we can do to stop that. We shall receive reports from the transport users' consultative committee. The change which has taken place is in the terms on which the Minister will consider those reports when they are received in relation to the transport needs of the area and the future regional economic planning in the area to which the hon. Member refers.
    Sir C. Osborneasked the Minister of Transport when he will make his decision on the proposed closing of the Grimsby-Louth-Peterborough line; and if he will make a statement.
    Mr. Swingler: We are awaiting the report of the transport users' consultative committee on hardship. Until we have
    1004
    examined it and all the other factors I cannot say when my right hon. Friend will be able to make his decision. But he will certainly do so as soon as possible.
    Sir C. Osborne: Will the hon. Gentleman bear in mind that my constituents do not mind if the Minister takes years and years to make up his mind, because they are bitterly opposed to the closing of the line? Will he also bear in mind that in the next decade the number of motor vehicles on the road may be doubled? Will not this affect general decisions on the closing of railways?.
    Mr. Swingler: The hon. Member has stated some, at any rate, of the reasons for our reconsidering this whole position. It is extremely interesting to find that we have his support in considering this whole question anew in the light of the needs of those regions, of economic planning, and of future transport. That is precisely what my right hon. Friend is going to do.
    Mr. Powell: Are we to take it or not from the hon. Gentleman's last two answers that when a major closure has been proposed already and has gone through the statutory procedure the Minister's decision will then await the regional transport plan?
    Mr. Swingler: Surely the right hon. Gentleman heard the statement made by my right hon. Friend on 4th November. He stated quite clearly the procedure which he would adopt in the light of the closures which have already gone through the procedures of the transport users' consultative committees and the criteria which he will apply when he considers whether or not he should give his consent and whether he regards them as major or not in relation to economic planning. What I have said means that we are adhering strictly to the terms of that statement.
    Mr. Monslow: Would not my hon. Friend agree that, without discrimination, we should cease all railway closures until we have had a complete review of the transport industry as a whole?
    Mr. Swingler: My right hon. Friend's statement made plain that with regard to major closures that is precisely what we are going to do. We shall consider halting the closures whilst we reconsider the economic needs of the regions. We

    1005
    shall then decide on the best form of transport in relation to our economic plans and our social needs.
    Mr. Powell: What can be the possible logic in not applying that procedure to major closures which are before the Minister but on which a decision has not been taken?
    Mr. Swingler: We are applying these criteria where these reports are coming forward from the consultative committees. My right hon. Friend is applying the criteria which he set out on 4th November from now on to closure proposals.
    Sir J. Maitland: Will the hon. Gentleman confirm that the closure to which we are now referring is a major closure in so far as it affects hundreds of thousands of people?
    Mr. Swingler: This is a matter which is again governed by my right hon. Friend's statement. He said that he will not prejudge the issue and he will decide, in relation to the surveys to be carried out, the economic plans to be made, the amount of hardship likely to he caused on the criteria set out, whether he should give his consent. He has stated that major closures will be halted while these plans are being evolved.
    Mr. John Hyndasked the Minister of Transport whether he will give an assurance that any further action towards the closing down of services on the Great Central Railway will be suspended until a proper review of the transport situation, taking account of the social as well as the direct financial considerations, has been undertaken.
    Mr. Tom Fraser: I would refer my hon. Friend to the statement which I made on Wednesday, 4th November. I am awaiting details of the Board's proposals for the passenger services on this line. Until I receive them I can make no assessment.
    Mr. Galbraith: Does not the number of Questions that we are having on rail closures indicate that the right hon. Gentleman's statement last week, instead of clearing up the difficulties, has created more uncertainty? Can he tell us what went on between him and Dr. Beeching at their meeting, because his hon. Friends seem to think that there will be a slow-
    1006
    ing down of railway closures and yet in today's Guardian Dr. Beeching is reported as saying that he will go ahead soon? Will the right hon. Gentleman clear the matter up?
    Mr. Fraser: I am bound to say that I have the impression from the Questions put to me on railway closures that hon. Members in all parts of the House want me to stop all railway closures.
    Mr. Maxwellasked the Minister of Transport whether he will give an undertaking that the Oxford-Bletchley-Cambridge railway line will be kept open to passenger traffic.
    Mr. Tom Fraser: I have now received the reports of the transport users consultative committees on hardship. I shall consider all aspects of this proposal before I make my decision.
    Mr. Webster: Would this be classified as a major closure? If so, when can we expect to get the regional plan?
    Mr. Fraser: I am very surprised at hon. Members. When I made my statement about major closures last week, I made it clear that I was dealing with closures which I would decide would be major before the proposals were published at all. In this case we are dealing with a closure which has been considered and has gone through all the procedures until it has come to me. Now I must make up my mind on this closure, and the question of major or minor does not really arise in this context at all.
    Mr. Maxwell: Would my right hon. Friend please take into consideration that these parts of Buckinghamshire, Oxfordshire and Cambridgeshire are due for very considerable expansion in both population and industry, and that it would be folly, to say the least, if that line were not to be preserved?
    Mr. Fraser: The consideration that my hon. Friend has mentioned is one which I shall, of course, have in mind when I seek to reach a decision.

    Aberdeen District Traffic Office
    Mr. Hector Hughesasked the Minister of Transport when he received from the Aberdeen Branch of the Transport Salaried Staffs Association a letter

    1007
    concerning the closing of Aberdeen district traffic office and the consequent dismissal of large numbers of the railway staff; what reply he has sent; why it is to be closed; how many of the staff will be dismissed; and if he is aware that the closure of this office will inflict loss and damage on the trade, business and employment of Aberdeen.
    Mr. Swingler: I regret that my Department has no record of receiving this letter. The subject is in any case a matter for the British Railways Board, and we have sent it a copy of the letter my hon. and learned Friend wrote to the Minister.
    Mr. Hughes: Will my hon. Friend take steps to countermand the closure of this traffic office? Does he realise that it is aiming a blow at the trade, industry, commerce and employment of Aberdeen? It is thoroughly wrong. Will he countermand it?
    Mr. Swingler: This is not a matter in which my right hon. Friend has any power to intervene. It is an administrative matter between the management of the Railways Board and the staff. There is a proper procedure for discussing this question. I believe that it is being discussed between the management and the staff. Therefore, the representations of my hon. and larned Friend will be taken into account by the Board.

    Stranraer-Dumfries Line
    Mr. Brewisasked the Minister of Transport if he will now rescind the consent given by his predecessor to the closure of the Stranraer-Dumfries railway; and whether he will make a statement.
    Mr. Swingler: No, Sir. And as the hon. Member will be aware from the statement my right hon. Friend made on 4th November, he has no power to do so.
    Mr. Brewis: Is the hon. Gentleman aware that his Answer will disappoint a great many people in Southern Scotland? Does he agree that if a line is closed—this line is not yet closed—it is in practice extremely difficult to reopen it? Will not the Government use their majority to take power to reconsider these decisions and, incidentally, to honour the official pledges given by both
    1008
    Labour candidates in Dumfries and in Galloway?
    Mr. Swingler: The consent in this case was given by the former Minister, of the hon. Gentleman's party. If the hon. Gentleman has concrete evidence that the alternative arrangements will not be satisfactory, we will certainly consider the matter. As my right hon. Friend the Minister said, he is prepared to vary the conditions attaching to the consent, although, as he said in his statement on 4th November, he has no power to revoke consents which have been given by his predecessor. If the hon. Gentleman will submit any evidence about the arrangements being made, my right hon. Friend will consider varying the conditions.
    Mr. Brewis: On a point of order. In view of the unsatisfactory nature of the reply, I give notice that I will raise the matter at the earliest opportunity.

    Richmond-Broad Street Line
    Mr. A. Royleasked the Minister of Transport what conclusions have been reached by British Railways about the future of the Richmond-Broad Street railway line; and if he will make a statement.
    Mr. Tom Fraser: The Board tells me that it has not yet reached any conclusions about the future of the passenger services on this line. If it wishes to propose a closure, I would expect it to give me the essential details so that I can decide quickly whether its proposal should be allowed to go through the normal statutory procedure or whether it is clearly unacceptable from the outset.
    Mr. Royle: Is the right hon. Gentleman aware that during the election campaign the Labour Party pledged itself immediately to remove uncertainty about this railway line? Will the Minister assure the House that if he receives from the Railways Board a proposal for closure, he will turn it down?
    Mr. Fraser: I should have thought that there is no great uncertainty about this line, because there is as yet no proposal to withdraw the service. I cannot anticipate whether a proposal will be put before me or what decision I will take after I have received details of proposals from the Railways Board.
    Mr. Dudley Smith: Will the Minister use his influence with the Railways Board and also with London Transport to get the line of route of this railway incorporated in the London Transport underground map? Does he realise that this would substantially increase the number of passengers and also the revenue?
    Mr. Fraser: That may well be a good suggestion, but it is clearly one for the Railways Board and for London Transport and not one for me.
    Mr. Royle: In view of the unsatisfactory nature of the reply, I will raise this matter on the Adjournment.

    National Council of Inland Transport (Representations)
    Mr. Owenasked the Minister of Transport what representations he has received from the National Council of Inland Transport concerning the urgent need for a reassessment of railway closures; what reply he has sent; and whether he will make a statement.
    Mr. Swingler: The Council has made representations that closures to which the Minister's predecessor has given consent but which have not yet taken place should be halted and that demolition of the track on closed lines should stop. It also asked that hearings by transport users' consultative committees in respect of other proposals by the Railways Board should be deferred until the whole policy and procedure had been reviewed. My right hon. Friend's reply, of which I am sending my hon. Friend a copy, referred the Council to his statement made on 4th November.
    Mr. Hay: Would the hon. Gentleman and his right hon. Friend treat with the greatest reserve the advice given by this so-called National Council of Inland Transport? It is in many ways a self-appointed body and its opinions in the past have been wildly wrong.
    Mr. Swingler: The hon. Gentleman will appreciate that we are getting advice on the subject of halting rail closures from all sorts of quarters, and especially the benches opposite. We are sufficiently open-minded to consider these representations on their merits.
    Sir D. Walker-Smith: On the question of the Minister's power to vary or revoke
    1010
    a decision already made, does the hon. Gentleman appreciate that there may well be two views about it as a matter of law? Will his right hon. Friend be frank with the House and give a list of those closures in respect of which decisions have already been made that he would wish to reverse, assuming, as may well he the case, that he has the power?
    Mr. Swingler: It is amazing that hon. and right hon. Members opposite who have been supporting the Minister of Transport for many years should ask us questions of that kind. The terms of the statement made on 4th November by my right hon. Friend were quite clear about the powers which he has and has not. He does not have the power to revoke consents previously given but he has the power to vary the conditions. My right hon. Friend said that when he considers these matters and is in receipt of representations he is prepared to exercise the power to vary the conditions where concrete evidence of the necessity is produced.
    Mr. Webster: Now that the chairman of this body, Lord Stonham, has been received into the Government, will the Government now disband it?
    Mr. Milne: Is my hon. Friend aware that many of the difficulties with regard to closures have arisen because the former Minister of Transport refused to listen to the advice of the transport users' consultative committee in many areas?
    Mr. Swingler: All I can say is that we are listening to the advice of the committees and those bodies interested in securing a decent transport service for the community and the country generally. It is on that basis that we are considering this matter.

    Ayr-Mauchline Line
    Mr. Monroasked the Minister of Transport whether he will give a direction to the Railways Board to discontinue work on reopening the Ayr-Mauchline line.
    Mr. Tom Fraser: No, Sir.
    Mr. Monro: Is the Minister aware that this line need be reopened to passenger traffic only if the Dumfries-Stranraer

    1011
    line is closed? Is he satisfied that this solution is in the best interests of the people of Dumfries and Galloway?
    Mr. Fraser: I have made clear that I cannot rescind the decision of my predecessor, which was taken some time ago. The Railways Board is now reopening the line between Ayr and Mauchline. It is rather interesting that I should now be asked to stop the Railways Board providing a new railway.
    Mr. Emrys Hughes: Could the Minister give the hon. Member for Dumfries (Mr. Monro) a large-scale map of south-west Scotland showing that the Mauchline-Ayr railway is in South Ayrshire, and could he tell us how many officials in his Department are now employed in dealing with complaints about the muddles of his predecessor?

    Finance
    Mr. Channonasked the Minister of Transport what proposals he has for taking steps to reduce the deficit of British Railways.
    Mr. Tom Fraser: Under the terms of the Transport Act, 1962, the statutory duty to improve the railways' financial position rests with the British Railways Board, not with the Minister. In considering with the Board its plans for the future, within the framework of the transport needs of the country as a whole, I shall have very much in mind the contribution those plans will make to reduction of the deficit.
    Mr. Channon: Will not the Minister agree that it is most important, both in the interests of the taxpayer and in the interests of rail travellers themselves, that British Railways should, at least, be given the chance to pay their way, and would not the best chance of keeping fares steady, as suggested by the hon. Lady the Member for Wood Green (Mrs. Joyce Butler), be given if British Railways did pay their way? Will he, therefore, devote a greater part of his attention to this matter rather than spend so much time on trying to increase the deficit instead of reducing it?
    Mr. Fraser: If the hon. Gentleman had listened to the many supplementary questions put from his side of the House today to both my hon. Friend and myself, he would have understood that
    1012
    a great many of his right hon. and hon. Friends appreciate that one cannot in the foreseeable future make the railways pay. I do not think that one can.
    Mr. Hay: The matter goes a little further than that. Is the Minister aware that, under Section 22 of the Transport Act, 1962, a statutory obligation is laid upon the Railways Board, within the first five years after vesting date, so to balance its accounts as to equate its income and expenditure? Will he say to what extent his recent statement of policy and the holding up of closures will affect that statutory obligation laid upon the Railways Board by this House?
    Mr. Fraser: Also by the 1962 Act power was given to the Minister of Transport to consider railway closures proposed by the Railways Board. Although Parliament was foolishly invited to write in those provisions about ensuring that the Railways Board should make the railways pay, it also took care to give the Minister authority to reach decisions which would make it impossible for the Railways Board to pay its way. It is now widely recognised, I think, that the 1962 Act was in many respects a very foolish Act.
    Mr. Philip Noel-Baker: Will my right hon. Friend give urgent consideration to the electrification of main lines, which would cut operating costs to two-thirds those of diesel working and would also save £60 million worth of imported oil?
    Mr. Fraser: The decision on whether electrification will be proceeded with is one of management, for the Railways Board, and I am well aware that the Board is all the time considering the capital costs of electrification together with the operating costs of the alternatives which are used at present. I do not want to hold out any hope that I shall require the Railways Board to engage in a considerably increased capital expenditure programme in the near future.
    Mr. Powell: When the Minister describes as foolish the statutory duty laid upon the Railways Board by the 1962 Act, has he forgotten that the same obligation was imposed by the 1947 Act? Is he seriously telling the House that his Government do not expect it to be possible in the foreseeable future?
    Mr. Fraser: The right hon. Gentleman will be aware that, notwithstanding the provisions about the Railways Board under the 1962 Act or the British Transport Commission under the 1947 Act paying their way, under the Government of which he was a member—a quite outstanding member, if I may say so—the Railways Board had a deficit of up to about £160 million a year. I have not said today that particular provisions of the 1962 Act were exceedingly foolish. What I was saying was that the Act as a whole, the whole conception of the Act, was foolish in the extreme, as is evidenced by the kind of representations which I am receiving from all parts of the House urging me to do things which I cannot do because of the limitations imposed by the Act.
    Mr. Shinwell: Is my right hon. Friend aware that, in spite of the fact that in the last 13 years of Tory Governments we have had several successive Transport Ministers, not a single one, with the full support of right hon. and hon. Gentlemen opposite, was able to demonstrate how the railways would pay?
    Mr. Fraser: I entirely agree with my right hon. Friend.
    Mr. Galbraith: Is not one of the best ways to reduce the deficit on the railways to get the liner trains moving? What will the right hon. Gentleman do to get the unions to withdraw their objections to the liner trains?
    Mr. Fraser: I think that that is really another question. But the liner trains are on the way, and I am not going to do anything to stop them being introduced by the Railways Board. I am most anxious that they should be introduced.
    Mr. Galbraith: But what is the right hon. Gentleman going to do to help their introduction?
    Mr. Channon: Mr. Speaker, in view of the unsatisfactory nature of the reply, I give notice that I shall raise the matter on the Adjournment.

    China Clay (Freight Charges)
    Mr. John Hyndasked the Minister of Transport whether he will review the ruling given by his predecessor on the appeal of the Chamber of Shipping, requiring the British Railways Board to
    1014
    raise their charges on china clay between Cornwall and the Kemsley Mills in Kent.
    Mr. Philip Noel-Bakerasked the Minister of Transport whether he has given consideration to the increase of freight charges for china clay imposed on the Railways Board by his predecessor as Minister of Transport; and what decision he has taken.
    Mr. Tom Fraser: I have examined the facts of the case, and I see no evidence to justify my withdrawing or varying at this stage the directions given by my predecessor.
    Mr. Hynd: But will not my right hon. Friend agree that it is entirely invidious, whatever the Act says, that the railways should be forced to raise their charges when they had already a charge which earned a profit, a condition which would not have applied had it been a road company which had made the quotation? How can the railways pay their way at any time if they are going to be specifically prevented from making profits on fair charges in this way?
    Mr. Fraser: As I understand the position, the provision in the 1962 Act was written as a protection for the shipping companies, to provide that the railways would not operate a subsidised service at the expense of the shipping companies. I understand that in giving the direction to which reference has been made, my predecessor merely required that the Railways Board should impose charges that covered the cost of operating the service that it was giving. But I should be very willing to have another look at the matter. I would merely say that at this stage I do not feel able to vary the direction given by my predecessor.
    Mr. Speaker: Mr. Philip Noel-Baker.
    Dame Irene Ward: Why should not coastal shipping be allowed this protection?
    Mr. Speaker: Order. The hon. Lady has been in the House long enough to know that it is usual to allow supplementary questions to hon. Members who have Questions on the Order Paper.
    Mr. Noel-Baker: While I thank my right hon. Friend for saying that he will be willing to look at the matter again,

    1015
    might I urge upon him that the railways should be allowed to reduce the cost of valuable exports and that it is most undesirable to put the private interests of a transport system before the national interest, which is involved here?
    Mr. Fraser: I have the impression from what I have seen of it that this is a very complicated matter. But I will certainly bear in mind what my right hon. Friend has said.
    Dame Irene Ward: With apologies to you, Mr. Speaker, may I ask the right hon. Gentleman for an assurance that there will be no alteration in the protection for coastal shipping? Also, is he aware that his half-promise to British Railways will be received very badly by those who earn their living in the shipping industry?
    Mr. Fraser: I should like to look into the whole question. It is not only shipping; it is road transport, rail transport—the whole lot. I should like to have a look at the whole matter.

    Victoria Line
    Mr. Liptonasked the Minister of Transport when the new tube line from Victoria will be completed.
    Mr. Biggs-Davisonasked the Minister of Transport what progress has been made with the construction of the Victoria Line; and when a decision will be made on its extension to Woodford.
    Mr. Swingler: The London Transport Board has informed us that work is in progress all along the route but shortage of labour—particularly of tunnel miners—and a high labour turnover are causing some delay to the programme as planned. Any effect of these difficulties on the total cost will be marginal. It is hoped to open at least the first section of the line in 1968.
    The possible extension of the line is being considered, together with other proposals, by the Passenger Transport Planning Committee for London as part of wider plans for transport development in the London area.
    Mr. Lipton: How does the date now announced for the completion of the first part of the line compare with that originally announced, and what is the reason for the discrepancy? In present
    1016
    circumstances, does it not look as if the whole of London's traffic will be completely paralysed before any passenger is able to use the line?
    Mr. Swingler: We hope that the timetable for the Victoria Line can be adhered to. It is true that London Transport has run into some technical difficulties in the course of construction, but the chief problem at the moment is the shortage of skilled labour—tunnel miners. I am at present advised that it will be possible to complete the line by 1968 if we can recruit the necessary force of tunnel miners to do this difficult job.
    Mr. John Harvey: Will the hon. Gentleman bear in mind that transport in this part of London would benefit greatly if a link could eventually be formed between the Victoria Line at Walthamstow and the Central Line at Leytonstone? Will he at least not close his mind to this long-term possibility?
    Mr. Swingler: Our minds are not closed to this possibility. But I am sure that the hon. Gentleman will bear in mind that these are not lines which will be financially viable. They are not going to pay their way. But we think that they will be of immense social benefit to the people of London, and that is why we wish these plans to go forward.

  ROADS

    Redditch New Town (Trunk Roads)
    Mr. Danceasked the Minister of Transport what progress is being made in the development of plans to ensure that the new town of Redditch is adequately served with trunk roads.
    Mr. Tom Fraser: It is still too early to say precisely what roads will be necessary to serve the new town of Redditch. My Department and the Ministry of Housing and Local Government will develop their plans concurrently with those prepared by the Development Corporation for the town itself.

    A.30 Road, Bagshot
    Mr. Gresham Cookeasked the Minister of Transport whether, with a view to avoiding severe congestion, he will improve the traffic situation at the railway bridge on the A.30 at Bagshot by

    1017
    making an additional lane to allow traffic to run north or by widening the railway bridge.
    Mr. Tom Fraser: My Ministry's proposals and the associated proposals of the Surrey County Council for improving the traffic situation at Cricketer's Bridge were considered at a public inquiry into the necessary compulsory purchase orders. This was completed on 20th October. I cannot say more until I have received and considered the inspector's report.
    Mr. Gresham Cooke: When the Minister is considering the report, will he bear in mind that my constituents say that this is one of the worst bottlenecks in the whole of the south of England, that the A.30 road could be improved at this point by the addition of one or, possibly, two tracks, and that it would be quite a feather in his cap if he were to do this?
    Mr. Fraser: I shall endeavour to take into account what all the interested parties have to say about this matter.

    M.4 Motorway
    Mr. Gresham Cookeasked the Minister of Transport when it is intended to publish the intended line for the M.4 motorway from Maidenhead westwards.
    Mr. Tom Fraser: The consulting engineers' report was received in May. A number of points on this very difficult project had to be referred back for further examination. I am anxious to press on with this project and will make a statement as soon as I can.
    Mr. Francis Noel-Baker: Will my right hon. Friend give an assurance that before a final decision is taken, the views concerning amenity—
    Mr. Speaker: Order. All kinds of difficulty attach to this. The first is that the hon. Member was not called. My attention was concentrated on the hon. Member for Twickenham (Mr. Gresham Cooke), who was rising rather slowly to ask a question.
    Mr. Gresham Cooke: Will the Minister say what is the reason for the further delay? Will he bear in mind, too, that it is 3½ years since the first line of the M.4 was put forward? Surely, in this dynamic technological age, we ought to
    1018
    have been able to advance better than this?
    Mr. Fraser: This matter may have been under consideration for about 3 years, but I have been in office only about 3 weeks. It is better that we should take a little time and make the right decision rather than act hastily and take the wrong one.
    Mr. F. Noel-Baker: I should like to ask you, Mr. Speaker, and the hon. Member for Twickenham (Mr. Gresham Cooke) to accept my apologies for rising rather precipitately on the matter which is of great interest to my constituents. Can my right hon. Friend the Minister give an assurance that the views of groups and individuals interested in the amenity aspects of the proposed route will be heard before a final decision is taken?
    Mr. Fraser: Yes, Sir. I have no reason to believe that the views of all interested groups of persons have not in the past been taken into account in any case. I would certainly wish that their views should be heard.

    London-Brighton Motorway
    Sir R. Thompsonasked the Minister of Transport what decision he has taken on the route of the London-Crawley motorway; and if he will make a statement.
    Mr. Doughtyasked the Minister of Transport when he will announce the proposed route through Surrey of the new Brighton motorway.
    Mr. Tom Fraser: The consultants' report on this motorway was received in May. It covered a great deal of ground and a number of alternative possibilities. Proper planning demands that the interests of all those national and local authorities who could be affected by this road be fully taken into account in fixing the most suitable route. Consultation has been, and is, still going on. I expect to make an announcement before the end of the year.
    Sir R. Thompson: Is the right hon. Gentleman aware that he has really said nothing at all, and I had a similar Answer about six months ago? [Interruption.] Does he suggest that the new Government ought not to be able to show some result for all the work which has

    1019
    gone on in the meantime? Further, does he realise that the largest free area of land within the Greater London area is virtually sterilised and made useless for the local authorities concerned until he and his experts make up their minds about where this road ought to go?
    Mr. Fraser: It is not just a matter for me and my experts. It affects a great many local authorities. What I have said this afternoon, whether the hon. Gentleman thinks that it is something or nothing, is that I shall not decide the route of this motorway without full consultation with the local authorities concerned.
    Mr. Doughty: Will the Minister first publish the proposed routes so that those who are vitally interested in them may, at least, make their voices heard about where the best route would go? It is no good making a decision until one has published the proposals and heard any possible alternative suggestions or complaints.
    Mr. Fraser: I have said that I shall publish a draft scheme, after I have had the views of all the local authorities concerned. We can then have the comments of all concerned, whether local authorities or not.
    Sir J. Vaughan-Morgan: Will the Minister consider consulting his colleague the Minister of Housing and Local Government to see whether he could give an interim decision as regards that part of the motorway which is at present holding up approval of the Redhill development plan, Redhill being the biggest town on the route?
    Mr. Fraser: I am not sure that it would be wise to do that now. I hope to be able to make an announcement before the end of the year. It is the 11th November now, and the end of the year is not so very far away. We are getting near to the publication of the draft scheme. I think that we had better do that, and then let hon. and right hon. Members in all parts of the House, and the local authorities concerned, see what the draft proposal is.

    A.2 Trunk Road (Lay-bys)
    Mr. Doddsasked the Minister of Transport, in view of the increasing use by holiday makers of the A.2 trunk road
    1020
    from London to the south-east coastal resorts and Channel ports, what has been the outcome of the consideration given to the problem of the abuse of lay-bys so as to remedy the present hazards to health during warm weath, and if he will take into consideration that at 10 a.m. on Saturday, 8th June, 18 motor-coaches and many private cars were parked within a 200 to 300 yard length of the tree- and bush-lined grass verge, in the vicinity of the Laughing Water Restaurant, near Cobham, Kent.
    Mr. Swingler: We are aware of the case referred to by my hon. Friend. We are studying a report from the Automobile Association about conditions on A.1 and a comprehensive survey of the position on trunk roads in rural areas from the County Councils' Association. We will announce our conclusions as soon as possible.
    Mr. Dodds: Will my hon. Friend bear in mind that at one time on 8th June there were 500 people using the lay-by and that it is estimated that over the summer months there were no fewer than 8,000 people? Can he imagine the surprise of the gypsies living in the camp nearby that this scandalous state of affairs is permitted?
    Mr. Swingler: I quite agree with my hon. Friend; something has got to be done about this problem. [Interruption.] Certainly; it is a serious problem in some places. But the question is on whom the responsibility should lie, especially financially. We shall be having discussions with the local authority associations and others about it, and will try to get something done as soon as possible.

    Bexley-Dartford Road (Lamp Standards)
    Mr. Doddsasked the Minister of Transport how many concrete lamp standards have been knocked down between the Black Prince, Bexley, and Watling Street, Dartford, since 1st January, 1960; and as many still left standing are within inches of the roadway, with no kerb to warn drivers in foggy weather, what action is contemplated as a matter of urgency to minimise the dangers that this presents.
    Mr. Swingler: Forty-six. All but three were knocked down in clear weather.

    1021
    The trouble is that the road is badly over Winter Keep Scheme loaded. This will be put right by the by-pass scheme due to start next year.

  DIVISION No. 1, 9th NOVEMBER (CORRECTION)
  Mr. Speaker: I must call upon the Tellers in Division No. 1, on 9th November, to come to the Table.
  Mr. CHARLES WHITLOCK (VICE-CHAMBERLAIN OF HER MAJESTY'S HOUSEHOLD) and Mr. BRIAN BATSFORD, who acted as Tellers in the Aye Lobby in Division No. 1, came to the Table.
  Mr. Whitlock: We have to report, Sir, that in Division No. 1, taken on 9th November, at 10 p.m., the number of "Ayes" was incorrectly reported by us as 300. The correct number was 301.
  Mr. Speaker: The appropriate correction will be made in the Journal recording the numbers in the Division as being Ayes 301 instead of the present figure.

BALLOT FOR NOTICES OF MOTIONS
  Machinery of Government
  Mr. George Younger: I beg to give notice that on Friday, 27th November, I shall call attention to the machinery of government, and move a Resolution.
  Grammar Schools
  Mr. Alan Hopkins: I beg to give notice that on Friday, 27th November, I shall call attention to the future of grammar schools, and move a Resolution.
  Winter Keep Scheme
  Mr. Michael Jopling: I beg to give notice that on Friday, 27th November, I shall call attention to the winter keep scheme, and move a Resolution.
BILLS PRESENTED
  RIVERS (PREVENTION OF POLLUTION) (SCOTLAND)
  Bill to make further provision for maintaining or restoring the cleanliness of the rivers and other inland waters and of the tidal waters of Scotland; to amend the Rivers (Prevention of Pollution) (Scotland) Act 1951; and for purposes connected with the matters aforesaid, presented by Mr. Ross; supported by Dr. Mabon; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 8.]
  REMUNERATION OF TEACHERS
  Bill to make new provision for determining the remuneration of teachers; and for purposes connected therewith, presented by Mr. Stewart; supported by Mr. J. Griffiths, Mr. Crossman, Mr. Gunter, Mr. Diamond, Mr. Prentice, Mr. Boyden, and Mr. Denis Howell; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 9.]
  PROTECTION FROM EVICTION
  Bill to restrict eviction from dwellings to postpone the decontrol of formerly requisitioned dwellings; and for purposes connected therewith, presented by Mr. Crossman; supported by the Prime Minister, Mr. Bowden, Mr. Ross, Mr. J. Griffiths, the Attorney-General, and Mr. Niall MacDermot; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 10.]
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee.
  [Dr. HORACE KING in the Chair]

  BUDGET STATEMENT
  3.35 p.m.
  The Chancellor of the Exchequer (Mr. James Callaghan): The immediate object of this Budget Statement is to seek the authority of Parliament for the measures announced by the Government to improve the unsatisfactory balance of payments. It came as a shock to me on the day of assuming office to learn that the prospective overseas deficit in 1964 might be as large as £800 million.
  I had forecast that the deficit would be substantial, but did not think that it would be as bad as that. Nor, apparently, did the right hon. Gentleman the Member for Barnet (Mr. Maudling). Last week he told us that on the basis of the first half-year's figures, which showed a deficit of £340 million, he had expected a deficit on the full year of £600 million.
  For the sake of comparison I remind the Committee that the deficit in 1960 was no more than £446 million; but that this led the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) to impose in 1961 a credit squeeze, a pay pause and other measures which led to the slowing down of British industry and a high level of unemployment. On our first weekend, when the present Prime Minister formed his Administration, we determined that we would not tread that path again.
  I have also found myself faced with the urgent and immediate task of holding talks with the International Monetary Fund and the leading member countries to ensure that a loan of several hundred million pounds will be available to help cover the current year's deficit when required. I agree with the right hon. Gentleman the Member for Barnet that this kind of borrowing is the least objectionable way of making sure that an inevitable deficit is covered; and we shall use, if we have to, the funds that will be made available.
  1024
  But borrowed money must be repaid in due course, and heavy criticism lies on those who have had full charge of our economic destinies for 13 years—and if I hear the words "American loan" mentioned by the Opposition, allow me to remind them that that loan was contracted immediately after the end of the Second World War at a time when the country was bankrupt and that it was borrowed in order to save our people from a situation that would have been worse than that of a defeated country. It was not negotiated when we had been in power for 13 years.
  I do not want to hold an inquest about the events of the last 13 years today, nor about why action which should have been taken earlier this year was not taken, but there is no doubt that delay in holding the General Election has made it more difficult for the incoming Government to take remedial action. Certainly, no one on either side of the Committee can deny that the Government have inherited a disagreeable economic situation that is not of our making and for which the full responsibility lies with the right hon. Gentleman opposite.
  On the day of assuming office the further information was published that the crude trade gap for the month of September alone amounted to £111 million—a pretty barren inheritance. We have made a determined and vigorous start to overcome these problems, but let no one believe that the initial measures to curb imports represent either a long term solution or indeed our policy in matters of international trade. We want lower trade barriers, not higher; and the duties that have been imposed are of an emergency character to stop the drain on our reserves. They will be reviewed, reduced and removed as soon as our balance of payments is in a healthy position.
  However, I wish to do more this afternoon than to seek Parliamentary approval for the necessary Ways and Means Resolutions governing the import charges and the export rebates. With the indulgence of the Committee I should like to give a clear indication of the way in which the Government's policy will develop in future Budgets in order to achieve our aim of breaking free from these periodic crises that have dogged our economy.
  The Budget, although of great importance, must dovetail with the general

  1025
  economic policy of the Government as outlined by my right hon. Friends the Prime Minister and the First Secretary in their speeches on the Gracious Speech. It is my task to use the Budget to ensure that demand in the economy is neither so strong that it overloads the productive system and causes bottlenecks nor so weak that our factories are working short time and unemployment grows. Secondly, I must use the taxation system to ensure social justice for those who stand in need.
  Thirdly, the Government, by all means in their power, including the tax system, must encourage the redeployment of resources in the most efficient manner, whether by means of capital allowances or in other ways, so as to ensure that resources are used where they will give the most efficient return and support our policies of regional development. Fourthly, the taxation Statutes themselves must be reviewed and revised to ensure that they do not hamper the enterprising and that they do not permit a few to escape paying their fair share by taking advantage of loopholes.
  The complexity of the tax machine, as others have discovered before me, limits the room for rapid manoeuvre; I cannot ask the Board of Inland Revenue to perform miracles, although its competence is such that it seems able to do the next best thing. Nevertheless, I hope that by the end of this afternoon the Committee will feel that we have made a beginning with these tasks.
  In all these ways budgetary policy must contribute to our objectives: a healthy foreign balance, stable prices and full employment, social justice for the needy, fair play for all taxpayers, sound planning of public expenditure, rewards for the energetic and sustained economic growth. These are all fields of activity in which the Government play a substantial r ôle. These objectives are important not only for their own sakes, but also in creating the climate that will make possible the achievement of an incomes and prices policy. No country in the world has yet achieved this, but great rewards await the country that can first secure such a policy. That is why the First Secretary, the Minister of Labour and I are making this venture our earliest task and it is my duty today to ensure that my budgetary policy does not
  1026
  thwart our joint activities, but, on the contrary, does everything possible to help them.

  THE BALANCE OF PAYMENTS
  The Chancellor of the Exchequer (Mr. James Callaghan)Before I discuss these long-term objectives in greater detail I must return to the situation in connection with the balance of payments. The rate of deficit this year is one of the largest in the country's history. There are some special features to which I call attention which have inflated the deficit this year such as the rise in import prices which took place in 1963. We have borne the full burden of that, but I cannot see much relief from it next year. Then, again, we have suffered this year from the stop/go of 1962–63 when industrialists allowed their stocks to run low. They have been building them up again in late 1963 and early 1964. I certainly hope that there will be some relief on this score as stocking assumes more normal proportions. Finally, three were items in the capital account, including a high level of investment overseas by the oil companies, which, I hope, will come down after this year.
  However, when due allowance is made for such specific and temporary factors, the record of 1964 is an extraordinarily poor one. Our exports, which were expected to show a "substantial increase", to quote my predecessor's last Budget speech, have, in fact, been drifting downwards throughout the whole of the last nine months. Our imports have been swollen by a very large increase in the imports of manufactures and semi-manufactures largely of the sort which we produce and export ourselves. Thus, while our machinery exports were stagnant, our machinery imports increased by 30 per cent.
  All these things were pointers to serious trouble. They also pointed to the expectation of a balance of payments deficit next year, which, while no doubt a good deal smaller than in the current year, still threatened to be disconcertingly large. This is my main complaint against the previous Government. An economy is not healthy when imports are booming and exports are static. These are the essential points which measure our competitive strength. But the implication of these facts and figures was consistently glossed over, especially by the Leader of the Opposition during the summer months.

  IMPORTS
  The Chancellor of the Exchequer (Mr. James Callaghan)It was against this background that immediate action was required to correct the balance of payments. In the first three-quarters of 1964 imports of such manufactures were no less than 30 per cent. higher, that is, at an annual rate almost £200 million higher, than in the corresponding period 12 months earlier. We believe that the import charges are the least objectionable—the Committee will notice the terms I use—of all the methods that lay open to us. To have imposed quotas would have been more rigid, required more elaborate machinery, would have interfered more with the normal flow and pattern of trade and might well have been construed as being more of a permanent feature.
  I stress again that the charges are of a temporary character and that we regard their protective effect as a serious disadvantage. It is not our objective to cushion British industry from competition; if British producers should use the protective effect to raise their prices unwarrantably, then we shall ensure that the Price Review Body which is about to be set up will investigate and adjudicate on their actions. I think that the Committee as a whole would agree that that should be done. [HON. MEMBERS: "Postal charges."] That was another undiscovered skeleton.
  The legislation which I shall introduce will provide for a temporary charge of 15 per cent., effective from 27th October last, on substantially all imports except—and these are very important exceptions— food, feedingstuffs, fuel, unmanufactured raw materials and unmanufactured tobacco. The Government have decided that books and periodicals should also be exempted from the charge. This is in conformity with our obligations to U.N.E.S.C.O. and because the Government do not wish to impose a charge which would be widely regarded as a tax on culture. The Government have also decided that the charge should not be levied on large ships, which, for this purpose, are those of 80 tons or more—some of us in former years would have regarded these as very small ships—on the ground that it could be avoided with relative ease and, even if paid, would have to be refunded when the ship left a United Kingdom port.
  1028
  Components used by British shipbuilders in the manufacture, repair or refitting of large ships in registered shipping yards will also be exempt.
  Considerations similar to those in respect of large ships also arise in the case of large aircraft, and we have accordingly decided that they should be relieved of the charge if they are of a maximum total weight exceeding 18,000 lbs. The exemptions for raw materials have also been widened slightly: details of the exemptions will be set out in the Ways and Means Resolution.
  The powers which will be taken in the Finance Bill will run until 30th November, 1965, but will be renewable for a further period of not more than a year by affirmative Resolution. It is, however, our intention to review the arrangements well before next November; indeed, I expect to make a first review in the spring of next year. The powers will also enable the Government—and that is an important point to note—to reduce the rates or the coverage of the charges at any time before November, 1965, by an Order subject to negative resolution.
  It is the Government's intention that drawback of the charge will be available for re-exported goods and for all exported goods which can be shown to the Customs to contain components or materials which have borne the charge. The revenue expected from the charge, if it stayed unchanged throughout a full year—I must emphasise that point—would be of the order of £200 million.

  EXPORTS
  The Chancellor of the Exchequer (Mr. James Callaghan)There is good reason to believe that the charge on imports will yield a substantial saving on our imports bill approaching £300 million a year. But this, of course, is not in itself a cure: it gives us a breathing space—and that alone—so that we can begin the redirection of our economic efforts towards a very substantial increase in exports. The first urgent task is to discover what were the obstacles to higher exports during the last nine or ten months, particularly in the engineering industries, and what were the reasons which made the actual course of exports this year so different from the forecasts made at the beginning of the year. In addition, there will be an intensive examination of ways and means to provide further encouragement

  1029
  to exporters. My right hon. Friend the President of the Board of Trade will have more to say about this tomorrow if he catches your eye, Dr. King.
  In the meantime, we have taken steps to relieve exporters of certain handicaps in the form of indirect taxes which have so far fallen on export costs as well as home sales. The duties are those on petrol and other oils, on vehicle licence duties, and some items of Purchase Tax which, at various stages, enter into the cost of manufacture for export. The legislation which I now propose will operate effectively from 26th October last. The rebate, as has been said, will probably vary from 1 to 3 per cent. of the value of exports according to the type of product. The estimated cost at the present level of exports is £70 million.
  This is a substantial help to our exporters. This view is confirmed by conversations I have had with some of our leading exporters. It is plainly a measure which will take time to show its effects, but we hope that the expansion in exports induced by the rebate will eventually be a good deal greater than the budgetary cost.
  There are various ways in which the rebate will help exporters. It will enable firms to keep their prices competitive; to devote more effort to the marketing of their goods abroad; and to devote larger resources to keeping their products fully adapted to the requirements of overseas customers. Finally, it will help to increase the profitability of exporting, so encouraging industrialists and traders to put more of their resources and efforts into the export side of their business. The intention will be defeated if firms merely pocket their rebates and make no effort to expand their sales abroad. If, as I hope, this rebate leads to a significant increase in exports it will have done good out of proportion to the money involved, and I shall not grudge the revenue forgone.

  PUBLIC EXPENDITURE
  The Chancellor of the Exchequer (Mr. James Callaghan)Another urgent task which awaited me when I took up office was to examine the prospects of public expenditure.
  The expenditure programmes that we found in being for defence, the social services, houses, schools, hospitals, roads, will all entail substantially increased ex-
  1030
  penditure every year. By 1968 the total expenditure in the public sector will be £2,000 million more than it is today, without making any allowance for increased prices in the interim. This future expenditure is based on the revenue and savings that would accrue from a growth rate of 4 per cent. in our gross national product. Hon. Members will know that the average annual increase in our national product over the last five or six years has been only about 3 per cent., or a little less, and over the whole period from 1951 onwards has been no more than 2½ per cent.
  Putting it another way, the previous Administration have pledged our future revenues for the next four years on the basis of an underlying growth rate that they did not achieve and, looking at their record, they were unlikely to achieve. Of course, it is possible that the previous Government would have achieved and maintained a 4 per cent. growth rate for the next four years in a row. I do not say that miracles cannot happen, but the programmes that we have taken over have been planned on the assumption that the miracles have already happened. Many of these programmes—current and capital—are, in practical terms, already committed. It will take time to reshape them, but we intend to do this.
  Our first objective is to get the deployment of economic resources right. For example, large and important parts of our industrial and technological manpower and capacity are locked up in production and research for the Government. It will be our urgent task to see how far this pattern should be modified in the national interest so as to release resources for more productive purposes and for the expansion of exports. Defence will be in the forefront of this examination. This year's figure is over £2,000 million, of which over £350 million is spent overseas and is a direct burden on the balance of payments. This is the important point. The failure to secure value for money in the defence field has become a byword throughout the country: by relating commitments to resources it is our intention to ensure that the Armed Forces are able to discharge their tasks with greater effectiveness and economy.
  We shall also examine those Government expenditures in the civil field which have an economic aspect to ensure that an adequate economic and financial

  1031
  return can be secured for the industrial and scientific manpower and capital which they absorb. The purpose of much of this expenditure is sound enough and it is not our intention to hack it with a meat chopper. In the first instance, therefore, we intend to ask a task group of senior officials including scientific and economic advisers to sort out these projects and appraise their economic priority. We shall then have a firm basis for action.
  Next, my hon. Friend the Chief Secretary will be reviewing the remaining field of civil expenditure and I have asked him to consider whether the priorities at present established are right or whether it is possible for the Government to release valuable men and plant for work which will strengthen the balance of payments and help expanding industry. We are looking for all economies, not just tiny economies, although it must be part of the Chief Secretary's task to try to get rid of the kind of waste to which the Comptroller and Auditor General has drawn attention in recent years. But our basic objective is to find substantial cases where expenditure is not yielding full value in social and economic terms.
  To turn to the other side of the medal, there are, clearly, fields in which increased expenditure by the Government can help the modernisation of the economy and the improvement of the rate of technical progress. The help that is being given to ensure more rapid development in the under-employed areas of the country is a good example of this. I very much welcome the discussions which my right hon. Friends the First Secretary and the Minister of Labour are about to have with industry to help men move easily from jobs where productivity is relatively low and opportunities are few to more productive and progressive employment.
  I come now to a very important priority in the field of public expenditure. I believe that all of us found during the course of the recent election that there is widespread public concern, not limited to any one section of the community, about the condition of the elderly, the sick and the needy in this country. I believe that there was a general desire to see their lot improved.
  1032
  We pledged ourselves during the course of the election that pensions would be increased if we formed a Government. We adhere to that pledge. We shall very soon be introducing legislation proposing increases in the rates of National Insurance and associated benefits. The standard rate of National Insurance benefit for a single person will be raised to £4 a week, an increase of 12s. 6d. The rate for a married couple will go up to £6 10s. a week, an increase of 21s. The 10s. widow's pension, which has been the cause of much heartburning for many years among widows who have felt themselves unfairly treated, will be increased to 30s.
  Finally, I am very glad to announce that the earnings rule for widows' benefits will be abolished. I have been convinced for a long time that it was intolerably unjust that a widowed mother who goes out to work should have deducted 6d. out of every 1s. of her earnings where they are between £7 and £8 per week and 1s. out of every 1s. of her earnings when they are more than £8 a week. These are families who have been deprived of a father, the principal breadwinner, and I am glad to sweep away this hardship which has been visited on mothers who have been trying to keep the home together and do a little better for their families.
  There will be corresponding increases in war pensions and industrial injuries benefits. The pension for 100 per cent. disablement will be increased by 20s. from £5 15s. a week to £6 15s. a week. These improvements must be paid for and their cost will be about £300 million in the first year. National Insurance contributions will, of course, have to go up, and account will have to be taken at the same time of the quinquennial review increase due to come into force in April, 1965. The increase in the contribution for an employed man will be 2s. a week and for his employer 3s. 3d. a week. The increase for an employed woman will be 1s. 9d. and 2s. 10d. for her employer. These increases will cover industrial injuries as well as National Insurance benefits.
  There will be no increase in graduated contributions or pension. We are leaving the graduated part of the scheme unchanged until our own plans for replacing it are ready for introduction. We

  1033
  believe that it was right and in accordance with the feeling in the country that we should not delay bringing about these improvements for the old, the sick and widows while we are working on our longer-term plans.
  The additional cost to the Exchequer of the improvements in National Insurance benefits and war pensions will be about £85 million a year. My right hon. Friend the Minister of Pensions and National Insurance hopes to present a National Insurance Bill within the next fortnight together with a covering explanatory White Paper and Report from the Government Actuary. All the details will then be before the House. My right hon. Friend will, at the same time, give full information about the war pensions increases.
  Subject to the timely passage of the legislation, the changes will come into operation in the week beginning 29th March, 1965, which, for practical reasons, is the earliest possible date. [Laughter.] Is that disputed?
  Mr. Arthur Tiley: May we be told what differences will be made? We are interested. We are very glad to hear of these improvements. May we be told what difference will be made in the National Assistance grants at the same time, because they run together?
  Mr. Callaghan: I want to say about the machinery, about which I thought there was some tittering—[HON. MEMBERS: "There was."]—that it really does need overhauling. I wish that it had been looked into before. It might then have been possible to do this earlier, but we are satisfied, on the basis of the machinery as it works at present, that it is not possible to make these increases from an earlier date.
  I understand that the National Assistance Board intends to propose increases in the scale rates of assistance to come into effect at the same time. The increases proposed in the single rate and in the rate for married couples will be 12s. 6d. and 21s. respectively, that is, the same as the increase for pensions. The annual cost to the Exchequer is £23 million.
  Since it will be some months before the new rates come into operation—a matter I regret—the National Assistance
  1034
  Board will meanwhile be giving special attention to the needs of the old and of others who may have heavy fuel bills and other bills to meet this winter. My right hon. Friend the Minister of Pensions and National Insurance, who has got through a remarkable amount of work since her appointment, will be announcing the details in due course. But I should like to say now that the Board will do its best to see that where additional help is needed as many of the payments as possible are made by the end of December.
  There is an Income Tax aspect of the proposed pension increase, namely, the income limit for the dependant relative allowance. Subject to the passage of the National Insurance Bill, I propose in my Budget next year to raise the present dependant's income limit of £180 up to which the full dependant relative allowance is due by £30 to £210 and the upper income limit of £255 at which no allowance is due to £285. Tax offices will proceed on this basis when they are fixing P.A.Y.E. code numbers for 1965–66 which take dependant relative allowance into account. I shall also consider, before next April, the question of raising the income limit for age exemption which exempts individuals over 65 from tax up to an income of £360 for single people and £575 for married couples.
  In the view of the Government these proposals are right and just in themselves; but they serve another purpose, particularly at the present time. The nation will be called upon for fresh efforts and this will give our people tangible evidence that even in times of economic difficulty ours is a society where the weakest and neediest are cared for. This action is the mark of a humane and compassionate society; it helps to bind our people together in facing the future and it is in that spirit that I believe the cost will be met. The improvements in National Insurance and those which are expected to be made in National Assistance, together with the removal of prescription charges, will cost the Exchequer something of the order of £130 million in 1965–66.

  ECONOMIC ASSESSMENT
  Mr. CallaghanNow I turn to the economic assessment. I must, of course, take account

  1035
  of these increased expenditure commitments in tackling the problem of regulating the economy so as to maintain full employment and yet avoid excessive pressure of demand which would lead to all the evils of inflation.
  I must similarly take account of the measures that are necessary to correct the balance of payments deficit. The effect of the import charge and of the export rebate will be to increase demand on home production. If this does not happen, the measures that we have taken will have failed in their purpose. Unless we succeed in diverting resources on a large scale to producing more exports or replacing imports, we cannot hope to wipe out the present large deficit in the balance of payments. Some of the necessary transference will be brought about by the import surcharge. Goods that continue to be bought from abroad will cost more and this in itself will reduce purchasing power.
  On the other hand, the fact that home-produced goods will be bought instead of imported goods has the opposite effect, and will increase the pressure on resources. We expect the second factor to have a more powerful effect than the first; that is to say, we expect the reduction in imports to be greater than the increase in revenue resulting from the import charge. It will be necessary to close this gap. The export rebate will tend both to promote exports and to give a bonus to the income of exporters, thus adding to the pressure of demand in two ways. If both the import and export sides are considered together, the conclusion is inescapable that the net effect will be to increase the pressure on our domestic resources.
  But this pressure is already high and in some industries and regions, although not in all, it is already hitting the limits of our industrial capacity. This is most evident in the building industry and in some parts of the engineering industry in the Midlands and in the South.
  I cannot assume that this high pressure would become any less in the absence of new measures. All the indications when we imposed the import charge were that there would be no falling away in the pressure of demand over the coming months. In spite of the very dis-
  1036
  appoingting trend of exports in the last 12 months, there will be opportunities for a renewed expansion of sales abroad over the months to come because of the present level of world trade.
  In investment, the latest Board of Trade surveys show that over the broad field of private industry and in the public sector, investment expenditure is expected to be about 10 per cent. higher next year than this year. Housing investment, both private and public, seems likely to go on at a high level. On the other hand, there may be some offset to these expansionary forces through a falling away of the rate of investment in stocks.
  As for the field of expenditure on consumption, an upward trend is to be expected as real incomes grow. But that may be moderated—I hope it will—by personal savings; and here I am glad to express my unqualified support and thanks to all the workers in the National Savings Movement for their efforts.
  I have weighed the position with the utmost care, and I do not see how, taking together the effect of the action needed to correct our balance of payments deficit and the cost of increases in social benefits which I have announced, I can avoid asking the Committee for more taxation.
  If I were not to do so, and were to allow the pressure in the economy to rise even further, we should run a serious risk of frustrating the measures that we have taken to put the balance of payments right. I therefore put these proposals to the Committee.

  OIL DUTY
  Mr. CallaghanMy first proposal for increasing taxation is to raise the duty on petrol and other light hydrocarbon oils and diesel oil for road vehicles by 6d. a gallon, to take effect from 6 p.m. tonight. This will yield £32 million in 1964–65 and £93 million in a full year, and will raise the retail price index by one-fifth of a point immediately and, because of the transport element in the cost of other things, by a further small fraction spread over a period of time. The higher rate of duty will be taken into account in calculating the amount of the export rebate, and it is estimated that it may raise the cost of the rebate scheme to about £75 million a year.

  1037
  This increase in duty will exercise an appreciable and immediate disinflationary effect and will make an important contribution towards my general objective of preventing an increase in the pressure of demand. The consequential change which is necessary in the rate of duty on certain imported goods containing hydrocarbon oil is being made by statutory order.
  I am aware that this increase in the petrol duty will add to the difficulties of those passenger transport undertakings which operate stage bus services. I have, therefore, asked my right hon. Friend the Minister of Transport to embark on early discussions with representatives of these undertakings with a view to finding a means of giving them some relief in respect of the additional cost of those services which this increase in duty will cause.

  INCOME TAX
  Mr. CallaghanI next propose legislation which will provide for a rise of 6d. in the standard rate of Income Tax to take effect from 6th April next year. But I do not propose to make a corresponding increase for the reduced rates of tax which are charged on the first £300 of the taxable income of individuals after they have received their personal allowances. The effect of this modification will be that 14½ million of the 21 million persons with incomes in the taxable field will be unaffected by the increase in the standard rate.
  I give some examples. A married man with one child under 11 years of age and earning not more than £18 a week will pay no more in Income Tax than he does at present. With earnings of £20 a week, such a married man with a small child will pay an extra 6d. a week. A married man without children will pay no more in tax if the earnings do not exceed £15 a week. At £17 a week earnings, such a married man without a family will pay another £1 2s. 10d. per year, or less than 6d. per week. A married man with two children under 11 will pay no extra tax up to an earned income of £1,100 per year. At £1,200, the extra tax will amount to an additional £1 10s. 8d. per year, or 7d. per week.
  1038
  I can put it this way. The levels below which no additional tax will be paid will be like this: for a single person, nearly £13 a week; for a married couple, nearly £15 a week; for a married man with one child under the age of 11, nearly £19 a week; for a married couple with two children under the age of 11, nearly £1,200 a year before any additional tax will become payable.
  As is the nature of the Income Tax, equity plays a large part. This is one of the reasons why I have selected it. The higher the income, the bigger the tax. I am, however, aware that it hits hardly on a great many people. I have no particular desire, in my first Budget, to raise taxation, but I am trying to face the situation that I have inherited and to deal with it honestly.
  If I may give two more examples, a married couple earning £2,000 a year and with two children under the age of 11 will pay an extra £17 a year and a married man with no children and an earned income of £3,000 a year will pay an extra £42 a year. I estimate that this increase in the standard rate of tax will yield an additional £122 million of revenue in 1965–66. Of this amount, about £78 million will be borne by companies and more than half of this will be borne by their shareholders.
  Given the need to increase tax rates, I believe that I have adjusted these additional imposts in such a way that they fall on the shoulders of those who can best bear them. I recognise fully that burdens and commitments grow with an increasing income and that to the young family with a small child and an earned income of £1,500 per year, even another 4s. a week can be meaningful. This is especially true when they are burdened with the cost of buying a home at high interest rates or renting accommodation and paying fares to and from work. We all should recognise these facts. I shall watch the revenue prospects carefully in order to ease their position as and when I can. Meantime, I hope that it will be recognised by all that they are making a contribution that will assist in the difficult task of climbing out of our balance of payments deficit and will help to ease the lot of the most needy in the community.

  EXCHEQUER PROSPECTS 1964–65
  Mr. CallaghanThe Committee will wish to know how these changes are likely to affect the Exchequer outturn for the current financial year. At this time of year, any forecast of the prospective Exchequer outturn for the current financial year as a whole can only be in very broad terms. Present indications are that, before allowing for the tax changes which I have just announced, the overall deficit at the end of the year would have been some £250 million less than my predecessor's estimate of £791 million. Allowing for the effect of the import charges, the export rebates and the increase in the duty on petrol and diesel oil for road vehicles, the overall deficit at the end of 1964–65 may now be expected to be of the order of £400 to £450 million.

  TAX REFORM
  Mr. CallaghanNow I wish to unfold to the Committee something about my plans in the field of tax reform. I aim to stimulate a lively and radical interest in this subject. Our system has become unjust both in its incidence between different individuals and social classes, and in some ways it has become a stumbling block to economic progress. Nor am I satisfied that its use is sufficiently closely related to the physical and planning aspects of our policies. For example, I propose to examine how far variations of taxes can mobilise the profit motive to do the work of planning. My predecessor made a beginning when he adopted the proposals that my right hon. Friends and I put forward for giving certain selective tax concessions for investment in development areas. I wish to pursue the question how much further fiscal means can be used to create the framework of a dynamic economy.
  In addition, I shall be looking especially closely during the coming months at the whole question of avoidance of tax. We all know that the greater the success of the ingenious tax avoider in this respect, the greater the marginal burden on the rest of us and the greater the injustice between classes of taxpayers.

  CAPITAL GAINS TAX
  Mr. CallaghanI intend to make a start next spring with two major tax reforms. The first will be a capital gains tax. The dividing
  1040
  line between capital and income has become blurred. The Income Tax system has been misused by some to avoid paying Income Tax by entering into arrangements which dress up income, which is taxable, to look like capital, which is mainly untaxed. The right hon. and learned Gentleman the Member for Wirrall caught a fleeting glimpse of this when he made short-term capital gains chargeable to tax under case VII of Schedule D, but, of course, he hardly even touched the fringe of the problem. I do not know what he intended to do, but he certainly did not succeed in doing what ought to be done and he did not raise any revenue.
  The short-term tax has been ineffective in operation and has yielded in the first year about £1 million revenue. At first sight, it might seem that the solution would be to extend the time limits set by the right hon. and learned Gentleman the Member for Wirral, but the major anomaly would remain that, by holding on to one's gain for an extra day, one can always ensure that the capital goes scot-free.
  Therefore, in my spring Budget I shall introduce proposals for the taxation of capital gains which will apply to gains arising from assets whenever acquired. The gains to be charged will not exceed the difference between the value of the particular asset on the 1965 Budget day and the amount realised when it is disposed of subsequently. That is to say, there will be no restrospection. There will be appropriate relief for realised capital losses.
  This measure will bring to an end the state of affairs in which hard work and great energy are fully taxed while the fruits of speculation and passive ownership escape untaxed. I hope, therefore, that it will have a substantial effect in helping wage and salary earners in this country to accept the need for an incomes and prices policy. This is part of fair play as between groups of taxpayers. They have recognised long since that when they forgo a wage or salary increase it is lost for ever, but that a dividend unpaid frequently reappears later as an untaxed capital gain. It is time that this was brought to an end.
  Mr. F. J. Bellenger: Will this new system replace the existing system?
  Mr. Callaghan: The purpose of the new system is to replace the existing system, but I should not care to go too far into detail till I have considered the matter further. It is to bring to an end the anomaly of the time limit. That is the purpose of it, but it has to be worked out in further detail. I hope that my right hon. Friend will possess his soul in a little patience. A lot of detailed work is being done on this at the present time.

  CORPORATION TAX
  Mr. CallaghanI shall have a major change to propose in the Budget of 1965 in the system of taxation as it affects companies and other corporate bodies. This system is not well designed for the second half of the twentieth century. In particular, it does not provide sufficient incentive to companies to plough back profits for growth rather than to distribute them as dividends. It is also unnecessarily complicated. Company profits are subject, in the first place, to Profits Tax, the burden of which remains on the company. Secondly, full company profits are charged to Income Tax at the standard rate, though, to the extent that the profits are distributed as dividends, the Income Tax paid on them by the company is treated as tax of the shareholder. So it is only the Income Tax on the undistributed profit—so long as it remains undistributed—which is really borne by the company, and this situation makes it very difficult to ascertain what the true burden on the company is.
  Moreover, the system leads to the abuse and anomalies to which attention has been called by the Public Accounts Committee. The effect of these is that companies can recover large sums called "tax" by way of repayment, though no corresponding amount has ever reached the Exchquer.
  A corporation tax levied on companies and other corporations distinct and separate from Income Tax would simplify the tax structure and put an end to a position that some are exploiting. I shall, therefore, come forward next spring with proposals to abolish Income Tax and
  1042
  Profits Tax on the income of companies. A new corporation tax will take its place.
  The rate of tax under these new proposals will, as in the case of any other tax, depend on the financial and economic situation at the time. The change will affect the burden of tax on different companies in different ways—according, for example, to the proportion of profits they distribute. Some companies will bear more, others will bear less, as is inevitable when a major change of this kind is made, but since, with the new tax, we shall be able to raise the same total revenue with a lower corporation tax rate than the present combined rate of Income Tax and Profits Tax, the new rate will mean a reduction on the current rate of taxation of undistributed profits—in other words, profits that are retained for investment and expansion. The main objects of the scheme will be to modernise the tax system, to get rid of anomalies and to provide an incentive to dynamic companies to develop at a rapid pace through the use of their ploughed back profits.
  Although I intend to introduce the legislation next April it will not be practicable to bring the scheme into force immediately. Income Tax assessments will continue to be made on companies under the existing system for 1965–66. I contemplate that the first profits to which the new corporation tax will apply will be the profits of the period immediately following that which formed the basis for 1965–66.
  A corporation tax will have the further advantage of making unnecessary some of the present complex anti-avoidance legislation. There will be a number of complicated problems to he solved in connection with its introduction. But this major reform in the fiscal field will reinforce the other policies of the Government for toning up the economy to face the future.
  The taxation proposals which I have made today are the necessary counterpart to the measures which the Government have taken to put our external position right. They also take account of the Government's proposals for additional expenditure on pensions and benefits. They are a direct consequence of the situation which we inherited—[HON. MEMBERS: "Oh."] If hon. Gentlemen do not think so they really cannot understand how the balance of payments can

  1043
  be as it is. These proposals are proof of our determination to find the money needed for the claims of social welfare. [HON. MEMBERS: "Ah."] They both go together. Hon. Gentlemen opposite cannot dodge this. They both go together. If we are to get the balance of payments right we have got to lessen the pressure of demand. If we do not do that we shall have inflation—an inflationary runaway; and that is the inheritance, and that is why we are trying to face it.
  The present state of the economy does not require action to be taken to divert resources away from the home market all at once: there will be a gradual build-up as our measures to correct the external deficit take effect.
  I have weighed the position very carefully and conclude that these measures will work provided that there is a successful and swift conclusion to the discussions on an incomes and prices policy that have already begun. I regard success in this field as vital.
  None the less, I must never forget the fallibility of previous forecasting, as a result of which other Chancellors have given the economy a deflationary twist just at the moment when it did not need it. I believe that on this occasion I have chosen the right measures in the correct proportions, but if they should turn out to be insufficient, I shall use the battery of additional weapons that exists for regulating pressure on the economy.
  As a result of what others have failed to do, we have reaped a bitter harvest, but the world overseas should know that the Government are determined to put an end to these recurring deficits in our foreign balances, to the constant recourse to international loans, and that we intend to re-establish our economic strength once and for all.
  I say this with confidence. The British people have only to understand the situation to respond to the need when Government measures are firm and clear and fair. All of us are involved in this, and, with all the conviction that I can muster, I say to the Committee and to the country that this is the time for a united effort both from management and from the shop floor. As the Government's measures unfold, we shall show that there is
  1044
  now the opportunity to fight our way out of the economic trap in which we have been caught for too long. The British people can do it, and I put my trust in them.
  That is the end of my speech, but, in accordance with normal usage, Budget Resolutions must now be distributed. I sat for long enough on the other side of the Committee to know what hasty decisions have to be taken. Therefore, with the indulgence of the Committee, I should like to say a few words while these Resolutions are being perused, in order that decisions can be reached.
  I think that it might be for the convenience of the Committee to remark that we have decided not to have a General Resolution on this occasion. The annual Finance Bill rightly occupies a good deal of the time of the House in the late spring and summer months, and it is proper that we should consider a wide range of suggestions for the improvement of our tax laws at that time. But an autumn Budget is a rather different matter, and I hope that the Committee will recognise that it will be making too great a demand on the timetable of the House—the right hon. Gentleman and are the only two who are listening to what I am saying.
  The Chairman: Order. I shall be grateful if hon. Members will pass the copies of the Resolution along the benches quietly.
  Mr. Callaghan: As I was saying, an autumn Budget is rather a different matter, and I hope that the Committee will recognise that it will be making too great a demand on the timetable of the House to have between now and Christmas a full-scale Committee stage for the second time this year. After all, the Government had the opportunity of putting down many new Clauses when they were the Opposition, and the Opposition had the same opportunity when they were the Government, only three or four months ago.
  We have a good deal of other business to transact, including the very important legislation to implement the National Insurance proposals which I have announced. Therefore, while I certainly accept that the House should have the opportunity for full discussion of the measures which I have proposed to be embodied in the autumn Finance Bill. I

  1045
  think that in the exceptional circumstances of an autumn Bill I can reasonably ask for our discussions to be limited to those proposals.
  The Chairman: Order. The Opposition Front Bench is very anxious to hear every word spoken by the Chancellor. I hope that hon. Members on the back benches will sit quietly while the Chancellor is finishing his speech.
  Mr. Callaghan: Now that I have raised the question of procedure, I think that I should also call the attention of the Committee to a procedural point arising from the need to make the increase in the standard rate of Income Tax operative from next April. Hon. Members will see that one of the Resolutions being circulated will fix the standard rate of Income Tax for the next Income Tax year, that is, 1965–66, subject, of course, to confirmation in the Finance Bill. As is the practice in such cases, a special procedure Resolution will be tabled to permit the inclusion in the Finance Bill of a provision which will take effect in a future year.
  The right hon. Member for Barnet will recall that there was a similar procedure Resolution in connection with the 1963 Budget proposal to taper off the child allowance when the child's income reached the income limit.
  I trust that in that short interlude hon. Members have had the opportunity of looking at the Resolutions and of defining their attitude to them.

  1. HYDROCARBON OILS, ETC. (CUSTOMS AND EXCISE)
  Motion made,
  That, as from six o'clock in the evening of 11th November, 1964, the duty of customs on hydrocarbon oils shall be increased by sixpence a gallon, and all the provisions of the customs and excise Acts which depend on the rate of that duty shall have effect accordingly including in particular—

  (a) the enactments specifying the rate of excise duty on hydrocarbon oils, on petrol substitutes and on spirits used for making power methylated spirits, and

  (b) Part VI of the Customs and Excise Act 1952 and other enactments affording rebates of duty or any allowance.

  And it is hereby declared that it is expedient in the public interest that this resolution should have statutory effect under the Provisional Collection of Taxes Act 1913.
  The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 90 (Ways and Means Resolutions):—
  The Committee proceeded to a Division, and The CHAIRMAN having directed that the doors be locked—
  Mr. R. J. Maxwell-Hyslop: May I raise a point of order, Dr. King? Did not I hear you order "Lock the doors", rather than "Clear the Lobbies", and, if so, is the Division valid in that case?
  The Chairman: It was an error for which the new Chairman apologises to the Committee, and which I corrected at once by giving the correct instruction.
  Ayes 303, Noes 293.

  Division No. 3.]

  AYES

  [4.37p.m.

  Abse, Leo

  Bradley, Tom

  Davies, S. O. (Merthyr)

  Albu, Austen

  Bray, Dr. Jeremy

  de Freitas, Sir Geoffrey

  Allaun, Frank (Salford, E.)

  Broughton, Dr. A. D. D.

  Delargy, Hugh

  Alldritt, W. H

  Brown, Rt. Hn. George (Belper)

  Dell, Edmund

  Allen, Scholefield (Crewe)

  Brown, Hugh D. (Glasgow, Provan)

  Dempsey, James

  Armstrong, Ernest

  Brown, R. W. (Shoreditch & Fbury)

  Diamond, John

  Atkinson, Norman

  Buchan, Norman (Renfrewshire, W.)

  Dodds, Norman

  Bacon, Miss Alice

  Buchanan, Richard (Gl'sg'w,Spr'burn)

  Doig, Peter

  Bagier, Gordon A. T.

  Butler, Herbert (Hackney, C.)

  Driberg Tom

  Barnett, Joel

  Butler, Mrs. Joyce (Wood Green)

  Duffy, Dr. A. E. P.

  Baxter, William

  Callaghan, Rt. Hn. James

  Dunn, James, A. (L'pool, Kirkdale)

  Beaney, Alan

  Carmichael, Neil

  Dunnett, Jack (Nottingh'm, Central)

  Bellenger, Rt. Hn. F. J.

  Carter-Jones, Lewis

  Edelman, Maurice

  Bence, Cyril

  Castle, Rt. Hn. Barbara

  Edwards, Rt. Hn. Ness (Caerphilly)

  Benn, Rt. Hn. Anthony Wedgwood

  Coleman, Donald

  Edwards, Robert (Bilston)

  Bennett, J. (Glasgow, Bridgeton)

  Conlan, Bernard

  English, Michael

  Binns, John

  Corbet, Mrs. Freda

  Ennals, David

  Bishop, E. S.

  Craddock, George (Bradford, S.)

  Ensor, David

  Blackburn, F.

  Crawshaw, Richard

  Evans, Albert (Islington, S. W.)

  Blenkinsop, Arthur

  Crosland, Anthony

  Evans loan (Birmingham, Yardley)

  Boardman, H.

  Crossman, Rt. Hn. R. H. S.

  Fernyhough, E.

  Boston, T. G.

  Cullen, Mrs. Alice

  Finch, Harold

  Bottomley, Rt. Hn. Arthur

  Dalyell, Tam

  Fitch, Alan

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

  Darling, George

  Fitch, Alan

  Bowles, Frank

  Davies, G. Elfed (Rhondda, E.)

  Fletcher, Eric (Islington, E.)

  Boyden, James

  Davies, Harold (Leek)

  Fletcher, Ted (Darlington)

  Braddock, Mrs. E. M.

  Davies, Ifor (Gower)

  Fletcher, Raymond (Ilkeston)

  Floud, Bernard

  Lewis, Arthur (West Ham, N.)

  Rhodes, Geoffrey

  Foley, Maurice

  Lewis, Ron (Carlisle)

  Richard, Ivor

  Foot, Dingle (Ipswich)

  Lipton, Marcus

  Roberts, Albert (Normanton)

  Foot, Michael (Ebbw Vale)

  Lomas, Kenneth

  Roberts, Goronwy (Caernarvon)

  Ford, Ben

  Loughlin, Charles

  Robertson, John (Paisley)

  Fraser, Rt. Hn. Tom (Hamilton)

  Mabon, Dr. J. Dickson

  Robinson, Rt. Hn. K. (St. Pancras, N.)

  Freeson, Reginald

  McBride, Nell

  Rodgers, William (Stockton)

  Galpern, Sir Myer

  McCann, J.

  Rose, Paul B.

  Garrett, W. E.

  MacColl, James

  Ross, Rt. Hn. William

  Garrow, A.

  MacDermot, Niall

  Rowland, Christopher

  George, Lady Megan Lloyd

  McGuire, Michael

  Sheldon, Robert

  Ginsburg, David

  McInnes, James

  Shinwell, Rt. Hn. E.

  Gourlay, Harry

  McKay, Mrs. Margaret

  Shore, Peter (Stepney)

  Greenwood, Rt. Hn. Anthony

  MacKenzie, Gregor (Rutherglen)

  Short, Rt. Hn. E. (N'c'tle-on-Tyne,C.)

  Gregory, Arnold

  Mackie, John (Enfield, E.)

  Short, Mrs. Renée (W'hampton. N. E.)

  Grey, Charles

  MacMillan, Malcolm

  Silkin, John (Deptford)

  Griffiths, David (Rother Valley)

  MacPherson, Malcolm

  Silkin, S. C. (Camberwell, Dulwich)

  Griffiths, Rt. Hn. James (Llanelly)

  Mahon, Peter (Preston, S.)

  Silverman, Julius (Aston)

  Griffiths, Will (Manchester Exchange)

  Mahon, Simon (Bootle)

  Silverman, Sydney (Nelson)

  Gunter, Rt. Hn. R. J.

  Mallalieu, E. L. (Brigg)

  Slater, Mrs. Harriet (Stoke, N.)

  Hale, Leslie

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

  Slater, Joseph (Sedgefield)

  Hamilton, James (Bothwell)

  Manuel, Archie

  Small, William

  Hamilton, William (West Fife)

  Marsh, Richard

  Smith, Ellis (Stoke, S.)

  Hamling, William (Woolwich, W.)

  Mason, Roy

  Snow, Julian

  Hannan, William

  Maxwell, Robert

  Solomons, Henry

  Harper, Joseph

  Mayhew, Christopher

  Sorensen, R. W.

  Harrison, Walter (Wakefield)

  Mellish, Robert

  Soskice, Rt. Hn. Sir Frank

  Hart, Mrs. Judith

  Mendelson, J. J.

  Steele, Thomas

  Hattersley, Ray

  Mikardo, Ian

  Stewart, Rt. Hn. Michael

  Hayman, F. H.

  Millan, Bruce

  Stonehouse, John

  Hazell, Bert

  Miller, Dr. M. S.

  Stones, William

  Healey, Rt. Hn. Denis

  Milne, Edward (Blythe)

  Strauss, Rt. Hn. G. R. (Vauxhall)

  Heffer, Eric S.

  Molloy, William

  Stross, Sir Barnett (Stoke-on. Trent, C.)

  Henderson, Rt. Hn. Arthur

  Monslow, Walter

  Summerskill, Dr. Shirley

  Herbison, Rt. Hn. Margaret

  Morris, Alfred (Wythenshawe)

  Swain, Thomas

  Hobden, Dennis (Brighton, K'town)

  Morris, John (Aberavon)

  Swingler, Stephen

  Holman, Percy

  Morrison, Charles (Devizes)

  Symonds, J. B.

  Horner, John

  Mulley, Rt. Hn. Frederick (SheffieldPk)

  Taverne, Dick

  Houghton, Rt. Hn. Douglas

  Murray, Albert

  Taylor, Bernard (Mansfield)

  Howarth, Harry (Wellingborough)

  Neal, Harold

  Thomas, George (Cardiff, W.)

  Howarth, Robert L. (Bolton, E.)

  Newens, Stan

  Thomas, Iorwerth (Rhondda, W.)

  Howell, Denis (Small Heath)

  Noel-Baker, Francis (Swindon)

  Thomson, George (Dundee, E.)

  Howie, W.

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

  Thornton, Ernest

  Hoy, James

  Norwood, Christopher

  Tinn, James

  Hughes, Cledwyn (Anglesey)

  Oakes, Gordon

  Tomney, Frank

  Hughes, Emrys (S. Ayrshire)

  Ogden, Eric

  Tuck, Raphael

  Hughes, Hector (Aberdeen, N.)

  Oram, Albert E. (E. Ham S.)

  Urwin, T. W.

  Hunter, Adam (Dunfermline)

  Orbach, Maurice

  Varley, Eric G.

  Hunter, A. E. (Feltham)

  Orme, Stanley

  Walden, Brian (All Saints)

  Hynd, John (Attercliffe)

  Oswald, Thomas

  Walker, Harold (Doncaster)

  Irvine, A. J. (Edge Hill)

  Owen, Will

  Wallace, George

  Jackson, Colin

  Padley, Walter

  Warbey, William

  Janner, Sir Barnett

  Page, Derek (King's Lynn)

  Watkins, Tudor

  Jay, Rt. Hn. Douglas

  Paget, R. T.

  Weitzman, David

  Jeger, George (Goole)

  Palmer, Arthur

  Wells, William (Walsall, N.)

  Jeger, Mrs. Lena (H'b'n & St. P' cras,S.)

  Pannell, Rt. Hn. Charles

  White, Mrs. Eirene

  Jenkins, Hugh (Putney)

  Pargiter, G. A.

  Whitlock, Charles

  Jenkins, Rt. Hn. Roy (Stechford)

  Park, Trevor (Derbyshire, S. E.)

  Wigg, Rt. Hn. George

  Johnson, Carol (Lewisham, S.)

  Parker, John

  Wilkins, W. A.

  Johnson, James (K'ston-on-Hull,W.)

  Parkin, B. T.

  Willey, Rt. Hn. Frederick

  Jones, Dan (Burnley)

  Pavitt, Laurence

  Williams, A. J. (Swansea, W.)

  Jones, Rt. Hn. Elwvn (West Ham, S.)

  Pearson, Arthur (Pontypridd)

  Williams, Ll. (Abertillery)

  Jones, J. Idwal (Wrexham)

  Peart, Rt. Hn. Fred

  Williams, Mrs. Shirley (Hitchin)

  Jones, T. W. (Merioneth)

  Pentland, Norman

  Williams, W. T. (Warrington)

  Kelley, Richard

  Perry, E. G.

  Willis, George (Edinburgh, E.)

  Kenyon, Clifford

  Popplewell, Ernest

  Wilson, Rt. Hn. Harold (Huyton)

  Kerr, Mrs. Anne (R'ter & Chatham)

  Prentice, Reginald

  Wilson, William (Coventry, S.)

  Kerr, Dr. David (W'worth, Central)

  Price, J. T. (Westhoughton)

  Winterbottom, R. E.

  Lawson, George

  Probert, Arthur

  Woodburn, Rt. Hn. A.

  Leadbitter, Ted

  Pursey, Cmdr. Harry

  Woof, Robert

  Ledger, Ron

  Randall, Harry

  Wyatt, Woodrow

  Lee, Rt. Hn. Frederick (Newton)

  Rankin, John

  Yates, Victor (Ladywood)

  Lee, Miss Jennie (Cannock)

  Redhead, Edward

  Zilliacus, K.

  Lever, Harold (Cheetham)

  Rees, Merlyn (Leeds, S.)

  Lever, L. M. (Ardwick)

  Reynolds, Gerald

  TELLERS FOR THE AYES:

  Mr. Irving and Mr. Rogers.

  NOES

  Agnew, Commander Sir Peter

  Anstruther-Gray, Rt. Hn. Sir W.

  Balniel, Lord

  Alison, Michael (Barkston Ash)

  Astor, John

  Barlow, Sir John

  Allan, Robert (Paddington, S.)

  Atkins, Humphrey

  Batsford, Brian

  Allason, James (Hemel Hempstead)

  Awdry, Daniel

  Beamish, Col. Sir Tufton

  Amery, Rt. Hn. Julian

  Baker, W. H. K.

  Bell, Ronald

  1048

  1049

  Bennett, F. M. (Torquay)

  Glover, Sir Douglas

  Maitland, Sir John

  Bennett, Dr. Reginald (Gos & Fhm)

  Glyn, Sir Richard

  Marlowe, Anthony

  Berkeley, Humphry

  Godber, Rt. Hn. J. B.

  Marples, Rt. Hn. Ernest

  Berry, Hn. Anthony

  Goodhart, Philip

  Marten, Neil

  Bessell, Peter

  Goodhew, Victor

  Mathew, Robert

  Biffen, John

  Cower, Raymond

  Maude, Angus E. U.

  Biggs-Davison, John

  Grant, Anthony

  Maudling, Rt. Hn. Reginald

  Bingham, R. M.

  Grant-Ferris, R. (Nantwich)

  Mawby, Ray

  Birch, Rt. Hn. Nigel

  Gresham-Cooke, R.

  Maxwell-Hyslop, R. J. (Tiverton)

  Black, Sir Cyril

  Grieve, Percy

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

  Blaker, Peter

  Griffiths, Eldon (Bury St. Edmunds)

  Meyer, Sir Anthony

  Bossom, Hn. Clive

  Griffiths, Peter (Smethwick)

  Mills, Peter (Torrington)

  Bowen, Roderic (Cardigan)

  Grimond, Rt. Hn. J.

  Mills, Stratton (Belfast, N.)

  Boyd-Carpenter, Rt. Hn. J.

  Gurden, Harold

  Miscampbell, Norman

  Boyle, Rt. Hn. Sir Edward

  Hall, John (Wycombe)

  Mitchell, David

  Brewis, John

  Hall-Davis, A. G. F. (Morecambe)

  Monro, Hector

  Brinton, Sir Tatton

  Hamilton, Marquess of (Fermanagh)

  More, Jasper

  Bromley-Davenport, Lt.-Col. Sir Walter

  Harris, Frederic (Croydon, N. W.)

  Morrison, Charles (Devizes)

  Brooke, Rt. Hn. Henry

  Harris, Reader (Heston)

  Morrison, John (Salisbury)

  Brown, Sir Edward (Bath)

  Harrison, Brian (Maldon)

  Mott-Radclyffe, Sir Charles

  Bruce-Gardyne, J.

  Harrison, Col. Sir Harwood (Eye)

  Murton, Oscar

  Bryan, Paul

  Harvey, Sir Arthur Vere (Maccles'd)

  Neave, Airey

  Buchanan-Smith, Alick

  Harvey, John (Walthamstow, E.)

  Nicholls, Sir Harmar

  Buck, Antony

  Harvie Anderson, Miss

  Nicholson, Sir Godfrey

  Bullus, Wing Commander Eric

  Hastings, Stephen

  Noble, Rt. Hn. Michael

  Burden, F. A.

  Hawkins, Paul

  Nugent, Rt. Hn. Sir Richard

  Butcher, Sir Herbert

  Hay, John

  Onslow, Cranley

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

  Heald, Rt. Hn. Sir Lionel

  Orr, Capt, L. P. S.

  Campbell, Gordon

  Heath, Rt. Hn. Edward

  Orr-Ewing, Sir Ian

  Carlisle, Mark

  Hendry, Forbes

  Osborn, John (Hallam)

  Carr, Rt. Hn Robert

  Higgins, Terence L.

  Osborne, Sir Cyril (Louth)

  Cary, Sir Robert

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

  Page, John (Harrow, W.)

  Channon, H. P. G.

  Hirst, Geoffrey

  Page, R. Graham (Crosby)

  Chataway, Christopher

  Hobson, Rt. Hn. Sir John

  Pearson, Frank (Clitheroe)

  Chichester-Clark, R.

  Hooson, H. E.

  Peel, John

  Clark, Henry (Antrim, N.)

  Hopkins, Alan

  Percival, Ian

  Clark, William (Nottingham, S.)

  Hordern, Peter

  Peyton, John

  Clarke, Brig. Terence (Portsmth, W.)

  Hornby, Richard

  Pickthorn, Sir Kenneth

  Cole, Norman

  Hornsby-Smith, Rt. Hn. Dame P.

  Pike, Miss Mervyn

  Cooke, Robert

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

  Pitt, Dame Edith

  Cooper, A. E,

  Howe, Geoffrey (Bebington)

  Pounder, Rafton

  Cooper-Key, Sir Neill

  Hunt John (Bromley)

  Powell, Rt. Hn. J. Enoch

  Cordle, John

  Hutchison, Michael Clark

  Price, David (Eastleigh)

  Corfield, F. V.

  Iremonger, T. L.

  Prior, J. M. L.

  Costain, A. P.

  Irvine, Bryant Godman (Rye)

  Pym, Francis

  Courtney, Cdr. Anthony

  Jenkin, Patrick (Woodford)

  Quennell, Miss J. M.

  Craddock, Sir Beresford (Spelthorne)

  Jennings, J. C.

  Ramsden, Rt. Hn. James

  Crawley, Aidan

  Johnston, Russell (Inverness)

  Rawlinson, Rt. Hn. Sir Peter

  Crosthwaite-Eyre, Col. Sir Oliver

  Jones Arthur (Northants, S.)

  Redmayne, Rt. Hn. Martin

  Crowder, F. P.

  Jones, Rt. Hn. Aubrey (Hall Green)

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

  Cunningham, Sir Knox

  Jopling, Michael

  Ridley, Hn. Nicholas

  Curran, Charles

  Joseph, Rt. Hn. Sir Keith

  Ridsdale, Julian

  Currie, G. B. H.

  Kaberry, Sir Donald

  Roberts, Sir Peter (Heeley)

  Dalkeith, Earl of

  Kerby, Capt. Henry

  Rodgers, Sir John (Sevenoaks)

  Dance, James

  Kerr, Sir Hamilton (Cambridge)

  Roots, William

  Davies, Dr. Wyndham (Perry Barr)

  Kershaw, Anthony

  Royle, Anthony

  d'Avigdor-Goldsmid, Sir Henry

  Kilfedder, James A.

  Russell, Sir Ronald

  Dean, Paul

  Kimball, Marcus

  St. John-Stevas, Norman

  Deedes, Rt. Hn. W. F.

  King Evelyn (Dorset, S.)

  Sandys, Rt. Hn. Duncan

  Digby, Simon Wingfield

  Lagden, Godfrey

  Scott-Hopkins, James

  Dodds-Parker, Douglas

  Lambton, Viscount

  Sharples, Richard

  Doughty, Charles

  Lancaster, Col. C. G.

  Shepherd, William

  Douglas-Home, Rt. Hn. Sir Alec

  Langford-Holt, Sir John

  Sinclair, Sir George

  Drayson, G. B.

  Legge-Bourke, Sir Harry

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

  du Cann, Edward

  Lewis, Kenneth (Rutland)

  Smyth, Rt. Hn. Brig. Sir John

  Elliot, Capt. Walter (Carshalton)

  Litchfield, Capt. John

  Soames, Rt. Hn. Christopher

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

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

  Spearman, Sir Alexander

  Emery, Peter

  Lloyd, Ian (P'tsm'th, Langstone)

  Speir, Rupert

  Emmet, Hn. Mrs. Evelyn

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Stainton, Keith

  Errington, Sir Eric

  Longbottom, Charles

  Stanley, Hn. Richard

  Erroll, Rt. Hn. F. J.

  Longden, Gilbert

  Stodart, J. A. (Edinburgh, W.)

  Fell, Anthony

  Loveys, Walter H.

  Stoddart-Scott, Col. Sir Malcolm

  Fisher, Nigel

  Lubbock, Eric

  Studholme, Sir Henry

  Fletcher-Cooke, Charles (Darwen)

  Lucas, Sir Jocelyn (Portsmouth, S.)

  Summers, Sir Spencer

  Fletcher-Cooke, Sir John (S'pton)

  Lucas-Tooth, Sir Hugh (Hendon, S.)

  Talbot, John E.

  Forrest, George

  McAdden, Sir Stephen

  Taylor, Sir Charles (Eastbourne)

  Fraser, Rt. Hn. Hugh (St'fford & Stone)

  Mackenzie, Alasdair (Ross&Crom'ty)

  Taylor, Edward M. (G'gow, Cathcart)

  Galbraith, Hn. T. G. D.

  Mackie, George Y. (C'ness & S'land)

  Taylor, Frank (Moss Side)

  Gammans, Lady

  McLaren, Martin

  Teeling, Sir William

  Gardner, Edward

  Maclean, Sir Fitzroy

  Temple, John M.

  Gibson-Watt, David

  Macleod, Rt. Hn. Iain

  Thatcher, Mrs. Margaret

  Giles, Rear-Admiral Morgan

  McMaster, Stanley

  Thomas, Sir Leslie (Canterbury)

  Gilmour, Ian (Norfolk, Central)

  McNair-Wilson, Patrick

  Thomas, Rt. Hn. Peter (Conway)

  Gilmour, Sir John (East Fife)

  Maginnis, John E.

  Thompson, Sir Richard (Croydon, S.)

  1050

  1051

  Thorneycroft, Rt. Hn. Peter

  Walters, Denis

  Wolrige-Gordon, Patrick

  Tiley, Arthur (Bradford, W.)

  Ward, Dame Irene

  Wood, Rt. Hn. Richard

  Tilney, John (Wavertree)

  Weatherill, Bernard

  Woodhouse, Hn. Christopher

  Turton, Rt. Hn. R. H.

  Webster, David

  Woodnutt, Mark

  Tweedsmuir, Lady

  Wells, John (Maidstone)

  Wylie, N. R.

  van Straubenzee, W. R.

  Whitelaw, William

  Younger, Hn. George

  Vaughan-Morgan, Rt. Hn. Sir John

  Williams, Sir Rolf Dudley (Exeter)

  Walker, Peter (Worcester)

  Wills, Sir Gerald (Bridgwater)

  TELLERS FOR THE NOES:

  Walker-Smith, Rt. Hn. Sir Derek

  Wilson, Geoffrey (Truro)

  Mr. MacArthur and Mr. Ian Fraser.

  Wall, Patrick

  Wise, A. R.

  The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

  2. INCOMETAX (CHARGE AND RATES FOR 1965–66)
  Motion made, and Question put:—
  That income tax for the year 1965–66 shall be charged at the standard rate of 8s. 3d. in
  the pound, and, in the case of an individual whose total income exceeds £2,000, at such higher rates in respect of the excess as Parliament may hereafter determine.
  The Committee divided: Ayes 312, Noes 286.

  Division No. 4.]

  AYES

  [4.51 p.m.

  Abse, Leo

  Dempsey, James

  Hobden, Dennis (Brighton, K'town)

  Albu, Austen

  Diamond, John

  Holman, Percy

  Allaun, Frank (Salford, E.)

  Dodds, Norman

  Hooson, H. E.

  Alldritt, W. H.

  Doig, Peter

  Horner, John

  Allen, Scholefield (Crewe)

  Donnelly, Desmond

  Houghton, Rt. Hn. Douglas

  Armstrong, Ernest

  Driberg, Tom

  Howarth, Harry (Wellingborough)

  Atkinson, Norman

  Duffy, Dr. A. E. P.

  Howarth, Robert L. (Bolton, E.)

  Bacon, Miss Alice

  Dunn, James A. (L'pool, Kirkdale)

  Howell, Denis (Small Heath)

  Bagier, Gordon A. T.

  Dunnett, Jack (Nottingh'm, Central)

  Howie, W.

  Barnett, Joel

  Edelman, Maurice

  Hoy, James

  Baxter, William

  Edwards, Rt. Hn. Ness (Caerphilly)

  Hughes, Cledwyn (Anglesey)

  Beaney, Alan

  Edwards, Robert (Bilston)

  Hughes, Emrys (S. Ayrshire)

  Bellenger, Rt. Hn. F. J.

  English, Michael

  Hughes, Hector (Aberdeen, N.)

  Bence, Cyril

  Ennals, David

  Hunter, Adam (Dunfermline)

  Benn, Rt. Hn. Anthony Wedgwood

  Ensor, David

  Hunter, A. E. (Feltham)

  Bennett, J. (Glasgow, Bridgeton)

  Evans, Albert (Islington, S. W.)

  Hynd, John (Attercliffe)

  Bessell, Peter

  Evans, Ioan (Birmingham, Yardley)

  Irvine, A. J. (Edge Hill)

  Binns, John

  Fernyhough, E.

  Jackson, Colin

  Bishop, E. S.

  Finch, Harold

  Janner, Sir Barnett

  Blackburn, F.

  Fitch Alan

  Jay, Rt. Hn. Douglas

  Blenkinsop, Arthur

  Fletcher, Eric (Islington, E.)

  Jeger, George (Goole)

  Boardman, H.

  Fletcher, Ted (Darlington)

  Jeger, Mrs. Lena (H'b'n&st.P'cras,S.)

  Boston, T. G.

  Fletcher, Raymond (Ilkeston)

  Jenkins, Hugh (Putney)

  Bottomley, Rt. Hn. Arthur

  Floud, Bernard

  Jenkins, Rt. Hn. Roy (Stechford)

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

  Foley, Maurice

  Johnson, Carol (Lewisham, S.)

  Bowen, Roderic (Cardigan)

  Foot Dingle (Ipswich)

  Johnson, James (K'ston-on-Hull,W.)

  Bowles, Frank

  Foot Michael (Ebbw Vale)

  Johnston, Russell (Inverness)

  Boyden, James

  Ford, Ben

  Jones, Dan (Burnley)

  Braddock, Mrs. E. M.

  Fraser, Rt. Hn. Tom (Hamilton)

  Jones, Rt. Hn. Elwyn (West Ham, S.)

  Bradley, Tom

  Freeson, Reginald

  Jones, J. Idwal (Wrexham)

  Bray, Dr. Jeremy

  Galpern, Sir Myer

  Jones, T. W. (Merioneth)

  Broughton, Dr. A. D. D.

  Garrett, W. E.

  Kelley, Richard

  Brown, Rt. Hn. George (Belper)

  Garrow, A.

  Kenyon, Clifford

  Brown, Hugh D. (Glasgow, Provan)

  George, Lady Megan Lloyd

  Kerr, Mrs. Anne (R'ter & Chatham)

  Brown, R. W. (Shoreditch & Fbury)

  Ginsburg, David

  Kerr, Dr. David (W'worth, Central)

  Buchan, Norman (Renfrewshire, W.)

  Gourlay Harry

  Lawson, George

  Buchanan, Richard (Gl'sg'w,Spr'burn)

  Greenwood, Rt. Hn. Anthony

  Leadbitter, Ted

  Butler, Herbert (Hackney, C.)

  Gregory, Arnold

  Ledger, Ron

  Butler, Mrs. Joyce (Wood Green)

  Grey, Charles

  Lee, Rt. Hn. Frederick (Newton)

  Callaghan, Rt. Hn. James

  Griffiths, David (Rother Valley)

  Lee, Miss Jennie (Cannock)

  Carmichael, Neil

  Griffiths, Rt. Hn. James (Llanelly)

  Lever, Harold (Cheetham)

  Carter-Jones Lewis

  Griffiths, Will (Manchester Exchange)

  Lever, L. M. (Ardwick)

  Castle, Rt. Hn. Barbara

  Grimond, Rt. Hn. J.

  Lewis, Arthur (West Ham, N.)

  Coleman, Donald

  Gunter, Rt. Hn. R. J.

  Lewis, Ron (Carlisle)

  Conlan, Bernard

  Hale, Leslie

  Lipton, Marcus

  Corbet, Mrs. Freda

  Hamilton, James (Bothwell)

  Lomas, Kenneth

  Craddock, George (Bradford, S.)

  Hamilton, William (West Fife)

  Loughlin, Charles

  Crawshaw Richard

  Hamling, William (Woolwich, W.)

  Lubbock, Eric

  Crosland, Anthony

  Hannan, William

  Mabon, Dr. J. Dickson

  Crossman, Rt. Hn. R. H. S.

  Harper, Joseph

  McBride, Neil

  Cullen, Mrs. Alice

  Harrison, Walter (Wakefield)

  McCann, J.

  Dalyell, Tam

  Hart, Mrs. Judith

  MacColl, James

  Darling, George

  Hattersley, Ray

  MacDermot, Niall

  Davies, G. Elfed Rhondda, E.)

  Hayman, F. H.

  McGuire, Michael

  Davies, Harold (Leek)

  Hazell, Bert

  McInnes, James

  Davies, Ifor (Gower)

  Healey, Rt. Hn. Denis

  McKay, Mrs. Margaret

  Davies, S. O.(Merthyr)

  Heffer, Eric S.

  Mackenzie, Alasdair (Ross & Crom'ty)

  de Freitas, Sir Geoffrey

  Henderson, Rt. Hn. Arthur

  MacKenzie, Gregor (Rutherglen)

  Delargy, Hugh

  Herbison, Rt. Hn. Margaret

  Mackie, George Y. (C'ness & S'land)

  Dell, Edmund

  Mackie, John (Enfield, E.)

  Pavitt, Laurence

  Strauss, Rt. Hn. G. R. (Vauxhall)

  MacMillan, Malcolm

  Pearson, Arthur (Pontypridd)

  Stress, Sir Barnett (Stoke-on-Trent, C.)

  MacPherson, Malcolm

  Peart, Rt. Hn. Fred

  Summerskill, Dr. Shirley

  Mahon, Peter (Preston, S.)

  Pentland, Norman

  Swain, Thomas

  Mahon, Simon (Bootle)

  Perry, E. G.

  Swingler, Stephen

  Mallalieu, E. L. (Brigg)

  Popplewell, Ernest

  Symonds, J. B.

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

  Prentice, Reginald

  Taverne, Dick

  Manuel, Archie

  Price, J. T. (Westhoughton)

  Taylor, Bernard (Mansfield)

  Marsh, Richard

  Probert, Arthur

  Thomas, George (Cardiff, W.)

  Mason, Roy

  Pursey, Cmdr. Harry

  Thomas, Iorwerth (Rhondda, W.)

  Maxwell, Robert

  Randall, Harry

  Thomson, George (Dundee, E.)

  Mayhew, Christopher

  Rankin, John

  Thornton, Ernest

  Mellish, Robert

  Redhead, Edward

  Tinn, James

  Mendelson, J. J.

  Rees, Merlyn (Leeds, S.)

  Tomney, Frank

  Mikardo, Ian

  Reynolds, Gerald

  Tuck, Raphael

  Millan, Bruce

  Rhodes, Geoffrey

  Urwin, T. W.

  Miller, Dr. M. S.

  Richard, Ivor

  Varley, Eric G.

  Milne, Edward (Blythe)

  Roberts, Albert (Normanton)

  Walden, Brian (All Saints)

  Molloy, William

  Roberts, Goronwy (Caernarvon)

  Walker, Harold (Doncaster)

  Monslow, Walter

  Robertson, John (Paisley)

  Wallace, George

  Morris, Alfred (Wythenshawe)

  Robinson, Ht. Hn. K. (St.Pancras, N.)

  Warbey, William

  Morris, Charles (Openshaw)

  Rodgers, William (Stockton)

  Watkins, Tudor

  Morris, John (Aberavon)

  Rose, Paul B.

  Weitzman, David

  Mulley, Rt. Hn. Frederick (SheffieldPk)

  Ross, Rt. Hn. William

  Wells, William (Walsall, N.)

  Murray, Albert

  Rowland, Christopher

  White, Mrs. Eirene

  Neal, Harold

  Sheldon, Robert

  Whitlock, Charles

  Newens, Stan

  Shinwell, Rt. Hn. E.

  Wigg, Rt. Hn. George

  Noel-Baker, Francis (Swindon)

  Shore, Peter (Stepney)

  Wilkins, W. A.

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

  Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

  Willey, Rt. Hn. Frederick

  Norwood, Christopher

  Short, Mrs. Renée (W'hampton, N. E.)

  Williams, A. J. (Swansea, W.)

  Oakes, Gordon

  Silkin, John (Deptford)

  Williams, LI. (Abertillery)

  Ogden, Eric

  Silkin, S. C. (Camberwell, Dulwich)

  Williams, Mrs. Shirley (Hitchin)

  Oram, Albert E. (E. Ham S.)

  Silverman, Julius (Aston)

  Williams, W. T. (Warrington)

  Orbach, Maurice

  Silverman, Sydney (Nelson)

  Willis, George (Edinburgh, E.)

  Orme, Stanley

  Slater, Mrs. Harriet (Stoke, N.)

  Wilson, Rt. Hn. Harold (Huyton)

  Oswald, Thomas

  Slater, Joseph (Sedgefield)

  Wilson, William (Coventry, S.)

  Owen, Will

  Small, William

  Winterbottom, R. E.

  Padley, Walter

  Smith, Ellis (Stoke, S.)

  Woodburn, Rt. Hn. A.

  Page, Derek (King's Lynn)

  Snow, Julian

  Woof, Robert

  Paget, R. T.

  Solomons, Henry

  Wyatt, Woodrow

  Palmer, Arthur

  Sorensen, R. W.

  Yates, Victor (Ladywood)

  Pannell, Rt. Hn. Charles

  Soskice, Rt. Hn. Sir Frank

  Zilliacus, K.

  Pargiter, G. A.

  Steele, Thomas

  Park, Trevor (Derbyshire, S.E.)

  Stewart, Rt. Hn. Michael

  TELLERS FOR THE AYES:

  Parker, John

  Stonehouse, John

  Mr. Irving and Mr. Rogers.

  Parkin, B. T.

  Stones, William

  NOES

  Agnew, Commander Sir Peter

  Buchanan-Smith, Alick

  Dean, Paul

  Alison, Michael (Barkston Ash)

  Buck, Antony

  Deedes, Rt. Hn. W. F.

  Allan, Robert (Paddington, S.)

  Bullus, Wing Commander Eric

  Digby, Simon Wingfield

  Allason, James (Hemel Hempstead)

  Burden, F. A.

  Dodds-Parker, Douglas

  Amery, Rt. Hn. Julian

  Butcher, Sir Herbert

  Doughty, Charles

  Anstruther-Gray, Rt. Hn. Sir W.

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

  Douglas-Home, Rt. Hn. Sir Alec

  Astor, John

  Campbell, Gordon

  Drayson, G. B.

  Atkins, Humphrey

  Carlisle, Mark

  du Cann, Edward

  Awdry, Daniel

  Carr, Rt. Hn. Robert (Mitcham)

  Elliot, Capt. Walter (Carshalton)

  Baker, W. H. K.

  Cary, Sir Robert

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

  Balniel, Lord

  Channon, H. P. G.

  Emery Peter

  Barlow, Sir John

  Chataway, Christopher

  Emmet, Hn. Mrs. Evelyn

  Batsford, Brian

  Chichester-Clark, R.

  Errington, Sir Eric

  Beamish, Col. Sir Tufton

  Clark, Henry (Antrim, N.)

  Erroll, Rt. Hn. F. J

  Bell, Ronald

  Clark, William (Nottingham, S.)

  Fell, Anthony

  Bennett, F. M. (Torquay)

  Clarke, Brig. Terence (Portsmth, W.)

  Fisher, Nigel

  Bennett, Dr. Reginald (Gos & Fhm)

  Cole, Norman

  Fletcher-Cooke, Charles (Darwen)

  Berkeley, Humphry

  Cook, Robert

  Fletcher-Cooke, Sir John (S'pton)

  Berry, Hn. Anthony

  Cooper, A. E.

  Forrest, George

  Biffen, John

  Cooper-Key, Sir Neill

  Fraser, Rt. Hn. Hugh (St'fford & Stone)

  Biggs-Davison, John

  Cordle, John

  Galbraith, Hn. T. G. D.

  Bingham, R. M.

  Corfield, F. V.

  Gammans, Lady

  Birch, Rt. Hn. Nigel

  Costain, A. P.

  Gardner, Edward

  Black, Sir Cyril

  Courtney, Cdr. Anthony

  Gibson-Watt, David

  Blaker, Peter

  Craddock, Sir Beresford (Spelthorne)

  Giles, Rear-Admiral Morgan

  Bossom, Hn. Clive

  Crawley, Aidan

  Gilmour, Ian (Norfolk, Central)

  Boyd-Carpenter, Rt. Hn. J.

  Crosthwaite-Eyre, Col. Sir Oliver

  Gilmour, Sir John (East Fife)

  Boyle, Rt. Hn. Sir Edward

  Crowder, F. P.

  Glover, Sir Douglas

  Brewis, John

  Cunningham, Sir Knox

  Glyn, Sir Richard

  Brinton, Sir Tatton

  Curran, Charles

  Godber, Rt. Hn. J. B.

  Bromley-Davenport, Lt.-Col. Sir Walter

  Currie, G. B. H.

  Goodhart, Philip

  Brooke, Rt. Hn. Henry

  Dalkeith, Earl of

  Goodhew, Victor

  Brown, Sir Edward (Bath)

  Dance, James

  Gower, Raymond

  Bruce-Gardyne, J.

  Davies, Dr. Wyndham (Perry Barr)

  Grant, Anthony

  Bryan, Paul

  d'Avigdor-Goldsmid, Sir Henry

  1054

  1055

  Grant-Ferris, R. (Nantwich)

  Lucas, Sir Jocelyn (Portsmouth, S.)

  Rodgers, Sir John (Sevenoaks)

  Gresham-Cooke, R.

  Lucas-Tooth, Sir Hugh (Hendon, S.)

  Roots, William

  Grieve, Percy

  McAdden, Sir Stephen

  Royle, Anthony

  Griffiths, Eldon (Bury St. Edmunds)

  McLaren, Martin

  Russell, Sir Ronald

  Griffiths, Peter (Smethwick)

  Maclean, Sir Fitzroy

  St. John-Stevas, Norman

  Gurden, Harold

  Macleod, Rt. Hn. Iain

  Sandys, Rt. Hn. Duncan

  Hall, John (Wycombe)

  McMaster, Stanley

  Scott-Hopkins, James

  Hall-Davis, A. G. F. (Morecambe)

  McNair-Wilson, Patrick

  Sharples, Richard

  Hamilton, Marquess of (Fermanagh)

  Maginnis, John E.

  Shepherd, William

  Harris, Frederic (Croydon, N. W.)

  Maitland, Sir John

  Sinclair, Sir George

  Harris, Reader (Heston)

  Marlowe, Anthony

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

  Harrison, Brian (Maldon)

  Marples, Rt. Hn. Ernest

  Smyth, Rt. Hn. Brig. Sir John

  Harrison, Col. Sir Harwood (Eye)

  Marten, Neil

  Soames, Rt. Hn. Christopher

  Harvey, Sir Arthur Vere (Maccles'd)

  Mathew, Robert

  Spearman, Sir Alexander

  Harvey, John (Walthamstow, E.)

  Maude, Angus E. U.

  Speir, Rupert

  Harvie Anderson, Miss

  Maudling, Rt. Hn. Reginald

  Stainton, Keith

  Hastings, Stephen

  Mawby, Ray

  Stanley, Hn. Richard

  Hawkins, Paul

  Maxwell-Hyslop, R. J. (Tiverton)

  Stodart, J. A. (Edinburgh, W.)

  Hay, John

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

  Stoddart-Scott, Col. Sir Malcolm

  Heald, Rt. Hn. Sir Lionel

  Meyer, Sir Anthony

  Studholme, Sir Henry

  Heath, Rt. Hn. Edward

  Mills, Peter (Torrington)

  Summers, Sir Spencer

  Hendry, Forbes

  Mills, Stratton (Belfast, N.)

  Talbot, John E.

  Higgins, Terence L.

  Miscampbell, Norman

  Taylor, Sir Charles (Eastbourne)

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

  Mitchell, David

  Taylor, Edward M. (G'gow.Cathcart)

  Hirst, Geoffrey

  Monro, Hector

  Taylor, Frank (Moss Side)

  Hobson, Rt. Hn. Sir John

  More, Jasper

  Teeling, Sir William

  Hopkins, Alan

  Morrison, Charles (Devizes)

  Temple, John M.

  Hordern, Peter

  Morrison, John (Salisbury)

  Thatcher, Mrs. Margaret

  Hornby, Richard

  Mott-Radclyffe, Sir Charles

  Thomas, Sir Leslie (Canterbury)

  Hornsby-Smith, Rt. Hn. Dame P.

  Murton, Oscar

  Thomas, Rt. Hn. Peter (Conway)

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

  Neave, Airey

  Thompson, Sir Richard (Croydon,S.)

  Howe, Geoffrey (Bebington)

  Nicholls, Sir Harmar

  Thorneycroft, Rt. Hn. Peter

  Hunt, John (Bromley)

  Nicholson, Sir Godfrey

  Tiley, Arthur (Bradford, W.)

  Hutchison, Michael Clark

  Noble, Rt. Hn. Michael

  Tilney, John (Wavertree)

  Iremonger, T. L.

  Nugent, Rt. Hn. Sir Richard

  Turton, Rt. Hn. R. H.

  Irvine, Bryant Godman (Rye)

  Onslow, Cranley

  Tweedsmuir, Lady

  Jenkin, Patrick (Woodford)

  Orr, Capt. L. P. S.

  van Straubenzee, W. R.

  Jennings, J. C.

  Orr-Ewing, Sir Ian

  Vaughan-Morgan, Rt. Hn. Sir John

  Jones, Arthur (Northants, S.)

  Osborn, John (Hallam)

  Walder, David (High Peak)

  Jones, Rt. Hn. Aubrey (Hall Green)

  Osborne, Sir Cyril (Louth)

  Walker, Peter (Worcester)

  Jopling, Michael

  Page, John (Harrow, W.)

  Walker-Smith, Rt. Hn. Sir Derek

  Joseph, Rt. Hn. Sir Keith

  Page, R. Graham (Crosby)

  Wall, Patrick

  Kaberry, Sir Donald

  Pearson, Frank (Clitheroe)

  Walters, Denis

  Kerby, Capt. Henry

  Peel, John

  Ward, Dame Irene

  Kerr, Sir Hamilton (Cambridge)

  Percival, Ian

  Weatherill, Bernard

  Kershaw, Anthony

  Peyton, John

  Webster, David

  Kilfedder, James A.

  Pickthorn, Sir Kenneth

  Wells, John (Maidstone)

  Kimball, Marcus

  Pike, Miss Mervyn

  Whitelaw, William

  King, Evelyn (Dorset, S.)

  Pitt, Dame Edith

  Williams, Sir Rolf Dudley (Exeter)

  Lagden, Godfrey

  Pounder, Rafton

  Wills, Sir Gerald (Bridgwater)

  Lambton, Viscount

  Powell, Rt. Hn. J. Enoch

  Wilson, Geoffrey (Truro)

  Lancaster, Col. C. G.

  Price, David (Eastleigh)

  Wise, A. R.

  Langford-Holt, Sir John

  Prior, J. M. L.

  Wolrige-Gordon, Patrick

  Legge-Bourke, Sir Harry

  Pym, Francis

  Wood, Rt. Hn. Richard

  Lewis, Kenneth (Rutland)

  Quennell, Miss J. M.

  Woodhouse, Hn. Christopher

  Litchfield, Capt. John

  Ramsden, Rt. Hn. James

  Woodnutt, Mark

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

  Rawlinson, Rt. Hn. Sir Peter

  Wylie, N. R.

  Lloyd, Ian (P'tsm'th, Langstone)

  Redmayne, Rt. Hn. Martin

  Younger, Hn. George

  Lloyd, Rt. Hn. Selwyn (Wirral)

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

  Longbottom, Charles

  Ridley, Hn. Nicholas

  TELLERS FOR THE NOES:

  Longden, Gilbert

  Ridsdale, Julian

  Mr. MacArthur and

  Loveys, Walter H.

  Roberts, Sir Peter (Heeley)

  Mr. Ian Fraser.

  3. INCOME TAX (REDUCED RATE RELIEF)
  Motion made, and Question,
  That it is expedient to make such amendments in section 220 of the Income Tax Act 1952 (reduced rate relief) as may be required, in consequence of any change in the standard rate of income tax made pursuant to a resolution of this Committee, to preserve the reduced rates under that section at their present level.—[Mr. Callaghan.]
  put and agreed to.

  4. CUSTOMS DUTY OF 15 PER CENT.
  Motion made, and Question,
  That there shall be charged on all goods imported into the United Kingdom on or after
  1056
  27th October 1964 (or so imported before but entered on or after that date), other than goods of the descriptions in the Table below, a duty of customs of fifteen per cent. of the value of the goods and that—

  (a) the duty so charged in respect of goods entered for warehousing shall (as in the case of goods entered for home use) become chargeable at the time when, under section 28(2) of the Customs and Excise Act 1952, the goods are so entered for warehousing,

  (b) the provisions of the customs and excise Acts shall apply to the duty subject to such exceptions and modifications as may be provided by or under any Act imposing the duty, and

  (c) any such Act may contain supplemental and incidental provisions, including

  1057
  provisions for drawback or remission of the duty and for the making of orders—

  (i) reducing the rate of duty, and

  TABLE

  EXEMPTED GOODS

  Description of goods (employing the Customs Tariff 1959)

  Title of tariff chapter, or summary of tariff heading

  Chapter 1 (all headings)

  …

  …

  …

  Live animals.

  Chapter 2 (all headings)

  …

  …

  …

  Meat and edible meat offals.

  Chapter 3 (all headings)

  …

  …

  …

  Fish, crustaceans and molluscs.

  Chapter 4 (all headings)

  …

  …

  …

  Dairy produce; birds' eggs; natural honey.

  Chapter 5 (all headings)

  …

  …

  …

  Products of animal origin, not elsewhere specified or included.

  Chapter 7 (all headings)

  …

  …

  …

  Edible vegetables and certain roots and tubers.

  Chapter 8 (all headings)

  …

  …

  …

  Edible fruit and nuts; peel of melons or citrus fruit.

  Chapter 9 (all headings)

  …

  …

  …

  Coffee, tea, mat é and spices.

  Chapter 10 (all headings)

  …

  …

  …

  Cereals.

  Chapter 11 (all headings)

  …

  …

  …

  Products of the milling industry; malt and starches; gluten; inulin.

  Chapter 12 (all headings)

  …

  …

  …

  Oil seeds and oleaginous fruit; miscellaneous grains, seeds and fruit; industrial and medical plants; straw and fodder.

  Chapter 13 (all headings)

  …

  …

  …

  Raw vegetable materials of a kind suitable for use in dyeing or in tanning; lacs; gums, resins and other vegetable saps and extracts.

  Chapter 14 (all headings)

  …

  …

  …

  Vegetable plaiting and carving materials; vegetable products not elsewhere specified or included.

  Chapter 15 (all headings)

  …

  …

  …

  Animal and vegetable fats and oils and their cleavage products; prepared edible fats; animal and vegetable waxes.

  Chapter 16 (all headings)

  …

  …

  …

  Preparations of meat, of fish, of crustaceans or molluscs.

  Chapter 17 (all headings)

  …

  …

  …

  Sugars and sugar confectionery.

  Chapter 18 (all headings)

  …

  …

  …

  Cocoa and cocoa preparations.

  Chapter 19 (all headings)

  …

  …

  …

  Preparations of cereals, flour or starch; pastrycooks' products.

  Chapter 20 (all headings)

  …

  …

  …

  Preparations of vegetables, fruit or other parts of plants.

  Chapter 21 (all headings)

  …

  …

  …

  Miscellaneous edible preparations.

  22.10

  …

  …

  …

  Vinegar and substitutes for vinegar.

  Chapter 23 (all headings)

  …

  …

  …

  Residues and waste from the food industries; prepared animal fodder.

  24.01

  …

  …

  …

  Unmanufactured tobacco.

  Chapter 25 (all headings)

  …

  …

  …

  Salt; sulphur; earths and stone; plastering materials, lime and cement.

  Chapter 26 (all headings)

  …

  …

  …

  Metallic ores, slag and ash.

  Chapter 27 (all headings)

  …

  …

  …

  Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.

  Methane within 29.01, 31.01

  …

  …

  …

  Guano.

  Natural sodium nitrate within 31.02.

  All goods within 31.04 except potassium chloride (analytical reagent quality).

  Mineral or chemical fertilizers, potassic.

  Fertilizers within 31.05 consisting of natural potassium nitrate together with natural sodium nitrate.

  37.04, 37.05, 37.06 and 37.07

  …

  …

  …

  Exposed film and plates.

  40.01

  …

  …

  …

  Natural rubber.

  40.03 and 40.04

  …

  …

  …

  Reclaimed and waste rubber.

  41.01

  …

  …

  …

  Raw hides and skins.

  Leather within 41.02, 41.03, 41.04 and 41.05 other than dressed leather.

  41.09

  …

  …

  …

  Leather parings and waste.

  43.01

  …

  …

  …

  Raw, fur skins.

  44.01 to 44.12

  …

  …

  …

  Wood, not planed or further manufactured

  45.01 and 45.02

  …

  …

  …

  Natural cork and waste cork.

  47.01 and 47.02

  …

  …

  …

  Paper-making materials (pulp and waste paper).

  49.01 to 49.07

  …

  …

  …

  Books, newspapers, maps, charts, manuscripts, typescripts, stamps, etc.

  Trade advertising material within 49.09 and 49.10, being material the primary purpose of which is to stimulate travel outside the United Kingdom.

  (ii) extending the descriptions of goods exempted from the duty and, for the purposes of removing anomalies, with drawing any such exemption.

  Description of goods (employing the Customs Tariff 1959)

  Title of tariff chapter, or summary of tariff heading

  Trade advertising material within 49.11, being publications, illustrated or not, the primary purpose of which is to stimulate study or travel outside the United Kingdom, or to advertise exhibitions held outside the United Kingdom.

  Printed matter within 49.11, being—

  parts of books or booklets in the form of printed pictures or illustrations not bearing a text, or

  printed documents, printed diagrams and printed architectural, engineering and similar industrial designs or plans, not being trade advertising material.

  Photographic prints within 49.11 imported in a packet not exceeding 8 ounces in gross weight which does not form part of a larger consignment.

  50.01, 50.02 and 50.03

  …

  …

  Silk worm cocoons, raw silk and silk waste.

  53.01

  …

  …

  Sheep's or lamb's wool not carded or combed.

  53.02

  …

  …

  Other animal hair not carded or combed.

  53.03 and 53.04

  …

  …

  Waste of sheep's or lamb's wool.

  53.05

  …

  …

  Sheep's or lamb's wool, carded or combed.

  54.01 and 54.02

  …

  …

  Unspun flax and ramie.

  55.01, 55.02, 55.03 and 55.04

  …

  …

  Raw cotton, linters and waste; cotton, carded or combed.

  57.01, 57.02, 57.03 and 57.04

  …

  …

  Unspun hemp, jute and other vegetable textile fibres.

  Chapter 63 (all headings)

  …

  …

  Old clothing and other textile articles; rags.

  71.02 to 71.10

  …

  …

  Synthetic and natural precious and semi-precious stones and precious metals not fully manufactured.

  71.11

  …

  …

  Waste and scrap of precious metals.

  Chapter 72

  …

  …

  Coin.

  73.02

  …

  …

  Ferro-alloys.

  73.03, 73.04 and 73.05

  …

  …

  Iron and steel waste, scrap, shot, grit and powder.

  74.01 and 74.02

  …

  …

  Copper matte; unwrought copper; copper waste and scrap; master alloys.

  75.01

  …

  …

  Nickel mattes; unwrought nickel; nickel waste and scrap.

  Unwrought electroplating anodes within 75.05.

  76.01

  …

  …

  Unwrought aluminium and waste and scrap.

  77.01

  …

  …

  Unwrought magnesium and waste and scrap.

  Waste and scrap beryllium within 77.04 and unwrought beryllium within 77.04.

  78.01

  …

  …

  Unwrought lead; lead waste and scrap.

  79.01

  …

  …

  Unwrought zinc; zinc waste and scrap.

  80.01

  …

  …

  Unwrought tin; tin waste and scrap.

  Chapter 81 (all headings)

  …

  …

  Certain base metals employed in metallurgy and articles thereof.

  Aircraft within 88.02 of a maximum total weight exceeding 18,000 lbs. (maximum total weight to be that authorised in the certificate of airworthiness in force in respect of the aircraft or, if there is no such certificate in force, ascertained in such manner as the Commissioners may direct).

  Ships and other descriptions of goods within 89.01, 89.02 and 89.03, if of a gross tonnage of 80 tons or more (ascertained in accordance with the Merchant Shipping Acts or, if not ships with a gross tonnage Under those Acts, ascertained in such Manner as the Commissioners may direct).

  Fishing vessels with in 89.01 of the kind commonly known as Danish-type seiners with a fuel carrying capacity of not less than 500 gallons.

  89.04

  …

  …

  Vessels for breaking up.

  Sound recordings not produced in quantity and not for general sale, within 92.12.

  Chapter 99 (all headings)

  …

  …

  Works of art, collectors' pieces and antiques.—

  [Mr. Callaghan]

  put and agreed to.

  5. TAX REBATES FOR EXPORTS
  Motion made, and Question proposed,
  That prevision shall be made for authorising the Commissioners of Customs and Excise to make payments out of the sums received by them on account of duties of customs and excise and purchase tax for the purpose of affording relief in respect of duties of customs and excise chargeable on hydrocarbon oils, vehicle excise duty and purchase tax incurred in connection with the production, manufacture or carriage of goods exported from the United Kingdom on or after 26th October 1964, for prescribing the conditions for, and the amounts of, such payments, and for supplementary purposes.—[Mr. Callaghan.]
  5.7 p.m.
  Sir Alec Douglas-Home: It falls to the Leader of the Opposition, whatever the content of the Budget, to offer congratulations to the Chancellor of the Exchequer on the conduct of his Budget speech, which is always a great Parliamentary occasion for any Chancellor.
  Although this is an autumn Budget, there is little difference, I think, in the ordeal, and I gladly acknowledge the personal achievement of the Chancellor and his success today. Indeed, I envy his facility in presenting rather dubious propositions in the most agreeable possible way. So zealous was he in his theme of taxation as the road to Socialist paradise that there flowed into my mind the response of the prisoner in the condemned cell to the parson, who said, "Doubtless I shall inherit eternal bliss, but do not let us talk about anything so depressing". The right hon. Gentleman fulfilled his task very well and I hope that the First Secretary, who is seeded No. 1 in this contest between the Economic Ministers, agrees with me as well.
  If I must talk on the context of the Socialist Budget, there are a few preliminary reflections I might make before my right hon. Friend the Member for Barnet (Mr. Maudling) replies to the right hon. Gentleman in full tomorrow. First, I cannot really accept the right hon. Gentleman's proposition that this Budget was necessary because of the balance of payments position. I cannot agree that the revenue proposals which he put forward to operate now, and those which he forecasts for another Budget next spring, have anything to do with that at all. The surcharge—yes. The exports incentive proposals—yes. The Govern-
  1062
  ment have chosen their own methods to deal with the balance of payments problem, but they have very little to do with the Budget which the right hon. Gentleman produced today.
  Nor do I think that this Budget was necessary because of pressures on the internal economy. In fact, the Government themselves said exactly the opposite, only a very few weeks ago. Paragraph 7, if I remember aright, of their White Paper on the Economic Situation said, in effect, that there were no undue pressures on the internal economy and that they had no proposals to make in this respect. Today, the Chancellor admitted that there was a problem here which had been brought about by the import surcharges themselves—that these, in turn, would lead to increased pressures on home supplies. There I am inclined to agree with him, and, therefore, I was glad to hear from him once more that these would be only temporary and of as short a duration as he could make them.
  The truth is that this is a Budget to raise revenue for social purposes and to raise it by increased taxation. I dare say that this may be justified, but this is the fact; this is why the Budget has been introduced. Let the right hon. Gentleman face it and give the natural and proper explanation.
  This is not, if I may say so to the Prime Minister and the Chancellor, what was forecast to the country only a very few weeks ago. I recall that we in the Conservative Party said that if a Socialist Government were to be in power this would mean heavy increased taxation. I recall my right hon. Friend the Member for Barnet making a particular forecast of what might or might not be necessary to pay for their schemes, and I remember the protests which were immediately made by the Chancellor of the Exchequer and his right hon. Friend the Prime Minister.
  Perhaps he will not take it amiss if I remind him of what he said. At Cardiff, in reply to my right hon. Friend, he said:
  "The whole basis of our case is that increased social expenditure will he financed out of the growing expansion of British industry".
  Nor did the Prime Minister correct him. The Prime Minister said:
  "Over the period of a Parliament, in our home programme for expansion we can do all

  1063
  this out of the increment of current production."
  On television he repeated himself, and said:
  "Over the period of a Parliament I believe we can do it without any general increase in taxation."
  [HON. MEMBERS: "Hear, hear."] Right hon. Gentlemen opposite cheer, but if this is not a general increase in taxation to which we have listened today, I do not know what is.
  The Prime Minister (Mr. Harold Wilson): Would the right hon. Gentleman say that, in view of the situation which we have inherited, the pensioners should wait?
  Sir A. Douglas-Home: If the right hon. Gentleman has a little patience I will come to that. I am simply saying that he made this statement that their programmes could be fulfilled without resort to a general increase in taxation. If the petrol tax and the Income Tax are not a general increase in taxation, I do not know what is. I do not know how the electors, particularly those who have had no experience of Socialism in the past, could reckon that within weeks a Budget would be introduced into the House for the express purpose of applying new and general taxation.
  We are told—and this is true—that this is to finance certain social services. One is pensions and the other is the abolition of the prescription charge. Like hon. Members opposite, we were pledged to raise the basic pension, and, what is more, we were pledged to give a supplement for the older pensioners. It has been admitted by the right hon. Gentleman—I hoped that he was getting somewhere near it in suggestions which he made—that there might be allowances for pensioners probably over the age of 65, or something of that kind.
  We ourselves are certainly pledged to this, and we welcome the fact that the old-age pensioners and war pensioners are to get more. But I remind hon. Members and right hon. Members opposite of the promises which they themselves made about pensions, and particularly one which was mentioned yesterday by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). This is one of
  1064
  the promises which no doubt the Prime Minister will recognise:
  "That is why I pledge the Labour Government to urgent action to deal with this problem with the humanity which has been lacking, to ensure each a guaranteed and adequate income below which they will not be allowed to fall and to have it without recourse to National Assistance."
  This is an advance for the old-age pensioners, but I think that they will feel that the result has fallen far below the promise.
  Mr. Sydney Silverman (Nelson and Colne)rose—
  Sir A. Douglas-Home: We are, I take it, to have a general debate, and I do not want to take up too much time this afternoon.
  I am saying that as we have seen it now—and I believe that the country will note this—we have seen only the tip of the iceberg of Socialist taxation, and it is a rather cold and uninviting prospect.
  I think that the right hon. Gentleman said that the relief from the prescription charges is included in his £130 million. I believe that those who go to a doctor or chemist for this purpose, if they considered the choice which has been given, of this concession and of crippling the British aircraft industry, would conclude that the Government have their priorities wrong.
  The real test of the Socialist Government will be to see the effect of these Socialist actions on prices. The First Secretary emphasised the other day the importance which they attach to holding prices. The right hon. Gentleman mentioned it again today. I remind him that when the Socialist Government were last in office the proportion of the nation's wealth which was taken in taxation was one-third. We were able in 12 years to reduce it to a quarter. Now the process is being started again, and we are returning—[HON. MEMBERS: "No."] If hon. Members check these figures they will find that they are right.
  We are returning again to a state of affairs in which a higher and higher proportion of the national wealth looks like being taken by the Socialist Government in taxation. I believe that these two charges—the Income Tax,

  1065
  against which we have voted, and the petrol tax, which comes in the cost of every business and every industry—are not taxes which should have been applied at this moment for these purposes.
  Both the First Secretary and the Chancellor set store by the body which will be asked to hold rising prices. That is all very well. So far, we are told only that they will "discover and examine the facts", but examining the facts will not get us very far towards holding prices steady when in one manufacturing industry after another, or one retailing industry or shop after another, the need for higher prices will be justified in future by the forces of inflation which a Socialist Government have unleashed.
  My final reflection is this. The Chancellor today talked almost more about a future Budget than he did about the Budget which he was presenting to us. He talked about an element of social justice in the economic and financial proposals and outlook of the Government. I marked this down in particular, because the same thing was said by the Lord President of the Council within the recollection of hon. and right hon. Members yesterday when, talking about an incomes policy in particular, he said that it has to be seen to be fair, and seen to be fair by both sides.
  The Chancellor of the Exchequer, I was glad to hear, confirmed this afternoon that this was his intention. I was, therefore, very glad that, before he embarks on a capital gains tax or anything of that kind, and before he begins to consider the details of his corporation tax, he has rejected the advice which he must have had from many in his party that he should take a swipe at the profits of industry and the capital which is necessary for expansion, because to tax profits before it was proved that wages and salaries were being held within the rate of growth of productivity could not be described as social justice.
  I was glad to hear that the Chancellor intended to take his time, and perhaps we shall know a little more about the chances of the Government getting an incomes policy which will really work before ha comes back with proposals for a capital gains tax or anything in the nature of a corporation tax. The right hon. Gentleman mentioned distributed
  1066
  profits. Again, I hope that before he decides to take any action in this respect he will reacquaint himself with the findings of the Royal Commission on the Taxation of Profits and Income in this respect, from which I should like to read a short passage.
  The Commission said:
  "The mere retention of profits cannot be rated as an economic advantage. On the contrary, it would better serve the public interest that a company should be encouraged to distribute those profits which it cannot put to fruitful use in order that there may be a chance that they may be invested effectively elsewhere."
  I hope that the right hon. Gentleman will take note of that finding. What is needed in this respect is that the Socialist Party should modernise its attitude towards capital and profit.
  We will, of course, give the right hon. Gentleman's proposals, and particularly those in his forecast, the most careful attention, but this is just the latest in a series of Government actions over the last few weeks which, I am bound to say, I find almost incredible. Whatever the merits may be in the imports surcharge—and I am not at the moment debating that—the Government have managed, through this operation, to create a crisis in E.F.T.A., to alienate our European partners, and to create a loss of confidence in Europe which was quite unnecessary even if they decided to take this action.
  They have threatened the British aviation industry with their open hostility to the Concord enterprise. Our European partners are in dismay at this. It has involved threatening to cancel, if not, in fact, cancelling—and I suspect that they will do so—a contract solemnly entered into by the British Government. They have halted the modernisation of British Railways and have today initiated policies on taxation which they indicated to the electors they need never apply.
  I do not think that the Chancellor of the Exchequer can escape from a degree of responsibility for the pledges which he and his right hon. and hon. Friends gave to the country during the election campaign. Although they knew that our proposals and programmes fully took up the resources of the nation, nevertheless they added to them one by one time after time. Again, they indicated that they could pay for these without increased taxation, and here we are with a Budget

  1067
  applying heavy taxation to a wide section of the people. They have only themselves to blame, therefore, if the earlier enthusiasm for a Socialist Government is very quickly dissipated in disillusion.
  The Prime Minister: The right hon. Gentleman would not give way earlier. Will he now answer this question? Having heard the Chancellor's figures, does he now still feel that the economy of the country has seldom, if ever, been stronger? If the right hon. Gentleman admits to having misled the country on this, will he say whether it was deliberate or because he did not know any better?
  Sir A. Douglas-Home: I saw the right hon. Gentleman fidgeting during my speech, but I did not know that he wanted to interrupt. I find it very easy to answer that question. The economy of the country is basically strong. The right hon. Gentleman himself has said so. I could almost quote the words to him, although my memory of his speeches is not quite as good as his memory of his own speeches.
  As I say, the economy of the country is basically strong, and, if the right hon. Gentleman wants my honest opinion, right hon. and hon Members opposite need never have created the atmosphere of crisis which they have created in recent weeks.
  5.26 p.m.
  Mr. John Horner: I would not have risen after the main speeches in this debate if I had not felt obliged to add one or two points to what my right hon. Friend the Chancellor of the Exchequer said about the need for an incomes policy. Before I come to those points, I should tell the Committee that I am here representing the constituency of Oldbury and Hales owen which for so many years sent Arthur Moyle to the House of Commons.
  I first met Arthur Moyle many years ago when I was a very young trade union official. He gave me unstintingly of his advice and much wider experience, and we have been friends for a quarter of a century. I am sure that hon. Members on both sides of the Committee will agree that Arthur Moyle is one of the kindest and warmest-hearted of men.
  1068
  The example which he has set me in serving his constituency is one which I shall find it difficult to equal but which I shall seek to follow.
  My constituency is a Black Country constituency, and it seems to me that it contains in microcosm most of the problems to which the Government have set their hands. The old traditional crafts of the iron trade are followed in it, and hon. Members may be interested to know that it was but a few years ago that the last woman chainmaker of Cradley gave up her work on her own domestic hearth. Nine-tenths of my constituents earn their living from using iron and steel, and I am sure that our earlier debate will be of profound interest to those men and women who are concerned with making available cheaply a constant and expanding supply of good-quality iron and steel from this country's own resources.
  It is a constituency where one can see the Industrial Revolution on the ground. It is also a constituency which is becoming a commuter area, to Birmingham and to the enormous industrial establishment of the British Motor Corporation at Longbridge. We see here new industries—plastics and chemicals, Tube Investments. We have the firm of Accles and Pollock there making all kinds of tubes. Very proudly, in rivalry with an American firm which recently sent Accles and Pollock the smallest tube in the world, that firm sent back that smallest tube with another threaded through the bore of it.
  In Oldbury and Halesowen we see the new Britain emerging from the old. The scars of the Industrial Revolution, the slag heaps and the old disused pit areas, still remain. I think it worth noting that one of the problems which confronts us there is the nuisance of industrial noise, Men and women, to whom 30 or 40 years ago the same noise was welcomed for the work which it produced, are no longer willing to put up with the nuisance and inconvenience of having to live in old houses next door to forges and foundries—I think that this is a good sign—but work remains hard in my constituency. In those same foundries and forges men graft for their living at wages which compared to modern rates are comparatively low. There is no aspect of the economic policies which we have

  1069
  had adumbrated in the House during the last two weeks but which has an immediate and direct effect on my constituents who look forward eagerly to the practical unfolding of these policies.
  It is with considerable temerity that I follow my right hon. Friend the Chancellor in his Budget speech, in the course of which he touched upon incomes, and also the speech of the right hon. Member for Perth and Kinross (Sir A. Douglas-Home). At last in this matter we are getting our definitions clear. We no longer talk about a wages policy. As far as I can remember, there has always been a wages policy in this society. The job of the trade unions has been to get as much as they could for their members in all circumstances and on every possible occasion. That is why workpeople pay their contributions to the trade unions.
  The boss would always freeze their wages. They have no need to await a wages policy of that kind. The rôle of the employer, it seems to me, was to pay as little as he could possibly get away with. This has been the traditional wages policy in our society for as long as anyone in the Committee can remember. Twenty years ago, Comrade Donaldson—[Laughter.] As an ex-matelot, Commander Donaldson, let me declare my close affinity. As I was saying, 20 years ago the T.U.C. gave some consideration to the sort of society that was emerging from the war, and it stated its position very plainly. It said that it would be prepared to co-operate with a Government which was sympathetic to the social objectives of the trade union movement. I will not read to the Committee the somewhat wordy pronouncement of the Trades Union Congress at the time.
  I think the Committee realises that, whatever our decisions, we cannot legislate for wages in this country. We cannot, with legislation, cut across the whole fabric of the collective bargaining machinery that has been built up over the last half century. We can, of course, disrupt it, but we disrupt it at our peril, as I hope to show in a moment. We live in a democratic society and we must accept that any incomes policy, if it is to survive, must stem from and must develop within the framework of the collective processes of present-day industrial relationships.
  1070
  I congratulate my right hon. Friend the Chancellor of the Exchequer and the Government for tackling what is clearly going to be the biggest job which faces them. I say to my right hon. Friend and to the Government that I think that in this case it is wise to make haste slowly. What are we after if, in fact, we cannot legislate on wages? I heard a reference to the climate of opinion in this country. We are seeking to create a climate of opinion in which trade unions and trade unionists will evolve a general understanding between themselves and the Government and one in which wage claims in total shall bear some relationship to the anticipated growth of the economy. With a Government whose social aims are akin to those of the mass of trade unions and trade unionists, in this mental climate the trade unions and trade unionists will agree that they will exert less than their full bargaining power in conditions of full employment. That is the sort of mental climate we are seeking to establish, and the question is whether it is, in fact, possible to bring about such a climate. It might be so.
  What I think is clear is that if it is just possible now to begin to work towards that objective, hitherto it has been quite impossible to do so. I think that hon. Members opposite must have some difficulty in fully appreciating the enormous damage that was done to industrial relations in 1961 and 1962 by the pay pause, and the deep and bitter feeling which was created over wide masses of workpeople, not only in the Civil Service and public services generally, but outside and those not directly affected by Government employment.
  At that time I was at the receiving end. I witnessed the rupture of negotiated agreements, the brutal brushing aside of collective bargaining, of machinery which had taken so many years to build up, until we began to witness the threat of a combined revolt of the teachers, nurses, firemen and civil servants. In those bitter months I just could not tell the firemen that the balance of payments in Britain was so precarious and that our economy was on such a razor edge that the wage agreement and settlement at which they had arrived with their employers, the local authorities, had to be put in cold storage, that they had to forgo any wage increase, and that, moreover, if the local

  1071
  authorities, in seeking to honour their undertaking to the firemen, dared to pay the increased wages under the agreement, those local authorities would be in danger of financial sanctions imposed by the Government by way of the withdrawal of Exchequer grants.
  People have long memories. When in the bloody winter of 1940 and the terrible spring of 1941, night after night friends of mine in the London Fire Service saw the city destroyed and tens of thousands of acres of London ruined, I think we are entitled to ask ourselves whether those same men, after going back to their fire stations every morning, would have come back night after night throughout those months with the same morale and the same determination to do their duty if they had felt that out of the ruins which Hitler was leaving behind 20 years ago there would be rich harvestings and pickings for land speculators and property dealers. Indeed, I think that this Chamber, which I saw, as many did, the morning after its destruction, must have been one of the few buildings in London to be rebuilt without giving any excess gain to the speculator.
  The men who remember these things were the same men who witnessed the scandal of tax-free gains for the land speculator at a time when they were being asked to forgo their own wage increase. One could not possibly hope for anything but the most violent opposition from trade unions when they saw wage and salary earners being treated, as they were three years ago, as the one factor adversely affecting Britain's economy, on their shoulders being put the burden of economic disarray.
  It seems to me, from what we have heard from the Chancellor today, that we are beginning to take the right steps, we are beginning to move along the way which may produce the sort of mental climate and general relationship between trade unions and Government which we earnestly hope to see established. Of course, trade unionists want to be sure that, when they get a wage increase, they get an income increase, but, as the Chancellor reminded us, they know equally that a wage increase surrendered is an increase gone for good, while a dividend restraint can prove to be a future capital gain. By his statement
  1072
  this afternoon, my right hon. Friend has shown that it is possible to follow a course to create the sort of conditions in which, I believe, it might be possible for the trade union movement to accept an incomes policy.
  What are the conditions? First, demands must not be made upon salary and wage earners alone. No longer must they be regarded as the sacrificial lamb. Tax evaders, land speculators and capital gainers must all come within what I call the general circumference of action. Second, advantages which accrue from economic expansion must be channelled into social benefits. I welcome, as we all do, my right hon. Friend's statement on pensions. As regards health, I do not know what old-age pensioners in my constituency will think about the Concord project, but I know that a man who falls ill and comes off his basic earnings on to National Insurance benefit will welcome the Government's decision to relieve him of the additional burden of prescription charges. I doubt that, when he goes to the chemist, he will even have in his mind the thought that he would rather have a piece of the Concord than free drugs. Therefore, I emphasise this second condition, that advantages which accrue from industrial and economic expansion must be channelled into social benefits, so that the real living standards of trade unionists, not only individually but collectively, are seen to rise. In the Chancellor's speech today, I feel that we may have the beginning of such a policy.
  I conclude by making, within the ambit of what I call the general circumference of action, a special plea for public servants, the people who have had the sticky end of things these last few years. I believe that there is a general consensus of opinion now that people like nurses and teachers, people whose productivity cannot be correlated on a bonus or piecework system and who have not shared in the general expanding prosperity of recent years, deserve special attention.
  All of us who have thought about an incomes policy know that, within the general circumference, there are many detailed and complex problems to be settled. I shall not bore the Committee with them today. They can be dealt with. The job is to create the necessary

  1073
  climate of opinion. When this subject was last discussed at the Trades Union Congress, about 18 months ago, the general secretary of the Transport and General Workers' Union, as he then was—he is now charged with other duties—said:
  "When we have achieved a measure of planning and a Socialist Government, if I have to say to my members, We must now exercise restraint', I will say it and, when I say it, I will mean it".
  The Government know that among the trade union movement, among the millions of trade unionists, there is an enormous fund of good will towards them. The Chancellor's statement today will strengthen that good will. All of us wish him well in his task of formulating an incomes policy which will work.
  I am grateful to the Committee for listening to me. I felt that these were points which I was bound to make.
  5.47 p.m.
  Sir Robert Cary: It falls to me, on behalf of hon. Members on both sides of the Committee, to congratulate the hon. Member for Oldbury and Halesowen (Mr. Horner) on the excellent and informative maiden speech which he has just delivered. When he comes to know Parliament a little better, he will discover that one of the most likeable characteristics of the House of Commons is that it has a short memory for a bad speech but a long memory for a good one. The hon. Gentleman falls effortlessly into the long memory category, and we shall look forward to the contributions which he may make to our discussions in the future.
  I have a personal interest in the hon. Gentleman because he succeeds an old friend, Arthur Moyle, who for so many years represented his constituency. Arthur Moyle was a good House of Commons man. He served it well, and he devoted his energies here at one time, as Parliamentary Private Secretary, to the interests of a distinguished Prime Minister. He made countless friends on both sides of the House, In retirement, he happens to be a close neighbour of mine in Kent, and I shall, therefore, be able to give him an eye-witness account of how well his successor at Oldbury and Halesowen discharged his task this afternoon.
  1074
  Although he is absent from the Chamber at the moment, I offer my congratulations also to the Chancellor of the Exchequer on succeeding to his great office. Over the years, I have become so used to thinking of him as the "shadow" Chancellor that it will take me a little time to become accustomed to the knowledge that he has achieved the substance of that office. Now, as the occupant of No. 11, Downing Street, he will discover the truth of the old adage that it is better to travel hopefully than to arrive.
  I welcome the Chancellor's proposals on pensions. For some years I have been the Parliamentary chairman of the British Limbless Ex-Servicemen's Association. No part of the pension plan put forward by the Chancellor did I welcome more than the additional benefit that he will give to the 100 per cent. disablement pensioners. Some hon. Members may recall the Motion I had on the Order Paper earlier in the year in which I asked the Ministry of Pensions to set up a comprehensive inquiry into all the circumstances of the pensions and benefits of the members of B.L.E.S.M.A. No doubt this benefit would have come from that inquiry. If when the inquiry is completed the Chancellor could add to the benefits that he has now given to the 100 per cent. disablement pensioner, nobody would welcome it more than me.
  I also welcome what the Chancellor has given to old-age pensioners. All candidates at the General Election received exactly the same questionnaire from the Old Age Pensioners' Association. The first question had to be answered by us all. It was whether we thought that £3 7s. 6d. was an adequate pension for a single person. The answer is "No". I said that I would like to put it up to £5, but that—this is essential—if I took such a step I would ensure that the £5 had the same purchasing power as the £3 7s. 6d. which it replaced. In the concessions which he has given to the elderly, the Chancellor has to fight again the same old battle with inflation.
  As to the general aspects of the Chancellor's speech, I would say that the first outcome of the "100 days" is to place a substantial amount to increasing the cost of living. In my opinion, a substantial increase in the cost of living is inevitable. I cannot in the limited time

  1075
  available cover the whole range, but perhaps I might cite one example, and that is the surprising action of the Chancellor, in trying to find the wherewithal to meet some of the new obligations that he has entered into, in imposing an additional 6d. taxation on a gallon of diesel oil, when the Labour Party is pledged to reduce that aspect of taxation. I take the right hon. Gentleman's mind back to the cost of living Budget in April, 1958, when the then Government gave a concession of 2d. off beer, and the bus fare, which was also in the cost of living index, was given no benefit. Hon. Members opposite complained bitterly and pledged that if they ever enjoyed a period of office, one of their first duties would be to examine and reduce the tax on dery, by means of which most of our vehicles operate on the roads.
  The net result of the 6d. addition to the cost of fuel will inevitably mean a rise in fares. I will give two examples. Manchester Corporation is paying no less than £700,000 to £800,000 a year in fuel tax, and this imposition will certainly put that payment up to nearly £1 million. A very large company which I operate pays nearly £200,000 a year in fuel tax. One benefit that I thought we should get from the Government was a reduction. But I shall now find myself paying not £200,000 but £250,000 in fuel tax as a result of this proposal. This is only one aspect. Take the 12s. 6d. given to the person who is now drawing £3 7s. 6d. The extra fuel tax will tend to increase the fares which the individual will have to pay in spending the extra 12s. 6d. What is the advantage? This is really the same stop-go policy again. One could elaborate on this unendingly.
  Has the Chancellor brought to the Committee anything basically new, refreshing or dynamic? He never once mentioned inflation, which will be the most important thing that he has to fight. He opened his statement by saying that his duty was to maintain the autumn Budget and to battle with the balance of payments situation. The balance of payments situation is not a novelty created by my right hon. Friends when they governed for 13 years. It is a problem and a battle which always has to he fought by the country. It goes on unendingly. Throughout all my time in political life the battle over the balance
  1076
  of payments has continued. Our actual trading balance has always been in deficit, but our invisible exports have generally brought us safely into harbour.
  I have figures from right over the years beginning with 1919 and ending with 1963, and the pattern is exactly the same. In 1920, the year of the coal strike; in 1931, when we had to borrow £40 million in gold from the Prime Minister of France to help us with our balance of payments problems; in 1947, when there was devaluation by Sir Stafford Cripps—let us always remember that the greatest wound ever conferred on the £ sterling was the devaluation by Sir Stafford Cripps—the pattern has been exactly the same. Right hon. and hon. Gentleman opposite, in trying to create prejudice against their political opponents, keep on talking about this desperate problem as though we had been betraying the nation. In their campaign they constantly denigrated the then existing Government, talking about the most frightful crisis and betrayal, and all this on the basis of something conventional which we have lived with all our lives—the balance of payments problem.
  I have had friends ask me—I do not know whether it is because my surname, an ancient Devon surname, brings something into their imaginative embroidery and reminds them of a street not far from this building—whether things are really all right with Great Britain and whether the country will go down the hill. If one thinks of Great Britain as an individual going to that street and appearing before the Registrar in Bankruptcy, I think one would give a very fine, very splendid, account of the individual. I deplore the action of hon. Members opposite in trying to create political prejudice against the previous Government, suggesting that Britain's credit is steadily going downhill. Right hon. and hon. Gentlemen opposite did the country a grave disservice in the campaign they conducted leading up to the General Election.
  What are the facts? Perhaps I might give a quotation from The Times of 9th March this year:
  "Most people, if asked whether Britain was not a debtor or creditor in the world, would have little hesitation, with memories

  1077
  of regular sterling crises and loans from the United States and the International Monetary Fund, in putting her firmly in the red. They would be wrong. For too long attention has been rivetted month after month on the fluctuations in the gold reserves and on the fact that Britain's short-term liabilties (generally known as the sterling balances) are far bigger than her immediate means of payment. Yet behind the gold reserves stand an impressive array of securities as well as massive investments in property, factories and natural resources all round the world. When all the assets and liabilties are put together, as the Bank of England has now done for the first time … Britain appears as a net creditor to the tune of at least £1,600 million."
  That is the position that the Chancellor of the Exchequer inherited from his predecessor. I deplore the constant nagging, by right hon. Gentlemen and hon. Gentlemen opposite, of the economy and of political opponents—implying that some frightful betrayal was carried out during our innings in office, particularly during the last few years.
  The Chief Secretary to the Treasury knows full well that the Government have had to pay a big price to get even the limited majority they hold and I hope that they may cease to taunt my right hon. Friends, who had their own plans to meet this situation and would have met it in their own way. Certainly I do not think that my right hon. Friend would have gone about it in the clumsy way proposed by the Chancellor of the Exchequer today.
  A point concerning the import surcharge arises in my own constituency in Manchester. The Chief Secretary to the Treasury was himself a distinguished Member for that city, representing a Manchester seat, and I ask him personally whether immediate steps cannot be taken in this case. Hexachlorophane, which is imported, has had the 15 per cent. surcharge imposed on it. It is used in hospital products by Atlas Laboratories in Levenshulme, Manchester. The firm writes bitterly to me to complain that, while the Government claim that the surcharge applies to nonessentials this product is essential for daily use in hospitals and may, in terms of cross-infection, mean the difference between life and death.
  Yesterday the hon. Member for Stockport, South (Mr. Orbach) made his second maiden speech and I enjoyed it. He referred eloquently, and in terms not
  1078
  overdrawn, to the Stockport Hospital where, in a ward designed to accommodate about 30 patients, no less than 72 are now crammed. If products needed for cleanliness in hospitals are so essential under normal conditions, how much more vital are they in the terrible conditions the hon. Member described?
  Mr. Maurice Orbach: Has the hon. Gentleman made any inquiries as to whether this chemical can be made in this country?
  Sir R. Cary: I do not want to elaborate on the letter but it makes it clear that this chemical can only be obtained abroad and therefore must be imported. After our discussion today, I shall take this letter to the Chief Secretary to the Treasury. I hope that he will put it in the right place for reasonably prompt attention and I trust that I shall have the privilege and pleasure of writing to the firm to say that I have succeeded in getting the surcharge removed from this product, even by a Socialist Government.
  6.4 p.m.
  Mr. Joel Barnett: Like most new Members, in composing my maiden speech I naturally gave great consideration to the subjects I felt to be concerning my constituents most. While they want to improve their standard of living, or at least maintain it, the people of Heywood and Royton, like Lancashire folk generally, are, above all, sensible people who realise that, in this context, the most important need of all is the achievement of a sound economy. The achievement of a sound economy is clearly impossible without an incomes policy and that itself is a non starter without a very different and very much fairer tax system. I am therefore very pleased indeed with my right hon. Friend's Budget statement.
  Like most right hon. and hon. Gentlemen, I welcome the increases in pensions and I was particularly interested in the comments of the Leader of the Opposition and his hon. Friends. I wondered, if they wish to have the pensions increased, how they would propose to pay for them. I also wondered whether an increase brought in by them, had they remained the Government, would have been met by a regressive form of taxation, as in the past—by increasing, for example, Purchase Tax—in preference to

  1079
  the way decided upon by my right hon. Friend—a progressive form of taxation through an increase in Income Tax.
  I want to address the Committee from my own experience as an accountant in practice. One of the worst results of our present tax system is the shocking waste of human resources. We have men spending a great deal of their time and early professional careers in excellent training but who go on to waste time on negative aspects of their work—this applies particularly to those in practice—in dealing with taxation problems instead of being engaged on the more fruitful task of helping companies to increase their productivity and efficiency.
  Perhaps my right hon. Friend the Chancellor of the Exchequer will consider ways of encouraging companies to engage accountants, whether full time or on a consultancy basis, to give companies the sort of information which is too frequently lacking, particularly in the case of smaller companies which, I understand, most fall behind with exports. This encouragement might be given by a form of investment allowance for the use of accountants in the ways I have suggested, as is done now for new plant. I know that there have been many objections to the granting of capital allowances for human beings, but my suggestion is rather different as there would be no question of considering wastage, as happens with capital allowances, by way of initial and annual allowances.
  That, however, is only one side of the coin. We must see that more men are available to do something about the time wasted in taxation affairs. There is a constant battle with inspectors of taxes. Incidentally, in referring to that, I cannot help thinking that, at an earlier period in my career, and given Parliamentary privilege, I might have been very much tempted to say some things about tax inspectors that I might perhaps have regretted. But now I am glad to pay tribute to these men and women, who uphold standards which many countries would be highly delighted if we could export to them.
  That is not to say that the inspectors cannot sometimes be very difficult. They can. They can also be somewhat callous. As an example, I quote the case of an inspector who wrote to me a little while
  1080
  ago saying that he regretted to hear of the death of a client of mine but added, "Would you please have his widow complete the attached Income Tax return?"
  A great deal of the trouble is not that accountants do not get on with inspectors, but that, particularly those in practice, spent far too much time dealing with the problems of tax avoidance and tax evasion. I am sure that the difference will be well known to hon. Members, although especially on expense accounts it is sometimes very thin. It has been described very aptly as the thickness of a prison wall. Accountants can submit accounts with many millions of £s turnover and have them agreed with the inspectors overnight, only to go on for months arguing over a comparatively small amount of what is termed "private benefit."
  On this question of expenses and the proper taxation of what is termed the "private benefit element"; I am sure that most hon. Members would agree that there is much abuse, but at the same time I know taxpayers who would rather pay extra tax than be subjected to the sort of "third degree" which it is sometimes necessary to inflict under the present system. For example, the Committee can perhaps imagine what a client says when a member of my staff asks him where he went at the weekend and how many miles he did in the company car. The inspector asks, as he is perfectly entitled to ask, about the entertainment expenses, the names of the persons entertained, with the dates. Apart from the time taken by my office and the director concerned, when this first happened I had visions of some clerk in some Revenue office somewhere doing a great deal of research and crosschecking to come up with the vital information that Miss A of XYZ Limited was entertained by 26 different people all at the same time. I can put the minds of hon. Members at rest, for I understand that no such cross-checking takes place. However, it must be obvious to most people that we need a new tax system.
  That is why I was delighted to hear my right hon. Friend the Chancellor of the Exchequer. We need a tax system fairer and clearly seen to be fairer to those millions on "Pay As You Earn" who are taxed on every hour of overtime and who feel with some justification

  1081
  that they are getting the worst of the present tax system.
  On this subject of the need for a new and much simpler tax system, I should like to refer to the 1955 Report of the Royal Commission on the Taxation of Profits and Income and in particular to the minority dissenting Report which was signed by three members of the Commission including George Woodcock and a Mr. Kaldor. In passing, I should like to say how repugnant have been some of the comments about Mr. Kaldor and the other distinguished economist, Mr. Balogh, who are at present advising the Government. This is petty criticism. Of course we have many fine British economists, but is it seriously suggested that we should select on a nationality basis, as happens in the United Nations, for example? My own brother-in-law, a very fine young British economist, is at present with U.N.E.S.C.O. in Pakistan, but he has been turned down for other excellent positions inside the United Nations for no reason other than that the British quota is full. I hope that we can steer clear of the sort of comments we have heard if for no other reason than that they have somewhat distasteful undertones.
  Paragraphs 117 and 118 of that Minority Report recommend a much broader base for assessing profits. This would make for a tax system very much simpler to administer. It would eliminate a great deal of the waste I have mentioned, but carried out unilaterally it would be difficult for our own companies, particularly those engaged in exports. We must have international co-operation. The Minority Report asked for the United Kingdom to press in the United Nations and other international bodies for just such a new system. Now that one-third of the signatories of that Minority Report is a Government adviser, I hope that he will press the Government for a start to be made in this direction.
  With a fairer and simpler tax system, we could make a great start towards achieving an incomes policy, which is basic to our whole economic structure. If we could eliminate the need for so many tax experts and could use accountants where they are most needed, we could improve the efficiency of our industry. For in this way only can we
  1082
  increase our productivity and obtain the resources which all hon. Members want us to have to help us to increase pensions and to pay for the hospitals, health services, schools and so on which the people of my constituency and the country as a whole so much need.
  6.16 p.m.
  Sir Henry d'Avigdor-Goldsmid: The hon. Member for Heywood and Royton (Mr. Barnett) has made a very attractive maiden speech. I think that all maiden speeches are attractive, but this was particularly endearing in that the hon. Gentleman spoke a great deal about the issues being debated today, and I am bound to say that many maiden speeches do not have that advantage. I shall revert to some of the things he said because they tie up with something I have in mind. I should first say that although we are pleased to see the hon. Gentleman here, the pleasure is modified by the loss of our former colleague, Mr. Tony Leavey, who had many friends on both sides of the House and who spent some eight or nine valuable years here. I wish no ill to the hon. Member in saying that we hope that we shall shortly see Mr. Leavey here again.
  I should like to disabuse the hon. Member on one matter. He talked about the simplification of our tax system. The Chief Secretary to the Treasury belongs to the same eminent profession as the hon. Gentleman. He has been in the House a good many years and perhaps he can take his hon. Friend aside and tell him that this Utopia of a simplified tax system does not yet even come into the dreams of those now conducting affairs.
  I pay my tribute to the Chancellor of the Exchequer who made his Budget statement today in his usual forthright, honourable and direct style. We on this side of the House have had the pleasure of sitting opposite him for a number of years. Personally, I have sat not exactly opposite but vis-à-vis him in more financial debates than I care to remember. He has always performed well. He says what he means and although he does not always quite understand what he means, he says it in a way which gets it on the record for keeps, and that is a great advantage, as we know in this place.
  We have had an interim measure put before us today. A good deal of attention has been directed to plans for future

  1083
  taxation, but I shall not dive into those because they are matters about which one is liable to be misled unless one has the printed script before one. I cannot believe that a capital gains tax of the importance foreshadowed by the right hon. Gentleman can be adequately explained in a speech of one sentence. I will leave that aside, because we will have the opportunity to revert to it at a later date. Leaving aside all suggestions for future taxation, what do we have?
  We have first the fulfilment of a number of election pledges, pledges given with great vigour on many platforms from both sides of the Committee. Most honourably, the Government have decided at the first opportunity to implement what they said, but what they have done is not what they promised to do. The right hon. Gentleman the Chancellor of the Duchy of Lancaster told us yesterday:
  "… there has been no time to mount our income guarantee scheme … it will be necessary to give effect to improved social benefits along traditional lines, which means that National Assistance would be retained for the present…"—[OFFICIAL REPORT, 10th November. 1964; Vol. 701, c. 869–70.]
  I should like to go into that a little.
  During the last election hon. Members on both sides accepted that there were about 6 million people of pensionable age in this country of whom about 1½ million had their pensions supplemented by National Assistance. There was also an unstated number of people entitled to National Assistance who did not make use of it. This is obviously not something about which one can argue. Those 1½ million, who clearly by definition are the neediest proportion of our population, will not benefit by one penny piece from the pension provisions about which we have heard today. As the Chief Secretary very well knows, not until we hear the revised National Assistance Board scales, which, I understand, are to come out at the end of March, will we know whether the 1½ million neediest people will benefit at all from the rise in the basic pension.
  Mr. R. E. Winterbottom: Did not the hon. Gentleman get the impression that my right hon. Friend the Chancellor of the Exchequer conveyed the idea that the ambulance form of National Assistance would be increased at the same date simul-
  1084
  taneously? There will, therefore, be an increase for those people.
  Sir H. d'Avigdor-Goldsmid: That bears out what I have said, that until the National Assistance Board scales are published those people will not benefit. This is a real point and it should not be overlooked.
  Another very important point is this. We were absolutely clear that the pension had to be increased. However, our opponents said that they would insist on what the Chancellor of the Duchy of Lancaster referred to in his speech, namely, that an income guarantee scheme was on the way which would have no reference to the Assistance Board. Now we see that this has been postponed—for how long we do not know—but it suggests to me that until such time as the income guarantee scheme is mounted these matters will have to be dealt with in the usual way, which is through the National Assistance Board, to which we are prepared to pay tribute but which always arouses from hon. Members opposite cries about a means test. Until this income guarantee scheme is mounted, some element of means test is bound to come into the pension. Therefore, I do not think that the first bite at fulfilling election pledges will, on consideration, prove to be of so much value to the recipients as to warrant the great outburst of cheering which we heard and a vast swing of votes to the Socialist Party.
  No one doubts the excellent and honourable intentions of hon. Members opposite. What we call attention to is the possibility of implementing some of the pledges which they gave during the election. I have pointed to one of them. The whole basis of our society and of our social services is that we should have some stability in the value of our money. Great expectations have been raised by the victory of hon. Members opposite at the election—I will not dwell on them; they have dwelt on them sufficiently themselves—that the pensioner will be materially better off in real terms than ever before. Now the responsibility rests fairly and squarely on hon. Members opposite to ensure that the currency in which those payments are made is not a weakened currency—in other words, that they will meet

  1085
  not only their verbal obligation but their moral obligation to satisfy the feelings which their propaganda has generally stimulated.
  I want to look at that a little seriously—this is a Budget debate and not a Second Reading debate—to see how likely our currency is to keep its purchasing power in present conditions. [Interruption.] The hon. Member for Dunbartonshire, East (Mr. Bence) has listened to me before; he must do it again.
  Mr. Cyril Bence: We have heard this before.
  Sir H. d'Avigdor-Goldsmid: Already we have had—
  Mr. Bence: Will the hon. Gentleman give way?
  Sir H. d'Avidgor-Goldsmid: Let me make my speech. The hon. Gentleman can interrupt later.
  We had in the Chancellor of the Exchequer's speech today indications of a rise of half a point in the cost of living through the increase of the petrol duty, and, of course, there will be consequential changes. But all this is small beer compared with the 15 per cent. surcharge. None of us knows the effect of that, and I very much doubt whether the export bonus will affect the cost of living to any extent, and I do not believe that the Chief Secretary would claim that it will. But there is something much more serious. We are suffering from balance of payments troubles, and the Government are trying to solve them by introducing this 15 per cent. surcharge.
  I should like to give hon. Members an analogy which they may understand. If a stout lady wishes to get her weight down, it does not do her much good to put on a tight corset. If she does, the bulk is transferred below the corset. This 15 per cent. surcharge will have the immediate result of reducing imports, but there will be a pent-up demand to be met when the 15 per cent. surcharge is taken off. It is clear that people rely, as they have every reason to rely, on the promise of the Chancellor of the Exchequer that this surcharge will be reviewed in the spring, and re-reviewed in November and, I understand, may then be prolonged for another year. Hon. Members opposite know perfectly well that we cannot go on for ever imposing
  1086
  this 15 per cent. surcharge, which is said to be a temporary measure, and keep face with the nations of the world with which we intend to do business.
  Therefore, the surcharge may have an immediate effect, but the cumulative effect will be even greater when it is taken off because of the pent-up demand to which I have referred and because there is no comparable stimulus to exports to carry the weight. I hope that the Chief Secretary will bear this in mind. What the Chancellor of the Exchequer has done by applying this "corset" is to take the weight off the waist and put it round the bottom. Instead of solving the problem in November, it has been postponed until May. But the problem is there just the same.
  Mr. Robert Maxwell: What is the alternative? Surely the result of the 15 per cent. surcharge will be that some imports will be produced in factories in this country and therefore will not be required. In any case, the hon. Gentleman has admitted that we have a balance of payments problem. That being so, how are we to solve it? What is the hon. Gentleman's solution?
  Sir H. d'Avigdor-Goldsmid: The hon. Gentleman has not been in the House very long. I do not know whether he has even made his maiden speech. When he has been here a little longer he will know that he has the chance of catching your eye later, Commander Donaldson, and of making these points then. I do not propose to deal with them now. We have postponed dealing with this problem of import surpluses; we have not dealt with it.
  I come now to a very much more important question. We have to borrow in order to deal with the current problem. However, as far as I can see, we are having some difficulty in borrowing, or the plan is not going as smoothly as was originally expected. I think that I can tell hon. Members opposite why that is the case. From whom are we borrowing? We are borrowing from other nations of the world who have more funds at their disposal internationally than we have. Are we offering them specific security? We are not. We are promising to repay them when we can. That is the point to which I wish to draw attention. The hon.

  1087
  Member for Heywood and Royton referred to the presence of Professor Kaldor in the Treasury buildings as having attracted adverse comment. I should like to place it on record that I know Professor Kaldor very well. I have a fiduciary connection with him, and I regard him as a man of complete financial integrity and also as a very skilled economist. I do not, however, regard him as a politician. I think the proof of that is in the unfortunate effect that his advice has had on the politicians to whom he has given it. I should like to go a little further. What, in fact, was the advice that he was giving to the people of this country before he got this appointment?
  The Chief Secretary to the Treasury (Mr. John Diamond): Before the hon. Gentleman goes further into detailed comment about one of my civil servants who is unable to answer any criticism that is made against him, I hope he will be good enough to bear in mind the usual courtesies we extend in this House to those who cannot speak for themselves.
  Sir H. d'Avigdor-Goldsmid: There is absolutely nothing damaging to Professor Kaldor that I wish to say. If the hon. Gentleman wishes to comment on it afterwards, I shall be very pleased to hear the comments. On 19th February, 1963, Professor Kaldor wrote in The Times, and it was published for all to see:
  "The British economy is incapable of maintaining high rates of economic growth or continued full employment without either severe import restrictions or devaluation. The introduction of severe import restrictions would run counter to the spirit of the age, to our long-run interest as a trading nation and to our proclaimed international aim to make trade free and less discriminatory all over the world. Sooner or later, therefore, the choice has to be faced between the maintenance of a fixed value of the £ and mass unemployment."
  These are honourable, straightforward words. I have great respect for Professor Kaldor's acumen and integrity. So, too, I think, have the people who are being asked to lend this money today to bail us out of the present financial difficulties. I feel rather as if I had gone to deposit money in the bank and found a masked bandit behind the bars. This is not the sort of bank in which I might wish to deposit money. I think that
  1088
  having taken him on as principal adviser, the Government must face the fact that this is bound to have an adverse effect on their own credit as far as potential lenders are concerned. That seems to me to be axiomatic.
  There is no imputation of sinister behaviour by Professor Kaldor. These are his views as expressed to the public and, as is frequently said in this House, why peer into the crystal when one can read the book? We need not delay to read the book. The book is on record. Hon. Members opposite have to face this. If they follow the behaviour which Professor Kaldor appears to recommend, they are going to do injustice, first, to people abroad who may be induced to lend us money and, secondly—this, I think, is very much more to the point—they are going to let down the people who relied on them to maintain the purchasing power of the increase in pensions which they have granted. This seems to me to be the inescapable dilemma, and it is about time that this position was made clear.
  If finally we obtain our loan at the cost of guaranteeing to repay in gold to the people who lend it, I must remind the First Secretary that we still have sterling liabilities of £3,800 million against a gold reserve of some £900 million. If we take a very large chunk of that and earmark it against our last borrowing, it seems that the sterling area as a whole has no cover at all for the facilities that have been given. If there is devaluation, it is at the expense of Australia, New Zealand and a great many countries poorer than ourselves. I ask the hon. Gentleman to bear in mind that devaluation might be a dirty word, but it is one that has to be faced. If we are to maintain our position as a trading nation, we have to say quite clearly that we are not considering anything of that sort, because otherwise the whole promise of a new society will go down the drain in a lot of broken promises.
  The Times today, rather unkindly, I thought, abandoned its friend to whom it has been staunch for more than a year and had a leading article headed, "In the Debtors' Court". The first sentence began:
  " Are there any further humiliations in store for Britain?".
  It commented on the argument with the group of 10 nations in Paris and said,

  1089
  I think rather sharply but not inappropriately:
  "It is easy to break promises and international rules when no further help is needed from other nations."
  Further help is needed from other nations, and the breaking of international rules does not make sense in these circumstances.
  We have had a further humiliation. The President of the Board of Trade indicated that we would make a special concession to the E.F.T.A. countries, but this had to be taken back straight away when he got to Paris and there was a row there. This is the sort of mess that one gets into when one does not think of the normal consequences of the action one takes. I commend that strongly to the Government.
  This is not a very fruitful time for debate, but I leave the Government with one last thought. This comes from the concluding speech of the Minister of Power on 9th November. The Minister finished his peroration with these words:
  "It is, therefore, within the power of the people to determine the kind of society in which they wish to live."—[OFFICIAL REPORT, 9th November, 1964; Vol. 701, c. 689.]
  This is very good stuff from the hustings. In fact, it is no more within the power of the people to determine the society in which they live than it is to determine the weather in which they live. It is not within their power to do either. We can achieve our power of choice within our economic circumstances, but we do not in this country have full control of our economic circumstances. We have to pay attention to the views of other people, and over the last four weeks we have paid extremely little attention to the views of other people. I am honestly, firmly and sincerely convinced that this is not a policy which we can live with, and that this country will, despite its strong position, be humbled, in the words of The Times, if we do not improve the general administration of our financial affairs. We are ordering them very poorly indeed at the moment and it is about time that an improvement was seen. I leave that thought with the Government.
  6.40 p.m.
  Mr. Derek Page: It is a very great honour to make a maiden speech here for any constituency, but it
  1090
  is doubly gratifying to speak as representative of one of the great historic constituencies of this country. King's Lynn can certainly claim to be that, for this constituency has sent to the House hon. Members of outstanding calibre throughout the centuries. It will be recalled that the first Prime Minister was Member for Lynn—Sir Robert Walpole. While we may envy his personal prowess, we cannot approve his methods of obtaining election, and those have gone by the board long ago.
  Coming to more recent times, many hon. Members will recall, among outstanding representatives from Lynn, Fred Wise, who served from 1945 to 1951, who has been of most invaluable assistance to me personally, and certainly to the constituency, and who continued to serve his country with another title in another place. I must also mention the hon. Member who preceded me, Denys Bullard. He certainly set an amazing standard in his care for constituency problems, and if I can live up to, and if possible surpass, the care which he gave to individual constituents, I shall be very well satisfied.
  Lynn is a very beautiful town and the countryside around it is one of the most outstanding beauty spots in the country. I remember a few days ago that my hon. Friend the Member for Norfolk, North (Mr. Hazell) spoke at length on the beauties of his constituency—and he has every reason to do so, because it is second only to Lynn.
  But we have some very serious problems. We have the ancient Borough of Lynn, with a port and certain industries, and it is undergoing a period of great change. There is an agreement with London to accept overspill over the next two years, but we have run into great difficulties because of the lack of coordination in the planning concerned with this. We have a serious need for more effective planning of industrial expansion in the area. The Lynn Council is constantly bedevilled with the question of whether it can go ahead with the most expensive expansion of public buildings and housing in the belief that industry will follow or whether it should wait for industry to come first and then proceed with the public buildings. This is a very difficult problem. The hospital

  1091
  is grievously overcrowded but the proposal for a new hospital was, a few months ago, put back certainly for five years and probably for longer. This is a grievous burden on the sick and their relatives.
  Many of the railway services in the area are under review—and we all know what to expect from that. This seems deplorable when we are expecting the overspill which will certainly need the services. The redevelopment of the town centre will cost millions of pounds, and, here again, the council has a thorny problem to handle. How soon can it expect the burden of interest rates to fall? Can it afford to wait? Should it go ahead now? These are the problems which must be faced. Above all, there is a lack of co-ordination in solving these problems.
  The Borough of Lynn itself represents about one-third of the constituency, and two-thirds of the electorate live in the area around the town. The biggest industry is agriculture, and here the biggest problem is in marketing. Agricultural marketing was a question raised again and again during the election. We have a small fishing fleet. It used to be a very large fishing fleet. At one time there were 200 vessels, but the number has fallen to 12, and these are working only two days a week. This is an urgent problem which I commend to the Government's attention.
  We all know how grievously underpaid farm workers are, and I trust that this will receive considerate attention. We are very pleased that the Government are pledged to consider the position of tied cottages and the need for sickness benefit schemes for farm workers. Bearing in mind how poorly paid they are when they are working. it is a serious necessity for farm workers to have a sickness benefit scheme.
  I am pleased to see various references in the Queen's Speech which should be most welcome in Lynn and which should help to solve these problems. One is the recognition of the need for regional planning. I point out to the Government that the south-east region, within which Lynn comes, is not all booming and super-prosperous. There are patches within the South-East which deserve treatment every bit as considerate as that
  1092
  given to the North-East and Merseyside, and Lynn is one of those areas. We need industry. We need every bit of help in favourable finance which we can get in solving the problems which I have outlined. The railway services from Lynn to Hunstanton are under consideration. The Wells to Dereham line, which ran into the neighbouring constituency of north Norfolk, and which also provided considerable facilities for people in my constituency, has been closed. That is a great burden on the people there. I am pleased to note reference to forthcoming action on agricultural marketing. As I have said, this is by far the greatest problem in agriculture. I sincerely hope that action on the horticultural section will also be forthcoming without delay.
  May I turn for a few minutes to some economic questions which have been raised, particularly with reference to the 15 per cent. surcharge. I wish to raise four points. The hon. Member for Walsall, South (Sir H. d'Avigdor Goldsmid) said that Britain was like an overweight lady, and he likened these measures to a corset. That is not a permanent solution, but if a lady finds herself in a tight squeeze, it can help considerably.
  The first rule in economics must be to be pragmatic, and the criticisms which I am about to make are made, I emphasise, in a constructive spirit. They are constructive criticisms. I wholeheartedly support the approach adopted by the Government in putting on the 15 per cent. surcharge as a means of easing us through this crisis. I support it, in particular, because I am convinced that the basic cause of our problems is low investment in British industry. If hon. Members look at the figures of investment and compare them with the figures of other countries, they will see the truth of that statement. The surcharge method of tackling our deficit does not cut our investment, and I therefore welcome it wholeheartedly.
  But there are one or two little corners which need smoothing, and I ask the Chancellor of the Exchequer to consider some of these points. The first concerns chemicals as raw materials. This is my own industry. I have been in it for 20 years. Without question, many chemicals are raw materials. Hundreds of

  1093
  chemicals are not made in this country but are imported. I feel that there is a very strong case for the removal at the earliest possible moment of the 15 per cent. surcharge on such chemicals as are not manufactured in this country.
  I understand that there will be a drawback on chemicals which are imported and then re-exported but I want to ask a question about this drawback. As I understand the rules, the drawback is not permissible if the chemical nature of the material has been changed. Let us take the case of ethylene diamine, which is brought into this country in Hundreds of tons and is not manufactured here. It is re-exported, and there should be a drawback. But a great deal is changed in its chemical nature. A great deal is converted into ethylene diamine tetracetic acid, which is a very important constituent of detergents and which is exported in detergents. Will drawback be possible under these conditions? I think this merits serious consideration, and that in the whole question of the surcharge on chemicals which are raw materials, chemicals should be divided into two categories, those which are genuine raw materials and those which are not.
  Secondly, there are development projects. I would draw an example from a company with which I have business connections though the same principle applies to a great many other projects; but this is one which I know particularly well. This is Nylon 11. Nylon 11 is different from Nylon 6 and Nylon 66 to which we have heard references in recent debates. This was developed in France, and a company in this country has the right to develop the manufacture of this plastic in this country. It has been importing this material until the scale of the market is sufficient to support a factory.
  The plant will need a minimum output of about 1,000 tons a year before it is economic. The build-up of the market has been as follows: 605 tons last year, and next year the estimated level of demand is 760 tons. So the company is rapidly approaching the point of building the factory, and it has approved plans for putting up a plant in Widnes, which is an area which really needs this employment. If the levy is left on this nylon which is being brought in to build
  1094
  up the market we are not likely to see this plant come in an area which needs it, and I feel that there is a case for reconsideration for this type of project.
  My third example is taken from Cambridge University where work is going on on new computers, and in connection with this orders have been or are about to be placed for American electronics equipment amounting to £130,000. These components are not made in this country, but when we have experience of them then very likely they will be made here, and if we do not get them the research work which depends on them cannot go ahead. Either the grant to the university must be increased to allow for the 15 per cent. or it should not be charged. I think it makes sense that it should not be charged.
  My last point is on a local industry in Lynn, which is the shell-fish industry. I am rather puzzled by the fact that the white fish subsidy is not applied to shellfish. That was because they were considered to be non-essentials. One would consider, therefore, that shell-fish would be considered non-essentials as imports, and therefore liable to the 15 per cent. surcharge. In fact they have been exempt from this surcharge, which seems to me to be contradictory, and I would urge the Ministers concerned to consider this point.
  I thank hon. Members of the Committee for their tolerance, and in closing I would trust that my right hon. Friend the Chancellor will bear these points in mind and will take them in the spirit in which they have been offered, as constructive criticisms, and, by doing so, make what I consider to be a good economic measure even better.
  6.54 p.m.
  Mr. Eldon Griffiths: It is a great pleasure to follow a fellow East Anglian Member in this debate, and in his maiden speech. The making of a maiden speech was an experience of my own only recently in the last Parliament, and I remember it very well indeed. I join the hon. Member for King's Lynn (Mr. Derek Page) in regretting the departure from this place of Mr. Denys Bullard, a man who, as the hon. Member said, worked intensely hard for his constituency and certainly understood its principal industry, agriculture. While welcoming the

  1095
  hon. Member here, and congratulating him on a speech which dealt specifically with many subjects with which he is so obviously familiar, I think it fair to say that we on this side of the Committee expect to see Mr. Denys Bullard back in his place here, and perhaps before not too long.
  This is a debate on the Budget which the Chancellor of the Exchequer has presented to us this afternoon. I have been casting around for some sort of definition of this collection of proposals which have been made to us, and the best label I can give to it is that it is in a sense a Budget of frankincense and myrrh. I think that there is no doubt that there is some frankincense in it. A great part of it smelled very sweetly and no doubt its electoral possibilities will be debated at some stage in the future. There is, on the other hand, the myrrh. If I may put it this way, I think the frankincense in the Budget is to be mainly enjoyed by elderly people, and certainly we on this side of the Committee will support that, but one does have the feeling that the bitter myrrh in the Budget is to be mainly paid by the young. I should like to develop that a little bit later.
  I welcome very sincerely the improvements which have been made this afternoon in the pensions payable to older people. This is a much bigger thing than party politics, and, indeed, anyone who has campaigned in recent weeks has seen the expectations which both parties, I think rightly, aroused in the minds of elderly people. I for one am glad to see the Chancellor beginning to fulfil them this afternoon. I say that with great sincerity.
  Mr. Maxwell: How does the hon. Member explain, then, his vote in the Lobby this afternoon against the increases in taxation so necessary to provide for these increased pensions?
  Mr. Griffiths: I hope to deal with that a little later in my speech.
  I think it fair, in welcoming these things, to say that I particularly welcome the improvements which are being made for the 10s. widow. This, I think, is something which needed to be done. I say, quite frankly, that I am glad to see the earnings rule removed, though it may
  1096
  well be that there will be difficulties in the practical application of this.
  I welcome these things and I think it is true of many, if not the great majority, of hon. Members on this side of the Committee, but I am bound to say that a false picture has been presented to the country in the suggestion that it was the other side which solely wanted to see these improvements. It is simply not true to suggest that. There was no resistance from this side to improving the pensions which are payable to older people. Indeed, as my right hon. Friend the Leader of the Opposition said this afternoon, this was pledged by the Conservative Party, and I am quite certain that if a Conservative Chancellor had been here this afternoon he would have been introducing improvements in the old-age pension.
  Hon. Members: Oh.
  Mr. Arthur Lewis: Is it not the case that it was the Leader of the Opposition who, on the television, went out of his way to explain that the Tories would give a donation to the old-age pensioners, but at no time said what the donation would be?
  Mr. Griffiths: The hon. Member ought to be able to do better than that. That is rather stale stuff.
  Mr. Lewis: It is still true.
  Mr. Griffiths: We hear the Socialists take all the credit for the improvements which may come, but I would remind the Committee that the Conservative Government improved the old-age pension on no fewer than five occasions, and, what is more, if we look back to the old-age pension which was offered by the party opposite when it was last in power in 1951 it was not 67s. 6d., as it has been until today, nor 57s. 6d., nor 47s. 6d.: it was a miserable 26s., which was increased to 30s. three weeks before the election. It is really preposterous for the party opposite to think that it alone is doing something for the old-age pensioners. It is not true, and it knows it.
  I think that we ought to recognise also why it is that these improvements in old-age pensions, which command the general support of both sides of the Committee, became necessary. There can be no doubt that the principal reason is that the large

  1097
  increases in other incomes, and particularly in wages, which have sometimes not been justified by corresponding increases in production, have worked their way through the economy into the shops and have frequently raised the prices against those living on fixed income. Hon. Gentlemen opposite know that that is true. Old-age pensioners and those living on fixed incomes have had to pay the price and carry the burden of a number of wage increases which were not justified by increased production. I think that we ought to recognise that that is the principal reason why these improvements, which I am glad to see, were necessary.
  This problem of increased wages which are not justified by increased production will not leave us just because we now have a Socialist Government. Indeed, the measures introduced by the Chancellor this afternoon will go a long way towards making the position worse, because, if anything, this is an inflationery Budget. In recent weeks hon. Gentlemen opposite travelled round the country saying that they were going to hold down prices. What have they done? The Chancellor has introduced a Budget which will undoubtedly mean higher industrial costs. It cannot have any other effect. If the price of fuel, which is basic to all industries, is increased, it means that ordinary people must pay higher fares. How else can the increase in the tax on petrol be accommodated? Hon. Gentlemen opposite must face the fact—and this is not a party matter—that if additional imposts are brought into industry, the result is higher prices.
  This is a problem which the new Government will have to face, just as the old Government had to face it. This increase will adversely affect the prospect of increasing our exports in the markets of the world. This is a national problem, and this increase represents some of the myrrh in the Budget, because it is very much the younger families who will bear the brunt of these increased costs.
  The 15 per cent. increase in tariffs is bound to increase the costs of our industries and, beyond that, the cost of goods in the shops. Perhaps I might give the Committee an example of what I mean. In my constituency a manufacturer of large concrete blocks has ordered a new German machine which is capable of increasing his production fivefold.
  1098
  This machine is necessary because East Anglia is building up rapidly but now he cannot afford it because of the new duty. He has to use the old machines and they are more expensive. I am sorry that the hon. Member for King's Lynn has left the Chamber, against what I understood to be the normal practice after an hon. Member has made his maiden speech.
  Mr. Arthur Lewis: The hon. Gentleman knows that my hon. Friend is a new Member, and has probably not been acquainted with that custom. Perhaps I might remind the hon. Gentleman that one of his hon. Friends left the Chamber immediately after making his speech, even though he has been here long enough to know the custom.
  Mr. Griffiths: I recognise that the hon. Member for King's Lynn is a new Member, but from my brief experience of the House I know that one of the duties of the Whips is to inform new Members of the customs of the House.
  Mr. Malcolm MacMillan: My hon. Friend the Member for King's Lynn (Mr. Derek Page) came into the Chamber after a meeting with one of the Ministers, at which I accompanied him. My hon. Friend had an appointment to see another Minister after making his speech. He asked me whether it was in order for him to leave after making his speech, and after listening to the hon. Member who followed him referring to his having made his maiden speech, I told him that from my experience it was in order, having listened to the ordinary courteous references in the following speech, to leave the Chamber.
  Mr. Griffiths: I thank the hon. Gentleman for giving me that explanation. I can only say that I understood my statement of the practice to be correct.
  Mr. MacMillan: The hon. Gentleman should withdraw his remarks.
  Mr. Griffiths: The inevitable effect of the 15 per cent. increase will be to send up costs, and therefore prices in our shops.
  I propose now to deal with some specific issues which affect my part of the country, and which were not dealt with by the Chancellor. I refer here to the

  1099
  expansion which we all hope to see in our country and in East Anglia as much as anywhere else. During the nineteenth century East Anglia was an economic backwater, but in recent years a number of important changes have taken place there. One such change is the rapid increase in the volume of imports and exports through the East Coast ports. Perhaps the hon. Gentleman will now understand why I regretted the absence of the hon. Member for King's Lynn. I propose to refer to King's Lynn, among other places, and it would have been better if the hon. Gentleman had been here to hear what I have to say about his port.
  Mr. MacMillan: Did the hon. Gentleman give my hon. Friend notice that he proposed to refer to his port? That is the normal courtesy. The hon. Gentleman must not make special rules of courtesy for himself.
  Mr. Griffiths: I think that it would be better if we did not bandy these Parliamentary niceties back and forth. I wrote to the hon. Gentleman, but I have no means of knowing whether he received my letter. If he did not, his absence is understandable.
  During the last five years we have seen an explosion in the volume of trade through these East Coast ports. In King's Lynn, for example, there has been a several-fold increase in imports and exports; in Yarmouth a four-fold increase; and in Ipswich and Felixstowe a similar increase. As the Port of London becomes more and more congested, and as exporters find that their goods are often delayed there for long periods, they are beginning to prefer to send their goods through these East Coast ports to the European market.
  When the Chancellor looks at his whole economic policy, I ask him to consider in particular the effect which the 15 per cent. increase in tariffs will have on the trade of these East Coast ports which have reached the point of beginning to invest in new equipment, in new wharves and in new ways of handling ships, which will benefit not only East Anglia but the country as a whole. I ask the Chancellor to appreciate the effect which this increase will have on the development potential of this area.
  1100
  Along with the growth of the ports in East Anglia, many new modern industries have been introduced there in the last few years. I shall not weary the House by listing them, but as hon. Members who represent East Anglian constituencies know, a great deal of new and modern industry has come into this region. We in East Anglia have some advantages, because if we wish to build new towns we do not first have to clear away the slums and the debris of the nineteenth century. As a farming area, we can start from scratch.
  Equally, if we want to bring in modern industries, we do not first have to get away from the methods of yesterday. We can start in the age of electronics and modern methods. We do not have the problem of getting rid of the old methods of yesterday. Therefore, we are apt to get a bigger return on investment because we do not have to dispose of the debris of yesterday.
  East Anglia's third advantage is more a prospect than a fact. It is possible that at some stage in the not too distant future we shall find oil or natural gas in the North Sea. I am sure that it is far too early for anyone to buy shares in this venture, but the mere possibility of discovering those products has brought new technicians, new experts and new investment into our area.
  These three things—the growth of the ports, the introduction of modern industry and the possibility of oil being discovered—have given to East Anglia recently quite a new zip; that is the best word to describe it. The area is progressing. I think this is important to our whole country and not simply to any one region. I want to ask the Chancellor and the Secretary of State for Economic Affairs to give consideration to designating East Anglia as one of the new regions that the Government have spoken about all this year.
  I am worried, as many of my constituents are worried, by some of the remarks made by the Secretary of State for Economic Affairs during the election campaign. He is reported to have said, and I believe I am quoting exactly here, that the Labour Government would scrap the South-East Survey. I hope that he did not say that, but I wish that I could get from the Chief Secretary this evening some understanding of this. Does

  1101
  the Labour Government intend to scrap the South-East Survey? We want to know. The reason we want to know is that the economic investment policies in our particular area of the country are conditional upon a number of assumptions that were made in that South-East Survey. The town plans of Bury St. Edmunds, of Newmarket and of these ports I have been speaking about are conditional upon the expectation that the survey aroused among our people.
  For our future planning purposes, I think we are entitled, when the Government has had the time which it must have to consider all these things in detail, to know what their intentions are about East Anglia. I would like to commend to the Government the thought that if there are to be regional councils and regional planning boards for certain areas we in East Anglia are entitled as a natural region of this country to have some clarity of the Government's intentions there. I would like to ask the Chief Secretary to give thought to this problem and perhaps answer it when he comes to speak.
  I want—very briefly because I have taken up the time of the House—to return to the Budget proposals themselves. With the greatest respect, the one thing that struck me more than anything else is that the Chancellor like other Government spokesmen, began with what I am bound to describe as their alibi. They first of all produce this story about the £800 million balance of payments deficit which may be £700 million, and in any case includes several hundred million pounds on capital account being loaned overseas. I have certainly not heard from hon. Gentlemen opposite that they want to discourage this country's investments abroad. They seem to preface every new proposal in this House with the alibi that we have this problem of balance of payments. But with the greatest respect, the measures which the right hon. Gentleman produced this afternoon, with the exception, I admit, of the 15 per cent. tariff, were measures of a social character. They did not arise out of the balance of payments problem and yet hon. Gentlemen maintained that they did.
  It is perfectly clear—and I give hon. Gentlemen opposite credit for this—that they gave certain undertakings in their
  1102
  election campaigns, as did hon. Members on this side, that there was to be an increase in pensions. I am glad to see that this increase in pensions has been brought before the House. But let us not pretend that this is something to do with the balance of payments problem. It sprang out of the fag-end of a speech that started off with the balance of payments problem.
  Hon. Gentlemen must realise that this sort of thing will not wash. The social improvements that have been brought in by the Chancellor this afternoon are fine and we all welcome them, but it is not necessary to tag them on to some argument about balance of payments. This is an entirely different subject.
  Mr. S. Silverman: If the hon. Gentleman will forgive me. I am sure he would concede that to get an equitable incomes policy has a direct bearing on repairing our economic difficulties. Does he consider that we could get an equitable incomes policy without beginning first where my right hon. Friend began in his speech by dealing with those who are worse off? Does not that have a direct bearing upon getting an equitable incomes policy?
  Mr. Griffiths: The hon. Gentleman frequently intervenes in the House and seldom without interest on all sides, but, with respect, I would say that all economic questions have a bearing one on the other and economic and social matters in the long term are inseparable. But I am simply trying to draw this distinction—that the Government Ministers, again and again, have dragged out the balance of payments problem and tried to tie it up with almost every single thing they have said. Quite honestly, that is politics; it is not administration. They bellow, "£800 million," as though they have found some wonderful new slogan, but it has nothing to do with the nature of the measures they brought in today.
  My objection to the whole attitude of the Government in the last few days of debate on the economic situation is that they seem to have this basic thought—that the State shall give and the State shall take away and blessed be the name of the State. It is there more than anywhere that we on this side of the Committee differ from hon. Gentlemen

  1103
  opposite. The important thing is simply that we all want expansion and we all want the modernisation of our country. I do not believe that hon. Gentlemen would disagree with that. This is common ground. The difference is, what is the best way of going about it?
  I would say to hon. Gentlemen, particularly to those sitting on the Front Bench, that the expansion of Britain is not something that takes place between the in-tray and the out-tray of Government Departments. It is a much more complex matter. I would have said to hon. Gentlemen that the way in which the country grows is by the individual decisions of hundreds of thousands of builders and contractors and engineers and firms all over the country. It is simply not possible, as we have seen in the Soviet Union and elsewhere, for all decisions to be made at the top and to be handed out on a plate. It is to me very dismaying that for the few weeks this Government have been in office, this conviction that they have all the answers and that they know best and are going to solve everybody's problems has led them to wear the character—I am sorry to use the word—of arrogance.
  What have they done? They have broken the pledged word of this country to the European Free Trade Area; they are on the point of breaking the pledged word of this country to the French on the Concord project. These are two cases where this country, which has a long reputation for keeping its word, has been cheapened by this Government within three weeks, and I am ashamed of it.
  I want to end as I started, by welcoming the improvements that have been made in the old-age pensions in this Budget and to say again that I am convinced that if a Conservative Government had been returned these improvements would have come, too. So we are on common ground.
  Mr. Arthur Lewis: Why did not your party say so?
  Mr. Griffiths: We said so. I would ask the Government to recognise that in giving with the one hand it is taking away with the other. It is taking away,
  1104
  particularly from young families, that opportunity to have a margin between their income and their expenditure which allows them to save perhaps for a new house or the goods they want in it. After they are confronted with higher taxes, higher costs—because inevitably these measures must mean higher prices, and higher bus fares—they are going to carry a heavier burden. No one grudges the improvements for older people—we welcome them—but I ask the Government to recognise that there are many young people in this country on whom we must depend very much for the enterprise and expansion which we need and they are being driven into the ground. To that extent, while I welcome part of the proposals this afternoon, I very much regret the rest.
  The Deputy-Chairman (Sir Samuel Storey): Mr. Idwal Jones.
  7.20 p.m.
  Mr. J. Idwal Jones rose—
  Mr. Maxwell: On a point of order, Sir Samuel. I wonder whether you would guide a new Member. The hon. Member promised me that he would explain to me why he voted against the money to pay for old-age pensions and he has not kept his promise—
  The Deputy-Chairman: Order. There is no point of order arising on that.
  Mr. Eldon Griffiths rose—
  The Deputy-Chairman: Order. The hon. Member cannot pursue it now, I have already called another hon. Member. Mr. Idwal Jones.
  Mr. Jones: I think it would be correct to say that the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) differs from me fundamentally in his outlook.
  Mr. Arthur Lewis: Thank heaven for that.
  Mr. Jones: It may be of interest to know that although I have never visited King's Lynn I have an historical interest in the place because, though it may be surprising to hon. Members to learn this, the first Welsh-English Dictionary was brought out in King's Lynn by a very famous Welshman who

  1105
  was known in Wales as Dr. William Richards of Lynn. With that brief introduction, I should like to say—
  Mr. R. E. Winterbottom: It shows how miserable he was in King's Lynn.
  Mr. Jones: —about this autumn Budget that it is not a new thing. In the story of post-war Governments we have had several autumn Budgets after a General Election. We had one after the 1955 election and after the 1959 election. There is nothing exceptional in the procedure. Had the election been won by the party opposite, no doubt there would have been a Budget introduced this afternoon by a Tory Chancellor.
  There was a fundamental difference in the approach of the Chancellor this afternoon compared with previous Chancellors we have had during the last 13 years. There was a new approach and a new purpose. We on these benches are very proud of the new approach and the new purpose behind it. The present situation is understood generally by all, although the hon. Member for Bury St. Edmunds hardly accepted it. Fundamentally, the problem is one of balance of payments, and we cannot avoid that situation. We have a deficit of between £700 million and £800 million. We need about £400 million to £500 million credit in order to feel that our economy is safe. That is the problem facing the present Government, and it has faced successive Governments for the last 13 years. But at last we have had a new approach, different in method and purpose. It is an approach long overdue for the welfare of this country.
  Had the party opposite been returned to Government at the General Election, there would this afternoon have been a Tory Chancellor introducing his Budget and applying the same traditional remedies and relying on the same monetary controls, Bank Rate, credit squeeze, Purchase Tax, regulators and so on. For the last 13 years we have seen an undue reliance placed on monetary control based on an unlimited faith in the efficiency of the Bank Rate. Such a policy Las been adhered to too tightly and too rigidly during the last 13 years. When in Opposition, we protested against that policy because it was too similar to the policy pursued after the First World
  1106
  War when Chancellors clung to the gold standard. They clung to a theory which did not meet the requirements.
  In the inter-war period the ordinary man in the street knew that there was something radically wrong in the theory of a gold standard which was meant to strengthen the £ but which sent him to the unemployment queue. That is the same sort of position which we have been experiencing during the last 13 years. Successive Chancellors have clung rigidly to the idea that what was necessary and essential was to strengthen the £. In order to do so they adopted monetary techniques. But with the strengthening of the £, in each case we experienced a stagnated economy. No hon. Member present can challenge that statement—[Laughter.] Hon. Members may laugh, but this country is last in the queue for economic expansion simply because Tory Chancellors have stuck too rigidly to the monetary controls in our economic affairs.
  Mr. Eldon Griffiths rose—
  Mr. Jones: No, I cannot give way. The hon. Member had his time and now I want mine.
  As the Bank Rate rose so did the financial burden of the Treasury and the burden of local government expenditure. So did the burden on the ordinary household. Each decision to raise the Bank Rate, to apply the credit squeeze and monetary techniques, distilled itself through the entire economy, and successive Chancellors in the last 13 years were faced with the dilemma that as the £ was strengthened the economy was weakened. No hon. Member opposite can challenge that statement. The strength of the £ was inimical to the strength of the economy and it did not make sense. Nor did it strike successive Chancellors that a new and alternative approach was possible in order to bring together the economic policy and the monetary policy to work in co-operation with each other and so create a sound economy.
  We on these benches know—we are not ignorant of economics either—that there is no real foundation, no lasting foundation, for a strong £ except a strong economy. That is where we stand, and that is what we found this afternoon. We have had a new approach, and that

  1107
  is the significance of this Budget. It seeks to strengthen the economy and to expand it; to close the gap between exports and imports; to strengthen sterling by strengthening the economy. We should not be in our present condition regarding imports today had we had a more effective Government policy to balance and expand the economy during the last 13 years. Today we are importing manufactured goods which we could manufacture in this country had we planned our economy on more reasonable and rational lines during the last 13 years. As a short-term measure, we believe that the 15 per cent. surcharge will help. It is to be imposed on all imports other than foodstuffs and raw materials. It is not a form of protection, as the Chancellor made quite clear—[HON. MEMBERS: "What is it?"] I will tell hon. Members.
  The Chancellor said this afternoon that there would be control if there is any increase in prices. Protection is a guarantee for increases in prices; that is the very basis of protection and of tariffs. We are buying from abroad on a scale we cannot afford. Whether other countries approve of our policy or not, we cannot keep on sinking deeper and deeper into debt. Nor can we carry the prosperity of other countries on our own backs. The time has arrived for us to look after our own prosperity and the welfare of our own people.
  There is the proposal to increase incentives for exports. For 13 years we have seen attempts made, by Purchase Tax and other regulators, to reduce home demand on goods in the hope that that would release more goods for export. That was the theory. Events have not proved that the theory was sound. We need an export drive, an incentive to export. Provided that the right incentives are given, increased exports and sales on the home market need not be inimical. Indeed, with the right incentives we can expand the markets at home and abroad and in that way increase our national income. That, I say again, is a new approach, an approach to strengthen our economy.
  The Guardian of 27th October had some interesting things to say:
  "City reaction favourable. Good day for sterling."
  1108
  We were assured that there were
  "signs of confidence in the Government's intentions to maintain the existing rates and this was reflected in substantial foreign buying of Government securities."
  Hon. Members opposite may laugh, but people who are interested in our economy recognise that the Chancellor is moving along the right lines.
  There is another characteristic in the Budget. The Leader of the Opposition, speaking on the Gracious Speech, said this:
  "I called the Socialist election manifesto a menu without prices. The Queen's Speech is neither a menu without prices nor even a menu. It is a sort of half-hearted advertisement for the restaurant and that is about all. It is our object to see that our people are not choked by the fare." —[OFFICIAL REPORT, 3rd November, 1964; Vol. 701, c. 62.]
  That observation merits examination in the light of the Budget proposals. We know about Tory autumn Budgets since 1951. They were without a single exception not menus without prices but prices imposed without a menu and without a meal. In 1953 prescription charges were imposed. In 1956 they were increased to a shilling per item. In 1959 they were further increased to 2s. per item. The prices were imposed. The meal did not follow. Purchase Taxes were imposed. Higher prices were imposed for the same goods. The Bank Rate was increased.
  Mr. William Clark rose
  Hon. Members: Sit down. The hon. Gentleman has only just come in.
  Mr. Jones: The Bank Rate was raised, which increased the cost of living. Prices were increased with nothing in return. Health charges were increased, which meant a charge of £63 million more on people who could not afford it because they were ill. It meant at the same time £82 million as a gift to Surtax payers. Those were the prices. The post-election Budgets were prices without a meal. They were comparable to a restaurant which took the price but did not provide the meal at the end of it.
  The Leader of the Opposition admitted, I am sorry to say, that his job, as he saw it, was to see that the people were not choked by the fare. The ordinary people of this country have not yet had the experience of being choked by the fare of

  1109
  social services. That may be the experience of other classes represented by hon. Members opposite. If there is any fatness in the land, we on these benches will see to it that that fatness is fairly distributed so that no one will be choked.
  The Leader of the Opposition stated that the manifesto was a menu without prices. The Budget statement this afternoon is clear—there is a meal. True, it will not come into effect until 29th March next. Many of us would like to see it implemented immediately, but we are informed that administrative difficulties are insurmountable. We know that, had there been a Tory Administration this afternoon, we would not have had a promise of better pensions for the old people.
  Mr. Arthur Lewis: We would have had a better promise but no pensions.
  Mr. Jones: The economic situation would have been made use of by a Tory Administration to increase charges of some kind or another. [HON. MEMBERS: "How does the hon. Gentleman know?"] The present Chancellor has remembered these people in the days of drab inheritance. The drab inheritance is due to the Government who went out of office at the General Election. It is time to remember these people who have been forgotten for far too long, for who are they? Those over 65 are those who went through the First World War. It was they who suffered the depression of the inter-war period. It was they who walked miles looking for work—everybody knew that there was no work—so as to qualify for the dole. It was these people who suffered and endured the Second World War. We pass through life but once. These people over 65 have had a thorny and stony path to walk along. If we are increasing the taxes of the so-called young people, who are doing well at present, they should consider it a privilege and a pleasure to contribute, thus doing something to help the people who have had a far more difficult time than they are having.
  We can say other things. I am very pleased indeed that the Chancellor this afternoon referred to a capital gains tax. It is long overdue. When the present Chancellor introduces it, it will be a substantial thing and not what we had from the previous Chancellor in 1962.
  1110
  There is to be a corporation tax as well. There are certain factors making climate, and there are certain factors making a social climate. The social climate cannot be healthy when people who earn their living through their labour are taxed, but people who make their earnings through capital gains, without any effort or labour, are not taxed. Social justice demands that this thing should be done. The Leader of the Opposition accused us of imposing taxes to secure the welfare of our people. We are going to increase the national productivity. We are going to increase the national dividend. We will reach the 4 per cent., and even higher, in the course of time. It cannot be done in a fortnight's time, as was suggested by the Leader of the Opposition this afternoon. We have not arrived yet. We are moving in the right direction. In due course we shall arrive. In the course of arriving we shall ensure that social justice is established in this country firmly, as it has never been established before.
  7.40 p.m.
  Mr. T. L. Iremonger: It gives me very great pleasure to congratulate the hon. Member for Wrexham (Mr. J. Idwal Jones) on his excellent speech. He spoke with the eloquence that one would expect from his native Wales, and I am sure that the House will look forward to hearing him again. Seriously, I was genuinely moved by the hon. Member's reference to the war disabled and especially to those who were disabled as a result of the First World War, of whom there are still a number among us. I single that out as the item in the Chancellor's proposals and announcements that gave me the most satisfaction. I have always said that I felt that the highest priority of all in social benefits should go to the widows, and I welcome the announcement made this afternoon by the Chancellor of the Exchequer. I am sure that it will be universally welcomed.
  It is, however, only fair to ask the House to recognise that the Chancellor is merely doing what both sides of the House were pledged to do if they were returned to office and I do not in any sense accept that this is some peculiar

  1111
  munificence of the Labour Administration or that the country should be particularly grateful to the Labour Party. I hope that those who have been on National Assistance will not miss the point that they are still on National Assistance and will continue to be on National Assistance and that after the complaints that were thrown at us about the fact that it was National Assistance that kept the benefits up to the minimum subsistence level, those people will recognise that the Labour Government have not increased the retirement pension to a level which enables pensioners to live on it. I hope that in future elections we shall hear no more of this.
  However that may be, the main fact sticks out that here is the first Socialist Budget and it has put taxes up, as we said it would, and that it will cause an increase in the cost of living when the increase in the price of petrol works through all commodities, as it will. One looks, therefore, with critical interest at the justification and the excuse put forward by the Chancellor of the Exchequer. It seemed to me that he was putting forward two complementary or alternative excuses. The first was that the money was required to pay for the social benefits. If that is so, what the Prime Minister said during the course of the General Election was grossly misleading. He ought frankly to say now that when he told the country that he would not impose extra taxation to give the benefits that he promised, he knew that that was not his intention. His reputation for fair dealing will have been gravely damaged by this breach of faith with the country.
  When the hon. Member for King's Lynn (Mr. Derek Page) said in his maiden speech that his predecessor Walpole campaigned in general elections in a rather different way from ours, I could not help thinking that the Prime Minister had kept up the tradition of bribes and misleadingness fairly worthily in the last election.
  Mr. Diamond: On a point of order, Sir Samuel. I do not know whether you heard the statement by the hon. Member for Ilford, North (Mr. Iremonger) in which he accused my right hon. Friend, during the course of his election campaign, of keeping up the practice of
  1112
  bribes, as I understood him to say. [HON. MEMBERS: "Political."] I do not know about political. I do not know whether you would care to comment on that, Sir Samuel.
  The Deputy-Chairman: I do not think that the hon. Member was referring to individual bribes. I think that the choice of words should be carefully considered.
  Mr. Iremonger: I am obliged to you, Sir Samuel. Any emendation that the Chief Secretary to the Treasury would like to my words to make it quite clear that I am talking about the political and electoral wholesale bribery—I am glad to see the hon. Gentleman does not jib at that—I should be willing to make. Of course, I would not suggest that the Prime Minister would be so unsubtle in his processes as to apply the kind of bribes that Walpole did.
  The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Richard Marsh): Get on with it.
  Mr. Iremonger: The hon. Gentleman, who is so very bumptious in his new office, should try to contain himself and recollect that it was his hon. Friend who intervened and delayed me, and not the other way round.
  My right hon. Friend the Leader of the Opposition said that the Labour Party's prospectus was a menu without prices. The first comment on the Budget is that we have now seen the prices. So the first justification simply does not wash. The second justification, however, is a little bit less crude. It is that these impositions of taxes were required in order in some way to help with the problem of the balance of payments. On that I would make two comments.
  First, I believe that the action that was taken to apply the import duties to try to help the balance of payments deficit was totally unnecessary. I believe that the arrangements that were made by my right hon. Friend the Member for Barnet (Mr. Maudling), expressly with the contingency in mind that we might have a serious balance of payments deficit while expanding the economy—those arrangements which allowed us to take advantage of the international liquidity which he engineered—would have been quite sufficient to have tided us over the exceptional period of demand on imports,

  1113
  which, as he explained the other day, was caused largely by exceptional factors which we need not expect to be repeated next year.
  Therefore, I do not think that these measures were necessary. They were profoundly undesirable and they have bred great mistrust of this country abroad, not only in E.F.T.A. and in the European Community, but also in the International Monetary Fund, as we very soon found out. As for the surcharges being temporary, all I can say is that I should like to hear what the Chancellor of the Exchequer says next April. These temporary things have a way of being very temporary when they start, but after a while the vested interests get entrenched, the balance of payments does not get any better, as it certainly will not under right hon. Gentlemen opposite, and we shall find that these impositions are permanently with us and that we have retaliation against us all over the world.
  Let us, however, suppose for the sake of argument that this is a valid excuse and that the balance of payments is in some way connected with this imposition of taxes. Let us follow for the sake of the exercise what the argument would be. It would be that the 15 per cent. impost on imports will limit imports and that the benefit to exporters will increase exports. That will mean, therefore, that there will be an increased demand at home, because there will be limited resources upon which purchasing power can be expended. Therefore, we shall have a situation of inflation.
  I do not agree with my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths). If one analyses it, this is not an inflationary Budget. It is intended to be, if anything, a deflationary Budget, otherwise the words "inflationary" and "deflationary" in the context of these policies have no meaning. Although inflation results in the raising of the cost of living and in increased prices, that is not a definition of inflation. It is a more subtle process.
  But if the argument is valid that it is necessary now because of the inflationary situation to decrease demand and purchasing power and that the way to do that is to increase taxation by Income Tax and the tax on petrol, I hope that when the situation is reversed and hon. Members opposite are sitting on this side
  1114
  of the Committee, and it is necessary for my party as the responsible Government to take deflationary measures, we shall have no more sneers about "Boyle's Law" and "stop-go". The fundamental economic philosophy which is being applied by hon. Members opposite is one which was consistently applied by us when we were responsible, and then it was impossible for us to obtain from hon. Members opposite any acceptance whatsoever of the economic necessity for these measures. I hope, therefore, that we shall have at least some sympathetic regard retrospectively from hon. Members opposite for comparable measures which we may in future times have to adopt.
  I was interested in the Chancellor's reference to cuts in capital investment which he rather ruefully admitted might have to be forthcoming. I wondered whether he was going to slash—I think that is the word—education or hospitals or roads or housing. I wondered which he would choose. I hope that he will have a rather more sympathetic response from this side of the Committee if he finds it necessary to cut down on the public sector than we had from his hon. and right hon. Friends.
  The right hon. Gentleman will realise that if he cannot maintain the rate of growth which the National Economic Development Council has described as desirable he will indeed have to curb public expenditure, and then he will have to make a choice and answer to the country for it. No doubt there will be a number of ingenuous excuses designed to convey that when we had to do it it was very wicked but that when right hon. Members opposite had to do it it was singularly virtuous.
  I was surprised after all the bombast that we have had over the years that we did not hear a good deal about expense accounts today. After all the wonderful promises that we had about how he was going to clean up the corrupt practices of directors and managers in industry I should have thought that this would have been the very time when the right hon. Gentleman would have applied his rigorous cleansing operation. The fact is that when the right hon. Gentleman went to his advisers in the Revenue Department, whom he rightly praised in his speech, they said that what he had been saying in the past was all bunkum.
  Mr. Arthur Lewis: How does the hon. Member know that?
  Mr. Iremonger: The hon. Member is shrewd and quite right. I do not know it. I guess it. We did not hear anything about this from the Chancellor, though we had praise for the near-miracle workers. It was no doubt the near-miracle workers who told the right hon. Gentleman that there never had been anything in what he had said.
  My objection to the Budget is the whole defensive background to the thought of the right hon. and hon. Members opposite. If there is some merit in a capital gains tax, I should have thought that it was a price well worth paying if the psychology is right that one cannot get incomes restraint and an incomes policy unless there is some form of vindictive fair shares for all. If so, it is strange that the Chancellor did not say a word about the necessity for an incomes policy. He skates very lightly over the subject. He gives the quo but he does not ask for the quid.
  The Chancellor or his right hon. Friend is going to reverse the decision in Rookes v. Barnard but he does not say anything about restrictive practices. He is going to impose a capital gains tax, but he does not say anything about its necessity and purpose, which is to get an incomes policy. He knows perfectly well that he will not get an incomes policy from the trade unions, because they think that he is a soft touch.
  I was glad to hear the right hon. Gentleman say something about savings, but I thought it curious to go about encouraging savings by decreasing the purchasing power of the people at this time. He said in his elaborate analysis that the increase in Income Tax would touch only the comparatively well-off, but he did not point out that it is not only the well-off who have to pay the increased National Insurance charge and that they are being taxed more directly and immediately than the higher income groups who pay Income Tax.
  This Budget is fully in accord with the attitude which we have seen unfolded in the first few days of this Administration. It was a fortunate and happy coincidence that before we heard the Chancellor we had an hour at the Dispatch
  1116
  Box from the Minister of Transport. When I listened to the passionate defence made of every derelict branch line by the Minister of Transport, I could not help reflecting that the Government are prepared to tax this country to pay for the maintenance of derelict railways every year more than the total cost of the Concord project which would have been a really constructive attempt to get the economy of the country into gear and moving forward in the way which it must do to solve the balance of payments problem in a way that has some real meaning. I see that the hon. Member for Buckingham (Mr. Maxwell) is about to make one of his very unmaiden interruptions. He has made more interruptions in this Chamber in three days than most people make in three years.
  Mr. Maxwell: I thank the hon. Member very much. The point about the Concord is that it employs at present in this country only 1,000 people. How on earth could the continued waste of several hundred million £s of public expenditure on an aircraft for which there is no economic or social need help the country's balance of payments or the economy?
  Mr. Iremonger: I am surprised at the hon. Member, who is rapidly becoming the Gerald Nabarro on the Government side. I am surprised that one of the most intelligent and forward-looking of the party opposite should not have considered the fundamental beginnings of this argument, which was that the Concord project was the way in for the most sophisticated kind of technological advance, in which Britain is ahead of the United States and can hope to lead the world for a generation, thereby making a really constructive contribution to solving the balance of payments problem. It is not a matter of 1,000 people employed here and there or a matter of £1 million or even £100 million. It is a matter of the way in which British industry can make a constructive effort to solve the eternal problem of a small island which has nothing but its skill to export. Here in the Concord, at comparatively trivial price, was the opportunity of putting ourselves on a sound industrial, expanding basis.
  Mr. Arthur Lewis: How much?
  Mr. Iremonger: If the sum is x it is a much better bargain than half that

  1117
  money spent on Dr. Beeching's closures. This is the position which we on this side of the Committee take. It is because the Government have no conception of a constructive approach to the economic problems of the country that I regard this Budget as a futile exercise, and in so far as it is trying to ingratiate itself with the electorate it will soon, and rightly, peter out and the bitter fruits of it will be eaten in the years to come.
  8.0 p.m.
  Mr. R. E. Winterbottom: This Budget cannot be described as futile. It will not be so described by the old-age pensioners who know that, in March of next year, they will have an increase in their pension of 21s. for a married couple and 12s. 6d. for a single person. In passing, I can tell my hon. Friend the Member for Buckingham (Mr. Maxwell), who was likened by the hon. Member for Ilford, North (Mr. Iremonger) to Sir Gerald Nabarro, that he has reached distinction in the first fortnight of this Government. If my hon. Friend is in this party anything like the live wire Sir Gerald Nabarro was in the Conservative Party, we shall welcome him with open arms. In the Conservative Party Sir Gerald was someone to take notice of, and it is no gibe to liken my hon. Friend to Sir Gerald Nabarro.
  Mr. Iremonger: I am much obliged to the hon. Gentleman for clarifying the point. I have great affection and admiration for Gerald Nabarro, and I regard it as a compliment to draw the comparison.
  Mr. Winterbottom: I turn now to some of the points which have been made by hon. Members opposite. The hon. Member for Walsall, South (Sir H. d'Avigdor Goldsmid), who advertised corsets and who, apparently, lives in the Victorian age of economics and has never heard about rollers and slimming diets, was very puzzled by the Chancellor's proposals because he could not understand how there could be a Chancellor of the Exchequer in this country who actually carried out his pledges to the electorate. This is something unknown among Conservatives. They make pledges and promises which are never honoured by a Conservative Party or Government. I could take countless examples from my long experience in political life, from
  1118
  Stanley Baldwin right up to the right hon. Gentleman who ceased to be Prime Minister a few weeks ago.
  Mr. W. Clark: The hon. Gentleman says that the Chancellor has kept his pledges about pensions, the welfare services and so on. Another of his pledges was that there would be no general increase in taxation. Why has he not fulfilled that pledge?
  Mr. Winterbottom: People have to wait to come to a bridge before they can cross it. My right hon. Friend the Chancellor was in the unfortunate position of not knowing precisely what our economic situation was at the time of the election campaign. He received full knowledge of it only recently as the information in his Department was revealed to him.
  One hon. Member talked about an increase in prices as a result of what the Chancellor proposes to do. There will be no increase in prices caused by action of the Chancellor or his supporters on this side of the Committee. Any increase in prices has been due to the neglect, inefficiency and dilatoriness of the previous Government. Let there be no mistake about that. If ever there was a Government who deliberately shed their responsibility as regards the country's economic situation while knowing full well about it, it was the last Tory Government.
  Let us consider the course of events over the past 12 months. Even before the last autumn Budget, the papers were full of reports and comment about the seriousness of our economic situation. It was constantly reported that the cost of imports was exceeding our export earnings. These matters were analysed very closely, showing that in many cases, under the free enterprise system we had, many of those imports need not have been imported at all. When the autumn Budget came last year, with a serious economic situation facing us, what did the Chancellor do? He temporised, concentrating on beer, tobacco and bingo.
  Mr. W. Clark: The hon. Gentleman keeps talking about an autumn Budget last year. There was no autumn Budget last year.
  Mr. Winterbottom: I am reminding the Committee of the seriousness of our

  1119
  economic situation at that time to justify my accusation of indifference, apathy and neglect, almost criminal neglect, on the part of the last Tory Government.
  Any person viewing that situation objectively, even without any political bias at all, with knowledge of a deficit of between £700 million and £800 million, cannot but conclude that the full impact of it must have been brought home to the Government of the day before the election came. I believe that it will be writ large in history that, whatever were the failures of the last Government, and they were manifold, the greatest failure of all was in not revealing to the country the real economic position of Britain during the past 12 months.
  It ill behoves hon. Members opposite to criticise the Chancellor now for facing the real economic situation and, at the same time, facing the promises, as far as we can, that we have made to the electorate. The Chancellor has done this fairly and frankly. From my point of view, this was the situation. I will put the position as I see it, in a way which, I hope, will not be misunderstood and I preface what I am about to say by affirming that I am a loyal supporter of the Government.
  I believe that what they have done is right and the only thing that could be done to meet the present economic situation, but I have questioned in my own mind whether the Prime Minister might have taken another course, whether, on the revelation of all that has come to his notice in the past fortnight, he might have gone immediately to the country and given the people the true facts. I am sure that if he had the next election would have depleted the ranks on the benches opposite almost to oblivion. [Laughter.] That is as I see it and I make no apology for saying it, nor do I apologise for saying that what has been proposed by the Chancellor, as the only alternative to that course, is the only logical thing to be done and the only thing that can really be understood by the British people.
  The Government are facing up to their responsibilities honestly and squarely and at the same time honouring the promises that they made. It ill behoves hon. Gentlemen opposite to jibe because a
  1120
  Chancellor has honoured his promises. I was taught in my Methodist upbringing that anyone who made a promise, particularly to a child or old person, and ratted on it was condemned to eternal perdition. That is putting it in the extreme, but it expresses what I believe over the Chancellor's action in facing the facts and at the same time, while knowing the economic situation, honouring the promises that we have made.
  The Chancellor made clear the relationship between the increase in pensions and the new scales of the National Assistance Board. A question was put to the Chancellor in a very fair and frank way, and the Chancellor replied clearly and emphatically. There can be no ambiguity about it. The National Assistance Board scales will be raised to the same extent and at the same time as the increase in pensions. That may be only a minor matter, but it is an important reform. During my experience as a Member of Parliament, having different dates for increasing pensions and National Assistance scales has merely added to the confusion in people's minds. The fact that the two things are now to be done simultaneously is a long overdue reform.
  That is not the end of the story. I believe that when the full economic possibilities have been thoroughly examined and the matter has been related to the graduated scheme which will have to be introduced, what has happened today will be surpassed by what will be done then. I am proud of this, because, although Britain is up against it and we have these economic problems, it remains true that any Government who neglect the old people or the young are undermining their own power and defeating their own economic objects. So I am proud that despite our difficulties, we are facing up to the problem.
  One problem that I want to mention has caused me great worry all my life. I was brought up in a Lancashire home. I commenced work at 12 years of age as a half-timer in a cotton mill. Most of the cotton concerns in those days were based upon a certain share capital—mostly at 5s. per share, and most of them with half-a-crown paid up—and the rest was secured by loan money from the people of the district. Huge lists of loans required were to be found in the newspapers. I remember a period of the

  1121
  war when there was an excess profits tax and there were legal restrictions on the sale of those shares on the market. I remember the boom which took many of those 5s. shares to prices of £10, £15 and £20. The boom in the Lancashire cotton industry was equivalent to the gambling which has taken place in the last few years by the Cottons and Clores.
  Then followed the result of that overcapitalisation, which was the start of the ruin of the Lancashire cotton industry as we knew it. One thing which I believe the Chancellor will do when he proposes a capital gains tax is to deal with the type of inflation mentioned by the hon. Member for Ilford, North—demand inflation, the pursuit of goods by too much money. One of the failures of this country for a long time which has helped to price us out of the market has been that many of our industries have suffered from this type of inflation, with costs pushing inflation and a demand for more and more production for the same dividends. When this is related to wages, one can say that those on the bottom rungs of the ladder have suffered accordingly.
  I look forward to the time when the Chancellor and his right hon. and hon. Friends table a proposal for a capital gains tax, even though it has to take into consideration the problem of capital losses as well, for I believe that that will be one of the most fundamental checks against the type of inflation which has helped to ruin Britain and bring us to the economic situation from which we suffer today.
  8.17 p.m.
  Mr. R. Gresham Cooke: We cannot let the hon. Member for Sheffield, Brightside (Mr. Winter-bottom) get away with one of his statements. He gave the impression that the Chancellor in the Conservative Government had been hiding things before the General Election. Month by month the Trade and Navigation Returns came out, and month by month the balance of payments figures were published on the day on which they normally appear. I was asked questions about these things during the election campaign. I think it is quite untrue to say that the former Chancellor was hiding these figures in any way.
  Mr. Arthur Lewis: Perhaps the hon. Gentleman will look at the centre page
  1122
  of today's Daily Mirror, where he will find an almost day-by-day account of statements by the ex-Chancellor and the ex-Prime Minister saying that there was no balance of payments problem and no crisis and that there would not be a crisis.
  Mr. Gresham Cooke: I have not seen the Daily Mirror. What I was saying was that the figures were fully revealed to the public.
  What has to be said over and over again today is that three-quarters of the Budget has nothing to do with the balance of payments problem. The sum of £460 million has been brought forward by the Chancellor as new expenditure on pensions, prescription schemes and so on. This is purely a straightforward transfer of income. I would describe the Budget as a perfectly normal social democratic one.
  Mr. Winterbottom: Does the hon. Gentleman mean that he approves of the Budget?
  Mr. Gresham Cooke: I was about to say that only a small part of it is connected with the balance of payments.
  Mr. Winterbottom rose—
  Mr. Gresham Cooke: I shall not give way.
  It is perfectly obvious, whatever one's definition of inflation, that the Budget will put up costs, both through the increased tax on petrol and through the increased cost of National Insurance stamps. There will be demands for increased wages to cover the extra cost, while a large number of young married couples, living to the limit of their income, will tell their employers that the increase of 6d. on the Income Tax means that their income is not quite big enough. These are the facts of life.
  One aspect has been rather hidden from us and I would like the Financial Secretary to deal with it. This concerns Resolution No. 2 which says:
  "… income tax for the year 1965–66 shall be charged at the standard rate of 8s. 3d. in the pound, and, in the case of an individual whose total income exceeds £2,000, at such higher rates in respect of the excess as Parliament may hereafter determine."
  Does that refer to an increase in Surtax in the forthcoming Budget?
  The Financial Secretary to the Treasury (Mr. Niall MacDermot): I will

  1123
  put the hon. Gentleman out of his agony. The effect of that formula is merely to keep the position open.
  Mr. Gresham Cooke: It mentions:
  "… such higher rates in respect of the excess as Parliament may hereafter determine."
  As I read it, Surtax may go up as a result. That is one very good reason to have voted against the Resolution, particularly as the Chancellor did not explain it.
  We should also look with great care at the question of the corporation tax, which has many attractive features but also one big difficulty—that tax will now be levied on corporations at a different rate of Income Tax from the rate at which Income Tax is levied on individuals. Therefore, when a dividend is transferred from a company to an individual and as, I believe, tax will not be deducted at source as it is at the moment, in effect there will be double taxation of dividends—paid first by the company and then by the recipient.
  I want to re-examine the economic position underlying the Budget. The whole excuse for the Budget is the balance of payments. Last week I was at Strasbourg for the meeting of the E.F.T.A. Parliamentarians and the Council of Europe, to which I am a delegate. On the very first day I felt the full anger of seven nations, and I felt it the next day from 17 nations, against the tariff surcharge. Rightly or wrongly—my colleagues may think I did wrongly—I thought that, for the prestige of the country, in view of the cries of "perfidious Albion" and other pejoratives against us, I had better come to the rescue of the British Government.
  I felt rather like the admiral in Washington at the end of the war who, when he heard that the Labour Government had been elected in Britain, said, "Well, never mind. My country Right or Left". I therefore carried out the somewhat unenviable task of putting to the nations of Europe the case for the tariff surcharge. I explained that the country had been greatly preoccupied with the General Election and that this no doubt had aggravated the position. I admitted that there was a temporary import problem.
  Mr. Arthur Lewis: I have a quotation here for the hon. Gentleman. His right hon. Friend the Leader of the Opposition said that there was no problem.
  Mr. Gresham Cooke: The facts and figures were produced in the Trade and Navigation Returns. These show that while our exports to E.F.T.A. countries went up 12 per cent.—quite a respectable figure—imports from them had gone up 37 per cent. Again, while exports to the Common Market had risen by 3 per cent. imports had gone up by 22 per cent.
  I asked what, if there were a serious temporary position, as was claimed, the remedies were. One remedy could be devaluation of the £, but I claimed that that would be disastrous for Britain, E.F.T.A. and the sterling area. Another remedy would be to put up the Bank Rate and to bring in hire-purchase restrictions. But I pointed out that the Labour Party was committed against that. The new Government were committed to continuous full employment and continuous expansion. [HON. MEMBERS: "Hear, hear."] We shall see in a few months' time.
  I explained that the policy of bringing in import controls and reintroducing the machinery of import controls would take a long time to bring about and, therefore, might take a long time to take off. That would not be an easy remedy. I finished by saying that possibly the surcharge was at least quick—quick to put on, and quick to take off by a stroke of the pen.
  Finally, I said—and I expect the Government to reinforce this tomorrow—that the surcharge would be strictly temporary and that we should get back to a normal pattern of trade in a few months' time—I hope by the spring. I think that what I said helped to assuage the anger of some of the delegates.
  Two days later the Economic Secretary to the Treasury came out to Strasbourg and made exactly the same speech. I think that Labour Ministers nowadays are very quick to learn and should be congratulated. Perhaps the Financial Secretary will pass that compliment on. As I faithfully supported the Government on that occasion I shall faithfully report

  1125
  what our E.F.T.A. and other European friends said about the surcharge.
  They said that there had been no consultation, and thought that a breach of faith. They said that it was a breach of agreement for there is no provision in the Treaty of Stockholm for surcharges. They said that Britain is the spine of E.F.T.A. round which smaller countries revolve and that many small firms had been led into making trading agreements with us on the strength of the Stockholm Treaty and had now been seriously let down.
  The Europeans said as a whole that this was a breach of the spirit of Europe—"perfidious Albion"—and would be aggravated if the agreement on the Concord were broken as well. Certainly, we are not very popular in France. I heard that in some public houses in France bartenders were chalking on their boards at the back "whisky à gogo" and then crossing it out and putting "vinrouge" underneath, following that with a surcharge against whisky.
  Apart from the polemics of this matter, we must put before the public our export-import position in all its nakedness. I have been studying the Trade and Navigation Returns for the first nine months of the year. It is not true to say, as the Chancellor of the Exchequer did, that our exports have been drifting downwards. Our exports made a respectable increase, 4·8 per cent. in the first nine months of the year compared with the corresponding period of last year.
  Of course, we all know that N.E.D.C. has said that exports should be increased by at least 6 per cent. to permit a 4 per cent. increase in trade every year. Imports have risen by 16 per cent. But let us consider that figure. Food imports have increased by 10 per cent., or £100 million, which means better living, which has to be paid for. Raw material imports increased by 15 per cent., at £106 million, a stocking up before the General Election, and so on. Fuel imports were up by 7 per cent. and chemicals, strangely enough, by 37 per cent. Imports of machinery also went up by the large amount of 34 per cent.
  Our largest section of exports, machinery and transport equipment, including ships, aircraft and machine tools, and so on, bringing in £1,370 million, a
  1126
  third of our exports, increased by £26 million, only 2 per cent. Taking into account the export of motor vehicles, which increased by £37 million, the exports of the engineering section of British industry as a whole actually went down. Imports of manufactured goods classified by materials, steel, and so on, increased by 8 per cent.; chemicals, 12 per cent.; miscellaneous, 13 per cent.; but mineral fuels and coal and oil, have actually gone down £2l million. The net result of the picture is that while imports have increased by £500 million, exports have increased by only £117 million.
  What are the remedies for this position? Assuming that the tariff surcharge is removed by the April Budget—and I suggest that that is the very latest date if we are not to continue to offend our E.F.T.A. friends and our friends in the Commonwealth and if we are not to run into objections under the G.A.T.T. and the Kennedy Round—the Government must take further remedies.
  The last Government took severe action against the employers over restrictive practices. They brought in resale prices legislation which caused a great deal of anxiety among employers and was one of the items which led to the downfall of this party, making a difference of 200 or 300 votes in many constituencies. With that legislation, the then Government tore up many agreements in British industry, including, for instance, the heavy steel agreement.
  We are, therefore, entitled to ask the present Government to ask the Trades Union Congress to look into restrictive practices on the trade union side. For instance, let there be an examination of the over-manning of fork lift trucks on the docks and so on, and demarcation disputes. Only the other day I heard that in the Manchester railway yards the National Union of Railwaymen was recently insisting that the driver of a four-ton lorry should have a mate, a practice not heard of in the rest of the transport industry. I ask hon. Members opposite who are interested in union affairs to take up these matters with their unions to see what can be done in the national interest.
  Last July, the Conservative Government set up the British National Export Council with five councils affiliated to it. Obviously a great deal of use can be made

  1127
  of these bodies. The result of the 1½ per cent. tax rebate on items such as notepaper for exporting firms has resulted in importers in other countries asking our exporters for a discount of 2 per cent. to make up the tax rebate.
  I come now to the incomes policy. The First Secretary has asked the T.U.C. by next spring to co-operate in agreeing to an incomes policy. I gather that he said in much more detail what we have been trying to say for the last three or four years, that he spelled it out to the T.U.C. I understand that he also asked the T.U.C. to adopt a guiding light of a 3 to 3½ per cent. annual wage increase, exactly the figure we have always put forward as the guiding light. Good luck to him! In return, the T.U.C. wants to know what is to happen about prices. It had the first answer yesterday with postal rates and another answer today with petrol—both going up.
  What will happen to Government-controlled prices, things like railway season tickets and electricity? Are they to be subjected to the price review body which the Government are to set up? In all fairness, this body must examine not only the prices of private enterprise but those of Government-controlled bodies such as electricity and gas boards.
  If the incomes policy were not successful by next spring, the next Budget would have to be a deflationary one. It would have to bring in either a higher bank rate or more restrictions, or there would have to be massive taxation. It is, therefore, all the more important that the First Secretary should succeed with his trade union friends in his search for an incomes policy.
  I want to make two constructive suggestions which I hope will help. We should intensify the search for our own raw materials. Two or three weeks ago I was in the South of France and I had the opportunity of seeing the natural gas establishment at Lacq, near the Pyrenees. I had never seen it before and I was immensely impressed by it. The French have dug down 9,000 or 12,000 feet and have found enough natural gas to supply 7 per cent. of their energy requirements in the next 20 years. They are supplying 50 per cent. of their industrial gas. In addition, they have obtained from the gas 250,000 tons of
  1128
  chemical by-products which they are exporting.
  We have the search going on in the North Sea, but this interesting point was made to me by one of the technicians. The Dutch came across their supply of natural gas by looking for salt. There are salt mines near Lacq in France. I wonder whether we have made sufficient and exhaustive researches in Cheshire and the Pennines for our own natural gas supply. Have we drilled low enough? I have written to the Minister of Power on this point—I do not know whether he should pass the inquiry on to the Minister of Land and Natural Resources—because if we can increase our supply of home raw materials our burden will be very greatly lessened. The growth in the French economy in the last few years is practically entirely due to the discovery of natural gas.
  My last suggestion is directed to the Chancellor of the Exchequer and the next Budget when the right hon. Gentleman may have to drain off demand by making savings more popular. We should look at the idea of a unit trust run by the National Savings Movement. If the Financial Secretary will look into the pigeonholes at the Treasury he will find some Conservative ideas. There was a pamphlet on industrial investment certificates and a paper called "Every man a Capitalist" which was published a few years ago. [Laughter.] Yes. Some quite good ideas have been put forward. This would not be backdoor nationalisation or a political move. There could be a national unit trust carefully controlled by an independent body of trustees, say, with a limit of investment by those trustees in any particular company.
  As I am deputy chairman of the Wider Share Ownership Committee, in company with Lord Shawcross I went two or three months ago to see Lord Mackintosh, the Chairman of the National Savings Movement, to put proposals to him. I think that they were sympathetically received and they might be introduced in connection with contractual savings, because if the National Savings Movement ran a unit trust it would provide capital for British industry, would be a hedge against inflation and would be a modern and attractive new savings scheme well worth consideration for adoption, possibly, in the next Budget.

  1129
  What will the next Budget be? I hope that it will not be a mere redistribution of income, because the Chancellor of the Exchequer must find a great deal of money. As he said, there is an overall deficit of £450 million. The new taxes which he has introduced will bring in £213 million, so that a great deal more money must be found in the next Budget.
  Unless the Chancellor of the Exchequer can solve the problem of an incomes policy and the other matters which I have raised, he will be in serious difficulty. I hope that he will adopt one or two of the ideas which I have put forward, particularly the one about a national unit trust.
  8.40 p.m.
  Mr. David Ginsburg: I listened to the constructive speech of the hon. Member for Twickenham (Mr. Gresham Cooke), as I always do, with very great interest. I listened particularly to his earlier comments about the import situation, with which I fully agree. I only regret that some of his hon. and right hon. Friends did not listen to his advice which, no doubt, he was proffering earlier about the situation, because I think that the national position today would have been a lot easier if people had hearkened to what he said.
  I should like to begin by complimenting my right hon. Friend the Chancellor on his Budget, in particular with regard to its humanity. Speaking on behalf of my own constituents, I feel that there will be many thousands of people, having regard to what is proposed, who will bless the day that the Labour Government were returned to Westminster. Secondly, I should like to compliment him on his economic judgment. I do that a little more tentatively, because I am always rather more of an expansionist than the Treasury sometimes is. I was glad to notice that he struck a very fine balance in his Budget. He said that for the financial year 1964–65 he was going to take away £32 million.
  Allowing for the fact that there will be improvements in certain social services before the end of the financial year, he is not affecting the level of demand in this country very seriously. I mention this because I think that it is right that the Committee should know, and the Government should notice, that the production
  1130
  figures are still rather static. The index of industrial production, inherited from the preceding Government, has not shown any improvement for a number of months. That is another thing which has not been discussed so far. I think that it would be rather dangerous to withdraw too much purchasing power from the economy until the Treasury Ministers are satisfied that the index of industrial production, that is, the demand for goods and services produced at home, is showing the lift that we should all like to see.
  Thirdly, I should like to congratulate the Chancellor on the vision which he showed in his forthcoming tax proposals as a move towards incomes policy. It would be premature to debate this this evening. It is common ground, I hope, on both sides of the Committee that until this problem is solved it will be very difficult to move the British economy forward in the way we wish to move. The proposals which have been outlined this afternoon should make a constructive contribution in that direction.
  Before I make some constructive comments, I want to say something about the responsibility of the last Government. When the former Chancellor, the right hon. Member for Barnet (Mr. Maudling), spoke during the debate on the Address in reply to the Queen's Speech, he suggested that his honour had been attacked. The honour of the last Chancellor is not in question. What I think is in question in this Committee are two things: first, his prudence, and secondly, his toughness. With regard to his prudence, I seriously submit that he played down the question of an economic crisis, certainly during the last week of the General Election campaign. There was talk a few minutes ago about newspaper headlines. I have a cutting from The Times, headed, "Troubles not crisis, says Chancellor". This was from The Times for Monday, 12th October. It said:
  "Mr. Maudling said at Sheffield, Bedfordshire, on Saturday: 'I have said that this country is suffering from economic problems, but not a crisis'".
  He said this on the Saturday. It should also be noted that on the Friday, the day before, there were published in The Times some very interesting figures from the Institute of Export. I saw them in my constituency, and I am sure that the Chancellor had them brought to his notice, too. These figures showed that

  1131
  manufacturing imports were up on the eight months by £312 million and that manufacturing imports, the lifeblood of this country, were up by only £137 million.
  There was a very serious situation—a crisis, let us not mince words—on the eve of the General Election. The incoming Government had no option but to take the measures which they took in respect of the surcharge. If hon. Members really criticise the surcharge—and I am not happy about some of the details—they should back their criticism with their vote, and the Opposition did not.
  My other quarrel with the former Chancellor of the Exchequer is about his toughness. I do not question his intellect. I respect it. I am sure that he knew the rough trends in the balance of payments statistics—the rough trends in imports. It is common knowledge, judging by the Press, that the former Chancellor of the Exchequer wanted a General Election last June. If he had had his way it would have given the incoming Government of the day, whatever political complexion produced by the election, the necessary breathing space and elbow room which were required in the national interest.
  It is a fact for the record that the previous Chancellor was overruled by the Prime Minister of the day on political grounds. I would only add that a Chancellor of the Exchequer—and I respect the former Chancellor—is the custodian of the economy. He is more than a party politician. Chancellors of the Exchequer sometimes have to put their country before their party. My own private feeling is that if the Chancellor felt as he did about the economy, it was his duty to offer his resignation rather than to allow the Government to go on for several months with a policy which in my submission has done very serious damage to the British economy.
  I turn to some more constructive remarks. Of course I support the Government's action over the surcharges. That is not to say that, like my hon. Friend the Member for King's Lynn (Mr. Derek Page), who made a very interesting maiden speech, and some hon. Members opposite, I have not certain detailed misgivings about the surcharge. But
  1132
  obviously something had to be done, and it was the least of all the evils.
  But I return to a theme which I elaborated in the previous Parliament and which I wish to repeat: by no means the worst problems of our balance of payments are on the visible account. It should not be imagined that measures to stem the influx of manufactured imports will alone get Britain over her balance of payments problems. What the experts call the invisible account is in serious trouble. The fact that it is invisible is one reason why it never seems to be properly debated here and does not attract as much attention from the Government of the day as it ought to attract.
  Anyone who has studied the balance of payments account of the United States in recent years will notice that the American balance of payments has been very seriously affected by Government spending abroad and by capital movements away from the United States. These factors in the American visible account are also very powerful factors in the present British economic situation.
  I mention one figure which I hope that the Financial Secretary will notice. Net Government spending abroad—and I hope that he will correct me if I am wrong—is up by £200 million in the last five years. We have to provide this £200 million by greater exports before Britain can afford further imports of manufactured goods, raw materials or foodstuffs. This figure is made up of defence expenditure and of Government grants overseas. I hope that there will be a very searching examination by the new Government of both these items. I was very interested yesterday in the House to notice that this point had apparently been taken by the new Minister of Overseas Development. She seemed to be aware of the shortage, the increasing shortage, of financial resources there will be for overseas development because of the factors which I have mentioned.
  Although I know this will not be easy, and that perhaps the present moment may not be an easy one, nevertheless I would suggest to the Government that they should consider initiating talks with some of the European countries about aid for underdeveloped areas, because unless one can get a co-ordinated international

  1133
  European approach to underdeveloped countries, unless one can get some of the other wealthier countries to contribute rather more, I suspect the strain on the British economy and the strain on the invisible balance will be increasingly hard, because it is not just Government grants which are involved. Government loans overseas in the last five years have gone up appreciably, I think by about £50 million, and private investment overseas is going up, too. It is not necessarily a bad thing, but we have to be frank and recognise the burdens which all this represents. I know it is a very tricky area for the Government to operate in, but, nevertheless, I think some action is necessary.
  I want to mention just one other figure. Today one-fifth of all our exports are going to pay for these invisible exports overseas. Five years ago it was only about one-sixth. So we have a very serious problem to tackle. I think I can speak candidly on this topic because in the last Parliament I used to talk on this subject, pressing the former Prime Minister, Mr. Harold Macmillan, for some further information, which was resisted at the time. I notice that the new Government have an economic adviser charged with overseas financial affairs in the Cabinet Office, and I hope he will look at some of the topics I have mentioned.
  I hope in particular that there will be a searching look and attempt at producing a realistic balance sheet of the net income received from abroad through the oil industry. It will be necessary—this is, again, a very complex exercise—to take into account the earnings of the oil industry for the balance of payments, but it will also be necessary to take into account some of the outgoings from this country and also some of the ancillary cost of Governmental operations, aid and defence, and it may well be felt that certain aspects of the oil industry's operation—I do not say all, but certain of them—do represent a less profitable form of economic activity than this country has hitherto realised.
  Let me mention just one other item on the invisible account which, I hope, will receive attention from the new Government. Many years ago when my right hon. Friend the Prime Minister was president of the Board of Trade we
  1134
  operated in relative balance on the tourist account. Quite a lot was spent overseas by British subjects, but a lot was spent in this country by tourists and visitors from abroad. No one is suggesting that there should be restrictions on overseas spending, but I am suggesting that there should again be a searching examination by the Government of the problems of the domestic tourist industry. There are many steps which could be taken by administrative and legislative action to make this a more attractive country for tourists, and if that were done the balance of payments account would benefit very greatly indeed.
  My other constructive comment is on the subject of Governmental planning. I hope to say a few words about the new Ministry of Economic Affairs, some of them a little critical. This is not a party issue, despite the comments yesterday of the right hon. Member for Bexley (Mr. Heath), because divergent views on the future of the Treasury have been held by many Labour and Conservative politicians. For example, Winston Churchill, when he was Prime Minister in 1951, felt that it was necessary to have a counter-weight to the comparatively restrictionist attitude of the Treasury, in the form of the then Paymaster-General, Lord Cherwell, backed up by the advice of Sir Donald MacDougall.
  Furthermore, Mr. Harold Macmillan, a former Prime Minister, has long been on record on this subject. He was in favour of a Ministry of Economic Affairs before the war. He felt it necessary to intervene against the Treasury and Treasury Ministers twice during his period as Prime Minister, first when the Chancellor and his two aides resigned in 1957, and, secondly, when the right hon. and learned Member for Wirrall (Mr. Selwyn Lloyd) resigned, and important structural changes were undertaken at the Treasury at the same time. I feel, therefore, that in comment on this position the Opposition cannot really feel that they speak with a united voice at all.
  During one of the economic debates, I think in 1961, I urged changes in the structure of the Treasury. My suggestion was resisted by the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) who, I think, was Economic Secretary at the time. He apparently had

  1135
  the support of our Front Bench spokesman, my right hon. Friend the Member for Battersea, North (Mr. Jay), so we are in very good company. I hope that at some time we shall have an opportunity to debate the machinery of government and the machinery of economic planning in considerable detail.
  Although I respect the people who work in the Treasury as individuals, I accept the criticism that the Treasury tends to be restrictionist in outlook. It is therefore necessary to create an inflence in the Governmental machine which is pro-growth, dynamic, and expansionist. But, having said that, I still have certain reservations about whether the split between the Treasury and the Ministry of Economic Affairs is at the right point. It may be that we shall find that more radical measures are needed.
  I note that the Treasury still retains responsibility for monetary policy, the balance of payments, short-term economic policy, and budgetary policy. Despite the new Ministry, those responsibilities are the prerogative of the Treasury, and these are vital responsibilities for the implementation of the economic plan. I incline to the view that the Treasury as we know it today should eventually be restricted to the control of the Governmental machine, to the control of establishments and to the control of expenditure within the Government orbit. But I have a personal inclination to confess. I think that, in the long term, it may be necessary to transfer the more vital economic functions to the new Ministry.
  I suspect, too, because we are living in a dynamic and changing world, that the Government and the House will have to look very very carefully at the sort of dividing line we should have between the Board of Trade and the Ministry of Economic Affairs. As I understand it, we have sponsoring Ministries in this country. The system has grown up whereby industries are sponsored by particular Departments. Now that economic planning has become so complex and extends to individual industries I feel that it may be necessary to review the way the borderline between the Ministry of Economic Affairs and the Board of Trade is drawn.
  1136
  I do not apologise in any way for raising these last problems with regard to economic planning. This country faces a tremendous challenge in the years to come. I remember, as a new Member, listening to the last great speech of Aneurin Bevan here. He said that the solution of the problem of dynamic planning in a democratic society had eluded both major parties. I think that what he said was true. I think that my right hon. and hon. Friends have made a brave beginning in fashioning the policies and the institutions that are necessary to solve this vital problem, and I wish them Godspeed on their way.
  8.56 p.m.
  Mr. William Clark: We have listened with great interest to the speech of the hon. Member for Dewsbury (Mr. Ginsburg). If I may, I should like to deal later on with some of the points he has raised. During this debate and in the Budget the whole emphasis has been on our balance of payments deficit. I may say, in parenthesis, that very few of the suggestions in the Budget are going to help us to solve our balance of payments deficit. The thing that astounded me is that everybody accepts that exports are vital, but nowhere—either in the Government's White Paper or in the Queen's Speech, or in the Budget speech—was the question of international liquidity mentioned at all.
  I would have thought that one of the reasons why exports are being held back—I am speaking on an international basis—is simply because the amount of liquidity is insufficient for world trade at the moment. Presumably the Chancellor of the Exchequer will in time get round to this. Eventually the Government will get round to the basic fact of life and realise that international liquidity and competitiveness regarding exports is the basis for any sound economy, irrespective of which party happens to be running the Government at the time.
  What worries me is the blunt instrument which the Chancellor has used in an endeavour to reduce imports. This 15 per cent. surcharge applies, roughly, across the board, with the exception of raw materials, tobacco and a few other things. It is a blunt instrument. If the Government say that we are to modernise and get some up-to-date machinery, why

  1137
  should we penalise industry by imposing a 15 per cent. surcharge on some machines from abroad simply because they are not manufactured in this country? Hon. Members opposite may say that the machines should have been made in this country, and we accept that, but if we want a piece of machinery in order to modernise, can we wait?
  I noticed that a few hon. Gentlemen opposite nodded their heads when I spoke of the increase in international liquidity. I think it deplorable that this blanket charge of 15 per cent. has caused such a stir, particularly in respect of the International Monetary Fund. One should pay tribute, in my opinion, to my right hon. Friend the Member for Barnet (Mr. Maudling) and his predecessors as Chancellors who were largely responsible for increasing international liquidity through the I.M.F. drawings and the Basle Agreement. It came as a shock to me that the I.M.F. should argue whether we had the drawing rights which we thought we had simply because the Government had imposed a 15 per cent. blanket charge.
  Another criticism I have of the surcharge is that as an international trading nation we must always fulfil the pledges we give in any agreements we may sign. I am not proposing to mention all our trading partners or the countries with whom we trade. Let us take the case of our E.F.T.A. partners. Here we have a clear-cut agreement. I would not have thought it beyond the wit of the Chancellor of the Exchequer to have had some consultation with our E.F.T.A. partners. I would much rather the right hon. Gentleman had been a little more discriminatory in the imposition of the 15 per cent. charge. As I am sure hon. Members will agree, we must always avoid any action which may lead to reciprocal action on the part of our trading partners.
  I think the Government have overplayed this crisis. The White Paper which was published with the announcement of the 15 per cent. surcharge referred to a deficit figure of £700 million to £800 million as being likely. We should remember that the balance of payment deficit goes on the calendar year and that we have already had ten-twelfths of that year. The last figure which I was able to obtain applied to the end of the
  1138
  second quarter and showed that our deficit was running at around £340 million. This included some of our overseas aid through exports for which we do not necessarily get paid. With our razor-edge economy we have to remember that we can at any time talk ourselves into a financial crisis. My greatest criticism of the Government is that they have exacerbated and exaggerated the balance of payments deficit. It was a difficulty but there was no need to exaggerate and to say that the deficit was something like £700 million or £800 million. My guess is that the amount will be very much less. It does not do very much good to the economy of the country to overstate the deficit.
  Mr. Bence: The point made by the hon. Member was that the instrument used by the Chancellor was blunt and that he might have been more discriminatory. Would the hon. Member advise us of any way in which it is possible to discriminate between one commodity and another?
  Mr. Clark: If it is necessary—and I have not accepted that it is—to impose a 15 per cent. surcharge, it should not be imposed on all imports. I have given one example, that of machinery, which provides a clear-cut case of imports necessary to activate the modernisation programme, and someone could be penalised by the surcharge for importing such machinery. This is what I mean by saying that the Government should have been a little more discriminatory. It was not a question of being discriminatory between one country and another. It was a question of discriminating over a whole range of goods.
  I do not think anyone in the Committee will deny that over the past 12 or 13 months we have been expanding our economy. Everybody in the Committee knows that before one can start exporting the raw materials must be bought to manufacture the goods to send abroad. Stockpiling has been going on. No one can deny that. Coupled with that fact, it was known that there was to be a General Election in October. There was no manoeuvrability about that. We knew that it had to be in October. [Laughter.] Hon. Members may laugh, but it is terribly serious to our economy. The result of it will be far more serious. With many of our industrialists fearing a

  1139
  change of Government and fearing that some sort of restriction would be put on imports, not only was there normal stockpiling, but there was additional stockpiling as a hedge against any sort of restriction on imports. Consequently, we have a balance of payments deficit, which I do not deny. Nobody knows whether it is in fact £700 or £800 million. I should have thought that it was much less than that. These two factors—normal stockpiling and extra stockpiling—would obviously enlarge the figure.
  I should not have thought in the circumstances that this is necessarily a crisis. I am sure hon. Members on both sides will agree that it is quite all right to get an overdraft from one's bank provided one does not spend the money. If I get an overdraft of £100 from my bank and then invest the £100 in stock, I am not any worse off than I was before getting the overdraft. The fact that I owe £100 does not mean that I am bankrupt. That is the position in this country. Too much emphasis has been placed on the fact that there has been a crisis. [Laughter.] Hon. Members may laugh, but I draw the comparison between borrowing from the I.M.F. to pay for stockpiling and borrowing from the Americans and spending the money. We have not in fact spent our stocks. I am convinced that in the succeeding months our stockpiling will show results and exports will rise. I believe that this will become clear when this month's figures, next month's figures, the figures for January, February and March, and so on, are known.
  Mr. Maxwell rose—
  Mr. Clark: The hon. Gentleman has had an awful lot of time. Since I have been sitting here he has interrupted an awful lot. I should like to finish this part of my speech.
  Another reason why I think we may be running into trouble is that this is such a blanket surcharge. I emphasise that it is a terribly blunt instrument, in that there has been no discriminatory action between various types of goods. It has been said that the surcharge is temporary. If one says to a trading nation and an importing nation such as we are that this is temporary, what are we doing? If, for example, somebody is thinking of importing a piece of machi-
  1140
  nery worth £100,000, he knows that it will cost £115,000 from now on. If he thinks that the surcharge is temporary, all he will do is postpone the importation of that piece of machinery.
  Mr. Bence: That is what we want him to do.
  Mr. Clark: Listen to the punch line. When the surcharge is lifted, obviously there will be people who have refrained from importing. There will of necessity be an upsurge in imports. This is another reason why I do not think that the surcharge has been thought out sufficiently.
  Mr. Maxwell: The hon. Member suggests that the 15 per cent. surcharge is wrong and harmful. He would have liked to see greater discrimination. He suggested, for example, that the Government should have exempted automated equipment from the surcharge. Does he realise, however, how complicated it is to define automated equipment? It would take two or three years to issue a list. The hon. Member also makes the point that if he borrows £100 from his bank and buys stock with it this would not cause him difficulty. How would he like to try to offer to repay his bank manager in goods when he asks for repayment of the overdraft?
  Mr. Clark: I am grateful to the hon. Member for allowing me to carry on. I am sorry that I have interrupted him, but I thought that his intervention would be germane to the argument.
  Nobody disagrees that it is difficult or complicated to differentiate, but are we to accept that simply because it is difficult we must therefore use a blunt instrument and chop everything? I am sure that the hon. Member, whom we are delighted to see here, has enough industrial acumen to realise that simply because something is difficult is no reason for not attempting it. I am sure that the hon. Member is not trying to prove that he is as naive as that.
  Throughout the accusations underlying this debate is the fact over the past thirteen years that the Conservative Administration has, to use the words of one hon. Member, been disastrous. I am not going into the merits or demerits. Suffice it to say that after thirteen years of Tory Administration the standard of

  1141
  living has gone up by 40 per cent., the quickest and highest rate of increase in history. [Interruption.] I am sure that hon. Members opposite will eventually be able to differentiate between the cost of living and the standard of living.
  The underlying theme has been that we have had a stop-go policy. We must not get a fixation about the words "stop" and "go". Nobody wants to stop-go, but it can also be described as accelerating and then braking. Any hon. Member who has had anything to do with business, whether manufacturing or distributing, knows full well that a business can never be run on an even keel with a steady rate of expansion. Of course it goes up and down. It goes forward quickly and then more slowly, and it then accelerates again. We should not fall into the trap of having a fixation about stop-go.
  Presumably, the Budget is directed towards exports. I do not think that it is, but the suggestion is that it is. We have been given a kind of preview of the next Budget that the Chancellor of the Exchequer thinks that he may be introducing sometime next year. When we consider that private industry is responsible for, I think I am right in saying, 98·5 per cent. of our exports, we must be certain not to overtax these companies, thus adding to their costs and in so doing pricing ourselves out of the overseas market.
  The Chancellor of the Exchequer has suggested that he will bring in an export incentive. I have always thought that there is a case for an export incentive. I appreciate that we have not had details, but my criticism of the way of doing it is as follows. To give an export incentive of 1½ per cent., or whatever the figure may be, means that even if our exports remain at their present level, the cost to the Exchequer will be £70 million to £80 million a year.
  I would have much preferred to have seen a more sophisticated formula so that increases in exports received a much higher degree of rebate, whichever way one worked the rebate. I do not think that the method of 1 per cent. to 3 per cent.—and no doubt there will be a differential between types of goods—will necessarily increase our exports. All that it will do is immediately to add
  1142
  on to the Exchequer another £70 million to £80 million, and we may not receive any benefit from it.
  This autumn Budget, to my mind, is a very political Budget. There are, of course, many things in it which everybody wants to do. The accusation has always been that successive Conservative Budgets have been vote-catching. I hope that we shall hear no more such accusations, for the simple reason that no fair-minded person could say that this was not a vote-catching Budget. Indeed, we on this side of the Committee think that this Parliament will not last too long.
  One hon. Member made great play of the fact that the increases in social benefits, pensions and the like, were the result of a pledge given by the present Government during the election campaign, but what hon. Members opposite will not accept is that, in addition to that pledge, both the Prime Minister and the Chancellor gave similar pledges that there would be no general increases in taxation. One cannot have it both ways. The pledge that old-age pensions would be increased has been kept, but the other pledge that there would be no general increases in taxation has not. As my right hon. Friend the Leader of the Opposition said today, a 6d. charge on petrol and 6d. on the standard rate of Income Tax is by anybody's assessment a general increase in taxation.
  On both sides of the Committee we all wish the economy of the country to be run as well as possible, but my one fear is that the measures taken by the Chancellor will not achieve the object which each of us desires, and that is to see the economy strengthened. We must remember the basic economic fact of life that we cannot possibly continue to thrive unless we are competitive, and we can be competitive only if we keep our costs down. Increasing taxation is not the way to go about it. We are not keeping our costs down. In that sense the Budget has measured up to the promises which we had from the present Government when they were in opposition, and particularly during the election campaign.
  9.15 p.m.
  Mr. Arthur Lewis: I am pleased to follow in the debate the hon. Member for Nottingham, South

  1143
  (Mr. W. Clark) because I have heard the whole of the debate. I have heard hon. Members make their speeches and—I must add with respect—seen most of them walk out of the Chamber immediately afterwards. I have listened particularly to hon. Members opposite in the hope of ascertaining from them whether or not there is a balance of payments crisis.
  I have heard the former Chancellor of the Exchequer say that he knew that there would be these difficulties and a balance of payments problem and that he himself had looked at the same sort of remedies. He had hit upon the same sort of proposals that the Government are now introducing.
  Mr. W. Clark rose—
  Mr. Lewis: I thought that I might get out more than two or three sentences before I was subject to the usual barracking.
  Mr. Clark: In introducing his Budget earlier this year, my right hon. Friend the Member for Barnet (Mr. Maudling) said that, because of stockpiling, there would be pressure on our balance of payments. He said it long before the General Election, and the hon. Gentleman should make that clear.
  Mr. Lewis: I am coming to that. When the hon. Gentleman spoke, he unwittingly hit the nail on the head when he said that we had to have the election this October. We did not. We could have had it last October, last February or last June. But there were reasons why there was no election last October or earlier this year, and I shall remind the Committee of them.
  Before doing so, however, I wish to congratulate my right hon. Friend the Chancellor on his Budget proposals. I am sure that he will remember this as a great day in his personal career, and we shall remember it as a great political occasion. I pay a sincere tribute, a birthday tribute, also to the right hon. Gentleman the Leader of the Opposition. I am sorry that he is not here to receive it. It may be forgotten that this is his birthday, the day on which he was wangled into leadership of the Opposition. That was why we never had the election last October, of course. Today is the right hon. Gentle-
  1144
  man's day, and I wish him a happy birthday. May he have many more happy years in occupation of that seat as Leader of the Opposition. He is the best Leader of the Opposition we have.
  Mr. John Wells: What has this to do with the Budget?
  Mr. Lewis: It has a lot to do with the Budget. I am about to remind the hon. Member for Nottingham, South and other hon. Members of why we could not have an election last October. I shall explain how the balance of payments problem has been directly attributable to the actions of the last Government, particularly the former Prime Minister. After the right hon. Gentleman was appointed, manoeuvred or jockeyed into leadership of his party, however it happened, he said:
  "From this moment on, the fact that there is a General Election ahead of us must never be out of our minds. Every act that we take, every attitude that we strike, every speech that we make in Parliament or elsewhere, must have that fact in mind."
  I quote from the centre pages of today's Daily Mirror. I advise hon. Members opposite to read it. I ask hon. Members on both sides of the Committee to read it. If I could afford to pay for it, I would circulate it to the public generally.
  I come now to a quotation from the former Chancellor of the Exchequer, the right hon. Member for Barnet (Mr. Maudling). It is true that, before the election, he said that there might be balance of payments problems, but he did not say it during the election campaign. This is one of the quotations from the right hon. Gentleman's words:
  "I think our economic prospects in the short-term are certainly good … I think that the use of the word 'crisis' is quite wrong."
  Just before the election, the former Prime Minister said:
  "Everyone seems to be agreed that short-term measures are not now necessary".
  That was from a speech on 3rd October last.
  I am not arguing about it, he may or may not have been right, but I am reminding the Committee that we have had the former Chancellor here saying that he believes that there is a need for short-term measures.
  The hon. Member for Nottingham, South cannot make up his mind whether

  1145
  the deficit is £700 million, £800 million, £300 million or £400 million. Apparently, he believes that it may be nearer £300 million or £400 million.
  But we cannot get the agreement of the Opposition on whether there is or is not a balance of payments crisis. I rather accept the word of the former Chancellor who, now that the General Election is over, admits that there is a balance of payments crisis. I only wish he had said it during the election campaign. I wish the former Prime Minister had said it on 3rd October. I wish he had said on 3rd October that there might be a need for short-term measures, that his right hon. Friend the former Chancellor had some ideas and proposals pigeonholed and that when they got back to office, if they got back, they would have an autumn Budget. But he did not.
  My accusation against the former Government is that either they knew and did nothing about it or did not know but ought to have known. They cannot have it both ways. Either they knew that the situation was getting crucial or they did not. I do not know which way it was, but I believe that they knew, and I believe that for electoral purposes they kept mum and hoped against hope that, as on previous occasions, they could get back to power and then start introducing their retrogressive legislation.. I believe that they would have done that if they had got back to power. Just as they started to dismember the National Health Service, so they could have continued. Just as they imposed taxation on kiddies' sweets and on ice cream, they could have done the same thing.
  What has happened? We have heard about it this evening. It is amazing. The Tories had 13 consecutive years in power. Over the last 50 years, with the exception of two short periods, they have had undisputed control over the affairs of the country. Yet they suddenly decided when they heard the Budget and realised that my right hon. Friend was to increase the pensions for the old people, widows and so on, that if they had got back they also would have done it. If I may use some non-Parliamentary language, why the heck did they not do it? The Labour Party would not have opposed them. In fact, time after time we asked that this should be done, but it was the votes of the Conservative Party which stopped it.
  1146
  A little earlier an hon. Member opposite said how terrible it was that the young people had to contribute towards the old-age pensioners. The hon. Gentleman does not know working-class men and women. They are only too pleased to look after Mum and Dad, and "Mum and Dad" are every old-age pensioner and retired person. All the working men and women in my constituency have said they are disgusted at the way the old people have been treated and neglected by the Tory Government over the last 13 years. I am not a bit worried about telling my constituents that they must pay a few bob a week to help give £1 a week to the old-age pensioners. Indeed, they are very pleased to do it. They know that the old people will get not only that but further advances which will come. Our ultimate policy is half pay on retirement.
  I want to be a bit critical about the payment of the increases. With all respect to my right hon. Friend the Chancellor of the Exchequer, I do not accept the advice given him by the Treasury, the Post Office or the Ministry of Pensions and National Insurance that the increase cannot be paid until March. That is wrong.
  I will tell the Government how the increase could be paid tomorrow. Every pensioner in receipt of a State pension collects it from the Post Office. A receipt is torn out from his book when he gets the money. All that is needed is to issue the Post Office with rubber stamps which would stamp the increased amount on each slip. The money would be paid by the Post Office and debited to the Treasury. I think that it takes about 24 hours to have a rubber stamp made.
  I urge the Government not to listen to the arguments about this that we heard during the 13 years of the Conservative Government. We were always told that the increase could not be paid so quickly. But when the judges wanted their increase, they got it overnight, and, with all respect to Ministers, when the necessary Bill passes the House they will also get their increases overnight, although they are not in so serious a need as are pensioners.
  Do not let this increase be delayed until March. Let us show that we can find a way. Even on the basis of using an I.O.U. from the Treasury to the

  1147
  Post Office, I would still prefer to show our determination to get the money paid as soon as possible—and as soon as possible is certainly not next March.
  I agree that it is silly to have a general impost because there are new machines, new inventions in plant and equipment, which either we have not made ourselves or which we should see in order to study the possibility of making them here. It might well be that some machines from abroad are necessary to improve our exports. It should be possible to issue exemption certificates for the importation of proved plant and equipment necessary for the export trade. This also could be done simply. It is only a question of the Board of Trade issuing the necessary certificates.
  My right hon. Friend the Minister of Public Building and Works wants a machine that will make more bricks. If I could find such a machine abroad, surely that would be a case for exemption from the new impost. The Board of Trade and its experts could examine it, and if it could be proved that the machine was able to do the job, it should be allowed in without the impost. Equally, if a machine could help us get a big export order, then it, too, should be exempted.
  The impost is a short-term measure. We must get down to the job of directly encouraging exports. Far too many industrialists and workers are very happy to make a lot of stuff neither useful nor necessary because they are able to sell it quickly and cheaply on the home market, making a big profit. They are not interested in exports. Why should they be? Under the profit motive so much admired by hon. Members opposite their job is to make the biggest profit as quickly as possible, and if they can do that by making stuff only for the home market, why blame them?
  A simple way of giving that incentive would be to allow everyone, not only manufacturers but British people going abroad on holidays, a cash discount in sterling on any foreign currency which they paid into the Bank of England. The discount could be altered according to whether the currency concerned became harder or softer. There are
  1148
  many people who, when about to return to this country from a holiday or a business trip, finding that they have a few francs or lira left, spend the money on some cheap souvenir which they do not really want rather than take the trouble to exchanging it here. If they knew that they could get a tax-free return on their money, I am sure that they would take the opportunity. [Laughter.] The hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) laughs, but I assure him that there are plenty of business people who would take advantage of a subsidy like that. Australia has such a system and is operating it with great success. The hon. Member for Worcester (Mr. Walker) has just returned from Australia and he would be able to confirm that.
  If the Government introduce an incomes policy, as is their desire, if they want the support and active co-operation of the trade unions, as they do, I hope that they will quickly tackle those problems which confront ordinary people, and I refer especially to rents and the Rent Act. I am very pleased that my right hon. Frined the Minister of Housing and Local Government has already laid a Bill in that connection today. I hope that he gets on with the job quickly. These are the things which prevent an incomes policy. If a chap finds that his rent is going up by 25s. or 30s. a week, or if, as is the case in my constituency, two unfurnished rooms having no toilet or bathroom are advertised at a rent of five guineas a week, how can the ordinary man be expected to carry on without asking for a wage increase?
  Let the Government deal with these problems and with the social services, the health charges and so on, and, as a trade unionist, I believe that if trade unionists see that the Government really intend to tackle the rackets which have been going on for so long under the party opposite, they will give their support to a fair incomes policy.
  9.44 p.m.
  Mr. Daniel Awdry: It is getting very late and I will say only a few words about the effect of the surcharge on our E.F.T.A. partners. I attended the Ministerial meeting of E.F.T.A. at Edinburgh in the summer. I then had the opportunity to meet the foreign Trade Ministers and to hear their views. I was

  1149
  immensely impressed by the very great fund of understanding and good will which existed among the Ministers of E.F.T.A.
  That good will did not happen by accident. It was built up steadily and patiently over the last five years. Two things struck me about that conference. First, all the discussions were in English, and that is in itself a mark of the respect felt towards this country. Secondly, all the talk was on a very intimate and friendly basis. So often at these international meetings all the talk is of a formal kind with prepared speeches and no attempt at debate.
  But E.F.T.A. is entirely different. I noticed the very ready feeling on behalf of all the Ministers at that conference to understand the points of view of the other nations. There is no doubt that enormous credit is due to my right hon. Friend the Member for Bexley (Mr. Heath) for building up this good will in E.F.T.A. over the years. At that meeting all the Foreign Ministers paid the most handsome and generous tributes to my right hon. Friend for all that he had done. He is very widely respected. I am profoundly disturbed at the great damage done in the last few days to that good will. It takes many years to build up international good will in foreign affairs and it can take only a matter of hours to wreck it.
  The recent action of the Government has made me ashamed of our country—[Laughter.] Wait for it—
  Mr. Bence: Gross exaggeration.
  Mr. Awdry: Mr. Lange, the Swedish Minister of Trade, who greatly impressed me at Edinburgh, said yesterday that the breach of the E.F.T.A. Convention by our Government was a grave matter and:
  "It is understandable that the British measures have given rise to a widespread feeling of anxiety and distaste."
  It is hardly surprising that Volvo, the largest Swedish car group, has already taken reprisals against this country. Its representative said only yesterday how bitterly disappointed Volvo was with the British Government. In view of the fact that last year Sweden was our biggest overseas customer for motor vehicle components, we can see how much damage may have been done already by the Government.
  1150
  It does not stop at Sweden. Only yesterday, the Danish Foreign Minister said that E.F.T.A. was passing through a very severe crisis. I am not surprised that in his winding-up speech last night, and in all the turmoil, the Lord President of the Council did not say a single word in reply to my right hon. Friend the Member for Bexley on this subject. I can only express the hope that at the next Ministerial meeting next week at Geneva the Government will take most urgent steps to try to repair some of the damage which they have done. It will take many years to build up good will again, and by that time this Government will, happily, have passed into oblivion.
  Mr. Tam Dalyell: Would the hon. Gentleman explain how we can overcome a deficit running at £800 million without hurting somebody?
  Mr. Awdry: If the Government thought it necessary to take these steps, it was only right that they should go through the usual consultative procedure. There was no rush and there was nothing to prevent the Government from consulting our colleagues and friends, which would have avoided the damage which undoubtedly has been done.
  I have said a few words on the external effects of the levy. I should now like to say something about the internal effects. Recently I received correspondence from a very small engineering company just starting in business. It has very little capital behind it. It intends to go into the export field. It is a precision engineering firm. Very shortly it will be able to export. Several months ago, in the summer, it ordered from Germany a special automatic lathe which it could not get in this country. The terms of the contract meant that it had to pay for the goods in full at the time of the order. The cost was £2,400, and this was paid in July. This small company is now suddenly faced with an additional bill for £300. It is far too late for it to be able to cancel this machine.
  I mention that case because it is typical. The Government's decision is harsh and retrospective and will have a very serious effect on British technical development and British exports. I am sure that if this levy is maintained for any length of time it will seriously discourage small

  1151
  export firms just at the time when everyone on both sides of the Committee realises that the maximum encouragement must be given exporters. This point was raised by my right hon. Friend the Member for Bexley last night, and again the Lord President of the Council entirely ignored it when he replied.
  I made about 40 speeches in the election, and in them I said that the return of a Socialist Government would mean higher taxes. I was heckled, and the Socialists said that this was entirely wrong. They have not had long to wait. We are already back to the same old medicine as before. We did not put up Income Tax over 13 years, but the Labour Government have put it up within a matter of weeks. The country has made its choice. It has chosen its bed and it has to lie on it until it has the good sense to wake up and bring us back to put things right.
  9.51 p.m.
  Mr. Cyril Bence: We have had some extraordinary speeches during the debate. We have had diagnoses of the sick patient who has been fed for the last 13 years by the Opposition. From most of the speeches one would imagine that we had been the Government for the last 13 years and had not been the Opposition. Hon. Members opposite have been in Government and are responsible for the patient's condition. When the hon. Member for Chippenham (Mr. Awdry) says that he is ashamed of his country—
  Mr. Awdry: I said that I am ashamed of the Government.
  Mr. Bence: I am ashamed of the Government of this great international trading nation which went on governing for 12 months and during that period allowed the position gradually to deteriorate from a rate of international indebtnedness of £150 million a year to a rate of nearly £800 million a year. The hon. Member should be ashamed of the Government of a country which allowed that situation to occur. He is right. I, too, am ashamed of that Government, which is now, quite rightly, in opposition.
  Mr. John Hall: Let us get the figure right. Even in the Govern-
  1152
  ment's own White Paper the figure is given as between £700 million and £800 million. Moreover, hon. Members must remember that about £350 million of this figure represents investment overseas and repayment of the U.S.A. loan.
  Mr. Bence: But £700 million to £800 million is the rate at which our balance of payments deficit is running. We were spending more abroad than we were earning—and that is the rate at which we were doing it.
  May I put it simply? Let us assume that I have been earning a certain income for a number of years and then my income falls in real terms under a Tory Government. I have to cut down my wife's housekeeping allowance. I say to her, "We have been spending £5 a week with the grocer but in future we can spend only £3 a week." That will hurt the grocer. This is what we have had to do. No matter what we did we should have had to hurt those people who import into this country. We could not avoid it. It is all very well saying that the surcharge affects our E.F.T.A. partners and upsets them. I know that it does. No trader in business likes his customer's income to be reduced so that the trade which he does with the customer falls.
  Of course they are upset. But what else could we do if we have been living beyond our means? One either cuts down one's imports or by some miracle suddenly drives up one's exports to reach the level of the imports. We have been in power for only a fortnight, and the balance of payments deficit was running at £800 million a year. We cannot get exports up to that level in a fortnight. It will take time. Hon. Members opposite say that the 15 per cent. surcharge will be ineffective, for one reason in particular: that people will regard it as only a temporary measure and will stop importing. If they stop importing and we keep exporting, the balance of payments problem will be solved and the 15 per cent. surcharge can be taken off—and, hon. Members opposite say, these people will start importing again. I hope that by the time they start importing again our exporters, with the encouragement of the export rebate, will have been geared up to our export figures so that we shall be able by our exports to carry the resulting increase in imports.

  1153
  Hon. Gentlemen opposite cannot have it both ways. It is really absurd to come into this Chamber and talk about this 15 per cent. being a frightful instrument, a blunt instrument, and then to argue that in the last 12 months manufacturers have been stocking up imports and that imports would, therefore, automatically have fallen. That is what we want to happen, and if they fall automatically then the 15 per cent. surcharge will not be used. It will not be imposed if they stop importing. This is logical.
  Therefore, it is nonsense to talk about this instrument being a particularly blunt instrument compared with any other, because in this situation, where we have to act quickly and immediately, any instrument must, in the very nature of the thing, be rather blunt. There is no sharp instrument one can use to solve this situation quickly.
  We had a proposition made by one hon. Gentleman opposite about discrimination. Discrimination is one of the most unfornate things any trading nation can resort to. To discriminate between commodities is bad enough, but to discriminate between nations is worse than ever. To show some preference for one trading group, whether it is E.F.T.A. or the Common Market or the United States, is very dangerous indeed, and I myself would never advocate it. As a great trading nation we want to avoid discrimination between different groups of countries and between individual nations as much as we possibly can.
  This instrument must be blunt, and I do not see any way out of it. The hon. Gentleman the Member for Chippenham said that our friends on the Continent are very disappointed and feel very bitter about it. Of course they are disappointed at this situation. We do not like it, either. We do not like to have to do this. We want to free world trade. We want to increase world trade. We do not want to do anything to restrict it, but we have been living beyond our means. As a nation we have been spending more and importing more and consuming more than we have been earning by our exports, and something had to be done to put that situation right, and to bring home to the people of this country that, after 13 years of Tory rule, the country has been allowed to drift into this serious state of affairs.
  1154
  Hon. Members opposite have been talking about this terrible imposition. We had a General Election in 1955 when the Tory Party got back. I remember playing a minor part soon afterwards with my right hon. Friend the Secretary of State for Scotland in a by-election in Greenock in October. We woke up one morning to find that the Conservative Chancellor had found the situation so bad that he had to bring in a series of Purchase Tax impositions—on pots and pans, scrubbing brushes, buckets, and many domestic items of that kind. My right hon. Friend will remember this very well. The situation was so bad he had to do something about it—
  The Secretary of State for Scotland (Mr. William Rose): Not I.
  Mr. Bence: No, not my right hon. Friend. I meant that the Tory Chancellor had to do something about it. The situation was so bad, he said. And that was the instrument he used.
  The right hon. Gentleman the Member for Barnet (Mr. Maudling) has said about the 15 per cent. surcharge that he was considering some such remedy as that. He admitted that he was considering using an instrument of this kind. Obviously, now, in opposition, he can say he was considering it and that he might not have used it, but I have no doubt that, if the party opposite had got in, a Conservative Chancellor would have used some similar instrument to redress the situation of an excess of imports over exports of something between £700 million and £800 million. The former Conservative Chancellor admits that he would have had to have taken some action. The matchbox attitude to our economy is out. The situation is far too serious to work with matchboxes. I am shocked at the lighthearted way in which hon. Gentlemen opposite are treating this serious situation.
  One hon. Gentleman opposite said that the difficulty—
  It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
  Report of Resolutions to be received Tomorrow.
  Committee also report Progress; to sit again Tomorrow.

  REPRESENTATION OF THE PEOPLE ACT, 1949
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lawson.]
  10.1 p.m.
  Sir Myer Galpern: I begin by offering sincere congratulations to my hon. Friend the Member for Cardiff, West (Mr. G. Thomas) on his appointment. I extend to him my very good wishes for a happy and successful tenure of office. My hon. Friend is possessed of infinite charm and good humour, coupled with a deep fund of good commonsense. I therefore expect that this evening he will be largely in agreement with what I have to say.
  I sought this Adjournment debate as a direct result of some personal experiences during the recent General Election which led me to make some investigations into the administration of the Representation of the People Act, 1949. I regret to say that, as a result of those investigations, I have some grave misgivings about the whole administration of the Act.
  Broadly speaking, my remarks this evening will fall under two heads: first, actions committed by the presiding officer or the polling clerk which lead to the rejection of ballot papers, and, secondly, the state of the electoral register.
  Paragraph 27 of the Parliamentary Elections Rules lays this duty on the returning officer:
  "The returning officer shall appoint and pay a presiding officer to attend at each polling station and such clerks as may be necessary for the purposes of the election, but he shall not appoint any person who has been employed by or on behalf of a candidate in or about the election."
  The first question to which we have to address ourselves is: how are the presiding officers and polling agents recruited? I know that the practice varies from area to area, but, generally speaking, there is a shortage of such people who can undertake this responsible duty which is an important aspect of democratic elections.
  On making inquiries from the deputy returning officer of Lanarkshire, which includes Glasgow's 15 constituencies, I found that, generally, the practice is
  1156
  to have a sprinkling of local government officers reinforced by people from the employment exchanges. There may be people from the employment exchanges who can do this work. In fact, there are many disabled people who can sensibly and intelligently discharge the duty of a presiding officer or polling clerk, but no test whatsoever is applied to the people who are sent by the employment exchanges. It seemed to me that, in the absence of such a test, it might be necessary to narrow the field of recruits to responsible people, drawing these officers on the election day from the local government service or from the teaching profession, who are generally on holiday during the period of a General Election.
  I know that there are many people who act as presiding officers who are well over 80 years of age. One case in the constituency I represent was the following—I discovered that the lady who acted as a polling clerk was almost stone deaf and an elector had to repeat her name about four times before she agreed that there was such a name upon the electoral register. If we are going to allow this haphazard method of appointment, we must look at the results of what I regard, in a large number of cases, as unfit people discharging this duty.
  There is nothing laid down in the regulations, as far as I am aware, as to what briefing ought to take place in order to instruct the people who are recruited for this job on the day of the election. It may be in some areas that some definite line is laid down by the returning officers, but in the Lanarkshire area I discovered that all the people, and there are over 3,000 in Lanarkshire, are brought in small groups before the returning officer, who delivers a little lecture lasting from eight to ten minutes about the duties of the presiding officer. They are given a booklet about a week before the election day, they are asked to read it, and that sums up the whole of the briefing, the whole of the instruction, that these individuals receive.
  I am concerned with one aspect of rejected ballot papers. Where an elector so chooses to invalidate his paper, that is his or her business, but I think it is wrong that there should be such a large number of papers rejected because

  1157
  of the gross errors and wrong actions of a presiding officer or a polling agent. In my own constituency, I discovered for the first time a most unusual form of error, which led to the rejection of 60 valid ballot papers because of the gross error or action of presiding officers. There were 60 papers where the presiding officer or his polling clerk had written across the face of the ballot paper in ink the electoral number that appeared opposite the name of the elector in the electoral register. There was nothing that the returning officer could do, because it is expressly laid down that where there is any mark upon the ballot paper which could identify the elector such a ballot paper is automatically rejected.
  There was another case. When I was speaking to my hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) he told me that in his constituency 200 ballot papers had been invalidated because the presiding officer had written on the reverse side of the ballot paper the electoral number in the register. In addition to that, in my own constituency, we had cases of ballot papers rejected because not only was the ballot paper torn out but it was torn out together with the counterfoil.
  This is one aspect of invalidation or rejection. The other aspect is the case which is all too common, of the presiding officer omitting to affix the mark to the ballot paper itself. Something which, during my long experience of public life, has caused me a good deal of grief is that we should have people, briefed as they are all too shortly, with an instruction in front of them on the table saying that all ballot papers must be franked before being handed to the elector, who fail to carry out this instruction. Therefore I should like to ask my hon. Friend whether, instead of waiting until the last minute and allowing a forgetful presiding officer or polling clerk to omit to affix the stamp, thereby invalidating a good paper, it would be possible—and if it is impossible why it is—to have that frank or perforation affixed when the ballot paper is printed?
  I know that we shall hear stories about the possibility of forgery or fraud. If anyone wished to engage in forgery, they could do so by getting a postal ballot paper, when they would see that the frank
  1158
  is affixed to the postal vote. If so minded, they could copy that.
  Mr. Robert Cooke: I think the hon. Member is wrong about that. The frank on a postal ballot paper is different from that on an ordinary ballot paper. I am with the hon. Member in considering that there are difficulties and inefficiencies about the selection of people. Will he bear in mind the suggestions which I made to the House in the last Parliament about avoiding confusion over the names of candidates, and will he try to urge some of his hon. and right hon. Friends to adopt the measures which I suggested at that time?
  Sir M. Galpern: I am obliged to the hon. Gentleman. I shall come to that point.
  I should like to hear from my hon. Friend the reasons why it is impossible to have the frank affixed to a voting paper during the printing of the paper. Because of errors in franking, we find that thousands of ballot papers, which otherwise would be perfectly valid, are rejected.
  Another aspect relating to rejected ballot papers arises from what is done by an elector. I am not worried about that. But during the recent General Election 11 Members of Parliament were returned to this House with majorities of under 200. They included majorities of 11, 14, 27, 47 and 53. If any candidate was defeated by 53 votes when there were 60 perfectly good ballot papers which had to be rejected because of some action on the part of the presiding officer, it might not only have altered the result of the election, but, in a situation such as that in which we find ourselves today regarding the state of the parties in the House, it might well have altered the composition of the Government. I do not say that that would have happened, but it could have happened.
  I suggest that we should try to recruit more responsible people as presiding officers and polling clerks. Those are very responsible jobs. Teachers and local government officers could, I think, be found in sufficient numbers to be employed to discharge such duties. There is nothing laid down in the Act to ensure that these people are briefed in the duties they have to perform. The briefing sessions should be longer and people

  1159
  should be put through a test by means of a mock election to discover whether they can perform their duties.
  I wish to refer to the state of the register. I have every sympathy with registration officers, who have a very difficult and onerous task to discharge. Their staff consists of temporary employees whose duties are laid down in the Act. The staff must make sure that all houses are visited in a house-to-house inquiry or other sufficient inquiry made as to the persons entitled to be registered. I have discovered from conversations, with some of my hon. Friends and other hon. Members since the General Election, that the state of the register in their areas, as in my own, was absolutely shocking.
  That is not always the fault of the registration officer, it is often due to the inefficiency and laziness of people engaged to carry out the canvass. In Glasgow there are residences comprising three or four flats to which access is gained by stairs. In a number of cases canvassers would knock at the door of the downstairs flat and inquire of the occupant whether "Mr. and Mrs. Brown", four stairs up, still lived at that address, or whether they had died. Whatever the occupant of the ground floor flat communicated to the canvasser was taken as gospel and recorded. That is not good enough in such an important matter. Not only did that happen frequently, but buildings and whole streets were excluded. Generally speaking the register was in a shocking state.
  I come to the state of the register vis-à-vis the number of "Y" electors who were due to vote for the first time in the recent General Election. From official figures supplied by the Home Department and the Scottish Home Department, it appears that in 618 constituencies, excluding Northern Ireland, 319,450 young voters were on the register. But about 710,000 young people became 21 during 1964. Of that total it can be reasonably assumed that during the qualifying period the number who would reach their majority would be about 460,000. Therefore, 140,000 young people were robbed of the opportunity to vote at the recent General Election. With figures of such magnitude, it is time that the whole of the administration of this Section, together with the other
  1160
  Sections of the Representation of the People Act, was examined. In addition to the large numbers I have mentioned, there were many more omissions—lodgers, people who had changed their addresses, and so on.
  I realise that electors are warned, as they have been warned at present, that they should go to libraries or some other public place and check that their names appear on the register. I regret to say that, human nature being what it is, all too few people avail themselves of the opportunity. I wonder whether two things would be possible.
  First, since so many movements are taking place, with people moving from place to place because of overspill and 101 redevelopments, why cannot we revert to the six-monthly register which was in operation up to 1949 but which, for reasons of economy, ceased to operate? That would to a great extent obviate many of the cases which have occurred of people not getting the opportunity to vote. Secondly, just as the returning officer sends out a polling card to each elector on the register prior to the General Election, possibly some machinery could be devised so that the registration officer should send out a card to each elector indicating that he is on the register. If an elector did not receive such a card, one would hope that he would be goaded into going and finding out why he had not.
  With these brief remarks dealing with two broad issues, I hope that I have given my hon. Friend the Joint Under-Secretary of State something on which he will be able to reply. I hope that in the interests of good democratic Government and democratic practices he will give us some assurances this evening that he will ensure that these matters are looked into before the next General Election.
  10.18 p.m.
  The Joint Under-Secretary of State for the Home Department (Mr. George Thomas): I am deeply grateful to my hon. Friend the Member for Glasgow, Shettleston (Sir M. Galpern) for the personal remarks that he addressed to me at the beginning of his speech. He is a very distinguished Member of the House and when a distinguished Scotsman pays tribute to a humble Welshman it is doubly appreciated.

  1161
  My hon. Friend has raised a subject on which hon. Members on both sides of the House will be very sensitive. The administration of the Representation of the People Act, 1949, is a matter of the utmost importance in the conduct of a General Election. My hon. Friend, with his experience in the House, was wise to realise that we can only discuss tonight the administration of the Act. It would not, however, be inappropriate for me briefly to refer to what my right hon. Friend the Prime Minister said yesterday in reply to Questions, namely:
  "We are considering various proposals for electoral reform, and hope to arrange for discussion between the parties shortly."—[OFFICIAL REPORT, 10th November. 1964; Vol. 701, c. 829.]
  The main issue which my hon. Friend has raised is whether the machinery set up by Statute has worked as it should and whether steps can be taken to make that machinery work more effectively and efficiently. I should like to make one or two brief general remarks before dealing with the points raised by my hon. Friend. In the Representation of the People Act, 1949, Parliament has placed responsibility for the conduct of the election in each constituency on the returning officer. In Scotland, this is the sheriff. In England and Wales, the returning officer for a borough constituency is the lord mayor or mayor and for a county constituency, the sheriff. In practice, as we all know, the returning officer delegates the exercise of most of his function to an acting returning officer, who is the town clerk or clerk to the county council, as the case may be, and in Scotland normally the sheriff clerk.
  A returning officer is not subject to direction by or answerable to my right hon. Friends the Home Secretary or the Secretary of State for Scotland as regards his conduct of an election. Although the acting returning officer is clerk of a local authority, he is not, as returning officer, the servant of or answerable to that authority. He is answerable to the courts in that summary proceedings may be taken against him by any person for any act or omission in breach of his official duties.
  Breaches of official duty by a returning officer of so serious a nature that they might be thought to have affected the result of an election—and this was re-
  1162
  ferred to by my hon. Friend—could be a ground for an election petition. The statutory independence conferred upon the returning officer is designed to ensure the fair and impartial conduct of an election. It is true that both my right hon. Friends offer general guidance to returning officers, but there can be no question of giving instructions, still less instructions about particular points or places.
  I understand that my right hon. Friend the Secretary of State for Scotland—and I am glad to have my hon. Friend the Minister of State, Scottish Office present with me in this debate—has it in mind in due course to convene a conference at which the difficulties that arose during the General Election may be considered. No decision has yet been taken whether similar general consideration is necessary in England and Wales.
  Before I deal with the detail of the speech of my hon. Friend the Member for Shettleston, I should like to pay tribute to the very high general standard of efficiency and devotion to duty displayed by returning officers and acting returning officers and their staffs, to whom we in this House—I know that my hon. Friend feels the same as I do—
  Sir M. Galpern: Hear, hear.
  Mr. Thomas: —and, indeed, the electorate as a whole are greatly indebted. Each of us, being victors at the General Election, has had the privilege of proposing the vote of thanks, a privilege which I always appreciate deeply.
  To turn to the important questions raised by my hon. Friend, he was concerned first with the recruitment of presiding officers and polling clerks. This is entirely a matter for the returning officer in terms of Rule 27 of the Second Schedule of the Representation of the People Act, 1949. In practice it is true that provisional lists of people suitable for appointment are compiled by the returning officer and that the help of the local office of the Ministry of Labour is sought. I was glad to hear my hon. Friend say that, of course, there are elderly and disabled persons who are quite competent, indeed more competent than some young and able-bodied people, and on social grounds as long

  1163
  as they are suitable they must be available and must have the chance to be employed.
  My hon. Friend raised questions about Glasgow. I have no responsibility for Scotland. No Welshman would claim it. [An HON. MEMBER: "What about England?"] I have some responsibility there, I am pleased to say. In Glasgow because of the numbers involved—about 3,000—and the time available there is no possibility of all the candidates being personally vetted by the returning officer or his staff but about 300 of the staff recruited are deliberately taken from the corporation staff. These 300 are selected for their known competence in electoral matters and are appointed as No. 1 officers with general oversight of a school or some other public building containing a number of polling stations.
  All presiding officers and clerks in Scotland are given quite clear instructions, and particular stress is laid on procedure for marking the counterfoil of the ballot paper and not the ballot paper itself. Everyone, of course, deplores it when mistakes are made. Millions of operations take place on election day and it would be a miracle if there were not some mistakes. I recall suffering an experience similar to that of my hon. Friend in the 1945 General Election. My majority was large enough to overcome my indignation but I know exactly how I would have felt if my majority had been less than the number of spoilt votes because the ballot papers were not embossed. I believe that returning officers take every possible care in the selection of people, and in the performance of their duty the returning officers take every possible care and give the presiding officer the right instruction.
  My hon. Friend suggested also that the ballot papers should be pre-embossed. This was a suggestion well worth serious consideration, but pre-embossing, as my hon. Friend anticipated, would give a period of time for any attempt at the preparation of forged ballot papers
  1164
  indistinguishable from the authentic ones, or even for spare papers to be improperly procured at the printers or at some later point of distribution. Embossing at the poll is considered to provide a safeguard also against the inadvertent issue of two ballot papers instead of one. There does not seem to be evidence, taking the country as a whole, that the present procedure causes serious difficulty.
  The number of votes disqualified in the last election through lack of the official mark is not yet known, but I understand that the figure for all Scotland in 1959 was 927, there being none in my hon. Friend's constituency. On this occasion, however, according to my information there were 38. The compilation of the register also is a subject on which we all have sensitive feelings. We have taken note of what my hon. Friend has said about young voters being left off the register, but I must point out to him that the truth is that there has not yet been time fully to explore the apparent discrepancy in the numbers which are supposed to have been left off the register. That matter is being looked at.
  It is true that electors have an opportunity to check the register. It is a pity that people leave their concern for their vote until the General Election is upon them. All of us have met people who are frustrated because their names are not on the register or because something has gone wrong to prevent their having their vote, but, bearing in mind the magnitude of the operation, every possible precaution is taken to see that all citizens entiled to vote can have a vote if they exercise their civic right. We can only—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-nine minutes to eleven o'clock.