Commons Sitting of 29 November 1965

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

    Adolescent Mental Patients
    Mr. Roseasked the Minister of Health if he will conduct an inquiry into the psychological effects upon adolescent mental patients of placing them in adult wards and into the moral and physical dangers to which they are exposed.
    The Minister of Health (Mr. Kenneth Robinson): No, Sir. Hospital authorities have already been advised that separate units are preferable for most adolescents.
    Mr. Rose: Is my right hon. Friend aware of the disquieting rumours that are circulating concerning assaults on young persons in adult wards? Does not he agree that it should be the policy of his Department to secure separate self-contained adolescent units in all hospitals in the future?
    Mr. Robinson: That is the Department's policy. I have not had brought to my attention any individual cases of exposure to moral or physical danger. If my hon. Friend has any evidence I hope that he will pass it on either to the hospital board concerned or to me.

    Psychiatric Units (Adolescent In Patients)
    Mr. Roseasked the Minister of Health how much has been spent on new adolescent in-patient psychiatric units during each of the last ten years; and how much it is proposed to spend during each of the next ten years.
    Mr. K. Robinson: Before April 1961, about £1,000; in the four following years,
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    £29,000, £26,000, £10,000 and £5,000 respectively. These are figures for capital expenditure. Future provision is subject to the current review of the hospital building programme.
    Mr. Rose: Is my right hon. Friend aware that in spite of that rather limited expenditure there is a scandalous situation, in that there is not a single inpatient psychiatric adolescent unit in the whole area of the Manchester Regional Board? Is he further aware that plans were put forward six years ago with regard to Springfield Hospital, and that plans with regard to Prestwich Hospital seem to have been stopped? Will he treat this as a matter of urgent priority?
    Mr. Robinson: I am aware that of the ten units specifically for adolescents there is not one in the Manchester region. I am sure that all the points mentioned by my hon. Friend will be taken into account in the current review of the hospital building programme.

    Student Nurses (Night Duty)
    Mr. William Hamiltonasked the Minister of Health if he is aware that certain hospitals require student nurses to do three consecutive months on night duty on the wards and that such students do 10 to 11 hours duty for eight consecutive nights before getting any time off; and what steps he will take to end this state of affairs.
    The Parliamentary Secretary to the Ministry of Health (Mr. Charles Loughlin): A maximum of three months' night duty in the year is acceptable to the General Nursing Council, and to the Nurses' and Midwives' Whitley Council. Our evidence suggests that most student nurses prefer duty on a number of consecutive nights.
    Mr. Hamilton: Can my hon. Friend give me any evidence for that statement? Is he aware that the existence of these conditions is quite scandalous? Can he tell me of a single industrial worker in the whole of the United Kingdom who works for eight or in some cases ten hours on consecutive nights, with no overtime rates and at less than 2s. 6d. an hour?
    Mr. Loughlin: The Whitley Council agreement provides that for student nurses the maximum period on night

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    duty should not normally exceed three months in any twelve. I am not prepared to make comparisons with other types of worker. I know that the General Nursing Council is watching this position closely. In respect of nurses who work for eight consecutive nights, my hon. Friend should be fair and point out that they get six nights off immediately afterwards.
    Mr. Hamilton: In view of the very unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.

    Geriatric Beds
    Miss Quennellasked the Minister of Health whether he will reconsider the formula for the provision of geriatric beds in general hopsitals so as to reflect the population structure of the locality, rather than continue to use a regional or national formula which does not reflect local need.
    Mr. K. Robinson: The ratio of geriatric beds to population recommended to hospital authorities is 10 for every 1,000 persons aged 65 and over, which provides for the differing needs of particular localities.
    Miss Quennell: Is the right hon. Gentleman aware that this does not entirely meet differing needs for differing localities and that in some cases the oddest anomalies occur?
    Mr. Robinson: This is only guidance. Hospital authorities are aware that local factors—for example, the local population structure and the stage of development of complementary services—have to be taken into account in assessing the needs of each locality.

    Bury St. Edmunds and Haverhill
    Mr. Eldon Griffithsasked the Minister of Health what plans he has for providing additional hospital facilities in the West Suffolk towns of Bury St. Edmunds and Haverhill in order to meet the needs of their town expansion programmes.
    Mr. Loughlin: The needs of Bury St. Edmunds and Haverhill and their districts will be taken into account in the current review of the Hospital Plan.
    Mr. Griffiths: Will the hon. Gentleman take it from me that the casualty department of the West Suffolk Hospital is grossly overworked and badly needs expansion, and also that, in Haverhill, there are many hundreds of young families who are deeply disturbed about the lack of maternity facilities and about accidents arising from industrial work?
    Mr. Loughlin: In the first place, there is appreciation by the East Anglian Regional Hospital Board of some deficiencies in the West Suffolk General Hospital. Improvements are being considered: I can go no further than that. In Haverhill, it is doubtful whether the population increase will for many years justify a viable maternity unit in that area.

    St. Thomas's Hospital (Rebuilding)
    Mr. Kenneth Lewisasked the Minister of Health whether he will give an assurance that the plans for rebuilding St. Thomas's Hospital, London, will proceed as planned and without delay.
    Mr. Woodnuttasked the Minister of Health why work on the building of St. Thomas's Hospital has ceased; what cost has been incurred to date; and what have been the total architects' fees on the current and earlier schemes.
    Mr. K. Robinson: Stage 1 of the rebuilding of St. Thomas's Hospital (costing over £2 million) is continuing and is expected to be completed next year. I am discussing the next stage with the Board of Governors and have not yet made a decision. Architects' fees have not yet been determined.
    Mr. Lewis: Is the Minister aware that there will be considerable disappointment that he is even considering the possibility of not going ahead with Stage II? Is he aware that this hospital is not only of importance to London but also of national and international importance, both in its site and in its work? May we have an assurance from him that this work will proceed, since it is the biggest rebuilding of a major London hospital since the war and we ought to complete it?
    Mr. Robinson: I am aware of many of the facts which the hon. Member has

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    given to the House. It is true that Stage II is a very large scheme indeed which will cost a very considerable sum of money, and that makes it right that it should be balanced against other priorities in the hospital building programme. The assurance which I can give to the House is that this matter will be considered as one of urgency and that a decision will be reached as soon as possible.
    Mr. Pavitt: Is my right hon. Friend aware that regional hospitals feel that perhaps the teaching hospitals have had more than their fair share in the hospital programme? Will he bear that in mind when reviewing this expensive second scheme?
    Mr. Robinson: I know that that view is taken by some regional hospital boards and certainly I will take it into consideration, together with all other factors.
    Mr. Woodnutt: I am glad to hear that the Minister is still considering this matter because to a casual observer it looks as though work has stopped. Will he bear in mind the First Secretary's assurance that the moratorium on capital expenditure in the public sector did not apply to hospitals? As this scheme had been agreed, would not the Minister agree, in view of the large amount of expenditure which has already occurred, particularly on architects' fees, that it would be more economical to carry on than to stop?
    Mr. Robinson: The House is certainly aware that hospital building projects were exempt from the capital expenditure moratorium. But I would differ from the hon. Member in his statement that this was a scheme which had been agreed. This is not so.

    Law Commission on Waste (Questionnaires)
    Sir H. Lucas-Toothasked the Minister of Health how many teaching hospitals and regional hospital boards have sent replies to questionnaires by the Law Commission on Waste as between Landlord and Tenant and on Distress for Rent, which he forwarded to them on 30th September, 1965.
    Mr. Loughlin: In all, 29 boards of governors of teaching hospitals and 13 regional hospital boards.
    Sir H. Lucas-Tooth: Why did the Minister send this lengthy, detailed and highly technical document which is concerned with nothing but points of Chancery law to the hospitals, which have plenty to do doing their own job? Will the hon. Gentleman let the Law Commission know that this kind of activity will bring it the reputation for nothing except bumbledom?
    Mr. Loughlin: The answer is simply that the hospitals are managers of a considerable amount of property, both for hospital and endowment fund purposes. It was felt that the hospitals were in a position to provide useful information to the Law Commissioners, and I do not think that there was anything wrong in what was done.

    Beds and Staff, Newcastle (Shortage)
    Mr. Rhodesasked the Minister of Health what plans exist to overcome the shortage of hospital beds and staff in the Newcastle Regional Hospital Board area.
    Mr. Loughlin: Plans for the development of hospital services in the Newcastle Region, which include proposals for overcoming bed shortages, are now under consideration as part of the review of the hospital programme. To meet shortages of staff, the board uses the normal methods of recruitment and, in addition, has established many local training schemes.
    Mr. Rhodes: While thanking the Parliamentary Secretary for that reply, may I ask him to bear in mind that the grossly excessive hours being worked by much of the staff in this area is, I suggest, virtually as dangerous as it is scandalous? While appreciating that he inherited this shortage of beds and staff from his predecessor, will he do his best to see that some priority is given to this area in future?
    Mr. Loughlin: The question of recruitment and the allocation of beds is largely the business of the regional hospital board. We appreciate that in many hospitals the staff is having to work under extremely difficult conditions. Being mindful of this, we are giving the whole matter our active consideration.

    New General Hospital, South Shields
    Mr. Blenkinsopasked the Minister of Heath when the second and later stages of construction of the new South Shields General Hospital are to be started.
    Mr. K. Robinson: This is one of the matters to be considered in the course of the current review of the hospital building programme.
    Mr. Blenkinsop: Is my right hon. Friend aware that there has been very considerable anxiety in South Shields and district because of some reported statements about possible starting dates? Will he keep in mind, as regional boards do, the rapid heavy industrial development which is taking place in the area and which involves a large increase in the number of men at risk?
    Mr. Robinson: I will certainly take that consideration into account, as I am sure the regional board will have done.

    Building Programme (Review)
    Mr. Woodasked the Minister of Health if he will now make a statement on his review of the hospital building programme.
    Mr. K. Robinson: Many hospital boards have already submitted to me their provisional proposals, and I expect the remainder shortly. It is necessary to study these in detail with the boards, but I hope to publish the results of the review in the first half of next year.
    Mr. Wood: Is the Minister aware that, meanwhile, the country has no facts on which to judge whether the confident promises made in October, 1964, are being broken or are being carried out, and that we are anxious to reach a judgment as soon as possible? In the meantime, news of disappointment and postponement is coming in. Can we be assured that by the time of the next election we shall be able to judge whether the Labour Party has kept its promises?
    Mr. Robinson: Long before then. The right hon. Gentleman can rest assured that the promises made in October are not being broken, but it was important to give the boards time to produce their plans and consult other authorities. My Department also must have adequate time
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    to study the programme. We are seized of the urgent need to review the plan and publish our findings, but we are not prepared to produce a hurried, ill-thought-out revision.
    Mr. Lubbock: Does the Minister realise that when the plans of the local authorities were published it was stated by the previous Government that it was important that those plans should be considered in conjunction with those of the hospitals. Can the right hon. Gentleman now give a similar undertaking that a review is taking place in respect of local authority health and welfare plans, and that they, too, will be published in the first half of next year?
    Mr. Robinson: That is my present intention, and I hope very much that the two plans will reflect closer consultation between the two sets of authorities than has been the case hitherto.
    Mr. Bagier: In considering the review, will my right hon. Friend ensure that much needed extensions of existing hospitals, which are required to carry out their ordinary duties, are not held up in any way? In particular, I ask my right hon. Friend to think of extensions for surgical and other facilities which, at the moment, are apparently awaiting the review of hospital building plans.
    Mr. Robinson: It is my intention, and I have already told the House, that the review shall not be allowed to affect the progress of schemes that were planned to start in the very near future, and, as far as I know, boards have carried out this advice.

    Pay Beds (Allocation to New Hospitals)
    Mr. James Johnsonasked the Minister of Health what factors determine the percentage of pay beds allocated to the general hospitals now being built.
    Mr. K. Robinson: I decide the number of pay beds for each hospital shortly before it is opened, taking into account all relevant factors, including the needs of non-paying patients and the probable demand for pay beds.
    Mr. Johnson: Whether there should be any pay beds in the National Health Service is debatable, certainly on this

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    side, but will my right hon. Friend accept the fact that, while we do not want pay beds, if we are to have any in the new hospital in Hull, there should be a lower percentage of them there than in, say, Cheltenham, Bournemouth or Scarborough, where there are factors other than political factors?
    Mr. Robinson: I think that my hon. Friend is aware that I have approved no pay beds in the new Western General Hospital at Hull, because the existing pay beds have not been fully used and in other hospitals there are long waiting lists for non-paying beds. But I shall be making a statement on pay beds as soon as possible.
    Mr. Wood: In order to put the matter in perspective, will the Minister give the figure of the contribution that payers in pay beds have made to the National Health Service? At the same time, will he issue figures to show whether any serious cases have been refused admission because only pay beds were available?
    Mr. Robinson: I shall be very happy to provide those figures, but, I am afraid, not without notice. The statistics of occupancy of pay beds certainly suggest that in many areas where the waiting lists for non-paying patients are very long, they are, perhaps, non-existent for paying patients, which has had the effect of delaying the admission to hospital of non-paying patients.

    Closures, Wales
    Mr. Clifford Williamsasked the Minister of Health if he will give details of circumstances since the publication of the 10-year plan for hospital development for Wales which will eliminate the proposed closure of smaller hospitals in the Welsh Region.
    Mr. K. Robinson: The closure of a hospital is decided according to the circumstances at the time, and I cannot give any forecast of hypothetical circumstances which might affect particular closures.
    Mr. Williams: While thanking my right hon. Friend for that reply, may I ask him whether, prior to any proposed closure on the development of any new hospital within the region, he will see that ample time is given for consideration with
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    all the proper authorities, particularly local health authorities?
    Mr. Robinson: Yes, Sir. I would readily give that assurance. There is very extensive consultation with all local interests whenever a proposal is made to close a particular hospital.
    Mr. Kershaw: Is the right hon. Gentleman aware that small hospitals are very popular not only in Wales, but all over the country, and will he bear that fact in mind?
    Mr. Robinson: Yes, Sir.

    Queen Elizabeth Hospital, Birmingham (Artificial Kidney Unit)
    Mr. Victor Yatesasked the Minister of Health how many persons in the Midland region are registered in need of treatment provided by the artificial kidney unit at Queen Elizabeth Hospital, Birmingham; how many have been refused treatment during the past 12 months; and what is the total number of persons throughout the country in need of this treatment.
    Mr. K. Robinson: There is no regional register; no suitable case of acute renal failure has been refused by this unit but five patients known to the hospital to be suffering from chronic renal failure who might have benefited could not be treated. The answer to the last part of the question is that no reliable figures are available.
    Mr. Yates: Is the Minister aware that the two doctors who operate this kidney machine at Queen Elizabeth Hospital, Birmingham, have themselves estimated that no fewer than 200 patients are being turned away annually to die within a few weeks, and 2,000 in the country? Will my right hon. Friend look into this again and check these figures, because this has caused grave apprehension in the Midlands?
    Mr. Robinson: A distinction needs to be made between the treatment by artificial kidneys of acute renal failure and of chronic renal failure. There is no shortage of facilities for the former, but treatment of chronic renal failure by intermittent dialysis has recently been regarded as acceptable. I agree that much needs to be done to

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    extend existing facilities, but only a minority of sufferers from chronic renal failure are likely to benefit from treatment by intermittent dialysis.

    Private Beds, North-East Essex
    Mr. Ridsdaleasked the Minister of Health to what extent the provision of private beds in the general hospitals in North-East Essex reflects the high percentage of retired people within the area, or to what extent they are provided on a regional or national formula which does not reflect local need.
    Mr. Loughlin: There are 21 such beds; the number is kept under review in the light of local conditions, and no specific formula is applied.
    Mr. Ridsdale: Is the Minister concerned about the growing number of elderly awaiting admission to hospital? What are the Government doing over and above what was done by the last Conservative Government to deal with this problem?
    Mr. Loughlin: I hardly see how the fact that elderly people are awaiting admission to hospital is related to pay beds. It may well be that many of the elderly to whom the hon. Member has referred are pensioners. I should have thought it more desirable that they should not be forced to pay for beds.

    Building Programme, North-East Essex
    Mr. Ridsdaleasked the Minister of Health to what extent the cutback in the Government's review of the hospital building programme is reflected in current and planned capital projects for North-East Essex.
    Mr. K. Robinson: There has been no reduction in the total amount of money expected to be available for hospital building, and in the current year £5 million more has been provided than was included in my predecessor's plans. As regards projects in North-East Essex, I would ask the hon. Member to await my review of the hospital plan.
    Mr. Ridsdale: Will the Minister assure the House that there will be no cut-back in the programme for North-East Essex,
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    particularly because of the increase of elderly in that area? Will he see that provision will be made for future projects because of the very serious problem in that part of the world?
    Mr. Robinson: It is for the North-East Metropolitan Regional Hospital Board to settle the priorities of the capital programme within the resources which I can make available. I have already received the Board's review of the programme and I shall consider it with reviews of other boards.

  MINISTRY OF HEALTH

    Chiropodists, Staffordshire
    Mr. Hugh Fraserasked the Minister of Health whether, in view of the shortage of chiropodists in Staffordshire for the implementation of an extended service for young people there, under the County Council's prophylactic foot-care scheme, he will permit chiropodists who have failed to achieve State registration but who have been in practice for 10 years prior to the beginning of the registration scheme, or who have worked satisfactorily for Government Departments, to be now employed locally by the National Health Service.
    Mr. Loughlin: No, Sir.
    Mr. Fraser: Is the hon. Member aware that in Stafford today we are being denied the extension of a scheme for the foot care of the young and, at the same time, that because of the regulations at least one chiropodist is now on National Assistance pay? Surely this is entirely wrong. One man is being deprived of his livelihood and the whole area is being deprived of his services. Surely the Minister will make the concession that I have asked for.
    Mr. Loughlin: We are not aware of any shortage of chiropodists in the employment of Staffordshire County Council and I understand that demands for treatment are generally being met. I think that the hon. Member will agree that State registration is desirable. It was introduced by the previous Minister. I am not prepared to comment on a case arising out of a Question of this kind.

    Contraceptive Pills (Dunlop Committee)
    Dr. Summerskillasked the Minister of Health if he will withdraw contraceptive pills from general circulation until the investigation of the Dunlop Committee into their possible side-effects has been completed.
    Mr. K. Robinson: I see no ground for asking the manufacturers to do this. The Committee has recently advised that, after reviewing the available evidence, it does not feel justified in objecting to the marketing of oral contraceptives.
    Dr. Summerskill: Will my right hon. Friend bear in mind that the Interim Report of the Dunlop Committee did not exclude the serious possibility that these drugs may be having serious side-effects? Does he not therefore consider it wise to withdraw them from circulation until a definite verdict has been arrived at?
    Mr. Robinson: No, Sir, the Committee is, of course, continuing to watch this position closely, and if it thinks that any further advice is desirable, it will, no doubt, give it. It discovered that there had been 16 deaths due to thrombo-embolic episodes in women taking oral contraceptives in the year ending 31st August. It estimated that the figure of 400,000 represented the number of women who had been taking them with reasonable regularity during that time and the official mortality figures indicated that 13 out of a similar number would normally have been expected to have died from the same cause.
    Sir Knox Cunningham: Has the Minister any evidence that sterility has been caused by taking these pills?
    Mr. Robinson: No, Sir.
    Dr. David Kerr: Would my right hon. Friend make it plain that the benefits derived from the widespread use of the pills at the moment clearly outweigh any risk of danger?
    Mr. Robinson: Certainly, I should have thought that the benefits are self-evident.
    Mr. McNair-Wilson: Would the Minister not agree that there is some evidence that if these pills are taken over a very long period the possible danger
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    increases? Is this not something upon which women should be reassured by some evidence which the Dunlop Committee can look into?
    Mr. Robinson: I can assure the hon. Gentleman and the House that the Dunlop Committee is very alive to all the possibilities and is looking into them as a matter of urgency.

    Venereal Disease (School Children)
    Miss Quennellasked the Minister of Health how many cases of venereal disease were reported among school children in the past school year; and how many have been reported in the current school year.
    Mr. Loughlin: In 1963 in England and Wales 1,319 new cases of gonorrhoea and 39 cases of syphilis (other than congenital syphilis) were reported in persons under the age of 18, including 233 and 2 respectively in persons under the age of 16. The corresponding figures for 1964 were 1,441, 32, 233 and 6. Figures for school children by school years are not available.
    Miss Quennell: Does the hon. Gentleman realise that, although the figure of 1,400 represents a minor increase in 1964 over the figure for 1963, it is still far too high a figure? Secondly, could he tell the House what special steps his Department is taking to halt this rise, since it is obviously continuing over a period of years and clearly must be tackled as a matter of seriousness and urgency for our young people?
    Mr. Loughlin: I agree that there has been a very disturbing rise: any rise in these figures is very disturbing. However, it is a very difficult problem, as the hon. Lady will know. It is a question of getting people to enter into treatment voluntarily. We pursue normal health education and normal advertising as far as we can, but this is one of those subjects in which there is some difficulty in knowing precisely how to get people to register and be treated, rather than merely acquainting people with the dangers.
    Mr. Scott-Hopkins: Is it not clear that the presents figures indicate that there is an increasing trend towards venereal disease in schools? Would the hon.

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    Gentleman take some much more dramatic steps to deal with this in the cases when it occurs in schools among children of school age? Is it not possible that some method of checking could be introduced for children at school between the ages of 15 and 19?
    Mr. Loughlin: It is very easy to talk about taking dramatic action on an issue of this kind. It is doubtful if it would be right to make compulsory the medical examination of school children between 16 and 19 over a small number of days, because the incubation period is so short. It is very difficult to start introducing procedures of this kind without interfering too much with the treatment of the individual.

    Drug Addiction (Brain Committee's Report)
    Mrs. Joyce Butlerasked the Minister of Health if he will make a statement on the report of the Brain Committee on Drug Addiction.
    Mr. K. Robinson: I would refer my hon. Friend to my reply to my hon. Friend the Member for South Shields (Mr. Blenkinsop) on 25th November.
    Mrs. Butler: While I understand the need for consultation in dealing with this spreading sore of drug addiction, does my right hon. Friend understand the extent of public anger at the ease with which young people can obtain drugs from drug addicts and the need for quick action on this? How soon will he be making a statement on measures he intends to take to implement the Report, and how quickly will he take them?
    Mr. Robinson: I agree with my hon. Friend that this Report discloses a disturbing situation. However, I think that it would be premature for me to make a statement of the Government's intentions before the consultations with the medical profession are completed. But I am fully aware of the urgency of the matter.
    Mr. Wood: While understanding that the right hon. Gentleman cannot make a statement at the moment, can he say how long it will take to complete these discussions and whether he will be able to make a statement early in the New Year to allay some of the disquiet which is felt?
    Mr. Robinson: Certainly, I hope that early in the New Year at least I can make a further statement. The consultations are already under way and we are treating them as a matter of urgency.
    Mr. Woodasked the Minister of Health what discussions he has had about the immediate setting up of an advisory committee to review the whole problem of drug addiction, as recommended in the Second Report of the Interdepartmental Committee, published on 25th November, 1965.
    Mr. K. Robinson: The consultations referred to in my reply of 25th November to my hon. Friend the Member for South Shields cover this as well as the Committee's other recommendations.

    Cervical Cancer
    Mrs. Joyce Butlerasked the Minister of Health what progress has been made with a national cervical cancer screening service for all women at risk.
    Mr. K. Robinson: By June this year almost 51,000 women a month were being tested in hospital, local authority and family planning clinics and by general practitioners. There were 283 pathologists and 383 technicians trained in cytology working in hospital laboratories and another 29 pathologists and 131 technicians undergoing training. About a third of the laboratories which propose to provide a cytological service should be able to support routine screening in the areas they serve by the end of this year.
    Mrs. Butler: While I thank my hon. Friend for the figures and appreciate his interest in this question, is it not a fact that progress is still much too slow in dealing with this scourge which could be eliminated entirely, and which is so disturbing? In view of the wastage from marriage and other causes, could he launch a drive to encourage fully qualified married women laboratory technicians to return on a part-time basis to their local hospitals?
    Mr. Robinson: I will consider what my hon. Friend said about part-time married women technicians. We need a great many more part-time women in many branches of the Health Service. We need about 500 whole-time equivalent

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    technicians for the national screening service. The 514 I mentioned in my Reply do not spend all their time in cytology and I understand that they represent the equivalent of 310 working full time.
    Mr. Murrayasked the Minister of Health what progress has been made in Kent in obtaining qualified staff for routine screening for cervical cancer.
    Mr. Loughlin: Progress continues. All the hospital management committees in Kent, save Tunbridge Wells, have extra staff trained or nominated for training.
    Mr. Murray: While thanking my hon. Friend for that reply, may I ask him if he will now consider the possibility of organising mobile clinics where clinics cannot be provided in set centres in Kent?
    Mr. Loughlin: I understand that there would be considerable difficulty in providing mobile clinics for this purpose.

    Nursing Cadets
    Mrs. Renée Shortasked the Minister of Health if he will review Ministry of Health Circulars H.M. (68) 104 and H.M. (63) 37 and remove the discrimination contained therein against second-year nursing cadets.
    Mr. K. Robinson: I do not think there is unfair discrimination, but I will keep the matter under review.
    Mrs. Short: Is my right hon. Friend aware that a second-year nursing cadet loses some £30 a year from her salary if she spends two days in college and three and a half days in hospital? Does he not think that this is an unfair discrimination against the older nursing cadets—the girl who already has one year's experience and who presumably is doing more responsible work in the hospital? In view of the need to encourage more girls to come forward into nursing, does he not think that this niggardly deduction could be removed at very little cost to the National Health Service?
    Mr. Robinson: I am aware of the situation which my hon. Friend has described, but I regard it rather differently. I would say that it is discrimination in favour of certain categories of first-year nursing cadets who enjoy a
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    concession which is extended to no other young staff. But, as I have said, I am keeping the matter under review.

    Fluoridation
    Dr. David Kerrasked the Minister of Health in view of the misleading and inaccurate information distributed widely by opponents of fluoridation of water supplies, whether he will grant sufficient money to the Central Council for Health Education to allow the Council to correct this effectively.
    Mr. K. Robinson: I fully accept the need for wide dissemination of factual and objective information about fluoridation, but I am not satisfied that this would be the most effective method in present circumstances.
    Dr. Kerr: Is the Minister aware that no fewer than 50 local authorities have already gone on record against fluoridation, misled by this kind of rubbish from otherwise well-meaning people? If he is not prepared to use the services of the Central Council for Health Education, would he please tell the House at an early date which service he proposes to use?
    Mr. Robinson: I share my hon. Friend's disappointment, but I remind him that about 90 authorities have decided in favour of fluoridation. I feel that fluoridation is one of the most useful preventive health measures which medical and dental science has so far made available to us in our fight against dental decay. In those circumstances, I feel it right that I as Minister should take the initiative and accept full responsibility for ensuring that the true facts are disseminated as widely as possible.
    Sir Knox Cunningham: Will the Minister tell the House which methods he is using to make the advice which he is giving to the House known to the public and the nation at large?
    Mr. Robinson: My advice is primarily directed towards the local health authorities. I have acquainted them with all the scientific information in favour of fluoridation. My Department has produced a considerable amount of material to counter the irresponsible propaganda against fluoridation which has received an unduly wide circulation.
    Mr. Speaker: Dr. Kerr.
    Mr. Rankin: On a point of order. May I have your guidance, Mr. Speaker? In view of the fact that I described fluoridation as sodium fluoride, which is a virulent poison, being added to our water, am I guilty of misleading the nation?
    Mr. Speaker: Order. The hon. Member is wasting time at Question Time by arguing under the guise of raising a point of order.
    Mr. Fisherasked the Minister of Health if he will give an estimate of the extent of anti-fluoridation opinion in the country.
    Mr. K. Robinson: The lists circulated with my reply to the hon. Member for Chigwell (Mr. Biggs-Davison) on 22nd November indicate that among local authorities the weight of opinion is predominantly in support of fluoridation. Leading professional opinion is almost entirety in favour.
    Mr. Fisher: Is the right hon. Gentleman aware that although personally I am fully in favour of fluoridation and a great supporter of his policy, I find that a considerable number of my constituents are not? In fact, an unofficial local poll revealed 85 per cent. against it. In view of this—which may be common throughout the country—is there any way by which people can express a personal opinion on a very personal matter?
    Mr. Robinson: I do not know whether the hon. Member is suggesting that there should be something in the nature of a referendum in local authorities. That would be a new constitutional departure. The fact is that almost all existing opposition to this proposal stems from the very small but very vocal group of people who bombard local councillors with propaganda which is both unscientific and irresponsible.
    Mr. Fisherasked the Minister of Health to what extent it is the policy of Her Majesty's Government that decision by individual local authorities is the best way of implementing the fluoridation of water policy.
    Mr. K. Robinson: The statutory function of making arrangements for fluoridation of water supplies rests with the local health authorities under Section 28 of the National Health Service Act, 1946. In
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    my view it is best that the decision should be theirs.
    Mr. Fisher: What bothers me a little is that local authorities have no mandate to decide the matter as far as I am aware. Does not the right hon. Gentleman agree that it has never been fully debated in the House and that therefore there has been no express approval by Parliament of it—although, I say again, personally I am greatly in favour of it.
    Mr. Robinson: I would welcome a debate in the House on fluoridation and I very much hope that some private Member who is lucky in the Ballot will put it forward as a subject for debate.
    Sir K. Joseph: Is the Minister aware that we on this side of the House wish him the best of luck in his campaign and hope that it is thoroughly successful?

    At Risk Register
    Dr. David Kerrasked the Minister of Health what representations he has received from local health authorities on the compilation and use of an At Risk register; and what advice he has offered on the subject.
    Mr. Loughlin: We have had no representations and issued no recent advice.
    Dr. Kerr: Is my hon. Friend aware that at the recent conference of the Health Visitors Association at Cheltenham some very critical observations were made about the use in certain local authorities of the At Risk Register? While the principle was in no way discounted, it was felt that some guidance might be needed in certain areas.
    Mr. Loughlin: We are not aware of the criticism which was made. If my hon. Friend will let me have details I will look at it.

    Birth Control (Appliances and Advice)
    Mr. Hamlingasked the Minister of Health what plans he has for the provision of birth control appliances and advice as part of the National Health Service.
    Mr. K. Robinson: This matter is under review, but I am not yet in a position to make a statement.
    Mr. Hamling: Is my right hon. Friend aware that there would be widespread approval of a decision by the Minister to make this advice and treatment available through the National Health Service?
    Mr. Robinson: I have already said in the House that I regard family planning as a proper and important part of health education. However, to provide advice and treatment free of charge generally in cases where there is no medical need would require changes in the present statutory provision and, of course, would be costly.

    Obesity
    Mrs. Renée Shortasked the Minister of Health if he will undertake a national campaign against obesity.
    Mr. Loughlin: I am not satisfied that any such campaign is likely to be effective.
    Mrs. Short: Is the Parliamentary Secretary aware that about two-thirds of the people in this country are overweight and that this leads to heart disease, arthritis, postural backache and flat feet? Does he not think that it would pay dividends if his Department undertook a campaign of this kind, which would relieve the National Health Service of a good deal of the problems which are caused by overweight? Is he also aware that large numbers of children are overweight and that if he were to——
    Mr. Speaker: Order. The hon. Lady must learn to slim her questions.
    Mr. Loughlin: I fear that you anticipated the very comment I was about to make, Mr. Sneaker. After the points made in question form by my hon. Friend, perhaps I now know the reason why I sometimes feel so ill. Experience of obesity clinics, both in this country and the United States, has proved very disappointing indeed. It is not just a question of getting off weight. It has been found that people who reduce their weight often do not have the same strength of character as my hon. Friend to continue with the slimming process.
    Mr. Wood: Would the Parliamentary Secretary agree that the hon. Lady's
    992
    campaign got off to a good start as a result of the activities of the bakers' union?

    Prescriptions (Time Limit)
    Mr. Shepherdasked the Minister of Health whether in the interests of encouraging economy in prescribing, he will put a limit on the period covered by any one prescription, save in exceptional circumstances.
    Mr. K. Robinson: While I do not think it would be right to impose a fixed limit, I wrote to all family doctors at the beginning of the year reminding them of the advice of an independent committee that no more than one week's supply of drugs should be prescribed at a time during the first two weeks of illness and thereafter no more than a fortnight's supply, save for certain chronic illnesses.
    Mr. Shepherd: I thank the Minister for that reply. Is he able to indicate any further action which he may be able to take to reduce the area of waste in prescribing?
    Mr. Robinson: I am watching the position. There is some evidence to show that the doctors have taken note of my suggestion in that while the number of prescriptions went up following the abolition of prescription charges, the quantity of drugs per prescription decreased compared with the average in 1964.

    Consultants (Merit Awards)
    Mr. Shepherdasked the Minister of Health how many merit awards to consultants have been withdrawn since the inception of the awards scheme.
    Mr. K. Robinson: None, Sir.
    Mr. Shepherd: Is the Minister satisfied that a system which appoints a considerable number of people to a position of advantage and yet removes none of them is working satisfactorily?
    Mr. Robinson: If the work of a consultant deteriorates unacceptably the question which surely arises is that of fitness for further employment rather than

    993
    that of his continuing to hold an award. The put back The award continuing after the consultant remains in his post beyond the normal retiring age has been the subject of discussion with the profession, but no decision has yet been reached.

    General Practitioners (New Drugs)
    Mr. Pavittasked the Minister of Health if he will review the present methods employed by his Department to keep general practitioners fully informed of new drugs.
    Mr. K. Robinson: Various methods are in use and they are under constant review.
    Mr. Pavitt: Would my right hon. Friend give serious thought to the possibility of making available an adequately financed central information service? Is he aware that although in 1962–63 the drug houses spent £8·3 million on research they spent considerably more than that on the promotion of medicines, which, in the end, the Exchequer must pay?
    Mr. Robinson: The question of the sales promotion activities of the pharmaceutical manufacturers is firmly within the terms of reference of the Sainsbury Committee, and I am sure that that Committee will give urgent attention to the matter.

    Mentally-Handicapped Children, Wellingborough (Training Centre)
    Mr. Harry Howarthasked the Minister of Health what representations he has received regarding the delay in building a new junior training centre for mentally-handicapped children in the Wellingborough area; and if he will authorise the building of the centre to proceed as planned without delay.
    Mr. Loughlin: The county council has asked for authority to proceed with this scheme at once, but my right hon. Friend is not satisfied that the circumstances justify exemption from the current general deferment of local authority capital projects.
    Mr. Howarth: Is the Parliamentary Secretary aware that there has been delay in building this centre, which was planned
    994
    previously? Is he aware that this was put back behind other centres in the Northamptonshire area because of questions involving the acquiring of land. As this is now designated, will he now reconsider his decision on this matter?
    Mr. Loughlin: We recognise that this is an eminently desirable project in itself, but other factors must be considered, particularly that of its urgency in relation to the Government's policy of deferring health and welfare building projects generally. However, I wish to impress on my hon. Friend that the deferment is only of a temporary kind.

    General Practitioners (Deputies)
    Mr. Pavittasked the Minister of Health what action he proposes to take to protect general practitioners from formal complaints made against a deputy acting within authorised arrangements.
    Mr. K. Robinson: Agreement with the profession on a new contract for general practitioners will result in new arrangements for accountability of deputies on the lines set out in Section 5 of the first report of my discussions with general practitioner representatives on the Family Doctors' Charter. A copy of this report is in the Library.
    Mr. Pavitt: I thank my right hon. Friend for that reply, which will be greatly welcomed in places like Ilford, where the emergency services are being threatened by the fact that if a deputy fails to do his duty the patient is reluctant to take action against the principal.

    Mentally Subnormal Children (Residential Homes)
    Mr. John Wellsasked the Minister of Health how many residential homes for mentally-subnormal children are under the charge of his Department; where they are located; how many children were in them at the latest convenient date; and what number of staff, qualified and unqualified, were employed at that date.
    Mr. Loughlin: On 31st December, 1964, local health authorities in England and Wales provided 42 such homes, and 564 mentally subnormal children were resident. Four new homes have been

    995
    opened this year with 80 places. As the list is long, I will with permission, circulate it in the OFFICIAL REPORT. I regret that the information about staff is not available.
    Mr. Wells: As the hon. Gentleman says that the list is long, will he now
    Hostels for mentally subnormal children are provided by:—

    Bradford County Borough.

    Buckinghamshire County Council

    …

    …

    …

    …

    Aylesbury.

    Bletchley.

    Cambridgeshire County Council

    …

    …

    …

    …

    Cambridge.

    Cornwall County Council

    …

    …

    …

    …

    St. Blazey.

    Cumberland County Council

    Carlisle.

    Derbyshire County Council

    …

    …

    …

    …

    Chesterfield.

    Chailey.

    Devonshire County Council

    …

    …

    …

    …

    Barnstaple.

    Dawlish.

    Plymstock.

    Dorset County Council

    …

    …

    …

    …

    Weymouth.

    Eastbourne County Borough.

    Essex County Council

    …

    …

    …

    …

    Colchester.

    Hampshire County Council

    …

    …

    …

    …

    Basingstoke.

    Huntingdonshire County Council

    …

    …

    …

    …

    Huntingdon.

    Kent County Council

    …

    …

    …

    …

    Broadstairs.

    Folkestone.

    Lancashire County Council

    …

    …

    …

    …

    Lancaster.

    Newton-le-Willows.

    Oswaldtwistle.

    Leeds County Borough.

    Lincolnshire (Parts of Kesteven) County Council

    …

    …

    …

    …

    Grantham.

    Lincolnshire (Parts of Lindsey) County Council

    …

    …

    …

    …

    Louth.

    London Borough of Hillingdon.

    Manchester County Borough.

    Northumberland County Council

    …

    …

    …

    …

    Clawick.

    Nottinghamshire County Council

    …

    …

    …

    …

    Newark.

    Oxfordshire County Council

    …

    …

    …

    …

    Banbury.

    Oxford County Borough.

    Shropshire County Council

    …

    …

    …

    …

    Shrewsbury.

    Sheffield County Borough.

    Somerset County Council

    …

    …

    …

    …

    Yeovil.

    Staffordshire County Council

    …

    …

    …

    …

    Cannock.

    Leek.

    Surrey County Council

    …

    …

    …

    …

    Woking.

    Sussex (East) County Council

    …

    …

    …

    …

    Cuckfield.

    Sussex (West) County Council

    …

    …

    …

    …

    Worthing.

    Warrington County Borough.

    Warwickshire County Council

    …

    …

    …

    …

    Rugby.

    Warwick.

    Wiltshire County Council

    …

    …

    …

    …

    Trowbridge.

    Wolverhampton County Borough.

    Yorkshire (East Riding) County Council

    …

    …

    …

    …

    Driffield.

    Yorkshire (North Riding) County Council

    …

    …

    …

    …

    Scarborough.

    Yorkshire (West Riding) County Council

    …

    …

    …

    …

    Harrogate.

    Disabled Patients (Private Cars)
    Mr. Woodhouseasked the Minister of Health whether he will take steps, in the case of disabled National Health Service patients who buy cars at their own expense without surrendering the invalid tricycles issued to them by the National Health Service, to pay them maintenance grants for such cars as well as the cost of adaptation.
    Mr. Loughlin: No, Sir. My right hon. Friend does not intend to introduce
    enumerate those homes that are in the County of Kent?
    Mr. Loughlin: I am very sorry, but I cannot do that without delaying the House too greatly at Question Time.
    Following is the list:
    any new arrangements until we have completed next year's comprehensive review of the provisions for transport for the disabled.
    Mr. Woodhouse: If, as I think, I am right in believing that the concession described in my Question is already made to war disabled patients, what justification can there be, 20 years after the war, for not extending it to all National Health Service patients?
    Mr. Loughlin: The point is that the cases referred to by the hon. Gentleman in his Question come under the National Health Service Acts, which do not empower the Minister to make cash grants, or to improve upon the vehicles, as an alternative to the present arrangements. We are looking very closely at the problem, but I do not of necessity say that we shall be able to accept what the hon. Gentleman wants, as other problems are involved.
    Lord Balniel: Is the Parliamentary Secretary aware that there is a great deal of hardship under the present regulations, and a great deal of distress, particularly among married families in this category? Can he assure the House that this is an urgent review, which will report as speedily as possible on what action can be taken to alleviate those cases of hardship of which I know the Parliamentary Secretary is aware?
    Mr. Loughlin: It is not necessary for the hon. Gentleman to impress upon me the difficulties that arise from this problem. How quickly we shall be able to review the position, in the light of the improvements made last year, I am not too sure, but the hon. Member can rest assured that, if it is humanly possible, we shall improve the position. The difficulty is that we have to assess the relative priorities not merely for the allocation of vehicles of this kind but also for that of monetary resources.

    Medical Practices (Compensation)
    Mr. Hamlingasked the Minister of Health what is the total sum now outstanding for the ultimate settlement of all claims for medical practices compensation under Section 36 of the National Health Service Act 1946; and how many practitioners entitled to compensation are over the age of 70, between the ages of 65 and 70, and between the ages of 60 and 65, respectively.
    Mr. K. Robinson: At 31st October, 1965, the total sum for Great Britain was £23·1 million. Of those entitled to compensation, 448 doctors will, at the end of this year, be aged 70 or over, 931 aged 65 to 69, and 1,644 aged 60 to 64.
    Mr. Hamling: Is my right hon. Friend aware that these figures indicate that a
    998
    considerable number of elderly doctors have not yet been paid this compensation; and that, in many cases, payment would mean that very straitened circumstances might be improved?
    Mr. Robinson: The National Health Service Acts provide that compensation shall be paid only on retirement or death, except in such circumstances as may be prescribed. The regulations provide for advance payments on grounds of hardship, and these payments are made where the doctor makes an application and I am satisfied that the payment is justified.

    Ambulance Service, Warrington
    Mr. W. T. Williamsasked the Minister of Health if he will inquire into the reason why an ambulance from Whiston, a distance of some five miles away, was sent to a motor cyclist injured during the weekend of 12th November, 1965, at Penketh Lane Ends, Warrington, when there was an ambulance depot nearby at Longshaw Street, Warrington.
    Mr. Loughlin: I am informed that this area is normally covered from Widnes, but their ambulance was already out. Lancashire ambulance control then judged it would be as quick to send the ambulance from Whiston as to invoke their mutual aid arrangements with Warrington.
    Mr. Williams: Has the Minister been told that this man as a result lay for 20 minutes in the frost? Does he appreciate that this is a problem of general application? Will he do what lies in his power to end the nonsense by which authorities which have ambulances near to the scene of accident make use of ambulances from a much further distance because of the cost factor? Will he see that in future the nearest ambulance is sent and trouble about payment shall he settled between the authorities after the person has been taken to hospital?
    Mr. Loughlin: I am perfectly sure that the cost factor did not enter into this matter at all. In view of what my hon. and learned Friend has said, the House had better hear what actually took place. A 999 call was received at one minute past midnight and the ambulance from Whiston station arrived at 12 minutes past midnight. Both the motor-cyclist

    999
    and the passenger arrived at Warrington Hospital at 22 minutes past midnight. Both were slightly injured and neither was detained.

    Artificial Kidney Machines (Home Units)
    Mr. Ioan L. Evansasked the Minister of Health what action is being taken to support the research into the refinement of large and expensive hospital kidney-treatment machines into small, compact and cheap home units.
    Mr. K. Robinson: I am giving financial support to research aimed at assessing the conditions in which artificial kidney treatment can be provided safely in a patient's home. My officers are keeping in close touch with this research.
    Mr. Evans: I thank my right hon. Friend for that reply. Will he give all encouragement to doctors in Queen Elizabeth Hospital, Birmingham, in particular those working with a local firm to produce a small compact home unit, because this would assist those cases and relieve pressure for demand for beds?
    Mr. Robinson: Yes, I certainly will, but I should point out that it is not right to assume that a small compact edition of expensive equipment would necessarily be cheaper. The reverse frequently applies.

    Group Practice Building Loans, South-Western Region
    Mr. Scott-Hopkinsasked the Minister of Health how many applications for group practice building grants he has received within the area of the South-West Regional Hospital Board; and how many of these he has accepted or refused in the last 12 months.
    Mr. K. Robinson: I take it the hon. Member is referring to group practice loans. On that assumption the Answer is 95, of which seven were approved and three refused in the last 12 months.
    Mr. Scott-Hopkins: I apologise for the fact that I referred to building grants. Will the Minister accept that conditions are extremely difficult to satisfy in some areas? Will he look into the matter again on these lines with the desire of increasing group practices?
    Mr. Robinson: This scheme may well be superseded under the new contract which I am negotiating with general practitioners, but the figures, even for the South-Western Region, hardly bear out what the hon. Member has said because 54 of the 95 applications were approved, 19 only were rejected, 16 withdrawn, and six are still under consideration.

    Cigarette Advertising
    Mr. Buchanasked the Minister of Health if he will take further action on cigarette advertising, particularly with regard to methods involving free distribution, details of which have been sent to him.
    Mr. K. Robinson: This is under active consideration, but I am not in a position to make a statement at present.
    Mr. Buchan: Will my right hon. Friend have another look at the appalling figures for lung cancer, particularly in Scotland? Will he keep in mind that the television advertising expenditure of the cigarette companies appears to be transferred to the Press, to free gifts and free sampling methods which I have shown to my right hon. Friend? The Imperial Tobacco Company told us that it does not know if it is involved in this practice. I think we should find out and stop the practice.
    Mr. Robinson: The information sent to me by my hon. Friend appears to relate to market research and not to advertising as such, but I deprecate the free distribution of cigarettes by or on behalf of manufacturers.

  MINISTRY OF LABOUR

    Redundancy (Terms and Length of Notice)
    Mr. Lubbockasked the Minister of Labour if he will introduce legislation to ensure that redundancy terms and length of notice are subject to consultation with the trade unions before public announcements of closures are made by employers.
    The Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton): My Department does a great deal to encourage wider consultation on these

    1001
    matters, but my right hon. Friend has no present plans for legislation.
    Mr. Lubbock: Is the hon. Gentleman aware that some employers seem to be jumping the gun on the Redundancy Payments Act and that they have taken steps to dismiss employees before the provisions of the Act come into force? What measures has the hon. Gentleman in mind to persuade employers to recognise the moral issues and before the Act comes into force to pay the terms which will be paid when it is in operation?
    Mr. Thornton: I think there can be no doubt that some employers have jumped the gun in this matter, but I think it only fair to point out that a number of employers since the Royal Assent was given on 5th August have paid roughly in accordance with the terms of the Act. Those employers are to be warmly commended. Employers who have brought forward the dates of redundancy in order to avoid payment deserve the strictures of this House.

    Retraining Centres, West Durham
    Mr. Armstrongasked the Minister of Labour if he will state the courses and number of places available in the Government training centres at Felling and Tursdale, respectively; and to what extent further facilities are being provided to retrain redundant miners.
    Mr. Thornton: There are now 18 courses and 373 places at Felling Government Training Centre and 8 courses and 99 places at Tursdale Government Training Centre. The latter is to be expanded by an additional 3 courses providing 46 more places. I will, with permission, circulate details of the courses in the OFFICIAL REPORT. I think that these facilities, together with those at the Centre at Billingham and the new centre to be established at Killingworth, Northumberland, will be adequate to meet the likely need for G.T.C. training for redundant miners in the area. In addition, the Finchale, Abbey Residential Training Centre for the Disabled is setting up a special engineering class which will provide short courses to assist redundant disabled miners to obtain semi-skilled work as machine operators; and two new industrial rehabilitation units are to be
    1002
    established in the region which will assist the resettlement of older and disabled miners.
    Mr. Speaker: That Answer is too long.
    Mr. Armstrong: I thank my hon. Friend for that information. Is he aware that with the recent announcement about pit closures the demand is much greater than the supply, particularly in West Durham? Will he have another look at the matter in order to determine whether another centre is required for West Durham?
    Mr. Thornton: I shall certainly agree to have another look at the matter, but from all our past experience we are led to believe that the present facilities plus the extended programme will lead to all applications being met.
    Following are the courses:
    Felling:—Bricklaying; carpentry; heating and ventilating fitting; electrical contracting; street masonry and paving; draughtsmanship; fitting (general); fitting (jig and tool); instrument, bench and machine work; centre lathe turning; capstan setting operating; precision grinding; hairdressing (men's); instrument maintenance; motor repairing; radio; television and electronic servicing; and storekeeping.
    Tursdale:—Bricklaying; carpentry; contractors' plant maintenance; fitting (jig and tool); centre lathe turning; agricultural machinery repairing; motor repairing; and storekeeping.

SCOTLAND (FADA-FIONN AND LAIDON HYDROELECTRIC SCHEMES)
The Secretary of State for Scotland (Mr. William Ross): Mr. Speaker, with permission, I would like to make a statement.
I have now completed my study of the Report into the Inquiry into the FadaFionn and Laidon hydro-electric schemes. The Report is being published today by the Stationery Office and copies have been placed in the Vote Office.
The Reporters conclude that neither of these schemes is needed, at least up to 1975, because adequate capacity will be provided by large new stations which must in any event be commissioned by that time elsewhere in Scotland. They also consider that the cost of the power that would be provided by either of the projected schemes would be greater than

1003
the cost of generation by a modern thermal station. The Reporters therefore recommend that neither scheme should be approved.
The assumptions on which such schemes have to be assessed are, of course, subject to change with economic circumstances. Furthermore, there are other factors which may affect the pattern of electricity generation in Scotland arising out of the continuing development of various methods of generation and the fuller exploitation of pumped storage.
Accordingly, although in the light of the Report I am not prepared to confirm these two schemes now, I do not regard this as precluding reconsideration of these schemes at a future date; and, when more information is available about future generation plans, the North of Scotland Hydro-Electric Board will be free to submit them again. In such an event, in accordance with the current procedure for inquiries, objectors will be given an opportunity of putting their views at a fresh inquiry, at which any changes of circumstances in the interval can be taken into account; but the parties will be entitled to rely, if they wish, on evidence already given. I propose, however, to determine now the responsibility for meeting the expenses incurred at the inquiry already held.
The North of Scotland Hydro-Electric Board and other parties to the Inquiry have been informed of the position.
Mr. G. Campbell: Has it not taken a very long time to reach this decision, considering the right hon. Gentleman's impatience and criticism before he came into office, for he has had this Report for over a year? Does not the Report and his decision prove entirely that the inquiry was necessary? Does he recall his own words in the debate on 6th February of last year, when he and his hon. Friend the Member for Glasgow, Craigton (Mr. Millan) said that the inquiry was unnecessary and that the delay was a plot to kill these schemes and any further hydro-electric schemes? While the North of Scotland Hydro-Electric Board has done and is doing an excellent job and has contributed greatly to the economy of the Highlands, should not the emphasis now be upon schemes such as the Cruachan scheme recently opened and
1004
started under the Conservative Government? This scheme has a capacity of 400 megawatts, about 100 times greater——
Hon. Members: Reading.
Mr. Speaker: Order. This is suspiciously like a speech.
Mr. Campbell: Is not that scheme, with a capacity of 400 megawatts, nearly 100 times more powerful than the Laidon scheme? Has the right hon. Gentleman any more pump storage schemes in mind for the future?
Mr. Ross: The hon. Gentleman is quite right to comment on the delay. He will appreciate that the impatience evidenced by myself and my colleagues, at a time when there was no evidence of action from his side of the House, was because these schemes were first put up in October 1960 and for four years the previous Government could not come to any decision. There was inquiry after inquiry. I am facing the facts as they are today objectively. I agree with the hon. Gentleman that there is a future for pump storage schemes. Indeed, the Hydro-Electric Board at my suggestion has already examined a possible Loch Lomond scheme.
Mr. Alasdair Mackenzie: Is the Secretary of State aware that this decision will be received with shock and disappointment in Ross and Cromarty, especially by those who have been long waiting for a supply and by those who have been looking for employment near their homes? We realise that the rejection of the scheme will receive the approval of the objectors. How can the Government reconcile this decision with the setting up of the Highlands and Islands Development Board, since more electricity will be required? Would the Secretary of State be good enough to tell us what effect this decision will have on the large numbers of potential consumers in Ross and Cromarty who have been long waiting for supply?
Mr. Ross: In relation to the last point, which was also the hon. Gentleman's first point, if he had read the Answer I gave last week he would have appreciated that I have already given authority to the Hydro-Electric Board to spend

1005
up to £1 million—that is £1 million extra—per year in linking up remote consumers. We are satisfied that the supply is sufficient until 1975. The hon. Gentleman spoke of the pleasure with which this decision will be received by the objectors, but if he reads my statement again he will find that their pleasure will be considerably qualified.
Mr. Hector Hughes: Does the Secretary of State agree that it is clear that the scandalous delay which has occurred occurred before he came into office, namely, under the previous Government, and not afterwards? In his future consideration of this matter, will he take care to ensure that north-east Scotland is not prejudiced in relation to power supplies in any way?
Mr. Ross: I can assure my hon. and learned Friend that supplies for northeast Scotland, particularly Aberdeen, will not be prejudiced. It is worthy of note that the first of the two 120 megawatt sets at Dundee will be opened in December of this year.
Mr. Monro: In view of the recommendation of the Reporters, how soon will the Secretary of State look at this matter again? Will this statement expedite a decision on the siting of the fast breeder reactor in Scotland?
Mr. Ross: It will not necessarily expedite it at all, but this is one of the factors which is taken into consideration. It will, be a matter for the Hydro-Electric Board itself, in the light of changed circumstances, to decide whether it wants to resubmit these schemes.
Mr. Manuel: Will my right hon. Friend note that his statement on these schemes will be received with dismay in many quarters throughout the Highlands? Is he aware that it will be regarded as a victory for the landowning interests who have opposed the schemes? Will he and his colleagues do all they can to ensure that this issue is raised within the Cabinet and that proper regard is paid to the social and economic consequences to these areas presently bereft of electricity?
Mr. Ross: The House should he clear on the matter of areas being bereft of electricity. I have already taken steps to ensure that there will be a speed-up of
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the connections for remote consumers. I said this in answer to a Question last week.
Mr. Edward M. Taylor: Does not the Secretary of State feel quite ashamed at having made this announcement today, as he and his colleagues fought the last election on a manifesto which said clearly that hydro-electric schemes in the Highlands were examples of public enterprise which should be greatly extended? Can he say that the Highlands and Islands Development Board was consulted about the social consequences of this decision before he made it?
Mr. Ross: If the hon. Gentleman appreciated what my statutory duties were he would realise that I cannot consult anyone in considering the outcome of the inquiry of the Reporters. It is my responsibility to decide "Yes" or "No". If the hon. Gentleman appreciated what is already being done in the Highlands—the new ventures under the Highlands and Islands Development Board—he would realise that we on this side have no cause for shame. It comes pretty ill from a party which stopped these schemes five years ago, under a Prime Minister who did not even know they had been stopped, to now proclaim that it is for them. If the hon. Gentleman had been listening he would have appreciated that the Hydro-Electric Board, despite the wishes of some of his hon. Friends, is still in existence and will carry on with useful schemes to satisfy the neds of the north of Scotland.
Mr. Buchan: The people of the area will ignore the crocodile tears of hon. and right hon. Gentlemen opposite, but may I ask my right hon. Friend whether we can be assured that in considering this decision, which I and, I am sure, many people deplore, he was not bound to the 8 per cent. interest rate figure imposed upon us by hon. and right hon. Gentlemen opposite? Has my right hon. Friend taken into consideration all possible rub-off of development in the area as a result of these schemes. Has he also taken into consideration what would have been the social effect of the schemes in terms of linking up with future development needs?
Mr. Ross: I assure my hon. Friend that I took everything relevant into consideration. The main point which is

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decisive is that neither scheme is needed until 1975 in view of current generation plans.
Mr. George Y. Mackie: Is the right hon. Gentleman aware that the last part of his statement suggests that there is some doubt in his mind whether at some future date he may proceed with these schemes? If there is doubt in his mind, has the right hon. Gentleman taken into account the inflationary aspect which means so much in the cost of hydroelectricity after a while, or is this merely window dressing? Would not the right hon. Gentleman agree that it might have been better to say that the schemes had gone for ever and something else would be put in their place than to leave this doubt in the minds of people in the Highlands who will be greatly disappointed?
Mr. Ross: It would be foolish to say that circumstances will not change both in respect of the cost and of the type of schemes brought forward and it was fairer to the Hydro-Electric Board to put the matter in this way.
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: Order. We must leave that matter now and proceed with the business of the day.

TEMPORARY IMPORT CHARGE
3.42 p.m.
The Chancellor of the Exchequer (Mr. James Callaghan): I beg to move,
That the Temporary Charges on Imports (Continuation) Order 1965, a draft of which was laid before this House on 1st November, in the last Session of Parliament, be approved.
It is a year since the temporary charge on imports was produced, and at that time we considered that it would be appropriate, as it was a temporary measure, that the House should have an opportunity of reconsidering it at the end of twelve months to decide whether it should be continued or not. I therefore think that this debate will meet with general satisfaction. As the laying of the present Order shows, it is the Government's intention to ask for a continuation of the charge, and I hope that the House will approve it.
The charge applies broadly to all imports except food and feeding stuffs, fuels, unmanufactured raw materials and materials which have undergone at most only elementary processing. It covers manufactures and semi-manufactures generally, but there are exceptions for books and periodicals in accordance with a U.N.E.S.C.O. agreement and for large ships and large aircraft, because they are mainly engaged in international trade. There are, as the House knows, relief provisions for goods imported for re-export or used as materials in manufacturing goods which are exported. There is relief for goods used in shipyards, for building or repairing large aircraft, for scientific research, and educational requirements, again in accordance with U.N.E.S.C.O. agreement, and for certain other minor uses.
The Order was laid on 1st November, and I should like to say at the outset that the Government have throughout made it abundantly clear that the import charge, a new device in our fiscal system, was introduced and maintained as a temporary device to help us tide over a period of intense balance of payments strain. The strain, I am glad to say, is now much less than it was a year ago. Nevertheless we shall need to restrain the growth in our import bill in 1966 and to do so directly through the import charge in order to continue to

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hold the position while the underlying imbalance is being corrected.
The import charge is one of the battery of instruments which we have introduced during the last 12 months. There is a comprehensive and coherent programme of measures, both short-term and long-term, which are intended to remedy the weaknesses in the economy. As the House knows, these measures fall broadly into three categories. There are the measures bearing directly on the balance of payments—the export rebate, the Exchange control regulations and the fiscal measures aimed at reducing the net outflow of private capital. That is the first range. Secondly, there are the measures designed to curtail the pressure of home demand and so make available resources for righting the balance of payments. These measures comprise an increase in direct and indirect taxation, the tightening of hire-purchase restrictions, the pruning of Government expenditure, and the restriction of bank credit.
It suits the book of propagandists in the country to claim that increases in taxation are due to a number of other causes, but I do not suppose that in this debate we shall hear much about that, because in this atmosphere it is well known that the increase in taxation was designed—difficult though it may be to get some of one's constituents to understand this, and I appreciate the difficulties of hon. Members opposite in this regard—to reduce the pressure on demand, and that it has nothing to do with the wicked Socialists. If hon. Gentlemen opposite continue to educate their constituents in this matter, as I am sure they diligently do, they will get their constituents to see that these measures are necessary to reduce the pressure of demand. I am sure that hon. Gentlemen opposite are anxious to do justice in this matter, and I am grateful to them for all the help I have received from them in explaining this to constituents.
Mr. A. E. Cooper: The right hon. Gentleman is wrong on the facts.
Several Hon. Members: Give way.
Mr. Callaghan: That does not mean that I have to give way. If the hon. Gentleman catches Mr. Speaker's eye, he will have the opportunity to put them right.
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Thirdly, there are the measures for bringing about basic structural reforms in the economy over the long term and setting an effective prices and incomes policy in motion. These measures have had a substantial effect. Exports are increasing in an encouraging fashion. The private capital outflow has diminished. The pressure of home demand has been contained, to the indirect benefit of the balance of payments. My right hon. Friend the First Secretary has recently explained the progress which we have made and the further steps which we intend to take in respect of structural reforms and incomes policy.
I have already told the House that there has been a marked improvement in our balance of payments by comparison with the situation which we found when we took office. I am sure the House is pleased about that, and exporters deserve to be congratulated on their performance this year. Over the ten months to October, 1965, exports have averaged 5½ per cent. higher than in 1964 as a whole and 6½ per cent. higher than in the first ten months of that year. There is need to continue this into 1966, as the House knows, and I shall have more to say about that later.
Industry also has played its part in reducing the balance of payments deficit by stepping up the output of products previously imported. It is not possible to be precise about the extent of import substitution, but the House will be interested to hear that total imports of goods subject to the temporary charge had fallen by nearly 3½ per cent. between April and September this year compared with the same period last year, whereas industrial production over the same period showed a rise of 2½ per cent. I should make quite clear at once, of course, before someone else points its out, that a substantial part of the impact of the charge has probably fallen on imports for stocks rather than for immediate use, but from now on the effect is likely to be concentrated on imports for immediate use.
Now another word about our balance of payments. Anyone who suggests, as I understand it is the intention to suggest, that the Order should be rejected today if the Government do not withdraw it—I assure the House that the Government have no intention of withdrawing it—

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ought to consider the effect of a vote against the Order on the balance of payments. The House knows that the last 12 months have seen this marked improvement. In the first half of this year there was a marked change for the better in the trade balance. Exports, as I have said, were substantially above their average level in 1964. Imports, in contrast to their previous strong growth, showed a slight fall. Seasonally adjusted, the deficit on visible trade for the first six months was little more than half the rate in 1964. The net surplus on invisible transactions showed some recovery from the low figures of 1964. So, with the improvements on both visible and invisible transactions, the seasonally adjusted deficit on current account in the first half of the year was less than half of the rate of deficit in 1964. The net outflow on long-term capital transactions was also much reduced, partly in consequence of the measures which I announced to the House in my April Budget.
The outturn for the balance of payments as a whole, that is, the deficit on current and long-term capital accounts together, amounted to about £100 million compared with over £300 million in the first half of 1964. We do not yet have a full tally of what has happened since the end of June. We have the trade figures, of course, and, on a seasonally adjusted basis, these show, if anything, a slight reduction in the trade deficit compared with the first half of this year. The monthly rate of trade deficit in the first half was just over £26 million. In the third quarter it was £25 million a month, and in October it was £18 million. These figures are seasonally adjusted; but, of course, the third quarter is always known to be unfavourable for the balance of payments, not only on visible trade but also on invisible transactions, especially in such matters as travel and official capital items.
For these reasons, we expect, and are basing our estimates on, a considerable deficit on the balance of payments as a whole in the third quarter, contrasting with the small surplus in the second for which I have claimed credit. The larger part of this deterioration between the two quarters is seasonal, and our estimates
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for the fourth quarter show a considerable improvement. We have also had some abnormally heavy oil payments to make in the current half year, for tax and other reasons. Nevertheless, for 1965 as a whole there will be a substantial improvement of several hundreds of millions of pounds over 1964. But I repeat—I never weary of repeating it—there will be a considerable deficit this year.
Because of the size of the deficit, we set ourselves a two-year pattern for reducing it to zero, and it looks as though we are half way there at the end of 12 months. So we have to continue next year along the lines which we have been following so far, or, as I would prefer, to improve on what we have done so far. The Government have accordingly decided that the import charge must continue in force at the current rate of 10 per cent. To reduce it at present or, as I understand is to be argued, to remove it, would hamper our recovery and delay the improvement in our balance of payments.
Mr. Iain Macleod: There is an important point here. In fairness, the right hon. Gentleman will recognise that, owing to our Parliamentary procedure, the Opposition are not in a position to suggest a reduction in the charge. We either have to take the whole Order or reject it.
Mr. Callaghan: Yes, I follow that, and I am obliged to the right hon. Gentleman for that intervention. I had it in mind to ask whether the Opposition were opposed to this in principle and want to take the charge off altogether. If the argument is that it should be reduced, I understand that that is at least an arguable case, though I should myself feel that this is not the right moment to do it. Moreover, as we discovered last time, if one announces in advance that one intends to reduce the charge, one gets the worst of all worlds, and we got a certain amount of that—[HON. MEMBERS: "Hear, hear."] Hon. Members opposite were not backward in pressing us to make the announcement, and what happened last time was that, because of pressure—I do not say from hon. Members opposite, but from E.F.T.A. and other countries—we gave an advance date. We foresaw the consequences. Imports were held up, and

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they then piled up when the reduction took place. This was an occasion when politics and economics were in contradiction to each other. However, if the right hon. Gentleman proposes to argue that the charge should be reduced, I beg him to argue that it should be reduced forthwith and not that we should give assurances that we shall reduce it later on.
I should make clear to the right hon. Gentleman and to others who think like him, if I have interpreted his mind aright, that the decision to continue the charge does not carry with it any implications about the further length of time for which it may be required. The draft Order, because of our Parliamentary form, provides for the charge to continue till the the end of November, 1966. That is the date required by the wording of the Act. But, of course, the Government have power to reduce or to remove the charge at any earlier time if our circumstances should permit. What I am arguing is that our circumstances certainly do not permit this when, despite our encouraging start, we are still half way from our goal at half-time.
It has been argued contrariwise in some quarters that the import charge has not had a significant effect on our import bill and is therefore not worth continuing. I do not know whether we shall hear that argument, but I think that I should try to anticipate it by setting out the way I see it. It is not possible to say with precision how far imports have been reduced below what they would have been if the charge had not been imposed and if no steps had been taken to moderate excess demand. The whole nature of the problem would have changed had we not imposed the charge a year ago, since to secure the necessary reduction in imports we should have had to impose a much more severe deflation, and I have not found too much support in the House for measures of greater deflation. But I estimate that, allowing for the reduction in the rate of charge last April from 15 per cent. to 10 per cent. and for some increase in imports of goods not subject to the charge in replacement of those which are subject to it—there has been a certain amount of that—the net effect on imports this year is likely to be a reduction in the range of £150 million to £200 million. This is a valuable con-
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tribution to the balance of payments. Anyone who suggests that the charge should be removed—and I understand that that is formally the way in which it will be done—or that it should be reduced will have to argue about that £150 million to £200 million deficit on our balance of payments.
Mr. Eric Lubbock: The figures which the Chancellor has given are based on 15 per cent. for part of the year and 10 per cent. for the rest. Will he tell us what his estimate for the year would have been or what it will be for the forthcoming year if 10 per cent. were applied throughout?
Mr. Callaghan: I have endeavoured to make some estimates. I said at the beginning of last year that I originally gave a figure of £300 million, as the hon. Gentleman will remember. That was a purely speculative estimate. I made a number of qualifications and it is a little difficult to know. Making as fair a guess as I can, I would say that it would be rather less than the £150 million to £200 million range, because it would now be impinging directly on stocks which are for immediate use. I would expect it to be rather less, but still very considerable.
When I go scratching round trying to save £5 million here and £3 million there and £2 million somewhere else on the balance of payments, I could not contemplate with equanimity the loss of this particular sum, whether it would be £150 million or something a little less. Certainly I could not lightly contemplate that.
In continuation of the view I have expressed, I would like to give the House some further details of this import charge. There is quite a bit to say in making a comparison of the way in which imports have moved. They have been only slightly higher than the average level in 1964. Imports of basic materials have remained fairly low; imports of semi-manufactures, which include some which are not subject to the temporary import charge, have been on average about 3 per cent. more so far this year compared with the first ten months of 1964. Some hon. Gentlemen opposite have jumped to the conclusion that they are more than they were last year and that the charge must have failed.

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If one is going to look at the situation one has to look at what they were over a run of earlier years. Take the preceding year, 1963–64, I have said that the imports of semi-manufactures, have been 3 per cent. up on last year. If one looks at imports of goods of this type in 1963–64, the increase was not 3 per cent., it was 29 per cent. Take imports of semi-manufactures, subject to the charge. These have fallen by 5 per cent., compared with a rise of 26 per cent. between 1963–64. Imports of finished manufactures have been swayed by a number of influences, including the United States dock strike, the effects of which, statistically, have lingered on long after the cause of the strike has been forgotten. So far this year the imports of finished manufactures are 4 per cent. greater than they were in the corresponding period of last year.
That does not mean to say that the charge has failed, because if we look back a further 12 months they increased in that period by 28½ per cent. The total import of goods subject to the charge has fallen by 1 per cent. compared with the first ten months of 1964, and compared with a rise of 27 per cent. between 1963 and 1964. It is not therefore enough to say that some imports have risen to prove that the charge is not worth anything. One has to look at what might have been. I cannot prove what might have been any more than any one else can. What I can say is that given the level of industrial activity, which has been maintained at least as high this year as it was last year, given the figures that I have shown for the increase in imports of these particular ranges over the previous year, I am at least if not more entitled than any one else to claim that it has had a very substantial effect.
Mr. Raymond Gower: The Chancellor said a minute ago that he would find it difficult to do without this sum of money and that he could not lightly sacrifice such a large sum. Is it not possible that, as time goes on, he will tend to regard this sum of money with even fonder attachment, and so will those sections of the economy which are enjoying the protection by reason of this subvention?
Mr. Callaghan: I have never regarded this sum with any form of liking since
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it was first introduced. So far as I am concerned it is a mule without a pride of ancestry or hope of posterity. I would like to see it got rid of, but I will come back to that later. I am well aware of the concern felt by other countries, partially on the grounds which the hon. Gentleman the Member for Barry (Mr. Gower) has now given. They have an anxiety that the import charge should be reduced or removed at the earliest possible date.
I would like to make three points. First—and this is a point which has gained greater recognition than it did a year ago—our balance of payments simply could not have sustained a continuing growth in imports at the rate at which we found it. I think this must be generally agreed. It would have absolutely run away with us. I do not want to raise the temperature and talk about why, but this is a simple statement of fact. Action had to be taken, one way or another, to restrain it, and action to restrain it must continue until we are in balance. As I have already said—and I point this out to the hon. Gentleman the Member for Barry—we have taken a series of other long-term measures to restore the balance of payments, and this is what we are relying on to do the trick.
I do not believe that other countries, any more than we ourselves, would have been better off, had we sought to contain our import bill through deflationary action which had the effect of bringing our own economic growth to a stop or even causing a turn down. Part of their complaint against us was that we were inflicting the burden on them instead of taking deflationary action. This argument was often used, although not quite in this direct form. I do not think that anyone abroad can really claim that that was so and certainly no one on the other side of the House would claim that that was so.
The complaint against me is that I have introduced too many of these measures, to the dislike of the constituents of hon. Gentlemen opposite. I do not think that I can be accused of that. I would like to say how much I appreciate the understanding which a great many countries, particularly the Commonwealth and the United States, have shown of our position. For this we are very grateful. It is perfectly understandable that some

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other countries, the free trade area countries, for example, should have raised objections. Their anxiety was and is to see the charge further reduced and then abolished, and this was expressed in the communiqué of the most recent E.F.T.A. ministerial meeting attended by my right hon. Friend. I hope that E F.T.A. and other countries will accept the words of the I.M.F. report, made to G.A.T.T. in October:
"…the general level of the import charge does not go beyond the extent necessary at the present time to safeguard the United Kingdom's financial position."
The hon. Gentleman the Member for Barry suggested that this charge might become built into our economy and cost structure. This is certainly not the Government's intention. When I introduced it I warned industry that the import charge was not a protective measure; and our frequently re-affirmed intention to reduce and then remove it as progress on the balance of payments warrants it will be carried out without regard to protective considerations. I recognise that the continuation of the charge creates some difficulty for United Kingdom industry. Hon. Gentlemen have been energetic in representing the difficulties of their constituents in this matter, and in the Treasury and the Board of Trade we have given very careful consideration to what has been said. During the passage of the 1964 Act and, subsequently, hon. Members have asked me to remove the charge from various categories of imports, for example from imports of semi-manufactured materials on which particular industries depend, or from imports of productive machinery. I recognise that there is validity in a lot of these requests, but we need to continue to restrain our imports on semi-manufactures and machinery generally, no less than our imports of consumer goods.
Any action to select particular products for exclusion, besides having inequitable effects as between one user and another, would be bound to be cumulative and narrow the coverage of the charge to such an extent as to postpone the time when our objective of a general reduction and removal can be achieved. Therefore the Government remain of the view that the right procedure is not to make piecemeal reductions in the coverage of the charge but to go all out to
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secure that improvement in the balance of payments, which will enable the charge to be reduced generally and eventually to be eliminated at the earliest possible date.
There is also the important question of drawback and the charge in respect of exports. We have been particularly concerned to see that the import charge put no avoidable obstacles in the way of our export trade and I believe we can justifiably claim that this object has been fulfilled. So far, £3 million of the charge levied has been repaid through the drawback arrangements and the charge has not been levied at all on about £30 million worth of goods intended for use in the export trade.
Drawback, which by definition calls for a certain amount of Customs control, represents relief from taxes or duties and, therefore, there must be some control. Criticism was to be expected. I should, however, like to pay a tribute—and I hope that the House will join me—to the way in which the Customs administration has handled these arrangements. The amount of criticism has been extremely small.
When I read the article in the Financial Times the other day entitled "Drawback without Tears" and the tributes that it paid to the Customs and Excise, I began to wonder whether they were not paying out public money a little too easily. Knowing them, however, I am sure that that is not true.
Before I conclude, I should like to say a word about prices and wages. One of the satisfactory features of the present situation is the comparative steadiness of prices. This, of course, if coupled with an equivalent steadiness in wages, would help us towards our objective of balancing our payments much more quickly than anything else, except an increase in productivity. [Interruption.] I am grateful for all the help which I get from hon. Members opposite in preaching this doctrine.
The retail price index has been fairly stable since May. Over the three months August to October, it averaged only 0·4 per cent. higher than in the preceding three months, and seasonal influences mainly accounted for this. Even excluding seasonal factors, however, the rise has been on the slow side, certainly in relation

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to what has been happening in labour costs as well as to import prices. Both have had their effect, import prices as well as labour costs.
When I turn, however, to wages, I see that the hourly wage rates index continues to climb steeply. In the first quarter it was high, as it was in the second quarter and again in the third. Among the reasons for the rise are a shortening of the average interval between settlements and reduction of normal hours of work in many industries from 42 to 40 without loss of pay.
Mr. Speaker: Order. I hesitate to interrupt the right hon. Gentleman, but I hope that he will link what he says on this subject with the Order which is before us. Otherwise, we shall have a very wide debate.
Mr. Nigel Birch: If I may say so, Mr. Speaker, the right hon. Gentleman's argument is extremely relevant.
Mr. Callaghan: I have a feeling that that helpful interruption was not altogether disinterested. I will not pursue the matter, Mr. Speaker, because I was conscious when I drafted this part of my speech that I was, perhaps, straying rather beyond the nature of the Order. In deference to your Ruling, I will cut out what I was going to say about it.
I think, however, that I should be in order if I were to say that at a time when the paramount need is to reinforce and to secure improvement in our balance of payments, any significant increase in our costs must be a matter for concern. The Government's measures have not produced, nor were they intended to produce, a sharp, old-fashioned deflation. It is true to say that the pressure of demand has been easing.
I think that I can also say, and be in order, that the measures which I took in the Budget have caused a check to the growth of consumer spending. This was in accord with the Government's policy, which was designed to give priority to investment and the rectification of the balance of payments and, therefore, to get rid——
Mr. Speaker: Order. I do not want to handicap the right hon. Gentleman.
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He will be in order as long as he links what he wishes to say with the Order.
Mr. Callaghan: Very well, Mr. Speaker. I will merely put it this way, and I think that I will be in order. I hope to have the indulgence of the House as well as being in order. [An HON. MEMBER: "Have a try at it."] I am having a very good try. We shall be able to get rid of the temporary import charge, at least at an earlier date, provided that we can attain the Government's target of external equilibrium during the year. Therefore, if during the course of next year I thought that getting rid of the temporary import charge through the achievement of equilibrium in our balance of payments was likely to be threatened by the rise of money incomes, I would not hesitate to take action on the demand side to offset it. I hope that that keeps me in order and enables me to say what I want to say on this matter, which is of importance.
I should like the Opposition to define their attitude on this matter. The right hon. Member for Enfield, West (Mr. Iain Macleod) was good enough to intervene a short time ago, but I did not get clear from his question whether he was opposed to the Order in principle or whether he thinks that there should be a reduction in the charge. Have the Opposition considered the likely effect on the balance of payments of either reducing or removing the surcharge at this moment? Do they think that it would be right to interfere with this progress towards balancing our payments by the end of 1966 by giving a jolt of this character to the progress that we are making? Do they think that removing or reducing the charge would increase our import bill? I take it that they cannot think that it would reduce it, and I suppose that all sensible men would agree that it would increase it. In that case, if they would either reduce or remove it, do they think that anything else would be substituted?
Should we, for example, have further deflation to offset the increased imports that would otherwise come in? What would right hon. Gentlemen opposite do about the worsening in the balance of payments that removal or reduction at this moment would be bound to cause? Do they want higher taxation to offset it? I have never noticed much enthusiasm

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in that direction. Do they want a higher level of unemployment? The answer to that, I am sure, is "No". That is why the right hon. Member for Barnet (Mr. Maudling) 12 months ago considered this as a device and a means of ensuring that the economy continued to move at a high level without the unemployment that no one, on either side of the House, wants to see.
If the Opposition vote against the Order, on the ground either that they oppose it in principle or that they want to remove or to reduce it, we are entitled to know what they would do and what they consider to be the alternative remedies. If the Order were defeated tonight, it would confront the Government and the country as a whole with a substantial jolt in our progress. I therefore recommend it to the House and hope that the House will give us the Order.
4.19 p.m.
Mr. Peter Walker: One always finds the manner of the right hon. Gentleman when debating at the Dispatch Box one of convincing style, and this afternoon's performance was no exception. His pleasant, conversational style at the Dispatch Box, his homely chats, are always enjoyed and appreciated, but I confess that I was surprised at the degree of satisfaction which he expressed with the working of this particular instrument.
I wondered if the Chancellor is more frank at breakfast time than he is in the afternoons, because a month ago he was interviewed by the Daily Mirror at No. 11 Downing Street and at the start of the interview, it is reported:
"Just a spoonful of sugar puffs helps the medicine go down."
He ended the interview by saying,
"I was surprised that imports are still so high."
I cannot help thinking that this afternoon the Chancellor has given us sugar puffs rather than a frank statement on the import situation.
The basis of our argument is that, firstly, the original argument upon which the surcharge was introduced was based upon a wrong premise; secondly, we would argue that the Government's economic policy has countered the
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favourable effects of the surcharge; thirdly, this type of measure has effects adverse to our exports and injurious to our trading relationships throughout the world.
Therefore, I should like to start off by examining the validity of the original argument for introducing the surcharge. This was stated in the now notorious White Paper of 26th October, 1964. The circumstances of that White Paper are well known to the House. It was presented ten days after the Government came to power, and it endeavoured to set out the economic situation which they had inherited, and the theme of the argument contained in the White Paper was that the economic situation was a desperately bad one and that the way to remedy it was to impose this surcharge. I think, on reflection, that now the true facts in 1964 are known it will be realised that this White Paper, by giving the wrong impression that it did, in fact caused more harm to the position of sterling than any other Government publication. Basically the argument was that the prospect of an £800 million deficit was a shock to the Government, but we now know that seven weeks before the election the Prime Minister in a speech to the T.U.C.——
Mr. Raphael Tuck: Is this in order?
Mr. Walker: This is certainly in order, because the whole basis for imposing the surcharge was the £800 million argument, and whilst I can understand the lack of wish on the part of the Chancellor that this particular subject should now be raised, he is certainly going to have it raised this afternoon.
The Prime Minister himself seven weeks before the election predicted that the adverse balance of payments on current account would be £100 million worse than it turned out to be. So far as the current account is concerned, when the Government came to power they found the situation was £100 million better than they had anticipated. Yet throughout their election campaign they persisted with their promises and made no mention of an import surcharge or of a need to take such action.
The significant passage of the White Paper upon which the whole of the

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import surcharge argument was based was paragraph 4, which stated:
"It is expected that, when the accounts for 1964 as a whole are available, they will show a deficit on the balance of payments, taking current and long-term capital account together, which is most unlikely to be below £700 million and may well reach £800 million."
Throughout all the White Paper there was no explanation at all of why that deficit was to be attained. There was no explanation why it was on capital account. There was no explanation of the stockpiling which had taken place and that it had entered into the calculation of this £800 million figure.
When the surcharge was announced, immediately there was an outcry throughout the world and among our trading partners, and the President of the Board of Trade had to go over to a special meeting at Geneva of the Council of Ministers of E.F.T.A.
The President of the Board of Trade (Mr. Douglas Jay): It was not a special meeting. It was the normal, routine meeting of E.F.T.A.
Mr. Walker: It was certainly a very special meeting in the manner of the meeting, because the President was very unpopular with his colleagues at that meeting, and the President of the Board of Trade was under attack at that meeting, for the method of announcing the imposition of the import surcharge, and he had of necessity to make out the case that it was due to the appalling state of the economy. It is very unlikely that at that E.F.T.A. meeting he brought in any of the arguments how the £800 million had occurred; he tended to throw, as the First Secretary had done in the White Paper, the worst possible light on the state of our economy. Therefore, it was not surprising that within 24 hours of that meeting of E.F.T.A. there was a run on sterling, and it was not at all surprising that the rest of the world judged that the proposals made in the White Paper were not sufficient for the state of the economy which the right hon. Gentleman had described at Geneva.
But by March the Government's position had altered. They had started a sterling crisis. They wanted to regain confidence in sterling. So suddenly in March we got nearer a true interpretation of the state of the British economy.
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The Prime Minister went to New York, and there his case was the general strength of sterling. He paraded all the defences which sterling enjoyed. He made a great issue of the £11,000 million worth of overseas investments—most of which had been built up during the 13 years of Conservative Government. There was no mention in the White Paper of 26th October of the £11,000 million worth of overseas investments.
Then, of course, the First Secretary, too, by that time was realising the importance of regaining confidence in sterling, so his Department came out with its March bulletin report which under the heading "Rise in Imports", gave an analysis of what the true position was in 1964. The analysis was a startling one, because the analysis first of all pointed out that of the increase in our imports in 1964, £385 million, was due to stockbuilding by industry—£385 million. What a difference it would have made if that had been put in the White Paper in October, 1964.
Sir Douglas Glover: Why was it not?
Mr. Walker: It further went on to say that a further £220 million of the increase was due to the increase in import prices during 1964.
Therefore, if the Government had endeavoured in their White Paper to give the true position of the state of the economy in October, 1964, they could with justification and with truth have stated that, "There is an adverse balance of £745 million, of which £385 million is due to stockpiling, £220 million is due to the increase in import prices, and £145 million is due to the increase in our private investment abroad, investment which will remain assets of this country". These three factors alone amount to £750 million. In fact, these three factors explain the whole of the adverse balance of payments during 1964.
I believe that this Government stand condemned for having stated a false interpretation in the White Paper for justifying the imposition of the surcharge, and I would suggest that if the President of the Board of Trade had gone to Geneva in November, 1964, and given the facts I have just given to the House they would never have tolerated the imposition of this surcharge. Therefore, our

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first argument is that the premise was a bad one.
Our second argument is, of course, that, so far as the successful working of the surcharge goes, it has been more than adversely affected by the economic actions of the Government, and this is shown, of course, by looking at the facts. The Chancellor of the Exchequer argued that the rate of increase this year was a much lower rate of increase than last year as a result of the imposition of the surcharge, but if last year there was stock-building to the extent of £385 million one would certainly expect a substantial reduction in our imports this year, and this has nothing to do with the import surcharge. It is due to the very heavy stockbuilding that took place last year.
This year, unlike last year, import prices have not risen. So last year, whereas there was a substantial increase in import prices, whereas there was substantial stockbuilding, and those were two factors which were to the advantage of the Government, as far as this year's figures are concerned, in spite of there being no increase in import prices, in spite of the benefits of stockbuilding during 1964 and in spite of the imposition of the surcharge, our imports are considerably higher than last year.
The right hon. Gentleman the Chancellor will know that the rise in manufactured goods has been greater than the rise in raw materials and non-manufactured goods, and it is very surprising that that should be the case with the surcharge on that particular section.
There is a simple explanation. If the economy is running in such a way that production remains static throughout the year while incomes rise by 7 per cent., the only two possible results are a rise in prices or an increase in imports. No other explanation can be given. The Chancellor, quite rightly, expresses publicly his concern at the rise in incomes as related to the lack of rise in production. He knows full well that the considerable gap that had taken place between these two during the first nine months of the year has more than made up for any favourable effects that the import surcharge may have had.
Our third argument concerns the manner in which the measure was introduced because it was introduced in a manner
1026
which caused considerable harm to our relationships with our partners in E.F.T.A. and our trading partners throughout the world. The Chancellor quoted the report of the International Monetary Fund. I hope that the Chancellor has also read the annual report of the European Free Trade Association, because these words form part of it:
"The attitude of the other E.F.T.A. countries, however, was to see the surcharge as a fundamental infringement of the Stockholm Convention. Such action by a member country without prior consultation with its partners struck at the very foundation of E.F.T.A. co-operation."
That is their analysis of the effects of and the manner in which right hon. Gentlement opposite imposed the surcharge.
There was lack of consultation and failure to put to our partners the alternative. If the Government considered it necessary to put on import restrictions, the President of the Board of Trade knew full well that various systems of import quotas were valid under our E.F.T.A. agreement. He decided, probably quite rightly, that the surcharge was a more acceptable method to them. But surely the right method of consultation is to go to them and say: "This is legal, and this is illegal, but would you not prefer us to take the illegal action?" It is not right just to impose it and then to try to explain it thereafter.
Then there is the damage it has done to our exports. The Chancellor of the Exchequer guessed at the figures of the improvement that had taken place in our imports. He gave no estimate of the deterioration that had taken place in our exports as a result of the surcharge.
Mr. Callaghan: Negligible.
Mr. Walker: The Chancellor says "negligible". There is a lot of evidence against it. There is, first of all, the evidence of the previous Chairman of the F.B.I., who certainly reported that he was very concerned at the effect that it was having on our exports. There is the report of the Chairman of I.C.I., Paul Chambers, who stated that he considered that it would have as much effect if not more on exports than it was likely to have on imports. We know the story of Volkswagen cutting out their purchases from British component manufacturers due to the manner in which the surcharge was imposed. There is hardly a Member of

1027
Parliament who represents an industrial constituency who has not been inundated with stories of the effect of the surcharge on the relationship between businessmen and their clients, and I am shocked and surprised that the Chancellor should treat this matter so complacently as he obviously does. It has caused bad will throughout the markets of the world.
Therefore, we have a situation where it has been introduced badly. It has some adverse effects on our exports, and the effect of it has been completely undermined by the Government's own policies. We on this side state that the premise upon which the surcharge was based was a false and a wrong one, and that the manner in which it was imposed was a clumsy and thoroughly bad one. The manner in which it has worked has been undermined by the Government's own attitude, and what is needed to reach a position of a favourable balance of payments for the country is not this type of measure, which goes against all the progress in international trade that was made in the previous 13 years. What is needed is a sensible economic policy that will get us higher production related with earnings.
Mr. Callaghan: If the hon. Gentleman is about to finish, I take it that he is going to tell us whether he thinks the charge should be withdrawn altogether or reduced, as he intends to vote against its renewal.
Mr. Walker: As far as that is concerned, the specific questions that were asked by the Chancellor will certainly be answered by my right hon. Friend in the wind-up. The case that I am making perfectly clearly is that if the Chancellor had been successful in running an economic policy where production had been related to earnings, there would be no necessity to renew the charge at all. It is because of our condemnation of the Government's policy in this affair that we are certainly critical of the whole extension of the surcharge.
4.35 p.m.
Mr. Robert Sheldon: I was very interested in the historical references of the hon. Member for Worcester (Mr. Peter Walker) in his attempt to justify the £800 million deficit
1028
last year. Sophisticated criminals do not usually return to the scene of their crime. The fact is that the hon. Gentlemen opposite failed miserably to manage the economy, and the crucial question is whether, faced with a similar situtation, not at the time of an election but at the beginning of a period in office, would they have permitted the same to have happened again? I rather doubt it.
The surcharge was introduced under conditions of extreme difficulty. In the declining months of the last Conservative Administration, various measures were prepared by the then Chancellor of the Exchequer to deal with the economic problems which he knew that he would face after the election. The import surcharge was one of them.
It was one of the means used by my right hon. Friend to slow down the flood of imports then coming into the country. At that time, faced with that emergency, there was little that could be done in the way of other long-term alternatives. The Government were, therefore, right to do what they did at that time and introduce the surcharge. The problem was serious and urgent, and measures had to be taken quickly, and had to have immediate effect. Other measures which would have required more administrative preparation were therefore ruled out. One of the measures so ruled out because of the need for immediate effect was the use of import quotas.
As the Chancellor said in the debate on 24th November, last year:
"…to have introduced quantitative restrictions would have involved unacceptable delays in bringing them into effect. While the apparatus was building up, the inflow of imports would have gone unstemmed."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1091.]
The import surcharge has served its purpose adequately. The exceptional flow was controlled, but the high level of imports remains with us.
Now is the time to examine the alternatives. What is required here is a measure that is permissible under our treaty obligations, variable in its effect upon categories of imports, and certain also in its effect upon the balance of payments.
All these advantages are obtained by quotas. Quotas are allowed under G.A.T.T. in the way that surcharges are

1029
not, and it is not true to say that quotas distort more than the surcharge. Under the surcharge certain imports have been hardly affected at all, whereas others have completely ceased. To exporters all over the world, the effort to establish oneself in a market is a very costly business, and exporters of goods with low profit margins can find their business virtually obliterated.
Quotas, on the other hand, permit a foothold to be retained for all exporters while they wait for better times to come. As an example of this, imports of steel from Australia in the nine months to September, 1964, were over £1½ million, whereas over a comparable period a year later they had declined to £140,000 and these totals conceal the virtual cessation of some exports from Australia to this country. To take another example, the import of semi-conductor devices has increased rapidly despite the surcharge. The surcharge for certain kinds of article has virtually meant the end of an investment by an exporter in this country, whereas quotas permit some form of holding operation. This is why surcharges are prohibited by Article 12 of the G.A.T.T. Agreement, and it is right that we should understand the anger of some countries when we say that the end result of both surcharges and quotas is the same. The overall result may be the same, but the impact on individual firms and countries can be widely different.
Any measure that is used to control imports needs to be variable in its effect so as to discriminate between categories of goods. In theory this is possible under the surcharge, but in practice to introduce an element of discrimination around an average of 10 per cent. surcharge can be very difficult, because some goods will have to be surcharged above and some below. Below the 10 per cent. surcharge the deterrent effect falls rapidly. For example, at 5 per cent. surcharge, it is generally accepted in industry and also by many hon. Members that the deterrent effect would be substantially removed and there would be little point in having a surcharge as small as that. On the other hand, an import surcharge of above 10 per cent. would have a deterrent effect which would inflame still further our trade relations with countries abroad, and particularly those whose industries were surcharged so heavily. The
1030
surcharge is no more capable of discriminating than is an electric light switch. It can be either on or off and no sophistication is possible.
On the other hand, quotas can be fixed for varying quantities, dependent on the desirability of importing certain articles. They can be varied because of the ability to manufacture those goods in this country. They can be varied because certain overseas products might be cheaper or technically superior to those that we can produce or because there may happen to be a shortage of capacity here. They can be varied so as to bring an element of overseas competition into an uncompetitive industry. They can be varied to provide a breathing space for an industry in the midst of reorganisation or even to effect broader improvements in industry and the economy generally.
Quotas can range from a strict limitation on gaming machines to open quotas for certain capital equipment, and intermediate positions are all possible. By changes in the level of various quotas, account can be taken of changing conditions, and a degree of flexibility can be introduced.
But the most important argument about quotas is the certainty that they can introduce into our balance of payments equation. In the import-export relationship attention has rightly been concentrated on exports, but the difficulty here is that the measures which are open to the Government only affect exports indirectly, and rarely with a convincing degree of certainty. Export rebates may be given, trade fairs may be held in major cities, and even the modernisation of the docks finally undertaken, yet no one can say with sufficient assurance that the level of exports over imports will definitely rise, and with less confidence can one predict the extent of that rise.
In the midst, then, of so much that is uncertain, not the least value of import quotas is that they bring some measure of certainty into our balance of payment position. With a flexible quota system our import bill can be estimated, and the exports necessary to sustain that can then be evaluated. Success in exports, when it comes, can then lead to changes in due course in the quota system. What we buy can then be closely aligned with what we earn. Imports can then keep in step with exports, and improvements in the one

1031
should be a necessary prelude to improvements in the other.
The time has come when we should all turn our minds to the great imperative of our economic conditions, the imperative to end the long record of our economic weakness, and to put right our balance of payments. At the present time I believe that this means the compulsion of a closer alignment between exports and imports. Hopes and aspirations and economic forecasts are no longer enough. We must now act directly on the problem, and quotas are one way of so acting.
4.46 p.m.
Mr. Nigel Birch: I do not want to follow the hon. Member for Ashton-under-Lyne (Mr. Sheldon) into his eloquent and intricate argument on the subject of quotas. I do not agree with him. The only thing I would point out is that if he is to have quotas he has to get rid of the surcharge, so I hope that he will vote with us tonight.
My position with regard to the surcharge has always been clear and unequivocal. I thought that it was wrong. I thought that it would lead to wrong, and I thought that it was a blunder. I want it abolished at once, and no nonsense about it.
It was wrong because we broke no less than nine treaties and agreements when we imposed it. Nobody seems to bother about that sort of thing nowadays, but it is rather odd when one realises that hon. Gentlemen opposite, who spend most of their lives shouting "Up the rebels," and now spit out the word "illegal" as though illegal action was beyond any possibility evil, yet here they are breaking the law nine times in cheerful ungodliness.
I thought that the surcharge would lead to evil. After all the stuff about a "matter of months", we are now putting it on for a second year. As a trading nation we depend upon our reputation and commercial integrity. What we have done over this has damaged that reputation, and it will take time for the damage to be made good.
It was a blunder for a number of reasons. First, because I am convinced that it had a great deal to do with starting the run on sterling. If we put on a sur-
1032
charge and subsidise our exports, we are doing something more or less equivalent to a devaluation. In Continental countries similar movements have often been the prelude to formal devaluation, and I think it was because foreign countries thought that what we did was a prelude to devaluation, as it had been in other countries, that the run started.
It was a blunder, too, because it took our minds and our attention off the real cause of our difficulties here. The real cause of our difficulties here is the overstrain in our economy, existing to a certain extent when the Government got in, but now positively worse, and the surcharge was used as a reason for not dealing with this situation.
The Government have taken a great many deflationary measures, and massive ones at that. If they had been taken quickly and firmly, and the Government had said what they were trying to do, the measures would have worked, but as they have been dribbled out over this long period they have not worked, and meanwhile costs have risen and the irreversible rise in our costs is continuing.
I propose now to say a word about the current balance, about which the Chancellor had several things to say. As the right hon. Gentleman said, exports are not altogether unencouraging. They have not risen by as much in volume as the National Plan demands, but they have gone up. There is one point that we should remember. Exports—especially exports of capital goods and engineering products—take a long time getting through the pipeline, and the great mass of the exports that we are now selling were contracted for when costs were far lower than they are today.
The Chancellor has said that imports have been fairly steady. Nobody can know what the effect of the surcharge on imports has been. The Chancellor produced some subtle arguments, but it is not possible really to say what the effect has been. It must have had some effect on our imports, but there are other more important factors. One is that there was a considerable change in the terms of trade in our favour—something that was not mentioned by the Chancellor. The terms of trade are very difficult to predict. The National Plan has predicted a very favourable trend in the terms of trade up to 1970. This is the difficulty. The

1033
First Secretary thought of a number, and all the other figures must be jockeyed round in order to add up to the number that he first thought of. The terms of trade were one of the factors that he had to include.
The other important consideration was the question of stockbuilding, which is most difficult to predict. Imports have not increased very much; they have remained stable, but high. But industrial production is not increasing, whereas last year it was increasing rapidly. If production starts increasing again stock-building will have to rise again also, very rapidly.
I come back to the basic fact. A very good speech, lasting one and a half minutes, was made by Lord Salter the other day in another place. He said that everything depended on whether we could keep our costs competitive with America. What has gone wrong is that our costs are rising with enormous rapidity, and there is no doubt that the surcharge has contributed to this by adding to the pressure on our own economy and upon wages.
There was a very gentlemanly controversy between the Chancellor and the First Secretary about how much earnings had gone up in the first eight months of this year. The Chancellor said that they had risen by 8 per cent., which is equivalent to 12 per cent, per annum, but the First Secretary thought that it was not so much——
Mr. Callaghan: With respect, I did not say that. I said that they had gone up by 8 per cent. per annum.
Mr. Birch: The right hon. Gentleman said 8 per cent. in eight months.
Mr. Callaghan: Yes. Perhaps I may have my accurate figure correctly reported. What I said was—and detailed notes were not taken at the meeting—that they had gone up at the rate of 8 per cent. in the first eight months. It looks as if the figure should be between 7 per cent. and 8 per cent.
Mr. Birch: Of course, I accept that. The two right hon. Gentlemen ended their quarrel by the statesmanlike device of their saying that neither knew what the answer was.
1034
There is other evidence. Some hon. Members may have seen an account of a speech delivered on the 24th of this month by the Chairman of the Thorneycroft Shipbuilding Company, of Southampton. He was speaking at the launching of a frigate and was talking about the difficulty of giving fixed price tenders when ships have to be delivered two or three years later. He said that the wage creep had been turned into a smart walk, and that over the last 18 months wage costs had gone up by no less than 18 per cent. To him it was 8 per cent. in eight months and 12 per cent. per annum. That was the rate at which his wage costs were rising. We all know that they are rising with immense rapidity and that they will go on doing so while the pressure on our economy is so great.
I beg the Chancellor not to talk as if there were nothing between mass unemployment and what we have now. What we have now is a situation in which the unfilled vacancies far exceed the number of unemployed. There is no doubt that the figures of unemployed include many people who are not employable, or who are not seeking employment, whereas the figures of unfilled vacancies are an underestimate of the true position. If we produce a situation in which the whole economy is out of balance it is quite impossible for any wages policy to work. The laws of supply and demand are bound to take over——
Mr. Deputy Speaker (Sir Samuel Storey): Order. The right hon. Member is getting away from the import charge, which we are discussing this afternoon.
Mr. Birch: I am, as ever, at your feet, Mr. Deputy Speaker, but these subjects have been extensively touched upon. I am coming to the end of this point. I was simply saying that the surcharge has increased the pressure on our economy, and with pressure as high as it is at the moment nothing will work.
The other day the Chancellor was attacking one of my hon. Friends for his doubts about the effectiveness of the wages policy. The right hon. Gentleman said, "What will you put in its place?" That involved the idea that the wages policy is in place. In fact earnings have risen almost exactly in accordance with the predictions made by Professor Phillips as to what would happen with

1035
unemployment at this level. But I do not altogether reject a wages policy. At the margins we can sometimes do something about it. It is worth having the present set-up, but it cannot work with the present pressure.
Mr. Deputy Speaker: Order. The right hon. Gentleman is getting away from the import surcharge. We cannot discuss the incomes policy.
Mr. Birch: I will return to the question of the surcharge and a remark made yesterday by the Chief Secretary, which was taken up by the Chancellor himself. The Chancellor pointed out that prices have been stable over the past few months, whereas wages have risen. This is the whole point. Wages have risen not because prices have risen but because of the supply and demand position. The Chancellor talked about educating our constituents. I wish he would educate the First Secretary. That desperately needs to be done.
We cannot get things right unless we can get a proper relationship between supply and demand on the wages front, and we cannot throw everything into Mr. Aubrey Jones' lap. What is the good of Mr. Aubrey Jones examining coal prices——
Mr. Deputy Speaker: This does not arise on the import surcharge that we are discussing.
Mr. Birch: I am sorry. I will not pursue that. Nor will I pursue the question of Forces pay, upon which it would be dishonourable for Mr. Aubrey Jones to pronounce.
I end under your stern eye, Mr. Deputy Speaker, by saying that I do not think that we can ever get our economy in balance if we do not stop talking and thinking nonsense, and we will not stop talking and thinking nonsense until ridiculous measures like this surcharge is thrown out of the window, as I hope it will be today.
4.58 p.m.
Mr. Edmund Dell: I was glad to be in the Chamber to hear the right hon. Member for Flint, West (Mr. Birch) because, as a new Member, I need his education on how to find my way round the Rulings of the Chair. I only hope that I will not need to use the experi-
1036
ence that I have just gained. I hope that I shall be able to keep far more within the terms of the subjects that we are discussing than the right hon. Gentleman did.
Unfortunately, I was absent from the Chamber for a few minutes during the speech of the hon. Member for Worcester (Mr. Peter Walker). Therefore, I must apologise for not being clear whether the Opposition are voting against the Order simply because they have no choice, or as a matter of principle. I am not sure, in other words, whether they would be prepared merely to see it reduced or whether they are against the whole thing.
Mr. Callaghan: My hon. Friend would not have been much wiser if he had heard the speech of the hon. Member for Worcester (Mr. Peter Walker).
Mr. Dell: I thank my right hon. Friend for that intervention. I am now clear on the fact that the Opposition are taking the same sort of attitude on these matters as they usually do. They give no guidance to the House or to the country as to what exactly they think should be done by the Government in this situation.
I take a fairly generous attitude towards the Opposition in this matter. The last Conservative Government had a very great and grave responsibility for the economic difficulties which we now face. They were utterly irresponsible during 1964. They allowed the deficit to increase far beyond anything which could possibly be justified. They knew it was increasing and took no action: instead, they delayed the election and did not meet the developing crisis which the country was facing.
Having said that, I would add that I do not think that the responsibility is theirs alone. There has been a long-term deterioration in this country's overall balance of payments. The National Plan refers to the way in which this country's underlying balance of payments has been getting worse. We have a long-term structural defect in our economy, in that our imports always too greatly exceed our exports. We have become used to living on a large invisible income which is less and less able to cover such matters as our trade deficit, Government overseas expenditure and the large continuing outflow of private capital——
Mr. Cooper: The hon. Member must try to be correct in his statements. In 1964, on our trade position as opposed to capital, this country earned a surplus of £57 million on visible and invisible account.
Mr. Dell: I think that the figures are sufficiently well-known. This country ended that year with the largest deficit in the whole of its history—the largest by a long way. If hon. Gentlemen opposite are going to start this argument by denying the fundamental fact about our economy, that our underlying balance of payments has been getting worse, they will then refuse to face up to the measures which are necessary to put the situation right.
The Government which was elected in October, 1964, put on the import surcharge in a moment of great crisis. It was one of a number of measures which they took to act directly on the balance of payments. Another was the control introduced in various ways on the outflow of private capital. I believe that it was put on by the Government very reluctantly, because there was clearly a number of serious arguments against it.
To begin with, it was said that it would cut competition in the home market. There is a long tradition in this country of believing, possibly correctly, that protection promotes industrial complacency and laziness, that it leads people to rely on the home market and not go out for exports. In passing, I would point out that three of our main and most successful industrial competitors, the United States of America, Germany and Japan, built up their considerable export capacity behind high protective barriers. However, this is a view which has for a long time been taken in this country—that industrial protection leads to industrial inefficiency and laziness.
Another argument which the Government undoubtedly considered as being against the import surcharge was the fear of retaliation by the countries who took our exports. There was a great deal of talk about retaliation in the months following the introduction of the surcharge. Nevertheless, I believe that, essentially, the surcharge has done what was expected of it. Imports have fallen— they are cer-
1038
tainly a great deal lower than they would have been without the surcharge—and the surcharge has not prevented exports from rising substantially. They have not risen as much as German and Japanese exports, but they are higher than the trend of export increase indicated in the National Plan.
There is another thing which can be said in favour of the surcharge. One of the interesting facts about this last year is that, despite the credit squeeze, we have succeeded in sustaining the level of industrial investment and employment. Why has the level of industrial investment been maintained during the last year? Many reasons have been advanced for this. One is that industrialists today have confidence in the possibility of continuous economic growth inspired by central planning. Another is that business men have learned the lesson. They have found in the past, each time they met a downturn in the economy by cutting investment, that when the upturn came they were short of capacity to meet the demands of the home market and exports. It is suggested that now at last some at least have learned the lesson and realised that it is important to maintain the level of industrial investment even during a downturn in the economy.
There is much in these two reasons to explain the maintenance of industrial investment, but the surcharge is also part of the answer. I believe that it has had the effect of sustaining home demand at a higher level than it would have reached if it had not been imposed. As we know, investment depends enormously on the level of current demand. The existence of the import surcharge, by tending to maintain the level of home demand, has had another important effect, that of sustaining the level of investment. At the very least the level of investment has been encouraged by the willingness of the Government to use such a method as the import surcharge, by this very considerable departure from the previous methods of conducting our economic affairs.
Therefore, taking all this into consideration, the import surcharge can be said to have been a success. But it is temporary and we have to look to the future. We should consider, right now, whether the surcharge is the total answer

1039
to the kinds of problems with which it was imposed to deal. In 1966, we plan to have our balance of payments in balance. But in 1967, there must be an upturn in economic activity if we are to fulfil the Plan. The fundamental question which the Government have to face is, what will happen to imports immediately they loosen the reins on the economy with a view to producing this upturn in economic activity?
We must understand that we cannot again permit, as was permitted in 1964, a large deterioration in our balance of payments with its effect on the reserves. We can never permit that again. We can certainly not permit it in the sort of situation we have today, when there is round our necks the burden of about £900-£1,000 million worth of short-term debts. The Government will have to face the problem of what they will do about imports when the upturn in the economy begins. They will have to consider—and should be considering now, alongside the import surcharge—whether they have this problem under control.
The Government are doing many things in this respect—the Economic Development Committees, the announcement which I hope will not now be long delayed about investment incentives and all the various export aids which have been introduced by my right hon. Friend the President of the Board of Trade. I hope that we may be told, today or in the near future, what the Government intend to do following the publication by N.E.D.C. of their important report on imported manufactures.
Nevertheless, the Government have to consider whether this will be enough, if only to produce, in the short period of one more year, a sufficient switch in the export-import relationship to enable us, with confidence, to remove the reins on the economy and allow this upturn to take place. Can we, during this next year, produce sufficient new industrial capacity to produce the change in the balance between imports and exports which will enable us with a feeling of security to allow the upturn to commence?
Will some other form of import control be needed, either alongside the import surcharge or after 1966? If so, should we not be thinking of it now? At the
1040
very least the Government should be preparing, to have ready to hand, certain additional weapons of import control. But I do not believe that the imposition of such weapons as imports control should be unconditional. I do not think that the Government should introduce measures of import protection which would be unconditionally offered to our industry. These should be weapons which could be used in a discriminatory fashion to make sure that we can control the flow of imports once the upturn in our economy starts.
Mr. John Hall: Would the hon. Member tell us how his proposals would be likely to affect the continued negotiations on the Kennedy Round?
Mr. Dell: I had intended to mention that later in my speech and, if the hon. Member will permit me, I will leave it until then, subject to your Ruling, Mr. Deputy Speaker, that such remarks are in order.
I was about to give an example of the way in which the Government should be prepared to introduce some sort of control over imports if necessary and if the other measures which they have introduced have not in time produced the overall results which they want. For example, I should like to take an interesting instance given in the N.E.D.C. report on imported manufactures in respect of the plastics industry. The chemical industry has been complaining for some years that the imports of plastics during times of world surplus are very high because there is dumping in this country owing to the relatively low level of tariffs imposed on plastics in this country compared, for example, with the United States. They want the Government to be prepared to protect them from such dumping, and I believe that they should be given that protection.
Mr. Deputy Speaker: Order. The hon. Member for Birkenhead (Mr. Dell) is going very wide. All we are discussing today is the import charge and its workability and whether it should be continued for another year.
Mr. Dell: I am suggesting that certain forms of import control are justifiable depending on the way in which they are operated. I hope that my remarks are in order.
Mr. Deputy Speaker: We cannot discuss other forms of imports control today. We are discussing this particular form.
Mr. Jay: Further to that point of order, I suppose that hon. Members on both sides of the House would be entitled to argue either that this charge was justified or that it was not justified on the ground that there are possible alternative methods. Within those limits, would not that be in order?
Mr. Deputy Speaker: Yes. But it is not in order to discuss the alternatives in detail.
Mr. George Y. Mackie: On a point of order. Mr. Speaker specifically allowed the Chancellor of the Exchequer to put to the Opposition the question what they would do instead of these import charges.
Mr. Deputy Speaker: It is not in order to go into the alternatives in detail. All that the House can discuss today is the working of these import charges and whether they should be extended for a further year.
Mr. Dell: I will try to keep within your Ruling, Mr. Deputy Speaker. All I attempted to say was that any form of industrial protection such as an import charge should be conditional on individual industries and firms being prepared to meet certain targets and, in the case of the chemical industry, being prepared to make the necessary investment in order to achieve a better export-import balance.
I am aware of the great objections which there are to measures of import control such as I was attempting to suggest, or to these charges. There is the objection that they reverse the trend towards freer world trade which has taken place since the war. The hon. Member for Wycombe (Mr. John Hall) asked what effect my proposals would have on negotiations for the Kennedy Round. I hope very much that those negotiations are successful. If they were rapidly successful they would ease the path in getting rid of these additional forms of import control. But the fact of the matter is that the Kennedy negotiations are not making great progress, and we have to face the possibility that the trend towards freer world trade is not making further progress at the moment.
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Although I wish to see this country taking part in all attempts to create freer world trade and to increase the flow of goods, in the last resort we have to make sure that our own country's situation is under control. In introducing the Order the Chancellor of the Exchequer said that the level of world trade would be likely to be higher if we controlled imports by methods such as the import charges rather than by means of a credit squeeze alone. He said that the latter is far more likely to reduce the level of our own contribution to world trade. This is true. In this country we have had a policy since the war of controlling imports by means of generally controlling the level of demand, by credit squeezes and by general economic measures, and it cannot be said that this country's contribution to world trade has been remarkably great since the war. If we were prepared to experiment with this new method we might in the long run make a much greater contribution to world trade than we have made in the past.
I accept the argument about the danger arising from cutting out the spur of competition, but the use of the import charges or any similar methods of imports control could be made conditional on firms taking a much more active part in exports. The competition which they will find in exports is much tougher and more educational in many ways than the competition at home. We could make any protection given to an industry in this country conditional on their promoting exports. If they failed, I should be happy to remove any import barrier by which they were being protected.
One of our difficulties at the moment is that we are not in a position to give firms this additional incentive to increase exports because of our balance of payments situation. If the balance of payments were more under control, we should be in a much better position to say to firms which were not going sufficiently into exports, "If you do not fulfil the plan or meet a reasonable target in respect of exports, we shall remove the import barriers which are protecting your home market."
There are many other arguments which could be used in connection with industrial protection and import control, but at the end of the day the Government must balance the arguments, and in this

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case the balance of the argument is in favour of giving industry, in co-operation with the Government, a period in which the structure can be changed so that the relationship between exports and imports may be drastically changed, too, once and for all. This must be done so that we do not continually face the problem that every time we take the lid off the economy and permit the rate of economic development to increase, we immediately face a balance-of-payments crisis.
Whether we like it or not, the problem of imports is, next to the problem of overseas military expenditure, the greatest immediate economic problem facing this country. The Government must face the fact that additional import controls may be required longer than they at first imagined. The Government must prepare themselves to ensure that if there is a need for such additional measures they can introduce them in ways which reduce to the minimum the harm to the national economy arising from the kind of defects in principle of import controls which I have indicated while outlining the main theme of my argument.
I hope that everything the Government are doing will have the effect sufficiently rapidly of avoiding the need for a continuation of special import controls beyond the period of the import surcharge. I also hope that the Kennedy Round negotiations as well as those to increase international liquidity will achieve success, as will, I hope, the various export aids which the Government are introducing. I am sure that these efforts will help to make the problems which I have advanced more easily soluble. However, if they are not solved before this temporary Measure expires—if, at the end of 1966, we still face the same sort of problems which we faced in 1964—then the Government must be ready to deal with them rapidly by having to hand continuing methods of import control.
5.21 p.m.
Colonel Sir Harwood Harrison: We have just listened to two very interesting speeches from the back benches opposite. Perhaps that of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) was somewhat more critical of his Front Bench, but there is no great harm in that.
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I have always taken the view during my years in Parliament that we have been trying to move towards rather freer trade. I recall Motions urging reductions in quotas against foreign countries and increased imports from those countries.
We always enjoy listening to the Chancellor. We enjoyed his speeches when he sat on this side of the House. However, I do not think that he felt particularly pleased today with the task before him, particularly since there can be no doubt that the House as a whole does not want the surcharge. The difference between the two sides rests on the question; should it continue for a further period or should it come to an end now?
The Chancellor presented us with a number of statistics which rather beguiled us as to the paucity of his case. I felt that while he was trying to act as though he and the Government had been rather good because they had reduced the surcharge from 15 per cent. to 10 per cent., it was almost like saying to an infantry soldier who had been marching for many miles carrying a pack weighing 50 lbs., "I have reduced your pack to 35 lbs., so it must feel lighter than if you had started with almost no load at all." This is a bad surcharge and there can be no doubt that it has acted unfairly on industry.
It is all very well to laugh off the bad effects of it on our customers because we have a fairly full export book, but no one can say how many exports we may have lost because of the surcharge. In other words, the amount of reduced imports may have been less than we have lost in terms of exports. We have fairly full export books, but it is in difficult times that one needs the goodwill which one has established over many years with one's customers. Many of these, particularly in the E.F.T.A. countries, have been shaken in their belief in the integrity of Her Majesty's Government. Just at a time when the general direction was towards freer trade, we, by this imposition, complicated the issue—and it seems from the Chancellor's speech that there is no intention on the part of the Government to remit it at an early stage. In other words, in a year's time it will come up for renewal.
I wish to take up three trade matters which have specifically been brought to my notice of how the surcharge acts

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against industry. First, there is a firm in my constituency, named Munton & Fison, which manufactures malt and malt products. This firm has a first-class record in the export trade. It has a lively, energetic board of young directors, and it is still a private company. The firm decided to expand from Stowmarket and two or three years ago it joined with an associate company at Bridlington in Yorkshire. With some difficulty, planning permission was finally obtained.
In December, 1963, the firm ordered through its main contractors two driers from Sweden. I understand that they were driers of a type which were not available in this country. They were supposed to have a capacity to pass 12 tons of barley per hour and reduce the moisture content from 19 per cent. to 12 per cent. In April, 1964, these two driers were imported and Customs duty at the then existing ad valorem rate of 7 per cent. was paid amounting to £1,153 18s. 8d.
In August 1964, the plant was started up, but owing to the exceptionally dry and fine summer the moisture content of the barley was low—not as high as 19 per cent.—and it was, therefore, not possible to test the driers to see if they were fulfilling their rated capacity. This test could not be made until the following December when, with the arrival of damper grain, tests were able to be carried out which showed that the driers could work to only 75 per cent. of their capacity.
The Swedish firm of Messrs. Kamas agreed to replace the driers at the same price. The duty against E.F.T.A. countries had by then been reduced to 5¼ per cent. from 7 per cent., but there was a 10 per cent. surcharge and the total amount paid was £2,470. The two replacement driers having arrived in the April, the two original driers were re-exported to Sweden and a claim to Her Majesty's Customs, reclaiming relief from the 10 per cent. surcharge on the grounds that these were replacements free under a guarantee, was made.
Customs would not agree. I took the matter up with the Chancellor and I have had a courteous reply. It is usually the case that the more courteous the reply from a Minister the less likely he may be expected to act on behalf of one's con-
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stituent. However, in this case I understand that there is a possibility that the Customs may be able to grant a refund on the ad valorem 7 per cent., but that under no circumstances can the import surcharge of 10 per cent. be altered. Are the Swedes expected to pay this? The Swedish company acted in a very generous way in replacing this machinery and is all this not likely to cause bad feeling? Or will this charge have to be paid by my constituents involved in this case? I gather that this is not a unique case but that there have been a number of similar ones. The mere fact that there have been more does not make this one any less important or worrying to industry.
I turn to another aspect of our export trade and in this, my second example, I am quoting the case of a firm with which I am connected and in which no constituents of mine are involved. In this case small articles are despatched and the example I have in mind is of hurricane lanterns which have a glass element and which, naturally, must be well packed. These lanterns are packed in cardboard cartons using Kraft Union paper and corrugated flutes. This method of packing has proved very successful for many years.
The firm which makes these cartons, not only for us but for many other firms, made very strong protests when the original 15 per cent. surcharge was imposed in that this type of paper was made subject to the charge since it is not produced in this country. As a result of the surcharge, the suppliers passed on to export firms the increased carton price of 6½ per cent. This increase is the importers' recovery of the surcharge on total cost and charge-out figures.
To facilitate the claim procedure, my firm, named Chalwyns Ltd. of Poole, arranged with its suppliers for all cartons using surcharge material to be marked "T.C.I." so that strict stock control was operated from receipt at the factory to exportation at the docks. It is also maintaining a record showing the number of these marked cartons exported, cross-referenced to shipping notes and invoices. This all involves a good deal of clerical work.
The carton manufacturer experienced a great deal of difficulty with the Customs

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officer at the point of entry over reclaiming the 6½ per cent. for its customers. In May, 1965, after tedious negotiations, the firm concerned reached an agreement with the Customs and Excise on the procedure to enable it to make claims for remission on behalf of its customers which re-exported "T.C.J." marked cartons. This complicated method involved extra records and valuable clerical time, but in view of the large sums involved—some hundreds of £s—the firm carried out this necessary work.
The matter was complicated again by the Government reducing the charge from 15 per cent. to 10 per cent., when the manufacturers reduced their 6½ per cent. to 4 per cent. That action, though welcome, made even more work. Here I would put in a plea to the Chancellor that, when he reviews the surcharge, he should not have another 5 per cent. step-down but should get rid of it altogether. I hope that this surcharge will be brought to an end.
A third instance brought to my notice is that of a company importing transistor radios and photographic equipment. Much of this comes into this country, and is held at the docks. The customers abroad often want a token delivery in order to decide whether they will buy a large quantity, and want them from the London docks, instead of their being routed direct. These items are therefore often re-exported. As I understand it, as each article is valued at less than 25s. the surcharge rebate will not be paid. As many thousands of these small articles can be sold together at a good price there is a loss to the export trade and to the re-exporters.
Turning to a general point, this surcharge is operating also against high-quality goods coming to this country, which may be small in volume. The whole consignment may not be wanted at once and so comes by ship, but a token amount may be wanted, and that is sent by air. This is a modern form of transport of goods which this House would be wise to recognise. The cost of freight by air is greater than that by sea, but the surcharge operates on the increased freight as well. If the sea freight is £20 an article, 10 per cent. means £2. If the air freight is £25, the percentage comes out at £2 10s.—in addition to the
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surcharge on the article itself. Surely there might have been some way of standardising the surcharge on the freight. It might have been done on a c.i.f. basis, or if the articles were sent by air it could have been arranged that it would be no more than the surcharge on the sea freight.
I have listed four cases of difficulties that have come to my notice but I have heard of others, as I know that other hon. Members have. It adds great point to the enormous amount of time and energy that is being wasted by firms up and down the country, all of which could be put to better use. As a result, they are not producing the extra effort to which the Government pays so much lip service.
Her Majesty's Government's actions are still resented in those E.F.T.A. countries with whom we are in association, and this has been reflected in the amount they buy from us. The particular firm with which I am associated which sells hurricane lamps, at one time exported over 90 per cent. of its products, but got little active thanks, even from Conservative Governments, except to be told, "You are very good boys." Today, wisely, it has diversified its activities and does more in the home market.
I have made a strong plea, though I know that the Chancellor has said otherwise, that goods from the E.F.T.A. countries might not be subjected to the surcharge. I put that in my speech before I heard the Chancellor, and it was very clear to me that the right hon. Gentleman's view was that he could make no exception for any part of the world, and that when the surcharge comes to an end it will come to an end altogether. All the same, I make a plea on behalf of the E.F.T.A. countries with whom we are so closely associated. The President of the Board of Trade is not now with us, but I saw that he wrote in the Daily Telegraph a very useful foreword on what is being done to bring life to the export trade. We do not have such as large representation in the E.F.T.A. countries as elsewhere but to the former we are selling a higher proportion of our goods.
The surcharge makes this Government appear to me once again to be a Government of theorists who do not understand

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the complications of business and the great difficulties put in the way of business people by various Government Departments. That being so, how can they expect the response they are demanding? Actions in other countries show that decrease in taxation, not increase, is the right approach to release ingenuity and endeavour, and produce the higher standard of living and the higher export trade that we all so much desire.
5.35 p.m.
Mr. Joel Barnett: Listening to speeches from the other side of the Chamber, one feels that one has been here before. The arguments are just the same as those put forward last year, and those of the hon. and gallant Member for Eye (Sir H. Harrison) were no exception. Although 13 months have gone by, we still have the same niggling criticisms and no constructive element, apart from the suggestion that in certain cases the surcharge might be removed—
Sir H. Harrison: The hon. Member is crediting me with a speech I did not make.
Mr. Barnett: The hon. and gallant Gentleman will know best, when he reads the OFFICIAL REPORT, which speech he delivered.
The arguments I have heard today from the Opposition Front Bench have been dishonest, irrelevant and irresponsible. It is not the form of words used at a particular time by this Government or by that which matters, but their actions, and the direction in which those actions are channelled. It is disappointing that in our economic debates we have only party political arguments, particularly from the other side, and the hon. Member for Worcester (Mr. Peter Walker) was no exception. Indeed, his rehash of last year's speech did him no credit.
When the surcharge was introduced last year there was no practicable alternative and the Opposition know it. The question is whether or not we should extend it for one year. What we are seeking to do today is to extend it for one year, and if any further period is wanted we shall need new legislation——
Notice taken that 40 Members were not present;
House counted, and, 40 Members being present—
5.36 p.m.
Mr. Barnett: It is not necessary from these benches to argue the need for a sound balance of payments in our economy. The only argument is as to how best we can achieve it. It can be summed up by saying that we need to reduce imports, we need to increase exports, and we need to produce goods which will be the import-saving type. We can reduce imports by measures of control, and/or by increasing production of the import-saving type of goods, or we can increase exports by the various methods that have been suggested in this House and outside it.
The methods have been discussed at very great length, but the trouble is that there is here a sort of vicious circle. We can only increase production of the import-saving type of goods and generally get an increased rate of growth if we have a sound balance of payments, and so avoid the intermittent recessions we have had over the last 20 years; the type of recession that makes boards of directors uncertain as to the future, and therefore uncertain as to whether to make the expansionist type of plans we need as a nation. It is against this type of background that we have to decide whether we should continue the surcharge.
One does not need to be a pessimist nor a fortune teller to see from the evidence available before us at present that we are not going to be able to solve the economic problems in the context of balance of payments in one year. Even if we had some Government which hon. and right hon. Members opposite would perhaps like to see, I do not for a moment believe that anyone in this House or elsewhere would argue that we could solve this aspect of our economic problems in one year. Therefore, as it is not a temporary problem, we need something more than a temporary solution. It is no use hon. and right hon. Members making pious statements about the need to increase exports and to reduce imports. This, of course, is self-evident.
For some years we are likely to need some kind of control of imports. The question is simply how best to do it while causing the least possible harm. On reflection, I believe the basic answer

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that gets to the crux of the problem is that, with all its imperfections, we have to have some form of quota system which will be both flexible and selective in its impact. For example, we have at present plant and machinery which needs to be imported to this country and there is a surcharge on it. The surcharge does not prevent that plant and machinery coming in, for the plant and machinery is very much required. It would be no use having a quota on machinery that we very badly needed. We would have to have a highly selective form of quota system. Apart from the certainty of a selective quota system, it could be a very useful bargaining weapon in negotiations with industry——
Mr. Deputy Speaker: Order. The hon. Member is not in order in discussing alternative import charges or the control of imports. All that we are discussing is the working of and whether we should continue the import charge.
Mr. John Hall: On a point of order, Mr. Deputy Speaker. I find myself in difficulty, and I ask for your guidance. When one is opposing an import surcharge there is a natural reaction to ask what one would put in its place. It is for that reason that we would suggest something else. This leads to an amount of detail.
Mr. Deputy Speaker: I am afraid that in this debate it is not in order to go into detail of alternative means of controlling imports.
Mr. Sheldon: Further to that point of order, Mr. Deputy Speaker. My contribution to the debate was on an alternative. I spoke of nothing other than the suggestion that the import quota should be replaced. Had I been ruled out of order I should have resumed my seat.
Mr. Deputy Speaker: I may have allowed the hon. Member for Ashton-under-Lyne (Mr. Sheldon) to go too far, but I cannot allow this debate to go from its proper course.
Sir D. Glover: When the hon. Member for Ashton-under-Lyne (Mr. Sheldon) concluded his speech I had every intention of intervening in the debate to ask questions on what he had said. According to a recent Ruling, however, everything that he said was out of order.
Mr. Deputy Speaker: That may be so, but what is in order in this debate is the working of the present import charge and whether it should be extended.
Mr. Barnett: I bow to your Ruling, Mr. Deputy Speaker, and I am grateful for the assistance that I have been getting.
Perhaps the least harmful point about having a form of selective and flexible quota system would be that it would not prevent a steadily increasing rate of growth. In this context perhaps I shall not stray too far if I refer to an article in the Financial Times on 15th November by Lombard. That was a very interesting article on the whole question of a quota system which, in view of your Ruling, Mr. Deputy Speaker, I cannot discuss now in the way I should like. The main point was that speedy action on imports is more likely to maintain rate of growth than to hinder the growth of world trade.
I am aware of the serious administrative difficulties involved in having any alternative to an import surcharge by way of a selective charge of the kind I have suggested. I do not believe, however, that there would be insuperable difficulties, particularly if the alternative is, as I believe, regular deflation every few years. This would happen if we had the surcharge for two years, then removed it and put nothing in its place. My hon. Friend the Member for Birkenhead (Mr. Dell) made the point very well that if we have to have the surcharge now we should at least look ahead to the underlying problems facing the nation in the whole problem of the balance of payments.
Perhaps the most serious criticism of my alternative is the charge of Protectionism. The answer to this lies in having the sort of highly flexible and selective form of quotas such as I have suggested. I wish to refer to another aspect of this question of whether or not we should deal with the balance of payments problem by some form of import control. I wish to refer to the other matter which seems to be affecting the minds of my right hon. Friend the Chancellor and others. It is an attitude of mind in the context of the whole balance of payments system which suggests that we should

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never be in debt as a nation, that we should try to get out of debt and never to have a debt again at all. That view has been expressed as if it is patently wrong to hold a contrary view. I certainly do not go along with the idea of never borrowing to get our economy in order.
Most efficient companies in this country are, and rightly, very heavily geared. There is a very strong argument for the nation too to be heavily geared. I suggest that long before 1970 we shall need to fund some of the debts we have at present.
Mr. Deputy Speaker: Order. This has nothing to do with the import charge which we are discussing today.
Mr. Will Griffiths: I am sorry to inflict another point of order on you, Mr. Deputy Speaker, but although I have not been in the House for more than a few minutes recently, I listened to the whole of the Chancellor's speech. As I understood, the Chancellor was recommending the continuance of this import surcharge because of its effect on sterling, on strengthening of the economy in general and on balance of payments in particular. Surely my hon. Friend the Member for Heywood and Royton (Mr. Barnett) is in order in referring to matters in a wider context?
Mr. Deputy Speaker: I understand that the Chancellor was called to order because he wandered too wide.
Mr. Barnett: Thank you, Mr. Deputy Speaker. I was about to say that in the context of the import surcharge, taking the comparison of companies borrowing money to balance their payments, it is important that if we, as a nation, are borrowing money it should be adequately covered both as to assets and as to yield. Of course it is equally important that money so borrowed should be put to good use. It is crazy to borrow to invest abroard on an inadequate return, as the previous Government had been doing and as apparently hon. and right hon. Members opposite are prepared to continue to do. But because they have been wrong in the past, there is no reason that we should now go too far the other way and assume that all borrowing is bad.
Mr. Deputy Speaker: Order. I must ask the hon. Member to come back to the order we are discussing this afternoon.
Mr. Barnett: I am sorry, Mr. Deputy Speaker. I am trying very hard to deal specifically with the import surcharge and its relation to the balance of payments problem. The import surcharge is very closely related to balance of payments and it is difficult not to refer to balance of payments when talking about the import surcharge but I shall do my very best. I was saying that what is needed is a flexible approach. It is wrong to use the old saying—"Never a borrower or a lender be". A Chancellor of the Exchequer should not subscribe to this maxim. In our present balance of payments position the national cannot afford such inflexibility. A flexible approach here combined with a carefully handled selective quota system could give us the steady and sustained rate of growth we all want.
It may be necessary to continue the surcharge at the moment because we do not have an alternative readily to hand and because we cannot allow a situation to exist in which we have no control over our imports. However, I hope, for the reasons I have outlined and the argument I have attempted to deploy, that before the next 12 months are over we shall be able to replace it by a system very much more flexible and selective in its use by way of quotas.
5.50 p.m.
Mr. John Peel: It is very interesting indeed to hear hon. Members opposite getting out of order, not in their rather feeble defence of this temporary surcharge but in suggesting ways of substituting something better for it. There is one aspect of this temporary surcharge which I have never yet heard answered by the Government, and I very much hope that we shall get a defence and an explanation, if there is one, from them today. As one of the British Parliamentary delegates to the Council of Europe, I was in Strasbourg just after the temporary surcharge was introduced and I heard, and had a great deal of sympathy with, the righteous anger and indignation of our friends and associates in E.F.T.A. Not only was I impressed by their anger at our action but especially, too, by the remarks of

1055
the Secretary-General of E.F.T.A. who, as a very able and oustanding Briton, was absolutely categorical in his condemnation of this measure, and he made it perfectly clear that it was in breach of a solemn treaty entered into by Britain. I have never yet heard any justification for what can only be described as a thoroughly immoral international act.
One of the things that I deplore more than any other from the Government benches is the feeble and cowardly excuse which they put forward that, because a departmental inquiry had been set afoot in an election year into all possible ways of overcoming the long-term problem of balance of payments difficulties, the Conservative Government must have approved it. This is certainly one of the feeblest and most cowardly excuses I have ever heard. It is an attempt to evade the Government's responsibilities for their own decisions and actions. What is more, I simply do not believe that a Conservative Government, if they had had to take action on this question, would have handled it in anything like the way that the present Government handled it.
If studies had shown that an import surcharge was really far and away better than any other method for controlling the balance of payments difficulties, since it was clearly completely contrary to our treaty obligations we must have had to consult our friends and associates. If it is argued that that was absolutely impracticable, I do not think that we ought to have introduced it at all and if necessary we should have introduced something which, though the Government may have considered it less suitable, was nevertheless within the terms of our treaty obligations.
The fact of the matter is that the Government were determined to create a false crisis for political reasons and in doing so they dragged Great Britain's good name in the dirt. This was very apparent to anybody who was in Europe at that time. I go regularly to the Continent to attend the Council of Europe, and I know that that bad name for that action is continuing. I am absolutely convinced that there is no hope of redemption and no hope of re-establishing real confidence abroad, upon which this country depends
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so much, until we have removed this illegal surcharge completely.
Mr. Jay: The hon. Gentleman uses all this rather "phoney" strong language, but he has to explain the fact that the right hon. Member for Barnet (Mr. Maudling) says that he also would have introduced the surcharge.
Mr. Peel: I happen to know that my right hon. Friend never said that at any time. The only thing that my right hon. Friend said was that departmental studies into ways and means of dealing with the balance of payments problem had been set on foot and this was one of the ways of overcoming it that they had looked into. He certainly never said that he would have introduced it. That is quite wrong.
Mr. Jay: He said that these schemes had been worked out by the previous Government and that of these various schemes the surcharge seemed to him the most promising.
Mr. Peel: No. If it was considered that this method was so much superior to all others, the very least we could have done was to talk to our friends and associates before making the treaty. As I said earlier, I am absolutely convinced that my right hon. Friends would have acted honourably in this matter.
Mr. Cyril Bence: On a point of order. Is it in order for an hon. Gentleman to say that had the Opposition been in power they would have acted honourably? Is not that impugning the Government by implying that they acted dishonourably in 1964?
Mr. Deputy Speaker: Not necessarily.
Mr. Peel: Quite apart from the moral aspect, I should like to know a little about the practical aspect. The Government seem to think they know that the surcharge is having a very beneficial effect by reducing imports. What we have not yet heard is how much damage they think it is doing to our exports. I am convinced that it caused so much annoyance and anger to our friends and associates abroad that they have taken it out of us in our exports to quite a considerable extent. Further, I should like to know what assessment the Government have made of the undesirable protection that is

1057
being given to home industries because that, too, should be taken into account when assessing whether the surcharge should be renewed.
The fact of the matter is that these charges have done us great harm abroad. We need look no further, though we might well do so, for the explanation of the sudden lack of confidence in Britain when this happened. The Prime Minister talked about a crisis of confidence, and it is not surprising that there was that crisis of confidence in us when a country like ours, the most important and biggest in E.F.T.A., the country that took an initiative in forming E.F.T.A., so seriously broke both the letter and the spirit of the treaty. Unfortunately, as long as we keep on these charges the blot upon our good name will continue and confidence in Britain will not be fully restored until they are removed. For those reasons, I shall vote against this Order tonight.
6.0 p.m.
Mr. A. E. P. Duffy: I note that the hon. Member for Leicester, South.East (Mr. Peel) will vote against the Motion. In listening to him I wondered whether we were debating the original Order of a year ago. If the hon. Member spoke in that debate no doubt he has been using his notes of his speech then for this occasion. All that he said, in so far as it was appropriate to any occasion, could have been said a year ago, but surely not today when we have the advantage of hindsight and can look back and decide whether or not the Order was a success. The question which must be asked now, and has been asked all the year long, is whether the Order has been successful; that is to say, what effect it has had on imports. We should also ask whether, if we are not too happy about the surcharge after a year's experience, what should be put in its place, though I am aware that it would be out of order to do that now in this debate.
Mr. Peel: In view of what the hon. Member said about my remarks, would he be good enough to tell us what advantages have flowed from the Order?
Mr. Duffy: I will certainly do that, and that I think will be the purpose of everyone who speaks from this side of
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the House. I regret that because of another engagement I have not had the opportunity of hearing all the speeches and in particular that of the hon. Member for Worcester (Mr. Peter Walker).
Mr. John Biffen: If it is any encouragement to the hon. Member, I would point out that the three preceding speakers from the benches opposite devoted their entire speeches to saying that a quota would be preferable to the present form of import surcharge.
Mr. Duffy: I have already said that after a year it is quite proper to ask ourselves if there is a case for something else in place of the surcharge, particularly because some people think that the surcharge was essentially a short-term measure. It may not be possible to do that now in this debate, but hon. Members outside the Chamber are entitled to speculate in this direction. There is nothing inconsistent about doing that. One has not thought about this problem unless one's mind has gone in that direction. The speech of the hon. Member for Leicester, South-East has not helped at all. To use strong language about a Government-formed crisis and to say that Government dragged Britain's name in the mud does not help.
I am trying to be objective and I hope that whoever winds up the debate for the Opposition will take me up on the points I make. I have no doubt that if he has the opportunity the hon. Member for Oswestry (Mr. Biffen) will not hesitate to do so. We must look into the pattern of imports in the post-war period. We should look at the years 1951, 1955 and 1960. One need only do this to be impressed with the elasticity of imports in relation to British G.N.P. and to know that we simply had to do something drastic in 1964. It sticks out a mile. There was no question of creating a false crisis.
As I have said, the real question that needs to be raised after a year of the working of the surcharge is what kind of success it has had. To arrive at that decision we must be quite clear about the goods which are affected by it. Many people are not clear on this point. They appear to believe that all imports are affected whereas in fact goods subject to the surcharge account for only about 30 per cent. of our imports, and about half of them are semi-manufactured goods

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and a third capital goods. The remainder are consumer products.
We had the advantage in September of the publication of the N.E.D.C. Report which showed us that the imports in these first two categories are largely responsible for the staggering import bill in the last year or so. It also needs to be said, before one attempts to measure the effects of the surcharge, that, as my right hon. Friend the Chancellor of the Exchequer mentioned, it is not easy to measure it. We may all come up with different answers. I say this because I do not want hon. Members opposite to accuse us of inconsistency. Because of the New York dock strike, recent deflationary measures and the reduction of the surcharge to 10 per cent. it is difficult to come up with the same answers. Nevertheless, if we take the period from July to October, 1964, as a base and trace the trend of imports, there is no doubt whatsoever that the goods subject to the surcharge have behaved differently to the totality of imports.
A N.E.D.C. Report published in September made a serious attempt for the first time to find out why British customers buy foreign goods. The Report is of great interest. It shows that British industry spent £290 million more on plant and machinery in 1964 than in 1963, and £101 million of that increase was spent on foreign equipment. Imports of machinery in 1958 were only just over 10 per cent. of gross investment in plant and machinery, whereas last year they amounted to 18·7 per cent. These figures speak for themselves. It is true that the marginal import content of capital investments in equipment is much higher than the average proportion of machinery bought from abroad. This needs to be borne in mind. It is true also that the import content of new machinery has increased in other advanced industrial countries as well as our own. Nevertheless, the British proportion is higher than that of Germany and several times higher than that of the United States. This is disturbing, even though it is part of the worldwide trend. Moreover, when Britain characteristically gets a low return in extra output from investment, a boom in business investment is inevitably hard on our balance of payments.
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I mention another couple of sets of figures because they throw further light on that category of semi-manufactured goods which is largely responsible for our import difficulties. Mechanical and electrical engineering was responsible for an increase in imports of 31 per cent. over the previous year and chemicals of 45 per cent. over the previous two years.
It is also interesting to note the reasons given by business men responsible for these imports to the authors of the N.E.D.C. Report. Availability and performance rather than price reasons were put forward on behalf of the large import of machinery, and availability was put forward largely in the case of the high chemical imports.
I wonder how many hon. Gentlemen have not made inquiries along these lines in their own constituencies and have not encountered evidence of local manufacturerers importing foreign machinery in preference to British machinery. In my constituency there is a firm of advanced and progressive manufacturers who are really moving with the times. I have noticed recently that they have bought imported machinery when only a few miles away similar machinery has been traditionally made for many years. The local makers were once responsible for a world-famous product, yet now some of their neighbours are going abroad for their machinery, even though they are having to pay twice as much. There is a moral in this, and it is not merely that these manufacturers were not put off by the surcharge.
I have mentioned that world trade in manufactures has been rising much faster than world manufacturing output over the last ten years. I have suggested that this has largely been because of increased activity between advanced industrial countries and not between advanced industrial countries and primary producing countries. I welcome this trend towards greater national specialisation. I am not one who supports import substitution as a policy. In the short term, perhaps, yes, but in the long term, no. In the long term, I am a free trader.
Mr. George Y. Mackie: Hear, hear.
Mr. Duffy: The hon. Gentleman will be glad to hear that I have agreed with

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him once again. We should regard with the utmost suspicion any serious attempts at import substitution.
Mr. Peter Emery: I have listened with interest to the hon. Gentleman's argument and his suggestion that the use of imported capital goods in the form of machinery is continuing extensively for the re-equipment of British industry. He tells us that he thinks this will go on. If that is so, why limit British firms by requiring them to pay an extra 10 per cent. when they will buy this machinery anyway? All one does in respect of these classifications is to put up manufacturing costs and capital coats, which we on this side would like to see reduced.
Mr. Duffy: I said that, as a matter of policy, I should not support import substitution. In the short-term, I can see the case for a brake on imports. But in the long term, we need settled investment programmes and therefore increased capacity. The Report published in September, for example, gives as one of the reasons for the difficulties of the chemical industry and its high import bill the uncertainty of investment in recent years. That, of course, is another reference to "stop-go". I hope that hon. Members will agree—I am just coming back to the import charges Order, Mr. Deputy Speaker—
Mr. Deputy Speaker (Sir Samuel Storey): Order. I hope that the hon. Gentleman will.
Mr. Duffy: One object of the import charge was to help us to maintain a higher volume of investment now and take some of the effect of deflationary policies away from investment. If we could give industries such as the chemical and capital goods industries that necessary capacity, it would enable them to meet home demand, and do it for perfectly proper reasons and without the protection which would shelter the high cost unit.
In the light of what I have said, the House will understand why, a year ago, I regretted the need to introduce the import charge. Nevertheless, as my hon. Friend the Member for Heywood and Royton (Mr. Barnett) has said, our balance of payments required some such action and, now, as a result of the charge,
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an impressive improvement on our current balance of payments account can be shown to have taken place. But, again, to use the sort of language which the Chancellor used today, if we are to have equilibrium we must have a surplus to cover the deficit on long-term capital items, and this means that we must look well ahead into 1966. This is a year in which we simply cannot take risks, first, because of the extent to which international financial collaboration facilities have been strained—we cannot expect to he able to borrow much more than we have already been able to borrow—and, second, because of the continuing high level of investment in 1966 in conjunction with what I have already described as the elasticity of imports, which will maintain a high import bill. Thus, there is a case for continuing the charge or a high level of exports.
How far can we rely on greater exports? British and American efforts to reduce their trade deficits are bound to affect world demand. The rapid rate of growth has slackened off in the Common Market. The downturn of prices of foodstuffs and primary materials is reducing the purchasing power of the Commonwealth countries. It is hard to see how far this trend will go. Nevertheless, in my view, we should be very cautious about setting too much store by an ever-increasing volume of exports.
There is the other factor of continued inflationary pressure at home. The pressure of demand in our own economy at a time when production may be easing will tend to make for imports, and this would certainly put back the time when we could ease current restraints on consumption. Thus, some control of imports may be required for a further period. It is at this point that I ask the question whether the import charge is the appropriate instrument of policy.
Having established to my own satisfaction that we need some restraint on imports, I ask whether, after a year's experience of the charge and in the light of what I have said about its nature as a short-term instrument of policy, and whether, at the present level of 10 per cent., it is having any "bite", it ought now properly to be replaced by another instrument. I should not argue for a quota system, but I should certainly argue

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for a form of restraint. I would come down on the side of monetary policy, and on another occasion I should be glad to describe what I regard as the advantages of the prior deposit system.
Captain Walter Elliot Captain Walter Elliot (Carshalton)rose——
Mr. Duffy: I think that if I were to speak any longer about the prior deposit system as an instrument of policy, the Chair would quite properly call me to order in this debate. I conclude by saying that I have no doubt that we still need to restrain imports. We have had no choice but to use the import charge as an instrument of policy, but, in the light of the past year's working of it, I should like to suggest that it be replaced by another form of restraint, although that is something which I cannot properly discuss on this occasion.
6.17 p.m.
Mr. John Biffen: I have listened to the debate with great interest, and it has struck me that of all the orphans of the storm the import charge seems to be the most deprived. The wretched child has had only one person prepared to say much in its favour, and that was the Chancellor himself. Other hon. Members opposite, the hon. Members for Ashton-under-Lyne (Mr. Sheldon), for Birkenhead (Mr. Dell) and for Heywood and Royton (Mr. Barnett), all felt that the charge, albeit that it had to be continued, suffered the serious defect that it lacked selective application. One appreciates that, for all their misgivings, they will support the Government tonight because we know that, on this occasion, the Asquithian relic will be voting with the Conservative Party. [HON. MEMBERS: "Oh."] One hopes so. I admit to having assumed that, if the residual elements of the Liberal Party cannot be dragged into the Lobby on an issue of world free trade, there must be very few issues left—[Interruption.] If I am wrong, I shall be only too delighted to deploy my conclusions on another more suitable occasion.
Mr. Lubbock: The hon. Gentleman must wait and see.
Mr. Biffen: That is very good advice to anyone who tries to follow the attitudes and behaviour of the Liberal Party.
Mr. George Y. Mackie: This accusation comes ill from a party which has been consistently protectionist since the war.
Mr. Speaker: Order. The hon. Member must address the Chair. I shall then be able to hear him and know whether he is out of order or not.
Mr. Mackie: He was, Mr. Speaker.
Mr. Biffen: With all respect to the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie), I believe that I am the only decent honest-to-goodness free trader on this bench at the moment, though what conclusions one should draw from that I would not like to say.
There are two points to be made about this Order. Both refer to a great deal of equivocation and misunderstanding on the part of the Government and right hon. and hon. Members opposite, and they must both be weighed very carefully when we consider the evidence on which we shall be voting tonight.
The first is the actual value of the surcharge. We have been told, in very calm and measured terms, by the Chancellor that he thought that the value of the surcharge was of the order of £150 million to £200 million on the balance of payments. That incidentally was the conclusion of, I suppose, an independent commentator, Mr. M. H. Fisher, writing in the Financial Times a short while ago. I agree that this is one of the most imponderable and difficult questions to answer and I will not cavil violently with that conclusion. Undoubtedly the import surcharge has had some effect and no one would wish to deny it. It would be very unfair to do so.
What I do suggest is that the calmness of the Chancellor this afternoon will be weighed against the lurid language of the First Secretary speaking in this House a few days ago. The conflict and difference between the First Secretary and the Chancellor is one of the reasons why so many foreign commentators, watching the behaviour of the British Government and the British economy, are confused and doubting. Their confusion and doubt about the import surcharge, and so much else is at the heart of a great deal of our weakness, because we are vulnerable to their opinions. On 17th November the

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First Secretary said, when the question of the surcharge arose, and referring to remarks made by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod):
"On the question of the surcharge which the right hon. Gentleman mentioned, may I put this thought to him? If imports had continued to rise at the rate at which they were rising under our predecessors, the gap this year would not be £800 million. It would be £450 million more."—[OFFICIAL REPORT, 17th November, 1965; Vol. 720, c. 1168.]
If this was meant to convey anything it was meant to convey that the surcharge had had a beneficial effect on the balance of payments of the order of £450 million.
Hon. Members opposite may object, but he was not saying that the credit restraints might be responsible for this. He was speaking in the context of the surcharge, and if hon. Members opposite do not believe me they are wecome, unless they find the whole prospect too frightening, to refresh their memory with the full text of the First Secretary's speech. What the First Secretary was ignoring were the points of difference between 1964 and the current year. He was ignoring the differences in the trends of stock-building; he was ignoring the very considerable political uncertainties which are bound to affect business in a year in which it is known that a General Election will take place; he was ignoring the fact that in 1964 there was a veritable rise in industrial production, whereas, as my hon. Friend the Member for Worcester (Mr. Peter Walker), pointed out, the index for industrial production has pretty well stuck for this year. Finally he was ignoring the terms of trade.
Those are all decent human failings which any of us may make and which the First Secretary did make. The difference between my making them and the First Secretary making them is that people abroad read his words but mercifully do not read mine.
Mr. Jay: That may be so, but the hon. Gentleman is now making another mistake. He forgets that industrial production on average this year has been 3 per cent. higher than 1964. That is the relevant point.
Mr. Biffen: I concede that. None the less, the point that is still valid is that in 1964 industrial production was on a rising plane and this year it is static.
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This undoubtedly is connected with the other arguments I am deploying which concern stock-building.
The second point I wish to make is whether or not the surcharge which we are being asked to renew this year is protective, either by accident or by design. That it is protective by accident is unchallengeable I think. It has provided a significant measure of protection for a number of industries. The question which remains in the minds of so many of our overseas trading partners is whether or not it is protective by design.
I fully accept that at all times when discussing the surcharge all right hon. and hon. Gentlemen opposite, with the exception, I think, of one intervention from the hon. Member for Buckingham (Mr. Maxwell) which, in fairness to hon. Members opposite I will discount, no attempt has ever been made to present the virtues of the surcharge in the light that it would provide some protective framework for British industry. But the language of protection riddles the thoughts and the arguments of hon. Members opposite. Even today when we are discussing the continuation of the surcharge, many of the speeches from the benches opposite have talked about selectivity. Selectivity is the language of protection because one is assuming that in certain areas selectivity in import behaviour is required to produce a desired pattern for the balance of payments. It is just as selective in intent as were the McKenna duties, which envisaged the reintroduction of protection into this country after the First World War. [An HON. MEMBER: "Did you oppose them?"] I was not here at the time, and, therefore, I am excused on that point. The point I am making is valid and if hon. Members opposite do not think so then I fear that they misconstrue outside opinion on what is the behaviour and intention of the Labour Government.
Mr. F. J. Bellenger: The hon. Gentleman referred to the McKenna duties. Was it not the case that they were introduced to protect certain industries?
Mr. Biffen: Exactly. My whole argument has been that once one begins to talk the language of selectivity when

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one is discussing import surcharges, or what might be the alternative, one is talking exactly the language of the McKenna duties. One is saying, "Here there are certain parts of the economy where we must take selective action because they show a remarkable propensity to weaken our balance of payments because of a high level of imports."
What was said by hon. Members, particularly the trio whom I quoted at the outset of my remarks—and I absolve the hon. Member for Colne Valley (Mr. Duffy) from this and I hope that he will be gracious and generous to me on this point—flowed perfectly from what was said by the Prime Minister when speaking at Swansea in January, 1964. Then he talked about the problem of imports and going through the Board of Trade returns to find out what was imported in times of a boom and how this could be cut. When one talks that language and then applies an import surcharge, when one forms a Government, one inevitably arouses suspicions.
When this matter was put before the House and before the world, on the evening of 26th October the Prime Minister went on television to explain why he had taken the range of actions that he had, including the import surcharge. He also commented in the same speech, that the Department of Economic Affairs was preparing a development plan to emphasise, and here I quote:
"Those industries which can do the most to substitute British manufactures for the imports we have been only too ready to rely on."
That kind of language frightens people overseas because they believe it is the language of a protectionist Government. Until that language is clearly and unequivocally rejected by hon. Members opposite, then the charge is likely to stick. One has to discern just where and how the import surcharge has bit. It has bit in one place which I believe should worry the President of the Board of Trade. I believe that the low-cost textiles may well have been adversely affected by this surcharge.
It may be that I am wrong and it may be that there are other quota arrangements which invalidate the point I am seeking to make. But from the evidence
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I can obtain from the Board of Trade's published figures up to September of this year, current exports, from what I would call the low cost Asiatic countries of India, Pakistan and Hong Kong, aggregate for the nine months to the end of September £32 million compared with the figure for the corresponding period of last year of £38,300,000. That, I think, is a reduction which makes a mockery of all protestations to be on the side of encouraging relations and trade between developed and underdeveloped countries. When taken alongside the proposals which the hon. Members have reported in their National Plan for future overseas aid, it is sinister indeed.
It will be a perfectly valid argument by the President of the Board of Trade when he answers the debate tonight to say that one cannot discuss the Order in a vacuum and that if one wants to see it scrapped, one must be prepared in broad terms to suggest an alternative I accept the challenge. I want to see the Order scrapped. I want it to go now. I believe it to be totally alien to the long-term interests of the country.
The alternative may well be unpleasant, but it must be faced—it must be faced in any event—and that is further restraint at home. One must argue this fearlessly and not be intimidated by the kind of language that the alternative means mass deflation, a return to anarchy and all the other adjectives and descriptions which I normally associate with the First Secretary and which I heard today from the Chancellor of the Exchequer.
Mr. Stanley Orme: Unemployment.
Mr. Biffen: The hon. Member speaks of unemployment. If he believes that any Chancellor would go through the next few months believing that the economy can sustain its present very low rate of unemployment, he is an optimist indeed.
Mr. Duffy: Would not the hon. Member agree—I am sure that he has read the N.E.D.C. Report published in September—that the deflationary policies which he envisages would merely emphasise the difficulties of the chemical industry, militate against increased investment and, therefore, capacity, and generally make for a high import bill?
Mr. Biffen: That may be so. A whole number of arguments could be produced to point to the imperfections of the course which I suggest, but if anybody believes that he has hit upon a magnificent touchstone which would solve all our problems without difficulty, it has yet to be revealed to the House.
The alternative, to which, I believe, right hon. Members opposite will drift in any event but in driblets, professing all the time that they never intended to do this, is an alternative which, if grasped now and in its reality, would be far more desirable. For that reason, I am delighted that we shall be voting tonight against the Order and I very much hope that with the aid of the Liberal Party the Government will be soundly defeated.
6.32 p.m.
Mr. Derek Page: I should like to begin by refreshing a few memories, which appears to me to be necessary, and by referring to The Times of 26th November last year, when it said that
"unless memories are refreshed, a Conservative myth will grow up that Sir Alec Douglas-Home and Mr. Maudling left behind them a sound, well-based economy which Labour promptly ruined … This is not so. The latest crisis was building up before the election. Action was delayed … The return of the Conservatives to power would solve nothing. They had thirteen years to produce the answer and did not do so."
There we have an authoritative statement of the crisis which existed and yet, in spite of that, we get these repeated assertions that the crisis was created by the Labour Government. Such a suggestion does not bear examination.
I have the most heartfelt gratitude to my right hon. Friend the Chancellor of the Exchequer because he had the guts to tackle the deficit by a new method. I am very touched by the tenderness by which so many hon. Members opposite have spoken of the feelings of other countries, and these must be taken into account. At a time, however, when the crisis had built up to such dimensions, the main thing was to consider the position of Britain. This was what the Chancellor had the guts to do. Other methods that have been used to tackle a similar situation in previous years always resulted in unemployment.
I congratulate the hon. Member for Oswestry (Mr. Biffen) on his courage. He
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has a perfectly valid standpoint and one for which a case can be made, but one with which everybody on this side disagrees wholeheartedly. The use of the surcharge has its disadvantages, but it had the tremendous advantage of saving us from unemployment, which would have to have been upwards of 2 million to cancel out the deficit had we relied upon the methods used in the past by hon. Members opposite.
The surcharge has been blamed for a number of things, some rightly, some wrongly. In one of my local papers, it has been blamed for the drop in trade in the port of King's Lynn during the past year. This is not so. I am, naturally, frequently in the area, and I am concerned at this situation, but it is important to have the right answer to why the drop in trade has occurred.
Since the import bill for the whole country has risen by only a fraction, the drop in trade at any one port cannot be explained simply on the basis of the surcharge, particularly when it is remembered that some of the biggest items to suffer a reduction were timber and food, on which no surcharge was levied. We must, therefore, avoid using the surcharge as a convenient whipping boy.
Mr. Peter Walker: I follow the first argument about the surcharge being successful in reducing our import bill. Now, the hon. Member appears to be arguing that it has not been successful in reducing imports into the port of King's Lynn.
Mr. Page: The answer is obvious. It has been successful in reducing the deficit. Hon. Members opposite must get past the elementary stage in economics. The surcharge has reduced the deficit by stabilising the import bill while our exports have increased. This was what the hon. Members opposite failed to do for so many years. Therefore, since the import bill was stabilised and did not go down, reductions in trade at individual ports cannot be blamed upon the surcharge.
Captain W. Elliot: May I ask a question?
Mr. Page: No, I am sorry, I have given way already.
One must ask what effect the surcharge has had on the balance of payments. I for one am prepared to accept the figure

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given by my right hon. Friend the Chancellor of the Exchequer of between £150 million and £200 million. I have heard a number of estimates by eminent economists to this effect. Undoubtedly, some of the improvement in the balance of payments was due to other factors.
Having spoken in favour of this method, however, one must ask the Chancellor to look into his crystal ball and see what will be the effect in future of asking us to renew the surcharge and whether it will be necessary and adequate. The surcharge has still left us with a deficit of £300 million which has to be closed. How is this to be done? Certainly, the improvement in exports, if continued over the next year at the same rate as during the last year, will close £250 million of this gap. It is, however, doubtful whether the import bill will stay down if exports and industrial production in general rise.
The true gap which we are likely to have to face will probably be between £450 million and £500 million rather than £300 milion. I cannot see the surcharge alone, or the increase in industrial output and exports, covering this extra gap which is bound to arise as the result of increased industrial activity.
I should, therefore, like my right hon. Friend the Chancellor to gaze into the crystal ball and tell us whether he believes that the surcharge alone will be adequate. I have my doubts. At the risk of being out of order, I should like to add my voice in support of my hon. Friends who have spoken of the need to consider urgently a system of quantitative controls.
6.38 p.m.
Mr. George Y. Mackie: I will not go into past history about who is to blame for the balance of payment position which led to the imposition of the surcharge. I enjoyed both the sound velocity of the hon. Member for Worcester (Mr. Peter Walker) and the extremely smooth efficiency of the right hon. Member for Flint, West (Mr. Birch) in their speeches attacking the surcharge. What we are concerned about and why we are opposing the Motion is simply that we differ from hon Members opposite in what is a temporary surcharge.
This surcharge has been on for a whole year now. A year may be nothing
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in the sight of the Psalmist who says that in the sight of God a thousand years are but as a day, but a year is a long time in the middle of the sort of crisis we appear to have been in, on and off, stop and go, for the past thirteen years. Without doubt the surcharge and also the other measures which have been taken, are due to the inability of British industry to hold its own in the world. Although our exports have gone up—we have all seen the figures—our share of world trade has declined from 13·8 per cent. to 13·1 per cent. in the last year. This means that we are no further on.
Hon. Gentlemen opposite have sincere doubts whether we shall get any further on with this continual fostering and bolstering of incompetent home industry. The hon. Member for Oswestry (Mr. Biffen) gave figures which agree with mine. The imports which have been cut include those of the textile industries. One would have thought that in a competent society like ours we ought to be encouraging textiles and getting on with the more expensive manufactures.
The import surcharge at the present moment appears to be helping to correct the long-term imbalance. The Times Review of Industry and Technology had a very interesting article which is relevant to this matter. The writer gave four reasons for the improvement in the balance of payments, and one of the reasons given was the surcharge. He said it quite well, but he says also that the continued expansion in world trade has been of enormous help to our exports. Hon. Gentlemen opposite kept reiterating—a very dangerous thing to do—that we must wait for times to get better, we must wait for the terms of trade to improve. However, we are right in the middle of this crisis now and we are totally unable to take advantage of that. Along with the expansion of world trade the writer gives due credit to the surcharge and along with that, the good harvest in 1964—a welcome tribute to the industry of the farmers. Fourthly, he says that income from Britain's overseas investments has offset the effect of a high Bank Rate. Here is another temporary measure, which, I agree reluctantly, had to be taken when restrictions on overseas investments were put on.

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But our long-term position must be tackled. There is no doubt at all in our minds that it is perfectly straightforward and simple. The Chancellor himself said today—I do not know why it has not been taken up before—that if we cannot reduce the surcharge, cannot abolish it, of course he will look at deflation. He said, "Of course I will not hesitate to take further steps." He said this in his speech, that he cannot reduce the surcharge. We are not prepared to accept this sort of assurance. If he is going to do it when he cannot reduce the surcharge, then surely the time to do it is now. If we cannot take a risk, if we have always to wait, to restrict the economy, to restrict our imports, protect our most inefficient industries till they are out of their short-term position, then we shall never get out of the crisis.
I do not think I need say any more. I t is as simple as that. We have to be competitive in industry. We have got to be. We cannot go on fiddling about from short-term measure to short-term measure, for if we do, industry will never have that competitive efficiency the Government say they want it to have.
6.44 p.m.
Mr. William Hamling: I am very pleased to follow the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie). At least he has some pretensions to consistency in a free trade attitude, but I should like to pursue the logic of one or two of his arguments further in relation to this Order. When he spoke about this surcharge being temporary, he seemed to imply that 12 months was a very long time for it to be temporary. But would not his alternative proposals be even longer in term than 12 months? After all, in this measure we are fighting still to overcome a balance of payments problem which is barely 12 months old so far as this Government are concerned, and I would suggest that 12 months in that respect is not by any means a long time.
We have succeeded so far in re-establishing British credit abroad, in spite of what the hon. Member for Oswestry (Mr. Biffen) may have said about other countries. I shall come back to him later. We have secured from that point of view a significant breathing space, and this measure, taken with the other measures
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of my right hon. Friends, has succeeded in reforming and restoring the credit of British industry in the world.
It has been said that this Order bolsters inefficient home industry. This may be an argument suitable to come from the Liberal benches. How significant or how appropriate it is coming from the Conservative benches we shall come to later. But should we have done nothing to stem the huge excess of imports we faced when we came to power in October of last year? The logic of the hon. Gentleman's argument that we should have done nothing, that we should have let it go on; either that, or, perhaps, applied deflation—cruel, harsh deflation, leading to considerable unemployment, opening British industry to the rude winds of international competition even more. Would that have produced an expanding economy in this country? The answer is, no. It would have produced great restriction it would have been far more restrictive and produced far more general and widespread restrictions than the policy of my right hon. Friends. This, no doubt, is a legitimate point of view for one section of the Opposition to put forward, that we should have adopted this widespread deflation and restrictive policy, but it is not one which has been put at all clearly from the Opposition Front Bench.
In any case, the hon. Gentleman, in putting forward this point of view, was saying that my right hon. Friend's policy was wrong in that we expected in this respite to wait till certain reforms, certain changes, had come about in our import-export position. It is quite obvious that even with the hon. Gentleman's proposals we should have had to wait till unemployment had done its work, till the bankruptcy court had done its work and driven all those inefficient British industrialists out of business. If he thinks that in the twentieth century unemployment and bankruptcy are good medicine—well, all right; but is that that party's policy?
Mr. George Y. Mackie: If the hon. Member would look at the effects of entry into the Common Market he would see that countries like France, very backward competitively at one time, by the sheer stimulation of competition have improved their position. No one on this

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bench has advocated massive doses of deflation. Without any deflation, what would be the prospects of employment if industry did not export?
Mr. Speaker: I think that when the Common Market comes into it it is about time to remind hon. Members to get back to the measure we are discussing.
Mr. Hamling: I much regret your Ruling, Mr. Speaker. I should like very much to have followed up that point, and particularly to have invited the hon. Gentleman to make a similar speech in relation to the Bill that we shall be considering tomorrow.
The argument that has been put forward is that the alternative to my right hon. Friend's Order is a policy which would have produced better results. I must be very careful in pursuing that argument, in case my remarks produce another intervention which is as equally out of order as the last one. I would therefore like to turn to the speech of the hon. Gentleman the Member for Oswestry, who is a free-trader in a curious coat.
He was concerned for overseas opinion, and no doubt it is legitimate to be concerned for overseas opinion. It is equally legitimate to be concerned for British industry, it is equally important to be concerned for opinion here, and perhaps it is equally of concern to be worried about certain other opinions overseas, apart from the people the importance of whom the hon. Gentleman was concerned about. He regard the Order as a significant measure of protection, and he went on in his speech to talk about the McKenna duties as being protective. It was not my right hon. Friends who were in power when the McKenna duties were introduced. It was the hon. Gentleman's own party.
Mr. Biffen: Surely the difference is that my colleagues and I evolve our thinking. Hon. Gentlemen opposite remain static in adhering to the attitudes they maintained in the days of the McKenna duties.
Mr. Hamling: Not at all. I am unfolding my arguments on this particular point. I was going on to say that protection of British industries is still the policy
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of the Conservative Party. They still believe in Imperial Preference and they still believe in protecting British industries. I suggest that for them to argue against protection in this context is a little illegitimate, to say the least. It is out of context for the hon. Gentleman's party to do that. It is out of context for his Front Bench to do it. After all, the way that they got us out of the 1931 crisis was again by a system of protection. He should look at the history of his own party. All the protectionists were there.
In any case, it is his argument that the measures were introduced by my right hon. Friend as a protectionist point. He was defining selectivity in terms of protection. My right hon. Friend has never done so. He has defined selectivity in the terms that there are certain things being imported which we ought to be making here, and it is very good Tory doctrine, I would have thought, to suggest that one way of compelling British manufacturers to produce certain things is to make the alternative source dearer. That is exactly the argument that was used by hon. Gentlemen opposite in relation to steel a few years ago, and it is perfectly good Tory doctrine. I am surprised that the hon. Gentleman did not get up and congratulate my right hon. Friend on his conversion.
Mr. Biffen: All that the hon. Gentleman is saying convinces me that he regards discarded Tory doctrines of 30 years ago as contemporary Socialism. That may be a reflection on contemporary Socialism and may be a reflection on Tory doctrines of 30 years ago, but it is not relevant to what we are discussing here.
Mr. Hamling: I was pointing out that, in relation to steel, only two years ago he and his party were saying that. That is not 30 years ago.
Mr. Speaker: Order. I would ask the hon. Gentleman now to come to the Order that we are discussing.
Mr. Hamling: I beg your pardon, Mr. Speaker. My enthusiasm sometimes takes me away from order. I was dealing with the Order in its selective aspects, and I hope in doing that that I shall keep within the rules of order.
What does "selectivity" mean? It means that we cut down certain imports,

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and that is the purpose of the Order. I would have thought that that was a highly desirable thing to do in the context of the balance of payments problem that we inherited from hon. and right hon. Gentlemen opposite.
What is wrong with selecting certain imports and saying that it is right and proper to cut them down? What is wrong with saying that British industry ought to be producing these things rather than importing them from overseas? The hon. Gentleman says that what is wrong is that it frightens people in overseas countries. I should have thought that it would have frightened people here far more if my right hon. Friend had not done something on these lines to cut down the huge excess of imports that we had in the fall of 1964.
He mentioned low-cost Asian textiles. Far be it from me to attack the import of low-cost Asian textiles in the context of some of the speeches on the point from hon. Gentlemen opposite representing Lancashire constituencies in recent months. They have been complaining far more than my right hon. Friend.
It is legitimate to ask, if the Order is being opposed by right hon. and hon. Gentlemen on the opposite benches, if they intend to vote upon it, what would have been their policy in the situation in which these Orders were introduced? Would it have been the selective cutting down of imports, as was implied by the right hon. Member for Barnet (Mr. Maudling) in November, 1964? [Interruption.] It was. Look at the speeches on the first Finance Bill introduced in the fall of 1964:
"These were measures which we would have introduced."
Mr. Iain Macleod: He did not say that.
Mr. Hamling: If he did not say it, he came as near to it as my reading of the English language would ever permit me to understand.
Mr. Iain Macleod: With respect, my right hon. Friend the Member for Barnet (Mr. Maudling) never said anything remotely like that. He said that the Government had inherited the problems and his remedies, and that means, as happens in all cases, that every single
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possibility should be examined. But the hon. Gentleman cannot produce a single quotation to justify what he has said of my right hon. Friend.
Mr. Jay: I quoted what the right hon. Member for Barnet in fact said when the right hon. Member for Enfield, West (Mr. Iain Macleod) was not in the Chamber. He said very much more than that.
Mr. Cooper: The right hon. Gentleman quoted what he thought he said.
Mr. Hamling: It would be wrong for me, an Irishman, to interfere in a fight between the two Front Benches. However, one can say quite legitimately that that is the policy that my right hon. Friend is introducing. Right hon. and hon. Gentlemen opposite are going to vote against it, and we are therefore entitled to ask what was their policy and whether their policy would have produced the desired result more effectively than the policy of my right hon. Friend.
If people overseas are frightened of that policy, why is sterling so strong today? Why have we overcome the lack of confidence in sterling which was produced by the legacy of the right hon. Gentlemen opposite? We have overcome it. From time to time we have had fresh indications of renewed confidence in the policy of Her Majesty's Government, and the present Order is an integral part of that policy.
7.0 p.m.
Mr. A. E. Cooper: If the hon. Member for Woolwich, West (Mr. Hamling) really believes the last two or three sentences of his speech, he will go on believing anything. What is the position of sterling today? It is bolstered by more than £1,000 million of extra debts saddled on this country by the right hon. Gentleman and his hon. Friends. What has really happened is that the Chancellor has gone to his bank and said, "Look, I have an overdraft of £800 million. Unless something is done I shall not be able to meet my debts, and I shall go bankrupt", and so his friends, who do not want him to go bankrupt because he happens to control a large share of the world's trade, have said, "All right, we will loan you £1,100 million to tide you over until 1970". The right hon. Gentleman then says, "This is first-class. We are now strong economically. We can

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look the world in the face, unashamed of our past", but the day of reckoning must come, and it must come long before 1970, and I assert that, far from strengthening the economy of this country, the Prime Minister and his hon. Friends have weakened us to a point worse that at any time in our history, in the last 50 years particularly.
It does nobody any good to delude himself that the measures taken so far by the Government have had any material effect whatsoever on the improvement in our balance of payment position this year. As I have asserted in this House on more than half a dozen occasions—and it has never been denied by the Chancellor who has often heard me say this—the improvement that we shall get this year will be due principally to two main factors, both of which are non-recurring—the very substantial item of stockpiling which we have heard variously described as between £300 million and £400 million, and the larger non-recurring item of capital items for the big oil companies which last year totalled about £150 million. We shall improve our balance of payments position this year by about £400 million, and it will be due entirely to those two factors.
Mr. Eric S. Heffer: Would the hon. Gentleman perhaps elaborate upon that a little? Would not he agree that the position is better than it was, and that when the Conservative Government were in power there was a continually rising deficit in the balance of payments position? Will the hon. Gentleman explain why there was that continual rise in the deficit, and also explain in great detail how it is that the Government's policy has nothing to do with the improvement in the deficit?
Mr. Speaker: Order. Before the hon. Member replies, I must tell him that he can elaborate in detail only as far as this Order is concerned.
Mr. Cooper: Mr. Speaker, that is what I had hoped you would say, because most of the speeches and the interventions that we have heard from the other side have been either irrelevant, or out of order, whereas on this side of the House——
Mr. Speaker: Order. I hope that the hon. Gentleman will withdraw that
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remark, which is a reflection on the Chair. The Chair is in charge of order, and when hon. Members are out of order, as most of them know to their cost, they are called to order.
Mr. Cooper: I unreservedly withdraw, Mr. Speaker. I meant no disregard to you whatsoever, as you know.
I regard this Order as about as big and shabby a piece of political chicanery that I can imagine even this devious Government bringing forward to the House. It is highly improbable that the present surcharge has any serious effect on the volume of imports now, because, in terms of cost, the surcharge of 10 per cent. is a relatively small item, and it has been absorbed already. In the main the goods covered by the surcharge are goods which are required by this country, and they will now come in automatically. The reduction to which the Chancellor referred this afternoon is being brought about this year because, primarily, the stockpiling of 1964 is largely being eaten into, and I would not have thought that at the present time the 10 per cent. represented any barrier on imports. Its sole effect is to put up prices, which of course is harmful to our general level of costs.
Mr. A. Woodburn: Is not the hon. Gentleman aware that the 15 per cent., or the 10 per cent. surcharge has been completely liquidated by people abroad reducing their prices, and not by putting them up?
Mr. Cooper: I am engaged in the chemical industry, and I have found no evidence to support the right hon. Gentleman's view.
A large percentage of the imports affected are materials which are required by industry, and they will continue to come into this country irrespective of the surcharge. Increased prices have been absorbed into costs, and the only effect of the elimination of the surcharge would be to ease prices in this country, with its consequent effect on the cost of living, a situation which I would have thought the right hon. Gentleman would have liked to see.
The only reason for this Order is revenue, £170 million of it in one year, and in his speech this afternoon the Chancellor lifted the veil a little. He said to

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my right hon. and hon. Friends, "If you are going to withdraw the surcharge, if it is your policy to do away with the surcharge, what will you put in its place—increased taxation? I find no support for such measures in this House". Those were the Chancellor's words.
What the right hon. Gentleman really means is that very quietly, and without anybody really knowing about it, particularly the people who tend to vote for the Labour Party in the course of an election, he is getting £170 million, a nice quiet revenue. That is what he is going to get. If the surcharge were removed, new taxes would have to be raised to offset this, and, of course, politically this would be a disastrous thing for the Labour Party. It would show up the profligacy of the Government who quite happily eliminated the prescription charge which they said was going to cost £23 million.
Mr. Speaker: Order. The hon. Gentleman must now correct himself and call himself to order. He must get back to the Order we are discussing.
Mr. Cooper: If the Government did not have this revenue of £170 million which this surcharge brings in, they would be forced to introduce taxation on consumer goods, or to increase direct taxation, and this I believe is the real reason why they have brought forward this Order.
The Chancellor of the Exchequer claims credit for the improvement in our balance of payments position, but I have already shown that this is not so, that credit is not due to him but to the situation, which would have occurred automatically, irrespective of which party was in power. In fact, if one were permitted to develop an argument of this sort, it could be shown that on the long-term view, particularly of capital investment overseas, the Government are harming the future prospects of this country.
The Government will require new taxes this year. It is difficult at this stage to judge just what they will be, but they will probably amount to about £400 million, and this £170 million will make a fantastic contribution to that sum. I should like the right hon. Gentleman and his hon. friends to be honest with the country for a change. In spite of what the hon. Member for Woolwich, West may say,
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this surcharge has done us a great deal of harm overseas. I can cite cases of orders which my company has lost, especially in E.F.T.A. countries, who have said quite clearly that they will not trade with us until the surcharge is withdrawn.
The hon. Member for Colne Valley (Mr. Duffy), talking about the chemical industry—the industry in which I earn my living—said that we should be producing much more in this country than we are at present, and that the surcharge was encouraging us to do that. That is absolute nonsense. Hon. Members should remember that we have only one raw material in this country—coal—and that we have to build all the chemical industry that we have fundamentally on this one raw material.
The reason why we bring in raw materials from the Continent and the United States—and from all the world for that matter—for the chemical industry is not that we cannot buy comparable goods here but simply that the basic raw materials are not produced here. The very goods which are fundamental to our industry are now surcharged. Does this make any sort of economic sense to the President of the Board of Trade?
This is an Order which has to be beaten tonight, and it will be the most sensible thing that the House of Commons has done in the last 12 years if we are successful in throwing it out.
7.2 p.m.
Mr. Geoffrey Rhodes: The hon. Member for Ilford, South (Mr. Cooper) said that borrowing money on the international markets was the only reason why sterling had revived. One would imagine that he was saying that the import surcharge, the check on imports coming into the country and the export programme had nothing to do with it. He cannot seriously expect the House to accept that argument. There has been a considerable revival of confidence, both at home and abroad, in the capacity of this country to meet the situation that it was facing a year ago. To argue that this is entirely a matter of borrowing money is to misunderstand the situation.
In any case, unless there had been a degree of international confidence in the state of our economy we would never have been able to borrow that amount of

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money. I am reminded of a business friend of mine who once said that his company was £1 million in debt. I said, "How tragic", but he said, "On the contrary; only a company in which there is a fair degree of business confidence could have an overdraft of that kind." The hon. Member was overstating his case.
He said that if this year we were £400 million better off than we were last year in our balance of payments this was entirely because of the money we have borrowed from abroad. The logic and mathematics of that are that had we not borrowed any money we would have had the same deficit.
Mr. Cooper: I did not say anything like that. I said that if we improved our balance of payments by £400 million this year it would be due to two factors, namely, the elimination of stockpiling—about £300 million—and about £100 million plus in respect of the oil companies.
Mr. Rhodes: I am sorry if I got the trend of the hon. Member's argument wrong. I thought that he was saying that we were surviving economically today, and reducing a difficult balance of payments situation, only because we had been running around borrowing money right, left and centre. If I misunderstood what he said, I withdraw my comments, but there was a hint in what he said that that was what he expected us to understand.
If I am wrong about that, I wrote down what he said on another occasion, namely, that the state of our economy today was very bad—as bad as it had ever been in 50 years. That is a fantastic statement because the balance of payments deficit in the present year is only half what it was last year. If he wants to persist in arguing that the state of the economy is as bad today as it has ever been in the last 50 years he should come to Tyneside and talk to the workers in the shipyards. Unemployment on the North-East Coast at present is lower than it has been in this month of the year for the last seven years. If he told the industrialists on the North-East Coast that the Government have allowed the economy of the North-East to deteriorate to a state that it has not been in for the last 50 years he would be laughed out of court.
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The import surcharge was introduced in a time of crisis. There has been some argument this evening as to whose was the responsibility for the crisis; whether the measure taken was the right one, and whether this is the right time to abandon it. Throughout last year there was an accelerated deficit of our balance of payments. Overall, it was about £746 million for the year. In the period immediately before the General Election the deficit was running at a much higher rate.
This was a critical situation, and it completely belies the statement made by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) earlier that our economy had seldom, if ever, been stronger. The fact is that our situation was deteriorating. I concede that it deteriorated further after the General Election. I do not know whether any of my hon. Friends have said so, but I believe it to be so simply because there was an indecisive result in the General Election and there was considerable doubt whether the Government could survive for long. This was well known in the House. Furthermore, there was some lack of confidence in industry as to the policies likely to be pursued by the Labour Government. This had some effect on confidence at home. But I assert that the political and economic situation has been transformed during the last 12 months.
It would be out of order for me to elaborate on the degree of confidence that the country has in the capacity of the Government to survive for many years, but it is not out of order to suggest that the increasing confidence of industry in the Government has been partly conditioned by the kind of measures that we took to deal with the critical situation with which we were faced. Of those measures, the principal one was the attempt to check imports by the imposition of the import surcharge. There were debates in the House and elsewhere as to whether this was the right method of dealing with the problem. There was also an argument as to whether or not we should have warned people abroad before we introduced this measure.
There was a tremendous argument amongst economists. As a former teacher

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on the subject I have always been inclined to believe that if all the economists in the country were laid end to end they still would not reach a conclusion. When one is in power one has to take a decision, whatever the risks involved in doing so, knowing that there are formidable arguments as to alternative measures and formidable arguments against those that one is taking. Nevertheless, I believe that the proof of the pudding is in the eating, and that the evidence since the measure was taken has shown that it was the correct decision to take and that the risks involved did not come home to roost.
Mr. John Hall: The hon. Member said earlier that the action taken by the Government had encouraged confidence on the part of other countries. Can he tell me any country that believes, even now, that the action taken in imposing this surcharge was the right one?
Mr. Rhodes: There is overwhelming evidence that the overall measures taken by the Government to check imports by means of the surcharge, to boost exports and to put our trading balance into a more healthy state than it was a year ago have had a great deal to do with the increasing confidence of businessmen at home and abroad in the capacity of this country to overcome its difficulties in the future. If the hon. Member will not accept that, he is welcome to his own point of view, but my experience of the feeling in the business community—which may not be the same as his—leads me to this conclusion.
Economists and experts are concerned tonight as to the exact effect of the surcharge on our import bill during the past year. It has been suggested that the figure involved is between £150 million and £200 million. I am convinced that whether or not this is a measurable factor, had there not been a measure of this kind to check our imports our import bill would have been markedly higher than it is at present and our balance of payments situation markedly worse.
I am speaking from memory, but I believe that the average deficit of our balance of payments during the first 10 months of this year was about £29 million, compared with £46 million in the equivalent period last year. I argue that there is considerable evidence that it
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was the import charge along with other measures which helped to create this situation. There is, of course, a danger in an import charge. I agree with the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie), to a point, that if we pursue a policy of import charges too long, if we take a stance which looks like a long-term stance of protectionism, we will, in the long run, defeat our original object.
We all know that measures taken to block imports may lead to a frustration of exports in the long run. I would go a long way with the hon. Member for Caithness and Sutherland when he pleads the case of free trade to discipline our economy to meet the competitive situation with which it is faced in the second half of the twentieth century. But I doubt very much whether, in the particular emergency faced by this Government 12 months ago, he or his party, if they were in power, would have used a long-term free trade solution to solve the immediate crisis facing the Government——
Mr. George Y. Mackie: That was 12 months ago.
Mr. Rhodes: I am coming on to this point. Hon. Members on the Liberal benches must restrain themselves a little.
I would not argue that this is a measure which intrinsically and basically, I like. I should be surprised if there were many hon. Members on this side of the House who, in their basic approach to international economics and trading, would advocate a long-term protectionist policy. Therefore, we come to timing and to the question of whether this is the right time to take the charge off. I do not know: I should have thought that we are only half way there. The deficit on our balance of payments for this year will be about half what it was when the previous Administration was in power.
A number of very competent economists are forecasting—I am not at the moment thinking of politicians, whose forecasts are sometimes conditioned by their political desires: I do not complain of that—who argue that our balance of payments a year from now will be virtually balanced, certainly very near it. Some time in the next 12 months—and nearer 12 months from now than the

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present moment—would be a more appropriate moment for the complete abolition of the charge.
There is another argument, about whether or not we should abandon it because it does not work, that some other drastic measure is needed to solve the problem. However, there is no evidence that this barrier on imports is not working and there is some evidence that it is. But if it was found in the future that it did not go on working, other more drastic measures would be used. It is the responsibility of hon. Members opposite to suggest how they would have dealt with this situation.
As I see it, the alternative to the import charge is some drastic deflation of the economy, a drastic return to stop-go policies. I can speak only for the North-East coast: I would remind the House that the measures taken by the previous Government in dealing with similar situations to this—which did not involve the solution which we are discussing this evening and which they are opposing—resulted, in my area and in the region of which it is the centre, in unemployment figures which varied from time to time between 50,000 and 80,000 people.
Unemployment in that area has now been reduced to such a level that we are getting near the point at which the only people unemployed are the unemployables. This situation is one which I would fight vigorously to defend. The alternatives to the import charge which might have to be used would constitute a severe threat to the security of employment and the prospects of economic expansion in the region, which I know my right hon. Friend has very much at heart because he has taken many measures to help us in this problem. However, that is not the subject of the debate.
The case is that there is a greater degree of confidence because the political crisis is past and there is a greater degree of political confidence in this Government. There is a greater degree of confidence on the economic and commercial front, largely because, as I said, the proof of the pudding is in the eating. The deficit on the balance of payments has been halved.
It sometimes distresses me, when good economic news of this kind is announced from this side of the House, that some hon.
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Members opposite seem displeased with the news. That is not good enough. It is in the national interest that this problem should be solved and it is not in the national interest that the charge should be taken off now. The economic problem is not solved yet, but we are nearer to a solution than we were a year ago and are far more likely to solve the problems of our economy in the next 13 years than we were in the last 13 years.
7.16 p.m.
Mr. Michael Alison: I think we all welcomed the comment of the hon. Member for Newcastle-upon-Tyne, East (Mr. Rhodes)—it seemed to have a ring of bipartisan truth about it which has not always been evident on both sides of the House—that the crisis in 1964 was not an economic crisis in the sense that the British economy was fundamentally weak, but a crisis of confidence. If that is the case, the logical conclusion one draws is that one of the measures taken by the Government in the light of
this crisis of confidence, the import charge, has to be renewed now because confidence is still lacking. The main consideration is not that the economy which they inherited is weak, but that they created the situation in which confidence was destroyed and did nothing to restore it—
Mr. Rhodes: I hope that I did not give the impression that I thought that the situation last November was entirely due to the change in the political situation. In fairness, I should point out that I said that this added to the severe economic position which we found as early as October.
Mr. Alison: The chink of the light of truth which the hon. Member shed on the situation showed that the curtain could be opened much wider than he opened it.
Like my hon. Friends who have spoken tonight, I consider that the Chancellor had a poor case for imposing the charge and has made an even worse one for continuing it. I am sceptical about his figure of the savings for the balance of payments of between £150–£200 million. This seems to be based on a comparison of the present time with a period in which there were exceptional circumstances at work, particularly the volume

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of stock building and the adverse trend in the terms of trade, which affected the value of imports in 1964. It is not demonstrable by the Chancellor that the savings figure is anything like as high as he claims; it may be very much less.
I want to put forward what I consider to be the really fundamental objection both to the imposition and, especially, to the continuance of the charge, and that is the way in which it applies in a particularly crucial sector of the economy—that related to machinery and capital goods for modernising British industry—where the impact of the charge seems to me, to use a Biblical phrase, to have been "neither hot nor cold but lukewarm". It is for that reason, to continue the analogy, that I believe it should be "spewed forth".
I will illustrate this by showing that, for machinery and capital goods equipment, it has had so little effect on the volume of imports that it might well not have been imposed at all. Looking ahead to the future, one sees that it might have the effect of promoting or encouraging a downturn in investment in manufacturing industry. If that is the case, it should certainly be abolished now.
If one looks at the overall figures for the imports of manufactures and semi-manufactures in the first nine months of 1965, one finds the results disappointing enough from the point of view of the Chancellor, as they have gone up by about 3·3 per cent. Although this may be nothing like as much as the rise in exports, which is one figure the right hon. Gentleman quoted to give a favourable impression, when one considers that some non-chargeable items like foodstuffs have gone down by as much as 5 per cent. the increase of 3 per cent. in manufactures and semi-manufactures is not a very good achievement in the light of the imposition of the surcharge.
When this is considered in detail, one discovers how ineffective the charge has been in its effect on manufactured goods and similar goods for investment in capifirst nine months of 1965 compared with tal industry. In machinery other than electrical the percentage increase in the 1964 was as high as 11 per cent., which is very much higher than the average of
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3 per cent. The figure for electrical machinery, which is a critical factor in British manufacturing industry, has risen in the first nine months of 1965 by nearly 7 per cent. These are very large percentage increases over the top of the dam, as it were.
An important point which has been made in a number of economic journals, although it struck me particularly when I read it in the London and Cambridge Bulletin, is that the reason for the continuance of these imports of special kinds of machinery for investment in British industry is not so much that their prices before the import charges were very attractive as that the quality of the goods which we were importing could not be matched in this country. In many cases they were articles for which there was no substitute. A typical example is the components for computers, some of which cannot be produced in this country. Others are imported because the quality is superior. It is desirable that this kind of import should continue.
Where the reason for importing a particular article is that its quality cannot be matched in this country or that there is no substitute for it, can there be any economic justification for throttling this kind of import? Some hon. Members may argue that one of the effects of these charges will be to encourage British industry to produce substitutes. The snag is that British industry is already fully stretched and that is not the moment to look for these fundamental changes and for the improvement in capital investment which would produce changes in quality. It is simple to illustrate this point. There is a factory in my constituency making chemicals. In the light of the demand for their product, all that they can do to increase production is to duplicate existing capital equipment. They have no chance of standing back during some slack in their demand in order to make these fundamental changes in their methods of production. All that they can do is to duplicate existing machinery. This is not the economic climate in which fundamental changes are made. There is too great a pressure on industry. In any case, the impact of the fiscal measures which we have had recently, such as the Capital Gains Tax and the Corporation Tax, is on the whole to discourage innovation—and innovation tends to

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come from newcomers to an industry rather than from existing firms.
One reason why we have to be particularly careful at present not to discourage the import of machinery and other capital equipment vital to British industry, which is what these charges try to do, although not very effectively, is that the export performance of this country, which in a competitive world is based not only on cost but on quality, is, in spite of what the Chancellor said, very disappointing. He gave a figure of 5½ per cent. increase in exports this year compared with the equivalent period last year.
Captain W. Elliot: On a point of order. Am I in order in pointing out that in this important debate there is no member of the Government present on the Front Bench who is concerned with the Board of Trade or with economic affairs? Nor is the Chancellor of the Exchequer present. Would it be in order to adjourn the debate until we have here a representative of the Government?
Mr. Speaker: The hon. and gallant Member is an old Parliamentarian. He knows that the point which he has raised is in no way a point of order.
Mr. Alison: Even if my comments fall on deaf ears, I hope that they will not fall on blind eyes. Perhaps I might point out that the improvement in the export figures for the first nine months of the year, for which the Chancellor claimed some credit, is in no sense a performance of which we can be proud. If we set this increase in exports alongside the world increase in the demand for manufactures, which is the economic climate in which we operate, we find that the United Kingdom share in the export of manufactured goods in the first few months of 1965 has taken an appreciable fall. It was 13·8 per cent. of world manufactures during 1964 and it is down to 13·1 per cent. now. Relatively we are losing ground. The economic climate is favourable to us, but we are not doing particularly well and there are no grounds for complacency.
Not only must we keep costs steady, as my right hon. Friend the Member for Flint, West (Mr. Birch) said—which in itself requires that these charges should
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be removed—but we must do everything we can to improve the quality of the goods which we export. This surely means that we must be ready to import without any let or hindrance the special items of capital investment for British industry which are sought because of their quality and their indispensability in that they are not otherwise available here. These are very good grounds for suggesting that these charges are not stopping the inflow of machinery and goods which British industry seeks from overseas because of their quality or because they simply cannot be produced in this country.
I have a feeling that the maintenance of these charges will have some very undesirable effects on manufacturing capacity in the months to come The snag is that all the economic indicators at present suggest that investment in British manufacturing industry has at best reached a plateau and is likely to take a dip down in 1966. The reason for this dip down is not very far too see. It is not only the tendency for labour costs to rise while enforced price stability makes it very difficult for manufacturers to make a profit. It is not only that the tax measures are making capital more immobile and tending to make it impossible for small firms to get the capital which they want for investment. All these items add to a decline in business confidence which these imports charges go only to reinforce and which is bound to have precisely the opposite effect to that which we need.
I therefore underline the point that these charges are not having the effect of preventing the import of vital capital equipment for British industry, and nor should they have that effect. For that reason they should never have been introduced. Moreover, they are liable to reinforce a trend in declining manufacturing investment in the coming months.
May I conclude by reference to the wider political repercussions of these imports charges? There has been nothing more fatuous than the fact that within 36 hours, looking backwards in time, of the Government bringing forward this Order, the Foreign Secretary has been making a public speech urging once more what he calls the continuance of "the process of bridge building". Could anything be more fatuous than for the

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Foreign Secretary to go round the country urging the continuance of bridge building in these circumstances? He has the effrontery to talk about bridge building in economic terms. He said we must also try to work with Europe
"for a reduction in tariffs, and we should make the fullest use of organisations like the Council cif Europe and the Western Union. These things help to create the right atmosphere for the bringing together of E.F.T.A. and the European Economic Community towards wider European unity …"
For him to talk in those terms at the precise moment that the Government bring forward a Measure to erect yet another tariff barrier between E.F.T.A. and E.D.C. or within E.F.T.A., when already we find that trade between E.F.T.A. countries apart from Britain, and the Community of the Six is expanding, and for him to talk about the need to negotiate on a bilateral basis for tariff reductions, is the most ham-handed double talk and political schizophrenia we have had for many months. I hope that the Foreign Secretary's spirit of collaboration between E.F.T.A. and the other nations of Europe will gain the day and that the Chancellor's proposals for continuing these irrelevant and indeed damaging imports charges will be beaten tonight.
7.40 p.m.
Mr. Forbes Hendry: Over the centuries Britain built up a reputation of being not only a great trading nation but a nation whose word was its bond. It seems that the integrity which we built up over many years of hard and honest trading virtually disappeared a year ago with the imposition of this monstrous surcharge.
One need only go abroad and speak with people who have been our customers for many years to realise just how monstrous is this imposition. I had the opportunity last summer of visiting several countries and speaking with many business men. I found that they were shocked by the surcharge, not so much because of the damage it might do to their interests but because of their feeling that it represented a denial of the integrity which they had formed of Britain and our trading methods.
Without any warning the surcharge was imposed on all manufactured goods coming here. In certain quarters that might
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have seemed a comparatively small thing, but to a great many countries, such as our partners in E.F.T.A., it represented a severe blow, particularly when for some of them this country represents the main customer for their exports.
Today we are asked to decide whether or not to renew the surcharge. When it was first imposed it was stated that it was a temporary measure. The promise that it was temporary was repeated time and again—yet now we are solemnly considering the continuation of this blot on our fair name as a trading nation. For many years we discussed, with our E.F.T.A. partners and others, methods of reducing impositions of this kind. We talked of reducing tariffs, of free trade areas, the Kennedy Round and so on. Then, suddenly, the Labour Government showed so little regard for the good name of this country that they brought in what they called a temporary surcharge—and now they are asking us to renew it.
What does this all mean to the trading nations of the world? It means that those countries with whom we have traded for many years and on whom our prosperity depends will simply say that we are a perfidious people that we are not to be trusted. As a result, our trade and our prosperity is liable to diminish further.
The Chancellor tells us that the surcharge has resulted in a reduction of imports. Figures like £150 million to £200 million are glibly used in this connection, but I would like to know how these statistics are made up. It could be that, as a result of the other bad policies of the Labour Government, our imports have indeed gone down, but we have not heard a word from the Treasury Ministers about the corresponding effect on our exports. I believe, from my experience and from what I have learned when visiting other countries, that our exports have gone down much more in proportion to the reduction in imports. We must remember that our exports had been doing reasonably well and that there was no reason to think that they would not continue to rise much faster than in the past year.
I will give two instances of what I have in mind. Not long ago I spoke to business men in certain E.F.T.A. countries about the effect of the surcharge

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on them. I was assured by them that the day after the surcharge was imposed there was a flood of German commercial travellers in the Scandinavian countries booking orders which would otherwise have come to Britain.
Captain W. Elliot: Has my hon. Friend noticed that a Board of Trade Minister has finally taken his place on the Government Front Bench? Should my hon. Friend not repeat the important points he made at the beginning of his speech?
Mr. Speaker: Order. I never interfere in political warfare, but I must remind the hon. Member that if he takes the advice of his hon. Friend and puts again the points he made at the commencement of his remarks he will be depriving some of his hon. Friends of the opportunity of taking part in the debate.
Mr. Hendry: I agree, Mr. Speaker, and I will not repeat what I said earlier. However, I hope that the Minister representing the Board of Trade will take the trouble of reading in the OFFICIAL REPORT what I said. He should at least do that, even if he is not prepared to come to the House to hear my comments.
I was pointing out that these businessmen deliberately did not give their orders to this country after the surcharge was imposed because they lost faith in us. It was not so much a question of the money involved or because they might lose as a result of the surcharge because, in many cases, they were not exporters but importers. As I say, their orders went to Germany and elsewhere.
I have personal knowledge of the second example I wish to give. It concerns Scotch refractories, a commodity of great importance. A large order was being negotiated with one of the Scandinavian countries before the surcharge was imposed and that order went to Poland because the merchants who were in a position to place the order were so disgusted with the action of Her Majesty's Government in this imposition—this monstrous duty in complete denial of the declared policy of the British Government—that the order was placed elsewhere.
Are we to continue to risk a further denial of our good name or are we to
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make it clear to the world that, as in the past, Britain is not perfidious, that we are honest and possessed of integrity, that we will honour our obligations and carry on the trade on which our prosperity has been built up over the centuries.
I urge the Government to abolish this monstrous imposition which is unworthy of this country. In doing so I wish to make it clear that it is not for me to suggest alternative remedies. I have explained how the surcharge is viewed by business men abroad. You would stop me if I were to discuss any alternatives in detail, Mr. Speaker, and, in any case, it is the duty of the Government to suggest other measures. I urge them to get rid of the surcharge and show the world that our good name and integrity still means what it has for centuries.
7.48 p.m.
Mr. Eric S. Heffer: I wish to concentrate my remarks on the arguments adduced by the hon. Member for Barkston Ash (Mr. Alison) in his interesting and thoughtful speech. I do not intend to be bipartisan, because this is such an important matter that we would be wise to keep as low a temperature as possible and consider it objectively.
The hon. Member for Barkston Ash made a number of telling points, the most important of which was that the surcharge is not having a great effect on the import of capital equipment—that we still require this sort of machinery because we are not able to produce such machinery of the required quality. We should take note of that important point, because in my constituency I have had experience, from visiting factories, of this and have seen how some large concerns have been forced to import machinery which, quality apart, just was not available or was not being manufactured in Britain.
When I visited a factory of the Dunlop Rubber Company I was intrigued by one piece of machinery which, I was told, the company had attempted to purchase in Britain but had found that it was not being manufactured here. It had the choice of purchasing the machinery from either Italy or Germany. It eventually settled on the German machine. The Company imported it because it was absolutely essential for the development of their new production processes. But

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that important point is not an argument for reducing the surcharge but for undertaking a very close investigation into our own industries that failed to produce a type of machinery they should have produced. It is a sad commentary on British industry, but it is not an argument for bringing down the surcharge.
There is no question at all that the surcharge had serious political repercussions. It was unfortunate that the British Government were forced to introduce it when they did, and it certainly had an unfortunate effect on our E.F.T.A. partners. Many of us in this House want to see a wider Europe, and closer ties, not only between Britain and her E.F.T.A. partners, but equally between E.F.T.A., including Britain, and the Common Market countries.
Anything that creates difficulties in the achievement of a wider Europe is regrettable, and something that we want to see ended as soon as possible. Nevertheless, we must remember that the original surcharge was one of 15 per cent., and that at the earliest possible moment the Government reduced it by 5 per cent., so that we are now talking in terms of 10 per cent. It is true that this Order continues the 10 per cent. rate, but if the situation gets better and there is a further improvement in our balance of payments, is it not possible—and possible within a reasonably short time—to have a further reduction of the surcharge?
When he introduced the surcharge last November, my right hon. Friend said:
"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."—[OFFICIAL REPORT, 11th November, 1964; Vol. 701, c. 1027.]
The point to emphasise there is that certain objectionable steps had to be taken to solve the problem, and the surcharge was the least objectionable. It is true that it had an unfortunate effect on our E.F.T.A. partners, but no matter what we had done it would have had an effect them. The surcharge was not entered into lightly, but because the Government had no real alternative unless they were to solve the problem in the traditional way.
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My hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Rhodes) made the very clear point that the way in which such a problem had been solved in the past had been to increase unemployment, but added at the present moment the unemployment figure in his constituency was the lowest since 1951. That is not only true of the North-East Coast. Before I became a Member of Parliament I came on demonstrations to this House to discuss with Liverpool Members the rise and fall in unemployment that we had had over the years. Increased unemployment occurred whenever there was an economic crisis, because of the methods adopted by Governments then.
On Merseyside, too, we now have less unemployment than at any time since 1951. We have maintained full employment, and although our position is not as good as that on the North-East Coast, we are now reaching a position in which only the unemployables are likely to remain unemployed. That is a very important factor, because the Government were faced with the choice of either introducing a surcharge or pursuing a policy leading to unemployment throughout the country——
Mr. Robert Cooke: The hon. Member has used the word "unemployables". I am sure that the House would be most grateful if he would give some indication of the total number of those people who fall into this category of unemployable so that we can have a more realistic view of the unemployment problem.
Mr. Heffer: People become unemployable through being unemployed for a long period of time. They then lose their ability to find employment and, in some cases, having obtained employment cannot keep it because, by being out of work for three, four or five years, they have lost their dignity and their ability to work. Unfortunately, because of policies pursued by the Conservative Governments in the past, there have been too many people on the Merseyside who have got into that situation.
Mr. Deputy Speaker (Mr. Roderic Bowen): Order. If the hon. Gentleman pursued this topic any further, he would be out of order.
Mr. Heffer: I apologise, Mr. Deputy Speaker, but I was attempting to answer the hon. Member for Bristol, West (Mr. Robert Cooke). Regretfully, I have to leave the point for the time being, but perhaps it may be possible on another occasion to pursue the subject in depth with the hon. Member. I assure the House that to do so would give me the greatest pleasure.
It has been suggested from the other side that the surcharge was introduced purely because the Government wanted to avoid extra taxation in other directions. Undoubtedly—and I will be very careful in what I say here—that suggestion has a certain amount of truth in it because, again, we had to solve the problem in one way or another. We either solved it by putting a direct burden on the people, or sought other means. The Government have attempted to solve it by introducing the surcharge.
I think everyone in this House will agree that we do not want the surcharge to continue any longer than is absolutely essential. But we have to be quite honest about it. It was not a good thing, but an unfortunate step which the Government were forced to take. I hope that within the next year—between now and the next time such an Order comes before the House—there will be a reduction at least from 10 per cent. We hope that by next year we shall not have a debate of this kind. Although these are my hopes, I say quite frankly that the Government were right to introduce the surcharge and they are right now to ask for this Order to be supported so that the surcharge can be continued.
8.1 p.m.
Captain Walter Elliot: I enjoyed the speech of the hon. Member for Liverpool, Walton (Mr. Heffer). Usually when he makes a speech I find myself in considerable disagreement, but tonight that was not entirely the case. However, I take issue with him on one or two points. At the beginning of his speech he took up a very interesting point raised by my hon. Friend the Member for Barkston Ash (Mr. Alison) about the importation of machines from abroad. In his argument the hon. Member for Walton appeared to be pursuing the line that it was very desirable that we should make those machines ourselves. I do not think we should take that argument too far. If
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this country ever plumps for self-sufficiency it is this country which will suffer in the end.
Many hon. Members opposite, including the hon. Member for Walton, have endeavoured to point to what they call the success of the surcharge in reducing imports. I shall examine that further, but at this stage all I say is that although from a broad view the object of the import surcharge was to reduce imports, in fact finer distinctions ought to be made. It was part of a package to get the balance of payments right. It must be looked at as part of the whole picture.
I was glad that the hon. Member for Walton recognised—I think he was the first hon. Member opposite to do so in this debate—the blow to confidence, particularly in the E.F.T.A. countries, which this imposition caused. The effects should not be judged only in relation to the balance of payments because the question of confidence which has been one of the oustanding problems of the last year has also to be considered. In September I was fortunate enough to go on an all-party delegation to Sweden. My hon. Friend the Member for Aberdeenshire, West (Mr. Hendry) was another member of the delegation and there were several hon. Members opposite on it.
Although Sweden was not particularly worried about the effect of the surcharge on its exports—I got the impression that she thought the surcharge would not affect her exports very much—there is no doubt that the imposition had a real psychological impact there. The Swedes thought when the E.F.T.A. agreement was signed that the bad old days of restriction of trade internationally were gone. Then suddenly out of the blue came these surcharges. That was a step backwards. The hon. Member for Walton said that the Government were forced to apply these surcharges. I am not in a position to argue whether they were so forced, not being in possession of the full facts and figures. Our main criticism is the manner in which the surcharges were applied. It was that which gave such a shock to countries like Sweden. I say in passing for the benefit of the Minister of State, Board of Trade that, if quotas were applied, for Sweden that would be the end. The Swedes are dead against quotas.
Mr. A. P. Costain: In Sweden did my hon. and gallant Friend find resistance to importing English materials because of the surcharges? What was his experience among buyers as a result of the surcharges?
Captain W. Elliot: What I gathered about that I must confess was from hearsay and I should not like to say anything definite about it. In Sweden as a whole, as I am sure the Minister of State must know, there was a very strong desire to increase trade and lower tariffs between our two countries.
The effect of this surcharge must be looked on not only as an effect on imports but on the balance of trade generally, and that, of course, includes exports. It was put on for the purpose of limiting imports and, of course, the imposition caused pressure on resources in this country and rising prices. Although we are given figures for exports, which are going up, everyone must have noticed that the increase is largely in value rather than in volume. That is rather significant. It is a very easy assumption to make that the surcharge has reduced imports, but we must thank the National Plan for pointing out what very heavy stock-building there was in 1964. During the last year industry has stagnated, or made very little progress. I suppose it is reasonable to assume that in that situation stockbuilding is at a low level if there is any at all.
It is very doubtful, in spite of the figures in the categories we have been given, to say how great the effect of the surcharge has been. I am prepared to admit that it was necessary to reduce imports, but there are two ways of doing that. The first way, in theory, is to put up prices so that home buyers cannot afford to buy goods from abroad. That virtually is what the surcharge was aimed at. We heard earlier from the hon. Member for Colne Valley (Mr. Duffy) that he knew of firms of engineers which were still buying machinery from abroad. It has been mentioned by a number of hon. Members that much of the machinery we buy abroad has to be bought from abroad and that it is the quality and type, not the price, that covers that question. Therefore, the effect of the surcharge is to raise prices at home.
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The second way—this is the only other way I know—is to reduce the demand. The Chancellor of the Exchequer has done a great deal to bring this about. He has been impeded to a certain extent by the imposition of the surcharge, because this has stimulated home production. My hon. Friend the Member for Oswestry (Mr. Biffen) spoke about reducing demand still further. He was interrupted rather severely for doing so. However, that is exactly what the Chancellor of the Exchequer is trying to do.
Whatever hon. Members opposite may say, I do not believe that they really think that when we say that demand must be reduced at home we would tolerate mass unemployment, any more than they would. For all political parties, that is out. I do not believe that a further reduction in demand should or will lead to anything like that. At the moment the Board of Trade is pushing up prices by the surcharge. The Chancellor of the Exchequer is trying to hold them down by the squeeze. He is fighting a losing battle. I believe that is a reason why we have got what my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) described as "stagflation". In fact, the Chancellor of the Exchequer cannot afford to lose. Unless we can get such things as the surcharge off, the Chancellor of the Exchequer will have to squeeze harder. If the result is that idle resources become excessive, it is the policy of the Government which will have caused it.
8.12 p.m.
Mr. Arthur Blenkinsop: I intervene briefly and wish to follow up one or two points made by the hon. and gallant Member for Carshalton (Captain W. Elliot) and one or two of those who spoke before him. I am sorry to see the hon. Member for Aberdeenshire, West (Mr. Hendry) leaving the Chamber after his interesting and lively contribution. It is important that we clear our minds on this issue. The hon. and gallant Gentleman said that he agreed that something had to be done to limit imports. What he did not say was what alternative action he would have proposed for the Government to have taken at that time other than the surcharge.
Mr. Deputy Speaker: Order. The hon. and gallant Gentleman would have been out of order if he had done so.
Mr. Blenkinsop: I am grateful to you, Mr. Deputy Speaker, for reminding me of that. As we are discussing whether the Order should be approved and the surcharge continued, it is reasonable for us to follow the point the hon. and gallant Gentleman made. He made it clear that in his view there would have been very strong opposition to any suggestion of a quota scheme, which is one of the alternatives which has been discussed. I do not want to develop this theme beyond saying that this is one of the alternatives and I rather understood from the hon. and gallant Gentleman that he would clearly have ruled it out.
Therefore, I am not clear as to what his view would have been about any other action the Government could have taken, because he does agree that some action to limit imports was necessary. It has been said that neither side of the House wishes to see any return to mass unemployment. I accept that this is so. Therefore, does the hon. and gallant Gentleman suggest that other fiscal means should be adopted which would result, if not in mass unemployment, at any rate in what is euphemistically called some flexibility in the market position, some increase at any rate in unemployment, which would in my view be very damaging to our economy?
Initially a great deal of anxiety was expressed about the surcharge by many firms in my own constituency and elsewhere. These firms were fearful of the effect it would have upon their working. In particular, they wondered whether they would be able to import certain essential machinery. They have discovered that their fears were unjustified. They have been able to get essential imports, although hon. Members are right to point out that this has added, sometimes marginally, to their costs. The initial anxieties expressed by many firms have proved to be unfounded, in the sense that they have not been in any way impeded in the operation of their plants and factories.
The hon. Member for Aberdeenshire, West used some rather extravagant language. That is not surprising, because one rarely listens to the hon. Member speaking without hearing some very generalised extravagant language. In particular, he said that the Order was a mon-
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strous one. At the same time, it was irrelevant. He used many other expressions to describe it. One wondered as the hon. Gentleman went along how he reconciled one comment on the Order with another. I suppose the hon. Gentleman's mind travels so fast that he forgets from one moment to another what he has said. The hon. Gentleman must face the fact that at the time of its introduction the surcharge was essential to meet the nation's needs. There is no evidence to suggest that it has crippled industry or had the kind of damaging effect that many feared at the time of its introduction.
It is true, as some of my hon. Friends have pointed out, that it is very much in this country's interests to limit the operation of the Order as far as we can. I accept the point made by some hon. Members, including the hon. Member for Barkston Ash (Mr. Alison), that there are fields in which the Order can be damaging. It has undoubtedly had some effect in raising the prices of goods we have to import. We accept that damaging factor.
Yet no one has been able to suggest any less damaging action which could have been taken to meet the critical situation we were in and which, to some extent, we are still in. It is extraordinary that some hon. Members suggest that this was an action that no country should have been allowed to take since this action, or comparable action, in which I include action by means of quota systems, has been adopted by many countries in difficulty from time to time.
Mr. J. Bruce-Gardyne: Can the hon. Gentleman cite a single example of a member of E.F.T.A. or of the Common Market or any organisation with such a governing treaty which has imposed tariff restrictions in contravention of such a treaty?
Mr. Blenkinsop: I was not talking about tariff restrictions. I was talking about the quota system, which I agree is permitted officially under the treaty, although, as the hon. and gallant Member for Carshalton said, it might be very much more objected to than the surcharge. One can quote a number of countries which in recent years have felt obliged to impose quota restrictions. Many of us have objected when these

1105
measures have been taken by other countries, including members of the Commonwealth. This illustrates the point whether we do not feel that the Government's action in imposing the surcharge, even though it was against the treaty, nevertheless bore less harshly on the various partners in the organisation and on other countries, within the Commonwealth and elsewhere, than if we had adopted measures which were open to us officially under a quota system, which in any case would have taken a long time to introduce.
Nevertheless, I join my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) in hoping that the Government spokesman, in reply to the debate, will be able to suggest that we shall seize any opportunity we can, if not to get rid of it altogether then at least to reduce the surcharge a long time before the matter arises again for any debate in the House. I support hon. Members on both sides of the House who have pointed to the dangers that flow from it, dangers which have been regarded as some form of permanent protection at a time when we want to encourage industry to be as vigorous and enterprising as possible. We appreciate these dangers, but we are entitled to ask hon. Members opposite 10 suggest alternative action which can be taken to protect the country at a time when we still have not overcome fully the difficulties which we faced on coming to office.
8.21 p.m.
Mr. Robert Maxwell: I should like to comment on the earlier remarks of the hon. and gallant Member for Carshalton (Captain W. Elliot). He appeared to be confusing the problems which arise from running a heavy deficit on balance of payments with the action taken by the Chancellor of the Exchequer to damp down demand at home to halt a dangerous rise in the cost of living. It is astonishing that hon. Members opposite, including the hon. and gallant Member, should be able to say that they do not Know or are not sure whether the introduction of the import charge was necessary. Can it really be said that the hon. and gallant Member has forgotten that the former Administration had brought about a deficit of about £800 million in our balance of payments? Has he and
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his hon. Friend forgotten that it was the former Chancellor of the Exchequer, the right hon. Member for Barnet (Mr. Maud-ling), who boasted that the measures taken by his Administration were designed to the same end? If we had had that misfortune and the hon. and gallant Gentleman had been on this side of the House, would not he have been defending Conservative action in bringing in this very surcharge?
I am disappointed that hon. Members opposite should be playing politics on this issue. There is absolutely no justification for opposing this Order. We are well on the way to bringing our balance of payments problems under control. The imposition of the import surcharge has helped immensely in doing so. One of the complaints of hon. Members opposite is that it has upset our partners in E.F.T.A. and elsewhere. Of course it has, but I remind the House that even the Swedes would have preferred the import surcharges to not getting paid for their exports to Great Britain. There is no possible justification for permitting this country to continue to suck in imports at an ever-increasing rate for which we cannot pay. There was, therefore, no alternative to the setting up of the import surcharge and there is every justification for continuing this.
Captain W. Elliot: I should like to correct the hon. Gentleman when he said that I was misunderstanding or confusing what the Chancellor was doing in controlling the rise in the cost of living. The hon. Member has just used the expression "suck in imports". Surely he agrees that it is well-known that if pressure is too high at home imports will be sucked in.
Mr. Maxwell: All the better reason why we should bring about a halt to the rise in imports, having regard to the fact that we cannot pay for them.
I support the maintenance of the surcharge, but I hope that my right hon. Friend the President of the Board of Trade will be willing and able to give an assurance to the House that it is not intended to continue this Order beyond April next. Our E.F.T.A. partners have been very patient in understanding and in helping us to get out of our balance of payments difficulties. Many of our trading partners who have been hit by the imposition of the surcharge have rallied

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massively behind the front for maintaining the parity of sterling. We need their help to fund our long-term debts. We need their help if we are to bring about a rapprochement between us and the Common Market countries. Our country will find itself dangerously isolated in many international trading affairs if Her Majesty's Government find it necessary to continue to maintain this surcharge beyond April.
If exports continue to be as viable as they appear to be now, and there is every expectation that they will, Britain's balance of payments position by the spring should enable us to cancel this charge. It would be a splendid statement of confidence in the future of sterling and the ability of our country to pay its way. I hope that the President of the Board of Trade will be able and willing to take this step and, if at all possible, to say this evening that he will be willing to cancel this surcharge before April next instead of allowing it to run on for a full year.
Mr. Patrick Jenkin: No doubt the hon. Member will recollect the request made by the Chancellor of the Exchequer that nobody in the House today should ask for a date to be put to when the surcharge would be reduced or abolished.
Mr. Maxwell: I recollect it, but I cannot forgo the opportunity of putting in a plea to the Government. To suggest that no one should ask for a date when it should be abolished to be named does not mean that businessmen and others interested in trade with Britain should not be concerned about it. The Government cannot do themselves any harm if they imply that, subject to our exports continuing at the present rate between now and the spring, they should be able to repeal it. The Government are being pressed by our E.F.T.A. partners to name a date. Our E.F.T.A. partners are justified in asking us to tell them, because it could help their balance-of-payments problems as well. I hope that the Government are doing something about this.
Businessmen in this country cannot understand why Her Majesty's Opposition should take a whole day to oppose this Order. We need to maintain the import charge. Surely, this is an issue
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in which politics need not be played. Sterling is still in danger and at risk. No good purpose is served by making statements of the kind which hon. and right hon. Members opposite have made in the debate. I am sure that this is one of the reasons why the party opposite is held in contempt by industrialists, because of its attitude and the way it treats serious national matters as subjects for party politics when there is absolutely no call to do so.
I fully support the Order and the continuance of the charge, but I hope that the Minister, when he replies to the debate, will be able to give an indication that, subject to exports continuing at their present rate, the Government will be willing to consider reducing or abolishing the charge within six months.
8.30 p.m.
Mr. J. Bruce-Gardyne: As always, I listened to the remarks of the hon. Member for Buckingham (Mr. Maxwell) with interest. I hope that, in spite of what the Chancellor said earlier today, we may have some sort of assurance about the termination of the charge, although it seems highly improbable that we shall.
The whole tenor of the speeches from hon. and right hon. Members opposite has been that the Government were, in effect, faced by a choice on taking office between producing a substantial increase in unemployment or imposing the import charges. I have always regarded this dilemma as one of the Government's own devising. If the hon. Member for Buckingham had been present earlier, he would have heard my hon. Friend the Member for Worcester (Mr. Peter Walker) explain the three basic elements in the deficit which faced the Government when they took office, those elements being stockbuilding, investment overseas and an adverse movement of import prices. I have always believed that the real reason for the imposition of the import charge was very different from the one stated by the Government, and rather more sinister. On the morning of 16th October, 1964, the Government found themselves with a majority which they realised could not last for very long. Therefore, they decided to impose the import charge in order to insulate the economy while they injected an additional dose of inflation

1109
which they believed would provide the right climate for an early election in the spring.
Mr. Ted Leadbitter: The hon. Gentleman has referred to 16th October. Will he now say what his Front Bench has refused to say, that import charges schemes were in the Board of Trade prior to that date, when his Administration were still in office?
Mr. Bruce-Gardyne: If the hon. Gentleman had been here a little earlier, he would have heard precisely that point discussed by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). Of course, it was right that my right hon. Friends should prepare for all sorts of situations which might well develop if the country's affairs fell into the tender hands of right hon. and hon. Members opposite after the election.
Mr. Leadbitter: Will the hon. Gentleman now agree, having accepted our allegation that surcharge proposals were in the Board of Trade prior to 15th October, that nothing very much could have happened in the 24 hours between 15th and 16th October to justify what he has said?
Mr. Bruce-Gardyne: No, I do not accept that at all. Clearly, my right hon. Friend was absolutely right to investigate various possibilities against the danger of the return of the party opposite to power. [Laughter.] This is no laughing matter.
Mr. Leadbitter: Just one point——
Mr. Bruce-Gardyne: No, I shall not give way again. There were various schemes which could have been considered. This one was selected by right hon. Gentlemen opposite, as I have said, in order to provide the right climate for an early election. We know that things went wrong, but they went wrong precisely because of this measure. [Laughter.] It is no laughing matter. Hon. and right hon. Members opposite have taken the attitude of our E.F.T.A. partners fairly light-heartedly throughout this year.
The fact of the matter is, as some of my right hon. Friends have already pointed out, the imposition of the
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surcharge, without any attempt at consultation except with one country, the United States of America, with whom we had no such obligations as we have to our partners in E.F.T.A., did untold damage to E.F.T.A. and E.F.T.A. has still not recovered from that damage. It was in order to attempt to calm the very considerable irritation, indeed fury, of our E.F.T.A. partners, that the right. hon. Gentleman the President of the Board of Trade had to go to E.F.T.A. meetings and exaggerate the state of the balance of payments problem which was facing the Government.
Mr. Maxwell Mr. Maxwell rose——
Mr. Bruce-Gardyne: I cannot give way at present. The result of this was that the Government were faced by the consequential measures, the 7 per cent. Bank Rate and the rest, and of course the climate was by no means propitious for the early General Election which they had been expecting.
We are now considering whether this surcharge should be renewed for a further year. I accept, as the Chancellor claimed earlier, that the surcharge has had a certain effect. I would agree with other speakers who have argued that the extent of this effect is very difficult to judge. Clearly there was a considerable degree of intelligent anticipation of the sort of measures which a Labour Government might propose if they came into power. Consequently the slackening-off of the rate of increase in manufactures and semi-manufactures to which the import surcharge applies was likely to have occurred in any case this year. On the other hand, I believe that the import surcharge has played its part in producing what my right hon. Friend the Member for Enfield, West referred to as "stagflation", of delaying the impact of the measures of restraint which the Chancellor has applied so that he has had to apply the dose again and again in greater severity.
We have been warned that he envisages the possibility of having to apply it yet again in still greater severity. I suggest to the Government that they are heading for another application of what has been called "sunshades in October", and that we shall once again be seeing the full impact of measures of deflation coming into effect, perhaps next summer or next autumn when the

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economy is already sharply on the downturn. The other effect of the import surcharge has been that the United Kingdom has been, in effect, on probation in E.F.T.A. The right hon. Gentleman the President of the Board of Trade and his right hon. Friends have had to go off at regular intervals to give a good conduct report to our partners in E.F.T.A. I make no complaint about that. It followed from the imposition of this surcharge. But it seems that in trying to ward off the very understandable wrath of their partners, right hon. Gentlemen have been driven to make some rather dubious concessions.
For instance, there is the concession which appears to have been offered on the export rebate to E.F.T.A. It seems to have been suggested by Her Majesty's Government that British exporters to E.F.T.A. will not be able to claim both the rebate and the E.F.T.A. tariff preference. This is a concession which appears to have been offered in order to excuse the Government's inability to reduce the import surcharge before the last E.F.T.A. meeting. Yet this is not, as even the Government say the import surcharge is, a temporary measure. This is a permanent concession and one which is going to vastly devalue the worth of E.F.T.A. to British exporters. I would further suggest to the right hon. Gentleman that it could well land him in serious difficulties with G.A.T.T.
Mr. Jay: The hon. Member does not have this quite right. This is part of a general settlement which includes drawback as well as the export rebate and applies equally to all members of E.F.T.A. as well as to ourselves.
Mr. Bruce-Gardyne: I am well aware that it includes drawback, but I think I am right in saying that the specific concession on the export rebate was offered by the United Kingdom Government as such. It seems to me to be inevitable that it will create countervailing demands for similar concessions from other members of G.A.T.T.
Mr. Patrick Jenkin: Would not my hon. Friend recognise that there is all the difference in the world between a drawback of an import duty and a rebate of an Excise duty? The point which he is making is perfectly valid.
Mr. Bruce-Gardyne: I am grateful to my hon. Friend. That is precisely the point.
Mr. Jay: If I may join in this two-cornered argument on the benches opposite, this is an arrangement that applies only by definition within a free trade area and, therefore, could not be applied outside.
Mr. Bruce-Gardyne: I take it from that intervention that the President of the Board of Trade means that he is not anticipating similar demands from other members of G.A.T.T. I only hope that he is right. I would not be as sure as he is.
If we had to give a concession to placate the understandable indignation of our partners at the continuation of the surcharge, I ask the right hon. Gentleman whether it would not have been possible to select a fairly narrow range of imports which come within the application of the surcharge but the level of imports of which would not be affected by the surcharge either way. I think of such items as certain timber manufactures from Finland and Sweden, certain special steels and various types of machinery which were referred to by my hon. Friend the Member for Barkston Ash (Mr. Alison).
If we wanted, as we naturally did, to placate the indignation of our E.F.T.A. partners, why did we not consider eliminating the import surcharge on items of that sort in the case of which it could not affect the level of imports on a most-favoured-nation basis, so that we could have given satisfaction to our partners without surrendering anything which would have been of long-term value to ourselves?
There is another aspect on which I should like to ask the President of the Board of Trade a question. His hon. Friend the Member for Buckingham expressed the hope that we should have an announcement of the abolition of the surcharge in, say, six months' time. I must point out to the President of the Board of Trade that Article 19, paragraph 2, of the Stockholm Convention states that if balance of payments difficulties perisist for more than 18 months in one of the member countries and the measures applied seriously disturb the operation of the Association, the Council may, by majority decision, devise special

1113
procedures to attenuate or compensate for the effect of such measures. In other words, the Council may decide at the end of 18 months that there is a legitimate case for retaliation. Is this not a rea1 danger that faces Her Majesty's Government if the surcharge is maintained much beyond another six months?
I assure the President of the Board of Trade that when I and some of my hon. Friends, as well as hon. Members opposite, were in Sweden in the autumn, our attention was specifically drawn to that Article of the Stockholm Convention. There was a clear inference that if the surcharge were maintained beyond 18 months, there would be trouble in the E.F.T. A. Council.
Mr. Julius Silverman: Does not that Article apply to the question of a continuing balance of payments deficit? The surcharge is an attempt to remove the balance of payments deficit. Surely that Article would apply if the Government had done nothing about the deficit and had not introduced the surcharge.
Mr. Bruce-Gardyne: I think the hon. Gentleman should study the clause. What it is saying is that if the balance of payments deficit continues——
Mr. Silverman: Yes.
Mr. Bruce-Gardyne: —and also if the measures which are designed to deal with it are continuing, despite the fact that the balance of payments difficulty is still there, the Council is entitled to meet and possibly to decide on retaliation. That is the point. The fact that the balance of payments deficit has not been eliminated does not obviate the particular country from very special surveillance by the Council at the 18 months date and at that point it is clearly envisaged that the right of retaliation can be invoked. I should say that this clause applies to quantitative restrictions, but then, of course, there is no provision in the Stockholm Convention for admitting application of an imports surcharge such as the Government have applied. Therefore, one would have thought that the purport of this clause in the Stockholm Convention would apply with all the greater force.
Now to my mind one of the more distressing aspects of this debate which we have had here today is the reiterated call
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from hon. Gentlemen opposite for the possibility of further and more extended application of tariff or quota protection. My hon. Friend the Member for Oswestry (Mr. Biffen) accused them of indulging in intense protectionism. I am not, I think, such a pure-blooded free trader as my hon. Friend, but, nevertheless, I have always believed that we cannot expect to maintain a tolerable expansion in our export effort or to achieve a tolerable level of rate of progress in productivity if we wrap our economy round with a cocoon of high tariffs. I further believe that the level of tariffs which this country maintained even before the import surcharge was substantially too high.
I have always myself believed that if the parity level of imports and exports can only be maintained by the application of such artificial stays and supports as import surcharges and export rebates then it is time that the parity rate were reexamined. I do not myself believe that the Government were facing that position when they came into office. I do not believe they are facing that position today, but I have no doubt—I have never had—that if the only way we can maintain our parity is by wrapping ourselves rouund with this excessively high level of protection then it is the parity which should be examined, and the level of protection should be brought down.
8.48 p.m.
Mr. Ted Leadbitter: Towards the end of his speech the hon. Member for South Angus (Mr. Bruce-Gardyne) certainly improved very much on what he had to say earlier. In my opinion he produced a far better speech than at the beginning I thought he would, judging by his general attitude.
On the question of the Order before us, we have to ask ourselves the obvious, simple question: are there any more arguments beyond what we had a year ago, or any arguments different from those we had a year ago, about the imposition of the surcharge, to persuade us at this point of time to withdraw it completely? I should have thought that all the evidence before us shows that the continuance of the surcharge arising out of the effectiveness that it has had on the economy is something which we should pursue. I bear in mind what the

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hon. Gentleman said about the clause of the Convention referring to what steps might be taken by the other partners in E.F.T.A. should the surcharge continue for a period of more than 18 months. But the point that he was trying to make—and I thought that he was trying to make it following on the remarks of the hon. Member for Buckingham (Mr. Maxwell)—was that a date ought to be declared, and I should have thought that that would have defeated the object of the surcharge.
To announce a date would be to defeat its purpose entirely, and I think that the President of the Board of Trade dealt with the matter adequately a year ago. That was the reason why we did not announce it then, and I believe that the House accepted the logic of the argument.
Mr. Bruce-Gardyne: I apologise for interrupting the hon. Gentleman's remarks, but is it not a fact that we did announce the intention to reduce the surcharge from 15 per cent. to 10 per cent. three months ago?
Mr. Leadbitter: That is an entirely different matter. [Laughter.] The apostles of the new confidence are not in a position to laugh, and we have only a few minutes before the summing-up. Your record is no laughing matter.
Mr. Deputy Speaker: Order. Will the hon. Member please address the Chair?
Mr. Leadbitter: The first thing that I ought to do, Mr. Deputy Speaker, is to apologise to you and say that right hon. Members opposite are not in a position to laugh. Their record over many years has provided sufficient evidence of that.
What is the problem that we were and, in my opinion, are still faced with? It is the imbalance which exists between our imports and our exports and, in particular, our physical trading balance. That is the problem.
The Financial Times of 15th March, 1961, had this to say:
"Between 1958 and 1960 the value of our exports rose by 11·3 per cent., while imports c.i.f. of food, basic materials and fuel rose by 9·7 per cent.… But … manufactured imports c.i.f. rose by 58·6 per cent."
That is the problem. The sharp increase of manufactured imports had created that kind of imbalance which in itself was the responsible element in the balance of
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payments deficit of £800 million. The Chancellor of the Exchequer has dealt with it, and speakers in the House have dealt with it. It seems quite impossible for hon. Members opposite to learn the simple lesson that not only did we inherit the problem, because, according to their own spokesman, the right hon. Member for Barnet (Mr. Maudling), we inherited his diagnosis of it.
Sir D. Glover: Oh, no.
Mr. Leadbitter: That is what he said.
Sir D. Glover: No he did not.
Mr. Leadbitter: No one else said it. The right hon. Member for Barnet has a reputation for being particularly honest, and he has not withdrawn it.
Mr. Peter Walker: The hon. Gentleman has completely misquoted my right hon. Friend. My right hon. Friend has stated on a number of occasions that when he was Chancellor of the Exchequer he had prepared by the Treasury its suggestions as to all the various methods that could be used if the position was reached where some action had to be taken about imports. It was one of the many methods that were so listed. He never at any time chose to use that particular method.
Mr. Leadbitter: I remember exactly the words of the right hon. Member for Barnet. He said that we, the Members on this side—
Sir D. Glover: Quote.
Mr. Leadbitter: I am quoting.
Sir D. Glover: The hon. Gentleman is not quoting.
Mr. Leadbitter: If the hon. Gentleman will allow me to come to a comma, I will quote. The right hon. Member for Barnet said that we on this side inherited his solution and his diagnosis. Those were his words.
It is reported again by one called Sir Roy Harrod that
"The trouble … with our balance of payments … is due to the fact that the cumulative effect of our successive derestrictions of imports has been to produce a bulge in manufactured imports of so great a size that we could not reasonably expect a bulge in exports to match it, however efficient we were in the export field."

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I have had to listen today to one or two hon. Gentlemen making some remarks about the solution to this problem. The hon. Member for Aberdeenshire, West (Mr. Hendry) referred to us as a great trading nation, and, of course, he is correct in saying that, but then he said about this so-called great nation that the surcharges were monstrous, yet it has not been denied that before 16th October, 1964 his own Government had plans to impose surcharges. Hon. Gentlemen opposite have tried to qualify that since by saying that they had other plans, that they may have considered different ways and means of applying these plans, but in my opinion that is only hedging. We knew what they would have had to do if they had had the support of the electorate on 15th October, 1964. The right hon. Member for Barnet knew it. The right hon. Member for Bexley (Mr. Heath) still knows it, but will not say so.
The hon. Member for Aberdeenshire, West went on to refer to the surcharge as a blot on our fair name as traders, and this was followed by one of his hon. Friends saying what has been mentioned in this House many times, merely because the Labour Party is in control of the nation's affairs, that the Conservatives have talked from time to time about the blow to our confidence abroad. The £ is strong. The visible trade figures are healthier now than they were last year. The surcharge is effective and I see no evidence of a lack of confidence.
The real breach of confidence took place many years before 1964. It started in 1951, and in not one of the years following 1951 did we match the export potential of this country. Our share of world markets fell every year, and in 1958 we lost out completely. Indeed, when the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd)—[An HON. MEMBER: "Where is he?"] He is not here, but he has had a lot to say about this on many occasions. The right hon. and learned Gentleman attempted to back two horses, and I should like to conclude by referring to what my right hon. Friend the Chancellor said about him. He said:
"The policy of the right hon. and learned Member for Wirral was based on the premise that home demand must be held down so that we should get"—
Sir D. Glover: On a point of order. May we be told from which document the hon. Gentleman is quoting?
Mr. Leadbitter: I am quoting from HANSARD of 4th April, 1963.
Sir D. Glover: Further to that point of order. It is well understood in this House that when an hon. Member quotes from a document he should declare what that document is.
Mr. Deputy Speaker: The hon. Member has indicated the document to which he was referring.
Mr. Leadbitter: I have done so. [HON. MEMBERS: "Answer."] Perhaps the hon. Member for Ormskirk (Sir D. Glover) would have more reason to intervene if he had been here much longer.
Mr. John Hall: I am sorry to interrupt the hon. Member. I am following him with great interest, and I want to be able to follow him also with intelligence. It would be helpful if he would tell us again the name of the document from which he is quoting, because I did not hear it the first time.
Mr. Leadbitter: I was referring to the right hon. and learned Member for Wirral. I have said that he backed two horses and I was indicating that he was trying to deal with the same kind of problem that we have had over the past year, but that whereas we have been consistent, not only have the right hon. and learned Gentleman and his colleagues been persistent in their inconsistencies but their indecision was the basic cause of bringing about the loss of confidence which has been referred to. Therefore, I referred to the document.
Mr. John Hall: What document?
Mr. Geoffrey Wilson: Give us the date.
Mr. Leadbitter: I will read it, and hon. Members will have to listen. It was stated in the debate in the House of Commons on 4th April, 1963, by the present Chancellor of the Exchequer——
Sir D. Glover: On a point of order. It is a long-standing tradition of this House that when an hon. Members quotes from a document he names that document.
Mr. Deputy Speaker: The hon. Member should be allowed to proceed a little longer. According to him he is about to reveal the identity of the document.
Mr. Leadbifter: I am entitled to read it in my own time. I would welcome some more interventions. I have answers for them. I now refer to the document. It is dated 4th April, 1963, and refers to a speech made by the present Chancellor of the Exchequer referring to the several matters that I have now related.
Mr. Deputy Speaker: Order. The hon. Member should not keep the House in suspense any longer.
Mr. Leadbitter: After tonight I may be nominated for any future filibusters that might go on. The document is HANSARD. [Interruption.] It is not HANSARD that I have here.
Sir Knox Cunningham: The hon. Member has quoted from a document which refers to something that was said in the House of Commons. This cannot be HANSARD. Will he now come clean and say what the document is?
Mr. Leadbitter: I am quoting an extract from HANSARD. Right hon. and hon. Members opposite will have to control their impatience, because I am going to quote, and if they want to cause any further interruptions they will have to choose another minor point. I now quote:
"The policy of the right hon. and learned Member for Wirral was based upon the premise that home demand must be held down so that we should get exports first. The Chancellor said yesterday that we must have growth at home to stimulate exports as soon as possible. Hon. Members opposite cheered both statements."—
some right hon. and hon. Members were there—
"The right hon. and learned Member for Wirral based his Budget on the need to safeguard the £ abroad, which, he said, meant restricting demand at home. That was the whole case for the pay pause. Yesterday, however"—
[Laughter.] I cannot understand why hon. Members——
Sir D. Glover: On a point of order. The hon. Member has just quoted and says he has quoted from HANSARD, and used the words "Hon. Members opposite cheered". Will the hon. Member ever
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state when, in his knowledge, it has ever been reported in HANSARD that "Hon. Members opposite cheered". This is obviously not from HANSARD.
Mr. Deputy Speaker: That is not a point of order.
Mr. Leadbitter: Mr. Deputy Speaker—[HON. MEMBERS: "It is wrong."]—in order that the hon. Member for Ormskirk (Sir D. Glover) may follow simply what I am saying, perhaps he would bear in mind that I am quoting what the present Chancellor of the Exchequer said on that date. I have no inclination to upset the hon. Member. If he interrupts, I will, wait, but I will still get to the end of this extract:
"Yesterday, however, the Chancellor told us that a healthy expansion of home demand and a strong £ go hand in hand. Hon. Members opposite managed to support both these statements at different times."—[OFFICIAL REPORT, 4th April, 1963; vol. 675; c. 636–7.]
The whole thing is rather interesting, because hon. Members opposite for far too long have been backing too many horses at different times. They have not an argument today about the Order. Not one new word has been spoken about the principle of charges. All we have had from hon. Members opposite is a spot of wishful thinking. When we go into the Division Lobbies tonight—if they dare try it—they know full well what we have been talking about in the corridors——
Sir Edward Brown: On a point of order. Tomorrow's HANSARD will quote the hon. Member as quoting from HANSARD. It has been clearly established tonight that the quotation is not from HANSARD. In order to protect the record tomorrow, Mr. Deputy Speaker, would you not rule that the name of the document from which the hon. Member is quoting should be given?
Mr. Deputy Speaker: The hon. Member has maintained that his quotation was from HANSARD. He should give the specific reference from HANSARD, if he is in a position to do so, and should have armed himself with that information before making the quotation.
Mr. Leadbitter: I said that I was reading an extract from HANSARD dated 4th April, 1963. When hon. and right hon. Members read HANSARD, they will be satisfied that it is a faithful report of the extract——
Sir E. Brown: Further to that point of order. The hon. Member has read a quotation in which it says, "Members of the Opposition cheered". Those words will not be found in any HANSARD and I feel tint the record ought to be put right, and the name of the document from which the hon. Member is quoting in full, including these words, should be published in HANSARD tomorrow.
Mr. Deputy Speaker: If the hon. Member had been paying attention he would have realised that I had ruled three minutes ago that that was not a point of order.
Mr. Leadbitter: I think that it is now reasonable after listening to what I think are silly, puerile interventions by hon. Members opposite, to say that these interventions are a measure of their case today. I challenge right hon. and hon. Members opposite who have spent the whole of the day—few in numbers until now, I notice—discussing a matter which they felt was of serious national import to come into the Division Lobby. Hon. and right hon. Members should go into that Lobby and exercise their professed convictions.
Sir D. Glover: On a point of order. Before the hon. Member for The Hartle-pools (Mr. Leadbitter) concludes and passes into history with his speech, I must remind you, Mr. Deputy Speaker, that he said that he was quoting from HANSARD. He made it quite clear that all he was saying was a quotation from HANSARD. In that quotation which he read is a statement that the Opposition cheered. You, Mr. Deputy Speaker, have been a Member of the House for many years and you know that that sort of language never appears in HANSARD. The hon. Member, therefore, was not quoting from HANSARD. It should not appear in tomorrow's HANSARD as being a direct quotation from the OFFICIAL REPORT. The hon. Member should state that, in fact, he was not quoting from HANSARD but from some other, probably very reliable, document. Otherwise we shall have a very wrong impression of what happens in the OFFICIAL REPORT.
Mr. Callaghan: Further to that point of order. I am grateful to my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) for reminding me of the words
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which I used when I stood at the Opposition Dispatch Box two years ago. He has read from HANSARD faithfully what I said on that occasion when I referred to hon. Members opposite cheering two contradictory statements. If only hon. Members opposite had listened more carefully they would have heard the context in which my hon. Friend was speaking. Without being offensive, I hope that we can get on with the debate.
Sir Knox Cunningham: On a point of order. Earlier, Mr. Deputy Speaker, you said that the hon. Member for The Hartle-pools (Mr. Leadbitter) would reveal the document in his own good time. I ask you to rule that he should reveal the document. It is clearly not HANSARD and it must be some other document. Would it not save us all trouble if he were to say what the document is?
Mr. Deputy Speaker: The hon. Member for The Hartlepools (Mr. Leadbitter) did reveal the document as being HANSARD. He revealed the date, and he would certainly have been more helpful if he had also revealed the column number. But that is not a point of order.
9.11 p.m.
Mr. Edward M. Taylor: The hon. Member for The Hartlepools (Mr. Leadbitter) and my hon. Friends who intervened in his speech have left me four minutes in which to get through what I had hoped would be a longer speech. I should like to mention briefly two points which have influenced the Government in deciding not to go ahead with this Order. First, I must say how grateful and unworthy I feel at making this short speech in the presence of the President of the Board of Trade and the Chancellor of the Exchequer. Some of my hon. Friends who have made very notable contributions today have done so in the absence of any representative of the Board of Trade or of the Exchequer.
We should have an indication of what precisely the intention of these charges is. On 26th October the Chancellor indicated that they would be temporary. On 3rd November, however, only a few days later, at the Lord Mayor's Banquet, he said,
"We aim to reduce it as soon as possible—as soon as our position shows an unmistakeable improvement."

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That was over one year ago, and the only conclusion we can reach is that there has been no unmistakeable improvement in the economy despite more than a year of his policies. On 11th November he stated that these charges were doing real damage to the long-term needs of the economy by providing extra protection. But we have had over one full year of this policy.
I suggest that the main reason for stopping these charges now is that by retaining them we are undermining our bargaining position with E.F.T.A. and the Common Market on some major items on which we must negotiate. For example, we hope for very substantial benefits from the E.F.T.A. alliances for our motor industry. In fact, in every country except one of the E.F.T.A. alliance obstacles have been put in the way of expanding our exports. Only Sweden of all the E.F.T.A. countries is giving us the advantage to which we should be entitled. I suggest that by continuing these import charges we are making it impossible for us to go ahead to get these benefits.
In the same way, we have at present before the European Common Market Executive proposals to give a 15 per cent. subsidy for all new shipbuilding. I suggest that if we are to negotiate to get rid of these special arrangements or to stop them from being introduced, then it is essential that we should create a measure of good will The same argument can apply to the more general question of going into the Common Market.
Finally, in the last minute remaining to me for my speech, these imports charges were put forward as a means of getting away from a policy of stop-go, which was certainly a change for the Labour Party, who had consistently maintained over the years that the way to get away from stop-go was to accelerate out of deflation and to accelerate out of difficulties in the economy. We have had a major change here which is doing a great deal of damage to the economy. Indeed, I suggest that the only constructive, practical advantage which has stemmed from the surcharge of £170 million of the £860 million in extra taxation which the Labour Government have brought to this country this year. That has, in fact, come from the surcharge. It will, in effect, add to the taxation burden, create unnecessary protection for industry and
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bring long-term bitterness to other nations in Europe.
9.15 p.m.
Mr. Iain Macleod: With the exception of a somewhat confused interlude a few moments ago, we have had both a good and cool debate. That is right for a subject which is at the same time complex yet simple, on which the House will take a decision in a short time.
The hon. Member of Liverpool, Walton (Mr. Heffer) thought it right—and he acknowledged the force of some of the comments made by hon. Members on this side of the House—that this should be a debate with a comparatively low temperature. There is a great deal to be said for that. I am bound to say that throughout the day the balance of argument has gone overwhelmingly against the Government—and that includes a substantial number of speeches from the benches opposite which, if they meant anything, meant that in order to find the way towards whatever solution they thought desirable the import surcharge should go.
For a very long period—and this was not treating the House with the courtesy to which we are entitled—no Minister at all was on the Government Front Bench—no one except a junior Whip, no one from the Treasury, the Department of Economic Affairs or the Board of Trade—until, eventually, Ministers were dragooned in from Ministeries which have very little to do with this debate.
There is a procedural point which we all know is connected with this debate; which I made and which the Chancellor acknowledged. It is the very real one that it is not possible to put down a Motion seeking a reduction in the period or in the amount of the surcharge, which is at present 10 per cent. It is not possible, equally, to put down a reasoned Amendment. We must argue this case—and this creates some difficulty for the House—on the basis of all or nothing at all. Whatever the procedural arguments may be, I am content to take it on that basis, and overwelmingly from this side and from the Liberal benches the feeling is that the right thing to do for the House would be to reject the Order and to deny the Government the authority they seek.
I start with three propositions which I like to think are non-controversial. They

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are certainly not meant to be controversial. It is with these in mind that we should study what our course should be. The first is that we angered by our action, and still anger, our partners now in E.F.T.A. and those whom we—certainly my hon. Friends and I—hope one day will be our partners in the E.E.C. Therefore, it would be excellent if we could put that right. Secondly, we broke no less than nine treaties, and we propose to continue the breach. It would be excellent if we could bring ourselves in order with those treaties. Thirdly, of all countries in the world, we are the most vulnerable to retaliation in this sphere and we have more to gain than any other country by lowering the barriers on trade.
The Chancellor will, I am sure, agree with those propositions. It follows from them that the onus of proof is not only on the Government, it is on the Government to such an extent that unless they can produce a case which answers all the points made from this side of the House tonight the House should not agree to the Order which is now before us.
We know the story. A year ago, on a little less than 30 per cent. of our imports, the surcharge was levied at the rate of 15 per cent., which from 27th April was dropped to 10 per cent. Now we are asked to renew this charge for at least another year. I emphasise the term "at least". How long is "temporary"? Schedule 1 of The Economic Situation of 26th October last year goes out of its way over and over again to emphasise this. The Chancellor will remember. Schedule 1 is headed "Temporary Import Charges". It starts:
"A scheme for temporary charges will be introduced immediately …"
and so on. In the next paragraph we read:
"The purpose of the temporary import charges …"
Again:
"The charge is essentially temporary, and will be reduced as soon as the balance of payments situation permits and it will be abolished at the earliest opportunity".
It was on the word "temporary" that agreement, silent agreement, was given a year ago.
It was on that understanding—and the undertakings of the Government are in-
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volved in this—that the E.F.T.A. countries even went as far as they did towards agreeing, under protest, to this measure. Perhaps I may quote from what was said about a year ago by the Danish Foreign Minister just after he had been having talks with Ministers in this country. He said:
"Denmark and other E.F.T.A. countries were talking 'in months, not in half years', towards the date of removal of the surcharge …"
He went on:
"Rather than demand compensation"—
he was thinking of an increased bacon quota:
"We must demand that the surcharge must be temporary. We don't sell our demand that it should be temporary."
Two half-years have gone since that statement was made, and we are now asked to add another two half-years to the term.
Nor can we get any comfort from the Chancellor's explanation on 29th October—and I am quoting now from HANSARD, not from the Labour Party speakers' handbook. This is what he said in c. 498. He had been asked by my hon. Friend the Member for Reading (Mr. Peter Emery) to define "temporary". The right hon. Gentleman gave this remarkable definition:
"It is in the hands of the House, and to that extent it' is clearly a temporary matter."
He went on:
"As regards the legislation itself, this expires 12 months from now, and therefore the meaning of the word 'temporary'—the hon. Member can take what definition he likes—must be that it cannot go on beyond a year from now unless fresh legislation is introduced."—[OFFICIAL REPORT, 29th October 1965; Vol. 718, c. 498.]
Where are we now about "temporary"? As I have quoted from the Danish Foreign Minister, this word was understood in this Parliament and throughout the Continent to mean that it would be only a short time—in months and not in half-years even—before this charge was removed.
Tonight we are asked to trust the Government with another year, on the understanding, of course, that at some time during the year this charge could be reviewed, reduced or abolished, but the meaning that the Chancellor of the Exchequer gave, and has given tonight, to the word "temporary" means that we

1127
simply cannot take for granted the assurances that he sought to give this afternoon. What he is offering is Humpty Dumpty's definition, which he will know:
"When I use a word, Humpty Dumpty said in a rather scornful tone 'it means just what I choose it to mean—neither more nor less!"
That is the definition of "temporary" which the right hon. Gentleman invites us to accept.
The other point of which the Chancellor of the Exchequer made some play on 29th October last, and again this afternoon, was that the charge would be removed as our progress warrants it; that is to say,
"… when we have corrected the imbalance of the economy and in our external payments."—[OFFICIAL REPORT, 29th October, 1965; Vol. 718, c. 497.]
The second quarter of this year was in balance, and one does not know from what the right hon. Gentleman said how long he feels that the situation has to be balanced before he can come to the House and offer either a reductions or abolition.
On this question of reduction or abolition, he and his hon. Friends said that long before this Order expired and without any question of new legislation, it should be abolished. The Chancellor's words this afternoon—I took them down—were that it would be reduced and then eliminated. If his thinking is along those lines, I beg him—perhaps the President of the Board of Trade will deal with this point—to think again. If he wins this vote tonight in the Lobby—I hope he does not, but that is what we shall see presently—I hope that when the time comes for him to review it, and it is under constant review, obviously, he will not contemplate a reduction to 5 per cent. and then an elimination of 5 per cent., because to take two stages to abolish a surcharge of 10 per cent. would be a pointless exercise. If he comes to the moment when he feels that he can change it, the only logical proposition to put to the House would be to abolish it entirely.
The question of what effect this has had is one which we have all discussed. The Chancellor said very fairly, "I cannot prove what might have been." It is impossible to judge exactly what the effect has been. That there has been some
1128
effect I would not for a moment seek to dispute. Originally the Chancellor said that there should be a saving on imports of £300 million. Naturally the reduction from 15 per cent. to 10 per cent. would reduce that estimate, but by not very much because the reduction came in on 27th April.
I think there is no doubt at all that that estimate of the Chancellor was exaggerated and over-stated the position. I very much doubt if the figure is as high, or perhaps anything like as high as even the lower figure of £150 million that the Chancellor gave in the House this afternoon. There is a great deal that the House must weigh in the scales against whatever it decides may be the effect, and, of course, there is an effect, of this import surcharge. I find it amazing that the Chancellor this afternoon should have said—and he was repeating something he said before in this House—that so far as he knows the effect upon exports is negligible. That is a phrase he used this afternoon. I cannot believe that, if not in his Ministerial capacity then in his capacity as Member of Parliament for Cardiff, South-East, he has not received overwhelming evidence in his post-bag, as have we all, of the effect this has had upon exports. [HON. MEMBERS: "No."] I have a file which I shall show any hon. Member in the House.
I will quote from what the Chairman of I.C.I., then Mr. Paul Chambers, said as reported on 6th January this year. I am quoting from the Daily Telegraph:
"Mr. Paul Chambers … said yesterday his guess was that the 15 per cent. surcharge had cut down exports more than imports."
Hon. Members can challenge that if they like, but there is a great deal of evidence that what Mr. Paul Chambers said is true and it simply cannot be argued by the Chancellor of the Exchequer.
Mr. Dell: How can he possibly know whether that is true or not when he has admitted that the exports of his own company were kept down by lack of capacity?
Mr. Macleod: I should have thought that the Chairman of Imperial Chemical Industries is probably in a better position than any hon. Member of this House from the information available to him to know what the effect of an import surcharge is both on exports and imports,

1129
and I have read his judgment to the House.
Of course, the figures we try to compare from last year with this year are difficult to compare because of the stockpiling on the one hand and the improved position in the Board of Trade which, as my hon. Friend the Member for Worcester (Mr. Peter Walker) clearly pointed out, have affected the position so much that the estimates that the Chancellor put before the House are simply unacceptable. There can be no question of the harm that has been done. Of course, there are some industries—no doubt this is true—which welcome an import surcharge. Of course, they can be called in evidence for 10 per cent., 20 per cent., 40 per cent., or any other figure. However, the fact is that a protected economy in time becomes an uncompetitive economy.
The Chancellor of the Exchequer would not disagree with that. Indeed, a year ago he went out of his way to emphasise it. He was stressing once more the temporary nature of this charge—this was in November, 1964—because he regarded the protective element as a serious disadvantage. The right hon. Gentleman will remember that he said so. I agree that it as so. This adds to the point that, unless the President of the Board of Trade can produce new arguments, which we have not heard from the Chancellor of the Exchequer, nor from any other hon. Member who has spoken, in our view it would be wrong to grant this period.
The Government are asking for this for a year. They say, "We may not use the whole of that time". They say, as I have quoted from the Chancellor of the Exchequer, "Conceivably we may take more". They are in the position of an alcoholic who comes with a bottle of brandy and who says, "I want all of this. I may take only one nip or I may take two nips, but I want it all". When asked, "What happens then?", he answers, "I may require another bottle". This is not an extension which we should give the Government.
The Government are left with only one argument. I propose to deal with it. I was asked to deal with it, and I am glad to do so. It was the only argument which was advanced by hon. Members opposite.
1130
It was to ask us what substitute we would put in place of this. That is an argument which I have used in my day. Every time I have used it I have been conscious that I have used it only because I had a thoroughly weak case. It is always true when the Government Front Bench uses this argument to the Opposition that their own argument will not stand the test of examination by others.
This particular point was answered by my hon. Friend the Member for Worcester, by my right hon. Friend the Member for Flint, West (Mr. Birch), by the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie), by my hon. Friends the Members for Ilford, South (Mr. Cooper) and Barkston Ash (Mr. Alison), and by a number of other hon. Members.
I summarise it in this way. First, the surcharge has added to the pressure on wages, and therefore to our problems. There can be little doubt of that. Secondly, the surcharge has damaged our commercial integrity and our relation with other countries. There can be no doubt about that. Thirdly, it weakens our bargaining position in G.A.T.T. and all the other international forums, and all the negotiations on which we have embarked are in peril by the fact that we are going into a second year of this unpopular import surcharge. It is harmful to exports and, as my hon. Friend the Member for Barkston Ash, in an excellent speech, showed, it is harmful also to manufacturing investment.
The harm it does is manifest. The good it does, if any, is unproven. We have tonight to decide all or nothing. That is the way that this question has to be put to the House. On the balance of the argument as we have heard it today, for the sake of our future economy and our relations with other countries, I advise my right hon. and hon. Friends to divide the House against the Motion.
9.35 p.m.
The President of the Board of Trade (Mr. Douglas Jay): Some people in this debate have argued that this import charge has had little or no effect at all. Some have argued that it has cut down trade and seriously damaged our relations

1131
with other countries. Both of these arguments might be wrong, but they cannot both be right at the same time.
The hon. Member for Worcester (Mr. Peter Walker) seemed to me to be advancing first one argument and then the other, but having listened to both speeches from the Front Bench opposite tonight I find the Opposition's attitude to this charge throughout the past year a little hard to follow. The Opposition have told us that when they were in power, before the election, they prepared this charge. The right hon. Member for Bexley (Mr. Heath) then attacked it. The right hon. Member for Barnet (Mr. Maudling), and I quote his exact words, thought it "the most promising alternative". Tonight, apparently, the Opposition are going to vote against it, and when at the end of his speech the right hon. Member for Enfield, West (Mr. Iain Macleod) asked himself what his party's alternative was, he was not able to tell us by the time he finished speaking. I intend to remain strictly in order this evening, and therefore I propose to ask myself the question which many people have asked themselves today—what has been the effect of the import charge in the last 12 months?
I have no doubt that it has had a substantial effect in holding our imports down and in quickly reducing the balance-of-payments deficit and so enabling us to maintain both full employment and a strong £ at the same time. By how much—and we must estimate this—would United Kingdom imports have risen in 1965 if this charge had not been imposed? In 1964 they actually rose by 15 per cent., or £700 million, and that was what contributed to the disastrous situation in which we found ourselves. A similar percentage rise this year would, of course, have undermined our whole economic situation and the position of sterling.
The hon. Member for Worcester said that import prices went up in 1964. This is no doubt true, but it does not make any difference to the fact that imports have to be paid for whether the rise is due to an increase in value or an increase in volume. The hon. Member also tried to blame a major part of the rise in imports last year on the rise in stocks,
1132
but he ignores the fact that at the end of last year the ratio of stocks to output was rather below the long-term average and there has been a further large rise in stocks this year.
Nevertheless, it may be reasonably argued that since world trade is not rising as fast this year as in 1964 imports without the charge would no doubt have risen by less than £700 million. I give the hon. Member that point. But in 1964 world trade rose by 13 per cent. and United Kingdom imports by 15 per cent. In the first half of this year world trade rose by about 7 per cent. If United Kingdom imports had risen this year at the same rate as world trade we would still have had a rise of about £400 million. In fact the rise has been virtually nil, or about £25 million at the rate at which it is now running.
Mr. Peter Walker: Would the right hon. Gentleman explain how it is that the goods on which there has not been a surcharge have gone up by 3·4 per cent. in the first nine months of this year? If the goods with surcharge had gone up at the same rate as the goods without surcharge, it would have made a difference of £35 million and not £100 million.
Mr. Jay: I assure the hon. Gentleman that I am coming to that.
If we look back a little further at this line of argument, we find that United Kingdom imports in recent years—not only in 1964—have tended to rise approximately as fast as world trade. In 1963 world trade rose 9 per cent. higher and United Kingdom imports 7 per cent. If our imports this year had risen at the average rate of the rise in world trade over the last ten years they would still have risen by £285 million. Therefore, I believe that however it is estimated there is no doubt that the import charge and the Government's other measures of restraint have together prevented a further rise of several hundred million in our imports this year.
I am following the hon. Member's line of argument. How, as between these measures, has this saving of several hundred million £s in imports been achieved, which has contributed so much to our recovery? No doubt, it is not wholly due to the import charge because, despite the rise in world trade, other measures of restraint have been at work.

1133
But the figures I shall now give show, to my mind, that a substantial part of it must have been due to the charge.
To test this, let us look closely at the actual record. Imports as a whole, as I have said, would have risen by several hundred million pounds this year, in all probability, if they had risen at the rate of world trade generally. In fact, they have not risen at all. But only about 30 per cent. of our imports are covered by the charge, and since—this, again, the hon. Member for Worcester forgets—industrial production this year has been, on average, 3 per cent. above last year, which is the relevant point, one would have expected a rise in those of our imports which do not bear the charge, including materials and semi-manufactures, and such a rise has, in fact, occurred. But in the case of imports which do bear the charge, the facts are as follows, and this is the answer to the hon. Gentleman.
In 1964, before the charge was imposed, those imports which bear the charge now were rising at about 25 per cent. a year. Since the charge was introduced, they have actually fallen absolutely. The best test here is probably to compare the six months before the charge was introduced, April to September, 1964, with the ten months January to October, 1965, by which time the charge had become effective. Between those two periods goods subject to the charge, which had risen 25 per cent. in the previous year, had risen, incidentally, by about 10 per cent. annually during the previous 10 years, actually fell by 3 per cent. This is an abrupt change of trend which seems to me rather sharper than one might reasonably have expected from a charge which stood at no more than 10 per cent., in the second half of the period.
Mr. Alison: Can the right hon. Gentleman give the figure for machinery, electrical machinery in particular?
Mr. Jay: I am coming to that, too. It will be quicker if I am allowed to get on.
Some of the types of imports bearing the charge have been sharply reduced. Semi-manufactures other than chemicals, for instance, are down by 12 per cent. in the first 10 months of this year although they were previously rising strongly. Imports of paper have been 9 per cent.
1134
lower, and textiles, yarns and cloth 17 per cent. lower. Imports of consumer goods, the rapid increase in which has, of course, contributed very much to our difficulties in recent years, were 8 per cent. down in the first ten months of this year. Clothing and footwear imports were down by nearly a quarter, and drink by 13 per cent.
I come now to machinery and capital goods. Imports of capital goods still continued to rise, but that is what one would have expected and, indeed, wished to see, because industrial investment, fortunately, is at a high level.
The fact is, as the figures show, that we have succeeded in selectively limiting the growth of our imports this year. We have held in check those imports in respect of which we could do without a further increase for the moment, and this, I should have thought, is what we all would have wished to see.
From all this, it seems reasonable to infer, although I agree with the right hon. Gentleman that it cannot be absolutely proved, that a major part of the saving of several hundred millions of pounds in imports this year must have been due to the import charge. It can be argued whether it is £150 million, £200 million or even £250 million, but, whichever figure one takes, the saving has plainly made an essential contribution to the cut in the visible trade deficit, which in 1964 was running at £550 million a year.
We have also managed to correct the deficit in a way which has inflicted the least possible harm on other countries. [HON. MEMBERS: "Oh."] The only other alternative we have had suggested in the debate is internal deflation. If we had adopted severe internal deflation, the only alternative, not merely would it have done us great harm but it would have reduced outright our imports from other countries. Consider the instructive case of Italy which adopted the Opposition's alternative.
Italy imposed severe deflation of this kind in 1963–64. As a result, her imports fell by 20 per cent. in one year. Our own exports to Italy were cut in 1964 as a result of her deflation by about 20 per cent. In contrast our imports this year have not fallen at all. They have risen fractionally in our year of readjustment and recovery. During our year

1135
of readjustment, United Kingdom imports from Italy in the past 10 months have risen by 7 per cent. I know that there were very understandable fears in the case of the E.F.T.A. countries that the charge might cut down their exports to this country. These fears tended to ignore that when all is said and done, 70 per cent. of our imports were exempt from the charge altogether. In the case of Denmark, which has just been quoted, the figure was 80 per cent. What has happened? All the remarks made today about E.F.T.A. totally ignored the fact that our imports from the rest of the E.F.T.A. countries this year have not fallen at all. They have risen by a further 4 per cent. and are now 82 per cent. higher than in 1960, the year when the Stockholm Treaty was signed.
Sir Harmar Nicholls: The right hon. Gentleman is making such a strong case for the surcharge, are we to understand that the temporary nature is now to end and it is to become permanent?
Mr. Jay: I am coming to that, but I thank the hon. Gentleman for giving me a rest. I have found, in constant conversation with E.F.T.A. Ministers, that although like all of us, including the Government, they would like to see this charge go, they understand the realities of the situation very much better than some hon. Gentlemen who have spoken from the benches opposite. They do not want to see the United Kingdom economic situation or the strength of sterling undermined, and they have constantly said so. I wish to pay tribute today to their patience and understanding on this matter.
The exemption of all food and raw materials from the charge has also been of the utmost benefit to the Commonwealth, particularly to the less developed countries because so high a proportion of their exports to us are of this nature. There is no doubt that the method we chose for achieving the inevitable restraint of imports has done the least damage possible to the outside world, and much less than by the deflation of 1961 when our imports fell as they have not done this year. It has also enabled us to go ahead with the planning of our long-term recovery. We can reasonably
1136
congratulate ourselves that the major improvement in our visible trade balance this year has been wholly achieved by an increased in exports and not by any absolute drop in imports.
The best way to get rid of this charge is to advance the export promotion campaign which British industry, with some help from my Department, has been pursuing this year, better export credits, export rebates, new Government grants, for missions, organisation of fairs, exhibitions and all the rest. If there were more time and I were in order I would pursue that line of order further. I do not think that anyone would deny that industry has responded strongly to the export campaign, to the new services incentives and facilities that have been offered. As a result we have had in the first 10 months of this year a 6½ per cent. increase in value over the same 10 months last year—in a year when world trade was increasing more slowly. The figures are highly instructive. In 1964 when world trade was increasing at 13 per cent. United Kingdom exports rose by 5 per cent. In 1965 with world trade increasing so far by about 7 per cent. United Kingdom exports have risen 6½ per cent.
That is the real measure of the export effort which this country has made this year. Thanks to this and to the restraint exerted by this charge on imports the balance of payments outlook is now immeasurably better. Last week I was able to tell O.E.C.D.—and let us remember that there are other countries of worth in O.E.C.D. besides E.F.T.A. countries, important as E.F.T.A. is—that the United Kingdom's visible trade balance has been halved since a year ago. The deficit on current account altogether, visible and invisible in the first half of this year was less than half of the deficit in the first half of 1964. Indeed, it was only one-third of the deficit in the second half of 1964. Even better—thanks also to the measures taken by my right hon. Friend the Chancellor of the Exchequer to correct the capital items—the overall deficit on current and long-term capital account together fell from £300 million in the first half of 1964 to only £100 million in the first half of 1965. That is why sterling is now strong, confidence is so much greater and the situation has been transformed.

1137
It is even more encouraging that we have achieved this remarkable recovery by restraint of excessive demand but without any creation of unemployment or outright deflation such as has been practised elsewhere, and here also—and do we rot know it—in former crises.
It was striking today that the only positive alternative policy that was put forward was by the hon. Member for Oswestry (Mr. Biffen), who frankly and bluntly called for deflation as a remedy for the situation. Far from doing that, we have contrived simultaneously, by making these restraints selective, to steer an increasing share of new work during this period into the under-employed areas and to concentrate the restrictions on the areas of congestion and overheating. Again, if it were in order, I should have some interesting figures to give to prove that.
However, while we can all be genuinely—and I hope that hon. Members opposite, too, are genuinely—and directly thankful that we have so heavily reduced the payments deficit of a year ago, and clone it without the creation of unemployment, we must, even now, not underrate the stubbornness of the task which is still ahead of us. We are still in deficit even on current account. We are not earning any surplus for the repayment of debt, for aid to poorer countries or for investment overseas which we ought to be able to afford.
We are still relying on this charge, if only at 10 per cent., to restrain our imports. This country, I fully agree, clearly owes an obligation to our friends, our allies and our partners in E.F.T.A. and G.A.T.T. to earn the surplus which will enable us to get rid of the charge as soon as possible.
It should not be assumed—I think that the right hon. Member for Enfield, West recognised this—that because we are tonight taking powers to levy the charge up to the end of November, 1966, we therefore intend to do so at its present level until then. We are determined as a Government to get rid of the charge at the earliest moment that the balance of payments permits.
Nevertheless, although I fully understand the right hon. Gentleman's procedural point that the Opposition tonight can only challenge the charge as such
1138
and cannot suggest any amendment or qualification, I must make it clear to the House that if the Order were not approved tonight, we should not have time to complete our present encouraging recovery or take the essential long-term measures to make that recovery complete. This is another compelling reason why we must seek to overcome the remaining deficit in the course of 1966.
To achieve this, we must press on relentlessly, first, with the export promotion campaign, because an increase in exports is far the best way out of the dilemma. Secondly, there is, in our view, no hope of getting rid of this charge quickly unless we stick, with the determination that my right hon. Friend the First Secretary is showing, to our present incomes and prices policy. In the past six months there has been practically no further increase in prices and the cost of living, but if we let prices get out of hand again it would be goodbye to any hope of an early balance of payments surplus and of an end to the import charge as soon as we would wish. Far and away the best way, therefore, to get rid of the charge would be an even steeper rise in exports than we have yet achieved That is why I take more encouragement from the 6½ per cent. increase in exports this year than from anything else.
Indeed, there are some people, I think, both at home and abroad, who underestimate the export achievement of British industry at the present time. The United Kingdom, incidentally, is already exporting 16 per cent. of its gross national output compared with 9 per cent. in the case of Japan and with 4 per cent. in the case of the United States. We are, indeed, now exporting per head of our employed population twice as much as the United States and four times as much as Japan, and naturally, when exports are as high as that, it is harder for us to achieve in the short term as dramatic a percentage increase as some other countries, starting from nearer scratch, can show.
Nevertheless, hard as it is it has got to be done if we are to achieve national solvency, honour our obligations, and get rid of this import charge at the earliest possible moment, but the success we have achieved already in one short year encourages me to believe that as long as

1139
the need is understood and the past year's efforts are maintained we shall wipe out the rest of the gap in the year immediately ahead of us
Question put:—
The House divided: Ayes 279, Noes 276.

Division No. 3.]

AYES

[9.57 p.m.

Abse, Leo

Fletcher, Raymond (Ilkeston)

McInnes, James

Albu, Austen

Floud, Bernard

McKay, Mrs. Margaret

Allaun, Frank (Salford, E.)

Foley, Maurice

Mackenzie, Gregor (Rutherglen)

Alldritt, Walter

Foot, Sir Dingle (Ipswich)

Mackie, John (Enfield, E.)

Allen, Scholefield (Crewe)

Foot, Michael (Ebbw Vale)

McLeavy, Frank

Armstrong, Ernest

Fraser, Rt. Hn. Tom (Hamilton)

MacPherson, Malcolm

Atkinson, Norman

Freeson, Reginald

Mahon, Peter (Preston, S.)

Bacon, Miss Alice

Galpern, Sir Myer

Mahon, Simon (Bootle)

Bagier, Gordon A. T.

Garrett, W. E.

Mallalieu, E. L. (Brigg)

Barnett, Joel

Garrow, A.

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

Beaney, Alan

Ginsburg, David

Manuel, Archie

Bellenger, Rt. Hn. F. J.

Greenwood, Rt. Hn. Anthony

Mapp, Charles

Bence, Cyril

Gregory, Arnold

Marsh, Richard

Benn, Rt. Hn. Anthony Wedgwood

Grey, Charles

Mason, Roy

Bennett, J. (Glasgow, Bridgeton)

Griffiths, Rt. Hn. James (Llanelly)

Maxwell, Robert

Binns, John

Griffiths, Will (M'chester, Exchange)

Mayhew, Christopher

Bishop, E. S.

Gunter, Rt. Hn. R. J.

Mendelson, J. J.

Blackburn, F.

Hale, Leslie

Mikardo, Ian

Blenkinsop, Arthur

Hamilton, James (Bothwell)

Millan, Bruce

Boardman, H.

Hamilton, William (West Fife)

Miller, Dr. M. S.

Boston, Terence

Hamling, William (Woolwich, W.)

Milne, Edward (Blyth)

Bottomley, Rt. Hn. Arthur

Hannan, William

Molloy, William

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

Harper, Joseph

Monslow, Walter

Boyden, James

Harrison, Walter (Wakefield)

Morris, Alfred (Wythenshawe)

Braddock, Mrs. E. M.

Hart, Mrs. Judith

Morris, Charles (Openshaw)

Bradley, Tom

Hattersley, Roy

Morris, John (Aberavon)

Bray, Dr. Jeremy

Hazell, Bert

Mulley, Rt. Hn. Frederick(SheffieldPk)

Brown, Rt. Hn. George (Belper)

Healey, Rt. Hn. Denis

Murray, Albert

Brown, Hugh D. (Glasgow, Provan)

Heffer, Eric S.

Neal, Harold

Brown, R. W. (Shoreditch & Fbury)

Herbison, Rt. Hn. Margaret

Newens, Stan

Buchan, Norman (Renfrewshire, W.)

Hobden, Dennis (Brighton, K'town)

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

Butler, Herbert (Hackney, C.)

Horner, John

Norwood, Christopher

Butler, Mrs. Joyce (Wood Green)

Houghton, Rt. Hn. Douglas

Oakes, Gordon

Callaghan, Rt. Hn. James

Howarth, Harry (Wellingborough)

Ogden, Eric

Carmichael, Neil

Howie, W.

O'Malley, Brian

Carter-Jones, Lewis

Hoy, James

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

Castle, Rt. Hn. Barbara

Hughes, Cledwyn (Anglesey)

Orbach, Maurice

Chapman, Donald

Hughes, Emrys (S. Ayrshire)

Orme, Stanley

Coleman, Donald

Hughes, Hector (Aberdeen, N.)

Oswald, Thomas

Conlan, Bernard

Hunter, Adam (Dunfermline)

Owen, Will

Corbet, Mrs. Freda

Hunter, A. E. (Feltham)

Padley, Walter

Cousins, Rt. Hn. Frank

Hynd, H. (Accrington)

Page, Derek (King's Lynn)

Craddock, George (Bradford, S.)

Hynd, John (Attercliffe)

Paget, R. T.

Crawshaw, Richard

Irvine, A. J. (Edge Hill)

Palmer, Arthur

Cronin, John

Jackson, Colin

Pannell, Rt. Hn. Charles

Crosland, Rt. Hn. Anthony

Janner, Sir Barnett

Park, Trevor (Derbyshire, S.E.)

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

Jay, Rt. Hn. Douglas

Pavitt, Laurence

Cullen, Mrs. Alice

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

Pearson, Arthur (Pontypridd)

Dalyell, Tam

Jenkins, Hugh (Putney)

Peart, Rt. Hn. Fred

Darling, George

Jenkins, Rt. Hn. Roy (Stechford)

Pentland, Norman

Davies, G. Elfed (Rhondda, E.)

Johnson, Carol (Lewisham, S.)

Perry, Ernest G.

Davies, Harold (Leek)

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

Popplewell, Ernest

Davies, Ifor (Gower)

Jones, Dan (Burnley)

Prentice, R. E.

Davies, S. O. (Merthyr)

Jones, Rt. Hn. SirElwyn(W. Ham, S.)

Prior, J. T. (Westhoughton)

de Freitas, Sir Geoffrey

Jones, J. Idwal (Wrexham)

Probert, Arthur

Delargy, Hugh

Jones, T. W. (Merioneth)

Pursey, Cmdr. Harry

Dell, Edmund

Kelley, Richard

Randall, Harry

Dempsey, James

Kenyon, Clifford

Rankin, John

Diamond, Rt. Hn. John

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

Redhead, Edward

Doig, Peter

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

Rees, Merlyn

Donnelly, Desmond

Lawson, George

Reynolds, G. W.

Driberg, Tom

Leadbitter, Ted

Rhodes, Geoffrey

Duffy, Dr. A. E. P.

Lee, Rt. Hn. Frederick (Newton)

Richard, Ivor

Dunn, James A.

Lee, Miss Jennie (Cannock)

Roberts, Albert (Normanton)

Dunnett, Jack

Lever, Harold (Cheetham)

Roberts, Goronwy (Caernarvon)

Edelman, Maurice

Lever, L. M. (Ardwick)

Robertson, John (Paisley)

English, Michael

Lewis, Arthur (West Ham, N.)

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

Ennals, David

Lewis, Ron (Carlisle)

Rodgers, William (Stockton)

Ensor, David

Lipton, Marcus

Rose, Paul B.

Evans, Albert (Islington, S. W.)

Lomas, Kenneth

Ross, Rt. Hn. William

Evans, Ioan (Birmingham, Yardley)

Loughlin, Charles

Rowland, Christopher

Fernyhough, E.

Mabon, Dr. J. Dickson

Sheldon, Robert

Finch, Harold (Bedwellty)

McBride, Neil

Shore, Peter (Stepney)

Fitch, Alan (Wigan)

MacColl, James

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

Fletcher, Sir Eric (Islington, E.)

MacDermot, Niall

Short, Mrs. Renée (W'hampton, N.E.)

Fletcher, Ted (Darlington)

McGuire, Michael

Silkin, John (Deptford)

Silkin, S. C. (Camberwell, Dulwich)

Thomas, George (Cardiff, W.)

Whitlock, William

Silverman, Julius (Aston)

Thomas, Iorwerth (Rhondda, W.)

Wigg, Rt. Hn. George

Skeffington, Arthur

Thomson, George (Dundee, E.)

Wilkins, W. A.

Slater, Mrs. Harriet (Stoke, N.)

Thornton, Ernest

Willey, Rt. Hn. Frederick

Slater, Joseph (Sedgefield)

Tinn, James

Williams, Alan (Swansea, W.)

Small, William

Tomney, Frank

Williams, Clifford (Abertillery)

Snow, Julian

Tuck, Raphael

Williams, Mrs. Shirley (Hitchin)

Soskice, Rt. Hn. Sir Frank

Urwin, T. W.

Williams, W. T. (Warrington)

Spriggs, Leslie

Varley, Eric G.

Willis, George (Edinburgh, E.)

Stonehouse, John

Wainwright, Edwin

Wilson, Rt. Hn. Harold (Huyton)

Stones, William

Walden, Brian (All Saints)

Winterbottom, R. E.

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

Walker, Harold (Doncaster)

Woodburn, Rt. Hn. A.

Summerskill, Hn. Dr. Shirley

Warbey, William

Wyatt, Woodrow

Swain, Thomas

Watkins, Tudor

Yates, Victor (Ladywood)

Swingler, Stephen

Weitzman, David

Zilliacus, K.

Symonds, J. B.

Wellbeloved, James

Taverne, Dick

Wells, William (Walsall, N.)

TELLERS FOR THE AYES:

Taylor, Bernard (Mansfield)

White, Mrs. Eirene

Mr. Harry Gourlay and

Mr. John McCann.

NOES

Agnew, Commander Sir Peter

Currie, G. B. H.

Hobson, Rt. Hn. Sir John

Alison, Michael (Barkston Ash)

Dance, James

Hogg, Rt. Hn. Quintin

Allan, Robert (Paddington, S.)

Davies, Dr. Wyndham (Perry Barr)

Hooson, H. E.

Allason, James (Hemel Hempstead)

d'Avigdor-Goldsmid, Sir Henry

Hopkins, Alan

Amery, Rt. Hn. Julian

Dean, Paul

Hornby, Richard

Anstruther-Gray, Rt. Hn. Sir W.

Deedes, Rt. Hn. W. F.

Hornsby-Smith, Rt. Hn. Dame P.

Astor, John

Digby, Simon Wingfield

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

Atkins, Humphrey

Dodds-Parker, Douglas

Howe, Geoffrey (Bebington)

Awdry, Daniel

Doughty, Charles

Hunt, John (Bromley)

Baker, W. H. K.

Douglas-Home, Rt. Hn. Sir Alec

Hutchison, Michael Clark

Balniel, Lord

Drayson, G. B.

Iremonger, T. L.

Barlow, Sir John

du Cann, Rt. Hn. Edward

Irvine, Bryant Godman (Rye)

Batsford, Brian

Eden, Sir John

Jenkin, Patrick (Woodford)

Beamish, Col. Sir Tufton

Elliot, Capt. Walter (Carshalton)

Johnson Smith, G. (East Grinstead)

Bell, Ronald

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

Jones, Arthur (Northants, S.)

Bennett, Sir Frederic (Torquay)

Emery, Peter

Jopling, Michael

Bennett, Dr. Reginald (Gos. & Fhm)

Errington, Sir Eric

Joseph, Rt. Hn. Sir Keith

Berkeley, Humphry

Eyre, Reginald

Kaberry, Sir Donald

Berry, Hn. Anthony

Farr, John

Kerby, Cant. Henry

Biffen, John

Fell, Anthony

Kerr, Sir Hamilton (Cambridge)

Biggs-Davison, John

Fisher, Nigel

Kershaw, Anthony

Bingham, R. M.

Fletcher-Cooke, Charles (Darwen)

Kilfedder, James A.

Birch, Rt. Hn. Nigel

Forrest, George

Kimball, Marcus

Black, Sir Cyril

Foster, Sir John

King, Evelyn (Dorset, S.)

Blaker, Peter

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

Kirk, Peter

Bossom, Hn. Clive

Fraser, Ian (Plymouth, Sutton)

Kitson, Timothy

Box, Donald

Gammans, Lady

Lagden, Godfrey

Boyd-Carpenter, Rt. Hn. J.

Gardner, Edward

Lambton, Viscount

Boyle, Rt. Hn. Sir Edward

Gibson-Watt, David

Lancaster, Col. C. G.

Brewis, John

Giles, Rear-Admiral Morgan

Langford-Holt, Sir John

Brinton, Sir Tatton

Gilmour, Ian (Norfolk, Central)

Legge-Bourke, Sir Harry

Bromley-Davenport, Lt.-Col. Sir Walter

Gilmour Sir John (East Fife)

Lewis, Kenneth (Rutland)

Brown, Sir Edward (Bath)

Glover, Sir Douglas

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

Bruce-Gardyne, J.

Glyn, Sir Richard

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

Bryan, Paul

Godber, Rt. Hn. J. B.

Longbottom, Charles

Buchanan-Smith, Alick

Goodhart, Philip

Longden, Gilbert

Buck, Antony

Gower, Raymond

Loveys, Walter H.

Bullus, Sir Eric

Grant, Anthony

Lubbock, Eric

Burden, F. A.

Grant-Ferris, R.

Lucas, Sir Jocelyn

Butcher, Sir Herbert

Gresham Cooke, R.

McAdden, Sir Stephen

Buxton, Ronald

Grieve, Percy

Mac Arthur, Ian

Campbell, Gordon

Griffiths, Eldon (Bury St. Edmunds)

Mackenzie, Alasdair (Ross & Crom'ty)

Carlisle, Mark

Griffiths, Peter (Smethwick)

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

Carr, Rt. Hn. Robert

Grimond, Rt. Hn. J.

Maclean, Sir Fitzroy

Cary, Sir Robert

Gurden, Harold

Macleod, Rt. Hn. Iain

Channon, H. P. G.

Hall, John (Wycombe)

McMaster, Stanley

Chataway, Christopher

Hall-Davis, A. G. F.

McNair-Wilson, Patrick

Chichester-Clark, R.

Hamilton, Marquess of (Fermanagh)

Maddan, W. F. M.

Clark, Henry (Antrim, N.)

Hamilton, M. (Salisbury)

Maginnis, John E.

Clarke, Brig. Terence (Portsmth, W.)

Harris, Frederic (Croydon, N.W.)

Maitland, Sir John

Cole, Norman

Harris, Reader (Heston)

Maude, Angus

Cooke, Robert

Harrison, Brian (Maldon)

Maudling, Rt. Hn. Reginald

Cooper, A. E.

Harrison, Col. Sir Harwood (Eye)

Mawby, Ray

Corfield, F. V.

Harvey, Sir Arthur Vere (Macclesf'd)

Maxwell-Hyslop, R. J.

Costain, A. P.

Harvey, John (Walthamstow, E.)

Meyer, Sir Anthony

Courtney, Cdr. Anthony

Hastings, Stephen

Mills, Stratton (Belfast, N.)

Craddock, Sir Beresford (Spelthorne)

Hawkins, Paul

Miscampbell, Norman

Crawley, Aidan

Heald, Rt. Hn. Sir Lionel

Mitchell, David

Crosthwaite-Eyre, Col. Sir Oliver

Heath, Rt. Hn. Edward

Monro, Hector

Crowder, F. P.

Hendry, Forbes

More, Jasper

Cunningham, Sir Knox

Higgins, Terence L.

Morgan, W. G.

Cumin, Charles

Hiley, Joseph

Mott-Radclyffe, Sir Charles

1142

1143

Munro-Lucas-Tooth, Sir Hugh

Ridsdale, Julian

Thomas, Sir Leslie (Canterbury)

Murton, Oscar

Roberts, Sir Peter (Heeley)

Thomas, Rt. Hn. Peter (Conway)

Neave, Airey

Robson Brown, Sir William

Thompson, Sir Richard (Croydon, S.)

Nicholls, Sir Harmar

Rodgers, Sir John (Sevenoaks)

Thorneycroft, Rt. Hn. Peter

Nicholson, Sir Godfrey

Roots, William

Thorpe, Jeremy

Noble, Rt. Hn. Michael

Royle, Anthony

Turton, Rt. Hn. R. H.

Nugent, Rt. Hn. Sir Richard

Russell, Sir Ronald

Tweedsmuir, Lady

Onslow, Cranley

St. John-Stevas, Norman

Vaughan-Morgan, Rt. Hn. Sir John

Orr, Capt. L. P. S.

Sandys, Rt. Hn. D.

Walder, David (High Peak)

Orr-Ewing, Sir Ian

Scott-Hopkins, James

Walker, Peter (Worcester)

Osborn, John (Hallam)

Sharples, Richard

Walker-Smith, Rt. Hn. Sir Derek

Page John (Harrow, W.)

Shepherd, William

Wall, Patrick

Page, R. Graham (Crosby)

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

Walters, Dennis

Pearson, Sir Frank (Clitheroe)

Smith, John

Weatherill, Bernard

Peel, John

Smyth, Rt. Hn. Brig. Sir John

Webster, David

Percival, Ian

Soames, Rt. Hn. Christopher

Wells, John (Maidstone)

Peyton, John

Spearman, Sir Alexander

Whitelaw, William

Pickthorn, Rt. Hn. Sir Kenneth

Stainton, Keith

Williams, Sir Rolf Dudley (Exeter)

Pike, Miss Mervyn

Stanley, Hn. Richard

Wills, Sir Gerald (Bridgwater)

Pitt, Dame Edith

Steel, David (Roxburgh)

Wilson, Geoffrey (Truro)

Pounder, Rafton

Stodart, Anthony

Wise, A. R.

Powell, Rt. Hn. J. Enoch

Stoddart-Scott, Col. Sir Malcolm

Wolrige-Gordon, Patrick

Price, David (Eastleigh)

Studholme, Sir Henry

Wood, Rt. Hn. Richard

Prior, J. M. L.

Summers, Sir Spencer

Woodhouse, Hn. Christopher

Quennell, Miss J. M.

Talbot, John E.

Woodnutt, Mark

Ramsden, Rt. Hn. James

Taylor, Sir Charles (Eastbourne)

Wylie, N. R.

Rawlinson, Rt. Hn. Sir Peter

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

Yates, William (The Wrekin)

Redmayne, Rt. Hn. Sir Martin

Taylor, Frank (Moss Side)

Younger, Hn. George

Rees-Davies, W. R.

Teeling, Sir William

Renton, Rt. Hn. Sir David

Temple, John M.

TELLERS FOR THE NOES:

Ridley, Hn. Nicholas

Thatcher, Mrs. Margaret

Mr. Martin McLaren and

Mr. Francis Pym.

Resolved,
That the Temporary Charges on Imports (Continuation) Order 1965, a draft of which was laid before this House on 1st November, in the last Session of Parliament, be approved.

TEMPORARY IMPORT CHARGE

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings on the Housing (Slum Clearance Compensation) Bill may be entered upon and proceeded with at this day's sitting at any hour, though opposed.—[Mr. Crossman.]

ORDERS OF THE DAY

  HOUSING (SLUM CLEARANCE COMPENSATION) [MONEY]
  Resolution reported,
  That. for the purposes of any Act of the present Session to amend Part II of Schedule 2 o the Housing Act 1957 it is expedient to authorise the payment out of moneys provided by Parliament of any increase in the amounts so payable under any other Act which is attributable to amendments of the provisions of Part II of Schedule 2 to the Housing Act 1957 relating to private dwellings.
  Resolution agreed to.

  HOUSING (SLUM CLEARANCE COMPENSATION) BILL
  Considered in Committee.
  [Sir SAMUEL STOREY in the Chair]

  HOUSING (SLUM CLEARANCE COMPENSATION) BILL

    Clause 1.—(PAYMENTS TO OWNER-OCCUPIERS OF UNFIT HOUSES. 1957 c. 56.)
    10.13 p.m.
    The Chairman: Before I call the first Amendment, I think that it would be for the convenience of the Committee if we were to discuss with it Amendment No. 3, in page 1, leave out lines 12 to 16 and insert:
    "as if the year nineteen hundred and fifty-five wherever it occurs were replaced by the year nineteen hundred and sixty".
    and Amendment No. 5, in line 17, leave out "the said".
    Mr. Graham Page: That would be very convenient, Sir Samuel, provided we may reserve the right to divide on Amendment No. 3.
    The Chairman: I will be prepared to call Amendment No. 3 for a Division when we come to it.
    Mr. Page: I am obliged, Sir Samuel. I beg to move Amendment No. 1, in page 1, line 5, to leave out "4(1)" and to insert "4".
    Amendment No. 3 is the substantive Amendment, and that which I have just moved is a paving Amendment to Amendment No. 3. The substantive
    1146
    Amendment does two things. First, it deletes the limitation on claims under Clause 1 (1, b) to the 1955 purchasers. That alone would leave the present possible claimants intact. But it also seeks to extend the period to 1960, so that claims to the supplement can be made by purchasers who purchased not only during the period 1939–55 but in the five following years, 1955–60. In order to make my argument on this point I will remind the Committee briefly of the present law. In general, it is that no more than site value compensation is paid for a house in a clearance area when it is compulsorily purchased, but those who purchased between 1939 and 1955 who are owner-occupiers are entitled under the present law to market value, notwithstanding that their house comes within a clearance area, provided that it is compulsorily purchased within the next fortnight.
    10.15 p.m.
    The Bill extends that fortnight by five years for a select few: those who purchased between 1950 and 1959 and who did not have 15 years' enjoyment of their homes. That is how the Bill stands and that is the point which we seek to amend. The Amendment would retain the existing law indefinitely for the benefit of the 1939 to 1955 purchasers and extend that benefit to those who purchased between 1955 and 1960. It is that last point which I wish to argue now. That of retaining the benefit of the existing law for those who purchased between 1939 and 1955 is raised on the next Amendment on the Order Paper. It would be best, therefore, I think, if I confined my argument on the present group of Amendments to the extension of benefits to the purchaser between 1955 and 1960.
    I would first question the usual justification for paying only site value for a house in a clearance area, which is that no owner should be paid for something which is not fit to live in as it is therefore worthless. However, case after case has been quoted in the House which proved the irrelevancy of that argument. Houses in clearance areas have been valued by the district valuer at £500, £1,000 and £2,000. Clearly, it is not true that, merely because a house is within a clearance area, it is worthless.
    There was a report in the Sunday newspapers yesterday of Mr. Bill Ralph

    1147
    of Wolverhampton, who had been offered £50 for his house by way of compensation on compulsory purchase because it was in a clearance area, yet his neighbours in a similar house had been offered £950. There, perhaps, is the measure of the difference between those entitled to market value—in this case £950—and the man entitled, because he bought without the 1939–1955 period, to site value only and who gets only £50.
    The real argument to justify giving only site value was put by the Joint Parliamentary Secretary during the Second Reading debate. He said:
    "It might be said that the answer is to give everyone market value, but we believe that that would be wrong. Slums were recognised as a problem long before an effective attack was made on them. All attempts to deal with them founded on financial obstacles until the site value rule was introduced. It is fundamental to an effective slum clearance and has been recognised to be so by successive Governments ever since it was introduced in 1919."—[OFFICIAL REPORT, 15th November, 1965: Vol. 720, c. 853.]
    In other words, we do not pay market value because, if we did, slum clearance would be too expensive. I believe that that is the real justification for saying that we pay only site value.
    Therefore, let us be frank with the owner. By not giving him market value for his property, we are asking him to subsidise slum clearance. I heard the Joint Parliamentary Secretary say that that was unfair. But that was exactly what his hon. Friend said on Second Reading—that slum clearance can be carried out only if we have the site value rule, otherwise we run up against financial obstacles all the time and it would be too expensive. If that quotation from the Joint Parliamentary Secretary is not sufficient, may I quote from column 856 of the OFFICIAL REPORT:
    "… the site value rule must be maintained. Its merits are celar. A slum-clearance programme which has to deal with the 770,000 unfit houses shown in local authorities' returns earlier this year simply cannot be conducted on any other basis."
    This disposes of the high moral humbug about not paying a man for rubbish. We can, therefore, deal from the practical point of view with these questions: from how many owners shall we demand this sort of subsidy and how many owners
    1148
    can we afford to let off? In the past we decided that we could let off the owners who purchased between 1939 and 1955. If I may quote again from Second Reading, the Joint Parliamentary Secretary said:
    "But Parliament decided in 1956 that special treatment was justified for owner-occupiers who bought their houses between the outbreak of war when slum clearance was suspended and the end of 1955 when its resumption was announced."—[OFFICIAL REPORT, 15th November, 1965; Vol. 720, c. 852–6.]
    This was the line drawn in 1955 merely because slum clearance was announced at that time.
    The Minister of Housing and Local Government (Mr. Richard Crossman): Who drew it?
    Mr. Graham Page: The Conservative Government at that time, in passing the legislation, drew that line and said that as from the time the legislation was announced, it would apply to purchasers before that date. Otherwise the legislation would have said to all and sundry, "If you buy within the next few years or after this period you will get full market value". The right thing at that time was to say that full market value would be given to those who purchased up to that date.
    But the announcement did not immediately make houses available. Merely by announcing a provision of this sort we do not put one single brick on another brick. It does not make any more houses available. People still had to find somewhere to live and, as cases have shown, they continued after 1955 to buy houses in the twilight areas. There has been no distinction between those who purchased between 1955 and, say, 1960 and those who purchased between 1950 and 1955. There may be some argument for saying that by 1960 slum clearance was so obvious and house purchase had become a little easier that those who bought in the twilight areas after 1960 did so with their eyes open, but I think that the dividing line of 1955 now looks rather fictitious. It is a dividing line which was made merely by the announcement of that legislation.
    It was quite right then to draw a line there and to say that there would be payment of compensation to those who purchased before that date. But we can look back now and say that people who

    1149
    bought at least in the next five years were riot speculators in slum property. Indeed, the speculators were frightened off by the 1956 Act. They knew the terms of the Act. The people who bought during the period 1959–60 were the same type of people as those who had been buying for the previous five or 10 years. They bought for the same reason; to have a roof over their heads at a time of considerable difficulty in housing. I suggest that we can safely bring them into the fold now and treat them on the same basis as the purchasers in 1939 and 1955.
    Mr. Charles Mapp: Before the Committee comes to a decision in this matter I wish to call attention particularly to Amendment No. 3 and to comment on it in relation to one of the towns which has this problem very much in the forefront of its housing difficulties.
    As I see the position—and this follows from what I said on Second Reading—it would be consistent for my hon. Friends to accept the view that there is a difficult position here in respect of those mainly small, humble people who sought to find owner occupation in an effort to get out of a bad condition of housing into something less bad. Certainly up to 1960—and I believe it is continuing now—they have had resort to the next best thing they could get, which was owner-occupation after 1955. We are now saying that those who bought houses of this character after that date did it with their eyes open, but I am not prepared to believe that the hundreds of people whom I know, many of them in towns like Oldham, deliberately, consciously and wilfully entered into this kind of ownership without making many inquiries. Nor do I believe that we can now say that slum clearance has reached such a stage that we can set a dividing line as tight as this.
    Towns like Oldham, Manchester, Liverpool and others cannot possibly at this stage take the view that owner-occupiers who, having in good faith at a fairly recent date—after 1955—done the best they could in the circumstances, should be rewarded with purely site value when, from our personal knowledge from visiting this kind of property, we can see that there has been a manifest and proud endeavour to make the most of what is, perhaps, after all, property which should
    1150
    go out of occupation at some time or another.
    On Second Reading I raised a practical problem which is still before us. It is that if one has authorities with immense jobs of this sort to be tackled there must be a period between which they can overcome the difficulty. For example, there are 15,000 such houses to deal with in my constituency. Are we to take it that all 15,000 must be dealt with by one stroke of the pen overnight, which appears to be implied in the Bill? Clearly it would take a considerable time and, in my constituency, probably a period of 10 to 15 years would be needed.
    Do we take it that in respect of houses which are somewhat substandard but which are not some of the worst, we are to say to these owner-occupiers that they should not invest in this kind of property and that, if they do, they will get only site value? I suggest that there is here a straightforward case for the Government reconsidering the matter or at least giving an assurance about early legislation—or, better still, for the Minister to say that more appropriate words will be inserted in another place to incorporate the principle which I have adduced and with which Amendment No. 3 is concerned.
    10.30 p.m.
    On Second Reading my hon. Friend the Joint Parliamentary Secretary to the Ministry of Housing and Local Government said:
    "I should make it clear that we regard this as a stop-gap Bill."
    I appreciate that, and that is why I trust that the Minister will give serious consideration to this matter and do something about it in another place. My hon. Friend added:
    "It is a Bill which we are basing largely on the 1956 Act and making some improvements on it, but basically we are accepting the approach to that Act at the moment. That does not mean that we are wedded to it or that we think that this is a final solution."—[OFFICIAL REPORT, 15th November, 1965; Vol. 720, c. 891–2.]
    The ideas behind that Act were the ideas of the right hon. Member for Wolverhampton, South-West (Mr. Powell), the hon. Member for Gloucestershire, South (Mr. Corfield) and the right hon. Member for Streatham (Mr. Sandys). These may have been commendable ideas

    1151
    from hon. and right hon. Members opposite at that time, but I ask spokesmen from the Government Front Bench not to commend them to me, because on this side of the Committee we want w examine the position now, regardless of the bad record of the former Government.
    Many hardships arise out of this situation which cannot be dealt with except by amendment of this Bill here or in another place or by some other approach. If the Minister says now that he cannot concede the principle for which I plead I can understand it, though I should be disappointed, and if he says that the well-maintained grant system affords an opportunity to meet the difficulty I can go some way with him. Recently in Oldham an area of 966 houses was cleared and it may be useful to the House to know that in a large area of working class houses 81 well-maintained grants were made. The sums varied from £35 to about £140, but I cannot give the average figure.
    If we cannot meet the problems of people who made the necessary inquiries but are still being caught by the uncertainty of communication from the town clerk, we should not discourage them from moving from bad accommodation to more satisfactory but, inevitably in the long run, unfit accommodation. Where there is clear evidence that people came into ownership after proper consideration, that there has been owner-occupation and good husbandry, with money spent to make the best of an indifferent job, it is the duty of the Committee, and certainly of my hon. and right hon. Friends, to face the situation and show hope of legislation in due course to deal with it.
    Incidentally, I would point out to the Committee the contradiction that, under the cold logic of the Bill, if one has one of these houses in an area declared unfit, there is a site value only for the house, but if the house is combined with a shop and the owner-occupier also operates the shop, he gets compensation for disturbance. Is this a justifiable distinction? I do not think that it is deliberately drawn to have that effect, but it should be noted in passing. If I or anyone else here has a house and shop combined in an area of this type and the fellow next
    1152
    door is only a householder owner-occupier, regardless of the fact that he has taken just as much care of his property as I have, having bought since 1955. I shall get additional compensation because I happen to be a shopkeeper as well as owner-occupier. Such a distinction cannot be sustained. It may not necessarily be there wilfully, but it is there none the less.
    I ask the Minister to consider the implications of Amendment No. 3 and to appreciate that, regardless of the politics of it, there is a real case for this set of circumstances to be met. I should prefer no date to be written in. I would rather have the criterion settled by reference to the period when the property was bought and the activities of the local authority in first initiating steps to redevelop and later acting on the operative order. But the principle is the same.
    Will the Minister assure us that he will seriously consider this question and, in the manifold activities of his Department, find an opportunity within coming legislation this year to remedy this key anomaly? I shall be even happier, of course, if, after hearing the debate on these Amendments, he can remedy it in another place on this Bill.
    Mr. Peter Griffiths: I support these three Amendments, particularly Amendment No. 3 even though it does not go as far as I should have liked. Last Session, in co-operation with my hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden), I was instrumental in introducing a Bill to offer market value compensation for all property acquired. But if this principle can be extended to those who purchased property between 1955 and 1960, that property having now been declared unfit, some of the anomalies which will otherwise arise can be avoided.
    Many purchasers expected that their properties would have a far longer life than they now find they have. Although development plans are regularly brought up to date and purchasers employ solicitors to carry out a search, the assurances which are given as to the life of a particular property cannot be absolute. In many areas, redevelopment depends on the possibility of the local authority acquiring the property. Sometimes one area is redeveloped much earlier than was

    1153
    expected, and another may be put off till the end of the plan period, and the consequence is that a property which the purchaser and even the local authority expected to have a life beyond 15 years has to be redeveloped sooner.
    It is not fair to say that, if someone has purchased property which is unfit, he does not deserve market value. Standards of fitness should as far as is humanly possible, be absolute—a house should be regarded as fit or unfit according to certain standards—but the pressure on housing in industrial towns such as my constituency, because of the shortage of municipal houses and of houses in general, is such that standards of acceptability are far lower than in more favoured districts. A purchaser may well have to accept a lower standard house in a large city than he would accept in a more comfortable market town. Equally, he may have to purchase a lower standard house because the high prices in our cities make that the only sort of house within his means.
    If we offer him site value only, then the loss is relatively greater. It was suggested that the real reason for offering site value was to reduce the cost of slum clearance. I would point out that if one gives site value only, a house-owner will almost certainly need to take part of that precious asset—a municipal house belonging to the local council. If he is offered market value, there is a good chance that he will become an owner-occupier again. Certainly, if the cost, in finance, is increased by giving fie market value, the social cost is probably far lower.
    I would ask the Minister, in order to avoid the unnatural anomalies which will otherwise occur when a house on one side of a street may be included for redevelopment and a house in exactly the same condition on the other side may not be developed for a number of years, to reconsider this or at least hold out a hope that he will keep this matter under close consideration and surveillance so that if these anomalies do arise we shall have early amending legislation.
    Mr. David Weitzman: Frankly, I feel rather unhappy about this provision. I suppose that the justification for the attitude adopted by the Government is that
    1154
    people in 1955 were warned that there would be slum clearance and if they bought in that knowledge, they clearly ought to be paid upon the basis of site value. But I do not think it is right to assume that when they bought in 1955 they bought with knowledge of that fact. I am aware of cases of real hardship. I have regard to the fact that when the Parliamentary Secretary spoke about this matter he referred to it as a stopgap measure, and I hope that the Minister might look at it again.
    There are obviously cases where real injustice might be done, cases of people who bought houses not knowing of slum clearance, and who expected to live in their houses for many years. That is the only point I desire to make, but I think that it is a rather important one and I hope that the Minister will look at this matter more carefully before rejecting entirely the suggestions put forward in these Amendments.
    Mr. Harold Gurden: The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) mentioned that this was a stopgap measure. I must remind him that unless something is done very quickly indeed, in a matter of weeks or days, it will be too late, because a lot of people will not qualify for reasonable payment for their houses. I would suggest to the hon. and learned Member that he might have shaken the Minister and woken him up while he was saying these important things, because he has gone to sleep and is not really taking this very seriously.
    I feel that this basic rule which has been quoted, that an unfit house should not qualify for market value, is unsound. It is demonstrated to be unsound because certain houses which are acknowledged to be unfit in some respects, can have a market price paid for them. It is clearly demonstrated in this Bill that it is a question of time—when the house is bought, how long it was owned and occupied, that is the criterion. I agree with the hon. and learned Member that this is obviously most unfair. If these Amendments are accepted it simply means that market value will be paid instead of site value in certain cases. What are the Government afraid of? It means that one will get market value for a house which is supposed to be unfit and therefore it can only be a price which is

    1155
    commensurate with the type of property. If it is a slum house and it is paid for at market value, it can only be a very low value by any valuer. It cannot be very much. Why rob the person of the extra money which would enable him to find other decent accommodation in which to live?
    10.45 p.m.
    We know that local authorities take over these houses which are supposed to be unfit, and yet some of them spend £100, £200 or £300 on them and then put tenants in them for years and years, showing that the houses can be made fit to live in quite reasonably. If this is possible, and it has been demonstrated in Birmingham that the houses can be made fit and reasonable to live in, why not give the owner-occupier the chance to put the house right for himself?
    What happens is that the corporation takes over the house for a mere few pounds and the occupier, who was previously the owner, who had paid a reasonable price for the house, has to pay a full rent to the local authority for a house of this kind. This is what the Bill perpetuates. Could anyone imagine anything more unfair?
    The Government Front Bench surely cannot feel that that is justified. This has been shown to be a matter which cuts across parties, because throughout the past 10 years or more hon. Members, from both sides, have repeatedly said that it is a most unfair principle to take houses for merely site value. Their owners then have no money with which to purchase a reasonable house in which to live.
    I certainly hope that the Government will reconsider the position. It is a simple matter to clear up, even at this stage. I join in hoping that if they are not willing to do as we suggest now, they will do so on Report. We cannot believe that this is the last word.
    Mr. Gordon Oakes: The hon. Member for Birmingham, Selly Oak (Mr. Gurden) and the hon. Member for Smethwick (Mr. Peter Griffiths) have underlined the cogent and compelling reasons put forward by my hon. Friend the Member for Oldham, East (Mr. Mapp) for comprehensive legislation dealing with all the anomalies of the clear-
    1156
    ance of slum property. There is no doubt that such legislation is urgently needed. I have this kind of property in my constituency, as my hon. Friend the Member for Oldham, East has it in his. Great anomalies arise within the same street, as my hon. Friend has mentioned, between the business user and the person who has a home and no shop. Those arguments do not support the Amendments that has been put forward by the hon. Member for Crosby (Mr. Graham Page).
    My hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) put his finger on the problem when he talked about cases of hardship. As the hon. Member for Smethwick has said, there are occasions when a local authority has changed its mind after 1956 and, therefore, a person who has bought after that date finds himself without compensation although at the time of purchase he did not know the position. Such hardship cases exist and it is a great pity that there is no provision in legislation whereby a local authority can help such cases.
    There are, however, other people who bought a property after 1955 and at the time of purchase well knew that their house was, or was likely to be, included in a slum-clearance scheme. They bought after the magic date of 13th December. They went to a solicitor and were advised by him that their house would, or might well, come under a clearance scheme.
    Mr. Weitzman: It occurs to me that it may be a helpful suggestion that machinery be devised in this way, that where a person has bought without knowledge that there would be slum clearance, or that the property would be likely to be subject to a slum-clearance scheme, he ought to be paid such and such an amount. Something on those lines might be more satisfactory.
    Mr. Oakes: In that I would entirely agree with my hon. and learned Friend. What I am seeking to point out to the Committee is that the Amendment put forward by the hon. Member for Crosby does not do that. It is much too clumsy a tool. It lets in everybody who bought between 1955 and 1960, regardless of whether they knew or not, and they would all be entitled to receive the full market

    1157
    value compensation. There are many cases of people who bought after 1955 who got quite considerable abatement of the purchase prices well knowing that fact. Such cases exist.
    Although there is a need for comprehensive legislation on the question of compensation for slum clearance, I would repeat that this Amendment would act in a grossly unfair manner. Indeed, I am surprised that the hon. Member has put forward this Amendment.
    In the Second Reading debate, as he will recall, and as will the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), there was a great deal of agreement between the two sides of the House on the question of those who purchased between 1939 and 1955 and who found themselves not covered by the provisions of this Bill. I do not think anyone on this side was saying that people beyond 1955 should receive compensation.
    When this Bill was first introduced I looked up what the magic date of 13th December was, and I chanced upon the Second Reading debate of 28th March, 1956. Hon. Members are now advancing the case of people who bought after 1955. The then Parliamentary Secretary, the right hon. Member for Wolverhampton, South-West (Mr. Powell), again would seem to be at some variance with his hon. and right hon. Friends, because he said in that debate:
    "It must have been acquired for owner-occupation before 13th December last. This is clearly right and necessary. A later qualifying date would clearly be out of the question."
    He gave reasons why, and said:
    "I think it will be agreed, therefore"—
    for various technical reasons—
    "that it is right that no house acquired for owner-occupation after the announcement of the contents of the Bill should be able to qualify."—[OFFICIAL REPORT, 28th March, 1956; vol. 550, c. 2163.]
    Indeed, it was agreed. On neither side of the House was the proposition denied. It was not until today that the proposition was denied. It was reconsidered in 1958 and put into the Act of that year. Had hon. Members genuinely believed in the need of these people they could have amended that Measure then, but they did not amend it then. Now we have this rather clumsy Amendment which would enable people, who bought with the full knowledge that their house would be
    1158
    subject to slum clearance, to receive full compensation at the expense of the local authority. It is far too clumsy an instrument, although I would entirely agree with my hon. and learned Friend the Member for Stoke Newington and Hackney, North that those who bought without such knowledge are indeed hardship cases and that the local authority should be entitled to assist them.
    Sir Anthony Meyer: I wonder if the hon. Member would agree, first, that it was clearly right at the time to try to discourage people from buying property in the expectation of getting full compensation, but that this discouragement, in fact, failed because a great many deserving people are not the sort of people who keep abreast of what is going on and with the laws we pass, and that there are, for instance, old people who get a bit muddled about these things? I wonder if he would agree that people who bought after 1955 are in many cases the ones who are most unfairly treated because they are not even getting 15 years' uninterrupted enjoyment which seems to be the philosophy of the Bill before us.
    Mr. Oakes: All I would say on that point is that some people who bought after 1955 had knowledge through their solicitors of conditions in their areas, and there was an abatement in the purchase price as a result of that knowledge. There are other cases like those mentioned by my hon. and learned Friend the Member for Stoke Newington and Hackney, North where the local authority has changed its mind. There are the cases that I mentioned in Second Reading where, because of the way that the business was transacted, the purchaser has never been told of the existence of a slum clearance area. There should be provision for local authorities to assist in such cases, but the Amendment is not the way to do it.
    Mr. Julius Silverman: The Amendment comes somewhat late in the day. The Opposition were in government until about a year ago, and they had opportunity to legislate right until the year 1964 and deal with the problem. But they choose to wait until they are in opposition to deal with it. Many people who come within the period between 1955 and 1960 have

    1159
    already been dispossessed at site value, and nothing has been done about it. One wonders why they have waited until they are in opposition, and whether they are not simply playing at politics to get the votes of certain people.
    None the less, I would say to the Minister that there is a very serious problem involved here. The Minister is not here at the present time himself—
    Sir Douglas Glover: Where is he?
    Mr. Silverman: I do not know. I would remind him, through his Parliamentary Secretary, that I have been in communication with him and have had long correspondence about this particular question, because the whole of the law relating to compensation is full of anomalies. I recognise that there are difficulties. It is not any easy thing to legislate about. The hon. Gentleman is aiming at the man who bought with his eyes open. Sometimes it goes deeper than that, and there are many cases of people who deliberately buy property which they know is going to come down, in order that in due course they may get the key to a municipal house. It is as simple as that, and I do not know the answer to it.
    If an Amendment as comprehensive as the present one is going to be introduced, does it mean that such a person will get his municipal house constructed at the expense of the ratepayer at a cost of £3,000 or £3,500 and, at the same time, get full market value for his house? Obviously that would be manifestly unjust.
    There are many problems like that. At the same time, there are other problems, and mention has been made of site value. But what is site value? It may interest the Committee to know that there is one law for the rich and one for the poor. The big slum owner with a block of 20 or 30 houses is compensated at a rate 20 times per square foot more than the small owner. That has been established by the High Court overruling the Lands Tribunal in the case of David v. Leeds Corporation. The ratio of that decision is supposed to be that because the small individual house is on its own, it cannot be developed within the existing byelaw, and therefore the owner gets a contemptuous amount for his house. It was formerly about £2, but
    1160
    now that compensation is upon the basis of annual value it amounts to about £10.
    That is ridiculous. It is a decision of the courts, but how can it be justified upon any moral basis? I have been trying to persuade the Minister, who is probably advised from Whitehall about the matter, that the point should be legislated upon and that that sort of anomaly should be dealt with. It is legal nonsense, and I do not see why it should be tolerated. I do not care what justification Whitehall finds for this. I suggest that the Minister should look sympathetically at this problem.
    11.0 p.m.
    I know that there are all sorts of difficulties in the Amendment, but I hope that the Minister will promise to deal with this matter. If he cannot deal with it by way of an Amendment on Report, let us be told that there is going to be early legislation to deal with this matter comprehensively so that people may have justice.
    I hope that in obtaining advice on this matter the Minister will not just go across the road or to the horse box and consult his advisers. Let him go to Birmingham and to other places and find out that this is a human problem. If he realises that it is not merely a legal and technical problem but a human one, I am sure that it will not be long before legislation is forthcoming.
    Mr. John E. Talbot: This matter has been fairly well discussed, and I would not detain the House were it not for the fact that I am often on the receiving end of this problem. This is something with which I, as a country solicitor, frequently have to deal.
    The action of solicitors in this matter has been mentioned, and it is not inappropriate that I should tell the House what is the normal experience in these matters. First, if one has a defined slum-clearance zone made and registered by the local authority in its local land charges register, the situation is comparatively easy. One advises the prospective purchaser that he runs a considerable risk of losing his capital, but there are many situations in which one cannot ascertain any precise information from the local authority, and one is thrown back on guesswork. One may, from one's knowledge of the neighbourhood, know that the local authority's

    1161
    slum-clearance programme is working towards the area concerned, and, if one does, of course one tells the potential purchaser and allows him to make up his mind about the risk. But there is no means of ascertaining firmly and definitely what the risk is, and, as slum clearance is a progressive matter, as the worst slums are cleared away, so the local authority goes forward to deal with the next worst slum, which by then has become the worst one.
    There is a very strong argument for having from time to time a shifting date in the final period at which full compensation will be paid. I know of many cases where I have told people not to buy a house, yet they have still done so. They have done it because, perhaps, they are living in one room. Perhaps a man, his wife, and two children are living in one room and sharing the kitchen, and they have to walk 40 yards up the yard to the lavatory. Even a slum house is better than those conditions.
    I have been in slum houses condemned without scruple by the Ministry's inspector where one could eat a meal off the floor. So often it is not the property but the tenant who creates a slum, and the variants of how people will deal with housing conditions which are by no means ideal are tremendous. If they have pride, one can get Buckingham Palace for 5s. a week. If they have not, it is a pigsty deserving to be condemned. This type of purchaser comes from the most saving, most careful and cleanest section of the community, and when he is told that he can have "well maintained" payment, that is certainly no substitute for proper market value.
    As I think has been intimated, in many cases there is not a lot of difference between full market value and slum-clearance value when the property involved consists of 20 houses in a row in a neighbourhood near a town centre. In these cases I do not think that any of us wants to waste any sympathy, but I know of, and can add to, the hardship cases which have been quoted in this House. Everyone knows that they exist. Old-age pensioners are swindled out of their savings by this law while their next-door neighbours may be receiving full market value, although they may have purchased their properties only two years previously.
    1162
    We cannot justify that in the name of social justice.
    This is an attempt to put the matter right, limited by the scope of the Bill. I am in sympathy with much of what hon. Members have said, not strictly within the purview of the Bill, which is of a very limited nature. If we can accept the Amendment and go forward for a full revision of the law affecting compulsory purchases in relation to owner-occupiers we shall be doing a good job in our capacities as back benchers on both sides of the Committee.
    This problem is one which the Government should solve now. If they have arrested creeping decontrol let them accept the creeping benefit to owner-occupiers, because, as this problem extends into the future on an ever-increasing scale, as it will do—because houses which we would think quite satisfactory to live in nevertheless fail to comply with Ministry standards; practically everything built before 1914 fails to comply with those strict standards—we can in this way do justice to some part of the problem by accepting the Amendment.
    Mr. Herbert Butler: I believe that the Amendment is being put forward to create a situation in which local authorities pay far in excess of the real value of slum property in terms of compensation to owner-occupiers. For many years there has been an argument that local authorities should pay more for unfit properties than is laid down under the Housing Acts, and these Amendments follow that line of argument.
    I want to deal with the question of the circumstances in which people purchase unfit houses. It is not true that local authorities suddenly descend on people and tell them that their houses are unfit. As a member of a local authority for some years, and chairman of a housing committee, I consistently have investigations made concerning the conditions of property in my borough. At some time notices are served, and would-be purchasers are often advised to go to a solicitor, who sometimes advises them not to purchase the property. Furthermore, one has to employ a surveyor before a mortgage can be arranged. The surveyor is competent to tell any would-be purchaser of a house

    1163
    whether there is internal light and proper facilities for storing food, or whether the conditions of the house put it in the category of unfit property. These are statements of fact.
    Mr. Gurden: Does not the hon. Member realise that the potential purchaser could not possibly know. The Ministry does not know, and the local authorities do not even know. They sometimes lend money on houses which they declare unfit a few weeks afterwards.
    Mr. Butler: The hon. Member says that local authorities do not know. I have already said that local authorities carry on a continuous investigation. At any one time the possibility of a compulsory purchase order may not be in the mind of the local authority. In a few months' time, it may be in their minds. Therefore, the sanitary inspector carries out his survey and prepares the information on the basis of which the application is made to the Minister. This is the position. If professional gentlemen—whether solicitors or surveyors—carry out their job, they are in a position to advise the possible buyer of the condition of the property and whether, under the Housing Acts, it is unfit. Surely that is accepted by both sides of the House.
    I want to draw attention to a matter which I have already drawn to the attention of the Minister. During the 30 years that I have been connected with housing matters, and now, a considerable number of working men and women have purchased their own small houses. In one scheme that I have seen, there are about 10 owner-occupiers. I have been amazed at the standard of fitness and comfort within these houses, which are designated unfit for human habitation. But among these 20 or 30 houses, there is a number of houses which were purchased in the London mart as a commercial and business proposition.
    As I have said before in the House, if any landlord buys property and it is considered unfit for human habitation, he should be dealt with as if he had bought a load of plums and tomatoes which were unfit for human consumption. In the latter case, the local authority directs that the goods offered for sale should be destroyed: the owner gets nothing at all and might be prosecuted.
    1164
    In the case of slum property, where landlords have battened on the housing problem, the property should be taken over and site value paid. But in the case of owner-occupiers—people who have bought their property and live in it and keep it up to reasonable standards—something should be paid to recompense them for what they have put into it.
    One may either be paid site value for unfit houses, or there is a payment for well-maintained houses. Some of the little places which I saw are remarkably well-maintained, but the owners receive no well-maintained payment because the inspector does not consider that the properties satisfy the requirement. These Amendments will not deal with this problem. It is not a question of when they were purchased, but of whether the standard which the inspectors are applying in their reports to the Minister take into account the case of the person who has paid £800 or £900 and, in many cases, has fitted his own bathroom.
    In one little house I know, the owner had fitted his own bathroom. In another, there was a beautiful Persian rug on the floor, and I feared that the dear old lady who owned it, who likes a glass of Guiness, might have too many one night when somebody offered her £1 for the rug, which was, in my opinion, worth £50. In this house, which was marked "Unfit for human habitation", I saw a mural. These Amendments will not deal with this sort of problem.
    My hon. Friend—who is nodding his head, I hope in agreement with me—should look into this question of whether the standards which are laid down under the Housing Acts should be applied in the case of owner-occupiers, who ought to have consideration for what they have done in the houses, and whether the inspector who conducts the inquiry should take this into account.
    Sir John Barlow: This is a very real, human problem, and I am glad that the hon. Member for Oldham, East (Mr. Mapp) raised it in the way he did. His constituency is very near mine, and this problem is common to both. It is especially true of a large number of houses in Lancashire mill towns which were built many years ago, the conditions of which are, in many cases, shocking.

    1165
    Under the present laws—I do not care who passed them—there is great injustice. I feel that this Amendment will go a substantial way to meet this injustice and, if the Government will not accept it, I hope that we shall get adequate assurance tonight that something appropriate will be done. Lancashire Members realise the injustice done to a large numbers of owner-occupiers in these older cotton towns.
    11.15 p.m.
    The Joint Parliamentary Secretary, Ministry of Housing and Local Government (Mr. James MacColl): There are one or two points about the Amendment which I feel I ought to comment on before looking at the particular principle behind this debate. I am not saying this in an impertinent way, but I am not sure how far the hon. Member for Crosby (Mr. Graham Page) intended the sense of some parts of that Amendment and how far he made a slip.
    The first point is that the Amendment does confine the Bill to cases where orders were made before 13th December of this year. The effect of it would be that the Bill would not apply to any order made in future. Therefore, some of the passionate remarks made about the wickedness of our Bill and the narrowness of the Bill dissolve. If we pass this Amendment the effect would he to take out of protection people in cases where the order was made in future.
    The other point is rather subtle. It deals with a little quirk of the present legislation which, I confess, I had not realised existed until I studied it with some care recently. At present, if one is in occupation on, say, 13th December, 1955 and still owned the property on the day when that order was made, then one is entitled to supplementary payment. Under that hon. Member's Amendment, one would also have to be in occupation on the day the order was made. I am not saying that that may not be an improvement in some ways. There is the difference.
    I do not want to ride off on a narrow interpretation of the Amendment, although I agree with hon. Members who have asked "Why stop at 1960?". If there is a case for going beyond 1955, and there is a logical reason which the Government of the day accepted that
    1166
    date, then one may not like it, one may not think it desirable. But it is logical in that it was based on the view that that was the date when slum-clearance started again and, therefore, any later date was open to difficulties, such as have been put forward in this debate. One may get people moving in to get council houses or cases where market value is pushed up because somebody was offered a completely unfit house, or a potentially unfit house, to buy and said he could not afford £1,500 for that house. Then, the vendor might say that he need not worry because he would get the full market value for it. Therefore, it was only a question of buying it for a short time and reselling it to be sure of getting his money back. There is a risk of market values of individual properties being inflated.
    There is no doubt that the Opposition have not a leg to stand on. They introduced a Bill as a temporary Measure, designed to deal in a temporary way with a temporary problem. They prepared no alternative Measure for dealing with compensation when in office. They did nothing until they found themselves in opposition, and suddenly they then became aware of the problem. Some hon. Members opposite have not taken that view but have been consistent in their criticism of it, but in the main the Opposition have not a leg to stand on.
    But, as my hon. Friend the Member for Oldham, East (Mr. Mapp) said, I ought to go a little further than South-West Wolverhampton for my political and social philosophy. I accept that rebuke; we must see this as a problem and not merely as a debate. My hon. Friend the Member for Oldham, East spoke as a Lancashire Member about these houses. My right hon. Friend commented on exactly the same point after he had been to Rochdale. It is a little churlish to say that my right hon. Friend does not know the housing situation when he is most assiduous in visiting large and small towns and when he has seen many of these examples. After visiting Rochdale he said exactly the same as my hon. Friend has said; my hon. Friend's phrase was that there is a manifest and proud endeavour to maintain the standards of the house, however humble it may be. To some extent that is dealt with across the whole range of owner-occupied property

    1167
    because of the possibility of getting extra payment if the property is well maintained.
    My hon. Friend also said that he would rather have no date at all—and I think that that is sensible, because whatever date we have, there is still the subsequent catastrophic drop in value. There was a case for the date 1955, but now the date must be fixed arbitrarily. One might say 1961 or 1961½—it would not make much difference to the hon. Member for Crosby. But if we have a date, then one man gets full market value, whatever that may mean, and the next day he would not get full market value.
    Mr. Graham Page: If the hon. Member cares to put down an Amendment to that effect we shall be only too happy to support him.
    Mr. MacColl: The hon. Member has not put down such an Amendment. I am looking at the problem as it exists, and I have been charitable to the hon. Member's Amendment by not making detailed points of criticism of it.
    Consistently over the past few months we have said that we recognised that a major problem arises due to a number of new situations. First, as slum clearance proceeds the horror examples of slums become fewer, less obvious, and, as my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) said, the test appears more arbitrary; one becomes much more dependent on the length of the inspector's foot than on any clear and objective test which anyone can see to be fair. The second difficulty arises from an extention of owner-occupation due to the decline of private landlordlism, something which many of us consider has led in many ways to an improvement in the condition of houses.
    The third factor in the situation—which, again, we have mentioned previously—is that we have the Central Housing Advisory Committee looking at the problem of the standards of fitness. Hon. Gentlemen opposite asked why the Government did not do something about the problem immediately on gaining office instead of waiting until half-past eleven tonight. I wish to make it perfectly clear that my right hon. Friend asked the Central Housing Advisory
    1168
    Committee to look at this problem a considerable time ago. The Committee has been working on it very hard for some months.
    To think aloud about the matter, one must try to find a way somehow to get away from the arbitrary distinction between unfitness, on the one hand, and fitness on the other. It means at present that if one happens to be on one side of the inspector's findings the golden key lets one in for full compensation, but if one happens to be on the other side—if there are one or two factors short in the standards of fitness—one finds oneself getting a very low level of compensation. If one could find a more continuous grading of houses one might be a good way towards solving this problem.
    I do not think that merely saying, "The market price for every house that is owner-occupied will be paid" is the answer at the moment. "Market price" is an arbitrary term and I fear that the hon. Member for Brierley Hill (Mr. Talbot) and I will never reach agreement on what is a proper market value. I suspect that we have very differing views about that.
    We must see that exploitation does not occur in respect of compensation. We must prevent the artificial inflation of prices and prevent in some cases a conspiracy to defeat the public good. In this connection, the hon. Member for Crosby was a little unfair to say that the only justification for this action was that it reduced the cost of slum clearance. Nobody has ever said that. It was not a question of this suddenly arising with someone thinking, "We had better hatch up a cheaper compensation method to get the costs down". Back in 1919, when the first consistent housing policy was being framed, the principle was laid down that compensation would be paid at site value where property was unfit. Anything that moved away from that principle has been dealt with on a basis of it being a special difficulty.
    The way the debate has gone shows that there may be a case for looking into the Ark of the Covenant—though I believe that one gets struck dead if one looks inside it, which would be an undesirable thing We must consider this whole matter not on the basis of this representing a wholly arbitrary distinction, for this

    1169
    is, by its nature, a stopgap Bill which keeps the matter on its legs, so to speak, so that we may deal with the present position this way until we can look at the wider situation.
    11.30 p.m.
    Mr. John Boyd-Carpenter: The Parliamentary Secretary said with truth that this was a stopgap Bill but, as he will gather from the general unhappiness on both sides of the Committee about the effect of the Bill, the trouble is that it does not stop the gaps. It would not be fair to suggest that one should criticise the Bill because it does not deal with all the wider matters which the Parliamentary Secretary said the Government were thinking about. But within its scope, and dealing with the problem with which both sides of the Committee are faced in respect of these particular owner-occupier cases and categories of people who purchased houses about this period, the trouble with the Bill is that it does not stop that gap either.
    It does not help to deal with the matter for the Parliamentary Secretary to say that if we are going to make the basis purchase up to 1960 then why not take it right up to the present day. There may be a good deal to be said for that. I will tell the Committee why we selected 1960. We thought that within the time period in which the Bill would operate this would deal with the majority of hard cases. Purchases after 1960 are unlikely to give rise to hard cases in respect of compulsory purchase in the near future. The main problem is tackled by dealing with cases up to 1960, but we certainly would not want to rest on that.
    If the Committee will accept the Amendment there will automatically be further stages of the Bill during which if the House wishes to take out 1960 and go further and bring the period up to the present date there would be no criticism from this side of the Committee. But the choice before us at this moment is not that. The choice is either to make this Amendment at the last effective stage of putting amending matter into the Bill and consider whether 1960 goes far enough, or to go back to the position of the Bill when introduced and leave no remedy in respect of cases where purchase took place after 1955.
    1170
    There is a good deal of force in the argument, which has been put from both sides of the Committee, that in the 1955–60 time term there would be some cases which would not be particularly meritorious because those who purchased must have known that there would be a slum clearance scheme affecting the property in the near future. It is difficult for any of us to quantify those cases, and if it is said that there are many extremely hard cases in respect of purchases between 1955 and 1960 we are put in the position, if we do nothing about it, of having caused unnecessary hard cases because if we did something some people would benefit without being particularly meritorious.
    Looking at the matter objectively, we are not on the whole dealing with people who buy houses with the aid of expensive professional men. We are dealing with people who, ex hypothesi, buy poor houses which for that reason are included in a few years in a slum clearance scheme. It is a pretty safe generalisation that the majority of the people who bought these houses bought them without the best professional aid. All our experience in our constituencies confirms that. It is a bad argument, therefore, that we should not deal with real cases of hardship about which hon. Members have told the Committee. We are dealing here with owner-occupiers. We are taking somebody's home and unless we extend this Bill within its scope as reasonably far as we can—and I suggest that we should do that by dealing with purchases up to 1960—we shall give to all who purchased after 1955 no more than site value for a building which, whatever else it may be, was their home. I find that a somewhat repulsive prospect. If we leave the Bill as it is, we shall—I ask the Committee to face this—inflict unnecessary hardship and injustice on a certain number of people.
    My hon. Friend the Member for Smethwick (Mr. Peter Griffiths) put a powerful further argument. If we pay market value in these cases, we put a man at least some way in the direction of buying another home for himself. If we do not, we make it almost certain that he will have to take a council house and reduce the stock of council houses available for others. Quite rightly, the right hon. Gentleman does not give permission for

    1171
    a local authority to proceed with a slum clearance scheme unless it gives an undertaking to rehouse in council property the people displaced. But that does mean that they go in front of the queue on the waiting list. If, by being so careful to ensure that people who may have had reason to suspect that a slum clearance scheme was coming shall have only site value, we make quite certain that one more person will be put at the top of some local authority's waiting list, to the detriment of those already on it, do we really do so much social good?
    For both those human reasons, the fact that one is taking somebody's home for what is, generally speaking, a negligible figure and forcing him to find another, and the fact that, from the social point of view, one is adding to the burden of the local authority as a housing authority and to some extent counterbalancing the relief to its obligations under its clearance scheme, this is a matter which we must press. The choice before the Committee is either to leave the Bill as it stands or to
    amend it in this form. I stress that this is the last effective stage. We did not have from the Parliamentary Secretary even a hint that the Government would use another place to make improvements, and, if the Bill goes through Committee without Amendment, there is no effective Report stage.
    Every hon. Member who has spoken has admitted that the law will be unsatisfactory and cause hardship if the Bill is left as it is. The Amendment will not remedy everything—it may not go as far as some of us would wish—but it will take care of a good many of the hardest cases and, what is more, leave the way open for further improvement such as the Government, with all their resources can provide. That is the clear choice before the Committee, and, for my part, I am prepared to go into the Lobby in support of the Amendment.
    Question put, That "4(1)" stand part of the Clause:—
    The Committee divided: Ayes 179; Noes 156.

    Division No. 4.]

    AYES

    [11.38 p.m.

    Abse, Leo

    Edelman, Maurice

    Johnson, Carol (Lewisham, S.)

    Allaun, Frank (Salford, E.)

    English, Michael

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

    Alldritt, Walter

    Ennals, David

    Kenyon, Clifford

    Armstrong, Ernest

    Ensor, David

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

    Atkinson, Norman

    Evans, Albert (Islington, S.W.)

    Lawson, George

    Bagier, Cordon A. T.

    Evans, loan (Birmingham, Yardley)

    Leadbitter, Ted

    Bennett, J. (Glasgow, Bridgeton)

    Fernyhough, E.

    Lever, L. M. (Ardwick)

    Binns, John

    Fletcher, Sir Eric (Islington, E.)

    Lewis, Ron (Carlisle)

    Bishop, E. S.

    Fletcher, Ted (Darlington)

    Lomas, Kenneth

    Blackburn, F.

    Floud, Bernard

    Loughlin, Charles

    Blenkinsop, Arthur

    Foot, Michael (Ebbw Vale)

    McBride, Neil

    Boardman, H.

    Fraser, Rt. Hn. Tom (Hamilton)

    MacColl, James

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

    Freeson, Reginald

    MacDermot, Niall

    Boyden, James

    Galpern, Sir Myer

    McKay, Mrs. Margaret

    Braddock, Mrs. E. M.

    Garrett, W. E.

    Mackenzie, Gregor (Rutherglen)

    Bradley, Tom

    Carrow, A.

    Mackie, John (Enfield, E.)

    Bray, Dr. Jeremy

    Ginsburg, David

    Mahon, Peter (Preston, S.)

    Brown, Hugh D. (Glasgow, Provan)

    Gourlay, Harry

    Mahon, Simon (Bootle)

    Brown, R. W. (Shoreditch & Fbury)

    Greenwood, Rt. Hn. Anthony

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

    Buchan, Norman (Renfrewshire, W.)

    Gregory, Arnold

    Manuel, Archie

    Butler, Mrs. Joyce (Wood Green)

    Grey, Charles

    Mapp, Charles

    Carmichael, Neil

    Hamilton, James (Bothwell)

    Marsh, Richard

    Carter-Jones, Lewis

    Hannan, William

    Mason, Roy

    Coleman, Donald

    Harper, Joseph

    Maxwell, Robert

    Conlan, Bernard

    Harrison, Walter (Wakefield)

    Mayhew, Christopher

    Corbet, Mrs. Freda

    Hart, Mrs. Judith

    Mendelson, J. J.

    Craddockk, George (Bradford, S.)

    Hattersley, Roy

    Millan, Bruce

    Crawshaw, Richard

    Hazell, Bert

    Miller, Dr. M. S.

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

    Heffer, Eric S.

    Molloy, William

    Cullen, Mrs. Alice

    Herbison, Rt. Hn. Margaret

    Morris, Alfred (Wythenshawe)

    Dalyell, Tam

    Hobden, Dennis (Brighton, K'town)

    Morris, John (Aberavon)

    Davies, G. Elfed (Rhondda, E.)

    Horner, John

    Murray, Albert

    Davies, Ifor (Gower)

    Houghton, Rt. Hn. Douglas

    Newens, Stan

    de Freitas, Sir Geoffrey

    Howarth, Harry (Wellingborough)

    Norwood, Christopher

    Delargy, Hugh

    Howie, W.

    Oakes, Gordon

    Dell, Edmund

    Hughes, Emrys (S. Ayrshire)

    Ogden, Eric

    Dempsey, James

    Hunter, Adam (Dunfermline)

    O'Malley, Brian

    Doig, Peter

    Irvine, A. J. (Edge Hill)

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

    Donnelly, Desmond

    Jackson, Colin

    Orme, Stanley

    Driberg, Tom

    Janner, Sir Barnett

    Oswald, Thomas

    Duffy, Dr. A. E. P.

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

    Page, Derek (King's Lynn)

    Dunn, James A.

    Jenkins, Hughes (Putney)

    Palmer, Arthur

    Dunnett, Jack

    Jenkins, Rt. Hn. Roy (Stechford)

    Pavitt, Laurence

    Perry, Ernest G.

    Silkin, S. C. (Camberwell, Dulwich)

    Wells, William (Walsall, N.)

    Popplewell, Ernest

    Silverman, Julius (Aston)

    White, Mrs. Eirene

    Prentice, R. E.

    Skeffington, Arthur

    Whitlock, William

    Price, J. T. (Westhoughton)

    Slater, Mrs Harriet (Stoke, N.)

    Wigg, Rt Hn. George

    Probert, Arthur

    Small, William

    Wilkins, W. A.

    Pursey, Cmdr. Harry

    Soskice, Rt. Hn. Sir Frank

    Willey, Rt. Hn. Frederick

    Redhead, Edward

    Swingler, Stephen

    Williams, Alan (Swansea, W.)

    Rees, Merlyn

    Taverne, Dick

    Williams, Clifford (Abertillery)

    Reynolds, G. W.

    Thomas, George (Cardiff, W.)

    Williams, Mrs. Shirley (Hitchin)

    Rhodes, Geoffrey

    Thornton, Ernest

    Williams, W. T. (Warrington)

    Richard, Ivor

    Tinn, James

    Willis, George (Edinburgh, E.)

    Robertson, John (Paisley)

    Tuck, Raphael

    Wyatt, Woodrow

    Rodgers, William (Stockton)

    Urwin, T. W.

    Yates, Victor (Ladywood)

    Rose, Paul B.

    Varley, Eric G.

    Zilliacus, K.

    Rowland, Christopher

    Walden Brian (All Saints)

    Sheldon, Robert

    Walker, Harold (Doncaster)

    TELLERS FOR THE AYES:

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

    Weitzman, David

    Mr. John McCann and

    Silkin, John (Deptford)

    Wellbeloved, James

    Mr. Alan Fitch.

    NOES

    Agnew, Commander Sir Peter

    Gardner, Edward

    Mayer, Sir Anthony

    Alison, Michael (Barkston Ash)

    Gilmour, lan (Norfolk, Central)

    Mills, Stratton (Belfast, N.)

    Allan, Robert (Paddington, S.)

    Gilmour, Sir John (East Fife)

    Miscampbell, Norman

    Amery, Rt. Hn. Julian

    Glover, Sir Douglas

    Mitchell, David

    Astor, John

    Glyn, Sir Richard

    More, Jasper

    AtKins, Humphrey

    Godber, Rt. Hn. J. B.

    Mott-Radclyffe, Sir Charles

    Awdry, Daniel

    Goodhart, Philip

    Munro-Lucas-Tooth, Sir Hugh

    Baker, w. H. K.

    Gresham Cooke, R.

    Murton, Oscar

    Barlow, Sir John

    Griffiths, Peter (Smethwick)

    Nicholls, Sir Harmar

    Batsford, Brian

    Gurden, Harold

    Nugent, Rt. Hn. Sir Richard

    Berkeley, Humphry

    Hall, John (Wycombe)

    Osborn, John (Hallam)

    Berry, Hn. Anthony

    Hall-Davis, A. G. F.

    Page, R. Graham (Crosby)

    Biffen, John

    Hamilton, Marquess of (Fermanagh)

    Peel, John

    Bingham, R. M.

    Harris, Reader (Heston)

    Percival, Ian

    Birch, Rt. Hn. Nigel

    Harrison, Col. Sir Harwood (Eye)

    Pike, Miss Mervyn

    Black, Sir Cyril

    Harvey, John (Walthamstow, E.)

    Pitt, Dame Edith

    Box, Donald

    Hastings, Stephen

    Pounder, Rafton

    Boyd-Carpenter, Rt. Hn. J.

    Hawkins, Paul

    Powell, Rt. Hn. J. Enoch

    Boyle, Rt. Hn. Sir Edward

    Heald, Rt. Hn. Sir Lionel

    Price, David (Eastleigh)

    Brewis, John

    Hendry, Forbes

    Quennell, Miss J. M.

    Brinton, Sir Tatton

    Higgins, Terence L.

    Redmayne, Rt. Hn. Sir Martin

    Brown, Sir Edward (Bath)

    Hobson, Rt. Hn. Sir John

    Ridsdale, Julian

    Bruce-Gardyne, J.

    Hogg, Rt. Hn. Quintin

    Royle, Anthony

    Buchanan-Smith, Alick

    Hooson, H. E.

    Russell, Sir Ronald

    Buck, Antony

    Hornsby-Smith, Rt. Hn. Dame P.

    Shepherd, William

    Carlisle, Mark

    Howe, Geoffrey (Bebington)

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

    Carr, Rt. Hn. Robert

    Hunt, John (Bromley)

    Smyth, Rt. Hn. Brig. Sir John

    Chataway, Christopher

    Iremonger, T. L.

    Stanley, Hn. Richard

    Chichester-Clark, R.

    Irvine, Bryant Godman (Rye)

    Steel, David (Roxburgh)

    Clark, Henry (Antrim, N.)

    Jenkin, Patrick (Woodford)

    Studholme, Sir Henry

    Clarke, Brig. Terence (Portsmth,W.)

    Johnson Smith, G. (East Grinstead)

    Talbot, John E.

    Cooke, Robert

    Jopling, Michael

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

    Cooper, A. E.

    Joseph, Rt. Hn. Sir Keith

    Taylor, Frank (Moss Side)

    Corfield, F. V.

    Kaberry, Sir Donald

    Temple, John M.

    Costain, A. P.

    Kershaw, Anthony

    Thatcher, Mrs. Margaret

    Crosthwaite-Eyre, Col. Sir Oliver

    Kilfedder, James A.

    Thompson, Sir Richard (Croydon,S.)

    Crowder, F. P.

    Kimball, Marcus

    Turton, Rt. Hn. R. H.

    Cunningham, Sir Knox

    King, Evelyn (Dorset, S.)

    Walder, David (High Peak)

    Curran, Charles

    Kirk, Peter

    Walker, Peter (Worcester)

    Davies, Dr. Wyndham (Perry Barr)

    Kitson, Timothy

    Wall, Patrick

    d'Avigdor-Goldsmid, Sir Henry

    Lancaster, Col. C. G.

    Webster, David

    Deedes, Rt. Hn. w. F.

    Legge-Bourke, Sir Harry

    Wells, John (Maidstone)

    Dodds-Parker, Douglas

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

    Whitelaw, William

    Doughty, Charles

    Longbottom, Charles

    Williams, Sir Rolf Dudley (Exeter)

    Drayson, G. B.

    Lubbock, Eric

    Wilson, Geoffrey (Truro)

    du Cann, Rt. Hn. Edward

    MacArthur, Ian

    Wise, A. R.

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

    Mackenzie, Alasdair (Ross& Crom'ty)

    Wolrige-Gordon, Patrick

    Errington, Sir Eric

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

    Wood, Rt. Hn. Richard

    Eyre, Reginald

    Maclean, Sir Fitzroy

    Wylie, N. R.

    Fisher, Nigel

    McNair-Wilson, Patrick

    Younger, Hn. George

    Forrest, George

    Maddan, W. F. M.

    Fraser, Ian (Plymouth, Sutton)

    Mawby, Ray

    TELLERS FOR THE NOES:

    Gammans, Lady

    Maxwell-Hyslop, R. J.

    Mr. Martin McLaren and

    Mr. Francis Pym.

    Mr. Graham Page: I beg to move Amendment No. 2, in page 1, to leave out lines 9 to 16 and to insert:
    "as if in the said paragraph 4(1) the words has been purchased' were replaced by the words become liable to be purchased'".
    1174
    If it would be for the convenience of the Committee, Mr. Bowen, may we take at the same time Amendment No. 6, in page 1, line 21, leave out subsection (2)?
    The Deputy Chairman (Mr. Roderic Bowen): Amendment No. 6 has not been

    1175
    selected, but it will be in order to discuss it with Amendment No. 2.
    Mr. Page: I am obliged.
    The main question on the Amendment is the one discussed fairly fully on Second Reading: that is, the retention within the benefits of the 1956 legislation of those who purchased between 1939 and 1955. It is true that the Amendment deals with a small definition point by using other words to define that which is in Section 1(1,a), but that is a minor point on which I need not spend much time.
    The main object of this Amendment is to retain the benefit of present law for those who purchased their properties between 1939 and 1955, not merely, as the Bill would have it, for those who purchased between 1950 and 1955. Even in respect of those the Bill makes limitations. I can see absolutely no justification at all for depriving the 1939…55 purchasers of their right under the present law to market value for their property, if it is taken away from them by compulsory purchase. The whole basis of the 1956 legislation, which gave that benefit, was to give relief to those who had bought their houses during the war and shortly after the war, who had had to find in extremely difficult conditions, at that time a roof over their heads.
    Really, whatever possessed the right hon. Gentleman to throw those people overboard at this time I cannot conceive. They are not the hated landlords we are talking about in this case—if the right hon. Gentleman would give me his attention for a moment. I was saying that I cannot understand why he had thrown those people overboard. These are owner-occupiers who are a class whom he has politically clasped to his bosom recently, and yet he goes out of his way to reject them from this Bill. They are not even business men of whom he could say, "They can look after themselves; they are quite capable of doing it".
    The extraordinary thing is that if this Bill is passed as it stands the business man will be able to claim compensation at market value and the home owner will not be able to claim it, because in paragraph 6 of the same Schedule to the Act, just two paragraphs after that with which we are dealing now, the owner-occupier
    1176
    or lessee occupier of a house which is used wholly or partly for business is already in the position in which we want by this Amendment to put the home owner. The man who owns a house which is partly used for business purposes has only to show that he was in possession of it on 13th December, 1955, whenever he purchased it before that time, and that at the time when it was compulsorily purchased from him he was carrying on business and had an interest in the house, and in that case he gets the full market value. His benefit does not run on to Monday fortnight. It lasts for the whole of his life.
    If that is to be left as the law, then does it not completely knock the bottom out of every argument for excluding the home owners who purchased between 1939 and 1955? How will the right hon. Gentleman be able to stand up in future and say, "Yes, the business tenant can get market value whenever prior to 1955 he purchased. But you home owners, no —only if you purchased between 1950 and 1955, that short period of five years, and then only if you have not had more than 15 years' life in your house"? This really is the most extraordinary aspect of Government policy. I do not wonder that this Bill was not put into the Queen's Speech if that is the sort of policy put before the Committee tonight.
    In face of leaving that business class to get compensation they cannot still maintain the right to exclude purchases during the 1939 to 1955 period. These are the purchasers who bought in extremely difficult conditions in the war and those who bought under shortage of accommodation for a few years after the war. Those are the people for whom the legislation was originally intended, and those are the people who are now being cut out by the present Bill.
    Mrs. Joyce Butler: While not being able to support the rather intemperate language of the hon. Member for Crosby (Mr. Graham Page), I have considerable sympathy with the sentiments behind the Amendment which he has moved.
    It so happens that, by a strange circumstance, the London borough of Haringey, of which my constituency is a part, holds its next council meeting on 13th December. On the agenda for that meeting, the

    1177
    council seeks approval for a compulsory purchase order for a slum clearance area. One of the houses in that area is owned by a widow whose husband purchased the leasehold interest on 15th May, 1950. As the Clause now stands, it means that because the council is meeting on 13th December, the widow will not be entitled to the lull compensation which the Bill is seeking to give to other owner-occupiers, and she will lose something like £1,000 because the council did not happen to be meeting the day before.
    That is a particular case, and one would not argue from a particular case to the general. But there must be many other similar cases, and there must be many other people who are going to be affected by slum-clearance schemes and compulsory purchase orders in the coming months and who will not get the full compensation to which other owner-occupiers will be entitled.
    Before my right hon. Friend replies to the Amendment, I would ask him to consider if something can be done for that particular group of people who purchased properties between 1939 and the operative date of 1955, to enable them to enjoy the privileges which the Bill is seeking to give to many other owner-occupiers. We attempt to do it at a very late stage, but I still hope that my right hon. Friend will find some means of doing it, because it will strengthen the Bill considerably.
    Mr. Gurden: Nearly all of the arguments that applied to the previous Amendment apply here, and every hon. Member who spoke on the last Amendment supported the idea that, instead of the Bill, we should have something quite different and, in any case, that we should have Amendments. If one examines the Parliamentary Secretary's words tomorrow morning in HANSARD, it will be seen that even he put forward the points that, as the Bill stood, it does not meet the complaints that are being made and certainly does not solve the problems and ought to be amended. That is really what his speech amounted to. Yet he sat down without giving any hope that the Bill would be amended.
    I am surprised that the hon. Gentlemen opposite who made very reasonable appeals to him did not rise again or make any effort to get something promised, if not at the present time, later
    1178
    on. We did not get anything at all; yet they calmly went into the Lobby to vote against their own speeches, and all the common sense that they had put forward went for nothing. They had appealed earlier to the Minister for the promise of amendment; yet nothing has come forward.
    I think that this is the moment when, across the political floor, they could do something about it if they wished. They could at least draw a further promise from the Minister, but if they do as they did on the last Amendment we shall probably meet with failure for a long time to come, and we shall have these anomalies going on.
    12 m.
    The Bill merely perpetuates the difficulty in which we have been for a long time. I accept that my party probably could have done something about it, but I warn the Minister that this sort of Bill creates slums, because a lot of people who see no hope of getting compensation when the day comes for compulsory purchase do not spend money on their houses to keep them in decent condition. This is bound to create slums. I could show the Minister areas in Birmingham where slums have been created simply because people knew that they were not going to get decent compensation at the end of the day. I ask the Minister to accept the Amendment, or at least to promise that he will put something into the Bill which will go some way towards alleviating this difficulty.
    Mr. Stan Newens: I support what my hon. Friend the Member for Wood Green (Mrs. Joyce Butler) said about the Amendment. I share the concern which has been expressed on both sides of the House about the people referred to in this debate. As I said during the Second Reading debate, I think that considerable injustice will be created by fixing a deadline in 1950, because a situation will be created in which next door neighbours may well be treated differently.
    Two neighbours may have bought their houses in successive years, one in 1949, and the other in 1950, one before the operative date, and one after it. It may well be that the house bought in 1949 is in better condition than the one bought

    1179
    in 1950. Nevertheless, the owner of the former will not qualify for market value supplement. This will create a deep sense of injustice in the minds of those who are forced to suffer as a result of this arbitrary date, and I do not think it is justified as an arbitrary fixed line. I think that the Opposition have raised this matter for party political reasons. I am not suggesting that that is so in the case of all hon. Gentlemen opposite, but the fact that hon. Members on both sides of the House are concerned about this arbitrary date is something that I hope my right hon. Friend will not overlook.
    If it were possible to consider some sort of sliding scale whereby the market value supplement would diminish as time went by, this would create some means by which people would not be treated differently, and in such a marked manner, just because they bought their houses a few months prior to the operative date. I think that hon. Members on both sides are particularly concerned that 1950 may, as a result of this Bill, form a great divide and create a considerable sense of injustice in the minds of those who suffer as a result. Therefore, even at this late stage I ask my right hon. Friend to reconsider the question and see whether there is some way in which we can tackle the problem so as not to detract from the great merit of the Bill which hon. Members have recognised, despite the facts to which the Amendment refers.
    Mr. MacColl: I think that this point about business premises is something of a red herring because the hon. Member for Crosby (Mr. Graham Page) worked himself up into an uncontrolled passion about the infamy of treating business premises in a better way than residential ones. The distinction was drawn in the 1957 Act. That has always run. We are not altering that at all. But we are amending it as regards residential premises, where the entitlement to a supplementary payment would have expired at the end of this year. We are extending it—so we are to some extent lessening the distinction, and not exaggerating it.
    The main point is that the original idea behind this legislation was to give a person at least 10 years' possession of his house. But it was inconsistent, because it went back to 1939. Therefore, if a person was in the 1939 class he got 26 years'
    1180
    enjoyment of his house before he got site value whereas a person at the other end of the scale—the 1955 end—got only 10 years. This was extremely unfair as between different owner-occupiers. We are saying that the sensible way to get justice as far as possible is to give everybody 15 years' enjoyment. It is fairer to do that than to give some people 26 years and some only 10.
    The proposal is that people who have not yet had 15 years' occupation will go on until they have had it. But there is no point in giving the people who have already had 15 years' occupation a permanent right to greatly increased compensation. There is a case for having a look at the whole method of assessing compensation, but there can be no case for picking on the people who purchased between 1939 and 1955 and saying, "You, although having had 26 years' enjoyment of your property, will be entitled to extra compensation whenever an order is made concerning your property." That would simply exaggerate the difference between them and the people who are not going to come within the terms of the Bill.
    Sir A. Meyer: This is where I came in before. I interrupted the hon. Member in the debate on the Second Reading, when the hon. Member said that he thought that the Government were giving everybody 15 years' enjoyment. The people who purchased after 1955 are not getting 15 years' enjoyment, and the Minister has refused to accept an Amendment which would give them 15 years—or have I misheard the Minister?
    Mr. MacColl: No—the hon. Member has been right on both occasions. We spent a long time discussing people who bought after 1955, and we settled it that they did not come within the terms of the Bill. We are now talking about the people who come within the terms of the Bill. Under the Bill they will get 15 years' occupation, whereas under the Amendment the people who have already had their 15 years will not just get another five years; they will go on for ever having rights which the later people do not have. That would seem unreasonable.
    Mr. Julius Silverman: This is not good enough. I cannot see the logic in it. It does not matter how many

    1181
    years of enjoyment a person has had in his house. At the time, whether in 1965, 1967 or 1968, in respect of this man who bought his house as an asset—and it may well be his most important asset—it is wrong to say, "We are going to take your house away because you have had so many years' enjoyment". It does not make sense to me, and I do not see how it makes sense to the Minister. I ask him to look at the question again. It is like his saying that all men who have reached the age of 50 should be shot. When they said that it was unjust, his argument would be, "You have had 50 years' enjoyment, what are you complaining about?" It is precisely the same sort of logic. It may be logic to the Minister, but it is nonsense to me. It would be the most sensible thing, merely as a matter of managing the Bill, to have extended the operation of the 1956 Act by five years. That would have saved the Parliamentary Secretary a good deal of trouble and argument.
    This is, I am sure, the feeling of hon. Members on this side of the House as well as on the other. I hope that my hon. Friend will look at this matter again. I suppose, if this goes to a vote, I will support him, but frankly—[HON. MEMBERS: "Why?"]—I am not happy about the matter.
    Mr. John Boyd-Carpenter: I agree very much with what the hon. Member for Birmingham, Aston (Mr. Julius Silverman), with whom I am not always in complete agreement said when he referred to the Parliamentary Secretary's speech as just not good enough. After all, when it was announced during the debate on the Address in reply to the Gracious Speech that the Government would introduce a Bill on this subject, it was generally thought, outside and on both sides of the House, that some additional period, beyond what was a fortnight ahead when my 'non. Friend moved the Amendment and is now less than a fortnight ahead, would be given to all the people covered by the original Act.
    It was with some surprise that we discovered, on studying the Bill, that it did nothing of the sort, that it was not, for the great majority of people covered by the original Act a stopgap Measure at all, that it was a stopgap Measure only
    1182
    for that group of people who acquired their houses between 1950 and 1955, and that it did nothing to alter the Bill's effect, in a fortnight, in depriving of market price those who purchased between 1939 and 1950—that is, by far the greater number of beneficiaries under the original Act.
    It is a mockery to describe as a stopgap Measure something which does not raise a finger to help the great majority of people whom hon. Members on both sides and opinion without want to see helped, even if only temporarily. As I said earlier, no one would hold it against the Minister that he did not in this Measure—urgently needed as it is—reform the whole complex system of compensation. Of course it would be unreasonable to expect that, but it is surely unreasonable of him not to continue at least for a time the occupation of all the people covered by the original Act, most of whom stand to lose that cover in respect of Orders made after a fortnight from now.
    It is not good enough for the Parliamentary Secretary to trot out again the argument that 15 years is what everybody is entitled to and nobody is entitled to any more. As my hon. Friend pointed out, he forgot that argument altogether on the previous Amendment, when we were talking about people who bought their houses between 1955 and 1960. They were not to be given 15 years: they were not to be given anything. Therefore, we are left, even on the Parliamentary Secretary's own showing, with this curious period of demarcation, that those who acquired their homes before a certain date get at least 15 years of occupation, but it terminates sharply then. Those who acquired their houses after that time get nothing at all.
    This is not good enough. I think that the Committee was very struck by the fitting illustration given by the hon. Lady the Member for Wood Green (Mrs. Joyce Butler). One's sympathy went out, not only to the owner of that house but to the members of the local authority who will be faced with an agonisingly difficult decision when they meet in a fortnight, unless the Committee deals—as it can now, if it so wishes—with this issue.
    It was said that the Amendment was put forward on partly lines and for party

    1183
    Purposes. Anyone can make that comment. It does not, I think, absolve the Committee, or any one of us as individuals, from making up our minds on the merits and subject matter of the law. It lies in the power of this House, if it wishes, to secure, at least for a time forward, that all people who have their homes taken from them under these schemes, who had cover under the original Act, shall continue to get the market price for their homes. That will give the Minister all the time he wants to deal
    with the broader system of compensation and, therefore, whether this scheme or system can be merged into a better and more comprehensive one. If the Committee decides to annul the Amendment, then the Act falls on 13th December and responsibility for that will rest clearly on the shoulders of those who oppose this Amendment.
    Question put, That the words proposed to be left out stand part of the Clause:—
    The Committee divided: Ayes 168, Noes 143.

    Division No. 5.]

    AYES

    [12.16 a.m.

    Abse, Leo

    Gourlay, Harry

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

    Alldritt, Walter

    Greenwood, Rt. Hn. Anthony

    Orme, Stanley

    Armstrong, Ernest

    Gregory, Arnold

    Oswald, Thomas

    Atkinson, Norman

    Grey, Charles

    Page, Derek (King's Lynn)

    Bagier, Gordon A. T.

    Hamilton, James (Bothwell)

    Palmer, Arthur

    Bennett, J. (Glasgow, Bridgeton)

    Hannan, William

    Pavitt, Laurence

    Binns, John

    Harrison, Walter (Wakefield)

    Perry, Ernest G.

    Bishop, E. S.

    Hart, Mrs. Judith

    Popplewell, Ernest

    Blackburn, F.

    Hattersley, Roy

    Prentice, R E.

    Blenkinsop, Arthur

    Hazell, Bert

    Price, J. T. (Westhoughton)

    Boardman, H.

    Heffer, Eric S.

    Probert, Arthur

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

    Herbison, Rt. Hn. Margaret

    Pursey, Cmdr. Harry

    Boyden, James

    Hobden, Dennis (Brighton, K'town)

    Redhead, Edward

    Braddock, Mrs. E. M.

    Horner, John

    Rees, Merlyn

    Bradley, Tom

    Houghton, Rt. Hn. Douglas

    Reynolds, G. W.

    Bray, Dr. Jeremy

    Howarth, Harry (Wellingborough)

    Rhodes, Geoffrey

    Brown, Hugh D. (Glasgow, Provan)

    Howie, W.

    Richard, Ivor

    Brown, R. W.(Shoreditch & Fbury)

    Hughes, Emrys (S. Ayrshire)

    Robertson, John (Paisley)

    Buchan, Norman (Renfrewshire, W.)

    Hunter, Adam (Dunfermline)

    Rodgers, William (Stockton)

    Butler, Mrs. Joyce (Wood Green)

    Irvine, A. J. (Edge Hill)

    Rose, Paul B.

    Carmichael, Neil

    Jackson, Colin

    Rowland, Christopher

    Garter-Jones, Lewis

    Janner, Sir Barnett

    Sheldon, Robert

    Coleman, Donald

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

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

    Conlan, Bernard

    Jenkins, Hugh (Putney)

    Silkin, John (Deptford)

    Corbet, Mrs. Freda

    Johnson, Carol (Lewisham, S.)

    Silkin, S. C. (Camberwell, Dulwich)

    Craddock, George (Bradford, S.)

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

    Silverman, Julius (Aston)

    Crawshaw, Richard

    Kenyon, Clifford

    Skeffington, Arthur

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

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

    Slater, Mrs. Harriet (Stoke, N.)

    Cullen, Mrs. Alice

    Lawson, George

    Small, William

    Dalyell, Tam

    Lever, L. M. (Ardwick)

    Soskice, Rt. Hn. Sir Frank

    Davies, G. Elfed (Rhondda, E.)

    Lewis, Ron (Carlisle)

    Swingler, Stephen

    de Freitas, Sir Geoffrey

    Lomas, Kenneth

    Taverne, Dick

    Dell, Edmund

    Loughlin, Charles

    Thomas, George (Cardiff, W.)

    Dempsey, James

    McBride, Neil

    Tinn, James

    Doig, Peter

    McCann, J.

    Tuck, Raphael

    Donnelly, Desmond

    MacColl, James

    Urwin, T. W.

    Driberg, Tom

    MacDermot, Niall

    Varley, Eric G.

    Duffy, Dr. A. E. P.

    McKay, Mrs. Margaret

    Walden, Brian (All Saints)

    Dunn, James A.

    Mackenzie, Gregor (Rutherglen)

    Walker, Harold (Doncaster)

    Dunnett, Jack

    Mackie, John (Enfield, E.)

    Weitzman, David

    Edelman, Maurice

    Mahon, Peter (Preston, S.)

    Wellbeloved, James

    English, Michael

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

    Wells, William (Walsall, N.)

    Ennals, David

    Manuel, Archie

    White, Mrs. Eirene

    Ensor, David

    Mapp, Charles

    Whitlock, William

    Evans, Albert (Islington, S.W.)

    Marsh, Richard

    Wilkins, W. A.

    Evans, loan (Birmingham, Yardley)

    Mayhew, Christopher

    Willey, Rt. Hn. Frederick

    Fernyhough, E.

    Mendelson, J. J.

    Williams, Alan (Swansea, W.)

    Fletcher, Sir Eric (Islington, E.)

    Millan, Bruce

    Williams, Clifford (Abertillery)

    Fletcher, Ted (Darlington)

    Miller, Dr. M. S.

    Williams, Mrs. Shirley (Hitchin)

    Floud, Bernard

    Morris, Alfred (Wythenshawe)

    Williams, W. T. (Warrington)

    Foot, Michael (Ebbw Vale)

    Morris, John (Aberavon)

    Willis, George (Edinburgh, E.)

    Fraser, Rt. Hn. Tom (Hamilton)

    Murray, Albert

    Wyatt, Woodrow

    Freeson, Reginald

    Newens, Stan

    Yates, Victor (Ladywood)

    Galpern, Sir Myer

    Norwood, Christopher

    Zilliacus, K.

    Garrett, W. E.

    Oakes, Gordon

    TELLERS FOR THE AYES:

    Garrow, A.

    Ogden, Eric

    Mr. Ifor Davies and

    Ginsburg, David

    O'Malley, Brian

    Mr. Joseph Harper.

    NOES

    Agnew, Commander Sir Peter

    Gammans, Lady

    Miscampbell, Norman

    Alison, Michael (Barkston Ash)

    Gardner, Edward

    Mitchell, David

    Allan, Robert (Paddington, S.)

    Gilmour, Ian (Norfolk, Central)

    Mott-Radclyffe, Sir Charles

    Amery, Rt. Hn. Julian

    Gilmour, Sir John (East Fife)

    Munro-Lucas-Tooth, Sir Hugh

    Astor, John

    Glover, Sir Douglas

    Murton, Oscar

    Atkins, Humphrey

    Glyn, Sir Richard

    Nicholis, Sir Harmar

    Awdry, Daniel

    Gresham Cooke, R.

    Nugent, Rt. Hn. Sir Richard

    Baker, W. H. K.

    Griffiths, Peter (Smethwick)

    Osborn, John (Hallam)

    Batsford, Brian

    Gurden, Harold

    Page, R. Graham (Crosby)

    Berkeley, Humphry

    Hall, John (Wycombe)

    Peel, John

    Berry, Hn. Anthony

    Hall-Davis, A. G. F.

    Percival, Ian

    Biffen, John

    Hamilton, Marquess of (Fermanagh)

    Pitt, Dame Edith

    Bingham, R. M.

    Harris, Reader (Heston)

    Pounder, Rafton

    Birch, Rt. Hn. Nigel

    Harrison, Col. Sir Harwood (Eye)

    Powell, Rt. Hn. J. Enoch

    Black, Sir Cyril

    Harvey, John (Walthamstow, E.)

    Price, David (Eastleigh)

    Box, Donald

    Hastings, Stephen

    Pym, Francis

    Boyd-Carpenter, Rt. Hn. J.

    Hawkins, Paul

    Quennell, Miss J. M.

    Boyle, Rt. Hn. Sir Edward

    Hendry, Forbes

    Redmayne, Rt. Hn. Sir Martin

    Brewis, John

    Higgins, Terence L.

    Ridsdale, Julian

    Brinton, Sir Tatton

    Hobson, Rt. Hn. Sir John

    Royle, Anthony

    Brown, Sir Edward (Bath)

    Hornsby-Smith, Rt. Hn. Dame P.

    Russell, Sir Ronald

    Bruce-Gardyne, J.

    Howe, Geoffrey (Bebington)

    Shepherd, William

    Buchanan-Smith, Alick

    Hunt, John (Bromley)

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

    Buck, Antony

    Iremonger, T. L.

    Smyth, Rt. Hn. Brig. Sir John

    Carlisle, Mark

    Irvine, Bryant Godman (Rye)

    Stanley, Hn. Richard

    Carr, Rt. Hn. Robert

    Jenkin, Patrick (Woodford)

    Steel, David (Roxburgh)

    Chataway, Christopher

    Johnson Smith, G. (East Grinstead)

    Studholme, Sir Henry

    Chlchester-Clark, R.

    Jopling, Michael

    Talbot, John E.

    Clark, Henry (Antrim, N.)

    Joseph, Rt. Hn. Sir Keith

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

    Clarke, Brig. Terence (Portsmth.W.)

    Kaberry, Sir Donald

    Taylor, Frank (Moss Side)

    Cooke, Robert

    Kershaw, Anthony

    Temple, John M.

    Cooper, A. E.

    Kilfedder, James A.

    Thatcher, Mrs. Margaret

    Corfield, F. V.

    Kimball, Marcus

    Thompson, Sir Richard (Croydon,S.)

    Costain, A. P.

    King, Evelyn (Dorset, S.)

    Turton, Rt. Hn. R. H.

    Crosthwaite Eyre, Col. Sir Oliver

    Kirk, Peter

    Walker, Peter (Worcester)

    Crowder, F. P.

    Kitson, Timothy

    Webster, David

    Cunningham, Sir Knox

    Legge-Bourke, Sir Harry

    Wells, John (Maidstone)

    Curran, Charles

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

    Whitelaw, William

    Davies, Dr. Wyndham (Perry Barr)

    Longbottom, Charles

    Williams, Sir Rolf Dudley (Exeter)

    d'Avigdor-Golclsmid, Sir Henry

    Lubbock, Eric

    Wilson, Geoffrey (Truro)

    Deedes, Rt. Hn. W. F.

    MacArthur, Ian

    Wise, A. R.

    Dodds-Parker, Douglas

    Mackenzie, Alasdair (Ross&Crom'ty)

    Wolrige-Gordon, Patrick

    Doughty, Charles

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

    Wood, Rt. Hn. Richard

    Drayson, G. B.

    McLaren, Martin

    Wylie, N. R.

    du Cann, Rt. Hn. Edward

    McNair-Wilson, Patrick

    Younger, Hn. George

    Eyre, Reginald

    Maddan, w. F. M.

    Fisher, Nigel

    Maxwell-Hyslop, R. J.

    TELLERS FOR THE NOES:

    Forrest, George

    Meyer, Sir Anthony

    Mr. R. W. Elliott and

    Fraser, Ian (Plymouth, Sutton)

    Mills, Stratton (Belfast, N.)

    Mr. Jasper More.

    Clause ordered to stand part of the Bill

    Clause 2.—(MONEY BORROWED BY OWNER-OCCUPIER TO PURCHASE UNFIT HOUSE OR ON SECURITY OF AN UNFIT HOUSE.)
    Mr. Boyd-Carpenter: I beg to move Amendment No. 7, in page 2, line 4, after "instalments" to insert:

    (i) shall not apply to mortgages, charges and agreements in favour of a local authority and any reference in the said paragraph 5 and in this section to a mortgage, charge or agreement shall be so limited; but

    (ii).

    This Amendment raises an interesting issue but not a point of the same degree of general seriousness and importance as that raised in the previous two Amendments.
    Clause 2, to which the Amendment relates, is in itself a very good provision.
    1186
    It is a good idea that where houses are demolished under slum clearance schemes the question of the fate of the mortgage —as to how the loss shall be divided between the parties—should be referred to the county court.
    The Amendment raises a point which I raised on Second Reading and to which no reply was made at that stage. It is the case where the mortgage is granted by a local authority which itself has promoted the slum clearance scheme. That must clearly, in the nature of things, be a case where the owner-occupier of the house could have had no idea when he bought it that the slum clearance provisions would be applied to the house. Obviously, if the local authority went so far as to grant a mortgage in respect of the property, the local authority itself could have had no idea whatever at the time that the house would be demolished

    1187
    in the forseeable future under a demolition scheme. Therefore, no fault of any kind could, in those circumstances, be attributed to the owner-occupier.
    In such a case I think the Committee will agree that it is quite plainly simple justice that further payments under the mortgage should be waived. It is unconscionable for a local authority to promote a slum clearance scheme in respect of a house on which it had granted a mortgage and then insist on further payments under the mortgage. This is so obviously unconscionable that in practice today local authorities do not insist on those payments. There is a procedure—it involves the consent of the Minister which, I understand, is never refused—under which where an authority's own scheme applies to a house on which it has already granted a mortgage, the authority drops its claim for further mortgage payments.
    The fear which I expressed on Second Reading—and which was not modified because the Minister did not deal with the matter—is that this procedure may make the position of the owner-occupier in such a case worse than at present. The present position in these cases seems to be perfectly satisfactory, but if there is a provision of this kind under which mortgages generally are taken to the county court, it seems likely that a local authority would feel bound to take all its mortgages to the county court.
    Hon. Members who are experienced in local government may feel that to adopt this course may involve criticisms by the auditor and even the possibility, however remote, of a surcharge. This procedure having laid it down generally that all mortgages must be taken to the county court, local authorities might feel it necessary to do just that, and while the court might rule that the loss should fall on the local authority, the matter would still be at risk and legal costs would be involved. All that procedure in this limited class of case would be required to try to do what is much more cheaply, effectively and quickly done at present by a local authority simply waiving the mortgage payments.
    12.30 a.m.
    I am sure that the solution proposed in the Clause is a good one for all the other cases, but I am unhappy about the
    1188
    effect in this limited class of case. I hope that the Parliamentary Secretary will satisfy the Committee that these fears are ill-founded and that there is no risk of a perfectly satisfactory position in these cases being accidentally undermined by the Bill. I should like to hear from the Parliamentary Secretary before deciding how further to proceed.
    Mr. MacColl: In this matter I feel that I am between the upper millstone of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and the nether millstone of my hon. Friend the Member for Oldham, East (Mr. Mapp) who, on Second Reading, took a diametrically opposite view. My hon. Friend's fear about the Clause was that it would discourage loan-granting bodies, whether local authorities or building societies, from lending money on old property because of the risk under this procedure that they might lose their security and right of recourse against the borrower. The right hon. Gentleman has taken the view that this might have the effect of encouraging local authorities to be tough in refusing to forgive a loan which they had given to somebody.
    Mr. Boyd-Carpenter: I did not put it quite like that. My point was that if this procedure was indicated in this context local authorities, however desirous they might be of waiving payments, might feel bound to submit the matter to the county court lest they themselves might be criticised by the district auditor.
    Mr. MacColl: I do not think that they would feel bound to do it. They would have power to make an agreement in a case where they thought it right and proper not to enforce the continuance of repayments. They have that power and there is no need for them to go to the court. On the other hand, local authorities are independent bodies. They can make their own decisions. In the short time that I have been in my present job I have come to know that local authorities do not always follow the course of action which we who are outside think that they should follow. If a local authority says to itself, "I am a trustee to the public for public money which I have loaned and therefore it is my duty to get what I can out of the borrower of the money", we cannot interfere.It is something which a local

    1189
    authority is entitled to do. Therefore it is important that the borrower should have the right to go to the county court to get a settlement of his claim and I would be reluctant to see that right taken away. If we put into the Clause that this shall not apply to mortgages in favour of local authorities my fear would be that somebody reading that would say, "Clearly this applies only to private borrowers and we as a public body are not subject to the provisions of the Cause"—and that would be the exact opposite of the result desired by the right hon. Gentleman.
    The right hon. Gentleman raised the question of the power of local authorities at present to make agreements, with the sanction of the Minister. I think that he is, perhaps, confusing two rather different things. A local authority has a general power to make ex gratia payments, with the permission of my right hon. Friend. The permission does not make them valid payments, but it does prevent the district auditor from doing anything about them, though it might still be open to someone else to object. That is a useful provision, but my right hon. Friend would like to see this case put on a rather more formal basis.
    To sum up, it is, as the right hon. Gentleman said, most desirable that this procedure of going to the courts should he available. In many cases, because they have encouraged the acquisition of the property, the local authorities must bear some of the responsibility and, therefore, one would think that the balance of argument would be in favour of settling out of court. Nevertheless, it is only right that the owner-occupier should have the right to go to the courts and get legal relief, if that he necessary.
    For these reasons, I suggest that the Amendment should not be made in the Bill. I think that our aims are exactly the same, but my misgiving is about what would happen as a result of the adoption of the right hon. Gentleman's suggestion.
    Mr. Boyd-Carpenter: I am a little reassured by what the Parliamentary Secretary has said, and I agree that our aim is identical. As I understood it, he gave me an assurance that, if the Clause remains as it is, a local authority would neither be compelled to go to the courts not be al risk of surcharge or action by
    1190
    the district auditor if it simply waived the payments without going to the courts. He has put that on record, and it satisfies my main anxiety.
    Mr. MacColl: I do not want to wriggle out of that at all, but I am wondering about how far it might be thought to go. The district auditor might think it improvident and reckless of a local authority not to get the money back. Let us suppose that it was the right hon. Gentleman who had been lent the money for the acquisition of an unfit house. It might be thought that he, with his enormous resources, ought to meet the cost rather than the ratepayers. But I think that in the normal case of a sensible local authority and sensible borrower, it would he perfectly proper to make an agreement of that sort.
    Mr. Boyd-Carpenter: I am grateful to the hon. Gentleman, not least for his tribute to my creditworthiness. I shall send the appropriate copy of HANSARD to my bank manager.
    In all seriousness, I think that that was a reasonably fair assurance. I take the point that, if a local authority were sticky about it, it would be right that the borrower should have power to take the matter to the county court, and this might be excluded by the Amendment. In the circumstances. I ought not to detain the Committee further, and I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.
    Clauses 3 and 4 ordered to stand part of the Bill.
    Bill reported, without Amendment.
    Motion made, and Question proposed, That the Bill be now read the Third time.
    12.40 a.m.
    Mr. Boyd-Carpenter: I do not wish to detain the House for more than a few moments, or to hold up the progress of the Bill. So far as it goes, and that is, I am afraid, a very powerful qualification, it will do some good and relieve some anxiety. I can at this stage only discuss that which is in the Bill, which leaves me a very restricted and limited field, because I think it should be made clear that this Bill greatly disappoints those who were

    1191
    cheered by the announcement of the intention to introduce it. Though its effects are, so far as they go, beneficial, it is a miserable, mean, under-sized, inadequate little Measure.
    Mr. MacColl: The right hon. Gentleman was enjoying himself rather unnecessarily. This is a useful little Bill which fulfils a pledge. It considerably extends the protection for the owner-occupier because it gives him the protection of having his rights dependent on when the Order was made, and not when his property was acquired, and that is a very substantial improvement. It applies to people who would not have this protection under existing legislation. It gives protection for 15 years, and although no one can pretend this is the answer to all our problems, it is a very considerable step to ease the position.
    Question put and agreed to.
    Bill accordingly read the Third time and passed.

    PUBLIC PETITIONS
    Select Committee appointed to whom shall be referred all Petitions presented to the House, with the exception of such as are deposited in the Private Bill Office,
    1192
    and that such Committee to classify and prepare abstracts of the same in such form and manner as shall appear to them best suited to convey to the House all requisite information respecting their contents, and to report the same from time to time to the House; and that the Reports of the Committee do set forth, in respect of each Petition, the number of signatures which are accompanied by addresses, and which are written on sheets, headed in every case by the prayer of the Petition, or on the back of such sheets provided that on every sheet after the first the prayer may be reproduced in print or by other mechanical process; and that such Committee to have power to direct the printing in extenso of such Petitions, or of such parts of Petitions, as shall appear to require it:
    Mr. Walter Alldritt, Mr. Bernard Braine, Lieutenant-Colonel Sir Walter Bromley-Davenport, Mr. David Griffiths, Mr. Forbes Hendry, Mr. Hector Hughes, Mr. J. C. Jennings, Mr. Godfrey Lagden, Colonel Lancaster, Sir Hugh MunroLucas-Tooth, Mr. Harold Neal, Mr. Pargiter, Mr. Leslie Spriggs, Mr. Tudor Watkins and Mr. Winterbottom.
    Power to send for persons, papers and records.
    Three to be the Quorum.—[Mr. Harper.]

Road Communications, Hull
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]
12.44 a.m.
Mr. James Johnson: Whatever the title of this debate, and however modest its scope, we are debating the future of Hull and I hope for a positive and helpful statement when the Parliamentary Secretary comes to reply. For 13 long years Tory Ministers have been useless and passive in this matter of affording communications to Hull, save, perhaps, for some nine miles of dual carriageway west of Hull. I expect better of my own Government.
Hull is the third port in the United Kingdom. Vast sums have been, are being and will be spent on the docks—something like £40 million in the coming years. "the docks handle 17 million tons of cargo a year. It is vitally important for our lifeblood that we have fast and accessible means of communication. If we compare a not dissimilar port like Bristol, Bristol has at least four motorways and the bridge across the Severn.
There is considerable feeling in Hull about the long and continuing neglect concerning the communications west to Leeds and Liverpool and to the Midlands and further south, which could be made much more direct and more adequate by getting over the estuary with the proposed Humber bridge. Perhaps my hon. Friend the Joint Parliamentary Secretary has seen the Yorkshire Post of last Tuesday which made some tart comments about it.
At long last, in October 1962 the Conservative Minister commissioned a firm of consultants, Scott, Wilson and Kirkpatrick, to examine the road requirements between Hull and the A.1, including the crossing of the Ouse. This was completed in 1964 and published in September, 1965, together with the Minister's conclusions. This new scheme will cost nearly £50 million but work will not begin until the early 1970s. The Minister has so far accepted this without modification.
I can safely say that leaders in all walks of life in Hull want a plan which will give a co-ordinated and coherent network for the whole of Humberside
1194
Let me make it clear that the Humber bridge and the east and west roads are not mutually exclusive, as some people, perhaps, have foolishly stated. All interests in Hull believe that a dual carriageway from Hull to the A.1 is an imperative necessity, but they also believe that the bridge is equally necessary, or will be equally necessary in the very near future.
The Humber is the only main river in England without a bridge or tunnel crossing. The estuary is a formidable barrier to traffic moving between North and South and South-West. It extends 40 miles from Spurn Head, or roughly one-third of the distance across England at this latitude. The nearest bridge is Booth Ferry, across the Ouse to Goole, 45 miles distant from Spurn Head and 28 miles from Hull.
Regarding the Scott, Wilson plan, accepted by the Minister, my complaint is that the Ministry of Transport consulting engineers were given terms of reference too limited. For example, they merely considered roads north of the Humber, traffic surveys were limited to Selby, Goole, Doncaster and the south side of the Humber was not studied. I again submit that the report is in many ways, if not obsolete, at least obsolescent having regard to the fact that in 1962 proposals by the Government for Humberside development were not envisaged. Now, we have a Yorkshire and Humberside Economic Planning Council.
I should like to quote what has been said by the Vice-Chancellor of Leeds University, Sir Roger Stevens. He told the Yorkshire Post that the Council considered that there was an urgent need for the bridge. The Council—I quote—
"believe that the economic development of the area depends to some extent on the bridge being built. History elsewhere had shown that the building of a major bridge had been the basis of development in an area."
We are to have a high-level bridge at Hook with 85 ft. headroom costing £5½ million, which is almost half of what it would cost to build the Humber bridge between Ferriby, on the north bank, and Barton-on-Humber, on the Lincolnshire side. This proposed bridge is only two miles from the existing bridge at Booth Ferry. It will not obviate the need for a new bridge at Selby, a few miles to the north, which,

1195
the Ministry states, would need only 25 feet headroom.
Having said all this, however, I must say that a dual carriageway from Hull to the Al is a plain necessity now because the existing highway west via Howden, Goole and Thorne is tortuous and notorious. The bottleneck at Elloughton is a nightmare. The single-lane canal bridge at Thorne is a scandal. The hon. Member for Goole (Mr. George Jeger) has shown me a letter which was sent to him by the Minister of Transport about the Thorne bypass. I would quote two lines from it, in which he is talking about having automatic means of opening the gates, which will reduce the time taken in opening them by one minute. He writes:
"We must look to the bypass to provide the remedy for through traffic. Attractive though a secondary temporary bridge alongside the present swingbridge may sound, it could not be provided for several years."
I would like the Joint Parliamentary Secretary to say that in the morning he will ask the Army Engineers to fling up a Bailey bridge at least for the next three or four years till we get the Thorne bypass.
Again, in passing, I would mention—though the hon. Member for Barkston Ash (Mr. Alison) could make the point better than I—the archaic anachronism of the Selby toll bridge which has been flogged time after time in this House by my hon. Friend the Member for Fife, West (Mr. William Hamilton) because of the tolls and the whole nature of the bridge. The locals have given up hope, although my hon. Friend the Member for Fife, West still carries on the fight.
Finally, to cap everything, the dynamic Minister of Housing and Local Government at the Blackpool conference of the Labour Party—I see him here—proposed the Humber as the site for the largest new town in Europe, with 750,000 population. My mind boggles at the thought. Perhaps it might be more in scale if the new town development had been for 150,000 or 250,000–1 do not know—given a bridge across the Humber, which might happen, said the Minister of Housing and Local Government, "if we have the courage to decide these things."
The Minister of Housing and Local Government (Mr. Richard Crossman): Hear, hear.
Mr. Johnson: If we had the courage I think that with that and a little imagination we could build the future of Hull.
Then came the Joint Parliamentary Secretary's statement in the Hull Daily Mail of 11 th November which incensed at least some local opinion. I want the Minister, if he will, to elucidate two vital points about this. I have the cutting here. Perhaps the Joint Parliamentary Secretary would tell us, first, what difference, if any, exists between his Department and the Ministry of Housing and Local Government regarding building the Humber bridge, particularly, of course, in the matters of timing and finance. He said that the Ministry of Transport is in close touch with the Ministry of Housing and Local Government, the Department of Economic Affairs and the Yorkshire and Humberside Economic Planning Council. Perhaps he will elaborate that a little tonight.
Do both Departments accept that the bridge can be urgently needed in the future? Do they both accept that the Government will give assistance in some form, through percentage grant or in loans? Secondly, regarding the £50 million scheme for improving the road network linking Hull with the Al and Doncaster, when will details of this scheme be given to local authorities? I would say to the Joint Parliamentary Secretary that the delay is causing confusion and misunderstanding among local authorities and playing havoc with their planning in their own areas, particularly with regard to Goole and the area south of the proposed bridge. Will the Joint Parliamentary Secretary give an assurance that he will speed this up as far as humanly possible?
Lastly, I ask for some imagination by the Government over our future on Humberside. Here is literally the only open belt of country left in the United Kingdom that is suitable for large scale development. Kingston-upon-Hull is the gateway to the Continent for the North and the Midlands. Let us have the courage that we talked about a few minutes ago. Let us have some inspiration for these lonely towns on the Humber so that they can go ahead boldly into the 1970's.
12.55 a.m.
Mr. Richard Wood: Before the Parliamentary Secretary replies

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to the case which has been very comprehensively put by the hon. Gentleman, I wonder whether I might put two very short questions to him?
First, can he explain, either on this occasion or on another, exactly what has happened to the comprehensive plan which was put forward by the East Riding County Council to meet these problems?
Secondly, can he give some indication, either now or in the fairly near future, of the order in which the improvements are going to take place? He will appreciate that unless the order is correct from the point of view of Hull and the East Riding, it will be a very long time before the benefits in terms of traffic become apparent, either to Hull or the East Riding.
12.56 a.m.
The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): I am very grateful to my hon. Friend the Member for Kingston-upon-Hull, West (Mr. James Johnson) for raising this important subject here tonight.
It is a very important subject, because we recognise that Hull is one of our major ports, and Humberside as a whole is an important and very lively region of the country.
The British Transport Docks Board has invested very substantial sums in improved port facilities in Hull in recent years. That investment is continuing, and there are proposals which we are now considering at the Ministry of Transport for a major extension of the docks system at Hull.
On the other side of the estuary, the port of Immingham has developed since the war into one of our most important ports for the handling of bulk cargoes, and its role in that field is still continuing.
Therefore we accept that Hull and Humberside are a region that must have good road links with the rest of the country. Some two months ago, my right hon. Friend the Minister of Transport announced his decision to provide a new trunk road network recommended by the engineering consultants who had been appointed by his predecessor late in 1962 to examine the problem in the region. I am not going to go into the background of the recommendations that
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were made, because that has been dealt with by my hon. Friend.
As my hon. Friend knows, the Minister consulted all the local bodies and interests before he announced his decision two months ago. In particular, he sought the views of the Regional Planning Council for Yorkshire and Humberside, which did not exist in the days of the Tory Administration and is a new creation of the Labour Government. It was therefore possible from the very early days of its existence to seek its views.
Only two of the bodies that he consulted disagreed with the views that had been put forward. One of those was the Humber Bridge Board, which had acquired powers under the Humber Bridge Act, 1959, to provide a bridge over the Humber between Barton and Hessle. Quite naturally, they thought that priority should be given in the new network to the inclusion of a Humber bridge.
The other dissentient was the East Riding County Council, which favoured a more northerly line for the new east-west route in the road network. But they did not dissent on the question of the Humber bridge. The views of the East Riding County Council and the bridge board apart, my right hon. Friend thus secured agreement that the network which he was inclined to favour was the right one. Moreover, in order to be sure that he fully understood the case in favour of including the Humber Bridge in the network, he had received in March of this year a deputation from the Humber Bridge Board itself. Contrary to some Press reports, my right hon. Friend received that deputation. My hon. Friend was present on that occasion, and he will remember that my right hon. Friend listened sympathetically to the case put forward by the Humber Bridge Board, and he agreed that the Board should put its case to all the local authorities concerned, which it did. None of the local authorities having studied the Board's case, took the view that a bridge over the Humber was a more urgent priority than an improved trunk road network.
I should like to explain why my right hon. Friend chose this particular network, which of course does not include a Humber bridge. The consulting engineers who were appointed by my right hon. Friend's

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predecessor carried out a detailed traffic survey in the area between the Al and Humberside. This showed that the through traffic movements were quite complex, but they identified five main flows. The two most important flows are, in this order, from Hull to Doncaster, Sheffield and the Midlands, and from south of the Humber to Doncaster, Sheffield and the Midlands, two east-west, or diagonal, flows. The third and fourth most important flows are from Hull to the West Riding conurbation and beyond, and from south of the Humber to the West Riding conurbation and beyond, in that order. There is also a significant flow from the Doncaster area to the North Yorkshire resorts.
There is no reason to believe that the direction and importance of the through traffic flows in this area have changed significantly since the survey made by the consultants. Hon. Members will immediately note that three of these flows of traffic are what might be termed diagonal flows from Hull in the Doncaster direction; from south of the Humber in the West Riding direction; and from the Doncaster area to the North Yorkshire resorts. These are the principal traffic flows, the heavy traffic flows, in this area.
The network which we intend to provide will cater principally for those flows of traffic in that the new routes north of the Humber and the new improved road south of the Humber will be linked by the new north-south route between East Cowick and Thorne. Thus, the diagonal flows will be able to get easily in the direction they want, and at the same time the straight east-west flows north and south of the river will be well catered for. This is based entirely on the technical surveys made by the engineers of the traffic flows. We therefore believe that the network approved by my right hon. Friend will provide the most economical way of catering for the main traffic flows between Humberside and the Great North Road.
It is true that the Humber Bridge Board has recommended a network including a bridge over the Humber which would cost less than the network which has been approved by my right hon. Friend, but on examination we find that
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this is only half a network. It would not by any means cater effectively for all the five major trunk flows which I have just mentioned.
We have examined this question most carefully, because it is a very important matter to the Humberside Region, and have come to the conclusion that no satisfactory trunk road network including a Humber Bridge could be built for much less than £60 million. The network without the bridge, which we are now proposing as an urgent priority, will certainly not cost more than £50 million at present prices. Therefore, in consideration of the limitation of funds for road schemes and transport schemes in general we must consider this network to have a higher priority than the other.
But there is no question of ruling out a bridge over the Humber. We recognise that it would bring great benefits to the Humberside Region. In fairness, having quoted the opinion of the Regional Planning Council, I should point out that it gave first priority to the trunk road network as recommended by the consulting engineers, but attached great importance to the provision of a bridge as soon as possible. I can assure my hon. Friend that we shall not allow the future development of the region to be hampered and stultified by the lack of a bridge. If a bridge becomes essential we shall give its construction the go-ahead.
My hon. Friend referred to the remarks of my right hon. Friend the Minister of Housing and Local Government at Blackpool. In October, at Blackpool, he presented the vision of a great new city on the southern side of the Humber. Obviously, the Humber Bridge will become top priority if a decision is taken to promote and facilitate the urban development suggested as a possibility by my right hon. Friend. On the feasibility of this we in the Ministry are in close touch with the Ministry of Housing and Local Government, the Department of Economic Affairs, and other bodies concerned with the Region's future. These studies will be pressed ahead as rapidly as possible. But at the moment, on traffic grounds the bridge is not an indispensable project; what is indispensable is to improve conditions for the existing heavy flows of through traffic in the area.

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As we see it now, this work must come first. The existing needs for the traffic in this area are so strong that we must deal with them before we consider the future needs of the area. Nevertheless, we have deliberately planned these roads so that if it is decided to construct the Humber Bridge it will be possible to graft it on to the new road network. In other words, these are not alternatives that we have been considering—as has been suggested in some sections of the Press in this area. We regard these road schemes as indispensable anyway, but if it proves from a decision taken by the Government that the Humber Bridge is indispensable on the ground of development on 'he southern side of the Humber, it is easily possible to reconcile these schemes with the development of the bridge.
Our road plans for this area were discussed with my right hon. Friend the Minister of Housing and Local Government before we announced them, and he agreed that we should give priority to them. The point is that a new city on the southern side of the Humber is a long-term project and, as I have said, our network is specifically designed so that it can be extended to include a Humber Bridge whenever this is called for by further developments on Humberside—whether it be a large new city or on account of the expansion of existing towns, or anything else. Therefore, it is wrong to suggest that there is any difference of policy here between the Ministry of Transport and the Ministry of Housing; we are in very close contact on these questions.
Of course, those in the area and my hon. Friend who so ably represents them are naturally interested in the immediate developments. There are, of course, immediate priorities in this respect. Some of this network of roads which we have approved are already in my right hon. Friend's trunk roads programme. I refer, for example, to the Thorne bypass, which will cost £3 million. This is a particularly important scheme, because it forms part of the "crosspiece" which
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will be used by traffic making the most important diagonal journeys on the lines I have mentioned.
We hope that the construction work on the Thorne bypass will be started in the next few years. We also hope that work will be started by 1968 at the latest on the Elloughton bypass. This is another scheme costing over £1 million, which, as my hon. Friend knows, is designed to improve the existing main westerly outlet from Hull. These are the most urgent priorities as we see them. The remaining part of the more than £50 million-worth of schemes which my right hon. Friend has approved in connection with road accesses around Hull will, of course, be urgently considered in the rolling programme on which my right hon. Friend has now to take decisions.
As the House knows, this has to be considered from year to year in accordance with the priorities which we have to set, depending on the pressure of demand for road schemes arising from traffic flows. My right hon. Friend has the very difficult task of making judgments as to when these schemes should be programmed. As from year to year we judge the "roll-forward" of the roads programme, we shall consider urgently in accordance with our scheme of priorities the £50 million-worth of schemes which my right hon. Friend has approved, and we shall try to programme them, in addition to the Thorne and Elloughton bypasses, as soon as we can.
We shall of course take into account very seriously the views put forward by the East Riding County Council, which have been mentioned tonight by the right hon. Member for Bridlington and other schemes which have been put forward——
The Question having been proposed after Ten o'clock on Monday evening 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 fourteen minutes past One o'clock.